“It’s about creating an even regulatory playing field and there is grain price transparency for producers.”
– REMI GOSSELIN
The Canadian Grain Commission (CGC) is making more changes regarding grain shrinkage.
Effective August 1 licensed primary elevators will no longer include a 1.1 per cent moisture rebound factor for grain artificially dried at primary elevators.
The CGC is also proposing the deduction for comprehensive shrinkage at licensed process and transfer elevators be set at zero.
“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 Remi Gosselin said in a recent interview. “It’s going to be replaced with 0.1 per cent below the fixed minimum for tough moisture level.”
For example, the fixed minimum tough level of moisture for grain corn is 15.6 per cent so a grain buyer can only deduct for drying to 15.5 per cent.
Previously, the 1.1 per cent rebound factor and the shrinkage deduction formula used by grain buyers meant that corn delivered at 18.5 per cent moisture and dried to 15.5 per cent would be allowed a four per cent shrinkage reduction. Under the new system the deduction will be three per cent.
Comprehensive shrinkage refers to the loss in weight of crops that occurs during handling and transportation. Under the Canada Grain Act, the CGC regulates how much grain buyers can deduct when paying farmers for their grain in anticipation of shrinkage.
In 2003, the CGC set the allowance for shrink at zero for licensed primary and terminal efforts. Now the CGC wants to do the same at process and transfer elevators.
“It’s about creating an even regulatory playing field and there is grain price transparency for producers,” Gosselin said.
The CGC asked the grain industry to respond to the proposed change. Of the 28 formal responses it received, 12 supported the CGC’s proposal, the CGC said in a paper published on the Canada Gazette’s website.
“Most of those who supported the proposed change – mainly producers and producer organizations – represented thousands of producers each,” the CGC paper says.
Farmers say they shouldn’t be held financially responsible for lost grain after it’s delivered to an elevator because they have no control over the grain.
The CGC said one farm group, which it didn’t name, suggested allowing grain companies to charge whatever they want for shrinkage. Farmers could then compare prices, including shrinkage deductions.
“This proposal has been strongly opposed by the vast majority of producers,” the CGC says. “The CGC has heard from producers over the years that if elevators are permitted to charge shrinkage it would become an industry standard and would be very difficult for them to negotiate shrinkage charges with elevators.”
The CGC met with some of the grain buyers, at their request. The grain buyers said they favoured either being allowed to deduct for shrinkage or have shrinkage deregulated. However, the buyers said if the CGC is going to regulate shrinkage they’d prefer all types of elevators be treated the same.