Third party inspections and the role of the CGC: grain companies seeking changes in the Canada Grain Act review

Grain companies have laid out their priorities for the current review of the Canada Grain Act, with consultations underway until April 30.

There have been multiple attempts to update the Act going back to the early 2000s, but they’ve all been derailed before reaching the point where the legislation was changed.

As Wade Sobkowich, executive director of the Western Grain Elevator Association, explains in the interview below, grain companies are looking for changes to the role of the Canadian Grain Commission (CGC) as both a regulator and a service provider under the Act.

At the top of the list: WGEA’s grain company members, as well as some farm groups, including the Alberta Wheat Commission, want to see the Act changed to allow third parties to conduct outward inspections of grain shipments headed overseas. Grain companies are currently required to pay the CGC $1.48 per tonne to inspect grain at port, regardless of whether their contract with the customer requires inspection by private third party, such as SGS. These fees, which are passed on to farmers in grain prices, are a major revenue line for the CGC, explains Sobkowich.

“We think the Grain Commission should stay as the primary regulator for the grain sector, but that some of the services that are done could be done through authorized third parties and still fall under the auspices of the Canadian Grain Commission,” he notes.

As Sobkowich outlines in the interview, they’re not necessarily calling for changes in every aspect, but wanting a comprehensive review covering the following areas:

  • Allow approved third parties to perform services currently done by the CGC, specifically outward inspection
  • Update the funding structure of the CGC (as revenues would drop without mandatory outward inspection fees)
  • Clarify the mandate of the CGC, as they are both regulator and service provider
  • Better define the CGC’s governance structure
  • Review grading system — WGEA believes there are too many classes
  • Review producer payment security program for when a grain company struggles financially
  • Continue licensing of elevators and grain buyers
  • Access to producer cars

The CGC also plays a role in market transparency by collecting and publicly sharing data on grain export shipments. Over the last few weeks, several commodity groups in Saskatchewan and Manitoba have passed resolutions to lobby for daily and weekly export sales reporting, similar to data collected and published by the U.S. Department of Agriculture. The WGEA is seeking more information on what farmers are looking for, and wants to make sure this information isn’t market-distorting and that it doesn’t provide an advantage for international competitors, says Sobkowich.

While the current review of the Canada Grain Act was officially launched in March 2019, consultations were delayed due to Covid-19. Agriculture Minister Marie-Claude Bibeau formally launched online consultations on January 12, 2021. Stakeholders can find more info and submit their comments up until April 30 here.

At the end of the day, grain companies and farmers both want the regulatory system to maximize the value of Canadian exports, says Sobkowich. “The regulatory system should be looked at it through that lens. I mean why else are we doing it, other than to earn as much as we can?”

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