The Canadian Grain Commission (CGC) is going to be reaching into its surplus for the first time in a while in order to cover its cost.
That comes as grain volumes are falling for Canada, and the commission needs more funds to keep up with their costs.
That's why they're dipping into their surplus, with Head Commissioner David Hunt explaining that came from their most recent financial review.
"After completing our 2024 fee review, the Canadian Grain Commission found that current fee levels will not cover the operating costs going forward. So just the other day, on October 16th, we announced that there'll be no new fee increases as a result of this review."
"Instead, we're going to use our accumulated surplus to cover any anticipated shortfalls this year and for the next two fiscal years, while at the same time, we're ensuring we're going to maintain the targeted investments and services to meet the needs of producers and industry."
The gap between revenue and costs has just sprung up in the last couple of years, with the CGC having stronger performance before that.
"Going back in time, long before I started here, but I'll say about 10 years ago, revenues actually exceeded spending till about 2018, moved from 2018 to 2020. Revenues really match spending and that's the goal," said Hunt.
"Then in 2021, there was a significant one-year peak in revenue and that was followed by a decline from 2021 to where we are today. The reason for this is the funding structure here at the Canadian Grain Commission. It's based on revenue, 90 per cent of our operating budget is actually through service and license fees and so when the revenue declined over the past four years, even though our spending was pretty stable, it resulted in the decline."
The CGC predicts that by 2027, they will have $57 million left in their surplus, dependent on the amount of grain they inspect and weigh over the next few years.
In case of a sharp rise in revenue for the CGC Hunt says that they can take their hands out of the surplus as the situation changes.
"We're not locked into using it. We have a revolving fee structure type budget here. If suddenly we saw large increases in volumes of grain, then we'd have to pause and reassess. We certainly don't want to be constantly accumulating surplus and we do try to set our fee models so that it's stable and we don't gather more revenue than is needed to run the operation."
Cutting costs can be tricky for the CGC as they have duties to fill out per the Canada Grain Act, but either fee increases or cutting would be on the table if revenues didn't rise by 2027.
Hunt says that overall he's excited about the future of the Canadian Grain Commission.
"Being new to this position, I'm very optimistic about the Grain Commission. We take a balanced approach that I think benefits all grain sector stakeholders and as part of this approach, I mentioned we are making targeted investments in services to ensure we meet the needs of producers and industries and ultimately contribute to the sector's prosperity. So very optimistic about CGC moving forward."