ARCHIVED — Vol. 146, No. 17 — August 15, 2012

Registration

SOR/2012-153 July 26, 2012

CANADA GRAIN ACT

Regulations Amending the Canada Grain Regulations

P.C. 2012-998 July 26, 2012

The Canadian Grain Commission, pursuant to subsection 116(1) (see footnote a) of the Canada Grain Act (see footnote b), makes the annexed Regulations Amending the Canada Grain Regulations.

Winnipeg, Manitoba, July 6, 2012

ELWIN HERMANSON
Chief Commissioner of the
Canadian Grain Commission
JIM SMOLIK
Assistant Chief Commissioner of the
Canadian Grain Commission
MURDOCH MACKAY
Commissioner of the
Canadian Grain Commission

His Excellency the Governor General in Council, on the recommendation of the Minister of Agriculture and Agri-Food and pursuant to subsection 116(1) (see footnote c) of the Canada Grain Act (see footnote d), approves the making, by the Canadian Grain Commission, of the annexed Regulations Amending the Canada Grain Regulations.

REGULATIONS AMENDING THE CANADA GRAIN REGULATIONS

AMENDMENTS

1. Section 71 of the Canada Grain Regulations (see footnote 1) and the headings before it are repealed.

2. (1) Form 6 of Schedule 4 to the Regulations is amended by deleting the following:

  • (a) “CWB refund $ .........................”; and

  • (b) “You should also contact the Canadian Wheat Board with respect to current requirements for wording, terms and conditions to be identified on this Cash Purchase Ticket in respect of the purchasing of any grain(s) governed by the Canadian Wheat Board.”.

(2) Form 6 of Schedule 4 to the Regulations is amended by replacing the word “Remarks” with the words “Explanation of levy/deductions/additions”.

3. Form 14 of Schedule 4 to the Regulations is replaced by the Form 14 set out in Schedule 1 to these Regulations.

4. Form 15 of Schedule 4 to the Regulations is replaced by the Form 15 set out in Schedule 2 to these Regulations.

5. Schedule 6 to the Regulations is repealed.

COMING INTO FORCE

6. These Regulations come into force on August 1, 2012.

SCHEDULE 1
(Section 3)

this image represents the form that shall be used by producers to obtain railway cars.

SCHEDULE 2
(Section 4)

FORM 15

SPECIAL BIN AGREEMENT

TO:

In accordance with section 57 of the Canada Grain Regulations, we agree to provide you

with ________ (quantity) _________ (gross/net)  tonnes of wheat equivalent space in our

___________________________ (location and identity of elevator) for the purpose of

special binning _______________________________________________. (type of grain and variety, if applicable, or grain product)

The grain or grain product stored pursuant to this Agreement will be stored in

Bin Number(s):      Capacity:     (Gross/Net)

Should the grain or grain product represented by this Agreement be transferred, for any reason, to any other bin(s), we agree to notify you and the Canadian Grain Commission of the new bin number(s), in writing, and this Agreement will be amended accordingly.

This Agreement becomes effective on ____________ and will terminate on ____________ when all grain or grain products stored in the above-mentioned bin(s) must be removed from the bin(s); otherwise, this Agreement remains in effect until the date on which all the grain or grain product is removed.

All charges assessed will be according to the applicable tariff rates filed by us with the Canadian Grain Commission.

ACCEPTED BY:

________________ ________________

DATED: ________________

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

1. Background

The coming into force of Part Ⅱ of the Marketing Freedom for Grain Farmers Act, on August 1, 2012, will create an open market for western Canadian wheat and barley producers by removing the single-desk marketing monopoly of the Canadian Wheat Board (CWB). As a consequence of these changes, some amendments will be made to the Canada Grain Act (CGA). The repeal of the single-desk monopoly necessitates the removal of some references to the CWB in the Canada Grain Regulations (CGR) and its accompanying schedules.

2. Issue

These proposed amendments are consequential to the amendments to the CGA which are contained within the Marketing Freedom for Grain Farmers Act. These changes are minor in nature and will not impact the role or mandate of the Canadian Grain Commission (CGC).

  1. The Marketing Freedom for Grain Farmers Act authorizes the creation of regulations by the Governor in Council for the implementation of a voluntary point of sale check-off to support wheat and barley research and market development for up to five years. These Regulations will allow a deduction for research and market development for wheat and barley being delivered to licensed grain buyers issuing a cash purchase ticket (CPT). The new check-off regulations are part of a separate regulatory process currently in prepublication, but as a consequence of that process, wording changes are required to the actual CPT form — Form 6 of Schedule 4 of the CGR. Deletions of references to the CWB are also necessary to update the CPT form to reflect changes in the Marketing Freedom for Grain Farmers Act.
  2. The Marketing Freedom for Grain Farmers Act removes the single-desk CWB monopoly for wheat and barley sales, and also repeals section 87.1 of the CGA which states that the CGC must provide end-use certificates (EUCs) on request, and that the Canada Border Services Agency (CBSA) should forward completed EUC forms, submitted at the border, to the CGC. An EUC form is completed by a person importing wheat, declaring that the wheat is imported for consumption in Canada and is consigned directly to a milling, manufacturing, brewing, distilling or other processing facility for consumption at that facility. Canadian EUCs only require a declaration that the wheat is imported for consumption in Canada and is consigned directly to a processing facility for use at that facility.
    The CGC does not have legal authority to determine who requires an EUC or to require anyone to obtain an EUC, only that it must provide one on request. Although the actual EUC form is found in Schedule 6 of the CGR, the authority to require EUCs was established under paragraph 46(1)(b) of the CWB Act as an exemption from import controls previously required under the CWB Act for U.S. wheat, oats and barley. This authority will be repealed on August 1, 2012, with the coming into force of the Marketing Freedom for Grain Farmers Act.
    Given this situation, the references to EUCs in section 71 of the CGR, and the actual End-use Certificate form (Form 1 of Schedule 6 of the CGR) are obsolete and are being repealed.
  3. References to the CWB and associated terminology are found in several sections of the Application for Producer to Obtain Railway Cars form (Form 14 of Schedule 4 of the CGR). Consequently, deletions of references to the CWB and some additional wording changes are necessary to update this form to bring it in line with the new legislation. For example, the word “quota” needs to be replaced with “contract” as the term “quota” is no longer relevant when discussing the process for calling wheat and barley into the grain handling system in absence of a single-desk monopoly. Under the CGA, grain producers are entitled to order producer cars through the CGC. Producer cars are used to ship grain directly to a particular destination and provide producers a delivery alternative to the licensed grain handling system. Form 14 is completed by a producer and then submitted by either a producer or producer car administrator to the CGC in order to apply for a producer car.
  4. In addition, a housekeeping change unrelated to the changes to the CWB is being included in this regulatory package. This minor amendment will improve clarity and update the Special Bin Agreement form (Form 15 of Schedule 4 of the CGR) to reflect current practices. This form is related to section 57 of the CGR that describes the Special Bin Agreement which lays out the conditions to be met when an operator of a licensed terminal or licensed transfer elevator specially bins any grain.

3. Objectives

The objectives of this regulatory package are to

  • Make consequential amendments to the Canada Grain Regulations and accompanying schedules to align them with amendments to the Canada Grain Act contained in the Marketing Freedom for Grain Farmers Act; and
  • Make an additional housekeeping change in the CGR to improve clarity and ease of use.

4. Description

The following are descriptions of the regulatory changes:

1. Cash Purchase Ticket Form

 Wording changes and deletions are necessary to update the Cash Purchase Ticket (CPT) form — Form 6 of Schedule 4 of the CGR.

 On the CPT form, there is a reference to “CWB refund” and a note to the licensees as follows: “you should also contact the Canadian Wheat Board with respect to current requirements for wording, terms and conditions to be identified on this Cash Purchase Ticket in respect of the purchasing of any grain(s) governed by the Canadian Wheat Board,” In addition, the current word “Remarks” is to be amended to read “Explanation of levy/deductions/additions.” Deletion of these references and wording changes are necessary to update the CPT form to bring it in line with amendments to the CGA respecting check-offs contained within the Marketing Freedom for Grain Farmers Act.

2. End-use Certificates

 The entire section 71 of the CGR and the actual End-use Certificate document — Form 1 of Schedule 6 of the CGR — are to be repealed. The legal authority to require EUCs will be repealed as of August 1, 2012, with the coming into force of the Marketing Freedom for Grain Farmers Act. As a result of this, the EUC regulations and form are obsolete. The United States government and U.S. producer groups have previously cited the EUC documentation requirement as an impediment to U.S. wheat sales into Canada. Both Agriculture and Agri-Food Canada and the CGC have met with U.S. producer groups and relevant U.S. government officials to discuss the EUC issue. These groups are welcoming of the elimination of this requirement. In turn, the U.S. is well aware of its legal obligation to sunset EUCs 30 days after Canada has eliminated its own EUCs. This has been flagged at several official meetings between Canada and the U.S. The U.S. has indicated it will reciprocate once the Canadian requirement is formally revoked on August 1, 2012. Canadian processors have cited support for the reduced compliance requirements and support the removal of EUCs.

3. Application for Producer to Obtain Railway Cars Form

 Wording changes and deletions are necessary to update the Application for Producer to Obtain Railway Cars form — Form 14 of Schedule 4 of the CGR — to align it with the new legislation.

 The references to “Canadian Wheat Board Identification Number” and “CWB Number” in Section A are to be deleted and replaced with “Producer Identification Number” and “Producer ID” respectively. In addition, the box in Section B of the form referencing “CWB Contract Series”; “Tonnes”; and “Does this application include your 45-tonne minimum delivery provision for Producer Cars?” is to be deleted.

 Part Ⅱ of the Marketing Freedom for Grain Farmers Act contains a definition of “producer” that is being added to the CGA. The statement “I am a producer as defined in the Canada Grain Act R.S.C. 1985, as amended” is being added to the lettered list in Section C of the form as item a), and the rest of the list re-lettered accordingly. This statement is being added to increase the clarity of who is eligible to apply for a producer car and ensure that the applicant is indeed a producer.

 Also, in Section C of the form, list item c) is to be amended by deleting the word “quota” and replacing it with “contract.” With the removal of the CWB’s single-desk, the term “quota” is no longer relevant when discussing the process for calling wheat and barley into the grain handling system.

4. Special bin agreement form

 A minor change is made in two places in Form 15 of Schedule 4 of the CGR to add a check-box to the “tonnes” amount to allow for the party requesting the special binning arrangement to select whether the quantity of wheat is “gross” or “net” tonnes (includes dockage weight or is minus dockage weight). This change will add clarity of understanding for both the consignee and consignor of the agreement as some grain handling companies wish to specify “net tonnes” rather than “gross tonnes.” This amendment will reflect current practice and align the form with an existing industry operating procedure.

5. Consultation

Introduction of the Marketing Freedom for Grain Farmers Act has generated extensive stakeholder discussions throughout the agricultural community and received wide coverage in the media. Stakeholders, including CGC licensees, producer groups, and the grain handling industry and associations have expressed their positions through extensive public consultation forums over the last few years.

The amendments in this regulatory package are consequential to the legislative package being put forward by Agriculture and Agri-Food Canada that requires amendments to the CGA contained within the Marketing Freedom for Grain Farmers Act. These housekeeping regulatory changes have had a minimal level of consultation as changes to the single-desk marketing monopoly of the CWB, and the impacts of these, have been communicated widely. The subsequent amendments to the CGR will be appreciated by interested stakeholders as they add clarity to the Regulations and simplify operational procedure.

Specifically, with respect to the changes to the CPT, the issue of maintaining some type of wheat and barley check-off funding (after the August 1, 2012, termination of the CWB check-off) was discussed during the consultation process for the Marketing Freedom for Grain Farmers Act. During these consultations, stakeholders expressed support for continuing research and market development as these functions benefit all industry stakeholders. Given that producer check-offs are indicated on CPT forms, the amendments to the CPT form are simply reflective of the need to categorize check-offs correctly.

In terms of the elimination of section 71 (end-use certificates), the CGC, along with Agriculture and Agri-Food Canada officials, has consulted with U.S. producer associations and U.S. government officials on this topic for several years. These groups, as well as Canadian wheat and barley processors, are welcoming of the reciprocal elimination of the EUC requirement.

6. Small business lens

The small business lens does not apply to this proposal, as there are no costs to small businesses.

7. Rationale

This regulatory proposal is expected to have minimal legal, financial, policy or other impacts. The changes are consequential to the Marketing Freedom for Grain Farmers Act.

1. Cash purchase ticket form

 In terms of the amendments to the CPT form, the actual timing of the deduction will change for producers. Although continuing to be a voluntary check-off, instead of coming off a producer’s final CWB payment, the check-off will be deducted at the point when a CPT is issued. As stated above, this deduction process is proposed in the regulatory package being put forward by Agriculture and Agri-Food in connection to the Marketing Freedom for Grain Farmers Act. This process will increase deduction visibility and transparency for producers. Therefore, the “Deduction of levy” reference on the CPT will now also include an amount in accordance with the proposed deductions contemplated by the new sections 83.1 to 83.3 of the CGA regarding wheat and barley check-offs.

 Licensed grain businesses who issue CPTs will require some administrative adjustments in order to reflect changes to the deduction process. These would not be a major re-write and as the CPT form already exits, changes would be a one-time process and be of low economic impact to licensees. Long-term administrative costs would not increase.

2. End-use certificates

 The elimination of the EUC provisions will have no impact on Canadian grain quality assurance. For the purposes of quality assurance, EUCs are no longer necessary. Currently the CGR requires licensed grain handling facilities to report to the CGC the origin of all grain, or when imported grain has been mixed with Canadian grain. The usefulness of EUCs to Canada has long since expired as a consequence of other, prior, unrelated regulatory changes in the Canadian grain sector.

 Repeal of the EUC form is expected to have no real economic impact or implications for Canadian importers of U.S. wheat given the lack of usage. Any administrative costs currently existing for these processor facilities will be eliminated.

 In addition, as the U.S. government and U.S. producer groups have cited this documentation requirement as an impediment to U.S. wheat sales into Canada, these groups are supportive of its removal. Although the elimination of the Canadian EUC requirement will require alignment of U.S. EUC policy, it is wholly welcomed by both countries as it will reduce regulatory burden and remove obsolete regulations as the authority for EUCs will be repealed August 1, 2012.

3. Application for Producer to Obtain Railway Cars Form

 There are no legal or policy implications with the changes to the Application for Producers to Obtain Railway Cars form. The changes to the form may only require minor clerical adjustments by administrators of producer cars if they want to tailor the form by adding more personal company information. However, the template form is available electronically for download or printing on the CGC Web site and, as a result, administrative and financial burden to users is minimal. Producer car administrators, or producers who self-administer, can use the template form as is, simply by downloading and printing the online form, or adjust it to suit their needs given that the minimal information required by the CGC is included on their form.

 The statement “I am a producer as defined in the Canada Grain Act R.S.C. 1985, as amended” is being added to Section C of the form to increase the clarity of who is eligible to apply for a producer car and ensure that the applicant is indeed a producer. This addition will help confirm for both producer car administrators and the CGC that producer cars are being allocated as per the producer car rights outlined in the CGA and CGR.

 Deleting the word “quota” and replacing it with “contract” in Section C of the form, list item c), is strictly consequential in nature. With the removal of the CWB’s single-desk, the term “quota” is no longer relevant when discussing the process for calling wheat and barley into the grain handling system. As is currently the situation with other grain types (e.g. canola, special crops), wheat and barley sales will be negotiated by market participants using sales contracts.

4. Special Bin Agreement form

 The minor change to the Special Bin Agreement form will allow for the party requesting the special binning arrangement to select whether the quantity of wheat is “gross” or “net” tonnes, i.e. includes dockage weight or is minus dockage weight. This change will add clarity of understanding for both the consignee and consignor of the agreement and avoid potential legal disputes. As the form is available on the CGC Web site, the amendment would have no financial administrative impact on operators of licensed terminal or transfer elevators.

8. Implementation and enforcement

These regulatory amendments will come into force on August 1, 2012. The consequential changes to the CGR require a minimal level of communications preparation by the CGC as changes to the single-desk marketing monopoly of the CWB have been communicated widely by Agriculture and Agri-Food Canada. The regulatory amendments do not impact the CGC’s role or mandate.

As we move towards August 1, 2012, Agriculture and Agri-Food Canada will be providing additional extensive communication regarding all aspects of the transition to an open market for wheat and barley sales. This will include information on marketing freedom, including information on the removal of the wheat and barley research, market development and technical assistance deduction previously shown on the CPT (CWB Levy); the removal of the requirement for EUCs; and the fact that the right of producers to obtain railway cars will be maintained.

At the same time, in order to ensure a smooth operational and administrative transition, the CGC will be informing grain producers, producer car administrators, grain industry associations, and licensed grain handlers of the changes to the CPT, Application to Obtain Railway Cars, and Special Bin Agreement forms, and the repeal of the requirement for EUCs.

  • A Memorandum to the Trade will be posted on the CGC Web site and distributed through existing mechanisms describing the changes to the three CGC forms.
  • The CGC Licensing Unit will send letters directly to all licensed grain handling facilities informing them of the changes to the CPT.
  • The CGC Producer Car Unit will contact all producer car administrators by phone indicating that an updated producer car application form is available on the CGC Web site.
  • CGC Executive, along with Agriculture and Agri-Food Canada officials, will directly communicate with relevant U.S. government officials, U.S. grain associations, and Canadian process facilities regarding the repeal of EUCs.

9. Contact

Melanie Gustafson
Policy, Planning and Producer Cars
Canadian Grain Commission
303 Main Street
Winnipeg, Manitoba
R3C 3G8
Email: melanie.gustafson@grainscanada.gc.ca

Footnote a
S.C. 2001, c. 4, s. 89

Footnote b
R.S., c. G-10

Footnote c
S.C. 2001, c. 4, s. 89

Footnote d
R.S., c. G-10

Footnote 1
C.R.C., c. 889; SOR/2000-213