The Western Canadian Wheat Growers Association thinks it’s time for the Canadian Grain Commission to cut some cheques to farmers.
The WCWGA call comes because the CGC has, over the course of the past few years, accumulated a $106.3-million operating surplus, mainly through user fees on farmers.
But a CGC official says he isn’t sure the commission has the authority, and even if it did, it would be difficult.
- Read more: KAP calls for CGC surplus to fund producer insurance
- Read more: WCWGA wants reduced CGC fees, refund
“It would be logistically challenging to determine what amount of grain producers have delivered and was actually inspected by the grain commission (resulting in a CGC fee being collected),” Remi Gosselin, the CGC’s manager of corporate information services, said in an interview Jan. 27.
That’s because grain companies pay the CGC’s outward export inspection fees of $1.80 a tonne, not farmers. However, it’s assumed most of the cost is passed back to farmers when companies buy their grain.
There are several ways to get the surplus back to farmers, WCWGA executive director Robin Speer said Jan. 26 in an interview.
“The first step though, it is to definitely reduce fees right now.”
The WCWGA suspects the CGC’s large surplus contravenes the Users Fee Act, Speer said. The act states an agency can only collect 10 per cent more than it needs to operate, he said.
The CGC’s surplus is due to a combination of higher user fees introduced Aug. 1, 2013 by the former Conservative government to make the CGC self-sufficient, and higher-than-expected western Canadian grain exports.
The CGC estimated it would inspect 23.3 million tonnes of export grain annually based on what it did between 1993-94 and 2009-10. But a record crop in 2013 was followed by three bumper crops, pushing exports much higher than forecast.
The CGC had a $32.9-million surplus as of June 20, 2013, Gosselin said. In 3-1/2 years another $73.4 million has been added. Since the CGC can’t run a budget deficit it needs a surplus of at least $35.6 million to cover possible income shortfalls following a crop failure, Gosselin said.
Despite complaints from farmers and grain companies, CGC user fees, on average, jumped 44 per cent at the start of the 2013-14 crop year. The outward inspection fee, which pays for the CGC’s ‘Certificate Final’ guaranteeing grades, tripled to $1.60 a tonne. It’s now $1.80 and is set to increase slightly Aug. 1 as part of a five-year fee schedule, which includes an annual inflation adjustment.
Changing CGC’s fees takes several months, Gosselin said. First the CGC makes a recommendation to the minister of agriculture. If he or she accepts it, the proposal is published in the Canada Gazette and the public is invited to comment. The feedback is reviewed and if the government has changed its mind, the fees are changed through regulation.
But Speer believes the federal government can quickly change fees through an order-in-council.
Gosselin said he didn’t know if that was the case and federal officials didn’t respond by press time. However, a source familiar with the CGC, who asked not to be named, said Speer is right.
In the meantime, the CGC is about to start consultations on what fees should be for the next five years, beginning Aug. 1, 2018 and also what to do with the surplus, Gosselin said.
“We don’t think there should be a consultation with what to do with the money,” Speer said. “It is farmers’ money. It has got to go back to farmers.
“We don’t want a long drawn-out consultation process for something so clearcut as immediately reducing fees.”
The current fees are costing an average farmer producing 5,500 tonnes of export grain $10,000, he said.
“It could go on a loan, or to buy equipment, or buy inputs for next year. $1.80 a tonne seems quite trivial, but $10,000 a farmer goes a long way.”
The Western Grain Elevators Association (WGEA), which represents the major grain companies, agrees CGC fees are too high, executive director Wade Sobkowich said in an interview. But it’s impractical to mail a refund cheque to every farmer, he added. The simpler option is to reduce the surplus by cutting fees, he said.
Lower fees or even a “fee holiday,” is something the WCWGA would consider, Speer said. But it needs to happen quickly to prevent the surplus from getting even bigger, he said.
Speer also said the WCWGA is willing to discuss how much surplus the CGC needs. In 2015 then CGC commissioner Murdoch MacKay said the CGC needs around $60 million a year to operate.
A source familiar with the CGC said if it were allowed a line of revolving credit, as it once was, it wouldn’t need as much surplus. It could borrow money to make up shortfalls and then adjust fees as needed.
Meanwhile, the Keystone Agricultural Producers (KAP) is asking the CGC to investigate using the surplus money to fund a new producer protection program similar to one operating in Ontario (see sidebar).
“That is certainly one of the options we’d be willing to look at,” Gosselin said. “There are a number of options that we would consider.”
They include “reinvesting” in laboratories, grain quality research, redeveloping and enhancing analytical surveys and investing in ways to make grain grading more objective, he said.
The WCWGA issued a news release Jan. 3, 2017 asking for the CGC’s surplus to be refunded to farmers and fees reduced. It repeated its request in a Jan. 24 release.