Agriculture committee  Thank you, Mr. Chair. Good morning. Bonjour. We want to again thank the committee for giving us the opportunity to meet with you today. Allow me to make a couple of introductions. First of all, I'm Elwin Hermanson, the chief commissioner of the Canadian Grain Commission, and I've been in that position since 2008.

Agriculture committee  It's not required as a mandatory service, but it costs money. So if we can eliminate it, there will be a savings.

Agriculture committee  Not quite. Right now, if a farmer delivers grain to a Viterra inland facility, an elevator on the prairies, normally they would agree on the grade, because there's not a CGC inspector on location at an inward elevator. But if there's a disagreement and the farmer says he's not happy with the grade he's been given, the farmer has the right under the act, which right continues under the amended act, to call for what we call “subject to grade and dockage”.

Agriculture committee  It's pretty extensive. We have something at a terminal called a crosscut sampler. It goes across the belt that carries the grain to the vessel. It takes a continuous sample of grain from that belt and sends it directly to a CGC office where CGC inspectors collect that sample. After 2,000 tonnes are loaded on the vessel, we do a cut-off on that one and start the next one.

Agriculture committee  Absolutely, consistency is an important word.

Agriculture committee  Absolutely, there is no change.

Agriculture committee  Absolutely.

Agriculture committee  I'm suggesting that the insurance would be set up in such a way that the total liability would be based on the risk of failure, and if there is a failure, then 100% of that risk is covered.

Agriculture committee  There are actually a lot of inspectors, and they're competent inspectors in all components of the private sector right now, as well as companies that operate solely to perform inspections. So all of the major grain companies have their own inspectors. They cooperate and they consult with us, and they will be able to continue to do that if this bill is passed.

Agriculture committee  What I'm saying, Mr. Allen, is that those inspectors are already there within the companies. There is not going to be a change because they are already inspecting on behalf of the company. The companies have to have those inspectors. I was also saying that at the current time there are companies that are already doing inward inspections and other inspections.

Agriculture committee  The way an insurance program would work is that the chance of the licensee not paying would be evaluated. If it was felt that this was a properly operated business and it was viable, they would get insurance and the full benefits to producers would be covered if there was a failure—

Agriculture committee  I'm going to get to that. It's very costly. The administrative burden on the licensee is huge. We have to do audits, and we have to go through tons of paper. You are absolutely correct. We're supposed to have 100%. Normally we do. We checked, and in the last 12 failures over about the last eight years, we had full payment from two-thirds of them.

Agriculture committee  On a limited budget, we consulted by this letter of engagement and got a good response.

Agriculture committee  Certainly, Mr. Hoback. The current system is what I call a silo system. Every licensee has to make security available in the name of the Canadian Grain Commission. It's not money we have on deposit, but money that is set aside through bonds or other financial instruments for the Canadian Grain Commission should they be unable to pay producers.

Agriculture committee  No. Farmers will save the $20 million. The only way there would be increased costs to the industry would be if they decided to do a lot of inward inspection. We don't anticipate there will be a lot. If companies start using other facilities and they want to pay the fee...they're telling us they don't want to do a lot of inward inspection on an optional basis, but if they do, that cost would come back into the system.