CGC changes may save feds but cost farmers

Producers affected | National Farmers Union said revamped commission will mean fewer services, less protection

Proposed changes to the Canadian Grain Commission are expected to save the federal treasury tens of million of dollars annually.

However, some farm organizations say those savings will come at a high cost to farmers.

Terry Boehm, president of the National Farmers Union, said efforts to revamp the grain commission will mean fewer services, less protection for grain producers and new user fees that will cost farmers thousands if not millions of dollars more annually.

“CGC programs were developed in response to very real abuses that took place in the past,” Boehm said.

“When those programs evaporate, the problems will return.”

Ottawa has been signalling for two years that it intends to streamline CGC operations, eliminate unnecessary services, reduce federal funding to CGC operations and transform the commission into a self-funding agency.

The federal government took a major step in that direction last month by introducing legislation that will amend the Canada Grain Act and result in significant changes to the CGC.

Proposed changes to the commission will include:

  • elimination of the grain appeals tribunal
  • elimination of mandatory inward inspections and weighing performed by the CGC at terminal and transfer elevators
  • introduction of a new producer protection program to replace the CGC’s existing bond-based security program

The commission also plans for more industry consultations aimed at updating user fees for all its services.

Elevators and shippers, including producer car shippers, will still have the right to appeal grading and dockage decisions and request binding arbitration in the event of a grading dispute.

The commission will also maintain responsibility for issuing certificate finals and conducting outward inspections on Canadian grain that is destined for export markets.

However, third-party service providers will play a larger role for other services, including voluntary inward inspections.

In an Oct.18 news release, the federal agriculture department said eliminating mandatory inward inspections will trim $20 million from the commission’s annual operating budget.

Doug Robertson, president of the Western Barley Growers Association, said the decision to eliminate inward inspections was an obvious move given that Ottawa is intent on cutting costs.

“There’s no use pussy footing around. We know that farmers are going to end up having the costs rolled down to them on (all CGC services). Companies will pass those costs on somehow,” Robertson said.

“Any costs that are mandatory are ultimately going to be borne by farmers, so if they are costs that aren’t important, if they don’t add any value to what farmers do, then farmers (don’t want to pay) for it.

“Mandatory inward inspection in particular is pretty low hanging fruit in that (regard) because most of the time, it’s just transfers between companies or transfers of grain between (facilities that are owned) by the same company.”

Robertson said his organization would have gone a step further and eliminated CGC inspections on outward grain shipped to foreign buyers.

“We’d also be in favour of eliminating mandatory outward inspections, or at least not having the Canadian Grain Commission responsible for that,” Robertson said.

Boehm argues that eliminating bonding requirements for licensed grain companies will also have an unknown financial impact on Canada’s primary producers.

The grain commission had an operating budget of $80 million in 2010-11, $26 million of which was covered by the federal government.

Ottawa has indicated it would like to see the commission move toward a full-cost recovery model, meaning user fees would cover most if not all of the commission’s spending.

Wade Sobkowich, executive director of the Western Grain Elevators Association, said proposed changes will result in a more efficient grain handling system.

However, WGEA members believe some CGC services benefit not only the Canadian grain industry but the Canadian population as a whole.

For that reason, Ottawa should continue to provide some level of financial support to the commission’s operations, Sobkowich said.

About the author



Stories from our other publications