Users Reject Higher CGC Fees

WINNIPEG - Dec 29/12 - SNS -- Users of the Canadian Grain Commission's (CGC) services rejected all proposals to raise fees without delivering a better value.

Moreover, the grain industry and farmers firmly believe the CGC provides a public service and therefore the cost should be shared by taxpayers.

The responses were received by the CGC during its user fee consultation, which was conducted following the guidelines of the User Fees Act and other government requirements.

The CGC reports as follows on the consultation and the responses:

On November 1, 2012, we released our User Fees Consultation and Pre-proposal Notification document, which outlined proposed individual fees, service standards and performance measures. Stakeholders had until November 30, 2012 to provide written submissions regarding the document.

This document was emailed directly to industry and producer stakeholders, including all Canadian Grain Commission licensees, producer organizations, industry organizations and relevant government organizations.

Eighteen formal written submissions as well as one submission by phone have been received from external stakeholders in total.

More public benefit appropriation required

The majority of stakeholders noted that a portion of the Canadian Grain Commission's services and activities provide a public benefit to all Canadians. Most stakeholders went further and stated that the Canadian Grain Commission should be allocated more than $5.45 million in appropriation for providing these services. Stakeholders consistently said that research and the Canadian Grain Commission's Grain Research Laboratory, the grain quality assurance system, food safety, policy development, traceability, monitoring and statistics should be for the public benefit and not cost-recovered through user fees but paid for by federal appropriation.

Public benefit appropriation should increase with inflation

Many stakeholders noted that fees are proposed to increase by 1.6% annually while there is no commitment to increase public benefit appropriation of $5.45 million by the same amount. These stakeholders recommended that public benefit appropriation should increase by 1.6% annually as well. They noted that otherwise, producers would be paying an increasing share of the public benefit costs as the federal government contributes a diminishing percentage.

The Canada Grain Act and Canadian Grain Commission services

Many stakeholders noted that they were pleased with the amendments to the Canada Grain Act that were included in the Jobs and Growth Act, 2012. However, a few of these stakeholders recommended that the Canada Grain Act and the Canadian Grain Commission's services need to be modernized further before the Canadian Grain Commission increases any of its user fees. In particular, these stakeholders recommended updating the Canadian Grain Commission’s governance structure, eliminating mandatory outward inspection and a general modernization of the Canada Grain Act.

Level of fee increases

The majority of stakeholders suggested that the magnitude of the proposed increases to user fees is significant and too high.

Ensure efficiency

Many stakeholders re-iterated their feedback from previous consultations that it is very important that the Canadian Grain Commission and its services be as efficient as possible.

Phase-in fee increases

A few stakeholders recommended that fee increases should be phased in over time as opposed to a large increase on August 1, 2013.

Valuable services

The majority of stakeholders stated that the Canadian Grain Commission provides valuable services and functions to producers, industry and Canadians.

Producers ultimately pay

Most stakeholders recognized that producers will ultimately pay for any fee increases to Canadian Grain Commission services (through higher tariffs, a lower basis or lower grain prices), even if the grain companies initially pay user fees.

Fees need to be competitive

Many stakeholders noted that Canadian Grain Commission fees need to be in line with those in the United States, Australia, other grain producing countries and the private industry; otherwise, Canadian producers will be at a competitive disadvantage.

Canadian Grain Commission fees need to be raised

Several stakeholders acknowledged that the Canadian Grain Commission's fees may need to be raised for services that are for the private benefit as it has been over 20 years since they were last increased. As noted above, however, most were opposed to the magnitude of the proposed fee increases.

Authority to charge fees for mandatory services

It was expressed that the Canadian Grain Commission may not have authority to fully recover the costs of mandatory services.

Cost recovery creates a conflict of interest

It was suggested that there is a conflict of interest when a regulatory body is seeking cost recovery because it has the incentive to generate revenue instead of creating the appropriate regulatory environment.

Specific services

Many stakeholders made recommendations or had questions about specific Canadian Grain Commission services.

Several stakeholders recommended making outward inspection optional and updating the Canadian Grain Commission’s governance structure.

Several stakeholders requested further information regarding the proposed insurance-based insurance security program. However, some of these stakeholders provided conditional support of the insurance-based security program if it is more cost efficient and provides effective coverage to producers.

A few stakeholders recommended that the Canadian Grain Commission play an increasing role to help maintain a transparent, well-functioning sector by collecting and making available additional grain sector related data and information.

It was suggested that a training program for industry grain inspectors be created.

Use of Canadian Grain Commission services

A few stakeholders suggested that the use of Canadian Grain Commission services may become less attractive and decline as a result of user fee increases.

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