Proceedings of the Standing Senate Committee on
Agriculture and
Forestry
Issue 7 - Evidence - Morning sitting
SASKATOON, Thursday, March 26, 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 8:34 a.m. to give consideration to the bill.
Senator Leonard J. Gustafson (Chairman) in the Chair.
[English]
The Chairman: Ladies and gentlemen, we welcome you here this morning; the Senate committee is pleased to be here in Saskatoon. So far we have held two days of hearings, one in Brandon and one in Regina, and we have listened to 50 witnesses. Of course, the whole reason for the Senate committee being here is to hear from the farmers, especially individual farmers as well as farm groups.
Our first witness this morning is Mr. David Orchard, representing the Citizens Concerned About Free Trade.
Mr. David Orchard, Chairman, Citizens Concerned About Free Trade: Thank you very much, Mr. Chairman. I would like to thank your committee for meeting a half hour earlier this morning to accommodate my presentation. I appreciate that very much.
To give you a little of my background, I farm at Borden, Saskatchewan, which is just about 45 miles from Saskatoon, and I am the author of a book called, The Fight for Canada, which is about the background of Canada-U.S. relations and the FTA and NAFTA.
I do not have a copy of my presentation, but I have copies of an article that I wrote that appeared in The Globe and Mail on the subject of the Canadian Wheat Board and I would be pleased to distribute those.
Our organization has approximately 12,000 members across Canada; a good number of those are farmers on the Prairies.
Recently, as you know, the Canadian Wheat Board has been under a barrage of attacks from organizations and individuals calling it "government control," "government monopoly," "socialism," and "communistic." We are being told it is not even a question of economics any more; even if the CWB provides better returns to farmers, it is depriving farmers of their liberty.
Many of the people making those claims are not farmers at all; they are brokers or truckers who have a vested interest in breaking the Canadian Wheat Board's monopoly.
Anyone attacking the CWB really forgets the history of why it was set up in the first place; people who forget their history sometimes turn out to be very dangerous individuals. I would like to remind you of why the Canadian Wheat Board was set up.
It was not set up as a communist plot or a government plot to oppress farmers; it was set up because farmers fought for it, all across the Prairies, and marched in the streets of Regina, 1,000 farmers and more, to take control of their industry back and put it back in the farmers' hands. That is the role of the CWB; that is why it was set up in those years when grain was selling for a few cents a bushel.
I just spoke to one of my neighbours the other day about this; he said that he trucked grain at the time before the CWB was in place and the freight for trucking the grain was more than what he got for the value of the grain at that time. Many of the people now attacking the CWB have no historical memory of those circumstances.
Because we have the Canadian Wheat Board, our grain trade is still roughly 70 per cent in Canadian hands. If we did not have it, our grain trade would go the same way as our automotive industry, our oil and gas industry and our movie industry, all of which are more than 90 per cent foreign controlled, largely American owned. If the CWB was destroyed or gotten rid of, that is exactly what would happen to our grain trade as well. The Louis Dreyfuses, the Continentals, the Cargill Grains would move in and take over control of the grain trade in our country. So it is an issue of sovereignty that we are talking about. That for me is the main point.
Cargill and the Winnipeg Grain Exchange, the grain trade, have for years wanted to get rid of the Canadian Wheat Board. After it was set up they had their spokesmen going across the Prairies making thundering speeches calling the board a communistic and socialistic plot, trying to get rid of it, but they were not able to sway the support of the farmers, the majority of whom supported the board then and still do today.
The difference today is, of course, that we have the Canada-U.S. Free Trade Agreement and NAFTA in place, and that has given a whole new lease on life to the opponents of the board and we are seeing them attacking it in greater numbers than ever before; but they still do not represent anywhere near the majority opinion of the farm community in Western Canada. It has to be remembered that even if they are able to make a lot of noise they do not represent the majority of the farmers.
After the free trade deal was put in place, they were able to trigger, first of all, the report on the Canadian Wheat Board and then Bill C-72 and now Bill C-4. The problem is that the Canadian Wheat Board is not broken; there is no need, in our view, to make changes to the Canadian Wheat Board; the institution is working well for farmers. We hear a lot of talk about democracy, suggesting that we have to elect the board members for the CWB; who is talking about electing the board members for Cargill Grain? They talk about needing to have transparency, that the board is too secret. Well, that is what the grain trade is all about. Nobody is demanding transparency from Cargill Grain.
The so called "freedom fighters" we have out here are not marching in front of Cargill Grain demanding transparency and openness in their operation, because they will not get it. The end result of their action is going to be to destroy the board and hand our grain trade over to American interests.
Since the free trade deal went into place we have seen 6,000 Canadian companies taken over by American corporations; we are seeing the Americanization of our country from one end to the other. C.N. Rail, the link that held this country together, was privatized and is now 70 per cent U.S. owned. That is what we will see happen if the Canadian Wheat Board is destroyed or weakened, and, in our view, this bill weakens the Canadian Wheat Board.
There is no need for these kinds of changes. We already have an elected advisory board. If the government and your committee want to, they can make some changes to strengthen the CWB. Just a couple of years ago, I believe, was Senator Dan Hays issued a report on what could be done to strengthen the Canadian Wheat Board; he just simply recommended that the advisory board be given a little more power. They should have a staff and they should have the legislative right to inspect all of the records of the CWB; that is basically all that is needed; just give them a little more power there. They are already elected by the farmers and accountable to the farmers. So there are no major changes needed at all.
We would like to see this bill killed, so that we can go back to the status quo. If you wished to implement a few minor modifications to strengthen the power of the advisory board, that would be good. That is all that is necessary; all this hullabaloo about making the Canadian Wheat Board more democratic, and so on, is really just a guise to destroy the CWB on behalf of vested interests who would like to see the grain trade put back in the same hands it was in before the CWB existed.
In essence, that is our presentation. As you know, there is a clause in this legislation that says the CWB has to act in a manner consistent with NAFTA and the FDA; once you change from a Crown agency to a mixed enterprise and you put in legislation that the NAFTA and the FDA are going to run and take precedence over the CWB that is the beginning of the end for the CWB.
We want to see this bill killed; we want to see us go back to the kind of position where the CWB can continue to do its job on behalf of Saskatchewan and Western farmers
[Translation]
Senator Robichaud: Thank you, Mr. Chairman. You are telling us that we should not touch the Canadian Wheat Board, that everything is working well and that we are trying to weaken the Canadian Wheat Board. My question is the following: do you believe that the Canadian Wheat Board could be weakened if producers are granted the opportunity to elect the majority of its directors? Producers would continue to be in a position to make the decisions relating to all of their activities.
In what way do you see this approach possibly weakening the Canadian Wheat Board?
[English]
Mr. Orchard: If I understood you, in your view electing the board will weaken the power of the CWB.
Senator Robichaud: Yes.
Mr. Orchard: It is not just electing the board, it is removing it from Crown agency status. Once you remove it from Crown status to a mixed enterprise, then suddenly the government is no longer compelled to back the CWB and it can start moving away from its responsibilities to it.
They will then set up a contingency fund; the CWB will finance that itself; farmers will be docked for that, and that will start maybe to undermine a bit of support for the CWB. But more than that, the government then suddenly is no longer legislatively required to back the Canadian Wheat Board. It can start to move away from it.
Then we come to the talks surrounding the World Trade Organization and the new agreement, the MAI, the Multilateral Agreement on Investment. I have just returned from a four-month speaking-tour on those, and under those agreements the Canadian Wheat Board will be undermined even more and the Canadian Government will simply move away from it because it will no longer be a Crown agency.
That is how I see it. It is not simply a matter of electing the board. Electing a board, it seems to me, is kind of an unusual way to run a major enterprise, a $6 billion enterprise, electing people to do it. That may work; it may not, but I do not see that as the main weakening of it; the main weakening of it is removing the Crown agency status.
Senator Hays: You made reference to a study this committee had done a while ago; of the senators here today I think only Senator Gustafson and I were there at that time. It was evident then, and it is even more evident now, that change is afoot in the grain industry and generally. We have entered into the Canada-U.S. Free Trade Agreement and now the NAFTA. We have negotiated the Uruguay Round and signed it. We no longer have the Western Grain Transportation Act in any form as a benefit or as a means of moving grain at lower costs, and, undoubtedly, all these things are going to affect the way in which the board operates.
At the time, our thinking was that if the advisory board played a larger role, more like a board, and if the Canadian Wheat Board was more responsive to it, that would be a positive way of dealing with the changed circumstances of the grain trade.
The government, in its wisdom, however, has brought this bill forward and Senator Robichaud has asked you a question which you have answered. The Canadian Wheat Board is going to have to change in various ways and because things around it are changing so rapidly we are going to have to, it seems to me, devise a way to adapt to that rapidly changing environment, and I am a little concerned about simply killing the bill being a good idea.
How do we deal with change, if we do not have a way of making the organization responsible to those that it serves a lot more than it is today?
Mr. Orchard: Change is afoot; you are right. There is too much change afoot, as many people will tell you. We are being told that the CWB and all these things are simply voices from the past, and that it is time to get rid of them.
I am reminded of a famous statement by a man I like to call a friend of mine, Mr. Trudeau, who said during the Meech Lake Accord, "Pythagoras is a man of the past, but two plus two still equals four." And that is exactly what I want to tell you about the Canadian Wheat Board: It has worked well; it has kept the Canadian grain trade in Canadian hands. Will that still be the case, once we start tampering with it? Really, this bill is a panicked response to a bunch of noisy characters who want to destroy the Canadian Wheat Board. We have always had them in the west, but the difference now is that the government is paying attention to them. They have been able to run their trucks across the border and get some media attention, and now, suddenly, in response to that we have a bill that is about to change, fundamentally, the Canadian Wheat Board, and I think it is a mistake.
The Chairman: There is a lot of investment in the grain industry in Canada today and in Western Canada, especially Saskatchewan. You have big plants going in south of Regina, Yorkton, by ConAgra, and somewhere around Dafoe here. You have ADM buying shares in United Grain Growers; they just last week bought out Pioneer Grain at Stoughton, which is quite an advanced plant. You have the Dreyfus International company from France announcing that they are going to build three terminals in Saskatchewan. That represents a lot of investment.
As I put it to the minister of Agriculture for Saskatchewan yesterday, how do you see all of these things happening, all of this investment, without governments provincially and federally responding to the changes that are coming? Is there not something positive about the fact that people see enough future in agriculture in Saskatchewan to invest their money? Furthermore, it speaks well for the fact that we produce the best grains in the world, and is there not something positive about that aspect of it?
Mr. Orchard: I do not think there is anything positive about the Americans buying up our grain industry, which is exactly what we are seeing happen. It is not because they have confidence in Saskatchewan; it is because they see the Canadian Wheat Board being destroyed so they want to move in. This has been Cargill Grain's position since day one.
In my book, which I hope you will all have a chance to read, I go through a little of that history in the Canada-U.S. Free Trade Agreement. On the U.S. side of those negotiations was a man named Daniel Amstutz, the former CEO of Cargill Investor Services. On the Canadian side, advising the Canadian government in those negotiations, was Mr. Gilmour from Cargill Grain Canada. So we had Cargill Grain sitting on both sides of those negotiations.
They want to remove the power of the Canadian Wheat Board to control the trans-border flow of grain. That is what is happening. Mr. Mulroney, as you know, is sitting on the board of ADM now and he helped them take over United Grain Growers. So there is nothing new about that. The American grain trade has always wanted to capture the Canadian grain trade in the same way as they have captured our energy trade. Now the question is whether we want to have that happen.
I do not think we can afford to sell this off. We are selling off far too much of our country as it is. This is not a positive sign. I think we have to keep the Canadian Wheat Board in place to prevent that from happening.
Senator Whelan: I am sure you are aware that the flour milling industry in Canada is now 80 per cent controlled by one company, Archer Daniels Midland; about 90 per cent is owned by two or three companies, and only about five per cent, I understand, is independent or Canadian-owned.
Yesterday, we heard a presentation by a farmer from Saskatchewan, who showed the actual income of farmers, including their cost inputs for machinery, fertilizer, seed, fuel and equipment; their income is actually going down while that of the grain companies is going up. Have you any comment on that?
Mr. Orchard: In preparing my article for The Globe and Mail I spoke to Gord Cummings, who, as you know, is CEO of the Alberta Wheat Pool. He pointed out exactly what you are talking about. He said that the Canadian flour milling industry went from Canadian hands to almost completely American control. This is a quote from him:
From start to end, when the first major transaction happened, when an American company bought one of the Canadian flour mills, until the point when virtually all the flour milling industry in Canada was owned by foreign interests was 15 months.
That is how fast they moved to take over the flour industry. These giants could simply swallow up the wheat pools here for breakfast, if there was nothing to stop them. Without the power of the Wheat Board to stop that, that is exactly what is going to happen, and, of course, the kind of profits you talk about there is what our fathers and our grandfathers lived through when they were completely powerless in the face of the grain trade's ability to manipulate weights and manipulate prices.
Senator Whelan: When I was in Cabinet I enjoyed fighting Cargill, making them adhere to all our rules and refusing to allow them to take over our poultry processing, et cetera. We did that under the Foreign Investment Review Agency, and still Canada was one of the easiest countries in the world to invest in. You can talk to the German investors, or to any of the investors, and they will say, "When we compare investing in Canada to investing in some of the other countries, with the rules and regulations they have, it is one of the easiest and one of the best." One investor told me that over 15 years he had never lost a penny on an investment in Canada.
When we talk about take-overs, if I understand correctly, and maybe you know the answer, no one could ever take over Cargill, the way it is set up?
Mr. Orchard: Well, no; it is the largest grain company in the world privately held.
Senator Whelan: Can it continue to get bigger? As I said yesterday, I worked with three different U.S. Secretaries of Agriculture who all told me that the grain companies in the States are so big there is nothing they can do about them.
Mr. Orchard: That is not true, you know. In Canada we live next door to the world's only superpower, the most powerful nation the world has ever seen, and John A. MacDonald used to say, "If we don't have an economic border, we soon won't have a political border." What he said in 1890 is just as true today.
We do have economic restrictions. For example, there are restrictions on the foreign ownership of our banks; there is the 10 per cent rule on banks, which was instituted by Walter Gordon when Citibank of New York came in and said it was going to buy out the Toronto Dominion Bank. That is when we introduced rules saying, "Just a minute, you cannot do that."
If we strip away those rules and we strip away the power of the Wheat Board, they are going to come in just as sure as light follows darkness; they are going to come in and they are going to take control of our industry, and then we will have the pleasure of selling to these huge American corporations over which we have no power at all.
Senator Whelan: If the bill is passed, do you think the directors should have the power to elect a chief executive officer? I can see tremendous politics involved in that.
Mr. Orchard:That is right. That is an issue of governance; I do not think that is the key thing. There are different kinds of things that could be dealt with in terms of governance, but in my opinion the key thing is to defeat the bill. I hope that you will delay this bill and send it back for a long enough delay that the darn thing dies.
When I made my presentation to the Commons committee on this over a year ago, I said, "Let the bill die on the order paper." That is my request to you today. I hope that you will carry on that good work.
Senator Stratton: Are you aware of the fact that the Saskatchewan Wheat Pool is building elevators across the line in North Dakota?
Mr. Orchard: Yes, I am, but it is in Sweetgrass, Montana.
Senator Stratton: Montana, sorry. Are you also aware that at a meeting of the Ontario Wheat Producers' Marketing Board on March 5 and 6 their delegates voted 90 to 10 to allow off-board marketing to the U.S.?
Mr. Orchard: I am.
Senator Stratton: With that kind of thrust on the part of Canadians, it is not just the Wheat Board that is doing this; it is not just the Wheat Board that is pushing for greater freedom for farmers and greater control by farmers. It is the Ontario Wheat Producers and the Saskatchewan Wheat Pool that are, in essence, becoming international traders with the U.S.
Mr. Orchard: Well, there actually has not been a vote of the producers yet in Ontario.
Senator Stratton: I understand that, but the push seems to be that way.
Mr. Orchard: Well, the push seems to be that way.
Senator Stratton: There were 100 delegates, and they voted 90 to 10 in favour.
Mr. Orchard: I understand that. All I am saying is that the producers themselves have not yet spoken. On this business of greater freedom for farmers, heavenly days, delivering us into the hands of Louis Dreyfus and the others, Continental and Cargill, is hardly greater freedom for farmers. That is the kind of distortion of language that these people use.
Senator Stratton: I guess my real question is this: if the delegates, who usually represent the farmers, voted 90 to 10 to allow off-board marketing, and if the Saskatchewan Wheat Pool is building elevators in the United States, are you just going to put up a wall and say, "No, you cannot do that"?
Mr. Orchard: We already have the Canadian Wheat Board in place. This bill is what is talking about ripping that wall down. I am saying you cannot do that and most farmers do not want that done, and if you do that we are going to be flooded by American control.
There is a reason that the Saskatchewan Wheat Pool is building across the line. I have some disagreements with some of their strategy, but they are doing that because they want to try to meet the new competition from the American giants.
That is what is happening and that is what Gord Cummings talks about in the article that I have given to you. It is a reaction; but they are not going to be able to stand up against the American giants at all, once you rip down the wall that currently protects us.
Senator Taylor: I have a little trouble following your statement on the advisory board to the effect that it is better than the elected board. You agreed that the advisory board should be strengthened by my colleague's recommendation of a few years ago, that they have access to more help, research and so on, which they will certainly have if they are elected. I do not see your point that an advisory board that is elected, which is really what we are talking about, is weaker than an advisory board that is appointed by the government, particularly if you believe, as you do, that the government of the day, for the last number of years, has sold out to the Americans.
Why would you want a government that has sold out to the Americans to be appointing the board?
Mr. Orchard: No, the advisory board is already elected, senator.
Senator Taylor: But it is still subject to a great deal of government control, whereas, if they were elected by the farmers, they would have a lot more autonomy.
Mr. Orchard: I do not believe your bill is talking about electing the advisory board; you are talking about electing the CWB itself. I am saying we already have an elected advisory board and all you need to do is make a couple of fine tunings and give them some staff; they need some money for some staff.
Senator Taylor: Under corporation law, a board that is elected usually has a lot more authority than an advisory board. In other words, I think we are strengthening the advisory board if we change the system to what we are talking about, rather than leaving it as it is.
Mr. Orchard: But that is not the advisory board's position. I think they presented to you --
Senator Taylor: You do not think so; you have made yourself clear. Now let us drop to the supplementary, then. If the election goes ahead, would you rather see the election by delegates, which is very similar to the advisory system, or would you like to see a direct vote in each of these areas?
Mr. Orchard: In either case you open it up to the private grain trade.
Senator Taylor: Never mind the "either"; you have only a choice between one or the other.
Mr. Orchard: How about if I say "neither"?
Senator Taylor: You would take neither. You hope that people will stay home. You know what happens to people who stay home? People they do not like run the thing.
Mr. Orchard: Does Cargill Grain elect their board? Do they let the farmers sit in there and start electing? Does Louis Dreyfus?
Senator Taylor: Their shareholders elect their board.
Mr. Orchard: And it is the most secretive institution in the world.
I want to refer you to Dan Morgan's book, Merchants of Grain, which is one of the better looks at the whole grain trade and the Canadian Wheat Board; I hope that each of you will have a chance to read that. It gives you some idea of how those corporations run, and, believe me, they do not fiddle around with concepts like transparency and electing a board and having accountability to anybody, except to the few who own them and control them. That is the route that we will go, if we get rid of the power of the Wheat Board.
Senator Taylor: This is what would happen here: the people who controlled the board would be the farmers, as they are the shareholders of these others. Do not get me wrong; I am not holding any candle for Cargill or any of the others.
Mr. Orchard: Good.
Senator Taylor: You seem to think that, if they are American, they are big bad boys; we have some big bad boys on our side too.
Mr. Orchard: Our big bad boys are quite a bit smaller than the ones from across the line. All I am saying, Senator Taylor, is that it is not broken, so don't fix it.
The Chairman: We want to thank you, Mr. Orchard, for appearing this morning; we take note of your statements and the article that you have given us.
Mr. Orchard: Thank you, Mr. Chairman.
The Chairman: Honourable senators, our next witness is Professor Hartley Furtan of the University of Saskatchewan.
Welcome to the committee, Professor Furtan. We are all aware that the University of Saskatchewan highlights agriculture and that Saskatoon is right in the heart of agricultural Canada; so we are really pleased to hear from you today.
Professor W. H. Furtan, Department of Agricultural Economics, University of Saskatchewan: Mr. Chairman, I have a submission which I have given to the secretary and I will speak from that directly.
It is my privilege to appear before the Senate Agriculture Committee to discuss Bill C-4. No one needs to say that this has been a contentious piece of legislation, as right from the start people have opposed it. The legislation is complex and makes changes to the Canadian Wheat Board that are far-reaching. It is not possible to forecast all of the impacts and the outcomes that will occur from this, but it is fundamental that we make some changes to the Canadian Wheat Board. In that respect I support the current bill.
Just as a little bit of background, the Canadian Wheat Board has a monopoly on the marketing of export wheat and durum, wheat and durum used for domestic consumption, export barley and malting barley from the Canadian Wheat Board area. The Canadian Wheat Board currently has five commissioners who report to the minister responsible for the Canadian Wheat Board who then reports to the House of Commons. Farmers have no direct say in the operations of the Canadian Wheat Board even though they pay for all of the operational costs.
So my key point today is that I support the notion of an elected board, which is fundamental to what I believe is public policy when you have this kind of agency. There is an advisory board -- and I do not want to minimize its importance -- that is elected and it does give advice; but it is only an advisory board; it does not have control or power in management.
In the past we have estimated from actual Canadian Wheat Board data that the Wheat Board has earned a price premium for farmers. For wheat we estimated the premium to be about $14 a tonne and for malting barley $44 a tonne. So there are significant premiums there. This is not to argue that the Wheat Board gets a premium in all markets, because it does not, but on average it did. Our results are not unique; they have been supported by other work.
As well, and I think this is important, we have estimated that the basis charged by the Canadian Wheat Board is lower than that charged by other marketing institutions. The basis is simply the difference between the price of the grain at FOB position and the price farmers receive.
Now, the premiums are earned, because Canada produces a very desirable product in high quality wheat. As Senator Gustafson said, it is known around the world, and that is true. It is also true that the Canadian Wheat Board did not develop these varieties; the high quality wheat and malting barley were developed by scientists and the regulatory system, like the Canadian Grain commission, and farmers.
We must remember, though, that wheat is still traded state to state, and by about 80 per cent it is still state-to-state trading. The key, though, is without a single-desk seller the benefits that have been built up by Canadians would be passed on to consumers. This is the basic argument of how a monopoly works.
In other words, because we have a high quality product and we have a single-desk seller, we can charge the Japanese a higher price than we charge the Chinese, and that is where you get you premiums. If we had an open market, we would charge all the consumers the same price. It is just like when you go down to the store to buy canola oil, even though it may be a higher quality than other oils, we charge all consumers the same price; it is a competitive market.
For wheat in the international market, because the Wheat Board is there, it is able to charge those who are willing to pay more than those who are not.
In summary, I believe the Canadian Wheat Board has earned a price premium and without the CWB and that single-desk selling component we would lose that.
Now you may ask, if the board is doing so well why do so many farmers want change? The majority of producers want to see the Canadian Wheat Board maintained, but they have some doubts about whether things are working quite right; that is the majority. The only way that this can be alleviated is by giving farmers a direct say in the operations of the Canadian Wheat Board.
Stakeholders in any public policy have at least two important roles. If we look at Bill C-4, first, stakeholders are involved with politicians in developing the policy objectives. Often the policy results in individuals being denied certain freedoms in order for the policy to work in a meaningful way. The Canadian Wheat Board falls into that category. In such an instance all stakeholders must be consulted. This may result in a political debate which may turn into an election issue, or it may not, in general.
In the setting of operational objectives, that is, how things work from day to day, the stakeholders also have an important role in a public-policy institution like the Canadian Wheat Board. Farmers need to have their voice heard on how access to services is determined, how quotas are set, how the Canadian Wheat Board car allocation policy works, and how senior management operates the institution. These are all important stakeholder issues that are outside the legislation, that is, the Canadian Wheat Board Act, but are still very important to grain farmers.
In the case of Western grains, all the grain handling, marketing and transportation could be turned over to the marketplace, as is done for other commodities such as coal and potash. In this case, the stakeholders would be the owners of capital and their success would depend on the performance in the marketplace. But the major difference would be on issues such as equity of deliveries, and how that would be treated.
The marketplace would not provide all grain farmers with the same access to the grain handling, marketing and transportation system; rather, it would sell a service at a price that equated demand and supply, which is another way to allocate the scarce resource.
Both the government and farmers have a financial stake in the Canadian Wheat Board. I think that is important. The federal government guarantees the initial payment paid to farmers when they deliver their grain to the Canadian Wheat Board at an elevator. In the past, these borrowing guarantees have cost the federal government money when the final price was below the initial payment. While this has been a relatively minor cost, it is nonetheless important.
The federal government also provides credit guarantees to the Canadian Wheat Board when importers are deemed to be worthy. However, the cost of running the Canadian Wheat Board is paid totally by farmers from the sale revenues of wheat and barley.
Farmers appear to be asking for input when they request evidence as to how well the Canadian Wheat Board is doing on its sales program. I have worked with some of these. Due to the structure of the international grain market and the requirements for commercial confidentiality, the Canadian Wheat Board has not found an effective mechanism to communicate this information. It is difficult to give farmers an ongoing, meaningful say, if they do not have adequate information as to the performance of the corporation.
Many of the policy changes within the Canadian Wheat Board, such as the publication of the "expected pool returns" and so on, are a direct result of producers' requests for information. While this information helps farmers plan their deliveries and make better financial plans, it does not seem to meet the full requirements for a voice in the operations of the Canadian Wheat Board. The current concern of many farmers is that they have no direct say, yet they are required by law to deliver their grain and use the marketing services of the Wheat Board. This could lead to a situation where the stakeholders, who otherwise would be strong supporters of the objectives and operations of the CWB, want to exit the system. In fact, that is what we are seeing. The issue of "voice" or having direct control is, therefore, essential to the running of the Wheat Board.
I think it is useful to look at other aspects of agriculture, such as supply management of dairy and chicken, where farmers do have a lot of control over the marketing and do have direct access, and it is very interesting that the farmers in those systems are very supportive of those systems. One of the reasons, I believe, is that farmers have a direct voice in the operational running of those organizations.
Similarly, you can look at cooperatives such as the Manitoba Pool, Saskatchewan Pool and Alberta Pool, and they all have an elaborate delegate system that provides information and carries the information back to the farm community. I believe the Canadian Wheat Board needs a farmer-controlled management system.
In time, farmers may choose to elect all members of the board, including the CEO, but that is down the road a way and, if that were to happen, a new deal would have to be made with the federal government because it would not want to carry the financial exposure and yet have no say. But that decision is down the road. I think we have to take the first step in getting this elected board in place.
The second issue I would like to speak to, senators, is the notion of pricing options. I have submitted to the Senate a report on the premiums earned by the Canadian Wheat Board. I have also submitted a report that we did on looking at these pricing options, how they might work, and what the advantages and disadvantages are.
This second issue is that of the flexibility regarding pricing options that is being made available to farmers in Bill C-4. If one is going to give farmers control over their marketing institutions, they should have flexibility to make changes as they see fit. Bill C-4 allows the Canadian Wheat Board to introduce new pricing options if it determines the options would be useful. We have examined some of these options and found that, as expected, they affect farmers in very different ways.
One of the changes that have occurred on grain farms is the increased diversity of farm operations. Some farmers feel that they could use financial instruments that are available in the marketplace but are not now accessible through the Canadian Wheat Board, such as options and futures. This kind of pricing flexibility will allow the options, as they evolve, to be made available to farmers.
The increase in price options is not a panacea and the Canadian Wheat Board is not obliged to use them, but it has the option of using those that are useful to producers while maintaining the integrity of the single-desk selling advantage. I think that that is the key thing. We can make changes to the Wheat Board in how it runs, but the key thing is maintaining that single-desk selling advantage, because that is where the premiums are.
There are other changes to Bill C-4 that increase its flexibility, but I do not have time to list them.
In conclusion, senators, the changes to the Canadian Wheat Board Act are not perfect. The government has started down the correct path and should be encouraged to continue. The grains industry is in the middle of change and we cannot foresee all the ramifications of any one amendment. However, we need to move on and start the process.
I suggest, senators, that you recommend that there be a formal review of the changes in a three- to five-year time period. That will provide all producers with another opportunity to address their marketing needs, when we have more information as to how the process of marketing, transportation and grain handling, to mention only a few, evolve.
Senator Andreychuk: I was pleased that you spent some time in your brief on the issue of confidentiality in the Canadian Wheat Board. You pointed out some of the areas that are now open to more scrutiny, and I think you have correctly pointed out that the Canadian Wheat Board has worked under closed doors for too long.
I want to ask you whether you feel that the proposed amendments within the act are sufficient to restore that confidence or have we gone too far down the road?
Just to give you a little time to think about that, let me say that I think the Wheat Board could have opened up; there are all kinds of things it could have shared as information, but which they hid behind, saying they was confidential. I think that they used confidentiality too often when it was not necessary. Because that that has led to such a lack of confidence, do you believe that the changes within Bill C-4 are sufficient to regain that confidence or are there further changes that Bill C-4 could have added that might have restored that confidence?
Mr. Furtan: Thank you, senator. I agree with your basic notion that the Canadian Wheat Board has been perhaps overly confidential. I do not think they have known how to release this information.
I will give you just a quick example. I have heard many farmers say that the Canadian Wheat Board is not audited. That is not true; it is audited by Deloitte and Touche every year. There is an audit report out there. They go through the books; they are audited. I think we are dealing with an issue where farmers themselves have to get the information and take it back to their own community.
If we start that process, it might work, but we do not know how the political changes that are afoot in our agricultural industry, grains industry, are going to work, and that is why I support the notion of an elected board, because it starts to give farmers control. I think that the only way that confidence can be restored is when you have direct say yourself. That is the right start. It is too bad that it did not start sooner.
Senator Andreychuk: The next question is whether are you aware of the Ontario situation?
Profession Furtan: Yes, I am.
Senator Andreychuk: And the two points that seem to work together is that the farmers who will be elected still will not control the hiring and firing of the CEO, a very unusual management technique. Moreover, how can the confidence be restored in Western Canada when their counterparts in Ontario will have more flexibility?
Mr. Furtan: I think the makeup of the board -- the five versus the ten, and the CEO -- is a political judgment as to how much control the government feels it should have to protect its financial stake, versus how much the farmers should have. That is a balance that the minister has chosen. Whether it is the right one or the wrong one, I do not know. I see that evolving over time. I think it is a start. Personally, I think, "Why not have a CEO appointed by the board?", but I guess this is the balance they chose.
The thing about the Ontario board that I think is correct is that they have farmers in charge of it, and they are starting to make a change through a delegate or elected body. That is the right way to make a change to this kind of public policy. So the lesson I would learn from Ontario is, is it right for the west? I do not know, but we should have farmers who are elected making that decision.
Senator Taylor: You mention that the transportation, grain handling and marketing should be privatized; in other words, the capital holders would be given more competitiveness and a better process. You also mention pricing options for farmers, and in the bill we talk about the right to be able to change pooling periods. However, we heard yesterday from one or two witnesses that changing the pooling periods will throw an unusual load onto our transportation system; in other words, it would not be effective.
Have you done any work to see whether you can coordinate a variable pooling period with a delivery system that is not the most efficient in the world right now?
Mr. Furtan: On your first question, senator, when I made the point on transportation and handling it was to say that we could go to a totally market oriented system; but that would have a different outcome, and that is a public policy issue that you are going to have to decide.
On the second point, yes, it is in the report that I have submitted on pricing options. We did look at the issue of shorting the pricing pool and what the benefits and the costs of that would be, so that is in there.
You can devise a system that would allow a short pool -- allow farmers to cash out. There are certain benefits and certain costs to that, however, and those would have to be weighed by the elected board as to whether that should be introduced or not. One can design such systems but there are costs and benefits there.
Senator Taylor: That would be compatible with the transportation system?
Mr. Furtan: Yes.
Senator Hays: I wonder if you could elaborate a bit on the value to producers of price discrimination, in terms of what competing grain marketers or trading companies might try to do unsuccessfully or perhaps successfully.
I will ask a second question in terms of the board, related to Senator Andreychuk's question. Do you agree with the appointment of a president and four members of the board at pleasure, out of 15, including the CEO, or should the CEO have more security in office. Would that be a good thing and would it perhaps be a good thing for the minister and the board to agree on who that person is?
Mr. Furtan: On the price discrimination question, basically the argument for monopolies is that monopolies always charge higher prices. I think most people would agree with that. The Canadian Wheat Board is no exception. It gets a higher price because of price discrimination between buyers. The Japanese have very high incomes. They like the consistency of the grain they get from Western Canada and they are willing to pay to make sure they have it every year in the amount they want.
You can go into a market like Indonesia -- Indonesia does not have anywhere near as much money -- and they will not pay as much because they will substitute American grain or they will substitute Argentine grain. So what you have if you take number one CWRS, the Japanese will pay a higher price than the Indonesians will.
If you have an open market for that and if we are in the business I want to sell to the Japanese and so do you, we all do. What happens is that is we will bid that price right down to the Indonesian price. We will are indifferent as to who the consumers are. That is how a competitive market works and that is why in competition the beneficiaries are consumers, because that competition will drive the price down to the price the least wealthy consumer will pay, given that the supply is available.
The advantage of the Board is that because there is no arbitrage between Indonesia and Japan the Japanese pay substantially higher prices for exactly the same grain on exactly the same day as do the Indonesians. That is where the price premiums come from and that is fundamental to single-desk selling. Without that you would go right down to the minimum price.
Consider the trade war we had in 1985 to 1993, where the Americans were EEP-ing certain markets. If you look at the data the Canadian Wheat Board pulled out of those markets because the price was too low. If you had a competitive market they would be indifferent to that and they would just reflect that price right back to the farmers and they would move on volume. To be able to price discriminate leads to higher prices and you have to have monopoly power to do that.
On the second point, as to the election of the board and the CEO Again, I am not privy to how much power the Department of Finance feels it needs to come in there and have those initial prices guaranteed. So I cannot really answer this question cleanly because I do not have that information, but I would think that over time farmers will want to have more and more control over who the CEO is and they will have to make a decision as to whether or not they are willing to give up some on the price guarantee to have more control. But I see that as a decision that evolves over time and what we are doing now is that we are starting that process, and that is the right thing to do.
Senator Stratton: Thank you, Professor, that is one of the best explanations for single-desk selling that I have heard.
On the issue of the CEO, I guess we are talking about confidence in the Wheat Board, to which Senator Andreychuk alluded. That is why I think we were considering the potential. If the minister and the elected members of the board approved the CEO that in itself would raise the level of confidence right off the bat. Do you think that that is possible?
Mr. Furtan: I think that the more influence the farmers have the more confidence they will feel and they will get it sooner. If the minister is prepared to do that I think that will build confidence.
Senator Stratton: You say that 80 per cent of grain is still traded state-to-state?
Mr. Furtan: Wheat trade, yes.
Senator Stratton: Even in today's world, despite the fact the USSR is no longer <#0107>-
Mr. Furtan: Oh, yes. Whenever the Americans have EEP they use the Commodity Credit Corporation. The United States is, in fact, a state trader. All the stuff that comes out of Europe is affected by export restitution, the government is involved. Canada is involved, Australia is involved. So you have your four big exporters. The only one where sometimes the government is not directly involved is the United States, but all of the rest of them are.
When you get to your major importers, Indonesia, Japan, Iran, North Africa, these people are all state importers, so you have state against state -- so it is still largely state trading.
Senator Fairbairn: One of the questions that we have been hearing with great vigour in the last couple of days in our hearings has been the question of across-the-board to the United States and there seems to just be this tremendous desire to have it both ways, to have the world outreach but then also to have an individual set of decisions, the ability to make those decisions vis-à-vis cross-border U.S. trading in the southern parts of our Prairie provinces.
Can you give us your notion of what the effect ultimately would be on the value of this cross-border trading if the Wheat Board were to be reconstructed in a way that would permit that?
Mr. Furtan: If it were, basically, to go to a continental type of market where the farmer could move across borders?
Senator Fairbairn: Yes.
Mr. Furtan: The first thing that would happen, I suspect, is that there would be some movement of durum, wheat, into that U.S. market. Then you have to start looking at the cost of things like freight. Montana freight costs are very high compared to Canadian freight costs. I believe that over time the ability of the Wheat Board to guarantee supply would be eroded and this is where it would hit.
The Canadian Wheat Board, in technical terms, has what we would call a long open position. Once the farmer has harvested the grain they have an idea of what the grade is and how much is out there. So then they can put their sales plan in place and they know how much these markets want. They can go and bargain that and try to get the highest price that they can and they discriminate against these markets.
If that were lost so that the Canadian Wheat Board no longer knew for sure how much durum or wheat or malting barley it could supply in the market then it would not be able to bargain as well because the buyers, technically, could get that same grain another way, they could move into the U.S. and move it through there.
So you would see, over time, the premium being eroded from the Canadian Wheat Board. That is why the border issue is important. Certainly the grain that would move into the United States, one would expect, would be from areas closest to the United States. Some of those farmers who are closest to the U.S. be able to find a better deal. I would not disagree with that. But on average Canadian farmers would not because, obviously, we cannot move all our grain through there.We would still have to have to move grain the other way and in that process the Wheat Board would have lost its single-desk advantage. So it would have hurt the industry collectively, but it may be true that some farmers may benefit.
Senator Whelan: I am concerned about what you said about the grain and grading. We had a man from the advisory board come and say that one of the biggest millers in the whole world, a man from Indonesia would never buy from the United States. If the Wheat Board were destroyed he would go out and buy all his supply from the Australian Wheat Board because he liked the continuing supply and he liked the high quality.
It sounded to me as if that you are suggesting they should have met that lower price in Indonesia, that you have got to meet a lower price with lower-quality grain.
My last comment is that you are a professor at a university and billions of dollars are put into the university. Do you have an elected board to govern what you do?
Mr. Furtan: We have a combination. The board is appointed. The government appoints some of the people and then we have stakeholder groups that appoint people. The Senate, which is elected from the convocation, appoints people.
I think what you are trying to say is why not have an elected board there and, in an earlier report, senator, I drew the parallels and suggested that universities have this same problem. They are not listening to their stakeholders quite enough and it is the same issue.
As to Indonesia, my point is simply Indonesians will not pay as much for high quality Canadian wheat as the Japanese will.
Senator Whelan: But why should we lower our price to them?
Mr. Furtan: Because we cannot sell it all to the Japanese. We sell as much as we can to the Japanese to get the maximum return there and then we go to the next market and try to get as much as we can out of that one and then we go to the next market and try to get as much as we can out of that one, all with the same quality of grain. That is what the Wheat Board does and without a monopoly you would not be able to do that.
Senator Whelan: No, I know you would not.
Mr. Furtan:That is why I support single-desk selling.
The Chairman: Thank you, Professor Furtan, we appreciate your appearing this morning and we thank you for being such an informative witness.
Our next witness is Mervin Lloyd. Please proceed, Mr. Lloyd.
Mr. Mervin Lloyd, Chairman, Concerned Farmers Saving the Wheat Board: Good morning ladies and gentlemen. We are grateful to have this opportunity to present our views to the senators. I will defer to Marvin White here to make the gist of our presentation, our written presentation. George Siemens beside me here is to help us answer questions and to see that young Marvin and old Merv manage to say what they are intending to say.
.After Marvin has read his brief introduction, or the gist of what our written presentation is, a group of farmers has asked me to say a few words about farmer frustration to you at the end of it.
Mr. Marvin White: Good morning ladies and gentlemen. I, too, would like to thank you for the opportunity to be here. We sit before you as nothing more than three farmers this morning, so keep that in mind as we try to get through this.
Our group, the Saskatchewan Concerned Farmers Saving the Wheat Board is a broad-based group of farmers from West-Central Saskatchewan, which we believe represents a large majority of farmers who are not being heard on issues related to the Canadian Wheat Board.
We initially organized in July of 1996 at a time when it was apparent that supporters of single-desk selling and price pooling needed a means of demonstrating their support for the Canadian Wheat Board.
We believe that the Canadian Wheat Board has done a commendable job of marketing our grain to a world-wide market. More importantly, we believe that single-desk selling and price pooling through the Canadian Wheat Board is the best way to market our grains in the years ahead.
As farmers we have gone through considerable change and we continue to deal with change in all aspects of our farm operations. As a result, we realize that changes must be made to the Wheat Board.
The changes proposed in Bill C-4 will essentially allow the elected board of directors to manage the Canadian Wheat Board in such a way as to meet and exceed our requirements and the requirements of virtually all grain producers in the Wheat Board designated areas.
After many years of discussion, study, hearings, consultation and legislative review, we believe that it is time to pass Bill C-4 into law and allow farmers, in partnership with the wheat board, to get on with producing and marketing wheat, durum and barley. It is apparent that, regardless of what is done or what is not done, it is never going to be possible to make everyone happy. Accordingly, the time has come, we believe, to recognize Bill C-4 as a starting point from which we can all move forward. Settling this issue is important for farmers, the Wheat Board, and all of Canada.
There are several specific issues with Bill C-4 that we will deal with briefly and maybe get into that more in the question-and-answer period.
We support the concept of a majority farmer-elected board of directors, however, we feel it will be very important that the election process ensures fairness for farmers. The actual election process should be such that farmers will have reasonable opportunity to get to know the candidates and the views of the candidates. The process should also place limits on the ability of non-farmers to influence the outcome of the election. Of course, we support the position that only bona fide farmers are eligible to run or vote for farmer-elected positions.
We also endorse the inclusion and exclusion clauses contained in Bill C-4. As we continue to live with change in all aspects of our business we may require the right to make changes in how we market various grains. This clause ensures that farmers -- I think that is important, that it is farmers -- have the democratic ability to determine what grains are marketed by the Canadian Wheat Board in the future.
Uncertainty about the contingency fund makes it difficult for us to pass judgement on the specific proposal in Bill C-4. However, it is our view that if farmers are to contribute to the fund they should expect to see the benefit of the fund. Furthermore, we believe the initial fund should be created by the Government of Canada, whether that be in whole or in part. Once created, the contingency fund may not be used for several years or many years. Having it all or partially government funded would mean that current farmers would not benefit future farmers.
It is our belief that if government is to retain the authority to appoint one-third of the members of the board of directors and the senior administrators of the wheat board, then the Government of Canada should remain largely responsible for covering the risks associated with initial price increases and operating costs.
The last aspect of Bill C-4 we wish to comment on is the increased flexibility associated with pooling periods and grain acquisition. We recognize that the current marketplace requires flexibility and the ability to move very quickly at times. Accordingly, we support giving the wheat board the option of using these greater powers to address small niche markets or even temporary markets that may arise both internationally and domestically.
As with many other aspects of the proposed changes to the wheat board we, as a group of farmers, are confident that a properly elected board of directors will make the right decisions for farmers. It is also our belief that a Canadian Wheat Board that is directed by a farmer-elected board of directors will go a long way toward demonstrating to a vast majority of farmers that single-desk selling and price pooling are the best and only way to market Canadian-grown wheat, durum and barley. I would like to thank you again for the opportunity to be here.
Mr. Lloyd: I have a fairly difficult task. We conducted a meeting out our way after we knew we had the opportunity to speak to you people. We asked the people at that meeting, "What would you like us to say if you could be there and speak to these people?" Mainly what came out is, "Golly, are we frustrated." Someone would jump up with a story and then another, and they were all over the place with stories. They asked me to try to convey some of those to you.
I will key in on two areas. The one frustration is the length of time the process is taking. Farmers a long time ago, quite some months ago, or years ago, decided yes, it is time for the Canadian Wheat Board to change and modernize; it is time to bring it up to date and make it work better for us. Let us not forget that it works for farmers; that is what it is intended for.
But the process seems to be taking so long and, as this process drags out, the detractors of the board are just ripping it apart and into shreds from every direction they can. They use language and quote as fact some of the darnedest things you can ever imagine and that is frustrating farmers to no end. We have no real means of defending our board from that.
The other area that they are frustrated in, of the many, has to do with the people that purport or say they are speaking on behalf of farmers. The farmers find it really frustrating.
When we as farmers hear those people speaking, we see a hat on their head, and it keeps changing colours and logo. It represents a bank, then a commodity exchange, then an international grain corporation. It represents all sorts of moneyed and financial interests.
We also see pockets, huge pockets, sticking out beside the speakers further than their arms can reach and dragging behind them far outside the door out and down the street, right across the country to cities like Calgary, Vancouver, Toronto, Montreal, Ottawa, and across the international border, I might add, to places such as Minneapolis and Chicago, New York, Washington, and from there back out in all other directions.
As Canada's senior politicians, as people with experience, we are happy you are here and able to recognize what we so easily recognize. When you do we hope that you will see fit to go back to Ottawa, pass Bill C-4, get it into law and let us get on with the job of growing and marketing the world's best wheat, durum and barley.
Then we have another job for you. I was at a meeting the other day where the rationalization of the grain handling system was being discussed. Farmers are terribly frustrated and afraid right now. The discussion over the wheat board is creating a smokescreen that is hiding a terrible thing. Our total infrastructure is being destroyed and turned upside down with no consultation from us at all. We need, perhaps, you people to come and help us look after that one.
I will turn it over to you for questions.
The Chairman: One quick question from the Chair, if you will. Is there not a lot of frustration because farmers cannot operate on $3 wheat and survive.
Mr. Lloyd: Yes, that is some of it. But a lot of it has to do with the way the press handles the issue, as well. To us as farmers, it seems that a lot of the democracy of our country is taking place in the press as opposed to where it should be.
Senator Hays: I want to ask about your point regarding a fair process or a process to ensure fairness in the election of the board as anticipated by the Act. Now this, as you know, will be dealt with in detail in regulations because the Governor in Council is empowered to do that under the Act.
I would be interested to hear how you think that should play out. Should it be through a delegate process, should it be by direct election? Geographic areas must be identified under the Act. Should there be limits on spending in the campaign and transparency in the source of funds? Please elaborate on that.
Mr. George Siemens: On the election of directors, we recognize that Western Canada is a big geographic area. It is going to be very difficult for people from across that region to know the 10 people representing them. In our organization we think that we have an obligation and a responsibility to have meetings where people present themselves and let us hear their views. Four or five of those kinds of meetings would be held in our area.
Our area, West-Central Saskatchewan, for example, is about 200 miles in length and about 100 miles in depth, so you can understand the difficulty of getting around to explain to farmers why I want to be a director of the Canadian Wheat Board.
We believe that there should be limitations on the amount of money spent on this for that very reason. We think bona fide farmers should be elected, as we have already indicated, because farmers are the ones who are going to pay and who will benefit. But I do not think we have any objection to the five people who have been suggested by the government to be on this board.
I think farmers have always welcomed other-than-farm opinions pertaining to our specific industry, because our industry is not only one that revolves around Saskatchewan or Alberta or Manitoba, it is an international commodity that we trade. We need people with specific expertise that can help us recognize them, and we will be the majority to make those kinds of decisions.
Senator Hays: Regarding bona fide farmers, is permit-book holders the definition you have in mind?
Mr. Siemens: Yes, it is.
Senator Fairbairn: I will preface by saying that Senator Hays basically asked the question that I was intending to ask, but I will make a very brief comment.
With no disrespect to any of the other witnesses we have heard, Marv is a breath of fresh air. He is not saying that the worst possible solution may be to have the board elected in majority or that those poor guys or women who get elected to that board will not have any influence, that they will cower in the face of government. Marv is saying that the farmers who might be elected to this board would be people who would speak for the farmers and their views on how to best market their grain.
I come from Lethbridge, Alberta, which is surrounded by farmers and ranchers. I cannot imagine a more feisty, vigorous lot and I would expect that this election campaign might be one of the truly inspiring ones in this country in terms of ideas and zest and desire for the job.
Good on you, Marv. An election will bring to the Canadian Wheat Board voices like the ones I know are out there. They will be speaking within the room on behalf of farmers, rather than outside it.
Mr. Lloyd: Can I just make one short comment? You can be sure that if you people get the process in place for us, farmers will elect the right kind of people to that board and they will all be determined to make the board work, not to pull it apart, to make it work. They will be able to speak for farmers and they will keep in touch with farmers and they will know what we are thinking because they will be, first and foremost, farmers.
Mr. Siemens: I think, along with that, Mr. Chairman, we are going to have to recognize that in order to communicate with farmers, because of the tremendous geographic area that we talked about, some funds will be required for people to get around and meet with people in the furthest corners of the specific area. It will not be a case where a guy is just going to talk to two or three people around his specific area and then go to Winnipeg and have a meeting once a month or whatever it is going to be. He will have to get out and visit with the farmers, so it is going to be more than just a two- or three-day job a month. He will have to be in touch with the people that he is representing. Things change on the farm very dramatically. Changes happen so quickly nowadays. I do not want to be too blunt about this but a lot of us farmers are not able to keep up with the changes that are taking place. Mr. Lloyd referred to one change, the transportation and grain handling issue. It is a well-advanced problem.
Senator Whelan: First of all I just wanted to echo Senator Fairbairn's words about your presentation. As a farmer, you seem to worry a little bit about your capabilities but your brief is one of the best that we have heard,
We are talking about electing people, and reference was made here earlier to the chicken boards under supply management, et cetera. All the members of the board of the Canadian Dairy commission, which is one of the oldest supply management systems, are appointed by the government and it is one of the most efficiently run systems. I just put that forward to you.
Also, you heard the professor here talk about marketing our grain, and I had some reservations when he said that the high-quality grain should meet the Singapore versus low-quality. I got the feeling that was that the farmers would receive less.
I travelled in many parts of the world and I always carried a little thing that the Wheat Board put out with the different samples of grain. You could turn it around or open it up like two different things. Our grain samples were far superior to those from France, the United States, Argentina or Australia. So do you care to comment on that
Mr. Lloyd: Could I just handle the latter part of that? We believe that the Canadian Wheat Board is doing an excellent job of marketing our grain; we trust and believe that. But something has changed in recent times. Back in the seventies and the sixties, the wheat board used to hang back and try to force prices up. We were left with yards full of grain. The old barn, chicken house and everything was full because we were trying to keep the price up and only sell into the high-priced markets.
Sometime in the seventies farmers got the message across that we could not operate that way any more. We could not operate with a zero income, we had to have something to handle our input costs and to get the next crop in. We, therefore, have the Wheat Board, which is responsible for selling all of our grain, not just a portion of it. They have to take advantage of every high-priced market they can. I heard Mr. Furtan saying that they also have to take a little less at times, but even then they get all they can out of it. We have to address all the markets it takes to get rid of our grain
Mr. White: I would like to add to that a bit. I am familiar with Mr. Furtan and his views. I think what he is referring to is the strength of a monopoly. If you control the supply of a specific product, which we do in Western Canada in high-quality durum and wheat, you can ask your price for it, but only to a point at which your buyers will start to substitute for something else. So there are only certain markets where you can reap a very large benefit or premium, if you want to call it that.
I believe it is very, very simple economics. If you dismantle the monopoly of the Canadian Wheat Board -- if I can make an example here -- as is being done with SaskTel, now we have Sprint Canada and AT&T Canada. What has happened to our long-distance rates? They have gone down. The American Government dismantled AT&T and what happened to their long-distance rates? They went down because the monopoly could no longer ask their price.
The only person that benefits from dismantling a monopoly is the buyer. We in this case are not the buyer; we are the seller, the grain provider. So why in the world would I want a whole bunch more middlemen coming in here fighting for the same market, marketing the same product against each other? Ideally what we need in the world -- this is a big leap here -- is something equivalent to OPEC to handle all of the wheat in the world. Then we could ask our price.
Senator Whelan: That was my next question. What do you think about OPEC shorting the market to raise the price.
Mr. White: Unfortunately, the problem with the Canadian Wheat Board is that the size of our market share in world export is so small that our wheat board monopoly cannot completely influence the price as it could if we had, say, 70 per cent of the world trade in grain. Then we would be able to accomplish something.
Mr. Whelan: But in reality you have Alberta and Manitoba saying they want to opt out of the Wheat Board. Are you telling me that Saskatchewan alone could maintain the Wheat Board if these other provinces opt out? I chaired the committee on drought, and the biggest portion of wheat grown in Saskatchewan is grown within 100 miles of the U.S. border.
Mr. Lloyd: I take exception to anyone believing that the farmers of Alberta or Manitoba want out of the Canadian Wheat Board. That is just not true. We had a vote recently over one small issue, just one side issue, and that was the feed barley market. It perhaps would have been more beneficial to some in Alberta than the rest of the area. But what did farmers vote? Perhaps the Government of Alberta thinks they should be out, but not the farmers of Alberta. You will be hearing from some of them, a group that we are aligned with, when you get up there. You will be surprised.
Senator Whelan: We just heard from them in Manitoba.
Mr. White: You refer to Alberta, and a lot of the problem there is not so much the wheat, but the barley issue. Specifically, if you look at the price being paid for feed barley in Alberta, it is higher in a lot of cases, although maybe not all cases, than what the wheat board is paying. You are talking about two different issues there.
One issue is the wheat board selling feed barley all over the world and at port for far more than the Alberta Feed Lot is paying. Alberta Feed Lot is competing on freight, not on the actual sale price. The benefit of their position is the fact that we do not have to haul it with C.N. or C.P. all the way to the coast.
I think some of the things that are being put forth in Bill C-4 can address some of those barley problems, like spot buying and stuff like that. Maybe we could have avoided something like that whole barley fiasco we had a couple of years ago. We might still have that barley market in Japan that we lost.
Senator Whelan: As to the feeding industry in Alberta, I can tell you firsthand I fed cattle for 10 years in Alberta because I could not afford to feed them in Saskatchewan.
Senator Andreychuk: I, too, want to thank the presentation but I also want to make sure that it is on the record that as a Senate member I respect the opinions of all of the people of Canada that have come before us. We may put a different weight on them; we may have our own opinions about them, but I respect the fact that we still have a country where people come and can speak their mind. To me, all the presentations have been valuable.
I would like to address one point in your brief. You point out that you like the flexible pooling arrangements that have been included in Bill C-4. Some presenters were quite worried about that aspect. For example, the Saskatchewan Wheat Pool yesterday was greatly concerned that this flexibility may lead to undermining the effect of single-desk selling. I would like to hear your comments, why you believe it strengthens single-desk selling.
Mr. Lloyd: I will let George handle most of that but there is one little comment I would like to put to that. We have faith that the people we will elect will have the tools to make the necessary decisions. A lot of people are tending to forget that this legislation sometimes reads "may" and sometimes reads "shall." Those are the important differentiations to make. "May" will be up to the farmers, and they will handle it; if it is to their advantage they will use it and if it is not, they will not. So we are not as afraid of it as some are.
Mr. Siemens: I think that the concern you raised is correct. But on the other hand, we also realize that there are specific times throughout a 12-month period when a country wants grain right away. Countries years ago used to buy three months in advance; today they are buying just as they need it. If there is a country that comes out and wants feed barley, for example, and they want it delivered in a two-week period, the Wheat Board must, if they bought it from them or would like to buy it from them, they must have the flexibility necessary to be able to go out to the farm, if that is the case, and buy it directly. I think it is well-known that some sales have been lost, and at premium prices, because they did not have that flexibility to go out and do that.
Senator Andreychuk: Some people who believe in the Wheat Board very strongly think that it needs change.They think that perhaps one of the things that should be built into the act is a mandatory review in a three- or five-year period to ensure that change occurs, so that we do not continue to have such a time delay between the necessary changes and the actual implementation. It is that "shall" and "may." An act is very hard to change,, so if we could force more mandatory change into the act it would be good. Would you support something like that in the act?
Mr. Siemens: We did not address that, Mr. Chairman, but I personally fully support that kind of a theory.
Mr. Lloyd: I do as well.
Mr. Siemens: I want to just say something, Mr. Chairman, on the second-last question to do with the feed barley thing, we were talking about Alberta. I think in many, many cases the malting industry gets the first kick at a bushel of barley. The feed lots get the second kick. What does that leave for the Canadian Wheat Board?
Mr. Lloyd: It leaves them with third-kick international.
Mr. Siemens: It leaves them with what they cannot sell to the feed lot, what they cannot sell for malting barley. I am a cattle person, I am a grain grower. The Wheat Board gets what the cattle industry and the malting industry does not want in many, many cases, not always but in many, many cases.
Senator Whelan: And one might say that that will increase if you look at what is happening.
Mr. Siemens: Yes, I agree.
The Chairman: I want to thank you for appearing this morning. We appreciate your presentation. Thank you.
Now we call to the table the National Farmers Union, Nettie Wiebe.
Ms Nettie Wiebe, President, National Farmers Union: Good morning and thank you very much for this opportunity to discuss what we in the Farmers Union have always considered a very important issue. Beside me is the Executive Secretary of the National Farmers Union Mr. Darrin Qualman who, with your leave, will respond to questions, as necessary, also.
You have in front of you the submission, the written submission. I am not going to read through it. I just want to move through it and I will try to do that in an orderly way because we are, as you know, supporters of orderliness in marketing as elsewhere. So we will move through that in an orderly way and then be pleased if we can engage in some discussion.
We begin our presentation with a brief description of the Canadian Wheat Board which I think I will forego reviewing because you are all by now very familiar with the institution. I would just want to point out that it is a reasonably large institution, and that it handles something like 6.1 billion dollars' worth of wheat and barley annually, so it is a very significant financial institution.
The Wheat Board rests, as we continue to say, on three pillars -- this is not unfamiliar to you either -- which are the single-desk selling component, the price pooling and the government financial back-up partnership.
I want to point out one thing in terms of the single-desk selling which seems to us a real advantage, and that is that the wheat board does not just sell grain on our behalf, it markets. I think that is a distinction that a lot of the people who are thinking about grain and the sale of grain fail to make in a clear enough way. Pricing grain is not marketing grain, and market development is another whole range of activity that all of our competitors engage in.
I just this morning received across my desk a magazine from the French grain industry where they quite clearly point out that every one of the major grain exporting nations has some institution in place which does market development for their grains. In our case it is the Canadian Wheat Board, in the United States it is the U.S. Wheat Associates which is funded, in part, by the federal government.
I point that out because if we do not have the Wheat Board that component, that market development component will still have to be carried by someone. I guess I am sceptical that we the federal government will leap into the breach and fund that. So that is one of the advantages that the Wheat Board gives us.
It gives us, of course, with its single-desk selling a lot of market intelligence and analysis and economies of scale, which is a piece that we should all think about because the alternatives in international grain, of course, all enjoy economies of scale also. The Cargills and the ConAgras of this world are, in fact, so competitive because they are so large, and the larger they get the more competitive they get: that is part of the economies of scale argument. We have that advantage with the Canadian Wheat Board. We, as individual producers, are acutely aware that we would not have that advantage sitting at our own little computers in our own kitchens or offices, as the case may be.
The Canadian Wheat Board with its single-desk selling, of course, has the predictability of supply and we think, for I believe it has been argued widely and well-supported, that it has, in fact, done a great deal to secure our reputation as not only a reliable supplier but a quality supplier. That quality component should not be underestimated. Even when you grow a high quality of wheat it, it does not get marketed as a high-quality wheat and a price recouped for that by magic.
I want to speak about the price pooling advantage a bit later also. A key component there for us as farmers is that it eliminates or it handles the risk for us. That is a very effective, low-cost risk management strategy. Always in the modern economy we hear endlessly about risk management. This is a very, very good risk-management strategy.
The third pillar is the government financial partnership. I want to say to you that that is very significant, although it is sort of background and not very often spelled out clearly for farmers. It is a very significant advantage for us that the Canadian Wheat Board can go into that international market and borrow at government rates, which are much more favourable. It saves us a lot of money. You know they pay up-front the initial price to us and the buyer, of course, has more time to pay. We would be very loath to give that up. That saves us more money, approximately 60 million dollars annually, than the operations of the board cost on a normal year. So that is a tremendous bonus, a partnership which, I want to hasten to add here for the public record, is not a cost to the taxpayer. It seems to me this is how governments ought to work; this is how, collectively, we ought to be able to back each other up at, in this case, no cost to the Government of Canada.
I want to point out to you that farmers very widely support the Canadian Wheat Board. In every case where we have tested that proposition we can say unequivocally that the media reports of "a growing number of farmers" who are disillusioned with the Wheat Board are untrue. That report has been going on now for at least half a dozen years; pretty much every news piece you hear says "a growing number." By now that number, if that was a true report, should have grown beyond the number of farmers we have. As a matter of fact that "growing number" continues to be a minority, and the vast majority by every legal means has demonstrated that it supports the Canadian Wheat Board single-desk selling.
I just want to run through some of the ways in which I think farmers have demonstrated it. You are well-aware that when you have a set of hearings, the people who speak before you and the balance of information and opinion you have here are, in some ways, not necessarily representative of what is out there. We try our best to be representative but it is, in some ways, a whimsical exercise in that some people can come, some people cannot, some people are very anxious about having to appear before eminent senators and would not come for those reasons. I must remind you, just from my own experience, we are in calving and that is a season where a lot of us who do grain and cattle find ourselves up at night and very much occupied by some other part of our farm.
I just want to put that before you because, as I said, every time we have had a real testing of the farming community on this, the vast majority support the Canadian Wheat Board. I run through some of the places where that has been demonstrated. The barley vote, I think, was an absolutely crucial demonstration of that. In March of 1997 when we had a mail-in barley vote on whether we wanted barley on the open market or whether we wanted the Canadian Wheat Board to handle it. Almost two-thirds of the farmers who voted wanted the Canadian Wheat Board to handle it and an amazing 75 per cent of voters responded which, for a mail-in ballot, shows you an intense level of interest in the question.
I just want to point out that by Canadian experience when you have a referendum 50.6 per cent is a win. We all know that; 63 per cent is a landslide, and that is what we achieved in the barley vote. I think that is a pretty clear, unequivocal demonstration of where the support of farmers is. Let me point out that we did not get breakdowns on provinces. But by the way we calculated the numbers, in both Alberta and Manitoba the majority of farmers voted in favour of single-desk selling, unless the results out of Saskatchewan were so vastly skewed that even those of us who live in Saskatchewan would not believe such good news.
It is quite clear that across the prairie region we have demonstrated that we support the board. We had a whole range of rallies in the summer of 1996; we had Canadian Wheat Board Advisory elections where 10 out of 11 of the candidates selected were clear pro-single-desk selling candidates.
We have had, by the minister's account, a lot of letters to the minister responsible for the Wheat Board. During the Western Grain Marketing Panel, when they tested the floor on support, overwhelmingly, in some places almost unanimously, those meetings supported the Wheat Board.
I just think that that part of the puzzle should not be puzzling: farmers support the Wheat Board. That does not surprise us because we are, as farmers, very practical and our support is based on very good economic reasoning. We can, of course, all of us, engage in ideological and larger-values discussions; but on this one, if you reach to the economics, if you look at the economics of it, around most farm kitchen tables it makes very good economic sense and we are practical about that.
You have heard this morning, I understand, from Profession Furtan, and I assume he put on the record the results of the Kraft, Furtan study; that is, that on economic grounds the Canadian Wheat Board makes us a lot of money annually.
Also on the barley report that was done in 1997 by Schmitz, Gray and Storey, clearly, clearly an indication from respected economists that what we know at the kitchen table is, in fact, backed up by the real numbers, it is there, it is making us money -- which is what one could anticipate given that it is a very fine marketing agency that sells on our behalf and returns those profits to us.
That is the key difference between the other very fine, huge marketing companies you have out there who also, of course, do a lot of marketing. The Cargills of this world do a lot of marketing of grain but they are not interested in returning the profit out of that international market to farmers. The Canadian Wheat Board has that right at the top of its agenda, which for us, makes the difference in recouping that value out of those sales.
I will not dwell long on these reports because I am sure you have all studied them and you have had other interveners refer to them, but I do want to point you to a table on page 8 which I think is very instructive. It is a table that comes out of the Western Grain Marketing Panel report, on page 52 of that report, which quite clearly indicates that in terms of our international customers -- and that is, after all, where we are focused. In terms of what our customers think, I think this chart is very instructive. Our customers think that Canada is number one in terms of quality, cleanliness, consistency of quality, technical support, long-term dependability of supply, efficiency of contract execution, and customer service policies. That is a very good report card.
Do you know where we failed? We failed miserably, came dead last, in giving them cheap prices. In fact, on that one count, our customers said that we were the most demanding in terms of price. Therein lies their dissatisfaction. They would like this high-quality grain and they would like it for cheaper.
Let me tell you that, as a grain producer, I am real pleased that they are having to pay more because, of course, that is money in our pocket.
Another reason that farmers are clearly in favour of the Canadian Wheat Board is that it gives us a fair and equitable delivery system, and in our current system I think that is a consideration. You may hear throughout your hearings that there is a great deal of worry about our transportation system. We clearly have a very constrained transportation system and an orderly system is key to getting even half of our crop out to port when it needs to be there.
So fair and orderly delivery is part of the Canadian Wheat Board, with their contract calls, with their market analysis, with their assurance and their knowledge of what is out there and when they need to call it and whom they need to sell it to, who they have sales for; that is a very important part of the equation and for farmers that makes a difference.
We are endlessly frustrated when we see, for example, as we did recently in our own area, 30-some cars of oats parked along a siding. They are in the system, they are in cars, but the ship has not come in. That is a problem of market information and intelligence. I do not think our system can afford that.
The Chairman: If I may point out to the witness, we would like to hear your concerns on the Bill C-4.
Ms Wiebe: I thought it was important just to put in perspective what is out there. We have great concerns with what is in the bill now. Let me point to the key things that we have supported and that we have found troubling.
We have supported and we have pushed very hard for an inclusion clause. We would be very disappointed if, along with these new changes to the Canadian Wheat Board, we did not have a feasible mechanism, a balanced, fair mechanism for allowing producers, by a majority vote, to include other grains under the board. How that mechanism is structured in the current C-4 is, for us, not entirely satisfactory, in that we would like general farm organizations, some of us representing voluntary organizations, more canola producers, for example, than are represented by the commissions in terms of voluntary representation. So we would like to have a say in terms of being able to trigger that mechanism.
But altogether we do need a mechanism there for including grains. I know there is pressure, I know there is nervousness around some centres that somehow farmers will get a bigger piece.
Let me assure you, farmers are democratically minded. We would only want a mechanism, as this one spells out, which allowed the democracy to work, but we would like the advantage of selling some other grains through our marketing arm, if that is the majority will. We strongly support an inclusion clause in the bill.
We are worried about cash buying; we are worried that it will undermine pooling. We are worried that it will also undermine the fairness and equity which the board is valued for. In other words, we are worried that if cash buying is taking place and grain is pooled for a higher price, those of us who remain in the pool will somehow feel like the board has treated us unfairly because someone else got the assurance of board marketing and got a better price out of them. So we are worried about the overall and underlying effects of that.
We are, of course, worried that the government is signalling, with their moving away from guaranteeing the adjusted initial prices, a moving away from that very valuable financial partnership which we have with them in the Canadian Wheat Board.
So those are some of the flags we want to run up the pole in terms of this particular bill.
I point to Appendix A, where we do a little analysis on dual marketing. You may hear all kinds of wonderful stories about having our cake and eating it too. I would say that you need to look at that. I think it is completely undoable; it is a transition to the end of the Wheat Board.
I want to just close by saying that we have a choice, not of freedom to market our own grains versus the Canadian Wheat Board but a choice of a fairly constructed interdependence, which the Canadian Wheat Board offers us, or a complete dependence on the trans-national grain trade. That is our choice, as farmers. We choose fairly constructed interdependence rather than dependence on the big traders.
Senator Andreychuk: For those senators who have not had the benefit of hearing Nettie before, she does equally well comprehensive reporting when she speaks to a group of 10 women in Regina; she is always well prepared. I thank you for that; it makes our task a lot easier.
Am I correct that your concern about flexible pooling is that it could lead to diminishing the Wheat Board, that risk is there and it feeds into what the detractors from the Wheat Board are hoping for, and that is less control by the Wheat Board?
Ms Wiebe: Precisely. That flexibility we think might be bought at a price that, in the end, will have been far too high.
Senator Andreychuk: Do you not feel that the elected board members, coming from the farms, actual farmers, would reduce that risk somewhat, that they would be on their guard against that?
Ms Wiebe: Of course. We have tremendous trust in what democratic institutions bring forward; the Farmers Union itself is a democratic organization. But there might be pressure at some point, tremendous pressure in that environment, to do something which, in the short term, looks feasible and advantageous and which, in the long term, does what I alluded to, which is undermine that trust that the farmers have that the Wheat Board treats them equitably and fairly. That is one of our worries.
Senator Andreychuk: I am glad you touched on marketing development because the strategies of how wheat is sold around the world is something not understood by a lot of people. Marketing development goes beyond selling a commodity; it goes on in the relations between countries. The trade-offs are not always price; there are all kinds of other hidden factors.
Do you feel that the degree of confidentiality that the Wheat Board has enjoyed to this point has worked to the detriment of understanding what the world marketing and pricing is all about because it is a very intricate system that is not receiving any scrutiny from the farmers?
Ms Wiebe: It is complex, and I urge you, if you have time, to engage yourself in that discussion with the Canadian Wheat Board. They have wonderful marketing strategies which involve millers from England and tortilla makes from Mexico; it is quite wonderful.
Do I think that it is a question of information? I think in some ways it is. Farmers are quite sanguine about what goes on there; it seems to function well. We do not have to spend all that time understanding what the Japanese want, in detail, et cetera.
In terms of the accountability, I think that is the wrong place to put that argument. The accountability that you have heard so much about is a problem of who gets to see the private contracts, and nobody in that environment could possibly want the Canadian Wheat Board to expose their customers and their confidential business to their competitors.
I was recently in Albuquerque, New Mexico at the national convention of the National Farmers Union, where the president engaged on the platform the Under-Secretary of State for the U.S.D.A., particularly on this question of transparency, and said to him, "If you are pushing for transparency of the Canadian Wheat Board then we want you to push for parallel transparency from the major trans-national corporations which deal in our grain. We want you to leave the Canadian Wheat Board alone unless we get parallel transparency." We will be waiting a while, I expect.
Senator Taylor: A large percentage of the people who want dual marketing, as I have been led to believe in the last few days in conjunction with letters I have received, appear to be fairly close to the U.S. border and they see spot markets occasionally opening up in the Dakotas and Montana. Bearing in mind that these people may be up to their armpits in snarling bankers and it looks like a few cents more can be earned across the border, have you got any solution for this problem? It is hard to tell somebody to wait and pool with everybody when things looks better somewhere else. It is like telling them that there is a heaven if they wait long enough.
Do you have any other solutions to the problems, other than to tell them absolutely no?
Ms Wiebe: The board, of course, has some up-front mechanisms to take that financial pressure off to some extent, and that is the cash advance and the initial payment, et cetera. That is clearly not what they want; they want the American price. What I continue to emphasize to people along that border -- and the American price is not always higher but it is sometimes surely higher -- is that that American price is not there for us to take. I have worked enough, regrettably, with those farmers along the Montana, North Dakota borders, and they say unequivocally, "If you think you can come down here and flood our feed lots and our elevators with your grain and fetch our price, you are badly mistaken. We will shut that system down forthwith."
Senator Whelan: Did I understand you correctly when you said you were a cattle producer?
Ms Wiebe: We have a small cow-calf herd, yes.
Senator Whelan: Do you make money out of that?
Ms Wiebe: I think that is confidential information, but let me be vague here -- sporadically we might. Sporadically we might.
Senator Whelan: As you know, I am a strong believer in orderly marketing, and I know you are too, so I am surprised that you participate in a production system that is one of the most disorderly of all.
Ms Wiebe: It is very disorderly. Chaotic. We do it for agronomic reasons. We have some light land, we need some hay land.
Senator Whelan: You do it for a conservation method?
Ms Wiebe: Right.
Senator Whelan: Do you think the chief executive officer, for instance, who is hired or appointed, should have tenure, similar to university professors?
Ms Wiebe: We have looked at that, the at-pleasure appointments versus the long-term appointments, and clearly the way the commissioners currently function, where they are not appointed at pleasure, is more arm's length and gives them a little more leeway. So that seems to us the preferable way.
Senator Whelan: I know there was evidence given to us about the advisory board being elected, and even the head of the Western Wheat Growers, Mr. Maguire -- I believe that is the organization he represents -- was defeated but he ran in an area to be on the advisory board. But I am concerned about directors. The 10 farmer directors, will they be full time? How will they look after their business? When I became a member of Parliament I had to give up my farm, for the most part, and almost went bankrupt.
Ms Wiebe: That is a difficult question, of course. As farmers, we want to be represented by our own; we want our own perspective there. If there is any important part here, it is to make known our perspective.
On the other hand, you are right, we do not expect we will get Ph.Ds and agronomists. We assume the government will be looking to see that the five appointed positions, in fact, represent that expertise.
In terms how much time that takes from us, yes, but some of us who work in farm organizations know that in certain periods during the year we intensively farm and do a lot of work after midnight on issues.
Senator Whelan: The chief executive officer of the Canadian Wheat Board is responsible for over $6 billion; it is one of the biggest businesses in Canada. What should be the pay for that person or for the directors?
Ms Wiebe: No. We have looked at some comparisons, and I believe that he makes a little less than half that of the CEO of the Saskatchewan Wheat Pool. They have been very modestly paid in terms. Whatever it costs will come out of the pooled account, so we assume they will continue to be modest in their expenditures, because that is the tradition people know.
The Chairman: I want to thank you for appearing here this morning on behalf of the Farmers Union. I believe we will be hearing from the Farmers Union again in Winnipeg.
Our next witness are from the Canola Growers of Saskatchewan. Please proceed.
Mr. Curtis Egert, President, Saskatchewan Canola Growers Association: I am President of the Saskatchewan Canola Growers Association. Holly Rask is our executive director. Ray Hilderman, who is from Strasbourg, is a director with the Saskatchewan Canola Growers.
The Chairman: Would you tell us where you gentlemen farm?
Mr. Egert: I farm about 80 miles northwest of here in a small community called Cando just south of North Battleford.
Mr. Ray Hilderman: I farm at Strasbourg which is about 60 miles north of Regina. I am a straight grain farmer.
Mr. Egert: I would thank the committee for making this effort to hear the views of Western Canadian farmers on Bill C-4.
The Saskatchewan Canola Growers Association is a voluntary producer organization involved in policy and agronomic issues facing the canola industry in Saskatchewan. We wish to express our views regarding Bill C-4, the bill to amend the Canadian Wheat Board Act.
We are very concerned with the content of the bill as it carries many negative implications for the agriculture industry which must be addressed. Our comments will focus on the main aspect of the bill, which SCGA feels is unacceptable, and that is the inclusion clause which will create a mechanism to place canola and other non-board crops under the monopoly of the Canadian Wheat Board.
We feel in an area where producers are requesting more choices in marketing and nations are shifting to more liberalized trade, a move towards single-desk selling is a move in the wrong direction.
Canola is currently marketed through an open-market system where the buyer and the seller meet daily to discover the price of the commodity at any given time. Price discovery and risk management are achieved through buying and selling on the Futures Market of the Winnipeg Commodity Exchange.
The ability for producers to better manage their financial situation is a key benefit to the open-market system. The open market does not require a quota system for delivery, allowing producers to better manage their cash flow. By taking advantage of the price discovery and risk management tools provided by the open market and the Winnipeg Commodity Exchange producers are able to choose a marketing plan that is best adapted to their own farms and their own situations.
Inclusion of canola under the Canadian Wheat Board would eliminate the marketing flexibility producers now have by placing it under a single-desk monopoly.
The SCGA sees no support among canola producers for single-desk selling of canola. Presentations were made to the Western Grain Marketing Panel from the canola grower groups, which included the Canadian Canola Growers Association, the Saskatchewan Canola Growers Association, the Manitoba Canola Growers Association and the Alberta Canola Producers commission stating the desire for canola to remain on the open market. The Western Grain Marketing Panel heard the industry desires regarding canola and, as a result, concluded, "The Panel is not recommending any fundamental changes to the marketing systems for other grains, oilseeds and specialty crops."
Our members have voiced concerns by sending numerous statements of opposition to Bill C-4 which we forwarded to Minister Goodale before and during the parliamentary debate. Producers also reminded us that they voted on this issue in the seventies and the results clearly showed considerable opposition to monopoly marketing of canola. This vote occurred in an era long before producers had the marketing options, skills and information that are currently available. Today more than ever, farmers do not see a need for single-desk selling of canola, in fact, they see it as an infringement on their market freedom.
In fact, all levels of stakeholders in the canola industry expressed the desire for canola to remain on the open market.
The canola crushing industry, which has undergone tremendous growth in the past few years and created many new jobs, is opposed to the inclusion clause because it will hinder the environment in which it does business. The SCGA is concerned that investment in value-added industry and new market development, and research into alternate uses of canola will be negatively affected if there is a threat that the Canadian Wheat Board could some day gain mandatory control over canola. There appears to be much energy and time being wasted to get the inclusion clause in the act when there is no substantial foundation of support among producers, processors or even the government's own Western Grain Marketing Panel.
In a period of rapid growth, the open market has served the canola industry well through its ability to respond to market signals, encourage market development, promote effective financial management, and develop value-added industry. The mere mention of the ability or mechanism for canola to be included under the Wheat Board monopoly will place a cloud of uncertainty over the canola industry. Even rumours of steps being initiated to place canola in a monopoly may result in unnecessary price swings in the markets.
Trade relations with countries such as the United States and Japan that import our canola and canola products will be seriously damaged if the provisions for Canadian Wheat Board control of canola is enshrined in the Canadian Wheat Board Act. In an era of open and free trade worldwide, a move towards government-guaranteed single-desk selling of canola would open the industry up to criticism and suspicion such as wheat and barley are currently facing in the United States. The SCGA does not want canola to face the possibility of restrictions in exports such as those that were imposed on wheat in the past. The U.S. has become one of our most important canola customers, purchasing 10 per cent of our seed exports, 51 per cent of our meal exports, and 76 per cent of our oil exports in 1995-96.
Our Japanese customers have clearly stated that they do not want to deal with the Canadian Wheat Board in canola purchases; and the inclusion clause also jeopardizes Canada's attempt at negotiating reduced tariffs on canola oil exports into Japan by sending a message that we are not serious about liberalizing trade.
The SCGA is also very concerned with the wording of the inclusion clause. It says, "a written request is sent to the minister by a producer association that represents the producers of the grain." This point is too vague as to the definition of who can claim to be a producer association representing canola producers. Could this conceivably leave the door open for non-commodity-specific groups, grain companies or even other levels of government to claim to represent producers? Already a group is openly saying that they will initiate an attempt to place canola under Canadian Wheat Board monopoly as soon as the inclusion clause becomes law.
Furthermore, in a personal conversation with Minister Goodale, Ray asked what group would be considered a legitimate producer group. Minister Goodale's response was that he hoped the new board of directors would rule on that when the inclusion clause was acted on by a group. This level of uncertainty from the one who has proposed the bill is somewhat frightening. It is appalling to canola growers to think that a board, which is in charge of running a company that has a monopoly on wheat and barley, will have the power to decide the future of monopoly control over canola.
The framework for a producer vote at the sole discretion and design of the minister is also unacceptable as it lacks the required detail as to eligibility requirements, the wording of the vote question, and the percentage of vote required to add a crop. The reality that over 80 per cent of the canola is produced and marketed by less than 20 per cent of the producers must be taken into account. This shortfall, coupled with the lack of clarity as to who can request inclusion, could conceivably put canola under the Canadian Wheat Board against the wishes of the producers who produce and market the vast majority of the canola in Western Canada.
SCGA also sees a lack of balance between the inclusion clause and the exclusion clause where the commodity groups representing board grains cannot request exclusion of those grains.
In summary, the SCGA feels the inclusion clause in Bill C-4 lacks producer support, it lacks fairness, it lacks a great deal of detail and it lacks balance. Therefore, we urge the Senate that the inclusion clause be left out of Bill C-4. This would produce a bill that the SCGA would no longer oppose.
The Chairman: Is the nervousness about canola because it has been at a very high price whereas the price of wheat and barley handled by the Wheat Board has been at a very low price?
Mr. Egert: That may be part of it, but the whole industry growth is a factor. Canola has thrived in an open-market system. I believe it is the system under which it has been marketed that has led to this growth. It has also assisted market development and led to alternate uses being developed, as well as the new variety development. The returns to the farmers through that system are what have led to its growth.
During 1990-94, canola rivalled wheat in total cash receipts to Western Canadian farmers. The growth in canola has dramatically increased under the current system, and farmers see the inclusion clause as a threat to this whole system
Mr. Ray Hilderman: Probably many canola farmers would not be farming today if we had not had the atmosphere of canola marketing and specialty crops. Continually, the board grains have been really low. Currently, on our farm, we mainly grow board grains because that is in our rotation. The flexibility we have with the unrestricted quotas, and the pricing mechanisms that are in place now for canola and specialty crops help us survive on our own. We don't need our hands held as much as people did in the thirties. We are capable of looking after ourselves a little bit more. We are trying to educate ourselves better. There is a lot more information out there than there has been before. Communication has changed, and we can deal with many of these changes ourselves.
Senator Andreychuk: I would congratulate the president on his choice of farming location. For the record, that is the area my father settled in and farmed. I understand your initiatives and your need for self-reliance, since my father taught me what those concepts mean.
Your brief is very clear. You have built this system on your own, and you are concerned that any intrusions may have a negative effect on it.
Your brief is also very clear that the inclusion clause is vague in that it will be left up to the board to determine your future, and that causes you a lot of concern. The bill uses the words "an association," and I am concerned that anyone could form an association of two or three members and effectively cause some turmoil. They may not succeed but that turmoil could have an impact on pricing and on the industry as a whole.
As well, in the definitions part of the bill, it states:
The Corporation may, by order, designate parts of the Province of British Columbia, other than the Peace River District, and parts of the Province of Ontario, lying in the Western Division that are included in the designated area, for the purposes of this Act.
There has been some concern that an association working in a designated area other than where traditional canola growers are located, could upset the balance. Have you given any consideration to that kind of interpretation of the bill?
Mr. Egert: That portion is not very familiar to me. Canola is grown in Ontario and in Peace River and we, through the Canadian Canola Growers Association, have been in contact with canola growers there, and they share our concerns with the inclusion clause.
In terms of a group being located there, yes, that could be a concern because of the lack of clarity in the definition as to what would comprise a group or who would be included from those areas.
Senator Andreychuk: We have heard, for example, that Ontario is embarking on a slightly different venture in wheat than what appears to be the situation in Western Canada. It has been pointed out to me that, if this is included in legislation, the determination of where your industry goes may be controlled outside of Western Canada, That may be an additional factor to the overall strategy of the canola growers.
Mr. Egert: I can agree with that point because the Canadian Wheat Board Act, as it was passed by a Parliament, did not have a majority of Western Canadian support. There was a lot of opposition from a coalition of which we are a member against the inclusion clause in the bill. There was no support from our growers for it, yet it remained as part of the bill.
Senator Andreychuk: What reasons have been given to you for its inclusion, if there is such a consensus in your industry that it should be left out?
Mr. Egert: The reason seems to be that there is a silent majority which is in support of the bill.
Senator Andreychuk: A silent majority of canola growers?
Mr. Egert: Of producers, in general. I do not think the minister has the pulse of the Saskatchewan canola growers or canola growers in general when he makes this assumption. I think he feels that he has alienated both sides of the equation and that he has a bill that is acceptable by the majority. I think he is wrong in making that assumption.
Senator Sparrow: Mr. Egert, did you state that you were in favour of the other provisions of the bill excepting the inclusion clause?
Mr. Egert: No, absolutely not. We, as a specific canola growers association, feel that, in representing our membership, we can only speak to an issue relating to the canola industry. What I said was that if the inclusion clause were removed, it would alleviate our concerns as an association, we would no longer adamantly oppose the bill, but we would not support it.
Senator Sparrow: Are you saying that you would not support the bill in its entirety, or there are certain provisions of the bill that you would not support?
Mr. Egert: If the inclusion clause remained we would oppose the bill. If it were removed, we would no longer oppose the bill, as canola representatives. Personally, I would oppose the bill, because I see other problems. However, as an association, we would remove our opposition to it.
Senator Sparrow: The indications from witnesses and from letters and phone calls are that the inclusion clause is the most controversial issue among the producers as a whole. Even if the inclusion clause were removed, I think you would agree that canola and other products could still be included, although that would have to be done by some other means, and it would have to come back for parliamentary approval. Nonetheless, you are saying that, if that happens, so be it, this eliminates this easy approach to adding other products into the bill.
If the inclusion clause were taken out, there still could be a vote of producers or permit holders and the minister could, in turn, bring introduce an amendment to the bill which would have to go through the parliamentary process. You understand that this does not, in fact, totally exclude canola or other products being put included in future?
Mr. Egert: Yes, I understand that. Our point is that we want the mechanism in the bill removed for one reason, the vagueness of its wording which could lead to the possibility of groups that do not represent a majority of the canola producers having a say in what will happen. Board approval of an inclusion is a problem to us because the board of directors of the Wheat Board are elected to take care of the interests of the Canadian Wheat Board and it would be in the interests of the Canadian Wheat Board to have monopoly control over all grains. Therefore, we cannot see them as representing a fair balance of what is best for the industry.
It would turn the board of directors election into a political debate in the countryside, or into a struggle between ideological differences in marketing, rather than it being an election of the people who are most capable of running a business like the Canadian Wheat Board.
Senator Sparrow: You are adamant about removing the inclusion clause, could you bring forward any suggestions as to how that inclusion clause could be changed? I suppose you could do it by taking out the word "canola"; but apart from that do you have a suggestion for an inclusion clause that you would accept or are you adamant that it should be completely removed?
Mr. Egert: Our association would prefer not to have canola mentioned in that way in the Canadian Wheat Board Act. We would prefer having it legislated in the future by the government in consultation with canola groups. I guess time will dictate the worthiness of it. This locks us into a mechanism that might not be appropriate to deal with the issues of the day. Therefore, we would oppose the inclusion.
Senator Taylor: Without suggesting that you might have been spooked unnecessarily on the interpretation of the inclusion clause, would you not agree that the government will have to fashion something if, say, the oat growers want to get back in.In other words, certain organizations may want a single desk to try to control price. Do the guidelines not deal with your concerns? They state that there has to be an association of members and that there has to be a recommendation by the board. As well, there has to be a vote in favour of the extension by producers of the grain. That could apply to oats, canola or whatever type of grain. All of that has to be done in a manner determined by the minister and we must bear in mind that he probably wants to be re-elected.
Are we not better to have a set of road signs that you recognize? If you take it out entirely, God knows what will happen. The next minister to be elected may decide to include canola without even asking you. At least you have something in here which will ensure that you will be asked and that you will have an opportunity to vote on.
Mr. Hilderman: With the inclusion clause in there right now, it triggers a process. This process has been triggered -- as with the barley vote -- and proven not to work satisfactorily, as far as I am concerned.
Minister Goodale appointed people on the Grain Marketing Panel to get information from producers, such as what they had and what they wanted in the future. They made a recommendation to the minister -- dual marketing for barley. He did not like that recommendation, so he went out and got a ballot that did not ask the question that the producers wanted. What is to stop the same thing from happening again? In this process you could have input from a producer group who wouldn't know what a legitimate producer was; in a personal conversation during the barley vote situation, I found that to be the case.
The board of directors needs to determine what a producer group is. Then if a request were to go to the board, it could ask for a vote. As it says in the act, the minister shall decide on the process of the vote. The minister, therefore, has total control, right to the very last, over what will happen. There is farmer input, but the minister really does not have to heed it; he did not do so before.
[English]
Senator Robichaud: You say that the inclusion of this clause in Bill C-4 could generate uncertainty. Senator Sparrow told us that even if we eliminated this clause, a process could be triggered anyway by a group petitioning the minister to include a commodity. This would launch a discussion over a much longer period of time and in my view it would cause more uncertainty. We have here a pre-ordained process which does not take a long time. This would limit this period of uncertainty rather than having someone pressuring the minister and the associations and the Canadian Wheat Board to get their grain included under the board.
[Translation]
Mr. Hilderman: I will try to answer that. As I said before, I have a problem with the credibility both of the minister and of this process; as I pointed out, it did not work before, and I cannot see it working now. It is not cut and dried as far as the inclusion clause is concerned; the legitimate producer group is a very grey area. I feel that the reason the inclusion clause was added was probably to take a load off the minister's hands. I do not how else to put it; I feel it is downloading by the minister.
Senator Whelan: I have a long association with canola. In 1972 I spent time with Dr. Downy in the research plots here in Saskatoon. We spent millions of dollars on research for canola, but not nearly so much on lentils, et cetera. It was research that developed these crops; we were interested in developing diversification and different forms of production for our farmers. We were not only interested in Western Canada; as I am sure that you aware, there are 10 million acres in the clay belt that could be developed with the short season varieties of canola that research has created. They are growing some in the New Liskeard area quite successfully, although they need to improve the drainage of their land.
So much as been said about the inclusion clause. If the inclusion clause required a representative vote by producers, you would not be afraid of it, would you?
Mr. Hilderman: As Curtis mentioned, we already had a vote not to put it on, back in the seventies. In the Grain Marketing Panel, too, the recommendation was that there be no fundamental change in the way that we market canola and specialty crops.
Senator Whelan: It appears that you are scared of a democratic vote?
Mr. Egert: It is not the fact that we are scared of a democratic vote. The problem we see is that the industry is thriving under its current system, and the raising of this issue will be divisive. A lot of uncertain questions will be asked out there, and that will cause a serious debate in Western Canada over the issue. We are concerned about the implications to trade and to the value-added industry, which will want to expand the job creation that it has made in Western Canada. It just a cloud of uncertainty over the canola industry.
This whole debate is something that the canola industry does not need. It has worked and grown very well under this system, and we want it to continue to grow. Our present system provides the producers that we represent with all the pricing options and the cash-flow options that they currently need and want. It would just be detrimental.
Senator Whelan: You did say, however, that things change and viewpoints of producers change. I know what you have to go through; you have to go back through Parliament to get the whole act amended if you did not have an inclusion clause or exclusion clause in the act. I think that would be detrimental to a truly democratic procedure.
Mr. Egert: Can I just ask you, what do you classify as a democratic vote?
Senator Whelan: By that I mean a vote by a majority of producers.
Mr. Egert: A majority of producers. If 100 people own shares in a corporation and one person owns 49 of those shares, do you call that democratic?
Senator Whelan: In that world, the world of oil companies and the like, any relation to democracy is purely coincidental, as far as I am concerned.
You keep pointing to Japan. I well remember Japan when canola prices went up to $11 a bushel. The Japanese came to me and I had to discuss it with the other ministers; we had contracts with them at that time, the Wheat Board did. I said, "We will honour our contracts," and we did honour our contracts. When prices lowered, however, Japan bought lower quality rape seed from France, so they were not so honourable.
I am worried about Japan. With respect to the World Trade Organization they say, "Hands off with our agriculture, hands off with our fisheries," et cetera. They are strong believers in tariffs, but they are scared of the CWB, which is what you are talking about. Are they scared of the Wheat Board because it may charge them a higher price?
I can remember when they had a contract for hogs in Alberta and they could get a guaranteed supply. When hog prices dropped they said, "oh, oh, that is bad," and when hog prices went up again they could not get their hogs.
I am concerned that Japan knows the marketing ability of the Canadian Wheat Board, knows that they are tough dealers, that they have one-desk selling, and that, if they are going to pay, they are going to pay a fair price.
The Chairman: Is $3 for wheat a fair price, Senator?
Senator Whelan: My Co-Chairman here -- I am the Co-Chairman with the Chairman -- always puts that little jab in every now and again. If he would remember what the farmers told him yesterday, however, it is the price of fertilizer, oil, machinery, and everything else that is taking their profits away; not so much the $3 for wheat. I want an answer about Japan.
Mr. Egert: What was the question, again?
Senator Whelan: The question was, do you think that Japan is scared of the Canadian Wheat Board because they are really good marketers and they are going to demand a fair price? The Japanese buy a lot of grain from the Canadian Wheat Board, and they know how they operate.
Mr. Egert: I am not so sure they are scared of paying a higher price under CWB control. Personally, I think they are probably more worried about the ability to get delivery and quantity; that is, the specific type of canola that they need on a timely basis, and on a basis negotiated between them and the people providing it. I think that the Japanese are comfortable with the system as it operates now, as are the farmers. I think that both would prefer it to be left that way.
Senator Fairbairn: Obviously, this is one of the lightning rods in the bill, and I understand your concern and your anxiety. From what we have been told, one of the reasons that the inclusion clause is even there is to balance the exclusion clause.
As I understand it, the intent is that inclusion would only be triggered by growers of the product, and decided by growers of the product. That is obviously unclear. That is the understanding that I have, and I think that others might have it, too. If there is confusion, that confusion should be eliminated.
Mr. Egert: I agree that it is very unclear. Returning to my statement, it causes concern and uncertainty in the whole industry.
With reference to the producer vote -- I mentioned the reality that over 80 per cent of our canola is produced by 20 per cent of the producers, and that has to be taken into account. A 50 per cent vote in favour of canola's inclusion under a monopoly control would force me, as an individual, to sell my grain to the CWB. We are not certain that that would be fair to the canola industry.
Senator Fairbairn: I think that the question of the weight of the percentage is a very important point, and it is certainly well taken.
The Chairman: I want to thank you for taking the time to appear this morning. Thank you.
Now we will call a group of individuals, Mr. Kurtenbach, Mr. Creighton, Mr. Tait, Mr. Watson and Mr. Leo Meyer. We would ask you to give your name and to indicate where you farm. Each of you will have five minutes, in order to allow for questions from the senators.
Mr. Leo Kurtenbach: Thank you, Mr. Chairman. I have not met all of the senators before, although I have met Senator Sparrow elsewhere, as well as Senator Andreychuk, and I met Senator Sparrow in Regina at the Rural Life Ministry.
My name is Leo Kurtenbach, and all of my life I have farmed about 50 miles northeast of here, near Cudworth.
Mr. Ron Watson: My name is Ron Watson, and I farm near a small town called Lancer, in the southwest corner of Saskatchewan.
Mr. Donald Tait: My name is Don Tait. I farm at Elrose, which is about 100 miles southwest of Saskatoon.
Mr. Daniel P. Creighton: My name is Dan Creighton, I am with the Canadian Farmers for Justice, and I do not farm now.
Mr. Leo Meyer: My name is Leo Meyer, and I farm northwest of Grande Prairie, in the Peace River region of Alberta.
[Translation]
Good day, honourable senators. Thank you for giving me the opportunity to submit my brief on the bill amending the Canadian Wheat Board Act.
[English]
Thank you very much for the opportunity to speak in front of your committee to amend the Canadian Wheat Board Act and Bill C-4 on behalf of the oat growers of Western Canada.
As I said, my name is Leo Meyer and I farm in Northwestern Alberta, near Woking, which is about 50 minutes northwest of Grande Prairie. Together with my wife Cathy and our six children, along with the help of seasonal employees and contractors, I grow wheat, barley, oats, rye, triticale, peas, canola and grass seeds. Our emphasis lies in producing identity-preserved crops in a sustainable and managed process which, whenever possible, is environmentally friendly.
A constant effort is being made to further integrate our operation so that we might better participate in logistics management beyond the farm gate. We therefore operate the transportation link between the farm and the market, and also actively involve ourselves in marketing, where we carry EDCs and future positions all the time. Access to world news, important events and latest trends in grain prices are available on our farm through D.T.N. and Internet, as well as through more traditional media forms. We follow the information carefully, and spend a lot of time on those issues which we consider to be essential to proper farm management decisions and to successful operations.
To ensure viability now and in the future, today's grain farmer must have full marketing choice to apply all instruments available to us. The next generation of grain farmers will need the opportunity to sell its produce as it sees fit, just as with other economic activities in an open society. We need to be concerned about our young people taking on grain farming, and efforts need to be made to break every possible barrier down. This implies that we be destructive to the specific activities in grain marketing.
Most grain farmers today are willing and able to take on the challenges of more grain marketing responsibilities, as they are doing in canola, flax, oats, rye, triticale and other off- and on-board grains.
I am here today representing oat growers, and I must pass on some concerns that we have with Bill C-4. The membership and my colleagues asked me to pass these points on for them.
We would like to see the inclusion and exclusion clauses dropped. Oats are doing fine as it is, and we do not want to have mixed signals sent to our industry. This would involve more investments on behalf of processors, more private and industry research into biotechnology, more identity-preserved production and, last but not least, marketing choice for oat producers.
Since oats came off the board in 1988 the quality and activity in oats has improved. Oat producers do not want to be part of the CWB again. This is our main concern with this bill.
Some of our concerns just have been mentioned to you by our colleagues from the canola growers, and we go along with them.
There are many other concerns which we have with this proposed legislation. These concerns have been mentioned by our colleagues from other pro-market-choice organizations. We support them, and we are part of a coalition against Bill C-4 which is made up by up to 15 different organizations.
Senators, we must move on and end this internal, Canadian-made constant discussion about how we market grains. Even the CWB admits that changes are needed to ensure its successful participation in the world market in the next millennium. The status quo does not work for anyone any more. We must be concerned about our country's ability to be part of the present and future global marketplace.Let us make it happen -- see consensus, give people marketing freedom, and together carry on to be one of the best places in the world to produce food products for growing world population and demand. There should be more to this country than the constant debate about the CWB and its involvement. I, for one, have that confidence in the people of Canada.
Senators, on behalf of the oat growers, our farm, my family and myself, thank you for this opportunity to speak to you and God bless you for the right decisions.
Mr. Creighton: Thank you. The submission I have today relates to the effect that Bill C-4 has on issues to which I will point.
Firstly, Bill C-4, in the words of the Honourable Ralph Goodale, effectively creates what he has described to be a "Mixed Enterprise Corporation." I have never heard of anything like that before, but I think that what he has come up with is something quite workable.
The moment that Bill C-4 is passed and becomes law, the elected majority of the directors is, in fact, in control of the operation. I say this because the moment that Bill C-4 becomes law it becomes subject to two further things. Before I get into that, however, I will indicate what the change has done to the previous CWB.
Firstly, the CWB will no longer be a federal board as established pursuant to section 3 of the Canadian Wheat Board Act.
Secondly, the CWB will no longer be a Crown corporation as established pursuant to section 4 of the Canadian Wheat Board Act. If you look closely at the act, the previous CWB was both a federal board and a Crown corporation.
Thirdly, the Canadian Wheat Board will no longer be an agent of Her Majesty the Queen.
Fourthly, the CWB will become a body corporate without share capital that is not controlled by Her Majesty, in that a majority of the directors will not be appointed by Order in Council or by a minister of the government. I refer you to section 4 of the Competition Act, which defines a corporation controlled by the Crown.
The fifth item on my submission is that the CWB under Bill C-4 now becomes subject to the provisions contained within the Competition Act. Therefore, Restrictive Trade Practices under Part VIII, section 77, become applicable.
The sixth paragraph goes on to say that any claim to monopolistic powers over the sale of wheat or barley would be subject to the Competition Act, and that this legislation was designed to prevent anyone from having absolute power over any part of the Canadian economy.
Number seven, the name of the new mixed enterprise body corporate should be changed to reflect the fact that it is no longer a federal board or corporation. This change should also reflect the fact that, from the moment the bill is passed the Canadian Wheat Corporation would be subject to the provisions of the World Trade Agreement. I submit to you that it is subject to those provisions right now. The World Trade Agreement was passed on January 1, 1995, and is such a powerful, overriding document that Canada has passed Bill C-67 to cause implementation of the same in Canada.
When Bill C-4 is presented to the overriding issues in the World Trade Agreement and the Competition Act, it will force the following changes to the Canadian Wheat Board Act, and I have detailed that and proposed amendments to be included in Bill C-4.
One suggestion is simply that section 46(d) of the Canadian Wheat Board Act be amended to delete the portion that requires that the difference between the price inside Canada and outside Canada be paid to the CWB. Were that to be done, the complaints and concerns about the inclusion clause would no longer be of any value, because there would be a choice.
I submit to you that, when Bill C-4 is properly exposed to the rule of law, it will be a good bill. It will not, however, maintain monopolistic powers for the CWB. That said, however, all it really does is to create a situation where a producer could get an export licence if it were of any value to him. I submit that the bill and the regulations, however, could limit that producer to exporting only his own grain, not somebody else's grain.
If those considerations are taken into account I submit that you will have eliminated the whole contentious issue that has for so long been part of the CWB controversy. These considerations would, in fact, complement both sides and still maintain the power of the CWB to take under control all of the grains that it wishes to sell.
Lastly, I would submit to you that we should not be backing up to look at the previous bill. We are past that. Obviously, the act without these amendments did have a problem. That is why we are here. That is my submission.
Mr. Tait: First I would like to thank you for the opportunity to appear as a witness before your committee and I congratulate you for taking the time to tour Western Canada and hear the views of western producers regarding Bill C-4.
I am a grain and special crop producer from Elrose and I have been farming for over 40 years. Firstly, I would like to say that I support the bill, and that I am also a strong supporter of the CWB. The bill is needed to give more flexibility to the board so that it will be able to better serve producers in the future.
The main advantages of the bill lie in the fact that, by virtue of the fact that they will elect 10 producers to a 15 member board, farmers will take control. Producers will have a two-thirds majority on the board. The directors will have the same powers as in a corporation, and they will control the operation of the board. If the producers are not satisfied, they can elect different directors. The directors may not do everything some producers want, however, governments do not do everything that some citizens want, either. Welcome to democracy.
The government will appoint five members. The reason for this is that the tax payers give financial guarantees to the board. These guarantees allow the board to borrow money at a federal government rate, resulting in a benefit of as much as 80 million dollars to producers each year. This money more than pays the yearly administration costs of the board. If the producers want to keep these guarantees they will have to live with some government appointed members at the table. I was discussing this with a former director of UGG the other day, and he told me that UGG's bottom line greatly improved when they had some outside directors appointed to its board; these people brought a different perspective and new ideas.
The board will have access to all CWB information, and it will be able to decide what information should be made public. This should satisfy the producers who want more information. The board will be able to choose its own auditor.
This act will allow for fundamental changes to the CWB, depending on what the board decides. The new act will allow producers to implement marketing innovations that many of the farm groups have requested.
If the act is so good why are so many individuals and groups opposing it? In some cases for very different reasons. The Saskatchewan Wheat Pool does not like the provision to allow the board to make cash purchases. The main reason for that is that the Pool makes good profits buying and selling feed grain, and it does not want the board to compete in that area. They are looking at their own bottom line.
The Farmers Union is opposed, as it views any changes of this nature as a weakening of the board, and as the thin edge of the wedge that will destroy single-desk selling and the pooling principle.
There is a coalition of various commodity groups and other interests including the Western Wheat Growers, the flax growers, the barley growers, the canola growers, and a number of others that oppose the bill. They are bitterly opposed to the inclusion clause that would allow the board to have a vote of producers to include crops, oats, flax, rye or canola under the jurisdiction of the board. This could only be done after a request from a legitimate producer organization whose membership consisted solely of producers of that grain. In the same way, after a proper request there could be a vote to exclude crops from the board. The producers will be the ones making the decision. Again, welcome to democracy.
If these clauses are so objectionable then perhaps the Senate should amend the bill to delete them. Perhaps we should go to the amendment proposed by Ralph Goodale -- no minister responsible for the CWB should attempt to enlarge or reduce the board's existing mandate without first having conducted a democratic vote amongst the relevant producers, and without also having consulted with the Wheat Board's new board of directors. Keep in mind that if you do this you are going against the spirit of the new act by taking away powers from the producers and giving them back to the minister and to the government.
Also keep in mind that there must be a definite way to handle this. When Charlie Mayer was minister responsible for the board, he used an Order in Council to remove oats from the board without any amount of consultation. Then, later on, he used an Order in Council to allow barley to go directly to the United States without being handled by the board. This -- the barley one -- was challenged in court by the pools and the court threw it out. We do not want to go through this again. However the Senate decides to handle this there must be a clearly-defined process.
There is also an idea which suggests a dual market. The coalition and other groups are demanding dual marketing -- in other words, producers would be free to market their grain through the board or export it to the U.S. or overseas. This is simply another name for an open market. If you allow producers to sell grain for export outside the board you will have to let the grain companies buy directly from producers and export it, since hauling wheat to the U.S. is only a limited market. The CWB would be just another grain company in the system -- with no elevators or export terminals -- and it would be unable to be assured of enough grain to meet its commitments. To me this would make no sense.
To the promoters, this would theoretically be the best of both worlds -- it would be like being married and single at the same time, or having your cake and eating it too. In my opinion, it would be a disaster. It is promoted by those who want an open market, but who do not want to directly advocate it for fear of not getting producers' support. Those people think that the producers who would not support an open market will buy into this plan. It is just an open market by another name, however. A dual market just will not work and it would be the end of the Wheat Board.
The media are a bit gullible; they are looking for sensational stories, and there is not enough balanced reporting. They are constantly repeating the statement made by some politicians that producers must deliver all the wheat and barley they produce to the board. They conveniently forget that over two-thirds of the barley produced is sold on the non-board feed market, and that wheat graded three or lower can be sold as non-board feed.
We also have the fringe element, which includes the Farmers for Justice and the Canadian Farm Enterprise Network, aided and promoted by the right wing National Citizens' Coalition, the Prairie Centre for Agriculture, and the Canadian Federation of Independent Business. They make wild accusations, dream up ridiculous scenarios and initiate illegal border crossings. They issue press releases with a lot of half truths and wild accusations, and the gullible media laps it up. They go to court to prove that their rights and freedoms have been trampled on by the CWB; when they lose they whine that the justice system is corrupt. I do not need these people speaking for me.
It is time to put this issue to bed, to pass the bill and to get the producers elected to the board. It will have the flexibility to do just about everything that the producers want, and it will be democratically elected by the producers themselves. We have been discussing this for over three years. When told that there had been not enough consultation, one producer said that the only person who had not been consulted was someone in downtown Toronto -- and that even he likely knew about it since it had probably been in The Globe and Mail.
I am including an article from the March 19th edition of The Western Producer. It quotes an official of the Dominion Bond Rating Service who says that there are too many grain companies, and that there will be a consolidation of the industry in five to ten years. This means that there will be even fewer grain companies and that they will be much larger than they are now. I am sure that they will be looking after their own bottom lines, and not those of the producers.
I can easily remember when there were more players in the business. Remember some of them? Federal, Ogilvies, Searle, Canadian Consolidated, Western, and many others. Where are they now? Bought up by the other companies. In a few years who will be left? Cargill, the Saskatchewan Wheat Pool, and one or two other multi-nationals. To me this is just one more reason why we need a strong Wheat Board to compete with these giants, and to look after the interests of producers.
With this in mind I would urge you to pass this bill and get the show on the road. I would hope that when you are in Winnipeg your committee will spend a day at the Wheat Board to learn firsthand how the board operates. I am sure that would be very helpful to your deliberations.
Thank you for your attention, and I will be pleased to try and answer questions.
Mr. Watson: I would first like to express my appreciation to the committee for holding these public hearings on Bill C-4.
I will start by stating that I believe that farmers would be much better off if Bill C-4 were withdrawn. The silent majority has indicated their support for Bill C-4's withdrawal in a number of ways, including the election of the advisory committee to the Canadian Wheat Board. The majority of the 11 members elected were strong CWB supporters -- this in spite of all the media noise that opponents of the board could muster.
The Grain Days meetings were held this winter across the CWB jurisdiction. At the majority of these meetings, resolutions were passed by farmers to withdraw Bill C-4. I think that those meetings are very significant.
Some of the changes to the Wheat Board that cause most concern are the loss of Crown agency status. The election of a board of directors would change the Canadian Wheat Board from a Crown agency to a mixed enterprise. The loss of Crown agency status will allow the government to begin withdrawing its financial and political commitments to the Wheat Board. A lack of government guarantees will increase the cost to farmers, due to highest interest rates. This has already been demonstrated by removal of the guarantees on adjustments to the initial payments. Having participated in discussions on the Crow rate and transportation, I believe that this would happen very quickly.
As for cash buying, purchasing grain on a cash basis from farmers, grain companies, or even from overseas would reduce producers' confidence in the price pooling. Pooling of returns provides fairness to all producers in the sharing of premium markets. Without pooling, single-desk selling would be lost, and the Canadian Wheat Board would be just like any other grain company.
The bill establishes a contingency fund to backstop cash trading and to guarantee adjustment on initial payments. Why should I, as a producer who does not want the risk of cash buying, pay as much as $6 per tonne, as an estimate by Mr. Hehn posits. If the government continued the guaranteed adjustment to initial prices -- and it is my understanding that the government has never lost money on this guarantee -- a contingency fund would not be needed at all.
An inclusion clause would be a very nice thing to have included in the bill. Government amendments put forward at a committee excluding general farm organizations from triggering the process would make it very, very difficult to implement. In addition, article 110 of NAFTA, which ensures the payment of compensation to multinational grain traders in the event that the board takes on the sales of more grains, would prohibit cabinet from passing the required legislation.
In conclusion, I wish to stress that I favour the withdrawal of Bill C-4 in its entirety. I just think it is the thin edge of the wedge to begin dismantling it completely.
Mr. Kurtenbach: Let me state at the outset that, along with a great majority of my producer neighbours, I am strongly supportive of the CWB, and of its structure. Producers feel the Canadian Wheat Board to be the most reputable and prestigious grain marketing agency in the world, and consider it to be their broker, acting in their interests. The Wheat Board has made it possible to keep Canada's grain industry 70 per cent domestically controlled, something we consider very valuable in an era of foreign take-overs.
Regarding Bill C-4, some of the sections in this bill are a cause of some concern to us. We feel that cash buying and variable pooling cash-out periods would seriously undermine the effectiveness of the board as a monopoly seller of grain.
Furthermore, the proposal to establish a contingency fund to facilitate cash buying, et cetera, would tend to weaken producers' confidence in how the board is controlling costs in marketing their grain. As you know, the cost to producers by the board for marketing our grain was about four cents per bushel, or about $1.46 per tonne for the 1996-97 crop year.
The establishment of a contingency fund by the board, requiring a check-off fee from producers, would find very little support. We could then envisage this as an opportune time for private grain traders and the trans-national grain corporations to unleash another tirade against the CWB in their efforts to destroy the monopoly powers of the board.
The majority of producers wish to maintain the crop-year pooling system. We are prepared to share the gains and losses within the crop year, and the marketing of our grain, because this policy facilitates the orderly delivery and transportation of our grain to our world-wide customers, and thereby provides benefits to all producers for equal opportunity of access to markets.
We also have a serious concern about the inclusion clause. We want to see an amendment to the clause that would establish a democratic mechanism to include other grains or oil seeds to be marketed by the Wheat Board. This is a process that could be initiated by the board of directors when they have an indication that producers want that to happen, and we expect the same democratic process should apply to the exclusion of any grain.
All producers are already labouring under an ever-increasing cost-price squeeze. We are now in a situation where the tripling of freight costs, the abandonment of rail lines, and the closing of elevators, are placing additional costs on producers of grain. This is contributing to further decimation of our rural communities and the loss of family farms which have been the very basic structure of the development of the Prairies in this century.
We have fewer and fewer producers competing more aggressively for fewer and fewer net farm dollars. These conditions are manifested by fewer producers operating ever greater acreages and the entry of industrialized corporate livestock factories.
Mr. Chairman, I have a very short story I would like to tell, if I have your permission.
This situation is best illustrated by a short story that is making the rounds in farm circles these days. Apparently two grain producers seeking to enhance their farm income got off-farm jobs at one of our national parks. On their day off they decided to hike deep into the woods; unfortunately, they met up with a hungry bear looking for lunch. Run as hard as they could, they could not outrun that bear, and at this point one of the farmers stopped, threw off his knapsack, donned a pair of running shoes and his friend gasped, "You will never outrun that bear," and the fellow with the running shoes said, "I don't have to, I just have to outrun you."
The Prairies were build on the cooperative movement, and this is a rather sad situation for them. As for me -- I have been farming for all of my life, for over 60 years, and I do not like the looks of things.
I will close by saying that I want to see the board maintain the cash-advance system and the guarantees of initial adjustment payments. Furthermore, we need the cooperation of the Canadian Wheat Board and the government in maintaining Canada's reputation as a reputable supplier of quality grain to our customers. Thank you very much.
Senator Hays: The two members of the panel who commented on inclusion/exclusion were Mr. Meyer and Mr. Kurtenbach. I will ask Mr. Meyer for a comment on oats, and the manner in which they became a Board commodity. Could you comment on that? I know that the oat producers, whom you represent, are happy that oats are not a board grain, but were there votes, was there consultation? Assuming that Bill C-4 is passed, we need to provide some discipline in terms of the minister having to consult with the board, to ensure votes are taken, et cetera. Perhaps the oats experience would be instructive to us, so what happened there?
Mr. Meyer: It has a lot to do with what we do with this crop today, and what we have done with it in the past. Most of the oats today are actually being processed here, and after that they are being shipped <#0107> at least partially processed, if not fully processed -- into the world markets. That is number one.
There are those who do not necessarily like that type of marketing system, and who feel that they really cannot get the marketing information that they think they should have in order to make proper decisions. There are a whole lot of other crops that they can go into, though.
In the oat industry today, producers are happy with the scenario, and they do not want it to be touched, because they have adapted to it. They have realized that, in order to successfully grow oats, you cannot just grow a crop and worry about the market later; you have to worry about the market first, and then you grow the crop. It is not just the marketplace itself, though -- it is also the kind of quality you grow. You do not dare grow a kind of oats that the market does not want, because you might not be able to sell it for the price that you need.
In reference to quality, which I emphasize, I think we see a very unique situation in the barley business, which is handled by the Wheat Board, where we have a system in uproar because of tiering. Again, it reflects on a type of system that is unprepared to handle today's markets.We do not have that in oats, we do not have it in canola, we do not have it in flax, we do not have it in rye, we do not have it in triticale. We have it on the board-handled grains.
I am not saying that it is the Wheat Board's fault, but there is a whole host of players beyond the Wheat Board who, in certain circumstances, seem to take advantage of the CWB. In specific, I am referring to quality standards, and what happens when they go on the specific contract fulfilments. Sometimes the Wheat Board might pass that on to an accredited grain company in order to fulfil the contract. You realize, of course, that export standards are different than standards in the country itself.
Senator Hays:When oats came off the board, producers were happy; if they had not been, they could have challenged the removal, as the barley people did. I am wondering what preceded the decision by the then minister to take it off, was there consultation with associations, were there votes, what was the process there?
Mr. Meyer: I think that there was great pressure from the processing side to make further investments; in order to justify the investments they needed to know if, in fact, they could operate in an open-market type of scenario. I think that needs to be mentioned. I farm in Alberta, and I think that there was great pressure from Alberta. I will refer to that briefly, although it is not necessarily part of your question.
This morning somebody said that, in Alberta, there really is no established view on the Wheat Board. We had a plebiscite on the Wheat Board where we said by two-thirds majority that we wanted to have a choice in marketing. Saskatoon is a fairly pro-market type of an environment, and I probably would have found it much easier to make this presentation in Edmonton or Calgary. We need to interact with each other, however, and that certainly was one of the reasons for our appearance here.
It would be wrong to say that the current scenario is changing the world market in respect to oat prices, or is keeping prices up. Some of the CWB's supporters have said that, even though prices rose in 1988 when oats came off the board, they dropped dramatically the year after. Prices are not made by any specific market players, however; they are made by the world market, and the world market dictates the price for everybody, including the CWB. To think that the marketing system itself is changing the price for farmers is wrong. What, in fact, is happening is that farmers need to adapt to capture any value, to secure profits for their operations. That means deferred delivery contracts and future contracts, it involves options, it perhaps involves things with which they are not presently familiar. What I am saying to you is that a change to a different type of system is not necessarily going to ensure better profitability for grain farmers.
Mr. Kurtenbach: I will respond to your question, Senator Hays, about the history of the decision to take oats from the board. I attended a meeting in the town of Wakaw, at which there were approximately 250 farmers. We had a vote to keep oats under the Wheat board; the vote in favour was 200 or so to 12. It bothered me a little that the government still decided to take them out, even with that many in favour of keeping oats as a CWB grain.
Senator Hays: Did they have meetings everywhere like that?
Mr. Kurtenbach: There were quite a few meetings.
Mr. Tait: I do not grow oats, but I think that it is important to recognize that there was no organized vote of producers when oats were removed from the board. The minister just simply passed an Order in Council and took them out. If you do not have some kind of definite arrangement to handle this, we will go back to the same thing.
There is nothing saying that a new government and a new minister could not simply decide that canola should be in the board, and pass an Order in Council to put it in. Whatever the Senate does with this, it must recognize that there has to be a proper process for handling this <#0107> not just pulling it all out and leaving them on their own.
Senator Sparrow: Is there any indication that the producers of oats are better off out of the CWB; do they have a better market and better returns for their product? Is this a philosophical move on the part of those who, in turn, want to bring oats under the Wheat Board, or is it economics? Anybody can answer that.
Mr. Kurtenbach: Recently I called my local elevator and inquired about the price of oats. He quoted the price of $1.46. I remember very distinctly when oats were under the CWB, and yet they were over $2 a bushel. Perhaps that does not mean very much, but I to think that there is an indication that the price of oats did not rise dramatically, even though there was more interest by processors.
Senator Hays: I have sold oats to the Wheat Board for 90 cents. The price of oats has certainly fluctuated a great deal, so it is not fair to pick out one individual time on the market.
Mr. Meyer: If I can respond to that question, too, Mr. Senator. Not to offend anybody, but that is precisely what you do not do with oats today. You do not go to the elevator and ask for the price. The fact is that you should have an arrangement in advance, or at any rate, you should watch the market. You are not going to produce oats, put them in the bin, and worry about prices later. You assess your market first. What this gentleman is really doing is trying to sell the oats into the lowest market. We are not in that business any more. We try to grow a quality product, and that quality product has a price which is established by the market.
There are other efforts which are being made with oats; in the future we are going to see beta gluten being extracted from oats. Beta gluten is going to be processed for shampoos, it is going to go into the pharmaceutical industries. We have two projects in Western Canada which will only process identity-preserved oats. You will have to produce into that market on a contract basis, and it will be significantly higher than the common oat kind of market that we have known in the past.
Half of today's growers produce a significantly larger amount of oats than they have in the past, simply because they have adapted to a different type of marketing system, and it needs to be done that way. You need to change to a different type of marketing scenario, there is no question about it.
Mr. Watson: I would like to respond to the philosophical side. There are those who think that people who support the CWB do so for philosophical purposes; I support the Wheat Board, and this could not be further from the truth. I support the board for purely selfish reasons. I believe that I can make more money by cooperating with my friends and neighbours -- getting market power and marketing my grain that way -- rather than competing with them.
Senator Hays: I do not want to usurp any questioner, but somebody should ask Mr. Creighton about his legal opinion and former Judge Andreychuk would be the person to do it.
Senator Whelan: I want to ask one question to Mr. Meyer, is it?
Mr. Meyer: Yes.
Senator Whelan:Is your member of the advisory board Mr. Macklin from Peace River district?
Mr. Meyer: Yes, District 11.
Senator Whelan: He was voted in by the vast majority of the people there, and he is a very strong supporter of the Canadian Wheat Board.
Mr. Meyer: Yes, he is.
Senator Whelan: I take it that you are here representing yourself, as well as the growers from that area?
Mr. Meyer: Yes.
Senator Whelan: Do you differ with Mr. Macklin?
Mr. Meyer: I am not a member of the National Farmers Union, if that is what you are asking me.
Senator Whelan: I did not ask you that.
Mr. Meyer: I belong to other associations which are, I suppose, a little bit different philosophically; they have a different opinionated and position. That should not, however, be an issue, Senator Whelan. I am here to represent oats; I did not want to make a philosophical presentation, and I do not think that I have.
Senator Whelan: Questions were raised about oats, and that is what I am trying to get at. If I see Mr. Macklin, I will ask him whether the former minister even asked the advisory board about oats. I know that their removal came as a surprise to many of us; we did not see any discussion beforehand.
Mr. Meyer: With all due respect, Senator, that was 10 years ago. At that time, I was not as involved in these issues as I now am; I was more bound to the farm. I have to admit to you that I had no opportunity to go to a meeting where that question was discussed. Your question, and it has been asked before, deals with the type of process that led up to that decision. I do not think that I had the chance to participate in an open meeting on that issue.
Senator Whelan: I cannot remember whether or not it was you who mentioned that the processors made representation to the CWB. It sounds to me as though the processors have a lot of power, a lot of influence.
Mr. Meyer: Senator, you have been around politics and agriculture issues far longer than I have. The fact is, you are well aware what the political mood of the time was. I think that it was a political decision; it was not a decision based on what the farmers said. Some very powerful players came to the table and were, I think, able to influence that particular government to make that decision. I am not trying to say that this was the wrong decision; I am sitting here 10 years later telling you that it was the right decision.
Senator Whelan: You have all complimented us for coming west and holding hearings on this bill. We are all going to be counted absent from the house and you will read that in the paper.
Senator Andreychuk: I do want to pick up on the legal point. Mr. Creighton, you put forward some very interesting points. I do not know whether my question is to the Chairman of this committee or to Mr. Creighton. Have these points been discussed with the minister and has the committee had any legal scrutiny of this bill?
As another point, the issue of agriculture is yet to be determined within the World Trade Organization. Your comments are well placed; we do not know where we are going in this area and what kind of agreements will be struck. Perhaps you could tell me how you became interested in this area so that we all have a little more background -- where your opinions were formed and with whom?
Mr. Creighton: The dialogue has been going on for a while, in fact. Personally, I have written letters to the CWB, to the Honourable Ralph Goodale, and to the Department of Justice, and I have simply asked what would happen if an American were to come to Canada under the World Trade Agreement and buy wheat or barley at the farm gate. As you know, the Canadian Wheat Board Act says that the CWB shall buy all grain produced in the designated area, being wheat or barley, that is "offered" to the board. In other words, it is not their grain until it is offered to the board. Therefore, if a farmer chooses not to offer the grain to the board, and an American person comes to Canada and buys 1,000 bushels of wheat at the farm gate, and then returns to Customs, the question really is not whether he or she needs to have a licence. The question is, would he or she have to pay to obtain a licence?
This person is not a Canadian producer, does not hold a permit book, cannot get a permit book, and does not share in the pooling account. The World Trade Agreement is implicated or implemented, as I understand it, relative to agriculture, and it limits the restriction of trade to only one thing; tariffs. There are no tariffs on wheat or barley. Therefore, it is my submission that an American can come here and access wheat or barley and he is not required to pay for the difference between the price inside and outside Canada.
Nobody has replied to my question; not Mr. Goodale, not the CWB, nor the Justice Department. We have, in fact, dialogued with the USDA, and with Mr. Dan Glickman, the Secretary of Agriculture, and they agree with what we are saying. The WTA allows its 130 odd members to access each other's production subject only to a tariff structure, and universality is at the heart of the WTA. If the scenario holds true, then, what would that do to Canadian producers? If an American can come here and do with Canadian grain what a Canadian farmer cannot do, we have a problem.
Senator Andreychuk: You are basing your ideas on what you think the World Trade Organization has done to this point? Most of the dialogue has been on what the World Trade Organization might do, where it is headed, et cetera -- the next round being fairly relevant to agriculture. Do you feel that what is in place under the World Trade Organization creates problems?
Mr. Creighton: I will put it this way, I have found nothing or heard nothing from anybody that contradicts that; if it is there I would like to see it. But I just simply have not found that and I have done considerable research on it.
Mr. Tait: I wanted to make a comment on the deer excreta in the barley. I take a direct interest in this because I am a producer representative on the standards committee of the Canadian Grain commission. In the last couple of week I sat in on two conferences calls we have had regarding this, and tightening up the regulations.
It concerns me that the people who are upset with the CWB all the time use this as another excuse to blame the board. There is a fellow not too far from me who has written letters to the paper claiming that if he had competition to buy his barley -- that if the private trade had it, they would have looked after it, and none of this would have ever happened. This is absolute nonsense; this problem has arisen because a lot of the grain comes from Northern Alberta where the crop stayed out in the swathe over the winter, or because the grain was piled outside during the winter and the deer got into it. This barley was bought by the competing companies that he says do not exist. It could have been bought by UGG, Pool, Cargill, or Patterson, or whoever. They turned it over to the board for export shipment.
One of the problems is that the Grain commission was perhaps not going as good a job as it should have, and it did not catch this before it got to Japan on the boat. To blame this on the board, however, is simply ridiculous. Suggesting that the situation would have been different had the private companies been involved -- it is the private companies who bought it, it is the private companies who cleaned it at the terminals and left the excreta in there. The commission has now tightened up the regulations, and the elevator companies have been told that they are not to buy stuff right at the premises; they are not to take in anything that involves this.
It bothers me that this is just another thing that is used against the board when the board literally had nothing to do with it.
Senator Whelan: In the Standing Senate Committee on Foreign Affairs we had Mr. Klassen from APEC. He clearly stated to us that Japan, our second largest trading partner, had said "no way" on agriculture and fisheries in Japan. It is not universal; the WTA claims 130 countries, but there are about 30 of them who pay no attention to it whatsoever. Japan said "no way" -- they are not involved. We are told that it is a big global thing. It is not a big global thing when people like Japan say no to agriculture.
The committee adjourned.