Farmers overcharged nearly $100 million in CGC user fees

The Canadian Grain Commission has built up a surplus of nearly $100 million since 2013-14 through excess user fees collected from Canadian grain farmers.

That surplus has prompted the Western Canadian Wheat Growers Association to call for surplus fees to be immediately returned to grain farmers.

In a Jan. 3 news release, the association called the excess funds a “massive and unnecessary surplus” and invited all western Canadian grain farmers to demand a refund and an immediate reduction in user fees.

The association has also launched an online petition at userfees.wheatgrowers.ca.

“With approximately $100 million of farmers’ hard-earned money having piled up into this enormous surplus, it’s time to immediately give growers a break and reduce these user fees,” said WCWGA president Levi Wood, who farms near Pense, Sask.

“User fees are supposed to help pay for (CGC) operations, but a nine figure surplus in user fees is shocking.”

The association said farmers pay user fees worth roughly $1.80 on every tonne of grain that’s delivered to an elevator.

Those fees are supposed to be used for inspection and weighing certification of grain being sold for export.

According to the wheat growers association, an average farmer who delivers 5,500 tonnes of grain to an elevator typically pays about $10,000 a year in CGC user fees.

The excess funds are partly the result of Canadian grain export volumes significantly exceeding industry expectations over the past four years.

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“It’s a fair point that export volumes have been higher in the past few years than first estimated, so the volume of fees has also been much higher, but that’s no reason to now hoard farmers’ money,” said WCWGA director Matt Sawyer, who farms near Acme, Alta.

“However, it is a great reason to now reduce these user fees — which are clearly out of line for their intended purpose of those operations — and it’s time to refund the surplus, giving the money from growers back to the growers.”

Grain commission spokesperson Remi Gosselin confirmed that revenues collected through user fees have exceeded expenditures since the 2013-14 crop year.

He confirmed that a surplus of roughly $100 million has been accumulated over the past three and a half years.

The commission will begin a review of its current fee schedule in early 2017 and will be consulting with stakeholders for ideas on how the accumulated surplus should be managed.

Gosselin said CGC user fees are set every five years.

The current schedule of fees was implemented in 2013-14 and is due to expire at the end of the 2017-18 crop year.

A new fee schedule will be implemented at that time to cover 2018-23.

“We made commitments to our stakeholders that we would review our fees every five years, and we are doing that in relatively short order,” Gosselin said.

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“In addition to that, the CGC is examining potential options to use the accumulated surplus and that will include an assessment of stakeholders views on the various possibilities.”

Gosselin said upcoming consultations will include discussions on potential user fee reductions and methods of allocating the current CGC surplus.

He said the surplus is the result of high grain volumes and lower-than-expected expenditures on grain commission programs that are financed through user fees.

“Basically, the grain volumes were higher than expected,” he said.

The wheat growers association said it hopes grain growers will use its online petition to request an immediate reduction in user fees and a refund of the surplus back to farmers.

“It’s been a tough year with the nasty weather we’ve had, and lower commodity prices, so a fee reduction and refund will go a long way to help growers,” said Graeme Manness, an association director who farms near Domain, Man.

“And it is growers’ money, that’s why we’re asking our farming colleagues to join with us in calling for the reduction and refund of our hard-earned dollars back to us at the farmgate.”

Contact brian.cross@producer.com

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  • ed

    It is extremely rich that a fine upstanding organization like the WCWGA, who were instrumental in helping kill the Western Canadian farmers price positive Canadian Wheat Board single desk collective selling monopoly, (cartel if you will), would bring into the light an injustice such as this. We have a contingency fund sitting with the CGC that is at least in a transparent position that can or could be easily still accessed by farmers with adjusted future rates. These things should not happen, yes, and did not previous to Aug. 1st, 2012. (WCWGA much celebrated “Freedom to Screw Farmers Day”). On the other hand with the loss of the CWB monopoly, the Western farmers according to several peer reviewed economist are annually and permanently lossing the better part of $4 Billion, (that’s $4,000,000,000.00 or approximately $200/acre annually), on their wheat and the WCWGA says nothing. It is nice to see that the farmers have a such a quality voice moving forward. This group will likely soon recommend getting rid of the crooked CGC and move the industry toward inward internal inspections only and we can all receive a #4, frozen, tough, high vomi, high dockage grade for all our bulk commodity export wheat products with no recourse to correct it. It just keeps getting “better and better” doesn’t it guys

  • bufford54

    This sounds like another mismanaged, over bloated government agency, with their hands in the pockets of hard working Canadian farmers. Why do farmers require a government agency to weigh and inspect their grain products being shipped abroad, doesn’t the grain handling and shipping companies do that already? Canadian farmers are already shipping their best quality products overseas, the countries and companies recieving the grain products do their own testing. What the CGC is doing amounts to “skimming”.

    • ed

      $5 to $6/bu. for #4, frozen, tough, high vomi, high dockage grade wheat which is actually your #1 high protein wheat that we have received over $12 in the past with the farmers very own CWB monopoly is skimming too. Under your way of thinking cattle farmers should be longing for another go at BSE. Maybe that would get the prices of cattle back up, right.

      • Unbiased Curiousity

        Ed,
        From an unbiased perspective on the overall issue being debated, I’m just curious as to how many times in your farming career you’ve sold your wheat for $12/bushel or more? It would be helpful to add how many years you’ve grown and sold wheat for us as well.
        Thanks,

        • Harold

          If Ed reports $6/bushel and 1 year experience in growing and selling wheat, or even no experience, how does that help you in the “overall issue being debated”? Even a person standing in a check-out line knows the difference between right and wrong, and what 100 million dollars in over-compensation represents.
          Is it your believe that 12/bushel represents something, other than a lack of compensation? How about $24/bushel and no experience?
          You can’t be “from an unbiased perspective” and be “curious” and neither can I.

          • Unbiased Curiousity

            Was pursuing the likelihood that Ed was selling $12 wheat and if it was statistically-significant enough to suggest the CWB impacted the actual price of wheat to get to $12/bushel more often than not

        • ed

          $12.64 actual!! #2 15.5 protein.. $3 per bushel of that was for the bit of higher protein which is more to your point, thanks for bringing it up. Probably the bigger canary in the coal mine on how badly screwed we are getting now without the farmers own price positive Canadian Wheat Board single desk monopoly selling agency, (cartel if you will), is the smaller factors that differentiated those bushels and elevated the price a dollar a bushel here, a couple of dollars there and fifty cents a bushel again somewhere else in the grade. Many times out of my 38 years of my selling wheat off our farm and over 80 years since my grandfather arrived here those increases for protein and grade accounted for more than half of the total price that we received for the wheat. Although the CWB only extracted $12.64 for that stated grade as an average on the pool for that grade only once in a high price year over the 5 years previous to the board ultimately annexed by Saudi Arabia, since then (Aug. 1st, 2012) the next 5 years, prices as you have eluded to being painfully aware of have been tragically stuck in the $5 to $6.37 range and they only move up a little bit from there when the buyers fall down on their homework of finding enough broke or desperate farmers to fill the next train string. A spot price will then go out to only the loyalist farmers who’s grain is in most of the 98 front cars to fill the last two in the hundred car spot. Under that example an extra 75 cents per bushel for the last two cars will elevate the purchase cost of the wheat in the other 98 cars for that company by only 1 and a half cents a bushel. No harm, no foul basically but the responsible buyer/buyers for the screw up do lose commission over it for not meeting or exceeding their steal targets. That is why they call them targets and suggest to you what the number should be. Anyway we will not see prices for our wheat ever again that represented 89-93% of the port price like we did under the CWB single desk and will experience our new normal of 40-60% of the port price, (approx. a $4 Billion annual lose), and economist are predicting that farm gate price to port price to drop as much as another 20% as these companies accelerate the repayment of some massive infrastructure investment. Being able to use farmers money to employ new technologies that can reduce these companies work forces and any and all if possible over time outlays vastly improves their bottom lines. The CWB oversight capped the company’s abilities to graphed off farmers profits and design a state of the art legalized theft system. It is sad to see this happen right in front of your eyes but the more you understand it the clearer it gets. For now a lot of guys are growing beans. It has become a glorified game of Chase the Ace where most will lose and burn off equity, (real-grampa’s farm or perceived-artificial non sustainable short term land price run ups), most of the time, and most will believe that if you do it long enough you or someone at least, (maybe your son), will win. Well, (epiphany moment perhaps now or later drum roll), someone is winning!

  • Let’s be Fair

    Perhaps the government should establish more regulation, and set up another variable cost index that would charge the producer based on the costs that need to be covered. In that regard, if the crop volumes increase dramatically, then the rate per tonne would be reduced accordingly. Called the “VCI” it would be complicated and cloudy….just like all government regulations.

    • ed

      It was more like that previous to Aug.1st, 2012 and it worked nicely. Farmers need to be aware as to how important this agency is and how it functions. Ship loading was stopped instantly with a phone call if the grading of the simultaneous samples to the company did not come in as good of better than the one the CGC person was looking at the same instant. For loading to proceed the company had to find their head from where ever it was and start grading properly and quit stealing. The system works well to reduce the shop lifting element always so prevalent in the grain trade. It is kind of like having a lock on your gas tank.

  • neil

    Paying the surplus back is one option. I wonder how much administration will cost to do that? And will it add up to enough for each farmer to make it worthwhile? The 5500 tonne and $10,000 example used in the story is the entire cost a farmer pays, the rebate would be much less than this, likely less than 25%. Another option is to have the money used for public variety breeding or other research that could benefit farmers more than the rebate itself. Just one idea

  • Frustrated!!

    Farmers continually pay more for everything, be it fuel, fertilizer, feed, or chemical, and companies don’t want us to use our own seed anymore but instead charge us a massive amount to buy theirs; and with our illustrious prime minister shoving a carbon tax on everyone how do we stay sustainable. This grab by the CGC is very unfair, and who are their stakeholders? Probably not the lowly farmer!! My dad sold some grain in 1975, and was paid $6.75 a bushel, received a text today saying “wheat special” $6.50…….SOME SPECIAL!

    • Bruce

      You got that point correct Frustrated! Your dad was selling into a demand market. You are selling into a supply market. Thus the same price over this time period.

      • ed

        93% of the port price under CWB single desk with the demand of 4 billion people with lower meat in their diet back then, and 50% of the port price with the shoe on the other foot free market and the demand of well over 7 billion with much higher grain intense meat in their diet now is the reason that adjusted for inflation wheat is being lifted off the Western Canadian farms for less than 20% of it’s 1975 value. What the hell did people think was going to happen.