From agriweek march 7/11:
This newsletter has been opposed to the Canadian statutory grain grading system for almost as long as it has been opposed to the savage, wealth-destroying single-desk monopoly of the Canadian Wheat Board. In my view statutory grading creates unnecessary costs throughout the grain economy, does not provide meaningful advantages in the marketplace and prevents or frustrates Canadian growers’ access to superior and more profitable varieties. No such system is used by any other major exporting country and there is no record of any buyer demanding it from sellers who do not have it. Virtually all wheat buyers who deal with the Canadian Wheat Board also deal with other suppliers who sell on an individual sample or specification basis.
Statutory grading is fanatically defended by the Wheat Board, which contends, without furnishing any proof, that the system provides it with advantages over competitors, even as it cannot demonstrate any price advantage except by using yardsticks of its own creation. Perhaps the grading system makes for less work for the Board, or maybe it fits nicely with its ruthless command-and-control culture. Whatever.
In response to my treatment of the subject in this space on Feb. 14, we have received a letter from Remi Gosselin, Manager, Corporate Information Services at the Canadian Grain Commission, from which the following quotations are excerpted:
“You state that falling number is not measured in the Canadian grain grading system. The falling number test is indeed a quality assurance factor . . . . and most contracts include a requirement for a minimum specification.”
Yes, but it is not a part of the statutory grading regimen, and there has been some controversy lately that it should be, since it is the often the quality characteristic of most interest to the buyer. Canadian wheat farmers are not rewarded at the time of sale by the present system for good falling numbers, as they are not penalized for poor numbers.
“You suggest that Eastern Canada is not subject to the same rigors of the Canadian grain grading system. Statutory grades and the grain grading system do apply in Eastern Canada.”
But, I continue to contend, not with the same zeal or the same impact on every participant in the chain.
“You are concerned about the ‘archaic’ and ‘ridiculous’ restrictions of the Canada Grain Act for Prairie wheat. There is in fact flexibility within Canada’s grain grading system, and it is quite common both in Western Canada and in Eastern Canada, that shipments may be made by specification rather than statutory grades, at the request of exporters.”
To be sure, and if it is “quite common” for sales to be made on specification or sample the case for statutory grading is further weakened. Transactions on the basis preferred by the end user not based on statutory grades do not relieve upstream participants, especially growers but also grain handlers, of the restrictions and costs imposed under this system.
“It should be noted that grade tolerances established under the Canadian grain grading system are based on scientific research, not ‘arbitrary’ and ‘capricious’ reasons.”
It is beside the point how they are established. The argument is over their existence, nature, value and usefulness.
“The grading of grain based largely on visual appearance works in the Canadian system because there is strict control over the release of varieties allowed into milling grades, therefore we know we are starting with a very good base product. Downgrades are the result of adverse growing conditions, disease or insect damage.”
As Mr Gosselin must know, kernel appearance is on its way out, exactly because the opinion of a grader of visual appearance is not ‘strict control’.
“There is no comparable system of controlling the release of varieties in the United States.”
Precisely the point. All other farmers are free to grow and sell whatever a customer wants (the customer is always right) without these artificial restrictions.
“You state that no other country has a government enforced statutory grading system However, in the United States for example, GIPSA has the same grading factors used in Canada such as frost, fusarium damage, etc. The American system is applied differently than in Canada, but the end result is similar.”
The end result is not the same because violating or ignoring American grading standards is not an offense under the law.
“In the end, what matters is that buyers come back each year to buy Canadian grain because they know what they are going to get, and because Canada’s grain grading system produces consistent and reliable results.”
Is it Mr Gosselin’s position that buyers of other countries’ wheat do not know what they are getting, or do not come back each year as customers?
This newsletter has been opposed to the Canadian statutory grain grading system for almost as long as it has been opposed to the savage, wealth-destroying single-desk monopoly of the Canadian Wheat Board. In my view statutory grading creates unnecessary costs throughout the grain economy, does not provide meaningful advantages in the marketplace and prevents or frustrates Canadian growers’ access to superior and more profitable varieties. No such system is used by any other major exporting country and there is no record of any buyer demanding it from sellers who do not have it. Virtually all wheat buyers who deal with the Canadian Wheat Board also deal with other suppliers who sell on an individual sample or specification basis.
Statutory grading is fanatically defended by the Wheat Board, which contends, without furnishing any proof, that the system provides it with advantages over competitors, even as it cannot demonstrate any price advantage except by using yardsticks of its own creation. Perhaps the grading system makes for less work for the Board, or maybe it fits nicely with its ruthless command-and-control culture. Whatever.
In response to my treatment of the subject in this space on Feb. 14, we have received a letter from Remi Gosselin, Manager, Corporate Information Services at the Canadian Grain Commission, from which the following quotations are excerpted:
“You state that falling number is not measured in the Canadian grain grading system. The falling number test is indeed a quality assurance factor . . . . and most contracts include a requirement for a minimum specification.”
Yes, but it is not a part of the statutory grading regimen, and there has been some controversy lately that it should be, since it is the often the quality characteristic of most interest to the buyer. Canadian wheat farmers are not rewarded at the time of sale by the present system for good falling numbers, as they are not penalized for poor numbers.
“You suggest that Eastern Canada is not subject to the same rigors of the Canadian grain grading system. Statutory grades and the grain grading system do apply in Eastern Canada.”
But, I continue to contend, not with the same zeal or the same impact on every participant in the chain.
“You are concerned about the ‘archaic’ and ‘ridiculous’ restrictions of the Canada Grain Act for Prairie wheat. There is in fact flexibility within Canada’s grain grading system, and it is quite common both in Western Canada and in Eastern Canada, that shipments may be made by specification rather than statutory grades, at the request of exporters.”
To be sure, and if it is “quite common” for sales to be made on specification or sample the case for statutory grading is further weakened. Transactions on the basis preferred by the end user not based on statutory grades do not relieve upstream participants, especially growers but also grain handlers, of the restrictions and costs imposed under this system.
“It should be noted that grade tolerances established under the Canadian grain grading system are based on scientific research, not ‘arbitrary’ and ‘capricious’ reasons.”
It is beside the point how they are established. The argument is over their existence, nature, value and usefulness.
“The grading of grain based largely on visual appearance works in the Canadian system because there is strict control over the release of varieties allowed into milling grades, therefore we know we are starting with a very good base product. Downgrades are the result of adverse growing conditions, disease or insect damage.”
As Mr Gosselin must know, kernel appearance is on its way out, exactly because the opinion of a grader of visual appearance is not ‘strict control’.
“There is no comparable system of controlling the release of varieties in the United States.”
Precisely the point. All other farmers are free to grow and sell whatever a customer wants (the customer is always right) without these artificial restrictions.
“You state that no other country has a government enforced statutory grading system However, in the United States for example, GIPSA has the same grading factors used in Canada such as frost, fusarium damage, etc. The American system is applied differently than in Canada, but the end result is similar.”
The end result is not the same because violating or ignoring American grading standards is not an offense under the law.
“In the end, what matters is that buyers come back each year to buy Canadian grain because they know what they are going to get, and because Canada’s grain grading system produces consistent and reliable results.”
Is it Mr Gosselin’s position that buyers of other countries’ wheat do not know what they are getting, or do not come back each year as customers?
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