Prairie farmers have called shrinkage allowances at grain elevators everything from an injustice to a licence to steal.
Manitoba’s general farm group left no doubt where it stands on the issue.
Keystone Agricultural Producers took the position that all maximum shrinkage allowances should be reduced to zero at primary elevators.
Shrinkage allowance compensates elevator operators for grain weight lost during handling. Weight is lost for several reasons. It may be left behind in equipment or bins or lost through leaks from rail cars. Weight can also be lost as moisture evaporates from grain.
Read Also
Agriculture ministers agree to AgriStability changes
federal government proposed several months ago to increase the compensation rate from 80 to 90 per cent and double the maximum payment from $3 million to $6 million
Most producers question why they should pay for shrinkage at elevators, said KAP vice-president Chuck Fossay.
“They don’t get paid for grain spilled in the field or when we’re loading it in the truck, yet grain companies do get compensation.”
The Canadian Grain Commission is reviewing the rules that allow for an automatic weight reduction on grain delivered to country elevators.
The commission has issued a discussion paper on the issue and is asking farmers and others in the grain industry to submit comments. As part of the discussion, the commission put forward three options, including the one that KAP opted for at a June 21 meeting.
“Producers feel that once the product is out of their hands, they should not be responsible for losses incurred through handling,” said Linda MacNair, a KAP member and executive manager of the Manitoba Pulse Growers Association.
Tradition dates back
Shrinkage allowances have been around in one form or another since 1912. Grain handlers traditionally charge the maximum allowable levels, currently set at 0.1 percent for wheat, oats, barley and rye, 0.35 percent for flax and canola, and one percent for other crops such as pulses. The allowances go higher on grain that is tough or damp.
MacNair said buyers of pulse crops, which include elevators and processors, have typically not been willing to negotiate anything below the one percent allowance on pulses — “despite the fact that the shrinkage allowance is a maximum.”
With a zero shrink allowance, the companies would have to be more conscious of losses during handling, said MacNair. Those that could keep shrinkage to a minimum would be more competitive and able to offer producers a better price.
“We want companies that manage the product better to be at a competitive advantage.”
KAP’s desire to see shrink allowances set to zero will not be welcomed by everyone.
The Western Grain Elevators Association already has vowed it will object to a zero shrinkage allowance.
The general sentiment at the KAP meeting last week was that the shrinkage of grain at elevators should be declining due to improved handling facilities.
