The Canadian Grain Commission, grain industry watchdog and wheat quality guardian for 100 years this month, won’t be financed by taxpayers after 2014.
Last week’s federal budget included $44 million to help the commission transition to full self-sufficiency over the next two years.
The federal government also plans to reintroduce legislation to “modernize” the commission. But with the Canadian Wheat Board’s sales monopoly ending Aug. 1 some question the need for as much commission regulation. And questions about the commission’s role are likely to be even more pointed if user fees, frozen since 1991, double to meet the federal government’s demand for self-sufficiency.
“Just removing the monopoly will not be enough to move the industry to a commercial grain-marketing system,” Western Barley Growers Association president Doug Robertson said in a news release April 2. “We have to remove unnecessary costs and regulations from the system as well, and we thank the government for recognizing how important that is.”
The commission’s annual operating budget of around $83 million a year, is typically $30 million short most years and made up by federal ad hoc funding. If Canada produces 50 million tonnes of grain the commission earns around $37 million in user fees collected mostly from grain companies, who pass the cost to farmers. (Ottawa provides $5.4 million in baseline funding to cover scientific research and some administration. And some years the commission has surpluses fees collected in the previous crop year.)
“Stakeholders should expect the CGC to update its user fees,” commission spokesman Remi Gooselin said in an interview, but he couldn’t say by how much. “That’s an unknown at this point.”
There are at least four outcomes. The first is a doubling of user fees. That’s likely to face stiff opposition from grain companies and farmers.
“We have to examine all the services the CGC currently provides and reduce costs where possible, as these costs will ultimately be borne by farmers,” said barley grower association past president Brian Otto.
A second option is to cut mandatory commission services and/or contract those and other services out to reduce commission operating costs.
The third approach is for the federal government to cover the entire shortfall or at least increase its contribution from its base funding of $5.4 million. Grain companies and farmers have argued many commission’s services are valuable to the Canadian economy and therefore the costs should be borne by the nation.
The fourth option is a combination of increased federal funding, fewer mandatory fees and contracting out.
Last month Agriculture Minister Gerry Ritz said he’d decide on future commission user fees after reviewing feedback from grain industry participants. The deadline to provide input was March 23.