The owner of Singapore’s largest bakery chain sits in a high-rise office tower gazing out over the world’s busiest ocean port. Any day now, a ship carrying wheat from Canada is scheduled to arrive and unload its cargo for milling.
The baker is already planning his production and quality-control program for months ahead, based on grain from halfway around the world he has never laid eyes on, much less inspected.
But he isn’t worried. He knows he will almost certainly get exactly the right kind of wheat with the precise specifications he requested. He also knows that, if there’s a problem with the bread when it emerges from the oven, Canadian officials will step in to provide technical assistance. Canada is one of the only countries in the world able to provide wheat sight unseen to an overseas buyer with the assurance that it’s what he paid for and will perform the way he wants. That fact is due in large part to the Canadian Grain Commission, a federal agency responsible for regulating the country’s grain handling system.
How the CGC provides customers with what the industry calls “the best wheat in the world” is a story spanning 100 years this month.
The world was a very different place in 1912 when the Board of Grain Commissioners, the CGC’s forerunner, was formed with a mandate to administer the new Canada Grain Act and enforce regulations for grain inspection.
But then, as now, the purpose was the same. The Board of Commissioners would see that farmers would be guaranteed fair treatment for the grain they delivered. They would receive the correct grade with the correct bushel weight. If there was any disagreement, the CGC could investigate and, if warranted, uphold the farmer’s complaint.
“The Canadian Grain Commission is an unbiased third party that ensures that all players who have a stake in the grain are treated fairly. That balance would not exist if there were no Grain Commission,” says Elwin Hermanson, chief commissioner of the Canadian Grain Commission.
“You have a disciplined system for putting grain into the market and you don’t have to deal as often with bad outcomes.”
Implicitly, that means end-use customers are treated fairly, too. A regulated, co-ordinated system involving farmers, the CGC, grain handlers and marketers ensures it. Farmers produce the grain, grain handlers market the grain and establish the price; the CGC certifies grades and quality and provides technical expertise and support to overseas customers.
“A customer in the U.K., for example, can have confidence that when he buys No. 1 Canadian Western Red Spring wheat with 13 per cent protein, when it is shipped, that the Canadian Grain Commission will certify that everything loaded on this boat constitutes No. 1 CWRS 13.0,” explains Hermanson.
Satisfying customers at the end of the supply chain may not have been uppermost in the minds of the Board of Grain Commissioners when they first set about their work a century ago. Protecting farmers from unfair treatment by railways, grain dealers and milling companies by enforcing regulations was the main emphasis (see related story).
But as Canada’s grain exports expanded, especially after World War II, customers began to demand that, if they were buying wheat from so far away, it had better be what they ordered.
Of course, European millers buying wheat from Western Canada could (and did) come over to observe the harvest. But they still needed to know for certain that what was in those vessels leaving Montreal was what they had purchased.
Thus was born the “certificate final” — a document signed by the CGC’s chief grain inspector certifying that the vessel was loaded with grain equal to the customer’s order. It is, in effect, a guarantee by the Government of Canada that what you buy is what you get.
Guaranteeing a specific quality for each load is a remarkable achievement, considering the grain is grown over a vast area under varying conditions that can range from flooding in one part of the Prairies to drought in another and delivered to over 300 country elevators owned by competing grain companies.
That’s because the system works co-operatively to produce the right product. Any grain exported through a terminal elevator in Canada must be inspected by the CGC as it goes into the terminal and as it’s loaded on to the vessel.
To ensure the grain going into the cargo hold is what the customer requested, samples are taken continuously during loading. A quality check occurs for every 2,000 tonnes, so a load to fill a 20,000-tonne vessel would be tested 10 times as the grain goes in.
What if, for example, nine samples are of the right stuff but one is not? The certificate final will say so.
“We cannot order the vessel unloaded,” says Daryl Beswitherick, the CGC’s program manager for quality assurance standards. “But what we will tell the grain company is that 2,000 tonnes that went on did not meet specifications. If they remove it, and continue to load grain that meets the quality that was sold, we will certify the whole lot as making spec. If they choose not to remove it, we will certify that 2,000 tonnes did not meet specification.
“The vessel would be able to sail. But what the customer would know when they receive their certificate final is that there are two different qualities within the hold of that vessel.
“If you’re loading wheat or barley or peas, the procedure is the same.”
How often is a vessel loaded with the wrong grain? “It’s fairly rare that instances like this occur,” says Beswitherick.
If it does happen, it’s up to the shipper and the customer to come to an agreement prior to the vessel leaving the port. Sending it back isn’t practical because the cost for offloading the vessel would be prohibitive. The cost of having an unsold cargo afloat is not practical either. The customer is not left high and dry. The checks and balances of the Canadian grain system extend all the way from the Prairie grain fields to the end user’s bakery.
If, for example, a customer feels the protein strength of the wheat in his shipment is not as expected, he lodges what’s called a cargo complaint. The CGC retains a sample from each shipment for six months. It will take part of the sample in question and test it in the CGC’s Grain Research Laboratory in Winnipeg to determine if the grading was correct. The commission can also mill and bake that sample in its lab to see if there really is a protein problem, as the customer alleges.
If the sample performs as expected in the lab, the problem may be at the customer’s end. Perhaps there’s something wrong with his flour mill or the baking process.
But if a cargo complaint turns out to be justified, the system works to try and correct it.
It may be that the grade and content of the shipment are right but, for some reason, the protein isn’t performing as it should. Perhaps the reason is an agronomic one, because soil and weather conditions under which wheat is grown can affect protein functionality.
In that case, the CGC may go over and help the customer work with the grain to produce the desired quality in the final product.
As a result, if an Indonesian buyer blends No. 2 CWRS 13.0 with Australian soft white wheat and Turkish flour to produce steamed buns or noodles, he can rely on the wheat from Canada even though he’s using other products in the mix.
“So that buyer in Indonesia can say. ‘When I buy this, I know I’m going to be able to use it in such a manner in my plant to upgrade the other ingredients I’m buying’,” Hermanson says.
The above process — inspecting, grading, certifying and providing customer support — holds true for any of the 21 official grains listed by the Canada Grain Act, whether cereals, oilseeds, pulses, mixed grains or other crops.
It’s important to note that farmers, who grow those crops in the first place, are directly involved in helping to shape Canada’s grain grading system.
Every spring and fall, the Western Standards Committee, a 26-member industry committee, which includes 12 grain producers as well as processors and exporters, meets to discuss grading issues and make recommendations to the Commission about grain grades and standards.
According to a recent CGC statement, the committee works to “make sure changes to the grading system reflect the interests and concerns of all stakeholders in Canada’s grain sector, including producers.”
The committee “constantly review(s) Canada’s grading system so that it continues to be relevant to the grain sector and to buyers of Canada’s grain,” says the statement.
The committee employs subcommittees to collect information about grading issues for specific crops. There are four subcommittees for wheat, barley and other cereals, oilseeds and pulses.
Chuck Fossay, who farms at Starbuck, Manitoba, sits on the wheat subcommittee. He says the group looks at all grading factors to distinguish one class of wheat from another. Those can include bushel weight, protein levels, allowable levels for fusarium head blight, or dockage.
Level playing field
By setting such standards, the CGC creates a level playing field for farmers when marketing their grain to different buyers, Fossay says.
Say, for example, the minimum weight for No. 1 CWRS is 60 pounds per bushel. A buyer looking for a heavier weight might demand 65 pounds per bushel. In that case, the producer could say, “sorry, the CGC says the minimum weight for that grade is 60 pounds and if you want more, you’ll have to pay a premium.” And the CGC will back up the farmer.
“So you’re not dealing with four different buyers who have four different standards for the grain you’re showing them,” says Fossay. “You may be dealing with four different buyers but there’s one standard set by a third party.”
Grading and inspection are only one part of the puzzle for ensuring grain quality. Another important piece is the variety-registration system, in which the CGC plays a central role.
The Canadian Food Inspection Agency administers the variety registration system, and the CGC is responsible for evaluating new varieties from a quality perspective coming forward out of co-op trials for registration. Once a year, in Saskatoon, Banff or Winnipeg, the Prairie Grain Development Committee (PGDC) meets to receive data from the Grain Commission on those varieties and assess whether they are good enough to be registered, based on quality factors. Other committee members will study other factors such as disease and insect resistance and agronomics. (The committee also meets in Eastern Canada, with the CGC playing the same role.)
With spring wheat, for example, the quality of a variety has to meet a certain end-use specification. Therefore, as producers make their seeding choices, they know that each variety has certain attributes from a quality, disease and insect resistance, and agronomic perspective. For their part, buyers can expect that a new variety within that class will perform in a certain manner.
Beswitherick says the system has very rigid requirements. If a variety is to be registered, it has to be equal to or better than a certain standard set by the PGDC.
“So a customer who buys registered varieties in a CWRS class knows that, if there are new varieties in there, they’re supposed to be at least equal to what he’s used to getting, or better than he used to get.”
Although the registration process is the same for all crops, quality parameters can vary. Beswetherick notes that criteria for canola, for example, are not as stringent as for some of the wheat classes.
Right now, all this is happening against the backdrop of one of the most significant developments in the recent history of the Canadian grain industry: the impending removal of the Canadian Wheat Board’s single sales desk for wheat and barley.
How a post-monopoly environment will affect the Canadian Grain Commission is uncertain.
Some believe business will continue more or less as usual, only without a CWB monopoly. Others have serious doubts because the CWB and the Commission are closely linked.
In the meantime, the CGC itself is under the microscope. Suggested changes to the Canada Grain Act would eliminate mandatory requirements for inward inspection and weighing at licensed terminals and transfer elevators. Grain handlers themselves would report inward grain grades and weights.
Some worry the changes, if implemented, would limit the CGC’s role as an independent arbiter and compromise assurance of fair payment to farmers — the very reason the Commission was formed in the first place.
“Regardless of changes proposed, we remain committed to the Canada Grain Act,” explains Hermanson. “That means that, through grain quality and quantity assurance as well as grain safety assurance, we will continue to ensure a dependable commodity both domestically and internationally, for the benefit of producers and the grain industry as a whole.”