Canadian Grain Commission fee reductions point to flawed system that imposes high costs on farmers
The Alberta Wheat and Barley Commissions applaud the Canadian Grain Commission’s (CGC) news of fee reductions effective August 1, 2021, but are concerned that Canadian farmers continue to be overcharged for the CGC’s cost of operations. Today’s news underscores that the current funding system, based on mandatory inspection services by the CGC, is fundamentally flawed and should be a priority to change as part of the Canada Grain Act review.
During the federal government’s consultations for the Canada Grain Act review, farmers were surprised to learn that the majority of the CGC’s operating costs are covered by revenues from mandatory inspection fees of export vessels of grain. Those inspection costs are passed onto farmers through lower grain prices, as the CGC’s regulatory costs are hidden in the grain basis.
“Mandatory outward weighing and inspection by the CGC is a redundant service since 70 to 80 per cent of grain contracts require a second inspection by a private, third-party company,” says Tara Sawyer, Alberta Barley chair. “Private companies can offer this service cheaper than the CGC, yet the CGC continues to offer this duplicated service.”
The CGC has accumulated a $148 million surplus, which will continue to grow due to the large volume of grain being moved in the current crop year. The CGC needs to adjust their funding model to expect variation and adopt a model that will allow excess funds to be returned to farmers through reduced operating fees.
“As part of the Canada Grain Act review, we identified that the landscape of international grain trade has changed and Canadian farmers need the CGC to adapt as well,” says Todd Hames, Alberta Wheat Commission chair. “It’s time for the CGC to transition away from being a service provider as their high cost of inspections is affecting our competitiveness.”
In their submission to the Canada Grain Act review, the commissions recommended the CGC shift away from being a service provider to a regulator to better serve farmers. Recommendations included eliminating mandatory outward weighing and inspection services by the CGC, increased transparency in the cost of the CGC’s regulatory services, grading reform, enhanced grading dispute resolution, amongst others. You can read the summary of the commissions’ submission including key recommendations here. To read the full submission report, click here.
Interim Communications Manager
Alberta Wheat and Barley Commissions