The Canadian Grain Commission (CGC) cannot return its operating surplus to farmers or grain companies as some farm groups suggest, according to Remi Gosselin, manager of corporate information services.
“The Canada Grain Act and the Canada Grain Act regulations do not provide for refunds or rebates,” he said in an interview April 28.
Nor will the CGC be committing a crime by spending the surplus, which was $114.5 million and rising as of last December, so long as the money is spent in areas related to CGC services included under the grain act, Gosselin said.
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“We are working with Justice Canada, Treasury Board and (the Department of) Finance to clarify procedures,” he said.
Some farmers at the meeting insisted CGC is restricted to either repay the money or use it to reduce user fees charged for its services, even going so far as to say using the money in other ways was fraudulent during the Keystone Agricultural Producers (KAP) advisory council meeting here April 20.
“The Canadian Grain Commission is not breaking the law by spending the surplus in an approved way,” Gosselin said in response.
“The Canadian Grain Commission does not have the authority to spend the accumulated surplus without approval from the Treasury Board of Canada.”
KAP delegates debated a resolution calling on KAP to lobby the CGC to use its surplus to standardize grain-grading infrastructure.
Bill Campbell, a Minto farmer and KAP’s vice-president, said farmers need a better system for grading and assessing crops as they are being delivered. Farmers are getting downgraded because of the amount of DON (deoxynivalenol) in the grain. DON is the toxin caused by fusarium head blight, a fungal disease. Campbell said a test showed his wheat had one per cent DON, but a grain buyer said it was 1.9 per cent.
“It took it from possibly being a No. 2 to Canada Feed — about a $2 (a bushel) discount at that particular time,” he said.
Campbell’s malting barley met specifications except for being just a bit over on DON. The contracted price was $5.50 a bushel, but the buyer said he might pay $4 for.
“So there seems to me there is no standardized testing, there is no standardized way a producer can go back and credibly challenge some of these places,” he said. “The grain commission’s position is to look after producers.
“I believe that we need to have more ability to test our grain and we need to be able to have a better standard in grain testing if this is going to be the criteria for which we receive payment.”
The Alberta Wheat Commission has also argued for additional “objective” testing at elevators for things like DON and falling number.
Starbuck farmer Chuck Fossay noted DON is not part of the CGC’s grading standard. Instead it uses fusarium-damaged kernels as a proxy. However, some years, including 2016, the correlation breaks down.
Including DON as a grading factor could be a double-edged sword, Gord Miles, the CGC’s chief operating officer, warned in a recent interview.
“There are some things we need to be careful with — specifications that we don’t necessarily want in the grading system,” he said.
“The problem is not all customers require DON testing. DON levels are not standard so they vary internationally. So if you put that into a grade rather than have it as a spec you could be creating more costs in the system.”
Starbuck farmer Reg Dyck said the resolution, if passed, would change KAP’s policy, which is for KAP to investigate using the CGC’s surplus to set up a new producer security program to compensate farmers who don’t get paid for grain after it’s delivered. Instead of grain companies posting security to cover farmer liabilities, KAP wants to explore Ontario’s compensation fund scheme.
And while he saw merit in the proposal, Dyck said improving the CGC’s security system, is also important.
“The broader-based security we can come up with the better off we’d be,” he said. “If we go for individual insurance I think it would cost us a lot more in the end and a lot of producers won’t do it and will get caught. In the 40 years that I farmed I had five exceptionally close calls in not getting paid (after delivering grain to a buyer). Most of the companies had been around for a number of years, but things happen and all of sudden they are in trouble and you’re looking at non-payment.”
Minto farmer David Rourke said some of the CGC’s surplus could go to both causes. Farmers need a system to better inform them of grain quality of theirs as they deliver or shortly after.
Delegates voted to refer the resolution to KAP’s Grains, Oilseed and Pulses Committee for further study.
A resolution calling on KAP to lobby the CGC to invest its surplus in rail cars was defeated.
Souris farmer Walter Finlay said buying cars that way would benefit farmers.
“I would say the train has left the station,” Dyck said.
The money wouldn’t buy enough cars to influence rail service, he suggested.
