On Wednesday, the Canadian Grain Commission (CGC) outlined how it plans to spend its $130 million surplus. The announcement didn't sit well with some farm groups.
“This surplus is built on the backs of hard working farmers, money that should be in their pockets, not CGC coffers," said Western Canadian Wheat Growers Association (WCWGA) President Levi Wood. "The CGC continues to keep their check-off fee higher than is required to meet their operational budget resulting in this enormous surplus. These funds should be refunded to the farmers that earned it and the check-off fee rate reduced.”
The $130 million surplus will be split between a Reserve Fund ($40M) and a Surplus Investment Framework ($90M). WCWGA says it was not consulted by the CGC on this decision.
As of December 31, 2017, the CGC had a revolving fund surplus of approximately $130 million. This surplus was accumulated because of higher than anticipated grain volumes and lower than expected spending. To reduce the risk of surplus accumulation, the CGC lowered its official inspection and weighing fees before the end of its five-year funding cycle on August 1, 2017.
CGC Head of Communications Rémi Gosselin stated that they again reduced user fees on April 1, 2018 "resulting in annual savings of approximately $15.5 million to producers and industry." He added, "This has stopped the accumulation of surplus. We are not considering further reductions at this time...We would review fees only if services change or if, for example, actual CGC operating costs became considerably unaligned with grain export volumes."
The CGC says it looked carefully at the option of returning the money to the sector, and to producers specifically. However, the Canada Grain Act does not currently allow refunding fees collected from the grain companies to producers. The CGC added, "returning the money directly to the companies that paid the fees may not result in direct benefits to producers."
The Western Grain Elevators Association (WGEA) was also displeased with how the surplus is being handled.
“The fees instituted by the CGC were never collected for the purposes outlined in its release of August 1, 2018, nor does the User Fees Act permit the overtaxing of users,” said Wade Sobkowich, Executive Director of the WGEA. “The CGC has found itself in a surplus position due to increased production by farmers, and handlers’ ability to market grain through the system. These amounts were charged to farmers and exporters, and should rightly be returned to the grain sector through a future fee reduction.”
The CGC will be investing $4 million from the Surplus Investment Framework to enhance the Harvest Sample Program. Beginning this year, producers who participate in the Harvest Sample Program will receive falling number and deoxynivalenol (DON) results for their wheat samples at no cost.
The Canadian Grain Commission says it is committed to working with grain sector stakeholders to ensure enhancements to programs and services deliver clear benefits to producers and add value to the sector into the future. In the coming months, the Commission plans to consult with grain sector stakeholders to develop more detailed proposals within the Surplus Investment Framework.