It's a pleasure to be here this evening to present to the committee.
I'm Humphrey Banack. I'm the vice-president of the Canadian Federation of Agriculture. We farm 4,500 acres of grains and oilseeds in central Alberta. We market between 4,000 and 5,000 tonnes of grain per year though CGC-licensed facilities and others, so these changes are very important to our operation. The costs of those fees are also very important to us. They're a huge part of what we need, and producer security is a part of that.
Thank you for the opportunity this evening to appear before the standing committee to discuss the changes to the Canada Grain Act.
Founded in 1935, the Canadian Federation of Agriculture is Canada's largest farm organization. Our members include provincial general farm organizations as well as national and interprovincial commodity organizations from every province. We represent over 200,000 farmers and farm families in Canada.
As you are aware, the Canada Grain Act and the Canadian Grain Commission are the cornerstone of the grain quality control system in our country. For over 100 years, it has served as the national entity overseeing the grain industry and protecting producers' interests within the system. This regulatory function has provided Canadian producers the framework to continually produce and supply high-quality, safe food to Canadians and our international customers. This should remain the focus of the changes today, from now until August 1, 2013, as the CGC evolves into its new role, and any future changes to governance and amendments to the act.
The CFA generally supports the changes to the Canada Grain Act and the role of the CGC, but continues to have reservations about the changes to the producer payment security program. In regard to repealing CGC inward inspection and weighing, the changes will better reflect the structure of the industry and modernize the current system. The option to appoint a third-party inspector is important to ensure an open and transparent system and to protect the shipper. The CFA supports the use of third-party service providers that are certified and accredited by the CGC. A monitoring system should be put in place to ensure results are consistent and uniform among the different service providers available. We also appreciate that the CGC will remain involved in the collection of inward inspection and weighing data, as access to this information is important to a well-functioning industry.
The elimination of the Grain Appeal Tribunal and its replacement with a one-time binding ruling by the chief inspector for Canada streamlines the appeal process and still provides the necessary course for compliance to appeal in an inward inspection decision at terminal position. In a case where a producer and operator don't agree, producers are still able to request a grading and dockage decision from the chief grain inspector. Paragraph 61(b) of the Canada Grain Act and section 36 of the Canada grain regulations will continue to provide legislative authority and to outline the procedure. There are no changes proposed to this important producer protection.
The current producer payment security program provides an insurance that allows farmers to utilize the full range of grain marketing tools that are available to them. The program ensures that farmers are financially protected and paid for the grain they deliver. We have confidence in the system, and the CGC regularly makes available a list of licensed companies and their relevant details. This assurance must continue.
The proposed amendments to subsection 45.1(1) of the Canada Grain Act replaces the current bonding system with an insurance-based third-party program. While the insurance-based program has merit, additional details are required prior to CFA’s fully endorsing the change and the new program. Details on the actual cost to run the program, cost savings to producers, percentage of grain covered, premium calculations, the structure of the insurance, or how the program will be operating have not been forthcoming. The concept and details of the program are first required prior to determining whether the industry will benefit under the new program.
To be successful, the CFA urges the CGC to work with provincial farm groups to ensure that the program details and implementation needs meet the needs of producers. These details will determine whether the insurance program can provide the cost savings to the industry and be a viable replacement to the current program.
We would like to stress that security coverage must be a mandatory prerequisite for a licence, no matter the size or structure of the licensee. No company should be exempted by regulation or by order of the commission. The CGC should continue to manage the program, including designating third-party security providers, auditing companies to ensure adequate coverage levels, and keeping producers informed of that coverage.
We would also like to comment on licences on feedlots, which are not in the scope of the proposed changes and are intended for further discussion. The feed industry has changed in recent years. Industry consolidation and economies of scale have led to larger lots and stock levels.
While the design and application is complex, developing a second class of licences or extending the security program to larger feedlots would be beneficial to farmers.
Recent experiences with Puratone in Manitoba filing for bankruptcy and Big Sky Farms in Saskatchewan entering into receivership have had negative ripple effects on producers and the grain industry.
The Grain Commission has indicated their desire to implement the changes being discussed this evening in conjunction with an increase in user fees. A 30-day public consultation on an initial user fee increase for 2013-14 and a subsequent 1.6% increase per fiscal year from 2013-14 to 2017-18 on all CGC services was launched November 1, 2012.
As previously indicated to the CGC, the CFA strongly believes the services of the commission are integral to ensuring high-quality, safe grain for Canadian and international consumers and as such should be considered a public good. Producers should not be saddled with these extra costs, and the CFA opposes the increases. While considering and enacting these changes, the government should ensure that the CGC is adequately funded to provide its various services.
In conclusion, the move to privatize inward inspection and weighing and to more wholly reform the CGC’s role in the system is a significant departure from the current system. It is important that the government work with producers and their producer groups to ensure that the implications are fully understood and that the producers benefit from the changes.
Thank you very much for this opportunity this evening.