Canada Gazette, Part I, Volume 146, Number 21: Regulations Respecting Research, Market Development and Technical Assistance (Wheat and Barley)
May 26, 2012
Canada Grain Act
Department of Agriculture and Agri-Food
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Currently, the Canadian Wheat Board (CWB) provides research funding by administering a producer check-off for wheat and barley under the Canadian Wheat Board Act and provides direct funding for market development and technical assistance. The check-off is a deduction taken from a grain producer’s final CWB payment to support wheat and barley research. The funds from the producer check-off go to the Western Grains Research Foundation (WGRF). The CWB provides direct funding to the Canadian International Grains Institute (CIGI) and the Canadian Malting Barley Technical Centre (CMBTC) to invest in market development and technical assistance. This money also comes from producers as the CWB uses a portion of the proceeds from selling producers’ wheat and barley to fund these organizations.
Funds collected through the producer check-off are invested into wheat and barley variety development through public breeding programs across Western Canada (i.e. through partnerships with university crop development centres and Government research facilities — all providing public goods). Many wheat and barley varieties grown on farms today were developed through research funded by the producer check-off.
The contributions provided to CIGI by the CWB are used for market development and technical assistance activities such as delivering customer training programs, providing applied technical services and developing new products and end-use applications for Canadian grains.
The technical assistance funding provided by the CWB to the CMBTC is used for activities such as crop evaluation, training programs for customers and purchasers, technical support and product testing, all of which help ensure Canada’s competitiveness in malting barley export markets.
The existing WGRF check-off will cease with the repeal of the Canadian Wheat Board Act on August 1, 2012. Without a monopoly on Western Canadian wheat and barley sales, the new interim CWB will not have the same guaranteed market it has prior to this change and is not expected to be in the financial position to support CIGI and the CMBTC as it has in the past. Also, the CWB will be competing with other grain companies, and it would not be appropriate for the CWB to be the sole industry support of organizations that provide sector-wide benefits. Without the check-off outlined in these Regulations, research and market development activities would lose access to funding and become severely curtailed.
The Government, supported by industry, has maintained that wheat and barley research, market development and technical assistance activities should continue, as they benefit Canada’s grain sector. The proposed check-off would continue producer funding for research, market development and technical assistance activities during the five-year transition phase, allowing the industry time to establish a long-term funding model.
With the end of the Canadian Wheat Board Act on August 1, 2012, the current producer check-off for WGRF research will end after the 2011–12 crop-year final payments. CWB direct funding to CIGI and the CMBTC is expected to end in the spring of 2012.
The Marketing Freedom for Grain Farmers Act includes an amendment to the Canada Grain Act that takes effect on August 1, 2012, and allows the Governor in Council to establish by regulation a wheat and barley research, market development and technical assistance check-off. The proposed check-off would temporarily replace the current wheat and barley research, market development and technical assistance support provided through the CWB while the industry develops a long-term funding model for these activities.
The objectives of the proposed Regulations are to
- Continue producer funding for wheat and barley research, market development and technical assistance on an interim basis; and
- Establish a transitional deduction with characteristics that closely mirror the current CWB funding.
The proposed Regulations would establish a refundable point-of-sale check-off lasting no longer than five years to support wheat and barley research, market development and technical assistance. After this time frame, it will be up to the industry to develop and administer its own check-off, if supporting these activities continues to be a priority for the grain sector.
The proposed check-off deduction would be made on sales of wheat and barley delivered to licensed grain buyers who issue cash purchase tickets. A cash purchase ticket is a document issued as evidence of the purchase of grain by a licensed facility as per the Canada Grain Act. The deduction in the proposed Regulations would not apply to imports, producer-to-producer sales, and feed and export sales not delivered through licensed facilities. In these transactions, a cash purchase ticket would not be issued as per the Canada Grain Act. The deduction would be applied to wheat and barley grown in the provinces of Manitoba, Saskatchewan and Alberta, and that part of the province of British Columbia known as the Peace River District, similar to the current jurisdiction of the CWB.
The proposed check-off funds would be submitted to a “prescribed agency.” The prescribed agency would receive the deducted amounts, arrange for their use for wheat and barley research, market development and technical assistance, process producer requests for refunds, and provide annual reports to the Minister of Agriculture and Agri-Food and the public. In the proposed Regulations, the Alberta Barley Commission (ABC) is named as the prescribed agency. The ABC is a non-profit, producer-funded organization established in 1991. The ABC would have the authority to determine which organizations would receive the check-off funds, and how much they would receive. A portion of the check-off (up to 5% of the deduction) would be used by the ABC to offset administration costs related to the check-off.
Similar to current procedures, producers would be able to request in writing a refund of the amount deducted. The refund request would be sent on an annual basis to the ABC.
The goal of the proposed Regulations is to establish a base funding amount for research, market development and technical assistance similar to current levels of funding provided through or by the CWB. Currently, the CWB research check-off provided to the WGRF is based on per-tonne rates of $0.30 per tonne for wheat and $0.50 per tonne for barley but is paid only if there is a CWB final payment to producers. In 2010, the WGRF received check-offs for wheat valued at $5,394,000 and $994,000 for barley. The CWB board of directors determined the funding that was directed to CIGI and the CMBTC for market development and technical assistance as part of its business planning. In 2009–2010, the CWB contributed a combined total of $2.3 million to CIGI and the CMBTC.
The proposed check-off rates are set at a level that replaces the current wheat and barley research check-offs and market development and technical assistance cash transfers supported by the CWB. The proposed check-off would provide a base dollar-per-tonne deduction level that recreates these funding levels. The deduction amount would take into account other variables such as historical average volumes of wheat and barley delivered to licensed facilities and historical producer opt-out figures. It also takes into consideration approximately 5% for administrative fees to cover the check-off process, monitoring and administrative costs.
The proposed check-off rates would break down to $0.30 per tonne for research, $0.15 per tonne for market development and technical assistance and $0.03 per tonne for administration for wheat, and $0.50 per tonne for research, $0.03 per tonne for market development and technical assistance and $0.03 per tonne for administration for barley.
For the proposed Regulations, this adds up to a $0.48 total deduction rate for wheat and a $0.56 deduction rate for barley. These deduction amounts are intended to replicate the current funding levels. The actual funding levels provided by the proposed check-off would depend on the volume of wheat and barley sold through licensed facilities and would vary with production volumes and producer refund requests.
In Alberta, the barley deduction would be $0.04 per tonne representing market development and technical assistance and a portion of the administration fee. Alberta barley was previously exempt from the CWB research check-off as it already had a provincial check-off in place; therefore it would also be exempt from the research portion of the proposed check-off.
The issue of research and market development funding was discussed during the consultation process for the Marketing Freedom for Grain Farmers Act throughout the summer of 2011. During these consultations, the Working Group on Marketing Freedom was established, which consisted of representatives from industry, academia and government. The Working Group met in Winnipeg, Manitoba, on a number of occasions between July and September 2011. The Working Group heard from a number of stakeholders and recommended continuing the funding for research and market development as these functions benefit the industry. These recommendations were published in the Working Group’s Final Report.
A number of producer groups and organizations have also written directly to the Minister of Agriculture and Agri-Food expressing support for the continuation of research, market development and technical assistance funding that is currently provided through the CWB. No letters of opposition to this kind of funding have been received.
A general consensus among stakeholders and the Working Group was that research and market development activities are vital for Western Canada’s grain industry and they need to continue without disruption. Industry understands that Canada needs to improve upon its research, market development and technical assistance in order to remain competitive in international markets. Stakeholder groups have not expressed any opposition to the continued funding for research, market development and technical assistance.
The Canada Grain Act authorizes the creation of regulations for the implementation of a refundable point-of-sale check-off to support wheat and barley research, market development and technical assistance lasting no longer than five years.
The Alberta Barley Commission was chosen as the prescribed agency based on its contact to industry, past experience administering a check-off (it has administered the existing Alberta barley check-off since 1991) and its ability to complete the required tasks as identified in the Canada Grain Act and the proposed Regulations.
The check-off would apply to wheat and barley grown in Manitoba, Saskatchewan, Alberta and the Peace River District of British Columbia to remain consistent with the operational area currently covered by the CWB. The deduction would be applied to all wheat and barley sales where a cash purchase ticket was issued in order to allow for simple implementation and processing and follow the amendments included in the Marketing Freedom for Grain Farmers Act.
Barley produced in Alberta was exempted under the current CWB research deduction for the WGRF as there was already a deduction set up in Alberta that contributed to research. Therefore, barley produced in Alberta would be an exception from the research portion of the transitional barley check-off. The collection area mirrors the current funding collection area of the CWB.
Producers would be able to request a refund once per crop year. Informal discussions with stakeholders suggest support for this approach, which provides the most streamlined option for industry to follow. It is also similar to how the current CWB research check-off and other refundable commodity check-offs work. Additionally, it allows producers a choice whether to participate in research, market development and technical assistance funding. Historically, the average percentage of producers requesting to opt out of the CWB research check-off for the WGRF is approximately 5%. With the deduction for market development and technical assistance now upfront and more visible to producers, the percentage of producers requesting a refund may increase.
The goal of the proposed check-off is to establish a producer funding level similar to the current level of producer funding for wheat and barley research, market development and technical assistance for up to five years, thus allowing the industry time to establish a long-term funding model. A deduction of $0.48 per tonne for wheat and $0.56 per tonne for barley recreates current rates collected through the CWB for research and funds provided by CWB for market development and technical assistance.
There is no cost to Government in implementing the proposed Regulations other than enforcement costs to the Canadian Grain Commission (CGC), which are expected to be minimal.
7. Implementation, enforcement and service standards
Once the proposed Regulations Respecting Research, Market Development and Technical Assistance (Wheat and Barley) come into effect, the check-off would begin. Licensed delivery points (e.g. grain elevators) would make the necessary deductions from the producer payments and document these on individual cash purchase tickets. The deducted funds would be submitted to the ABC on a monthly basis. The ABC would disburse the funds for purposes of research, market development, technical assistance and administrative costs as per the Act.
Producers would be able to request refunds in writing from the ABC. Producers must request a refund by December 31 of the crop year. The Prescribed Agency (i.e. ABC) must remit the refunds within 60 days from the end of that same crop year. Currently, producers write to the WGRF to opt out of the research deduction administered by the CWB, but do not have the option of opting out or requesting a refund on the current market development and technical assistance funding supported directly by the CWB.
The proposed Regulations for the deduction fall under section 83.2 of the Canada Grain Act. Monitoring and enforcement of these Regulations would follow enforcement procedures established in the Canada Grain Act (e.g. the CGC audits licensees for compliance with security rules). To have the authority to issue a cash purchase ticket, the grain dealer or elevator must be licensed through the CGC. Licensed grain elevators must meet a number of requirements in order to gain and maintain their licensed status. One of the requirements is that operators of licensed grain elevators provide detailed reports to the CGC documenting the type of grain and amount delivered to each of the licensed elevator’s delivery points. These detailed reports assist the CGC in enforcing the Canada Grain Act, including the transitional wheat and barley check-off.
Additionally, when the licensed grain elevator submits the check-off funds to the prescribed agency, they are to provide a report showing the amount of wheat and barley delivered and the amount of check-off deducted from each producer. This report would assist in the refund process by identifying the refund amount as well as providing a verification point ensuring the correct amount of check-off is being deducted and submitted by the licensed grain elevators.
The Minister of Agriculture and Agri-Food would receive annual reports from the ABC on the amount of check-off funds received and how the funds were invested into wheat and barley research, market development and technical assistance activities. The report would also include a breakdown of administrative costs associated with administering the wheat and barley check-off. The intent is that AAFC and/or ABC would release information to the public that would show how the check-off funds are invested and used. These public statements would inform producers about how and where their check-off money was spent.
All of these reports would provide reference figures and basis points for a risk-based approach for auditing the check-off from point of deduction to investment in research, market development and technical assistance. The reports would identify possible discrepancies and trigger mechanisms to identify when and where further investigation is needed. The Government would direct the audits as required. The Department of Agriculture and Agri-Food, the CGC and the ABC would all work together to monitor and enforce this check-off.
The Department of Agriculture and Agri-Food will be providing communications regarding the transition to marketing freedom including information on the wheat and barley research, market development and technical assistance deduction.
Crop Sector Policy Division
Agriculture and Agri-Food Canada
303 Main Street
PROPOSED REGULATORY TEXT
Notice is hereby given that the Governor in Council, pursuant to section 83.2 (see footnote a) of the Canada Grain Act (see footnote b), proposes to make the annexed Regulations Respecting Research, Market Development and Technical Assistance (Wheat and Barley).
Interested persons may make representations concerning the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part Ⅰ, and the date of publication of this notice, and be addressed to Tom Askin, Director, Crop Sector Policy Division, Agriculture and Agri-Food Canada, 303 Main Street, Room 500, Winnipeg, Manitoba R3C 3G7 (fax: 204-983-5300; email: tom. firstname.lastname@example.org).
Ottawa, May 17, 2012
Assistant Clerk of the Privy Council
REGULATIONS RESPECTING RESEARCH, MARKET
DEVELOPMENT AND TECHNICAL ASSISTANCE
(WHEAT AND BARLEY)
1. In these Regulations, “Commission” means the Alberta Barley Commission.
2. These Regulations apply to wheat and barley grown in Manitoba, Saskatchewan and Alberta and the Peace River District of British Columbia.
3. The Commission is the agency to which amounts are to be remitted under section 83.1 of the Canada Grain Act.
4. (1) Any person required to issue a cash purchase ticket under the Act must collect a deduction of the following amounts:
- (a) $0.48 per tonne for wheat; and
- (b) $0.56 per tonne for barley except in the case of barley grown in Alberta for which the amount to be collected is $0.04 per tonne.
(2) The amounts that are deducted must be remitted to the Commission within 30 days after they are collected along with a report that indicates the amounts deducted in respect of wheat and barley from each producer.
REFUNDS OF AMOUNTS DEDUCTED
5. (1) Any producer may make an application for a refund from the Commission of any amount that was deducted under subsection 4(1).
(2) The application must be in the appropriate form supplied by the Commission, be signed and dated and contain the producer’s name, mailing address and telephone number.
(3) The application may be made once every crop year and must be submitted by December 31 of that crop year.
(4) The Commission must remit the refund no later than 60 days after the end of the crop year.
6. The Commission must provide an annual report to the Minister of Agriculture and Agri-Food no later that 90 days after the end of the crop year that contains the following information in respect of wheat and of barley:
- (a) the total amounts of deductions;
- (b) the total amounts paid for research activities into new and improved varieties of wheat and of barley, the recipients of the funds and a description of those activities;
- (c) the total amounts paid for the promotion of the marketing and use of wheat and of barley, the recipients of the funds and a description of those activities;
- (d) the total amounts paid for technical assistance relating to the use of wheat and of barley, the recipients of the funds and a description of the technical assistance activities;
- (e) the total amounts of refunds; and
- (f) details of the administrative costs.
COMING INTO FORCE
7. These Regulations come into force on August 1, 2012.