This article appeared in the Winter 2014 issue of Pulse Crop News.

Elwin Hermanson Chief Commissioner, Canadian Grain Commission

There have been several changes made within the Canadian Grain Commission over the past six months, I had a chance to speak with Elwin Hermanson Chief Commissioner, Canadian Grain Commission, to discuss these changes and what can be expected in the future, here is what he had to say.

Chris Thompson: Can you give me some background information as to what lead to these Changes?

Elwin Hermanson: We implemented a number of changes on August 1 and the background to these changes was the commission had its fees frozen and had no substantial changes to legislation within the Canada Grain Act since 1991, and there had been no major overhaul of the act in over 40 years. So a lot of our stakeholders it was due. Some of these changes came from an act of parliament called the Jobs and Growth Act was passed in 2012 and the biggest change that this made was it removed the process of inward inspection. Inward inspection is the inspection of grain as it is unloaded from rail cars at terminal elevators e.g. Lakehead Vancouver and the St Lawrence Seaway. There was a charge for this but because of the way that the industry has developed and the wheat board was no longer the single desk marketer for wheat and barley, inward inspection became obsolete and seen as more of something that should be done as commercial activity than something a government regulator should be involved in.

CT: Are these changes going to positively impact the industry?

EH: It would depend on your point of view. For the industry I don’t think that there is much doubt that it was the right move. For the commission we did have to downsize, we went from about 700 people down to 400. A lot of these positions were the inspectors at ports that did the inward inspection. But through this we also were able to reduce the cost of our services by about $ 20 million, which is a cost that will no longer be passed down to farmers. This is something that a lot of our stakeholders said was long overdue.

CT: What about for peas?

EH: On the pea side the government of Canada said that we can’t have your fees frozen any longer and that they should be primarily cost recovered, this meant that we had to do compensation with the industry and increase the fees for most of the services that we provide. Had we not gotten away from inward inspection our costs for $3 per ton for inspection of grain and that is far too high. As it stands now with the changes that came in to effect on August 1, for outward inspection (which is the major service we provide) the cost is about $1.60 per ton, while that is still pretty high by industry standards, but is provides much more than outward inspection. It is the basis for our grain safety program, our statistical reporting and a lot of analysis of samples of harvested grains. We are still looking at how we might further reduce the costs of outwards inspection. (Outward inspection is the inspection of grain that is being loaded on to vessels for export. This is extremity important this protects Canada’s reputation because it ensures that only grain that meets the standards’ of the contractor is loaded and exported.)

CT: With changes of this magnitude there is obviously a transition period what still has yet to be implemented and are there any other changes that producers can expect?

EH: With the ending of inward inspection we also changed our role with the weighing of grain being the ones who actually weighed the grain in to an oversight role and that reduced some costs as well. There is some speculation that our grain act could be changing as well. Other changes could come to governance and the mandate of the commission and there might be some changes within the dispute resolution system that would be less cumbersome than going to the courts. We are also looking at strengthening our role in grain safety because this is becoming a front of mind issue for the users of grain around the world. Places where we export grain around the world are tightening up regulations for containment of pesticides residues and heavy metals. We have to stay on top of this in order to protect Canada’s brand and reputation.

We may also have an increased role in the container movement of grains. The way the act is constructed right now is it is pretty much silent on the container movement of grains. This is especially true of all special crops including pulses; right now they kind of slip through the cracks without proper attention to grain safety and grain quality assurance. We are also looking at a way to implement fines for not abiding by the Canada grain act. Right now we have very little clout other than to take away the license from licensees or to start court proceedings. If we were able to implement a monetary penalty that is something that we would definitely look at.

CT: What has not changed?

EH: One thing that is extremely important is producer protection. We are charged with producer protection and for the most part our role in this has not changed. This is the allocating of producer cars and the right of farmers that if they are in a dispute of the quality of grain at a primary elevator they can send a sample to us and we will grade it and our results are final and binding. Then there is also the securities program, which is the assurance that producers will be paid when they deliver to a licensed elevator. The securities program is changing from a liabilities model to an insurance model. This should have come into place on August 1 but it was costly and very difficult to administer. We are hoping that this will come into effect fairly early in the New Year, although we do not have a final date.

Under the new system the eligible coverage amount will only by 95% which puts a little bit more of an onus on produces to watch who they are selling to, and make sure the company is viable, this will also prevent companies from offering more for grain and going bankrupt as a result thinking that the producers are completely covered and re establishing themselves under some new format. We are also looking at if some of those protections can be extended to sellers of feed as well because right now feed is exempted.

CT: What has the reaction been from producers?

EH: Producers have not noticed much of a change because they still have all the producer protection that they had in place before. Some of our other stakeholders are concerned are the increased costs which is ultimately passed back to producers although it is not that visible for them. We are seeing the most push back on the $1.60 per ton for outward inspection which is considered by the industry a bit on the high side. As far as our relationship with the industry and producers we still provide the weekly statistical information that they want (weekly stats available at http://www.grainscanada. gc.ca/statistics-statistiques/gsw-shg/gswm-mshg-eng.htm). We still have the grain research lab up and operating. So we have not received much negative feedback from the changes other than some people other than the costs of some of our services.

CT: Is there anything that you would like to add?

EH: If there are further changes coming we will be consulting the industry including farmers to get their input as we have done in the past. I would say if some of these changes are proposed farmers should be ready to provide feedback and involve themselves. The other thing I would like farmers know is that we are please to serve them and we invite them to use our services and familiarize themselves with what we have to offer by going to our website from time to time.

http://www.grainscanada.gc.ca