The future of the Canadian Grain Commission (CGC), whose statutory mandate since 1912 has been to regulate western Canadian grain quality in the interest of farmers, is getting closer to being determined.
Why it matters: For 109 years the Canadian Grain Commission, under authority of the Canada Grain Act, has regulated Western Canada’s multibillion-dollar grain industry. Views vary on how to improve the act to best serve farmers and grain companies.
Ahead of the April 30 deadline for submissions to Agriculture and Agri-Food Canada on what changes should be made to the Canada Grain Act and CGC, which administers it, some farm and industry groups made their positions public.
Most were already known.
For example, the Western Grain Elevator Association (WGEA) representing Canada’s major grain companies, continues to advocate to change the CGC’s mandate so it would ‘work in the interest’ of Canada and farmers, instead of just farmers.
To save money the WGEA also wants to drop mandatory CGC outward grain inspection in favour of private inspectors certified by the CGC.
The Alberta Wheat and Barley Commission (AWBC) and Western Canadian Wheat Growers Association (WCWGA) support that.
But ending CGC outward inspection raises questions about how the CGC would be funded since most of its revenues come from outward inspection fees.
The WGEA submission says more should come from the federal government because much of what the CGC does is for the good of Canada. It says direct CGC services such as for producer car allocations, should be paid by users.
In addition to having to pay the CGC for outward inspection its members hire private ‘third-party’ inspectors to grade 70 per cent of the grain exported by ship, the WGEA submission says.
Companies do that for a number of reasons, including customer preference, WGEA executive director Wade Sobkowich said in an interview April 28.
The Saskatchewan Wheat Development Commission (Sask Wheat), Agricultural Producers of Saskatchewan (APAS) and the National Farmers Union (NFU) do not support the WGEA’s proposal, fearing it would undermine the reputation of Canadian grain exports.
Less known is the WGEA’s position that the CGC should stop engaging directly with buyers of Canadian grain, even though some see that as part of its mandate.
“(W)hen the CGC endeavours to make direct contact with international customers to ask about their satisfaction with the Canadian grain industry and the CGC itself, it has the unintended consequence of prompting customers to ask for more value, without understanding that relinquishing value ultimately means a transfer of wealth from the Canadian grain sector to other countries,” the WGEA submission says. “The CGC has historically not appeared to fully grasp the reality that protecting the customer in this way necessarily means lower prices for Canadian grain producers.”
There’s a role for the CGC to play on trade missions promoting Canadian grain, “but it’s the exporters that contract with the customers, not the Canadian Grain Commission,” Sobkowich said.
What the WGEA wants would fundamentally alter the ability of the CGC to work in the interest of farmers, according to the NFU’s Cam Goff.
“It would be a huge departure from where we are,” Goff said in an interview April 29. “They (WGEA) don’t want the grain commission to be a regulator. They want the power for themselves. It would be great for them. I can understand why they’d want to do that, but it would be terrible for farmers.”
Self-regulation doesn’t work, he added, pointing to the debacle over flaws in Boeing’s 737 Max airplane that caused two of them to crash killing all aboard.
The CGC was created following years of farmer complaints that grain buyers weren’t grading or weighing grain fairly.
“It’s needed as much now as it was 100 years ago, in my opinion,” Goff said.
Under the grain act scales are checked, the CGC in consultation with farmers and grain companies sets grading standards, and when farmers and buyers disagree on grades the CGC can be asked to make a final determination — a process referred to as, subject to inspector’s grade and dockage.
In addition, grain farmers have some protection under the CGC’s producer protection program if they deliver grain to a company but don’t get paid.
However, that program costs the CGC money to administer as well as costing grain companies obliged to post security to cover liabilities to farmers. Some wonder if there’s a cheaper way. The WGEA prefers scrapping it.
Canada’s grain sector has seen many changes in recent years with huge inland grain elevators replacing smaller, less efficient elevators, increased grain production and the ending of the Canadian Wheat Board.
The Harper government had plans to revise the grain act in 2014, but the legislation was derailed by the election 2015.
In 2019 the current federal government started over, but the process was waylaid by the COVID-19 pandemic in early 2020.
In January of this year AAFC began consulting the grain sector about possible revisions, issuing a discussion paper, which included a list of topics for feedback, including:
- Are there gaps between the current binding determination of grade and dockage system and what is needed?
- Can Producer Payment Protection be improved?
- Does the existing licensing approach meet sector needs?
- Are there ways to improve the official inspection and weighing system?
Sask Wheat, APAS and the NFU submissions suggest many of the same things, including:
- Maintain the CGC’s mandate to work in the interest of grain producers.
- The CGC should continue its producer protection program.
- The CGC should gather and disseminate more information about grain sales. Maintain the CGC’s governance structure of two government-appointed commissioners and a chief commissioner.
The WGEA also supports the commissioner model, but wants the minister of agriculture to pick one commissioner based on suggestions from farmers, another based on grain handlers’ suggestions and the chief appointed based on suggestions from all Canadians.
The AWBC and WCWGA want the commissioners replaced by a board of directors and CEO.
The AWBC wants the CGC’s producer protection program to cover 100 per cent of farmer losses up to 90 days after grain is delivered to a buyer.
Sask Wheat wants the CGC’s surplus invested in programs that help farmers such as providing DON and falling number measurements.
The WCWGA wants the surplus repaid to farmers. The CGC says it’s impractical.
Sask Wheat and the NFU want the CGC to license commercial feed mills and companies loading containers with grain.
The WGEA wants producer car-loading facilities that commingle grain from different farmers licensed as primary grain elevators.
The WGEA wants the CGC to scrap its producer protection program.
“In our view, the level of sophistication of farmers has matured to the point where they are able to make business risk management decisions for their own operations,” the WGEA’s submission says. “This change would contribute to a more competitive, market-responsive grain-handling system.”
However, if a protection program is deemed necessary the WGEA says it wants a system that corrects what it sees as an “imbalance” in the current program.
“It is worth noting that since inception of the CGC producer security system, not one claim has been made in relation to a WGEA member company,” the WGEA submission says.