CGC Proposes to License Feed Mills
WINNIPEG - Feb 10/15 - SNS -- The Canadian Grain Commission (CGC) is looking to require feed mills to become licensed as process elevators.
From a statistical perspective, the change makes it possible to more accurately track the quantity of peas and other pulses being consumed as livestock feed. Starting from the time a facility is licensed, it would be required to submit weekly reports on grain stocks and handlings.
Grains covered by the reports include: barley, beans, buckwheat, canola, chickpeas, corn, fababeans, flaxseed, lentils, mixed grain, mustard seed, oats, peas, rapeseed, rye, safflower seed, soybeans, sunflower seed, triticale and wheat.
The CGC has now begun consultations on the proposal. The intent is to assess the feed mill industry in western Canada. Information collected will be considered when determining a threshold for commercial feed mills to be licensed.
The Canadian Grain Commission is seeking input from feed mills, grain producers, producer groups, current licensees, and industry stakeholders on its proposal to licence feed mills and to assist in the development of licensing requirements for feed mills.
Financial Difficulties
Explaining its rationale, the CGC said, "Feed mills are not immune to market volatility, and some have experienced financial difficulties over the years, resulting in non-payment for grain deliveries. Recent bankruptcies of hog operations and feed mills in Western Canada left grain producers who were owed monies with little recourse. Extending Canadian Grain Commission licensing to feed mills that purchase grain from grain producers will reduce the risk of non-payment for grain producers in future transactions."
The CGC discussion paper continues:
The Canadian Grain Commission has historically exempted feed mills from licensing. As a result, grain producers who sell grain to feed mills are not covered under Canadian Grain Commission's producer payment protection program.
Some producer groups have expressed concern about the exemption of feed mills from the Canadian Grain Commission's producer payment protection program in light of recent failures. The Canadian Grain Commission has received calls to extend producer protection to the industry.
The Canada Grain Act provides the Canadian Grain Commission with the authority to licence grain elevators west of Thunder Bay, Ontario, and elevators along the Great Lakes and the St. Lawrence Seaway.
In addition, the Canada Grain Regulations identifies types of operations that are exempt from requirements and programs under the Act. These include process elevators not purchasing grain from farmers, operations that handle or store grain as part of a seed cleaning operation, and elevators that only act on behalf of licensees.
It is proposed that the Canadian Grain Commission expand its producer protection mandate to include deliveries to feed mills in Western Canada, by licensing these operations and applying the security requirement provisions to feed mills as a condition of their licence.
It is proposed that all feed mills having purchased grain from a grain producer in Western Canada over the last year for use in the production of feed would be subject to a review for licensing. A feed mill may be defined as an operation where a process or a combination of processes is used to produce or manufacture feed for livestock or poultry consumption. The intent is to assess the feed mill industry in western Canada. Information collected will be considered when determining a threshold for commercial feed mills to be licensed.
License as Process Elevators
Feed mills are currently classified as process elevators, but are exempted from licensing in the Canada Grain Regulations. Should the Canadian Grain Commission licence feed mills, they would be required to obtain a licence and could be subject to some requirements for process elevators set out in the Canada Grain Regulations.
Costs specific to licensing of feed mills have yet to be determined. Once administrative cost estimates have been determined, the Canadian Grain Commission would ensure that the licensing fees charged to feed mills (either that of a process elevator, or specific to feed mills) are in line with the Canadian Grain Commission's cost recovery model.
Security requirements may be determined upon the review of monthly liabilities of a feed mill and may be tendered in the form of a bond, irrevocable standby letter of credit or guarantee, cash deposit or payables insurance.
The Canadian Grain Commission is considering licensing feed mills in a way that captures those most at risk of adversely impacting grain producers. This could be done either by establishing licensing requirements, or identifying exceptions to allow the Canadian Grain Commission to focus its licensing efforts.
The concept of licensing requirements and exemptions could provide an objective and quantifiable way of determining which types of operations are most at risk. Licensing requirements or exemptions might be determined on the basis of the following factors:
- Type of operation: on-farm, commercial
- Type and volume of grain purchased from grain producers in a given month
- Volume of feed produced in a given period
Only active subscribers can read all of this article.
If you are a subscriber, please log into the website.
If you are not a subscriber, click here to subscribe to this edition of the STAT website and to learn more about becoming a subscriber.
