What We Heard Report – Consultation on updating grain grading dispute resolution

Introduction

When producers deliver grain to a licensed primary elevator, their grain is assessed by the receiving elevator for grade and dockage. As indicators of the grain’s quality and cleanliness, grade and dockage are factors in determining the payment value of the grain delivery. If the producer disagrees with the elevator’s assessment, they have the right to request that the sample be assessed by the Canadian Grain Commission for an independent, binding decision. This is often referred to as “Subject to Inspector’s Grade and Dockage” (“Subject to”).

The Canadian Grain Commission is proposing to update the grain grading dispute resolution mechanism. The proposed changes to sections 34 and 36 of the Canada Grain Regulations would

  • clarify the minimum time requirements for retaining a sample
  • allow for more flexible arrangements between the producer and primary elevator in determining who and where a delivery sample is held
  • clarify that producers are able to access grain grading dispute resolution even if they do not deliver the grain themselves
  • clarify the time period over which a producer is entitled to exercise their right to access grain grading dispute resolution, including a period after delivery

For more information about the proposed changes, refer to the consultation document.

Consultation process

The Canadian Grain Commission held a consultation on its regulatory proposal to update the grain grading dispute resolution mechanism from December 13, 2021, to February 28, 2022. The consultation document, including written instructions outlining the participation process, was emailed to grain sector stakeholders, including producer and commodity organizations, industry associations, and other relevant government organizations. The commission issued a news release announcing the consultation and posted the consultation document on its website. The Canadian Grain Commission also offered to meet with organizations that wished to provide their input directly.

Stakeholder submissions

The consultation received a total of 13 submissions: 4 from producers, 8 from producer and industry associations, and 1 from a provincial government. Every submission broadly supported the Canadian Grain Commission’s proposal, with some stakeholders suggesting amendments in specific areas.

Feedback themes

Number of days to trigger grain grading dispute resolution

The majority of respondents did not recommend changing the time period indicated in the Canadian Grain Commission’s proposal.

The most common suggestion, included in 6 out of 13 responses, was to amend the number of days a producer has to trigger “Subject to” after receiving a primary elevator receipt. Of these, 3 of the 6 suggested changing the time from 7 calendar days to 5 business days. They noted that business days would allow producers to have 5 days to consider their options without having to factor in holiday disruptions. One respondent recommended lowering the requirement to 3 business days. The other two respondents requested the allotted time be increased beyond 7 days to allow for “…enough time to see how other elevators are grading and discussions between neighbours to happen”, and to provide enough time for producers to receive documents from commercial truck drivers.

One submission noted that sample retention costs could increase for some elevators while producers decide whether or not to trigger “Subject to”. The respondent explained that while grain handlers typically invest in sample containment and warehousing systems, the need to retain samples for 7 days may require some elevators to increase their storage capacity to retain the necessary samples, especially during the busy harvest period.

Canadian Grain Commission oversight and presence at the elevator

Six out of 13 respondents suggested that the Canadian Grain Commission should provide more oversight or direction for grain sampling and compliance inspections at primary elevators. Suggestions ranged from random spot checks to dedicated personnel paid for by the Canadian Grain Commission at primary elevators to grade deliveries. Five responses were requests for the Canadian Grain Commission to provide clarity around what constitutes a reasonable sample for “Subject to” purposes and how that sample would be stored to ensure its integrity.

Fees for grain grading dispute resolution

Three respondents raised the issue of fees for “Subject to”. Two of these described situations in which primary elevators have handled producer requests for “Subject to” to the detriment of the producer. The first submission described a mailing fee that a primary elevator charged the producer to ship the sample to the Canadian Grain Commission for dispute resolution. The second submission outlined a general reluctance by primary elevator operators to send a “Subject to” sample to the Canadian Grain Commission because of fees for the service. Two submissions recommended waiving the fee for the “Subject to” service.

Information provided to producers

Three respondents recommended ways to improve the information producers are provided when considering whether to trigger “Subject to”. One respondent recommended requiring primary elevators to provide grading information within 48 hours of delivery. One submission suggested that the Canadian Grain Commission increase oversight in this area. Another respondent suggested that in addition to having private company inspection personnel onsite, the Canadian Grain Commission should have these private companies collect data to provide producers with better market information.

Producers retaining samples

Four of 13 submissions referenced producer eligibility to retain samples. One submission recommended language that would entitle producers to keep a sample for their own records. One submission suggested that producers be entitled to keep enough sample to independently verify any contract specifications in the event of a dispute. Two submissions requested clarity around the process where producers and primary elevators can agree to retain a sample offsite, including what happens in the event of dispute over where the sample is to be retained and how the Canadian Grain Commission would ensure compliance in this area.

Extending grain grading dispute resolution to all specifications

“Subject to” can be used to dispute the assessment of any regulated grain’s official grade or any individual grading factor, such as moisture, protein and dockage. This service cannot currently be used to dispute grain delivery contract specifications that are not listed in the Official Grain Grading Guide as grading factors for that grain, such as Falling Number and deoxynivalenol (DON). Three respondents requested that the “Subject to” process be extended to include all grain delivery contract specifications, including Falling Number and DON.

Extending grain grading dispute resolution to all classes of elevators

As per the Canada Grain Act, the right of the producer to dispute their grain’s grade is available only at the time of delivery to a licensed primary elevator in western Canada. Two respondents requested that “Subject to” be extended to include all classes of licensees that purchase grain directly from producers. One of these submissions specified process elevators, container loading facilities, and feed mills.

Producer’s right to observe and verify

Two respondents raised the issue of producers being allowed to observe elevator operators perform grade and dockage assessment at delivery. One respondent said that physical barriers, in place to protect against COVID-19, inadvertently restrict producers from observing the grading and dockage process and may reduce trust between parties, increasing the risk of a dispute. One respondent asked the Canadian Grain Commission to ensure that “the right of the producer to attend the grading process should be maintained and guaranteed in all circumstances”.

One respondent also recommended that the same language as in section 64 of the Canada Grain Act be applied to process elevators to entitle producers to verify the weight of their grain at delivery. One respondent also raised concerns that producers do not have an opportunity to verify that samples are weighed accurately during grading and that producers are not being compensated for the grain lost during sampling.

Next steps

The input from stakeholders provided valuable information on the proposal to update grain grading dispute resolution. All feedback received during the consultation will be considered as the CGC moves forward with making regulatory changes. Thank you to all those who submitted their feedback and suggestions.

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