Elwin Hermanson says wheat quality not down since end of monopoly

The chief commissioner of the Canadian Grain Commission says there's no evidence that the quality of Canadian wheat exports has decreased since the dismantling of the Canadian Wheat Board's marketing monopoly in 2012.

Earlier this month, Reuters reported that international buyers had experienced problems ever since the Harper government introduced what it called "marketing freedom" for wheat and barley.

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In addition to allowing farmers to sell their crop however they want, other changes rolled out for the grain industry in 2012 affected how the crop is inspected and handled on its way to market.

In an interview with CBC News, Elwin Hermanson said Canada has the best crop inspectors in the world.

"Over the last three years the number of cargo complaints has decreased," he said, adding that none of the complaints received were found to be justified. "That's because we do a good job."

So what happened? Hermanson admits there may be a difference between a formal complaint filed with and investigated by his agency, and informal grumbling among industry players. 

"Lots of things can happen after loading a vessel," he said, pointing out some things are beyond Canadian inspectors' control. "If you talk to our customers, they'll say Canada is among the best if not the best at... quality assurance."

Losing market share?

Reuters suggested the quality assurance problems threatened Canada's market share of global wheat exports, currently at about 14 per cent compared to over 20 per cent in the early nineties.

"Canadian farmers are growing other crops. That's why the share is down," he said, describing a decrease in Canada's dependence on wheat.

"Diversification is a good thing. It gives producers more marketing options. They have to decide what to grow."

​Hermanson is a former Reform MP and leader of the provincial Saskatchewan party. In 2008, Agriculture Minister Gerry Ritz appointed him to lead the grain commission, the government agency responsible for inspection and crop quality under the Canada Grains Act.

Changes he oversaw in 2012 increased the user fees for crop testing — fees that had been frozen since 1991, resulting in taxpayers footing half the bill for grain companies' samples.

The CGC also ended "inward inspection" for grain, when a crop was weighed and graded when first delivered to a grain terminal.

These services amounted to a government subsidy to grain companies, Hermanson said.

The $20 million in "unnecessary costs" were ultimately borne by farmers, the Harper government's press release said at the time.

"Outward inspection [before export] ... is what matters to the brand," Hermanson said. "That's what we can't leave up to companies."

While the end of inward inspection services meant a reduction in the commission's workforce, outward inspection "hasn't been touched," he said.

Commission inspectors never missed a shift despite all of last year's shipping problems and unpredictable delays, he said.

Brand challenges?

Reuters talked to a European grain trader who said that buying Canadian wheat was less complicated under the monopoly system.

But Hermanson said the impact of the former Canadian Wheat Board was overstated when it comes to Canada's international reputation. Quality issues aren't about who is marketing the crop.

"The Canadian Wheat Board was not responsible for the brand [quality], the Canadian Grain Commission was," he said.

The wheat board was the marketing "mouthpiece," but it could say how great it was because of the commission's work, he said.

"A new voice needs to be found," he says, now that Canadian wheat is marketed by multinational corporations, not one central organization. His organization is working on that.

The industry "can learn from what happened in the past," Helmanson said, as it continues to adapt to an open market.

2014 quality varies

The 2013 crop year was full of challenges. Transportation backlogs and other market access issues hurt farmers' bottom line despite an otherwise bumper crop.

Environmental factors — or put simply, the weather — have hurt the gluten strength and protein levels in recent years, but those were better in 2014, he said.

This year's crop has "quite a variance in quality," presenting challenges for inspectors and marketers. He'll be relieved when it's all moved through the system, he said.

Some of the confusion among customers abroad is being resolved with better communication, he said.

"We can't control the weather, we can't control exchange rates," he said. "But what we can control, we can do better."

"There will always be challenges," he says. "That's what makes this industry so interesting and exciting."