Improving Canada's Grain Quality Assurance System

Variety Eligibility Declaration (VED) Update

June 2003

Background

Our grain quality assurance system is designed to consistently provide customers with the quality of grain they require. A key strength of our system is the ability to segregate grain according to class, type, and grade, enabling end-users to purchase shipments of grain with predictable processing qualities.

Grains and classes of wheat are visually distinct from one another. We refer to this as kernel visual distinguishability (KVD). KVD enables rapid low-cost segregation of products, and has been key to maintaining uniformity of quality. However, the grain industry has entered a period where additional tools are required to assure quality. KVD places constraints on plant breeders and their ability to quickly improve agronomic performance for the benefit of producers or processing qualities being demanded by specific domestic or export markets. Canadian crop production of non-registered varieties, often from the United States, is also challenging our quality assurance system. These varieties are often not visually distinguishable from registered milling-quality wheats.

In 2001, the Canadian Grain Commission (CGC) established an advisory committee to consider alternatives to relying on KVD to segregate grain. The committee was representative of producers, grain handlers, and marketers. Other participants included the Canola Council of Canada, the Canadian Special Crops Association, the Canadian Seed Growers Association, and the Canadian Food Inspection Agency (CFIA). In 2002, this committee formulated the concept of variety eligibility declaration (VED) in a report to the CGC. The CGC committed to broadening the discussion to seek input from all stakeholders.

The VED Concept

The VED concept, which formed the basis of the consultations, involved declaration of class eligibility and facilitated traceability in the event of detection of a contamination. It proposed that every time grain changed hands, samples would be taken, and declarations signed. The declaration would indicate that the lot of grain delivered is comprised of a variety, or varieties, eligible for a specific class. The basis for declaration would be a class eligibility list prepared by the CGC, that would indicate which varieties are eligible for specific classes. Documentation and sampling would make it possible to trace grain making up a cargo back to elevators and farmers whose grain would be in that cargo. It would be possible to detect the point at which unacceptable levels of unwanted varieties entered the system.

Persons or companies responsible for the misrepresentation of grain deliveries would be held accountable for their actions. Deterrents to misrepresentation, such as downgrades, fines or liability for damages, would be part of the VED system.

VED was proposed to initially reinforce our visual system. The proposal suggested that, as our industry gains experience and confidence in the use of declarations, we could gradually relax KVD in careful, measured stages.

Consultation Activities

From January 20 to March 31, 2003, the CGC conducted broad consultations on the VED concept. The objectives of the consultations were to inform, to listen, and to learn. Stakeholders that were included in our consultation process included researchers, plant breeders, agricultural economists, the seed industry, producers, grain handlers, grain transporters, marketers and exporters, feed and livestock industries, end-users and federal, provincial, and municipal governments.

The mechanisms used during the consultations included a press conference, mass mail-out of a discussion paper inviting comment, focus groups, meetings with stakeholders, and our web site. We received 99 written submissions. We held 6 focus groups across the Prairie Provinces, which were attended by 129 people representing 55 associations, organizations, and agencies. In total, VED was explored at over seventy meetings or events during the consultation period.

Feedback from Stakeholders

The feedback that we received was thoughtful, constructive and very helpful. Overall, stakeholders demonstrated a very good understanding of, and appreciation for, the problems that VED was designed to address: non-registered visually indistinguishable varieties entering the handling system and the constraints imposed by KVD. It was widely recognized that solutions need to be developed to address these challenges.

There were many valid points raised by stakeholders. However there are four keys areas of focus that emerged during the consultations, and therefore warrant highlighting: accountability and liability, logistical feasibility, benefits versus costs, and alternatives.

With respect to accountability, everyone we spoke with supports the idea that all must be accountable for their actions, and that effective deterrents to misrepresentation must be built into the system. Broadly speaking, we have two alternative directions: government regulation with mandated declarations and penalties; or industry self-regulation through contracts, litigation, and possibly arbitration. Both approaches have strengths and weaknesses. Some supported a government regulatory approach because it would involve a neutral third-party enforcing clearly stated penalties. Others said that contracts enforced by the courts, perhaps with an arbitration component, would be effective. In short, more evaluation needs to be done in this area.

Logistical feasibility was another common theme in the feedback we heard. A declaration system would require all participants to make changes to their operations. All would have to cope with sample retention and documentation issues. Everyone agrees that the earlier problems are detected, the better. For farmers, concerns centered around what steps they would need to take in order to confidently declare the class eligibility of their delivery. Possibilities included using certified seed or having their saved or common seed variety tested. As well, many wondered about the implications of third-party truckers transporting their grain.

For primary, terminal, and transfer elevator operators, there are questions about whether they could actually maintain the identity of grain through their facilities in a way that would facilitate traceability. Marketers and buyers expressed concerns about the timing of the Certificate Final. In the proposal, the CGC would provide the Certificate Final after the cargo had been variety tested. For a variety of reasons, this is a key issue for marketers and buyers, and something that will need to be addressed.

Costs and benefits of a VED-type system were key considerations for all stakeholder groups. We are not yet at the point of being able to say what a VED-type system would cost. The consultation has been a key part of the costing process. Up to now, we have been consulting on a concept, but the questions we asked during consultations have helped us identify the factors that would contribute to costs. Stakeholders also identified the benefits that could be realized through a VED-type system. Some potential benefits included: new market opportunities, such as better-serving the domestic feed industry; removal of kernel visual distinguishability, thereby permitting faster improvements in quality characteristics, disease resistance, and yield; clearer accountability for actions that can be detrimental to the quality of bulk commodities; and alignment with other program requirements in the areas of food safety, HACCP and ISO.

During the consultations, stakeholders offered a number of potential alternatives to VED. Some examples are: keep KVD and identity-preserve (IP) the indistinguishable varieties that command a premium; keep KVD and put more money into technological research and development; CGC to test every cargo, downgrade as appropriate, and permit the grain industry to develop means to manage indistinguishable varieties; and an alternative that we are calling 'VED Lite'.

'VED Lite' would involve changing the Canada Grain Act to require declarations from producers, based on a class eligibility list that would be established and maintained by the CGC. It would include the CGC performing random testing of deliveries into primary, terminal and transfer elevators as well as testing of all export cargoes. The CGC would be provided with new powers to prescribe penalties for misrepresentation, in addition to downgrading where necessary. This proposal would be attempting to detect problems upon delivery into the system. This is a contrast to the original VED concept, which facilitated detecting problems at export position, then tracing-back to the source of the contamination. The VED-Lite proposal recognizes that most people are honest and that those few who might be tempted to misrepresent their grain would be deterred by the possibility of being caught and penalized.

Next Steps

The CGC has convened a representative group of producer and industry stakeholders to address the issue of logistical feasibility. The work of this committee will be fed into an initiative to analyze the costs of a VED-type system and to identify potential benefits. We have contracted two well-respected economists to perform this work and will incorporate their analysis into the feedback already received. We are working towards reviewing all of our material, considering the alternatives that have been put forward, and formulating a proposal by fall 2003. We will provide stakeholders with opportunity for input before any decisions are made.

The overall objective remains the same: to ensure that the Canadian Grain Quality Assurance System, which has served the industry well for almost a century, continues to ensure that Canada is respected the world over for the quality of its grain, and the consistency and uniformity of its grain exports.

More Information

For more information, call the CGC information line at 1-800-853-6705 or contact:

Pat Funk
Consultation Coordinator
Canadian Grain Commission
700 - 303 Main Street
Winnipeg, Manitoba
R3C 3G8
Tel.: 204 983-4363
Fax.: 204 983-0248
Email: pfunk@grainscanada.gc.ca

A Discussion Paper on the Use of Variety Eligibility Declarations. January 14, 2003