Consultation document - Moisture shrinkage allowance for grain artificially dried at licensed primary elevators

Background

Moisture shrinkage is not specifically defined in the Canada Grain Act or Canada Grain Regulations. Moisture shrinkage refers to the loss in weight of a parcel of grain when it is naturally dried or artificially dried by mechanical means. Moisture shrinkage is considered different than comprehensive shrinkage, which is defined in the Canada Grain Act as “the loss in weight of grain that occurs in the handling or treating of grain”.

Primary elevators are permitted to deduct moisture shrinkage when artificially drying producers’ grain but must do so in accordance with Canadian Grain Commission orders, pursuant to section 38.1 of the Canada Grain Regulations. Canadian Grain Commission Order No. 2008-31 – Calculation of moisture shrinkage allowance for grain artificially dried at primary elevators - stipulates the formula by which licensed primary elevators are to calculate moisture shrinkage for tough, damp, moist or wet grain that is artificially dried at the producer’s request. The moisture shrinkage formula is calculated as follows:

% moisture shrinkage = % moisture before drying - % moisture after drying / 100% - % moisture after drying X 100

Canadian Grain Commission Order No. 2008-31 also directs that licensed primary elevators that dry grain for producers cannot charge for drying to less than 1.1 percent below the fixed minimum tough moisture level specified for that grain in the Canadian Grain Commission Order Off Grades of Grain and Grades of Screenings. For example, in the case of wheat, where the fixed minimum tough moisture value is 14.6%, the lowest moisture value an elevator can use to calculate moisture shrinkage allowance is 13.5% (14.6%-1.1%). This 1.1 percent factor has been specified by Canadian Grain Commission order since at least the mid 1980s.

This 1.1 percent below the fixed minimum tough moisture level was introduced for two reasons. The first reason was to compensate primary elevators for an effect called moisture rebound. Moisture rebound occurs because artificially drying grain causes the outside of the kernel to dry, leaving the centre with a higher moisture content. After a period of time, the moisture from the centre of the kernel gradually migrates outward bringing the kernel to moisture equilibrium. With current technology, it is impossible to determine the actual moisture content of grain for up to 24 hours after artificially drying it. The moisture result obtained immediately after drying will be lower than the result after moisture rebound. Regardless, the actual moisture and weight of the kernel remain fixed during the rebound process.

The second original reason for the 1.1 percent rebound factor was to ensure that elevators did not excessively charge producers for moisture rebound and to ensure that the elevators did not over-dry grain to take advantage of the weight reduction from the producer and then use the extra dry grain to naturally dry or blend a separate lot of tough grain.

Current situation

Although the order permits producers to negotiate a drying deduction of less than 1.1 percent with the primary elevator prior to drying; it has become common practice for primary elevators to simply apply the 1.1 percent factor. Producers routinely question why the weight reduction (moisture shrinkage allowance) for dried grain is 1.1 below the fixed minimum tough moisture for that grain when the kernel’s actual moisture and weight may not change during the rebound process.

Statistical information or technical data to support the across-the-board 1.1 percent moisture rebound factor or a lesser value factor is not available. According to a publication on drying basics by Grain Handler, a U.S. manufacturer of grain dryers, “moisture rebound is commonly in the range of ¼ percent to 1 percent.” Moisture rebound also varies from grain to grain and elevator to elevator.

Proposal

The Canadian Grain Commission intends to continue to regulate how moisture shrinkage is calculated for grain artificially dried at licensed primary elevators but proceed to eliminate the 1.1 percent rebound factor included in the Canadian Grain Commission Order. The 1.1 percent would be replaced with a reference to a moisture level of 0.1 percent below the fixed minimum tough moisture level specified for that grain in the Canadian Grain Commission Order Off Grades of Grain and Grades of Screenings.

The Canadian Grain Commission’s proposal and request for input is based on the following rationale:

• There are ongoing queries, requests and recommendations from producers and producer groups for a review of the moisture shrinkage allowance for grain artificially dried at licensed primary elevators and the 1.1 percent rebound factor included in the moisture shrinkage Canadian Grain Commission Order.
• It is often cited that since actual moisture and weight of grain does not change during the rebound phase after artificial drying, a rebound factor of 1.1 percent is not required. As a result, producers often perceive that they are being over-charged for drying because the 1.1 percent rebound factor allows the elevators to increase the moisture shrinkage allowance resulting in a payment for fewer tonnes to the producer.
• Statistical information or technical data to support the across-the-board 1.1 percent moisture rebound factor or a lesser value factor is not available. The rebound factor may vary from grain to grain and elevator to elevator.
• The Canadian Grain Commission has already removed a similar moisture shrinkage allowance for grain artificially dried at licensed terminal elevators. The Canadian Grain Commission is seeking consistency of policy and regulatory application across licensees in order to develop a level playing field amongst industry players.
• The Canadian Grain Commission remains committed to a science-based grain quality and quantity assurance system and is continuing to work towards eliminating non-science-based factors from the grading system.