Grain Producer FAQs

Grain Producer Questions & Answers

Grain Commercial FAQ Coming Soon

Download offline version of the Grain Producer FAQ (pdf)

Sections:
Finding a Buyer
Grading System
Contracts & Pricing
Crossing the Border
Delivery of Grain
Settlement – Payment
Check-offs, Taxes & Other Deductions
Relevant Regulations & Standards

Introductory Questions

How does Canada’s new grain marketing legislation (the Marketing Freedom for Grain Farmers Act) affect trade?
Deliveries of Canadian wheat and barley can now be contracted and sold through the open market from any supplier and to any buyer for delivery after August 1, 2012.

Effective August 1, 2012 the cross-border system for wheat, durum and barley trade will work as it does for other commodities such as canola and pulses. Export licenses will no longer be needed to export wheat, durum or barley from Canada. Grain entering Canada would still be subject to Canada’s phytosanitary requirements.

How do the changes to the Canadian system affect U.S. producers’ ability to deliver wheat to Canada?

The Marketing Freedom for Grain Farmers Act has no impact on U.S. producers’ ability to deliver wheat to Canada as there are no regulatory restrictions on cross border deliveries, beyond phytosanitary requirements. However, there are different marketing practices and grading regulations that apply in Canada that U.S. producers need to be aware of when delivering grain into Canada. As in any commercial transaction, U.S. producers must determine if selling into Canada is profitable.

How do the changes to the Canadian system affect Canadian producers’ ability to deliver wheat to the U.S.?
Canadian producers can contract and sell their wheat, durum and barley either directly or through a grain company to buyers in the U.S. without going through the Canadian Wheat Board. Export licenses will no longer be needed to export wheat, durum or barley to the U.S. More information is available at: Customs Notice 12-019

Will the Canadian Wheat Board still exist after August 1, 2012?
Yes. The, the Canadian Wheat Board will exist after August 1, 2012, but will be known as the CWB. The CWB will continue as a voluntary marketing organization for up to five years, at which point it could either be privatized or wound up. The CWB will continue to operate as a state trading enterprise for five years in order to continue marketing wheat and barley for farmers and grain buyers who wish to use it. The CWB must submit a commercialization plan to the Government of Canada within four years in order for it to become privatized.

Finding a Buyer

Where can I find a listing of Canadian Grain Elevators and Buyers?
A listing can be found here.
Where can I find a listing of U.S. Grain Elevators and Buyers?
A listing can be found here.
What elevators in Canada will accept U.S. origin grain?
Reference information found here.
What elevators in the U.S. will accept Canadian origin grain?
Reference information found here.

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Grading System, How Grain Quality is Determined

What are the objectives of Canada’s official grain grading system?
Brands Canadian grain by assuring consistent quality for buyers; Stimulates ongoing quality improvement by relating quality to price; Facilitates fair payment to producers based on quality attributes; and Helps to inform production decisions. More objectives here.

What are the objectives of the U.S. official grain grading system?
Facilitates the marketing of cereals, oilseeds, and related agricultural products for the overall benefit of consumers and American agriculture.

Can grain of U.S. origin receive an official Canadian grade?
No. Learn more here.

Can grain of Canadian origin receive an official U.S. grade?
Yes.

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Can grain of U.S. and Canadian origin be commingled in a Canadian elevator?
Yes.

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Can grain of U.S. and Canadian origin be commingled in a U.S. elevator?
Yes.

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Does Canada’s system restrict the varieties of wheat that Canadian producers can grow?
No.

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Does the U.S. system restrict the varieties of wheat that U.S. producers can grow?
No.

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Does a seller of U.S. grain need to provide varietal information?
No.

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Does a seller of Canadian grain need to provide varietal information?
No.

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Is there a difference in the way Canada and U.S. measure and report protein content?
Yes.

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Contracts and Pricing

What is the process for entering into forward contracts or making spot deliveries of U.S. grain into Canadian grain facilities?
Grain generally enters the Canadian grain system under contracts that specify the delivery period, either spot or deferred.

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What is the process for entering into forward contracts or making spot deliveries of Canadian grain into U.S. grain facilities?
Unless deposited for storage, grain generally enters the U.S. grain system under contracts that specify the delivery period, either spot or deferred.  In the US, like Canada a verbal agreement is considered an enforceable contract, however, in most cases a written confirmation will be forwarded to the producer to be signed.

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How do sellers of grain of U.S. origin into Canada compare nominal Canadian and U.S. prices?
Canada uses the metric system for weights and measures whereas the US uses the English system.

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How do sellers of grain of Canadian origin into the U.S. compare nominal U.S. and Canadian prices?
U.S. prices are generally listed in U.S. dollars per bushel.  A bushel is an “avoirdupois or imperial ” (U.S. / British) and U.S. customary unit of dry volume.

Where can pricing information for grain delivered to Canadian elevators be found?

Sellers of U.S. grain wishing to deliver to a Canadian grain facility can obtain price information directly from the grain company either by phone or in some cases on company websites.

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Where can I find pricing information for grain delivered to U.S. elevators?
Price indications are provided on many websites and advisory services.  Sellers of grain wishing to deliver grain to a U.S. grain facility should always obtain actual or contractible price information directly from the grain company.

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What trade rules govern cash grain sales at Canadian elevators?
There are no standardized rules for grains and oilseeds delivered to Canadian elevators.  The conditions are contained within the terms of the contract.

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What trade rules govern cash grain sales at U.S. elevators?
Many grain facilities in the U.S. use the NGFA Grain Trade Rules and arbitration.  Adopted in 1902, these rules govern most transactions of a financial, mercantile or commercial nature involving grain in the U.S.

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Can U.S. origin grain be priced against Canadian futures contracts?
Yes.

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Can Canadian origin grain be priced against U.S. futures contracts?
Yes.

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Crossing the Border

Where are the Canadian / U.S. border crossings located?

Canada Border Services Agency (CBSA) offices  and U.S. Customs and Border Protection offices.

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Where are the U.S./Canadian border crossings located?

Canada Border Services Agency (CBSA) offices  and U.S. Customs and Border Protection offices.

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What identification is required to enter Canada from the U.S.?

All drivers must have a valid driver’s license for the transport unit they are operating.

All drivers and passengers must have a valid passport or Free and Secure Trade (FAST) identity card.

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What identification is required to enter the U.S. from Canada?

Canadian Producer and Commercial Truck drivers require a valid driver’s license for the transport unit they are operating. All drivers and passengers need a passport or FAST card

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What customs and other documentation is required for grain to enter Canada from the U.S.?

All carriers (Producer and Commercial) require a Canada Border Services Agency (CBSA) issued carrier code to cross the border.

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What customs and other documentation are required for grain to enter the U.S. from Canada?

Canadian Producer and Commercial Trucks would need a Standard Carrier Alpha Code (SCAC) code and transmit information electronically through the Automated Commercial Environment (ACE).

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What are the licensing, registration and fuel requirements for U.S. trucks transporting grain within Canada?

U.S. producers hauling grains into Canada do not require specialized licensing (i.e. farm plates are permitted), if they are hauling their own grain.

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What are the licensing and registration requirements for Canadian trucks transporting grain within the U.S.?

Canadian producer trucks hauling grains into the U.S. do not need specialized licensing (i.e. farm plates are permitted), IF hauling their own grain.

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What are the load restrictions for grain trucks on Canadian highways?

The Provincial and Territorial governments in Canada have authority over the weight and dimension limits which apply to the highways within their boundaries.

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What are the load restrictions for grain trucks on U.S. highways?

The U.S. has weight limits for heavy vehicles, such as grain trucks.  For interstate highways, the weight limit is 80,000 lbs. of total weight.

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What documentation is required to import grain of U.S. origin into Canada?

Depending on the crop type being imported, its origin and its intended end use there may be phytosanitary import requirements (i.e., a phytosanitary certificate, an import permit, certificate of origin, or other document).

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What documentation is required to import grain of Canadian origin into the U.S?

Primary responsibility for administering the U.S. laws relating to import, export and the collection of duties is given to the United States Customs and Border Protection (CBP), an agency within the Department of Homeland Security.

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What if the grain requires further processing (includes cleaning) after entering Canada?

The importer will need to ensure that any grain or seed imported into Canada that requires further processing (such as cleaning), meets the requirements of CFIA directive D 96-07 (Import Requirements for Screenings and Grain and Seed for Cleaning).

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Are there any additional requirements if the grain or grain products being imported to Canada are for animal feed?

Depending on the end use of the grain, the shipment might also be regulated by the animal feed program.

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Are end-use certificates required for shipments of grain of U.S. origin into Canada?

No.

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Are end-use certificates required for shipments of Canadian origin in the U.S.?

No.

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Where can I find current and additional information related to border crossing?

There are several websites that offer different types of relevant information, including current border wait times, weather conditions, road conditions, current traffic conditions and more.

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Regarding Delivery Of Grain

What sampling methods are used by Canadian grain elevators when receiving grain by truck?

Canadian elevators typically use a probe sample prior to unload or a hand sample while unloading to sample grain received from trucks at the elevator.

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What sampling methods are used by U.S. grain elevators when receiving grain by truck?

U.S. elevators typically use a probe sample prior to unload or a hand sample while unloading to sample grain received from trucks at the elevator.

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Grain of U.S. origin delivered into Canada can receive a U.S. grade in Canada. How is the grade determined?

Canadian grain companies and processors are free to bid for and settle grain of U.S. origin basis U.S. grades and establish premiums and/or discounts for grading specifications including moisture, protein content, falling number, dockage, foreign material, damage, vomitoxin, etc. in the same way grain companies and processors do in the U.S.

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When grain of Canadian origin receives a U.S. grade in the U.S., How is the grade determined?

The sample will typically be tested for dockage, test weight, moisture and protein.  More tests may be or may not be done depending on the physical appearance of the sample and the experience of the crop year.

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Are varietal declarations by producers required at Canadian elevators for grain of U.S. origin?

Upon delivery, U.S. producers will need to declare that the grain is produced outside of Canada and is foreign grain regardless of variety.
Variety is not a factor in determining U.S. grades.

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Are varietal declarations by producers required at U.S. elevators for grain of Canadian origin?

Sometimes buyer may require knowledge of the variety, most likely only if the specific variety is required under contract.  Variety is not a factor in determining U.S. grades.

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What documentation is required regarding the producer’s chemical use when grain of U.S. origin is delivered to a Canadian grain facility?

No specific documents related to chemical use are required to sell grain in Canada unless specified in the contract agreement.

What documentation is required regarding the producer’s chemical use when grain of Canadian origin is delivered to a U.S. grain facility?

Unless specified in contracts no specific documents related to chemical use are required to sell grain to U.S. grain elevator or to anyone in the U.S.

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Where can I find information regarding chemicals approved in the U.S. but not in Canada or approved in Canada but not in the U.S.?

http://www.mrldatabase.com/

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Where can I find information regarding MRLs in Canada?

MRLs for Canada can be found on the Health Canada website at http://www.hc-sc.gc.ca/cps-spc/pest/part/protect-proteger/food-nourriture/mrl-lmr-eng.php

Where can I find information regarding MRLs in the U.S.?

USDA FAS maintains a global database on pesticide MRLs at: http://www.mrldatabase.com/ and at that site related market information from some countries is linked.

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What recourse do sellers of U.S. grain have with quality problems or rejection in Canada?

If there is a question about a particular grade or factor within a grade there may be an opportunity for a representative sample to be drawn and submitted to a qualified third party at a different location.

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What recourse do sellers of Canadian grain have with quality problems or rejection in the U.S.?

Sellers should be sure to understand all terms that apply to the sale of grain to any U.S. grain buyer.

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Settlement – Payment

When is payment received for the U.S. grain delivered to Canadian elevators?

Canadian elevators can provide immediate payment via cash purchase ticket (grain cheques) at the elevator at the time of unload as long as a grade and price have been established.  However, as per industry practice most often payment is made upon completion of the contract agreement or delivery period.

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When is payment received for Canadian grain delivered to U.S. elevators?

Technically the seller can receive payment promptly at the time of a truck delivery, but more normal practice is to complete delivery of the farm bin or bins being emptied, or the fields being harvested, before making payment.

What is required to prove clear title to U.S. grain delivered to Canadian elevators?

Canadian grain purchase contracts typically include a term whereby the seller represents to the purchaser that the seller is the owner of the grain in question and that the grain is free from all liens, charges or other security interests.  As a result, if there is a problem with ownership of the grain, then the producer could bear personal liability to the grain company.

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What is required to prove clear title to Canadian grain delivered to U.S. elevators?

In the U.S. if grain that has a perfected lien against it is sold into commerce, the buyer may face the risk of paying twice for the same amount of grain.  State laws vary on this aspect of risk to the elevator.

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How are grain facilities licensed in Canada?

The Canadian Grain Commission is a federal government agency that operates under the authority of the Canada Grain Act.

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How are grain facilities licensed in the U.S.?

U.S. grain elevators providing storage for grain owned by farmers or others are generally required to have a warehouse license to conduct business.

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What is the payment protection program in place for deliveries to licensed grain handling facilities in Canada?

The Canadian Grain Commission (CGC’s) producer payment protection program is a security based mechanism.

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What are the bonding requirements and payment protection programs in place for grain facilities in the U.S.?

U.S. buyers are either privately owned companies or farmer-owned cooperatives.  There is generally no problem with sufficient funds being held by the elevator business to cover the checks issued to grain sellers, but bankruptcies can occur.

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Beyond the bank deposits and net assets of the elevator company, what other resources  are available to assure financial performance of the U.S. buyer?

U.S. grain elevators, because they provide storage services, are generally required to have a warehouse license to conduct business.  This warehouse license may be issued by either the federal U.S. government or the state government.

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Check-offs, Taxes and Other Deductions

What check-offs will U.S. grain delivered to Canadian elevators be subject to?

Most grain delivered in Canada is subjected to a provincially regulated mandatory check-off to provincial commodity associations which use the funds for research and market development activities.

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What check-offs will Canadian grain delivered to the U.S.be subject to?

The U.S. has established marketing promotion programs for wheat and other commodities that are paid for by producers growing wheat in the U.S. and/or selling wheat at U.S. locations.

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What other deductions can I expect from my settlement for U.S. grain delivered to Canadian grain facilities?

Other than the checkoffs described in a) above, we are not aware of any common or  additional deductions from the quoted delivered price as long as all specifications of the contract are met.

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What other deductions can I expect from my settlement for Canadian grain delivered to U.S. grain facilities?

Other than the checkoffs described in b) above, we are not aware of any common or  additional deductions from the quoted delivered price as long as all specifications of the contract are met. [read_more text=”Learn More” href=”/?page_id=267″ target=”_blank” arrows=” →” style=”font-size:12px;margin-top:20px;”]
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Relevant Regulation and Standards

What are the statutory grain classes of Canadian Wheat?

Canadian wheat varieties fall into 10 classes and each class is unique. The varieties within each class are grouped by their functional characteristics. For example, varieties in the Canada Prairie Spring Red class have medium hard kernels and medium dough strength.[read_more text=”Learn More” href=”/?page_id=269″ target=”_blank” arrows=” →” style=”font-size:12px;margin-top:20px;”]
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What are the statutory grain classes of U.S. Wheat?

The U.S. defines wheat grain that, before the removal of dockage, consists of 50 percent or more common wheat (Triticum aestivum L.), club wheat (T. compactum Host.), and durum wheat (T. durum Desf.) and not more than 10 percent of other grains for which standards have been established under the United States Grain Standards Act and that, after the removal of the dockage, contains 50 percent or more of whole kernels of one or more of these wheats.[read_more text=”Learn More” href=”/?page_id=271″ target=”_blank” arrows=” →” style=”font-size:12px;margin-top:20px;”]
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What are the objectives of Canada’s official grain grading system?

Canada’s official grain grading system:

  1. Brands Canadian grain by assuring consistent quality for buyers;
  2. Stimulates ongoing quality improvement by relating quality to price;
  3. Facilitates fair payment to producers based on quality attributes; and
  4. Helps to inform production decisions
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What are the objectives of the U.S. official grain grading system?

To facilitate the marketing of cereals, oilseeds, and related agricultural products for the overall benefit of consumers and American agriculture.[read_more text=”Learn More” href=”/?page_id=275″ target=”_blank” arrows=” →” style=”font-size:12px;margin-top:20px;”]
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What are the requirements to receive a Canadian statutory grade?

Varieties that are registered and grown in Canada can be delivered into the grain handling system and be eligible to receive statutory grades.  Varieties grown in the U.S. can be delivered into the bulk grain handling system but the only statutory grade that can be applied is feed grade.[read_more text=”Learn More” href=”/?page_id=278″ target=”_blank” arrows=” →” style=”font-size:12px;margin-top:20px;”]
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Does Canada’s grain grading system facilitate sales on specification as well as statutory grades?

Yes, The Canadian grain grading system facilitates sales by specifications in several ways: [read_more text=”Learn More” href=”/?page_id=280″ target=”_blank” arrows=” →” style=”font-size:12px;margin-top:20px;”]
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Does the U.S. grain grading system facilitate sales on specification as well as statutory grades?

Yes.[read_more text=”Learn More” href=”/?page_id=282″ target=”_blank” arrows=” →” style=”font-size:12px;margin-top:20px;”]
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What are the key similarities and differences between the U.S. and Canadian grading systems?

The two systems are similar in that both systems establish official grades for all major grains, form a basis for transactions as well as facilitate price discovery and value communication.  Both grading systems allow for sales by specification.[read_more text=”Learn More” href=”/?page_id=284″ target=”_blank” arrows=” →” style=”font-size:12px;margin-top:20px;”]
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What are the objectives of Canada’s variety registration system?

Every country needs a robust seed system to guarantee the sustainability of its agriculture and to ensure that the products of modern plant breeding and local farmer ingenuity are widely available.[read_more text=”Learn More” href=”/?page_id=287″ target=”_blank” arrows=” →” style=”font-size:12px;margin-top:20px;”]
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How and why is Canada’s grading system linked to Canada’s variety registration?

In order to maintain a high quality standard for statutory grades, the variety evaluation and registration process is closely linked to Canada’s grain classification and grading system.[read_more text=”Learn More” href=”/?page_id=289″ target=”_blank” arrows=” →” style=”font-size:12px;margin-top:20px;”]
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What information should a broker who is not the end user of the product be aware of?

The CFIA has created an information kit for brokers that act on behalf of an importer bringing grain or seed into Canada. This document is available here: http://www.inspection.gc.ca/english/imp/kite.shtml[read_more text=”Learn More” href=”/?page_id=291″ target=”_blank” arrows=” →” style=”font-size:12px;margin-top:20px;”]
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What information should a broker who is not the end user of the product be aware of?

Anyone importing into the United States may want to refer to the U.S. Customs and Border Patrol (CBP) website for general information related to importing into the United States:[read_more text=”Learn More” href=”/?page_id=293″ target=”_blank” arrows=” →” style=”font-size:12px;margin-top:20px;”]
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What if the grain is to be re-exported from Canada?

For any grain or seed that is going to be re-exported from Canada, it is the exporter’s responsibility to ensure the commodity meets the import requirements of the destination country. [read_more text=”Learn More” href=”/?page_id=296″ target=”_blank” arrows=” →” style=”font-size:12px;margin-top:20px;”]
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What if the grain is to be re-exported from Canada?

For any grain or seed that is going to be re-exported from Canada, it is the exporter’s responsibility to ensure the commodity meets the import requirements of the destination country.[read_more text=”Learn More” href=”/?page_id=298″ target=”_blank” arrows=” →” style=”font-size:12px;margin-top:20px;”]
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Once the grain shipment enters Canada are there any additional conditions that must be followed?

In most cases, once a grain shipment has been cleared by Canada Border Services Agency (CBSA) on behalf of the CFIA, it can move within Canada.[read_more text=”Learn More” href=”/?page_id=300″ target=”_blank” arrows=” →” style=”font-size:12px;margin-top:20px;”]
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Once a truck with grain is in the U.S. are there any additional conditions that must followed?

Compliance with U.S. laws, including posted speed limits and other laws impacting transport in the U.S. is mandatory.[read_more text=”Learn More” href=”/?page_id=302″ target=”_blank” arrows=” →” style=”font-size:12px;margin-top:20px;”]
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