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Minister’s Message

I am pleased to submit to Parliament and Canadians the Canadian Grain Commission (CGC)'s Report on Plans and Priorities 2012-13. This report details how the CGC intends to use its resources to carry out its responsibilities to protect grain producers' interests and to ensure a dependable commodity for Canada's international and domestic markets.

Canada is known around the world for the quality, consistency, reliability, and safety of its grain and grain products. The activities of the CGC continue to be a key factor in permitting Canadian exporters to market successfully in competitive international grain markets. This year marks the CGC's 100th anniversary. In its 100th year, the CGC will play an important role in helping the grain sector remain competitive. Our Government will deliver on its commitment to modernize the western Canadian grain sector. An important part of this will include the CGC working with Agriculture and Agri-Food Canada (AAFC) and the entire Agriculture and Agri-Food (AAF) Portfolio to deliver on the important priority of modernizing the Canada Grain Act. I'm excited about the prospects that lie ahead and am committed to a strong quality assurance system for the Canadian grain industry from producers to customers.

As we take time to celebrate the CGC's history, this is an opportunity for me to thank the organization for its outstanding contribution to making the Canadian grain sector what it is today, and what it will be in the future. Looking ahead, I will continue to rely on the collaborative efforts of the CGC and my entire Portfolio to help me meet the sector's needs, efficiently and effectively. I invite you to read this report to learn more about the CGC's plans and priorities for the 2012-13 fiscal year.

Chief Commissioner’s Message

Welcome to the Canadian Grain Commission (CGC)'s Report on Plans and Priorities 2012-13. Through its activities, the CGC supports a competitive, efficient grain sector and upholds Canada's international and domestic reputation for consistent and reliable grain quality and safety. In addition, the CGC protects the rights of Canadian grain producers when they deliver grain to licensed grain handling companies.

Since 1912, the CGC has been the federal agency responsible for setting standards of quality and regulating Canada's grain handling system. On April 1, 2012, the CGC will be celebrating its 100th anniversary. The CGC was initially established in response to producer-led organizations asking for a way to guarantee fair treatment in the grain handling system. Since then, we've helped producers and grain companies work together by offering a neutral third party perspective. Through our various programs, we have assisted the continued growth of the grain industry in Canada. We are proud of our role in the history of Canada's grain industry and have several activities planned to mark this important milestone.

The CGC is operating in a time of rapid change in the global and domestic grain industries. We anticipate that grain quality and grain safety requirements and technology will continue to become more sophisticated. We feel we are well positioned to continue to evolve to meet the emerging needs of producers and the grain industry. We are committed to modernizing our activities and our legislative framework to ensure the long-term success of Canada's grain quality assurance system and to add optimal value for Canadian grain producers and the grain sector.

As Chief Commissioner, I look forward to the CGC's ongoing exemplary work to effectively meet the needs of producers, the industry and Canadians in general. I invite you to read this report to learn more about the CGC's plans and priorities for fiscal year 2012-13.

Section I: Organizational Overview

Raison d’être

Responsibilities

Under the Canada Grain Act, the CGC regulates the handling of 21 grains¹ grown in Canada to ensure Canada's grain is safe, reliable and marketable, and Canadian grain producers are protected. The CGC is an unbiased, third party agency in Canada's grain sector and is the official certifier of Canadian grain. Through its activities, the CGC supports a competitive, efficient grain sector and upholds Canada's international reputation for consistent and reliable grain quality. To achieve its mandate, the CGC:

• regulates grain handling in Canada through the grain quality and quantity assurance programs,
• carries out scientific research to understand all aspects of grain quality and grain safety and to support the grain grading system, and
• has implemented a number of producer protection programs and safeguards to ensure the fair treatment of Canadian grain producers when they deliver their grain to licensed grain elevators and grain dealers. This includes the licensing and security program, the producer car allocation program, and producer support program.

The CGC's head office is located in Winnipeg, Manitoba. The CGC currently operates 12 additional offices across Canada and plans to employ approximately 741 full-time equivalents (FTEs) in the upcoming fiscal year. Funding for CGC programs and activities is through a combination of revolving fund and appropriation sources. Additional information on the CGC's mandate and responsibilities is available on the CGC website at http://www.grainscanada.gc.ca/.

Strategic Outcome and Program Activity Architecture

The following diagram illustrates the CGC's Program Activity Architecture (PAA). The PAA is the basic structure for managing and allocating resources to various programs and activities to achieve intended results. The CGC's PAA has five program activities which each contribute to making progress to the CGC's single strategic outcome. The producer protection program consists of three program sub-activities.

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Canada is known around the world for the quality, consistency, reliability and safety of its grain and grain products. It is widely recognized that the provision of CGC programs and activities is fundamental to maintaining this reputation and to the functioning of Canada's Grain Quality Assurance System (GQAS). CGC programs result in shipments of grain that consistently meet contract specifications for quality, safety, and quantity. This is essential for producers to realize maximum value from their grain. In our role as a neutral third party regulator and arbitrator, the CGC works in partnership with virtually every participant in the grain industry including producers, industry stakeholders, AAF Portfolio partners, and other government departments and agencies.

Organizational Priorities

The CGC has identified two priorities that will be the focus of attention during the reporting period. The first priority is aimed at strengthening the CGC's program activities while the second is aimed at sound integrated people and business management. Progress towards these priorities will mitigate program risk and ensure long term success in delivering upon our sole strategic outcome. To make progress towards these priorities, the CGC will continue to work in close collaboration with producers, industry stakeholders, AAF Portfolio partners, and other government departments and agencies.

Priority	Type2	Strategic Outcome and/or Program Activities
Relevant positioning of CGC program activities to deliver upon the CGC's strategic outcome	Previously committed to	This priority contributes to all of the CGC program activities and the overall strategic outcome
Status
Why is this a priority? This priority involves positioning the CGC to remain relevant and support the continued competitiveness of Canadian grains in both domestic and international markets. This includes development and integration of new technologies and protocols into daily program and service delivery, sound regulatory framework, ongoing responses to increased market demands for assurances of grain safety and market concerns about low level presence (LLP) of unapproved genetically engineered events, as well as continuously improving producer protection programs and service delivery models. Plans for meeting the priority Continue efforts to evolve service delivery models and our workforce to remain relevant and meet future service requirements. Legislation to amend the Canada Grain Act has been introduced twice since 2007, but failed to pass in minority governments. In September 2011, the Working Group on Marketing Freedom recommended that a modernized CGC would complement the proposed changes to the Canadian Wheat Board, and that these reforms would serve to transform the Canadian grain sector to a more competitive market-oriented environment. This priority includes plans to modernize the Canada Grain Act and the CGC to reflect the evolving grain handling and transportation system. Possible amendments include changes to governance, mandate, producer payment security, licensing, inspection, weighing, and enforcement. Continue efforts to facilitate market access to ensure Canadian grain remains competitive domestically and internationally. Raise the domestic and international profile and understanding of the CGC's role. This includes celebrating our past 100 years and highlighting where we plan to go.

² Type is defined as follows: previously committed to—committed to in the first or second fiscal year prior to the subject year of the report; ongoing—committed to at least three fiscal years prior to the subject year of the report; and new—newly committed to in the reporting year of the RPP or Departmental Performance Report (DPR).

Priority	Type3	Strategic Outcome and/or Program Activities
Integrated people and business management	Previously committed to	This priority contributes to all of the CGC program activities and the overall strategic outcome
Status
Why is this a priority? This priority involves sound integrated and accountable planning and management processes to ensure the optimal allocation of human and financial resources to meet business needs. Since 1912, the CGC has charged fees to recover at least a portion of the costs of providing services to the Canadian grain sector and regulating grain handling in Canada. Most of the CGC's user fees have not been updated since 1991 despite the fact that the cost of providing our services has continued to rise. Since 1999, we have depended on annual ad hoc funding to continue serving producers and the industry. This means that the revenues from user fees now cover approximately 50 percent of the cost of service provision. The CGC faces ongoing challenges in securing enough funding to provide services and perform its regulatory functions. Lack of a stable funding environment has made planning for long term integrated people and business management a challenge. Plans for meeting the priority In November 2010, the CGC began a project to update its cost recovery framework consistent with the requirements of the User Fees Act. The CGC held extensive consultations with grain sector stakeholders in early 2011. A User Fees Proposal which sets out an updated fee structure based on the costs of the services and a proposed private sector cost share is planned during 2012-13. Recommendations and a formal proposal will be submitted to Parliament. Updating our user fees will eliminate our dependence on annual ad hoc funding and create a more stable environment for integrated people and business management.

³ Type is defined as follows: previously committed to—committed to in the first or second fiscal year prior to the subject year of the report; ongoing—committed to at least three fiscal years prior to the subject year of the report; and new—newly committed to in the reporting year of the RPP or DPR.

Risk Analysis

The Canadian grain industry, the CGC, and the GQAS operate in a climate of constant change. The CGC and the GQAS must be able to adjust in a measured and careful fashion to these changes in order to maintain Canada's reputation as a consistent supplier of quality grain. The CGC is continually adapting programs and services to assure consistent and reliable grain quality and grain safety that meets the needs of international and domestic markets and to ensure Canadian grain producers are protected.

Risk management is an essential part of strategic planning and decision making at the CGC. While the majority of risk involved in the CGC's work is inherent and constant, some risk varies according to changes in the internal and external environment. The inherent risks to CGC programs and services, such as risks associated with assuring accurate quality and quantity assessment and accurate certification of Canadian grain, are addressed by continuous monitoring and adjustment in order to manage risk effectively, thereby maintaining high levels of performance. Feedback from producers and grain handlers, domestic and international grain buyers and processors, and other government organizations has proven to be a reliable early indicator of risk arising from developments in our external environment.

Strategic planning at the CGC includes preparation of an extensive environmental scan to identify emerging threats and/or opportunities for improvement, an internal and external workforce analysis, and a Corporate Risk Profile Summary to identify areas of greatest risk exposure to the CGC in delivering its strategic outcome and program activities. The following key challenges, or risks, have been identified as having potential implications for our performance during 2012-13 and beyond:

• Ensuring that the organization adapts and remains relevant to our stakeholders. For example, this includes ensuring that technology and infrastructure remain current, making changes to meet domestic and international industry needs, developing internal and external alternative service delivery models in consultation with stakeholders, and modernizing our legislative framework to meet the rapidly evolving needs of Canadian producers and the grain industry.
• Establishing appropriate fees and sustainable funding. Stable funding is required to sustain our operations, as well as for evolution of operations going forward. Lack of stable funding impacts all long-term human resource, business, and investment planning.
• Ensuring there is sufficient capacity within the CGC to manage change. This includes enhancing our People Management Framework, as well as developing change management strategies and plans within each priority.

Several mitigation strategies are currently in place for each of these challenges and additional mitigation strategies have been identified going forward. The CGC's 2012-13 priorities and plans are designed to mitigate the risks associated with these challenges. Challenges and risks will be monitored during 2012-13 and further mitigation strategies will be put in place as required.

Planning Summary

The following provides a summary of the CGC's planned spending and human resources for the next three fiscal years. Planned spending for 2012-13, 2013-14 and 2014-15 includes the annual appropriation of $5.45 million and projected spending of approximately $37.63 million of revenue earned through fees. Planned spending for 2012-13 also includes access to the accumulated surplus of $15.45 million. The planned spending and planned FTEs shown throughout this document are reflective of approved authorities to date only and not reflective of total resource needs required to fulfill the CGC's mandate. To put this in perspective, actual 2010-11 spending as reported in the CGC's 2010-11 DPR was $78.571 million. Actual 2010-11 FTEs as reported in the CGC's 2010-11 DPR were 671. The CGC is currently assessing options to ensure appropriate funding is available to maintain program delivery going forward. CGC management remains committed to monitoring and controlling discretionary spending. Further information on CGC funding is provided in the Expenditure Profile Section.

Financial Resources⁴ ($ thousands)

2012-13	2013-14	2014-15
58,531	43,078	43,078

⁴ Planned spending is reflective of approved authorities to date only and not reflective of total resource needs required to fulfill the CGC's mandate. To put this in perspective, actual 2010-11 spending as reported in the CGC's 2010-11 DPR was $78.571 million. The CGC is currently assessing options to ensure appropriate funding is available to maintain program delivery. Planned spending differs from the Annual Reference Level Update with respect to non-appropriation funding as these include spending of approximately $37.63 million of revenue earned through fees. The Annual Reference Level Update reflects the authority limit of respendable revenue of $42.88 million.

Human Resources⁵ (Full-Time Equivalent-FTEs)

2012-13	2013-14	2014-15
534	389	389

⁵ Planned FTEs are reflective of approved authorities to date only and not reflective of total resource needs required to fulfill the CGC's mandate. Actual 2010-11 FTEs as reported in the CGC's 2010-11 DPR were 671. The CGC is currently assessing options to ensure appropriate funding is available to maintain program delivery.

Strategic Outcome: Canada's grain is safe, reliable and marketable and Canadian grain producers are protected

Performance Indicators	Targets
Number of instances where buyers are dissatisfied with CGC standards, methods or procedures used to ensure a dependable commodity for domestic and export markets	Zero instances
Level of producer satisfaction with CGC producer protection services	Zero unresolved or unaddressed complaints

Planning Summary Table
($ thousands)

Program Activity	Forecast Spending 2011-126	Planned Spending7			Alignment to Government of Canada Outcomes8
		2012-13	2013-14	2014-15
Quality Assurance Program	41,250	32,726	21,565	21,565	Innovative and knowledge-based economy
Quantity Assurance Program	13,249	11,213	8,642	8,642	Innovative and knowledge-based economy
Grain Quality Research Program	10,630	3,521	3,521	3,521	Innovative and knowledge-based economy
Producer Protection Program	3,891	2,625	905	905	Fair and secure marketplace
Subtotal Planned Spending9	69,020	50,086	34,633	34,633

⁶ 2011-12 actual results may differ from the 2011-12 forecast spending. The forecast is based on a reprofiled budget as at December 31, 2011.

⁷ Planned spending is reflective of approved authorities to date only and not reflective of total resource needs required to fulfill the CGC's mandate. Planned spending for 2012-13, 2013-14 and 2014-15 includes only the annual appropriation and projected spending of revenue earned through fees. Planned spending for 2012-13 also includes access to the accumulated surplus. The CGC is currently assessing options to ensure appropriate funding is available to maintain program delivery.

⁸ Information on the Government of Canada Outcomes is available at: http://www.tbs-sct.gc.ca/ppg-cpr/frame-cadre-eng.aspx. Information on the CGC's alignment to the Government of Canada Outcomes is available at: http://www.grainscanada.gc.ca/cgc-ccg/cr-rm/goco-rogoc-eng.htm.

⁹ Subtotal planned spending does not include amounts for the internal services program activity. 2012-13, 2013-14, and 2014-15 amounts are not reflective of total resource needs required to fulfill the CGC's mandate. The CGC is currently assessing options to ensure appropriate funding is available to maintain program delivery going forward.

Planning Summary Table
($ thousands)

Program Activity	Forecast Spending 2011-1210	Planned Spending11
		2012-13	2013-14	2014-15
Internal Services	13,882	8,445	8,445	8,445
Total Planned Spending12	82,902	58,531	43,078	43,078

¹⁰ 2011-12 actual results may differ from the 2011-12 forecast spending. The forecast is based on a reprofiled budget as at December 31, 2011.

¹¹ Planned spending is reflective of approved authorities to date only and not reflective of total resource needs required to fulfill the CGC's mandate. The CGC is currently assessing options to ensure appropriate funding is available to maintain program delivery.

¹² Total planned spending includes amounts for all CGC program activities. Planned spending for 2012-13, 2013-14 and 2014-15 includes the annual appropriation of $5.45 million and projected spending of approximately $37.63 million of revenue earned through fees. Planned spending for 2012-13 also includes access to the accumulated surplus of $15.45 million. 2012-13, 2013-14, and 2014-15 amounts are not reflective of total resource needs required to fulfill the CGC's mandate. The CGC is currently assessing options to ensure appropriate funding is available to maintain program delivery.

Expenditure Profile

Additional ad hoc appropriation has been required to meet CGC operational requirements on a yearly basis since 1999. The following chart illustrates average CGC spending by funding source over the past four years (2008-09 through 2011-12). During this time: approximately 42 percent of CGC expenditures have been funded by annual ad hoc appropriation (this includes the use of the CGC's accumulated surplus between 2008-09 and 2011-12); approximately 7 percent of CGC expenditures have been funded through core appropriations which have historically been used to cover a portion of the costs related to the grain quality research program and functions associated with Assistant Commissioner positions (see explanation below); and approximately 51 percent of expenditures have been funded through CGC fee revenues collected primarily from inspection and weighing services.

Average Spending by Funding Source (2008-09 to 2011-12)

Most of the CGC's user fees have not been updated since 1991 despite the fact that the cost of providing our services has continued to rise. The CGC is in the process of developing a user fee structure and funding mechanism that will eliminate annual ad hoc funding and result in fair and consistent user fees, service standards and performance measures for CGC services. The additional revenues will provide the CGC with sufficient resources and a stable funding platform to provide its mandated services and deliver upon its ultimate priority of ensuring Canada's grain is safe, reliable and marketable and Canadian grain producers are protected. It is planned that in 2012 the Minister of AAF will table user fees proposals into both houses of parliament as per the User Fees Act. Amended fees are planned to take effect in the 2013-14 fiscal year. Further information on the CGC's User Fees Consultation process and feedback received to date is available at: http://www.grainscanada.gc.ca/consultations/consultation-eng.htm.

The graph below shows the CGC's funding level trend from 2008-09 to 2014-15. The two trends shown on the graph are core funding and total spending.

Total Spending against Core Funding Level from 2008-09 to 2014-15

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Total spending from 2008-09 to 2011-12 is reflective of all funding sources available to the CGC including appropriations realized through the full Estimates process and fees generated through the provision of services. For 2012-13, 2013-14 and 2014-15, the graph shows the CGC's approved authorities to date only (core funding). The graph does not include 2012-13, 2013-14 and 2014-15 total resource requirements due to the expiration of ad hoc funding. The CGC is currently assessing options to ensure appropriate funding is available to meet operational and staffing requirements.

For 2012-13 and future years, core funding of $43.08 million partially consists of $5.45 million in annual appropriation which is used to fund a portion of the costs related to the grain quality research program and the functions that were associated with the Assistant Commissioner positions. Assistant Commissioner functions have been assumed by the CGC Commissioners, the Licensing Unit, and Communications. The remainder of the organization's quality assurance, quantity assurance, and producer protection programs are intended to be cost recovered via fee revenues collected primarily from inspection and weighing services. These revenues are dependent on annual grain volumes which can fluctuate up to 20 percent from year-to-year, resulting in variable revenue from fees. The CGC forecasts spending of revenue earned through fees of $37.63 million generated from inspecting and weighing expected grain volumes of 50.6 million tonnes of grain. Planned spending for 2012-13, as detailed throughout this report, also includes access to our accumulated surplus of $15.45 million (this is not shown on the graph).

In order to meet the evolving grain industry needs and increasing operating costs, the CGC will continue the ongoing process of cost containment and reallocation of internal resources to meet new and emerging priorities. The CGC will continue efforts to manage spending through the following actions and mitigation strategies:

• staffing needs to deal with fluctuating grain volumes and the delivery of mandatory services will be addressed with the use of overtime or the hiring of term and casual employees, where appropriate;
• discretionary capital spending will be made on a "mission critical" basis only;
• discretionary expenditures will continue to be monitored and controlled; and
• the CGC will continue to search for efficiencies through the sharing of internal services with AAFC and other government departments.

The figure below shows the allocation of 2012-13 planned spending by program activity. The largest portion of the CGC's planned spending is allocated to the quality assurance program. While the CGC has a specific program activity dedicated to producer protection activities, it is important to note that all CGC program activities contribute to the CGC's overall mandate of producer protection. For example, the quality assurance and quantity assurance programs are essential for producers to realize maximum value from their grain. With consistent mandated expectations, the percentage allocated to each program activity does not change significantly from year-to-year.

2012-13 Planned Spending by Program Activity

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Estimates by Vote

For information on our organizational appropriations, please see the 2012-13 Main Estimates publication.

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