User fees at 1992 level | The ag minister also said changes to inward inspection of grain will not undermine food safety
Federal agriculture minister Gerry Ritz was on Parliament Hill Nov. 1 defending higher user fees at the Canadian Grain Commission.
He insisted at the Senate agriculture committee that the changes are overdue, revenues must be raised after two decades of fee freezes, farmers can afford it and ending un-necessary mandatory services will make the commission more cost-effective.
“These proposed changes will contribute to a competitive and innovative grain sector by reducing costs, improving regulation and providing choice for our producers and others in the grain sector overall,” he said.
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The overhaul of the Canada Grain Act was included in the government’s mammoth budget implementation bill that was approved in principle by the House of Commons last week.
The Senate committee quickly began studying the agricultural-related sections.
The House of Commons agriculture committee begins its study Nov. 6 with an appearance by the minister.
The changes are aimed at downloading some costs onto farmers as a way to end the grain commission’s dependence on government subsidies each year to meet its costs.
User fee levels frozen since 1992 left the commission tens of millions of dollars short each year and required an annual plea to Ottawa for help.
Ritz said this period of higher grain prices makes it an opportune time to shift more of the system costs to farmers while giving them more flexibility to decide what optional services they want and are willing to pay to receive.
The commission will continue to cover the costs of mandatory grain quality and food safety services.
“There have not been any changes to the costing for the work done by the grain commission to assure quality and consistency for over 20 years,” Ritz said.
“We are now seeing our grain sector for the last two and almost three years doing quite well. It’s time to start making those changes. The benefit in maintaining the initial grading is for the farmer himself so we are seeing that there are some costs that the farmer can bear now with the increased value to their commodities.”
One of the major proposed changes is to end mandatory inward inspection of grain moving within the system from the point of delivery to an export terminal, often from facilities owned by the same company.
Inspection for quality and grade still would be mandatory at point of delivery and point of export.
Critics have argued ending the mandatory inward inspection will undermine the grain quality and food safety system.
Ritz went on the attack.
“In no way do our proposed changes to inward inspection impact food safety as some have said,” he said. “Inward inspection is not and never has been about the safety of Canadian food.”
It is a way for companies that blend grain during its journey from delivery to export to ensure grade is maintained, he added. Companies or farmers who want that commercial service still will be able to have it done privately or by grain commission inspectors on a fee-for-service basis.
Ritz said ending the mandatory inward inspection will remove $20 million in costs from the system, almost certainly at the expense of inspector jobs within the commission.
Neither Ritz nor CGC officials said they were able to say yet how many jobs will be lost. Layoff notices and staff reductions will involve working with the inspectors’ union.
The minister also defended the government proposal to change the way farmers are protected from loss if a grain dealer goes bankrupt after taking delivery of the grain.
For decades, dealers have had to post a bond to cover the potential liability for inventory. The Conservatives are proposing this be changed to a risk insurance system.
Chief commissioner Elwin Hermanson told the committee it will free up hundreds of millions of grain industry dollars now held in bond and available for reinvestment once the bonding ends.
He said switching that system to a market-based insurance scheme will also reduce the need for the grain commission to audit and oversee the bonding system, which will also take costs out of the system and reduce commission staff.
Critics, including former agriculture minister Ralph Goodale, warn that the change will leave farmers more vulnerable to loss.
