Alberta’s wheat and barley commissions and the Grain Growers of Canada are unhappy that the Canadian Grain Commission won’t be giving back $90 million in surplus service fees it collected from Prairie farmers.
“Over the past five to six years, the Canadian Grain Commission has built up a surplus of funds based on user fees by handling all grain types,” said Alberta Barley chair Jason Lenz.
The grain commission did consult farm groups, but then ignored the wishes of the majority, added Tom Steve, general manager of Alberta Barley and Alberta Wheat.
“The majority of the respondents felt that the surplus should be used to reduce fees for inspections and those would result in savings to farmers,” said Steve. “The grain commission instead has decided to use those funds on special projects and expansion of their operations.
“That’s why we’re disappointed.”
The groups also don’t like the lack of detail surrounding what the grain
commission calls its “surplus investment framework.”
“Whatever they decide to spend that money on has to show direct benefit back to producers, because it’s producer dollars that helped build those funds,” said Lenz. “What they’ve laid out in front of us so far isn’t in great detail. We’re very unclear about what those dollars are going to go to and how it’s going to benefit producers in the long run.”
The only specific use of the surplus announced by the grain commission so far is $4 million to bolster the harvest sample program. Under this program, producers can send samples to the grain commission for testing and receive information such as the unofficial grade and protein content for cereals and pulses. Under the enhanced program, producers will also receive the falling number and DON (deoxynivalenol) results for wheat as well as dockage amounts for canola.
But the crop commissions want to know about the other $86 million.
“Producers have a right to know what some of that money is going towards rather than them saying this is their wish list,” said Lenz.
“They’ve chosen to take $90 million of farmers’ money and spend it on programming that they have only partially described,” said Steve.
However, the grain commission’s decision won support from two main farm groups in Saskatchewan.
Sask Wheat praised the grain commission for taking “positive steps.”
“Under this framework, the (grain commission) will be able to provide new and enhanced services for producers that will not only benefit producers, but also Canada’s grain system and international reputation for growing high-quality wheat,” said Sask Wheat chair Laura Reiter.
The Agricultural Producers of Saskatchewan also supported the move, saying it wants the surplus to benefit the farmers who ultimately pay service fees.
“Since there was no fair or simple way to refund the surplus fees back to individual producers, our members supported measures to improve services for grain producers,” said Todd Lewis, the farm group’s president.
But other farm organizations want to see a reduction of service fees, which would help draw down the grain commission’s $130 million surplus. (The other $40 million came from higher-than-usual grain volumes in recent years.)
“Grain farmers are the ones who overpaid user fees for years, and the common-sense solution would have been to reduce user fees to draw down the surplus,” said Grain Growers of Canada president Jeff Nielsen, who farms near Olds.
“We welcome the opportunity for further consultation, but fees should have been reduced as a first step.”
The bulk of the surplus resulted from fee increases ordered by the former Conservative government in 2013 to make the grain commission self-sufficient. The agency has since cut its fees twice — once last summer and again in April. It also adjusted the average amount of grain it expects to inspect annually to 34.4 million tonnes (from 23.3 million, which had been the previous 15-year average).
The grain commission has promised to consult with farm groups on how to spend the remaining $86 million. It said its plan is to “strengthen safeguards for producers, improve grain quality assurance programs, and enhance grain quality science and innovation.”
When farm groups met with grain commission officials earlier this month and asked what that means, “we didn’t get a lot of answers,” said Steve.
“We’re now at a period where we don’t even know when the consultation process is going to start,” he said. “They weren’t specific on that, other than that we will be consulted. We’ve already been advocating for reforms of the Canadian Grain Commission and how it will operate. Hopefully, this will start a broader discussion.”
But the Western Grain Elevator Association — which represents grain companies — predicts the costs of new services that are initially paid for with surplus funds will eventually lead to higher service fees for farmers.
“It’s a windfall for the (grain commission) and it is using it to bolster itself,” said Wade Sobkowich, the association’s executive director. “That’s a major, major concern for us and we are astounded that the (grain commission) and the federal government would make a decision such as this.”
On its website, the grain commission acknowledged that most of the farm groups it consulted wanted lower fees, but said “a number of stakeholders, however, did not support this proposal.”
“They said that it is unlikely fee reductions would translate into increased profits for producers; instead any savings would be absorbed by grain companies,” the commission said. “A fee reduction, they said, would not result in any meaningful long-term solutions to current concerns in the sector.”
The fees charged for grading and weighing services on exported Canadian grain are paid for by grain companies, but it’s generally agreed the cost is passed back to farmers in the basis — the difference between the elevator and export price.