Changes to grain shrinkage rules should provide greater price transparency and protection for producers, says the Canadian Grain Commission.
The commission proposes to set shrinkage levels to zero at process and transfer elevators, matching the levels now in effect at primary and terminal elevators. The change could go into effect this fall.
Also, as of Aug. 1, 2010, licensed primary elevators will no longer include a 1.1 percent moisture reduction for grain artificially dried at primary facilities.
The proposed changes are designed to improve price transparency and ensure all commercial grain handling facilities are operating on a level playing field, said Remi Gosselin, manager of corporate information services for the CGC.
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“Producers feel they have been overcharged for drying and have been requesting a review and for more price transparency for some time,” he said.
The Canada Grain Act defines shrinkage as the loss in weight that
occurs as a result of the handling or treating of grain.
Licensed primary and terminal elevators have a maximum shrinkage allowance of zero.
However, under existing regulations, process and transfer elevators and grain dealers can charge whatever they want for shrinkage. Those numbers are rarely made public, leaving farmers in the dark about how their price has been calculated.
If the proposal is approved, then all types of elevators will be subject to the same shrinkage rules.
Also, the commission will be reclassifying licences following a recently completed licensing review.
As individual licences come up for renewal after Aug. 1, 2010, some licencees, notably grain dealers who handle and store special crops, will be re-classified as primary elevators.
In July 2009, a consultation document regarding the proposal to regulate shrinkage at transfer and process elevators at zero was distributed by the CGC to 59 industry stakeholders and 180 CGC licencees.
There were 28 formal responses, 12 of which were in support and 16 opposed.
However the commission noted in the regulatory statement that producer and producer organizations, representing thousands of farmers, were mostly supportive of the proposal.
The producers told the commission that farmers shouldn’t be responsible for shrinkage after they have delivered grain because the primary elevator operator can manipulate shrinkage through handling processes, while producers have no such ability.
Most grain buyers opposed the CGC proposal on the grounds that shrinkage exists and that they should be allowed to charge fees to reflect it. They also said shrinkage should be completely deregulated.
