Let It Go

The Why and How to Change the Governance of the Canadian Grain Commission

This is my contribution to the debate about the governance of the Canadian Grain Commission (CGC). And when I say debate, I mean it’s not as heated as the colour of your farm equipment (or your football team), but it’s an important topic too. When you ask stakeholders for an opinion, you get one and this is mine.

The Call

I was quite pleased with myself when I got the call from Minister Marie-Claude Bibeau in December 2020 about my appointment as Assistant Chief Commissioner to the CGC. It is a stellar organization with a noble mandate, and there I was in the top section of the org chart - one of three commissioners that form the quasi-judicial body that administers and enforces the Canada Grain Act and regulates the grain industry.

I wondered if I would have my own bathroom. The Canadian Wheat Board (CWB) commissioners, as I remember it, had lavish offices with oak furniture and ensuite bathrooms. They were obviously important men.

As a new CWB hire in 1994, my interaction with the commissioners was limited to the odd briefing note or set of speaking points. One of them might sit down at the same table in the cafeteria. Whoa. That was kind of a big deal.

The CWB commission was ultimately replaced by a board of directors in 1998 with changes to the Canadian Wheat Board Act. I mean no disrespect, but I never heard anyone say that they missed the commissioners.

After my four years as a CGC commissioner, I have to say, it’s time for that commission to go too.

There are three main problems with the current governance model.

1. A three-person commission is too small to be representative no matter the permutation of appointees.

The grain industry is vast and complicated. With only three positions to work with, farmers and grain companies will always be disappointed and suspicious that the appointed commissioners do not have their best interests in mind or even know what they are.

And it’s not just the industry-farmer balance. There is also the political spectrum, the provincial ratio, the east-west split, and the 21 official grains. Given their growing numbers and unique risk profile, it is increasingly important to also include companies outside of Canada’s “big six”.

With a larger commission you can achieve a diversity of stakeholder representation and maybe even bring in experts and perspectives from outside the industry. Imagine that!

Agriculture has a lot of experience with larger commission-type bodies. I spent most of my years as a director with Manitoba Agriculture being responsible for the many provincial councils, boards, commissions, and tribunals that support the industry. They all administer and enforce acts. They all have between 5 and 10 members. And, importantly, they are all part-time.

2. Frankly, CGC commissioners have too much time on their hands.

I have talked to current and former commissioners and the big secret is that they struggled to keep busy. The core job of regulatory oversight takes up very little time for the commissioners (other than the Chief Commissioner/CEO, but more on that later).

They all had strategies to cope. I showed up at any industry function I could get into. I jumped at the chance to speak to any group who came through. But mostly I read and wrote in my lavish office (with no ensuite bathroom, alas).

These are not full-time jobs.

You know the adage about idle hands? The devil’s workshop at the CGC commission produces interference and influence. It is tempting for the commissioners to get too involved with staff and their work, and for staff to lobby commissioners.

This was true at the CWB, and it was true at the CGC.

3. If your chair and your CEO are the same person, that’s a problem.

Under the Canada Grain Act, the Chief Commissioner is also the CEO. This is a version of “CEO duality” and it is falling out of favour. Some governance theory says that having a combined chair and CEO can result in a concentration of power that leads to reduced accountability and oversight that in turn leads to mismanagement and unethical behaviour.

Brian Hayward says in his very readable book on board governance, The Great Chair, that he focused on the chair partly because Boeing separated the positions in 2019 following a number of plane crashes. He concluded that, “If splitting the role of chair from CEO is somehow connected to making sure planes don’t crash, then the chair must be important.”

The CGC Commissioners don’t keep planes from crashing, but I witnessed other kinds of crashes. The test weight debacle of summer 2023 comes to mind, but perhaps that’s a topic for another newsletter.

The COMPAS Report

I believe the closest we came to a change in CGC governance was the 2006 Standing Committee on Agriculture and Agri-Food response to the COMPAS report. I agree with a lot of what they said on governance.

The standing committee recommended a single CEO.

• Yes!

And they said that the CEO should have “a working knowledge of the industry … in addition to managerial and other skills.”

• Yes, of course. The CGC is an $80 million dollar, 500-person, two-union, service provider/research facility/industry regulator. You gotta have a pretty impressive resume to lead that kind of organization.

The standing committee recommended that the CEO be supported by three vice-presidents.

• Hell no! The last thing the CGC or any government bureaucracy needs is more layers of management.

What About a Board of Directors?

Those who would like to see a change in the CGC governance most often cite the board of director model, but boards of directors are for organizations with shareholders and members.

Think about the first two duties of a board: protect shareholder/member value and make sure the organization stays out of trouble. For the CGC, that’s covered. In today’s federal government, a department spends 10% of its resources just on internal and public reporting. (I actually don’t know the percentage, but it’s a lot.)

Sure, there are Canadian government organizations that have boards of directors, but if you look at them, they all have a large commercial function and operate at arms length. This was the case for the CWB. This is the case for an organization like Farm Credit Canada, which has a board of directors. This is not the case for the CGC.

If you love the commission, let it go.

I know there are many stakeholders who cling to the three-commissioner model thinking it better protects their interests. But the value the commission brings to the industry rests in its regulatory decision-making authority and dispute settlement responsibilities.

It could do a better job at that if it was larger, more diverse, and part time.

The commission needs to keep its fingers out of operations and focus on its mandate to, in the interests of the grain producers, establish and maintain standards of quality for Canadian grain and regulate grain handling in Canada, to ensure a dependable commodity for domestic and export markets.

If the door opens for changes to the Canada Grain Act, let’s make sure the door stays open long enough to let the three-commissioner model go.