Canada Grain Act Amendments

[TOM4CWB]

Dec 13, 2007 12:12 ET
Minister Ritz Tables Amendments to the Canada Grain Act and the Canadian Grain Commission
OTTAWA, ONTARIO--(Marketwire - Dec. 13, 2007) - The Honourable Gerry Ritz, Minister of Agriculture and Agri-Food and Minister for the Canadian Wheat Board, today introduced amendments to the Canada Grain Act (CGA) to address evolving needs of the grain sector. The proposed changes will help to modernize the CGA and the Canadian Grain Commission (CGC). They include clarifying the CGC's mandate, focusing the CGC on value-added activities for the grain industry and strengthening enforcement measures.

"The Government of Canada is taking action to benefit farmers by improving the regulatory environment for Canada's grain sector," said Minister Ritz. "We are updating the Canada Grain Act and the Canadian Grain Commission and making sure the CGC continues to meet the needs of farmers and the entire industry."

The proposed changes to the CGA and the CGC are based on recommendations of the Standing Committee on Agriculture and Agri-Food following a public, comprehensive and independent review of the Act and the CGC in 2006 by COMPAS Inc. Stakeholders were consulted extensively and given many opportunities to provide input throughout the review process.

The proposed reforms to the CGA and CGC are consistent with the goals expressed in the government's Growing Forward framework for agriculture. They will contribute to building a competitive and innovative grain sector by reducing costs, improving competitiveness, reducing regulation, and providing choice.


BACKGROUNDER

On August 1, 2005, Section 2.1 of Bill C-40 came into force, adding a new section 120.1 to the Canada Grain Act (CGA) requiring a review of the Canadian Grain Commission (CGC). The consulting firm COMPAS Inc. was selected to lead the review, building on reviews conducted over the previous six years. COMPAS consulted extensively with industry stakeholders online and at public meetings across the country.

The COMPAS report, tabled in the House of Commons and the Senate in September 2006, was referred to the Standing Committee on Agriculture and Agri-Food (SCAAF) for review. The Standing Committee reported back in December 2006.

Canadian Grain Commission Mandate

In keeping with the recommendations of the Standing Committee, the CGC's mandate will be clarified by splitting it into two parts. Part one will set out the CGC's core mandate to establish and maintain quality standards for Canadian grain and to regulate grain handling in Canada to ensure a dependable commodity for domestic and export markets. The second part will make clear the CGC's mandate to protect farmer interests with respect to deliveries to elevators and grain dealers, access to binding CGC determination of the grade and dockage of grain deliveries, and the allocation of producer cars.

Mandatory Inward Inspection

Consistent with the recommendations of the Standing Committee, inward inspection and weighing of grain being delivered to terminal or transfer elevators will be made optional. Shippers will have the right to request weighing and inspection. Terminal and transfer elevator operators will be required to allow access to service providers who will do the weighing and inspection. While the CGC will no longer be involved in the delivery of this optional service, both shippers and elevator operators will have access to binding CGC arbitration in the event of dispute over a grain grade.

The Canadian grain quality assurance system will remain effective, maintaining Canada's reputation as a consistent supplier of quality grain. The CGC will continue to conduct its quality monitoring programs and export shipments will continue to be weighed, inspected and certified by the CGC.

Producer Payment Security

To reduce costs, the current CGC-administered producer payment security program will be ended. This will bring the Western Canadian grain industry in line with other agricultural sectors, and with the grain industry in Eastern Canada where the federal government does not require the industry to participate in similar security programs. Costs of such programs have ultimately been borne by producers. Ending the producer payment security program will reduce system costs, and remove a barrier to new entrants into the grain merchandising industry. With the federal government ending this mandatory program, the way will be clear for producer groups to develop a commodity clearing house or other ideas to help manage risk in a cost-effective way, if they so wish.



For more information, please contact

Agriculture and Agri-Food Canada
Ottawa, Ontario
Media Relations
613-759-7972
1-866-345-7972

or

Office of the Honourable Gerry Ritz
Patrick J. McCloskey
Press Secretary
613-759-1059

[charliep]

Will be curious about the level of interest/caring in these proposals. Likely will have more impact on farmers than the CWB issue. I note the last paragraph above in particular. It would appear licencing will stay but bonding/other forms of payment protection will go.

Governance of the CGC has also been discussed previously. Will be interesting on how handled.

[parsley]

Don't you just love it when he states:

"Ending the producer payment security program will reduce system costs".


I'm planning my holiday and will pay for the flight with the savings.

Hold your breath.

Parsley

[ado089]

If I read this correctly it suggests that Malt Barley can be sold outside the pool system domesticaly. This makes alot of sense to me. Providing the CWB doesn't give away malt in the international market it should drive domestic value adding. Taking raw product off the international market should also drive that price up as well. Competition doesn't have to be direct to influence prices.

[GrainBeetle]

Parsley:

If I too only sold 100 tonnes of wheat/yr like you, I wouldn't care about the cgc bonding issue. Your opinions here are irrelevant to commercial sized farmers, please post on an organic thread instead.
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As for the CGC, looks like Cam Dahl was appointed as CGC commissioner by Harper, et al. specifically to gut the organization.

Yet Harper et al, supports Eastern Canada supply management, protecting rual sw ontario and rual french quebec ridings and the 300% import tarriffs restricting US and NZ dairy imports.
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Adam Smith: If you are the real Adam Smith, how can you justify supporting supply management and this government????????????????????
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[TOM4CWB]

Charlie,

I note these comments on Grain Security:

"Although the CGC requires licensees to post security in the form of bonds, cash deposits, letters of credit, and other types of guarantees, the entrance of new players and subsectors in the system has apparently led to uneven compliance. According to some witnesses the lack of uniformity has been detrimental to smaller players. Some companies associated with smaller operations, particularly those in the special crop sector, have complained that existing CGC security requirements are too onerous and inflexible. It is argued that posting of bonds to cover 100% of the liability limits operating capital and acts as a barrier for new companies and restricts competition.

Based on a submission from the Western Barley Growers Association and suggestions from other groups, Compas recommended that the CGC “explore the costs and benefits of operating a clearinghouse mechanism.”24 Compas also recommended a stakeholder round table based on the Canadian Food Inspection Agency model, which could develop solutions to provide optimal security and fair prices for producers.

Similarly, a witness who appeared before the Standing Committee suggested an approach similar to the Ontario’s Grain Financial Protection Program (GFPP), which is a system of fees similar to a check-off that protects producers from failure of payment by licensed grain handlers. The GFPP is administered by Agricorp on behalf of the Ontario Ministry of Agriculture, Food and Rural Affairs. Another witness suggested that the provision of bonding should become a voluntary service because that would remove the barrier to entry within the industry. Producers would then have the freedom to select a bonded or non-bonded facility depending of the level of risk aversion each farmer has.

The Standing Committee recognizes that modernization of the grain system must be accompanied by an efficient and flexible system of contractual security that will be understood by all participants. Being at the beginning of the system chain, grain producers require protection against potential failures emerging from downstream activities in the grain sector. Therefore:

RECOMMENDATION 11

The Standing Committee recognizes the necessity of contractual security and supports the concept of a clearinghouse, or other models such as the Ontario’s Grain Financial Protection Program. However, the Standing Committee believes that such an important risk management tool requires further investigation and therefore recommends that the federal government report back to the Standing Committee, prior to the tabling of a new grain legislation, on the various models that could be implemented for protecting grain farmers."

As a person Responsible to oversee these consultations and the "Risk Management" portion of Grower Security the CGC has been responsible for... the actions presented... leave a massive hole in our system and do NOT follow the recommendations of the Parliamentary Standing Committee on this issue.

[TOM4CWB]

Charlie,

Here is the link the Recomendations:

http://cmte.parl.gc.ca/Content/HOC/committee/391/agri/reports/rp2564356/agrirp05/05-rev-e.htm

[TOM4CWB]

Charlie,

Here is what Compas Recommended:

3.0 Mandate and Stakeholder Interests
�� We recommend that paragraph 13 of the Act be modified to read as
follows:
Subject to this Act and any directions to the Commission issued
from time to time under this Act by the Governor in Council or the
Minister, the Commission shall:
1) establish and maintain the standards of quality for Canadian
grain and regulate grain handling in Canada, to ensure a
dependable commodity for domestic and export markets, and
2) in the interests of producers, provide the right of
delivery access by grain producers to primary or
terminal elevators, provide the right to third party
grade and dockage verification, provide the right of a
grain producer to access a producer car for shipment
of grain and to have third party weighing and
inspection of that unload, provide the right of grain
producers that their commercial grain transactions
with licensees under this Act be secure.
�� The last provision in the list is intended to afford the CGC freedom to
consult with stakeholders to select the most appropriate form of security
protection for any given transaction at any given time.


It is HARD to see how the Amendments to the Canada Grain Act fulfill these grower needs.

[parsley]

GrainBeetle,

The CGC is a national institution that can affects exporters, value adders, and not just farmers.

Much as the Elections Act governs all Canadians, the CGC is national legislation as well.

There is a world out there outside the perimeters of your farm.

And Grainbeetle, I've said this before, but perhaps you will understand it someday:

EVERY farmer has value, and every one of them is a peer, a fellow farmer.

Appreciate them and respect them for what they produce, whether it be small volumes or mountainous volumes, whether the volumes have the worth of diamonds, or the worth of beetles.


Parsley

PS We haven't grown wheat for quite a few years.

[AdamSmith]

Adam Smith: If you are the real Adam Smith, how can you justify supporting supply management and this government????????????????????

Grain Beetle, please direct me to any posting in which I even came close to supporting supply management?

You must have me confuse with someone else.

Yes I have supported PM Harper in the past, I still do consider him an improvement over many past PM's,

But today, I am quite disillusioned with what I see as more Liberal Lite than anything else from this current admin,

With the cwb issue, I am just plain pissed. It really isn't that hard at all but it seems all the knotheads in Ottawa can't get their heads around doing anything meaningful on CWB.

And by meaningful, I do specifically mean, rendering it Non-Monopolistic.