Status of $90 million CGC surplus remains in limbo

A decision on what to do with the remainder of a $130 million operating surplus at the Canadian Grain Commission has been delayed again, this time by the COVID-19 pandemic.

Sources in the Canadian grain industry told The Western Producer last week that the fate of the CGC operating surplus will not be fully determined until a federal review of the Canada Grain Act and the role of the Canadian Grain Commission have been completed.

That review has been put on hold indefinitely due to COVID-19.

In the meantime, user fees for a range of CGC services increased earlier this month by about two percent. The fee increases — the second fee adjustment in as many years — is meant to cover the increase in the CGC’s cost of conducting business and is not expected to result in additional operating surpluses.

The CGC surplus — initially calculated at around $130 million — was accumulated between 2013 and 2017 and was the result of higher-than-expected Canadian grain export volumes.

About $40 million of the $130 million surplus was retained in a CGC contingency fund, which will be

used to cover unexpected costs and future operating shortfalls, the commission has confirmed.

The remaining $90 million is still waiting to be allocated, despite a previous indication in early 2018 that the CGC would use the money over a five-year period to expand commission programming.

So far, the only CGC program to be enhanced was the commission’s popular Harvest Sample Program, which now includes tests for falling number values and DON accumulations.

Those program enhancements are expected to cost the commission an estimated $4 million over five years.

“We continue to hold on to approximately $90 million worth of surplus …,” CGC spokesperson Remi Gosselin confirmed last week.

“Of that $90 million, only $4 million has been spoken for so far….”

That fate of the CGC surplus was a contentious issue a few years ago. At the time, some farm groups including the Western Canadian Wheat Growers Association had demanded that the full surplus amount be returned to farmers.

However, the grain commission said at the time that refunding the CGC surplus to farmers was not an option under current regulations governing the commission.

The CGC launched a consultation in late 2017 seeking input on what to do with the surplus funds.

Based on that, about $90 million was to be allocated to CGC programming over a five-year period ending in late 2022 or early 2023. However, allocation and program enhancement decisions were put on old in early 2019 when Ottawa announced that it intended to conduct a comprehensive review of the Canada Grain Act and the role of the Canadian Grain Commission.

That review process is now in limbo due to the global COVID-19 pandemic.

Timelines for completion of the review are now unclear. Directors at Agriculture Canada who are familiar with the review process were unavailable for comment.

The grain commission did reduce user fees in 2017 and 2018 to “mitigate the risk of further accumulation of surplus funds and … align fees with operational costs.”

Since then, user CGC fees have been increased twice — once on April 1, 2019, and on April 1, 2020.

Those annual increases, both amounting to about two percent per year, are linked to inflation.

Contact brian.cross@producer.com

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