CGC Funding Collapse
WINNIPEG - Jun 14/11 - SNS -- The Canadian Grain Commission (CGC) is looking at severely reducing program spending after August 1, 2012 because of the expected expiration of ad hoc funding from the federal government.
Without any increase in user fees, planned spending by the CGC would plunge from $81.216 million in 2011-12 to $42,515 million in both 2012-13 and 2013-14.
Facing the "expiration of ad hoc funding", the CGC said in a report to the Treasury Department that it is "currently assessing options to ensure appropriate funding is available to meet operational and staffing requirements. This includes a review of CGC user fees.
"Core funding for 2011-12 and future years of $42.52 million partially consists of $5.45 million in annual appropriation which is used to fund a portion of the costs related to the Grain Quality Research Program and the functions that were associated with the Assistant Commissioner positions. Assistant Commissioner functions have been assumed by the CGC Commissioners, the Licensing Unit, and Communications.
"The remainder of the organization's quality assurance, quantity assurance and producer protection programs are intended to be cost recovered via fee revenues collected primarily from inspection and weighing services. These revenues are dependent on annual grain volumes which can fluctuate up to 20% from year-to-year, resulting in variable revenue from fees.
"The CGC forecasts spending of revenue earned through fees of $37.06 million generated from handling expected grain volumes of 50.0 million MT of grain. However, the CGC has fixed costs related to its statutory mandate which cannot be eliminated or reduced as revenues decline. In order to meet the evolving grain industry needs and increasing operating costs, the CGC maintains an ongoing process of cost containment and reallocates internal resources to meet new and emerging priorities."
One result of the CGC's need to address its long term funding problems was the decision to no longer provide any services to grains which are not named in the Canada Grains Act. This means that as of August 1, 2011 the CGC will no longer provide analysis services for canaryseed and several niche grains.
Grading Services Funding Hit Hardest
Without any change in its funding outlook, the CGC expects to slash spending on its quality assurance program from $41.799 million in 2011-12 to $21.176 million in the following two marketing years.
In its brief to the federal government, the CGC explained, "Canadas GQAS (grain quality assurance system) assures consistent and reliable grain quality that meets the needs of international and domestic markets. Daily provision of grain inspection and grading services as mandated by the Canada Grain Act as well as strong scientific and technical support programs and services are integral components to the overall delivery of an effective GQAS.
"The CGC continually adapts Canadas GQAS to the end-use needs of domestic and international buyers of Canadian grain, and to the ongoing structural changes within the grain industry. An effective GQAS is a key factor in permitting Canadian exporters to market successfully in competitive international grain markets and is essential for producers in order to realize maximum value from their grain."
Even so, the CGC says it will continue to:
- Maintain and deliver an effective Quality Management System as per the ISO 9001:2008 standard. Adherence to ISO Quality Management System procedures includes regular review of quality assurance processes allowing the CGC to adjust service procedures and identify or adjust training as necessary.
- Inspect and grade grain using regularly updated and approved standards as mandated by the Canada Grain Act.
- Provide certificates and documentation related to the inspection and testing of grain exports to assure sellers and buyers of the quality and safety of a shipment of Canadian grain.
- Provide an unbiased process for appeal of official inspections to producer car users, and licensed primary, terminal, and transfer elevator operators who disagree with the grades assigned by CGC inspectors.
- Manage a complaint resolution process for cargo disputes related to grain quality and conduct unload investigations upon shipper and producer request to ensure customer satisfaction.
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