The Canadian Grain Commission decision to keep surplus service fees rather than offer refunds or fee reductions is renewing calls for the agency to be restructured.
Wade Sobkowich, executive director of the Western Grain Elevator Association, said he’d like to see the CGC’s grain inspection role limited to that of a regulatory agency certifying third party inspectors.
He said about 80 percent of all sales contracts specify third party inspections and documentation anyway. Those involve private companies that test samples to ensure they meet prescribed quality parameters. The CGC’s weighing and inspection services are carried out in addition to those.
“What we’re trying to point out is that we have a redundant cost in the system,” said Sobkowich.
“We are beginning to talk about it just to make it known that this is happening. That we’re double paying for inspections in some cases, in many cases, and we’re forced to pay the exorbitant costs of the Canadian Grain Commission, which cover more than just the cost of providing the service. It covers the operation of the entire agency.”
Remi Gosselin, head of communications for the CGC, said any changes to CGC services depend on the federal government making changes to the Canada Grain Act, and nothing is in the works.
“It would depend on the priorities of the government of the day,” he said.
However, if reforms are discussed he’d like to see a broader discussion involving several possible models.
The CGC has a $130-million surplus, much of it collected in excess service fees charged to farmers from 2012 to 2017. The agency instituted fee increases to comply with an order from the previous Conservative government to operate on a cost-recovery basis. Once it discovered it overcharged, the CGC opted to use the added money to improve services rather than reduce service fees.
Sobkowich said that decision prompted the WGEA to be more public with its questions about CGG’s role.
Cam Dahl, a former CGC commissioner and current president of Cereals Canada, which represents a wide range of stakeholders across the cereals value chain, said he sees a need to have a look at the situation.
“There is a significant cost that we really do need to be asking if it’s necessary and if there’s a better way of delivering that kind of inspection service oversight, and whether the resources should be focused in other areas,” he said.
All parties in the discussion emphasized that nobody is talking about doing away with inspections. No grain will leave Canada uninspected. It is a matter of the CGC role in that process.
The CGC is required by law to provide outward inspection and weighing services on all grain exports.
The WGEA, which represents grain companies that move about 90 percent of Western Canada’s bulk grain exports, maintains that the CGC should serve as an unbiased regulatory agency that oversees inspections conducted by private companies.
Gosselin pointed out that removing the CGC from hands-on inspections would cause a significant budget shortfall. Last year, all but $5.4 million out of its C$65 million budget came from fees collected for services and the “lion’s share” of that came from weighing and inspection fees, he said.
He agreed that many grain-handling companies carry out separate inspections in addition to the CGC’s inspections. But he said if changes are made to CGC services, then new funding models would need to be explored.
Dahl and Sobkowich agreed.
Dahl said the CGC conducts a lot of other important work in addition to inspections, such as its research laboratory work on grain safety, which is becoming more and more important in markets where food safety and environmental sensitivities are growing concerns.
He said the first step is to spell out what the CGC’s roles should be and then look at funding to support that model. In most other grain-exporting countries, agencies similar to the CGC are funded by the taxpayer, he said.
“How much of what the CGC does — its food safety, grain safety work, for example, how much of that should be a public good funded by taxpayers?” he asked.
Sobkowich said having the CGC operate on a cost-recovery basis has the potential to place it in a conflict of interest position.
“It ends up making decisions that sustain funding for the agency going forward, and not necessarily in the best interests of the industry,” he said.
The CGC tackles many activities that are for the good of the overall grain industry and for the good of Canada, he said, and that should be recognized and funded by the federal government.
Sobkowich would like to see the CGC act as an unbiased regulator that could side with farmers on key issues. Some of those could include access to producer cars, access to grade and dockage services, policy issues, and in instances where grain companies might pay potential penalties to producers for delivery contract disputes.
“There are roles for the CGC to operate and to act in the best interests of producers but that should be clearly indicated so they don’t interpret it to mean that they decide with producers in every instance where they’re faced with a question.”