After eight years at the helm of the Canadian Grain Commission (CGC), Elwin Hermanson is as convinced as ever it plays a vital role to Canada’s success as a grain exporter.
“This is a great organization,” Hermanson said in an interview as he prepared to depart the CGC’s downtown Winnipeg headquarters on his final day of working there Jan. 20. “I think it’s critical to Canada’s success in the international grain marketplace. It provides tremendous service and protection to producers. It has been around since 1912. It’s over 100 years old and there’s reason why it has stuck around that long — it’s needed.”
And while not all farmers agree with some of the changes the former Harper Conservative government made to the CGC, only the most churlish would question Hermanson’s commitment to the institution charged with regulating Canada’s grain industry and assuring grain quality.
Some people were initially suspicious. Hermanson, a farmer from Beechy, Sask., was a Reform Party member of Parliament from 1993 to 1997 and then helped form and lead the Saskatchewan Party. The Harper Conservative government appointed him and Harper was openly anti-government and anti-regulation.
The House of Commons agriculture committee, consisting of a majority of opposition MPs, voted to reject Hermanson’s appointment, accusing him of being too partisan and too close to then agriculture minister Gerry Ritz. Ritz was Hermanson’s campaign manager in 1993.
Hermanson may have been appointed but had to apply for the job first. He was interviewed by officials from the Privy Council Office, Prime Minister’s Office and Agriculture and Agri-Food Canada.
“They interviewed quite a few people and I managed to be the successful candidate,” he said.
The government prevailed and so did Hermanson. Hermanson spoke at many farm meetings, handling questions with ease. He knew his stuff and was obviously well prepared. Hermanson was friendly and confident, but he never came across as arrogant.
Under his watch, the CGC developed a backbone. In 2010, the CGC started requiring some licensed grain dealers to become licensed primary elevators. A primary elevator can buy and store grain. A licensed grain dealer can only buy but many stored grain too. For years, the CGC turned a blind eye, not wanting to discourage entrepreneurs. But it was unfair to companies that followed the rules — and it put farmers at risk.
Under Hermanson, the CGC also stepped up grain company monitoring to ensure they posted enough security to cover what they owed farmers.
The CGC worked on a new security plan. It wanted a private company to backstop the risk but after concluding it was impractical wisely backed off.
Now it proposes grain companies pay into a fund to cover defaults. The CGC says it will be more effective and cheaper than the current security posting scheme.
Under Hermanson’s watch, mandatory CGC inward inspection — weighing and grading grain at export terminals — was scrapped. The move substantially cut CGC costs, which starting Aug. 1, 2013, were 90 per cent transferred to the industry and ultimately farmers through user fees. Grain companies and farmers still don’t like it.
In 2008, Ritz ended kernel visual distinguishability — a wheat quality control tool — two years sooner than the industry wanted. Still, Hermanson defended quality control, often against farmers who argued the market should decide.
“Every major grain exporter has some kind of infrastructure in place to provide grain quality assurance,” Hermanson said.
“Canada has the reputation for providing the most consistent product, pleasing the customer. So I think we should take some pride in that. It’s not just the commission but the commission plays a significant role in achieving that outcome.”
Grain buyers want consistency, he added.
“The Canadian system assures them that they get that product they want to a better degree than anywhere else in the world and we’re very proud of that.”
Hermanson defended the wheat variety registration system, which assists in quality control, even when Ritz seemed intent on destroying it.
Also while Hermanson was at the helm, the CGC worked hard to address customers’ complaints about weaker gluten strength Canadian wheat. That sparked a review of the wheat class system culminating in tighter standards for Canada’s premier wheat class, Canada Western Red Spring (CWRS), and the creation of the new Canada Northern Hard Red class starting Aug. 1.
It came after almost a year of consultations resulting in industry consensus — a practical move protecting and enhancing the CWRS quality brand, while allowing the industry to pursue the potential of higher-yielding wheats.
Under Hermanson, the CGC revamped its grain shrinkage regulations, resulting in farmers getting paid for more of their grain.
As a farmer he knew a lot about what the CGC did, but gained a greater appreciation after becoming chief commissioner.
“I did not realize the complexity and the importance (of the CGC),” Hermanson said. “I didn’t understand fully what we were doing on outward inspection, the Certificate Final and how that all worked. And most farmers have no idea of the terrific role the Grain Research Laboratory plays in the whole scheme of things and what it has contributed to our industry.”
The last two governments proposed ending commissioner governance at the CGC and replacing it with a full-time president and chief executive along with a board of directors. Whatever happens, Hermanson hopes the CGC is led by people close to the grain sector and especially farmers.
“This has been a strength of the CGC,” he said.
As for highlights, Hermanson pointed to the resiliency of employees after downsizing.
“I think that speaks to the quality of people here, the value of what we provide the industry and the recognition within the CGC that we’re important and needed. If you feel you are needed and important what more could you ask?
“I have nothing but hopes and aspirations that this institution does well going forward and the government recognizes its role.”