The Canadian Grain Commission is looking for more ways to streamline its operations without compromising Canada’s reputation for high-quality exports, its chief commissioner says.
Elwin Hermanson said that may bring changes to how services like inspections prior to export are delivered, but not the end result for customers.
“Our minister has been very clear and very public in saying he wants to protect the Canada brand. He sees value in the Canada brand. And he has also stated there has to be a cert (Certificate) Final,” Hermanson said in an interview. “That doesn’t mean we have to keep doing outward inspection exactly as we are currently doing it.”
One option is to allow private grain inspectors to do outward inspections for willing exporters and grain buyers, with CGC oversight. However, CGC outward inspections would be available too, Hermanson said.
“There are some customers who won’t accept Canadian grain unless it’s inspected by the CGC,” he said. “There are others who will. But to protect the Canada brand the minister has made it very clear that he wants CGC oversight.”
As of August 1, 2013, it’s optional for grain companies to have grain inspected as it enters their export terminals, which is referred to as “inward inspection.” In the past, that was mandatory as well, and only done by CGC inspectors.
Grain companies that want inward inspection must hire private inspectors at their own cost.
Some in the grain industry want outward inspection made voluntary too.
But outward grain inspection is too important to make it optional, Hermanson said.
“It’s the country’s reputation and the industry that we have to be concerned about,” he said. “That’s our mandate… We work for companies, we work for farmers, but we work for Canada and for the benefit of the grain industry in Canada.”
Higher CGC user fees took effect Aug. 1, 2013 aimed at making the CGC self-funding. Farmers and grain companies that pay those fees and are closely scrutinizing what the CGC does and how much it costs.
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Currently about $40 million, or two-thirds of the CGC’s average annual $60-million budget comes from the $1.82 a tonne charged for outward inspection on about 23 million tonnes of grain exports. Hermanson estimates outward inspection costs the CGC 50 or 60 cents a tonne, but it needs to charge $1.82 to cover most of the rest of its costs.
What’s more, outward inspection is done on Canadian grain exported in ships, which accounts for only a third of the grain Canada produces. Grain sold domestically or exported to the United States doesn’t contribute.
“So, we’re looking at how we might correct that,” he said. “It’s not easy to fix.”
Assuring quality isn’t just about maintaining foreign markets as Canadian grain production increases, it’s about expanding markets, he said.
If the CGC could collect a checkoff on every tonne of Canadian grain, which Hermanson said is unlikely, the cost per tonne would be low.
Under that model, CGC would cut its outward inspection fees, which Hermanson said he suspects would be similar to what private inspection companies would charge.
“The cert final is important,” Hermanson said. “You’ve got to have some document that customers are confident in. And the other thing is, you have to have a process that protects you from actions from other governments.”
A grain exporter and grain buyer might agree to terms regarding a grain sale, but the importing country could block the import for phytosanitary reasons.
Hermanson said the CGC played a key role in keeping Europe open to Canadian flax imports following the discovery shipments were contaminated with traces of CDC Triffid, a genetically modified flax not approved in Europe.
“Cadmium levels in durum is another example where we were able to identify it was a potential problem, work with stakeholders to correct it and now our cadmium levels in durum are low enough, it’s not impeding sales around the world,” Hermanson said. “Those are multi, multimillion-dollar events that have taken place that have been to the benefit of Canada. That’s why it’s important that somehow we have the funding in place to do the job that we need to do so that we can compete with the U.S. and Australia for markets.”