The following is an Op-Ed, published with permission, by National Farmers’ Union Vice-President Terry Boehm on Bill C-13, the Conservative government’s plan to amend the Canada Grain Act that is about to go before the House of Commons. For more information on the implications of the bill, please see this report by the Centre for Policy Alternatives. The New Resilient hopes to take a more in-depth look into this bill in the near future.
Bill C-13 an Act to Amend The Canada Grain Act is now before the House of Commons. If passed, this bill will fundamentally change the purpose and the rationale of the Canadian Grain Commission. Its purpose, to this date, and over a century, has been to act in the farmer’s interest as an intermediary between grain companies and railways in recognition of the huge power imbalances between individual farmers and grain and railway companies.
The current mandate under the Canada Grain Act (Section 13) states:
Objects of the Commission:
13. 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, in the interests of the grain producers, establish and maintain standards of quality for Canadian grain and regulate grain handling in Canada, to ensure a dependable commodity for domestic and export markets.
This will be ended if Bill C-13 is passed, by altering the mandate and objects of the commission. The key phrase defining the primary object for the CGC “in the interests of the grain producers,” is removed in the proposed legislation and what is left is “to establish and maintain standards of quality for Canadian grain and regulate grain handling in Canada to ensure a dependable commodity for domestic and export markets.” This change coupled with others in the Act will ultimately allow grain companies to restructure agriculture in their interest and gain at the expense of farmers.
The five main changes affecting farmers will be:
- Loss of a mandated institution which acts in farmers interest.
- The end of inward inspection of grain as it arrives at the terminals from country elevators as an auditing process of the grain trade and an important piece of a functioning producer car system.
- The ending of bonding requirements for licensed grain companies which have protected farmers from non payment by bankrupt companies.
- The end of a quasi independent regulatory agency relatively free of political interference becoming a department of the Minister of Agriculture.
- The increase of fines for miss-representation of grain going up from 9000 CAD first offence to 50 000 CAD and from 18 000 CAD second offence to 250 000 CAD second offence with fines being double that for corporations.
The Canadian Grain Commission under the changed mandate could focus on the strict requirements of ensuring quality standards and guaranteeing availability of a dependable product without regard to producer interests. Indeed a hostile Chief Commissioner favouring grain companies could fulfil the new mandate and severely disadvantage farmers at the same time. The setting of standards favourable to grain companies could result in specifications set so high that it will be difficult to achieve top grades and leave farmers grain discounted. Another very likely scenario is one where a farmer who would like to sell their crop might be confronted with a situation where achieving the deemed ‘quality’ may only be achieved by planting varieties which grain companies have exclusive rights over. The next step would be the exclusion of farm saved seed as standards would only be met on conditions of varietal purity supplied by certified seed.
The CGC would change from an institution embodying farmers rights to one that would define farmers duties.
Another piece of this bill is to eliminate inward inspection services of the CGC. Inward inspection is the weighing, and grading of grain that arrives at export terminals from the countryside. It serves as a continuous audit so that grades and volumes issued at primary elevators match that at terminal position. It is also essential to the functioning of producer cars so that they are graded when they arrive at the terminals. Inward inspection prevents discrepancies where companies buy for one grade in the countryside and sell for a higher grade at export position beyond what is achieved by blending upwards. An example from exactly a century ago shows what became the rational for enforcing inward inspection:
“In 1909 in an audit of grain terminals at the Lakehead it was discovered that stocks and shipments of No. 1 Northern, in the case of two terminals, exceeded receipts by over 1 million bushels- There were corresponding shortages in the lower grades.” Pg.17 A History of the Canadian Grain Commission (1912-1987) J. Blanchard
The loss of inward inspection would eliminate the jobs of many dedicated CGC employees. The government blithely states that one can hire private service providers to do some of this work but again history shows us, to quote J. Blanchard again: “by the 1880’s it was felt grain inspectors should be government employees as they would be unduly influenced by those who paid the fees.” There is no reason why this would not be the case today.
This bill also eliminates the requirement for bonding of licensed grain companies. Currently licensed grain companies must post bonds with the CGC that cover their monthly purchases. This bond is used to pay out farmers in the event of bankruptcy or failure of a grain company. In this period of financial collapse the government chooses to eliminate this protection leaving ‘farmers free to create their own risk management strategies’. The stated logic being that bonding is a barrier to new entrants to the grain trade. It is more the case that without bonding farmers bear all the risks. They would tend to protect themselves by selling only to the biggest corporations giving no business to ‘new entrants.’ The other very expensive solution for farmers being discussed is the commodity clearing house. This would be like a grain exchange for transactions. A farmer would have to post funds for the eventuality if he reneged on a contract and grain companies would have to do the same if they reneged or failed. What is very unclear is why a grain company would participate in this scheme and in conversations with designers of the scheme it was said that the cost would be too expensive for individual farmers to post margins and that they would have to go through brokerage firms in order to participate. This sounds like a way for farmers to pick up more costs and more risk where they have not had too with CGC bonding.
Another subtle but fundamental change takes place that affects the independence of the CGC. Section 15 of the Canada Grain Act would be repealed. This required that the Commission shall report on its activities for the preceding crop year. In the new legislation this will no longer be the case because for the purposes of the Financial Administration Act the CGC is deemed to be a department of the Ministry of Agriculture. Therefore it must Report to Parliament through the minister by tabling a Report on Plans and Priorities and Performance for the proceeding year. In the past the fixed term appointments of the Commissioners left them somewhat independent, of the Minister, to administer guided by the primary mandate of “in the interests of the grain producers.” Now they will be reporting and designing programs seeking the approval of the Minister in advance without the focus of grain producers interests.
Finally the fine structure has been changed in regard to misrepresentation to the CGC. The fines go from $9000 first offence to $50000 and from $18000 second offence to $250000 with fines being double that for a corporation. This will become increasingly problematic when grade declarations move to varietal declarations. Farmers will find that they will need the paper trail of certified seed purchases to avoid problems that could come up by using farm saved seed. The question will be how else can one prove variety?
The Conservative government is trying to break the Canadian Grain Commission and leave grain producers at the peril of the grain companies and big railways. We have a very long history that shows farmers come up very short in their encounters with unregulated grain and railway conglomerates. They will not hesitate to take all they can from farm families. Farmers will be imperilled by these changes and it will be another rather large spike in the coffin of Canadian farmers. We must fight this as the CGC functions for all grain farmers across Canada.
Terry Boehm is the Vice-President of the National Farmers’ Union, a nation-wide organization devoted to the development of economic and social policies that will maintain the family farm as the primary food-producing unit in Canada. He farms near Allan, Saskatchewan.
Photo of Terry Boehm courtesy of the Hijacked Future website.
