Review of the Canada Grain Act and the Canadian Grain Commission by fdjerue7eeu

VIEWS: 334 PAGES: 124

									        Review of the Canada Grain Act and the
Canadian Grain Commission in response to the Legislated
         Requirement in the Canada Grain Act

          Solicitation number 01C15-05AJ01/A




                        COMPAS Inc.
           Public Opinion and Customer Research
                      August 15, 2006
Review of the Canada Grain Act and the Canadian Grain Commission:
Report to Agriculture and Agri-Food Canada, Number 01C15-05AJ01/A




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Review of the Canada Grain Act and the Canadian Grain Commission:
Report to Agriculture and Agri-Food Canada, Number 01C15-05AJ01/A




                                          Contents

Executive Summary .....................................................................................4
1.0. Introduction..........................................................................................18
2.0. Setting, Challenges, and Opportunities ...............................................23
3.0. Mandate and Stakeholder Interests.....................................................31
4.0. Governance: Board and Executive Structure ......................................39
5.0. Funding, Public Goods, and Private Goods.........................................43
6.0. Quality and Quantity Assurance ..........................................................47
7.0. Weighing and Inspection Services ......................................................54
8.0. Liability, Misrepresentation, and Certificate Final ................................62
9.0. Contractual Security ............................................................................67
10.0. Licensing ...........................................................................................72
11.0. Dispute Resolution ............................................................................77
12.0. Research Services ............................................................................82
Appendix I: Itemized Summary of Recommendations................................87
Appendix II: Stakeholder Responses to the COMPAS Survey .................105
Appendix III: Partial List of Invited Stakeholders and Experts ..................114




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Executive Summary

   Background
           COMPAS Research was selected to lead the independent review of the
           Canadian Grain Commission (CGC) and the Canada Grain Act (CGA).1
           Conrad Winn Ph.D., president of the public opinion and customer
           research firm, led the team, which was assisted by Saskatoon
           agricultural consultant Tom Halpenny (www.triticumconsulting.ca).

           Selected in February, COMPAS sought counsel from almost 500
           stakeholders and experts, elicited written feedback from almost 100, had
           direct talks with about 60, issued a discussion paper in May, and held
           public fora in eight cities in June.

           Canada is a grain powerhouse and leading exporter of many products.
           Our grain system has been valuable to foreign food brands as varied as
           flour that is guaranteed as “Manitoba” or “Super Manitoba” in such
           countries as Italy and Greece, pasta marketed in Poland as 100%
           Canadian durum, sundry brands of mustard based on Canadian
           ingredients, and Tsingtao beer, guaranteed to Chinese consumers as
           made from at least 50% Canadian barley. Our achievements have been
           made possible by: unique prairie land and climate; industrious,
           trustworthy farmers; astute elevator and grain companies; modern,
           effective shippers; brilliant scientists and breeders; excellent seed
           companies; and high quality public and industry officials and the systems
           they oversaw.



       1
          The selection was made through a competition carried out by Public Works and
   Government Services Canada on behalf of Agriculture and Agri-Food Canada as mandated by
   Bill C-40 from the 28th Parliament.
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    The Canadian Grain Commission is a regulator and service provider. As
    a service provider, it supplies inspection and other services. As a
    regulator, it licenses most of the private sector players and specifies
    grain and grain player standards.

    As a regulator, the CGC has a mission that is made difficult by the
    increasing complexity of grains thanks to new varieties and uses for
    food, feed and fuel. For the Canadian Grain Commission, the problem of
    increased complexity is compounded by increased uncertainty.

    A few of the big uncertainties relate to balancing conflicting interests. At
    various times, the CGC may have a quandary about how to balance
•   its attention among the many currently and potentially regulated grains,
•   the somewhat different interests of those who produce our historic
    exports, the Canadian Wheat Board’s wheat and barley, vis-à-vis those
    who produce potentially significant non-Board grains and organic wheat,
•   the interests of those whose livelihood depends on Canada’s reputation
    for human-use grain exports vs. those who would satisfy the increasing
    demand for feed and fuel use grain,
•   Canada’s traditional protection of quality through its grading system vs.
    increasing overseas demand for product based on specific traits that
    may not correspond well to our grades,
•   farmers’ needs for security against grain handlers’ bankruptcy vs. the
    grain handlers’ needs to limit bonding and other security costs in the
    face of global downward pressure on prices,
•   husbanding the CGC’s meager budget for inspection and other services
    while minimizing the financial impact of inspection delays on handlers
    (terminals) and shippers, whose margins are thin,
•   serving the needs of other agencies that impact on grain, for example,
    by carrying out services at port for the Canadian Food Inspection
    Agency, vs. persuading other agencies to help service the CGC’s
    needs, and
•   impacting on the twin overseas demands for ever pricier health and
    safety standards and ever lower prices.

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         The grain sector is at a cross-roads. The single most important prospect,
         a once-in-a-lifetime opportunity, involves biofuels. Like animal feed grain,
         the ideal ethanol grain is low protein, high carbohydrate—the opposite of
         what is most desirable for human consumption.

         Ethanol represents a present and future opportunity for the U.S. corn
         belt. But it is not entirely clear to what extent Canadian farming, suited to
         its own kinds of crops, can benefit. Nor is it clear how our ability to profit
         from ethanol demand will be affected by Canada’s system of grading and
         quality assurance for grains. Some fuel-grade varieties of wheat could be
         visually confused with high quality varieties and could damage our
         reputation if accidentally co-mingled in transit. Canada would be able to
         accommodate safely the production and export of such new varieties for
         non-food use if we had either swift, economical DNA technology to
         distinguish the visually indistinguishable at port or a bullet-proof system
         for tracking the identity of grain in transit from origin to destination. But
         we have neither.

         An impediment to Canada’s ability to respond successfully to the
         preceding challenges is a heritage of mistrust among the agricultural
         players and stakeholders. One confidant described Canada’s grain
         industry as a kind of Hobbesian “a war of all against all.”2 There is
         certainly mistrust between farmers and grain companies that has historic
         roots. In the absence of survey data, it is a challenge to estimate to what
         extent the mistrustful voices heard at our forums, especially in
         Saskatchewan, reflect the sentiment of grain farmers as a whole.


Reasoning and Recommendations
         Our review offers nearly one hundred recommendations along with their
         underlying reasoning. Major changes in the global and domestic setting

     2
      Private conversation with a longtime observer of the grain sectors in Canada and the
United States, June, 2006. The phrase itself is from the description (1651) by British political
philosopher Thomas Hobbes of human existence in the absence of government and civil
society.
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        of the grain sector do require major changes in the Canadian Grain
        Commission. But a sector as apprehensive, mistrustful, and
        disharmonious as this one may have difficulty embracing change.
        Respectful of the sector’s apprehensiveness, we place as much
        emphasis as possible on the reasoning that underlies our
        recommendations as the recommendations themselves.

        Our recommendations and reasoning will be guided by longstanding
        Government of Canada Regulatory Policy, including but not limited to
        these provisions: “the limited resources available to government are
        used where they do the most good,” ”information and administrative
        requirements are limited to what is absolutely necessary and that they
        impose the least possible cost,” “ the special circumstances of small
        businesses are addressed,” and “parties proposing equivalent means to
        conform with regulatory requirements are given positive consideration.”3

        We urge readers to explore the reasoning in tandem with the
        recommendations, located near the end of each section, just before a
        concise review of impacts on stakeholders. For ease of review, a partial
        listing in the section that follows and a lengthy itemization in Appendix I.


A Partial Selection of Recommendations by Section of the
Report

    2.0 Setting, Challenges, and Opportunities
        As container use grows, the CGC need to launch a special accreditation
        process, authorizing independent service providers to inspect and certify
        product to a declared standard or set of buyer specifications.




    3
      Government of Canada Regulatory Policy - http://www.pco-bcp.gc.ca/raoics-
srdc/default.asp?Language=E&Page=Publications&subGovernmentofCanadaRegula.
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3.0 Mandate and Stakeholder Interests
  We recommend that paragraph 13 of the Act be modified to read as
  follows:
         Subject to this Act and any directions to the Commission issued
         from time to time under this Act by the Governor in Council or the
         Minister, the Commission shall:
         1) establish and maintain the standards of quality for Canadian
            grain and regulate grain handling in Canada, to ensure a
            dependable commodity for domestic and export markets, and
         2) in the interests of producers, provide the right of
            delivery access by grain producers to primary or
            terminal elevators, provide the right to third party
            grade and dockage verification, provide the right of a
            grain producer to access a producer car for shipment
            of grain and to have third party weighing and
            inspection of that unload, provide the right of grain
            producers that their commercial grain transactions
            with licensees under this Act be secure.
  The last provision in the list is intended to afford the CGC freedom to
  consult with stakeholders to select the most appropriate form of security
  protection for any given transaction at any given time.

  We recommend that the Canadian Grain Commission require all
  contracts between farmers and licensees to remind farmers of their rights
  under the Act in a form prescribed by the CGC, of which we provide a
  sample in section 10.

  We recommend that the CGC invite the Canada Grains Council or
  another such body to recommend draft wording for a CGC requirement
  in all sales contracts of a simple, clear statement in the form of unit
  pricing (e.g. price offered or paid per tonne/bushel with all costs factored
  in. We recommend this because farmers told us that they were confused
  by the allegedly purposeful complexity of grain company valuations.

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  We recommend the CGC approach Industry Canada about more
  frequent elevator scale monitoring for the next few years until survey
  evidence confirms that farmers are confident in the accuracy of such
  scales.

  As detailed in the report, we recommend that the Act strengthen
  accountability and transparency provisions relating to staff beyond the
  general constraints on public servants as a whole so as to reinforce the
  Canadian Grain Commission’s credibility with producers and other
  stakeholders.

  We recommend throughout our report the creation of stakeholder-driven,
  CGC-funded roundtables on the model of the consultation program of the
  Canadian Food Inspection Agency (CFIA) to enhance the ability of
  stakeholders to work well with each other and the ability of the CGC to
  work well with its stakeholders. We recommend this because we see the
  Canadian Grain Commission’s consultation efforts as inadequate and
  largely so for budgetary reasons.

4.0 Governance: Board and Executive Structure
  We recommend the creation of a single President/CEO/Chief
  Commissioner, supported by Vice-Presidents and other senior
  executives, for reasons explored at length in the body of the report.

  The Canadian Grain Commission has six “Assistant Commissioners.”
  The continuance of these ambiguously defined positions is in our
  estimation incompatible with principles of modern government. For
  reasons of clarity, we recommend creation in their place of an Office of
  Grain Farmer Advocacy with a mandate to ensure that farmers
  understand their rights under the Act and to advocate for them in
  disputes with handlers, the CGC, or other stakeholders. The future of this
  Office and its budget should be evaluated every three years on the basis
  of evidence for the need of its services as shown in annual surveys of
  farmer behaviour, knowledge, and perceptions undertaken by Agriculture
  and Agri-Food Canada (AAFC). As an alternative to an Office of Grain
  Farmer Advocacy, we would recommend that AAFC hold a competition,
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  inviting proposals from non-governmental organizations, to supply such
  services.

5.0 Funding, Public Goods, and Private Goods
  We recommend that the federal government defray all basic
  infrastructure costs of the CGC, assigning cost recovery to the
  incremental or marginal costs associated with individual services
  necessary for commercial transaction. We define infrastructure broadly
  to include the costs of physical establishment and ongoing management,
  as discussed in the report.

  In the case of inspection, we recommend that the overtime portion of
  salary costs (i.e. the portion exceeding normal non-overtime costs) be
  absorbed by the CGC through federal government subsidies as if this
  were the equivalent of basic infrastructure cost.

6.0 Quality and Quantity Assurance
  We recommend a slight reduction in the number of Canadian Grain
  Commission appointees on the Standards Committee insofar, as a
  regulator with staff and influence, its impact on its Committees is
  necessarily larger than its numerical representation anyhow.

  We recommend that the impetus that prompted the Canadian Grain
  Commission’s introduction of a new class of wheat extend to future CGC
  efforts to balance the interests of those who would priorize protection of
  export brands with the interests of those who favour new varieties for
  feed and feedstock.

  We recommend that the CGC consult annually with stakeholders about
  criteria for benchmarking and assessing its effectiveness in grading and
  monitoring risks to Canadian grain quality, and that the CGC make
  annual reports to stakeholders on its effectiveness on the basis of these
  criteria.


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  We recommend that the CGC report to stakeholders each year on its
  past performance, or that of its contractors if inspection is contracted out,
  in accommodating purchases by specification and requests for
  customized services, and its plans for the future.

  We recommend that the Canadian Grain Commission collaborate with
  current or potential independent providers to provide such customized
  services, where necessary under CGC license to the extent that
  customized services can be outsourced.

  The Canadian Grain Commission should continue to work with
  stakeholders in the oilseed sector to develop and implement a grading
  system with factors for oil content that meet stakeholders’ needs.

  Our recommendation for reducing irritants is for the Canadian Grain
  Commission to receive adequate funding for a sustained program of
  consultation on the model of the CFIA. In the spirit of the CFIA, the CGC
  would subsidize consultation efforts. Like the CFIA, the CGC would
  delegate to stakeholders much of the responsibility for organizing such
  consultations in order to give them the confidence that consultation was
  genuine. CGC-funded and stakeholder-led consultations will greatly
  improve the two-way flow of information, improve CGC’s
  responsiveness, and enhance stakeholders’ understanding of some of
  the unavoidable limitations on the ability of the Canadian Grain
  Commission to meet their needs as fully as they might wish.

  We recommend that the CGC approach CFIA and Health Canada for the
  purpose of discussing the merits of jointly sponsoring and funding
  stakeholder-led roundtables on the issue of food safety.

7.0 Weighing and Inspection Services
  We recommend that inward inspection become optional.

  We recommend that the Act require the Canadian Grain Commission to
  ensure that a capacity for carrying out inward inspection be maintained
  at public cost since both the availability of inward inspection and its
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  practice do benefit Canada as a whole by helping to sustain both
  producers and smaller handlers, who need such services for
  transactional purposes.

  We also recommend that samples of grain taken for grading be retained
  for a prescribed period of time for all grain receipts even in a setting of
  inward optionality because of the public benefits in terms of quality,
  safety, and potential traceability.

  We recommend that the price of such optional inward inspection services
  continue to be subsidized, particularly at port, because of the public
  benefits of an optional system.

  We recommend that the CGC use roundtable stakeholder consultation to
  identify the best administrative methods for provision of optional
  weighing and inspection services.

  We recommend continued mandatory outward inspection and weighing.
  Our view is that Canada’s reputation and the brand of our products
  require outward inspection.

  We recommend that CGC’s inspection services be contracted out under
  CGC license except for CGC’s retention of an essential capability to
  conduct appeals. Our report provides a detailed discussion of optimal
  processes for carrying out such changes so as to satisfy such diverse
  criteria as ensuring competition among providers and efficiency in the
  provision of service.

8.0 Liability, Misrepresentation, and Certificate Final
  We recommend that the Canada Grain Act be amended to hold the
  CGC, and the federal government as its underwriter, responsible for up
  to 33% of the harm incurred by a revision to the Certificate Final. We
  recommend that the Canadian Grain Commission be liable because in a
  modern democratic society government agencies must meet the same
  standards of responsibility as required of businesses and ordinary
  citizens. By assigning clear but limited liability on the CGC, the change
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    would assert an onus on the CGC, terminal operators, grain handlers,
    marketers and farmers to help ensure that appropriate systems are in
    place to mitigate reasonable risks prior to the final stage of vessel
    transfer to a customer.

    The magnitude of the harm from a revision to the Certificate Final would
    be determined by an Arbitrator appointed by the Minister, as detailed in
    our report.

    We recommend that the Act be modified to allow the CGC to impose
    fines and that regulations be modified to permit the Canadian Grain
    Commission to assign penalties for misrepresentation of grain and for
    failures to observe other regulations, as detailed in our report.

    Prior to preparing regulations, we recommend that the Canadian Grain
    Commission consult stakeholders for the purpose of identifying factors
    that would be taken into consideration when deciding the magnitude of a
    fine.

9.0 Security
    We recommend that the CGC:
•   consult with accounting and risk management experts to explore the
    costs and the benefits of operating a clearinghouse mechanism to
    reduce efficiently the transactional risk to farmers, and subsequently
•   launch a stakeholder roundtable on the CFIA model to involve all
    stakeholders in developing solutions that provide optimal security at
    optimal prices and with maximal clarity to producers about the true
    assurance being provided.
    We recommend deletion in the Act of Section 49.1(2), which eliminates
    liability to the CGC if a licensee fails to fulfill payment to a producer. In
    keeping with the accountability and transparency principles discussed in
    section 2, we do not believe that any regulatory body ought to receive
    legislated immunity from court action in the event that it fails to perform
    its heavily advertised functions.

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  We recommend that the surveys of farmers previously suggested in this
  study measure the actual demand for transactional security once farmers
  understand the system costs of compulsory security.

  In the Venture Seeds and Naber’s bankruptcy cases, we believe very
  strongly that the Canadian Grain Commission should fully compensate
  the affected farmers, pay their legal costs, pay interest for the affected
  period, and pay a penalty for causing needless distress. Our view is that
  government agencies have no less obligation than businesses or
  ordinary citizens to carry out their responsibilities to customers adversely
  affected by their failures. The duty of the Canadian Grain Commission
  and hence the government of Canada to fulfill obligations implied by
  CGC promises is a matter that is separate from the obligation of the
  CGC to provide security.

10.0 Licensing
  We recommend that the Canadian Grain Commission consult with the
  CFIA and other agencies as well as stakeholders as to whether facilities
  (e.g. producer car loading facilities, farmer-owned processing) that do
  not conduct transactions for the purchase of grain or incur liabilities for
  unpaid grain should be exempted or placed into a separate class with
  few, if any, requirements other than a license. Licensing would have
  value, in our view, if CFIA and/or other agencies saw CGC licensing as a
  valuable, supplementary tool for influencing the health and safety
  practices of such facilities or collecting statistical data.

  The CGC should ensure that there is clear understanding of grain
  company fees and charges by supporting the extension activities of the
  recommended Office of Grain Farmer Advocacy given that farmers have
  indicated frustration at certain fees charged by grain companies, and the
  lack of regulation. The CGC should be able to fine or penalize licensees
  for overcharging or not disclosing all fees to be charged to a farmer prior
  to settlement.



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  We recommend that the CGC commit itself to introducing greater
  uniformity, transparency, and clarity to its patchwork quilt of licensing
  regulations, as discussed in our report.

  We recommend modifying the rules to allow farmers to request CGC
  inspection and dockage up to 24 hours after delivery of the grain to the
  elevator.

  We recommend that every grain contract from every class of licensee
  contain the following words in the footer of the first and every page in a
  font no smaller than the average font in the contract: “Under the law,
  every grain producer is entitled to receive the opinion of the Canadian
  Grain Commission (800 number) on the grading of this grain and on
  dockage, and is entitled to contact either the Commission or the Office of
  Grain Farmer Advocacy (800 number) for their advice.”

11.0 Dispute Resolution
  We recommend that the Canada Grain Act be modified to allow
  stakeholders to use arbitration services as set out in the arbitration
  process outlined in the Canada Transportation Act and mediation
  services akin to those that support the Farm Debt Mediation Act. In
  keeping with this recommendation, we further recommend eliminating
  Section 92, authorizing Commissioners to act as arbitrators.

  Arbitration and mediation would be available for disputes relating to the
  Canadian Grain Commission’s policy applications and for any dispute
  involving stakeholders in the grain sector in Canada.

  The Canada Grain Act should provide for both mediation and arbitration,
  albeit outside and independent of the Canadian Grain Commission. Both
  processes would be administered by the AAFC, as detailed in our report.

  The scope of disputes to be presented for mediation or arbitration should
  be limited to commercial activities between Canadian parties. The CGC
  Grain Appeals Tribunal would continue to address grading disputes.

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  We recommend that the Canadian Grain Commission be required to
  participate in any mediation or arbitration that seeks the Canadian Grain
  Commission’s engagement.

  In the event that a grain producer requests mediation or arbitration with a
  licensee, we recommend that the licensee be required to participate
  under CGC regulations.

12.0 Research Services
  We recommend that the federal government embark on a long-term (7-
  10 year) plan to increase grain research spending four-fold. A long-term
  plan is essential to enable the GRL Grain Research Lab to attract strong
  replacement researchers in a successful succession plan. A key purpose
  is to develop fast, economical technologies for testing.

  We also recommend that AAFC establish a special fund for the
  development of such technologies with such resources available to
  AAFC researchers and on a competitive basis to private sector and
  university researchers in order not to put all the federal government’s
  eggs in the same metaphorical basket.

  We recommend that both the CGC and AAFC make annual reports to
  stakeholders on the effectiveness of their research efforts and their
  forthcoming research plans.

  The Canadian Grain Commission should create a roundtable of federal
  and provincial research funding agencies and post-secondary
  departments along with university Agricultural units to maintain a
  watching brief on grain research during these key years.

  The GRL should maintain its reporting role through the CGC, and its
  funding be listed as a separate appropriation through the CGC.

  The CGC and GRL should be encouraged to co-locate in the mooted
  Centre of Excellence.

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  The GRL should collaborate with stakeholders to encourage university
  and private sector research in support of stakeholders’ needs.

  To protect the perceived impartiality of the Canadian Grain Commission,
  the GRL should refrain from accepting research contracts from licencees
  except in exceptional circumstances when university and private sector
  suppliers are unavailable.




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1.0. Introduction

   1.1. The Study—Its Subject and Purpose
       Authorized by the Canada Grain Act (CGA), the Canadian Grain
   Commission (CGC) reports directly to the federal Minister of Agriculture and
   Agri-Food. The CGC describes its organizational vision as being “a leader in
   delivering excellence and innovation in grain quality and quantity assurance,
   research, and producer protection”.4 Specific functions of the CGC are to:
                 Establish grain grades and standards;
                 Regulate the handling, transportation and storage of
                 grain in Canada;
                 Provide producer protection services, and
                 Undertake and sponsor research in grain and grain
                 products.
        The value chain for the Canadian grain sector includes scientists, breeders,
   seed companies, tens of thousands of producers, Canada’s own domestic grain
   and oilseed and special crops processing industry, transportation companies,
   millers, and export markets. The main grain industry players own inland
   elevators and terminals at port, and are represented by associations such as
   the Western Grain Elevator Association and the Quebec Grain Dealers
   Association (Association des Négociants en Céréales du Québec). Producers
   are represented by such diverse organizations as the Canadian Wheat Board,
   the National Farmers’ Union, Pulse Canada, the Alberta Canola Producers
   Association, Keystone Agricultural Producers in Manitoba, and the Ontario
   White Bean Producers.
        Buyers are represented by such varied groups as the Canadian National
   Millers Association and the Manitoba Pork Council. Some organizations are a


       4
           http://www.grainscanada.gc.ca/Whoare/who-e.htm
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blend of producers and industry players, e.g. the Canadian Organic
Association.
     Terminals on the coasts are necessarily linked to transport systems. A
consortium-owned terminal at Prince Rupert is served by CN Rail. Eastbound
export shipments are made possible by a network of terminals at Thunder Bay,
which discharge primarily to laker vessels that carry the cargo across the Great
Lakes through the Welland canal and a series of locks to the St. Lawrence
Seaway. From Montreal to Baie Comeau along the St. Lawrence, a number of
transfer elevators deliver to salties or ocean-going vessels to carry the cargo to
final destination. Much of the production from the eastern region reaches the
export pipeline or its final Canadian destination by truck.
     The Canadian Wheat Board (CWB) in Western Canada provides marketing
services for wheat and barley for export and for domestic human consumption.
In Ontario, the Ontario Wheat Producers Marketing Board, the Ontario Bean
Producers Marketing Board and the Seed Corn Growers of Ontario offer
collective marketing services for those products for which they are responsible.
The Canadian special crops industry is represented by the Canadian Special
Crops Association while legume crops are represented by Pulse Canada, made
up of provincial administering bodies.
     Research for the sector is undertaken at the CGC’s Grain Research
Laboratory (GRL), AAFC, the Canadian Food Inspection Agency, selected
universities, and certain private sector organizations. The CGC provides
research for grain and grain products through the Grain Research Lab. The
Canadian Grain Commision’s Lab undertakes grain quality, phytosanitary and
mycology research for industry players and for the general benefit of the
industry. With its lab’s assistance, the CGC does a post-harvest survey and
evaluates the quality of the samples to ensure the predictability of the grade
standards that are set for the year. The GRL ensures that shipments of
Canadian grain meet high grain safety guidelines.
     Independent of the CGC but co-located, the Canadian International Grains
Institute (CIGI) provides market development support and international
education with respect to the Canadian grain system, the quality of Canadian
grain, and how to use Canadian products for further processing or feed. The
Canadian Malting Barley Technical Centre (CMBTC) provides a similar function
focused on malting barley and brewing technical support. The professional and
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technological resources of the CGC’s Grain Research Lab, the CMBTC and
CIGI help create an enviable team.
     On the subject of grain standards, the CGC plays a role by recommending
the primary (i.e. domestic) and export standards for grades for Canadian grains
and oilseeds. The Canadian Grain Commission participates in an industry-
based process to register varieties for the recognized grains in Canada. The
Prairie Grain Development Committee in the CWB-designated area and the
Eastern Expert Committee on Cereals and Oilseeds recommend varieties to the
Variety Registration Office of the Canadian Food Inspection Agency (CFIA).
     On the subject of handlers, the CGC is responsible for licensing and
security requirements for all primary, terminal, and process elevators and grain
dealers in the region west of and including Thunder Bay. East of this port city on
Lake Superior, the Canadian Grain Commission regulates licensing and
security for transfer elevators and grain dealers involved in western grain. For
other handlers in Ontario and Quebec, regulation is carried out by the provincial
governments.
     A significant portion of each year's crop in central Canada is sold directly to
domestic processors or trucked to the United States. Grain farmers in Ontario
and Quebec tend to be closer to their customers in terms of geography and
business relationships. Greater proximity fosters a more intimate relationship
between suppliers and buyers, hence more individual accountability for quality
and quantity control and a less pressing need for a strong CGC role.
     The Canadian Grain Commission provides some certainty and clarity with
respect to the processes for the receiving of grain into a primary, process,
transfer, or terminal elevator. Farmers receive various forms of protection
including provision for dispute settlement in the event of grade conflicts
between grain seller and buyer. The CGA requires any person who operates a
primary, process, terminal or transfer elevator and acts as a grain dealer to be
licensed by the CGC.
        The CGC certifies the quality and quantity of shipments of grain for
export. This provides overseas markets with a high level of assurance of
Canada’s reliability as a supplier of grain, enhancing the appeal of our products.
Such documentation is referred to as the Certificate Final. This process has
provided benefit to Canadian exporters of grain in disputes with foreign

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purchasing bodies. For producers who wish to know their grade prior to delivery
to an elevator, the CGC will provide a fee for service grading of samples.
     The Canadian Grain Commission monitors grain imported into the licensed
elevator system. The CGC plays a role in discussions respecting the trans-
shipment of foreign grain through Canada, ensuring that the process does not
compromise Canadian grain quality.
     COMPAS was contracted by AAFC to review past analyses, hold forums,
consult stakeholders, and provide its own assessment of how the CGC and its
Act ought to be modernized. Our task is limited to the CGC and its regulatory
role and system. Our task does not extend to such matters as the future of the
Canadian Wheat Board or protecting the income and livelihoods of grain
farmers. Such concerns are entirely legitimate ones but fall outside the mandate
of this regulatory study.

1.2. The Team
     COMPAS is an independent, non-partisan, national public opinion and
customer research firm based in Toronto. The grain companies, farmer
organizations, seed companies, and inspection companies are not among our
past and present clients. Our major weakness as consultant on this project is
that we are not experts in the subject. Our major strength is equally evident—
we have no bias by dint of experience or economic interest, and we strive to
show respect to all stakeholders in the process.
     The team leader is Conrad Winn (Ph.D. Wharton School, University of
Pennsylvania). COMPAS President, he is author of many books and
professional articles outside agriculture and a professor at Carleton University.
     Our efforts on this project have been ably assisted by Tom Halpenny
(www.triticumconsulting.ca), a Saskatoon agricultural consultant with 20 years’
experience in the grain industry, working previously as a farmer and on the staff
of the Canadian Wheat Board.

1.3. The Organization of Individual Sections
    Each of the ensuing sections is organized into (a) the issue, (b)
recommendations and reasoning, and (c) impacts on the stakeholders. Impacts
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on stakeholders are elucidated in the form of a matrix on the model of the
ensuing table.

                   INTENSITY OF
STAKEHOLDERS       IMPACT            CHARACTER OF IMPACT
                   (HIGH/MED/LOW)
Producers-Food
Producers-
Feed/Fuels
Grain companies
Independent
inland terminals
Dealers and
brokers
Transport
Breeders and
Seed companies
AAFC
Ag researchers
and scientists
Other (incl.
governments,
taxpayers,
consultants




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2.0. Setting, Challenges, and Opportunities

   2.1. The Four Key Features of the Grain Setting—
        Memory, CWB, Transportation, and Turbulence
       An assessment of Canada’s grain system needs to take into consideration
   four key features of the system:
                Memory—How memory of conflict between grain
                companies and grain farmers on the prairies a century
                ago forms a legacy affecting collaborative decision-
                making today;
                Canadian Wheat Board—The role of the CWB as “single
                desk” or monopoly seller of wheat and barley, our main
                grain exports;
                Transportation—Prairie farmers’ distance from port,
                greater than the corresponding distances for their foreign
                competitors, and the rising costs for shipping grain; and
                Turbulence—The challenges posed by an unusual pace
                of change in global markets, including new (i) grains, (ii)
                uses for grain in feed and feedstock, (iii) low cost, foreign
                competitors, and (iv) health and safety demands,
                reviewed below in section 2.2.
        The historical roots of grain are in the 1901-1911 period. The Prairies
   experienced immense population growth with settlers flocking west to earn a
   living from agriculture. Wheat was the dominant grain, and Canada was
   becoming a significant global exporter.
        The first third of the 20th century on the Prairies involved a wide variety of
   ethnic tensions along with economic tension between grain producers and grain
   companies. Many of the ethno-social tensions lessened or dissolved with the
   passage of time. The persistence of some tension between farmers and

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companies is therefore noteworthy. A century ago, grain farmers felt victimized
by colluding buyers and railroads. Public concern about oligopolistic grain
buyers and railways led to a Royal Commission in 1899, the resulting Manitoba
Grain Act, the Grain Inspection Act in 1904, and the Canadian Grain
Commission under the Canada Grain Act in 1912.5 Memories of hard,
mistrustful times continue to affect attitudes towards grain companies and the
CGC today, particularly among farmers who attended our public forums in
Saskatoon, Regina, and Brandon.
     While the legacy of early 20th century conflict remains a feature of the grain
sector, another key feature of the sector is the Canadian Wheat Board (CWB)
as “single desk” or monopoly seller. Having just celebrated its 70th anniversary,
the CWB is the dominant player in foreign sales thanks to the importance for
exports of Board grains wheat and barley. Any change to the Canadian Grain
Commission and its regulatory system needs to consider the role of the CWB.
Admittedly, the latter’s importance may not be as great as it once was and
could be modified by both changes in federal agricultural policy and the CWB’s
own strategic objectives.
     Until the 1980’s the Canadian Wheat Board coordinated the delivery quota
for all grains, and there were about six major grains. Today’s crop is widely
diversified with 21 grains listed under the Canada Grain Act along with canary
seed and others that are not listed.
     While the legacy of mistrust and Canadian Wheat Board pre-eminence are
two key features of today’s setting, transportation is a third. Farmers have long
been concerned about the service and cost of railway transportation. The end of
the Western Grain Transportation Act in 1995 added to the stress by removing
subsidies. The end to subsidies coincided with and may have also contributed
to some key changes:
               The corporatization of farmer-owned Prairie Pools, which
               had provided producers with farmer co-op alternatives to
               the large grain company handlers,
               Increased concentration among grain companies, and


    5
      J. Blanchard, A History of the Canadian Grain Commission (Ottawa: Supply and
Services, 1987).
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              The emergence of new, efficient, high throughput, inland
              or primary elevators.
     The creation of the modern primary elevator was accompanied by a fall in
the number of primary or inland elevators6 and spur railway lines. Farmers
faced new direct costs for trucking and new indirect costs for road maintenance.
     Another consequence of the decline in the number of inland elevators was
a drop in storage capacity—down from 6.7 million tonnes in 1995 to 5.1 million
tonnes in 2005.7 To successfully process traditional volumes of grain with
reduced storage and segregation capacity has required greater coordination
among all the services necessary for terminals to function effectively. The
system has managed to achieve higher levels of coordination and
synchronization. But improved coordination alone would seem insufficient to
satisfy the emerging increase in world customer demand for specialized and
distinctive products, whose trans-shipment requires continuous segregation.
The various changes to our transportation and elevator systems have been
taking place during a period when demand for Canada’s grain exports has not
been relentless.8

2.2. Opportunities in Grain—Feed, Feedstock, and Quality
     Grains for Human Consumption
    Grain farmers have responded to the cost pressures affecting their
businesses by diversifying the applications of their product. The production and
sale of non-Board grains have increased. More grain is directed for domestic
consumption as feed. Grain farmers have benefited from an approximately 10
percent increase in Canadian cattle inventory as a byproduct of BSE-related
impediments to cattle exports. Grain farmers have also benefited from an even
larger jump in the hog inventory, as shown in fig. 2A.




    6
       Down from 1340 in 1995 to 352 in 2005. Source: Canadian Grain Commission.
    7
       Grain Elevators in Canada, 2005-06, Canadian Grain Commission
     8
       Among stakeholders responding to the COMPAS online survey for this study, about half
foresee a moderate weakening in Canada’s competitive position. See Appendix III, below.
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                                    Fig. 2A




    Cattle inventories are expected to continue rising, and Prairie farmers are
seeding more acres to grass and pasture land. Increased feed requirements
draw grain from export. The redirection of sales from foreign to domestic
markets may help farmers but not grain companies or the Canadian Grain
Commission, whose incomes rises and falls with the amount of handling.
    Feedstock may represent an even greater opportunity than feed. Ethanol
and biodiesel capabilities are being fostered by governments in response to a
basket of concerns that includes environmental protection and security of
supply. Canada’s recent announcement of a national biofuels strategy of a 5%
renewable standard for transportation fuels by 2010 will foster increased
ethanol and biodiesel production. Our country has significant production of
canola, a preferred oilseed for biodiesel production. Meanwhile, wheat-based
ethanol has been showing strong competitive returns compared to corn-based

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ethanol. The cost effectiveness of wheat-based ethanol is partly the result of the
value of the wheat based dried distillers grain that emerges as a byproduct.
     The biofuels industry seems ready to explode. Canadian consumption of
gasoline and diesel fuel are about 40 billion litres and 23 billion litres,
respectively.9 The 5% biofuel standard entails a regulated demand for 2 billion
litres of ethanol. If satisfied by wheat, such demand would require over 5 million
tonnes of the grain. This would amount to 22% of Canadian non-durum wheat
production of 22.4 million tonnes that is forecast for 2006.10 The demand for
ethanol feedstock is being made possible not only by regulated requirements
for ethanol in gasoline but also by government financial supports for ethanol
production.11
     The demand for biodiesel is expected to rise to 1.15 billion litres by 2010 as
a result of federal and provincial regulation. If from canola, such demand has
been estimated to require about 115 million bushels or 2.6 million tonnes,
representing about 32% of 2006 estimated canola production of 8.1 million
tonnes.12
     The United States is ramping up ethanol production with several dozen
ethanol plants in production, increased acreage devoted to corn, and increased
productivity per acre. Some doubt has been expressed in industry publications
about how easy it will be for the United States to meet its own demand:
               Each time a new ethanol plant opens it creates new
               demand for 1.5 to 3.75 million bushels of corn a year. A
               dozen new ethanol plants will open in 2006 and another
               25, already under construction, in 2007. Many more
               plants now only in conceptual stages will be built in
               2007, 2008 and 2009. There is absolutely no reason to
               expect that the rate of ethanol expansion will slow.
               Between now and the end of 2009, the time at which the
               futures market is currently pricing corn at $3.30 a bushel,


    9
      Saskatchewan Ethanol Development Council.
    10
       AAFC Grains and Oilseeds Outlook, June 27, 2006.
    11
       “Way to Go,” Agri-Week, June 26, 2006.
    12
       Ibid.
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                ethanol demand will nearly double to at least 4 billion
                bushels a year.13
      Feed and feedstock appear to represent the greatest present and future
opportunities but quality grains for human consumption ought not to be
discounted. Incremental increases in domestic and international consumption of
non-CWB grains and special purpose, high nutrient value CWB grains can add
up to substantial value.
      Opportunities for sales of special purpose Canadian Wheat Board grains
will likely be helped by gradual increases in the use of containerization as
Canada continues to emulate world trends.14 It is admittedly unclear to what
extent containers can fully compete with bulk shipments. It is therefore difficult
to know whether container use will grow any more quickly than it has. For the
grain sector, containerization represents an additional method, involving
individual responsibility, for segregating grain in transit. As container use
grows, the Canadian Grain Commission may need to adopt new procedures to
facilitate and monitor quality assurance by this method. The CGC may need to
launch a special accreditation process, authorizing independent service
providers to inspect and certify product to a declared standard or set of buyer
specifications.

2.3. A Need for Collaboration and Consultation as the Key
     Feature of the Regulatory Setting
    Paradoxically, the Canadian Grain Commission matters enormously to the
grain sector and also hardly at all. It matters enormously insofar as it is the
grain sector’s primary regulator. It matters hardly at all insofar as the
productivity, profitability, and viability of grain sector stakeholders are impacted

    13
       Agriweek, July 31, 2006.
    14
       “The volume of grain being exported by container has gradually and consistently
increased over the past 25 years. Certain high value crops such as soybeans, lentils, dried
beans, and buckwheat are exported nearly entirely in containers. Conversely, the vast majority
of Canada’s larger volume crops such as canola or wheat continue to be exported in bulk
vessels. Nearly all of the grain exported in containers travels through the ports of Vancouver
and Montreal.” Source: Canadian Grain Commission communication to COMPAS, March 17,
2006.
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by so many government agencies other than the CGC. Other federal
departments and agencies affect the productivity and viability of stakeholders in
such diverse ways as negotiating bilateral trade agreements with foreign
countries, revising health and safety standards for grain, and changing taxation
policy and administration in ways that affect grain farmers or grain companies.
Provincial and local governments also matter in significant ways.
     As the sector regulator, the Canadian Grain Commission has an interest in
ensuring optimum coordination between its rules and practices and those of
other bodies impacting on the sector. The CGC also has an interest in fostering
greater consultation with and among stakeholders. We suggest ways of
improving such coordination and consultation in 3.0, acknowledging that doing
so may be expensive.
     Better consultation is vital for better regulation. Better consultation among
non-governmental stakeholders will contribute to a more accurate
understanding among stakeholders and regulators of precisely where the
interests of stakeholders collide, where their interests are easily reconciled, and
where regulators need to make the make the best decisions for the people of
Canada even in the face of stakeholder misgivings.
     Less than adequate consultation runs the risk of delays in normal regulatory
modernization. It may be part of human nature for regulators to sometimes
postpone decisions on matters fraught with stakeholder tensions. Successful
consultation may narrow and delimit the issues on which stakeholders truly feel
conflicts of interest.

2.4. A Need for Accountability and Transparency as the Key
     Feature of Public Expectations
     If it is true, as Harry Truman said famously, that a day is a long time in
politics, a century may be an eternity. The Canada Grain Act and the Canadian
Grain Commission were created almost a century ago in an era with few of the
laws, citizen rights, and opportunities for citizen communication that mark
modern democracy.
     Canadians in the 21st century expect transparency in their laws and
government institutions along with accountability in the way these institutions

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are organized. These closely related requirements for accountability and
transparency will help guide our recommendations.
    Greater accountability and transparency are requirements for better
consultation, which, we suggested above, is essential for better regulation.




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3.0. Mandate and Stakeholder Interests

   3.1. The Issue
        In our estimation, the two main issues are the mandate of the Canadian
   Grain Commission, including whose interests it serves, and how the CGC
   should relate to stakeholders.
        The general mandate of the CGC elicited no complaint from stakeholders
   whom we encountered and is unobjectionable in our estimation: “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.”
   (Par. 13).
        This same paragraph also makes reference to serving the interests of
   producers. This phrase arouses controversy. The three main positions on the
   issue are that the Canadian Grain Commission should indeed serve the
   interests mainly or exclusively of farmers, that it should serve the interests of all
   elements of the grain sector including grain companies, or that it should serve
   the interests of Canadians as a whole.
        The argument for serving the interests of Canadians as a whole lies in
   democratic principles as well as the admonitions of the Government of Canada
   Regulatory Policy.15 The argument for serving the interests of all Canadians and
   not just producers also lies in the reality that the Canadian Grain Commission
   normally makes conscious decisions with the interests of Canadians as a whole
   foremost in mind.
        The argument for serving the interests of other stakeholders as well lies in
   principles of fair play, whereby some stakeholders should normally receive no
   special consideration vis-à-vis others.


       15
          Government of Canada Regulatory Policy - http://www.pco-bcp.gc.ca/raoics-
   srdc/default.asp?Language=E&Page=Publications&sub

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    The argument for continuing to highlight the interests of producers lies
partly in history. The Canadian Grain Commission began in the early troubled
period of western agriculture. The official history of the CGC describes the
market imperfections and mistrust that characterized that period. “The mood
amongst the grain farmers of the west during 1897, 1898, and 1899,” wrote the
CGC’s historian, “was one of outrage, indignation, and frustration. There was no
doubt in their minds that the CPR, the grain dealers and the milling companies
were formed into a monopoly designed to cheat them.”16
    The Canadian Grain Commission’s official historian proceeds to quote the
Winnipeg Tribune in an effort to convey the “mood” of the time:
               The Tribune has reason to believe that a gigantic
               combination exists to defraud the farmers of Manitoba
               and the west in connection with the wheat crop (Tribune,
               Sept. 14/1897, p. 2).
               From many different quarters there comes up an
               ominous growl this fall over the agitated question of
               elevator monopoly and combine of the grain companies
               (Tribune, Sept. 14/1897, p.5).17
    The Royal Commission of 1899 was asked to look into unfair treatment of
farmers in respect of excessive dockage (reduced weight due to cleaning),
improper scales, and restraint of trade. The Royal Commission concluded that
“the proper relief from the possibility of being compelled to sell under value and
of being unduly docked for cleaning is only to be had by giving the fullest
obtainable freedom in the way of shipping and selling grain [so that he will no
longer]…be more or less at the mercy of elevator operators.”18




    16
       J. Blanchard, A History of the Canadian Grain Commission (Ottawa: Supply and
Services, 1987), p. 8ff.
    17
       J. Blanchard, A History of the Canadian Grain Commission (Ottawa: Supply and
Services, 1987), p. 10.
    18
       Ibid., p. 13.
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   Created in 1912, the Canadian Grain Commission offered farmers both
general consideration19 and specific rights or protections:
            Commissioners may have farming interest but no
            industry interests;
            The Western and Eastern Grain Standards Committees
            have numerically strong representations by farmers;
            Any changes to the grading system should attempt to
            minimize the reduction in value of any existing grain;
            Primary elevators with space available are required to
            accept grain on a first-come, first-served basis . They are
            required to grade and weigh grain upon arrival.
            Producers may appeal the grading to the CGC, and are
            to be given the necessary facilities to verify the grain’s
            weight ;
            Primary elevators are to take inventories of their grain, at
            intervals determined by the CGC, to ensure the accuracy
            of their weighing;
            Upon receipt of the proper documents, they must release
            the grain into railway cars or other vehicles, forthwith;
            All elevators and grain dealers must be licensed by the
            CGC and have suretyship to insure any cash purchase
            tickets, elevator receipts or grain receipts they issue to
            producers;
            In the case of grain at a terminal or transfer elevator,
            holders of elevator receipts to the grain there have
            priority over all others with claims against the grain.
    Turning to the second issue, we have received complaints about the
insufficiency or manner in which the CGC relates to stakeholders. But we do not



    19
       Paragraph 13 of the Canada Grain Act declares that “the Commission, in the interests of
the grain producers (our emphasis; added to CGA in 1970), shall establish and maintain
standards of quality…to ensure a dependable commodity for domestic and export markets.”
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see the CGC’s insufficiencies in this regard as entirely or even mainly of its own
doing.

3.2. Recommendations and Reasoning with Respect to
     Serving the Interests of Producers
     We recommend that paragraph 13 of the Act be modified to read as follows:
             Subject to this Act and any directions to the Commission
             issued from time to time under this Act by the Governor
             in Council or the Minister, the Commission shall:
             1) establish and maintain the standards of quality for
                 Canadian grain and regulate grain handling in
                 Canada, to ensure a dependable commodity for
                 domestic and export markets, and
             2) in the interests of grain producers, provide the right of
                 delivery access by grain producers to the licensed
                 handling system, provide the right to third party grade
                 and dockage verification, provide the right of a grain
                 producer to access a producer car for shipment of
                 grain and to have third party weighing and inspection
                 of that unload, provide the right of grain producers
                 that their commercial grain transactions with
                 licensees under this Act be secure.20
   The purpose of the modification is to acknowledge that the Canadian Grain
Commission exists to serve the interests of all Canadians above all.
Paradoxically, to serve the interests of all Canadians the CGC needs to satisfy
several, itemized interests of producers in light of imperfections in the grain
marketplace. The principal imperfection, an important one, is that farmers have


     20
       The last provision in the list is intended to afford the Commission freedom to consult with
stakeholders to select the most appropriate form of security protection for any given type of
transaction at any given time. Such protection may involve the use of clearing houses, partial
security, full security, or other devices so long as (a) authentic effort is invested to enhance
security and (b) producers have an unambiguous understanding of their actual degree of
assurance.
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a small and declining number of grain elevators within a plausible distance from
the farm gate.
     The total number of delivery points across the Prairies in western Canada
has dropped from 744 in 1998 to only 340 points in 2006. Almost 60% or 198 of
the current delivery points are non-competitive delivery points, having only one
company servicing them.21 The average length of haul from farm to elevator
has doubled from the mid-1990’s to 2004 to 55 kms.22 If a commercial dispute
arises between a farmer and a company, the farmer faces a significant cost to
transport product to another delivery point.23 A sizeable number of farmers are
in the catchment area of only one grain company. The specific protections for
farmers itemized above serve the interests of all Canadians by helping to
protect the transparency, efficiency, and viability of the sector.24
     At forums and in private communication, farmers expressed concern that
elevators were misleading them in grading and said that they felt intimidated.
Farmers told us that their neighbours and peers were often unaware of their
rights to have the Canadian Grain Commission verify the accuracy of grain
company grading. For a time, one prominent grain company was perceived to
have contravened the law, specifying in its contracts that its decisions were
final. We recommend that the CGC require all contracts between farmers and
licensees to remind farmers of their rights under the Act in a form prescribed by
the CGC, of which we provide a sample below in section 10.
     At forums and in private conversation, farmers told us that they were
confused by the allegedly purposeful complexity of grain company valuations.
We recommend that the CGC invite the Canada Grains Council or another such


    21
         Canadian Grain Commission, Grain Elevators in Canada
    22
         SHT Saskatchewan Grain Flow Model, Wayne Gienow, 2004
      23
         By contrast, in beef cattle marketing the primary point of sale is at livestock auction
yards, or on internet or satellite sales, with many buyers in one place. There may be a cost to a
beef farmer to engage a different set of buyers by going to a different auction yard, but there
often are multiple buyers, including fellow farmers buying their stock.
      24
         Canadians as a whole have both a fairness and an economic interest in these provisions
for farmers. The economic interest arises from exposure to the Canadian Agriculture Income
Stabilization program (CAIS), which supports individual farm incomes through a modified gross
margin level based on historic averages. In 2004, estimated total provincial and federal payouts
through CAIS were $1.4 billion; 2005 numbers are not available at this time.
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body to recommend draft wording for a CGC requirement in all sales contracts
of a simple, clear statement in the form of unit pricing (e.g. price offered or paid
per tonne/bushel with all costs factored in).
    Though we are not convinced that accuracy in weighing is a problem given
the modern technologies utilized for that purpose, we were approached by
farmers with concerns. We recommend that the Canadian Grain Commission
consult with Industry Canada with respect to more frequent verifications of
scales, at least for the next couple of years, in order to confirm or disconfirm the
existence of a problem. Assuming that Industry Canada may not be able to
accommodate such a request, we recommend that the Canada Grain Act be
amended to allow the CGC to monitor the accuracy of elevator scales more
frequently than carried out by Industry Canada under the Weights and
Measures Act, and to empower the CGC to fine elevator companies for
non-compliance with this or any other CGC regulation.
    We recommend that the Act be modified to allow the Canadian Grain
Commission to require (i) elevators to contract annually with third party
providers to verify the accuracy of their scales with an automatic fine of no less
than three times the typical cost of the service for non-compliance and (ii) the
CGC to carry out random, surprise checks with (iii) significant fines for
significant levels of inaccuracy under the preceding two scenarios. This
provision would be used if Industry Canada were unable to accommodate a
CGC request for more frequent scale verifications.
    Using results from annual AAFC surveys of farmers, we recommend that
the Canadian Grain Commission reduce or eliminate its requests of Industry
Canada or, as the case may be, its direct requirements for annual and random
scale verification in the future as farmer confidence in the accuracy of elevator
scales is shown to be sufficient.25
    In the spirit of reinforcing the Canadian Grain Commission’s credibility with
producers and other stakeholders, we recommend that the Act strengthen

    25
       In a spirit of transparency, COMPAS does not hold a Standing Offer position with AAFC
and so would not normally be eligible to compete for such a contract. We would have a better
chance of winning such work if it were let by the CGC, which would have to issue a public
request-for-proposal, allowing COMPAS to compete. We recommend that the survey work be
issued instead by AAFC so that its design and interpretation were at arms’ length from the
CGC.
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accountability- and transparency-related provisions relating to staff beyond the
general provisions for public servants as a whole. The Act would be modified to
prohibit senior staff from holding direct or indirect interest in any aspect of the
sector, including futures, and shares as well as in farming operations except for
incidental or recreational purposes. We have no reason to doubt the probity of
CGC Commissioners or staff. But we heard murmurings of general concern
from farmers, and the sheer complexity of the grain sector allows more
opportunity for conflicts of interest than in most other areas of government
operations.

3.3. Recommendations and Reasoning with Respect to
     Relating to Stakeholders
     As discussed throughout our report, we see the Canadian Grain
Commission’s consultation efforts as inadequate and largely so for budgetary
reasons. Effective consultation is expensive. As discussed in several places in
this report, the CGC is under-funded for core activities as well as in
consultation. On the model of CFIA’s consultation program, we recommend
throughout our report the creation of stakeholder-driven, CGC-funded
roundtables to enhance the ability of stakeholders to work well with each other
and the ability of the CGC to work well with its stakeholders.




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3.4. Impacts on Stakeholders
                   INTENSITY OF
STAKEHOLDERS       IMPACT             CHARACTER OF IMPACT
                   (HIGH/MED/LOW)
                                      It benefits producers by increasing transparency of
                                      transactions, reinforcing their traditional rights, and
Producers-Food     Med
                                      making more widespread an understanding of their
                                      rights.
Producers-
                   Med                Same
Feed/Fuels
                                      It benefits grain companies by reassuring them of the
Grain companies    Med
                                      neutrality of the CGC.
Independent
                   Low                Same
inland terminals
Dealers and
                   Low                Same
brokers
Transport          NA                 NA
Breeders and
                   NA                 NA
Seed companies
AAFC               NA                 NA
Ag researchers
                   NA                 NA
and scientists
Other (incl.
governments,                          It may increase efficiency on the margins by increasing
                   Low
taxpayers,                            transparency.
consultants




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4.0. Governance: Board and Executive Structure

   4.1. The Issue
        For varying reasons, stakeholders have communicated to us some
   discontent about the performance of the CGC, highlighting concerns about
   accountability. The four main issues emerging from such discussions have
   been a desire for a more accountable executive structure, a desire for a more
   effective organizational positioning (e.g. a unit within AAFC), a desire for a
   supervisory Board of Directors, and concern about the unusual role of
   patronage-appointed Assistant Commissioners.
        In 7.0, we propose contracting out inspection services under CGC license.
   In the present section, we also propose some organizational changes. But we
   do not see the formal organization of the CGC as the main cause of discontent.
        Our estimation is that the two key sources of discontent are under-funding
   of the main activities of the Canadian Grain Commission along with
   under-funding and underperformance in respect of stakeholder consultation.
   We discuss the value of adequate funding of roundtable consultations in the
   spirit of the CFIA’s efforts in various places through our report. On the model of
   the CFIA’s efforts, improved consultation among stakeholders and between
   stakeholders and the CGC might dissolve some of the discontent that we have
   observed.

   4.2. Recommendations and Reasoning
       Public service activities that can be highly technical and may entail
   intensive relationships with and among stakeholders tend to function best in
   agency settings, an extra step removed from cabinet. Ministerial involvement is
   not ruled out. But ministerial involvement is not encouraged in order to make it
   easier for regulators to reach the right decisions with some independence from
   the political process. These considerations as well as the benefits of historical
   continuity lead us to recommend no change in the CGC’s agency status.
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     We do nonetheless recommend a change at the executive level with the
creation of a single President/CEO/Chief Commissioner, supported by Vice-
Presidents and other senior executives. The Canadian Grain Commission’s
executive is currently a triumvirate of Chief Commissioner, Assistant Chief
Commissioner, and ordinary Commissioner. Some critics call for a CEO
structure, blaming the triumvirate structure for what they perceive as slow
decision-making and low accountability. Some critics believe that the three
Commissioners do not have enough purely Commissioner-like or adjudicative
business to occupy their time. Some defenders of the triumvirate structure
believe that important decisions of the CGC should be made in committee and
not by a single person.
     Our view is that there is merit in the argument that a triumvirate might reach
better decisions than a single CEO. But the theoretical quality of such decisions
is in our view less important than the perceived accountability and transparency
of a single person at the top. We also recommend the creation of a single CEO
because this is the most common structure in organizations. The CGC should
adopt a commonly used form of organization in part to reduce the burden on
stakeholders of trying to understand how the CGC functions.
     The Canadian Grain Commission has six “Assistant Commissioners.”
Despite their title, they are neither adjuncts to the Chief Commissioner nor
normal CGC staff, having been appointed by cabinet for a fixed term rather than
by the CGC or the Public Service of Canada for a career trajectory. At the best
of times, they are well regarded by farmers for interceding with elevators in
weighing or grading disputes but the style of their interventions are reportedly of
uneven quality. At the worst of times, they are inhabitants of patronage heaven.
The continuance of these ambiguously defined positions is in our estimation
incompatible with principles of modern government.
     For reasons of clarity, we recommend creation in their place an Office of
Grain Farmer Advocacy with a mandate to ensure that farmers understand their
rights under the Act and to advocate for them in disputes with handlers, the
CGC, or other stakeholders. This Office should have investigative powers akin
to those Assistant Commissioners today. Some farmers tell us that many
farmers, intimidated by grain companies as well as the CGC, exercise neither
their rights to do comparative selling nor even their rights under the Act to
ensure fair weighing and grading. By contrast, some grain handlers tell us that

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they are so competitive that they will bend CGC rules to offer farmers’ supra-
normal revenue in strenuous efforts to win their business.
     There exist apparently no surveys of grain farmers to indicate to what
extent either version of reality holds true. We recommend that the Office of
Grain Farmer Advocacy be launched with the budget currently allocated to the
Assistant Commissioners. The future of this Office and its budget should be
evaluated every three years on the basis of evidence for the need of its services
as shown in annual surveys of farmer behaviour, knowledge, and perceptions
undertaken by Agriculture and Agri-Food Canada (AAFC).
     As an alternative to an Office of Grain Farmer Advocacy, we would
recommend that AAFC hold a competition, inviting proposals from non-
governmental organizations, to supply such services.
     We do not recommend a Board of Directors overseeing the Canadian Grain
Commission for three principal reasons. First, the grain sector is so large and
diverse that a Board might be unwieldy if large enough to incorporate
representation from all or most stakeholders. To make the Board more
effective, we would need to restrict participation from some stakeholders. But
which should be incorporated and which left out is a forbidding challenge.
     Secondly, it is a forbidding challenge to decide how proportionately large
farmer representation should be relative to other legitimate stakeholders.
     Lastly, it would be wise to base such a major change in the structure of an
important regulator on guidance from the government as a whole. Government
of Canada Regulatory Policy provides help on many specific issues relating to
the services carried out by regulators. Government of Canada Regulatory
Policy probably needs an updating to incorporate guidance with respect to the
reporting structures of regulatory agencies including the nature and composition
of their Boards and representation by stakeholders. In the absence of such
cross-governmental guidance, we recommend no immediate action on the
matter of a Board. We recommend that any significant change to the reporting
structure above the chief executive officer or proposed President await a
potential new Regulatory Policy on the reporting structures of agencies and
regulators in general.




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4.3. Impacts on Stakeholders

                   INTENSITY OF
STAKEHOLDERS       IMPACT            CHARACTER OF IMPACT
                   (HIGH/MED/LOW)
                                     The CEO structure benefits producers by increasing
                                     transparency and accountability at the CGC. Replacing
                                     the Assistant Commissioners with an Advocacy Office
Producers-Food     Med
                                     or equivalent service under contract enhances the
                                     efficacy of the Assistant Commissioners’ advocacy
                                     roles by providing greater clarity of mission.
Producers-
                   Med               Same
Feed/Fuels
                                     The CEO structure provides greater transparency and
Grain companies    Med
                                     accountability.
Independent
                   Low               Same
inland terminals
Dealers and
                   Low               Same
brokers
Transport          Low               Same
Breeders and
                   NA                NA
Seed companies
AAFC               NA                NA
Ag researchers
                   NA                NA
and scientists
Other (incl.
governments,                         It eases the work of CGC staff by increasing the clarity
                   Low
taxpayers,                           of their reporting relationships.
consultants




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5.0. Funding, Public Goods, and Private Goods

   5.1. The Issue
        In our view, the three biggest income issues facing the Canadian Grain
   Commission are income volatility, income insufficiency, and income sourcing.
   The income volatility challenge derives from the volatility of the grain industry
   itself as caused by production factors, notably weather, and market factors. In
   the extreme, grain volumes can fluctuate by a third or more from one year to
   another, as illustrated in table 5A. Fee income rises and falls with grain volume
   but sub-proportionately because not all fees are volume-based.
        There are several reasons for believing that the Canadian Grain
   Commission is funded inadequately. Resource constraints have prevented the
   CGC from maintaining adequate core infrastructure to be able to provide
   optional cost-recovery services wanted at various times by stakeholders.
   Stakeholders who agree on little else among themselves seem agreed that the
   CGC is under-funded, even those who are deeply critical of it. As discussed in
   12.0, we believe that the CGC’s research function is greatly under-funded. A
   ten million dollar research budget for the regulator of Canada’s third largest
   export industry seems short-sighted.
        A concluding issue is how the Canadian Grain Commission should be
   funded. The dilemma is how much the benefiting stakeholders should
   contribute, how much the taxpayer should contribute, and how much flexibility is
   available under international trade law to provide public support for the
   regulator.




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           Table 5A: Canadian Grain Commission Income in Millions $ and
                       Grain Volumes in Millions of Tonnes26
                                2001-2     2002-3     2003-4      2004-5     2005-6
  Grain Volumes                   48         30         41          45         49
  Fees                            39         26          34          36        39
  Appropriations                  25         33          38          22        27
  Total Revenue                   64         59          72          58        66
  Net Surplus (Deficit)           (1)        (1)          8          (5)       (4)


                    Table 5B: CGC Services and Cost Recovery27
                                                          NET               % COST
         EXPENDITURE              2005-06 COST        OPERATING            RECOVERY
                                                       SURPLUS             FROM FEES
Inward Inspection                   $11,609,000       ($4,161,000)            64%
Inward Inspection (Prairies)        $5,298,000        ($3,781,000)            29%
Inward Weighing                      $3,490,000       ($1,792,000)            49%
Outward Inspection                  $13,208,000         $160,000             101%
Outward Weighing                    $6,247,000          $864,000             114%
All Other operational
(licensing, optional                $30,291,000        $4,641,000            25%
services, research, etc.)
Total                               $70,143,000       ($4,068,000)

    In practice, the Canadian Grain Commission fees have not increased in
more than a decade. The absence of fee adjustments since 1991 is likely
rooted in an appreciation that the business performance of stakeholders,
notably farmers, does not afford them much flexibility to increase payments.



    26
         Source: Canadian Grain Commission communication to COMPAS Research, July 6,
2006.
    27
         Source: Canadian Grain Commission communication to COMPAS Research, undated.
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     The Canadian Grain Commission has provided data on the degree to which
its various services are fueled by cost recovery from fees, as shown in table 5B.
The CGC’s calculation estimates that outward weighing is a profit centre while
inland inward inspection is a cost centre, whose losses are compensated by
appropriations.28

5.2. Recommendations and Reasoning
     The grain economy has enormous economic importance as Canada’s third
largest export sector and significant potential importance for both the
environment and security of supply in respect of energy. For these diverse
reasons, the people of Canada and hence the federal government have a
special reason to protect and sustain the regulatory system and infrastructure.
We therefore recommend that the federal government defray all basic
infrastructure costs of the CGC, assigning cost recovery to the marginal
expenses associated with individual services necessary for commercial
transaction.29
     In some situations, the Canadian Grain Commission incurs overtime salary
costs to meet scheduling obligations to stakeholders in the transshipment of
grain. We recommend that the overtime portion of such costs (i.e. the portion
exceeding normal non-overtime costs) be absorbed by the CGC through federal
government subsidies as if this were the equivalent of basic infrastructure cost.




     28
        These estimates seem plausible to us and we have no reason to doubt them, but
confirming them is beyond the mandate of our study. All cost estimations necessarily combine
empirical data with assumptions, and reasonable people can disagree about the
appropriateness of different assumptions when attributing costs.
     29
        We are inclined to define infrastructure broadly to include both physical infrastructure
and the ongoing management capability necessary to provide incremental individual services
necessary for commercial transaction.
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5.3. Impacts on Stakeholders
                   INTENSITY OF
STAKEHOLDERS       IMPACT            CHARACTER OF IMPACT
                   (HIGH/MED/LOW)
Producers-Food                       It benefits them by increasing the efficacy of the system
                   Med
                                     and controlling their costs.
Producers-
                   Med               Same
Feed/Fuels
Grain companies    Med               Same
Independent
                   Low               Same
inland terminals
Dealers and
                   Low               Same
brokers
Transport          NA                NA
Breeders and
                   NA                NA
Seed companies
AAFC               NA                NA
Ag researchers
                   NA                NA
and scientists
Other (incl.
                                     It may on the margins reduce the burden on the
governments,
                   Low               Canadian Agriculture Income Stabilization program by
taxpayers,
                                     contributing to the efficiency of the grain system.
consultants




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6.0. Quality and Quantity Assurance

   6.1. The Issue
       Several issues emerge in quality and quantity assurance. First, there is
   KVD, Kernel Visual Distinguishability. KVD has made possible the efficient
   segregation of quality based on defined visual characteristics of different
   classes. KVD has also played a role in ensuring that exports of wheat were
   indeed what buyers had contracted for. As a byproduct of this positive purpose,
   KVD has necessarily blocked the introduction of some new varieties that were
   greatly desired by those who would buy it for feed or feedstock.
       On June 29, 2006, the CGC announced the creation of a new class of
   wheat so as to reduce some of the barriers to innovation presented by KVD.
   The Canadian Grain Commission would sustain its traditional protection of
   quality assurance by maintaining the KVD requirements for Canada Western
   Red Spring (CWRS) and Canada Western Amber Durum (CWAD). The CGC
   would allow no new variety if it resembled visually either of these two. But,
   effective August 1, 2008, the CGC would end KVD requirements for minor
   wheat classes.30 On the same day, the CGC would create a new class of
   wheat, Canada Western General Purpose (CWGP), with disease resistance
   and agronomic criteria but few other quality requirements and no visual
   requirements other than not visually resembling CWRS and CWAD.
       The Canadian Grain Commission’s purpose was to increase flexibility while
   protecting the two core classes. As CGC Assistant Chief Commissioner,
   Terry Harasym, put it in the Commission’s Press Release, “This will provide
   producers with more options and greater choice in growing high-yielding
   varieties suitable for livestock feed or ethanol.” A desire to accommodate the
   growing biofuels and livestock industries is the most pressing practical reason

       30
          Canada Western Red Winter (CWRW), Canada Prairie Spring Red (CPSR), Canada
   Western Soft White Spring (CWSWS), Canada Prairie Spring White (CPSW), Canada Western
   Extra Strong (CWES), Canada Western Hard White Spring (CWHWS).
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behind pressure for reforming or abolishing KVD. The movement against KVD
is also driven by an ideological desire for more market freedom.
     Some stakeholders believe that the Canadian Grain Commission has
compromised as much as it can without risking Canada’s traditional export
varieties. From this perspective, the essence of KVD must continue. KVD must
remain until either a fast, economical DNA technology or its equivalent
becomes feasible for testing at terminals or until a secure, viable Identity
Preservation system becomes available for tracking segregated product
throughout the system. Varying stakeholders nonetheless feel that the reform is
too little and too late or that KVD should be discontinued altogether.
     Secondly, after KVD, numerical grading emerges as a related issue.
Numerical grading is condemned on the basis that buyers increasingly make
their purchases on the basis of long lists of complex, demanding specifications
that may require extensive testing and not on the basis of grade alone.
Numerical grading is defended on the grounds that it is a cost-effective method
of segregating product based on quality-related criteria.31
     Thirdly, some concern was expressed by stakeholders about the need for
the system to accommodate increasing purchases by specification. In practice,
the CGC can and does provide test-based certification of specifications beyond
grade. It is not entirely clear to what extent the CGC has the inclination and
resources to meet the growing demand at a pace that satisfies all stakeholders.
      The Hagberg Falling Number test is an aspect of this issue of grain
specification and testing. The Hagberg Falling Number measures germination
activity in wheat and hence the functionality of the resulting flour. The CGC’s
research lab is working on a rapid method for conducting this test at terminals.
     In the oilseed sector, the main buyer specification factor for canola is by oil
content, but oil content is not a grade factor. Some stakeholders believe that
there ought to be grade factors for oil content, akin to protein in wheat, to
facilitate contracts and financial settlement.
     In keeping with expectations of increasing purchases by specification, a
number of stakeholders anticipate greater shipments of identity preserved


     31
          The US, Argentina, France, Ukraine, Australia all use numeric grading systems for
grains.
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product in the future. Bulk co-mingled shipments would decline. The current
grain system accommodates some degree of identity preservation, for example:
             The CWB offers seven identity preserved programs for
             wheat based on varietal and quality specifications,
             representing over 1 million tonnes of sales annually;
             The Warburton wheat program successfully segregates
             selected wheat from the farmgate to the UK end-user.
             The designated barley sales are all made by varietal
             identity preservation, representing 2-2.5 million tonnes
             annually;
             Among non-Board grains, High Eurucic Acid Rapeseed
             (HEAR) is segregated from other canola;
             East of Manitoba, non-GMO soybeans have been
             successfully segregated for years.
     The CGC has developed an optional accreditation for Identity Preservation
known as CIPRS (Canadian Identity Preserved Recognition System). Some
grain companies see this as a wasteful duplication of procedures that they
themselves follow under the more widely known HAACP32 or ISO certification
processes.
     Fourthly, there is the issue of the Western and Eastern Standards
Committees, whose role is to recommend grain standards each year. We heard
few strong criticisms of the Committees but concern was expressed that they
were too influenced by CGC or CWB, too large for effective decision-making,
and too producer-dominated.
     Fifthly, some concern was expressed about the CGC’s perceived tardiness
in removing Hard Vitreous Kernels (HVK) as a grade factor for wheat despite
the CGC’s own unequivocal findings that HVK does not have a strong
correlation to quality performance.
     Sixthly, some complaints were made about the CGC’s acting in haste with
respect to the presence of ruptured kernels in wheat, causing needless
economic hardship as a result.

    32
        Hazard Analysis and Critical Control Point (HACCP) is a systematic approach to
identifying and defending against microbiological, chemical or physical hazards relating to food.
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     Seventhly, some stakeholders see food safety has an area of immense
growing importance involving greater opportunity for Canada. Some
stakeholders are concerned that the issue may fall between the stools of
different agencies and regulatory systems, for example between CGC and
CFIA.
     Lastly, there is a background issue of uneven enthusiasm for national brand
development. Producers and marketers of non-Board grains appear to be less
interested in a coordinated quality assurance system than stakeholders
involved with CWB marketed grains. That is the impression gained from the
public forums and communications directed to us. To the extent that this
impression is well founded, the lesser commitment of non-Board grain
producers to the quality assurance system may be explained in several ways.
They do not have a history of collaboration under a CWB-type organization.
Their products lack the number of grades and grade variability characteristic of
Board grains, for which reasons they may experience less of an economic need
for collaboration.

6.2. Recommendations and Reasoning
    Among the issues raised in respect of quality and quantity assurance, only
one, the composition and size of the Standards Committees, requires legislative
change. The concern that these committees, notably the Western one, are
unwieldy has merit. Some of the scholarship on board and committee sizes
appears to conclude that somewhat smaller committees may take their tasks
more seriously.33 From this, it follows that the Western Standards Committee
ought to be smaller.
    Composed of 26 members, the Western Committee could be safely shrunk
by reducing the number of general CGC appointees, who could number 7 under
present rules, and by reducing the number of farmers, who number at least 12.
On the other hand, some scholarship also suggests that larger boards and
committees are more effective at building links to stakeholders and



    33
       See Steven F. Cahan et al., “Board Structure and Executive Compensation in the Public
Sector,” Financial Accountability and Management (November, 2005).
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strengthening the legitimacy of the organization.34 We ultimately remain neutral
on the issue of size because these Committees need not only make good
recommendations but also earn legitimacy and buy-in from their stakeholder
communities.
     We received advice to recommend reducing producer presence on these
committees but no adequate explanation of how the system would benefit. We
do not recommend a reduced representation on the part of farmers. There is
nonetheless merit in reducing representation from the Canadian Grain
Commission itself insofar, as a regulator with staff and influence, its impact on
its Committees is necessarily larger than its numerical representation anyhow.
We would thus recommend a slight reduction in the number of CGC
appointees.
     On the matter of KVD and new grades, we recommend that the impetus
that prompted the Canadian Grain Commission’s introduction of a new class of
wheat extend to future CGC efforts to balance the interests of those who would
priorize protection of export brands with the interests of those who favour new
varieties for feed and feedstock. As discussed in sections 3.0 and 4.0, the CGC
needs a major infusion of resources for purposes of sustained stakeholder
consultation. Sustained stakeholder consultations are essential for ensuring that
the CGC is always alert to stakeholder concerns and that stakeholders perceive
the CGC as receiving and welcoming their feedback. Sustained stakeholder
consultations are also essential for encouraging stakeholders to work together
to find win-win solutions for the CGC’s consideration.
     We recommend that the Canadian Grain Commission consult annually with
stakeholders about criteria for benchmarking and assessing the effectiveness of
the CGC in grading and monitoring risks to Canadian grain quality, and that the
CGC make annual reports to stakeholders on its effectiveness on the basis of
these criteria.
     As discussed in 12.0, we recommend that the federal government commit
itself to a graduated, multiyear increase in allocations to the CGC’s Grain
Research Lab for purposes of developing fast, economical technologies for
testing. In order not to put all its eggs in the same metaphorical basket, we also

    34
      See the classic analysis in Jeffrey Pfeffer, “Size, Composition, and Function of Hospital
Boards of Directors,” Administrative Science Quarterly (September, 1973).
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recommend that AAFC establish a special fund for the development of such
technologies with such resources available to AAFC researchers and on a
competitive basis to private sector and university researchers. We recommend
that both the CGC and AAFC make annual reports to stakeholders on the
effectiveness of their research efforts and their forthcoming research plans.
      On the matter of the Canadian Grain Commission’s capacity for
accommodating purchases by specification, we recommend that the CGC meet
with stakeholders to establish a template for benchmarking and annual
reporting on its performance in this regard. Thus, the CGC would report to
stakeholders each year on its past performance in accommodating purchases
by specification and requests for customized services, and its plans for the
future. To the extent that the CGC follows our recommendations for contracting
out of inspection as outlined in 7.0, the agency would also report annually on
the performance of its contractors in accommodating purchases by specification
and requests for customized services.
      To the extent that customized services can be outsourced, we recommend
that the Canadian Grain Commission collaborate with current or potential
independent providers to provide such services, where necessary under CGC
license. To the extent that it is reasonable, we recommend outsourcing so that
the CGC can focus on its core activities and so that the CGC, a regulatory
body, does not un-intentionally place itself in a conflict between a dependence
on revenue from a regulated organization and its need to chastise or punish
that organization for failure to meet regulatory standards.
      In the oilseed sector, the Canadian Grain Commission should continue to
work with stakeholders to develop and implement a grading system with factors
for oil content that meets stakeholders’ needs.
      Some of the issues delineated above constitute irritants, even serious
irritants, rather than matters of fundamental policy requiring legislation. We
interpreted many of the criticisms of CGC action as rooted in the weakness of
CGC consultation. Our recommendation for reducing irritants is for the
Canadian Grain Commission to receive adequate funding for a sustained
program of consultation on the model of the CFIA. In the spirit of the CFIA, the
CGC would subsidize consultation efforts. Like the CFIA, the CGC would
delegate to stakeholders much of the responsibility for organizing such
consultations in order to give them the confidence that consultation was
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genuine. CGC-funded and stakeholder-led consultations will greatly improve the
two-way flow of information, improve CGC’s responsiveness, and enhance
stakeholders’ understanding of some of the unavoidable limitations on the
ability of the CGC to meet their needs as fully as they might wish.
     On the specific matter of food safety, we recommend that the CGC
approach CFIA and Health Canada for the purpose of discussing the merits of
jointly sponsoring and funding stakeholder-led roundtables on the issue.

6.3. Impacts on Stakeholders
    The impacts of each of the above recommendations would be primarily on
the effectiveness of the system as a whole rather than on any particular
stakeholder segment.




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7.0. Weighing and Inspection Services

   7.1. The Issue
        Weighing and inspection of grain is carried out by the Canadian Grain
   Commission and is mandatory on bulk shipments overseas but not for container
   movement or for exports to the United States, where these are optional. One
   issue is whether inward and outward weighing and inspection should remain
   mandatory or become optional at the discretion of the shipper. A second issue
   is whether the inspection and weighing services now performed by CGC staff
   could be carried out in whole or in part by independent third party providers
   under license and contract with the CGC. A third issue involves weighovers at
   primary elevators. These are a kind of inventory process, whereby primary
   elevators are required to provide annual data on their stored and flow-through
   volumes.
        Inspection involves retrieving a sample using a CGC-approved method (e.g.
   automatic samplers, which are universal at terminals). The sample is inspected
   for quality, to ensure freedom from contaminants, and to assign a grade. This
   sample also makes possible testing by the CGC’s Grain Research Lab for non-
   registered varieties or for other quality purposes as required. The CGC provides
   third-party weighing so as to forestall gross errors such as missed railcar
   compartment unloads and to provide assurance to producers on the one hand
   (inward weighing) and overseas buyers on the other (outward weighing). In
   practice, the producers of Board grains tend to be more desirous of a strong
   CGC role in inward weighing and inspection than the producers of non-Board
   grains. The sales of Board grains are settled on the basis of information from
   inward weighing and inspection whereas non-Board grain transactions will have
   already been completed.
        The stakeholder pressure for optionality is rooted in the increasingly price-
   sensitive global marketplace. Grain companies, especially those that ship to
   their own affiliates overseas, want to avoid costs that are not necessary for their

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ability to conduct business effectively. About half of railcars unloading at
terminal elevators originate at primary elevators of the same company.35
     We also received some stakeholder pressure for contracting out of services
and more than some stakeholder complaints about service. Grain and shipping
companies both lamented the impacts on their bottom line of tardiness in
inspection services with the CGC apparently reluctant to authorize overtime and
work on holidays and weekends. We also received some complaints from
inspectors about last moment scheduling and planning by the CGC. The issue
is whether an increased budget would be an adequate solution or whether
services should be contracted out and, if so, how.
     We received little comment on primary elevator weighovers. Originally
intended as a double-check of elevator honesty in an era that long preceded
automated weighing, the issue is whether weighovers have value. They are not
a true check in that they involve a soft process audit instead of a true forensic
audit, there are far better ways of auditing weighing performance, and some
primary elevators fail to provide the weighover data without consequences. The
CGC’s removing of their licence might be considered excessive punishment
while the CGC lacks the authority to impose fines, a situation requiring remedy.

7.2. Recommendations and Reasoning with Respect to
     Optionality of Service
    Compulsory inward and outward weighing and inspection deliver benefits to
both the service receivers and Canada. Inward inspection and weighing
provides producers with a basis for financial settlement on quality and quantity
and rail freight charges.36 Both inward and outward inspection provide a
checkpoint for quality control, create a possibility of appeal, and provide a
pathway to attribute liability for misrepresentation by virtue of the retained
sample. Inward and especially outward inspection benefit Canada by
generating data for statistical purposes, grade tolerance evaluation, and
accounting and forecasting purposes.



    35
         Source: Canada Grain Commission data.
    36
         Railways are apparently developing an automated system for prospective use.
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     It is difficult to justify maintaining the mandatory requirement for inward
inspection given that it is not a universal requirement. U.S. and container
shipments do not appear to require it and there is little likelihood of a change in
their treatment in the foreseeable future. In light of these specific
considerations, the lack of a requirement for inward inspection on
intra-company shipments on non-Board grains, and the admonition from
Government of Canada Regulatory Policy to avoid needless requirements, we
recommend that inward inspection become optional at shipper’s request.
     Both the availability of inward inspection and its practice do nonetheless
benefit Canada as a whole by helping to sustain both producers and smaller
handlers, who need such services for transactional purposes. For these
reasons, we recommend that the Act require the Canadian Grain Commission
to ensure that a capacity for carrying out such inward inspection be maintained
at public cost. The appropriate sampling systems and weighing equipment to
ensure third party verification of quantity and quality will need to be provided
and maintained to support optional inspection and weighing. Because of the
public benefits in terms of quality, safety, and potential traceability, we also
recommend that samples be retained for a prescribed period of time for all grain
receipts even in a setting of inward optionality. Because of the public benefits of
an optional system, we recommend that the price of such optional services
continue to be subsidized.37
     The introduction of inward inspection optionality may increase unit costs
and prices by reducing economy of scale.38 Optionality will almost certainly
place smaller grain companies, those without terminals, at a competitive
disadvantage, especially perhaps in the potential absence of the CWB. The

    37
        Inward inspection cost is partially recovered through fees paid by farmers and/or
industry. The cost recovery for inward inspection is 64%. In the most recent year, inward
inspection accounts for 19% of total CGC fees collected, inward weighing accounts for an
additional 4%. Government appropriations generally cover the costs that exceed fee revenue.
Source: CGC Revenue and Expenditure Analysis, 2005-06
     38
        Approximately 75-80% of shipments may require inspection (CWB, producer cars, and
independent terminals). Currently, the 10 year average of total CWB unloads at terminal or
transfer elevators remains quite steady at approximately 76% , the total producer cars shipped
in 2004-05 was 7650 (3.3% of total) and 2005-06 inter-company shipments is 10.5 million
tonnes, or 48% of total shipments . This represents a decline of 19% of total shipments,
indicating the growing domination of the terminal owning companies.
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fees for inward inspection and weighing are collected from farmers at the
primary elevators. Optionality would benefit the larger terminal owning
companies by enabling them to not have the fee, providing them with a more
attractive price offering to farmers. Grain companies with a greater geographic
footprint have a greater ability to reap profit from blending.
     We believe that Canada has a public interest in furthering competition in
handling by helping the smaller players. This can be achieved partly by
defraying the cost of the inward inspection infrastructure and subsidizing unit
prices. Helping the smaller players can also be achieved by policies that are the
responsibility of departments and agencies other than the CGC.
     Advocates of inward inspection optionality tend also to advocate outward
inspection optionality but we see the two situations as different. We recommend
continued mandatory outward inspection and weighing along with optionality for
inward weighing and inspection.
     The Canadian Grain Commission collects samples when ships are loaded.
Inspectors monitor the quality of the grain to ensure grade specifications and
freedom from contaminants. Together with weighing, outward inspection forms
that basis of the Certificate Final, the official certification of quality and volume.
     There is merit in the counter-argument that intra-company shipments have
no greater need for outward than for inward inspection. But our view is that
Canada’s reputation and the brand of our products require outward inspection.
Inspection is necessary to forestall problems and to ensure sampling so as to
rectify problems expeditiously if they nonetheless materialize. The recent
example of Ochratoxin being wrongly alleged to be in Canadian durum exported
to Italy is an example of why Canada needs to be diligent in protecting its brand
through outward inspection and other means.

7.3. Impacts of Inward Inspection Optionality
    Producer rights of access to the terminal as granted by the Canada Grain
Act will not be affected.
    Producers and the CWB should not be unduly affected financially if a proper
publicly supported infrastructure and pricing system are put into place in light of
the public benefits of maintaining an inward inspection capability.

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    The main impacts will be on administration. There may be additional work
to determine which cars are to be inspected and which are not, and to
coordinate and assign the inspection resources to the appropriate terminal to
ensure fluid discharge of grain with minimal or no interruption.

                   INTENSITY OF
STAKEHOLDERS       IMPACT            CHARACTER OF IMPACT
                   (HIGH/MED/LOW)
                                     - Depending upon the financial health of the publicly
                                      supported infrastructure, optionality may increase
Producers-Food     MED                the cost of inspections on certain shipments,
                                      particularly CWB grains as the overall volume of
                                      inspections declines
Producers-                           - Grain producers for feed and fuel use domestically
                   LOW
Feed/Fuels                            will not be affected
Producer Car
                   MED               - Similar to impact on CWB
shippers
Grain companies    LOW               - Little impact
                                     - Some of the costs of optional I&W could be
Independent
                   MED                attributed to independent inland terminal shipments.
inland terminals
                                      Higher costs may reduce their competitiveness
Dealers and
                   LOW               - No direct impact.
brokers
                                     - Additional methods for determining weight for rail
Transport          MED
                                      freight invoicing may have to be developed
Breeders and
                   LOW               - No direct impact
Seed companies
AAFC               MED               - The requirement for appropriations will change
Ag researchers
                   LOW               - No direct impact
and scientists
                                     - Optionality may reduce the CGC work requirement
CGC and
                   MED               - an advance request of inspection communication
employees
                                      system will have to be developed
Other (incl.                         - Port communities could see minor reduced
governments,                          employment. There is a risk of attenuation of
                   LOW
taxpayers,                            statistical data. The requirement for appropriations
consultants                           will change.


    The recent study by Meyers Norris Penny (MNP) on the impacts of different
optionality scenarios concluded that optionality would produce savings. The
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study did not estimate the administrative consequences of optionality nor the
impact of optionality on competitiveness among handlers. The MNP study
distilled 11 scenarios, and did not provide a hierarchy of recommendations or a
clear preference. We recommend that the CGC use roundtable stakeholder
consultation to identify the best administrative methods for provision of optional
weighing and inspection services within the spirit of the recommendations that
follow in section 7.4.

7.4. Recommendations and Reasoning with Respect to
     Contracting Out Service
     From grain and shipping companies, we received complaints about costly
delays during peak periods, inspectors whose arrogance had a demoralizing
effect on company staff, and inflexibility in service delivery (no authorization of
overtime). From a couple of inspectors, we received complaints about a pattern
of insensitive, last minute, assignment of overtime duties.
     Government of Canada Regulatory Policy contains an admonition to use
private sector services when possible. CFIA has had success in contracting out
inspection services in the seeds area. Private sector suppliers would be under
pressure from a desire for renewal of contract to provide expeditious, flexibly
timed service. For these reasons, we recommend that CGC’s inspection
services be contracted out under CGC license except for CGC’s retention of an
essential capability to conduct appeals.
     Specific features would include:
              Balancing a need to link a single contractor to a given
              location in order to enhance accountability for service
              with a need to ensure adequate competition among
              contractors, for example by assigning segments of the
              larger ports to different contractors;
              Providing the market with long advance warning of the
              intention to contract out inspection services so that
              potential new suppliers can organize to compete for the
              business;


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              Provision of training programs to enable current CGC
              inspectors and all other potential contractors to prepare
              to compete for the CGC’s inspection business;
              Working with stakeholders, potential contractors, and
              actual contractors to define the processes by which
              requests for inspection would be transmitted and
              implemented;
              Requirements that contractors be independently owned
              and provide CA-audited39 confirmation that their volume
              of business does not exceed a to-be-defined threshold of
              dependence on a given grain company or farming
              organization;
              Gradual implementation of contracting out so as to
              minimize risk and disruption and to maximize the
              opportunity for current inspectors and other potential
              Canadian providers to compete successfully for the
              business;
              Work with stakeholders to establish clear standards of
              inspector performance by which contractors can be
              evaluated effectively and fairly;
              Use such standards and performance measures to
              impose penalties and ultimately revoke the licenses and
              contracts of poorly performing providers; and
              Evaluate objectively such performance measures along
              with the satisfaction of all relevant stakeholders as a
              basis for annual feedback and as a basis for evaluating
              incumbents when successive renewal competitions are
              launched.
    To ensure competitiveness, it is envisioned that more than one service
provider would be engaged and sustained, which increases the complexity.
The method of assigning work will need to be determined. Developing a

    39
      Audited by a member in good standing of the Canadian Institute of Chartered
Accountants.
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method with multiple competitive service providers to impartially allocate the
business will be critical. This effort will require additional resources by the
CGC.
    In keeping with longstanding Government of Canada Regulatory Policy, we
recommend contracting out because the burden of proof and evidence should
be with proponents of Canadian Grain Commission service, not the proponents
of contracting out. We do not believe that the proponents of CGC service have
satisfied that threshold of proof. But we also do not believe that contracting out,
especially in concert with inward inspection optionality, will be uneventful or a
cure-all.
    At ports with multiple terminals (Vancouver, which is busiest and most
congested), the process could be complex. Such complexity could increase
costs and even delays.
    It will be important for the CGC to retain some civil service inspectors for
the purpose of ensuring that it has the technical ability to participate in
arbitrating disputes and to provide service arising from the grain producers’
rights to subject to inspector’s grade and dockage. The CGC should be
prepared to continue as a small-scale, backup service provider, although it is
acknowledged that forecasting inspection volumes will be very difficult in this
environment.

7.5. Impact of Contracting Out on Stakeholders
    Implemented successfully, contracting out will benefit all players in the
system by improving efficiencies.
    Current inspectors may well gain, especially if they form companies to
provide the services.




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8.0. Liability, Misrepresentation, and Certificate Final

    8.1. The Issue
         As is well understood within the sector, grains with very different nutritional
    and agronomic properties can mimic each other visually. There is always a
    potential risk of purposeful or inadvertent misrepresentation that is normally
    detectible only by time-consuming tests, normally performed at the GRL facility
    in Winnipeg.
         When ships are loaded at port, the Canadian Grain Commission provides
    expeditious “Certificate Final” certifications on the basis of professional onsite
    inspections. Despite their apparent finality, Certificates Final will necessarily
    entail a risk of error being uncovered in subsequent lab testing until
    instantaneous, economic, onsite testing by DNA or other methods becomes
    available. One issue is how much liability, if any, the CGC should carry in the
    event that testing reveals unpreventable inspector error in the Certificate Final
    after a ship has set sail.
         Another issue is how to ensure that farmers pay a price for
    misrepresentation other than through civil action. Grain companies are loath to
    resort to civil suit partly because of public affairs risk. They are also hesitant to
    take legal action because of the high standards of traceability proof required in
    such court cases and the possibility that the proceeds of even a successful
    action will not match the costs of the fraud and the costs of taking legal action.
         In a well known case in 2003, a CGC Certificate Final assigned a grade of
    CWRS # 2 to a shipment of wheat coordinated by Sask Wheat Pool (SWP). A
    sample of the cargo was collected, and the vessel set sail. Thirty-three days
    later, the Canadian Grain Commission advised SWP that lab testing had
    revealed 20% content of unregistered varieties. The CGC moved to downgrade
    the Certificate Final to CW Feed Wheat.
         Sask Wheat Pool challenged the revision in court. The judgment ruled
    against the Canadian Grain Commission on the grounds that it had not

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instituted regulations to allow a change to the Certificate Final. In practice, the
CGC considered but did not introduce such regulations. In practice the issue of
changing the Certificate Final is significant because of the value of a ship’s
cargo, not because the probability of such misrepresentation is high. The
incidence of such misrepresentation is in fact extremely low for a variety of
reasons:
              The CWB and the grain trade have developed an
              ‘ineligible varieties protocol’ that helps ensure traceability
              to the farm gate;
              To protect their national brand and for ethical reasons,
              farmers monitor each other;
              Elevator managers are alert to the habits and values of
              the people from whom they make purchases.

    There are two requests to help address this situation for the future: 1) the
Government of Canada should stand behind the CGC Certificate Final and
share some of the liability to ensure the integrity of the Certificate Final, and 2)
there should be financial penalties for anyone who delivers or forwards
misrepresented grain in the handling and marketing system.
     For the purposes of this issue, misrepresentation of grain includes
introducing or forwarding ineligible varieties as well as fraudulently representing
grain as something other than its true identity, variety or by its inherent traits
(e.g. GM vs non-GM).

8.2. Recommendations and Reasoning with Respect to
     Liability for the Certificate Final
     To an exporter, the commercial harm of a revision to the Certificate Final
ultimately depends on the size of the cargo and the business impact in a
particular set of circumstances. The harm will never be less than the difference
of value between the originally estimated product and the actual product; the
harm will sometimes be much more.
     We recommend that the Canada Grain Act be amended to hold the CGC,
and the federal government as its underwriter, responsible for up to 33% of the
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harm incurred. The magnitude of the harm would be determined by an
Arbitrator appointed by the Minister and accepted by a majority of the affected
parties, or conversely by the Courts upon application by any affected party. We
recommend that the CGC be liable because in a modern democratic society
government agencies must meet the same standards of responsibility as
required of businesses and ordinary citizens.
     This change will help ensure the integrity of the Certificate Final. By
assigning clear but limited liability on the Canadian Grain Commission, the
change would assert an onus on it, terminal operators, grain handlers,
marketers and farmers to participate in and ensure that appropriate systems are
in place to mitigate reasonable risks prior to the final stage of vessel transfer to
a customer. All parties need to play a part in ensuring the integrity of the quality
assurance system, for which reason the risks should not rest with the CGC
alone.
     The Minister should have the authority to appoint a knowledgeable
Arbitrator with sufficient authority and support to investigate and assign liability
where a problem associated with misrepresented grain occurs. Considering
that many parties may be affected, the Arbitrator must be acceptable to a
majority (50% +1) of them. This Arbitration process would result in a binding
assessment of the aggregate damages and an assignment of those damages to
the appropriate parties.
     Given the potential for crops with novel traits in the future, and changes
away from KVD, the proposed process would be an important integrity
measure, providing greater domestic and international confidence in the
Canadian grain system and hence in Canadian product.




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8.3. Recommendations and Reasoning with Respect to
     Liability for Farmer Misrepresentation
     We recommend that the Act (Section 106) be modified to allow the
Canadian Grain Commission to impose fines or Administration Monetary
Penalties for various infractions,40 including for misrepresentation of grain. The
Act would specify maximum financial penalties of up to $ 20,000 for individuals
and entities other than licensees and up to $ 40,000 for licensees with
automatic adjustments to take inflation into consideration, assuming a review of
the Act on a periodic basis.
     Prior to preparing regulations, we recommend that the Canadian Grain
Commission consult stakeholders for the purpose of identifying factors that
would be taken into consideration when deciding the magnitude of a fine, for
example, past history of misrepresentation, purposefulness or inadvertence,
and the recency of farming experience.
      Too much is at stake for all stakeholders in the system to fail to introduce
enough means for deterring unscrupulous conduct. In small cases of
misrepresentation, the various stakeholders may have a multitude of public
affairs or financial reasons for not taking legal action. An offending farmer may
have insufficient assets to make action worthwhile. A court may require much
higher standards of evidence of traceability than necessary to convince most
reasonable people of a farmer or grain handler’s culpability.




    40
        We believe that the CGC needs the threat of monetary penalties to enforce its
regulations. Though we recommend in 10.0 the discontinuance of weighover requirements at
primary elevators because such procedures are outmoded, the fact that some elevator
companies have failed to comply for years ultimately undermines the legitimacy not just of the
regulatory system in grain but also of the structure of Canadian governance as a whole. In the
absence of financial penalties, the CGC’s ability to enforce compliance rests almost entirely on
the unlikely cancellation of a licence.
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8.4.   Impact on Stakeholders of CGC Liability for Certificate,
       Arbitration Process, and Penalties
    Virtually all stakeholders benefit insofar as these recommendations
contribute to enhance confidence in Canadian product and stronger brand.

                   INTENSITY OF
STAKEHOLDERS       IMPACT            CHARACTER OF IMPACT
                   (HIGH/MED/LOW)
Producers-Food     MED               - All recommendations benefit producers as a whole
Producers-
                   LOW               - Negligible impact
Feed/Fuels
Producer Car                         - Producer car shippers benefit on the margin to the
                   LOW
shippers                               extent that the food brand is strengthened
                                     - Grain companies stand to benefit from both
Grain companies    MED                diminished direct liability and greater confidence in
                                      the system
Independent
                   LOW               - Similar to preceding but attenuated
inland terminals
Dealers and
                   LOW               - Little direct impact
brokers
Transport          LOW               - No real impact
Breeders and
                   LOW               - No direct impact
Seed companies
AAFC               MED               - The requirement for a reserve fund may change
Ag researchers
                   LOW               - No direct impact
and scientists
CGC and
                   MED               - Greater clarity of responsibility
employees
Other (incl.
governments,                         - The system as a whole benefits from greater brand
                   LOW
taxpayers,                             strength
consultants




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9.0. Contractual Security

   9.1. The Issue
        The issue area is protection of farmers and other sellers in the event of a
   grain handler’s failure to pay. The first of two specific issues is how much
   regulated security the Canadian Grain Commission ought to be entitled to
   impose. This is partly a matter of regulation policy in general, as defined by
   Canadian Regulatory Policy. It is also a practical matter insofar as the CGC
   must balance the needs of some farmers for security of transaction against the
   needs of all stakeholders, including farmers, to limit costs in a global
   marketplace that is increasingly price-sensitive.
        The second specific issue is the ethical matter of assigning liability for
   shortfalls in payments to grain producers who were not fully compensated for
   losses in two recent bankruptcies that were secured by the Canadian Grain
   Commission itself.
        Effective August 1, 2006, Canadian Grain Commission policy will require all
   grain companies to be licensed and hence subject to CGC security
   requirements. There is some ambiguity as to whether this provision will be fully
   enforced insofar as some grain companies will apparently be exempted qua
   dealers, as discussed in section 10.0.
        The CGC has long required licencees to post security with the CGC as
   producer protection in the event of failure. The security provision takes the form
   of bonds, cash deposits, letter of credit, guarantees and payables insurance
   sufficient to cover eligible liabilities to producers or another acceptable financial
   instrument. All companies must report eligible liabilities monthly to the CGC.
   The magnitude of the security has been adequate to cover most liabilities to
   producers in most collapses, but not all.
        Since 1982, there have been 19 failures of licensed, bonded companies.
   Of these 19, there are 3 instances where the payout was less than 100%, one
   being virtually 100% (98.4%). There are 2 other instances where the CGC paid

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producers 100% for failures of companies that were not licensed or carrying
security. The CGC made payments in addition to or in the absence of security
provisions in a total of 5 cases.
    A number of grain companies have urged COMPAS to recommend
optionality for security on the grounds that the mandatory requirement for
security imposes an un-necessary cost during a period when global markets are
unusually price-sensitive. The carrying cost for committing this collateral
increases their cost of doing business, placing at risk price-driven sales.
Furthermore, mandatory security introduces a cost that impedes new entrants,
thereby constraining competition.
    In recent years, the Western Barley Growers Association and other groups
have called for implementation of clearing house systems as economical
substitutes for assuring payment. Modeled on futures exchanges, clearing
house systems would require pre-approval of participants, margins to assure
performance, and administration by such experienced bodies as the Winnipeg
Commodity Exchange, Toronto Stock Exchange, or the Montreal Bourse.41
    The second issue involves the Canadian Grain Commission’s obligations to
producers who received only partial payments in the Venture Seeds and
Naber’s failures. The CGC delivered less than full payment because the posted

     41
        The Western Barley Growers Association’s submission to COMPAS made the following
observations: “The cash commodity clearinghouse would operate [like a] traditional futures
exchange clearinghouses…Pre-approved buyers and sellers would register trades with the
clearinghouse and post initial margins to backstop their performance guarantees. The
clearinghouse becomes the buyer to all sellers and the seller to all buyers in the role of central
counterparty guarantor. Daily price fluctuations would be monitored and which ever side of the
transaction was in a negative position would post margin equal to the difference thereby
maintaining a balanced financial exposure between buyer and seller. These funds are held in
trust until the physical contract has been delivered to each counterparty’s satisfaction…
      “This technique is a more direct and suitable approach to securitizing contractual
obligations as it is a direct measure of actual financial exposure on a contract by contract basis
as opposed to the Canadian Grain Commission’s (CGC) overall enterprise bonding approach.
In the past the CGC has required all grain trading enterprises to post a security bond to protect
the interests of those parties doing business with an approved agent. This has proved
challenging to enforce due to the unwillingness of some participants to register, outdated
financial information, the difficulty in securing assets when a failure occurs and the inability to
defend against outright fraud. Losses have been substantial over the past decade and
settlements have been inadequate in several instances.” (June 19, 2006).
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security of the two companies was insufficient for the task. We received the
following three main arguments for the CGC to nonetheless top up payments:
             The federal government has done so before,
             CGC oversight of the two firms was ultimately at fault for
             not ensuring that the security was adequate for the task,
             and
             CGC invocations to farmers to use only licensed
             companies were so ardent, fulsome, and unrestrained
             that it would be difficult for the average farmer or
             Canadian citizen to conclude that the CGC was offering
             less than 100% protection, the most persuasive
             argument in our estimation.

9.2. Reasoning and Recommendations with Respect to
     Security
    We recommend that the Canadian Grain Commission
           consult with accounting and risk management experts to
           explore the costs and the benefits of operating a
           clearinghouse mechanism to reduce efficiently the
           transactional risk to farmers, and subsequently
           launch a stakeholder roundtable on the CFIA model to
           involve all stakeholders in developing solutions that
           provide optimal security at optimal prices and with
           maximal clarity to producers about the true magnitude of
           the assurance being provided.
     On the advice of this roundtable, the Canadian Grain Commission will need
to find a reasonable balance between the needs of some farmers for third party-
assured security of payment in transactions on the one hand and the system’s
need to constrain costs on the other. We recommend that the roundtable
explore all possible options, including explicit ceilings on transaction
guarantees. Irrespective of the particular balancing point that the CGC opts for,
all communications to farmers need to be unambiguously clear, far clearer than
past CGC claims of assurance.
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     We recommend deletion in the Act of Section 49.1(2), which eliminates
liability to the CGC if a licensee fails to fulfill payment to a producer. In keeping
with the accountability and transparency principles discussed in section 2.4, we
do not believe that any regulatory body ought to receive legislated immunity
from court action in the event that it fails to perform its heavily advertised
functions.
     We recommend that the surveys of farmers previously recommended in this
study measure the actual demand for security once farmers understand the
system costs of compulsory security.

9.3. Reasoning and Recommendations with Respect to CGC
     Liability in the Venture Seeds and Naber Seeds Failures
     For reasons of transparency and accountability, we believe very strongly
that the Canadian Grain Commission should fully compensate the affected
farmers, pay their legal costs, pay interest for the affected period, and pay a
penalty for causing needless distress. The duty of the CGC and hence the
government of Canada to fulfill obligations implied by CGC promises is a matter
that is separate from the role of the CGC in requiring secure transactions.
     The Canadian Grain Commission’s position has been that its obligations
are limited by the amount of the bankrupt company’s security. In the Venture
and Naber’s cases, the posted security fell short of the company’s obligations.
In these two recent examples of prorated payments, the affected farmers were
in no position to know that their degree of protection could be limited or that the
bankrupt company had not secured itself adequately. The CGC website at the
time was a staunch advocate of CGC-licensed grain companies. “Your grain,
your gain. Why risk it?” was the headline. The web-brochure went on to ask
“are you betting the farm when you sell your grain? If you’re not dealing with a
company that is Canadian Grain Commission (CGC) licensed, you could be
putting your financial gain at risk without realizing it.” The CGC’s document
proceeds with repeated entreaties to use and trust only its licensees. Our view
is that government agencies have no less obligation than businesses or
ordinary citizens to carry out their responsibilities to customers adversely
affected by failures to live up to promises as these promises would be
understood by the average Canadian.

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9.4. Impacts on Stakeholders
     The launching of CFIA-prototype stakeholder roundtables will contribute to
more harmonious relations among stakeholders through a better understanding
of the interests and constraints affecting each side. The output in terms of
security policy could provide low cost, high effectiveness security that satisfies
most or all parties.
     Full prompt payment to all producers affected by the Venture and Naber
bankruptcies will help enhance the credibility of the grain system and its
regulator.
     Companies in distress often resort to panic buying from producers as a way
to shore up their working capital position, effectively ‘borrowing’ from producers
until payment is received from grain sales. This action is what gets the posted
security out of balance with the actual liability. This policy will insulate farmers
from this phenomena, by transferring the risk to the CGC. In response, the
CGC will have to improve the rigour of its required reporting to offset the
assumption of this risk. We believe the CGC can develop program rules to
effectively accomplish this without undue risk to the taxpayers of Canada.




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10.0. Licensing

   10.1. The Issue
        As in other sectors and in the professions, licensing is required of service
   providers as a guarantee of a certain level, homogeneity, and predictability of
   service standards. Licensing helps protect customers from shoddy service. In
   this instance, farmers are protected through the licensed regulation of storage,
   weighing and handling of grain. By assuring a certain quality of service,
   licensing helps sustain the economic viability of the sector and therefore the
   profitability of the legitimate stakeholders who provide service to it. By
   protecting producers, the licensing authority also protects the economic
   interests of the various licensed grain companies, handlers, transportation
   companies, and other firms that earn revenue by serving the sector.
        The overarching licensing challenge is that the Canadian Grain
   Commission’s efforts to encompass new players and sub-sectors has led to an
   apparent patchwork quilt with uneven transparency, uniformity, and compliance.
   Some examples:
                  Not all handler groups are licensed, the main exemption
                  being special crop dealers;
                  Trucking is not licensed because it does not entail
                  elevation;
                  Licensing requirements in respect of pricing seem to vary
                  without apparent reason, for example, grain dealers can
                  charge shrinkage, while primary elevators cannot;
                  Licensing obligations with respect to farmers’ rights vary
                  without reason, for example, deliveries to grain dealers
                  have not been eligible for the farmers’ right to inspector’s
                  grade and dockage, and yet some grain dealers are
                  operationally indistinct from elevators;

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             Grain dealers have no weighover or other audit/inventory
             requirement;
             Elevator companies have weighover obligations but
             these are not enforced, as discussed in section 7;
             Farmers are entitled to request inspector’s grade and
             dockage at an elevator but farmers are decreasingly able
             to exercise that right as a result of their growing reliance
             on commercial truckers to deliver the grain;
             Commercial buyers of grain are licensed and bonded but
             not the commercial transportation companies that have
             operational possession of the grain between farm gate
             and buyer;
             Countless grain buyers are licensed but not feedlots;
             Elevator companies are required to report tariffs and
             fees, but not grain dealers; and
             Companies with more than one type of license, we have
             been told, can to some extent cherry-pick the
             requirements they would prefer to satisfy.
     The broad area of internal or intra-company transactions requires the
development of regulations that exempt them in a uniform and transparent way
from requirements intended to protect parties in transactions. Some grain
companies have expressed dismay over licensing exemptions for producer
loading facilities. The Canadian Grain Commission was nonetheless right to
make the exemption, in our estimation. We recommend that the CGC consider
enunciating a regulatory policy that treats as a separate class facilities that do
not conduct transactions for the purchase of grain or incur liabilities for unpaid
grain. Such a policy would treat differently not only producer loading facilities
but also farmer-owned processing facilities.
     We recommend that the CGC consult with the CFIA and other agencies as
well as stakeholders as to whether such facilities should be exempted or placed
into a separate class with few, if any, requirements other than a license.
Licensing would have value, in our view, if CFIA and/or other agencies saw
CGC licensing as a valuable, supplementary tool for influencing the health and
safety practices of such facilities or for statistical data collection.
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    We foresee that there may need to be an additional class of license in the
future for container loading facilities. As this mode of transportation grows, the
CGC will have to consult with stakeholders on the requirement for certain
regulations to protect and preserve Canada’s brand.
    Lastly, farmers indicated frustration at certain fees charged by grain
companies, and the lack of regulation. Charges relating to barley designated as
malting quality were of particular concern. In 1995, the CGC discontinued
establishing the fees and tariffs that can be charged by a company, and now
only require the reporting of a maximum tariff. The CGC should ensure that
there is clear understanding of grain company fees and charges by supporting
the extension activities of the recommended Office of Grain Farmer Advocacy.
The CGC should be able to fine or penalize licensees for overcharging or not
disclosing all fees to be charged to a farmer prior to settlement.

10.2. Reasoning and Recommendations
    We recommend that the CGC commit itself to introducing greater
uniformity, transparency, and clarity to its patchwork quilt of licensing
regulations. In specific, the Canadian Grain Commission should:
              provide an annual report to stakeholders on its efforts to
              introduce uniformity, transparency, and clarity in
              licensing;
              work with stakeholders and other government agencies
              for the purpose of developing and enunciating a policy
              setting out the rules by which organizations are
              exempted from licensing (and security) requirements, for
              example, producer-owned or closed loop systems;
              formally review the licensing classifications, cost and
              procedures every 5 years;
              assess annually stakeholder satisfaction with its efforts to
              develop clear, uniform, and fair guidelines for licensing;
              establish a protocol prescribing primary elevators’
              obligations and procedures in respect of taking and
              storing automatic samples of all deliveries, and modify its

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               rules to allow farmers to request CGC inspection and
               dockage up to 24 hours after delivery of the grain to the
               elevator;
               require that every grain contract from every class of
               licensee contain the following words in the footer of the
               first and every page in a font no smaller than the average
               font in the contract: “Under the law, every grain producer
               is entitled to receive the opinion of the Canadian Grain
               Commission (800 number) on the grading of this grain
               and on dockage, and is entitled to contact either the
               Commission or the Office of Grain Farmer Advocacy (800
               number) for their advice.”

10.3. Impact on Stakeholders of CGC Liability for Certificate,
      Arbitration Process, and Penalties
    Virtually all stakeholders benefit insofar as these recommendations
contribute to enhanced confidence in Canadian product and stronger brand.

                    INTENSITY OF
STAKEHOLDERS        IMPACT            CHARACTER OF IMPACT
                    (HIGH/MED/LOW)
                                      - Producers benefit greatly by being able to work in a
Producers-Food      HIGH               more transparent and uniform system of licensed
                                       handlers
Producers-
                    LOW               - Negligible impact
Feed/Fuels
Producer Car                          - Producer car shippers benefit insofar as their
                    LOW
shippers                               exempt status is regularized
                                      - The majors benefit as a result of seeing new
Grain companies     MED                entrants and smaller players having to meet equal
                                       licensing standards
Independent                           - Negligible
                    LOW
inland terminals
                                      - The better players will benefit insofar as producers
Dealers and                            come to see their service as meeting similar
                    LOW
brokers                                regulatory standards to those required of the majors

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                                - Commercial truckers may incur slightly higher costs
Transport        MED             to the extent that they may be obliged to meet
                                 licensing and security obligations
Breeders and
                 LOW            - No direct impact
Seed companies
                                - Increased efforts at the CGC in respect of licensing
                                 policy, stakeholder consultation, and inter-agency
AAFC             MED
                                 coordination will increase the monitoring burden on
                                 AAFC
Ag researchers
                 LOW            - No direct impact
and scientists
CGC and                         - Increased burden for consulting stakeholders and
                 HIGH
employees                        coordinating with other agencies
Other (incl.
governments,                    - The system as a whole benefits from greater
                 LOW
taxpayers,                       perceived transparency, uniformity, and clarity
consultants




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11.0. Dispute Resolution

   11.1. Issue
        The issue is not the Grain Appeals Tribunal of the Canadian Grain
   Commission. The Grain Appeals Tribunal has earned some plaudits for
   effectiveness. Our impression is that the Tribunal is respected for its role in
   grading disputes, although at times some stakeholders sensed excessive
   influence on the part of the Office of the Chief Inspector.
        The issue is that the industry has a range of disputes requiring arbitration
   and mediation beyond grain grading. In a society that places an increasing
   premium on accountability and transparency (see section 2.4), the Grain Appeal
   Tribunal’s location within the CGC sets a limit on its legitimacy and perceived
   effectiveness.
        We furthermore see bubbling to the surface an increase in the range and
   complexity of disputes. Indeed, it would almost be an unfathomable situation if
   there were no sizeable increase in conflict given the growth in the number of
   grains, varieties, and commercial uses. Civil action remains an option for
   settling disputes but litigation is almost always dear, dilatory, and deleterious to
   the smooth functioning of the organization that launches the action.

   11.2. Recommendations and Reasoning with respect to
         Arbitration and Mediation
        We recommend that the Canada Grain Act be modified to allow
   stakeholders to use arbitration services as set out in the arbitration process
   outlined in the Canada Transportation Act and mediation services akin to those
   that support the Farm Debt Mediation Act. In keeping with this
   recommendation, we further recommend eliminating Section 92, authorizing
   Commissioners to act as arbitrators.


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     Arbitration and mediation would be available for disputes relating to the
Canadian Grain Commission’s policy applications and for any dispute involving
stakeholders in the grain sector in Canada. Neither process would be used in
international disputes. International disputes can usually be heard through
World Trade Organization mechanisms or dealt with according to international
laws. Nor would either process be intended for use in creating or overturning
policy. The two processes would be utilized to ensure the fair implementation of
policy and fairness in commercial transactions across the grain industry.
     The proposed pre-court processes for dispute resolution are intended to
help make the climate of stakeholder opinion in the industry more conciliatory
by resolving disputes more quickly and at less cost. This process would not
prevent any individual or organization from pursuing remedy through the courts
except during the period of mediation and arbitration if mediation or arbitration
were selected. Court action could always commence after the best efforts of
mediation or arbitration had concluded.
     Following convention, arbitration and mediation would necessarily involve
different styles and procedures. In mediation, a certain focus is placed on
preserving relationships. In arbitration, a focus is placed on investigating fact.
Final offer arbitration entails a review of the each side’s apparent final offer.
One of the offers is adopted as the final decision.
     The Canada Grain Act should provide for both mediation and arbitration,
albeit outside and independent of the Canadian Grain Commission. Both
processes would be administered by the AAFC department entrusted with
responsibility for administering the Farm Debt Mediation Act. This department
has the requisite experience, expertise, and networks to provide effective,
economical service.
     The scope of disputes to be presented for mediation or arbitration should be
limited to commercial activities between Canadian parties. The CGC Grain
Appeals Tribunal as described in the Act would continue to address grading
disputes. We recommend the main elements of arbitration as follows:
               A list of pre-approved, knowledgeable arbitrators would
               be generated and made available;
               The process would begin if both conflicting parties agree
               to arbitration in a two-party dispute or if a majority
               reached an agreement in a multi-party dispute;
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               The arbitrator should be enabled to investigate disputes
               in the grain industry that may relate to contractual
               conflicts, the assessment of fees or charges between
               buyer and seller;
               The arbitrator should also be empowered to arbitrate
               disputes about misrepresentation of grain and to assess
               damages, as discussed in Section 9.0 regarding the
               Certificate Final;
               Parties to the dispute would have a choice of single
               arbiter or panel of three arbitrators;
               The costs for arbitration should be shared equally
               between or among parties;
               If a party applies for arbitration, the administering agency
               should contact all parties and get their agreement to
               proceed to arbitration within 15 days along with the
               details of their final offer;
               the complainant retains the option of court action.
    In the case of mediation, we recommend the following provisions, in
particular that
              the Farm Debt Mediation Service (FDMS)42 provide the
              professional resources in light of its ready access to
              knowledgeable agriculture mediators and financial field
              persons with Standing Offer or Vendor of Record
              contracts at AAFC;
              FDMS be utilized as a professionally effective,
              economical solution—it has a national network of
              experienced mediators while the utilization of FDMS
              would entail no new overhead costs;
              Mediation services would be provided by AAFC through
              its Standing Offer contracts with existing professionals;


    42
        In the spirit of transparency, we note that Tom Halpenny, consultant to COMPAS on this
project, holds a Standing Offer contract with the Farm Debt Mediation Service.
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               Any stakeholder could apply for mediation; and
               Mediation prices would be subsidized sufficiently to
               encourage utilization but not so much as to invite
               frivolous use.
     We recommend that the Canadian Grain Commission be required to
participate in any mediation or arbitration that seeks its engagement. We do not
specifically recommend that this requirement appear in the Act because any
such obligation of the CGC should probably be an outgrowth of future
Regulatory Policy before being placed into law.
     In the event that a grain producer requests mediation or arbitration with a
licensee, we recommend that the licensee be required to participate under CGC
regulations. The onus on licensees to participate is justified in our view by the
Government of Canada Regulatory Policy injunction to design rules so as to
address the special circumstances of small business, in this case grain farmers.

11.3. Impacts on Stakeholders
     The general impact will be to attenuate suspicion by removing impediments
to the expeditious resolution of conflict.

                    INTENSITY OF
STAKEHOLDERS        IMPACT            CHARACTER OF IMPACT
                    (HIGH/MED/LOW)
                                      - Producers benefit greatly by receiving economical
Producers-Food      HIGH
                                       opportunities for the swift resolution of conflict
Producers-                            - Negligible impact with some potential for resolution
                    MED
Feed/Fuels                             of conflict in the future
Producer Car
                    MED               - Similar to preceding
shippers
                                      - All the grain companies benefit from the potential
Grain companies     MED
                                       opportunities for swift, economical conflict resolution
Independent
                    LOW               - Similar to above
inland terminals
Dealers and
                    LOW               - Similar to above
brokers
Transport           LOW               - No direct impact


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Breeders and
                 LOW            - No direct impact
Seed companies
                                - Some added burden and cost but also some
AAFC             MED
                                 recognition of excellence in conflict resolution
Ag researchers
                 LOW            - No direct impact
and scientists
                                - Short-term impact may be perceived diminished
CGC and
                 HIGH            authority; long-term impact will almost certainly be
employees
                                 increased legitimacy
Other (incl.
governments,                    - The system as a whole benefits from greater
                 LOW
taxpayers,                       opportunities to resolve and mitigate conflict.
consultants




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12.0. Research Services

   12.1. The Issue
        The central issues are inter-related budgetary issues—how much should
   Canada be spending on grain research, where should it be spent, and to what
   extent should the Grain Research Lab of the Canadian Grain Commission be a
   profit centre, earning revenue by providing research services.
        A dispassionate assessment of the state of grain in Canada and abroad
   justifies an exceptional public sector investment in grain research. Our
   historically predominant global position in quality Canadian Wheat Board grains
   for human consumption is in long-term decline because we are a high cost
   producer. In the history of business, high cost producers normally protect their
   positions by turning their focus to high value, research-driven product.
        It would be especially logical for Canada to enhance its investments in grain
   research because such research would be perceived as buttressing one of our
   comparative advantages, the perceived strength of our quality assurance
   systems. One of our longstanding competitive advantages is that our integrated
   quality assurance system cannot be easily duplicated in other countries. Heavy
   investments in research stand to build on that advantage.
        Let us suppose that it would be a bad idea to invest in research to establish
   leadership in high value product. Let us also suppose that it would be a bad
   idea to invest in research so as to enhance our reputation for quality assurance.
   We would nonetheless need greater research budgets to accommodate the
   movement of global markets to ever higher, research-driven, quality standards.
   Global RFPs43 for grains now consist of pages of research and testing
   requirements. Research and testing standards form the basis of massive grain




       43
            Requests-for-proposal.
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purchases. They also form the basis of hard-ball negotiations to force price
reductions after the delivery of product.44
     For purposes of argument, let us suppose that a heavy investment in
research were unnecessary in the current climate of RFPs and contract
negotiations. Let us also suppose that heavy research investments were
superfluous for an export strategy focused on value-added product. A heavy
investment in research would nonetheless be essential because of rapid
changes in our domestic grain industry.
     Even if all the preceding arguments for investing more in research were
repudiated, it becomes especially important to reinforce the sector through
investment in research at a time when the Wheat Board’s mission is being re-
assessed.
     Canada’s longstanding GRL budgets are being spread thin by the
proliferation of uses for grains (feed and feedstock) along with the proliferation
of grains and varieties within grains. Canadian farmers have diversified their
crop production dramatically over the past decade. Such diversification
necessitated allocating research resources to pulses, new types of oilseeds,
variety identification and GM grains and oilseeds. There have been no new
resources at the GRL with the result that research resources are spread more
and more thinly.
     For the preceding reasons and for many others, Canada ought to be a top
national investor in grain research but we are not. We lag behind our
competitors. It would be too much to say that our research budgeting resembles
the Aesop fairy tale about the goose that laid the golden eggs. But we do seem
to be moving to a situation without a goose. At the GRL, there seem to be
succession and replacement challenges.
     In practice, agriculture industry observers such as University of Minnesota
economist, Phillip Pardey,45 have remarked on Canada’s deficient contribution



    44
        For example, a Canadian cargo was held up in China for contractual dispute because
testing in China revealed that the product contained excessive amounts of selenium. In fact, the
Chinese client should feel fortunate that the cargo was high in selenium, an essential nutrient
for forestalling prostate cancer in which the World Health Organization found the Chinese
deficient.
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in agricultural research. A recent study conducted by the Thomsen Group for
AAFC rates Canada’s contribution to agricultural research as “intermediate”
compared to some key competitors.
     The CGC’s Grain Research Lab has done admirable work in the past. It has
provided research on detection methods and potential effects of important
quality assurance factors such as mycotoxins, radionuclides, plant
insects/disease, heavy metals and chemical residue. These factors are also
health and safety factors, and the GRL serves as a research and detection
service for the CFIA on these seed related issues. The GRL enables the CGC
to make statements of quality assurance on a sound scientific basis.
     Marketers indicated that the technical resources of the CGC have not been
as available for international market development as they should be. There are
two effects of this: the CGC is not as tuned in to international customer
attitudes, and the market development efforts are not quite as effective as they
could be.
     The CGC, along with the CWB, CIGI, CMBTC,46 and AAFC, are evaluating
a mooted Center of Excellence for grain research to be developed in Winnipeg.
These entities all face re-capitalization challenges over the next few years.
     The key issue is that the GRL has not been funded to an optimal level, and
there may not have been a sufficient level of collaboration among research
agencies and government departments. To address these two issues, some
stakeholders suggested that the GRL be relocated to AAFC. Other concerns
are that revenue from services or licensing is used to offset the cost of the GRL.
Stakeholders generally felt that research was a public benefit, and should be
funded by the public treasury. Stakeholders indicated emphatically that
government investment in research was WTO-compliant, and not
countervailable from a trade perspective.
     To mitigate the effects of ceilings on research resources, the GRL has
undertaken some services for budget-replacement reasons. We heard some



    45
        On Canada’s lag in agricultural R&D investments relative to Australia and other
countries, see the observations of University of Minnesota agricultural economist Philip Pardey
as reported in Meristem Land & Science: PRRCG Report (April 15, 2006).
     46
        Canadian Malting Barley Technical Center.
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concern that this practice, once more popular than it now is, could have risked
the impartiality of the Canadian Grain Commission.

12.2. Recommendations and Reasoning
    Given that weak funding of research capability of Canada’s third biggest
export resembles the Aesop tale, we recommend that the federal government
embark on a long-term (7-10 year) plan to greatly increase grain research
spending. A long-term plan is essential to enable the GRL to attract strong
replacement researchers in a successful succession plan, necessary given the
age profile of its staff. Yearly increases in a multiyear plan are essential for
successful absorption and deployment of resources.
    We recommend that total grain research spending be increased four-fold in
ten years with the largest portions going to the GRL and a proposed AAFC
program for outsourcing research on an RFP basis.
    Other specific recommendations are that
              the CGC create a roundtable of federal and provincial
              research funding agencies and post-secondary
              departments along with university Agricultural units to
              maintain a watching brief on grain research during these
              key years;
              funding agencies responsible for post-secondary
              education and agricultural research in the five relevant
              provinces be encouraged to collaborate with and match
              the proposed investment in agricultural research;
              the GRL maintain its reporting role through the CGC, and
              that its funding be listed as a separate appropriation
              through the CGC;
              the CGC and GRL be encourage to co-locate in the
              mooted Centre of Excellence;
              the GRL collaborate with stakeholders to encourage
              university and private sector research in support of
              stakeholders’ needs; and


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            to protect the perceived impartiality of the CGC, the GRL
            refrain from accepting research contracts from licencees
            except in exceptional circumstances when university and
            private sector suppliers are unavailable.

12.3. Impacts on Stakeholders
    The long-term impacts will be to strengthen the sector and thus benefit all
stakeholders. The short-term impacts will be to encourage the growth of
expertise in agricultural research in general and grain research in particular.
Some technology companies might ultimately benefit from commercializing
under CGC license the fruits of its technological and testing innovations.
    Taxpayers will bear the cost of additional spending in research while
reaping its benefits. As discussed in the preceding passages, spending on
research amounts to an essential, productive investment given that the future of
the grain sector, a mature economy, lies in research-dependent advances in
health, safety, and value-added new products.




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Appendix I: Itemized Summary of Recommendations

   1.0 Introduction
   No Recommendations

   2.0 Setting, Challenges, and Opportunities
   1.    As container use grows, the CGC may need to adopt new procedures to
         facilitate and monitor quality assurance by this method. It may need to
         launch a special accreditation process, authorizing independent service
         providers to inspect and certify product to a declared standard or set of
         buyer specifications.

   3.0 Mandate and Stakeholder Interests
   2.    We recommend that paragraph 13 of the Act be modified to read as
         follows:
                 Subject to this Act and any directions to the Commission issued
                 from time to time under this Act by the Governor in Council or the
                 Minister, the Commission shall:
                 1) establish and maintain the standards of quality for
                    Canadian grain and regulate grain handling in
                    Canada, to ensure a dependable commodity for
                    domestic and export markets, and
                 2) in the interests of producers, provide the right of
                    delivery access by grain producers to primary or
                    terminal elevators, provide the right to third party
                    grade and dockage verification, provide the right of a
                    grain producer to access a producer car for shipment
                    of grain and to have third party weighing and

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                 inspection of that unload, provide the right of grain
                 producers that their commercial grain transactions
                 with licensees under this Act be secure.
3.    The last provision in the list is intended to afford the CGC freedom to
      consult with stakeholders to select the most appropriate form of security
      protection for any given transaction at any given time. Such protection
      may involve the use of clearing houses, partial security through bonding,
      full security through bonding, or other devices so long as (a) authentic
      effort is invested to enhance security and (b) producers have an
      unambiguous understanding of their degree of security.
4.    We recommend that the CGC require all contracts between farmers and
      licensees to remind farmers of their rights under the Act in a form
      prescribed by the Canadian Grain Commission, of which we provide a
      sample in section 10. We recommend this because farmers expressed
      concern that elevators were misleading them in grading and said that they
      felt intimidated. Farmers told us that their neighbours and peers were
      often unaware of their rights to have the CGC verify the accuracy of grain
      company grading. One prominent grain company had been perceived as
      contravening the law, wrongly specifying in its contracts that its decisions
      were final.
5.    We recommend that the CGC invite the Canada Grains Council or
      another such body to recommend draft wording for a CGC requirement in
      all sales contracts of a simple, clear statement in the form of unit pricing
      (e.g. price offered or paid per tonne/bushel with all costs factored in). We
      recommend this because farmers told us that they were confused by the
      allegedly purposeful complexity of grain company valuations.
6.    We recommend the CGC approach Industry Canada about more frequent
      elevator scale monitoring for the next few years until survey evidence
      confirms that farmers are confident in the accuracy of such scales.
      Mindful of the possibility that Industry Canada may be unable to
      accommodate such a request, we recommend that the Act be amended
      to allow the CGC to monitor the accuracy of elevator scales more
      frequently than carried out by Industry Canada under the Weights and
      Measures Act, and to empower the CGC to fine elevator companies for

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           non-compliance with this or any other CGC regulation to alleviate farmer’s
           concerns about accuracy in weighing.
7.         We recommend that the Act be modified to allow the Canadian Grain
           Commission to require (i) elevators to contract annually with third party
           providers to verify the accuracy of their scales with an automatic fine of
           no less than three times the typical cost of the service for non-compliance
           and (ii) the CGC to carry out random, surprise checks with (iii) significant
           fines for significant levels of inaccuracy under the preceding two
           scenarios to alleviate farmer’s concerns about accuracy in weighing.
8.         Using results from annual AAFC surveys of farmers, we recommend that
           the Canadian Grain Commission reduce or eliminate its requests of
           Industry Canada or, as the case may be, its direct requirements for
           annual and random scale verification in the future as farmer confidence in
           the accuracy of elevator scales is shown to be sufficient.47
9.         We recommend that the Act strengthen accountability and transparency
           related provisions relating to staff beyond the general constraints on
           public servants as a whole so as to reinforce the CGC’s credibility with
           producers and other stakeholders. The Act would be modified to prohibit
           senior staff from holding direct or indirect interest in any aspect of the
           sector, including futures, and shares as well as in farming operations
           except for incidental or recreational purposes.
10.        We recommend throughout our report the creation of stakeholder-driven,
           CGC-funded roundtables on the model of CFIA’s consultation program to
           enhance the ability of stakeholders to work well with each other and the
           ability of the CGC to work well with its stakeholders. We recommend this
           because we see the Canadian Grain Commission’s consultation efforts as
           inadequate and largely so for budgetary reasons.



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       In a spirit of transparency, COMPAS does not hold a Standing Offer position with AAFC
and so would not normally be eligible to compete for such a contract. We would have a better
chance of winning such work if it were let by the CGC, which would have to issue a public
request-for-proposal, allowing COMPAS to compete. We recommend that the survey work be
issued instead by AAFC so that its design and interpretation were at arms’ length from the
Commission.
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4.0 Governance: Board and Executive Structure
11.    For reasons explored in the body of the report, we recommend no change
       in the Canadian Grain Commission’s agency status.
12.    We do not recommend a Board of Directors structure for the Canadian
       Grain Commission. We recommend that any significant change to the
       reporting structure of the CGC await a potential new Regulatory Policy
       from the Government of Canada on the reporting structures of agencies
       and regulators.
13.    We recommend a change at the executive level with the creation of a
       single President/CEO/Chief Commissioner, supported by Vice-Presidents
       and other senior executives, for reasons explored at length in the body of
       the report.
14.    The Canadian Grain Commission has six “Assistant Commissioners.” At
       the best of times, these political appointees are well regarded by farmers
       for interceding with elevators in weighing or grading disputes but the style
       of their interventions are reportedly of uneven quality. At the worst of time,
       they are inhabitants of patronage heaven. The continuance of these
       ambiguously defined positions is in our estimation incompatible with
       principles of modern government. For reasons of clarity, we recommend
       creation in their place of an Office of Grain Farmer Advocacy with a
       mandate to ensure that farmers understand their rights under the Act and
       to advocate for them in disputes with handlers, the CGC, or other
       stakeholders.
15.    We recommend that the Office of Grain Farmer Advocacy be launched
       with the budget currently allocated to the Assistant Commissioners. The
       future of this Office and its budget should be evaluated every three years
       on the basis of evidence for the need of its services as shown in annual
       surveys of farmer behaviour, knowledge, and perceptions undertaken by
       Agriculture and Agri-Food Canada (AAFC).
16.    As an alternative to an Office of Grain Farmer Advocacy, we would
       recommend that AAFC hold a competition, inviting proposals from non-
       governmental organizations, to supply such services.



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5.0 Funding, Public Goods, and Private Goods
17.    We recommend that the federal government defray all basic infrastructure
       costs of the CGC, assigning cost recovery to the incremental or marginal
       costs associated with individual services necessary for commercial
       transaction. We define infrastructure broadly to include the costs of
       physical establishment and ongoing management, as discussed in the
       report.
18.    In the case of inspection, we recommend that the overtime portion of
       salary costs (i.e. the portion exceeding normal non-overtime costs) be
       absorbed by the CGC through federal government subsidies as if this
       were the equivalent of basic infrastructure cost.

6.0 Quality and Quantity Assurance
19.    We ultimately remain neutral on the issue of size of the Standards
       Committees. A stakeholder recommendation to reduce their size makes
       sense insofar as smaller committees are known to be more effective at
       administrative tasks. But larger committees are known to be more
       effective at building networks of legitimacy.
20.    We do not recommend a reduced representation on the part of farmers
       on the Standards Committee. We received advice to recommend
       reducing producer presence on these committees but no adequate
       explanation of how the system would benefit.
21.    We recommend a slight reduction in the number of CGC appointees on
       the Standards Committee insofar, as a regulator with staff and influence,
       its impact on its Committees is necessarily larger than its numerical
       representation anyhow.
22.    We recommend that the impetus that prompted the Canadian Grain
       Commission’s introduction of a new class of wheat extend to future CGC
       efforts to balance the interests of those who would priorize protection of
       export brands with the interests of those who favour new varieties for feed
       and feedstock.
23.    We recommend that the Canadian Grain Commission consult annually
       with stakeholders about criteria for benchmarking and assessing the
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       effectiveness of the CGC in grading and monitoring risks to Canadian
       grain quality, and that the CGC make annual reports to stakeholders on
       its effectiveness on the basis of these criteria.
24.    We recommend that the federal government commit itself to a graduated,
       multiyear increase in allocations to the CGC’s Grain Research Lab for
       purposes of developing fast, economical technologies for testing.
25.    We also recommend that AAFC establish a special fund for the
       development of such technologies with such resources available to AAFC
       researchers and on a competitive basis to private sector and university
       researchers in order not to put all the federal government’s eggs in the
       same metaphorical basket.
26.    We recommend that both the Canadian Grain Commission and AAFC
       make annual reports to stakeholders on the effectiveness of their
       research efforts and their forthcoming research plans.
27.    We recommend that the Canadian Grain Commission meet with
       stakeholders to establish a template for benchmarking and annual
       reporting on its performance regarding the CGC’s capacity for
       accommodating purchases by specification. Thus, the CGC would report
       to stakeholders each year on its past performance in accommodating
       purchases by specification and requests for customized services, and its
       plans for the future.
28.    We recommend that the Canadian Grain Commission collaborate with
       current or potential independent providers to provide such customized
       services, where necessary under CGC license to the extent that
       customized services can be outsourced. We recommend outsourcing so
       that the CGC can focus on its core activities and so that the CGC, a
       regulatory body, does not un-intentionally place itself in a conflict between
       a dependence on revenue from a regulated organization and its need to
       chastise or punish that organization for failure to meet regulatory
       standards.
29.    The Canadian Grain Commission should continue to work with
       stakeholders in the oilseed sector to develop and implement a grading
       system with factors for oil content that meet stakeholders’ needs.
30.    Our recommendation for reducing irritants is for the Canadian Grain
       Commission to receive adequate funding for a sustained program of
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       consultation on the model of the CFIA. In the spirit of the CFIA, the CGC
       would subsidize consultation efforts. Like the CFIA, the CGC would
       delegate to stakeholders much of the responsibility for organizing such
       consultations in order to give them the confidence that consultation was
       genuine. CGC-funded and stakeholder-led consultations will greatly
       improve the two-way flow of information, improve CGC’s responsiveness,
       and enhance stakeholders’ understanding of some of the unavoidable
       limitations on the ability of the Canadian Grain Commission to meet their
       needs as fully as they might wish.
31.    We recommend that the CGC approach CFIA and Health Canada for the
       purpose of discussing the merits of jointly sponsoring and funding
       stakeholder-led roundtables on the issue of food safety.

7.0 Weighing and Inspection Services
32.    We recommend that inward inspection become optional. It is difficult to
       justify maintaining the mandatory requirement for inward inspection given
       that it is not a universal requirement. U.S. and container shipments do not
       require it and there is little likelihood of a change in their treatment in the
       foreseeable future. These specific considerations, the lack of a
       requirement for inward inspection on intra-company shipments, and the
       admonition from Government of Canada Regulatory Policy to avoid
       needless requirements, lead us to this conclusion.
33.    We recommend that the Act require the Canadian Grain Commission to
       ensure that a capacity for carrying out inward inspection be maintained at
       public cost since both the availability of inward inspection and its practice
       do benefit Canada as a whole by helping to sustain both producers and
       smaller handlers, who need such services for transactional purposes.
34.    The appropriate sampling equipment to ensure third party verification of
       quantity and quality will need to be provided and maintained to support
       optional inspection and weighing.
35.    We also recommend that samples of grain taken for grading be retained
       for a prescribed period of time for all grain receipts even in a setting of
       inward optionality because of the public benefits in terms of quality,
       safety, and potential traceability.
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36.        We recommend that the price of such optional inward inspection services
           continue to be subsidized,48 particularly at port, where the cost of
           provision is lower because of the public benefits of an optional system.
37.        We believe that Canada has a public interest in furthering competition in
           handling by helping the smaller players. To this end, we recommend
           defraying the cost of the inward inspection infrastructure and subsidizing
           unit prices. Helping the smaller players can also be achieved by policies
           that are the responsibility of departments and agencies other than the
           CGC.
38.        We recommend that the CGC use roundtable stakeholder consultation to
           identify the best administrative methods for provision of optional weighing
           and inspection services.
39.        We recommend continued mandatory outward inspection and weighing.
           Our view is that Canada’s reputation and the brand of our products
           require outward inspection. Inspection is necessary to forestall problems
           and to ensure sampling so as to rectify problems expeditiously if they
           nonetheless materialize.
40.        We recommend that CGC’s inspection services be contracted out under
           CGC license except for CGC’s retention of an essential capability to
           conduct appeals because: Government of Canada Regulatory Policy
           contains an admonition to use private sector services when possible;
           CFIA has had success in contracting out inspection services in the seeds
           area; and private sector suppliers would be under pressure from a desire
           for renewal of contract to provide expeditious, flexibly timed service.
41.        Specific features of contracting out inspection services would include:
           41.1. Assignment of a single contractor to a single location in
                   order to enhance accountability for service, as detailed in
                   the report;



      48
       Inward inspection cost is partially recovered through fees paid by farmers and/or
industry. The cost recovery for inward inspection is 64%. In the most recent year, inward
inspection accounts for 19% of total CGC fees collected, inward weighing accounts for an
additional 4%. Government appropriations generally cover the costs that exceed fee revenue.
Source: CGC revenue and Expenditure Analysis, 2005-06
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         41.2. Providing the market with long advance warning of the
               intention to contract out inspection services;
         41.3. Provision of training programs to enable current CGC
               inspectors and all other potential contractors to prepare
               to compete for the CGC’s inspection business;
         41.4. Working with stakeholders, potential contractors, and
               actual contractors to define the processes by which
               requests for inspection would be transmitted and
               implemented;
         41.5. Requirements that contractors be independently owned
               and provide CA-audited49 confirmation that their volume
               of business does not exceed a to-be-defined threshold of
               dependence on a given grain company or farming
               organization;
         41.6. Gradual implementation of contracting out so as to
               minimize risk and disruption and to maximize the
               opportunity for current inspectors and other potential
               Canadian providers to compete successfully for the
               business;
         41.7. Work with stakeholders to establish clear standards of
               inspector performance by which contractors can be
               evaluated effectively and fairly;
         41.8. Use such standards and performance measures to
               impose penalties and ultimately revoke the licenses and
               contracts of poorly performing providers; and
         41.9. Evaluate objectively such performance measures along
               with the satisfaction of all relevant stakeholders as a
               basis for annual feedback and as a basis for evaluating
               incumbents when successive renewal competitions are
               launched.


    49
      Audited by a member in good standing of the Canadian Institute of Chartered
Accountants.
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42.    To ensure competitiveness, it is envisioned that more than one service
       provider would be engaged and sustained, which increases complexity.
       The method of assigning work will need to be determined. Developing a
       method with multiple competitive service providers to impartially allocate
       the business will be critical. This effort will require additional resources
       for the CGC.
43.    It will be important for the CGC to retain some civil service inspectors for
       the purpose of ensuring it has the technical ability to participate in
       resolving disputes and to provide services under the provision, subject to
       inspector’s grade and dockage.

8.0. Liability, Misrepresentation, and Certificate Final
44.    We recommend that the Canada Grain Act be amended to hold the CGC,
       and the federal government as its underwriter, responsible for up to 33%
       of the harm incurred by a revision to the Certificate Final. We recommend
       that the CGC be liable because in a modern democratic society
       government agencies must meet the same standards of responsibility as
       required of businesses and ordinary citizens. The provision of liability will
       help ensure the integrity of the Certificate Final. By assigning clear but
       limited liability on the CGC, the change would assert an onus on the
       CGC, terminal operators, grain handlers, marketers and farmers to help
       ensure that appropriate systems are in place to mitigate reasonable risks
       prior to the final stage of vessel transfer to a customer.
45.    The magnitude of the harm from a revision to the Certificate Final would
       be determined by an Arbitrator appointed by the Minister and accepted by
       a majority of the affected parties, or conversely by the Courts upon
       application by any affected party. This Arbitration process will result in a
       binding assessment of the aggregate damages and an assignment of
       those damages to the appropriate parties.
46.    We recommend that the Act be modified to allow the Canadian Grain
       Commission to impose fines and that regulations be modified to permit
       the CGC to assign penalties for misrepresentation of grain. Too much is
       at stake for all stakeholders in the system to fail to introduce enough
       means for deterring unscrupulous conduct. In small cases of

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       misrepresentation, the various stakeholders may have a multitude of
       public affairs or financial reasons for not taking legal action. An offending
       farmer may have insufficient assets to make action worthwhile. A court
       may require much higher standards of evidence of traceability than
       necessary to convince most reasonable people of a farmer or grain
       handler’s culpability.
47.    We recommend that the Act (Section 106) be modified to allow the CGC
       to impose fines or Administration Monetary Penalties for various
       infractions, including for misrepresentation of grain. The Act would specify
       maximum financial penalties of up to $ 20,000 for individuals and entities
       other than licensees and up to $ 40,000 for licensees with automatic
       adjustments to take inflation into consideration, assuming a review of the
       Act on a periodic basis.
48.    Prior to preparing regulations, we recommend that the Canadian Grain
       Commission consult stakeholders for the purpose of identifying factors
       that would be taken into consideration when deciding the magnitude of a
       fine, for example, past history of misrepresentation, purposefulness or
       inadvertence, and the recency of farming experience.
49.    The imposition of financial penalties is not to the exclusion of the
       proposed Arbitration process occurrence as an arbitrated assessment of
       liability.

9.0. Security
50.    We recommend that the Canadian Grain Commission
       50.1. consult with accounting and risk management experts to
             explore the costs and the benefits of operating a
             clearinghouse mechanism to reduce efficiently the
             transactional risk to farmers, and subsequently
       50.2. launch a stakeholder roundtable on the CFIA model to
             involve all stakeholders in developing solutions that
             provide optimal security at optimal prices and with
             maximal clarity to producers about the true assurance
             being provided.

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51.    We recommend that the stakeholder roundtable explore all possible
       options to find a reasonable balance between the needs of some farmers
       for third party-assured security of payment in transactions on the one
       hand and the system’s need to constrain costs on the other, including
       explicit ceilings on transaction guarantees.
52.    Irrespective of the particular balancing point that the Canadian Grain
       Commission opts for in the case of transactional security, all
       communications to farmers need to be unambiguously clear, far clearer
       than past CGC claims of assurance.
53.    We recommend deletion in the Act of Section 49.1(2), which eliminates
       liability to the CGC if a licensee fails to fulfill payment to a producer. In
       keeping with the accountability and transparency principles discussed in
       section 2, we do not believe that any regulatory body ought to receive
       legislated immunity from court action in the event that it fails to perform its
       heavily advertised functions.
54.    We recommend that the surveys of farmers previously suggested in this
       study measure the actual demand for transactional security once farmers
       understand the system costs of compulsory security.
55.    In the Venture Seeds and Naber’s bankruptcy cases, we believe very
       strongly that the Canadian Grain Commission should fully compensate
       the affected farmers, pay their legal costs, pay interest for the affected
       period, and pay a penalty for causing needless distress. Our view is that
       government agencies have no less obligation than businesses or ordinary
       citizens to carry out their responsibilities to customers adversely affected
       by their failures. The duty of the Canadian Grain Commission and hence
       the government of Canada to fulfill obligations implied by CGC promises
       is a matter that is separate from the obligation of the Commission to
       require or implement security.

10.0. Licensing
56.    We recommend that the Canadian Grain Commission consult with the
       CFIA and other agencies as well as stakeholders as to whether facilities
       (e.g. producer car loading facilities, intra-company transfers) that do not
       conduct transactions for the purchase of grain or incur liabilities for unpaid
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       grain should be exempted or placed into a separate class with few, if any,
       requirements other than a license. Licensing would have value, in our
       view, if CFIA and/or other agencies saw CGC licensing as a valuable,
       supplementary tool for influencing the health and safety practices of such
       facilities or collecting valuable statistical data.
57.    We foresee that there may need to be an additional class of license in the
       future for container loading facilities. As this mode of transportation
       grows, the CGC will have to consult with stakeholders on the requirement
       for certain regulations to protect and preserve Canada’s brand.
58.    The CGC should ensure that there is clear understanding of grain
       company fees and charges by supporting the extension activities of the
       recommended Office of Grain Farmer Advocacy given that farmers have
       indicated frustration at certain fees charged by grain companies, and the
       lack of regulation. The CGC should be able to fine or penalize licensees
       for overcharging or not disclosing all fees to be charged to a farmer prior
       to settlement.
59.    We recommend that the Canadian Grain Commission commit itself to
       introducing greater uniformity, transparency, and clarity to its patchwork
       quilt of licensing regulations.
60.    In specific, the Canadian Grain Commission should:
       60.1. provide an annual report to stakeholders on its efforts to
                introduce uniformity, transparency, and clarity in
                licensing;
       60.2. work with stakeholders and other government agencies
                for the purpose of developing and enunciating a policy
                that sets out the rules by which organizations are
                exempted from licensing (and security) requirements, for
                example, closed loop systems or intra-company
                transactions;
       60.3. formally review the licensing classifications, cost and
                procedures every 5 years;
       60.4. assess annually stakeholder satisfaction with its efforts to
                develop clear, uniform, and fair guidelines for licensing;


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       60.5. establish a protocol prescribing primary elevators’
             obligations and procedures in respect of taking and
             storing automatic samples of all deliveries, and modify its
             rules to allow farmers to request CGC inspection and
             dockage up to 24 hours after delivery of the grain to the
             elevator;
       60.6. require that every grain contract from every class of
             licensee contain the following words in the footer of the
             first and every page in a font no smaller than the average
             font in the contract: “Under the law, every grain producer
             is entitled to receive the opinion of the Canadian Grain
             Commission (800 number) on the grading of this grain
             and on dockage, and is entitled to contact either the
             Commission or the Office of Grain Farmer Advocacy (800
             number) for their advice.”

11.0. Dispute Resolution
61.    We recommend that the Canada Grain Act be modified to allow
       stakeholders to use arbitration services as set out in the arbitration
       process outlined in the Canada Transportation Act and mediation
       services akin to those that support the Farm Debt Mediation Act. In
       keeping with this recommendation, we further recommend eliminating
       Section 92, authorizing Commissioners to act as arbitrators.
62.    Arbitration and mediation would be available for disputes relating to the
       Canadian Grain Commission’s policy applications and for any dispute
       involving stakeholders in the grain sector in Canada. Neither process
       would be used in international disputes. Nor would either process be
       intended for use in creating or overturning policy. The two processes
       would be utilized to ensure the fair implementation of policy and fairness
       in commercial transactions across the grain industry.
63.    The proposed pre-court processes for dispute resolution are intended to
       help make the climate of stakeholder opinion in the industry more
       conciliatory by resolving disputes more quickly and at less cost. This
       process would not prevent any individual or organization from pursuing
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       remedy through the courts except during the period of mediation and
       arbitration if mediation or arbitration were selected. Court action could
       always commence after the best efforts of mediation or arbitration had
       concluded.
64.    Following convention, arbitration and mediation would necessarily involve
       different styles and procedures. In mediation, a certain focus is placed on
       preserving relationships. In arbitration, a focus is placed on investigating
       fact. Final offer arbitration entails a review of the each side’s apparent
       final offer. One of the offers is adopted as the final decision.
65.    The Canada Grain Act should provide for both mediation and arbitration,
       albeit outside and independent of the Canadian Grain Commission. Both
       processes would be administered by the AAFC department entrusted with
       responsibility for administering the Farm Debt Mediation Act. This
       department has the requisite experience, expertise, and networks to
       provide effective, economical service.
66.    The scope of disputes to be presented for mediation or arbitration should
       be limited to commercial activities between Canadian parties. The CGC
       Grain Appeals Tribunal would continue to address grading disputes. We
       recommend the main elements of arbitration as follows:
       66.1. A list of pre-approved, knowledgeable arbitrators would
               be generated and made available;
       66.2. The process would begin if both conflicting parties agree
               to arbitration in a two-party dispute or if a majority
               reached an agreement in a multi-party dispute;
       66.3. The arbitrator should be enabled to investigate disputes
               in the grain industry that may relate to contractual
               conflicts, the assessment of fees or charges between
               buyer and seller;
       66.4. The arbitrator should also be empowered to arbitrate
               disputes about misrepresentation of grain and to assess
               damages, as discussed in Section 9.0 regarding the
               Certificate Final;
       66.5. Parties to the dispute would have a choice of single
               arbiter or panel of three arbitrators;
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       66.6. The costs for arbitration should be shared equally
             between or among parties;
       66.7. If a party applies for arbitration, the administering agency
             should contact all parties and get agreement to proceed
             to arbitration within 15 days along with the details of their
             final offer;
       66.8. The complainant retains the option of court action.
67.    In the case of mediation, we recommend the following provisions, in
       particular that
       67.1. The Farm Debt Mediation Service (FDMS) provide the
              professional resources in light of its ready access to
              knowledgeable agriculture mediators and financial field
              persons with Standing Offer or Vendor of Record
              contracts at AAFC;
       67.2. FDMS be utilized as a professionally effective,
              economical solution—it has a network of experienced
              mediators while the utilization of FDMS would entail no
              new overhead costs;
       67.3. Mediation services be provided by AAFC through its
              Standing Offer contracts with existing professionals;
       67.4. Any stakeholder could apply for mediation; and
       67.5. Mediation prices be subsidized sufficiently to encourage
              utilization but not so much as to invite frivolous use.
68.    We recommend that the Canadian Grain Commission be required to
       participate in any mediation or arbitration that seeks the Commission’s
       engagement. We do not specifically recommend that this requirement
       appear in the Act because any such obligation of the CGC should
       probably be an outgrowth of future Regulatory Policy before being placed
       into law.
69.    In the event that a grain producer requests mediation or arbitration with a
       licensee, we recommend that the licensee be required to participate
       under CGC regulations. The onus on licensees to participate is justified in
       our view by the Government of Canada Regulatory Policy injunction to

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       design rules so as to address the special circumstances of small
       business, in this case grain farmers.

12.0. Research Services
70.    We recommend that the federal government embark on a long-term (7-10
       year) plan to greatly increase grain research spending. A long-term plan
       is essential to enable the GRL Grain Research Lab to attract strong
       replacement researchers in a successful succession plan. Yearly
       increases in a multiyear plan are essential for successful absorption and
       deployment of resources. We recommend this because of the importance
       of grain export to the Canadian economy – they are our third largest
       export. Increased commitment to research as a bulwark of the grain
       system is especially important at a time when the CWB’s role is being re-
       assessed.
71.    We recommend that total grain research spending be increased four-fold
       in ten years with the largest portions going to the GRL and a proposed
       AAFC program for outsourcing research on an RFP basis.
72.    Other specific recommendations:
       72.1. That the Canadian Grain Commission create a
               roundtable of federal and provincial research funding
               agencies and post-secondary departments along with
               university Agricultural units to maintain a watching brief
               on grain research during these key years;
       72.2. That the GRL maintain its reporting role through the
               CGC, and that its funding be listed as a separate
               appropriation through the CGC;
       72.3. That the CGC and GRL be encouraged to co-locate in
               the mooted Centre of Excellence;
       72.4. That the GRL collaborate with stakeholders to encourage
               university and private sector research in support of
               stakeholders’ needs; and
       72.5. That, to protect the perceived impartiality of the Canadian
               Grain Commission, the GRL refrain from accepting
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       research contracts from stakeholders except in
       exceptional circumstances when university and private
       sector suppliers are unavailable.




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Appendix II: Stakeholder Responses to the COMPAS
Survey

   Note on Method
       A total of 85 individuals and organizations completed the online survey. Half
   were among the approximately 400 organizations and experts invited to provide
   submissions or participate in the survey. The remaining half were uninvited
   participants who found the survey on the COMPAS website.

   Scope of Review


                       (Q3) Thinking of the grain sector as a whole—
                              from plant breeding to production
                          and processing, what grade would you
                       give it for effectiveness, direction, and vision?
                      Please use a 100 point school report-type scale.
                                                 N = 74
                                            50
                                     Mean                   DNK
                                      61                     13




       50
           The arithmetic mean is normally what lay people refer to as the “average,” i.e. the sum of
   all the scores divided by the number of scores. DNK=do not know.
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Grading the Performance of the Act and the Commission


              (Q5) On a 100 point, school report-type scale,
                     what grade would you give the
                           Canada Grain Act,
                      which sets out purposes and
                     activities of the Commission?
                                   N = 69
                            Mean             DNK
                             66               19


              (Q7) On a 100 point, school report-type scale,
                what grade would you give the Canadian
                   Grain Commission for carrying out
                        its legislative mandate?
                                   N = 67
                            Mean             DNK
                             66               21


Canada’s Brand in Global Markets


         (Q11) How do foreign markets perceive the quality of grain
      from Canada as opposed to other countries? Please score their
     perceptions on a 5 point scale where 1 means Canadian grain is
     perceived as very inferior and 5, very superior to the competition.
                                   N = 68
          Mean         5      4       3       2       1        DNK
           4.0         29     32      19      2       3         15

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Challenges Facing Canadian Producers in the Next 10 Years


        (Q13) Please score agreement with the following opinions about
       challenges facing Canadian producers over the next few years on
        a 5 point scale where 1 means strongly disagree and 5, strongly
                              agree. RANDOMIZE

                    N = 68                  Mean   5    4    3       2    1    DNK
A major threat will be heavy government
                                            3.8    40   24   18      9    7     3
subsidies for foreign producers.
A major threat will be increasing
consolidation and vertical integration of
                                            2.9    24   12   18      18   28    2
companies in the grain industry in
Canada.
The Canadian brand advantage will
weaken as grain exporting nations move
to containers and buyer countries have      2.4    8    10   18      33   25    6
less reason to worry about poor quality
product from co-mingling.


Keys to Canadian Grain Industry’s International
Competitiveness


           (Q14) Do you foresee Canada’s international competitive
                        position… ROTATE POLES
                                                                 N = 67
                                                                   %
       Weakening somewhat in coming years                          54
       Staying about the same                                      28
       Strengthening in coming years                               15
       Don’t know or no opinion                                     3

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 (Q17) Please score agreement with the following opinions about keys to
   strengthening Canada’s position on a 5 point scale where 1 means
       strongly disagree and 5, strongly agree. The key will be to…
                             [RANDOMIZE]

                    N = 69                 Mean       5    4    3    2    1    DNK
Reinforce the brand by investing
heavily in research to increase
Canada’s leadership in manufacturing
                                               4.0    44   28   16   4    6     2
and mixing properties (e.g. gluten
content, oil properties) and tell the
world about it.
Reinforce the brand by investing
heavily in research to increase
Canada’s leadership in healthy                 4.0    44   22   24   6    4     0
properties (e.g. anti-oxidants) and tell
the world about it.
Protect our quality assurance
processes through setting grade
                                               3.7    42   20   16   7    15    0
standards that are at least as strong
as today.
Protect our quality assurance
processes through inspection and
                                               3.5    36   20   16   15   13    0
grading that is at least as strong as it
is today.


Grading, Standards, and Inspection


      (Q19) On a 100 point report-type scale, what grade would you
        give the KVD (Kernel Visual Distinguishability) system?
                                      N = 63
                              Mean                   DNK
                               54                     26

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               (Q21) On a 100 point scale, what grade
                   would you give Canada’s grain
                    varietal registration system?
                                 N = 61
                        Mean               DNK
                         66                 28


       (Q22) Would you say that grain for domestic Canadian
                        consumption is…
                                                         N = 68
                                                           %
  Inferior in quality to that for export                    3
  About the same                                           66
  Superior in quality to that for export                   10
  Don’t know or no opinion                                 21



        (Q23) Comparing standards for export and those for the
        Canadian market , should… [RANDOMIZE]
                                                         N = 64
                                                           %
  They be identical                                        48
  Export standards be higher                                5
  Domestic standards be higher                              2
  Export standards be allowed to vary but never be
  fundamentally different in quality from domestic         30
  standards
  Don’t know or no opinion                                 16




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       (Q24) On a 5 point scale where 1 means disagree strongly and 5,
             agree strong, please score your view of the following:

                 N = 69                Mean     5      4   3    2    1    DNK
An affidavit system is a desirable
option for some or all classes of       3.1     23   15    19   15   19   10
wheat
Compulsory inward inspection
                                        3.0     29   10    9    10   31   10
and weighing should be ended
Exports within the same company
should not require inspection and       3.0     22   21    13   10   29    4
grading
All CGC grading and inspection
                                        2.8     24   19    7    9    40    2
should be optional
Exports by container should not
require inspection and grading by       2.6     23     9   9    16   36    7
the Canadian Grain Commission
Only outward weighing and
inspection at terminals should be
                                        2.5     12   18    12   18   34    7
compulsory



Transportation


       (Q26) On a 100 point report-type scale, how would you grade the
                  Commission’s handling of producer cars?
                                       N = 41
                            Mean                 DNK
                             67                   52




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                 (Q27) On a 100 point report-type scale,
                 how would you grade the Commission’s
                        handling of containers?
                                 N = 31
                         Mean              DNK
                          70                64


Licensing


               (Q28) On a 100 point scale, please assess
                   the performance of the Commission in
                licensing primary elevators, grain dealers,
             and others governed by licensing requirements.
                                 N = 53
                         Mean              DNK
                          59                38


Dispute Resolution


                        (Q30) On a 100 point scale,
               what grade would you give the Commission
              for how it responds to complaints or disputes?
                                 N = 53
                         Mean              DNK
                          62                38




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Liability


            (Q32) On a 100 point scale, what grade would you give the
                Commission for how it deals with liability issues?
                                     N = 39
                             Mean              DNK
                              53                54

Governance Structure of the Commission


      (Q34) As you know, several Canadian bodies share responsibility
       for grain. On a 100 point performance scale, how would you rate
          the impact of how the grain sector is organized on the grain
                            sector’s effectiveness?
                                     N =56
                             Mean              DNK
                              57                34



Funding


       (Q38) Out of 100 per cent, what proportion of the Commission’s
                             activities serves…
                        N = 50                       Mean        DNK
      Grain producers and the grain industry          75          41
      and what proportion serves Canadians as
                                                       33         42
      a whole?



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    (Q39) What percentage of the Commission’s revenue should
                         come from…
                   N = 49                    Mean       DNK
  Industry users                              64         42
  and the taxpayer through the federal
                                              39         45
  government?




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Appendix III: Partial List of Invited Stakeholders and
Experts51
   Name                              Organization
   Mr. Gary R. Ablett                University of Guelph
   Mr. Murad Al-Katib                SaskCan Pulse Ltd
   Mr. Thomas J. Allen               University of Saskatchewan - College of Agriculture of Agriculture
   Hon. David Alward                 New Brunswick Ministry of Agriculture, Fisheries and Aquaculture
   Dr. Nancy Ames                    Agriculture and Agri-Food Canada
   Dr. Bill Anderson                 Canadian Food Inspection Agency
   Dr. G. Harvey Anderson            University of Toronto
   Dr. Robert Annis                  University of Brandon
   Ms. Erin Armstrong                Brewing and Malting Barley Research Institute
   Ms. Sheilagh Arney                ADM Milling Co.
   M. Maxime Arseneau                Opposition Agriculture critic for the Parti Quebecois
   Mr. Tom Askin                     Agriculture and Agri-Food Canada
   Mr. Alex Atamanenko               Opposition Agriculture Critic for NDP Party of BC
   Mr. Gordon Bacon                  Pulse Canada
   Hon. Jim Bagnall                  Prince Edward Island Ministry of Agriculture, Fisheries and
                                     Aquaculture
    Mr. Terry Baker                  Saskatchewan Wheat Pool
    Mr. Darren Barber                FarmPure Seeds Inc.
    Mr. Ernest M. Barber             University of Saskatchewan - College of Agriculture of Agriculture
    Dr. Richard Barichello           University of British Columbia
    Mr. Thomas S. Barton             Agriculture and Agri-Food Canada
    Dr. Katherine Baylis             University of British Columbia
    Mr. Chris Bazaluk                Intertek Agri Services
    Ms. Johanne Beaulieu             Agriculture and Agri-Food Canada
    Mr. Pierre Beaumier              MAXXAM Analytics
    Ms. Janet Beauvais               Health Canada


        51
           We exclude from this list selected current and past politicians and other individuals from
   whom we sought input on the basis of their personal rather than organizational perspectives.
   Not all individuals on this list provided input while individuals not on this list did.
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Name                       Organization
M. Réal Bélanger           Canada Ports Corporation
Hon. Pat Bell              BC Minister of Agriculture and Lands
Mr. Vic Bell               Rogers Foods Ltd.
M. Bruce Bennett Sr.       Johnson & Dever
Mr. Ron Bonnett            Ontario Federation of Agriculture
Mr. Daniel Bouchard        Peace Country Oats Processors A Division of Falher Co-op Seed
                           Cleaning Plant Ltd.
Mr. Tino Breuer            Ontario Bean Producers Marketing Board
Dr. Derek Brewin           University of Manitoba
M. Richard Bridgeman       Les Silos Port-Cartier (Louis Dreyfus Canada)
Ms. Brenda Brindle         Alberta Grain Commission
Mr. Bob Broeska            Canadian Oilseed Processors Association
Mr. William Brown          University of Saskatchewan - College of Agriculture of Agriculture
Dr. Anita Brûlé-Babel      University of Manitoba
Mr. Frank Brunetta         Agriculture and Agri-Food Canada
Mr. Rob Bruns              AgriPro Wheat
Ms. Debra Bryanton         Canadian Food Inspection Agency
Ms. Sher Bushell-Viau      Canadian Food Inspection Agency
Mr. Garth Butcher          Winter Cereals Canada
Mr. Roy Button             Saskatchewan Mustard Development Commission
Hon. Ed Byrne              Newfoundland and Labrador Ministry of Natural Resources
Mr. Jim Caghlin            Saskatchewan Canola Growers Association
Ms. Elaine Cales           LWC Seed Cleaning A division of LeRoy-Watson Co-operative
                           Limited
Mr. Ken Campbell           Agriculture and Agri-Food Canada Research
Mr. Lorne Campbell         Peace Grain Advantage Ltd.
Dr. Jared Carlberg         University of Manitoba
Mr. Claude Carles          Weyburn Inland Terminal
Mr. Gordon R. Carson       Canadian International Grains Institute (CIGI)
Mr. Ian Carter             London Agricultural Commodities, Inc.
Mr. François Catellier     Canadian Special Crops Association
Mr. David Champion         ConAgra Limited
Mr. Robert Chappell        Rahr Malting Canada
Dr. Mark Charbonneau       Testmark Laboratories
Mr. Jean-Paul Charlebois   Canadian Grain Commission
Mr Charles Charron         Agriculture and Agri-Food Canada

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Name                     Organization
Hon. Ron Chisholm        Nova Scotia Ministry of Agriculture and Fisheries
Mr. Brock G Chittim      Wellington Laboratories
Mr. Brian Chorney        Manitoba Canola Growers Association
Mr. Bernie Churko        Farmer Rail Car Coalition
Dr. John Clarke          Agriculture and Agri-Food Canada
Dr. Michael Clayman      Laboratory Services, University of Guelph
Mr. Howard Collins       Brewers of Canada
Mr. Blair Colquhoun      Paracel Laboratories
Mr. Blair Coomber        Agriculture and Agri-Food Canada
Mr. Dean Corbett         Saskatchewan Pulse Growers
Mr. Gary Corbett         Professional Institute of the Public Service of Canada
Mr. Dale Cowan           Agri-Food Laboratories
Mr. John Cowan           Canadian Seed Trade Association
Dr. Barry Coyle          University of Manitoba
Mr. Jean Crepin          Norwest Labs
Mr. Gordon Cresswell     Saskatchewan Flax Development Commission
Ms. Alexandra Cristea    SGS Canada Inc.
Mr. Bob Cumming          North West Terminal Ltd.
Mr. Neil Cumming         Levelton Analytical Services
Dr. Fouad Daayf          University of Manitoba
M. Pierre Dagenais       Leblanc LaFrance
Mr.Cam Dahl              Agricore United
Mr. Bruce Dalgarno       Manitoba Canola Growers Association
Mr. Germain Dauk         Pulse Canada
Mr. Jack Dawes           Prairie Oat Growers Association
M. Joseph Dawson         ADM Benson Quinn
Dr. Ron M De Pauw        Agriculture and Agri-Food Canada
Mr. Don Deaville         Alberta Pulse Growers
Mr. Robert Deverall      ALS Environmental
Dr. Jim Dexter           Canadian Grain Commission
Mr. Gerry Dickie         Cascadia Terminal
Mr.Tony Dobesch          Colley Motorships Ltd.
Mr. Bill Dobson          Wild Rose Agricultural Producers
Hon. Leona Dombrowsky    Ontario Ministry of Agriculture, Food and Rural Affairs
Mr. Robert Douglas       Canadian Grain Commission
Mr. Fred Draude          CMI Terminal JV
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Name                         Organization
Dr. Bernie L. Dronzek        University of Manitoba
Mr. Wayne Drul               Agricore United
Mr. Yves Ducharme            Public Service Alliance of Canada (PSAC)
Ms. Louise H. Duke           Canadian Food Inspection Agency
Mr. Walter Dyck              Canadian Mustard Association
Mr. Doug Eadie               Ontario Corn Producers Association
Dr. Hugh Earl                University of Guelph
Hon. Wayne Easter            Opposition Agriculture critic for the Liberal Party of Canada
Mr. Doug Eden                Prairie Malt Ltd.
Mr. Leonard Edwards          Agriculture and Agri-Food Canada
Dr. Nancy Edwards            Canadian Grain Commission
Mr. Ralph Eichler            Opposition Agriculture Critic for Conservative Party of Manitoba
Mr. Vern Ellis               Cargill Sarnia
Ms. Maire Engdahl            Inland Terminal Association of Canada
Mr. Don Enns                 Cantest Ltd.
Dr. Martin H. Entz           University of Manitoba
Mr. Peter Entz               James Richardson International Limited
Mr. Dennis Erickson          Enviro-Test Laboratories
Mr Ab Ettinger               Agriculture and Agri-Food Canada
Mr. Marc Faille              Canadian Food Inspection Agency
M. Jack Falcone              Cargill Limited
Dr. Ken Falk                 POS Analytical Services
Dr. W.G. Dilantha Fernando   University of Manitoba
Mr. Lyle Fetterly            Hudson Bay Port Company
Dr. Diane Finegood           Canadian Institute for Health Research
Hon. Diane Finley            Former Opposition Agriculture critic for the Conservative Party of
                             Canada
Mr. Rob Flack                Stratford Agri-Analysis
Mr. Gord Flaten              Canadian Wheat Board
Mr. Mel Foat                 Sexsmith Co-op Seed Cleaning Association Ltd.
Ms. Deb Foote                Certified Organic Associations of British Columbia
Dr. Marc Fortin              Agriculture and Agri-Food Canada
M. Antoine Fortin            Louis Dreyfus Canada Ltd.
Mr. Jack Foster              Prairie Malt Ltd.
Dr. Stephen Fox              Agriculture and Agri-Food Canada
M. Marcel Frenette           Régie des marches agricoles et alimentaires du Québec

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Name                      Organization
Mr. Bob Friesen           Canadian Federation of Agriculture
Mr. Harvey Friesen        Canadian Ports Clearance Association
Dr. Brian W. Fristensky   University of Manitoba
Dr. Jane Froese           University of Manitoba
Dr.Bin Xiao Fu            Canadian International Grains Institute (CIGI)
Dr. Murray Fulton         University of Saskatchewan - College of Agriculture of Agriculture
Dr. Hartley W. Furtan     University of Saskatchewan - College of Agriculture of Agriculture
Mr. Roger Gadd            Great Western Rail
Mr. Mike Gagné            Winnipeg Commodity Exchange
M. Marc A.Gagnon          Régie des marchés agricoles et alimentaires du Québec
Mr. Rick Garrett          White Water Coulee Cleaners
Mr. Jon Gerrard           Opposition Agriculture Critic for the Liberal Party of Manitoba
Ms. Janine Gibson         Organic Food Council of Manitoba
Mr. Ross Goldhawk         W.G. Thompson & Sons Ltd.
Ms. Helene Goulet         Tobacco Control Programme
Dr. Robert J Graf         Agriculture and Agri-Food Canada
Dr. Cynthia Grant         Agriculture and Agri-Food Canada
Ms. Karen Gray            Statistics Canada
Mr. Richard Gray          University of Saskatchewan
Mr. Michael Greer         Ellison Milling Co.
Mr. Paul Gregory          Interlake Forage Seeds Ltd.
Mr. Reg Gross             Points West Consulting Inc.
Dr. Sumeet Gulati         University of British Columbia
Mr. Andrew Haarsma        Alberta Canola Producers Commission
Mr. Barry Hall            Flax Council of Canada
Mr. Howard Hampton        Opposition Agriculture critic for the NDP of Ontario
Mr. Ernie Hardeman        Opposition Agriculture critic for the Conservative Party of Ontario
Mr. Gordon Harrison       Canadian National Millers Association
Dr. Dave Hatcher          Canadian Grain Commission
Mr. Dean Hayhoe           Hayhoe Mills Ltd.
Mr. Mark Hayhoe           Hayhoe Mills Ltd.
Ms. Nancy Heaman          Warburton Foods Ltd.
Mr. Terry Hearn           Agriculture and Agri-Food Canada
Mr. Bob Heck              Westlock Terminals (NGC) Ltd.
Mr. Harold A. Hedley      Agriculture and Agri-Food Canada
Mr. Steve Heeney          Cereal Foods Canada, Inc.
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Name                       Organization
Mr. Don Henry              Eastern Elevator Association
Mr. Don Henry              Goderich Elevators Limited
Mr. Richard Hill           Agriculture and Agri-Food Canada
Dr. Robert D. Hill         University of Manitoba
Dr. Jill E. Hobbs          University of Saskatchewan - College of Agriculture of Agriculture
Mr. Michael Hoffbauer      Lex Scientific
Mr. John Holiday           Smucker Foods Canada Co.
Mr. David Hope             Pacific Rim Laboratories Inc.
Hon. Doug Horner           Alberta Ministry of Agriculture, Food and Rural Development
Mr. Jim Howson             Howson and Howson Limited
Dr. P.J. (Pierre) Hucl     Crop Development Centre
Mr. Phil Hulina            James Richardson International Limited
Mr. Gavin Humphreys        Agriculture and Agri-Food Canada
Mr. Dave Humphries         Alberta Research Council
Mr. Frazer Hunter          Nova Scotia Federation of Agriculture
Ms. Laurie Hunter          Agriculture and Agri-food Canada, Strategic Policy and Priorities
Mr. Izzy Huygen            Alberta Grain Commission
Mr. Robert Hysong          Smucker Foods of Canada Co.
Mme Giovanna Iofredda      AgroHall Limited
Ms. Barbara Isman          Canola Council of Canada
Mr. Clayton Jackson        University of Saskatchewan - College of Agriculture of Agriculture
Mr. Derek Jamieson         New-Life Mills Ltd.
Mr. Larry Jarman           Pyntre Ent. Ltd.
Mr. Jim Johnson            Eastend Grain Co. Ltd.
Ms. Cherilyn Jolly-Nagel   Western Canadian Wheat Growers
Mr. Grant Jones            Ontario White Bean Producers Marketing Board
Ms. Tammy Jones            Manitoba Pulse Growers Association Inc.
Mr. Garvin Kabernik        Manitoba Flax Growers
Dr. Kutty Kartha           National Research Council of Canada Plant Biotechnology Institute
Mr. Joe Keating            Intertek Testing Services
Mr. Greg Kelly             Prairie West Terminal
Mr. Paul Kennedy           Mission Terminal, Thunder Bay
Mr. Alan Kerkhof           Ontario Wheat Producers Marketing Board
Dr. William A. Kerr        University of Saskatchewan - College of Agriculture of Agriculture
Dr. Renne Kim              University of Manitoba
Mr. Kevin Klemenz          Red Coat Road & Rail Ltd.
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Name                         Organization
Mr. Andy Kovacs              Alberta Soft Wheat Producers
M. Richard Lacroix           La Coop Fédérée
Dr. Lakhdar Lamari           University of Manitoba
M. Réne Lapointe             Louis Dreyfus Canada Ltd.
Mr. Daniel Larose            Association of Canadian Financial Officers
Mr. Gordon Lawrence          Admiral Grain Co. Ltd.
Ms. Bonnie Lawson            SunWest Food Laboratory Ltd.
Mr. Felicita Lee             BC Grain Shippers Clearance Association
Dr. Genyi Li                 University of Manitoba
Mr. Robert Linnell           Winter Cereals Canada
Mr. Rob Lobdell              West Central Road & Rail
Dr. A Loyns                  Prairie Horizons Ltd.
Dr. Odean Lukow              Cereal Research Centre
Mr. Sulo Luoma               Alberta Winter Wheat Producers Commission
Mr. Hugh MacDonald           Opposition Agriculture Critic for Liberal Party of Alberta
Mr. Bruce MacIntyre          Dover Industries Limited, Halton Flour Division
Mr. Murdoch MacKay           Agricore United
Mr. Brian MacKenzie          Anheuser Busch Canada
Dr. Chandra A. Madramootoo   McGill University
Ms. Liliane Maisonneuve      Canadian Grain Commission
Ms. Linda Malcolmson         Canadian International Grains Institute (CIGI)
Dr. Brian Marchylo           Canadian Grain Commission
Ms Brigitte Marois           Agriculture and Agri-Food Canada
Mr. Andrew Marsland          Agriculture and Agri-Food Canada
Mr. Yvan Martel              Agriculture and Agri-Food Canada
Mr. Ray Martin               Alberta NDP opposition agriculture critic
Mme Ginette Martin           James Richardson International Limited
Mr. Gary Martins             University of Manitoba
Ms.Deborah Masson Stogran    SGS Canada Inc.
Mr. Doug McBain              Western Barley Growers Association
Mr. Ken McBride              Agricultural Producers Association of Saskatchewan Inc.
Dr.Tom McCaig                Agriculture and Agri-Food Canada
Ms. Janette McDonald         Alberta Pulse Growers
Mr. Wilf McDougall           Dawn Food Products (Canada) Ltd.
Mr. Bruce McFadden           Quorum Group
Mr. Don McKercher            Ontario White Bean Producers
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Name                     Organization
Mr. Bud McKnight         Manitoba Corn Growers Association Inc.
Ms. Monique McTiernan    Atlantic Grain Council
Dr. Peter B.E.McVetty    University of Manitoba
Mr.Adrian Measner        Canadian Wheat Board
Mr. Robert Meijer        Cargill Limited
Mr. Brett Meinert        Saskatchewan Mustard Growers Association
Mr. Stan Michie          White Mud Trading Co. Inc.
Ms. Donna Mitchell       Agriculture and Agri-Food Canada
Mr. Scott Moir           Bunge Milling
Mr. David Mol            Canadian Seed Growers Association
Mr. Martin Moore         BC Grain Producers Association
Mr. Neil Moore           Nutrasun Foods Inc.
Ms. Christine Moran      Grain Growers of Canada
Mr. Robert E. Morgan     POS Pilot Plant Corporation
M. Gilles Morin          Les Grains Lac Superieur Ltée/Lake Superior Grain Ltd
Mr. Grant Morrison       Pepsi QTG Canada
Dr. Malcolm Morrison     Agriculture and Agri-Food Canada
Mr. Allan Moskal         S&T Farms Ltd.
Ms. Kelly Moskowy        Saskatchewan Grain Car Corporation
Ms. Syliva Nelson        Poplar Hills Producers Co-operative Ltd.
Ms. Lisa Nemeth          Canadian Wheat Board
Mr. Dave Newhook         ADM Milling Co.
Dr. James Nolan          University of Saskatchewan - College of Agriculture of Agriculture
M. Patrick Nolan         AgroHall Limited
Mr. Trevor Nysetvold     BioVision Seed Labs
Ms. Catherine O’Brien    Canadian Association of Professional Employees
Ms. Carolyne O'Brien     Canada Bread Company Ltd.
Dr. Erasmus Okine        University of Alberta
Mr.Y Okumura             Overseas Merchandise Inspection Co. (OMIC)
Dr. Brian Olesen         University of Manitoba
Mr. Michael Ostrovsky    IMS Analystical Services Ltd.
Mr. Terry Otto           Canadian Federation of Agriculture
M. Christian Overbeek    Fédération des producteurs de cultures commerciales du Québec
Mr. Bill Parrish, Jr.    Parrish and Heimbecker Ltd
Mr. Andrew Paterson      N M Paterson and Sons
Mr. Garth Patterson      Saskatchewan Pulse Growers
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    Report to Agriculture and Agri-Food Canada, Number 01C15-05AJ01/A


Name                         Organization
Mr. Greg Patterson           A&L Canada Laboratories Inc.
Dr. Craig J Pearson          University of Guelph
Mr. Len Penner               Cargill Canada
Mr. Blair Peregrym           Stony Plain Seed Cleaning Association Ltd.
Ms. Connie Perron            University of Saskatchewan
Mr. Garry Petrie             North East Terminal Ltd
Mr. Garry Petrie             Inland Terminal Association of Canada
M. Allan Philip              Laden Maritime Inc.
Mme. Heather Philip          Laden Maritime Inc.
M. Charles Pick              DNA LandMarks Inc.
Ms. Grace Pidperyhora        SunWest Food Laboratory Ltd.
Mr. Trevor Pizzey            Can-Oat Milling
Dr. Doug Powell              University of Guelph
Dr. Merv Pritchard           University of Manitoba
Mr. Gordon Pugh              Agriculture and Agri-Food Canada
Ms. Vivian Purganan          Central Testing Laboratory
Mr. Bruce Ralston            Opposition Agriculture Critic for NDP Party of BC
Mr. Ross Ravelli             Canadian Canola Growers Association
M. Robert Reford             Div.of MRRM (Canada)
Mr. Jeff Reid                SeCan
Mr. Mel Reimer               Prairie Oat Growers Association
Dr. William R. Remphrey      University of Manitoba
Ms. Yvonne Rideout           Keystone Agricultural Producers
Mr. Sig Rieger               Kraft Canada Inc.
Dr. Len Ritter               University of Guelph
Mr. Allan Roberts            Great Northern Grain Terminals Ltd.
Mr. Jay Robson               Ontario Soybean Growers
Dr. Alejandro Rojas          University of British Columbia
Mr. David Rolfe              Keystone Agricultural Producers
Mr. Kenneth A. Rosaasen      University of Saskatchewan - College of Agriculture of Agriculture
Dr. B.G. (Brian) Rossnagel   University of Saskatchewan
Mr. Howard Rowley            Dover Flour Mills Ltd.
Mr. Robert Roy               University of Saskatchewan - College of Agriculture of Agriculture
Mr. Jean-Marc Ruest          James Richardson International Limited
Mme Deepi Sandhu             Scandia Shipping Agencies Ltd.
Dr. Harry Sapirstein         University of Manitoba
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    Review of the Canada Grain Act and the Canadian Grain Commission:
    Report to Agriculture and Agri-Food Canada, Number 01C15-05AJ01/A


Name                       Organization
Dr. Vimal Sapru            Weston Bakeries Ltd.
M. Luc Sarrazin            Cargill Limited
Mr. Rod Scarlett           Wild Rose Agricultural Producers
Dr. Rachael Scarth         University of Manitoba
Mr. Michael Scheffel       Canadian Food Inspection Agency
Mr. Mark Schell            South West Terminal Ltd.
Ms. Nada Semaan            Agriculture and Agri-Food Canada
Mr. Barry Senft            Canadian International Grains Institute (CIGI)
Hon. Clay Serby            Saskatchewan Minister of Rural Development
Ms. Janet Shay             Ocean Nutrition Canada
Mr. Roger Shier            Agriculture and Agri-Food Canada
Mr. Jason Skinner          North West Terminal Ltd.
Dr. Brent Skura            University of British Columbia
Mr.Jim Smolik              Grain Growers of Canada
Mr. Troy Snobelen          Canadian Soybean Export Association
Mr. Wade Sobkowich         Western Grain Elevators Association (WGEA), Country Elevators
                           Association (CEA),
Mr. Ernie Sommer           South West Terminal
M. Benoit Soucy            James Richardson International Limited
Dr. Dean Spaner            University of Alberta
Ms. Brenda Stanek          SRC Analytical Laboratories
Dr. Claudio Stasolla       University of Manitoba
M. Jean-Guy St-Onge        Bunge du Canada Ltée
Mr.Bob Sutton              Rahr Malting Canada
Mr. Christian Svensgaard   FOSS in North America Canadian Office
Ms. Jean Szkotnicki        George Morris Centre
M. Dominic Taddeo          Canada Ports Corporation
Mr. and Mrs. Murray and    Temple Enterprises
Nicole Temple
Mr. Stan Thomas            Dover Mills Ltd.
Dr. Julian Thomas          Agriculture and Agri-Food Canada
Mr. Fraser Thomson         International Malting Company Canada
Ms. Elizabeth Tokariuk     Alberta Winter Wheat Producers Commission
M. Henri Tousignant        Canadian Grain Commission
Dr. Michael Trevan         University of Manitoba
Ms. Loren Urquhart         ADM Milling Co.

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    Review of the Canada Grain Act and the Canadian Grain Commission:
    Report to Agriculture and Agri-Food Canada, Number 01C15-05AJ01/A


Name                     Organization
Hon. Yvon Vallières      Quebec Ministère de l'Agriculture, des Pêcheries et de
                         l'Alimentation
Dr. Rene C.Van Acker     University of Manitoba
Dr. James Vercammen      University of British Columbia
Mr. Gilles P. Vinet      Industry Canada – Weights & Measures
Ms. Suzanne Vinet        Agriculture and Agri-Food Canada
Dr. Allan Walburger      University of Lethbridge
Mr. Edwin Wallace        Prairie Producer Car Shippers Association Inc.
Mr. Richard Wansbutter   Canadian Grain and Oilseeds Exporters Association
Mr. Roy Ward             Canadian Ports Clearance Association (formerly Lake Shippers’
                         Clearance Association
Mr. Dave Warner          Canadian Food Inspection Agency
Mr. Grant Warner         Ellison Milling Co.
Hon. Mark Wartman        Saskatchewan Agriculture and Food Ministry
Mr. Ward Weisensel       Canadian Wheat Board
Ms. Donna Welke          Canadian Grain Commission
Mr. Stewart Wells        National Farmers Union
Mr.William Weymark       Vancouver Wharves Limited
Mr. Robert White         Halifax Grain Elevator Ltd
Ms. Bernadine Wolfe      Ontario Coloured Bean Growers Association
Mr. Norm Woodbeck        Canadian Grain Commission
Mr. James Woodworth      Prairie Producer Car Shippers Association Inc.
Mr. Graham Worden        Canadian Wheat Board
Mr. Peter Worfolk        Smucker Foods of Canada
Hon. Rosann Wowchuk      Manitoba Ministry of Agriculture, Food and Rural Initiatives
Mr. Glenn Wright         New Life Mills Ltd. (representing Canadian National Millers
                         Association)
Dr. William Yan          Health Canada
Mr. Randy Yaremkiw       CP Rail
Mr. Mark Ziegler         Agriculture and Agri-Food Canada




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