Farmers’ groups push against grain-handlers

Hey there, time traveller!
This article was published 05/08/2023 (974 days ago), so information in it may no longer be current.

It seemed routine and innocuous: the mid-June news release from the Canadian Grain Commission announcing changes to wheat-grading parameters.

On the surface, the changes even made sense. The top grade of wheat delivered to a country elevator would now have to weigh the same as what is loaded to a customer’s vessel at an export terminal.

Why would you want to have a variance? The minimum test weight for No. 1 wheat is 60.1 pounds per bushel at the elevator and the export minimum at port is 63.3 pounds per bushel. With grain-handling capacity at a premium, anything that can streamline the grading process and make the system more efficient has appeal.

However, the more that farmers and their organizations considered the idea, the less they liked it — so much so that organizations that can’t usually agree on which way the wind is blowing were co-signing letters to the federal minister of agriculture condemning the move.

Meanwhile, grain companies favoured the change. As the grain-handling system has consolidated to fewer delivery points and larger unit trains, the fewer grading complications they must deal with, the easier their job becomes.

That made farmers even more suspicious that this wouldn’t work in their favour.

At issue is who captures the benefits of blending as grain grown by thousands of farmers is collected, consolidated, transported by rail and pulled through a terminal onto ships at port.

Under the current system, farmers whose wheat weighs a little below the export standard but meets all the other criteria can still make the No. 1 grade because their delivery will be blended with wheat from farmers whose grain weighs more. Most of the time, grain deliveries exceed the minimum standards for weight, although that might be different this year because of the drought across the West.

Under the proposed change, the lighter grain would be graded No. 2, which means the farmer is paid a lower price. However, by the time it reached export, that grain could be part of a lot that meets No. 1 export standards because of the blending. In that scenario, the company reaps the reward, not the farmer.

It’s not clear how many would be affected. It would depend on local growing conditions year by year. But farmers could see potential for thousands of dollars difference in how their grain is valued.

What made them even angrier was that the grain commission pushed ahead with the change, despite protests from the farmer representatives on its own grain-standards advisory committee and without providing any economic impact analysis or other rationale for why the change was necessary.

Farmer groups were lining up to protest. However, it was the joint letter from the National Farmers Union and the Wheat Growers Association that seemed to catalyze the commission’s decision to reconsider.

“The NFU and WGA disagree on many policy matters but are united in their opposition to the decision to harmonize primary and export standards for wheat,” said their statement.

Ultimately the grain commission backed down a few days before the new crop year dawned Aug. 1.

It might have had something to do with the wording of the Canada Grain Act, which clearly says the commission’s mandate is to act “in the interests of grain producers” when establishing quality standards and regulating grain handling. In the absence of evidence to the contrary, this appears detrimental to producer interests.

The federal government has plans to modernize the act, which hasn’t seen a major overhaul in more than 50 years. Some have proposed that the grain commission’s mandate be changed to act in the best interests of the industry. After all, isn’t what’s good for the industry also good for farmers?

Farmers may have something to say about that.

Industry lore is that when the act was first passed more than a century ago, one of the driving forces was an audit that showed there was a lot of No. 2 wheat flowing into the grain terminals at Thunder Bay that was graded No. 1 when it flowed out onto ships.

Laura Rance is vice-president of content for Glacier FarmMedia. She can be reached at lrance@farmmedia.com.