Proceedings of the Standing Senate Committee on
Agriculture and
Forestry
Issue 6 - Evidence - Afternoon 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 1:00 p.m. to give consideration to the bill.
Senator Leonard J. Gustafson (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, we will now hear from our first group of witnesses this afternoon, and I would ask Kyle Korneychuk, Stuart Leis, Henry and Joyce Neufeld and Avery Sahl to come forward.
Would you take the witness chairs, please? We will begin as before, hearing each of your presentations and then going to questions, and we will begin with you, Mr. Korneychuk, if you please.
Mr. Kyle Korneychuk: Good afternoon, ladies and gentlemen. Honourable senators, thank you for allowing me this time to make my presentation. As the chairman has mentioned, my name is Kyle Korneychuk. My wife and I and our two children have a farm in the Pelly area, which is in the northeast of Saskatchewan.
Before starting my presentation I would like to make one point perfectly clear; I support the Canadian Wheat Board and am strongly supportive of the principles of single-desk selling and orderly marketing. Quite simply, the Canadian Wheat Board allows Western Canadian farmers the ability to tackle world markets together as a powerful force. That seems to be a preferable option for Western Canadian farmers compared to competing amongst ourselves first in terms of delivery and price and then in export markets in the hopes of achieving a reasonable price.
However, I cannot support the present form of Bill C-4, and I am suggesting that unless major changes are made the Senate should recommend the scrapping of this bill.
The present government has put the CWB and farmers in a difficult position. Essentially, the government has allowed deregulation to occur in the agriculture industry, and effectively all power has been transferred or will be transferred to multinational corporations. The government has had the audacity to allow Americans to purchase rail lines within Canada. Canadian pork facilities have gone to Americans as well. All of this has happened without farmers having had any input into or any say in the process. Now that the majority of the mechanisms for conducting orderly grain marketing have been removed, the government is asking the farmers to fix a system that has been gutted by government policies.
In supporting the Canadian Wheat Board, I also realise that the Canadian Wheat Board cannot be an effective marketer if it is removed from the transportation issue. You can have the best product in the world, but, it is worthless, if you cannot get it to the market. Therefore, my presentation assumes a large degree of control in the transportation sector by the Canadian Wheat Board, and does not take the compartmentalised approach to marketing and transportation that the federal government is now taking.
Although the Ministers of Agriculture have always indicated that they consult with the agri-industry, I am not sure that that has ever included listening to farmers, or even if farmer input has ever been considered. I do know that, had I conducted this same type of consultative process with my wife, our partnership would have terminated long ago. What I mean by that is that the consultation process has allowed the grain companies, the outsiders, to somehow be given the ability to represent farmers. It is difficult to imagine how the grain trade officials, who make more than $250,000 a year, could represent farmers. One must remember that the present grain companies within Canada have undergone drastic change within the past few years. No longer are any grain companies wholly owned by farmers. The traditional Western Canadian grain cooperatives are no longer ancillary institutions supporting the family farm. Their main focus today is the profitability of their corporation. They no longer see themselves as agents of the CWB, but are entering into alliances with transnational companies such as ADM and Cargill. It may even be a stretch of the imagination to think that any of the grain companies have farmers' interests at heart, when they either have shares traded on the stock exchange or are privately owned.
The new farm policy leaders in Saskatchewan would have to be the Saskatchewan Association of Rural Municipalities. They carry the policy wishes of the majority of producers. Why is that? Although they have no direct commercial interests in the grain industry, they end up picking up the bills for rail line abandonment and elevator closures and then pass them on to the farmers through increased taxes. From their point of view, and from a farmer's point of view, we are not moving towards an efficient system.
The procrastination to implement change has only allowed the division among farmers to increase. The sense of frustration within the farming community is real, but I am not convinced all of it is appropriately targeted to the Canadian Wheat Board. The real issue is money and who is getting it. The fact is that farmers are not getting an appropriate return for their products.
While our governments sit on their haunches and indicate that we must go to a market-regulated non-subsidy pricing mechanism, the Americans and Europeans continue to subsidise their farmers. Everyone then expects the Canadian Wheat Board to compete in this environment and bring a fair return to farmers. This strategy is designed to have only one outcome: the elimination of the Canadian Wheat Board and its substitution by a grain trade that can gouge farmers at will, thus returning to a system of 60 years ago that our forefathers fought to get away from.
No doubt you will hear some farmers criticizing the Canadian Wheat Board, but if you really analyse their statements, I am sure the majority of their criticism stems from the issue that farmers do not receive a fair return for their product. I see the changes intended for the Canadian Wheat Board as the first steps in privatising the board and allowing its demise to occur. Quite simply, the majority of changes will weaken the board and ensure that true marketing power for farmers is reduced, and that the real power is allowed to transfer to the grain trade who, in case some people are not aware of it, are in the business of buying and selling grain for a profit. Please remember that that profit comes directly out of the farmers' pockets.
Data from the Saskatchewan Department of Agriculture and Food indicates that from 1947 to 1996 farm cash receipts have continually grown; however, net income for the same period has trended downward. It would appear that we have too many people interested in farmers' revenues.
At the end of my written presentation there are four graphs that I would really encourage people to look at. There are some interesting statistics there. From 1950 to the present time the number of farmers has dropped; we have half the number of farmers that we once did. Unfortunately, the net income has not risen, though; it has actually fallen. If we are looking at a family-farm operation like my own, we are looking at a net income of under $9,000 for four people to survive on.
The real issue is not the Canadian Wheat Board, which is only one piece of the puzzle; the real issue is that somebody is screwing the farmers. I would also caution the members of this committee that, when listening to presenters, they consider the following: Are they farmers? Will the changes they are suggesting benefit farmers or another group? Do they represent the interests of farmers, or are they a group funded by non-farmers who are only interested in the profit margin? With the profit margin being made on the backs of farmers, I ask you to consider these points, so that all family farms can continue to exist. Otherwise, our next social issue will be what to do with these ex-farmers and their families.
Please do not consider the point lightly. It was almost a year to the day when I was in another hotel room addressing the standing House committee, and there was a young fellow like myself who had an opposing view of the Canadian Wheat Board, and that really discouraged me. I was wondering how two people of relatively the same stature and economic position could have such different positions. It was not until about four months later, when I went to a trade show where this fellow was actually portraying himself as a commodity broker, that I approached him and asked him, "What about your presentation to the standing committee?" He said, "Well, yes, I used to be a farmer, but I have been a commodity broker for years, and they don't need to know everything." So I think you really need to pay attention to who is presenting the position and why he is presenting it.
I believe Bill C-4 should be terminated and replaced with a bill that ensures government guarantees, maintains Crown status, eliminates cash buying, and allows easy access to producer votes for the inclusion or exclusion of grains under the CWB. Although I am firmly committed to this, I am not totally naive, and I realise that the present political climate does not include a political regime interested in promoting a strong-producer economic sector controlled by farmers; rather, it supports a corporate agriculture sector. I am not sure the Senate will be able to kill the bill, and knowing that the present Canadian way in agriculture is to consult and compromise to the lowest common denominator, I am offering some points that I feel must be included as amendments if the bill proceeds.
I have four points on corporate governance and Crown status. First, elections for elected farmer directors could be held and a pool of potential directors established. However, the Minister of Agriculture could then select a predetermined number of farmer directors to sit on the board from this pool. This would allow Crown agency status to remain.
Only bona fide producers should be allowed to run for the farmer-elected positions and it is an insult to farmers to suggest that railway, grain company, or stock market officials could run for the position of farmer-elected directors.
The federal government should not have the ability to overrule board decisions. If this provision remains, the board will be a government puppet, more concerned about partisan politics than benefiting farmers.
Federal government appointees should be term positions, in order that these directors can operate in the best interests of farmers, without fear of repercussions.
With respect to cash buying, I would recommend that cash buying be eliminated or that there be strict criteria by which it can be used. It is essentially a feed barley issue and should be so structured.
As to the contingency fund, it must be eliminated and replaced with government guarantees for all pricing. If a contingency fund is allowed it should be funded by those farmers who create the additional costs through cash selling. It only makes sense that those creating the additional costs through additional risks should be responsible for paying for them; in essence it would be a user-pay system.
The federal government should continue to guarantee adjustments to the initial price. The guarantee should remain. If guarantees remain there is no need for a contingency fund to be collected from farmers. Guesstimates by Mr. Hehn are that the contingency fund would cost farmers an additional $6 per tonne of grain, a totally unnecessary cost if we had a government committed to agriculture.
With respect to pooling periods, I believe that pooling periods should remain as predetermined periods of time. Varying pooling periods will alienate farmers in different pools, and it contradicts the spirit of price pooling. Accurate future price indicators would indicate to farmers when to enter pools or not. This entire issue centres around feed barley and should be restructured to deal with that issue only.
I come now to the inclusion clause. The inclusion clause must remain but be tailored to allow farmers, not commodity groups, to initiate addition of crops to the Canadian Wheat Board. Some commodity groups do not verify that their policy development is voted upon or even supported by the majority of members. The inclusion clause should simply require a minimum of producers initiating the petition to include a certain crop and, at that time, an election could be held. The same process could be used for removal.
At present, transportation costs account for more than 25 per cent of total crop receipts; add input costs and fixed costs and that leaves a negative return on investment for farmers. CN has recently reported record profits. Net income was $403 million, led by the grain business unit posting a 23 per cent increase in revenue, and they still want to abandon rail lines and transfer additional costs on to producers. Compare that to the expected return on investment of 15 per cent for grain companies and this should indicate that farmers need more control of their industry. This can start with an effective and farmer-controlled Canadian Wheat Board maximising returns to farmers, not the proposed system.
I am here today to ask you to carefully consider the consequences of this act and to make logical and fair decisions, decisions which will benefit farmers, and thus the whole country. Please do not view this as a political issue and cater to the corporations so that they can increase their profit off of farmers. The legislation as it currently stands will pass unnecessary costs on to farmers, allow the government to abdicate its responsibility and accountability to farmers, and give the perception that farmers are in control, while, in reality, the government will still be able to control the board of directors.
The legislation now before us is a very blunt instrument which will sever the social contract that now exists between farmers and the Parliament of Canada. This contract will be replaced by a regime where there is more influence directly from the minister's office and the grain trade and, from a farmer's point of view, that is a negative step.
The Chairman: Thank you, Mr. Korneychuk. At this time we will go to Mr. Sahl.
Mr. Avery Sahl: Thank you, Mr. Chairman and honourable senators. To give you some idea of my background, I farm with my son in the Mossbank area. I am a former vice-president of the Saskatchewan Wheat Pool. I served on the advisory committee for about 16 years and spent a good portion of that as its chairman. I spoke on a number of occasions at the International Grains Institute on how farmers fit into the system. I have been on the Grain Standards Committee and I suppose it is as a result of that background that the minister asked me if I would serve on the marketing panel, which I did.
I urge you to get on with this legislation, because farmers have been asking for this kind of legislation for years. It goes right back to the Steer Committee, which the board itself initiated. Farmers had asked for more flexibility, they wanted a board of directors, some wanted a cash buy or reasonably quick interim payments and the government never acted on any of that. The Board itself asked for the same kind of changes and the government of the day saw fit not to implement them. So, in the interest of farmers and their welfare, I suggest you get on with this legislation.
I should also say that our customers around the world are showing some concern -- and some of them have had a 40-year relationship with the Canadian Wheat Board and farmers -- and they are saying, "What is going on in Canada? We have had this standing relationship with the Canadian Wheat Board for years and now we hear about all this turmoil in Canada."
Our marketing panel sent a letter to 70 customers around the world asking them how they felt about their relationship with the Canadian Wheat Board and Canadian farmers. We even sent an envoy, Mr. Denny Stevens, who was head of the Canadian International Grain Institute, to visit these countries. If you want to check the results they are documented in the report.
The only complaint that they had was that the Wheat Board charges too much for its grain. All the other reactions were extremely positive -- we get the kind of grain we ask for, we get it on time, if we have any problems in mixing it with our own grain we get assistance from the Grain Commission and the Institute and the board itself and they say that kind of information is invaluable. That is what our customers think about the Canadian Wheat Board and the relationship with farmers.
The biggest miller in Indonesia, in Jakarta, made a special trip to present his views to the marketing committee. He said, "If I cannot get my grain from the Canadian Wheat Board I will probably go and get it all from the Australian Wheat Board." He was buying about half from us and half from the Australian Wheat Board." The panel said, "What is wrong with buying it from the U.S. or some of the other countries," he said, "I have had enough of that." He said, "When I order a boatload of grain it has got to be at my dock. My mill cannot stand still, it has got to run 24 hours a day and I need to know what is coming up. I cannot fool around with some of these other arrangements that I have had a very bad experience with."
We had a special delegation from Ceroil, China oil, food and cereal, which has had over a 40-year relationship with the Canadian Wheat Board. We were the first country to sell China a large volume of wheat. They said, "What is going on here? We have had a long-term relationship with the board but now there seem to be problems. The Wheat Board has even been accused of being dishonest." They said, "That has not been our experience in our dealings with the board. Quite the contrary."
Another reason for asking you to get on with this legislation is to improve the morale of the board itself. You can well imagine the morale in any organisation that has a good international reputation but that has been beaten about the head and ears as the Canadian Wheat Board has, that has been accused of everything from being dishonest to secretive, and you name it.
I want to deal with two aspects of the legislation where there is some degree of contention.
One is the contingency fund. Can you tell me how in the world an organisation that does about $6 billion worth of business, that is expected to comply with the legislation -- with more money up front for farmers and all the different options for pricing and a whole host of things -- will be able to comply the legislation if they have not got some kind of a fund? Some people are blowing it completely out of proportion, suggesting $5 and $6 billion. That is absolute nonsense. I think the contingency fund should be probably be funded by the government, in the first instance, at a very minimal rate.
Other than that, it should be set up on an individual basis. If those farmers who want to take advantage of this run into problems they should pay the price and not load the contingency funding fund on those who want to stick with the current pooling system. This is something that this group should take very seriously -- I think it was the Saskatchewan minister who alluded to it -- and I think it is a worthy suggestion one.
The other aspect I wanted to talk about is the inclusion clause and the exclusion clause. When I was on the advisory committee I represented an area that stretched from Bengough, Saskatchewan, to the Alberta border. There was a lot of rye grown in that area and I had letter after letter from the rye people saying, "Can you please include rye as one of the commodities the board would market." I had to answer that I did not have that authority, nor did the board have that authority. That authority has got to come from the Government of Canada. I said, "The only advice I can give you is to present your case to the government."
Time went on and eventually rye was added onto the Winnipeg commodity exchange and finally they said, "Sorry boys, we want nothing to do with you." And now is not even marketed through the Winnipeg commodity exchange. Those people are out in left field. I do not know how they market -- I suppose with some sort of individual arrangement with a grain company. That is the inclusion clause aspect.
I want to deal now about the exclusion.
To the bewilderment of the advisory committee, to the bewilderment of the Canadian Wheat Board, all of a sudden the minister responsible for the board made an announcement in Winnipeg that oats would be excluded from the Canadian Wheat Board. The board had already forward-sold oats in the United States, which was the only market at the time, and there were was only about four buyers. After that announcement every elevator company -- I think every farmer -- that had a truckload of oats headed to the United States and started to offer oats and they all had different prices.
My sister lives in a little town in Iowa called St. Ansgar and there is a large oat milling plant just north of town. I was visiting her about two months after the announcement and I saw two government of Canada hopper cars on the mill's track so I told the miller who I was and that was the first time in my life that I have ever been ashamed that I was from Canada because he jumped on my back. He said, "What the hell is going on up there? All I do is answer the phone from grain companies and farmers and some even drive here with a half-ton truck offering me oats." He said, "I do not know what kind of oats they have. When I need oats I have to know what kind of oats I am getting and when it is going to be here. What the hell are you guys going to do?"
I want to ask the oat producers what happened to the premium that the board was getting for milling oats at that time? Take a look at the records and you will find that the oat pool had a $32.3 million deficit as a result of that transaction. The board had contracted to sell oats and they had to renege on some of their sales. An initial price had been set and consequently the government had to pick up a $32.3 million. I think the minister could have at least had the courtesy to call me, as the chairman, or run it by the advisory committee or say to the board, "Sorry, you will not market oats any more." But that is the result.
When barley went the same route the premium for malting barley disappeared and barley prices went down to the same level. So that is what happens.
I just want to explain briefly why the marketing panel agreed to put barley in the open market. There was confusion among the board and farmers and the trade about who was going to handle barley. The Board was a big seller of barley to Saudi Arabia, a very big market of 5 million tonnes, and they were having trouble getting enough barley to fill that contract. Why? Because people were holding back barley to try run up the price in the domestic market. So, there sat the board, trying to fill a barley contract to Saudi Arabia in April and there was no barley. What happened on July 15? A half a billion tonnes of barley hit the country elevator system, but the market for that barley was pack in April, it was not there in July. The recent contract with Japan is another example.
The Chairman: We will now go to Henry and Joyce Neufeld.
Mr. Henry Neufeld: Joyce and I farm in southwestern Saskatchewan. We understood that our brief could not be more than five minutes long, so we will stick to that rule. This is a joint brief. Joyce will lead off and I will conclude.
Ms Joyce Neufeld: Thank you. I do not have the expertise with all the committees and so on that Mr. Sahl has but I have driven a tractor and cultivator, I have hauled fertilizer, I have hauled grain, I have even picked rock, so I am a bona fide farmer.
The time allotted will not allow us to address all of our concerns about the bill, but we will cover a few of them.
Governance. Whether the Canadian Wheat Board and its current structure lacks accountability is debatable, and if accountability is a problem it is unlikely that an elected board of directors will be a solution. We do not support the creation of a partially elected board of directors for the Canadian Wheat Board as a way to enhance its accountability with farmers. Depending on your point of view, the elected board proposed by Bill C-4 may be the worst of all possible worlds. It gives the illusion of control and it will undoubtedly be blamed for all that befalls the board.
The minister, who has the power to select the chairperson of the board from among its members, not all of whom are elected by farmers, and to appoint the president, retains the real power and can manipulate the Canadian Wheat Board behind the scenes. I am sure that former Agriculture Minister Charlie Mayer would have been ecstatic with Bill C-4 in its present form during his reign of terror.
Elected or appointed, the board can only do whatever the legislation allows it to do. Clause 4 of the draft legislation states that candidates are not required to possess a Canadian Wheat Board permit book, which would mean that non-farmers could run. I am sure that railway representatives and grain traders would have the best interests of farmers in mind when sitting on the Canadian Wheat Board.
We believe that the current structure, where farmers can hold the government accountable for the Canadian Wheat Board, is much better. We would, however, recommend more powers be granted to the producer-elected Canadian Wheat Board advisory committee. If this Senate committee sincerely believes that an elected board is more accountable than an appointed one why, then, are we appearing before an appointed body today? I cannot emphasise that strong enough.
Pooling. Where the pool period, which presently means a crop year is changed to such period or periods not exceeding one year as the corporations may order, is also of great concern. This would allow for pooling periods of any length so long as they do not exceed one year. In our opinion this would encourage producers who are financially able to do so to withhold grain hoping for a higher price in a later pool. It would, however, place many farmers in the position of selling into the lower price pool when funds are needed to pay bills. We feel that the problem of the shortages should be addressed through contract closures rather than pool closures.
Inclusion-exclusion. The clause that allows only commodity groups to request other grains be added to, or deleted from, the Canadian Wheat Board clearly discriminates against farmers who choose to be represented by general farm organisations. Manitoba's Keystone Agriculture Producers, Alberta's Wild Rose Producers, the National Farmers Union and the Canadian Federation of Agriculture are virtually eliminated by this clause. As producers of both oats and rye, and as members of a general farm organisation, we find it highly offensive that we have no opportunity to place these grains under the single-desk selling powers of the Canadian Wheat Board. We are certain that there are many other producers represented by the general farm organizations who would like to have the opportunity to market other grains and oilseeds through the Canadian Wheat Board.
Government guarantees. The contingency fund may need to be as high as 10 per cent of the Canadian Wheat Board revenue, the 1995-1996 Canadian Wheat Board revenue was $5.8 billion, which would mean a total of $580 million. This would translate into $5.45 per tonne of grain per year for five years on every tonne sold through the Canadian Wheat Board. This would come directly out of farmers' pockets and is completely unacceptable.
Bill C-4 was supposed to strengthen the Canadian Wheat Board, but it does not do this. In fact, it weakens it leaves the door open for its complete destruction. It would effectively destroy price pooling, single-desk selling, government guarantees and orderly markets, all the pillars that are the strength of the board.
Mr. Neufeld: I think that it is appropriate to say why we are here and why these changes are being proposed in Bill C-4.
The minister would have us believe these changes express the views of western farmers as documented at the Western Grain Marketing Panel meetings.
As one of over 300 farmers in attendance at the WGMP meeting in Swift Current, Saskatchewan, let me set the record straight. At the conclusion of that meeting a recorded vote was called for. When the question was posed as to who supported the present single-desk selling monopoly with expanded powers for the Canadian Wheat Board only five were opposed, two abstained and the rest voted in support. This is very typical of all the WGMP meetings in Western Canada. Let me state very clearly that the WGMP report completely misrepresented what really took place in Swift Current. The official report is so much at variance with the truth that I am moved to say that the panel members in attendance in Swift Current were either asleep or the meetings in Western Canada were nothing more than a deliberately planned fraud.
At 12 recent Canadian Wheat Board meetings in western Canada farmers voted overwhelmingly, 10 to one, for withdrawal of Bill C-4. The barley vote strongly favoured keeping barley under the single-desk monopoly of the Canadian Wheat Board. Very clearly, farmers are not in agreement with Bill C-4 and, as stated previously, it would effectively destroy price pooling, single-desk selling, government guarantees and orderly marketing.
The legislation is very flawed, and does nothing to give farmers more control. In fact, it gives them less. Nor does it strengthen the powers of the board. We ask that you have this bill withdrawn and scrapped in its entirety.
The Chairman: Thank you. Mr. Leis?
Mr. Stuart Leis: I am from Kamsack where I farm, with my brother and father, some 4,200 acres of grain and oilseeds.
Two years ago, almost to the day, I came to Regina to make a presentation to Mr. Goodale's grain marketing panel. I and many other farmers spent two days here in Regina only to soon learn that it was a total waste of time and tax money. Basically, he accepted none of their recommendations. I certainly hope this will not be a similar exercise in futility.
Since the March 1996 panel hearings much has happened. Many farmers have been charged with selling grain to the highest bidder and have been taken to court, some repeatedly. Many have already been found guilty and have paid fines, very large fines. Some have pleaded guilty to plea bargain for a lesser fine and an end to the expensive court process when, in fact, they were guilty of nothing more than selling grain to keep their farm business alive and feed their families. For many of us, our day in court is still coming.
We are seeing terrible inconsistencies in the courts. Dave Sawatzky gets acquitted and, on the same charge, Andy McMechan gets 155 days in jail and is treated worse than a serial killer. As a result he loses his farm. What kind of a justice system do we have? What kind of a country throws farmers in jail for trying to make an honest living?
One major issue with me and most of the farmers is that of property rights. Whose grain is it? When we seed our wheat in the next couple of months at what point is that no longer our wheat -- when it comes out of the drill, when it emerges from the ground or perhaps when we harvest it or when we sell it?
If the Crown prosecutor says at the David Brian court case just a little over a month ago that we have no right of property then why do we not get some financial assistance to grow that wheat crop. If it is not ours why do we have to assume all the risk and bear all the costs or, conversely, since we do have all the risk why can we not sell it to the highest bidder?
The price difference of wheat today between the Canada and U.S -- I am speaking of my farm -- depending, of course, on whatever deal somebody has made is at least $10 a tonne. It has usually been $35 to $40 a tonne or more.
The Canadian Wheat Board monopoly has cost our farm well in excess of a million dollars since 1989. That was the first year we tried to market wheat into the U.S. for about a $1.65 a bushel premium and the CWB would not sell us a permit to export, it was just not available at the time. This is our retirement I am talking about.
The issue of Canadians not having property rights frightens me. If the government can expropriate our grain it can also expropriate our other possessions, such as our land and our homes, as it did with thousands of Japanese Canadians some 50 years ago. I have recently been made aware that Canadians do not even have a valid constitution and that nobody can come up with a signed copy of the British North America Act. That might help explain why we do not have any property rights. It looks like we are in a bigger mess than first meets the eye.
Getting back briefly to the David Brian case, I am wondering what Mr. Chrétien was doing in Winnipeg the day before the judge rendered his decision. You do not suppose he talked to the judge something like when those mandarins flew in to talk to the judge at the Andy McMechan trial.
I understand that the Ontario wheat producers will soon be able to decide whether or not they do sell to an open market or to Ontario's Wheat Board before the beginning of the crop year. How is it that they can have a choice of a dual market but we cannot? Is that not discrimination? Is Canada still not one country?
The last and most important issue I wish to address is Bill C-4. This is not what prairie farmers want. We do not want canola, flax and oats included in the CWB monopoly along with wheat and barley. These off-board crops are our only bright spots. They are our only cash crops.
We are getting Bill C-4 rammed down our throats just like Bill C-68, the gun control bill. We do not want it. Just as gun control will not stop crime wheat control will not make us more money. Those are freedoms we are talking about and we are losing them. Rather than trying to amend the Wheat Board, under what lawful act or authority does the government have the power to set up a wheat marketing board in the first place? I understand marketing boards are illegal. Further to that, Mr. Goodale made an order in council making it, in his words, "crystal clear that an export permit must be provided to the chief officer of the customs," while an order in council is completely illegal and without effect.
This all makes Canada look very bad. It is looking more and more like Cuba and China. Just wait until more Canadians find out what kind of a country we are living in.
On behalf of our farm and every sensible, logical-thinking free enterprise farmer in western Canada I am asking you gentlemen of the Senate to abolish Bill C-4, and while you are at it abolish Bill C-68 as well, and take steps to immediately implement a voluntary Wheat Board. Let those who choose to deal with the CWB do so but do not force those who do not want to have to. It will happen sooner or later and you all know that. Do not put off the inevitable any longer.
The Chairman: Thank you, Mr. Leis. Mr. Wigmore will replace Mr. Murray Bright. Mr. Al Wigmore, please.
Mr. Al Wigmore: I am a farmer from just west of Regina, a third generation farmer. We farm peas, lentils, canary, sunflower and, if we have to, a little bit of wheat just for rotation. We do not farm wheat because you cannot make money at wheat. When you are losing money growing a crop you wonder why you seed it.
For me to put this into perspective is pretty simple. From the time we were small we have been taught that lying and stealing is wrong, but when it comes to the Canadian Wheat Board we are forced to sell to them, and we believe this is the same as stealing our product.
Last fall, when I harvested my one field of durum, you could get on the phone and get an elevator price that would be paid to the farmer. Any elevator just south of the border was $8 a bushel for durum. The price in Moose Jaw, where I happened to be hauling that day, was under $4 a bushel. That is a $4 difference in price. We will get a final payment on that, if we are lucky I will get $5, but $3 a bushel is the difference between paying your bills and not paying them. We are not getting treated fairly by the Wheat Board.
Part of the problem with the Wheat Board -- and we have supported the cooperative system for years -- the cost-plus system to the farmer once the grain leaves the farm gate. When you unload your truck in any elevator in western Canada there is a government tariff of 28 cents a bushel. If you unload it in an elevator where there is competition it is 7 cents a bushel, a quarter the rate.
Grain storage. Canada is the only country where the farmer has to store his grain. We cannot deliver our grain to the system because the system will not take it. But who gets paid the storage? The grain companies. We store the grain and the grain company gets paid the storage. When a local elevator is to be demolished a farmer cannot buy it. The Saskatchewan Wheat Pool would not sell an elevator to a farmer. He might compete with them, this poor little farmer would compete with this multi-national company. The elevator is destroyed even though it could be used for storage by farmers.
We have a system that is opposed to farmers. We cannot believe that even the auditor general is a risk to the Wheat Board, that he cannot look at their books. How could our auditor general be so dishonest as to destroy the Wheat Board by looking at their books. We cannot understand that.
It is funny that in Canada a farmer and his wife, his children and his grandparents, can harvest a crop in six weeks, maybe eight weeks in a poor year, but yet our government-run railways and our Canadian Pacific cannot haul it to port the rest of the year. We are pretty efficient and yet we have to pay the cost.
It is now so expensive to haul your grain by rail that I could truck it to port cheaper than the railways would haul it. I could buy myself a truck and truck it to Thunder Bay cheaper than what it costs me to haul it by rail. How can we support a system that is so backward and so inefficient that it is no wonder we cannot grow wheat and make money.
As a farmer I must have the opportunity to sell my wheat or my barley to those who want to buy it. Instead, I am forced to sell it to the Wheat Board, which will not sign an honest contract with me. We now have a contract system with the Wheat Board by which you have to sign a contract that you will deliver your grain but there is no commitment from them to buy it and no price is set. I can sell my peas, I can phone up any company that wants to buy and they will tell me what they are paying and if I agree to it on the phone there is a fixed price and the commodity has to be delivered within a certain time frame and everything is agreed to by both parties.
The Wheat Board complains about not getting their product but they do not give you any guarantees. We have to hold their product but they will not give us a price or tell us when we can deliver. I can do that with lentils, I can do it with canary, I can do it with sunflower.
I grew sunflower last year for the first time. I can phone -- there are three people in Manitoba who buy it -- they offer you a price and if you agree to it either they pick it up or you deliver it. One variety of sunflower that I tried had to be delivered to North Dakota, and they told us it had to be delivered at a certain time and it was delivered and it was paid for and it was no problem.
So these people that say that we cannot market grain, that only the Wheat Board can market grain, do not know what they are talking about, because that is all you have to do. The same grain companies that buy our other products will buy our wheat and our barley if the Wheat Board would get out of the way. Either they should buy it from us and pay us for it or else let us sell it. The problem is that sometimes we have got to sit on our grain for over a year after we grow it before they will take it off our hands and then pay for it a year later, which this is not acceptable.
I could say more to tell you that the way the Wheat Board is run is corrupt, completely corrupt in the eyes of the farmer.
Senator Hays: Just a question on the permit holder qualification to sit on the board. I think you could refer to people from sectors that maybe one would not expect to sit on the board, railways and so on, but I think for instance of Lorne Hehn. I do not know whether he is a permit holder or not. He is a permit holder? In any event, there may be some people who are professionals in the grain business who a district might want to consider. In particular I think of the president of the board, the amount of time he or she would have to farm in terms of their responsibilities as president. There are two of the presenters here who thought that candidates should be permit holders to sit on the board.
The Chairman: Mr. Sahl?
Mr. Sahl: Well, certainly, the producer-elected people who will be elected to the board have got to be permit holders.
There is a great disagreement about who the appointed members should be, but almost every board in the private trade picks out people with a certain expertise. Even the Imperial Bank has a farmer sitting on its board. There are a lot of organizations that have asked people to sit on their board who have different strengths that they can bring to that board.
I have not got any big concern about the government appointments because they know damn well if they appoint somebody who is not acceptable and does not have something to contribute to the board they will come under severe criticism. I do not object to the government maybe appointing a person from the University of Saskatchewan, Alberta, or Manitoba, agricultural economics, somebody who has got some real strength in international trade. I think that gives some strength to the board.
Mr. Neufeld: It is my understanding that the changes that were proposed in Bill C-4 was done purposely to give farmers, no one else, control of the Wheat Board. If we have people sitting on it who are not farmers, who could be representing corporate interests, is that not the direct opposite of what Bill C-4 was designed to do?
Senator Hays: Just to comment a little bit on that, the farmers would elect the board member, and the way the bill is structured I guess the president and four other board members will be appointed. But certainly the 10 would be elected by farmers, I assume from districts, because there is a requirement to represent certain geographic areas and so on. If someone other than the permit book holder was elected to sit on the board it would be because the farmers had elected that person.
Mr. Neufeld: I am very fearful about who will be on the board if it should come about that you can have people elected who are not farmers. We have large corporations that would have a farmer run on their behalf but I am very much concerned that their interests would not be with the person out on the land. Just from Joyce's and my perspective, no, we would oppose that adamantly.
Mr. Korneychuk: I would just like to add a little bit to what Mr. Neufeld said. I guess it is a good question, Senator, to ask, but I bet that if Jean Charest ran or the Pope ran, he would get some votes. The legislation was supposed to provide more accountability to farmers, and quite frankly I am getting tired of everybody else making decisions and calling themselves farmers. Let farmers have a go at it.
There is another side of the question, about bringing in expertise but the farming community has a lot of expertise too. You talked about Mr. Hehn, but where did Mr. Hehn come from? I think we have to look at the accountability issue. We will have five outsiders, for lack of a better word. I do not think there is anything wrong with restricting 10 or 11 to being farmers.
Mr. Leis: I wonder what expertise a permit book gives anybody? I do not see any relationship here at all. Or does a permit book qualify one as a farmer? We farm over 4,000 acres and for the past five or six years we have not had a permit book. You do not need a permit book to grow a lot of bushels. We could grow twice or four or 10 times the bushels or have twice or 10 times the acres and still not have a permit book, because grain is very easy to market, so I do not see any expertise. I will challenge pretty much anyone, on an acre-to-acre basis, to out-produce us on our farm. So we have expertise in agriculture, we have expertise in marketing. I do not see that having a permit book gives you any kind of expertise.
Mr. Korneychuk: I think the assumption in the modern world is that, if you are a permit book holder, you are also a farmer. I do not disagree with some of the points you made but how do you identify what a bona fide farmer is? I think permit book was used as an example. It is not necessarily the only point.
Senator Taylor: With regard to Mr. Korneychuk, you had some very good graphs here on income and operating expenses that showed that everything is rising except net income. I have seen that the price of farmland has continued to rise over the last 10 to15 years. I was just wondering, if the statistics and the economics are as bleak as you paint them -- and I think our chairman said yesterday somewhere it shows there was only a 3 per cent rate of return on capital -- just what explains the rising land prices?
Mr. Korneychuk: I am not an economist, but in my area we are seeing a lot of farms move away from being the traditional family farm, being purchased as corporate farms -- grain companies are getting involved in purchasing land or renting land. We also have the Native people -- they have purchased a lot of land and that has driven up the prices.
On a family farm to family farm basis I do not really see those price increases in our area. The value is going up, but I think you also have to think in terms of relative dollar values for a given year. When you look at that the increase is not as dramatic.
Mr. Leis: I have a question that I put out to anybody here basically. If we have such a world class system in the Canadian Wheat Board why do we then have companies like ConAgra and ADM coming in to move our grain to export, and doing a very good job of it and making us more money as farmers for delivering to them?
Senator Hays: Well, I do not know that I can answer it, but I assume they cannot. I assume they are like any other receiver of grain in terms of their Canadian operations for wheat and barley.
Mr. Leis: It appears that they are not exactly the same, they are definitely tied to the U.S. market and they definitely see that there is money to be made here. We are being paid for it, we are getting quite a premium for the particular type of grain we are growing and selling it to a particular company that is shipping it across the line. Even though they are having to jump through some of the hoops so far as export permits are concerned they are still getting considerably money for us, and that is all I care about is what comes to my farm, than we would get if we delivered by any other method like, for instance, the CWB.
Senator Hays: I do not know, I am just assuming that whether it is the Saskatchewan Pool or ConAgra or Cargill or Alberta Wheat Pool, they operate in the same environment
Mr. Leis: It would not be the Saskatchewan Pool.
Senator Hays: I listened carefully to your presentation, which is similar to some others, and I would like to know the extent to which the board's prices are a factor in the extreme distress that many feel about the board.
One of the witnesses earlier today was pointing out that we have gone through a period of, basically, price war, a trade war in the cereals because of rich subsidies to produce and, on top of that, export subsidies as part of the common agricultural policy of the European union, and we have seen the United States respond. So, for a couple of generations Canadians, when they developed a system to move and market, did very well growing certain commodities but that has come under a lot of stress recently because of international market. Trying to fully understand the problem by not looking beyond our borders is perhaps not a good idea. Perhaps there are world factors at play here.
Mr. Korneychuk: I would like to response to Mr. Leis' question -- and it may be something the senators may consider. We farm in the same area so we will battle here a bit.
When you are talking about ConAgra you are talking about a company that is coming in and trying to buy grain, so there are premiums, there is no doubt that you can make a bit more money. They plan to lose 15 to 20 per cent the first year, reduce it in the second year and turn a profit in the third year. So we will see price fluctuations.
The interesting part, though, is they do not buy all your grain. They want a select group. Mr. Leis brings out the point when he says the "my farm." That is important because everybody is interested in their own farm. But I think that my wife and I look at it a little bit bigger picture, we look at it from the point of view of everybody's farm. If you deal with the Canadian Wheat Board you will not always get the best price, I would never say that for certain, but in an overall picture it will provide a better return to a majority of farmers. Then the issue is, are we talking about a majority of farmers or are we talking about specific farmers.
The reason I say that is I am hooked up to probably just as many DTN systems as he is and I have beat the board three years out of 11, so that is where I am coming from. It is hypothetical that I beat them three years out of 11. That was picking a day, selling all my grain, not worrying about orderly marketing or getting it to market.
I think you need to weigh the two issues. It is not always highest price, it is moving all the grain at the best price.
Mr. Sahl: I just want to clarify some remarks that the gentlemen on my right made. All my relatives are in North Dakota, Minnesota and Illinois and they are all farmers. I have sat and I listened to them phone around for prices. They spend all morning doing that. They calls up a semi and they said, "The price is this much," and he has got to deliver it to the riverfront on the Mississippi, to Archer Daniels Midland and when he gets there he is told, "I am sorry, that price was this morning's. It is a different price this afternoon. You either take it home or you take this afternoon's price." That is one of the things that our friends in ConAgra and the ADMs are pulling off in this free market country of the United States.
The Chairman: We sell canola as well and we phone ADM in Velva, North Dakota, or we phone Pioneer or we phone the Wheat Pool and whoever gives us the best price buys the canola, so that is not a big problem. It is a 1-800 number, it is not a big problem.
Mr. Wigmore: The only time they will not give you a price is if you will not give them a quantity. If you give them a quantity they will sell that quantity and give you that price. We sell products that way all the time.
Senator Whelan: You were talking earlier about appointed directors and elected directors. The commissioners who are there now are full-time. How many farmers who are qualified, as business people, et cetera, will be able to serve full-time on the board? Will they give up their farming operations to be a full-time director?
Mr. Sahl: Well, I know that one day spent at the advisory committee took you away from the farm. I do not see farmer directors being full-time, but I think they are there to give guidance.
Senator Whelan: What do you think about a retired farmer who is a senator, maybe from another part of Canada, who has a lot of agricultural experience, being on the board of directors?
Mr. Sahl: Well, knowing you and your history, I would not quarrel with you at all.
Senator Andreychuk: Mr. Sahl, you were with the Canadian Wheat Board. To what extent were you consulted or involved in the marketing strategies of the Canadian government, particularly in the trade talks? Were you consulted before, during or after?
Mr. Sahl: I was not on the advisory committee when the trade talks first took off, so I really cannot answer that. I know that the current advisory committees are consulted.
Senator Andreychuk: But, during your tenure, were you ever consulted?
Mr. Sahl: We were consulted on a host of things, that was part of the job.
Senator Andreychuk: We have had trade talks for a long time in this country. Were you ever formally consulted?
Mr. Sahl: We were certainly in on the discussion on the U.S. subsidy programs, the subsidy programs of the European Common Market and things like that. The trade talks I was referring to were the ones that started in Venezuela and I was not there when they got started.
The Chairman: I wish to thank each of you for appearing here today, for taking the time to prepare a brief, and we do appreciate that.
At this time we will call Mr. Bill Rees from the Organic Crop Improvement Association. Mr. Rees, will you give us a five-minute presentation, and then we will go to questions? Would you tell us where you farm?
Mr. Bill Rees, Organic Crop Improvement Association: Okay. As mentioned, my name is Bill Rees, I am an organic farmer. My farm is southwest of Stockholm, Saskatchewan.
I belong to chapter 6 of OCIA. In our chapter, which is situated in northeast central Saskatchewan, there are approximately 43 members. My comments will be brief and, hopefully, clearly understood. The presentation that I have, as mentioned, is brief.
I speak on behalf of myself. Maybe I should mention that my farm is a small farm, it is approximately 500 acres, there are all sorts of grain that I produce, barley, wheat, oats, flax, rye. So far as the two products, namely wheat and barley, are concerned, we, and including myself, have a problem with the Canadian Wheat Board in as much as we have to buy this product back when we choose to export to the United States of America or anyplace else in Europe.
This matter has been discussed to some lengths at different meetings that we have had in our chapter, and on April 26 last our chapter passed a resolution in unanimous style, and to verbalise that just shortly it states this: "That this chapter adopt a policy based on the principle of open market system for certified organically-grown products and which is exempt from the Canadian Wheat Board."
Presentations and a little background is that insofar as our organic groups are concerned, the different chapters, we have made representation on behalf of ourselves with a similar objective in mind at the time that the marketing panel came through the province and also, later, with the Bill C-74. You may be interested to know that the marketing panel recommended our exclusion. When it comes to the C-74 presentations, there were four of us last time in Regina, three of them requested absolutely, very clearly, that they would like to acquire the exemption. The fourth party was a little ambivalent, he had positive things to say and negative things to say.
So far as we are concerned, we do believe that it is a superfluous situation that currently exists by virtue of the fact that the Canadian Wheat Board does not market any of our product, and it is an encumbrance in more ways than one. It is costly and difficult to carry through the buy-back arrangement, and it is also difficult by virtue of the fact you do not know exactly what it will cost always. So, in my particular case, I have not included barley and wheat in my rotation. I have on two occasions, and last summer I did sell some grain to the Saskatchewan Wheat Pool which I was quite satisfied with, however, other than that, I have excluded it.
I suppose our request would be something like an order in council to exempt our product from the jurisdiction of the Canadian Wheat Board. It could be something similar, and I guess I have to be careful how I word this, because there are some variances in the matter of the opting in and opting out so far as the Canadian Wheat Board is concerned. I understand that arrangement is being dealt with in Ontario. If it could happen, and it was absolute, it would be quite satisfactory to us.
I would like to make a positive statement with regards to organics. I think that most of our organic farmers are smaller, and they are becoming more than simply organic producers of grains, but also they are producing beef now, we are starting to get into that, and probably the most commendable thing that can be said about the organic industry is the fact that it does realise smaller units and more families in rural Saskatchewan. We have got a mighty big problem over the last 35 years in Saskatchewan with a complete revolution in our population circumstance. We now have 20 per cent rural, 80 per cent urban.
I suppose I could carry on for a while, but I think principally I have made my point.
Possibly one last and remaining thing would be that I expect that in the past there had been some question with regards to the integrity of and security, if you like, of the industry in as much as maybe other products other than organics could enter into the industry and there could be some problem associated with that. There is a possibility there but I have to say that it is a small possibility. The integrity of the industry is quite complete and thorough, there is certificates required in all transactions, and our certification people in OCIA, which is an international group, I think are quite thorough.
So far as our chapter is concerned, we have a clear endorsement from the OCIA, and I would have to speak very positively on behalf of their integrity. I believe that it is a responsible group and we will continue that.
The Chairman: I have one short question. When you ship your product in a container or bags or otherwise, is it generally the freight paid by you, or the buyer?
Mr. Rees: All the grain that I have sold has been at farmgate, right at my farm.
The Chairman: So they pay the freight?
Mr. Rees: That is right.
Senator Stratton: Two questions. The Wheat Board does not market any of your products at all?
Mr. Rees: No they do not.
Senator Stratton: But they want control?
Mr. Rees: Well it would seem as though they do, because they have had probably time sufficient to alter, so I would have to accept that as fact, yes.
Senator Stratton: You have excluded Wheat Board crops from your farm except for rotational purposes. Is that a philosophical or an economic decision, or both?
Mr. Rees: It is an economic one. I would like to grow wheat this year because it fits into my rotation but, virtue of the fact that traditional grain, especially wheat, is going down, it is an extra risk to transport that to where most all my markets are in the United States. My buyers are mostly millers. Selling wheat, not knowing all of the additional expenses, is too risky, so I choose not to do that.
Senator Hays: You are one of two organic presenters today, and we had one yesterday. You represent the Organic Crop Improvement Association, and this morning we heard from a representative the Saskatchewan Organic Growers. Yesterday we heard from another organic group. How do you all relate to one another? That is, is there one main organization, or are there several organizations which reflect the producers of organic or farm commodities?
Mr. Rees: I am glad that you asked that question. What we have organized for Saskatchewan is a body called the Saskatchewan Organic Directorate. We have met several meetings over the past year, and we have a final meeting April 8 in Saskatoon. We have named officers to the executive, and each chapter has one representative. The terms of reference for the organization are put in place, and I would have to say that the initiatives that are being taken are both straightforward and very encouraging.
In my presentation, I speak in regard to the Canadian Wheat Board, so I do not wish to address it in my opening remarks. However, the Saskatchewan Organic Directorate is a body to which I am a second chair, and our principal preoccupation is to serve the producer.
We also have a sunset. That is, we are named to our offices for one year. If we do not produce, and if we cannot convince the producers of the industry that we are there to benefit them or to provide the leadership that they require, then we are gone. I like that.
Senator Hays: As organic producers, you have a very highly-specialized product -- probably not a high-volume product -- which requires a specialized marketing approach. It sounds like the Wheat Board is not interested in getting involved in that, and you might not even want them to be involved in the actual marketing. Could you comment on that?
I will add my last question, which deals with the future of your type of farming. You mentioned that it requires more labour, and thus offers more employment for farmers. I would also appreciate your comment on that.
Mr. Rees: Your first question referred more to markets.
Senator Hays: The CWB does not seem to be interested in marketing organic grain, wheat and barley, although it might be, and I would like to know about it if that is the case. It does not seem likely that it would be, given the volumes involved, and also the specialized marketing approach.
The other question deals more with the industry's evolution in terms of providing farm employment, at a time when we seem to be going in the other direction.
Mr. Rees: The Canadian Wheat Board has not marketed any of our product in the past, and has not indicated anything that would lead us to believe that they intend to do so in the future.
The Saskatchewan Wheat Pool, which probably works very closely with the CWB, has taken a positive step by identifying one of their elevators at Ernfold to receive our product. They will possibly identify three more in the province to handle our grain.
To answer your question more specifically, no, I do not think that the CWB really wants to be involved in the marketing of our grain. I would think that it could probably benefit from identifying markets to people such as those in the Pool, but, as far as we are concerned, it is an encumbrance that really has no justification.We are not asking for anything; we do want any contribution or grant.We want the exemption, nothing more.
You asked about the industry and its volume. I have 500 acres, and looking after them is all the work that I want. There is a lot of work that goes into it, and a lot of the timing is very important. Again, of course, it depends on what kind of a job you want to do. That is, if you want to do an exemplary job then, of course, you pay more attention to it. All of us, or at least most of the organic farmers that I talk to, have a special inspiration when it comes to clean food and a clean environment.
Senator Taylor: My understanding is that, when a buy back occurs, a pooling price comes in. This is the basis for the argument that buy-backs are not as bad as they look.
Is there any such a thing as a market pool? You said that they do not sell any grain, so what kind of a price do you get if you do go through that buy-back process? Is it just the same amount that you would get if your product were non-organic?
Mr. Rees: That is a hard question, because there are so many variables in the buy-back arrangement. You never know specifically what the price will be. Although they tell you that it will be the Chicago quote of the day, that does not always follow through. A lot of the time you find that the price will be something different.
Senator Taylor: Not only Archer Daniels Midland changes its price then?
Mr. Rees: That is right. It is too uncertain to run with.
Senator Taylor: On a pool basis you are supposed to get some money later, I understand. Do you not get a second price, a second amount of money, if you sell that way?
Mr. Rees: When you market through the Saskatchewan Wheat Pool, yes. I mentioned earlier that I had sold at the Saskatchewan Wheat Pool. I did get a final payment, but it was the common payment for a conventional grain. It was not a payment which reflected the fact that it was an organic product.
Senator Taylor: I am having trouble wrapping my mind around this, because I cannot understand why the CWB want this if it is as innocuous as you say. The only thing that I can think of is that the Wheat Board sees this as a loophole through which a lot of other sales will be done.
On an organic farm you will raise a lot more things than wheat and barley. What percentage of the organic product of a Saskatchewan farm be wheat and barley? Is that the principal thing an organic farmer raises or are you busy on oats and other things?
Mr. Rees: I cannot answer that question. I do not know what the percentage would be.
Senator Taylor: How about your own farm?
Mr. Rees: Hopefully, I will grow wheat this year. Last year I only had 75 acres, but this year I would produce about 150 acres of wheat. I cannot answer that question because I think that there is a problem with the volume and the acreage by virtue of the buy-back.
Senator Fairbairn: On examination of the bill as it currently stands in relation to the exclusion clause, would you not hope that a vigorous expression of will on the part of your organic producers might have the effect that you desire? That is, in getting your products exempted from the Wheat Board?
Mr. Rees: Yes, we would want that very much.
Senator Fairbairn: Yes. This morning we heard from another producer, and that caused me to look at the act. I am suggesting that there might be cause, under the clause as it is currently written, for future optimism on your part.
Mr. Rees: Oh yes, I see, the way the bill as written. As I understand it, yes, that could be a possibility. Having read it, however, it is a little bit on the Shakespearean side, where it has these little variants or deviants, or whatever.
Senator Fairbairn: Again, though, if you had a majority elected board of farmers you would have the opportunity to make a very vigorous case. With the ultimate prospect of a vote of producers, your producers, I suggest that there might be more cause for optimism than one might think right now.
Mr. Rees: Those representatives, those directors, would be conventional farmers. They would not be, naturally, representing the organic industry.
Senator Fairbairn: No, but they would be elected farmers representing the interests of farmers in Western Canada. Were you to vigorously present you case, I would suggest there might very well be cause for optimism.
Mr. Rees: All right. As I mentioned in my presentation, we have met with the marketing panel, we have met with C-74, and we have now met with C-4. If something like you suggest is necessary in the future, we will be doing that too.
Senator Whelan: I just have one question. Do you have any statistics that show the benefits of eating organic-produced food; how much longer our life expectancy is, how much less disease we contract, our immunities to flu, colds, et cetera? Do you have anything that really shows the advantage of organics?
Mr. Rees: The only thing I can say is that there is a lot of interest in the product. The industry is growing all over the world. It has taken off in Europe, and, here as well as in the rest of North America, the industry increases itself by approximately 20 per cent a year.
It is all for the consumption of the product; that is, millers are purchasing our product and turning it into foodstuffs. That seems to be the enthusiasm. With the baby boomers going through the population profile, they want to look after their health. They seem to be turning to us, and because they like organic food we will produce it.
Senator Whelan: I remember seeing statistics that showed that, if we all tried to survive on organic-produced food, we would not be able to. We have to have the fertilizers, the weed control products, et cetera, or else there would be mass starvation. People feel that organic food is better for them, though, so they will be for anything that is better for them.
Mr. Rees: There are a lot of negative things that come out with regards to the organic industry. If you listen to Mr. Avery of the United States of America, who I suspect is sponsored by the American Department of Agriculture, he will tell you 1,001 reasons why the industry should be aborted and should be plowed under.
In addition to that, there are currently decisions being made by the United States Department of Agriculture to water down the quality of the product, so that it will almost become part of the regular industry. The people in OCIA and other certifying groups are really upset over that, and they will fight a big battle over it.
As far as Canada is concerned, there are a lot of things happening with regards to a Canadian standard. At the moment, I think that those standards are being accepted. There is still more work to be done, however -- principally in the area of accreditation.
The Chairman: Mr. Rees, I want to thank you for appearing here today, and for taking the time to present a brief to us.
The Chairman: Next we will call next the Saskatchewan Wheat Pool, Mr. Marvin Shauf, and those who are accompanying him. Marvin, we welcome you here today. Could you introduce the people with you?
Mr. Marvin Shauf, Vice-President, Board of Directors, Saskatchewan Wheat Pool: Thank you very much. I have with me Mitchell Demyen and Dan Schmeiser, both of whom work in the policy and economic research division of the Saskatchewan Wheat Pool.
The Chairman: Thank you. You will make a presentation first and then we will go to questions.
Mr. Shauf: My name is Marvin Shauf, and I am a farmer from the southeast area of Saskatchewan, near Stoughton. I am also the Vice-President of the board of directors of the Saskatchewan Wheat Pool.
On behalf of the 74,000 members of the Pool we are pleased to have this opportunity to provide your committee with our input. The Saskatchewan Wheat Pool operates approximately 325 country elevators in Saskatchewan and parts of Manitoba, as well as terminal elevators at Thunder Bay and Vancouver.
Over 30 per cent of the grain, oilseeds and special crops delivered to country elevators in the Prairies moves through our facilities. In the interests of diversification, we participate in a host of activities, including wheat and oat milling, the production and marketing of bakery supplies, barley malting, oilseed crushing, and processing. We also provide cattle and hog marketing services, and are involved in their direct production and processing.
Through the operation of our democratic structure, the Saskatchewan Wheat Pool develops and promotes various policy positions on issues important to our producer members. Our policy on grain marketing, and specifically on the Canadian Wheat Board, is fundamental to our organization.
The Pool strongly supports the orderly marketing of western grain through the Canadian Wheat Board. We believe its success and strength stem from three key pillars; single-desk selling, price pooling, and government guarantees and credit. Any changes through Bill C-4 should preserve and enhance these three pillars.
We are in agreement with the stated policy objectives of the federal government. That is, we agree that we must build upon the proven strength of our existing marketing system while, at the same time, modernizing the governance structure and enhancing its accountability. We must also improve responsiveness to changing producer needs and opportunities, and provide more flexibility and faster cash flows through Canadian Wheat Board operations in order to minimize the future complications in international trade. However, we believe some amendments are imperative if the goals set by the government are to be fully met.
Our preference would be for changes to the legislation. Most of our concerns could, however, be addressed in the drafting of the regulations. It would be unfortunate if Bill C-4 were unduly delayed, thereby preventing early director elections, which will hopefully be held this fall.
Our recommendations may be grouped into the following; changes to the Canadian Wheat Board's governance structure, and enhancement of the three pillars.
The future governance of the Canadian Wheat Board is a sensitive issue to prairie grain producers. The Canadian Wheat Board is their marketing agent and its mandate is to maximize returns to them. Its policy decisions must reflect the needs and wishes of the majority of that farm constituency. As a result, it should be fully accountable to them. The government's decision that two-thirds of the directors' positions on the board of directors will be filled by a vote of producers helps to establish this necessary accountability. However, the legislation is still deficient in respect to the selection of the president and CEO, and the inclusion of that senior officer on the board of directors. Therefore, the Saskatchewan Wheat Pool has some recommendations with respect to the board.
Firstly, the president should not be a member of the board of directors. Furthermore, the board of directors should have the power both to appoint and to terminate the employment of this individual.
Secondly, all directors should initially be elected at the same time, in elections held prior to the end of 1998. In the future, only half of the board should be up for re-election at any one time.
Provisions in the legislation such as those which allow the CWB to make payments to producers in order to offset the cost of farm storage, or to issue tradable certificates, are consistent with the three pillars. Other provisions, such as the removal of the federal guarantee on adjustments to the initial payment and cash purchasing, are inconsistent and detrimental. The creation of a contingency fund will have a negative effect both on producer perceptions and on their cash flow.
We appreciate that the legislation provides for federal government guarantees of Canadian Wheat Board Borrowing, and the sales of grain made on credit. However, Bill C-4 would also remove the federal guarantee on adjustments to the initial price. It is our understanding that there has never been a deficit in a pool account caused by an adjustment payment. Hence, the guarantee on adjustments represents virtually no financial risk to the government.
Therefore, the Saskatchewan Wheat Pool does not support the removal of the federal guarantee on adjustments to the initial price. In addition, more timely adjustments could be achieved by removing the requirement for cabinet approval, and simply requiring the approval of the minister responsible for the CWB and the Minister of Finance.
The Saskatchewan Wheat Pool is extremely concerned with the provision of the legislation which will enable the CWB to make cash purchases directly from farmers. It is our view that the co-existence of an ongoing, unrestricted cash market and a revenue pool under the CWB would not be sustainable, and would lead to the ultimate demise of the pooling system. As well, managing two different pricing systems would be unworkable for grain companies, as it would put them in conflict of interest in purchasing producers' grain. Furthermore, it could disrupt the orderly flow of grain and undermine the efficiency of the grain handling system. We believe that the creation of tradable producer certificates, which is provided for by the legislation, will largely negate the need for cash purchases. Therefore, the Saskatchewan Wheat Pool does not support the concept of cash purchases of grain by the Canadian Wheat Board.
The Saskatchewan Wheat Pool is also uncomfortable with the possibility of several pooling periods during the crop year. Taken to extremes, this could lead to regular cash pricing via different means. Even the use of two or three separate pooling periods could introduce speculative decision-making and supply uncertainty, which would be detrimental to effective single-desk selling and throughput through the system. We therefore believe that provisions for multiple pooling periods during a crop year should not be used in a way that undermines the fundamental principle of pooling.
The Saskatchewan Wheat Pool strongly objects to the establishment of a contingency fund, as is proposed in Bill C-4. We do not believe such a fund is required to achieve the goals established by the government or to enhance the three pillars of Canadian Wheat Board marketing.
The Saskatchewan Wheat Pool has identified its concerns with the provision that enables the Canadian Wheat Board to make cash purchases. The contingency fund would backstop this. We do not believe it is in the farmers' interests to have the returns from CWB marketing finance a measure which could ultimately destroy a fundamental pillar of that very marketing system.
We have already stated that guaranteeing adjustments to initial payments or initial prices poses little risk to the government and would not represent a likely expense. However, if such guarantees are replaced with a contingency fund, they will represent a real expense to farmers, especially if the farmers are required to forego some of the returns from the Canadian Wheat Board in order to establish and build such a fund. Farmers are already burdened with the costs of government budget reductions and cost-recovery actions.
It is our understanding that the contingency fund will be allowed to go into deficit, so an accumulation of funds for adjustment payment guarantees should not be necessary. We recommend that references to the contingency fund in Bill C-4 be deleted. If the government chooses not to implement this recommendation, we strongly feel that the regulations of the act should be drafted to prescribe a maximum limit on the moneys that may accumulate in the fund. We believe that amount should not exceed $30 million.
The Saskatchewan Wheat Pool recognizes that the government felt it necessary to include a clause which would provide for the inclusion or exclusion of crops from the marketing jurisdiction of the CWB. We appreciate the effort that has been made to prevent frivolous requests for producer votes on the inclusion of new crops.
Under the proposed legislation, a vote would have to be recommended by the board of directors and requested by an organization representing producers of the commodity. The latter condition, however, may lead to legal battles over whether one group or another actually represents producers. To help clarify this condition, the Saskatchewan Wheat Pool proposes that producers seeking to add or delete any crop from the CWB jurisdiction be required to submit a petition signed by at least 10 per cent of the producers who list that crop in their permit books. The board would then conduct a plebiscite of all primary producers of that crop to decide on the addition or deletion.
We acknowledge that the inclusion/exclusion clause is a concern -- both to those who support the CWB single-desk marketing authority, and to those who do not. In response to these concerns the minister has proposed further amendments to this clause. It is our understanding that these amendments would require both the current and the future minister to consult with the board of directors and to hold a favourable producer vote prior to introducing legislation to add or delete crops. The Saskatchewan Wheat Pool would support, in principle, the introduction of such a clause.
In closing, I would again express my appreciation for the government's efforts to enhance the effectiveness and the accountability of the board. The Saskatchewan Wheat Pool is generally supportive of Bill C-4, and believes that the changes we have recommended would make it a stronger and more effective piece of legislation. We hope that the Senate committee will give serious consideration to our concerns with respect to cash buying and to the contingency fund, and that you will adopt our recommendations.
We are confident that the suggestions made in this submission will help to ensure that the CWB is effectively governed by producers and continues to serve them well into the future. In our opinion, the mindset of many producers has shifted from the proposed legislation to the forthcoming director elections. Changes to the governance of the CWB have received, and continue to receive, wide-spread support from prairie producers. We believe that the realisation of this wish by producers, to elect directors to the CWB, should not be unduly delayed.
Senator Taylor: You mentioned that the mindset of producers has shifted to the proposed legislation. Earlier, we heard it suggested that the electoral boundaries for the members of the board of directors be the same as for the advisory board -- although it would have to be taken into consideration that there is one more member of the advisory board. What is your opinion on this?
Mr. Shauf: There are a different number of directors involved in the election, and that would require the changes that you mentioned.
Senator Taylor: There is a difference of one, yes.
Mr. Shauf: There are a number of other criteria that need to be looked at in determining those boundaries. Some of them may be cropping patterns, some of them may be geographic; there are different production areas, different concerns. I think that those would need to be looked.
Senator Taylor: On page 5 you mentioned your concern as to cash sales breaking down the system, and yet you do say that tradable producer certificates would negate the need for cash purchases. Why would anyone take a cash purchase when they could take the negotiable tradable producer certificate? The certificate would likely have some upside, whereas a cash payment would not. In other words, are we not worried about nothing; will not the certificates always replace cash sales?
Mr. Shauf: The cash purchases, I think, create some different issues than do the tradable certificates.
The tradable certificates would be something that a producer would have and could sell and get his price, get his cash, up front.
The issue with cash buying, I think, is that it can put grain companies in conflict with themselves. That is, in terms of purchasing barley, the major issue would be whether feed barley would go into the domestic market or into the export market. In that scenario, you would have the grain company competing directly with the CWB for those barley supplies.
Senator Taylor: That is not what you say at the top of page 5, which is what I asked you about.
Mr. Shauf: On the top of page 5 we said that the cash sales create some problems, and that the tradable certificates would negate the need for those cash purchases. I am saying that the cash sales or the cash purchases by the grain companies put the grain companies in a conflict with the Wheat Board, for which they are acting as agents. The tradable certificates do not do that.
Senator Taylor: I do not follow you but go on.
Senator Eugene Francis Whelan (Deputy Chairman) in the Chair.
The Deputy Chairman: Thank you, Senator Taylor. Senator Hays?
Senator Hays: Thank you, Mr. Chairman. I understand your position on the contingency fund. You do not think that they should create a fund, but, if they do so, you have suggested a cap.
If there were no contingency fund would you object to there being a provision for after-the-fact deductions to cover a loss that arises out of a mistake on either the initial or the final or adjusted payment?
Mr. Shauf: Would we object to the producers paying back an overpayment from the CWB? That would then be money that producers had already received that they would be paying back?
Senator Hays: I suppose that that would be a good answer. It might be a risk borne by the pool, in that the Pool is exclusively the commodity or the class of grain on which the overpayment was made, yes.
The contingency that would be borne by the pre-charge of a potential loss would be, I assume, on all classes of grain, if that loss occurred before. If that payment were taken before the loss occurred, it could also be handled the same way after the loss had occurred, it could be a return of the overpayment to the one pool.
My question is, do you say that the government should bear the risk, end of debate? Is there any case where you would agree with some means of recovering the overpayment; either from the whole, as occurs with the contingency, but post-loss, or from the pool to which the overpayment was made?
Mr. Shauf: As I understand it, the return of a loss to the pool accounts would be built from a lesser payment to producers in the following year.
Senator Hays: Is that acceptable? The government's problem, I think, is with having an open-ended risk, one which is not underwritten in any way, neither by a contingency fund nor by a future payment. If we did not underwrite it with a contingency fund, do you object to it being charged after the fact?
Mr. Shauf: No, we have not objected to it being charged after the fact, the pooling accounts would be closed at the end of the year, and the following year there could be a lesser payment made to those commodities.
The legislation does provide for it to go into a deficit and the deficit could be returned by producers.
Senator Hays: I am curious about your own board. I assume that it is elected from districts, either directly or through delegates. Many have expressed to us a concern that it is difficult for a board to deal with business decisions and political decisions at the same time. What is your feeling on this, speaking from your own experience?
Mr. Shauf: Our board is elected. We have 16 districts in the province, represented by 123 delegates. Each district elects one director to our board.
Senator Hays: From among their numbers?
Mr. Shauf: Yes. A similar structure has governed our board for almost 75 years. I would argue that the Saskatchewan Wheat Pool has operated very effectively throughout that period, with farmers on the board of directors.
Senator Hays: Have you ever considered direct election, that is, not using the delegate process? Has that ever been a matter of debate, and rejected?
Mr. Shauf: I do not recall it ever having been a direct debate. I think our system is working very well and I have not seen any serious proposal to change it.
Senator Andreychuk: I wanted to go back to a couple of points in your brief. You do not support the appointment of the president by the government.
Mr. Shauf: Right.
Senator Andreychuk: One of the witnesses has said that this is a check and balance system, designed to allow the government to check and balance the board should the board, for whatever reason, not make the appropriate choices. This seems to have been raised as one reason for having that clause in the act. Do you see any other benefit of an appointed president/CEO?
Mr. Shauf: I believe that the government has the ability to appoint five board members to the board of directors and I think that that, in large part, covers their potential for risk.
I think that a board of directors, in order to be able to function effectively, needs to be able to hire its president and CEO, and the president/CEO needs to know that he or she is responsible to that board of directors.
Senator Andreychuk: It is simple management?
Mr. Shauf: It is a simple, ordinary, corporate management structure.
Senator Andreychuk: You have said that there is a benefit in not delaying elections. You have also said that there are some necessary changes, and that there are also some things that you strongly feel ought to be amended.
If the act were passed as is, that is, if it were not amended, what do you think the situation would be five years from now? Would the Wheat Board have the same competence to act on behalf of the farmers, or would the weaknesses that you have pointed out have the potential to weaken or destroy the single marketing concept?
Mr. Shauf: That is not an easy question. It never is an easy question when you are asked to look into a crystal ball.
Let me just say that I think that our amendments would make the CWB more effective in terms of fulfilling its mandate to serve producers. I also believe that they would make it stronger, and give it a longer life span, allowing it to be more effective in the future.
Senator Andreychuk: We have heard from a number of individuals and organizations who have a lot of concerns about Bill C-4. There seem to be two camps. The first would prefer to strengthen the CWB and to make it more exclusive; perhaps even more exclusive than this act would make it. The other would like more independence from this structure; either a dual system, or an opting-out system.
You live in Saskatchewan, and you have an understanding of the farmers. If this act were to pass without amendments, would this exacerbate these two polarities, or do you think that the debate will die down after passage?
Mr. Shauf: I think there will be an ongoing debate about the Canadian Wheat Board, and about its effectiveness. I think what the proposed legislation does improve, however, is the accountability of those who guide the CWB to the producers. It allows the producers to influence the people who set the direction for the board. I think that this should, and most likely would, create more satisfaction with the Wheat Board.
Senator Andreychuk: How would the Saskatchewan Wheat Pool deal with the election of board members? Would you enter into information services, into direct assessment of the election? Would you play a hands-off role, or would you be involved in ensuring that some of your corporation's perspectives would be incorporated into the successful candidate?
Mr. Shauf: The role of the Saskatchewan Wheat Pool in the election process would largely be up to our membership. I think that we would probably want to introduce the candidates to our membership. Beyond that I would be guessing.
[Translation]
Senator Robichaud: Thank you, Mr. Chairman. On the first page of your brief, you say that you have 74,000 member-owners. This is very impressive. I would like you to give me a profile of your members so that I can better understand who they are.
[English]
Mr. Shauf: We have members in other provinces as well, but by and large our members are farmer-producers within Saskatchewan. They operate all kinds of farms.
[Translation]
Senator Robichaud: I understand that your association is made up of small, medium and big operators. So you cover the whole spectrum of producers?
[English]
Mr. Shauf: Yes, we do.
Senator Leonard J. Gustafson (Chairman) in the Chair.
Senator Whelan: The first time that I was at a meeting, we had 44 members of the House of Commons at a committee meeting in Regina. I suggested to the Saskatchewan Wheat Pool that their elevator system might be slightly obsolete and outdated, and that places such as the government elevators at Moose Jaw and Saskatoon should be taken over by the Pool. I was nearly run out of town. In southwestern Ontario, though, we had the big cement silos with asbestos siding, steel, cement, and double cleaners.
From our hearings, and from my observations of your organization, I notice that you are on a very modern modernization and consolidation program with your grain elevators. Is that correct?
Mr. Shauf: Yes.
Senator Whelan: Today we heard evidence that many new companies will be doing business in Saskatchewan. Will this allow you to compete with them?
Mr. Shauf: I think that the system that we are developing is about competing, about providing service. Many changes are coming about because of the deregulation, and there are a number of factors driving those changes.
Senator Whelan: I agree with a lot of the things in your brief; I like it very much. I do not know whether I agree with the idea that the president should be elected by the board, however. If the government is still to have the responsibility for financing and protecting the operations of the CWB, I think that it should have some say in who the CEO should be.
Mr. Shauf: I think that, by virtue of having five directors appointed to the board, the government does have some say. Further, for the board of directors to be able to function appropriately, it needs to have the power to both hire and dismiss the CEO.
Senator Whelan: On page 4 you say the "Saskatchewan Wheat Pool does not support the removal of the federal guarantee on adjustments to the initial price. In addition, you say "more timely adjustments could be achieved by removing the requirement for cabinet approval and simply requiring the approval of the minister responsible for the Canadian Wheat Board and the Minister of Finance".
I was a member of the cabinet for nearly 11 years, and I strongly disapprove of that. In my experience, two people should not be making a decision for which the whole cabinet and the Parliament would be responsible.
Mr. Shauf: What we were proposing was an accelerated process through which adjustments would be able to be made to producers.
Senator Whelan: Sometimes, I think, the accelerated process may be a process that is not well known, or not public enough, even within the administration. I have strong reservations about that.
You say that you are uncomfortable with several pooling periods during the year, and I agree with you on that.
Do the Alberta and Manitoba Pools concur with you in your brief? Have you discussed it with them, or is this the Saskatchewan Wheat Pool's own brief?
Mr. Shauf: This is our own brief. We have had discussions about this specific topic with the other two Pools, but there would be a couple of places where the Alberta Pool, in particular, would not support our recommendations.
Senator Stratton: I understand that you are building an elevator outside the country; is that true?
Mr. Shauf: Yes, that is true. We are building a couple of elevators outside of the country.
Senator Stratton: Just across the border?
Mr. Shauf: Just across the border, yes, in North Dakota.
Senator Stratton: Could you tell me why?
Mr. Shauf: That facility will be handling grains for a partner with whom we will be working in the United States, and it will not be Wheat Board grain. There are a lot of grains that are welcomed into the U.S. at this point, and the plant will largely handle oats.
Senator Stratton: You obviously have a lot of confidence in the fact that there will be free trade across the border, and that the U.S. is not likely to put limitations on the quantities of those grains which you bring in.
Mr. Shauf: We have a lot of confidence that the U.S. government will not put up barriers for grains going into the United States. We have a lot of confidence that, in the long-term, Canada will move a lot of grain into the United States. We are not precluding the possibility that there will be times when there are problems with grain going into the United States, however.
Grain going into the United States by rail car is less of a problem politically for the U.S. than grain which enters on trucks, and that is a significant factor.
Senator Stratton: I can understand that. The Canadian Wheat Board would likely export more and more grain to the United States as well?
Mr. Shauf: The CWB will probably export more grain into the United States. That market will likely continue to grow. The CWB almost exclusively deals with end users in the U.S., as opposed to putting grain into the American handling system. That is a major difference as well.
Senator Stratton: You have no fear, then, of the grains that are not currently under the Wheat Board? Would you still be building these elevators if you were concerned that these grains might be included in the CWB listings?
Mr. Shauf: I am sorry, I did not understand.
Senator Stratton: You are saying that you are building those elevators for grains that are not currently under the CWB. If, through the inclusion/exclusion clause, the board decided to include those grains under CWB, would you have any problems with that?
Mr. Shauf: I do not think it would be a problem for us if the Canadian Wheat Board were to have control of more grains. We have worked with, and we do work with, the CWB in moving grains to market, regardless of where those markets are. If the CWB handles a grain, we work with them. If the CWB does not handle the grain, then we market it directly.
Whether the grain is handled by the CWB or not, I think that the market is there in the United States, and I think that we will work in those markets. We believe, though, that the farmer gets the best returns through the Canadian Wheat Board system.
Senator Stratton: If you can do this through pooling, if some of those grains are put onto the CWB lists and you can still market your grains or put them in elevators in North Dakota, why can an individual farmer not do the same?
Mr. Shauf: Part of the issue is whether or not you believe in single-desk selling.
Senator Stratton: I understand, but, if it is sauce for the goose, why can it not be sauce for the gander?
Mr. Shauf: It is all about whether the premium markets are shared by individuals, or whether they are shared by a larger group. It is about whether the premium markets are pooled with all of the markets, whereby everybody within that pooling system achieves a weighted average price, or whether you exclude those premium markets.
Senator Stratton: The grains that you are marketing now, those which are not on the list -- are you not marketing those to obtain premium prices for your pool, for the Saskatchewan farmer?
Mr. Shauf:There are some significant benefits that we let disappear if we do not maintain the vigilance of the Canadian Wheat Board single-desk.
If you allow grain to drift across the border and be segregated down there, you no longer have the ability to be able to extract those premium prices from the market, because now you have a competitor who has, potentially, the same product that you do, and is competing against you in the world market.
The Chairman: I just have one additional question on that. If I, as the farmer, buy the grain back from the CWB at the elevator, I am charged an additional price. I just checked this out because we needed some durum seed, and for $4.74 number 1 durum without any protein, the buy-back for me is $7.17 from the Wheat Board. Are you, as an elevator company, paying the same price for the buy-back that I do?
Mr. Shauf: I cannot answer that specifically, but I would assume that we are. As I understand it, that is the CWB's asking price, and that would be the same for you as for me.
The Chairman: As a farmer, when I buy back I have to pick up the freight and handling charges, as well as other charges. That is why it is $7.17.
When there were fleets of trucks going south, a lot more of the grain was hauled out of Moose Jaw by the Saskatchewan Wheat Pool than by individual farmers. As an individual farmer, I would have to buy that grain back. Did you have to do so?
Mr. Shauf: Was it CWB grain that was moving?
The Chairman: It was durum.
Mr. Shauf: Well if it was CWB grain that was moving, the Saskatchewan Wheat Pool is an accredited exporter; we perform that function on behalf of the Canadian Wheat Board. I am not exactly sure of the relationship, but the returns from that premium market would go back into the CWB.
The Chairman: If you had to pay the same price that a farmer would, you would not be making any money hauling it down there. That happened on our own farm. We went through the CWB, we got a permit to do it legally, and we were told that with regards to returns, we had to send a cheque to the CWB, and we would get the rest of the money from the pool.
Mr. Shauf: I personally saw cheques that came back from grain that had gone into the United States -- some of it illegally. I know for an absoloute fact that those people, at the end of the year, had less money in their pockets than they would have had had they marketed legally, through the CWB.
Senator Taylor: We have been surprised, yesterday and today, by the number of organic farmers who would like their organically grown wheat and barley to be excluded from CWB jurisdiction because of their uniqueness and small volumes, which make a buy-back process expensive and needless. They would like their grains to be dealt with as you would deal with flax or oats. As a representative of the Saskatchewan Wheat Pool and as a very, very big buyer, do you agree with that? Would you agree that their product, organically-grown wheat and barley for human consumption, should be taken out of the board?
Mr. Shauf: I personally know a number of organic producers who work through the CWB, and who are very satisfied with that situation. They have the ability to take part in the market in the United States and they also take part in the pooling returns through the CWB.
Senator Taylor: They should be happy?
Mr. Shauf: I think there is a way for them to work through the CWB to accomplish their goals.
Senator Andreychuk: Just a clarification, I think, to Senator Stratton and Senator Gustafson.
You are saying that the prime reason that you do not want someone to opt out of the CWB and sell, is that they would be a competitor for you because they would have the same high quality. Is the only driving and compelling reason to keep the CWB the fact that they would not be able to withstand the competition? Would the Wheat Board not, by nature, have quantity as a selling point?
Mr. Shauf: The Canadian Wheat Board obviously has quantity. What Canada has, though, is quality. The quality is an important enough factor to be able to recognize premiums from it alone.
If you allow someone else to develop the same product that you have, you have given up an advantage. The notion of single-desk selling is to not have other people competing against you in the marketplace with your own product.
Senator Andreychuk: But the product is the farmers' product?
Mr. Shauf: Yes it is.
Senator Andreychuk: Historically, as I understand it, the Wheat Board was supposed to be the agent?
Mr. Shauf: Yes.
Senator Andreychuk: I am trying to understand your reasons. I thought that there were all kinds of compelling reasons for the CWB; not just quality and the fact that it could not stand the competition.
Surely the farmer would continue the quality, and the Wheat Board would still have the majority. You seem to be saying that, if the system is opened up, the farmers will all leave the Wheat Board, which would then not have the quantity, and would not be in a preferred position for negotiation.
Your statement that the farmers want the Wheat Board cannot be correct if you are saying that, given the opportunity, they would all leave. I am sure that, given an opportunity, some would leave, but not all of them. The majority would presumably stay, and the competitive edge of the CWB would be maintained.
I am just trying to get some logic out of this. Am I wrong about what you are saying?
Mr. Shauf: The first thing is the quality. The U.S. is a premium market, there are a number of premium markets in the world, and the U.S. is one of them. The U.S. is a high user of our product.
I will address the issue of the CWB as an agent of the farmer, which is exactly what it is. People say that they have to sell to the CWB. Nobody sells to the CWB; everybody that markets wheat sells through the CWB. It markets on behalf of farmers and the returns from the marketplace come back to the farmers.
The premiums that you can extract from the marketplace are, therefore, a very important part of pooling, and of the price of pooling. You need to take the high markets with the low markets -- you have to put them all together.
If you take the premium markets out of that pooling, then you do not have an attractive pool account. If the CWB is not the single marketer into the United States, you have taken a premium market out. Am I missing something?
Senator Andreychuk: What you are saying, then, is that if you have exclusive rights, you are in a better selling position?
Mr. Shauf: Exactly.
Senator Andreychuk: My point was that, if you are the big gun in the situation, and there are a few minor players, you might lose a little of your competitive edge. You will not lose a lot, however, if you represent the majority. Are you trying to say that something else happens?
Mr. Shauf: I have been in China where they bragged about buying Canadian feed barley through the United States, just so that we knew that they did not have to pay any more than the world price. That told me an awful lot about how important it is to maintain the single-desk selling.
Senator Andreychuk: You think that sufficient numbers of farmers would opt out, and that exclusivity would be lost?
Mr. Shauf: The United States is a premium market for Canadian grain, so there is an economic pull to go into the United States.
Senator Andreychuk: If that happened, if farmers left, then I would have to question the role of the Wheat Board. Was it not fulfilling its role, if it did not attract and maintain a majority of farmers?
Mr. Shauf: It attracts the majority of farmers, and it maintains the premium prices along with the other international prices. It puts all of those prices in a pooling account, and returns those prices to the producers.
Mr. Dan Schmeiser, Research Division, Saskatchewan Wheat Pool: Not to belabour this but, for the purposes of clarification, I do not think we can market all 20 million tonnes of wheat into the U.S. It is a premium market, but to sell all of our crop, we have to sell to all markets, not just to the U.S.
A great deal has been said about quality, and quality commands a premium; you can leave that on the table if you are competing against yourself. The single desk also gives you market power, however, because we do market 20 per cent of the world's wheat, and there is a premium extracted because of that market power, as demonstrated in the Kraft, Furtan, Tyrchniewicz study.
We have also seen that there are premiums to barley because of that single desk. Collectively, producers benefit because they are receiving more money than they would in a system which pits individual against individual.
Senator Sparrow: You mentioned, Marvin, that you were in China. Was that with the Wheat Board?
Mr. Shauf: No it was not.
Senator Sparrow: You mentioned that they talked about the price of barley, and their ability to buy it. Were you saying that the U.S. was charging the same price that we were?
Mr. Shauf: No. They just wanted us to be clear that, once Canadian barley was available in the United States, we had a competitor with our own product.
Senator Sparrow: What did they mean by that?
Mr. Shauf: What they meant by that was that you can take apart your advantage in the marketplace by not segregating your product and maintaining a single desk.
Senator Sparrow: Because of different barley, or better barley, or what?
Mr. Shauf: They had the barley from Canada that they wanted, and they did not have to pay any premiums for it, because once it was outside of Canada it had to compete on the world market.
Senator Sparrow: I still do not quite understand that. If some of the Americans bought it and it was a better barley, they would sell at a premium too, would they not?
What I am trying to get at is secrecy in the Wheat Board itself. It continually talks about competitiveness, and yet says that it cannot release any information; it cannot reveal what the members of the board are paid, or what the staff is paid, or how much its associated costs are, et cetera, because of the competitive aspect. It would seem to me that the price of barley and wheat is well known in the market, correct?
I sold canola to Mexico, and all of the companies would give me the price that they would give me to transport it there. There was no hiding or anything from the Wheat Pool, from the Cargills, et cetera. It seems to me that that information is out there, is it not?
Mr. Shauf: I would doubt it. I would doubt very much that the information that product is moving into Mexico is public knowledge. I have not seen any company that is willing to make its own on-the-ground data public. Everybody talks about it, but I do not see anybody else that is putting up their actual marketing numbers. Companies will make public their price for buying a product from you, but I do not see anybody making the price that they will sell the product at public.
Senator Sparrow: I am just telling you that they did it with me.
Mr. Shauf: They did?
Senator Sparrow: Yes, all the companies did. I would be happy to give you that information, including the prices, if you are interested.
Mr. Shauf: You were doing business?
Senator Sparrow: Yes.
Mr. Shauf: If you are actually doing the business, that is one thing. I do not think that they would give those prices to anybody else.
Senator Sparrow: There was no swearing to secrecy or anything like that.
Mr. Shauf: If you are actually doing business, that is different than just handing out the information.
Senator Whelan: Are you not involved in some kind of a joint program for a grain elevator in Poland, with the European Development Bank?
Mr. Shauf: Yes we are.
The Chairman: I want to thank you for appearing; we appreciate the brief that you have presented.
We will now call Gene Davis, the Director and the Chair of Grains, Organic Special Products Group.
Mr. Gene Davis, Director and Chair of Grains, Organic Special Products Group: I am Gene Davis, a certified organic farmer from North Portal, which is in southeast Saskatchewan. I have been farming there for most of my life.
What I am presenting to you here today are copies of submissions that we presented to the Canada-U.S. Joint Commission on Cereal Grains. I also have copies of the submission to the Western Grain Marketing Panel presented on behalf of the OSPG, which is the Organics Special Products Group, and the response from the Western Grain Marketing Panel with regards to organic product. Both are submitted on behalf of a large community of organic growers, not just a chosen few.
Copies of a follow-up letter to the Honourable Ralph Goodale are enclosed, as are copies of his response. In conclusion I have a couple of letters that I wrote with regards to the barley vote that was held; they speak for themselves, I did not solicit support from organic growers.
The first document is the submission which identifies the position that we placed before the Canada-U.S. Joint Commission on Cereal Grains in Winniped in March of 1995. I explained what organic grains were, how they are produced, how they are traced, and how they are certified. Their response was one paragraph, and we were pleased with that much of a response:
Organic farming and sales of organically grown products are increasing in the grain industry. This type of farming emphasizes little or no use of chemicals to enhance the quality or yield of its harvests. As organic producers grow in importance, Canada and United States should take steps to ensure that this activity is recognized in the development of policies and programs.
That was the suggestion from 1995.
This is part of the presentation that we made to the Western Grain Marketing Panel; this was the first of the submissions. It establishes the organization of the Organic Special Products Group, and includes a copy of a letter forwarded to the Honourable Ralph Goodale, Minister of Agriculture, on February 15, 1996. There is also a letter that I received from a Mr. Earl Geddes in response to my letter; I believe that at that time he had something to do with the CWB and organic products, although I am not sure what his position was. The letter is there for your perusal.
The balance of the submission contained support information on our position, and there are copies of it all for you. We cannot begin to go through it all, as we do not have enough time here, but I would hope that you would take it into consideration.
After the support information I have submitted to you a copy of the recommendation from the executive summary of the Western Grain Marketing Panel on organic grains. It says:
Organic wheats should be regulated outside the jurisdiction of the Canadian Wheat Board and handled on an IP basis under supervision of the Canadian Grain Commission. Marketing would be done privately with CWB participation optional. The organic associations and the federal government need to complete efforts to establish a recognized certification program.
At this time, I believe that this certification program is almost complete.
I have a letter from the Honourable Ralph Goodale in response to that, dated January 21, 1996. If you gentlemen care to read it, it would be fairly self-explanatory. His last paragraph says:
There is no doubt about the importance of the Canadian organic food industry. I want to assure you that we are making every effort to explore each marketing option for organic grains in order to maximize the profitability of organic grain growers.
Again, thank you for bringing your concerns to my attention.
The last two are submissions or letters that I wrote, not specifically on behalf of anybody but myself, more or less as a follow-up to the barley vote. Excluding the dual market option was most contentious.
The last page is a letter that I wrote to The Western Producer which they chose not to publish.
If there are any questions, I would be more than pleased to answer them.
Senator Andreychuk: I notice that your letter from Mr. Goodale is from June of 1996. I take it that there has been no further correspondence?
Mr. Davis: Very little, no.
Senator Andreychuk: So the bill and the last letter are the only two pieces of information?
Mr. Davis: There was a follow-up letter basically telling me not to prejudge the outcome of the marketing panel. After that there was a follow-up letter that came with the marketing panel suggestions but, since then, nothing has happened.
Senator Taylor: Unless there is some sort of bureaucratic wrist-twisting going on, I do not see why the Wheat Board wants you in, unless they think that there is some sort of leakage.
The previous witness from the wheat pool sort of danced around a little bit and told us that he knew of some organic farmers who were happy. I do not know what that answer means.
The Wheat Board does about $6 billion worth of business. What are they worrying about? Can you make a guess?
Mr. Davis: It is a growing industry.
Senator Taylor: Have you heard any rumours out of Iran, China or the U.S. that, somehow or another, organically grown wheat was sneaked into the country without the board's knowledge?
Mr. Davis: I do know that the Saskatchewan Wheat Pool is very interested in selling organically grown wheat. They want to get into the business.
Senator Taylor: What are they doing in that regard?
Mr. Davis: I am not sure what their plan or their full intentions are, but I know that they have expressed that desire at our meetings.
As far as the leakage is concerned, the organic system is a system that is and must be accountable from the producer to the table. Some may consider that difficult to understand, however, the certification system is not too much different from the system for certified seed growers whose concern is variety purity. The variety must be what it is claimed to be.
Senator Taylor: Does the Wheat Board handle any certified seed?
Mr. Davis: I know you can sell certified seed outside the Wheat Board. Whether or not they handle it I do not know.
You must realize that people pay a premium for the organic system goods. In some instances they pay very high premiums. They must know where the product actually came from. Their concern is -- and we guarantee it -- that in our production method we have not used any fumigants, insecticides or herbicides. They are also concerned with our handling, processing, and all methods throughout our production system.
It is "commodity-specific." It is transported in containers, in tidy bags. Organic grain is now shipped as a boat loads.
Senator Taylor: Not only do you have the concern about selling it as any other off-board grain where you might have to buy it back, but you have the additional worry of trying to guarantee that it is organically pure all the way to the flour mill or wherever it is going.
Mr. Davis: Right to the table, yes.
Senator Taylor: It might go in a dirty wheat pool truck, for all you know. Would that bother you?
Mr. Davis: Yes. The driver has to certify that the container is clean; and the shipper has to sign that the container is clean. There is a screening process throughout the system to ensure the integrity of the product.
Senator Taylor: Has the Wheat Board been willing to do that?
Mr. Davis: No, not at all. What they are willing to do is have us sell it through their system, then buy it back, and then look after it on our own after that time.
Senator Stratton: The individual for the Organic Crop Improvement Association, Bill Rees, was not aware that the Canadian Wheat Board was interested in marketing your product.
Mr. Davis: Pardon me, not the Canadian Wheat Board; it is the Saskatchewan Wheat Pool which is interested in marketing organic grain.
Senator Stratton: Has there been no expression of interest by the Wheat Board in marketing your product?
Mr. Davis: No: "Sell it to us, buy it back through the elevator of your choice."
Senator Stratton:Is the Wheat Board interested in control over your product because it is growing?
Mr. Davis: They have control over our product. When you grow wheat or barley in the designated region, which is the Prairie region, you have one right, and that is the right to a permit book -- nothing else. You can grow the grain but you do not own it.
Senator Stratton: Would they be against giving up that control?
Mr. Davis: Yes.
Senator Stratton: Simply because you have a growing market?
Mr. Davis: It may not simply be that. Their reasons, I cannot assume, other than the fact that they do now control it, and I think, within the system, there are no parameters for them not to control it.
Senator Stratton: Do you see the pools or the Canadian Wheat Board imposing any penalties on you if you were out on your own?
Mr. Davis: Penalties on their end of it?
Senator Stratton: Yes. What price would they pay by allowing you to freely market your product?
Mr. Davis: I suppose they would lose our buy-back money, our $1, $1.50 or $2.00 a bushel, depending on the period of the crop year, that we have to pay to buy it back.
Senator Stratton: Is there anything else, apart from that?
Mr. Davis: No.
Senator Stratton:Am I correct is saying that you do not have a problem selling your product?
Mr. Davis: I do not have a problem, because I choose not to grow barley or wheat.
Senator Stratton: Are you off-board?
Mr. Davis: I did grow barley and wheat. The last wheat I grew I sold for feed wheat, because I got $4.20 a bushel. On the premiums, the end return was about $3.80 on No. 1 High Protein wheat, so I sold it as feed to Pioneer elevator.
The Chairman: If you were to get a market price for wheat that would give us organic bread, what would it be worth, without the problems you have got?
Mr. Davis: A neighbour of mine is sitting on some No. 1 Hard Red Spring, and he has an offer of $7.25 U.S. per bushel. He is not moving because of all the hassle and the red tape. He does not know what he will do. His buy-back, right now, is in the neighbourhood of $2.00 a bushel.
Senator Sparrow: The Wheat Board would give him a permit to sell it, though. He can sell it, buy it back, and then resell it.
Mr. Davis: They have control in that area. They say that they will give anybody a permit, but some farmers have been denied permits.
Senator Sparrow: A permit to do what?
Mr. Davis: To buy back and resell into a specific market.
Senator Sparrow:You would specify the market in the U.S. and the Wheat Board would give you a permit to export; is that how it works?
Mr. Davis: Your buy-back would, I believe, tie on the market you are going into.
Senator Sparrow: You would have to physically deliver the produce, and then buy it back.
Mr. Davis: That is right.
Senator Sparrow: With no assurance regarding how that product was handled?
Mr. Davis: You do not have to unload it. You go to the elevator of your choice, whether it is Cargill, Pioneer or Saskatchewan Wheat Pool, they weigh it, and they give you a cheque. You, in turn, give them cash or a certified cheque for the buy-back price, you drive off the scale, and the grain is now yours.
To my knowledge, the permit has to be dealt with through the Canadian Wheat Board. I am not entirely familiar with this system, because I have chosen not to go through it, but I believe I have fairly accurately described how it works.
The Chairman: You are actually buying the grain back from the Wheat Board.
Mr. Davis: That is right.
The Chairman: I just checked that out in respect of seed grain. You are actually buying it back, not from Pioneer or whoever, but the Wheat Board. You are paying the Wheat Board for it.
Mr. Davis:Yes, but there is a fee that goes to the grain company.
The Chairman: You pay the handling charges?
Mr. Davis: Yes.
Senator Sparrow: The same situation applies to seed grain. The seed grower has to sell it to the Wheat Board and then buy it back; is that correct?
Mr. Davis: No.
Senator Sparrow: I thought that was what you said?
The Chairman: No, only if you were trying to buy seed from the Wheat Board that had already been sold into the elevator. We were singled out. In the case of seed or feed, you do not have to go through the Canadian Wheat Board.
Senator Whelan: Do you ever eat out in restaurants?
Mr. Davis: I think everybody does, sir.
Senator Whelan: How can you be sure you are getting organic food?
Mr. Davis: I have no guarantee of that. We are a very small market. When there is an organic food restaurant in the area, I support it.
Senator Whelan: I am not against organic food. Just after the last war our average life span I think was 47 years of age; now it is 76 years of age. Even with all the bad things we have been eating that number goes up.
Mr. Davis: We do not get into the scientific approval or disapproval as to whether organic food is, indeed, healthy.
We have customers who search out our organic food because they say it definitely tastes better. They search it out because they know that, when it lands at the dock, it is not fumigated. They know we clean and inspect the containers before the grain is loaded or transported. They know that our cleaning facilities and processing facilities are inspected and are certified through this independent third-party certification. Those are the standards that we assure and guarantee the consumer and the buyer that we are following.
The organic stewardship and the biological soil building of the land is also part of our production system. You must be actively improving the biological content of your soil.
Senator Taylor: On the June 24 letter to Mr. Gene Davis from Ralph Goodale, in referring to the marketing of grain outside the Wheat Board, at the end of his second paragraph, he states:
This and a number of other options pertaining to organic grain are expected to be taken into consideration by the Panel when it releases its report in the near future.
I know that is only three years ago, but has that report been issued and, if so, what did it state?
Mr. Davis: The report of the Western Grain Marketing Panel stated that we should be operating outside the Canadian Wheat Board. You have a copy of it there, sir.
Senator Taylor: I will take your word for it.
Mr. Davis: We see nothing definitive in Bill C-4 that deals with our concerns about the cost of both time and effort.
The Chairman:I would thank you, Mr. Davis, for assisting our committee. We have your brief as well as the material you submitted to each one of the members.
I would now like to call the Flax Growers of Western Canada, Mr. Bill Farley. Gentlemen, would you introduce yourselves and tell us where you farm, and so on.
Mr. Bill Farley, Director and Past President, Flax Growers of Western Canada: Good afternoon. I farm in the Regina area, in Grand Coulee. With me today is Garvin Hanley, the Chairman of the Flax Council of Canada.
Let me begin by thanking the Senate committee for coming out to Western Canada. We appreciate this opportunity to present our position.
Flax Growers of Western Canada is a producer group funded voluntarily by flax seed producers across Western Canada. Our activities are directed to research, market development, and marketing of flax seed. Universities, provincial agencies and Agriculture Canada consult with us on activities related to flax seed. We have participated in overseas trade missions with the Canadian government and private industry.
Flax Growers of Western Canada is opposed to the Canadian Wheat Board being the sole marketing agency for flax seed. We are therefore opposed to Bill C-4, 47(1), the inclusion clause.
I would like to present to you some history of flax seed in association with the Canadian Wheat Board. In 1942, the Government of Canada placed the marketing of flax seed under the control of the Canadian Wheat Board. Due to the War Measures Act, flax seed was considered an essential raw material for military use. The price to growers was set at $3.25, based at Thunder Bay.
At that time, the United States did not impose price controls on flax seed. The price was considerably higher, in the $7 per bushel rage. A letter that came across my desk placed the price of flax seed at $7.25 per bushel in Minneapolis in 1946. The loss to Canadian farmers was substantial. We estimate that the acreage involved was around 7.5 million acres; we estimate the loss to Western Canadian flax producers to be in the range of $270 million, as a result of that government decision.
From 1947 to 1986, the Canadian Wheat Board had control of setting quotas for delivery and transportation of flax seed. Every time a quota increase was called by the Canadian Wheat Board, the market price for flax seed dropped. Since the buyer knew that producers had to deliver flax, the price would go down, or the basis would widen. Flax seed producers did not deliver to a favourable price but to a delivery opportunity.
There were quota inequities, and producers received lower quotas of three to five bushels per acre, but the crushers would get quotas of 25 bushels per acre. The crushers usually paid a somewhat lower price for flax seed than the primary elevator companies. At other times, prices could be very attractive; because of quotas, producers could not deliver to that price. Frustration was considerable and financial losses even greater. We estimate the range of loss to be around $258 million over that period of time.
Quotas for flax seed were established in the following manner. The Canadian Wheat Board would establish quota increases by a poll of each elevator company in the country elevator association. They would ask for consideration for an increase in flax seed quotas. However, if one of the major flax seed buyers was opposed to an increase, then no increase came about.
Companies who needed flax seed for shipments had to buy from other companies at a premium price rather than from flax seed producers. There appeared to be collusion and possible payoff between the Canadian Wheat Board and major companies buying flax seed.
We were approached by some of the grain companies and we sent a letter to Mr. John Bertrand, who is the Director of Restricted Trade Practices, Consumer and Corporate Affairs Canada, indicating the polling method and possible interference with the Canadian Wheat Board and some grain companies. Mr. Bertrand investigated our complaint and, in his reply to our letter, he indicated that we were correct in our assessment but that the Canadian Wheat Board was beyond the powers of the Restricted Trade Practices Act.
Nevertheless, the investigation did change our relationship with the Canadian Wheat Board. Through the efforts of President Garvin Hanley, who is on my left, and the Canola Growers Association, and discussions with the CWB, quotas became larger, and set more often. In 1986, quotas were discontinued. Today, flax seed is marketed freely in Western Canada by producers to many companies large and small.
So you can understand our frustration with the Canadian Wheat Board and why we do not wish any further relationship with that organization.
Flax seed is a small crop compared to wheat and barley. Flax seed is usually sold in small orders of 1,000 to 10,000 metric tonnes. These shipments are placed in small compartments on large cargo ships. However, some very significant markets are developing. One is flax seed movement by truck from farms to U.S. crushers in the Fargo and Minneapolis areas in the U.S. This producer movement does not require export permits for buy-back from the Canadian Wheat Board.
In the period 1996-97, 85,900 tonnes were moved by producers to the U.S.A., or 3,385,000 bushels; and in the previous year, 46,200 tonnes were moved that way. In the new crop year from August 1 to November 30 -- you can see how it is increasing -- 36,400 metric tonnes have moved that way. This movement will discontinue if flax seed is under the Canadian Wheat Board. There will also be greater producer dissatisfaction at all this lost opportunity, making the present problem with wheat and barley growers look like a tea party.
Because of the health benefits of consuming flax seed, a whole new industry has grown. This market was established by several small grain companies and several individual farmers. Now many grain-cleaning plants are cleaning flax seed to a high purity standard for food and neutriceudical markets. We are told by the Flax Council of Canada that this segment of the industry is growing at a rate of 15 to 20 per cent per year. Although the totals are hard to establish for this market potential, observers estimate that over 1,000 containers were moved last year to overseas destinations. Certainly, if the Canadian Wheat Board had control of marketing flax seed, this growing industry would be curtailed.
Linolenic flax seed, which produces an edible cooking oil, is now well-established in Western Canada. Our marketing rights are held by United Grain Growers. The crop was grown on 300,000 acres last year in Western Canada. If the Canadian Wheat Board had control of marketing flax seed, United Grain Growers would lose their sole marketing rights. They have worked hard to establish agronomic practices and develop markets for their oil and meal. I am sure they would move to another area to produce this alternative crop which, again, would be a loss to us in Western Canada.
In the past year, 2,060,000 acres of flax seed were grown in Western Canada; in fact, flax seed is grown in all provinces except New Brunswick and Newfoundland. There are no controls on marketing flax seed in these areas. Will they be included in this inclusion clause?
Potentially 2.4 million acres of flax seed could be grown in Western Canada this year. The market outlook is very attractive. If the Canadian Wheat Board controlled flax seed marketing, the acreage devoted to flax seed will drop significantly, and we would certainly review our operations as to production of flax seed, and we have been growing for 45 years.
Flax seed is marketed by several alternatives:, cash flax; forward-pricing flax seed; delivery of your production and pricing later; agreeing to a basis and selling at any time before the contract comes due; buying a futures contract and delivering to that contract.
Pricing flax seed is transparent. You know what you will receive and you do not have to wait 18 months to know if you made a good decision.
Inclusion of flax seed under the Canadian Wheat Board would bring about the demise of the flax futures market contract with the Winnipeg commodity exchange, the only price discovery mechanism to flax seed pricing in the world.
Under C-72, the forerunner to Bill C-4, there was no mention of flax seed. Under C-4, we woke up at harvest time this fall to the inclusion clause being brought forward by the Honourable Ralph Goodale. Flax Growers of Western Canada was not consulted by Mr. Goodale or anyone in his department about this inclusion clause. It would appear that Mr. Goodale considers Flax Growers of Western Canada not able to make decisions on marketing flax seed.
At the 1993 annual meeting of Flax Growers of Western Canada, the following resolution was made:
Whereas recent recommendations emanating from the federal regulation review task force has stated that as a non-board crop all flax delivery quotas should be removed; therefore be it resolved that Flax Growers of Western Canada support this change and further be it resolved that Flax Growers of Western Canada recommends flax be removed from the Canadian Wheat Board Act.
This resolution was forwarded to the Honourable Ralph Goodale and we have yet to receive a reply.
We can assure you that if the vote were necessary for marketing flax seed under the Canadian Wheat Board, that the Government of Canada and the Canadian Wheat Board would be embarrassed by the resounding defeat.
If the inclusion clause, 47.1, is passed by the Government of Canada, Flax Growers of Western Canada will join forces with many producers and related groups to fight the few who wish monopoly control by the Canadian Wheat Board. We will support those directors who do not show a bias to the Canadian Wheat Board.
However, Flax Growers of Western Canada prefers not to participate in this process, and so we are asking the Standing Senate Committee on Agriculture and Forestry to support removal of clause 47.1, the inclusion clause of Bill C-4. I thank you for your attention.
The Chairman: Do you wish to make a presentation, Mr. Hanley?
Mr. Garvin Hanley, Chairman, Flax Council of Canada: No.
Senator Sparrow: How many members does the Flax Growers of Western Canada have?
Mr. Farley: Just a few hundred.
Senator Sparrow: If there were a vote on inclusion by those few hundred members, it would be soundly defeated; correct?
Mr. Farley: I am sure of it.
Senator Sparrow: If that were the case, what is your concern about inclusion being allowed in the Canadian Wheat Board Act?
Mr. Farley: In that regard, we feel that if flax seed is brought under the Canadian Wheat Board, the marketing system would reflect the pricing, we would end up having problems with divisiveness between farmers, and we do not think we need to go through that. The operation is going well now? In the previous bill, Bill C-72, it was not there, why now?
Senator Sparrow: Do you think that there would be some action taken to have a vote that was not sponsored by your association or your growers?
Mr. Farley: No one knows. It could be another association formed just for that purpose.
Senator Sparrow: So that people who are, say, growing flax once every five years or something may form an organization and ask for that inclusion?
Mr. Farley: They very well could.
Senator Sparrow: I have a great admiration for flax growers because it is a tough crop to grow.
Senator Whelan: It is a tough one to combine, too. You have to have a sharp knife and ledger plate.
Mr. Farley: You have got that right, Mr. Whelan.
Senator Fairbairn: Thank you very much for your presentation. I can certainly understand your concern about your product.
I have no idea what the end result of this issue will be. I just wanted to mention to you that my understanding of the inclusion clause, so-called 47.1, is that neither the government nor the Canadian Wheat Board could trigger any inclusion. Only the producers of the grain could trigger any inclusion -- and in your case you would not do it, I gather, in a million years. It would be in the form of a written request from a legitimate flax organization whose membership consisted solely of producers and could only be decided, in the end, by a vote. And according to your testimony, your producers would clearly make their negative views evident.
So although the mention of the word "include" worries you, the process that has been set out, as I understand it, has the producers in the driver's seat, that it would not happen, and I do not think that some faulty or cooked-up group would be recognized as legitimate.
I only make these points to share my thoughts with you, that it sounds as though you are in a very strong position and that this would not happen unless, for some inexplicable reason, the flax growers themselves decided that there was a benefit to them in it.
Mr. Farley: Probably the most aggravating thing is the fact that flax seed is mentioned.
Senator Fairbairn: Flax seed is not mentioned at all.
Mr. Farley: Yes, it is, in the inclusion clause. It is mentioned in the inclusion clause; that is why the aggravation.
Senator Fairbairn: Okay.
Mr. Farley: It is mentioned as a possible candidate.
Senator Fairbairn: "Possible."
Mr. Farley: That is an aggravation to us. Why are we going through this process when we do not need to do it?
We have kept our nose out of Bills C-4 and C-72; we think the wheat producers and the barley producers can make their own decisions. We are thrown into the fray for no reason, and why? We do not want it, it is an aggravation, and I think it will affect decisions or it could affect decisions as to possible crushing plants or more value-added to flax seed in Western Canada.
I also believe that Mr. Goodale should have consulted with some of the other groups. He probably thought that this would slip through, without any sort of backlash.
The Chairman: Mr. Farley, do you know of any group of special crops, canola, mustard, the other crops, oilseeds, that are asking for inclusion?
Mr. Farley: I do not think they are. The canola producers are not asking for it; I think their growers association will say that they are opposed to the inclusion clause.
Mr. Hanley: Just a further comment. As an industry, we felt that we were sideswiped, that we could have been asked if we had an opinion about the inclusion clause. So, at this point in time, we would certainly want to suggest that we would have liked to have been consulted. While we would not have entered into a policy debate particularly, we would have probably suggested to Mr. Goodale that it was totally unnecessary.
We absolutely have no idea where the notion to include flax seed, or the other crops for that matter, came from.
We are quite happy with the marketing efforts of the Canadian flax industry. "If it ain't broke, don't fix it." We oppose being included and we did not like not having been asked our opinion.
The other thing, customers. It is an aggravation to us, but customer always comes first.
Senator Fairbairn: An uncertainty with the customer?
Mr. Hanley: All the customers have to hear is that we are marketing flax seed under the Canadian Wheat Board. We have spent a lot of time and effort explaining that that is not exactly the way it is; we have had to do a lot of explaining. We are the world's largest exporters, but if we want to let our markets go Argentina will gladly take them.
Senator Fairbairn: I appreciate that and I understand exactly what you are saying.
Senator Whelan: Just one comment first. I do not know of your association, but I have read a lot about organic foods, health foods, et cetera. Your flax has come on the screen as one of the healthiest foods that you could eat. Are you marketing it that way.
Mr. Farley: That is correct. The Flax Council of Canada and our organization, Flax Growers, and now the Flax Development Commission of Saskatchewan, are doing lots of work towards the development of the markets.
I will let Garvin speak to it, but I was at a meeting last week of the Flax Development Commission and we are awarding a contract to the Department of Medicine at the University of Saskatchewan for a study of the STG for flax seed for control of diabetes, and it looks very interesting. So that is the type of work that is being done, and you are correct, sir.
Garvin and the Flax Council of Canada have done a lot of work on that.
Mr. Hanley: Part of the reason for the increased acreage, the better prices, and the more stabilized type of production and marketing situation we are in right now is due to expansion of numerous small markets that have to do not only with the health side, but feed markets in animals, and it will take several more years of research to prove our theories on some of these feeding applications. But these are growing and so it probably will be one of the large markets for Canada.
Senator Whelan: We hear a lot about democracy in the discussions and presentations associated with this committee. Down the road, what will be the demand, say, from the flax growers or the canola growers? If the inclusive clause is there, there would have to be a vote by the producers. I hope you are not suggesting that you are scared of democracy?
Mr. Farley: I share that view with you, but I also feel that the can be made more democratic when the minister for the Canadian Wheat Board does some consultation, too.
Senator Whelan: I agree. I was the greatest consulter there was.
Mr. Farley: I agree, you were, and I met with you before sir.
Senator Whelan: Yes, I know.
Senator Stratton: In my opinion, it is simply a tyranny of the majority, and you are in a very minor position, and I think for that reason I have a problem. Just by the fact that there is an inclusion and an exclusion clause, you are on that list, whether you like it or not, implicitly. I have a real problem with that.
From what I have heard from other folks, but I want it for the record, no one from the government side has explained to you a logical reason for the exclusion/inclusion clause? Have they given you an explanation?
Mr. Farley: To this day, we have not received any information on that proposed legislation from the Canadian Wheat Board or the Standing Senate Committee on Agriculture and Forestry. We have not received any changes in the wording of the inclusion clause. We have received nothing.
I know we are a small organization, but I feel that the consultation process has been very poor. As I said, we were not opposed to Bill C-72; it did not reflect on us. We feel that the barley producers and the wheat producers, and the other organizations that are concerned, can actively look after it; but when it relates to flax seed, it kind of aggravates us when we are not consulted.
Senator Chalifoux: Under the Canadian Wheat Board Act, the definition of "grain" includes flax; am I correct there?
Mr. Farley: That is correct.
Senator Chalifoux: That is what you are objecting to; correct?
Mr. Farley: We have asked, over the years, a number of times to have the words "flax seed" removed from the Canadian Wheat Board Act. But until as recently as Friday, no one has raised this because since 1986 marketing has been good, usage of flax seed is growing, and we are all fairly happy.
Senator Chalifoux: So does that mean, then, that what we have here in clause 47.1 is the inclusion and exclusion?
Mr. Farley: Yes.
Senator Chalifoux: So when it you say that a written request was sent to the minister by an association whose members are "grain" producers, that is what your contention is, the grain, because the grain, as defined in the act, includes flax?
Mr. Farley: That is right.
Senator Andreychuk: Is there only one association in Canada?
Mr. Farley: There is only one flax seed association in Canada, that I am aware of. There is flax seed grown all over, but there is only one association.
Senator Andreychuk: Are all known flax seed growers in one association?
Mr. Farley: Ours is a voluntary organization; probably only a small number of the flax seed growers belong to the association.
Senator Andreychuk: So there are other flax seed growers that are not part of your association?
Mr. Farley: That is correct.
I would like to thank you, Mr. Chairman, for the opportunity to speak here today. You have raised the credibility of the Senate, in my mind, a great deal in this last couple weeks. Thank you very much.
The Chairman: Thank you.
We will call the last witnesses for today, Mr. Hickie, Mr. Thompson, Mr. Burton, Mr. Geisam, and Mr. Laird.
I would ask each of you to introduce yourself, tell us where you farm and what kind of crop you grow.
Mr. Edward Sagan: I am from Melville, Saskatchewan. I am a registered seed grower. Our family is in the grain business, and we run a little seed plant.
Mr. George Hickie: I am from Waldron, Saskatchewan. I operate a cow-calf and grain operation.
Mr. Douglas Thompson: I come from Congress, Saskatchewan, which is very close to Assiniboia, and we operate a family farm which consist of lentils, peas and canola.
Mr. John Burton: I am from Regina, Saskatchewan. I farm at Fort Qu'Appelle. I am a practising agrologist, and a former Member of Parliament.
Mr. Bryce Geisam: I live in Regina. My wife and I farm 35 miles southeast of Regina, in conjunction with our son, and our daughter and son-in-law.
Mr. Elmer Laird: Mr. Chairman, I am a veteran of World War II. I have had a Canadian Wheat Board permit book for 52 years. I have grown organically for 30 years. I have marketed through the Wheat Board and bought it back and sold it, for 20 years now.
The Chairman: Thank you, gentlemen. I will ask Mr. Hickie to begin, please.
Mr. Hickie: Thank you for the opportunity and privilege of being allotted time to express my views and concerns regarding the Canadian Wheat Board and Bill C-4.
My sons and I operate a 2,000-acre grain and beef farm at Waldron, Saskatchewan. We seed and harvest approximately 1,200 acres annually and calf out about 120 cows. My personal calculations through the years have indicated that I have received a monetary advantage by selling my wheat through the Canadian Wheat Board.
Example: In 1992, we were hit by severe frost; all our wheat graded feed. The initial Canadian Wheat Board price was $1.58 per bushel; the market price was $1.88 per bushel, with no quota needed to sell on the open market. A great portion of my farmer friends who were in desperate need of cash sold all their feed wheat on the open market at that price. I sold all mine to the Canadian Wheat Board, received adjustment, interim, and final payments, and ended up with a final take-home pay of $2.65 per bushel, 50 to 70 cents more per bushel than my desperate neighbours received.
I am totally convinced that the three university economists from Saskatchewan, Manitoba, and Alberta were correct in stating that, according to their study, prairie wheat producers received $13 per tonne more for their wheat through the Canadian Wheat Board than they would have received through the open market, and that was over a period of ten years.
I understand and appreciate orderly marketing, equal pay for equal quality, equal delivery opportunities. At least that is the way it used to be before some of the recent changes.
Marketing our grain through the Canadian Wheat Board results in more efficient use of the grain transportation and grain handling system. It ensures a consistent quality of product that the U.S. system cannot. Ask any U.S. millers and they will confirm this. But, best of all, I receive any profit that the Canadian Wheat Board makes on my grain.
Regarding Bill C-4, I can find little value in it. It will weaken the Canadian Wheat Board, not strengthen it; it will cost more to operate the board. Speculation and inequality will be ingrained into the very heart of the board. New moneys will not be created, only redistributed; more for some, less for others, creating more injustice and inequality. If that is what we want, we already have the open market for most of the grain we grow on the Prairies, oats, canola, lentils, mustard, rye, domestic barley, peas, triticale and others.
The inclusion clause, in its present form, is almost meaningless. It discriminates against those of us who are members of a general farm organization, those of us who believe that farmers should work together instead of fighting among ourselves.
Those who are obsessed with destroying the Canadian Wheat Board argue that the freedom to choose is their God-given right. Freedom of choice is meaningless to me if it means that I will have to take less, if it means more injustice, more inequality, and more inefficiency will be created. The only thing that really matters, and should be given consideration, is: What do a majority of grain producers want? In the past, every indication has been that prairie grain producers want the Canadian Wheat Board. We won the recent barley vote by nearly a two-thirds majority. In the past, we won almost every advisory board election. Is there any doubt where popular opinion lies?
It does not serve the cause of justice to force the wishes of a minority on a majority. Yes, grain producers are experiencing grave economic hardships on the Prairies, thousands have gone bankrupt during the last two decades, and all indications are that thousands more will suffer the same fate during the next decade. Input costs are higher than grain revenue.
Example: From every acre on which I grow grain, the chemical companies receive $50 to $60, the railroads $30 to $50. Add to this the high cost of fuel, machinery, repairs, and taxes, and you have your answer to why there are so many unhappy farmers. The Canadian Wheat Board is not responsible for our financial woes.
In closing, I would respectfully draw your attention to page 3 of this brief, a line graph that clearly illustrates why farmers are facing extremely harsh economic times. Many will not survive any length of time. You will note that, within the last decade, Canadian agri-food exports have risen from $10 billion to $20 billion annually. This is mainly due to the fact that we have greatly increased production. In contrast, during the same period of time, net farm income has dropped annually.
To clarify the message, each of us who till the soil to produce food produce much more than we did only one decade ago at great extra cost and effort, but are receiving less net income. In fact we are receiving over a third less income today, at this time, than we did ten years ago, and we are producing double.
Changing the way the Canadian Wheat Board functions through Bill C-4 will do nothing to solve farmers' desperate economic problems. Thank you very much for giving me this time.
The Chairman: Thank you, Mr. Hickie.
Mr. Thompson, please.
Mr. Thompson: Honourable senators, I would first like to thank you for holding hearings on Bill C-4 out in the agricultural area of Regina.
I am a young farmer, one of the new breed, so people tell me. I come from a four-generation family farm, with three generations still producing. I am educated with a Bachelor of Science in Agriculture from the University of Saskatchewan, along with many other courses. I have gained experience from operating a custom harvesting operation throughout Canada and the United States, operating my own trucking business in the U.S. and Canada, and co-managing a 7,500 acre family farm. I am currently serving as a director of the Western Canadian Wheat Growers Association. I am also in touch with markets and feel comfortable marketing my own products. For these reasons, I ask you to take my concerns as seriously as I do and help lead agriculture into the 21st century.
What is wrong with Bill C-4. Bill C-4 has rallied progressive Western Canadian producers to speak out against the bill. This bill promotes two classes of Canadian farmers: first, Western Canadian controlled by a monopoly; and second, Eastern Canadian who have choices. The new declared off-board alternative that was voted in by the Ontario Wheat Producers' Marketing Board allows for Ontario farmers to opt out of the marketing system from year to year. I have no similar option.
The inclusion clause will cause uncertainty in the markets, and this will stall value-added investment. The uncertainty will drive away the entrepreneurial skill and capital. The inclusion clause will greatly affect the election of directors. The membership will be voting on the candidate's position on whether the crop should be added or removed, not on the qualifications of the candidate. This will greatly politicize the elections.
Bill C-4 makes the Canadian Wheat Board more blatantly a government-run organization. Producers will not operate the Canadian Wheat Board; the Canadian Wheat Board does not appoint the CEO, the government does. The Canadian Wheat Board must have all its operational and financial plans approved by the government. The government appoints five directors who serve at pleasure. The bill allows the government to give specific instructions to the Canadian Wheat Board, which the directors must follow. The bill is flawed.
First, it fails to give me a marketing choice; secondly, it jeopardizes value-added development; and thirdly, it gives the federal government more control.
Recommendations. I want the declared off-board alternative, which would allow me to market my own crops. This is not unreasonable. Ontario farmers have the option, why should not I? If this were included in the bill, I would not have any further concerns, because I now could be responsible for my own marketing.
For producers who would use the Canadian Wheat Board, it is important that the inclusion and exclusion clauses be dropped. This would allow the directors to do their jobs and remove the marketing debate from the boardroom. I believe that it is important that there be a weighted-vote structure for all Canadian Wheat Board votes, one vote for producer, plus another for every 100 tonnes grown. This is very important, because people with a bigger stake in the industry should have more voting power. It would be advisable that a two-thirds majority be needed to add or retain any crop to the Canadian Wheat Board.
Barley should be removed from the Canadian Wheat Board monopoly. Private grain companies already trade most of the barley through the domestic market or through buy-backs for the export markets. The Canadian Wheat Board is a cumbersome middleman and should be removed. Durum is another crop that should be looked at to be removed from the monopoly.
Some sort of risk-management tools need to be in place for myself to be able to lock in a price for a portion of my crop for the upcoming year. The pricing option proposed by the Western Canadian Wheat Growers would fill this need.
The board of directors should be fully elected by farmers, and they should be able to hire their own CEO. If this is a problem for federal financial guarantees, then reduce the guarantees to the levels granted to the Ontario Wheat Producers' Marketing Board.
Finally, the authority to issue export permits or buy-backs should be removed from the Canadian Wheat Board and transferred to some more appropriate government department.
In conclusion, this bill greatly affects the ability of my farm to continue for another generation. Please use your granted powers to amend the act to reflect the recommendations that I have put forward. I thank you.
The Chairman: Thank you, Mr. Thompson.
Mr. Burton, please.
Mr. Burton: Mr. Chairman, members of the committee, thank you for this opportunity to present my views to the committee.
The principle of orderly marketing embodied in the Canadian Wheat Board is sound and has been of profound benefit to the Western Canadian economy. Any erosion of its powers or its ability to act effectively on behalf of Western Canadian agriculture will cost farmers and the entire economy heavily. The board's powers have been eroded seriously for some years. While Bill C-4 is being presented in a manner that suggests it strengthens the board, in fact as it now stands, it will further erode its ability to act for western farmers.
A vocal minority oppose Bill C-4 because of their fundamental opposition to the principle of orderly marketing. They suggest that the CWB was given full control over wheat marketing in September 1943 because of wartime developments rather than because of farmer demands. I remember those times.
My father was elected to the House of Commons by a large majority for the constituency of Humboldt, Saskatchewan in a by-election on August 9, 1943. He captured the seat previously held by the Liberals for the then-CCF. He campaigned for a Canadian Wheat Board with the full mandate to manage the grain system. The federal Liberal government acted a little more than a month later. They could not have done so without a broad base of support for their actions in the farm community, and that broad base of support has been an underpinning for the CWB ever since.
Almost exactly one year ago, I presented a brief to the a House of Commons standing committee in Regina, on virtually the same bill. A copy of my brief is attached to this submission. I stand by its contents.
Since that time, the results of the barley plebiscite were made public. Farmers indicated, by a large majority, that they still want the CWB. This outcome occurred in spite of a heavy barrage of anti-board propaganda and in spite of some stacking of the deck by the minister.
Last year there was a great deal of concern about transportation problems associated with grain movement. The railroads demonstrated then, and since that time, that they regard grain as simply another commodity and that they will not give any consideration to the well-being of the farm community. Transportation of grain must be managed and the CWB should have adequate powers to deal with the situation.
My recommendation is that Bill C-4 be dropped as it now stands. The present system, even with some flaws, is better than what is proposed in Bill C-4. The change in governance will not solve any problems, real or perceived. The management of the board has been sound. There have been problems of communication and interaction with the farm community; for a long time, others did that job, and the board did not have to give it high priority. Now the board or another body, like the existing advisory committee, has to be equipped to address needs and also respond to the organized attacks on the CWB. Other provisions like cash-buying, the contingency fund, and the appointment of the president will all have a negative effect.
However, if the committee feels that it should approve the bill, then I would strongly urge that it make some important improvements and that it act with all due speed. It should be kept in mind that the real objective of many of the detractors of the CWB is to destroy it. In addition to changing the items just noted, I would urge the committee to retain the inclusion clause, but change it to allow farmers to ask for change. As well, the board should be given adequate powers over transportation questions, and the appointment of the president should be subject to the approval of both the minister and the board of directors.
In addressing these issues, the fundamental concern must be for the long-term well-being of Western Canadian agriculture. The CWB has a proven track record. Expediency in dealing with critics by making compromises on fundamental issues is not the answer. The basic concern must be to ensure that the CWB is soundly structured and that it has necessary powers to do its job in the long term. Thank you.
The Chairman: Thank you. Now we will go to Mr. Geisam.
Mr. Geisam: Thank you for this opportunity to appear before this committee.
My next thanks goes to the Canadian Wheat Board. The farmers and others, as I see it, are trying desperately to grow alternate crops that are not under the Canadian Wheat Board jurisdiction. Perhaps, just perhaps, that is why we have peas, lentils, beans, spices, a whole barrage of products out here, and processing of the same out here on the Prairies. Just perhaps it is noteworthy that it is and has been, still is, individuals who have and are spearheading this; not the government, not the Canadian Wheat Board, not the co-ops, not the pools.
The Canadian Wheat Board is a monster. It is an animal out of control with no accounting, with no competition, with no clear responsibility, with immunity from prosecution, with exemption from real checking, exemption from probing, exemption from any direction from farmers it purports to serve. This animal is groomed and caressed by Mr. Goodale and others to serve entrenched interests, to alienate farmers, to divide farmers and others, to create turmoil, et cetera.
Honourable senators, Bill C-4 is a sham, it is a shame. The monopoly, the Canadian Wheat Board, is fourteenth-century peasantry and Ralph Goodale and others are, and have been, usurpers.
Honourable senators, I love my country, but it is the government I am afraid of. Yes, it is the government I am afraid of. I love this country. There are people, inside and outside of this country, who go around boasting, thumping their chests, preaching, acting high and mighty about civil rights, tolerance, compassion, and enlightened humanity, et cetera, while back at home there are examples to the contrary, like jailing farmers for trying to sell grain they grow.
Gentlemen, what do we call people like this, or a government that carries on like this? Gentlemen and ladies, let us focus on that critical inch, the bulls-eye, the ruling elite who are subduing the people, number 1; number 2, the ruling elite who are usurping power and authority to take arrogantly as if it is their right; number 3, despots using their power to get it their own way; number 4, hypocrites pretending and making it look to be what it is not; and number 5, gentlemen, if it is legal, that is all the dumb western farmer needs to know, and if it is not legal we will make it look legal.
Gentlemen and ladies, I grew up through our system in Canada and as I learned in school, I thought this was the case, choice in a democracy is founded on individualism. Or is it founded on collectivism? On freedom or coercion?
Look, this controversy is totally unnecessary. Just restore the natural common law and the inherent right to all people, including farmers, to what they own, the right to what they own and to choose to do with what they own.
Gentlemen and ladies, I will make one quote. There happens to have been an issue in the paper recently, from out of Alberta, with regard to the rights of sterilization victims. I quote from Edmond O'Neill, president of the Criminal Trial Lawyers Association. He says:
It was a massive violation.
The Charter of Rights is the supreme law of Canada. It puts people higher than the state and stays that their rights cannot be violated at the stroke of a pen like they can be in a repressive dictatorial regime.
Ladies and gentlemen, I was born an individual, I was born by choice, I was not born collectively, I was not born by force.
The Chairman: Thank you.
I will now ask the last presenter, Mr. Laird, to make his presentation.
Mr. Laird: I would like to introduce my colleague, friend, and long-time friend, Henry Lorenzen, who is helping the staff member pass around some bread. He is one of our long-time consultants. He is an environmental architect, and after you retire, if you want a house that is solar heated and all these things, this is your man.
Going back to the bread, what I am supplying you with is the top quality wheat in the world, certified organic number 1 hard red spring wheat. We are proud to present ten loaves of bread, stone milled and baked from the top-quality wheat in the world, to members of the Standing Senate Committee on Agriculture and Forestry.
This certified organic hard spring wheat was grown on the Schmidt farm at Fox Valley, which has long been recognized as a high-protein area of Saskatchewan. The protein content of this particular bread is 16 and the falling number is over 30. The wheat was stone milled and baked today, in preparation for this meeting, by Debbie Donnelly, owner and baker at the Flour Pot Bakery, 2334 Cornwall Street, especially for the Senate committee.
Stone milling preserves all the nutrients in the grain and the wheat germ does not go rancid. You put in 60 pounds of wheat, you get out 60 pounds of flour, and this is the top method of milling. We hope the senators will enjoy sharing this bread with family and friends along the way. Samples of wheat and flour are also included. In fact, this bread maintains its high quality for a long time, like the bread mother used to make; it should last until you get home Friday night, if you have not eaten it all by then.
Now I have to warn you about addiction. If you ever cut into this and eat it, you will be addicted for life. I am addicted for life; I eat nothing but this bread, unless I cannot find any. In fact, it has many qualities we seniors enjoyed growing up, before the age of chemical agriculture. Certified organic farmers are aware of the quality, most Canadians are aware of the quality, and our customers all around the world are aware of the quality and are demanding it.
The Canadian Wheat Board has been getting orders for organic grain for ten years or more. They held two conferences in Saskatoon to work out the details of how to market it, and the only thing that is holding it up is the lack of a national certification program.
The question is: How do we get Ottawa-establishment MPs and senators to recognize the quality of certified organic food, for the purpose of developing useful agricultural policy for sales and maintaining the health and well-being of all Canadians and our customers abroad?
The Ottawa establishment to date: refuses to recognize how important certified organic food and a clean environment is in maintaining the health and well-being of all Canadians and our customers all over the world; refused to serve certified organic food in the restaurants of the House of Commons -- which is terrible. You people do not have this opportunity, which is why I am giving you this opportunity; please understand that;
As well, the Ottawa establishment to date: supports only chemical agriculture research and extension service to Canadian farmers, and the provinces do the same; has failed to provide a national certification program that organic farmers have been requesting for at least ten years; refuses to supply hormone-free beef, which Europeans are demanding; spends huge sums on genetic engineering research to produce food that our European customers do not want; and refuses to recognize that chemical agriculture is polluting both our surface- and groundwater supplies.
There is no mention of money earmarked for organic agriculture in the millennium fund. Denmark and Holland have been graduating students in organic agriculture for at least ten years;in fact, the budget never mentioned it.
We are in a health and economic crisis here. Transnational drug and chemical companies are rapidly gaining control of our farms. They are selling large volumes of agricultural chemicals that pollute our water, food and air, and make us ill, then they sell us the drugs to try to cure the illness.
Canadian Wheat Board marketing: If you are marketing a product, the most important thing is to know the quality of the product you are marketing. The question I would like to ask right now, Mr. Chairman, is: Does the Senate committee recognize certified organic number 1 red spring wheat as the top quality wheat in Canada, or is the committee part of the Ottawa chemical lobby?
The Chairman: I have a question for you. How many cents worth of wheat is there in this?
Mr. Laird: In answer to your question, Mr. Chairman, on the back page are the prices of organic products. If you look down at number 1 red spring wheat, it says 15 per cent and up. The average price in the organic market is $9.06. Now I think there are 24 ounces of wheat in a loaf, so maybe somebody who has a calculator can give you that figure then.
There is one other thing I would like to point out. On page 7 is a chart. This sets out conventional wheat prices, not organic. In 1934, farmers received 25 cents per bushel at Davidson. They were receiving, under the open market, from 19 to 29 cents. My father was one of the people who was delivering grain at that price. If you adjusted the cost of living index, that is $3.13 in today's prices.
The Chairman: About what we are getting.
Mr. Laird: In 1935, when the CWB came in, the price went up to 52.5 cents, so that makes it, at today's prices, $6.34 a bushel. But wheat today, selling in the Davidson elevator, is worth $2.75 a bushel. So tell the people in Ottawa, when you go back, that we are in a depression here just like we were in the thirties. That is a very important message for you to carry.
Thank you, Mr. Chairman. I have a lot of other stuff here, but I know the time is up.
The Chairman: On behalf of all the senators, thank you for the bread.
Mr. Laird: Now if we were in a different culture, you guys might be able to have a second wife; you should look for one who can bake bread like this.
Senator Whelan: Mr. Laird from Davidson, Saskatchewan, some of the things you have said I agree with; your presentation was good.
My wife bakes bread at home, but she comes from Yugoslavia.
There are many advantages to this kind of meeting. There are various opinions about the Canadian Wheat Board around this table. We have the young, educated man from Assiniboia; and then we have the educated man sitting next to him, from Regina, an agronomist in his own right and well-educated. We have farmers disagreeing, not violently but very expressively, very strongly.
Some of the things that Mr. Geisam said are pretty strong, because in our democratic country -- and I have been in many countries. When you classify the Canadian Wheat Board as something as violent as the words you use here describing it, "The Canadian Wheat Board is a monster, an animal out of control with no accounting, with no competition, with no clear responsibility, with immunity from prosecution," the CWB was given its authority by the most democratic institution in the world, the Canadian Parliament, one of the most democratic parliaments in the world. I was a member of that Parliament; not when the CWB was instituted, but I was there when reports were tabled and for Question Period. I was never responsible for the Wheat Board when I was the Minister of Agriculture, but I find it difficult to accept when you use those words.
When you talk about people being sued for $100 million, being sued for $600 million for improper procedure, you seem to be, although you do not say that in your presentation, condoning them as the kind of people you want to deal with, where no one has ever pointed out what you said about the Wheat Board, that it has been corrupt, that it has been crooked, and that it operated for anyone's benefit excepting the farmers of Western Canada; and at one time the farmers of Eastern Canada. I find that hard to accept, knowing the CWB administrators, the people who run it, and the high respect that this organization has all over the world.
It is a fact that we built this country by sharing and by democratically legislating. They were given this power, as I said, by the Parliament of Canada.
I can go on and show you examples of newspaper clippings I have cut out: "Oil nations to slash production," "Oil pact helps the Toronto Stock Exchange to a record high." The newspapers like the The Globe and Mail or The Toronto Star do not condemn the countries because they are cutting back oil production.
What in the world do you have to say about that? OPEC is one of the most corrupt organziations of all, yet we guide ourselves by it. Can you find out anything about the oil companies, their costs, et cetera? Can you find out anything about the big grain companies, their margins, their pricing system, et cetera? No, because no company in the world would give you that. So that is my comment.
To the young man from Assiniboia, I was there when we agreed to subsidize education, and education is the most highly-subsidized organization in Canada.
Mr. Geisam: I respect you, Honourable Senator Whelan, but may I ask one simple question? Were you there in Canada, down east, when, together with some people in this province and the prime minister of the day, they took out of the Constitution, out of the fibre of our country, the most important democratic right that our fathers came here for, and that is the right to ownership?
Senator Whelan: I understand that that is still very much in the Constitution.
Mr. Geisam: The problem with the Canadian Wheat Board is plain and simple, and you have heard it here today over and over: if somebody wants to market on their own, why are they not able to? Why are individuals trounced on? If we have a democracy, why are individuals pushed into corners, why are individuals jailed for growing their own wheat on the farm?
If the Canadian Wheat Board wanted to take carrots from my garden, they could say that I have to come to them first before I can decide to give them away, or eat them, or even if I want to let them rot.
Senator Whelan: That is an exaggeration and you know it. The fact is that the law is the law of the land, and you abide by the law of the land until the law of the land is changed.
The Wheat Board was formed and the commission set up because the marketing system was so bad, so corrupt and so unfair. It was not Liberals who put it into force, it was Conservatives, because even they recognized the unfairness that existed.
As I said. This country was built by compassion and by sharing and by working together from sea to sea, and we built the best country in the world. Find me a better country, a freer country, in the world.
Mr. Geisam: Honourable member, I do not want to talk about Liberal, Conservative, or anything else. I am asking you a question about democracy and individuals.
Is this democracy founded on collectivism or individualism? Are we founded by freedoms or by coercion? That is the crux.
I am asking you and all the people in Canada, especially senators, to please let us get to the crux of the matter. All this argument about these other little things is a red herring, a smoke-screen. Let us get back to what this democracy is all about.
Senator Whelan: This country was founded in the most democratic fashion of nearly any country in the world. Not a drop of blood was shed when we put this country together, and we welcome people from all over the world. We may have some faults, but I will challenge those faults against those of any other country in the world.
Senator Stratton: Senator Whelan, I think you have to respect people's opinions. You are sitting there in your chair telling these people that they are wrong. I do not think that is our right. They are here presenting their own concerns and we have to respect that.
Senator Whelan: Senator, I am giving respect. I am defending my country, the country that I love, that I helped, with a lot of other millions of other people, to build. The Wheat Board is part of my country, and it is not a monster; it is not arrogant.
The Chairman: I think we have to realize that we are talking about two different views.
I think the senators will agree that one theme has prevailed pretty well through the two days of hearings that we have had. There are some who believe that they should have the choice outside the Wheat Board, or the choice to market through it. There are others who believe that if that choice is granted, the Wheat Board will be destroyed. I think that is what it comes down to.
We certainly are here, as a Senate committee, to hear from you. We appreciate the views of each person that has come before the committee today. You have all put your heart and soul into your submissions, there is no question about that. You believe strongly about the issues that you believe in, and that is the great Canadian way. As senators, we are here to listen and hear from you, the farmers.
I especially appreciate the individual farmers that have come, as well as the farm groups, especially the gentleman and his wife that appeared today from a family farm. I think all of us really appreciated their appearance here, as well as yours. Thank you. Mr. Hickie?
Mr. Hickie: I would like to answer Senator Gustafson's question regarding the value of the wheat in that loaf of bread.
I am looking it over, and it the loaf a little bit on the small side, so my guess would be about 4 1/2 cents wheat in that loaf of bread, not more.
The Chairman: Of course that is a question that prevails. It seems that farmers do not get a just return for the product that they produce, when you look at the manufactured product that comes out and the price we pay in the stores for these items. There is no question about that. Thank you. That concludes our session. We will consider our committee recessed.
The committee adjourned.