Some grain producers would like to see shrinkage allowances shrink away to nothing.
The Canadian Grain Commission last week announced a review of the rules that provide for an automatic weight deduction on grain delivered to country elevators.
The commission said that with improved grain handling technology, it’s time to look at whether those shrinkage allowances are still needed, and if so, what level they should be set at.
A number of farm groups said they are eager for the review and plan to tell the commission there’s no reason producers should have to pay for grain lost during handling and transportation.
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“The grower has sold a product to a plant,” said Garth Patterson, executive director of Saskatchewan Pulse Growers. “The question is why they should then be responsible for any shrinkage.”
Grain buyers can incorporate the costs of shrinkage in their purchase price, he said. The most efficient plants will have the lowest shrinkage costs and be the most competitive in bidding for farmers’ business.
Wayne Bacon, chair of the Canadian Canola Growers Association, thinks shrinkage allowances are too high and also questions why farmers should be held responsible for weight lost after their grain enters an elevator or rail car.
“I’m not sure why farmers should be picking up the cost of that once it leaves their yard.”
Shrinkage allowance, which has been around in one form or another since 1912, is intended to compensate elevator operators for grain weight loss that occurs during handling and transportation.
Dust and grain can be left in equipment or bins, or can leak from rail cars. Weight can also be lost when moisture evaporates as grain dries.
The allowance is 0.1 percent for wheat, oats, barley and rye (0.2 percent for tough or damp), 0.35 percent for flaxseed and canola (0.52 percent for tough or damp), and one percent for other grains (one percent for tough or damp.) The higher rate for special crops will also be an issue during the review.
Grain commission policy manager Tom Askin said the review was prompted in part by continuing questions from farmers about the need for a shrinkage allowance, along with the new grain handling technology at country elevators.
“The grain handling industry has been making some major changes which change the need for the level of shrinkage that we have,” he said.
Shrinkage levels were last reviewed in 1993.
Lower, but don’t eliminate
Jack Tye, manager of quality assurance for Agricore, said country elevator operators have been gathering information to present to the commission to back up their view that while the level can be negotiated, some shrinkage allowance is still appropriate.
He acknowledged many producers are skeptical about the need for shrinkage allowances, given developments in grain handling technology.
“That’s a fair question to ask, and that’s why rather than a blanket ‘we need it,’ we undertook to put together some data to present the companies’ case,” he said.
The companies have completed their analysis, but Tye declined to say what the data showed.
Askin said the commission will do its own analysis to see how much difference there is between the amount of grain that goes into elevators and the amount shipped out. That should give some indication of how much volume is actually lost to shrinkage.
Patterson urged farmers to make their views known to the commission, especially those who grow pulses and other special crops, which are subject to a shrinkage allowance far in excess of the rate for the major cereals and oilseeds.
Askin said the review will carry on through the winter, with en eye toward making changes for the beginning of the next crop year Aug. 1, 2001.
