Winnipeg, MB — The government and grain producers have very different ideas about what to do with a $130 million surplus collected by the Canadian Grain Commission (CGC).
The CGC announced that it will invest the funs in a Harvest Sample Program. Beginning in the 2018-19 crop year, producers who participate in the Harvest Sample Program will receive falling number and deoxynivalenol (DON) results for their wheat samples at no cost. With this additional information in hand, producers will be better able to market their crop to ensure the best return for their farms.
According to the CGC, these enhancements to the Harvest Sample Program will be funded for the next five years through the investment of $4 million from the CGC’s accumulated surplus. This is the first step in the Canadian Grain Commission’s plan to invest $90 million through a Surplus Investment Framework. The commission also announced that in the coming months, the Commission will consult with grain sector stakeholders to develop more detailed proposals within the Surplus Investment Framework.
“We are pleased to announce a key investment in the Harvest Sample Program,” stated Patti Miller, Chief Commissioner of the CGC. “It’s an important tool that makes data available to promote the sale of Canadian grain, helps producers ensure the best return for their crops, and contributes to research on grain grades and the end-use quality of Canadian grain.”
“The Canadian Grain Commission will invest surplus funds in programs and activities will meet the evolving needs of the grain sector for years to come. We look forward to working with stakeholders to maximize the value of surplus investment initiatives.”
The Western Grain Elevators Association (WGEA), however is disappointed by the decision. In statement released to the media, the WGEA believes that over the course of five years the CGC systematically overcharged the industry, including farmers, by $130 million, and with this announcement the government is signaling that it has no intention of returning any of the overpayment. In addition, it is with certainty these expenditures will cause a further fee increase in the following five year budget cycle due to what will become an ongoing commitment to maintain these new and expanded programs.
“The fees instituted by the CGC were never collected for the purposes outlined in its release of August 1, 2018, nor does the User Fees Act permit the overtaxing of users,” said Wade Sobkowich, executive director of the WGEA. “The CGC has found itself in a surplus position due to increased production by farmers, and handlers’ ability to market grain through the system. These amounts were charged to farmers and exporters, and should rightly be returned to the grain sector through a future fee reduction.”
In its May 2017 submission to the CGC, the WGEA said the most logical and responsible course of action would be to return the overcharges to farmers by reducing the CGC’s prescribed user fees for a fixed period of time, since the CGC is unable to return the money through other means. The $130 million surplus was generated by unnecessarily high user fees, and the WGEA along with many other grain related associations asked the CGC to find a way to compensate the value chain for collecting too much money.
Furthermore, according to the WGEA, in May 2018, the federal government created six Economic Strategy Tables to drive innovation and growth in Canada’s priority sectors including Agri-Food. Input from the agricultural sector included significant reduction in the CGC’s presence to allow Canada to compete on a level footing with other exporting nations, both financially and from a regulatory standpoint. “The CGC announcement pre-supposes what the Agri-Food Table will conclude and runs counter to recommendations for reform,” continued Sobkowich. “What is the point of asking for input from the value chain if the government is going to make a multi-million dollar announcement ahead of the outcome, with the industry’s own money no less?” The WGEA is of the strong view that the CGC must step away from providing commercial services and limit itself to the role of regulator.
The WGEA contends that not only did the CGC overcharge for its services, but it has also been applying these fees to offset the cost of government services that are of a general public benefit. “One-third of the costs in the U.S. and approximately 40% of costs in Australia are covered by their governments for similar services,” said Sobkowich. “Not only does the CGC operate in a near 100% cost recovery model, but now it has overcharged by $130 million and has no plan to return it.”