Proceedings of the Standing Senate Committee on
Agriculture and
Forestry
Issue 6 - Evidence - Morning sitting
REGINA, Wednesday, March 25, 1998
The Standing Senate Committee on Agriculture and Forestry, to which was referred Bill C-4, to amend the Canadian Wheat Board Act and to make consequential amendments to other Acts, met this day at 9:03 a.m. to give consideration to the bill.
Senator Leonard J. Gustafson (Chairman) in the Chair.
[English]
The Chairman: Senators and ladies and gentlemen, I welcome you, senators, the Queen City of the plains and to Saskatchewan.
We are interested, of course, as the Agriculture Committee, in hearing the representations of the different farm groups as well as individual farmers on Bill C-4, as we did yesterday in Brandon.
Our first presenters this morning are with the Saskatchewan Association of Rural Municipalities, Mr. Neal Hardy and Mr. Jim Hallick. I will ask you to introduce yourselves.
I will ask the senators to introduce themselves first, where they are from and so on. Would you begin, Senator Hays?
Senator Hays: Thank you, Mr. Chairman. Dan Hays, and I am from Alberta and I farm near Longview.
Senator Fairbairn: Joyce Fairbairn from Lethbridge, Alberta, which is surrounded by farmland and cattle ranching, and we draw our strength from the agriculture community.
Senator Whelan: Senator Whelan from the deep southwest, every kind of farming in Canada, and I am glad to be back in Regina. I for 10 years I had an office on Broad Street not very far from here, the only minister -- I had better be careful -- who had a political office in Western Canada.
The Chairman: Len Gustafson, Macoun.
[Translation]
Senator Robichaud: My name is Fernand Robichaud and I come from the southeastern region of New Brunswick in the Maritimes.
[English]
Senator Chalifoux: Thelma Chalifoux, senator from northern Alberta, and I live in the bush.
Senator Taylor: Nick Taylor, also from northern Alberta. I also live in the bush and I grow oats and alfalfa.
Senator Stratton: Terry Stratton. I live just out south of Winnipeg and I have absolutely nothing to do with farming.
Senator Sparrow: Herb Sparrow from North Battleford.
Mr. Jim Hallick, Director, Saskatchewan Association of Rural Municipalities: Jim Hallick, director for SARM for Division 4, and I live in Sturgis, Saskatchewan, which is a mixed farming area.
Mr. Neal Hardy, Vice-President, Saskatchewan Association of Rural Municipalities: Neal Hardy. I am Vice-President of the Saskatchewan Association of Rural Municipalities. I farm in the northeast part of the province in the area called Hudson Bay. I am in the bush country and I have been Vice-President of SARM for going on my third term now.
The Chairman: Gentlemen, I will ask you to begin, we have a half an hour until 9:30.
Mr. Hardy: We are very pleased to have the opportunity to be here this morning to present to you, the Senate, our position on Bill C-4. I want to say thank you to all the senators who have came here to Saskatchewan to hear our opinions on what we believe needs changing in Bill C-4. We will bring them forward as we go through our brief presentation, then we will leave it for questions. I think maybe the questions will be more important than the presentation.
We handed out a brief which I will go through briefly fashion and then we will take it from there.
The SARM represents all of the 298 rural municipalities in this province through local governments and the interests of 210,000 rural ratepayers on municipal and agricultural issues. We represent them in many ways and one of the areas we have been representing them on more and more is agriculture.
Agricultural issues are very important to our organisation because the majority of our members are farmers. These producers are our taxpayer base. The price of grains and the opportunity to get them to market is one of SARM's functions.
There are a few areas in Bill C-4 that are of concern and I would like to touch on them this morning.
One of those areas of concern is how the president is selected. The president and CEO is the key person in any organisation. In a normal corporation the CEO is selected and hired by the president. Under the provisions of Bill C-4 the CEO will be appointed by cabinet, the minister, and therefore will be responsible to the government of the day and not to the board or to those who have elected the board and whom the board represents.
I just want to make clear why we feel so strongly that the CEO should be, at the minimum, under the control of the board of directors. The CEO is responsible for day-to-day operations and would normally take long-term direction only from the board of directors. If the CEO failed to carry out the directions specified by the board, the board would be free to replace him or her. The structure would resemble that of the Ontario Wheat Producers' Marketing Board, where an elected board of directors selects the general manager of their choice.
Under Bill C-4 as it is right now that would not be true. The minister would select the CEO and the board then could set his salary, which, according to the legislation, would have to be a reasonable one. But, more importantly, that CEO would report back to the minister. When you have somebody reporting back to the minister then there is no longer control by producers. I believe producer control is necessary to the longevity of The Canadian Wheat Board. That is one of the reasons we have recommended and we have told Mr. Goodale of our position. I would hope the Senate would give serious consideration to making sure, or at least recommending, that the board hires and/or dismisses the CEO. In any corporation, particularly where producers are involved, I believe it is very important.
We do not have problems with the terms of office as proposed. The only area is that we do not think there should be a maximum number of terms. We think that the producer should decide how many terms a person can serve.
It is really important that we get this bill through as quickly as possible, that we have our elections and that we get on with the changes necessary to make the Wheat Board work.
On election issues, we have talked with the minister and we support electoral districts. We think staggering directors' terms is a good idea. Only permit book holders should be allowed to vote. Candidates must be permit holders.
We really have some problems with the appointed board members. We believe that the appointed board members should have to meet the same criteria as the elected board members. We believe that among our producers in Western Canada, and in Ontario as well, there are certainly qualified people who can do just as good a job as anyone.
We were a little concerned about with the pooling periods. If you have too many closings of pools and everybody tries to get into one closing the board may not have long-term grain line that they need. The grain available will not be available and everybody will be trying to rush it in at once, filling up the elevators and trying to get into the pooling period they think is the best. We think that perhaps there should be only one pooling period but that it should be much quicker. One pooling period would give every farmer a better equal balance in receiving the best return possible.
We do not believe that there is a need for a contingency fund. The government. We think the federal government has some responsibility to us as producers in Western Canada. As the legislation stands, any contingency fund would come out of the producers' pocket. There should be some responsibility at the federal level to ensure such things as the guarantee of loans. The federal government, indirectly and directly, receives benefits from our $7 billion trade in grains. We feel very strongly that the contingency fund is not necessary and that is a federal government responsibility.
Times have changed and we believe that the Canadian Wheat Board must change too. A major revision in the Canadian Wheat Board's governing structure and the introduction of enabling clauses into the Canadian Wheat Board Act are necessary to allow the Canadian Wheat Board to continue to operate and to be accepted by prairie farmers.
With changes to this bill to allow for a CEO appointed by the board and reporting to the board and reconsideration of the provisions of the contingency fund Bill C-4 can transform the Canadian Wheat Board and allow it to continue to be an effective vehicle for years to come.
We must have full accountability to producers or I believe the Wheat Board's future will not be very good. There are people who feel that the Wheat Board is not necessary. If we do not make changes to give an opportunity for those people to take part in the Wheat Board we may not see its demise but it will certainly be in trouble.
Senator Stratton: I have been focusing on the contingency fund, in part because as I understand it there is a fairly substantial amount owing to the Wheat Board by other governments around the world that is guaranteed by the Canadian government. I think part of the reason they want the contingency fund is to spread the risk a bit.
If there is to be a contingency fund would you accept a compromise to the effect that there would be a cap on the amount of money contributed by the producers?
Mr. Hallick: Our understanding of the contingency fund is that it would only be used to cover interim and final payments, not for credit situations. We think that the government should continue to do this outside of the contingency fund so it would not have much of a bearing on the contingency fund.
Certainly, a cap would give us some comfort, but we still have a big problem with the contingency fund requiring more money from the producers. For example, in my area I probably average a little better than a tonne per acre and it costs me $55 to ship that west, $77 to ship east. Having to make contributions to a contingency fund would be very burdensome.
I think the federal government has some commitments in this area and I think that they should live up to them. We do not think that there is any necessity for a contingency fund.
I think that we can use the Ontario Wheat Board as an example. There is a situation where the producers are more autonomous than this bill allows us to be and I do not think the Ontario government has a problem in that area.
Senator Stratton: You did not talk about inclusion-exclusion.
Mr. Hallick: No, we did not address that. We feel that the inclusion-exclusion clause contributes to a lot of unnecessary debate in Western Canada and we would be in favour of pulling that clause because we do not think it is crucial to the bill.
Senator Stratton: You believe the board of directors rather than the government of Canada should deal with any additional products moving into the market?
Mr. Hallick: That would be the wish of producers, and when you have responsibility to a constituency you will do what that constituency directs you to do.
Senator Sparrow: You were saying that it would have to go back to legislation?
Mr. Hallick: If the enabling legislation does not provide it now it would have to go back to legislation for change, but that should be driven from the bottom up, not from the top down.
Senator Sparrow: From the producer to the board to the government?
Mr. Hallick: Right.
Senator Sparrow: The government would still have a say. It seems to me that there are three areas of decision: the producer, the board, and the minister. Would you agree with that?
Mr. Hardy: Yes, there would be the three levels: producer to the board and then to the government to ask for changes in the legislation to allow the board to proceed.
Senator Fairbairn: In this producer to board to government pathway do you see it as involving a vote among the producers who are directly affected?
Mr. Hallick: Most definitely. It would have to be a rather substantial vote of the commodity group involved.
Senator Fairbairn: Substantial?
Mr. Hallick: Probably two-thirds.
Senator Taylor: On the question of control of the CEO, I notice there is concern that it is by appointment by the governor in council, but the fact is that the board, which is dominated by farmers by two-thirds, controls the pay. Is that not a two-key system, one can name a CEO but if the other does not approve the salary can be reduced to a dollar. Is that not a good enough compromise to get what you want, which is a CEO acceptable to the farmers' representatives who run the board and also acceptable to the government because the taxpayers of Canada are putting up as much as $6 billion credit time and again. So each one could countermand the other and they have to reach agreement?
Mr. Hallick: We have some problems with that. If you have a corporation why do you not run it as a corporation rather than looking for a back way of getting control? This is a crucial point with producers. If there is even a perception that there is a loss of control the Wheat Board will be in dire circumstances. We already have one elected advisory committee. We do not need two.
Senator Taylor: Supplementary. Maybe what we have to do is get out to the producers more than we have that they do control the CEO's salary.
Mr. Hardy: Our concern is that the bill it says that the CEO would be paid an appropriate salary and expenses and all the rest.
Sure you say you can control the salary and maybe through a lot of hassle you will get a person changed. I think it is bigger than that. The producers, the elected board, should have the opportunity to select the person who they believe is best to represent them as their CEO, as their major marketing tool. The CEO directs the Canadian Wheat Board.
A board, as you know, is pretty ineffective if a CEO is reporting to a minister first and accountable to the minister first and to the board second. That really undermines any opportunity for the board to be run as a corporation and to represent their producers as they should represent them. We lose that opportunity to run that Canadian Wheat Board as a producer-operated board. That is our product that you are selling, it is us. I know about the government guarantees but the government guarantees a lot of things and they do it for a lot of reasons and I really think it is important that that CEO be selected, hired and fired, if necessary, by the board of directors.
Mr. Hallick: The other concern we have is that the CEO sits as a full board member. There are very few corporations where that is a practice and with the knowledge of and background in day-to-day operations the CEO has a great advantage over the other board members and can exert a lot of influence and control.
Senator Sparrow: It seems to me, Senator Taylor, that the bill provides for an adequate salary and there is no provision there for the board to change that. If they tried to they would be faced with a court case so fast that I do not think, in that aspect, there would be any provision for you to reduce his salary to try to get at or try to discipline the CEO. There is no provision for that, is that correct?
Mr. Hallick: That is the way we were looking at it.
Senator Taylor: Mind you this is always the case. When you fire somebody, whether it is somebody who is cleaning the offices or somebody who is running the offices, nowadays you cannot do it without running into problems if you get a good lawyer.
Mr. Hallick: We have some experience with that in Saskatchewan at the present time.
Senator Hays: I do want to ask some questions about the board but, before I do, if both provisions with respect to exclusion and inclusion are removed from the bill then you would find nothing in the bill that requires a vote. In answer to a question from Senator Fairbairn you indicate that you believe a vote would be necessary, and you have also given an indication of the threshold, but I just want to confirm that you are happy with the act remaining silent on that?
Mr. Hardy: We do not see it as a major problem. There is a group out there thinks there should be no Wheat Board at all. If you include the inclusion-exclusion clause all you do is make the situation much worse and by leaving it out at least you know which grains you are dealing with and you are not including or excluding any additional ones.
Senator Hays: Should there be provision for a chairman of the board?
Mr. Hallick: There are provisions for a chairman of the board now and that person is appointed by the board. The problem is with the CEO.
Senator Hays: So you think that it is not appropriate to leave the role of chairing the board to the CEO but rather to have that that as a separate executive function?
Mr. Hardy: In the proposed legislation the chairman is selected by the board and we are saying that is okay, we agree with that. The CEO, we say, must also be selected or appointed by the board.
Senator Hays: I would like to ask you about your position on the method of election, which would be a direct election from districts rather than with the buffer of a delegate election. A number of people who have appeared before the committee have expressed concern about the polarisation you referred to earlier about the Wheat Board that exists among producers and they give that as a reason for the government being the decision-maker in important issues such as dual marketing. They do not want this to be left to the board because they do not think a board can function effectively if it is saddled with a political job as well as the job of overseeing the running of the board.
Mr. Hallick: If you go to a delegate system it is just another level between the producers and the elected board and we have confidence in the democratic process. If it is good enough for the parliament of Canada it should be good enough for the Wheat Board.
Mr. Hardy: We do not think all producers would get equal opportunity to decide who they would like to represent them, so we prefer electoral districts, with representation by permit book vote.
Senator Whelan: A comment was made about the wheat producers in Ontario. I was one of the founding directors of that organisation and when we had meetings a lot of people came. I am concerned about what is happening there and how you will elect your directors.
Meetings can be packed , only a small percentage of the producers may be there and some of the directions of the Ontario Wheat Producers' Marketing Board have been changed, they will have two systems of sales, et cetera. I have strong reservations about how you will elect your directors. It must be defined so that each producer gets a vote, and I would favour by mail.
Mr. Hallick: That was part of our first submission to the minister, that it be a mail ballot or that elections could be held in the rural municipality offices where all of the producers are taxpayers, but most certainly the opportunity for one producer one vote must be there.
Senator Whelan: In one of the largest businesses in Canada -- $6 billion a year -- for years all the executives have been appointed and never once did they get in trouble, never once were they criticised for being corrupt, et cetera, so I have some reservations about elections. I have seen how in other organisations, when we first started them up, they would fight amongst themselves about who would be chairman, who would be president, et cetera, and some of the organizations would have disappeared if it had not been for ministers from the provincial governments moving in.
So I have a concern about how you will handle an election and appoint the chief executive officer. The bill clearly states that there are to be part-time directors. Are part-time directors sufficient for $6 billion business? Clause 3.02(3) stipulates that:
[T]he directors, with the exception of the president, shall perform their functions on a part-time basis.
Mr. Hardy: That is our concern. If you appoint the CEO -- the president -- and he is there full time, he runs the total operation and with our elected representatives only coming in part-time they will act more in an advisory role the president than really directing the operations of the board.
The CEO reports back to the minister and the board itself then becomes a part-time board, performs more of an advisory role rather than actually directing the operations of the Wheat Board. We think that is not the way to go if you want to retain the Wheat Board .
There are a whole lot of farmers out here who are very bright, who are very aggressive, who say it is time to make a change and if you do not make the change we will take action. We must look at the real world and say we will have to make some major changes and one of the changes has to be that the CEO is appointed by the board of directors.
Senator Whelan: Again I come back to the fact that they have all been appointed ever since the Wheat Board was created and it has been one of the best run corporations in Canada, so I have some reservations about saying there should be no appointments.
Senator Stratton: That is a matter of opinion, senator.
Senator Whelan: The appointment system has worked very well for the interests of the farmers of Western Canada.
Mr. Hallick: My comment would be, read the constituents today and see what the level of confidence is. We have got a major upheaval here and there must be a reason for it.
Senator Whelan: I do not want to leave the impression I am against being elected because I am a senator. I have spent 39 years in elected office, including a lot of farm organisations.
Senator Stratton: So, essentially, you are saying -- you have one permit per person -- if you have a corporation that has 13,000 acres and there are three partners in that corporation they get one vote and a guy with 900 acres, one owner, also gets one vote.
Senator Sparrow: Do you read the proposed legislation as saying that there would be one, two, three, four pooling periods? Is there not a danger there of triggering the contingency fund? If you pool the first half of the year and then the prices drop to rock bottom the contingency fund would come into play.
Mr. Hallick: That is one of our concerns. If you have three or four pooling periods in the year you might as well sell at the market because that is basically what you are doing. Our concern on the pooling side is with the delay after the pools are closed.
For example, the pool closes July 31 and we get our final payment January 1. This is a problem. We are either losing interest or we are paying interest. The same thing with interim payments. If you look at the durum situation last year, when the prices were going up significantly, we were having a time lapse of three to four months before an interim payment came in and we have some difficulty justifying this. Surely we can count our beans faster than that.
Senator Sparrow: So are you suggesting one pooling period?
Mr. Hallick: Yes.
Senator Sparrow: Okay. You are referring to a major upheaval, and I do not think that is a great exaggeration, I think there is a potential for a major upheaval, at least in the agricultural community. Is time of the essence in this bill?
The provision is that an election shall be held by December 31. Is that realistic? When do you think the bill would have to be passed to make it possible to have the election conform with the December 31 deadline?
Mr. Hallick: It is our view that time is of the essence. When you have a new board you will have a pretty extensive orientation period to get up to speed and if you want to have it in place for the next crop year you cannot be much later than that.
Senator Sparrow: If this upheaval that you are referring to is out there maybe even a year's delay would be helpful rather than harmful. The Wheat Board, I think you agree, has in fact operated relatively well throughout the years. There should be changes, but are we rushing those changes?
Mr. Hardy: I believe that we need to have it in place for the next crop year, not the 1998 crop year, but the 1999 crop year. We need some time to have the elections, we need some time for orientation and to get up to speed, so I think it has to be through the House as quickly as possible so that they can get on with the process of setting it up.
Time is of the essence. Change is also of the essence and the two together are very, very important.
Senator Sparrow: So change is of the essence. I guess what concerns a great many farmers out there, as least those who come to me, is that the Wheat Board has been so secretive in its dealings that the farmers, who they presumably should represent, feel that they are not being represented. They feel that the board is an agent of the government and that it is not responsible to the farmers, it is responsible to the government.
How can we get into the bill some type of access to information. Are you concerned about access to information?
Mr. Hallick: I have just a brief comment. We all appreciate the commercial aspects of the operation, and there has to be some confidentiality in that, but I think you would have some comfort in the farm sector if they were assured that there was at least complete accountability to the board, and that the board was responsible to their wishes. We cannot open our kimonos to the whole world, but we would at least have the comfort that the board was satisfied with the operation, which is not the case now with the advisory committee or anyone else.
Just to comment on your question of delaying it for a year, I do not think that that would diffuse the unrest out there; it would just add to it. The time limits of this bill are very urgent.
Mr. Hardy: Mr. Chairman, I just wish to thank the committee for allowing us the opportunity to present our views. We really appreciate it.
The Chairman: Thank you, Mr. Hardy.
We will now call upon the Honourable Eric Upshall, Minister of Agriculture and Food for the Province of Saskatchewan.
Will you introduce your assistants, please, Mr. Minister?
The Honourable Eric Upshall, Minister of Agriculture and Food, Government of Saskatchewan: Certainly, Mr. Chairman. I have with me this morning Mr. Ernie Spencer, Assistant Deputy Minister, Department Of Agriculture and Food, and Mr. Jim Stalwick, Manager of the Policy Branch of the department.
Good morning, honourable senators. First, I should like to say that we appreciate your being here, because this is an important issue, and is one that has been talked about for a long time and will, I suppose, be talked about well into the future.
If I may, I will take about ten minutes to give you a quick overview of our position, following which I think the question and answer period will be most productive.
The majority of Saskatchewan farmers want a strong, effective Canadian Wheat Board to act as their agent for wheat, durum, and barley for both domestic human use and export markets. The benefits of the CWB have been well documented in a couple of studies. The Kraft, Furtan, and Tychniewicz study indicated that the Canadian Wheat Board provided about $375 million annually to farmers. The report covered the period between 1980 and 1994 and it noted that in the fluctuating years, when prices were low, under the board a benefit accrued to producers, and when prices were high they also enjoyed a benefit, because the CWB could get maximum prices from the different markets quite effectively.
The Schmitz, Gray, Schmitz, Storey study found that an average annual benefit of $72 million for barley growers was due to the Canadian Wheat Board.
Saskatchewan wants to see a strong and strengthened CWB with the necessary tools to be an effective marketer. With its amendments, Bill C-4 makes many, but not all, of the changes necessary to the act to give the CWB the needed additional tools to market grain. In our previous submissions on the amendments, the Government of Saskatchewan outlined a number of additional changes that would, in our opinion, improve the tools the CWB needed to market grain while maintaining its fundamental principles.
In this submission we ask for a number of improvements, and I will just highlight them:
that the board of directors select the president;
that the inclusion clause be clarified to make it workable -- that is, strike the clause where the inclusion clause is initiated by a commodity association;
that a capital fund be authorized to allow the board to be competitive in world markets;
that parameters be included for how cash buying should be utilised;
that the pool period be maintained as the crop year;
that the contingency fund be made an individual equity fund for producers;
that producers access final payment through loans or cash advances.
We would ask the Senate committee to review our previous submission on each of these points. We would support amendments to Bill C-4 to address these issues, but only if it does not unduly delay the amendments. Other parts of Bill C-4 give the CWB powers they need as soon as possible. The democratically elected board of directors that will result from these amendments needs these tools to operate the CWB. We have to rely on the elected board to operate in the best interests of farmers. I can elaborate on that in the question period.
With respect to their views, producers have had the opportunity to provide input into the amendments to the Canadian Wheat Board Act through the Western Grain Marketing Panel and through two sets of standing committee hearings in the House of Commons. In fact, no agricultural issue in recent history has had as much debate as this issue. In our view we have all the information we need to make decisions on Bill C-4; everyone has had the opportunity to speak; it is now time to get on with making the decisions.
The majority of farm organisations and farmers support a strong Canadian Wheat Board working effectively for producers. You will hear some groups or individuals following their own agenda and, I believe, not representing the views of the majority. Most Saskatchewan farmers want an effective CWB that can get the top price for their grain on world markets. That is why it is fundamental to the CWB to get those amendments passed.
Saskatchewan has made two submissions to the Standing Committee on Agriculture and Agri-Food. Those submissions clearly outline our views on the CWB and they outline the changes we propose. We ask the committee to look at what we proposed in those submissions.
With respect to the exclusion and inclusion clauses, the act is enabling legislation; it outlines in broad terms the powers and duties of the CWB to effectively market grain on behalf of producers. We have supported giving the CWB the ability to market additional crops, if that is the wish of farmers. In our first submission to the Committee on Agriculture and Agri-Food we called for a provision to allow the CWB to market other crops on a voluntary basis and under a full central-desk status.
We continue to support giving the CWB the ability to be a volunteer marketer of additional crops. Legislation relating to the inclusion clause under full central-desk selling is, of course, enabling legislation. There are a number of steps that would have to occur before a crop could be added or deleted from the jurisdiction of the CWB. To withdraw the inclusion clause, however, would preclude any attempt or steps to add crops to the CWB's mandate. It would be neither wise nor balanced to deny the industry the ability to add crops when the ability to take away crops is enabled by legislation.
Our preference is that the process for inclusion and exclusion be parallel. We would prefer the inclusion clause to be changed so that the wording is the same as the exclusion clause, based on the decision of the Canadian Wheat Board's board of directors and a producer vote.
I will touch on dual marketing for a moment. This committee may hear calls for freedom of choice for dual marketing, but freedom of choice, and I want to be very strong on this point, has to include the choice of the CWB as a central-desk seller, which by definition includes compulsory marketing powers.
The CWB gains its marketing power and its ability to capture benefits for the prairie producers because it has compulsory central-desk selling powers. In a dual market, the it would lose the opportunity to capture this benefit, and would not survive. The choice is not dual marketing and the Canadian Wheat Board; the choice is dual marketing or the Canadian Wheat Board.
What would happen in a dual market system? Let me just quickly touch on a few points. First, there would be no premium. Having many Canadian companies trying to sell in export markets will result in an acceptance of the tender from the one who can supply the product at the lowest price. There would be no opportunity for The Canadian Wheat Board to capture a premium in those markets that might have been prepared to pay more for a high quality product.
There would be no supply, in that there would be no way to be assured of a reliable supply of grain, which was the basis of the CWB's most profitable long-term deals. It would be easy for the private trade to make sure the CWB could not get grain; they would just have to set the street price at slightly below the CWB's projections.
It would be the end of pooling. In a weakening market the CWB would get all the grain, which would result in lower pool returns and might create a significant problem with deficits. When prices were rising, the tendency would be that the CWB would get very little grain because people would be trying to capture the street price, which probably would be rising ahead of the CWB's initial price.
Quality standards would be lost. Losing the single desk would also mean losing the ability to segregate markets that are prepared to pay a premium for quality. Without premium coming into the pools, producers would have less incentive to grow quality grains, and the quality control system in Canada would be very difficult to maintain.
There would be a dependence on competition for service. The CWB does not have an elevator gathering system in the country, nor does it have terminals or loading facilities at the ports, so it would be very difficult to compete with companies that do. Those companies would make absolutely sure that their business was done first and that the CWB's was second.
There would be a loss of government partnership. The private grain trade would demand that any perceived advantage, such as government financial guarantees, be eliminated so that there could be "real" competition. The government's financial guarantee is worth $80 million to prairie grain farmers.
Finally, there would be a loss of equity. The Canadian Wheat Board system works because there is equity. If there is a waiting period for delivery or for payment, everybody waits equally. The dual market system will boil down to satisfaction with the street price, and the integrity of the CWB will be gone, because it can no longer equitably distribute market access.
So dual marketing is just a fancy way of saying, "Let's eliminate the Canadian Wheat Board and go back to open marketing."
There will be a transition period. Bill C-4 provides for the CWB to move from a structure of commissioners and producer advisory committee to a board of directors and a president with the associated management structure -- or democratising the board, as you say.
We want to see a deliberate process in place to assist the new board to "get up to speed" and one which allows for the responsible transfer of corporate knowledge. The experience and expertise of the current commissioners will be invaluable in providing continuity and confidence among farmers and customers. We would propose that they have a continuing role on the board of directors and/or in management positions. The current advisory board has built up an understanding on these issues that the new board will be involved in and should pass that information on.
In conclusion, while Bill C-4 has shortcomings, we must re-emphasise our basic message that it is essential that the legislation gets passed by the federal Parliament as soon as possible. The CWB has been weakened by the failure of past federal governments to give it the tools needed to respond to the problems in the barley market and the changing needs of farmers. The ideological attacks on the CWB have taken their toll as well. The CWB must be allowed to concentrate on building relationships with producers and being an effective marketer of prairie grain.
The committee should look at the changes that the Government of Saskatchewan proposed last year on Bill C-4, but it must also ensure speedy passage so the CWB can get on with marketing grain with the tools they need.
Farmers will be electing the majority of the directors under these amendments, and I am confident we can rely on these elected representatives to look after the best interests of farmers.
Thank you, honourable senators. I would be willing to answer any of your questions to the best of my ability.
The Chairman: I have one question before we go to Senator Fairbairn.
Honourable Minister, this is hypothetical, but if Alberta or Manitoba were to opt out because they did not feel there were enough choices in the Canadian Wheat Board for their farmers, would the Canadian Wheat Board survive?
Mr. Upshall: That is a very good question. Probably not, but it might survive in some semblance. I will tell you why.
Opting out, whether it be by province or by producer decision, will mean that you automatically lose the premium on the portion or the volume of the grain that is opted out, because the CWB then becomes, or is, a competitor with that grain from the same region.
Once that grain is through the system, and let us assume it can get through before the end of the year, the CWB can then go out and, being the sole marketer of the grain that is left, get the premiums. So the question becomes: "Why? What is the purpose? Is it an individual gain? Is it a political gain?" What we have to look at here is the gain of the region.
We are competing against the U.S., Europe and Australia, and if we do not start looking or continue to look, as the CWB has, in other areas as a region, at what is best for this entire region economically -- that is, all the farmers in our region -- then I do not think we are doing a service to the region, and opting out would be a disservice.
The Chairman: Mr. Minister, how do you read the cash purchase area in the bill?
Mr. Upshall: We put some red flags on cash purchasing. I think cash purchasing of barley is necessary.
If you remember, I think it was in the fall of 1996, there was a Japanese sale that was due to be shipped, but because at that point in time the street price was escalating the CWB could not access the grain. Had they had the ability then to cash buy that grain, they could have done so immediately and got the shipment away. They did manage to do that through a lot of work, but it could have meant that we shorted that shipment, and that would mean that the buyers would not look on us as favourably as they have.
The second point I want to make is that the cash buying of wheat is something that we are not sure is necessary, but since it is in the bill we think that, if you elect the board of directors, they must have control. This is enabling legislation, so, and I want to underline this point, if we are going to democratise the board, we really have to let them be in control. If you put too many handcuffs on them, what is the point of electing them?
Let us put the enabling legislation in. We agree there are some weak spots, but I have the confidence that the people of the region can elect people who are qualified and can learn, if they do not know now, how to return this organisation. Let us give them some leeway.
Senator Fairbairn: In your brief, you outline the improvements that you had been asking for previously; one of them was to make the contingency fund an individual equity fund for producers. Could you just elaborate on that for us?
Mr. Upshall: The problem with the contingency fund is that we do not know what it is yet. Let me outline some of the concerns that we have.
If you have contingency funds taken out of the pool, or the farmers' money, then in some way you have to be able to keep it fair. If you allowed forward pricing, you could be in a situation where those who forward-price and cause a deficit to the pool are being subsidised by the rest of the producers who are putting that money in the pool.
If you made it an individual account, then the initial amount of the money, or the seed money, wherever it came from, could be allocated individually. If I did not use up my contingency because I did not forward price, did not lose, then I would be entitled to that money as opposed to someone who might do it every year and cause a deficit every year. In other words, if you make it an individual account, I think you put more responsibility on the producers to be cautious of their hedging and to make sure that they know what they are doing.
There has got to be some risk. You cannot build a system where one individual's risk is minimised by the fact that the rest of the individuals are in the same pool as far as money is concerned.
Senator Fairbairn: In your brief you talk about the importance of the current commissioners; you say that there should be some transitional period in which their knowledge of the operations of the Canadian Wheat Board would be very helpful to a newly elected group, a majority board of elected members. How would you see that and what form would you see that taking? Would you want that in the bill or would you want an understanding that there would be a temporary phase? Just exactly what did you have in mind in that supportive role that you see being important?
Mr. Upshall: Well, I do not think it is necessary to have it in the bill. This portion of the presentation, I think, could be labelled as sort of the common sense portion. Would it be necessary in regulation? Probably, in order to have some kind of consistency. That regulation, I think, would include the transition from one election to the next election and how the board would turn over. I am not writing the regulations here, but I think you understand what I mean. I will tell you why.
We have three commissioners now who travel this world. I have done a fair amount of this myself, and I suppose many of you have too, in building the relationships that you need in order to do business. The number one priority is establishing that respect and rapport. We have that with the current commissioners. We need to maintain that if we put a new system in place or have the board of directors replace those people; I do not know how it will unfold or evolve, but we have to maintain that respect or that trust. The reason we put this in is that we think those people have that, and they are the first people, the first line.
The second line is the advice from the advisory committee. I know that if I were elected to the board as a producer I would want that. I think I know a fair amount about the board, but I only know very little compared to what there is to know. Each one of us in this room only knows so much compared to what there is to know, but the commissioners know that, and the directors have the second model, I believe, on that.
So you have to maintain the common sense of a transition, a smooth transition, to do one thing, to maintain the credibility of the organisation in the world markets.
Senator Fairbairn: How long do you see that extending? Would you say a year or beyond a year, or what period?
Mr. Upshall: Do I hear three? We could start bidding here. I think the only way to judge that is with the response of the consumer. If you are getting satisfaction from the consumer in a year, then fine; if they say that the elected board and the people who are serving them are satisfactory, then you can make the decision at that time. If you do not feel that comfort as a sales agent, and you are the agent, then you had better wait a little longer. I cannot answer as to the time frame; I am just saying that that is something that you will have to judge as the evolution of the democratisation takes place.
Senator Fairbairn: We have had varying opinions on how the election should be run for the members of the board, whether it is a straight-out district election, or whether it is done through a delegate selection process. Do you have a view?
Mr. Upshall: Well, I have seen the intent, the lines that have been drawn. I think that we have to have a ward type of system rather than an at-large system, because, that way, you have each region represented. You have to have caps on spending so that money does not influence the final outcome. In that way I think we can get a board that will be responsible.
I am not sure I have answered your question. I would prefer a ward system, with the people representing us being elected in a region. In any event, in the view of my staff, that is a very good point, and the key to governance is the individual producers taking ownership of the board. We think that that is the key.
Senator Stratton: Welcome, Mr. Minister. Thank you for coming. I liked your comments on the contingency fund. I believe, like you, that there should be individual risk and individual accounts for contingency, but that is the first I have heard of that; I think it is an excellent idea.
If we go on to the dual marketing or opting-out, in Brandon yesterday there was quite a group that really wanted the option of opting out, to the degree that we heard from one farmer in southwestern Manitoba that, in his current crop year, he is not going to grow any CWB crops; he will deliberately go into other crops that are not marketed by the CWB so that he will not have to deal with the CWB.
Our researcher has informed me that, as of March 5 or 6, the Ontario Wheat Producers' Marketing Board has allowed off-board marketing or off-board sales to the U.S. They are saying it is not a dual marketing system, but it allows the producer to sell his produce off board, but to the U.S. only.
Our concern is that, if farmers are willing to go to jail for the opportunity to market their products in the U.S. off board, then how do you respond to that kind of push and thrust that is happening despite the monopoly position of the board?
Mr. Upshall: I have talked to many people in the U.S. about this and I just start by saying that I think we are seeing a small move, or change of attitude, in the U.S. towards sort of getting rid of the board. The question becomes what will the U.S. accept in terms of movements down.
My question to the U.S. Ambassador was, "Would you sooner deal with a single agency in Western Canada that you could go to Ottawa with, to talk about volumes being shipped to the U.S., or would you sooner deal with 120,000 producers?" We all know what will happen as we hive off those individuals who are shipping to the U.S. As the volume increases, the cry from the U.S. producer will increase to shut the border down. The U.S. is one of our major trading partners. That action will cause another reaction, which will cause still another reaction, which does not make sense in terms of trade.
Senator Stratton: When you see how determined these people are, and they are really determined, and when you see the Ontario Wheat Producers' Marketing Board doing exactly that, you have to wonder why Manitoba or Alberta, or whatever province, would not form its own marketing board and do exactly what Ontario has done. That, to me, is the thin end of the wedge; that is my real concern.
No producer that we talked to yesterday wanted to do away with the board; they wanted the ability to opt out. They did not want to do away with the board; they recognised the strength of the board. Of course, if the board disappeared, some of them would not really care, but they were not setting out deliberately to get rid of the board. Some of them wanted to be able to opt out, but they still believed in the board.
When you have this kind of push happening in Ontario, it is a little scary, because, as the chairman has said, what province will be next? The point is this: How can we allow that to happen while still protecting the board and allowing it to survive long-term? That is my fundamental question.
Mr. Upshall: You protect the board in the long-term by maintaining the marketing monopoly in the region. Anything other than that undermines the ability to attract premium prices.
Ontario, when they are talking about their changes, will be doing it, I believe, on export only.
Senator Stratton: U.S. only.
Mr. Upshall: Yes, the U.S. only. However, in this western region, where the product is different for the most part, as soon as you start hiving off anything, that amount will compete with your ability to get premiums, and you will get the street price.
It is a fundamental principle of trading -- the price is the price is the price is the price. The price is the ordinary price, unless you have a reason to get a better price, and the board does that through tools that they have at their disposal.
Senator Whelan: I agree with what you said about the Wheat Board <#0107> i.e., what a great job it has done and the importance of it -- but I am concerned about the unrest that has been created in the sectors of grain growing, lentil growing, oilseed growing, all these things that have taken place. Some people have suggested to me that the amendments will weaken the Canadian Wheat Board and give private companies, such as Archer Daniels Midland, an opportunity to exploit Canadian farmers. Do you think there is any evidence to suggest that that may be so?
When I dealt with the secretaries of agriculture of the United States of America, they said that those grain companies were so big that they could not do anything with them. Now I fear these people taking over.
Archer Daniels Midland was just fined $100 million. They also are involved in a $600 million lawsuit by the federal government. I am concerned that these people are causing some of the unrest and demanding that this marketing system be changed. Are they working in the rural parts of Western Canada to do that kind of thing? Have you any evidence of that?
Mr. Upshall: Very little direct evidence. One company, I think it was Cargill, made a public representation to participate in the barley vote.
I am not one to blame these companies. They are in business to do business for the best interests of their shareholders. If they are allowed to do that in Western Canada they will do it, and why would they not, because they are in the business of making money for their shareholders and their owners, in Cargill's situation.
It is our responsibility to determine if that system is the best system for the producers of this country, this region. If it is, then we can throw it wide open. I believe it is not simply because of the reasons I have stated.
The fundamental question is: Does the right of the individual, no matter how vociferous, override the rights of all the producers in the region? That is what this discussion is all about. Does my individual right to go broke if I want override the rights of the economics of all the producers in the region? I say that it does not. I say that the region and all the individuals in it, collectively, have the right to achieve a higher price, and the individual is second, and I think the courts agreed with that in the court challenge.
The Chairman: The reality of the situation is that south of Regina ConAgra is putting in a plant; possibly 15 spots in Western Canada. Archer Daniels Midland are buying a large percentage of United Grain Growers, and now United Grain Growers have just bought the plant at Stoughton; the French company, Diffuse Canada, have announced that they are putting in three plants in Saskatchewan.
There are two sides to this. One is that it indicates confidence in the producers and confidence in the industry; it also allows for access to the global market. So I do not see this as all being bad. I am trying to balance what Senator Whelan was saying, but is this all bad that we have this? It would appear that these companies view the industry of agriculture in Western Canada as having great potential.
Mr. Upshall: There is one more thing that it could mean; that is, that they see an opportunity within the region of a growing margin for their company, and that we will buckle under the adversity caused by individuals and a few groups to destroy the board. This would allow them to capture, then, that growing margin for their company. I think it is both.
They see an opportunity here. I have talked to most of them and welcome them here, but it is up to us to decide whether we hand over that margin to them or maintain it and retain that premium for the producer.
Senator Andreychuk: Thank you, Mr. Minister, for attending our committee meeting and continuing the long tradition in Saskatchewan of having ministers come to federal Senate hearings.
There is a mood out there, and attitudes and opinions sometimes are based on fact and sometimes not; but they become ingrained and take on a life of their own and can, in fact, become facts in the end, self-fulfilling prophesies in some ways.
Am I correct, in your assessment, that if the bill is passed it will diminish that activity amongst a certain segment of the farmers; or will it, as some other people say, only inflame it and cause continued difficulties?
Mr. Upshall: I think the passage of this bill will throw the ball firmly into the hands of those people who are elected to run the board. Hopefully, the tools they have been given through legislation are the tools, hopefully all the tools, they need to restore confidence to those disbelievers.
Will the debate and the argument ever stop about those people who want to get out of the board? No. It is philosophical; it is more philosophical than monetary, unfortunately. Nevertheless, this bill is enabling; it will allow those people who are elected by the producers to take ownership on behalf of the producers and prove to the world that they can do the job.
That is why we cannot have handcuffs put on; that is why we cannot have the exclusion clause only. You are putting one philosophical opinion forward. On the other hand, if you had an inclusion clause only, you would be putting another philosophical point of view forward. You have got to have them both.
You must let the board have equal opportunity, or inclusion/exclusion, to determine what is best for this business, a $6 billion business of making profit for the shareholder, which are the 120,000 producers who are shipping grain to them. They will have to prove it, but let us give them the tools; they have not been given the tools in the past.
The people who say "do nothing", in my estimation, are saying "do not give the flexibility". I think that would be as hard on the board as anything, as removing or going to a dual market system. If we want to democratize, let us give them the opportunity, with the tools they need, to satisfy the needs. If they do not, then we have the opportunity to elect somebody else or add more tools.
Senator Andreychuk: If I go back to the culture and the history and the philosophy of the times that I grew up with in this province, the Canadian Wheat Board was there to serve the farmers. It was never imposing an interest on the farmers; it respected what the farmers could do for the rest of Canada. I do not see that mood changing anywhere. The difference may be how we accomplish it.
How can you say that it will be democratically run and that they will be able to have that dialogue with all the farmers that they need to have, if the board cannot control who it gets as its chief executive officer directly?
Surely, as you know, Mr. Minister -- I will be as frank as you -- if you did not have control over your deputy minister and all of those professionals around you, and if in fact they were appointed by somebody else, how effective would you be, when that is really your knowledge base, your management base?
Mr. Upshall: Yes, I agree with you.
Senator Andreychuk: Okay. I wanted that on the record clearly. Why, then, has that message not gotten through to the minister and the officials who drafted the bill if they are so interested in having the democratic system and having those rights entrenched for the benefit of the farmers?
Mr. Upshall: You would have to ask those people.
Senator Andreychuk: I suppose my question is: Have you asked the minister?
Mr. Upshall: As the government, there is a tendency, as you all know, to keep things under control, because if it is not in your control you will get blamed for it anyway. So you may as well have it in your control if you get blamed for it. We put forward a solution.
Let the board select the CEO and let government have veto power. If what the CEO is doing is not in the best interests of the country, then that person may have to be removed, even though he or she may be serving a four-year term. There may be times when the government may have to use veto power. I think we put that forward in the first or second presentation that we made to the board.
So give the people who are elected to the board the power, but the government may have some function if things start falling apart, so have a veto.
Senator Andreychuk: So what you are saying, then, is that you do not believe that the democratically elected board would conduct itself reasonably but that a democratically elected minister would act more responsibly?
Mr. Upshall: Not at all.
The democratically elected board has the power to run the Canadian Wheat Board. If something happens wherein the government, for whatever reason, felt that a decision by the board was not in the best interests of this whole region, then, the government must ensure that the region does not get destroyed or that the economic process does not get destroyed; not hands-on, but just overseeing.
I think the elected body will do a good job. Do I think that at some point in time maybe something will happen? I do not know. All I am saying is that when you are building a system you have to build in the safeguards.
The Chairman: Honourable Minister, thank you for appearing. You may make one last statement, if you wish.
Mr. Upshall: My statement is: Thank you very much for carrying out these hearings across the country. It is important.
Even though we have debated it and debated it, I think we are coming to a conclusion of another stage in the life of the Canadian Wheat Board, and I believe it is important to get on with the show. Hear people out again and make your recommendations, but let us not drag it out. If we make the change to democratizing the board, let us do it and get on with it.
The Chairman: Our next witnesses are from the Saskatchewan Organic Growers. We have with us Mr. Dorwart and Mr. Krueger.
Please proceed, gentlemen.
Mr. Ray Dorwart, President, Saskatchewan Organic Growers: I am from Lampman, Saskatchewan; Erwin Krueger is from Estevan, Saskatchewan.
I would like to thank the Senate committee for giving us the opportunity to give you a brief rundown on some of the day-to-day operations of organic farming and the importance of being able to operate without any restrictions from the Canadian Wheat Board.
I am currently the President of Saskatchewan Organic Growers, Chapter No. 1. We are certified by the OCIA, which is an international certification body, recognized and respected world-wide. Our chapter is also one of the most respected and known OCIA-certified chapters in the European market because of the quality of our grains and the strict controls used in growing and handling.
It would be a near-impossibility for the Canadian Wheat Board to keep up the integrity of the various grains being sold in any or all countries, even our own. All our products are meticulously recorded and handled. At any time now or in the future, these products can be traced from the shelf back to the carrier, through to the processor, the original grower, and the bin that it was stored in, as well as the field it was grown on and the year it was grown. Records show how the organic product was grown, what previous crop rotations were used, and if any green manures were used for plough-down.
Inspectors come to each and every farm and inspect our equipment, handling, storage, our yard and field conditions, and make sure that each farmer is capable of using the procedures for growing, handling and storage of their products, all the while keeping the integrity of the product. There are guidelines for buffer zones around roads and neighbouring farm that may be using conventional means for growing crops. Records are also inspected to see that they are following the proper steps in all areas. If any of these steps are not followed, certification is nullified for that farmer.
We are indeed a grass-roots organization and would like to remain that way. We have, up to this point, beaten all odds and criticism that we were only a passing fad, although all this can and will come to an end if we are forced to be under the control and structure of the Canadian Wheat Board.
We take great pride in knowing that we are playing a big part in sustaining the environment that our grandchildren will be around to enjoy. Although this is our first and foremost priority, we still need economic value to keep operating in this fashion.
It takes us two years to grow the same crop that it takes the conventional farmer to grow in one year. All this is achieved by not using any government funding or handouts. We are not a drag on the taxpayers of this country. What politician or company person would not be elected or promoted to the top of their field if they run their business on their own resources, produce top-quality products without harming the environment, without any cost to the taxpayers of Canada. Do the people of Canada, or the Minister of Agriculture, know the true benefits of organic farming industry?
Again, we do not want any help; just leave us alone to operate freely without controls over our products the Canadian Wheat Board did when we first began to farm organically.
We are in no way suggesting that the Canadian Wheat Board be abolished. It is my belief that Ontario is, or will be, operating under a dual marketing system and that system can certainly work for the organic farming industry also.
Organic growers are much the same as seed growers, and the latter do not operate under the control of the Canadian Wheat Board. The difference is that we, indeed, have stricter regulations and therefore have more reason to be excluded from the Wheat Board monopoly, more reason to have the right to sell our own grains individually and independently and to have the right to opt out.
The majority of our members have now since stopped growing Canadian Wheat Board-controlled grains as they cannot deal with expensive buy-backs. Barley deals have been lost at enormous risk and in money-losing sales. The problem is that many of these controlled crops are very essential to our crop rotations and all play a big role in soil fertility, crop diseases, pest and bug control, and the list goes on.
A government panel was put in place two years ago to listen to growers, process and marketing agents in Western Canada and make recommendations based on their findings. It was their opinion that it was in the best interest of all organic growers to be exempt from the control of The Canadian Wheat Board. I trust that, with your own personal discussion on this matter, you will also find yourselves in favour, for operating under the Canadian Wheat Board would be a grave impossibility.
After a meeting on November 19, 1992, I noted after the minutes that "it was unanimous that organic grain sales be exempt from the Canadian Wheat Board jurisdiction.
I truly thank you for your time and patience and hope that I was able to shed some light on this very delicate matter. I will try to answer any questions you might have.
The Chairman: Mr. Krueger, do you care to make a statement?
Mr. Erwin Krueger, Secretary-Treasurer, Saskatchewan Organic Growers: No, I am just supporting Ray here, so if there is something I can help him with in the questions, I will. But other than that I have nothing more to say than what he has said.
Senator Taylor: The Wheat Board markets so much grain, what percentage of it would be organic: something like 1 per cent or 10 per cent?
Mr. Dorwart: I do not have the actual figures, but I think it would be about 1 per cent.
Senator Taylor: So you would hardly shake the world if you got out on your own?
Mr. Dorwart: We are growing every year, and the demand seems to be outgrowing our production, but it is still a slow process to get people involved and educated.
Senator Taylor: So you do not have visions of 15,000-acre farmers suddenly switching over to organic and using it as a loophole to sell?
Mr. Dorwart: No, organic farming is vastly different from conventional farming, and most farmers have been farming the way they have been farming for years. Farmers who convert to organic farming are compelled to grow little or nothing for the first few years. For crops with high weed infestation it takes a long time to get the land cleaned up, and they would quite likely have a good chance of going bankrupt by making that transition. You have to really believe in organic farming and slowly convert to it.
Senator Stratton: It is really a niche market.
Senator Hays: I think that the potential for organic products is very great; they have a bright future. Maybe you could elaborate a bit for our benefit about that time when organic crops were exempt from the board, and how it happened that the board changed its mind.
Mr. Dorwart: I guess at the start that it was just kind of a small group of people who wanted to look after their own needs, be healthy and have a glow about them.
The Canadian Wheat Board, from my understanding, just did not bother getting involved in any way whatsoever, for organic grain sales were not going to amount to more than a per cent of a per cent probably.
Now, in this last year or so, organic growers and producers have been starting to get letters from the Wheat Board saying "We see that the sales are booming; you guys are growing some crops out there; your quality is there; your production is there, and now we would like to be involved. At no point in time did we ever say that you were exempt from us, but now we want to make sure that you guys start paying us."
Senator Hays: Was there a criteria, in those early days, of what constituted an organic crop? Maybe there is a solution now in the relationship of organic growers to the board, in terms of them having the flexibility they need to market their crops. Perhaps it could be tied to a criteria that the board could live with?
Mr. Dorwart: Yes, there has always been a criteria: organic farmers must meet the minimum requirement of three pesticide and herbicide-free years. Our chapter's requirement is four years. That is one of the reasons why we are a little bit more recognized in Europe, because our restrictions are a little bit higher, and our quality is as good or better.
Senator Hays: And I gather you have gone to the Canadian Wheat Board and said "This is our criteria; this is an organic crop, grown on land that has been pesticide and herbicide-free for three years, and we need to move the product in a way that does not comply with your buy-back provisions or other provisions." And they said, "No, we cannot do that." Is that how it played out?
Mr. Dorwart: No, I do not think that anyone has gone to the Canadian Wheat Board. They just did not bother with us at the start because of the small amount grown.
Senator Hays: Is it possible that all they are saying now is that we need to have a more formal arrangement?
Mr. Dorwart: They did not state that. They just stated that it is irrelevant how the crops are grown. They realize now that there are more people in it than when it first got going, and they feel that we should sell the grain and then buy it back. They just want a part of the purse now, too.
Senator Hays: Have you tried to buy back with them?
Mr. Dorwart: I myself have not. I have made some phone calls and tried to find out some buy-back things, but even earlier in the fall, durum buy-back at that time was almost $3 and I think the conventional price on durum was only a shade more than $3.
Senator Hays: But, in the case of an organic grain, your price is quite a bit higher, is it not?
Mr. Dorwart: It is, yes. Some people in our organization lost on barley deals because of the buy-back. They phoned in and were going to get X amount of dollars, and then when they went to make the deal, they were offered less. The buy-back changes from day to day; it will not be the same tomorrow as it is today, so you are never reassured that your buy-back will be there. So that puts some people in jeopardy, and some farmers have lost money on barley deals.
Senator Hays: I note your comments about not taking advantage of any funding or "handouts" any more. Is that relevant? I mean that may or may not be very commendable, depending on your operation, but why is that? Is that a criteria of organic farming?
Mr. Dorwart: No, it is not, but individually, we believe that what we are doing is right, and we do not want handouts. Our deficits are getting higher and higher every year, and we do not want to have a problem with that.
There are arguments every day at the coffee shop. There are guys at the post office whose hats are bent from looking for their next paycheque. They will never turn that down. But our industry just seems to be by itself; and individually, we do not want handouts.
Senator Andreychuk: I just want to know how large you have to be in order to be attractive to the Wheat Board. Is it based on acreage? You talk about organic farmers, but there are also people growing organic grains for their own consumption and for organizations that I know. Does your association encompass those people, or how do you define a farmer that may be subject to this Wheat Board regulation?
Mr. Dorwart: Anybody who sells grain that is controlled by the Wheat Board is subject to it, regardless of size. If you are just growing grain for your own consumption, it is not a problem, but I could not sell ten bushels of crop to Erwin for seed or for anything. Even if he was to make bread out of it, it is not legal.
Senator Whelan: First of all, I wanted to ask if any of your seeds are gene-engineered through new modern biotechnology, like Roundup-resistant canola, that type of thing?
Mr. Dorwart: No, we try to use all our in-house seed. There is absolutely no way we would use that. I have read articles where they say that Roundup is completely neutralized when it hits the ground, but that is indeed not so.
Senator Whelan: You spoke, as others have done this morning, about what the Ontario winter wheat producers are doing there. Have you studied just how they went about doing what they did?
Mr. Dorwart: No, I knew a while back that they were not under any Wheat Board control, and now I heard that they have just voted to have a dual marketing system and that they can sell to the United States. I do not know a lot about it, and I apologize for that.
Senator Whelan: Even if they sell to the United States, they still have to get a permit from the Canadian Wheat Board, but I suggest that you check the undemocratic way that they run that board now. They pack the meetings, et cetera.
This is what I am concerned about. There are over 20,000 wheat producers in Ontario, and not even 1,000 know what the Wheat Board is doing.
Mr. Dorwart: I was not aware of that. Thanks for telling me.
Senator Stratton: We will give you a copy of the press release. The Ontario Wheat Producers' Marketing Board has put one out regarding that, and I have asked the researcher to give a copy to these gentlemen, so that they are aware of what has happened.
Senator Whelan: Okay. But what I mean, Senator Stratton, is they should be aware of everything that has happened, how they plugged meetings et cetera, in the most undemocratic fashion you can imagine.
Mr. Dorwart: That is fair enough.
Senator Stratton: It is the thin edge of the wedge.
Senator Fairbairn: Your very interesting brief obviously conveys the impression that you should be exempt from the Wheat Board.
I have just been looking at the legislation, and as it now stands with an exclusion clause in it, would it not apply in the future to your products?
Mr. Dorwart: I am not sure how it reads, but do they give an exclusion to organic farmers per se?
Senator Fairbairn: No, it does not say that they would be excluded, but what it does say, if I might just read Mr. Chairman, is, on the recommendation of the Minister, the Governor in Council may, by regulation--
...exclude any kind, type, class or grade of wheat, or wheat produced in any area in Canada, from the provisions of this Part...of the Act.
Now this refers specifically to wheat and barley, but I believe that organic crops would not be prevented from using this procedure as well.
Mr. Dorwart: That is all we are asking, to be exempt. I wrote numerous letters to Mr. Goodale, and did not get personal answers myself, but another gentleman who is coming this afternoon did get a personal answer. We just want a chance to remain in the market.
Senator Sparrow: Under any government agency, wheat board or any food and health agency, is there any definition of an organic product or organic grower in Canada? You refer to an international agency but there seems to be no definition of an organic product or producer.
Mr. Dorwart: I am not sure I understand the question. There are a number of certifying bodies, not only one. We can individually look at them all and try and the one that best suits our needs. Now are you saying that in the Wheat Board Act there is a provision?
Senator Sparrow: There is no provision under the Wheat Board Act to define an organic producer or an organic crop. Under the federal Health and Food Act there is no definition of organic products. You cannot, under that act, sell an organic product that is registered or condoned by federal health and food.
I think some definitions will be needed, otherwise anyone could say to the Wheat Board, "I have produced an organic wheat" or other product. Am I correct in that?
Mr. Dorwart: Anybody can say that they are organic farmers now, but a recognized body would not certify just anyone.
Senator Sparrow: There is no Canadian certifier, though. You are talking about a world body, but is there anything in Canadian law?
Mr. Dorwart: The Canadian Organic Advisory Board (COAB) is working on standards right now. They should be before Parliament in the next little while.
Senator Sparrow: If you were selling organic wheat to the Wheat Board, would you actually have to deliver that product? For if that is the case, would they guarantee that if you took a load of wheat, that you would sell it and you would actually get your own wheat back? Is there a provision for that?
Mr. Dorwart: No, there is none whatsoever that I know of. As soon as it hits their pit you have immediately lost control of its integrity. The pit and reloading facilities would have to be inspected every time, because it could be contaminated with another crop.
Senator Sparrow: So we would have to have certification for an organic grower and an organic product, and provisions for where the product could be sold and bought back, if necessary, without leaving the farm?
Mr. Dorwart: Yes, that is the difficult part. Most of the stuff is traced right from point to point along the way and there is no deviation from that.
Senator Sparrow: Is the integrity of the product at risk?
Mr. Dorwart: Yes, it is very much so. On behalf of the chapter, we appreciate you all coming down this far. I am sure there are lots of things you could be doing elsewhere. It is nice to be heard.
The Chairman: I call next the Western Canadian Wheat Growers. Mr. Larry Maguire, President, and Alanna Koch, Executive Director, will be appearing.
Mr. Larry Maguire, President, Western Canadian Wheat Growers' Association: Thank you, Chairman Gustafson, and senators for taking the time and effort to hold these hearings on the prairies, and particularly here in Regina, which I would say is the heart of wheat country and is where the Western Canadian Wheat Growers began our existence and where we have our head office.
Members of the Senate, there is a widespread impression that the committee will only deal with the inclusion/exclusion clause and that they will recommend the Goodale amendment. We cannot believe that the Senate's constitutional role will be so easily subverted and are sure that your committee will reach an independent conclusion.
Your committee must know that C-4 is being enacted over the objections of virtually every farm and industry group in Western Canada. I have listed about 20 for you in our brief, I am just giving you a summary of the brief that we have presented to you that you have in your hands, and a couple of the supporters of the program as well.
It is important to understand that the impetus for reforming the Canadian Wheat Board came from farmers wanting a choice in marketing their grain. This is what the Western Grain Marketing Panel's recommendations would have given us, but the government ignored them. Bill C-4 moves backward; it is a retrogressive step, and actually takes choice away.
I would draw your attention to the preamble to our submission where we deal with a most important development that has occurred in Ontario. It is near the bottom of page 1. It reads as follows:
Since our last opportunity to make our views known to government (at the hearings of the House of Commons Standing Committee on Agriculture and Agri-Food), an event has occurred in Ontario which completely changes the circumstances surrounding the debate on Bill C-4. We refer to the decision taken by the Ontario Wheat Producers Marketing Board (OWPMB) Delegates' Conference on March 5 and 6, 1998 at which the delegates voted 90 to 10 to make a "Declared Off Board Marketing Alternative" available for Ontario wheat farmers.
This decision has made the position of western wheat farmers completely intolerable. It is inconceivable that we can perpetuate a situation in Canada where professional business people engaged in the same enterprise can be made to operate under such dramatically differing arrangements.
With the decision which Ontario wheat producers have made, and which they were able to make under their governance structure, Canada now has two classes of wheat farmers: Ontario wheat farmers who have a choice in how they market their crops; and western wheat farmers who are chained to a monopoly. It is apparent that this situation cannot, by any standard of fairness and justice, be perpetuated.
With this dramatic turn of events the Western Canadian Wheat Growers Association has one primary recommendation in regards to Bill C-4:
It is recommended that Bill C-4 be amended to provide for western wheat producers a "Declared Off Board Alternative" identical in all respects to the alternative to be made available to Ontario farmers.
If the federal government wishes to put an end to the controversy, and if it wishes to stop the civil disobedience which many farmers feel forced into to make their point, it will do nothing less than this.
If, on the other hand, the government persists in shoving Bill C-4 through the Parliamentary process without making this change, the political ramifications will be severe. It now has the opportunity to provide Western Canadian farmers with marketing choice, as was recommended in the Western Grain Marketing Panel, and your committee has the opportunity to recommend that this be done.
The one other part of our submission I want to draw to your attention is the section on page 6, where we say that the Ontario plan cannot be implemented under Bill C-4, and it is as follows:
The minister responsible for the Canadian Wheat Board has already argued that the provisions of Bill C-4 will allow the new board of directors to provide western wheat farmers with the same, quote, "Declared Off Board Marketing Alternative" which is being implemented in Ontario. While this might be theoretically possible we believe it will be impossible, from a practical point of view to do so. We suggest the following points:
1. The CWB has no duty of care to western farmers. Nothing in this bill will change that situation [and some court cases have pronounced this].
2. This Bill requires the Directors to act in the best interests of the Corporation, not in the best interests of farmers. It is unlikely that the new board of directors would see the end of the monopoly in the Corporation's best interests, even if it is in the best interests of farmers.
3. The appointed directors and the government-appointed CEO will act in accordance with government instructions, not in accordance with the wishes of farmers. The experience with C-4 shows quite clearly that the present government is strongly supportive of the status quo and is opposed to the interests of farmers who want reform. Even if all the elected farmers wanted the Ontario plan implemented, their wishes could be frustrated.
4. Most importantly, the most likely outcome of a producer election will be a split Board of Directors. As a practical matter, by making the Canadian Wheat Board boardroom the primary venue for the pro and anti-central marketing debate, Bill C-4 ensures that change will not occur. The most likely result of Bill C-4 will be a deadlocked board of directors.
The Wheat Growers have repeatedly said that marketing policy belongs in the political arena, not in the boardroom of the CWB. The allegation that farmers will be able to set marketing policy and could therefore implement the Ontario plan is, in terms of practical possibilities, false.
Now in our presentation we dealt with other parts of the brief and I will mention a few of those. We made some of the recommendations in previous submissions to the government, but they are only relevant if the federal government persists in its current blind course of ignoring the views of all the commodity groups in Western Canada and continues to ride roughshod over that democratic process. I will, however, review these briefly.
If the government refuses to correct the injustice opened by the Ontario decision, and still wishes to leave Bill C-4 in the public arena as its solution to Canadian Wheat Board reform, then we recommend:
That further consideration of Bill C-4 be delayed until Justice Willard Estey has completed his review on grain transportation. We base this recommendation on the possibility that the current review of the grain transportation by the Estey Committee may well recommend changes to the Canadian Wheat Board's transportation responsibilities and changes to the Canadian Wheat Board Act. Opening the Canadian Wheat Board Act after the bitter controversy of Bill C-4 will be politically impossible and, therefore, the implementation of the Estey recommendations may therefore be jeopardized.
Of course, if they continue to persist, we then deal with the inclusion and exclusion clauses which are the most destructive element of the bill. We recommend as follows:
That the inclusion and exclusion clauses of the bill be dropped and that clause 25 of the bill (which repeals section 46(b) of the existing CWB Act) also be dropped.
The intent of this recommendation is to leave the provisions for exclusion or inclusion of any crop as they are in the current CWB Act.
The remainder of our recommendations relate to the Goodale amendment and other recommendations which, before the Ontario decision, we thought would make C-4 acceptable to western farmers. We no longer believe they would work. The resulting injustice is too large for western farmers to continue to accept.
The other recommendations in this submission are there for your consideration if the government continues to go blindly down the road with Bill C-4. They would ameliorate the worst elements of the contrast between eastern and western wheat farmers.
Senators, we would be happy to answer any questions that the committee might have.
Senator Stratton: We have a copy of that press release from the Ontario Wheat Producers' Marketing Board declaring off-board marketing at their meeting on March 5 and 6. I was not aware that the vote was so one-sided as 90 to 10.
Despite all that as background, the Honourable Eric Upshall, the Minister of Agriculture and Food with the Government of Saskatchewan, stated quite clearly that despite people going to jail, and despite the imposition of the Ontario Wheat Producers' Marketing Board, that the Canadian Wheat Board should stick to its guns and hold to the mandatory requirement for producers to sell through the Wheat Board "single-desk," with no opting out.
I told him that there was a push to get out from under the Wheat Board. People are growing products just to get the heck away from it. The push for opting out is strong to the degree that people are going to jail.
With that in mind we are sitting here representing one side of the argument, and you have presented the other side. Recognizing that we have two solitudes, really, do you see any way of bringing these two solitudes together, not instantly but over a period of time, such that we can satisfy them both, although not completely, because you will have to take water with wine. But how can we do this over a period of time to prevent what I see as the horrific problems that will result if this bill passes?
Mr. Maguire: In relation to choices, you will have to ask Mr. Minister Upshall if hogs are smarter than wheat. He is trying to create a dual marketing system. We applaud him for making that move. I do not mean to be facetious.
Absolutely, we see mechanisms to make this come together; we have made recommendations on them for years. We are the largest voluntary farm organization in Canada and we have put forward responsible mechanisms on many of these issues for years. This whole process began because farmers sought more choices and, therefore you have to take into account the views of those who want to maintain the monopoly. Therefore, we have said that it is no longer tolerable when one region of the country has given itself the ability to sell the same product in open market. All we want is that choice.
Other areas of the world have done the same. They have moved more towards privatization of the Australian Wheat Board. There are nine different ways the farmers can sell their wheat to the Australian board. There are geographic differences, but certainly the mechanisms could be used here.
We made three recommendations to the standing committee last fall. We suggested that they remove the inclusion clause; and, secondly, take barley out of the board completely now because there is very little feed barley being sold to the board any more and as it affects the price of the other product, the rest of the barley that is being sold. Thirdly, the biggest compromise that we put forward is the fact that we had a 25 per cent amendment for wheat whereby farmers could sell their own wheat or could price it against any given established futures market. It would have to be the Chicago, Minneapolis or Kansas City markets, because we do not have a milling wheat commodity on the Winnipeg exchange. The farmer could sell this into the market when he wished to, into the pricing market at that time, and sell his futures position, and at the time of delivery to the Canadian Wheat Board give the Canadian Wheat Board 100 per cent of the wheat.
The Canadian Wheat Board's concern is that they need to have 100 per cent of the wheat to sell. We have passed this idea by bureaucrats in Ottawa, in the provinces, and in the board itself. The board has an idea of how they would like to "flat-price" grain to farmers, and this concept is really not market responsive. There is nothing really responsive about setting a flat basis, determining what the price will be, announcing it publicly, and saying "Take it or leave it."
Our organization wants more management alternatives. They need to be able to use some of those markets, like the futures and options ones, and they need to be able to sign deferred contracts. We have signed some deferred delivery contracts for oats for next fall already; we have locked in a small amount at narrow-basis levels -- just what we are happy with -- for next fall's delivery. These kinds of tools are available to farmers today, but were not there in my father's day, let alone five to ten years ago.
So in answer to your question, absolutely, there are ways this can be done. But it has taken so long and so little has been done since the early nineties. That was when this thrust really became apparent, and it was exasperated by the flat quick change in the Crow benefit that has driven immense change in Western Canada, so immense that you cannot imagine the changes that are taking place in farms out there today. Farmers have a desire as never before to be able to manage their own risk even better than ever.
So all of our membership is telling us that they need to have this option. Your committee hearings started after the debate in the House, and Ontario's decision has come in between. That is why we are asking you to recommend to the federal government that we have an off-board alternative as Ontario now has. If you implemented that, you could drop the rest of our recommendations.
Senator Stratton: I want to mention for the record that there was a presentation yesterday on forward pricing, on what is called the Archibald clause, essentially.
Mr. Maguire: Yes, Mr. Archibald did talk about that yesterday in Brandon. We essentially have the same clause that he presented to you. We have taken it to Ottawa and shopped it in the provinces and the Wheat Board and we are getting very good signals.
Senator Stratton: Good. If the Wheat Board does not move on this and if the Ontario Wheat Producers' Marketing Board has this opting-out provision for exporting to the United States -- I guess it is a leading question but I will ask it anyway -- would not Manitoba and Alberta be likely to follow suit? What would prevent another province from following along?
Mr. Maguire: At present Manitoba, Saskatchewan and Alberta fall under the mandate of the monopoly.
Senator Stratton: But couldn't the governments push, saying "Look, you have done this in Ontario; we will do it here."
Mr. Maguire: Yes. Alberta has already made that push, and Manitoba has been against the inclusion clause in this whole bill. Saskatchewan has entered into many more marketing choices in their own province in other commodities.
Ms Alanna Koch, Executive Director, Western Canadian Wheat Growers Association: For reference Senator Stratton, Alberta has actually tried to implement the Ontario system to allow Alberta farmers to specifically get around the monopoly.
A plebiscite was held in Alberta where an overwhelming majority of farmers in Alberta asked to be able to choose to get outside of the monopoly. The plebiscite was set very constructively, and it followed all the rules of a regular plebiscite. It is clear that Alberta farmers want out from underneath a monopoly.
The Alberta government developed a policy and a program and then put in a reference to the Alberta Court of Appeal to ensure that they would have the ability, as a province, to get out from underneath the jurisdiction of the Canadian Wheat Board monopoly. Right now, it is being held up in the courts. The Canadian Wheat Board and the Government of Canada have twice delayed the process of getting that program's reference heard through the Alberta Court of Appeal. It would seem that the Wheat Board and the Government of Canada are even afraid to go through the court process.
So it is certainly not because the Alberta Government has not tried. They have.
Senator Hays: You made reference to the better situation of the Ontario Wheat Producers' Marketing Board, given their decision. But the decision in Ontario was a board-driven decision. The board was used to change a situation in a marketing area, and the main thrust of Bill C-4 is to put in place a board that would be able to do those things as well, not that they would be easy, as we all acknowledge. I am wondering if you could comment, Mr. Maguire?
Mr. Maguire: My leading comment is that this is enabling legislation that is being put forward here.
We have lost so much time in Western Canada fighting for these choices. This began in the early nineties; we had a unanimous panel in 1986; and here we are in 1998 and nothing has been implemented in the west. Others are going ahead and trying to implement it, but we do not have the democratic process they have in Ontario.
Keep in mind the CEO will still be appointed by the government, and four other directors will as well. I outlined four or five reasons why we do not believe our process here in the west, even if Bill C-4 is put in place, will give anybody any kind of alternative quickly.
So if we have to wait for world trade organization kinds of rounds of technical discussions, we feel that Western Canada will lose out on the economic development of even more things, like flour mills and processing plants that we need here right now. Some are being developed but, as was discussed, there are at least eight wheat mills being established in North Dakota and Manitoba and, of all things, a durum plant in Illinois. They do not grow any wheat there, but it is closer to a marketplace. I understand why they are doing it.
Senator Hays: You raised the issue that the Act stipulates that the board of directors will direct and manage the affairs of the corporation and is, for those purposes, vested with all the powers of the corporation. Your concern is that the board will not be able to effectively deal with what you call the political issues of choice. Can you be more specific?
They will have vested in them the powers of a corporation, and it is a large corporation. In the classic stock market sense, if you will, it would be a shareholder/director situation. What if this legislation were more clear? Not only does it have the powers and responsibilities set out here, but the board also must carry out its decision-making in the best interests of the district, the districts that the board comes from. I mean if it were made clearer, would that help you with this, and turn you completely around this dilemma to become a supporter of the Wheat Board?
Mr. Maguire: I understand exactly what you are saying, Senator Hays. If it very clearly stated that in the act, and that is one of the things we are asking for, that the elected board of directors be responsible to the farmers of the region, it would certainly help to clarify it.
Senator Hays: My own view is that I think they are anyway, because this is not an ordinary corporation. It would not be an ordinary corporation unless the board decided to privatize it at some point down the road, which would require an order in council and everybody to approve it. But as it would come onto the stage after the passage of Bill C-4, it seems to me, even without being specific about it, that those people who were elected to the board would have a responsibility to those that elected them. It would not be analogous to a board members' relationship to shareholders in the classic large-corporation sense. But if it were clearer you would be happier.
Mr. Chairman, I know time is tight and I see Senator Whelan in the chair. I guess that prevents you from asking questions, but I will perhaps come back to this if there is an opportunity later.
Senator Eugene Whelan (Deputy Chairman) in the Chair.
The Deputy Chairman: Senator Whelan is first and Senator Taylor is second.
Senator Hays: I think Mr. Maguire wanted to comment.
Mr. Maguire: I think the point that has to be stressed is that if we had what Ontario already has, we would not be here today, and they do not have five appointed people on their board of directors. They are all elected, accountable, and they hire and fire their own CEO, and the federal government still gives them a guarantee on their initial price.
The Deputy Chairman: They were elected at one time in a very democratic fashion in Ontario. I remember the hell we went through to get them elected, and we used to have about 90 per cent of the producers' vote.
If you look at this very closely you will see that this will not be implemented this year. It will not be implemented until 1999, so they do not yet have what you are saying has been granted. The delegates turned down the option to discuss this with producers, which indicates support for pooling and the board. They realize that the proposed new marketing alternatives require time to be implemented to work in harmony with the existing marketing board.
Perhaps that board will not exist next year. Out of some 20,000 producers, there were only a thousand in the meetings. They take it for granted that everything will go along rosy. So I am just saying it is not a fact yet. It may be or it may not be.
I will tell you this. I wanted to go to the meeting as one of the founding directors. I could not attend. Why were they scared of this old retired farmer and senator, who knows a little?
Eighty per cent of the flour milling industry in this country is controlled by one company, Archer Daniels Midland. When they have that much control, it is hardly a great free marketing system. It is unbelievable.
Mr. Maguire: Maybe you should make your recommendation to the government's anti-combines program.
I would like to ask why the proposed vote that the Ontario Farm Products Marketing Commission put forward, that required a two-thirds monopoly in Ontario, was cancelled ten days before the ballots were to be sent out to the farmers? The grass roots wanted that vote to take place. I do not know the answer.
The Deputy Chairman: The decision was made in the Ontario government, so you would have to make your enquiries there. Someone in the Ontario Farm Products Marketing Commission made the decision that it should not be held. There was a discussion as to the principles of democracy involved.
Mr. Maguire: You must look to the members of the Ontario Farm Products Marketing Commission. You are absolutely correct.
Senator Taylor: I am intrigued by your Ontario analogy. For the last few days, I have been trying to get some idea of what exactly went on, and I am still getting conflicting reports.
I gather that this opting out applies only to export to the U.S., and I want to know if your organization would be happy with that if it is the only way that it could sell.
Mr. Maguire: We are saying that we want exactly what they have.
Senator Taylor: All they have is the right to export to the U.S.
Mr. Maguire: As Senator Whelan pointed out, they do not have it yet. It is to be confirmed by their board of directors, and on November 30 they will have to declare their ability and desire to sell their whole crop.
This is like an opt-out for their whole crop into the American market for 1999. The winter wheat crop planted in the fall of 1998 is the crop that they will have the opportunity to sell next year; it will not be the one that is presently in the ground. June 30 is the date for the spring crops for 1999.
Senator Taylor: Would that be export only though?
Mr. Maguire: Yes. They would have to declare all of their wheat, though.
Senator Taylor: I gather that they would have to get an export licence from this Ontario board. Would that also be acceptable to you?
Mr. Maguire: That is not correct. Presently Ontario farmers can sell wheat into the U.S., but they have to get agreement from the Ontario Wheat Producers' Marketing Board to do so, and then, on their behalf, that board applies to the Canadian Wheat Board for an export permit. The Canadian Wheat Board is the only body in Canada that can issue an export permit. Those Ontario farmers will still have to get an export permit from the Canadian Wheat Board but they will no longer have to go through the Ontario Wheat Producers' Marketing Board to ask for one.
Senator Taylor: Would you be happy with that?
Mr. Maguire: For years we have been asking for the same buy-back privileges that the Ontario producers have. They have not had to have any kind of buy-back and they have had rubber-stamped things, and we have been asking for the same ability to sell into another market.
Ms Koch: In further reference to Senator Taylor's question, which asked whether we would be happy with the Ontario program -- that is what we are willing to go with right now. That is certainly the push of the Wheat Growers' Association.
Senator Taylor: You will take a hamburger today you want the steak tomorrow.
Mr. Maguire: We want to get caught up to where others are.
Ms Koch: Right. It is based on the continental market philosophy. Certainly farmers in Western Canada want choice and they want the ability to market their crops. If the Ontario option is where we can start, it is certainly a good way to start.
Senator Sparrow: First of all, the Ontario Wheat Producer's Marketing Board has not made those provisions. A vote has only taken place at a delegate meeting, and the board of directors will not make a decision until it meets in April. The recommendation to them is that they be able to opt out for one year. Without going to dual marketing, are you suggesting that you would be happy if a producer could opt out, and what period of time would you suggest that he or she opt out for without being able to come back in?
Mr. Maguire: This is only a beginning.
The Ontario people are having the ability to do it for one year, and that is what we have asked for in our brief. Many of our members have gone so far as to suggest that they will opt out permanently if given the opportunity, but we are not promoting that.
Senator Sparrow: Your recommendation is for one year then?
Mr. Maguire: At the present time, yes. All we are saying is that we need to bring parallels to the marketing of the same product elsewhere in Canada.
Senator Sparrow: You are aware that the Ontario Wheat Producers' Marketing Board has not made that condition?
Mr. Maguire: Yes, although it is our indication it will be ratified at the board. They feel that this is a huge compromise -- marketing their wheat in Ontario so that they can maintain the other benefits of the Ontario board.
Senator Sparrow: A question supplementary to my previous one. They do have to declare their production, and they would have to declare their production. If they did not sell what they produced, would they carry that product over in storage, and sell it in the second crop year?
Mr. Maguire: It could be that they are declaring volumes, because they are doing this at seeding time. At seeding time they are declaring that they will sell. That proposal came to the Canadian Wheat Board in about 1989. If I recollect it from my days on the Wheat Board advisory committee, it actually came forward to one of the commissioners of the board in the seventies. It has been around for a long time.
What we are saying is that we need to get our industry caught up to speed in regards to having choices, and also as to where we go in relation to opting out.
In relation to opting out, it is our understanding that it is based on acreage. As you are doing this prior to seeding, you will not know your volumes prior to harvest, and you would have to declare them at that time.
Senator Leonard J. Gustafson (Chairman) in the Chair.
The Chairman: Mr. Maguire, could you please give us one short wrap-up statement?
Mr. Maguire: As I think that you have sensed, our presentation has a much stronger emphasis on choice than we have ever before presented.We have tried to compromise before; the Crow benefit debate went on for decades. There were those who believed that a change in the Crow benefit would destroy every small town in western Canada; exactly the opposite is happening.
It is a harsh reality because it was done overnight. It is also a reality that the government privatized CN. As you heard, the Crow benefit has been a vast sudden change, and we need the abilities to manage our own risk. That is why we put this forward so forcefully, that is why we have thought through a lot of the things that we think of C-4.
There are those who say that in three to five years time we will have a choice in how we can market our wheat anyway, and I hear them. We have been doing this for a decade; we should learn something from the processes that we have gone through in Western Canada. In the past we have tried to design mechanisms that would allow those of us who want a choice to have it, while still allowing the board to market for those who want to be able to market through it. It is, however, becoming very apparent that other areas and other jurisdictions are having much more freedom than we are having here in Western Canada.
We are hit with all of these increased input costs, and individual farmers need to have the freedom to use what is already before them. The previous presenters talked about needing to be able to manage their own response, and being able to do it with less government response, under commodity credit corporation mechanisms. The last thing that we want to have them do is to use the Canadian Wheat Board as a subsidy mechanism; that will be the fastest downfall of the CWB. Minister Vanclief is going through a new safety net mechanism that we are part of, and agree with, and if there are safety mechanisms that is where they should be dealt with.
We need to have these choices in Western Canada. All of the choices that we submitted to the Agriculture and Food committee in September really are superseded by events which have taken place since your committee announced that that you would come out and hear our submissions in Western Canada.
Senator Stratton: For us to properly deal with this whole issue, we need to know if there is a board of directors meeting of the Ontario Wheat Producers' Marketing Board in April, and we need to know where that meeting is taking place. The results of that meeting are fairly critical to our deliberations; we need to know what the board of directors of the Ontario Wheat Producers' Marketing Board will do regarding the Ontario wheat market.
The Chairman: A point well taken. To begin, we will have you gentlemen introduce yourselves -- talk about where you farm and what kind of crops you grow.
Mr. Norman Baker: Thank you, Mr. Chairman. I am Norman Baker, I was born and raised on a farm just south of Regina, and I have had an interest in the farm all my life. I am pleased to have this opportunity to speak to you on Bill C-4.
One of the things that I wanted to point out is that Bill C-4 is Ralph Goodale's vision as to how the Canadian Wheat Board should operate -- not the farmers'. Despite his claims, it does nothing for the farmer -- it does things to the farmer.
All of these issues are very, very important, but by far the most significant issue of Bill C-4 is the disregard of individual rights and freedoms for the farmer. This is the real issue, and all others pale in importance. There is no justification for oppressive legislation in Canada. Bill C-4 is a direct attack on property rights, individual rights, and equal rights. It is a frontal attack on the individual's civil liberties, and on the fundamental freedoms of all Canadians. It is tyrannical and an unjust abuse of power. I am a veteran of World War II where, if need be, it was our duty to die to preserve those freedoms. To this day, I would prefer to die to preserve them rather than be intimidated into silence on this issue.
Ladies and gentlemen, I urge you to give the issue of individual rights and freedoms your most serious and thorough consideration. Without question, it will be one of the most fundamental issues you will ever have to face. You must determine if Canadians will be free, or whether will we be ruled by the use of force.
I urge you not to let anyone rush you and stampede you into a hasty decision. I understand, from listening here, that there are people trying to do just that. Do not let it happen.
If you do give this oppressive legislation your most serious attention, time and consideration, I am sure that you will succeed in getting it changed so that it conforms with the higher principles of a free democratic society. May I remind you that it is your responsibility, first and foremost, to see to it that the individual rights and freedoms of each and every Canadian are protected.
The Chairman: Thank you. We will wait with questions until later on. Will you give your name and your farm, please?
Mr. Don Baron: I am Don Baron. Mr. Chairman, thanks for the opportunity to come and address you. I am not a farmer, as some of you may know. Our family farm was down in the Ottawa valley. I have been a journalist most of my life -- I was editor of Country Guide for quite a few years, and I have had a few other roles as well.
Mr. Chairman, thank you for your invitation to be here this morning. Your committee faces a crucial task. We all know that the search for freedom has driven our western civilisation for centuries, but the truth is that we, Canadians, have stripped our prairie grain growers and their industry of their freedom to grow and market their crops as they would choose, and the cost to all of us is uncounted billions.
Those freedoms must be returned, Mr. Chairman, yet Bill C-4 goes in exactly the wrong direction. Your committee's task can be no less than to decide the issue of personal freedom in prairie grain today.
Consider the history. A century ago tough settlers broke the virgin land here and, by 1910, more wheat was passing through Winnipeg's grain exchange directly from farmers than through the half-century-old Chicago exchange. Winnipeg had exploded into a booming frontier city, and was said to have 19 millionaires, two fewer than Toronto. The Prairies were seen as a world treasure house, and they had become Canada's driving engine.
Look at what we Canadians have done. Look back to the nightmare days of the 1970s grain crisis; bulging grain bins, mountainous piles of grain on farmers' fields, Vancouver's English Bay wall to wall with ships awaiting grain, and cash-strapped growers pushed back in time to the days of barter, hauling grain to dealers to trade for tractors, trucks and supplies. Our rich breadbasket, ladies and gentlemen, was crashing down around us when we should have been leading the way in feeding the world's populations. How could we have done this to ourselves? Let me relate a story.
President Mac Runciman of United Grain Growers was then leading the struggle to find the cause of the breakdown. He finally labelled our grain handling system a failure, saying that it was 20 years behind that of the U.S., and that our rail system was little change from the horse hauling days of the nineteen thirties. In fact, the prairie grain was caught in the grip of politics, and the marketplace was often forgotten. Worst of all, the entrenched political establishment's resistance to change was almost insurmountable.
Some initiatives were taken. The Canada Grains Council was set up and its 1973 report confirmed Runciman's diagnosis. It described an industry in shackles, unable to respond to beckoning markets. The report, however, was ignored.
One initiative did pay off richly. Growers and the trade focused on an obscure new crop called rapeseed -- now canola -- that could be sold outside the politician's monopoly grip, unhampered by those marketing restrictions. Operating in a free environment, the growers and the trade turned canola into Canada's Cinderella crop, rivalling wheat in value. They taught us a lesson that we dare not forget; there is no limit to what can be done if growers and the trade have freedom.
When I got into writing my new grain robbery book, I knew that only one question really mattered. What has caused Canadians to allow the erosion of our breadbasket's enormous potential? While looking for the answer, I stumbled on to information that simply blew my mind.
Paul Earl was a young grain industry professional who decided to go back to university. In his Ph.D. thesis, he documented a story that should be known by every Canadian, of how U.S. Protestant pastors at the turn of the century had focused on the poverty problems in their cities. They decided that they had found a new universal truth, and they cried out "abolish capitalism", labelling it and the open market the cause of human misery.
Their preaching became known as the social gospel. It was scorned in the United States but these pastors were welcomed with open arms in Canada. We can see now that those pastors, with their all-out assault on capitalism and the free market, were oblivious to one vital truth; the free market and competition are the very basis of personal freedom and wealth production. These "social gospellers" nonetheless led the public debate that shaped the industry and the country.
You all know of Andy McMechan, who spent five and a half months in jail for selling his own Canadian-grown grain in the U.S. Mr. Chairman, we all should be asking, if we really want a country that says to young Canadians "if you work hard and imaginatively to create wealth to benefit your families, your communities, and the country, we will throw you in jail."
On a more positive note, developments like free trade, and the end of the Crow benefit, amongst others, are finally returning some lost freedoms to the growers, grain companies, and the railroads. Let me repeat, however, that Bill C-4 goes in exactly the wrong direction. It will make the Wheat Board even more of a political instrument, condemning growers to more years of endless political struggle.
Honourable senators, I suggest that for too long we have denied growers the freedom to fully develop this great prairie treasure house, and we have all paid the price. I urge you do not let Canada down this time.
The Chairman: Thank you. Mr. Herb Axten?
Mr. Herb Axten: My name is Herb Axten. I farm ten miles north of the U.S. border, approximately 90 miles south of Regina. We run a mixed farming operation on a third-generation farm. We are 25 miles from the Burlington Northern Railroad at Plentywood, Montana, which also has facilities for terminal and 104-car trains. I jotted a few notes down and, if you will indulge me, I will read them.
I want to thank you for this opportunity to come before this panel to oppose Bill C-4. The reason that I oppose this bill is because it will not give my farm more marketing freedom for wheat and barley. I say this because marketing freedom comes from competition and a far better cash return than can be had under our present system.
Some people will argue that single-desk selling for wheat and barley is the only option. I beg to differ. Our farm has lost in excess of $800,000 in durum sales alone since 1990, not to mention spring wheat and barley sales. We can argue the validity of sales figures on each side of the 49th parallel but, at the end of the day, the only person that I have to answer to is my accountant. When I tell him I lose $100,000 a year he asks why. I answer in two words: Ralph Goodale.
Last week I contracted a 1998 flax crop with an American grain company. After numerous phone calls to every major grain company in Canada this company outbid every other company that I talked to by a dollar a bushel. Lentils, peas, canola, and oats are no different. I am not saying that I want to haul my grain to the U.S., but I do want that option.
I ask myself why there are hundreds of farmers willing to face thousands of dollars in fines, not to mention jail terms, to sell their grain to the U.S. It is not because they are hardened criminals and do not respect our judicial system. It is their firm belief that it is their property and not the property of the federal government. It take a lot of nerve to face the fury of Canada customs agents, and RCMP officers, who can impound your trucks and threaten you with heavy fines and jail terms. The sign that I erected on number 6 highway close to my farm says it all: "Welcome to Canada, the only country in the free world that jails its farmers for selling their own grain".
Should we, as Western Canadian farmers, be proud of the fact that the government can, by law, take farmers' grain and sell it at bargain-bin prices? After all, the Canadian Wheat Board has adopted the motto of one of Canada's leading department stores, "we sell for less".
In Western Canada there are approximately 110,000 permit book holders and, of that, 20 per cent of the producers produce 80 per cent of the grain. As one of those 22,000 farmers I wonder why Ralph Goodale is so interested in the way we want to market our grain. Is it because the government is skimming hundreds of millions of dollars, every year, from the sales of that grain? Why else would he be interested? Why not interested in 22,000 bus drivers or 22,000 school teachers or 22,000 government employees? It is because the law gives the government the opportunity to steal our grain.
Unless this grain market becomes more deregulated our farming operation will not be viable. Our son is graduating from Agriculture College this spring. We have some serious decisions to make regarding the future of our farm. Our farm is large enough to employ three full-time people and three families, but, because of low grain prices, it can now only support one and a half families.
At a meeting in Weyburn two years ago, during the grain marketing panel hearings, I spoke to Brian White, information officer for the Canadian Wheat Board. He told me, and I quote, "if you do not like the present system, why do you not move?" At the time I was angry that a government bureaucrat could tell a producer to leave his own country, but we are now seriously considering that option. As much as we hate to sell a third-generation farm, we may have to make the decision to move to Western Montana, where we will make a decent living doing the things that we love.
Why should good, hard-working farm families not be able to make a decent living in their own country, and why should our young people not be able to choose farming as an occupation with a future?
I urge you to make the necessary changes to give Western Canadian farmers more marketing choices.
The Chairman: Thank you, Mr. Axten. The next presenter, will you give us your name, please, and where you farm?
Mr. Rod Flaman: My name is Rod Flaman, I farm 35 miles northeast of Regina at Edenwold, where I took over the family farm in 1982.
Our land base is small by today's standards; we own just 900 acres, and rent a similar amount. We have gone to a continuous cropping system to make the maximum use of our land and machinery and to prevent wind erosion on our light, sandy loam soil.
Because of our continuous cropping we are very dependent on crop rotations to avoid disease and other pest problems. We try to grow cereal crops in alternate years with oilseed and pulse crops. Our main options for cereal crops include wheat, barley, oats and rye. Of these four crops, oats and rye are small markets, and the prices can be volatile. Over-production of these crops can easily depress prices. We are therefore forced to consider planting one-half of our farm with wheat and barley each year.
If we choose to grow the high-quality crops of hard red spring wheat and malting barley that are suited to our growing conditions, we have no choice but to market through the Canadian Wheat Board.
I compare the Canadian Wheat Board to a knife. It can be used as a valuable tool in the hands of a surgeon, or as a weapon in the hand of a thief. The Canadian Wheat Board often mentions that it demands and receives the highest prices world-wide for our grain. If this is the case, why is the Canadian farmer not also receiving the highest farmgate prices world-wide?
I believe that the CWB is being used as a weapon against the prairie farmer in order to confiscate his grain and to make him subject to a non-competitive grain gathering and transportation system.
I have observed wheat and barley prices in the United States for the last two years, and there has never been a time when I could not have received a higher price for any variety or grade of wheat and barley in the United States than that which I would receive from the Canadian Wheat Board. I have asked the Wheat Board's permission to sell my grain to the United States, and I have been told that, to do this, I must obtain a Canadian Wheat Board export licence. This is a law that is enforced uniformly all across Canada, and the licence is granted free of charge by the board -- if you comply with certain conditions. These conditions are not applied uniformly across Canada.
If you live in Quebec or Nova Scotia, there are no conditions. Here in the Prairies, to be granted a free Canadian Wheat Board export licence, you are forced to purchase the grain from the board. You cannot get a licence to export your own grain, you can only get a licence to export grain purchased from the board, even if it is your own grain.
This is not a system of regulation, this is prohibition of trade. Grant me an export licence for the same price that a Quebec farmer would pay for it, and allow me to seek out markets; let me compete directly with the Wheat Board. If the CWB is as effective as it claims to be, the majority of farmers will continue to support it, and we would all benefit from a more competitive grain handling and transportation system.
This discrimination against prairie farmers is causing anger and frustration. The Canadian Wheat Board was forced to admit in court a few months ago that they have no duty of care to farmers. They further admitted that there is no mandate in the Canadian Wheat Board Act to obtain profitable returns for prairie farmers. These self-incriminating statements and the CWB's stubborn insistence on secrecy are dissolving any trust that prairie farmers have had in the board.
Why have the proposed amendments to the Wheat Board not advocated some level of responsibility for the financial well-being of the farmers whose grain it is marketing? Why has there not been a move to lift the shroud of secrecy for the only institution in Canada not subject to the Access to Information legislation? This legislation is no more a threat to the Canadian Wheat Board than it is to the Fresh Water Fish Marketing Agency, the Atomic Energy Control Board, or the Bank of Canada. The act is, in fact, responsible for drawing the lines between what must be kept secret and that information which should be made available to the public.
Any argument that could be made on behalf of the board pales in light of the facts. Saskatchewan is probably the most resource-rich province in Canada. Since the granting of monopoly powers to the board in 1943 the province's population has remained at 1 million people. This in itself would not be a problem, but our population is ageing, and so many of the young people that we raise and educate leave the province for the oilfields in Alberta or booming British Columbia.
Why do we not have a pasta processing industry? Why have most of the flour mills in Saskatchewan closed down? There are 14 pasta plants in North Dakota milling Canadian durum wheat and stealing Canadian jobs while there are none in Saskatchewan. How can your business be competitive when you are denied the right to purchase your inputs on a competitive basis?
Look at the success of the canola crushing industry on the prairies. Here is a crop that barely existed 20 years ago and now it rivals wheat for gross revenues to prairie farmers. Canola crushing is value-adding to nearly one half of the prairie production and providing jobs here in the designated area.
The situation is similar for the other non-board crops. Many Saskatchewan communities have fresh new businesses that are cleaning and processing lentils, peas, canary seed, and other specialty crops. They are creating jobs and wealth for their communities, they are marketing their products all over the world with innovation and high-tech tools such as fax machines and the Internet. What a contrast to wheat and barley where, for all intents and purposes, there is no value-added industry and no encouragement of entrepreneurship for our young people.
These are troubled times with the regionalization of the federal political parties. The Canadian Wheat Board has the potential to break up our country or to make it strong. It all depends on whether it is being used by the surgeon or by the thief.
I appreciate your time and your commitment to this process and I pray that you use your hearts when you take our message back to Ottawa.
The Chairman: Thank you, Mr. Flaman. I will go to Mr. Halyk.
Mr. Michael Halyk: Thank you, senator. I am Michael Halyk. I grow grain, oilseed, pulse, livestock, forage, and pedigreed seed in the Melville area. I am a fifth generation farmer. My ancestors came to this country in the late 19th century from the Ukraine. We have farmed the land in the Melville-Birmingham area ever since; raised our families, and worked in the communities.
I am proud to be here to address this issue, and I thank you for this opportunity. I have spent 20 years as an elected advisor to the Canadian Wheat Board, and I have been totally independent of farm organisations in that position. I bring some of the wealth of knowledge that I have earned in those 20 years to the table.
I have spent my entire adult life being involved in primary agriculture and the formation of its policies. I find the present discussion surrounding grain marketing to be unlike any other policy that we have dealt with in 60 years. Owing to its importance, and to the fact that so many individuals and groups are directly involved in it, we should not be surprised that the debate has become so lengthy, and, at times, so heated. I believe that it is only fitting that this legislation should now have close and careful scrutiny, and then be given final and quick passage by Canada's upper house, the Senate.
There are many areas of the bill on which I could comment. I would, however, like to centre my entire remarks to you today on the issue and the importance of the change in governance of the Canadian Wheat Board.
If you understand Canada's history, which I am sure you do, you will realize that it has always been a struggle to develop a process which would keep farmers involved in, and bound to, the Canadian Wheat Board. In the first 40 years of the Canadian Wheat Board's history that process was made easier by the fact that the vast majority of grain handling was done by farmer-owned and controlled elevator companies. Most of these companies had once tried wide-scaled marketing and had dismally failed, and they knew that their own futures were directly tied to a strong and healthy Canadian Wheat Board.
Owing to all the activity that went on within these grain companies and the strong farm organizations, in the 1940s the Government of Canada put in place an appointed advisory committee to the Canadian Wheat Board. These companies and organizations changed and became more independent and, in 1974, the Honourable Otto Lang changed the appointed advisory committee to one that would be elected by all permit book holders. It should be noted that the same farm organizations that are opposing Bill C-4 today opposed Mr. Lang's move back in 1974.
When we speak of governance of the Canadian Wheat Board, it has a vast and important meaning and purpose. The move to change the governance of the Canadian Wheat Board should be done as correctly as possible, so that this issue can stay out of the realm of politicians and in the hands of the farm community.
A change in governance is certainly not a catch-phrase of the 1990s, at least not if we are talking about the CWB. In my studies and readings I found it was noted as far back as 1970-71 in the Grain Marketing Review Report headed up by Dr. Menzies, which said that the government should improve farmer control and create an atmosphere of modernization in management. Again, in 1989-90, in the Steers Report of the review panel, it was strongly recommended that a new corporate structure be adopted with major control put in the hands of the farm community.
It should be noted that, in that review, the terms of reference were not to study governance but, instead, to examine the challenges and opportunities that will be faced by the Canadian Wheat Board in the 1990s and beyond. I have attached a copy of that report for your committee to review.
We need to ask ourselves some very important questions. Do farmers want to govern the Canadian Wheat Board? This question must be answered first before we can move forward with a governance proposal. I believe you will find, if you have not already, that the farmers in Western Canada feel frustrated and unable to direct grain marketing as they believe they should. I noted with interest a recent grain marketing survey done by my own member of the legislature here in Saskatchewan, Mr. Ron Osika, an opposition Liberal, which clearly points out the confusion that exists in farmers' minds over marketing. However, it also strongly points out that farmers want to be able to elect a board of directors that will govern the Canadian Wheat Board, and they want the Canadian Wheat Board of the future to have a flexibility in its mandate to price differentially, and to possibly sell more crops than it does today. I have attached the survey results and marked it as "Appendix 2."
How do we change the governance and do it right? The first thing I would recommend is that the 11 districts that now make up the advisory committees' constituencies should be maintained, and that the new boundaries for the elected board of directors would be those 11 districts. This would still leave the government with the ability to appoint four of the 15-member board of directors.
My reason for recommending an increase of one director from the farm community is simply keeping the director's area reasonable in size so he or she can do an honest job of representing their constituents. That will still leave every director responsible for approximately 11,000 farmers, representing districts that now make up three to four federal constituencies.
The second recommendation I would make is that the chief executive officer of the Canadian Wheat Board be hired by, and responsible to, the entire board of directors. I have had opportunities to serve on many different boards and committees in my lifetime. I can assure you that the ones that function the best are those that use this particular chain of command.
My third recommendation would be that the appointed board of directors be made on a term basis. If board members wish to operate at arm's length from government, without interference from that government, they simply cannot be appointed at pleasure.
Fourthly, while this recommendation may appear to steer away from the governance issue, in reality it does not. I would recommend that the farmers in Western Canada be guaranteed that they have the ability in the future, without government interference, to either add or subtract grains and other products from the jurisdiction of the Canadian Wheat Board. In essence, I am saying that farmers need to know that a tool is in place so that, in the future, the Canadian Wheat Board can be changed by farmers' wishes without having to go through a political landmine field. As well, we should ensure that this process would allow a board of directors to continue conducting its business, instead of dividing that board of directors over an issue of inclusion or exclusion of grains or oilseeds.
My final recommendation is one that is not referred to in Bill C-4 or its predecessor, Bill C-72, and that is, compensation for the future board of directors. I believe the bill states that the future board would decide on their own compensation. Because the issues surrounding Bill C-4 have become so divisive, I believe this could be a huge mistake. In fact, one of the biggest downfalls on the current advisory committee is that the legislation which we must work under is very limited in allowing for compensation in getting the job done. For close to 10 years the present committee has asked previous and present ministers to address this problem. The response has normally been that the new legislation is being drafted, so there has been a reluctance to change the present legislation. Unfortunately, so much could and should have been done by the advisory committee, which would have alleviated some of the problems we now have in Western Canada, however for many reasons, and certainly proper compensation is one of them, jobs and studies were never carried out.
I am attaching, at Appendix 3, a T-4 reflecting my 1997 remuneration as a member of the advisory committee of the Canadian Wheat Board. While I am not complaining, many would be amazed and shocked at how little we are compensated for the enormous task and hours entailed to do the job.
As I stated earlier, if we are making changes, let's do it right. I would recommend that the Senate, being a knowledgeable and impartial group, immediately conduct a study, and then recommend to the minister in charge of the CWB, Mr. Ralph Goodale, the allowances and remunerations that all the members of the board of directors to the CWB should receive upon taking office. This, I believe, would be a step towards lessening the hostility and anger that may be directed at the first board of directors to the Canadian Wheat Board.
I would be glad to answer any questions you may have.
I am proud to be here as an impartial individual who can to provide you with some small insight regarding the governance of the CWB. I am not here to preach rhetoric; I am sure others will do that.
It is my view that a strong and healthy Wheat Board, which allows producers to sell to the world market through a legislated monopoly, would not only serve my generation of farmers but, hopefully, my children's.
Again, I thank you for your time, and look forward to a positive and early report from your committee.
The Chairman: Thank you. We will now hear from Mr. Fred Harrison.
Mr. Fred Harrison: Honourable senators, Mr. Chairman, I have farmed all my life in the Rocanville and Moosomin area. I produce grain and oilseeds, as well as livestock.
I have brought a friend along from Welwyn, Alvey Clark. He might have a brief comment.
Mr. Alvey Clark: As Fred has said, I farm in the Welwyn area. I grow canola, wheat, flax and peas.
Larry Maguire, who ran as our Wheat Board representative in that area, was soundly defeated by Bill Nicholson. The main argument against Mr. Maguire was that he would not support our views on the Wheat Board.
Mr. Harrison: Mr. Chairman, I think it seems to me that this whole issue has to do with corporations creating monopolies and we, as farmers, are supposed to go it alone. Does that make sense? I don't agree with us going it alone in marketing. Over many years of struggling, we have developed the marketing system and now two people can come alone and throw it out, and that, for their own personal greed, I guess.
Repeal of the WGTA has unleashed dynamic social, political and economic forces that are creating a continental grain and transportation market where mainline railways will be dominated by two continental companies, and the transnational grain companies will absorb the residual pieces of the Canadian cooperative elevator companies. The Wheat Board may no longer be relevant in the emerging continental industry configuration. I think you realize, now, that ADM is now a joint venture with UGG.
Transnationalization of the grain marketing system has serious implications for the volumes and viability of Western Canadian rail, port and elevator systems. These companies will seek economies by exporting Canadian product through their existing and under-used export facilities in the U.S.
Since elimination of the Crow benefit, the government is trying to slow down the logical outcome of the restructuring it set in motion. I believe the government has already decided the industry will be deregulated but is concerned about the political implications of too rapid a transition. Bill C-4 is an interim step to the inevitable total deregulation of marketing when the political climate is favourable.
Proposed changes to the operational powers of the Canadian Wheat Board contained in Bill C-4 allow the option to make cash purchases of wheat and barley. If this option is implemented, the three pillars of board marketing: single-desk selling, price pooling, and government guarantees, will be undermined. This option must be rejected.
The option that would allow the Canadian Wheat Board to make on-farm purchases presents a problem. The Wheat Board does not own any facilities for handling grain, therefore, this practice would alienate and cause conflict with grain companies who, at present, act as agents of the board.
The option of terminating pool accounts at any time and disbursing the funds at any time would result in more administration costs and would seriously jeopardise and undermine the pooling principle. It would cause more unrest, questioning, and condemnation of the board. It would further pit farmer against farmer.
The option of negotiable producer certificates raises the spectre of a separate market in producers' certificates. This also increases administration costs. The very idea makes one's head spin.
The option of establishing a contingency fund to cover deficits from the interim payments or loss in cash payments, would be funded by another check-off, which farmers detest, on their grain. Farmers contend that this is the first step towards government withdrawing guarantees. The government backstop of the Canadian Wheat Board is a tremendous asset to the board's security and operations.
The bill ends the board's role as a Crown agency. As a result, the board's borrowing guarantees, now enjoyed as an agency of Her Majesty, will end. This guarantee has been very important to the board. It saves $60 million to $80 million annually, as it allows the board to borrow funds internationally to finance operations. These savings more than pay for the administration costs of the board. The balance goes in the pool accounts to be distributed to farmers.
While Bill C-4 maintains a board structure, it undermines the principle of orderly marketing. There will be no accountability to farmers. The government will retain all the powers in board financial matters and in appointing the president. A proposed contingency fund to cover board losses on the open market requires farmers to insure and subsidise board speculation, even if they do not use the open market. The proposed power for the board to buy grain in the cash market undermines the price pooling mechanism that supports equity and fairness. The attempt in Bill C-4 to resolve deeply entrenched ideological disputes among farmers will fail.
Following this Senate committee's hearings in Washington and Winnipeg in 1995, you recommended that the present structure of the board should be maintained. You found that powers of the Wheat Board advisory committee could be enhanced. As well, you suggested that, to choose commissioners, the advisory committee could propose names to the minister who would make the appointments.You said that this would ensure some democratic control of the appointees.
The present legislation is a modification of a dual marketing system. The present minister in charge of the Canadian Wheat Board has stated that a voluntary board is not an option.
This is my summation of Bill C-4. I have stated what I find to be the cracks in the armour of the Canadian Wheat Board. If one pig got its nose through a crack in the barn door in order to get out, and was able to push its way out of the pen, the whole pen of pigs would follow -- so goes the Wheat Board. Senator. Whelan talked about ADM who own 80 per cent of our flour milling industry in Canada. What if they were one of the pigs who left?
The last page of my brief consists of an article in The Western Producer, which quotes the former Chief Commissioner of the Canadian Wheat Board, W.C. McNamara as having stated:
One must search for the source of intent of the rumours, and the agenda of those who are attacking the board.
I suggest the attack is from a well-financed minority who are ideologically driven free-marketers who have adopted condemnation of the Canadian Wheat Board as a religion.
My appendix illustrates my point, that is, the support that the western wheat growers are getting from the corporate sector and the railroads of this country.
Senator Sparrow: Would an opting-out clause, which would enable a producer to opt out for whatever period of time, solve the problem?
Mr. Baker: As far as I am concerned it would. I believe in the rights and freedoms of the individual. As a veteran of the last war, I fought to preserve our individual civil liberties and our fundamental freedoms. I see an analogy between this and what I fought for 60 years ago. I think it is a bloody crime that in Canada, after we lost 40,000 men in order to protect our individual civil liberties and fundamental freedoms, we are insulted with this proposed legislation.
Senator Sparrow: Thank you. Mr. Baron, would you respond to that same question, please?
Mr. Baron: Freedom is essential. Our ancestors came to this country in search of freedom. Growers should have the choice to sell their own crop, or to do it through the Wheat Board or some other organisation. The principle of freedom to make that choice is what matters.
Senator Sparrow:You are saying there should not necessarily be dual marketing but at least the choice to opt out; is that correct?
Mr. Baron: Yes, opting out, if you choose.
Senator Sparrow: Does anyone else wish to comment on that?
Mr. Halyk: Opting out may sound good but, in practicality, how will that work?
I had the opportunity to be involved with crop insurance in this province for a short period of time. They developed programs which allowed you to be either in or out. Farms are not necessarily run by one individual. They may be run by a group of individuals. Is it easy for one individual not to be in the program and another individual to be in the program? Who will police this? Do we want to create a police state?
As long as the legislation is wide-ranging enough, a future board of directors could allow individuals to market on their own.
As to the much talked about buy-back procedure, what people are failing to mention is, although they might be paying to go through the buy-back procedure, their grain is still in the pool account and they receive all the payments. Those payments, most of the times, will far exceed any amount that they would put up front.
Mr. Axten: If that were an option given to me by the Government of Canada as a straight opt-out with no other negotiations, I suppose I would do it. I would take it before the the ink was dry.
However, there are other options open to producers. I want to make it clear that I do not want to haul my grain to the U.S.
In 1975 a group of us built a terminal at Weyburn, Saskatchewan to take advantage of better marketing and transportation opportunities. The government of the day thought it was a joke. The minister responsible for highways in Saskatchewan said that he would tax every truck that hauls to that terminal. Now that is the thing to do -- build terminals wherever you want. Now we are talking about transportation issues and rail line abandonment and on and on and on.
If Ralph Goodale sent me a letter tomorrow saying, "You are out of here, cowboy," I would be gone before the ink dried.
Senator Stratton: You said you would like to opt out. If I may, what are the alternatives?
Mr. Axten: I participated in the Western Grain Marketing Panel back in 1996. During our hearings, a number of issues were debated and, at the end of the day, the panel made its recommendations. Some of us felt that the recommendations did not go far enough, but I think most of us agreed that they were a step in the right direction.
However, when the MP from Wascana saw our recommendations, his reaction was: "You guys get the hell out of here. You don't know what you're talking about". We then went back to square one. We told him what farmers want and, to this day, the minister will not listen.
Mr. Harrison: I would call the Wheat Board a marketing "partner" and, to me, that means you have to have everyone delivering into the system because, if you have a dual system, the U.S. will not allow that for very long before they shut the border. They did that a few years ago. The U.S. sets the world price. If we flood the U.S. market, it will depress the world price.
Another issue I wanted to talk is freedom. Two years ago we had the freedom to vote on barley marketing and an overwhelming majority of farmers voted to keep barley under the Wheat Board. What more freedom do we want? Do we want freedom to do whatever we want? Do we want to drive down the left side of the road when everyone else is driving down the right side of the road? Is that the freedom we want?
Senator Taylor: Instead of asking the government to legislate opting out, and basing that on what was done by the Ontario board, would each of you, Mr. Flaman and Mr. Harrison, be willing to trust the board of directors that you elect to decide whether or not to allow opting out? In other words, should we keep the government out of it, give it back to the farmer, and you elect the directors? Would you trust the board of directors that you elect to make that decision for you?
Mr. Flaman: Perhaps you have to step back one question. Will that board be responsible to the farmers, or will they have complete freedom to do what they want?
Senator Taylor: I am asking you to suppose that they have that freedom.
Mr. Flaman: If they had that freedom, and if they truly represented the wishes of the farmers, I think we would probably trust them to make that decision. I think it is obvious that the majority of farmers want this freedom, the flexibility.
Mr. Harrison: I would follow up on that by again referring to the barley vote. If farmers had wanted a dual system they could have rejected the existing system. To me a dual system is not an answer. It is like a man trying to have a wife and a girlfriend on the side. It is most unlikely they would be compatible, and, in bed together, there would definitely be conflict. They are just not compatible. You have one or the other.
Senator Whelan: If I had time I would go after that old editor down there, Don Baron, who used to go after me all the time. He talked about the Cinderella crops, canola and lentils. The government that was responsible for creating those after spending millions of dollars on research. I remember Dr. Downey showing me the work he was doing on rapeseed and canola.The government interfered so much that we brought in an American to do the research, paid him $750,000, which was a lot of money at that time, to do research on lentils. Now Saskatchewan is the lentil capital of the world. This was not accomplished by the board, it was by a minister who believes in the board.
Have we forgotten all the reasons why the board was created? Was it a pink-eyed Liberal or a red-eyed Socialist, no, it was a blue-eyed Tory, R.B. Bennett, who started it. He did that because of the unfair marketing system that existed.
I don't know if you can totally rely on Archer Daniels & Midland for fair marketing. You only have to look at what happened in Windsor, Ontario when they told the soybean board, "We don't have to talk to you any more," to see that democracy can run wild. That is my statement.
Mr. Baron: I have never suggested that the government has given too much support or too much financial assistance to growers, to farmers. I think the money that has been invested has been marvellously invested.
The only issue, as I see it, Senator Whelan, is that we have got to build this industry and populate these Prairies. As Rod mentioned a few minutes ago, 60 years ago we had almost a million people in Saskatchewan, today we have got almost a million people in Saskatchewan. This is one of the most resources-rich areas of the world. The amount of money that it has cost us to ignore this and by tangling it up in politics, boggles the mind. I think we are on the verge of a great move forward, but Saskatchewan should be leading the way in Canada, not trailing along the way we have been for so many years.
Senator Whelan: As you know, many visitors have come to Western Canada to see how our farmers produce in the coldest country in the world. Approximately 55 per cent of our production is grown further north than any other country in the world. They wanted to one of the best systems, and one of the best marketing systems, in the world. Everyone approved of a system where farmers dealt with one agent, not ten. Farmers knew the price and there were no finder's fees or other payments to somebody outside.
By the way, the Canadian Grain Commission was also started by R.B. Bennett. They grew the highest grade of grain in the world. When I travelled as your minister around the world, and I always carried little sample bags that the Wheat Board put so that I could show all the samples of the grain. They were much superior to anything that was grown in United States.
I remember dealing with a man by the name of Maguire from the United States, not the one here, from Nebraska. They would follow their trainloads of wheat all the way to Amsterdam because their customers complained that they not getting the kind of wheat the farmers were producing, they were getting wheat that the grain companies blended with dirt and dust and everything else because they could add a certain percentage to it. Nebraska farmers were sending their wheat all the way there, and it was not arriving as a top quality grade. Their customers often made comparisons with Canadian wheat.
I am not suggesting that the Wheat Board is perfect, but when we think about what has happened in other parts of the world and how it has helped us towards a fair market system, I think it has done a good job.
You are closer to the American border. The wheat farmers in Ontario who are fighting are the ones with the big semi trucks that can scoot across the border to Ohio or Michigan in a couple of hours. It is the ones who are farther away from the border and who do not have the facilities to do that which cause me concern.
We built this great system, and it is still one of the best systems in the world as far as farmers having the individual right to produce and grow what they want, and to set contracts. I could write another column for your paper.
The Chairman: Senator Whelan, thank you for that exhortation.
There is no question that agriculture today is in great change. There are opportunities and there are some problems, including freight rate changes which are changing the situation for our farmers here in Saskatchewan. Do you feel this bill adequately addresses issues such as value added, the ability to produce, the ability to make choices of growing different grains and so on? If this bill does not adequately address the changes that must come, we will be dealing with this next year or in two years or three years.
On our own farm changes have to come. You can no longer deliver wheat at $3 a bushel when it costs you $5 a bushel to produce it. Certain crops such as canola and other grains have saved our farm. That is why I think there is a lot of anxiety about this bill. Would you respond to that comment?
Mr. Flaman: I was born into my family farm, and I had no choice in how the existing system was set up. I do not deny the success of the system's ability to move grain to a buyer in Amsterdam. It is amazing. However, I do not care about the buyer in Amsterdam, I care about the viability of my farm, the viability of this province, and the ability to produce jobs for my children and keep them here.
Just like Herb Axten said, I am seriously considering selling my farm and moving not just out of Canada, but right off this continent.
The Chairman: The question I asked, though, was, does this bill address the changes?
Senator Whelan: Can I answer it? We export the highest percentage of our production of lentils, oilseed and wheat as compared to any country in the world. It is very important that we have high-quality grain to compete with other markets, and we have had that. That is why we have, on occasion, sold at a higher price. That fact is important to your homestead or your farm operation.
Mr. Flaman: Regardless of what system we use to market the grain, it will not affect the quality of grain that I grow, I will still grow the best quality grain because it is in my best interests to do that to get the highest return. I have no intention of lowering the standards to which I produce grain.
Mr. Axten: This bill does absolute nothing to address the question you just asked. This bill is totally regressive to Western Canadian agriculture.
I would make one point on Senator Whelan's statement about the quality of Western Canadian Hard Red Spring and Hard Amber Durum. I agree that we have the highest quality grain in the world, but I want to see the money for that. The Hard Red Spring, grown on the south end of the 49th parallel, hauled to Columbia Grain in Plentywood, Montana today is being sold for $3.50 U.S. That is, in the farmer's pocket; no discounts taken off. The grain that I haul to the Weyburn Inland Terminal will probably sell for $3.50 Canadian. The difference is $1.40 in the exchange rate.
Mr. Harrison: We talk about the freedom to market. Using canola as an example, in 1973-74 the spread between the high and the low was $160 a tonne. About 45 per cent of the produce was delivered in the period off the combine or before November 1 because, on your deferred input, you had to pay interest after November 1 or the end of October, so farmers delivered into the market, whatever the price. If you could afford to wait until the following June, it was about $10 a bushel. The same thing goes on in the Prairies. We talk about freedom, but we beat each other to pieces for own personal gain.
Why is ConAgra and ADM moving in here? They are anticipating the Wheat Board will go. They cannot make money under a Wheat Board system. They can only have handling charges. They believe that people will not be happy with a dual market; that they will not be happy until the bloody Wheat Board is gone.
Mr. Halyk: We must remind ourselves that farmers in Western Canada faced a world trade war from 1985 to 1995 that decimated wheat production. That trade war was not fought over oilseeds or pulse crops, it was fought over wheat. We were innocent bystanders but we were decimated.
We have seen a small upswing in prices since 1995, but we have also seen huge discounts from transportation. That is why we are facing $3 wheat at the elevator. It has nothing to do with the Canadian Wheat Board marketing, it has to do with the world situation.
By delaying this bill and suggesting that a future board of directors will change everything -- improve prices and reduce costs -- is totally fallacy. That is the illusion some people are trying to create.
We have huge problems ahead, both in transportation and in world trade. We have to get on with the job of moving forward so that we can get on with some of those serious and important issues, such as transportation and the world trade talks which are about to resume.
The Chairman: Thank you, gentlemen, for appearing. It has been a most interesting morning.
Senator Sparrow: May I ask just one further question? Are you all practising soil conservation on your farms?
Mr. Axten: Absolutely.
The Chairman: Thank you, gentlemen.
The committee adjourned.