Push Back On Doubling CGC Service Fees

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Canada’s grain industry, including farmers, are questioning the Canadian Grain Commission’s (CGC) proposal to go to full cost recovery by more than doubling user fees that have been frozen since 1991.

Currently about half of the CGC’s $80 million budget comes from fees charged for its services, most of which are ultimately paid for by farmers. The rest comes from the federal government.

In a discussion paper released in December, the CGC said it expects its annual budget will soon increase to $90 million and it wants to get all of it – a $50 million a year more – from fees it charges for things such as weighing and inspecting grain.

The CGC held a series of meetings across Canada last month to get feedback on its proposal. The deadline for submitting written responses was Jan. 31.

While several farm groups agree producers should pay a bit more specifically for services that benefit them directly, they stress much of what the CGC does is for the public good and should be paid for by taxpayers.

“I now the feds would like to see full cost recovery, but we don’t think that’s necessarily fair to us as producers,” Manitoba’s Keystone Agricultural Producers (KAP) vice-president Rob Brunel said in an interview.

“The CGC is one of the basics for food safety within this country when it relates to grains and oilseeds.”

Not fair

It’s reasonable for farmers to pay for services such as administering producer cars but the CGC’s Grain Research Laboratory and trade missions benefit the whole country and the government should pay, he said.

Where both benefit Ottawa should cover 60 per cent and farmers the rest, Brunel said.

Any increases in fees should be phased in, he said.

The Canadian Wheat Board (CWB) says the CGC should not seek full cost recovery.

“Such a radical shift in how the CGC is funded and an extraordinary increase in fees of this magnitude would be a tremendously unfair burden on Canadian farmers,” CWB president and CEO Ian White stated in a written submission.

Moreover, funding the CGC only through fees would put agency charged with ensuring Canada exports high quality grain and policing the grain sector in a conflict of interest, he said. Rather than focusing on its mandate, the CGC could be distracted by recovering costs.

Illegal

The Western Grain Elevators Association goes further, suggesting it might even be illegal. Under the User Fees Act government agencies can only charge for services if they benefit the person paying for them, according to the WGEA. This implies the CGC can’t charge for mandatory services.

The Western Canadian Wheat Growers Association and WGEA say before changes are made, the CGC’s services need to be reviewed. Any changes there would require amendments to the Canada Grain Act.

Certain mandatory CGC services could be made optional or done more cheaply by third parties, the CWB, WCWGA and WGEA said.

The CGC could save millions by making inward inspection and grain weighing at terminals optional. The mandatory service currently costs $31 million a year, accounting for 83 per cent of the CGC’s spending, the WCWGA said.

“As long as each farmer maintains the right to have his grain deliveries officially graded (i. e. the ‘subject to inspector’s grade and dockage’ option remains in place), then we consider it to be an unnecessary extra cost for this grain to be inspected at port, especially on intra-company shipments,” the WCWGA said.

Pointing out that the CGC has dropped outward inspection of Canadian grain exported to the United States, the WCWGA suggest this too could be optional too.

Continue to license

The CGC should continue to license grain companies and because it’s a “public good” Ottawa should pay for it, the WCWGA said.

The WCWGA also wants grain companies to continue posting security to cover money owed to farmers for delivered grain until a “more cost-effective” replacement is found.

The CWB, WCWGA and WGEA also warned changes to CGC fees risk making Canadian uncompetitive in global markets.

Both the CWB and NFU emphasized the CGC is critical to Canada’s grain industry by ensuring quality control.

The NFU also said the CGC’s mandate to work in the best interest of grain producers is important for farmers.

The NFU wants the federal government to fill vacant assistant grain commissioner positions and re-open closed rural CGC offices.

The CGC is pleased with the feedback, said CGC spokesman Remi Gosselin.

“I think there was a general realization that fees need to be increased and they’ve been frozen for quite a long period of time, but if those increases occur they should be phased in over time,” he said.

The CGC will announce its proposed new service fees on Mar. 1. The public will have until Mar. 31 to comment, Gosselin said.

Then the CGC will prepare recommendations for the federal cabinet on how to proceed, including a summary of public feedback.

The CGC hopes to have new service fees in place by April 1, 2012.

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“Ithinktherewasageneralrealizationthatfeesneedtobeincreasedandthey’vebeenfrozenforquitealongperiodoftime,butifthoseincreasesoccurtheyshouldbephasedinovertime.”

REMI GOSSELIN

CGC

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