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Grain Commission fees plan meets mixed reaction

Some say excess fees should be refunded, others say they’ll never find their way back to farmers

Western Canada’s grain industry is divided over how the Canadian Grain Commission (CGC) wants to use $90 million in surplus service fees.

They were ultimately collected from farmers following fee increases ordered by the Harper government in 2013 to make the CGC self-sufficient.

Some groups want the money returned to farmers through reduced CGC fees, while others fearing the savings will be captured by grain companies instead, support the CGC’s plan to “strengthen safeguards for producers, improve grain quality assurance programs and enhance grain quality science and innovation.”

The CGC announced its Surplus Investment Framework Aug. 1, which includes spending $4 million over the next five years to enhance its Harvest Sample Program.

The CGC encourages farmers to submit harvest samples by providing them with a free unofficial grade, and in the case of wheat, protein content.

The CGC uses the samples to get new crop quality information for exporters and their customers.

Under the enhanced program the CGC will now also provide the falling number and DON (deoxynivalenol) levels on wheat samples and dockage in canola, Remi Gosselin, the CGC’s head of communications, said in an interview Aug. 2.

The CGC will consult with the grain industry on how the remaining $86 million will be spent, he said.

The Western Grain Elevator Association (WGEA), Grain Growers of Canada (GGC), the Alberta wheat and barley commissions and Western Canadian Wheat Growers Association (WCWGA) say the surplus should be returned to farmers through lower CGC fees.

“We’re very disappointed in the decision,” WGEA executive director Wade Sobkowich said in an interview Aug. 2. “It would be as though an individual was paying taxes to the Canada Revenue Agency and the Canada Revenue Agency did a reassessment and found out that you overpaid but then said it was going to keep the money anyway.

“It’s a windfall for the CGC and it is using it to bolster itself. That’s a major, major concern for us and we are astounded that the CGC and the federal government would make a decision such as this.”

Sobkowich predicts new services from the CGC paid for now with surplus funds will lead to higher future service fees later.

The other groups raised similar concerns in separate news releases.

“Grain farmers are the ones who overpaid user fees for years, and the common-sense solution would have been to reduce user fees to draw down the surplus,” GGC president Jeff Nielsen said. “We welcome the opportunity for further consultation, but fees should have been reduced as a first step.”

The WCWGA said it’s “outraged” by the CGC’s plan.

It has a legal opinion that the CGC contravened the User Fees Act and the Constitution Act.

The Saskatchewan Wheat Development Commission and Agricultural Producers of Saskatchewan (APAS) support the CGC’s plan.

“The CGC is making positive steps in the use of the surplus,” Sask Wheat chair Laura Reiter said in a release. “Under this framework, the CGC will be able to provide new and enhanced services for producers that will not only benefit producers but also Canada’s grain system and international reputation for growing high-quality wheat.”

APAS wants the surplus to benefit the farmers who ultimately pay CGC service fees, president Todd Lewis said.

“Since there was no fair or simple way to refund the surplus fees back to individual producers, our members supported measures to improve services for grain producers,” he said.

The Keystone Agricultural Producers (KAP) doesn’t have a position. A CGC official was scheduled to speak about the plan at KAP’s advisory council meeting in Brandon Aug. 9.

Agriculture and Agri-Food Canada says Canada exported almost $21 billion worth of grain last year. Since the CGC’s annual budget is $65 million, its cost represents less than one per cent of the value of grain exports.

During a consultation in the spring of 2017 some farmers asked the CGC to return the surplus funds to them, but “the vast majority of stakeholders said that the Canadian Grain Commission’s accumulated surplus should be directed towards activities that deliver clear benefits to producers,” the CGC’s website says.

The fees the CGC charges grain companies for grading and weighing services on exported Canadian grain are paid for by grain companies, but it’s generally agreed the cost is passed back to farmers in the basis — the difference between the elevator and export price.

“We did carefully look at the option of refunding money to the sector and producers more specifically and what we’ve come to understand is the Canada Grain Act does not allow us to refund a fee we collect from the grain industry to producers because the grain industry is the one that paid the fees directly,” Gosselin said.

The WGEA’s Sobkowich said since it’s generally agreed the CGC fees grain companies pay are passed back to farmers, reduced fees would be as well.

But the CGC’s website says a number of stakeholders disagree.

“They said that it is unlikely fee reductions would translate into increased profits for producers; instead any savings would be absorbed by grain companies,” the CGC site says. “A fee reduction, they said, would not result in any meaningful long-term solutions to current concerns in the sector.”

The CGC’s $130-million surplus is the result of a combination of higher fees and increased grain production and exports.

In 2013 CGC fees charged to grade and weigh Canadian grain exports jumped an average of 44 per cent after the federal government required the CGC to be self-financing.

Then Canadian grain production and exports jumped.

The CGC cut its fees twice in nine months — Aug. 1, 2017 and April 1, 2018 — to end the overcharging.

It also adjusted the average amount of grain it expects to inspect annually to 34.4 million tonnes from 23.3 million, which had been the previous 15-year average.

The CGC wants to keep $40 million of the surplus to fund itself in years when grain production falls, Gosselin added

About the author

Reporter

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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