What We Heard Report – The Falling Number and Deoxynivalenol (DON) Stakeholder Discussion
Canada is known around the world for the quality, consistency, and reliability of its grain shipments. The Canadian Grain Commission is responsible for establishing and maintaining Canada’s grain grading system.
Canada’s grain grading system reflects the needs and concerns of all parts of Canada’s grain sector, from grain producers to exporters and processors, while maintaining the standard of excellence for Canadian grain.
As part of its commitment to grain grading modernization, the Canadian Grain Commission began a review of the Canadian grain grading system in 2017. The focus of this review is to provide more efficient and precise assessments of grain quality while responding to the needs of Canada’s grain sector.
This work has resulted in recent changes to the grading system such as:
- consistent decimal precision in grading factors,
- new standard samples for assessing mildew and frost/heat stress in wheat, and
- adjustments to individual tolerances for small seeds and roughage in wheat
The Canadian Grain Commission is also looking at the increasing role of analytical testing in grain transactions, and if further changes to the grading system are necessary to reflect this evolving aspect.
Because of advances in technology and analytical testing grain buyers can now purchase grain based on specific quality characteristics. These characteristics can be verified through analytical testing in addition to, or in place of, visual grading. Many transactions now include payment or discount based on specifications that are important to grain buyers and customers. These specifications are either in lieu of, or in addition to, the grain grading factors detailed in Schedule III of the Canada Grain Regulations and the Official Grain Grading Guide.
Specifically, the Canadian Grain Commission is considering how best to address Falling Number and deoxynivalenol (DON) specifications in the context of the statutory Canadian grain grading system. Currently, Falling Number and DON are not official grading factors in the grading system for any type of crop, including wheat. However, they increasingly play a critical role in grain contracts and the assessment and price that grain sector participants, including producers, receive for their grain.
On March 11, 2019, the Canadian Grain Commission initiated a 60-day discussion with stakeholders on the potential implementation of Falling Number and DON as official grain grading factors. The discussion gave stakeholders an opportunity to have their say on what the impacts would be if these changes were made to the statutory grading system.
This report summarizes the feedback we received from stakeholders during the discussion period, which ended on May 11, 2019. While submissions included a wide range of comments, this report summarizes feedback into three common themes: reliability, cost and efficiency.
We emailed the discussion document, including written instructions outlining the participation process, to grain sector stakeholders, including producer and commodity organizations, industry associations, grain marketers, provincial crop insurance agencies and other relevant government organizations. The commission also issued a news release and posted the discussion document on its website and on Service Canada’s Consulting with Canadians website. On request, the Canadian Grain Commission held teleconference calls with interested stakeholders.
The discussion document invited stakeholders to share their perspectives on the proposal and provided them with a series of questions to help guide their responses. The document requested stakeholders to give feedback on the potential approach as outlined, how this approach would impact their business, and other methods that could be used for addressing Falling Number and DON in the official grading system.
The Canadian Grain Commission received 29 written submissions, with many of these responses representing the views of producer and commodity groups, as well as industry and industry associations. We received a lower number of submissions than we had for other recent consultations. The commission received four requests for teleconference calls.
Figure 1: Number of Submissions by Participant Category
Note: Industry refers to any group that is involved in the grain trade (purchase or sale) that does not also identify as a primary producer of grain, a producer group, or a commodity organization.
Summary of key stakeholder feedback by theme
The most common themes throughout the discussion were reliability, cost, and efficiency.
Figure 2: Relative Size of Top Themes
Note: Each theme is sized in relative proportion to each other and represents the number of stakeholder submissions (of the entire number received) that commented on reliability, cost and efficiency. The ‘Other’ category includes all other comments.
A majority of respondents discussed the reliability of Falling Number and DON testing procedures. Of those who discussed reliability, most expressed concerns regarding the accuracy, precision, and repeatability of current testing procedures. The remaining respondents felt that the addition of the objective assessment of Falling Number and DON as official grading factors would improve the reliability of results and help reduce the uncertainty that producers face when marketing grain.
Many respondents questioned the potential costs of implementing Falling Number and DON testing across the grain industry. Responses were split between assertions that costs would exceed the benefits of implementing Falling Number and DON as official grading factors and uncertainty about potential added costs. Of the responses that considered the cost of implementation, many cited concerns that grain handlers either could, or would, pass any additional costs back to producers. In general, respondents felt that the costs or benefits of amending the grain grading factors were unclear and that they needed more information before they could determine a clear net cost or benefit.
Many submissions addressed operational efficiency, including how these tests would affect the length of time required for a quality assessment. Most of these comments expressed concern that if the Canadian Grain Commission were to require Falling Number and DON testing, it would introduce significant delays into the grain handling system. The remaining comments expressed uncertainty about potential efficiency impacts. A few respondents felt that if the Canadian Grain Commission changed Falling Number and DON assessment requirements (e.g. from a contract specification to an official grading factor), then grain buyers would be less able to respond to shifts in market demand. In addition, some submissions questioned how producer access to a Canadian Grain Commission binding determination on grade (in other words, ‘subject to inspectors’ grade and dockage’ service) would be affected as Falling Number and DON results would not be known at the time of delivery. Currently, producers must initiate a grain grading dispute at the time of delivery.
Summary of feedback by stakeholder group
Most stakeholder groups opposed the addition of Falling Number and DON as official grain grading factors. The next most common stakeholder response was to take no firm position. Instead they requested more information. A smaller number of stakeholders supported the proposed changes.
Producer and commodity groups
Producer and commodity groups that opposed the proposal to add Falling Number and DON as official grading factors were concerned that tests results would only be as accurate as the sampling procedures followed; that adding these factors would create significant delays at unload while samples are graded; that grain handlers would pass the costs of implementation on to producers; and that producers could see an increase in downgraded deliveries.
Producer and commodity groups that took no firm position said they did not have enough information to make a definitive decision. Specifically, they asked for more information on the net benefits of the proposal. As well, they asked if implementing the proposed grading factors would increase the likelihood that producers’ deliveries would be downgraded. They also wanted more details on what the proposed values and tolerances for Falling Number and DON would be by grade.
Producer and commodity groups that supported the proposal to add Falling Number and DON as official grading factors said that transitioning from subjective to more objective grading criteria would add value and improve producers’ returns. These respondents also stated it would be beneficial if producers were able to request the ‘subject to inspectors’ grade and dockage’ service on Falling Number and DON results and asked if crop insurance would cover financial losses due to high DON or low Falling Number.
Industry and industry associations
Industry respondents that opposed adding Falling Number and DON as official grading factors were concerned that the current Falling Number and DON test methods and sampling procedures are not robust enough to minimize the variation of results between tests. These stakeholders also said that realized and expected costs would override any benefits and that expected delays in obtaining grading results would impact operational efficiency.
Industry respondents that took no firm position requested more information on the implementation of Falling Number and DON as official grading factors. For example, they asked for more details on applicable grain types, removal of other grading factors, costing distribution, timing, testing methods, sampling processes, etc.
Industry respondents that supported adding Falling Number and DON as official grading factor changes stated that transitioning from subjective to objective grading factors would be beneficial and facilitate marketing decisions.
Crop insurance agencies
Provincial crop insurance agencies generally stated that their programs could be adjusted to reflect Falling Number and DON as official grading factors, but that they would need appropriate lead time to make these changes. These organizations also raised concerns about added system costs.
The discussion with stakeholders on the potential implementation of Falling Number and DON as official grain grading factors provided valuable information and feedback for consideration. We would like to thank all the stakeholders who participated in the discussion.
While the accuracy of analytical tests such as those used to assess Falling Number and DON may be better than that of visual inspection for some quality factors, we clearly heard that other considerations, such as impacts on efficiency at delivery, impacts on the overall efficiency of the grain handling system and if costs will be transferred to producers, need to be understood before further steps are taken to add Falling Number or DON as official grading factors. Any broad-based changes must balance the desire to make the grain grading system more accurate and objective with the associated costs and implications for the sector.
The modernization of the grain grading system remains a key priority for the Canadian Grain Commission. Moving forward, we will continue to look at potential ways to improve the grain grading system and ensure it evolves with the sector.
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