Grain handling fees skyrocket

Farmers left with the bill | Increases in outward inspection fees expected to rise by $17 million

Individual grain growers will pay thousands of dollars more in annual Canadian Grain Commission user fees starting in the new crop year.

However, one grower group says the fight isn’t over.

Bill C-45, which comes into effect Aug. 1, eliminates the need for inward grain inspection, greatly increases the cost of outward inspection and places the onus on the industry to pay for those additional fees.

The grain industry bill for user fees is rising to $54.3 million per year from the current $37.6 million.

It means user fees will increase to $1.80 per tonne from $1.25 per tonne, assuming Canada exports 30 million tonnes of grains, oilseeds and pulses a year.

At a one tonne per acre yield, that is an added cost of $2,750 for a 5,000 acre farm.

Wade Sobkowich, executive director of the Western Grain Elevator Association, said farmers will likely pick up the entire tab.

“When it comes to fixed costs, things that (grain companies) can’t control and things that are the same for each one of them as competitors, those tend to get passed through to farmers,” he said.

The lion’s share of the additional costs come from a huge hike in outward inspection fees.

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“They’re more than tripling their outward inspection costs. Right now we pay 51 cents a tonne. Going forward, we’re going to be paying $1.60 per tonne,” said Sobkowich.

CGC export certificates are required on grain shipped anywhere other than the United States.

Qualified third parties operating in Canada can provide an export certificate for 40 cents per tonne, which is similar to the 30 to 60 cents per tonne U.S. exporters pay for a Certificate Final.

“Do we really want the industry to be paying double or triple what our competitors are paying?” said Sobkowich.

The federal government was contacted for this story but did not respond in time to meet the Western Producer’s production deadlines.

Under the new user fee arrangement, the grain industry will be responsible for 90 percent of the grain commission’s funding. The government’s share falls to 10 percent, down from 50 percent.

Sobkowich said that is out of whack with other jurisdictions. For instance, the U.S. government funds the Federal Grain Inspection Service to the tune of 37 percent.

“We take issue with it because our competitors aren’t being treated the same way by their governments,” he said.

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Rick White, general manager of the Canadian Canola Growers Association, said it is unfair that the CGC is being funded almost entirely through outward inspection and outward weighing fees.

He said the agency does some work that should be considered public good and paid for by taxpayers, such as what happens at the CGC’s grain research laboratory.

Growers are pushing Ottawa to table a follow-up bill that makes further changes to the CGC, including squeezing some costs out of the system.

“We have had some assurances from the (agriculture) minister that there is more to be done,” said White.

“I think there’s a reasonably good chance of getting that second bill, and we’re going to continue to press the government to commit to that.”

He hopes the bill will be tabled and passed in the fall and include governance changes at the CGC that would make the agency more accountable to farmers.

“If the industry is going to be absorbing most of the costs, then industry has to have more control over that organization,” said White.

The WGEA wants the CGC’s outward inspection service to be an option rather than a requirement because some importers would be satisfied with third party inspection certificates.

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As it stands, the cost of a Certificate Final for a 50,000 tonne vessel will increase to $80,000 from $25,500.

  • Andy

    “Wade Sobkowich, executive director of the Western Grain Elevator Association, said farmers will likely pick up the entire tab.

    “When it comes to fixed costs, things that (grain companies) can’t control and things that are the same for each one of them as competitors, those tend to get passed through to farmers,” he said.”

    So how does this work? Previously, CGC fees for inward inspection and weighing at terminal elevators were included or built into the elevator fees that Producers paid when they had their cars unloaded at port. While these CGC fees are being reduced or eliminated, I am guessing these terminal elevators will not be reducing the total elevating bill for unloading and elevating these hopper cars citing inflation and other factors and increasing because of the higher outwards inspection fees. The CGC has moved to Oversight (hardware/software, not “real-time”, no CGC weighers on-site) from Monitoring for outward weighing to vessels – dropping the fees to 16 cents per ton for weighing to a vessel and raised the fees for outward inspection from 51cents a ton to $1.60 per ton.

    “He said the agency does some work that should be considered public good and paid for by taxpayers, such as what happens at the CGC’s grain research laboratory.”
    “If the industry is going to be absorbing most of the costs, then industry has to have more control over that organization,” said White.

    Wow, if “industry” includes foreign grain companies, how much control and influence should a foreign controlled company have over a Canadian regulatory agency and legislation?

    It appears it is all unfolding as predicted
    “Boehm said efforts to revamp the grain commission will mean fewer services, less protection for grain producers and a new user fees that will cost farmers thousands, if not millions of dollars more each year.
    “(Canadian Grain Commission) programs were developed in response to very real abuses that took place in the past,” he said.
    “When those programs evaporate, the problems will return.””
    From http://www.producer.com/daily/farm-groups-question-who-pays-after-grain-commission-changes-enacted/

    Do any of the grain companies profits get passed along to farmers or is it just expenses?

    Are farmers better off because of all these CGC changes? Will grain companies see greater profits? How much of “public good” is really corporate good?