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Frequently Asked Questions

More Frequently Asked Questions


Grain Handling

Questions and Answers about Shrinkage

Licensed primary elevators are not permitted to charge grain producers for shrinkage.

What is shrinkage?

Shrinkage is the loss in weight of grain that occurs as grain is handled or treated. Weight losses occur when dust and grain are left behind in equipment and bins and when grain is handled and treated.

What are the deductions for shrinkage as of August 1, 2003?

As of August 1, 2003, the Canada Grain Regulations will no longer permit licensed primary elevators to charge producers for shrinkage. See the table below. Shrinkage deductions will be negotiable at process elevators and grain dealers licensed by the Canadian Grain Commission.

Maximum shrinkage allowances (% of weight) at primary elevators
  Until July 31, 2003 As of August 1, 2003
Grain Straight Tough or Damp Straight Tough or Damp
Wheat, Oats, Barley, Rye 0.10 0.20 0 0
Flaxseed, Solin, Canola, Rapeseed 0.35 0.52 0 0
Other Grains 1.00 1.00 0 0

Why did the Canadian Grain Commission change the regulations?

The Canadian Grain Commission changed the regulations to address concerns of producers. Consultations with producers and the industry on this issue took place in 2001. In reviewing data from nine years of primary elevator weigh-overs, the Canadian Grain Commission noted that some elevators were losing more weight than provided for in shrinkage allowances, and some were losing less. There was great variability from elevator to elevator and from year to year. Because many factors influence weight loss, it was impossible, statistically, to set a reliable shrinkage allowance. Further, the Canadian Grain Commission was convinced by producers who argued that they should not be responsible for weight losses that occurred after their grain was delivered. Therefore, the Canadian Grain Commission decided to set primary elevator shrinkage deduction allowances at zero.

During the consultations, the Canadian Grain Commission published a discussion paper entitled "Review of Maximum Shrinkage Elevators at Primary Elevators." (Adobe PDF format).

Won't primary elevators recover their shrinkage losses in other ways, such as higher elevation tariffs or lower prices?

This may happen. However, companies may also take steps to reduce and minimize their actual shrinkage losses and not rely on government-set allowances which for some will be higher than the actual shrinkage experienced. This will benefit farmers.

Will the change apply to licensed process elevators and grain dealers?

No. The change will not apply to licensed process elevators and grain dealers. Neither will it apply to unlicensed companies. However, producers can negotiate shrinkage deductions with dealers and processors. If they are unable to get a better deal on shrinkage from them, producers could consider delivering to primary elevators where shrinkage deductions cannot be taken.

The term process elevator, as defined in the Canada Grain Act, means "an elevator the principal use of which is the receiving and storing of grain for direct manufacture or processing into other products." This type of operation should not be confused with the term "processor" which is often used in the special crops industry to describe seed-cleaning plants. Unlike primary elevators, process elevators are not under any obligation to receive a producer's grain. Similarly, shrinkage has never been regulated at process elevators and will continue to be negotiable at these facilities.

Some pulse processors are licensed as grain dealers. The Canadian Grain Commission does not have the legislative authority to regulate shrinkage for this class of licence. Historically, shrinkage deductions taken by grain dealers have mirrored those taken at primary elevators. The Canadian Grain Commission expects that, to remain competitive, these companies will reduce their shrinkage deductions accordingly. If they do not, producers have the option of selling to licensed primary elevators where shrinkage deductions will be prohibited on August 1, 2003.

How can producers be certain about who is paying them?

Sometimes there is confusion about who is paying the producer and the class of licence under which the facility is operating. There are two ways to find an answer:

What about agents that receive grain on a company's behalf?

Some companies have agents receiving grain on their behalf. All agents of licensed companies must issue the documents appropriate to the licensee and follow the regulations for shrinkage deductions. If the agent is acting on behalf of a licensed primary elevator, there would be no deduction for shrinkage. When a company is licensed as both a primary elevator and a grain dealer and the producer is uncertain which licensee the agent is representing, the producer should ask the manager of the licensed facility.



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Last updated: 2004–02–19

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