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Jun 6

AFSC creates salvage grade factor to account for low grade spring harvested crops

Posted on Jun 6 By: Victoria Decker

The following content was provided by AFSC 

For 2019 insured crops that are spring combined, a ‘salvage’ grade factor has been created to account for market conditions this spring. It was created through a survey of buyers to determine a range of prices at which crops are trading. If the grain is of lower quality than normal grade factors account for, the salvage factor provides an assessment that reflects the extraordinary conditions of the spring-threshed crop,

For 2019 insured crops that are spring combined and are being sold for prices lower than what the low-end grade factor reflects, AFSC has widened the acceptance of sales tickets to include buyers who are not licensed by the Canadian Grain Commission as long as the transaction is ‘arms-length’ as defined below. The price on the ticket/receipt can be used to create indemnification more reflective of the individual client’s situation. Additional documentation to validate the unlicensed buyer may be required.

Crops that have a Salvage grade

Arms-Length Transactions

Sales tickets/receipts from unlicensed buyers are acceptable for the 2019 insured spring harvested crops if the transaction is arms-length, as defined by AFSC.

An ‘arms-length’ grain sale is one where the buyer and seller are independent, unrelated parties acting in their own interest and the outcome of the transaction is reflective of the market for the commodity.

Examples of eligible transactions:

  • Sale to a feedlot, feed-mill, bio-diesel plant, ethanol plant, processor, etc.
  • Sale between farms where the grain is physically transferred to the new site and used for on-farm consumption or re-sale at a later date. Re-sale must be to an entity that is not the original seller. The purchasing entity must also be arms-length to the original seller.
  • Examples of ineligible transactions:
  • Sale to a cousin, brother, sister, uncle, aunt, parent, spouse, etc.
  • Sale to an entity owned in any part by the seller, related person or entity.

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