Most of us are aware that the main motive of the federal Conservatives’ review of the Canadian Grain Commission and the Canada Grain Act is cost cutting.
That should not automatically be viewed as a bad thing.
It’s no secret that the federal government has wanted to change the CGC for years. It recently streamlined the governance structure and last year the CGC held a series of meetings to gather suggestions about how it could become financially self sufficient.
Those meetings focused on which service fees the CGC could increase to offset its $50 million annual deficit. That could lead to a doubling of fees farmers pay.
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At the least, the government and the CGC owe it to farmers and other stakeholders to conduct a thorough review of potential areas for savings before instituting large fee hikes.
But the devil will be in the details.
One idea would be to use the public purse to fund programs deemed to be for the public good. While farmers have primary responsibility to produce quality products, services such as inspecting grain can be directly linked to consumer health and safety and as such, farmers should not be forced to shoulder all of the costs.
Other services the review is bound to examine include inward and outward weighing and inspection fees. They now account for 83 percent of the commission’s revenue it charges in service fees in a normal year.
Inward inspection fees cost $25.68 per car in Canada in an average year, compared to $18.08 in the United States. To remain competitive, Canada must get these expenses down.
Inward inspection could be made optional with little significant risk to grain quality. Grain companies settle with farmers on grade and dockage when farmers deliver to primary elevators, so there is little value in inspecting the grain again at port, especially if the same company owns the primary terminal and port facility.
However, it is key that farmers retain the right to have deliveries officially inspected if requested.
Third party inspections must also be available to companies that lack their own port facilities.
CGC or third party inspections must also be maintained to settle disagreements between farmers and grain companies.
Outward inspection could also be made optional. The CGC did away with all weighing and inspection requirements for shipments to the United States in 2009 with no ill effects.
If U.S. and domestic grain buyers are satisfied with the quality, there is no reason to believe quality for overseas customers would suffer.
Key to this, however, is a provision that inspections services be made available to buyers who want added quality assurance on a fee-for-service basis. This would help ensure Canada remains a key player in the high end of the market.
Other important changes concern current provisions that the CGC operate in the interests of farmers. That mandate would change to have the commission act for the benefit of the entire Canadian population, including farmers. It promises to be a hotly debated point that may diminish farmers’ voice in the grain handling system. On the other hand, if the CGC is serving a broader public good, there may be increased opportunities for public funding.
The issue of licensing and bonding of grain buyers is also bound to be contentious, but any decision must be guided by providing the best possible producer security.
The CGC must also have proper enforcement tools.
This does not close the door to a less expensive producer security method if one can be developed, but present suggestions of a clearing house fund to provide farmer security require further details.
