Before the Canadian Grain Commission hikes user fees, there needs to be a thorough review of services, says the Western Canadian Wheat Growers Association.
“Our approach on this is that before we raise any fees we should first have a critical examination of all of the services that the grain commission provides,” WCWG executive director Blair Rutter said at the organization’s annual meeting last week. “It’s time to say, ‘OK, which of these services are still required, which ones could be reduced or eliminated, and which ones can be done better in a different way – through the private sector perhaps.’”
“Canada has set the grain standard for the world to beat,” CGC chief commissioner Elwin Hermanson told the meeting. “We have to be aware of how agriculture is changing, hear what people are saying, and stay relevant to the needs of the industry.”
The CGC is proposing changes to user fees to stabilize funding to allow it to maintain Canada’s reputation as a leader in grain quality, and continue the service for grain quality and safety assurance, as well as producer protection, and fair transactions.
It has been 20 years since the last increase in user fees. Now the CGC is consulting with the grain industry to find solutions because the fees only cover half of the cost of the services provided. Current revenues are about $40 million from services provided, against expenses of more than $80 million, leaving government to fund the shortfall.
“It has become an intolerable situation,” said Hermanson. “It’s a time-consuming function to always have to go back to Parliament for funding, and it’s not how it should work.”
Hermanson says that the freeze on user fees has forced the CGC to stray from the original funding model and restricted the ability to plan. The CGC was originally established as a revolving fund, allowing it to finance continuing operations without any fiscal year limitation. The commission set user fees based on average grain volumes, and the carry-over meant that it could buffer the low-volume years where the costs of service exceeded the fees with the high-volume years where the service fees produced a profit.
When fees were frozen in the 1990s, the commission became increasingly dependent on Parliament to supplement the budget. The proposed increases to user fees would restore the original vision of complete cost recovery, which is becoming increasingly important in the face of the current government-wide spending freeze. The CGC is not alone. As government agencies struggle with rising costs and fixed budgets, user fees are going up in other areas as well.
“They are going to have a hard time getting cost recoveries across all facets of government,” said Jay Bradshaw, president of Syngenta Canada. “It’s in the regulatory area and in the grain commission too. It’s going to be demanding because a lot of the user fees are going up.”
This year’s Western Canadian Wheat Growers convention, themed “Out in Front on the Waterfront,” focused on the end of the line for Canadian wheat. The highlight of the program was a tour of the Port of Metro Vancouver.
“When we sell our wheat we haul it to the elevator. We have one buyer, the CWB, and there’s a bunch of paperwork listing deductions for freight, shipping and handling, inspection fees,” said B.C. wheat grower, Irmi Critcher.
“In the port you actually see what they have to do for quality assurance to the customer and ensure that they get what they have ordered,” says Critcher. “It’s an assurance to the farmer as well that that grain leaving the farm gets inspected again to make sure that it’s still what you said that you sent. It’s a whole bunch of checkpoints in the system which make the Canadian grain-marketing system work.”