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Grain commission proposes 24 per cent cut to major user fees

But Alberta Barley wants fees eliminated for a year while Alberta Wheat wants better testing at elevators

The Canadian Grain Commission will cut its two major user fees Aug. 1 — but an Alberta farm group says it needs to do more to whittle down a massive surplus accumulated over the last three years.

If implemented, the combined fees for officially inspecting and weighing ships exporting Canadian grain will drop by 44 cents a tonne — or 24 per cent — in crop year 2017-18 compared to the current crop year, which ends July 31. That would lower the inspection fee to $1.35 a tonne and the weighing fee seven cents a tonne, for a total of $1.42.

But Alberta Barley wants the grain commission, which had a $114.5-million surplus as of December, to go further.

“While any reduction is a good step, Alberta Barley would have preferred an immediate temporary elimination of fees in order to more quickly return the excess fees accumulated since August 2013 to the marketplace, and therefore to farmers who ultimately bear the cost,” the farm group said in a news release.

“While Alberta Barley recognizes that a $1.42 (per tonne) fee will likely be in place effective Aug. 1, 2017, a one-year fee elimination in 2018 would address some concerns of its members. With an operating budget of about $60 million, the CGC will have more than enough in the revolving fund to operate for a year’s time.”

In March, the grain commission issued a discussion paper proposing similar fee reductions for April 1, 2018 and remain in effect for five years, with an annual 1.5 per cent increase for inflation.

“This proposal is intended to stop the accumulation of surplus, which is what the sector has been asking for, for some time, and we are responding to that need,” said commission spokesman Remi Gosselin.

The surplus is the result of the commission underestimating grain exports coupled with higher user fees imposed in 2013 after the former Conservative government ordered it to become self-sufficient. That resulted in a jump in user fees by an average, 44 per cent, with the cost of one fee — ship inspections — tripling to $1.60 a tonne, sparking widespread industry criticism.

The commission has since revised it forecasts of grain exports, which it initially set at 23.3 million tonnes a year and now predicts they will average 34.4 million tonnes a year. (In the past three crop years, exports have been 30.4 million, 37.6 million and 38.4 million tonnes.) If the new forecasts prove accurate, the lower fees will save the grain industry $15 million. Although grain exporters pay most of the fees, it’s widely believed the costs are passed back to farmers.

The commission needs about $63.5 million to operate annually and at least $36 million in reserves, Gosselin said.

Agriculture Minister Lawrence MacAulay supports the proposed fee reduction, which also includes the elimination of overtime charges for official inspection.

The proposed fee cut was also endorsed by the Grain Growers of Canada.

“We applaud this regulation and look forward to working with government on the consultations around the new fee schedule and use of the current surplus,” Grain Growers president Jeff Nielsen, who farms near Olds, said in a statement.

The Western Canadian Wheat Growers Association wants the money either paid back to farmers or used to reduce future fees. The grain commission itself has suggested the surplus could be used to reduce future fees, but returning it to farmers is logistically impractical, Gosselin said.

The commission has also suggested using the money to fund a new security program to compensate farmers when grain companies fail to pay them, upgrading its laboratories, or delivering real-time analytical testing at licensed terminal elevators or other locations.

The Alberta Wheat Commission supports the latter, saying additional “objective” testing at elevators for things like DON (deoxynivalenol) and falling number would benefit farmers.

— With staff files

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