ARCHIVED - Canadian Grain Commission

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Section II - ANALYSIS OF PROGRAM ACTIVITIES BY STRATEGIC OUTCOME

Analysis by Program Activity

During 2007-2008, the CGC was organized around four strategic outcomes to reflect the planned direction of the CGC as well as the daily delivery of the CGC’s program activities. The four strategic outcomes are:

1. A grain quality assurance system that addresses the changing requirements of domestic and international grain markets
2. A grain quantity assurance system that addresses the changing needs of the grain industry
3. Research and development on grain quality that enhances the marketability of Canadian grain
4. Producers’ rights are supported to ensure fair treatment within the grain handling system

Each strategic outcome has one corresponding program activity. As a consequence, the results achieved under each of the following program activities are reflective of the CGC’s performance at the strategic outcome level. This section provides detailed information on the CGC’s achievements and challenges for each strategic outcome/program activity during the 2007-2008 reporting period. During the 2007-08 reporting period, the CGC delivered upon all of its strategic outcomes and met emerging priorities by reallocating resources where needed.

Strategic Outcome 1: A grain quality assurance system that addresses the changing requirements of domestic and international grain markets

Program Activity: Deliver inspection and testing services

Financial Resources ($ thousands)

Planned Spending	Authorities	Actual Spending
$50 279	$55 729	$46 257

Human Resources

Planned	Authorities	Actual
445	445	408

Performance summary

Expected Result: Consistent and reliable grain quality and grain safety assurance to meet the needs of domestic and international markets1
Indicator1	Target1	Results2
Number of justified cargo complaints due to a breakdown in CGC quality and/or safety assurance	Zero	There were zero justified cargo complaints due to a breakdown in CGC quality and safety assurance during 2007-2008.

¹ As per the CGC’s revised Performance Measurement Framework.

² Results are based on the Cargo Quality Monitoring program and an established CGC complaint resolution process.

During the reporting period, the CGC continued to successfully deliver an effective Quality Management System as per ISO 9001:2000 standards. An effective grain quality assurance system supports the enhanced marketability of Canadian grain which benefits producers and the grain industry. Daily provision of grain inspection and grading services form a major part of the quality assurance system. Grades allow buyers to identify end-use value without the need for end-use tests or direct examination of individual lots of grain. This improves the efficiency of grain handling and helps to ensure that sellers receive payment that reflects the value of their grain.

Canada’s GQAS is supported by a strong scientific and technical base. This includes testing of grains, processing into various end-use products, and assessing cooking quality. The CGC is the only government agency that provides grain safety assurances on pesticides, trace elements, mycotoxins, and fungi. Buyers of Canadian grain increasingly demand more rigorous, timely testing for chemical residues and trace elements on cargoes. These demands have increased the importance of research aimed at developing new or adapting existing analytical methods (see Strategic Outcome 3).

During 2007-2008, the CGC continued to deliver consistent and reliable grain quality and grain safety assurance to meet the needs of domestic and international grain markets. Inspection services were delivered in accordance with the legislative mandate of the Canada Grain Act. For example, the CGC:

• Inspected 265,056 railcars upon receipt at licensed terminal and transfer elevators,
• Inspected 20,066 railcars loaded from primary elevators prior to receipt at licensed terminal and transfer elevators,
• Inspected 26,712,829 tonnes of grain for export from terminal and transfer elevators,
• Provided 5,267 Certificate Finals, 2521 Letters of Assurance, 3604 Letters of Analysis, 1,297 official Probe Certificates, and
• Certified 2,001 samples submitted for grading by producers and 17,877 samples

There were 2,776 grade changes on official re-inspection representing an inspection accuracy rate of 99.03%.

There are major challenges facing the CGC and the GQAS including: increased international emphasis on end-use functionality, growing global competition, shifting domestic crop production, expanding number of end-uses of grain, and export volume fluctuations. The CGC continued to develop protocols for accrediting or designating third party agencies, with CGC oversight, to perform sampling in order to address inconsistencies with respect to container, rail, and bulk handling shipments to enhance the marketability and handling of Canadian grain. The CGC remains committed to providing a grain quality assurance system that meets the needs of the grain industry today and over the long term.

Delivering inspection and testing services supports departmental Priority #1. Daily delivery of inspection and testing services continued to support not only the ongoing delivery of the CGC mandate, but also positions Canada with a sustainable competitive advantage in global grain markets. The CGC continually strives to adapt CGC services and the grading system to meet the end-use needs of buyers of Canadian grain, and to adjust to the ongoing structural changes within the grain industry (Priority #2).

Addressing Priority #4 is critical in order for the CGC to continue fulfilling its statutory mandate and maintain service levels to producers and the grain industry. CGC inspection services are delivered as per ISO 9001:2000 Standards (Priority #5). This contributes to maintaining the CGC’s international reputation for consistent and reliable Canadian grain shipments. During 2007-2008, there were 10 inspection related minor non-conformances identified through internal and external audits. Non-conformances occur when Quality Management System procedures or work instructions are not followed. The CGC has reviewed the summary reports that were completed from both the internal and external audits. In order to take the appropriate actions, an Improvement Request(s) form was submitted to the procedure owner and an appropriate corrective action and timeframe were identified and attached to the non-conformance to ensure completion.

During 2007-2008, the CGC continued the ongoing monitoring of domestic and export cargoes to ensure Canadian grain is meeting tolerances in terms of domestic and international grain safety tolerances and end-use quality. The CGC certified the quality of 5,267 cargoes and investigated complaints from buyers regarding 15 of those cargoes. Upon thorough investigation of the loading process, including analysis of cargo samples and vessel loading documentation, the CGC’s Chief Grain Inspector concluded the complaints were unsubstantiated.

A broad spectrum of producers and grain industry representative meet several times annually, through the Western and Eastern Standards Committees and commodity-specific subcommittees, to study and review grain standards, ensuring relevance and value of those standards in facilitating the movement of grain and transfer of ownership. During 2007-2008, 13 new standards and guides were prepared by the CGC, approved by the Western and/or Eastern Standards Committees, and released to the grain industry. The use of all other pre-existing standards and guides continued during the 2007-2008 crop year.

During 2007-2008, CGC scientists and technical experts continued to play an important market support role by liasing with buyers, marketers, industry and producers and providing technical advice and information on grain quality, grain safety, and end-uses. Customer feedback is used to continuously improve the GQAS. CGC staff went on eight overseas market support missions to investigate, train, or convey the quality of Canadian grain to customers. Additionally, there were 34 international delegations that visited the CGC to learn about the CGC and Canada’s GQAS. Buyers have stated that they are satisfied with the overall quality of Canadian grain and Canada’s GQAS.

Additional information on the CGC’s grain quality assurance system is available on the CGC’s web site at: http://grainscanada.gc.ca/quality-qualite/iaqm-mrsq-eng.htm

Strategic Outcome 2: A grain quantity assurance system that addresses the changing needs of the grain industry

Program Activity: Deliver weighing services

Financial Resources ($ thousands)

Planned Spending	Authorities	Actual Spending
$14 969	$16 592	$13 830

Human Resources

Planned	Authorities	Actual
133	133	126

Performance summary

Expected Result: Consistent and reliable quantity assurance of Canadian grain shipments1
Indicator1	Target1	Results2
Number of justified cargo complaints due to a breakdown in CGC assessment of quantity	Zero	There were zero justified cargo complaints due to a breakdown in CGC assessment of quantity during 2007-2008

¹ As per the CGC’s revised Performance Measurement Framework.

² Based on the Cargo Quality Monitoring program and an established CGC complaint resolution process.

The Canadian grain quantity assurance system assures the weight of grain loaded into or discharged from conveyances and in storage in the licensed terminal and transfer elevator system. The CGC delivers weighing services to meet the legislative mandate of the Canada Grain Act and the requirements of the grain industry from producers to customers.

During 2007-2008, the CGC:

• officially weighed and certified 282,385 railcar unloads upon receipt at licensed terminal and transfer elevators,
• monitored and certified 27,059,734 tonnes of grain prior to export from terminal and transfer elevators,
• officially weighed 3,017 railcars destined for Mexico at primary elevators,
• officially weighed 3,592 railcars destined for the U.S. at primary elevators, and
• conducted 16 official weigh-overs of all stocks in store at licensed terminal and transfer elevators.

The challenges for the grain quantity assurance system include increased requirements for quantity information to manage grain stocks and keeping up-to-date with increasingly sophisticated grain weighing and transfer technology. During 2007-2008, the CGC continued to provide ongoing technical support for the Canadian quantity assurance system. For example, to verify the accuracy and reliability of terminal and transfer elevator weighing equipment, CGC Weighing Systems Inspectors conducted 536 weighing system device inspections. In 182 instances (34%), the device under inspection required an adjustment or servicing. Of these 182 inspections, 81 (45%) were found to be operating with measurement errors of 0.10 percent or greater. The CGC’s grain receival service and outward weighing programs provided essential quantity data used by the grain industry, railways, Canada Ports Clearance, and the CGC in managing grain inventories and for statistical publications.

This program activity directly supports departmental Priority #1. During 2007-2008, the CGC successfully continued the daily delivery of weighing services to meet the legislative mandate of the Canada Grain Act. In addition, the CGC continued the ongoing review and development of weighing programs, procedures, and equipment to enhance the Canadian GQAS. This contributes to the success of departmental Priority #2. Addressing Priority #4 is critical in order for the CGC to fulfill its statutory mandate and maintain weighing service levels to the grain industry. CGC weighing services are delivered as per ISO 9001:2000 Standards (Priority #5). This contributes to maintaining the CGC’s international reputation for consistent and reliable Canadian grain shipments.

During 2007-2008, the CGC logged and investigated 5 weight-related export cargo complaints at the customer’s request. Upon thorough review and analysis of the information documented at the time of loading, the CGC’s Chief of Weighing concluded that the original statement of quantity for all the shipments was correct.

The CGC’s Dispute Resolution System (DRS) assists grain producers and the grain industry in recovering for grain lost during transport by railcar or during the discharge process. During 2007-2008, the CGC conducted 749 weight-related investigations on railcars and 956 railcars required their weights officially apportioned due to the mixing of grain from two or more railcars in a common grain reception area as the cars were unloaded. Due to incidents around un-recovered spills, 1,205 cars required their origin weight to be verified and assigned as the official unload weight. The CGC completed 4,217 exception reports for railcars that arrived at unloading facilities with low or empty compartments. Client satisfaction was measured by the instances where disputes with respect to weight were not addressed and feedback provided. While client claim success rates are confidential, clients maintain that the information supplied by the CGC – DRS is a very significant part of their claim and is the most reliable information for processing a successful claim.

Additional information on the CGC’s grain quantity assurance system is available on the CGC’s web site at: http://grainscanada.gc.ca/quantity-quantite/iaqnm-mrsqn-eng.htm

Strategic Outcome 3: Research and development on grain quality that enhances the marketability of Canadian grain

Program Activity: Conduct research to understand and measure grain quality

Financial Resources ($ thousands)

Planned Spending	Authorities	Actual Spending
$7 663	$8 494	$10 511

Human Resources

Planned	Authorities	Actual
59	59	81

Performance summary

Expected Result: Research and development on grain quality and grain safety to support and improve Canada’s GQAS1
Indicator1	Target1	Results2
Assessment of grain quality and grain safety research undertaken, sponsored, and/or promoted by the CGC	"Excellent" on a scale of excellent, good, fair or poor	Good – the majority of project milestones/outcomes delivered on time and on budget

¹ As per the CGC’s revised Performance Measurement Framework.

² Results are based on industry and peer review.

The Canada Grain Act requires the CGC to undertake, sponsor and promote research related to grains. The CGC’s GRL conducts research directly related to supporting the GQAS that permits the effective marketing of Canadian grain in the interests of producers. The GRL researches new methods for quality, new measurement factors to determine quality, end-use applications of Canadian grain, quality of new breeders’ varieties, and carries out the annual Harvest Survey. The GRL, through its research, supports the continual improvement of the GQAS.

There are major challenges confronting the CGC’s research activities and the GQAS due to the changing needs of the Canadian grain industry. Research focus has shifted to address these issues in pulses, new types of oilseeds, variety identification, and GM crops. Research related to traditional crops, such as wheat, barley, canola and flax, is still essential, as these crops make up a significant percentage of the domestic and export markets. There is increasing emphasis on end-use functionality, especially new end-uses in the domestic industry. Grain is increasingly being sold based on specifications requiring objective non-visual testing of quality or safety factors and the provision of grain quality and safety assurances. Continually evolving uses of grain requires that the CGC have the ability to anticipate, identify, and measure new grain specifications in order to meet changing industry needs. Research that supports emerging issues in the GQAS is crucial to all segments of the Canadian grain industry.

This program activity directly supports departmental Priority #1 as undertaking, sponsoring and promoting grain related research upholds the mandate of the CGC and facilitates effective marketing of Canadian grain. In addition, ongoing research of new methods and measurement factors to determine quality, end-use applications of Canadian grain, and quality of new breeders’ varieties supports improvement of the Canadian GQAS and departmental Priority #2. Addressing departmental Priority #4 is critical in order for the CGC to fulfill its statutory mandate and continue ongoing research focused on understanding and measuring grain quality. The GRL is in the early stages of assessing the applicability of ISO/IEC 17025 certification to certain methods in its laboratory testing environment and has initiated the process of hiring an ISO coordinator for the GRL (Priority #5).

During 2007-2008, the GRL successfully conducted research and development on grain quality and grain safety to support and improve Canada’s GQAS. The GRL completed several research projects within cost and timelines and successfully met the milestones of numerous ongoing research projects. The GRL’s performance results were rated as “good” due to cost and timeline variances associated with some projects. These projects have been reassessed and while some have been finalized others are still ongoing. Variances are considered normal within a research environment.

The GRL participates in several external proficiency tests on an annual basis to receive unbiased evaluations with respect to accuracy and precision. For example, the American Association of Cereal Chemists check sample service is used by numerous laboratories around the world to evaluate techniques and ensure quality control. The GRL uses this service and several others to test equipment and to monitor the use of proper methods among laboratory personnel. During 2007-08, the GRL participated in twelve external proficiency test programs. The GRL was non-compliant in one round of studies of the twelve programs. The GRL has taken action on the non-compliance and the necessary corrective actions have been made.

Additional information on the CGC’s grain research activities is available on the CGC’s web site at: http://grainscanada.gc.ca/research-recherche/iarm-mrsr-eng.htm

Strategic Outcome 4: Producers’ rights are supported to ensure fair treatment within the grain handling system

Program Activity: Protect producers’ rights

Financial Resources ($ thousands)

Planned Spending	Authorities	Actual Spending
$3 086	$3 421	$3 940

Human Resources

Planned	Authorities	Actual
27	27	33

Performance summary

Expected Result: Producer satisfaction with the grain handling system1
Indicator1	Target1	Results2
CGC response to producer complaints	Zero unresolved or unaddressed complaints	Zero unaddressed complaints

¹ As per the CGC’s revised Performance Measurement Framework.

² Results are based on CGC tracking mechanisms.

The CGC is mandated to serve producer interests by upholding the Canada Grain Act and as such has implemented a number of programs and safeguards to ensure the fair treatment of Canadian grain producers. This program activity consists of three programs: the licensing and security program, allocation of producer cars for producers and producer groups that wish to ship their own grain, and producer support programs including a grain grade appeal system. In addition, the CGC collects and updates grain quality data and grain handling information to facilitate producer sales and marketing decisions.

This program activity directly supports departmental Priorities #1 (ongoing delivery of the CGC mandate) and #3 (regulatory compliance), as the CGC is mandated to ensure the fair treatment of producers within the grain handling system. Addressing Priority #4 (sustainable CGC funding mechanism) is necessary to maintain producer satisfaction with the delivery of various procedures and systems related to their protection.

The CGC continually strives to improve on the programs and activities that directly contribute to the CGC’s mandate of facilitating fair treatment of producers within the licensed grain handling system. The CGC was successful in meeting the target of this program activity/strategic outcome. During the 2007-2008 there were zero unaddressed complaints with respect to the producer protection programs administered by the CGC. While the majority of complaints were resolved, there are some ongoing investigations.

The proposed amendments to the Canada Grain Act (Bill C-39) include clarification of the CGC mandate by identifying that the CGC shall specifically act in the interests of producers with respect to: deliveries to elevators and grain dealers, access to binding CGC determination of grade and dockage, and allocation of producer railway cars. Repealing the CGC producer payment security program is also a proposed amendment and will benefit producers by reducing barriers for new entrants into the grain handling system and removing system costs. The proposed amendments also include, extending “subject to inspector’s grade and dockage” provisions to include producer deliveries to grain dealers and process elevators. During the reporting period, the CGC worked closely with officials from Agriculture and Agri-Food Canada and other departments and agencies, to advise the Minister with respect to Bill C-39 ammendments.

The challenges associated with protecting producers’ rights are the time it takes to gather all the facts from parties and then to review and make decisions. In terms of producer cars, the challenge is to get enough cars to meet demand, and in a timely fashion. Strategies that are being implemented to improve future results include a risk assessment process that will assign a financial risk rating and an overall risk rating (high, medium, low) for all licensees. Staffing is underway for a Head, Audits and a financial statement reviewer to free up audit times for our Compliance Auditors. In addition, the CGC is in the process of preparing a communications plan related to licensing and security.

The following provides further detail on the three main programs associated with this program activity and how the CGC was successful in providing producer protection during 2007-2008:

Licensing and Security Program

• During the reporting period the CGC issued licences for 337 primary elevators, 43 process elevators, 15 terminal elevators, 13 transfer elevators, and 106 grain dealers as of March 31, 2008. There are currently 35 known unlicensed companies that require licensing under the Canada Grain Act. Of these, all have initiated the licensing process. During 2007-2008, 23 licensees were audited by the CGC and Audit Services Canada to ensure appropriate security coverage and one licensee was visited to review operations. The CGC cancelled one licence in February, 2008 as a result of the company advising the CGC that they were in ‘voluntary receivership’. The CGC has initiated the process of realizing on security and finalizing claims and compensation. CGC staff responded to all known instances of licensing non-compliance and all producer concerns regarding fair payment.

Producer Car Allocation Program

• The CGC has sole responsibility for the allocation of producer cars for both Canadian Wheat Board (CWB) and non-CWB grains. During 2007-2008, the CGC worked closely and cooperatively with the CWB, grain companies, and the railways in an effort to ensure that producer car orders are filled in a timely manner. The CGC received and processed approximately 11,300 applications from producers for producer cars and responded to all complaints with respect to administration of the allocation of producer cars. Overall, there has been a significant increase in demand for producer cars over the past ten years.

Producer Support Programs

• Producer support is comprised of many programs and activities including mediating and/or arbitrating producer complaints concerning transactions with licensed grain companies, re-inspection of samples on producer request, investigation of quality and dockage complaints, and collecting and updating grain quality data and grain handling information and making it available to producers and other interested parties to facilitate producer sales and marketing decisions. These programs are aimed at ensuring producers are properly compensated for the quality and quantity of grain delivered within the licensed grain handling system. During 2007-2008, the CGC responded to all producer complaints related to compensation received for the quality and/or quantity of grain delivered within the licensed grain handling system.

Additional information on the programs and activities that contribute to this strategic outcome and program activity is available on the CGC website at: http://grainscanada.gc.ca/protection-protection/iappm-mrspp-eng.htm

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