A grain industry committee is working overtime to ensure a smooth transition when KVD is eliminated from the grain handling system Aug. 1.
The new system will require farmers and perhaps other stakeholders to sign affidavits to ensure the right grain is moved from farmers’ fields to customers overseas.
KVD refers to kernel visual distinguishability, the system under which wheat is segregated into classes based on the appearance of the kernel.
The federal government recently announced KVD would be eliminated this year, rather than in 2010 as the grain industry had been expecting.
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As a result, the industry working group has had to step up the pace to devise a system to replace KVD until new technologies are available.
A crucial part of its work is developing a clear and understandable affidavit for farmers to sign, declaring that the wheat they are delivering is of a certain class.
For the past few years, farmers have signed a declaration that the wheat they are delivering is a registered variety. The new affidavit will be modeled on that, attesting that the wheat is an eligible variety of a certain class, such as Canada Western red spring or red winter.
If it later turns out that the wheat is not eligible for that class, whether by design or accident, the producer could face sizable financial penalties and possibly civil liability.
“I’m not suggesting producers would do it deliberately,” said KVD committee member Chuck Fossay, a farmer from Starbuck, Man.
“But with prices so high, someone may be tempted to deliver the wrong variety to the high value milling market.”
Committee member Earl Geddes, vice-president of product development for the Canadian Wheat Board, said that accountability must apply equally to everyone involved in moving grain through the system.
“We don’t anticipate there will be deliberate actions to cause problems but there could be completely unintentional mistakes and people have to be accountable.”
While the details have yet to be worked out, it appears that a producer will make a declaration at the start of the year at the elevator where he or she regularly delivers. That would cover all deliveries to that location for the rest of the year.
However, if they deliver to the same company at a different location, or to a different company, they will have to make another declaration.
Farmers won’t be the only ones making declarations.
Grain companies will likely have to declare what has been loaded into rail cars being shipped from country elevators.
Similar declarations may also be required when the grain is unloaded at export terminals and when it is loaded into a boat.
“We need a paper trail from the farm to the boat,” said Fossay. “That’s a way of ensuring our importing customers that what they’re buying is what they’re getting.”
Fossay is one of three producers on the Working Groups on the Removal of KVD, which also includes representatives from grain handling companies, inland terminals, the CWB, the Canadian Grain Commission and Agriculture Canada.
The group has been meeting about every second week since the Aug. 1 deadline was announced by the federal government.
Jim Stuart, director of industry services for the grain commission, said the group has four objectives: to oversee the removal of KVD; to develop a declaration system; to implement a new wheat quality management system at the CGC and among grain elevator companies; and to devise testing and monitoring protocols.
Stuart said there must also be an effective communications program to educate farmers and other stakeholders about what will be required of them under the new system.
“KVD was a very effective and low cost tool to register varieties into various classes and as a segregation tool,” he said.
“It will be a learning experience for everyone to have declarations in its place.”
The elimination of KVD as a requirement for registration of new wheat varieties is expected to result in the introduction of high yielding, lower quality varieties designed for the ethanol and feed markets.
The working group is grappling with a number of issues, including:
- Liability – Where will liability apply along the supply chain in the event a load of grain is contaminated? Grain companies, railways, the CWB, farmers?
Will stakeholders be free to pursue civil actions in the event of contamination leading to financial losses?
- Penalties – The passage of bill C-39, an act to reform the CGC, would allow for penalties to be imposed in the $10,000 to $20,000 range. If that doesn’t happen, more modest fines would be imposed under the Canada Grain Act.
- Monitoring – How closely should shipments be monitored to ensure the right grain is moving through the system? Should every rail car be inspected? One in five, one in 10, one in 20? What role will different stakeholders play in monitoring?
- Purity – Will a certain level of contamination by a foreign class be allowed under the affidavit? If so, what would that level be: one, two or five percent?
