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Apr 25

Farmers, grain companies grapple with fee hikes

Posted on Apr 25 By: Tyler Difley

As part of restructuring legislated by the federal government, the Canadian Grain Commission (CGC) recently increased its user fees for the first time since 1991, drawing the ire of farmers and grain handlers alike.

Bill C-45, which came into effect on Aug. 1, includes several measures de- signed to reduce the CGC’s dependence on federal money and move the organization towards a self-sustainable funding model. The bill eliminates the need for inward inspection of grain shipments while significantly increasing the cost of outward inspection, which is currently mandatory for all grain exports headed to non-U.S. destinations.

The bill also cut federal funding to the CGC from 50 per cent of its annual budget to about 10 per cent, leaving the grain industry on the hook for the remaining 90 per cent. This translates to a cost increase from about $1.25 to $1.80 per tonne for CGC’s inspection and weighing services.

“It’s going to be really tough, to be totally honest,” said Stephen Vandervalk, president of the Grain Growers of Canada. “With about 60 cents per tonne added to your bill, the question becomes
‘how much of that are companies going to pass on?’ My guess is probably most of it.”

The CGC’s manager of corporate information services, Rémi Gosselin, acknowledged that costs appear to have gone up significantly, but said it’s important to keep this in perspective.

“If we had not made changes to our operations and to the Canada Grain Act, fees would have been closer to $3.44 per tonne, a much more substantial increase,” he said. “We feel like we have
done our part in terms of reducing costs to the sector and we’re committed to ensuring our operations remain relevant.”

Gosselin also cited the elimination of inward inspection and other un- necessary services as the source of $20 million in savings for the industry. Wade Sobkowich, executive director of the Western Grain Elevator Association, said those savings will only be going to one place, and it’s not back into the grain industry.

“From a dollars and cents view, it’s the federal government that has benefitted from the removal of this service because we’re saving those CGC costs, but we still have to perform the function,” he said. “So, really, it’s a shift in costs from taxpayers to farmers.”

Particularly troubling for Sobkowich is the mandatory nature of the CGC export certificates for almost all grain shipments leaving the country, especially when most countries importing Canadian grain do not require it—and third party inspection is available at a fraction of the cost.

“We don’t use that document for any- thing, it gets thrown in the garbage,” he said. “It’s an incredible waste of money for the industry.”

Vandervalk said that until the CGC can prove its inspection and certification services are positively benefitting farmers, they should be optional, allowing farmers to seek out more competitive rates.

“If this were a private company, would farmers use it? And if farmers wouldn’t use it because they don’t see any value, why are we being forced” he said. “They need to prove that it brings value, that Japan or China or Egypt is willing to pay a premium for that certificate.”

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