Service to unlicensed users

Effective January 1998

Introduction

The Canadian Grain Commission's directive to the trade regarding Services to Unlicensed Users establishes the conditions under which Canadian Grain Commission services will be provided to unlicensed companies and individuals. The directive covers the provision of all Canadian Grain Commission inspection, weighing and analytical services. It limits the provision of Canadian Grain Commission services to licensees, and to those unlicensed companies or individuals that would not normally require a licence. The Canadian Grain Commission developed the directive to ensure that its services are provided equitably, and to reduce risk to producers. This directive is effective immediately.

Background

An elevator or grain dealer's licence is required by the Canada Grain Act (CGA) if a company or an individual

  • operates a facility that meets the CGA definition of an elevator, or
  • buys or sells grain using official grade names

An applicant for a license must give security, to cover outstanding payments to producers for grain, by way of a bond, letter of credit, or some other form acceptable to the Canadian Grain Commission. The level of security required is fixed by the Canadian Grain Commission, based on the applicant's potential obligations for payment or delivery of grain to producers. Licensees are required to submit monthly reports to the Canadian Grain Commission, indicating their outstanding obligations for payment or delivery of grain to producers, and the amount of security available to meet those obligations. The Canadian Grain Commission can request additional security if it deems it necessary to protect producers.

Because of these licensing requirements, producers have a high level of financial protection when they sell their grain to licensees. It, therefore, must be clear to producers whether or not the companies or individuals they are dealing with are licensed. If the actions of the Canadian Grain Commission lead producers to the mistaken assumption that a particular company or individual is licensed, the Canadian Grain Commission could be held liable if that company or individual is unable to meet its obligations to producers. For example, provision of Canadian Grain Commission grading services to an unlicensed company could be used by that company to buy grain from producers on the basis of official grade names. This use of official grade names could lead producers to assume they are dealing with a licensed and, therefore, secured company.

The Canadian Grain Commission has refused services to most unlicensed companies because of the risk to producers. An exception has been the provision of special sampling, grading and other quality analyses services to independent surveying companies, which are not required by the CGA to obtain a license. However, because the criteria for determining the conditions for offering services to unlicensed companies have not been clear, some companies have complained that independent surveying companies have been receiving preferential treatment. This directive addresses these concerns by clarifying the conditions under which Canadian Grain Commission services are made available to unlicensed companies and individuals.

Elements

Companies or individuals eligible to receive Canadian Grain Commission services

Licensees of the Canadian Grain Commission, and companies or individuals not required to be licensed under the CGA will be provided all Canadian Grain Commission inspection, weighing and analytical services.

This means that the Canadian Grain Commission will provide services to any unlicensed company or individual that

  • does not operate a facility that meets the CGA definition of an elevator, and
  • does not buy or sell grain using official grade name

Companies or individuals not eligible to receive Canadian Grain Commission services

Companies or individuals that have received an exemption from licensing, or that are operating without a licence in violation of the CGA, will not be provided any Canadian Grain Commission services. This includes

  • seed cleaning plants that meet the definition of an elevator, but are not licensed, whether or not they are exempted from licensing,
  • bulk handling facilities and container facilities which have been exempted from the licensing requirements of the CGA
  • unlicensed companies east of Thunder Bay that deal in western grain

Applying to Receive Canadian Grain Commission services

Unlicensed companies are required to apply for service at least 3 weeks prior to the expected date of the provision of the Canadian Grain Commission service. The application requires companies to declare the nature of their business, their clients, and the Canadian Grain Commission services they would like to receive. Each application is reviewed by the Canadian Grain Commission's Licensing and Audits Section to determine whether or not the company is eligible for services. If the company is eligible, Licensing and Audits will include it in a list of eligible users. This list, which includes all eligible unlicensed companies, is maintained by Licensing and Audits and is used by Industry Services, when determining whether or not to provide services to unlicensed companies.

Unlicensed companies or individuals must be on the list of eligible users, before they can receive any Canadian Grain Commission services. Once on the list of eligible users, unlicensed companies can receive all Canadian Grain Commission services at the standard Canadian Grain Commission fees outlined in Schedule I of the Canada Grain Regulations, and in Canadian Grain Commission Fees for Optional Services, distributed to the industry at the beginning of each crop year.

Procedures for Bulk Handling and Container Facilities Handling Direct Hit Shipments

Bulk handling facilities and container facilities are exempted from licensing and cannot directly receive Canadian Grain Commission services under this policy. When these facilities handle direct hits, the Canadian Grain Commission will provide services only on the request of a licensed grain dealer or grain elevator operator.

When a licensee wants to make a direct hit shipment through an unlicensed bulk handling or container facility, the licensee must notify the Regional Director at the appropriate regional Canadian Grain Commission office in writing on a Notice of Direct Hit form at least 48 hours before the grain is expected to arrive at the port. Canadian Grain Commission certificates will be issued to the licensee making the original request. Certificates will not be issued to the unlicensed bulk handling or container facility.

If you have any questions about this directive, please contact the Regional Director in your region.