The Canadian Grain Commission wants to know if it pays to inspect every load of grain that arrives at a terminal elevator.
The agency is planning to hire an independent consultant to conduct a cost-benefit analysis of mandatory inward inspection, a policy that survived a similar review six years ago.
Gord Miles, the commission’s chief operating officer, said those previous debates have too often involved philosophy or politics.
This time around, the commission wants to get a solid understanding of the dollars and cents involved.
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“We want a clear picture of the economic impact on producers, on the grain handling industry generally and on the CGC,” he said.
“This is the benefit, this is the cost, let’s take a good hard look at it. I’m not aware that kind of analysis has ever been done.”
The consultant will be hired by public tender through Public Works Canada. The commission hopes the work will begin in January.
Under the Canada Grain Act, every rail car arriving at a terminal or transfer elevator is subject to inspection and weighing by commission personnel.
Samples are taken to establish grade, dockage, moisture and protein and to check for contamination and infestation. The results of the inspection form the basis for financial settlement with the shipper.
Miles said the review is separate from the upcoming overall review of the commission by the federal government, which is to be completed by August 2006. However, he acknowledged that the results will be “fed in” to that broad review.
At least one farm organization is nervous about the review.
National Farmers Union president Stewart Wells said mandatory inward inspection and weighing by an independent third party is crucial in protecting the interests of producers, which is the grain commission’s mandate.
“Discontinuing or privatizing inward inspection is a dangerous, unwise and unwarranted move,” he said, noting farmers pay just one cent a bushel for the service, which guarantees an impartial, objective grade.
“It is valuable to them and there have been no calls from farmers for its termination.”
Wells added that eliminating mandatory CGC inspection of producer cars arriving at terminals would be a “dream come true” for elevator companies.
Western Canadian Wheat Growers Association president Cherilyn Jolly-Nagel supports the review, saying that making inward inspection optional might reduce costs for farmers or enable them to obtain better grades through negotiations with grain companies at primary elevators.
However, she also thinks the issue should be part of the comprehensive review of the CGC’s role and mandate, along with other issues such as the future of visual grading and licensing and bonding regulations.
“These shouldn’t be looked at in isolation,” she said.
The Canadian Wheat Board wants to retain mandatory inward inspection, saying that having an objective third party oversee the inspection not only provides assurance to farmers that they will be treated fairly, but also contributes to the grain quality assurance system.
“There is marketing value in having that third party determination,” said CWB spokesperson Maureen Fitzhenry. “Otherwise the grade is simply an agreement between the primary and terminal elevator and that could result in problems.”
Prairie grain handling companies see mandatory inward inspection as an unnecessary and costly regulatory intrusion.
They would prefer a system in which a final grade is established before shipment from the primary elevator, either by CGC staff or other certified inspectors employed by testing organizations or the grain companies themselves.
Inward inspection at terminals would be optional, based on the requirements of the parties involved.
Wade Sobkowich of the Western Grain Elevator Association said such a system would benefit everyone.
“It seems to me our request would reduce costs in the system, without any other impact to farmers,” he said. “Why wouldn’t they support it?”
Once farmers are paid based on the grade assigned to their delivery to the primary elevator, said Sobkowich, it should be of no concern whether the grain company maintains that grade through to the terminal, except in the case of ineligible varieties.
In 1999 the grain commission proposed changes whereby it would provide a “base level” of service, with on-site inspection only for protein and moisture content. Samples would be sent to a central laboratory for further analysis and official grading, paid for by shippers.
The idea was dropped.
