Farm groups balk at CGC’s plan to spend surplus

The Western Canadian Wheat Growers Association wants the surplus returned to farmers, calling it an illegal tax

The Canadian Grain Commission has come up with a plan on how to manage a $130 million surplus accumulated through the collection of excessive user fees from the Canadian grain industry.

However, the CGC plan has fallen flat with some western Canadian agriculture groups, including one outraged organization that says the commission surplus is equivalent to an illegal tax on farmers that violates federal law.

“This surplus is built on the backs of hard working farmers, money that should be in their pockets, not CGC coffers,” said Levi Wood, president of the Western Canadian Wheat Growers Association.

“These funds should be returned to the farmers that (paid them).”

The grain commission has been working for the past two years or so on a plan aimed at managing the surplus.

It was accumulated before 2017 through user fees that were collected on commission services, primarily outward weighing and inspection services at Canadian grain export terminals.

Remi Gosselin, a spokesperson for the CGC, said approximately $95 million of the $130 million surplus was collected over a five-year period from 2012-17.

The rest, approximately $35 million, was accumulated previously.

Grain commission user fees were increased in 2012.

At the time, the commission was following a directive to cover a greater proportion of its annual operating costs through user fees, part of a new cost recovery model devised by the federal government.

Fee increases at the CGC were calculated based on projected Canadian grain exports.

More specifically, the commission looked at historical grain export volumes over a 15-year period between 1997-98 and 2011-12 and used average annual exports during that period to calculate future fee increases.

Based on that model, projected export volumes were calculated at 23.3 million tonnes annually.

However, Canadian farmers produced some of their largest crops after 2012, and actual grain export volumes exceeded commission projections by a significant margin.

In essence, the CGC failed to accurately predict the growth in Canadian grain exports, which resulted in the unprecedented operating surpluses.

Since 2017, user fees at the commission have been adjusted to ensure that revenues are in line with actual program costs, he added.

The method used to project Canadian grain export volumes has also been adjusted.

Annual export estimates are now set at more than 34 million tonnes a year.

In the CGC’s surplus investment framework unveiled last week, the commission announced that $40 million of the accumulated surplus will be retained in a CGC contingency fund.

That fund will be used to support CGC programs in the event of an operating deficit.

The other $90 million is earmarked for strategic investments in CGC programs that will strengthen safeguards for producers, enhance grain quality assurance and improve the quality of Canadian grain using science and innovative technologies.

Only one specific initiative has been confirmed within that framework.

The CGC’s popular harvest sample program will be expanded to include falling number analysis and deoxynivalenol (DON) tests on all spring wheat samples submitted.

Those program enhancements have been pegged at a cost of approximately $4 million over the next five years.

The rest of the $90 million strategic investment fund will be allocated over the next five years.

“We’re going to be rolling out additional initiatives in the coming months … and we’re committing to consulting with the sector on these individual initiatives as they’re developed under the surplus investment framework,” Gosselin said.

CGC officials said all options were considered when deciding how to manage the surplus.

The decision to invest surplus money in CGC programs was deemed the best option available, following extensive consultations with farm and industry groups.

During consultations, a number of organizations suggested that surplus funds be returned to growers.

But according to Gosselin, existing federal legislation does not allow the money to be refunded directly to producers.

“We looked carefully at the option of returning the money to producers but … the Canada Grain Act doesn’t allow (it),” he said.

“Certainly, there are some groups that continue to believe that rebates (to farmers) can be provided, but that’s not the case.”

The CGC’s plan has generated negative reactions from a variety of groups in the western Canadian agriculture sector, including the Western Grain Elevators Association, the Alberta Wheat Commission and the Alberta Barley Commission.

But not all farm groups have responded negatively.

The Saskatchewan Wheat Development Commission and the Agricultural Producers Association of Saskatchewan expressed support for the CGC’s approach.

“You never like to see a big pot of money accumulated like that but … it’s a bit like a big ocean liner. It’s hard to get that turned around overnight so we’re willing to be patient with it, “ said APAS president Todd Lewis.

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