RE: SaskBarley Submission to the Canada Grain Act Review

Agriculture and Agri-Food Canada
1341 Baseline Road
Ottawa, ON K1A 0C5
Submitted via: aafc.cgareview.aac@canada.ca
 
April 30, 2021
RE: SaskBarley Submission to the Canada Grain Act Review
 
To whom it may concern,
 
The Saskatchewan Barley Development Commission (SaskBarley) welcomes the opportunity to provide feedback to Agriculture and Agri-Food Canada (AAFC) on the review of the Canada  Grain Act (CGA) and operations of the Canadian Grain Commission (CGC).
 
A comprehensive review of the CGA has not been completed in 50 years and the economic landscape for Canada and the agricultural sector has significantly changed. There is a continuing need for regulatory oversight in areas such as weights and grading, payment protection, dispute resolution and licensing requirements. These areas need to be updated to reflect the current state of the industry and the future needs of the producers.
 
We recognize that several submissions will be received for changes to the CGA, but we request that AAFC complete a thorough analysis with a comprehensive benefit-cost analysis for producers prior to any recommendations being implemented.
 
While there are many areas of considerable importance in this review, including those mentioned above, SaskBarley has highlighted areas of the greatest urgency to the barley producers we represent.
 
 
The mandate of the CGC
 
As legislated in the CGA, the CGC’s mandate is…
 
“… in the interests of the grain producers, establish and maintain standards of quality for Canadian grain and regulate grain handling in Canada, to ensure a dependable commodity for domestic and export markets.”
 
SaskBarley firmly believes that this mandate must remain in service of “…the interests of the grain producers.” Without adherence to this core tenet, any subsequent changes to the CGA or shift in the operations scope of the CGC will
not be in the best interest of the farmers that they serve.
 
In fact, the adherence to this mandate must direct this review process and its outcomes – rather than feature as an element of it.

The reasons for this are as simple as they are existential. Farmers are uniquely affected by the imbalance of market power within the industry they operate in. This lack of countervailing power leaves no options other than government regulation to protect them from the market power of input and marketing firms.

Saskatchewan’s barley farmers are price-takers, and ultimately bear the cost of user-fees and licensing in the prices that they receive for their grain. They are at the behest of these outside forces and, therefore, require a regulatory mechanism that acts and preserves their interests in the face of those who seek influence.
Recommendation: Preserve the intent of the CGA and the CGC’s mandate to act in the interest of grain producers. All recommendations considered during this review, should be evaluated under this framework.

 

Market transparency

This current review represents a once-in-a-generation opportunity for Canada’s agriculture sector, especially our barley farmers. Barley does not have a price discovery mechanism available to producers. With recent market disruptions, changes in trade patterns, and lagging information on supply and demand dispositions, Canadian farmers need critical marketing information to maximize returns and improve profitability. A comprehensive data reporting program is essential to producers and would benefit the Canadian economy.
At our January 2021 Annual General Meeting, a resolution by our farmer members was brought forward to…

“… advocate for a meaningful price discovery mechanism that allows all parties to have access to information through the establishment of a national sales reporting program – where data is reported daily and compiled weekly.”

SaskBarley has advocated for this before, including as a key recommendation in the Saskatchewan Producer Coalition’s submission to the Canada Transportation Act review in 2015. However, this past crop year has been one of the most dramatic demonstrations as to why timely sales reporting is needed.

The recent report commissioned by the Saskatchewan Wheat Development Commission by Mercantile Consulting Venture Ltd. Entitled “Data Requirements for a Transparent Market” provides a comprehensive overview of data gaps in grain markets and the solutions required to put producers on an equal footing when planning their cropping decisions and marketing their production.

The lack of information in Canada has prevented our producers and market analysts from accessing the same level of information needed to make informed marketing decisions as other players in the industry. The competitive disadvantage that results from this information asymmetry is harmful for our farmers and represents a missed opportunity to put Canadian farmers on a level playing field.
Recommendation: In collaboration with existing reporting, we recommend CGC implement a data reporting program to reduce information asymmetry currently experienced by producers to assist in their marketing decisions.

A sustainable and predictable funding model

The central challenge for the CGC’s operations model is to turn it into a more responsive framework for the needs of the modern agricultural industry. For SaskBarley, these changes must be initiated through the CGA review and result in an actionable strategy that:

(a) Reduces the reliance on user-fees to cover operational costs
(b) Secures predictable and sustainable funding that can support longer-term initiatives

These amendments for CGC’s funding are critical to achieve the next step towards modernization.

SaskBarley remains concerned about an overreliance on user-fees by the CGC to cover operational costs. The user-fee model has obfuscated the need for a predictable and sustainable funding from the federal government that can support CGC services and programs that serve a clear public good. These include grains research, market development, and maintaining quality assurance programs that support Canada’s competitiveness in international markets.

A key aspect of these CGC services that remains significant for barley producers is the Grain Research Laboratory. The laboratory provides a vital service when it comes to research related to crops, including the assessment of grain harvest quality and analysis of how grading factors affect end-use properties. They also evaluate new varieties as part of the variety registration process, and develop methods used to assess the quality and safety of Canadian grain. These services are a vital element of the Canadian barley value chain and require a stable source of funding to remain relevant and responsive to the needs of farmers.

As it stands, the federal funding level of between $5-6 million annually represents about nine per cent of the CGC operational budget. By comparison, 33 per cent of the US Federal Grain Inspection Services budget is funded by government. This represents an area where the CGC’s funding has not kept up with the needs of the industry – let alone the rate of inflation.

The reality is that our nation’s grain exports have grown considerably, whereas the funding for CGC’s services remains at odds with the federal government’s goal of reaching $75 billion in agricultural exports by 2025.

Recommendation: Funding for the CGC must be sustainable and predictable with a recognition of the ‘public good’ that many of its services provide.

Next steps

In closing, we appreciate the opportunity to contribute to this review and echo the sentiment that this review and actions resulting from it must never compromise in prioritizing the interests of Canada’s grain producers.

Please get in touch with our Executive Director, Jill McDonald, at jmcdonald@saskbarleycommission.com or at 306-370-7237 should you require further clarification or additional information.

Regards,
Matt Enns – Chair, SaskBarley

 

View or download the PDF of this letter here.