Grain declarations same, but different

CUSMA compliance means the documents are no longer voluntary contracts between buyer and seller

On the surface the grain delivery declarations western farmers fill out before being allowed to deliver grain to elevators in the new crop year starting Aug. 1 won’t look much different than those of the past 15 years.

However, there is a major change. While the declarations, which have been essentially commercial contracts between grain sellers and buyers, they are now required by federal law under the Canada Grain Act. This, and other changes to the grain act, came about because of the new Canada, United States Mexico Agreement (CUSMA), which replaces the North American Free Trade Agreement (NAFTA) July 1.

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Not only will farmers be legally required to fill the new declarations out before delivering grain, grain buyers are legally obliged to provide the declarations to farmers.

Those who fail to comply — farmers and grain companies — face possible fines or even imprisonment (see ‘Penalties’ at bottom). The same penalties, have and continue to apply, to any breach of the grain act.

Farmers in Eastern Canada have not been subject to declarations and therefore will not be required to fill them out until next crop year.

Under the old declarations farmers who misdeclared grain deliveries could be sued by companies to cover their costs due to a misdeclaration. The same applies under the new declarations.

Why it matters: The changes are under the radar but represent a new legal status for an established delivery declaration system.

Another major change under the grain act will allow wheat grown in the United States to receive an official Canadian Grain Commission (CGC) grade when delivered to a Canadian buyer — so long as the variety is registered in Canada.

This change addresses the U.S. complaint Canada unfairly discriminated against its wheat.

Canada’s grain sector generally supports the change, noting Canadian wheat has unfettered access to the U.S. market.

Neither the CGC, which administers the grain act, nor the Western Grain Elevator Association (WGEA), which represents seven of Canada’s biggest grain companies, expect the new declarations, or other CUSMA-related grain act changes, to adversely affect farmers or Canada’s grain quality control system.

The National Farmers Union (NFU), however, worries the changes give grain companies too much power to decline farmers’ deliveries, and will likely undermine the grain quality control system — the foundation upon which Canada’s reputation for delivering high-quality grain is built.

The old declaration system applied just to companies belonging to the WGEA, but now all grain companies will be required to get farmers to submit delivery declarations, CGC spokesman Remi Gosselin said in an interview June 16.

By signing, farmers swear they are delivering a variety eligible for the kind of grain and class, if applicable, they have declared (see the declaration here: wgea.ca).

The same declaration includes provisions grain companies wanted, including farmers agreeing they are delivering only varieties registered in Canada, grown in compliance with plant breeders’ rights legislation, and that the herbicides saflufenacil and glufosinate-ammonia have not been applied to flax and lentils, respectively.

“It’s not a new thing for farmers to sign a declaration once per year per company,” WGEA executive director Wade Sobkowich said in an interview June 18.

“We have adjusted it a little bit but by and large it’s the same declaration as it was last year. The members had to make sure they were compliant with the wording that the CGC wanted to comply with the (CUSMA) regulations.

“To us it’s pretty much a non-event. It’s something that was in place and something that is going to continue to be in place.”

According to the NFU, changes to the grain act will allow all American grain to enter Canada, weakening Canada’s quality control system. But Gosselin said for wheat it only applies to varieties registered in Canada.

“I think it’s important to make that distinction,” he said.

“I think it’s about creating an equitable environment between Canada and the U.S. We want to be certain that what’s provided in terms of U.S. deliveries is quality controlled and this is another tool that’s available.”

Sobkowich doesn’t see American grain as a threat to Canadian quality control.

“We’re not talking about U.S. farmers growing and delivering different varieties,” he said. “The areas where we could see some exposure, but I think it is manageable, is with pesticide use…”

American wheat might have been sprayed with a product registered in the U.S. and not in Canada.

“The second thing could be phytosanitary where you have pests of concern that don’t have a presence in Canada but perhaps do in the United States,” Sobkowich said. “So there is going to have to be some due diligence done by grain-handling companies, and by the system as a whole, to make sure those things are managed.”

Asked if maintaining Canada’s quality control system is important to Canadian grain companies, Sobkowich replied: “That’s an understatement. Quality controls are an extremely important part of our business. We need to make sure we meet customer specifications, not because we are required to do so by the law, but because our customers expect it.”

Both Gosselin and Sobkowich said they can’t predict how much American wheat will flow north after the changes take effect. However, they said the economics don’t favour it.

According to the Americans, little of their wheat came to Canada because it was ineligible for top Canadian grades and had to be segregated. But Gosselin and Sobkowich say even without a grade there was nothing preventing Canadian companies from buying American wheat and paying what it was worth based on its quality.

“It wasn’t eligible for the top grades, but that doesn’t mean it didn’t have value if we did bring it into Canada for sale or to export to customers,” Sobkowich said. “But that didn’t happen very much because the economics didn’t allow it to. We don’t know if this change is going to really result in a huge increase in volumes, other than what we were experiencing before.”


Penalties under the Canada Grain Act

The Canada Grain Act states the following about penalties for contravening the legislation that governs Canada’s grain industry:

Section 107

(1) Every operator of an elevator who contravenes or fails to comply with Section 72 is guilty of an offence, and

(a) if an individual, is liable
(i) on summary conviction, to a fine not exceeding nine thousand dollars or to imprisonment for a term not exceeding two years, or to both, or
(ii) on conviction on indictment, to a fine not exceeding eighteen thousand dollars or to imprisonment for a term not exceeding four years, or to both, or

(b) if a corporation, is liable
(i) on summary conviction, to a fine not exceeding thirty thousand dollars, or
(ii) on conviction on indictment, to a fine not exceeding sixty thousand dollars.

(2) Every person who contravenes any provision of this act, other than Section 72, or of the regulations or any order of the commission, other than an order for the payment of any money or apportionment of any loss, is guilty of an offence, and

(a) if an individual, is liable
(i) on summary conviction, to a fine not exceeding six thousand dollars or to imprisonment for a term not exceeding one year, or to both, or
(ii) on conviction on indictment, to a fine not exceeding twelve thousand dollars or to imprisonment for a term not exceeding two years, or to both, or

(b) if a corporation, is liable
(i) on summary conviction, to a fine not exceeding nine thousand dollars, or
(ii) on conviction on indictment, to a fine not exceeding eighteen thousand dollars.

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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