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Section I - Overview

Minister's message

I am pleased to submit to Parliament and Canadians the Canadian Grain Commission’s (CGC) Departmental Performance Report (DPR) for the fiscal year 2006-2007. This report details how the CGC used its resources from April 1, 2006 to March 31, 2007 to regulate grain handling and establish and maintain grain standards, while protecting the interests of producers and ensuring a dependable commodity for domestic and export markets.

As Minister of Agriculture and Agri-Food, I have been impressed by my portfolio team’s dedication to serving the agriculture and agri-food sector and indeed all Canadians. Although they have different mandates, the six organizations within the Agriculture and Agri-Food Portfolio – Agriculture and Agri-Food Canada (AAFC), the Canadian Dairy Commission, the Canadian Food Inspection Agency, the Canadian Grain Commission, Farm Credit Canada and the National Farm Products Council – are working together effectively to build a profitable future for Canadian producers and the other players in the agriculture and agri-food sector.

Given the inherent complexities of the challenges, I maintain that collaborating as a portfolio is essential if we are to succeed in achieving long-term prosperity for Canada’s agriculture and agri-food sector. I have seen the advantages of teamwork on priorities such as the development of the Next Generation of Agriculture and Agri-Food Policy. I am confident this collaborative spirit will continue to be a defining feature of my portfolio as implementation of the new policy proceeds over the coming months.

As part of the integrated strategic approach to the future of the Canadian grains sector, on September 18, 2006, an independent and comprehensive review of the operations of the CGC and the provisions of the Canada Grain Act was tabled in Parliament. This legislative review was commissioned by AAFC and conducted by COMPAS Inc., a Toronto-based public opinion and customer research consulting firm. The COMPAS report was referred to the Standing Committee on Agriculture and Agri-Food (SCAAF) for consideration. SCAAF held meetings and called witnesses, before tabling its “Report on the Review of the Canada Grain Act and the Canadian Grain Commission Conducted by COMPAS Inc.” in Parliament on December 5, 2006. A government response to the SCAAF report was provided on April 16, 2007. Most of the SCAAF recommendations remain under review as the government considers changes to the Canada Grain Act and the CGC. Both the COMPAS report and the Government’s response to the SCAAF report are available on AAFC’s web site. The review is part of a process that will provide guidance as to how the CGC can effectively add more value to Canadian producers and the grain industry in general.

This Departmental Performance Report outlines the CGC’s performance during fiscal year 2006-2007, as well as organizational challenges and responsibilities and how they are being addressed.

The Honourable Gerry Ritz
Minister of Agriculture and Agri-Food
and Minister for the Canadian Wheat Board

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Chief Commissioner's message

Welcome to the Canadian Grain Commission’s (CGC) 2006-2007 Departmental Performance Report (DPR).

The CGC is the federal agency responsible for setting standards of quality and regulating Canada’s grain handling system. Our vision is to be a leader in delivering excellence and innovation in grain quality and quantity assurance, research, and producer protection.

Canada has a strong reputation for supplying domestic and world markets with safe, high quality grain. The CGC’s role in providing assurance of grain quality, quantity, and safety are integral in helping Canada maintain this reputation. As a result, the CGC plays a key role in achieving a “Canada Brand” for grains. The CGC is continually working alongside the Minister of Agriculture and Agri-Food’s (AAFC) portfolio partners and the grain industry to maintain market competitiveness and add value to Canadian producers and Canada’s grain quality assurance system.

The 2006-2007 fiscal year has presented the CGC with many challenges including: continued pressures on Canada’s visual grading system, increased consumer concerns about grain quality and grain safety assurances, and significant funding pressures. The CGC continued to deliver its mandate despite these challenges. Highlights of some CGC accomplishments during the past fiscal year include:

• Continued development and implementation of our integrated Wheat Quality Assurance Strategy (WQAS) to address the challenges of visually indistinguishable nonregistered wheat varieties and the constraints that kernel visual distinguishability (KVD) imposes on the development and handling of non-milling wheats. Progress on specific WQAS elements includes:

  • Continued regular monitoring of railcar unloads and vessel shipments of wheat to determine that shipments of Canadian grain have not been contaminated with nonregistered and/or visually indistinguishable potentially inferior varieties.

  • Intentions to proceed with implementation of a wheat class restructuring plan that represents a balanced solution to stakeholder needs was announced after thorough evaluation of all feedback and divergent viewpoints related to the June 2005 discussion document titled “The Future of Western Canadian Wheat Quality Assurance”. Effective August 1, 2008 a Canada Western General Purpose (CWGP) wheat class will be introduced and KVD requirements for the six minor wheat classes will be removed.

• Implementation of the CGC “Licensing Compliance Initiative” effective August 1, 2006. In May 2005, the CGC provided notice of its intention to require compliance to the licensing provisions of the Canada Grain Act (CGA) to enhance producer protection and strengthen the grain quality assurance system. In order to conduct business, all elevators and grain dealers, as defined by the CGA, must be either licensed and secured, or exempted, or be subject to criminal prosecution. To facilitate compliance, the CGC streamlined the licensing renewal process and continued to evaluate alternative security instruments while still providing adequate financial protection to producers.
• Continued assessment of new RapidVisco Analyser (RVA™) technology which offers an objective assessment of sprout damage in wheat by providing estimated falling number (FN) values quickly and simply. FN is the internationally accepted measure of alpha-amylase activity – an enzyme found in sprout-damaged wheat. RVA technology may provide the Canadian grain industry with the ability to segregate producer deliveries at the primary elevator. It may also provide a solution to accurate, objective results at both primary and terminal elevators where space for specialized laboratory equipment is limited and rapid turnaround is key. The CGC is currently chairing a RVA Industry Working Group that is examining how best to implement FN into the wheat grading system should RVA technology prove to be viable. Additionally, in collaboration with the RVA Working Group, the CGC conducted an industry-based project at two primary elevators in Manitoba and Alberta. This project demonstrated that it was feasible for the method to be performed accurately by elevator staff without any specialized technical skills.

Over the past several years, reviews of the CGC have repeatedly recognized the value of the CGC to the grain sector, but have also identified the need for change. Most recently, on September 18, 2006, a report concerning the future of the CGC and the CGA was tabled in Parliament (http://www.agr.gc.ca/index_f.php?s1=info&s2=consult&s3=cgc-ccg). The independent report was subsequently referred to the Standing Committee on Agriculture and Agri-Food (SCAAF) for consideration. SCAAF tabled its review of the COMPAS report in Parliament on December 5, 2006. A government response to the Standing Committee report was provided on April 16, 2007.

The CGC has studied the COMPAS and SCAAF report recommendations and has been working collaboratively with AAFC on next steps necessary to facilitate the long-term success of Canada’s GQAS. This will enhance Canada’s competitive advantage in global grain markets and ultimately create value for Canadian grain producers and the grain sector overall.

I invite you to read this report to learn more about the CGC’s accomplishments and how the organization carried out its mandate during the 2006-2007 reporting period.

Chris Hamblin
Chief Commissioner
Canadian Grain Commission

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Management representation statement

I submit for tabling in Parliament, the 2006-2007 Departmental Performance Report (DPR) for the Canadian Grain Commission.

This document has been prepared based on the reporting principles contained in the Guide for the Preparation of Part III of the 2006-2007 Estimates: Reports on Plans and Priorities and Departmental Performance Reports:

• It adheres to the specific reporting requirements outlined in the Treasury Board Secretariat guidance;

• It is based on the department’s approved Strategic Outcomes and Program Activity Architecture that were approved by the Treasury Board;

• It presents consistent, comprehensive, balanced and reliable information;

• It provides a basis of accountability for the results achieved with the resources and authorities entrusted to it; and

• It reports finances based on approved numbers from the Estimates and the Public Accounts of Canada.

Gordon Miles
Chief Operating Officer

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Summary information

Reason for existence:

Mandate

The CGC derives its authority from the Canada Grain Act (CGA). The CGC's mandate as set out in this Act is to, in the interests of producers, establish and maintain standards of quality for Canadian grain and regulate grain handling in Canada, to ensure a dependable commodity for domestic and export markets.

Vision

The CGC vision is to be "A leader in delivering excellence and innovation in grain quality and quantity assurance, research, and producer protection."

Department Description and Accountability

The Honourable Chuck Strahl, Minister of Agriculture and Agri-Food is the Minister responsible for the CGC. The CGC is headed by a Chief Commissioner, an Assistant Chief Commissioner, and a Commissioner who are all appointed by the Governor in Council. The Commissioner position is currently vacant. The Chief Commissioner reports to the Minister. The Chief Operating Officer reports to the Chief Commissioner and co-ordinates the activities of the CGC's operating divisions.

The CGC is organized into the Executive, Corporate Services, Grain Research Laboratory (GRL), Industry Services, and Finance divisions. Its head office is located in Winnipeg, Manitoba. Industry Services comprises five regions: Bayport, Eastern, Pacific, Prairie and Thunder Bay. As of March 31, 2007, the CGC employed 631 full-time equivalents and operated 15 offices across Canada.

The CGC may have up to six Assistant Commissioners for the main grain producing areas of Canada, also appointed by the Governor in Council. As of March 31, 2007, the CGC had three Assistant Commissioners. The Assistant Commissioners deal with producer and grain industry complaints and inquiries, and publicize the activities of the CGC at the farm level. Section III provides further detail on the CGC’s organizational structure.

The CGC enhances grain marketing in producers’ interests through the inspection, weighing, research and producer support programs and services identified in the Strategic Outcomes in Section II. The uniform provision of these programs results in equitable grain transactions and consistent and reliable grain shipments. Funding for CGC programs and activities comes from a combination of revolving fund and appropriation sources.

Departmental Priorities during the 2006-2007 Reporting Period

1. Ongoing delivery of the CGC mandate under the CGA in a climate of constantly changing international and domestic markets, technological advancements, and evolving end-user needs and preferences.

2. Positioning the Canadian grain quality assurance system (GQAS) to remain relevant and to support the continued competitiveness of Canadian grains in both domestic and international markets.

3. Licensing compliance

4. Sustainable CGC funding mechanism.

Financial Resources ($ thousands)

Planned Spending	Total Authorities	Actual Spending
$76 738	$77 959	$67 204

Human Resources (FTEs)

Planned	Actual	Difference
712	631	81*

*The difference between actual and planned FTEs reflects the following:

• Planned FTEs for 2006-2007 should have been reflected in the RPP as 664.
• The increase in grain volumes and corresponding work volumes caused a delay in hiring activities.

Departmental Priorities - Status on Performance ($thousands)

2006-2007
Status on Performance			Planned Spending	Actual Spending
Strategic Outcome 1: A grain quality assurance system that addresses the changing requirements of domestic and international grain markets
Priority #1 (ongoing)	Program Activity: Deliver inspection and testing services Expected Result: Increased buyer satisfaction through delivery of consistent Canadian grain quality and increased marketability of Canadian grain Results: see Section II	Performance Status: Successfully met	44 736	37 556
Priority #2 (ongoing)		Performance Status: Successfully met	4 627	4 010
Priority #4* (new)		Performance Status:Not met**	56	21
Strategic Outcome 2: A grain quantity assurance system that addresses the changing needs of the grain industry
Priority #1 (ongoing)	Program Activity: Deliver weighing services Expected Result: Client satisfaction with CGC weighing and dispute resolution programs. Results: see Section II	Performance Status: Successfully met	15 749	12 051
Priority #2 (ongoing)		Performance Status: Successfully met	247	265
Priority #4* (new)		Performance Status: Not met**	56	21
Strategic Outcome 3: Research and development on grain quality that enhances the marketability of Canadian grain
Priority #1 (ongoing)	Program Activity: Conduct research to understand and measure grain quality Expected Results: Adaptation of new objective methods for quality assessment and grain safety assurance; adoption and publication of new methods by current standard setting organizations; provision of accurate quality assessment tools for new breeder lines Results: see Section II	Performance Status: Successfully met	458	479
Priority #2 (ongoing)		Performance Status: Successfully met	8 713	9 103
Priority #4* (new)		Performance Status: Not met**	56	21
Strategic Outcome 4: Producers’ rights are supported to ensure fair treatment within the grain handling system
Priority #1(ongoing)	Program Activity: Protect producer's rights Expected Result: Increased producer satisfaction with the grain handling system Results: see Section II	Performance Status: Successfully met	1 264	2 038
Priority #3 (ongoing)		Performance Status: Successfully met	944	1 702
Priority #4* (new)		Performance Status: Not met**	56	21

* Priority #4 has been identified for information purposes only. These costs are already included within each strategic outcome.

**Refer to Priority #4 for further information.

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Summary of Departmental Performance

The Canadian grain industry operates in a climate of constant change marked by shifting international and domestic markets, technological advancements, and evolving end-user needs and preferences. Canada’s GQAS must continually adapt to keep pace with the evolution of the global grain industry. This is particularly important considering Canada exported more than $28 billion worth of agriculture and agri-food products in 2006. About 35% of these exports were grains, oilseeds and related products with an estimated value of $10 billion.

The CGC is confident that the program activities and related key programs and services identified in Section II illustrate how the CGC strived to achieve its strategic outcomes and priorities during 2006-2007 while at the same time, contributed to the long-term interests of the Canadian grain industry. The relationships between the CGC’s priorities, strategic outcomes, and program activities are further detailed in Section II.

Link to the Government of Canada Outcome Areas

Canada's Performance 2006 is the sixth annual report to Parliament on the federal government's contribution to Canada's performance as a nation. This report highlights both strengths and areas for improvement. Canada's Performance 2006 is structured around four main policy areas including: economic affairs, social affairs, international affairs, and government affairs. Within these policy areas are thirteen broad Government of Canada outcomes which form the framework used for the whole of government reporting. The whole of the government reporting framework groups departmental strategic outcomes and program activities into the thirteen Government of Canada outcomes.

All four of the CGC’s strategic outcomes and program activities align with the key federal policy area of ‘economic affairs’. As illustrated below, three of the CGC strategic outcomes and program activities align with and directly contributed to the pursuit of the Government of Canada outcome area An Innovative and Knowledge-based Economy. The fourth CGC strategic outcome and program activity aligns with and contributed to the pursuit of the Government of Canada outcome area of A Fair and Secure Marketplace.

CGC Strategic Outcome	CGC Program Activity	Link to Government of Canada Outcome Area
A grain quality assurance system that addresses the changing requirements of domestic and international grain markets	Deliver inspection and testing services	An innovative and knowledge-based economy
A grain quantity assurance system that addresses the changing needs of the grain industry	Deliver weighing services	An innovative and knowledge-based economy
Research and development on grain quality that enhances the marketability of Canadian grain	Conduct research to understand and measure grain quality	An innovative and knowledge-based economy
Producers’ rights are supported to ensure fair treatment within the grain handling system	Protect producers’ rights	A fair and secure marketplace

Challenges

The CGC’s departmental priorities were critical in making significant progress towards the realization of the CGC’s strategic outcomes in the 2006-2007 reporting period. The priorities focused on and were committed to delivering excellence and innovation in grain quality and quantity assurance, innovative research, and producer protection. The following section outlines the CGC’s priorities and how they related to some of the major challenges confronting the organization during the 2006-2007 reporting period.

Priority #1 - Ongoing Delivery of the CGC Mandate Under the CGA in a Climate of Constantly Changing International and Domestic Markets, Technological Advancements, and Evolving End-user Needs and Preferences.

The CGC continued to fulfil its mandate through the operation of a national GQAS. This entailed effective inspection, weighing, monitoring, and grain sanitation programs to ensure grain exports were uniform and consistent with regard to intrinsic quality and grain safety assurance, while at the same time ensuring fair grain transactions. In addition, the CGC’s research and development on grain quality continued in order to enhance the marketability of Canadian grain.

The first priority of the CGC was consistent daily delivery of programs and services within each of its organizational divisions in support of the CGC’s strategic outcomes and program activities. Ongoing delivery of the CGC mandate contributed directly to the achievement of all of the CGC’s strategic outcomes and program activities. The major programs and services performed within each division and the on-going human resource management activities in support of this priority are outlined below:

1. Industry Services:

• Inspection services – outward and inward, reinspection and quality control, quality assurance standards, analytical services, dispute resolution services, certification and accreditation
• Weighing services – outward and inward, dispute resolution
• Registration and cancellation processes

2. Grain Research Laboratory (GRL):

• Cereals, oilseeds, and pulse research
• Grain safety assurance – monitoring and research
• Objective grading methods development
• Variety identification – monitoring and research
• Quality monitoring and assurance
• Development of methods to detect genetically modified (GM) grains

3. Corporate Services:

• Communication services
• Information services
• Administration
• Policy, planning, and producer protection
• Statistical services
• Health and safety services

4. Finance Division:

• Reporting at the national and organizational level
• Accounting operations
• Budgeting and planning
• Costing and cost recovery
• Internal auditing
• Procurement

5. Management of Human Resources:

• Resourcing, retention, and performance management
• Labour relations
• Compensation and benefits
• Learning and development

Priority #2 - Positioning the Canadian GQAS to Remain Relevant and to Support the Continued Competitiveness of Canadian Grains in both Domestic and International Markets.

Canada’s robust GQAS has permitted Canadian grain to be “branded” internationally for many years, providing Canada with a competitive advantage in the global grain market. However, the sensitivities of international grain buyers are increasing and generating additional specific end-use and certification requirements. As such, the CGC has recognized the importance of continuing to evolve and refine the Canadian GQAS to remain relevant and competitive in both the domestic and international marketplaces.

During the reporting period, the CGC continued to develop and implement many programs, initiatives, and new research methods and processes aimed at strengthening the Canadian GQAS. Enhancing Canada’s grading system directly supports the CGC’s strategic outcome #1 (a grain quality assurance system that addresses the changing requirements of domestic and international grain markets), and strategic outcome #3 (research and development on grain quality that enhances the marketability of Canadian grain).

Currently, Canada’s kernel visual distinguishability (KVD) requirement for wheat allows quick and cost effective segregation of wheat into quality classes based on visual distinguishability. While KVD has provided Canadian wheat growers a competitive advantage, there are compelling reasons to move away from wheat segregation based solely on KVD. These include:

• Increasing demands for new varieties with different agronomic, disease resistance and end-use qualities to meet human (food), livestock (feed) and industrial (e.g., ethanol) needs. Presently, KVD is an additional criterion that plant breeders must incorporate into the development of new varieties.
• Nonregistered, visually indistinguishable varieties have the potential to compromise the quality of Canadian wheat shipments and the entire assurance system if they are misrepresented as a registered variety or accidentally enter the bulk handling system. They can cause significant financial losses for grain handling companies and marketers and pose a particular concern for western Canada’s premier milling wheats - Canada Western Red Spring (CWRS) and Canada Western Amber Durum (CWAD).
• Buyers of Canadian grains are becoming more quality conscious and increasingly sophisticated. They are asking for a wider range of quality types. In order to enhance the traditional visual grading system, it is necessary to develop faster, more flexible and more precise instrumental methods to objectively analyze intrinsic quality characteristics and to certify grain quality and safety.
• Visually indistinguishable grains developed for non-milling uses, such as animal feed, pharmaceutical, fuel and industrial purposes, will necessitate the development and introduction of effective instrumental tools to analyze quality parameters and certify quality and safety. Effective segregation of these grains from the food supply is essential to maintain the overall value of the GQAS.

There are also pressures to address KVD issues for non-cereal grains. The CGC is working towards the development of rapid methods and systems that can assist in the identification of varieties of different quality types.

The various CGC programs, initiatives, research methods and processes aimed at supporting and accomplishing this priority are described below:

Wheat Quality Assurance Strategy (WQAS)

To address the challenges of visually indistinguishable nonregistered wheat varieties and the constraints that KVD imposes on the development and handling of new varieties, the CGC continued to implement and build on the integrated WQAS that was initiated in December 2003 (http://grainscanada.gc.ca/newsroom/news_releases/2003/2003-12-19-f.htm). This strategy was composed of three elements:

1. Increased monitoring of railcar and vessel shipments for nonregistered wheat varieties

To address growing sectoral concerns and support CGC certification processes, the CGC increased monitoring of grain shipments throughout the licensed handling system. Monitoring activities were expanded for wheat railcar unloads and vessel shipments for the presence and source of nonregistered wheat varieties.

Currently, the CGC coordinates an extensive cargo monitoring program which includes the use of protein electrophoresis high-performance liquid chromatography technology (HPLC) and DNA analysis to monitor for ineligible varieties. This monitoring program provides the industry with information to help them better manage the handling system and requires that elevator operators exercise their own due diligence.

2. Development of rapid affordable variety identification (VID) technology

Variety identification, combined with objective testing, will underpin the future of the Canadian GQAS and sustain Canada's position as a dependable supplier of quality grain to the international market. In order to support grain grading and inspection, to monitor the variety composition of export shipments, and to provide assurances for variety-specific shipments of wheat and barley, the CGC has developed and continues to develop non-visual methods for VID. Knowing the variety composition of a shipment is a practical alternative to classifying grains into end-use classes. Development of this technology will help meet the needs of marketers and producers.

Currently, the CGC performs protein electrophoresis and DNA fingerprinting on individual kernels of grain. Many kernels must be analysed to determine the variety composition of a sample. The long-term goal is to develop a DNA-based method that will determine the variety composition of a ground sample of grain rather than multiple individual kernels, similar to the technology successfully developed for barley by the CGC. The aim is to provide technology that accurately quantifies the variety composition of grain shipments in a timely manner in a commercial environment.

Through its VID work, the CGC continues to be a leader in the development of VID technology, the establishment of comprehensive variety fingerprint databases for wheat and barley, and in the implementation of these tools for the benefit of Canada's grain industry. The CGC is committed to transferring VID technology to the private sector for use in commercial VID testing. The CGC is also actively engaged with many private and public sector partners in the evaluation and development of such technologies.

3. The development of a proposal to restructure the western Canadian wheat classes to enable the development of non-milling wheats

In June 2005, the CGC released a discussion paper titled The Future of Western Canadian Wheat Quality Assurance. This document included a proposal to restructure some of the minor wheat classes in order to facilitate the registration and handling of high yielding, non-milling wheats which currently cannot be registered because of KVD. After thorough evaluation of all stakeholder feedback, in June 2006 the CGC announced its intent to eliminate KVD requirements for the six minor classes and introduce a new Canada Western General Purpose (CWGP) wheat class effective August 1, 2008. With this plan, the major wheat classes (CWRS and CWAD) will remain unchanged in terms of variety registration requirements, including KVD. In addition, varieties within the minor classes can resemble each other, but must remain visually distinguishable from CWRS or CWAD.
http://grainscanada.gc.ca/newsroom/news_releases/2006/2006-06-29-e.htm
http://grainscanada.gc.ca/Pubs/discussions/wqas/update06_06_01contents-e.htm

Implementation of this plan will allow breeding institutions to concentrate their resources and efforts on traits that are of economic significance to producers and end-use customers. As such, producers, marketers and customers will have access to a wider range of wheat varieties than the current system permits, while the integrity of the major milling classes and grades remains protected. Since the announcement, the CGC has worked in close collaboration with industry stakeholders to identify the relevant processes and regulations that require reworking in order to meet the August 2008 deadline. All the necessary steps are in process or near completion.

Process Verification

In a marketplace with increasing global demands for unique product specifications and traceability requirements, the CGC continued to develop and implement process verification programs with the goal of enhancing global acceptance of Canadian grain by delivering specific quality attributes demanded by domestic and international buyers.

Ineligible Varieties Working Group (IVWG)

The CGC is part of a grain industry working group (IVWG) whose objective is to develop protocols for sampling, testing, and process controls that will minimize the incidence of visually indistinguishable ineligible varieties being shipped to buyers under incorrect certification. The working group continued to investigate the potential for an industry Quality Management System that would have the CGC monitor and audit logistical processes within the Canadian grain handling system.

The IVWG is developing protocols that apply to varietal testing and process controls throughout the grain supply chain (originating at the primary elevator through to export terminals and vessel loading) for all cargo shipments of western Canadian wheat and durum that will receive a Certificate Final. The CGC is overseeing the design and plans to conduct a pilot study to determine if IVWG protocols are auditable and effective in mitigating the risks posed by ineligible varieties.

Canadian Identity Preserved Recognition System (CIPRS)

CIPRS is a voluntary tool for process verification that the industry can use to provide third party assurance of the processes used throughout the supply chain to deliver the specific quality attributes and traceability that some domestic and international buyers require. During the 2006-2007 reporting period the CGC continued to implement CIPRS to recognize industry's ability to deliver products with improved quality assurance systems for maximum acceptance in global markets. In addition, the CGC continued to investigate the development of further tools and standards for process verification to address the need to segregate varieties with unique quality attributes within closed-loop identity preservation programs.

The CGC is also in the process of developing its CIPRS+ program, which adds a food safety and quality aspect to the program. The CGC is participating in soybean and mustard pilot studies to test the on-farm and post-farm impacts of implementing food safety and quality management models for identity preserved grains. The infrastructure supporting CIPRS is being adapted to provide verification of HACCP-based (Hazard Analysis Critical Control Points) processes in order to provide safety assurances for grain. For further information on the status of the CIPRS and CIPRS+ programs refer to http://grainscanada.gc.ca/prodser/ciprs/ciprs1-e.asp.

Coherent and Integrated Approach to Handling Imported Grain

The CGC continued to support Canadian WTO obligations regarding the treatment of imported grain, while at the same time maintaining the integrity and policy objectives of the Canadian GQAS. The CGC liaised with appropriate government portfolio organizations and relevant industry stakeholders to explore, examine, and refine an integrated approach to handling imported grain.

Research and Objective Testing

Many international grain buyers are investigating the exporting country of origin’s practices and regulations concerning such factors as registered genetically modified (GM) events, pesticide registrations, residue limits and usage, and recognized grain and food safety programs.

During the reporting period, the CGC continued to augment its GQAS system with new objective testing methods to quantify the impact of degrading factors and to assure grain quality and safety for end-users.

Grain Safety

The CGC continued to develop new and improved objective methods for testing chemical residues, natural toxins, trace elements and micro-organisms because of the growing complexity and sophistication of regulatory and technological requirements of importing countries. Progress is continuing on research initiatives directed at cargo specific grain safety testing for ochratoxin A and baseline studies of bacteria and degrading factors such as fusarium. http://grainscanada.gc.ca/Grl/grain_safety/grain_safety-e.htm

Grading System Factors - Falling Number (FN) and Rapid Viscosity Analysis (RVA)

FN is the internationally accepted measure of alpha-amylase activity – an enzyme found in sprout-damaged (germinated) wheat. Many buyers place strict limits on FN in the wheat they buy because flour damaged by alpha-amylase results in undesirable final product characteristics. Sprout damage in wheat is difficult to assess - a wheat sample containing even a small amount of severely sprouted kernels may have high levels of alpha-amylase.

In the Canadian wheat grading system, sprout damage is a visually assessed grading factor. The CGC is currently chairing an Industry Working Group to determine how best to implement FN into the grading system should technology prove to be viable. Extensive discussions have taken place and are ongoing.

During the reporting period, the CGC continued its assessment of new RapidVisco Analyser (RVA^TM) technology and purchased additional units for intensive field trials. RVA technology offers an objective assessment of sprout damage by providing estimated FN values quickly and simply. The CGC in collaboration with the RVA Industry Working Group conducted an industry-based pilot project at two primary elevators in Manitoba and Alberta. This project demonstrated that it was feasible for the method to be performed accurately by existing elevator staff. Ultimately, RVA technology may provide a solution to accurate, objective results in primary elevators and in terminal elevators where space for specialized laboratory equipment is limited and the ability to segregate deliveries with rapid turnaround is critical.

Genetically Modified (GM) Grains

Many countries are establishing GM labelling and traceability requirements in response to differing consumer preferences. As a result, the ability to segregate GM grain and non-GM varieties is critical to maintaining Canada’s international market share and meeting the requirements of the International Biosafety Protocol. The ability to segregate will benefit exporters of Canadian food products given that there is a growing requirement to label products. In addition, due to asynchronous approval of GM events in different importing countries it may become necessary to determine the status of grain shipments with respect to various GM events. The CGC continued to develop and/or validate GM organism detection, identification and quantification methods for grains. The CGC also continued to collaborate with Agriculture Portfolio partners in the development of operational and testing efficiencies to address GM organism and adventitious presence (AP) concerns. AP is defined as low level presence of GM events appearing in grain shipments that have been authorized in one or more countries, but not in the importing country.

Priority #3 - Licensing Compliance

In May 2005, the CGC provided notice of its intention to require compliance to the licensing provisions of the CGA to enhance producer protection and strengthen the GQAS. The licensing compliance policy, detailed in a CGC document, Background Document for Elevator and Grain Dealer Licensing Compliance Effective August 1, 2006, requires that companies dealing in or handling western grain be licensed by the CGC, or lawfully exempted from licensing, or subject to criminal prosecution.

To facilitate compliance, the CGC has worked toward reducing the costs and administrative requirements of licensees. For example, the CGC has implemented measures to streamline the licence renewal process and has continued to explore and evaluate alternative security instruments that will provide adequate financial protection to producers. In addition, the CGC has increased resources in the licensing, audit, and compliance operational units to address the increase in the number of licensees.

Since the licensing compliance policy came into effect on August 1, 2006, the CGC has licensed 47 new grain companies, the majority of which are grain dealers handling specialty grains such as peas, lentils, chickpeas and beans. Additional grain companies have been approved for licensing, subject to the submission of documents such as security (e.g. bonds, letters of credit, payables insurance). The CGC continued efforts to obtain information on other companies in order to prepare recommendations for licensing.

Priority #4 - Sustainable CGC Funding Mechanism

The CGC is mandated to perform services as legislated by the CGA. Over the past 15 years, a combination of increasing costs and a freeze on mandatory fee levels has led to the CGC being chronically under-funded. During this time period, cost recovery levels dropped from around 90% to between 50 and 60%. This has required the CGC to seek interim government appropriations on an annual basis.

In order to meet evolving grain industry needs, labour contract settlements and general increases in the costs of goods and services, during the reporting period the CGC continued to engage in an ongoing process of cost containment and internal re-allocation of resources to new and emerging priorities. However, sustainable funding is imperative for the CGC to carry out its legislated responsibilities and maintain its capacity to create value for producers, the grain industry, and the Canadian public as an integral part of a successful Canadian GQAS.

During fiscal year 2006-2007, the CGC continued efforts to seek a sustainable funding mechanism. The CGC reviewed its costs to determine which ones should be publicly funded and which ones should be recovered by fees as CGC activities serve both the public interest and the interests of particular grain sector stakeholders. In addition, a review of alternative funding mechanisms was initiated and is underway to determine the optimal arrangement. Although a sustainable funding mechanism has not been determined, the CGC continues to work in consultation with AAFC and Government of Canada central agencies.

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