A short line railway operator is miffed that the Canadian Grain Commission wants to start licensing producer rail car loading sites.
Last year the commission consulted with industry about licensing feed mills and determined it would go ahead with that process.
Last week it announced it was launching consultations to license producer car facilities and agents and to get feedback on its plan for feed mills.
“We thought that in terms of licensing exemptions it would be fortuitous to look at all licensing exemptions to make sure that they are still relevant,” said commission spokesperson Remi Gosselin.
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More grain is moving through producer car loading facilities the last few years and the commission would like to accurately capture that movement to improve the data published in its Grain Statistics Weekly and Grain Deliveries at Prairie Points reports.
It currently estimates that volume by using the number of railcars allocated to the facilities multiplied by the average railcar unload weight the previous crop year.
The commission wants to ensure the integrity of Canada’s quality assurance system by collecting samples at producer car sites to see if there are any problems with things like insect infestations or treated seeds.
Licensing the facilities would also give the commission oversight of the maintenance and testing of weight equipment to make sure producers are receiving consistent delivery documentation.
And it would allow farmers to access the commission’s dispute arbitration process.
However, there would be significant differences in how producer car facilities are regulated compared to other licensees.
The main difference is that they would not be required to tender security to cover liabilities to producers or submit monthly reports of those liabilities.
“The reason why we wouldn’t require them to tender security or to submit monthly liability reports is that they’re not supposed to be purchasing grain from producers,” said Gosselin.
“They’re just forwarding it on to another grain buyer on behalf of producers.”
For the same reason the facilities would not be required to issue receipts, comply with requests for binding arbitration or submit annual financial statements.
Producer car sites would be licensed as a subclass of the primary elevator licence since they meet the definition of a primary elevator as outlined in the Canada Grain Act.
Ken Eshpeter, chair of Battle River Railway, a short line railway located near Edmonton, said that is absurd.
“That’s the dumbest thing I’ve heard in a long time,” he said.
“If a producer car loading facility meets their definition of a primary elevator there is something wrong with their definition.”
He believes the commission is taking this initiative at the behest of grain companies who are concerned about rising producer car shipments.
“Whenever the numbers start to get a little bit higher then they always have to come along with some big sledgehammer to try and pound on our fingers or on our head again,” said Eshpeter.
According to the CGC, 341,300 tonnes of grain has been shipped in producer cars through week 37 of the shipping season.
That compares to 626,400 tonnes for the same time last year and 1.07 million tonnes the year before that.
“Big grain will not be happy until absolutely any small entity is dead or dying or certainly choking to death.”
Wade Sobkowich, executive director of the Western Grain Elevator Association , said Eshpeter is off base.
“That’s not true. We’ve always supported the right of producers to order and obtain producer cars. It’s in every submission we’ve made to the Canadian Grain Commission throughout all of the different reviews of the Canada Grain Act,” he said.
Sobkowich said grain companies have not been lobbying the commission to make this change.
“It certainly has nothing to do with us asking for the review to take place. But now that the review is taking place we will make our views known,” he said.
Members of the WGEA believe producer car sites should be licensed because they store and forward producer grain just like elevators.
“Any facility that engages in this type of activity should be required to be licensed as a primary elevator in our view,” said Sobkowich.
Eshpeter said that is ridiculous. The sites are not a far cry from growers loading rail cars with augers from the back of their trucks.
He said the reasons the commission put forward for licensing the facilities are bogus.
The commission already collects statistics because it allocates the cars and knows the capacity of each car.
“It doesn’t take a rocket surgeon to do the math,” he said.
Most producer car facilities collect samples and are able to avoid things like insect infestations and the weighing equipment is simply a way to protect producers by making sure what is unloaded at the coast matches what was loaded inland.
Eshpeter fears that what the commission is proposing is just the first step down the road to more costly regulation.
“I think they should leave it exactly as it is,” he said.
The commission is also exploring licensing agents or companies that act on behalf of a licensed company. The commission wants to license agents with elevator facilities. It says the risk of continuing to exempt agents has gone up due to their increased presence in the grain handling system.
Agents who incur producer liabilities by receiving and storing grain will be required to post security with the commission to cover the risk of business failure.
Growers who sell grain to a licensed agent would have access to dispute arbitration and binding determination of grade and dockage.
The commission divulged its plan for licensing feed mills. It is proposing to license mills that purchase more than 5,000 tonnes of grain annually.
“Feed mills that purchase less than 5,000 tonnes of grain annually from producers do not pose a significant risk to producers and they’re usually smaller on-farm operations,” said Gosselin.
He estimates that well over 200 mills would be licensed.
Feed mills would be required to provide security as a condition of licensing and would be subject to dispute and binding arbitration.
The commission is seeking input from producer car loading facilities, agents, feed mills, grain farmers, producer groups, current licensees and other industry stakeholders. Gosselin stressed that feedback is welcome and nothing is set in stone.
The comment period is open until June 3, 2016. The goal is to have the new regulations in place by Aug. 1, 2017.
