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Shrinkage Deduction Ending At Process, Transfer Elevators

The official term is “shrinkage” but farmers often call it “tookage” and won’t be grieving its demise.

The Canadian Grain Commission has ordered licensed process and terminal elevators to stop making shrinkage deductions effective March 19. “Comprehensive shrinkage” is defined as the loss in weight of grain while it’s handled or treated, and shrinkage deductions were once commonplace. But the CGC ended that practice at terminal and primary elevators in 1990 and 2003, respectively, and is now doing the same at process elevators (such as canola-crushing plants and other processing facilities) and transfer elevators (St. Lawrence facilities which receive grain by rail or lake freighter and load it into ships destined for offshore ports).

“This change is good news for Canadian grain producers,” said Elwin Hermanson, CGC chief commissioner. “They can now expect consistent deductions when they deliver their grain to any type of elevator licensed by the Canadian Grain Commission.”

However, while the last vestiges of this type of shrinkage are poised to disappear, the elimination of a factor used to calculate moisture shrinkage is going to be challenged in court.

The Western Grain Elevators Association is taking the CGC to Federal Court in hopes of overturning changes ordered by the commission last year.

“We objected to the change because it wasn’t based on science,” said Wade Sobkowich, WGEA executive director.

“This is a matter of principle and the CGC is doing something in our view that’s outside their authority. We felt we needed to take a position on this and challenge this because we don’t believe they’re acting within their legal authority here.”

At stake is a technical calculation called the “rebound factor,” which the CGC virtually eliminated last Aug. 1. (See accompanying story.)

There was also opposition to the complete elimination of comprehensive shrinkage. When the CGC asked the grain industry last year to respond to the proposed change, it received 28 formal responses, but only 12 supported ending the shrinkage allowance, the commission said in a paper published on theCanada Gazette’swebsite.

“While there were more responses from those opposed to the proposed shrinkage change, most of those who supported the proposed change – mainly producers and producer organizations – represented thousands of producers each,” the CGC paper stated.

“The producer and producer organization comments were mostly supportive of the CGC’s proposed changes.”

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 say 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 said. “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. [email protected]

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“ThischangeisgoodnewsforCanadiangrainproducers.”

– ELWIN HERMANSON

About the author

Reporter

Allan Dawson

Allan Dawson is a reporter with the Manitoba Co-operator based near Miami, Man. Covering agriculture since 1980, Dawson has spent most of his career with the Co-operator except for several years with Farmers’ Independent Weekly and before that a Morden-Winkler area radio station.

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