Stakeholder feedback on User Fees Consultation and Pre-proposal Notification

This summary provides a review of comments the Canadian Grain Commission received from stakeholders during our user fees consultation, which concluded on May 1, 2017. The consultation was conducted following the guidelines of the User Fees Act and other government requirements.

Stakeholder feedback will be taken into consideration when the Canadian Grain Commission makes recommendations and submits a formal proposal to Cabinet and Parliament regarding changes to our user fees.

1. Consultation process

On March 1, 2017, we released our User Fees Consultation and Pre-proposal Notification document, which outlined proposed fees, service standards and performance measures.

The consultation document was emailed directly to industry and producer stakeholders, including all Canadian Grain Commission licensees, producer organizations, industry associations and relevant government organizations. At the same time, a news release was issued. The consultation document was posted on this website, and a link to it was posted on Service Canada's Consulting with Canadians website.

The consultation document was accessed over 1,200 times between March 1 and May 1, 2017. A total of 92 formal written submissions were received.

2. Feedback themes

The following summarizes prevalent comments of stakeholders.

Fee levels

All stakeholders agreed with the proposal to reduce user fees for the 2018 to 2023 user fees cycle. Many stakeholders also suggested reducing fees even further for at least part of the 2018 to 2023 fee cycle to reduce the existing revolving fund surplus and return money to producers and the grain sector. One stakeholder also questioned the proposed increase of the short-term licence fee.

New grain volume forecasting methodology

All stakeholders were supportive of the new grain volume forecasting methodology. A number of them recommended that grain volume projections be reviewed and/or adjusted on an annual basis rather than being held static over a 5-year fee cycle. These stakeholders said a static grain volume forecast would be unrealistic, given the clear trend in increased grain production.

Other stakeholders voiced support for the 5-year fee review cycle in tandem with annual reviews of grain volume projections.

Formula-based fee setting mechanism

The majority of stakeholders supported replacing the existing fixed-fee structure set out in Schedule I of the Canada Grain Regulations with a formula-based fee structure. Stakeholders said that this regulatory change would help streamline future fee adjustments. However, many of them suggested building in some type of flexible or automatic adjustment mechanism into fee formulas. A mechanism like this would trigger a fee review if the Canadian Grain Commission’s actual operating costs become unaligned with grain export volumes.

Many stakeholders also said that fee formulas and their associated variables and input values should be published and transparent.

Funding model and costing principles

Most stakeholders agreed with the Canadian Grain Commission’s guiding principles for fee setting. However, some stakeholders said that official inspection and weighing fees for grain exported offshore do not reflect the actual costs of service provision as these fees subsidize other Canadian Grain Commission services. They said that operating costs should be recovered equitably for all Canadian Grain Commission services in both western and eastern Canada.

It was also suggested that the Canadian Grain Commission’s published financial information is too broad to accurately assess whether fees are set accurately or operational overhead amounts are reasonable. In addition, a couple of stakeholders questioned if it is valid for Canadian Grain Commission fees to be governed by the User Fees Act.

Federal appropriation for public benefit activities

The majority of stakeholders said that a portion of the Canadian Grain Commission's services and activities provide a public benefit to all Canadians. Most stakeholders said that the Canadian Grain Commission should be allocated substantially more than $5.37 million in appropriation for providing these types of services. Specifically, stakeholders consistently said that research and the Canadian Grain Commission's Grain Research Laboratory, the grain quality assurance system, food safety, traceability, policy development, and monitoring and statistics are valuable and should be for the public benefit. These services should not be cost-recovered through user fees, but instead paid for by federal appropriation.

Annual increase in federal appropriation

Many stakeholders noted that fees are proposed to increase by 1.5% annually while there is no commitment to increase public benefit appropriation of $5.37 million by the same amount. They recommended that public benefit appropriation should increase as well by 1.5% annually; otherwise, producers would pay an increasing share of public benefit costs while the federal government contributes a diminishing percentage.

Fee comparisons with other grain exporting countries

Many stakeholders said that Canadian Grain Commission fees need to be in line with those in the United States, Australia, other grain exporting countries and the private industry; otherwise, Canadian producers will be at a competitive disadvantage. Several stakeholders also noted the discrepancy between the Canadian Grain Commission’s appropriation amounts and those of its counterparts in other grain exporting countries.

Services and service standards

Many stakeholders said that the Canadian Grain Commission provides valuable services and functions to producers, the grain industry and Canadians. Many also voiced support for the Canadian Grain Commission’s service standard commitments. There was a suggestion to develop more farmer-focused service standards and to implement a formal process for stakeholders to provide regular comments.

Conflict of interest as regulator

It was suggested that regulatory bodies that are funded through cost recovery are in a conflict of interest. The argument was made that there is a greater incentive for generating revenue than for creating the appropriate regulatory environment and offering appropriate services.

Role and services

Some stakeholders recommended that the Canadian Grain Act and the Canadian Grain Commission’s role and all of its services should be reviewed and modernized. In this way, the organization and its services would keep pace with changes in the grain sector and provide the most benefit to producers and industry stakeholders. Many stakeholders also made suggestions about specific Canadian Grain Commission roles and services, as explained below.

Some stakeholders suggested that the Canadian Grain Commission should transition to a strictly regulatory oversight role and stop service provision. In this situation the Canadian Grain Commission would become the certifying body that accredits qualified private sector companies to provide services.

Several stakeholders recommended introducing an element of competition by allowing private sector companies to provide official inspection services at export position. These stakeholders felt this change would ensure cost efficiencies and better service alignment with industry requirements. It was also suggested that official inspection services could be optional and be provided by either private sector companies or the Canadian Grain Commission.

Some stakeholders called for a review of the grain grading and standards systems. It was suggested that grain grading and standards should be the Canadian Grain Commission’s primary function.

A few stakeholders recommended that a dispute resolution process be implemented as a cornerstone of Canadian Grain Commission accountability.

A few stakeholders recommended that the Canadian Grain Commission play an increasing role to help maintain a transparent, well-functioning sector by collecting and making available additional grain sector related data and information.

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