The Canadian Grain Commission has announced its first expenditure to draw down its $100-plus million user fee surplus that it collected from farmers from 2013 to 2017.
The CGC says it will invest $4 million over the next five years in enhancing its Harvest Sample Program. Producers who submit wheat samples to the program starting with the 2018-19 crop year will receive falling number and deoxynivalenol (DON) results, in addition to grade and protein information that was previously provided.
“This is something producers have been asking for. The Harvest Sample Program is very supported by the industry because it’s used to help market our grain and provides producers with information about the quality of the crop,” says the CGC’s chief commissioner, Patti Miller, in the interview below.
The commission, which is financed through a revolving fund, accumulated the surplus on fees charged for grain inspection and other services from 2013 through 2017. To stop the accumulation, the commission lowered its fees on August 1, 2017 and again on April 1, 2018.
As of December 31, 2017, the CGC’s revolving fund had a surplus of approximately $130 million.
The commission says $40 million has been set aside for a contingency operating fund, in the event there’s a sudden decline in grain volume and to cover employee obligations.
As for the remaining $86 million, the commission has established what it’s calling a “Surplus Investment Framework” to allocate the funds in three strategic areas:
- strengthening safeguards for producers,
- investing in grain quality assurance, and
- enhancing science and innovation in the grain sector.
Details on how and when this money will be allocated within this framework have yet to be determined, says Miller.
The CGC’s decision is drawing a polarized reaction from farm and grain grower groups.
“The CGC is making positive steps in the use of the surplus,” says Laura Reiter, Sask Wheat Chair, in a news release. “Under this framework, the CGC will be able to provide new and enhanced services for producers that will not only benefit producers but also Canada’s grain system and international reputation for growing high-quality wheat.”
APAS — the Agricultural Producers Association of Saskatchewan — is also voicing support for the CGC’s announcement.
“Our members were very active in carefully considering all options in developing our recommendations, and we are very pleased that our recommendations were recognized, and that the Harvest Sample Program has been enhanced. We look forward to further announcements on the plans for the CGC surplus in the near future,” says APAS president Todd Lewis, in a statement.
Meanwhile, the Alberta Wheat Commission (AWC), Alberta Barley, Grain Growers of Canada and the Western Canadian Wheat Growers Association say they’re disappointed with the plan:
“AWC and Alberta Barley are concerned that plans to spend the $90 million surplus have already received approval from the federal government without a detailed plan,” say the groups in a joint news release.
“The surplus is farmers’ money stemming from overcharging for the CGC’s services and should not be spent without a business case and cost-benefit analysis that demonstrates value to Canadian farmers,” says AWC chair Kevin Bender. “In today’s announcement the CGC has ignored the advice from numerous groups to use the surplus to reduce costs to farmers.”
“Grain farmers are the ones that overpaid user fees for years, and the common-sense solution would have been to reduce user fees to draw down the surplus,” notes Jeff Nielsen, GGC President. “We welcome the opportunity for further consultation, but fees should have been reduced as a first step.”
In response, the CGC says it is not considering further user fee reductions at this time, as “additional reductions for grain companies that pay our fees may not result in direct benefits to producers.”
The Alberta groups also say they believe initiatives under the “Surplus Investment Framework” priorities should be funded by the federal government, not by grain farmers.
“In our view, the focus of the CGC should be on an efficient, low-cost grading system that elevates Canadian farmers competitively in the global marketplace,” says Alberta Barley chair Jason Lenz. “We question how these expenditures will achieve that and we look forward to making our views known to the CGC and the federal government.”
Wheat Growers’ chair Jim Wickett calls the CGC’s plan “unacceptable.”
“These overcharges by CGC, which amount to tax, are taken from the farmer’s bottom line and should not be used to expand the mandate of the grain commission. It is time we look at private sector numbers and find the most trustworthy and most cost-effective way to provide the services of CGC. It would be at a fraction of the cost,” he says.
The CGC says it also explored the option of returning the money to producers, but the Canada Grain Act does not allow for fees collected from grain companies to be paid to producers.
“There would also be the challenge in that the money comes through grain companies so we don’t know the specific farmers that it comes from, so returning the money is a real challenge,” notes Miller.
Editor’s note: This story has been updated with additional quotes and the interview with Patti Miller.