To modernise agricultural policy and regulation, the Government of Canada conducted several industry consultations in recent years, particularly in areas of the Canadian Grain Commission (CGC) mandate and governance, user fees, producer security, service comportment and standards. On October 18, 2012, the federal government introduced the amendments to the Canada Grain Act (CGA), which was part of Bill C-45, Jobs and Growth Act, 2012. Bill C-45 received the royal assent and became law on December 14, 2012. The last major review of the CGA was done in the 1990s.
The agricultural industry generally sees the recent amendments to the CGA are necessary, mainly due to fundamental industry changes experienced during the last 10 to 20 years. For example, the number of primary elevators in Canada decreased to 344 in 2012 from 976 in 1999. Industry consolidation has resulted in a few major grain companies accounting for large shares of grain handling activities at both primary elevator and port terminal levels. Due to the integration of grain handling industry, grain received at port terminals often comes from the primary elevators owned by the same company. In the current system, the CGC will conduct a grading/weighing inspection, although the grain movement is simply within the same company. The CGC inspection services in the case seem redundant to many industry stakeholders. The consolidation of grain handling industry, coupled with the recent removal of the Canadian Wheat Board single desk, has led to the need for changes in agricultural policy and regulation.
A major change is the elimination of mandatory requirements for inward inspection and weighing of grains by the CGC at port terminals and transfer elevators
The amendments to the CGA intend to streamline the CGC operation and eliminate redundant or unnecessary services. A major change is the elimination of mandatory requirements for inward inspection and weighing of grains by the CGC at port terminals and transfer elevators. Inward inspection is a practice of inspecting grain at port terminals or transfer elevators when the grain comes from a domestic grain handling facility, in most cases, primary elevator. Due to the integration of grain handling industry, primary elevators often ship grain to a port terminal or transfer elevator owned by the same company, reducing the need for inspection. If this is not the case and an inspection is necessary, the proposed new system would allow shippers and elevator operators to request weighing and grading by a private service provider authorized by the CGC. Based on the estimate from the federal government, the elimination of redundant services is expected to save about $20 million annually. Many industry stakeholders believe that agricultural producers bear all these costs in the end.
For the producer payment protection program, the CGC would introduce a new insurance-based system to replace the current single option of bonding. The federal government believes the new approach will improve producer protection coverage and reduce licensing costs.
The amendments to the CGA will also eliminate the grain-appeal tribunals. If grade/weight disputes occur, the proposed new system would allow producers and other industry stakeholders to request a binding determination of grade/weight by the CGC. The CGC would provide oversight and the office of the CGC Chief Grain Inspector would be the final decision-making authority for inspection services provided by the private sector. The CGC will continue to establish and maintain standards of Canadian grain quality, and particularly, safeguard the quality of grain for exports. As well, the CGC function in producer rail car administration will remain unchanged.
The CGC has just completed another round of industry consultation on user fees. Many producer organizations and industry stakeholders provided their input to the process. A summary of the consultation findings is available at the CGC website.
In the Budget 2012, the federal government has allocated $44 million over two years to allow the CGC to transition to the new model. The CGC will continue its current statutory functions until August 1, 2013 when the proposed changes and new user fees will take effect.
For more information on the amendments to the CGA, visit the CGC website.
This link on the Agriculture and Agri-Food Canada website provides information on the amendments to the CGA.