Producer car facilities don't fit old rules

If the Canadian Grain Commission decides producer car loading sites have to be licensed as primary elevators, that will pose at least one small problem.

It’s illegal for a farmer to load a producer car through a primary

elevator.

And that, say supporters of producer cars, illustrates the folly of what the commission is trying to do with its review of producer car rules.

“It will mean you can’t function,” said Bernie Churko, general manager of the Saskatchewan Grain Car Corp. and a director of West Central Road and Rail, a company building a network of producer car loading sites in the province.

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Churko said the commission has suggested it could deal with the dilemma by not enforcing the rule or by granting West Central and similar companies an exemption.

But he said that is no real solution and shows that the commission shouldn’t be trying to apply the existing rules to producer car facilities.

“They’re trying to put a square peg into a round hole,” he said. “It just doesn’t fit.”

The commission will soon begin three months of consultations with interested parties as it grapples with what has the potential to become a contentious political issue.

A number of local farm and community groups have been building or planning to build producer car loading sites in areas where regular elevator service has been lost. Foremost among them is West Central Road and Rail, which has built the first of its six planned sites in western Saskatchewan.

The commission sent shock waves through those producer car groups in July when it told West Central it had to get a primary elevator licence.

The commission has since backed down, and instead will hold three months of consultation with the industry to decide what to do.

While the right to load producer cars is enshrined in the Canada Grains Act, the rules are based on individual farmers loading a few rail cars with their augers, not a sophisticated grain storage and loading system capable of loading trains of 25, 50 or 100 cars.

Producer car proponents say the principles are the same and there is no need for new rules. But the commission says the state-of-the-art producer car sites represent a potentially significant change in the handling and transportation system and its impact in areas like producer risk and quality assurance need to be sorted out.

“What we’re trying to do here is get a handle on the future,” said CGC spokesperson Paul Graham.

“How do we make sure the regulatory system meets the needs of producers?”

The discussion paper being prepared by the commission on the issue will put forward three options: require the producer car facilities to obtain a primary licence; exempt them and leave them unregulated, or create a new class of licence specifically designed for producer car sites.

Having a primary elevator licence would impose a number of responsibilities on the producer car companies, none of which apply to an unregulated facility or to producer cars. Among them:

Primary elevators must post a security bond with the commission.
Producers have a statutory right to reclaim from a licensed elevator grain delivered for storage or delivered and not yet paid for.
Primary elevators must accept grain offered for delivery by farmers without discrimination, if there is room and grain is in good condition.
Primary elevators are subject to CGC-administered arbitration in any disputes over grade, dockage, moisture and protein.
A primary elevator has a legal duty to preserve grain quality.
Primary elevators must do periodic “weigh-overs” to balance their books on grain received and shipped.