Industry surprised Grain Act amendments don’t go further

CGC mandate Expected changes to the Canadian Grain Commission aren’t part of the new legislation

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Most of the amendments to the Canada Grain Act tabled in the House of Commons last month were expected.

What wasn’t is that the changes cutting the 100-year-old Canadian Grain Commission’s (CGC) role in the grain industry were buried in the controversial 457-page omnibus budget implementation bill.

The legislation doesn’t change the CGC’s mandate or governance, which also surprised and disappointed some.

“We view this as a missed opportunity to properly adjust to deeper changes we’ve seen in farm operations and grain handling and marketing and exporting in the global marketplace,” Wade Sobkowich, executive director of the Western Grain Elevator Association, said in an interview Oct. 18.

“I would say this is only the first step,” said Richard Phillips, executive director of the Grain Growers of Canada. “There needs to be something a little more sweeping than what’s happened so far.”

National Farmers Union president Terry Boehm is pleased the CGC’s mandate to regulate Canada’s grain industry “in the interests of the grain producers,” is untouched for now. The grain act and CGC were created to help farmers counter grain and railway company power and is needed as much today as in 1912, he said.

The federal government should cover the CGC’s $83-million annual costs because of the grain industry’s economic value to Canada, Boehm said.

Grain act amendments won’t undermine Canada’s grain quality, CGC spokesman Remi Gosselin said.

“We’re going to continue to set standards and grain grades and that’s going to continue to be the standard for all of industry,” he said. “We don’t feel this is going to have an impact on Canada’s grain-quality assurance system or our reputation internationally.”

The single biggest change — ending mandatory CGC inward grain inspection (weighing and grading) at terminal elevators — has been discussed for 20 years and included in previous failed Conservative bills.

Grain shippers, including producer car shippers, can request inward inspection, but they’ll have to pay an independent third party authorized by the CGC and chosen by the terminal operator.

“These amendments will streamline and modernize the operations of the CGC, reduce the regulatory burden for grain producers and eliminate about $20 million annually in unnecessary costs from the grain-handling system — costs that are ultimately borne by farmers,” the federal government said in a news release.

Higher fees

The Public Service Alliance of Canada estimates 250 CGC jobs will be cut, said Fabian Murphy, first national vice-president of the Agriculture Union, which is part of the Public Service Alliance of Canada.

The CGC is supposed to be self-sufficient but typically has a $30-million deficit that Ottawa covers. Cutting CGC costs by $20 million means another $10 million needs to be earned to cover all its costs.

The Grain Growers of Canada expects higher fees, including for outward inspection, which includes the CGC’s “Certificate Final,” guaranteeing the grade of exported grain.

“If our outward fees have to go up substantially then that makes us less competitive in the world market,” Phillips said.

The WGEA, GGC and the Keystone Agricultural Producers support ending mandatory inward inspection. Since most grain coming to port terminals is owned by the same company, CGC inspection is an unnecessary expense, they say.

But according to Boehm mandatory inspection makes grain grading more transparent, encouraging companies to share blending benefits with farmers.

Producer security

The Grain Appeal Tribunal is being scrapped. If a disagreement arises from a requested inward inspection, Canada’s chief grain inspector will settle it.

Other amendments include:

  • No official CGC inspection and weighing of laker shipments.
  • One class of licence for terminal and transfer elevators.
  • No regular primary, terminal and transfer weigh-overs.

The CGC will also revamp its producer security program, replacing the bonding system to cover money owed farmers with an insurance scheme, paid for by companies, not farmers, Gosselin said. Defaults would be 100 per cent covered. Insurance will be cheaper for companies and less costly for the CGC to oversee.

The CGC will release its revised service changes in the coming weeks and seek feedback, he said.

These amendments focus on reducing costs to the grain industry, Agriculture Minister Gerry Ritz said in an email.

“Making these specific changes now will not in any way prevent the CGC from continuing their modernization and consultations on future changes,” Ritz wrote.

The WGEA’s Sobkowich isn’t so sure.

“This is our shot to modernize the Canada Grain Act,” he said. “Who knows how long it will be before we have the opportunity to address these important things?”

Sobkowich said more changes are needed. “Because they have been able to carve out one of the higher-cost component pieces, we wonder also if the same desire is going to be there down the road to make these further amendments.”

The WGEA wants optional outward inspection, Sobkowich said.

The KVD (kernel visual distinguishability) system, used to visually segregate wheat classes until Ottawa ended it in 2008, still hasn’t been replaced in the grain act, he added. The WGEA wants the act to include penalties for misrepresenting varieties on delivery.

The WGEA also wants the federal government to pay for CGC’s “public good” services such as grain research and monitoring grain for pesticides and toxins — something not included in the current amendments.

The GGC wants that too, but the government can add it later, Phillips said.

It’s up to the grain industry to keep the pressure on the government to bring in additional amendments to the grain act, he said.

“That comes down to us having effective lobbying and having their ear and keeping the pressure on to getting it done.”

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