Elevator Companies And Grain Commission Headed To Court

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The court case launched by Western Grain Elevators Association concerns a formula, approved by the Canadian Grain Commission, used to calculate how much weight the grain will lose.

In addition to that deduction, elevator companies were allowed, until Aug. 1, 2010, to deduct another 1.1 per cent. It was based on the idea that when grain is artificially dried its moisture level rebounds over the next 24 or so hours as higher moisture inside the kernel migrates to the drier exterior. Knowing this, grain companies often dry grain more to offset the rebound.

So, for example, if an elevator dried 100 tonnes of grain resulting a three per cent drop in the grain’s weight, the elevator company would deduct that three per cent plus another 1.1 per cent for a total of four per cent. The farmer would be paid for 96 tonnes of grain instead of 100 tonnes (100 -4 {100 X 4%} = 96).

Under the new rules the farmer is paid for 97 tonnes (100 -3 {100 X 3%} = 97).

(The CGC has a moisture shrinkage calculator on its website at http://www.grainscanada.gc.ca/guides-guides/drying-sechage/cwldd-pprsc-eng.asp)

“Many in the industry consider the 1.1 per cent rebound factor to be an arbitrary deduction that’s not based on science,” CGC spokesman Rémi Gosselin said in an interview last July.

Because the matter is before the courts, Gosselin declined to comment on it when contacted this month.

The new 0.1 per cent rebound factor is just as unscientific as the 1.1 per cent, said Wade Sobkowich, executive director of the Western Grain Elevators Association (WGEA). He said his association volunteered to work with the CGC on a study to determine what the correct deduction should be, but the offer was turned down.

“We say the CGC has the right to set moisture rebound but not the right to prohibit it and what they’re doing is basically prohibiting it,” Sobkowich said.

If the change in rebound factor is costing elevator companies money they could adjust the tariffs deducted from what farmers are paid when they deliver grain, but the expense would be a hidden, he said.

“It’s not fair to bury this sort of thing in the tariffs,” Sobkowich added.

“We have no interest in trying to take something that’s not ours. We just want to find the right number and that’s the CGC’s responsibility. It says so in the regulations. The CGC needs to operate on science and what happens in the real world and not on politics or what looks good from an optics point of view.”

The CGC has quasi-judicial powers. Those who oppose its order can appeal to the Federal Court.

The WCEA did just that last fall and the Federal Court has agreed to hear the complaint but a court date has not been set, Sobkowich said.

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