Proceedings of the Standing Senate Committee on
Agriculture and
Forestry
Issue 8 - Evidence - Morning sitting
CALGARY, Tuesday, March 31, 1998
The Standing Senate Committee on Agriculture and Forestry, to which was referred Bill C-4, to amend the Canadian Wheat Board Act and to make consequential amendments to other Acts, met this day at 9:03 a.m. to give consideration to the bill.
Senator Leonard J. Gustafson (Chairman) in the Chair.
[English]
The Chairman: Welcome, gentlemen. Please tell us where you are from.
Mr. Ken Larsen, Alberta Pro-Canadian Wheat Board Group: Mr. Chairman, my name is Ken Larsen, and with me today is Mr. Steve Bothi. I have a mixed barley and cattle farm at Benalto, Alberta, which is about two hours northwest of here and Steven comes from the Bassano, Alberta, area.
Mr. Bothi, Alberta Pro-Canadian Wheat Board Group: I am a dry-land grain farmer here at Bassano, southeast of Calgary, right on the edge of the eastern irrigation district. We have a diverse picture of farming experience.
The Chairman: I bought some cattle from Bassano one time.
Mr. Bothi: I'm sure it was good cattle.
Mr. Larsen: I guess the other point to make about Steven and I is that we're not connected with any commodity group or other farm organization. We are both full-time farmers. Our wives do not work off the farm. We do not broker grain. We do not have grain elevators. We are just producers. The Pro-Canadian Wheat Board Group is a group of farmers that got together around the federal barley plebiscite and we organized some rallies in favour of the Wheat Board at the Alberta Legislature and it has grown from there. We never thought we would end up spending as much time doing this sort of thing.
Interestingly, I found it was easy to organize support for the Wheat Board here in Alberta. We got 300 farmers out to the Alberta legislature from the south of the province up to the Peace River block. In the south of the province at that time, they were swathing their grain. In the central part, they were haying, and in the north they were just starting to roll. We found a lot of support for the board in the province, and it is certainly grown from there. We have about 300 active members who donate money to help defray costs.
It is nice to have you here in Calgary. Calgary was the place where the Wheat Board was really started a long, long time ago through the Alberta Pool and the efforts of Henry Wisewood and others to set it up. That was a long, long battle that went on for many years. I think it speaks well of our cooperative heritage. We think it is safe to say that there's a big general support for the intent of this legislation, and the intent, as we see it, is to add a layer of accountability and feedback between the farming community and the Wheat Board to an already very good institution. I think it is safe to say that many people are quite happy with the Wheat Board just as it is.
We think the task, if we may be so presumptuous, of this committee is to just make this bill a wee bit better. There are a few things that need to be amended to make the bill function well. We do not think it will undermine the board in any way.
We are here because our institutions, the Prairie pools and others, have been failing to defend the Canadian Wheat Board's single-desk selling in the propaganda wars that have been going on in Alberta particularly over the last ten years. That is what has brought us here today. We have consulted pretty widely in the farming community amongst people like ourselves who actually have to make a living from the land as opposed to brokering grain and other things. Today we will try and tell you what matters to producers like ourselves. The first thing is that we have to respect the things that make the CWB a desirable institution: single desk selling, price pooling and the financial backing of the federal government. Those are the three elements. Those are the three pillars that you have heard so much about and that is what really matters to the Wheat Board.
There have been those who have attempted to muddy the water in this discussion with the phrase "dual marketing," especially after their resounding defeat in the barley plebiscite last spring. I think you should make no mistake about it, the concept of dual marketing was very much a part of that campaign and the farming community knew full well what they were voting for and what they were rejecting. The farming community understood that any definition of dual marketing is inherent in a positive and open market environment with some kind of quasi-Wheat Board involved. This is not a third option, but an open market option only. Keep in mind that neither the Steers Committee nor the Western Grain Marketing Panel ever supported a dual market, but clearly recommended one of two options. If the third choice were viable, we would not in good conscience be here.
We preface our comments by saying that there has been a steady and growing consensus across the designated areas about those three pillars and their importance. We would like to commend the advisory committee to the CWB in their submission dated March 19, which I believe you heard in Ottawa. The advisory committee brings a wide spectrum of opinion to the table, and I think that the consensus they built around Bill C-4 is a pretty fair representation of the conclusions of most of us who actually make our living by growing grain.
After the plebiscite vote and the debates, most producers recognize that we have to be pretty serious about our role in international grain marketing endeavours, and that if we are to remain independent Canadian producers in the global market, we need the Wheat Board to act as our agent in that market. Governance is an issue that has often been raised.
The issue of governance has been on the minds of a lot of people. We would like to agree with the rationale of the advisory committee that the number of board members should be increased to 11. The other aspect of governance that is really important, and this was identified in the Steers Committee as well, is that the CEO or president should be hired by the board in consultation with the minister, as opposed to the way it is in this legislation now. I think that would help ensure the corporate integrity of the organization and give the impression of a greater democratic structure.
Reflecting our Alberta heritage of cooperatives, we would like to go one step further and suggest that you consider the delegate structure to elect the board of directors. It is something that has worked well for cooperatives throughout Canada, particularly here in Alberta. It certainly got a lot of support in the rural community. I know there is a motion before the delegates of the Alberta Wheat Pool today to discuss this issue, following which either they will recommend it or not recommend it to you.
The other big issue that has come forward is the inclusion and exclusion of grain clauses, and we have heard a lot of nonsense about government control and that sort of stuff. A fault of the bill is that it makes it too easy to remove grains from the CWB and too difficult to put them into the Wheat Board; there is a lack of natural balance there. We would like to support the advisory committee's suggestion that the inclusion and exclusion clauses be balanced and that that should arise from farmer initiative to the elected board of directors, to the minister and then to a farmer vote. That would make it a democratic process throughout. Those who are elected would respond to a producer initiative, which would short-circuit that whole debate as to who legitimately represents farmers; you would be dealing with elected people throughout.. The mediation of commodity groups, some of whom may or may not legitimately represent farmers, is not necessary. Finally, you would have the producer vote.
Cash buying really goes to the heart of what the Wheat Board is; the Wheat Board is not a buyer of grain. The Western Producer still publishes bitter letters that read: "We would be richer out here if that darn CWB would just pay us more for our grain." Well, the Canadian Wheat Board is a seller of grain on the international market; it brings the international market price to us. The international market price just is not high enough, but we cannot shoot the messenger because the news is bad. The problem with cash buying is that it changes the nature of the CWB from a seller to a buyer, which impacts on the built-in equity of treatment of farmers. Essentially, one farmer is traded off against the other. Grain is a non-differentiated product; thus, you cannot tell the difference between the barley Steven grows, the barley the fellow in Peace River grows, or the barley I grow. Cash buying will create resentment because Steven may sell his product for a greater price than I do. We understand that the rationale was to allow the CWB to pick up grain from the trade if they have a short shipment, or something like that. We would like to suggest that you look at some sort of regulatory structure that fences that in so it does not affect the pool accounts.
There are a lot of people who say that the CWB inhibits cash flow. We would like to suggest that they go back to square one because just about every industry uses price pooling in one fashion or another. You are sitting in a city now where the national gas industry, through TransCanada Pipelines, has used price pooling and equity of delivery opportunities for years and years and years. As well, there are interest-free cash advances. Anybody who knows anything about banking knows that you can go get a loan on your undelivered or unpriced grain. One of the things the advisory committee suggested was a pool equity account. That might be a good thing to add to this legislation if it is not possible within the legislative framework.
The third pillar is government involvement in the financing of the CWB. Except on one occasion, that is something that has never cost the government any money. It allows the CWB to finance itself in the most cost-effective way possible. And let's remember what Minister Goodale told us at the beginning of this, that the Canadian Wheat Board is the single biggest net foreign exchange earner this country has. Part of that strength comes from the CWB's to finance its sales through the Canadian government. That is something that is kept in this legislation for the initial payments but not for the adjustment payments. The adjustment payments historically have never caused a deficit, so why take away that guarantee here? We would suggest leaving it in, which would, of course, do away with the necessity for a contingency fund. Setting up a contingency fund on a $6-billion or $7-billion operation strikes us as an expensive hit to the farmers' pocket. We would rather see cash buying tossed out than lose the initial and guaranteed adjustments.
We want to establish that we are independent of the advisory committee in many respects. We reject the whole idea of having another plebiscite on this legislation. What we hear in the farming community is, "Let's get on with this." Implement these minor amendments, which will make this legislation just that much better. As well, we are not critical of Ralph Goodale. We think he may have tried to do a bit more than was required in some areas and has not, perhaps, emphasized enough the idea of preserving the three pillars of the Wheat Board. With the amendments that we have suggested, that can be rectified.
We do condemn those who have used this review of the CWB Act as an opportunity to advance their own agendas or their own business interests at the expense of the majority of farmers. Some of these people have even made careers out of this argument. They first argued that it was a matter of money to divorce from the CWB. However, when this assertion did not stand up to the scrutiny of producers, they attempted to shift grounds and made the destruction of the CWB a matter of freedom and tried to pretend that they were not here to bury the CWB but to praise it, to paraphrase. Well, it is our observation that the people with the most coin in their pocket have the most freedom, and we stick by the premise that the majority of farmers benefit the most by supporting single-desk selling and therefore have more freedom and choice than if the CWB were to be undermined. I think the CWB supporters know this.
Whatever you decide, try to keep in the back of your minds the factors that make the CWB so desirable for us -- that is, the three pillars. I think Steve made a point that we have to use the collective intelligence of our agricultural community to compete with other nations rather than to set up competition between farmers, because that will just low-ball everything.
In conclusion -- I tend to be a bit of a history buff -- I dug out some information on what it takes in terms of purchasing power to do certain things like fill a tooth or buy a magazine. I pulled the numbers from Nesbitt's Tides in the West, which is the history of the Alberta Pool. In 1932, with 30-cent a bushel wheat at Stettler, it took about 200 pounds of wheat to fill a tooth. My daughter just had a tooth filled, and it cost about 750 pounds of barley in 1996 dollars. There is a lot of bitterness against the CWB because it is the bearer of bad tidings to Western Canadian agriculture, and those bad tidings are that commodity prices are not what they really should be, in our view. With that, I close my remarks and thank you for your kind attention.
The Chairman: Thank you for your presentation. In talking to a director of a grain company, he tells me that the Wheat Board would like to get out from under the barley. He said that they are not handling enough barley, that most of the barley is being sold and traded as feed, and that it is not a large enough crop for them to handle. Have you any information on that?
Mr. Larsen: For the barley plebiscite, we looked at the numbers from Stats Canada, and the trend line is going actually the opposite way. More and more people were selling to the CWB in the last crop year. We produced, I believe, about 12 million metric tonnes of barley in Canada and, of that, about 6 million metric tonnes went to the Wheat Board. That was on a trend line going up as opposed to down. The Lethbridge area is a fee deficit area, so generally you might do better selling to them than you will to the board, but as the trucking distances get further, you are much better off selling through the Wheat Board. Who have you talked to at the Wheat Board and why they would have said such a thing, I have no idea. I suspect it may have been more wishful thinking on their part than anything else, perhaps.
The Chairman: We will have a chance to verify that later when we call the Wheat Board before the committee. With respect to the CEO, how would you propose that that would be done? You talked about a joint decision, between the minister and the Wheat Board.
Mr. Larsen: Because you have an elected board representing farmers and an elected minister representing the interests of Canada, there must a collaborative process between the two sides to select that person.
Mr. Bothi: The fundamental thing is that the minister does have the opportunity to appoint some members to that board. The big distrust factor that I sense out in the country is the fact that the CEO would more or less be chosen by the minister, although Bill C-4 does make reference to consultations and, of course, the setting of the salary by the board itself. We think it would be more an issue of trust and management if the board were set up as a policy group and a dialogue between producers, the board, and the government were to take place. From the operational side, we feel that this board would be quite capable of choosing a CEO/president who would be able to function as a manager of the Canadian Wheat Board and be able to report to the elected appointed board.
All avenues, in term of accountability, are then covered, and the operation sector is segregated; the elected appointed board does not get into the day-to-day management of operations and undermine the business effort is.
Senator Stratton: I will try to be brief, if I may. Welcome and thank you for your presentation. It was interesting.
It has been said that the real power of any board is the ability to hire and fire the CEO, and beyond that it does not have a lot of influence. I firmly believe that the board should be selected, in my view, because the government has got such a position within it. Would you consider the selection of the CEO by the minister with the approval of the board?
Mr. Larsen: I think the issue is functionality, and in that sense it sounds like that would do the trick.
Senator Stratton: The big concern, of course, is who gets to fire because ultimately that is where the argument will come. It is interesting that when you talk about inclusion/exclusion <#0107> and perhaps I am curious about it because we have heard a lot of representations regarding inclusion/exclusion. People who are not within the board right now are very concerned about having someone tell them that they have to be in the board when they are doing quite well outside of the board. Can you explain in a little more detail how you would work or operate that inclusion/exclusion?
Mr. Larsen: The way it works now is that the commodity organizations representing all the producers have to trigger the inclusion clause. Well, I am a member of the Alberta Canola Council, even though I do not want to be. I am a member of the Alberta Cattle Commission, even though I do not want to be. I am a member of the Organic Crop Improvement Association, and none of those organizations has ever sent out -- these are organizations, particularly the first two I mentioned, with a lot of resources because they have a compulsory check-off -- a survey to me. They have never telephoned me. They have never asked me or any of my neighbours, "What do you think of our position on Bill C-4?" If those folks trigger the inclusion clause, well, who says we are all doing really well on canola? Quite frankly, the first crop I ever grew was canola and it was almost the last one because it was an open market commodity. While I was at university I rented some land. I had to sell in the fall, and the price went way up in the spring, and so on. Look at it from the producers' point of view as opposed to these commodity organizations because they do not necessarily represent all the producers of commodity. That is really important. We would like to see that layer dispensed with. Let us go directly to the producers.
Senator Stratton: If I may, are you saying that because the debate is really on who gets to be included and who gets to be excluded, it is the producers of that commodity that would have the vote on whether they are included or excluded?
Mr. Larsen: I think you have to include all farm producers because there are a lot of farmers who do not grow canola, simply because it is not under the board. There are a lot of organizations, a lot of commodities, like the rye producers, that do not have an organization now. I think you have to take a look at some mechanism for saying, "This is the farming community," because we do not grow just wheat and barley. We grow canola, et cetera, et cetera. You have to broaden the inclusion, and all the farmers should vote on that because as you add grains to the board, that impacts on the board's function.
Senator Stratton: I am a firm believer in democracy, but in a lot of cases, as I stated last week, I worry about the tyranny of the majority in this instance, where canola producers are outside the board and they do reasonably well and they are really concerned that the majority will virtually dictate their economic future. That is a realistic concern that can be expressed. How would you respond to it?
Mr. Larsen: The last time I looked, this was still a democracy, and I think if you have a majority vote to include or exclude a grain, that is democracy and that is the way it falls. I do not see how you can carry on in any other fashion. What shall we do? Have exclusion clauses or, you know, hive off little Bosnia's here and there with people who do not want to go along with the majority?
Senator Stratton: They just do not want to have inclusion/exclusion.
The Chairman: We have about three minutes.
Mr. Bothi: Our point is that the ultimate power should rest in the hand of the producer, and nobody else.
Senator Hays: I just want to give you an opportunity to comment on -- and congratulations, by the way, on succeeding in what I think is one of the toughest businesses you could have chosen to pursue. I will give you an opportunity to comment on the criticism or concern that the board and the strategy we followed had a negative effect on diversification and value added.
Mr. Bothi: I have to challenge that because when I looked at all the information that came out, particularly in the summit missions to the Western Grain Marketing Panel report, one of the interesting findings was how the malting industry boasted about the Canadian success story and how the flour milling industry talked about the secure basis they have had historically to develop and grow and particularly pursue export markets in the value added end of it. I cannot remember the exact figures, but since the 1970s, growth in flour milling has been several hundred per cent.
Contrast that to industries like canola crushing, where we had tough times in the 1980s, where the provincial government bailed out the crushers to the tune of $40 million in 1984, where there were plant closures last year, instability, and we never know if that margin cuts too far and the price of the seed is too high, and then the plant shuts down. We have had ups and downs in several areas. Rye was once a very important crop around here. Now there are one or two companies that are interested in it, and it is anybody's guess what sets the price. I suppose it is relative to everything else.
We have a hard time buying the argument that those people who are trying to add value to products that are marketed by the Canadian Wheat Board are hard done by because the fact is that they have done very well relative to everybody else.
Senator Fairbairn: Thank you for being here today. I would just like to go back to the inclusion/exclusion issue; it certainly has been a lively one throughout our hearings on both sides. Could you explain to me the difference between the current procedure and the one suggested in the bill, as it relates to exclusion and inclusion? Presumably, your biggest concern focuses on who would do the voting. Could you just clarify that for me, please?
Mr. Larsen: There are really two concerns, Senator Fairbairn. One is the natural justice issue, that the two should be symmetrical. In other words, whatever mechanism you use to include should be the mechanism you use to exclude. The second level of concern is the one you identified, which is: Who triggers the inclusion clause? The inclusion clause is much more onerous than the exclusion clause. We would suggest making the inclusion clause symmetrical with the exclusion clause, because with the inclusion clause, you have commodity groups which many of us do not feel legitimately represent us. On the other side, you have the commodity groups claiming that they alone represent producers. Senator Stratton has identified a problem, by asking, "Who is a producer?" Am I a producer of canola? Well, I am on occasion, but I am not sure that they would consider me that. That is why we suggest making them symmetrical. Follow what the advisory committee suggested -- make it a direct democratic structure, from the farm community up through the elected board, which is structured, and to the minister, and then back to the farm community for a plebiscite. That makes it symmetrical.
Senator Fairbairn: It may be that the bill itself is unclear. My understanding all along has been that if this should stand the whole purpose of the process would be that these would be decisions asked for by the actual producers and voted on by the actual producers of the grain or the crop.
Mr. Larsen: Therein lies the problem. Who represents those actual producers? It makes reference in the bill, as I understand it, to the commodity organizations or an organization representing the majority of producers of that commodity. There really is no such organization now in Western Canada that could do that. We would suggest forgetting about that layer of it and keeping it simple. Of course, I am not a lawyer.
Senator Whelan: We have heard a lot of representation about selling the grain to the United States of America. I just spent the weekend in British Columbia. The lumber industry is in distress. One of the reasons they cite for being in such distress is that they cannot ship to the United States. Do you think that if, say, the Wheat Board disappeared the Americans would welcome 20 million tonnes of wheat to the United States?
Mr. Larsen: I sincerely doubt it. History does not support that. The last time the board was done away with, the Americans took about six months to impose a 60-per-cent tariff on Canadian grain. The other thing is that it is a coals-to-Newcastle argument. The United States, as most people might remember, is a major grain producer. They will not welcome our grain very much. They talk a great line on free trade, but the fact is that there is not much of a market for our grain.
Senator Whelan: They are not very much free traders, either.
Mr. Larsen: No, a lot of people would say that, and I agree with you.
Senator Whelan: They are very protectionist.
The Chairman: It has to be recognized, though, that more grain is flowing north and south than there has been in the past. We are probably into a North American common market, the way things are going. Farmers on both sides of the border suffer when either the Americans or ourselves undercut the other. There must be a reasonable adjustment to this situation.
Mr. Bothi: That point was raised in 1990 and addressed by the Steers Commission. There was a recognition that there was a growing continental market-place; NAFTA has made that happen. Two options were identified at that time by the Steers Committee. The first option was to integrate Canadian standards of quality, marketing, et cetera, with those used in the United States. That would solve the problem; everything would be the same and you have free flow. The second option that they looked at was to maintain the standards of Canadian grain, and the Canadian Wheat Board was identified as playing a major role in making that happen. In the interests of the highest return to the individual producer, they chose the second option in their report.
Senator Spivak: In identifying your three pillars, it seems to me that you omitted the orderly marketing function of the Canadian Wheat Board.
I want to know what your opinion is and if farmer confidence and acceptance of single-desk selling could be sustained if there were a lot of cash buying and the returns were not equally distributed through pools.
Mr. Larsen: I do not think it could be maintained at all if you implemented widespread cash buying because you would be setting one farmer against the other, one region against the other.
Senator Spivak: So what is your view about cash buying?
Mr. Larsen: Restrict it to the port level, perhaps, only, and leave the farm community out of it because it undermines the whole equity of the thing. The other thing about orderly marketing, which comes back to the question of north/south flow, is thatyou have to remember that we produce 20 per cent of the world's wheat and barley. How is the open market able to absorb that amount of grain in three to six months without affecting price -- which raises the other great strength of the board; that is, that the board stages its sales so that the market does not become flooded with grain causing the price to collapse. That is a real possibility, one that you often see in other commodities.
The Chairman: Thank you for your presentation.
We will now call, from Western Barley Growers Association, Greg Rockafellow and Doug Robertson. Welcome, gentlemen. We would ask you to proceed with your presentation, following which we will have questions from senators.
Mr. Doug Robertson, Western Barley Growers Association: We would like to thank the Senate committee for allowing the Western Barley Growers a chance to present our views on this highly contentious bill. We will leave a formal written presentation outlining our points in greater detail with you; we hope it will be of help as a reference in your deliberations.
First and foremost, let us be clear that although Western Barley Growers Association recognizes the need to completely overhaul Bill C-4 as it now reads our preference is for a voluntary Canadian Wheat Board, not a new and improved monopoly. Most of the problems in the Wheat Board Act and the Wheat Board in general would be gone under a voluntary Canadian Wheat Board. Markets and competition would guarantee that. We would also prefer a true annual audit of the Wheat Board by the auditor general, to make it more accountable to farmers, even if only older records, not current crop year data, were examined. Both this and the rules which allow the Auditor General to exempt market-sensitive documents should be enough to alleviate concerns expressed by the Wheat Board about the possible competitor advantage from the release of their secret sales information. These changes, we feel, would go farther to bring the board into the market realities of the late 20th century than any changes proposed in Bill C-4.
With the limited time available for this verbal presentation, we would like to concentrate on two areas only, the effectiveness of the board of directors and the inclusion/exclusion clauses. More areas are covered in our written presentation. The primary advantage of this bill, according to Mr. Goodale, is that it will give farmers control over the Canadian Wheat Board because 10 of them will be elected to the board of directors. This is completely untrue and he knows it. First of all, he will appoint the president or CEO, not the board of directors. The president is charged with running the Canadian Wheat Board. The board of directors has no control over the president and will therefore be the kind of rubber stamp body that we see now with the three Prairie Pool delegate assemblies, and nothing more. Ottawa approves the corporation's business plan and all financial aspects to do with the Canadian Wheat Board, so the board will approve what Ottawa deems to be in the best interests of the corporation, not of farmers.
Second, the bill is quite clear that the board of directors and the president must act in the best interests of the corporation, not just to satisfy their job descriptions, but to protect themselves from liability. There is no way they can share any information that comes their way with anyone outside the Wheat Board; nor can they do anything contrary to Ottawa's wishes or they will be dismissed.
Third, since Mr. Goodale appoints five directors, including the president, only three more pro-status quo directors need to be elected to subvert the wishes of the majority of producers. Even if 70 per cent of the farmer directors favour a voluntary Canadian Wheat Board in the future, they will be outvoted eight to seven.
Fourth, there is no commitment in the bill that the 10 elected directors will be farmers; and since Mr. Goodale designs the election, we have little hope that they will be unbiased individuals. Witness the recent barley plebiscite in which Mr. Goodale's own polling indicated that up to 80 per cent of farmers would prefer a voluntary Wheat Board. With this in mind, he refused to include this option and asked farmers only if they wanted the Wheat Board as it was or no Wheat Board at all. Nearly 40 per cent of Prairie farmers told him to kill the Wheat Board anyway.
If Mr. Goodale were serious about giving farmers the accountability we ask for, he would have to look no further than the Ontario Wheat Producers Marketing Board. Ottawa guarantees most of their financial arrangements in the same way they do for the Wheat Board, but 10 elected farmers operate and oversee the Ontario board without any federal appointees thrust upon them. They have complete authority to hire and fire anyone they want within their operation. They do not have to ask permission from Mr. Goodale or the federal cabinet whenever they want to rearrange their affairs.
A recent vote by their directors saw 90 per cent of them vote in favour of being voluntarily. Mr. Goodale claims that he must have federal appointees running the Wheat Board because Ottawa gives more financial guarantees to the Wheat Board than to the Ontario Wheat Producers Marketing Board. If this is all that is standing in the way of the Prairie farmers having the same freedom Ontario and Quebec farmers do, then we and the majority of Prairie farmers are prepared to forego these extra guarantees. It is morally unjust to perpetuate a double standard through legislation.
Mr. Rockafellow, President, Western Barley Growers Association: Mr. Chairman, I will take it from here.
With regard to the inclusion/exclusion clause and Minister Goodale's last-minute proposed amendment, since canola is a favoured board target, I would like to examine it for a moment. Farmers have embraced canola, despite its riskier growing habits, versus wheat and barley because it was a non-board crop and could generate badly needed cash flow, either when the board grains were paying very little or when they needed an advance, cash flow, from their financiers. The price risk can be handled by using the futures market. Canola is easy to sell and quick to be paid. The world price is visible and set by the free market as opposed to the board grains, which are always below world price and set by bureaucrats. In fact, the only trouble farmers have had with canola is when the federal bureaucrats have messed up with it. What I am speaking about there is when we had the removal of producer cars and had dealer cars put in their place and the cash call market put in through Vancouver.
It appears that Minister Goodale and the cabinet want to really mess up canola by putting it and other grains under the CWB umbrella. This has little to do with what farmers want and everything to do with what the federal Liberals and the three Prairie Pools want. The Western Barley Growers Association is fundamentally opposed to the CWB having control over any more grains when independent studies all show that it cannot successfully market the grains it already has now. The reason farmers grow canola is to avoid the board, and we will never support its inclusion. Senators from Ontario and Quebec should also closely examine this inclusion clause. It is our opinion and that of legal advisors that there is nothing preventing western producer groups from petitioning the CWB to get any grains grown in Canada under the CWB and therefore federal control. I am sure your farmers would be about as pleased as we are to have the federal government telling them when, where and for how much money they can sell the agricultural products that they grow.
I would therefore suggest that you not support the inclusion clause in any way, shape or form. The exclusion clause in this bill was cited as the reason there had to be an inclusion clause. It has been misrepresented as an easier way of getting grain out of the CWB control than under the existing legislation. It is quite the opposite. Under the existing legislation, an order in council from the cabinet could remove a grain.
Bill C-4 requires five steps, each of which can torpedo that removal. First, it must be recommended by the board of directors, which is highly unlikely since they are legally required to support the best interests of the corporation as defined by Ottawa. Second, the Canadian Grain Commission must establish a program to preserve that grain's identity from all others, a monumental and quite unnecessary task. Third, a producer plebiscite designed and run by Minister Goodale must be won, which, given his question tailoring abilities that we saw in the barley plebiscite, would never be fair or likely. Finally, both the minister and the cabinet must approve the exclusion, leaving the whole process open to political whim in the end.
The fact is, the whole exclusion process is academic. A grain can only be excluded if the cabinet makes a regulation to allow it to happen. Bill C-4 also sneakily reveals clause 46(b), which allowed them to make these regulations in the first place. The only way a grain can be excluded after jumping through these five hoops is to write and pass new legislation, like Bill C-4, to amend the act. I am not sure anyone wants to go through this process again.
With regard to Minister Goodale's last-minute amendment, the opposition was wise not to have accepted it. It simplifies the ability to add more grain to the CWB, but it makes it even harder to get grain out. It would add the following procedures to the insurmountable ones already mentioned. First, farmers must get the minister to hold a plebiscite to remove the grain. Second, they must win the engineered plebiscite. Third, they must wait for the minister to write the bill to exclude that grain and hope it passes. Then they can begin the five-step exclusion process already mentioned. We find it highly improbable that any grain would pass the three steps, let alone the other five steps in the bill. Therefore, both the inclusion and exclusion clauses should be stricken in favour of a simple farmer plebiscite vote administered by an independent body outside of the minister, the CWB and the grain companies. Minister Goodale knows full well that a voluntary CWB would survive and thrive if it wanted to.
Mr. Robertson: It is the contention of the Western Barley Growers Association that the many problems already inherent in the Wheat Board and those additional ones created by Bill C-4 guarantee that a political solution to this problem is not possible. The federal Liberals and Mr. Goodale see the Canadian Wheat Board as a tool to keep power out of the hands of western farmers and in the hands of federal bureaucrats and politicians, not a grain marketing tool for farmers. We therefore recommend that barley be removed from the Canadian Wheat Board and that a voluntary Canadian Wheat Board be established for wheat. While only a small percentage of barley is sold by the Wheat Board, as long as farmers have no access to world prices, all western barley suffers in both price and market opportunities.
Numerous independent studies, polls, plebiscites, and even Goodale's hand-picked grain marketing panel have all called for at least a voluntary Wheat Board or barley to be removed from the Canadian Wheat Board. Mr. Goodale has ignored them all and now attempts to make the Wheat Board even more intrusive with his inclusion clause. To quote Mr. Goodale himself, "One person's definition of freedom is another person's straight-jacket." Through Bill C-4, he is putting western barley farmers in a straightjacket when all we asked for was the freedom to market our own grain.
Senator Hays: Your first point was to do with the secrecy of the Wheat Board and of not finding a way of knowing more about what it does by way of marketing grain, in terms of pricing and so on. We have heard that one of the advantages of the board is its ability to price discriminate, and that is for a particular grade of grain, sell it at a higher price to one customer than another. We have also heard that grain marketers -- I won't name them, it doesn't matter; we know who they are -- do not disclose this information either, but that the Wheat Board operates at an advantage in this area because it controls a particular commodity, namely a certain type of wheat, and it deals on a long-term basis with customers and is able to have an advantage in that respect. Would you please comment on that.
To some degree it seems to me that it is simply a way of looking at the board for those who question its monopoly powers as a competitor and, accordingly, because it has a monopoly and it is the single-desk seller, it is not a fair competitor with those people who are dealing in similar commodities within the country.
The third option, I guess, is simply a matter of trust; that the board is not trustworthy and needs to be operating in a more open way.
Mr. Rockafellow: Just a couple of points about the visibility of the board, and certainly that raises a lot of questions among producers. There is waning trust of the board from producers, and that is obvious because this debate has been fairly active and rampant over the last couple of years. One answer might be to have the auditor general look at the books. He does not have to look at sales figures of today or last year, but maybe those of three years ago or 60 years ago, and he can decide if it has been fair.
Senator Hays: What I am trying to get at is your rationale for not trusting the board. Of course, the board supporters say that secrecy and the fact it is a competitor are important aspects of the board, in terms of realizing the maximum amount on the grain that it markets and getting to this issue that you do not sell your grain to the board, but rather it markets it for you.
Mr. Rockafellow: The philosophy tells us that because it is a monopoly, it can maximize those amounts. The board is not a monopoly seller, it is a monopoly buyer of the producers of grain on the Prairie provinces. It sells competitively with many grain companies in many countries around the world. So the argument that the monopoly gives us that advantage in the world is a bit of a farce. I think what angers farmers most of all is that they compare the prices they receive from the Canadian Wheat Board to what other farmers are getting around the world, or what they can arbitrage. Whether it is the American market, the domestic market, or those markets where the board does not have control, when you look at the profitability of your farm, the board crops do not necessarily work very well. All I have to look at is whether the farmers can be profitable under that type of control, and they cannot be.
Mr. Robertson: It says somewhere in the legislation that the board is charged with getting the best price. That is a complete fallacy. It says nowhere in there that the board even has to attempt to get the best price. They only have to move the grain that is contributed to them and then we trust them for performance.
You were trying to liken it to the grain companies, and we hear this often, "Well, I do not get to see Cargill's books when I deliver to them." I do not care because the only deal between me and Cargill or me and whoever I sell to, the pools if I sold to them, would be, "Tell me upfront what I get for my grain, and if that is acceptable to me, I do not care if you dump it down a hole after that." I do not care what happens to it. I do not have to worry about whether or not Cargill is around tomorrow; I do have to worry about the performance of the board.
For instance, if you have a product to sell me for $2 and I tell you that I will pay you $1 now and then, depending on how successful I am at selling the good, I may give you the $1 balance, you would be very interested in my performance vis-à-vis how successful I am at selling that good. On the other hand, if I told you upfront, "I am going to give you $2 for it," and that was the price you wanted, you would not care beyond that. This is the problem, this fallacy about the board having to get the best price.
The legislation says nothing about the CWB having to do that. That is the problem. They are not charged with having to perform at all. I do not really care if they have to perform; that is not so much the problem we have. The problem is that, as a producer, I do not have the choice to decide with my own vote whether they perform or not.
If participation were voluntary, I would not care whether they performed or not because I would have the choice to trust them or not. If I felt that they were trustworthy or I felt they were getting the best price, I would put my money into the Wheat Board; if I did not, I would contribute outside the board. But I am not given that choice. There is supposed to be a strength in a monopoly, but I do not see where the strength is when it is a monopoly buyer, not a seller.
Senator Hays: Do you have, at hand, any comment on pools that operate on a voluntary basis successfully?
Mr. Robertson: You are talking about cooperative pools or grain pools specifically?
Senator Hays: Well, a commodity pool. Pooling seems to me to mean that everybody commits to a pool and a pool price and the distribution of the end result of marketing the commodity, whatever it is, and the board you recommend would be a voluntary pool.
Are there some examples of situations like the one you recommend for the pool that do work that you think are compelling or persuasive?
Mr. Robertson: The reason we cannot have a voluntary board is that the States tried it and failed miserably so we obviously cannot use it. There are examples, and I do not have them at hand, of working pools in many different commodities, including grain, but we are not asking for an example of a specific commodity. We are wanting to design something that works for Canada. This whole idea that we have to buy into the American system and do things the way they do is crazy. We have a chance to design our own system here, and the problem the board has is that the board does not understand contracts.
I, as a producer, have to understand contracts because when I sign a contract with a grain company to deliver canola, for instance, and I do not deliver up to quantity or quality,or whatever, it costs me money. There is a performance clause in that contract; it costs me money. It is called an immutable contract.
If the board, at the start of the crop year, wants to be assured supply, producers would be perfectly willing. I have talked to many of them. So if I want to contribute all my durum wheat to the Wheat Board, I sign a contract. I have to do that. If I deliver outside of that, a big hand comes down and slaps me. If I want to put my canola under the CWB, fine; but if I do not, then I have the right to deliver outside the board.
I do not see what is so difficult about that. The whole idea that you need this huge amount of grain under monopoly to get a better price is crazy. If you look at the facts, and the CWB admits the facts, they only have to have premium buyers where they get a premium price from them. Suppose the premium buyers are paying $50 and everybody who is outside of this premium group pays only $30. Every one of those tonnes you sell to the guys who are only paying $30 decreases the price in that pool. You are hurting the guys who contributed good grain into that pool.
It is actually in the CWB's best interest to have less grain hanging around that they, by legislation, have to move. They do not have to get the best price, but they do have to move it. That decreases the pool and hurts the people inside the pool. So they would actually see the benefit to having less grain under their jurisdiction.
The whole idea that we would flood the market with this grain if we did not have the CWB orderly marketing it and carefully dribbling it into the market is just nuts. I do not sell my grain at the same time Greg does, and we sell off-board grains, because the cost of production on my farm is different than his. The circumstances for each farmer are unique. If you were to ask ten farmers around here what the best price for canola is, you will get ten different answers on what price they would accept on that day. And the price I accept tomorrow may be different from today's price because the bank might have phoned and demanded a payment.
The fallacy that we will all flood the market with our grain is crazy. It will not move over the border into the States if we had access to a world price because there is such a thing in the futures market called "threat of delivery." The same thing applies to delivery into the States. If you have a threat that somebody might deliver to get that world price, that world price comes all the way back to my gate minus the transportation it costs to get it to that nearest American point or to the nearest world price point. I would bet that tomorrow not a bushel more would move over the border if we have a completely open market than moves today.
Senator Spivak: How many members are there in the Western Barley Growers Association? Who do you represent?
Mr. Rockafellow: We have approximately about 600 members in the Western Barley Growers Association.
Senator Spivak: That is 600 farmers?
Mr. Rockafellow: Yes. The views that we are bringing forward today are views that were expressed a recent convention, where numerous resolutions were passed and sent forward to the association.
Senator Whelan: How many barley growers are there in Western Canada?
Mr. Robertson: I believe the Alberta Barley Commission will be here today and they will certainly give you a number. Their number could be somewhere between 35,000 and 40,000, as far as the commission is concerned. I am not sure how many there are in Saskatchewan and Manitoba.
Mr. Rockafellow: You just have to look at the number of metric tonnes by which board grains are decreasing, year after year after year. If you want to pinpoint our organization down to a certain number, fine, but we as an organization are charged with trying to do things that are in the benefit of the farmers as we see them. That is why we have not called for the Wheat Board to eliminated because producers should have the chance to use it if they so choose. However, they should not be able to force me to use it. I mean, we talked about majority rules here; the witnesses before us spoke about majority rules; but we never get to actually vote on whether the majority ruled anyway. The majority rule idea works as long as somebody is not forcing you to do something.
Now, why is it that the board is able to hide behind this idea of a cooperative when they are not? A true cooperative, by definition, is voluntary. If I deal with the United Farmers Association, which is a co-op, or any other co-op I can think of, I have the choice of whether or not I will buy my cereal or my farm equipment, or whatever, at that co-op. There are no repercussions if I choose not to purchase a John Deere from that co-op.
It is the same with the pools. If I want to contribute grain to the Alberta Wheat Pool, or any of these other pools out there, and get a pooled fund back or get a certain amount back for my patronage, that is my choice, but that does not mean that I have to deliver every bushel to the Alberta Wheat Pool. That is crazy. None of you would accept that.
Senator Whelan: We are aware that the barley growers voted to stay in the Wheat Board. I assume from your brief that that vote did not mean anything? You are asking the Wheat Board to just exclude barley without a vote.
Before you respond, I wish to point out that the Wheat Board is audited by a well-known and well-respected auditing firm. It is audited just as many big companies are audited. I was a founding member and director of the Ontario Wheat Board, and I know how it operates and what is happening there now. There is a lack of interest in it. If they put it to a vote in Ontario, they would never be doing what they want to do, and Maguire, who is head of the Wheat Growers Association, said he would not want that. When he was interviewed after the meetings, Maguire said that he would not be under the restrictive rules because you have to sign up your wheat in the fall that you intend to sell off-board in Ontario. It has not been approved yet either, by the way, and may not be approved either as far as that goes.
I said earlier, and you probably heard me say, that I just came back from British Columbia after spending three days listening to people talk about the lumber business and the restrictive measures they have to meet in order to export lumber to the United States. They just cannot increase it. They're on quota sales. I dealt with three Secretaries of Agriculture of the United States in my life, and they were most restrictive. The congressmen and senators south of the border here are some of the most protectionist people of all.
I cannot believe in my wildest dreams that they will allow this rush of grain into the United States of America without stopping it. They are not free traders. They are free traders only when they can take over a market.
Mr. Rockafellow: Senator Whelan, I agree with you that the Americans are very restrictive and protective of their markets. With a deficit in exports, as they have this year, they will become even more so. I remind you of the Continental Barley Market a few years ago. Maybe you saw on T.V. the big trucks lined up at the Shelby elevator. If you saw that clip, the truck that was at the head of the line-up had grain from our farm in that truck. The problem I had was that the board was willing to pay me a dollar a bushel for the grain that I was selling to them, 80 cents American. Those American farmers were getting $2.40 a bushel. I phoned some of my American friends down there and let them know the kind of prices we were getting. This year, there are 13.5 million tonnes of barley in Western Canada. The board will sell 700,000 tonnes, three per cent of what is grown. Are they an effective marketer if they are selling only three per cent of the product that we grow?
Mr. Robertson: Let's deal with the three points. First of all, will the U.S. allow a lot of dumping? As Greg said, obviously not. Let's not pretend that the board is lily white here too because we have documentation from a few years ago that proves that the board, to close the border up, dumped a bunch of barley they bought at Westlock at about 90 cents a bushel over the border just to round the Americans off.
As I said before, there is a threat of "delivery" involved here and that is all it takes to push the world price up at my farm gate. If we have access to the world market, there will be no more grain flooding over the border because the price I get at my gate will be the price at the U.S. port or whatever U.S. delivery point, minus the cost of the freight. That is what my price is because that is what it would cost for me to deliver it to that American point. Say they gave me $100, and it costs me $30 to get there. I should be getting $70 at my local elevator. If I do not get $70, I will threaten to deliver. It is as simple as that. Every feedlot in southern Alberta knows what that cost is, exactly to the penny right now, because they are ready to go. In fact, they are ready to buy grain out of the States too if the price is right. I have no problem with it as long as we have a two-way street going here.
As far as the barley plebiscite being a real vote, give me a break. As we said, the Minister of Agriculture polled us, and I know he carefully arranged the question because he polled everybody first, and found that he would lose if he asked "Do you want the dual market or not?" He would not ask the real question. He did not have the guts to ask the real question. He went up north to all his friendly areas and phoned people repeatedly and asked, "If we phrase the question this way, would you be more likely or less likely to vote yes or no? He spent a long time carefully engineering the question, asking producers "Do you want to kill the Wheat Board or not?" As I said, I am surprised that nearly 40 per cent said "Kill the Wheat Board." That shows the anger that is out there among producers. That is up about 20 per cent from the last time he asked this question in his polls.
The question is not "Are you going to kill the Wheat Board?" Nobody wants to kill the Wheat Board, except for a very, very small number of producers who have just had enough. Most of us want to see the Wheat Board as a working tool for farmers, not as one for federal bureaucrats who want to force a price and a social document on producers. We would like it to be a tool for us to use. The legislation says it cannot be. The legislation explicitly states that it cannot act in the farmers' best interests.
As for the audit, Wayne Easter got very excited and waved Deloitte & Touche's audited report in Ottawa and asked, "Are you saying Deloitte & Touche are disreputable?" That is not the point. An audited report is not a performance audit, and that is what we are asking for. An audited report counts grain tickets and checks totals. I know this happens because our own accountant and many others have told me that they earned money by counting grain tickets as part of the audit. These audited reports really do not mean a heck of a lot.
The Chairman: I would like to thank you. I will take one short question from Senator St. Germain.
Senator St. Germain: Senator Whelan is correct in pointing out that we are in real trouble in the lumber situation with the Americans. It is because the federal government and the provincial government decided to get into a dumb quota system. That is what is killing us in British Columbia. If the Americans were to start subsidizing aggressively, which they sometimes do, do you think that the dual system would be able to stand up or would you be dumping a complete load on the Canadian Wheat Board at that time, making it virtually impossible for them to operate?
Mr. Rockafellow: The fact is that the market-place is the market-place, whether we have a board or an open board or a dual market or farmers fend for themselves in the market-place. Europe is dumping now at $70 a tonne. The Americans will probably retaliate -- their farmers are calling for something. We just went through the National Safety Net Review, and the issue kept coming up that the subsidy levels across the world, in Europe and the U.S. particularly, are much higher than they are in Canada. We are somewhere between Australia and the United States. When we start throwing ad hoc programs into agriculture, people feel that makes us more competitive in the world market. It does not. It makes us competitive against one another as farmers. Every time we throw money at a problem as a nation, the price of land and machinery goes up and farmers pay higher land rentals, leaving them with no more money in their pockets. Whether the board is in place or whether farmers fend for themselves, the world market-place is the market-place. The board has to compete in it. They do not go out and get three times what the world market is asking for for grain. How could they? Who would buy from them?
The Chairman: Gentlemen, I want to thank you for appearing before us this morning and for preparing your brief.
Mr. Rockafellow: We would like to thank you. Our verbal brief was very brief. Our written one should be here any minute, and I urge every one of you senators to please take a look at it and read it, if you don't mind.
The Chairman: Honourable senators, I will now call on the Prairie Centre for Prairie Agriculture Inc., represented by Mr. Ness and Mr. Docksteader.
Good morning, gentlemen. We have approximately a half hour. If you would make your presentation first, we will then go to questions. Would you indicate to us where you farm and who you represent?
Mr. Jim Ness, President, Prairie Centre for Prairie Agriculture Inc.: I farm out at New Brigden, Alberta.
Mr. Craig Docksteader, Coordinator, Prairie Centre for Prairie Agriculture Inc.: My name is Craig Docksteader. I am a coordinator with the Prairie Centre. I am not a farmer. I work in the office in more of a research and administrative capacity.
Mr. Ness: Mr. Chairman and honourable senators, I would just like to thank you for coming out west and hearing the concerns of farmers and farm groups, whether they are for the CWB or against the CWB. I really appreciate your efforts in this undertaking. I would also like to thank you for the opportunity to present our recommendations on Bill C-4.
The Prairie Centre is a non-profit member organization supported by over 10,000 farmers and ranchers across the Prairies. Our members have a significant interest in Bill C-4 and we appreciate the opportunity to speak to you on their behalf. Bill C-4 was introduced to make the CWB more accountable to farmers and to give farmers more control over the CWB mandate. The bill fails on both counts for a number of reasons, but for the purpose of this submission we would like to highlight just three of them.
Regarding the accountability mandate, Bill C-4 fails on two significant points. First, it fails to bring the CWB under the Access to Information Act. Second, it fails to bring the CWB under the purview of the Auditor General. Farmers across the Prairies have been consistently calling for accountability and an end to the secrecy that surrounds the activities and operations of the Canadian Wheat Board. While claiming to be supportive of such accountability, the government has failed to take advantage of the two most obvious opportunities to do so, that is, to make the CWB subject to the existing Access to Information Act and bring it under the purview of the Auditor General of Canada.
It is imperative that these two amendments are made for the following reasons: First, they bring an end to the unwarranted secrecy of the CWB by ensuring an appropriate level of public disclosure; second, they will provide the means for farmers, taxpayers, journalists, members of Parliament and senators to evaluate the CWB's performance in carrying out the public policy purpose for which it was established.
While the CWB claims to be acting in the best interests of farmers, it has no such mandate, and has no statutory obligation to public disclosure, which would enable farmers or the general public to evaluate this claim beyond the annual reports submitted to Parliament.
We recognize that there are a number of objections to bringing the CWB under the Access to Information Act and giving the Auditor General access to the books. We would like to address these briefly.
Objection 1: The CWB cannot be subject to the Access to Information Act because of its commercial nature. Answer: False. The Access to Information Act already makes provision to protect commercially sensitive information. If the CWB were subject to the act it would not have to release any information which is commercially sensitive or personal.
Objection 2: Only farmers pay the operating expenses of the CWB, not the taxpayers. Therefore, taxpayers are not entitled to detailed information about the Board. Answer: False. The Public Accounts of Canada show that taxpayers contribute millions to the operation of the CWB on a regular basis. Farmers and all other taxpayers have a legitimate right to expect increased public disclosure from the CWB.
Objection 3: The CWB does not need to be brought under the Access to Information Act or be audited by the auditor general because it is already audited by a reputable private sector audit firm. False. Bringing the CWB under the Access to Information Act has nothing to do with how reputable the existing auditor is. It pertains to the release of information not contained in the CWB's annual reports, audited financial statements and other publications already publicly available. Furthermore, the CWB should be required to account to farmers and the Canadian public for not only its financial bottom line but also for its performance in carrying out the public policy purpose for which it was established. Once every five years Crown corporations under the purview of the Auditor General's office are subject to a special examination in which the Auditor General must report any observed lack of due economy, efficiency, effectiveness or regard for the environment. The CWB has no obligation to fulfil such a requirement.
Objection 4: Calling for those amendments implies poor performance or wrongdoing at the Board. Answer: False. These amendments are an essential step towards ensuring legitimate public disclosure in an entity established by an act of Parliament. They are in no way reflective of or contingent on the performance of the CWB.
Objection 5: The CWB already releases more information than its private sector competitors. Answer: The CWB is not a private sector company and cannot expect to operate under the same public disclosure requirements as those who are. Giving politicians the right to establish corporate entities demands an assurance that there will be a high degree of public accountability from those entities. The Canadian Wheat Board is a public policy initiative which has been exempted from the level of public disclosure necessary to evaluate its performance in achieving its public policy objectives.
Objection 6: Bill C-4 will allow farmers to elect directors to the board. These directors will determine how much information should be made publicly available. Answer: This argument may have some merit if every producer is a willing and voluntary participant in the CWB. However, as we know, this is not the case. It would be a fair analogy to say that the Canadian Wheat Board Act essentially makes farmers shareholders in a government-established marketing corporation. Each year farmers invest billions in this corporation, yet they are prohibited from accessing information which would allow them to independently evaluate the claims or effectiveness of the Board. Furthermore, even if they are dissatisfied with the Board's performance they are prohibited by law from selling their shares and entrusting their product to an alternative marketing corporation. Being given the opportunity to elect a director of a corporation with which you do not want to do business provides little comfort and does not constitute public accountability.
Therefore, we recommend that Bill C-4 should be amended to bring the CWB under the provisions of the Access to Information Act and to appoint the Auditor General of Canada as auditor of the CWB.
Giving farmers control of the CWB mandate. While Bill C-4 claims to give farmers more control of the CWB mandate it fails to do so. As the committee is well aware, farmers have been consistently demanding more marketing options for some time. No one is calling for an end to the Canadian Wheat Board but rather that farmers who so desire be given the opportunity to opt out of the Board for a given period of time and be allowed to sell their crop on the open market through the marketing agency of their choice. Bill C-4 not only fails to address this significant issue but introduces two measures which would have the net effect of decreasing options for farmers. These two measures are known as the inclusion clause and the exclusion clause. The inclusion clause would remove existing marketing options on the grains currently under the open market by bringing them under the Board's marketing monopoly. The exclusion clause would remove the opportunity for the board supporters to market a type of grain through the CWB by completely removing it from the Board's purview. What farmers have been calling for is increased choice in the marketing of their product. What Bill C-4 gives to them is the potential to lose choices. Board supporters would lose the option of marketing through the Board and open market supporters would lose their preferred option of marketing outside of the Board. While we recognize that it is unlikely Bill C-4 would be amended so as to establish dual marketing it must at least make allowance for the establishment of dual marketing. Failure to do so is to once again ignore the consistent and clear call from farmers for increased choice in the marketing of their products.
Recommendation: Bill C-4 should be amended to allow for dual marketing whereby growers would voluntarily choose where they would market their products.
Conclusion: Bill C-4 does not accomplish what the government claims it will. It is fundamentally flawed and is not supported by the majority of farmers. We request that the Senate Committee on Agriculture recommend the three essential amendments we have outlined. The last page contains our recommendations.
The Chairman: Thank you, gentlemen, for that presentation.
Senator Hays: I just want to clarify matters because I think you are coming close to what I think people who are concerned about how the Board is audited want. The Auditor General could very easily audit the Board just the way their current accounting firm does. Your point is not that, I gather. Your point seems to be that you want a value for money audit done on the Board, a comprehensive audit of the sort that the Auditor General does on government departments and certain Crown entities. Am I right? Would you be satisfied if the Board changed its auditor to the Auditor General?
Mr. Docksteader: There is more. Obviously, Deloitte & Touche is a very capable auditor and we have no quarrel with them as the auditor of the Wheat Board in terms of their qualifications as professional auditors. However, the auditor general, as I am sure we are all aware, serves a function that is somewhat unlike a regular private sector auditor in that they audit the company not only from a financial viewpoint but also on ability and its success in accomplishing its public policy objectives. We feel that this is the significant point in having the Auditor General's office be the auditor who looks at the books, examines the activities, examines the performance, because they would be examining it not just from a financial perspective but also to determine whether or not the corporation is accomplishing and achieving its public policy mandate as set out by the act.
Senator Hays: That would be a comprehensive audit. Nobody likes those if you are being subjected to them and I am guessing -- I do not know -- that the Wheat Board's concern would be about who they were being compared to. Who would they be compared to? Also, I would appreciate your comment, because I asked this of the previous witness, on the ability of the Board to be successful in obtaining the best price if they were required to disclose more than their competitors about their business file price and so on.
Mr. Docksteader: There is a difference between an audit of a government department and an audit of a Crown corporation. My understanding after speaking with the Auditor General's office is that value for money audits are not done on Crown corporations. They can only be done on government departments. However, Crown corporations are subject to a five-year review during which any lack of due economy, efficiency, effectiveness or regard for the environment is examined. If it were to be compared to anything it would be compared to other Crown corporations and their ability to carry out public policy. In my view, it would be somewhat inappropriate to attempt to compare the Canadian Wheat Board to some other private sector marketing corporation because the Canadian Wheat Board is a public policy instrument and should be evaluated as such.
I believe your second question had to do with releasing information that, perhaps, other corporations or grain companies do not release and how that might affect their marketing competitiveness. In the first place, the Access to Information Act protects any information which is commercially sensitive. If it can be shown that something was, in fact, commercially sensitive the CWB would not be required to release that information. We are not asking for any information that would, in fact, jeopardize the Board's competitive position. The Access to Information Act covers all kinds of information not just simply sales contracts. If there is a concern about the more recent sales contracts we would suggest that there be some kind of a sunset clause to govern how long those contracts could be kept secret. For example, is it five years? Is it 10 years? Is it 20 years? How long can a Canadian Wheat Board sale contract be kept secret? At some point in time that kind of information must cease to be commercially sensitive and what that time should be needs to be determined. After that period the information should be publicly available.
Mr. Ness: The Office of the Auditor General is one institution that Western Canadians still have faith in and I believe that if it was the auditor of the Board and if it showed that the Board was performing well and getting a premium price for farmers, as Board officials tell us it does, that would go a long way towards dispelling the hard feelings that have been floating around Western Canada for the last few years. It is really important that the Auditor General have a free hand in Canadian Wheat Board operations.
Senator Fairbairn: In speaking about this bill in the House of Commons the minister indicated that when it came to the question of auditing if the new board of directors believed that a change should be made in how or by whom the Canadian Wheat Board was audited they would be heard on that.
Just to clarify, the previous witnesses, the Western Barley Growers, in terms of the auditor general being involved, would find it acceptable if the process were not necessarily conducted on current documents but rather on documents for which there is a cut-off period for the sensitivity or the confidentiality of the information.
Mr. Docksteader: The idea of the new board appointing the Auditor General as the auditor is a step forward but it is not, in our view, sufficient because the Canadian Wheat Board is simply just not accountable to farmers. The Canadian Wheat Board needs to be accountable to taxpayers, to Parliament, to the Canadian public in general. Establishing the Auditor General as the auditor of the Canadian Wheat Board recognizes that it is an instrument of public policy and needs to be evaluated accordingly. Although it would be an improvement to at least give the Board the opportunity to appoint the auditor, in our view that would not be sufficient. That is something that should be determined by Parliament. We feel quite strongly that Parliament itself should be calling for this, that Members of Parliament and senators should be demanding that the Auditor General have access to the books of the Canadian Wheat Board, which is a $6 billion a year corporation with significant contingent liabilities on the public purse. The Auditor General himself has asked more than once to have access to the books, which a very sufficient reason for the Auditor General to be appointed now instead of simply waiting for that to be determined by the next board of directors.
With regard to current sale information, we did address that briefly. We are not looking for any information that would jeopardize the competitive position of the Canadian Wheat Board. However, from meeting with the Canadian Wheat Board we know that we would have some disagreement with them as to what kind of information that is. That would need to be determined in some kind of public forum rather than just leaving it to the Wheat Board's discretion to determine what, in fact, was commercially sensitive. That should be something subject to a public forum as well but we are not interested in having any information released that is commercially sensitive or that would jeopardize the marketing position of the Canadian Wheat Board.
Senator Spivak: I think your point about the Auditor General and accountability is very well taken. What you are talking about is a comprehensive audit, as Senator Hays said. I wish that could also apply to other corporations and public boards such as the Export Development Board, where people give a billion and a half dollars to China and nobody can look at their books.
I want to ask you what your opinion is of the Furtan report, which was done in 1995 and examined all the sales prices for Canadian red wheat and found that farmers were benefiting to the tune of $265 million a year. Now, that is a comprehensive audit, not as comprehensive, I suppose, as it would have been if it had been done in all aspects, but it is one indication of what took place. Is that the sort of thing you are looking for?
Mr. Ness: When you look at the Furtan report you have to remember who paid for the it.
Senator Spivak: Are you suggesting that you do not believe the results?
Mr. Ness: Most free enterprise farmers take it with a big grain of salt.
Senator Spivak: In other words, that the results are not credible.
Mr. Ness: That's correct.
Mr. Docksteader: This comes back to the same issue, which is we can have all the independent studies done, with secret information provided to those carrying out the study, and there is still no way for growers themselves to evaluate the credibility of those studies because even the source information is secret. I do not know of any other kind of technical study or academic study in which the source information is kept secret so that those studying the report cannot go back to the source information and verify the accuracy of the study and the authenticity of the claims. So you see a situation you see in which there is a line-up behind this study of dual marketers and there is a line-up behind this study of Board supporters, which only shows that there is no way for farmers to evaluate the performance of the Canadian Wheat Board. Attempts to do so have failed to reconcile differences because of the lack of access to the source information.
The Chairman: I would like your comment on the fact that the government of Canada does finance the sale of grain. In the Senate I asked, "How much money is owed to the Wheat Board that the government of Canada is carrying?" It is $6.6 billion. I asked that question just two weeks ago. There is a direct advantage to the farmers there, plus the interest, and that was stated in the answer to the question. The interest is also carried by the government of Canada. Now, there might be some political downside in letting the taxpayers know this. I just ask you the question, How do you think that will play? Then it also ties in with the contingency fund, at least in the minds of many of the producers.
Mr. Ness: I believe that both taxpayers and farmers are fed up with secrets. They have had enough of it and they want to know the details on what we understand at the Prairie Centre is actually a $7.1 billion liability to the taxpayers. I believe taxpayers should be able to get answers to questions on that issue.
The Chairman: There have been a lot of questions about choice before the committee. Do you think that the Wheat Board would survive if the farmers were given the choices?
Mr. Ness: For me, the importance of individual freedom is many, many times greater than the importance of an outdated public institution like the Canadian Wheat Board.
Mr. Docksteader: I think the important thing to realize is that if there were choice for farmers it would be the farmers themselves who determined the future of the Wheat Board. I do not know of any more preferable outcome. It seems to me that that is what even what the minister is saying he would like to have happen. Dual marketing seems to be the best way of ensuring that that can happen. Regarding your previous question with the government guarantees, and I believe you were referring to the Board being able to borrow money at government guaranteed rates, we see no reason why that would have to end. There is no reason why the government could not continue to have some kind of export program. Most other grain or wheat exporting countries have such programs. I am sure they could, in their creativity, continue that program, even under dual marketing.
The Chairman: The Wheat Board today takes ownership of the grain at the elevator. If that were changed to the Wheat Board taking ownership of the grain at the ports or at the export level, which would allow a farmer to buy grain back from a company and so on, would that be a major change in the right direction?
Mr. Ness: In my opinion it would be a major step ahead in that it would trim down the excessive number of bureaucrats at the Board and it would sharpen the performance of the ones who were left.
The Chairman: And it is still your opinion that the Wheat Board would survive?
Mr. Ness: Yes.
The Chairman: You represent, was it, 10,000?
Mr. Ness: 10,000 farmers and ranchers.
The Chairman: Are they all Albertans or are there some in Saskatchewan and Manitoba?
Mr. Ness: Saskatchewan and Manitoba as well and very few want to see the Wheat Board gone.
The Chairman: But they do want choice.
Mr. Ness: They do want choice. In fact we at the Prairie Centre have seen a major swing in public opinion in the last four to five months, a drastic change. There are producers right in this room here who never got a ballot in the barley vote. If that vote were to be held again today under truly democratic conditions the outcome would be, I believe, 80 or 90 per cent against the Board's monopoly.
Senator Whelan: First of all, I would like to just give you an experience I had with the Auditor General when I was your Minister of Agriculture for over 11 years. Only once did he question what we were doing. It was about a little project we had in this province of Alberta. We ran a waterline eight miles, I think it was. I cannot remember both towns but Hanna was one of the two we were running a waterline to. The Auditor General questioned why we did that. He said, "What has that got to do with agriculture?" That was the only thing ever found. We had a meeting every year when he would go over the Department of Agriculture's books, and that was research and everything, and because our department was so well run that was the only thing he could find fault with. Those towns would have died if they did not have water. That was my great experience with the auditor general.
Senator Gustafson has asked a question about the size of your membership. Do you have the membership fee? How are you financed?
Mr. Docksteader: We do have a membership fee and our brief says we have 10,000 supporters. We have just over 5,000 members from whom we collected over 5,000 membership cheques last year and each one of those cheques, on average, represents two people, so we have 10,000 supporters or 5,000 members.
Senator Whelan: Is that list public?
Mr. Docksteader: No, it is not.
Senator Whelan: The Ontario Wheat Producers Board, you quote them, and you have probably heard me say before it is not settled what they intend to do. It is privately run, but under Ontario government supervision and some federal supervision, and they have a private auditor to do the books. I can remember that he gave a report on what we were doing wrong and he made suggestions on how changes could be made, et cetera. The operation of the Board was, I thought, audited in a very fair manner and I had been on many different boards before I became a Member of Parliament. They were all audited and the members could question the auditor's report at every annual meeting. Is this what you are suggesting be done with the Auditor General and you're suggesting that it is not being done with the Wheat Board now?
Mr. Docksteader: What we are suggesting is that the auditor general brings a perspective to an audit that a private sector auditor does not and that is that the audit is conducted from a public policy vantage point. Because the Canadian Wheat Board is first and foremost a public policy instrument it should be evaluated as such. Giving the Auditor General access to the books is one way of ensuring that that is being done.
Senator Stratton: I prefer to call it opting out rather than dual marketing because if you have the opportunity to opt out you cannot have it both ways. You are either in or you are out and for a period of time, because you cannot in a good year opt out and then in a good year opt in. It would destroy the Board. I think that is obvious to everyone. If you did have an opting-out provision, would it be a permanent opting out? Would it be for five years? How would you approach this?
Mr. Ness: I would ask the farmers what kind of time period they wanted. Farmers want input about things like this. They are tired of being told what will happen to them.
Senator Stratton: I appreciate that but this is a difficult issue. If you are asking farmers those who want to opt out are doing so because they want to protect their economic futures, and there has to be a penalty as well as a reward to go along with this. If you believe in opting out, then you have to be firm about it. Some folks have said, "Hey, I am gone. I am not gone permanently." I think it would help us if we knew what, in your opinion, a reasonable length of time would be?
Mr. Ness: I would say that farmers should have at least two options for opting out. One would be for life, and I know many that would take that option, and the other one should be for at least five years. That would give the Board some time to work with.
The Chairman: Could this not be handled by contract? It is done by contract now. You tell the Wheat Board how many bushels you have to deliver. If you do not deliver it you pay a penalty. Could you not indicate that you wanted to opt out with 25 per cent and give them a number, sell 75 per cent through them or whatever? Is that not what is happening in Ontario?
Mr. Ness: To my mind that would not be an option for us out here. Farmers should have the option of staying with the Board, opting out for life or opting out for a pre-determined period of time. It should be that simple.
The Chairman: But under a contract, they would not have to contract anything with the Wheat Board. They would be out automatically if they did not contract.
Mr. Ness: Yes, it could be done that way.
Senator Spivak: It seems to me that two of the central issues here are the dual marketing issue and the question of choice. You said that you thought the Board would survive regardless. There is not a lot of evidence for that because historically dual marketing did not work and the reason the Board was formed in the first place was to balance out the fluctuations in the market. Don't you think that when prices are high everybody would just opt out of the Board and then when prices collapsed they would come back to the Board and the government would pick up the tab? I mean, surely in our country, we will not allow the farmers all across the Prairies to go broke. That is the argument that most people make against dual marketing.
Mr. Docksteader: You have to realize that when the Wheat Board was first set up one of the things that was established was a base level. The reason farmers would switch between the open market and the Wheat Board is that they always knew they would get a guaranteed price from the Wheat Board at a certain level. If the open market price fell below that price naturally they would all go to the Wheat Board. That is no longer the situation. Currently, we work on the crop year and I see no reason why anybody would have to opt out for any longer than one year because the pools are closed off within the year. The opting out would have to happen prior to the Wheat Board's projection of what they expect their initial price to be and their pool return outlook, so it would have to be prior to that, but other than that I can see no reason why it would have to be longer than a year unless the grower chose to make it longer.
The danger here is that if the Wheat Board says it anticipates a return up here and the open market anticipates a return down here you will have a problem. The other factor is the Wheat Board is selling on the open market, so the Wheat Board really has no control over prices because the selling price is not subsidized unless it falls below the initial price.
Senator Spivak: You are suggesting a one-year opting out?
Mr. Docksteader: I see no reason why it has to be extended further than that unless a grower chose to stay out longer, but as far as protecting the Board goes I cannot see what benefit it would have.
Senator Spivak: What about marketing? The Board has become a pretty good marketing agency, as I understand it. You are not concerned with how a dual marketing situation would impact the ability to sell a particular product of grain which is of a high universal standard? That is the other argument that has been advanced.
Mr. Ness: Well, a lot of people have given credit to the Canadian Wheat Board for the high quality of Canadian wheat. It is the farmer who grows the good wheat, not the Board.
Senator Spivak: We are talking about the marketing. The Wheat Board does not grow wheat.
Mr. Ness: Farmers and their organizations market all the other crops that are grown in Western Canada but are outside the Board quite well. I do not think there would be any problem. Farmers just want to have the option.
Mr. Docksteader: If anything, I would think that the Wheat Board, if they are as good marketers as they claim they are, and we are not here to contest that, should have the advantage. They have the edge. They have the contacts. They have the relationship. They have had years of experience. So I do not see why that would be a threat to the Wheat Board. If anything, it should give them the competitive advantage if they are, in fact, as good as they say they are.
[Translation]
Senator Robichaud: When the subject of duality with respect to marketing and opting out was discussed, you did not all answer the question the same way. One of your members told us that it would be for an indefinite period of time, whereas another suggested a maximum period of one year. Which is it to be?
[English]
Mr. Docksteader: I do not believe that we contradicted one another. The point was that one year would protect the board. Anything more than that would be at the discretion of the producer.
[Translation]
Senator Robichaud: Mr. Docksteader suggested to us that this would be either permanent or in place for a period of one year. Do you agree with your colleague that a period of one year would be sufficient?
[English]
Mr. Ness: I was repeating what farmers have told me. I have run into farmers who say they want out for life. I have had other farmers say that they would like to be out for five years and then make an evaluation.
[Translation]
Senator Robichaud: You have not answered my question. Do you agree that one year would be a suitable period of time?
[English]
Mr. Ness: A one-year period would be positive.
The Chairman: Inn the bill, there is a cash purchase arrangement. Many of the people who appeared before the committee suggested that this was the beginning of major change in the Wheat Board. Do you see it as that?
Mr. Ness: To me it is a very, very small step. I have farmed for 30 years. I have been one of those who have been wanting change to the Wheat Board Act for probably 25 years. I am getting a little impatient. I want to see some changes while I am still farming because there is a lot at stake. The family farm is at stake in Western Canada. The only way to maximize returns to the farmer is for the farmer to have choice, not to be under a dictatorship.
The Chairman: I want to thank you gentlemen for appearing this morning and presenting your brief to the committee. Now we will call the Alberta Winter Wheat Producers Commission.
Mr. Otto, Past President, Alberta Winter Wheat Producers Commission: My name is Brian Otto, past president of the Alberta Winter Wheat Producers Commission. I farm at Warner, Alberta.
Mr. Lanier, Past Chairman, Alberta Winter Wheat Producers Commission: I farm just southeast of Lethbridge and I am a past chairman of the Winter Wheat Commission.
The Alberta Winter Wheat Producers Commission represents approximately 1,900 producers throughout Alberta. Commission activities are financed by a mandatory but refundable check-off on the sales of winter wheat in Alberta. Historically, refunds have remained at less than five per cent of our total levies, which translates into very strong membership support. The Alberta Winter Wheat Producers Commission opposed Bill C-72 before the Parliamentary Standing Committee on Agriculture and I would like to repeat the opening paragraph of that presentation. I quote: "Farmers' criticism of the Canadian Wheat Board Act has historically focused on the lack of alternatives or options as to how to market their grain as well as their inability to have meaningful input into their marketing agency. Bill C-72, as a sincere attempt to respond to these concerns, fails dramatically, arguably making the worst of a bad situation."
Our submission went on to describe our apprehension regarding the vague mandates of the board of directors and its management structure and the onerous aspects of the contingency fund. We found absurd the proposed storage payments which would reimburse farmers with their own money.
The Alberta Winter Wheat Producers Commission is just one of the very active and vocal participants in the coalition against Bill C-4. The coalition represents an unprecedented groundswell of opposition to federal legislation being imposed upon Western Canadian farmers, namely Bill C-4. There are 30,000 individual farmer members who, we suggest, grow the bulk of the wheat, barley, oats, flax, canola, rye and triticle in Western Canada. It includes 17,000 individual enterprises on the Prairies. Where are the statistics in Mr. Goodale's support? The coalition represents a true consensus of Prairie farmers, especially since those groups which were usually opposed to our position are also opposed to Bill C-4.
Canadian federal governments have for decades used a perceived lack of consensus among Western farmers as reason and/or excuse not to allow meaningful change and farmer input into the Canadian Wheat Board. International trade realities have now forced the government to start the process of change. The new Prairie reality is a consensus which is vehemently opposed to a pre-ordained government agenda to maintain and increase government control of Western grain producers.
Mr. Goodale will not, or cannot, reveal exactly who or how many support his legislation. Mr. Goodale, we suspect, has lost the numbers gained when he started and is proceeding on bluff. It is certain that he has lost his credibility and the trust of Western farmers. Ladies and gentlemen of the Senate, will you allow Mr. Goodale to bulldoze Bill C-2 through Parliament in bad faith and by distorting the facts? We hope not, for our future and yours.
Bill C-4 is the wrong prescription for national unity and the development of a vibrant and competitive grains industry in Western Canada. An untenable double standard seems likely to be imposed on Canadian farmers. Ontario farmers have voted recently for freedom to export grain outside of the Ontario Wheat Board. This would mean an opportunity for profit for Ontario farmers and an opportunity to go to jail for Western farmers, another absurdity maintained by Bill C-4.
Senators, there is a solution. Any sincere attempt to privatize the Canadian Wheat Board would have to remove an antiquated monopoly that is supported only by myth and legend. How else can you describe the support or basis of an entity that is completely shrouded in secrecy? There can be no legitimate evaluation or study of a secret monopoly by anyone. The monopoly was imposed by government, not chosen by farmers.
Secrecy makes the virtuous claims for single-desk selling, a pillar of the monopoly, indefensible. The monopoly is an agency that handles farmers' money in trust. This implies a legal obligation for disclosure. Proper disclosure can only happen if the Auditor General of Canada is appointed auditor of the Canadian Wheat Board and the Canadian Wheat Board is brought under the Access to Information Act. Monopoly defenders claim they disclose more information than private grain companies. That claim is irrelevant. The government monopoly expropriates my grain. We are compelled by law to deliver to the monopoly or take a lower price in the domestic free market. On the other hand, we choose the grain companies with which we deal.
Senators, we urge you once again to do whatever is necessary to delay or prevent the passage of Bill C-4 without a thorough overhaul. Western farmers, provincial governments and the grains industry are presently involved with the Estey Review of the Western grains transportation system initiated by the federal government. To pass Bill C-4 before the review is tabled is a crude affront to all those involved and only adds to the cloud of suspicion created by Bill C-4. There is no urgency for passage of legislation which will damage Western agriculture and abuse the political process.
The Chairman: Could you tell us how much winter wheat is produced in Canada.
Mr. Lanier: It goes up and down. We hit a production high in the mid-1980s and that would have probably been over a million tonnes. It has dropped off since then because we have very, very few adaptable varieties. It is on the increase now mostly because it gives farmers some substantial significant management choices in the use of their capital resources and in spreading their machinery allocation and that sort of thing around. It also appears to be very, very suitable for the world noodle market and I think it will find a very good fit there.
The Chairman: I think that is true in the area that I farm in as well. There are times when farmers grow quite a bit of the winter wheat and then there are times when it seems that they opt out of it. There is probably more of it grown in Alberta?
Mr. Lanier: No, there is more grown in Saskatchewan. Traditionally, in Alberta the winter wheat was grown in southern Alberta, in the Chinook Valley, but now, with new varieties that are winter-hardy and higher yielding, it is moving into central Alberta and especially into central Saskatchewan. Manitoba will probably increase in relative terms more than any other province, because winter wheat's early maturity avoids some of the disease problems they are having, like midge and fusarium.
The Chairman: There is a lot of winter wheat grown in Montana. How does the price compare on your farm with Montana's price?
Mr. Lanier: On average my price is lower.
The Chairman: How much lower?
Mr. Lanier: It was several dollars lower in 1995 and 1996.
Mr. Otto: Friday's price quoted, FOB, Great Falls, Montana, $2.88, that is U.S. The Canadian price at the elevator at this time is around $2.70 Canadian with maybe a final payment, who knows? But the difference is net present value, which is what you have to look at when you are pricing grain. When they dump their grain in the pit it is paid for there. That price has been as high in the last year, I have been tracking it, as $3.25 U.S. If you convert that into Canadian dollars they are getting close to $4 plus and we will not see $3.50 Canadian net in our pockets. We have to wait until January to see that for next year.
Senator Fairbairn: Mr. Lanier, the presentation of views on behalf of the Winter Wheat Producers Commission is very straightforward. It is very clear. I know your views and I respect them now as I have over a long period of time. I am wondering, however, putting the presentation aside for a moment, whether it is possible for you to offer any suggestions to us on areas that are contained in the bill, such as the election of farmers to the board. Do you have any advice or suggestions for us on parts of the bill that, in the larger picture of the Wheat Board, could be helpful or is it the concern of the Commission that the bill is so flawed that a discussion of a majority elected board is, at this point, not relevant? In terms of the election of the board, is that going in the right direction? Because it is obviously unclear at this point how the regulations for election of the board would be worked out specifically.
Mr. Lanier: I think that historically events have shown that electing a board like this only turns out to be divisive to Prairie agriculture. There is no hiding the fact that there are very, very fundamental differences in points of view on this subject. I think the feeling about Bill C-4, among the people I talk to, is that it does not address the fundamental issue. The fundamental issue is the monopoly. You cannot have a Board that will provide disclosure or accountability to any significant extent without removing the monopoly. I challenge anyone to provide facts to defend the monopoly, because it has all been secret. How do you define something like that? All of the studies use figures that they were given by the Board or were not given at all. I mean that there is no effective evaluation of the Board at the present time and there will never be as long as the monopoly is in place.
Why is the monopoly so important? It only affects wheat and barley and the production of wheat and barley is dropping significantly. Very soon, if the Board continues in this way it will not have any grain to handle. With the feed grain consumption that is proposed Alberta could become a deficit barley area. That is hard to imagine but Alberta produces 80 or 85 per cent of the barley and we will be a deficit barley area? The freight rates have done that. We are paying the full rate now and it is not a difficult choice when you figure out what your freight weight will be and what you will net, which route you will take. What logic is there forcing us to deliver to the Board? All the other crops we grow we handle very well. The sky has not fallen because the Board does not have canola or peas or any of these other crops. I am getting carried away.
Senator Spivak: In today's Calgary Herald they suggest that cattle farming will double and hog production will go up three- or four-fold. My question to you is, if everybody switches -- and I agree with you, the freight rates are killing, in Manitoba they are up by 39 per cent -- will there be enough grain on the Prairies to feed that livestock?
Mr. Lanier: There will be enough barley if we can make money at it. You have to be able to make a profit growing it. If the demand is there the price will be there.
Senator Spivak: Yes, but why do you say then that there will be a barley deficit? You can market feed grain any way you want.
Mr. Lanier: That's right, but not everybody wants to grow feed grains. They are growing canola. They are growing lentils. They are growing peas. They will not all switch.
Senator Spivak: No. My point is, though, if the livestock and hog production goes up to exponentially, and it is growing very quickly in my province, too, I do not know how you will balance that out so that you do not have a barley deficit. This is what I am asking you.
Mr. Lanier: The market-place will decide that if we allow it to.
Senator Hays: I have a couple of matters I would like clarified. Your position, I gather, that the Wheat Board has never had a useful role. The previous witness has been unhappy for the board for 25 years. In your presentation you say the monopoly was imposed by government, not chosen by farmers. Am I right in saying that your position is that the Board has never played a positive role?
Mr. Lanier: One answer to that is that in almost 50 years of grain production I cannot tell you what one bushel of my grain ever sold for. I know what the Board paid me but I do not know what they sold it for. Now, to me, those are the wrong kinds of market signals for any commodity.
Senator Hays: I take it that is a "yes"?
Mr. Lanier: Not unqualified.
Senator Hays: The other related question, in terms of the waiting, is that you have not been getting enough for your product and the Board is the reason, but there are other reasons we know of, such as the grain war and. The Board is at fault but there is also a policy in the European Union and United States which subsidizes production and also subsidizes exports. As between those two major factors, what is most to blame for low prices, the Board or the grain war, just in terms of weighing them?
Mr. Lanier: I do not believe in attributing blame. It is not very productive. I think we are doing far better in the off-Board crops than we are doing in the Board crops. The production of hard red spring wheat will drop. At these prices there is no profit. You have to grow something at higher volume to make a dollar. These days you cannot survive if you have a bad crop anymore. You have to have a reasonable crop to make any money and I do not think the Board crops allow you that every year.
Senator Hays: I have a last question in terms of our choices. We could kill the bill, which I take it is your position, but that would leave the Wheat Board as it is and that is not something you are very happy with. We could enter this dangerous game, I think, of choosing. We are urged by some people to reinforce the Board and to make it stronger in its monopoly and so on and we are encouraged by another group to go to dual marketing or have a different kind of Board. It seems to me that is a divisive issue. Behind the bill is a way of involving farmers directly through an elected Board, maybe not perfectly, and maybe that is something this committee should revisit and look at carefully. But it seems to me it would not be any less divisive an issue if we chose one side or the other. There does not seem to be much middle ground here or am I wrong on that? The Senate would be a good institution to carry the cannon, I am sure, but it seems to me it would not be any less divisive if we chose for farmers rather than pursuing the invitation of Bill C-4, which is to give farmers a direct role in deciding for themselves.
Mr. Otto: I do not quite know how to answer that because everybody seems to be placing a lot of emphasis on this elected board. You have to remember that only two-thirds of them are elected. A third of them are appointed. That board does not have any power. That board can make a recommendation to the Minister of Agriculture and if he does not agree with it he does not have to approve it. There is no power in that board. You can elect whomever you want there. If they make a recommendation he does not like he won't do it. The government will not pass it. So where is the power of this elected board of directors? It is a fallacy.
Senator Hays: The answer is that Bill C-4 does not provide a way for producers to have a meaningful role in the decision making on the board's future because a third of the board members are appointed by the government. My comment back is what if it were an effective board, that is, if all of them were elected by the farmers? What would your answer be then?
Mr. Otto: As to the effectiveness of the board of directors?
Senator Hays: As to a way of resolving this difference that we see coming up constantly in our hearings between people who want dual marketing and people who want the board. The government is having trouble, I guess, deciding on which way they want to go on that one. One of the purposes of Bill C-4, if it passes, will be to involve farmers directly in the decision-making about the Board's future. Your answer is that, No, you do not believe that because the government will still have control on decision-making. I am trying to lead you a little further on that by saying what if you believed the board was effective in terms of actually representing producers and not being an entity controlled by the government? Would you think then that this would be a good way to proceed?
Mr. Otto: To solve the problem of dual marketing or to make a decision between dual marketing and --
Senator Hays: To make a decision on the future of the Canadian Wheat Board. That is my question.
Mr. Otto: The future of the Canadian Wheat Board will obviously depend on the decisions made by the board of directors. My firm opinion is it does not matter what board of directors you have there, the future of the Canadian Wheat Board will depend on how they do in marketing grain. Are they competitive? The only way to find out if they are competitive is to put them in a dual market situation where they have to compete with other grain selling agencies in Canada. Can they do as good a job? Can they offer the price that the farmer needs? The bottom line is the farmer has to make money at what he is growing. We do not know what our grain is selling for, to start with. You have to do away with the secrecy so that we know what they are selling grain for. I know what I need on my farm for a bushel of wheat in order for me to be able to grow it, but my price for a bushel of wheat that I need to make a profit on my farm is not the same as Ike's. His costs are different. Right now, you are pooling prices in the Canadian Wheat Board and we do not know what our final price will be until 18 months down the road after we have grown that crop.
Now, I listened to a quote earlier here about farmers being pitted against farmers. That is what the Board system does right now, believe it or not, because where I come from I cannot grow the bushels per acre that somebody can in central Alberta. So I have to depend on a better price for that grain and I might be in an area where I can access a better price for it because of my logistics, where I farm, the quality I grow. But you are telling me I have to sell it to the Board and pool it with every other farmer in Western Canada when they might not be in an area that can access that same price. Now you are pitting me against that farmer. I cannot produce as much as him but my operation is being pitted against him in the market-place through this Canadian Wheat Board.
Senator Hays: I think your answer is clear. It is not an issue so much of how it is decided as to what the ultimate decision is. You are committed to that and I understand that. We are hearing a lot from a lot of people on this and so all of our questions are simply designed to draw out more information that will be helpful to us in weighing what it is that we hear because it is not always the same thing.
Mr. Otto: Can I throw a question to all the senators around the table?
Senator Hays: That is up to the chairman.
The Chairman: Certainly.
Mr. Otto: How many of you around this table know how the Wheat Board arrives at a pool price in each grain grade? I have had it explained to me twice and I still do not understand it. It is not simply a matter of averaging the price of a bushel of grain. There is a convoluted formula in there and to make a good hard decision as to the effectiveness of the Canadian Wheat Board maybe you should have somebody from the Wheat Board explain it to you because I do not think there is anybody there that can. I will guarantee there is not because I have asked this question of Canadian Wheat Board employees and there are very few people who even know how to even start to answer that question.
Senator Whelan: We are meeting with the Wheat Board on Thursday in Winnipeg, so we will ask the them the question again We have probably the most sophisticated system in the world on how we grade our grain -- the best grading system in the world -- and it is a tremendous advantage for the Wheat Board to be in a position to sell that grain, which probably is of the highest quality in the world. They can tell from which area in Western Canada that wheat comes from and what protein content it is, one of the most sophisticated systems in the world. I want to tell a little story first about that fellow by the name of Ike there. I visited your farm, if you remember, some many years ago when we were making the big extension to the Lethbridge research station, which is the largest agriculture research station in Canada, and I remember going to your farm and you dug a little hole in the ground. I looked at it and you said, "What do you see, Mr. Minister," and I said, "A hole in the ground." You said, "Don't you see?" I said, "What?" He said, "How dry it is?" I said, "What do you need?" Do you remember what you said? You said, "We need rain." I said, "That is all you want?" And that night it rained half an inch, if you remember. Anyhow, I remember your hospitality, your farm, the nice operation you had, but I want to ask you this question. When you talk about competition I am sure you are aware that 80 per cent of the flour milling industry in Canada today is owned by one company, Archer Daniels Midland. The United States and Canada are teaming up on their anti-combines legislation, I see less and less marketing opportunity for people. We spent millions of dollars on canola when I was your Minister of Agriculture and we brought an American in to do research on developing the lentils. We were strongly of the opinion that farmers should have the right to decentralize or diversify their production if they wanted to. That is why we spent so much money on research. We built the biggest research branch of any branch of government and it was financed by the government. I hear them say the Wheat Board did not do anything about these new varieties but we certainly did. Maybe you did not say that but the earlier witness did and it is something that has been said to us in some of the other meetings too.
You mentioned that you did not know what they sold your grain for. Are you telling me that Archer Daniels Midland, ConAgra and Continental Grain tell you what they sold your grain for? I have never heard of that.
Mr. Otto: I am not worried about what they are selling my grain for. I am worried about the price I know I am getting when I dump it in my pit, that I can make a decision on. When I dump my wheat in the pit in the elevator in Warner I have no idea what the final price on that grain will be. I do not know whether I will reach what I need as a target price to make that crop profitable. I will not know until 18 months down the road from harvesting that grain. If I dump it in an open market system, if that is the price I need, I can choose to dump it there. If it is not the price I need I still have the option to withhold it and try to find somebody else that will pay me that price.
Senator Whelan: The CWB represents the farmers, so there is no advantage to any individual in the Wheat Board. They are not like the banks, which, if they do a good job, get a huge bonus; they might get $1 million compensation for running the bank. The CWB are there, not to get a bonus, but to do a job for the farmers. I used to travel all over the world, and one thing I learned was that the Wheat Board was highly respected. They were able to demand certain prices because they knew they had quality products to sell, and that was true for nearly every agricultural product, including our canola and our lentils.
We are the lentil capital of the world now. We have that reputation and the ability to live up to it. Our people marketing for us, whether in the private sector or through the Wheat Board, have the best product to offer. All they have to ask is, "Do you want it?"
For instance, in France today, the producers of baguettes, the loaves of bread they particularly like, demand Canadian wheat, and they do not want it blended with any American junk, where they put in a certain percentage of dust and dirt, et cetera, when they sell it abroad. They say, "We don't want that stuff."
When I was in Nebraska, I saw how the CWB followed their trainload of wheat to the coast and through to Amsterdam; and the people in Holland said, "That is the kind of wheat we want, not what we generally get."
Mr. Otto: Well, pardon me, but I believe that is the responsibility of the Canadian Grain Commission, not the Canadian Wheat Board.
Senator Whelan: But it is a government body.
Mr. Otto: It is a government body, but you are mixing apples and oranges here. That is not part of the Canadian Wheat Board's mandate. They guarantee quality. The Canadian Wheat Board is the one that finds the sales.
Senator Whelan: But they guarantee the quality of the wheat that the Canadian Wheat Board has to sell and they work hand in hand, don't you think? They are very close operations.
Mr. Otto: But they also work in the private industry in the lentil market, the pea market, the canola market and the spice market.
Senator Whelan: In one of the earlier reports -- I forget the name at the moment, but you may have read it -- they said we should make our laws and our rules for grading our grains, et cetera, the same as the United States of America. I am sure you would agree that, if we did that, that would be lowering our grades.
Mr. Otto: I have not advocated that.
Senator Whelan: No. It was in, say, the "A" report that one of the witnesses gave, but there was a "B" report, and they recommended to adopt the "B" report. But under NAFTA, we are supposed to combine those things and put them together and make them so they are, how do you say, one North American grading system. That means we would lower our standards to theirs.
Mr. Lanier: I did not realize it, but you are sounding like a consultant. Do you have to be on site to bring rain or to be a rainmaker? Can I call you any time I need a half inch of rain?
Senator Whelan: You know what I told the farmers out there? And when I left there, I went to Saskatchewan; I said, "Did you pray for rain?" Then I went back East and did not return to the West for six weeks. They said, "You know, ever since you were out here, it has been raining. For God's sake, we want to harvest our crops. Tell Him to stop." So I said, "Did you thank Him for the rain?" Two days later the wind came and the sun came out and they harvested one of the best crops ever.
Mr. Lanier: Timing is everything, isn't it? Senator, you mentioned the fact that France, for example, demands Canadian wheat. We think that is wonderful, but we don't know whether they pay top price for it. We don't know whether they pay a premium for that commodity that they demand. We have no way of knowing that.
Senator Whelan: We usually have no way of knowing if it is blended with American wheat or something else before it gets to them. The chefs and the people who make the bread demand Canadian wheat, because of the quality; with some of the blending they get in grains, the quality is not the same.
Some of the big elevators used to have a man who panned underneath the grain with a pan, like a gold panner. You know, he was worth his weight in gold because he could plant dust, dirt and wheat seeds, et cetera, with good grain and mix a No. 1 with a No. 4 and make it a No. 2, and that type of thing. Now they do it with computers and they don't need that man, but they still mix junk with good grain to make a profit.
However, in Canada, because of our grading system, we know that, when the grain goes out of our supervised Canadian Grain Commission elevators, people get what they pay for.
The Chairman: The bottom line here seems to be that the farmers do know what they are getting from wheat now. They know they are not getting a return on the input costs and they cannot survive the way it is. The specialty crops have been a saviour for us. I can tell you that on my own farm, if it were not for canola, we would be out of business.
Senator Whelan: But if it was not for agricultural research, you wouldn't have the canola to sell either.
The Chairman: I admit that. Our research people have done a great job. I guess the problem we are facing here is that there is a nervousness about the inclusion clause, because many farmers have had to go to specialty crops to survive on their farms with the input costs the way they are.
Senator St. Germain: If this went to a vote by all producers who are subject to this, do you think the majority would vote down Bill C-4? In the past, I understand votes have come up as high as 40 per cent against, but in view of Bill C-4 what is your opinion? I realize it is an opinion based on a position that you have already taken to a degree, but maybe you could give me an opinion as to what you think the outcome would be if they went to all the producers that are subject to the Canadian Wheat Board?
Mr. Lanier: That is a dangerous question.
Senator St. Germain: I know. We answer those all the time. Now we are asking you farmers to answer one.
Mr. Lanier: Will you base it on acres or will you base it on production? What is the question you want to ask?
Senator St. Germain: I guess it comes down to picking the board; who will be on the board? Will it be the actual producers or not? I realize that that is the dilemma we are trying to resolve here. We have to make a decision, but it is not simple and that is why I am asking you for help.
Mr. Lanier: I do not think it would pass, no, if the question was properly formed and it was a legitimate question and everybody got a vote. You have to be an actual producer. Will you weigh it for acres or production? I mean, it gets very dangerous. What is the problem in giving us a choice? The Senate is apprehensive about trying to make this decision and choose between which way you rule. Why not let us decide?
Senator St. Germain: I gather that the argument is that the CWB is not able to exist, if you have the choice. That is what we have been told.
Mr. Lanier: Is it not time after 50 years to let us decide whether the Wheat Board survives or not?
Senator St. Germain: I am prepared to give you the choice, but in any event I thank you for trying to answer it as well as you can.
Senator Spivak: But it was the farmers' demand that created the Wheat Board. That is what elected the Progressives.
Mr. Lanier: It was never put to a farmer vote.
Senator Spivak: That is true, but it was farmer demand that created the CWB, because the government was very opposed to it.
Mr. Lanier: How many farmers? Who demanded it?
Senator Spivak: This was back in the 1930's.
Mr. Lanier: Right; good point.
Senator Spivak: Not today.
The Chairman: I want to thank the presenters for appearing this morning. It has been a lively discussion, and that is what we are here for. After dinner, we will hear from individual farmers for the rest of the afternoon. In the meantime, we have one more presenter.
Senator Whelan: If I may add a word or two, I want the witnesses to realize that, when we are here, we are considered absent from the Senate. That means that for two weeks we will be counted absent, and you can be sure the press, and the media generally, will be telling the people that we are not doing our duty, but they won't be saying anything about our being out here listening to these briefs. We will simply be absent. That happens all the time, and you might just bear it in mind when you read some of these criticisms.
The Chairman: I call Mr. Clifton Foster from the Alberta Barley Commission.
Mr. Brian Criz, Chairman, Alberta Barley Commission: For clarification, Clifton Foster is the General Manager of the commission, and he will not be here today. Both of us here today are farmers. I am Brian Criz, the Chairman of the Alberta Barley Commission, and with me is our Vice-Chairman, Glen Logan, who farms southeast of here.
We have listened to a bit of the debate, and we are here in good faith. We also made a presentation on Bill C-72, and followed Ike Lanier that day. I can start by agreeing with what we just heard from that producers' commissioner. The Alberta Barley Commission is here today representing not wheat but barley, and barley is certainly a different issue than wheat.
The quality standards that Senator Whelan discussed in relation to wheat do not apply to feed barley. Our problems include pricing and the transport of quality product to the market. You are here today to listen to the Alberta Barley Commission and to Alberta farmers, and I can tell you that our cause has not been served by the Wheat Board Act, and it will not be served by Bill C-4.
Our commission is a mandatory check-off that is refundable, and we work on a 93-per-cent rate that stays in the commission. We have been involved in these commission activities since 1991. The reason that there is a barley commission in Alberta today is partly due to the problems in marketing Alberta's barley. That is the raison d'être. Within the Alberta Barley Commission we are all barley producers, and we run into the marketing problems brought about by the monopoly. I am not here to pick on personalities, and I am not necessarily here to pick on the past, but I would like to make some suggestions about the future.
As the Alberta Barley Commission, we think that Bill C-4 is a failed attempt to design marketing system. No one ever asks why barley and wheat are included, and we would really like an answer to that question. On a mixed farm, we have options as to what we grow, and I have heard people say, "If you do not want to grow Wheat Board grains, so be it. You do not have to participate in that monopoly." That is not what it is about, however. It is about having choices to make profits. The reason that barley is grown is that it makes a profit -- it is hedged against a lot of risks in this part of the country.
We have voluntary market options in all kinds of other commodities, such as timothy and hay. As an individual, you have the right to sell your used car. The ability to market what you produce, to differentiate quality, and to have interaction with the user, is innate. That is not allowed under Bill C-4, nor is it allowed under the present Canadian Wheat Board Act. Why would you be interested in designing a new bill that will not let the farmer interact with his customer, whoever he may be? The inland standards for Canadian barley are very good, but the export standards are very poor.
Without naming names, the Canadian grain companies have taken advantage of this system for quite some time. I would not blame them for doing so, because the rules are there to let them do it, but our export quality standards for feed barley are very poor. We have, for example, just had some shipments rejected and discounted because of deer excrement in the barley. Quality control of feed barley by the Canadian grain commission is non-existent. Our own feed barley is generally cleaner than it is at export. As a farmer, however, I can grow top quality barley for my neighbour's dairy or for my neighbour's hog barn, but I am not allowed to move that barley to Korea or Japan. This situation needs to be addressed, but Bill C-4 does not address it. It does not give us those tools.
We are interested in the discussion about the inclusion and exclusion clause. At first we thought that was a bit of a lost leader put in by Ralph Goodale; that it would confuse the issue, and that it would prolong the debate. The more we look at it, however, it will do neither. This inclusion clause is onerous and the exclusion clause is more onerous.
The mandate of the board of directors is to look after the best interests of the CWB, and I cannot see how it would ever be in the best interests of the Wheat Board to exclude wheat. That will not happen. I can, however, see that it would be in the best interests of the CWB to include any number of grains. That is the issue, and it is not a fair issue. To use the inclusion and exclusion clauses as they are stated under Bill C-4 is not fair. That is our position on inclusion and exclusion. I can see that Minister Goodale wanted to use exclusion and inclusion to give farmers control over what the CWB does, but that will not happen through this act.
This issue has been well tested at hearings, which is a point that is sometimes missing from the debate. The Western Grain Marketing Panel spent a lot of time out in the country, used the expertise that was presented to them, and came up with some recommendations. We have also found some recommendations from studies done in the early 1990s; these have to do with value added and processing in Canada, and they have never been released. This government, through the Western Grain Marketing Panel, has not seriously considered these recommendations, and that forces the questions that we are asking here today. If that was not a serious attempt, is this a serious attempt?
A voluntary CWB would be balanced and fair. Producers could control the mandate of the board, simply by reserving their individual rights to participate or not. Such was the message of the Winter Wheat Commission, and I believe it to be our message; whatever form the board would survive in would be the form that it could survive in.
At the Bill C-72 hearing I used the example of the ability of the open market to do some things. You are familiar with agriculture. Consider what happens in the middle of May across the Prairies; the farmer is not concerned that the input will be there, nor is he concerned that someone is designing who gets what, nor is he worried that the railroads are moving in. The farmer gets a clear price signal before he uses it, and it is available within a few miles of his farm. In Canada, that open market system for input works very well. City people do not hear about the problems we have on the input side of agriculture. That is the open market at work, and we understand that. In our case the input is our production, and we would ask for the same open market system for it. There is a blind faith on the input side, and you use the same values when you build a house and use contractors; there is no designed system. We would ask that wheat and barley, too, not have a designed system.
Mr. Logan: The whole issue comes down to farmers' freedom to choose the type of marketing system that they want. Earlier in the debate we heard about opting out of the Wheat Board for a year or permanently. I do not think that is an issue here. If we are to believe that the Canadian Wheat Board is a top-notch marketer, we should be able to accept a contract from them on Monday, a contract from Cargill on Wednesday, and a contract from the Wheat Board on Friday -- so long as the price works for the individual. Right now, that choice is not there in the Wheat Board grains.
The Chairman: That concludes your presentation?
Mr. Criz: I have another point. We would like to discuss who are competitors are, and what their grains systems are like, in relation to Canada. We are not working in a vacuum; our competitors are revamping their grain systems in the hopes or acquiring more market share for their farmers. Through multilateral trade reforms, they are also able to influence our own policy debates. You have seen the American interest in our policy debates, and for good reason. This political environment drives home the need for policy reforms that will allow producers to develop partnerships with down-stream ventures. Grain companies currently have that ability, but farmers do not. As the milling industry and the organic producers have told you, farmers cannot even move down stream on their own farms. You have heard about these problems.
Ontario producers are able to control the marketing of their crops and are able to begin developing partnerships, yet Prairie producers are not. This is a pretty significant point, and it is one that is pretty hard to swallow in Alberta. The Alberta Barley Producers wish to take responsibility for our own future through strategic alliances with the end users of our products. That is the nature of farming today, and, in these amendments, the CWB should recognize this. Having an inclusion or exclusion clause in this act is not the answer. Making participation in the CWB scheme voluntary is the only effective way to address these issues and to end the debate.
The Chairman: You asked if this were a serious attempt. I sat in the House of Commons for 14 years on those committees; as for Senate committees, I have to be careful what I say here, but there is a lot of expertise around this table in the persons of the appointed senators. I believe that there will be a very, very serious attempt to make some recommendations, as well as to add some amendments to this bill. This is my point of view, and the other senators will doubtless have their own views on this committee and on what we have heard from farmers. We especially wanted to hear firsthand from farm groups and individual farmers as to how this is affecting the farmers of Western Canada. Senator Whelan?
Senator Whelan: When you mentioned deer dung getting in the barley, you somehow intimated that it was the Grain Commission's fault. I have shovelled all kinds of grain, as well as all kinds of dung. Do you not think that this is partly the fault of the farmer that shipped the grain? He or she knew that that should not be done. That is what I meant by handling it yourself -- you know when you should not be doing something.
Mr. Criz: I agree that it is the fault of the farmer. He or she is not charged, however, because this is only one player in the pool account -- he or she does not take the blame and is not accountable. It is our system that is not accountable.
Personally, I have no room for sort of thing. Every granary has a little bit of mouse dung at the front of the bin. If you were to put that in, however, you would do so at your peril. On the farm, the system is accountable; you can eat that grain yourself, or you can clean it out. When elevator companies and farmers are not accountable, however, you get this kind of problem. That will not change with Bill C-4.
Senator Whelan: Oats were removed from the Wheat Board without any say from producers. Would you be against a producer vote, under the inclusion and exclusion clause, to add or remove a grain like wheat or canola from CWB jurisdiction?
Mr. Criz: In my mind it is a moot point. As far as I am concerned, why not vote on putting used swathers or any other commodity under the Wheat Board? Why these two commodities, wheat and barley?
On my farm, we make our living growing barley. It is our main commodity, and I think that I have more of a vested interest than some fellow who dallies in the malt market every five or six years. That is the difference. My farm is in the hills at a 3,500-foot elevation, and we have a fairly short season. Barley is pretty important and it always will be. The problems for the CWB have come from west central Alberta, which is barley country. This is due to the injustices in the market, to the price arbitration for better barley, and to all of these other problems.
Back in my father's time as a grain farmer, we had a problem with the quota system. The high volume areas of west central Alberta were allocated at minimal quotas, and we were growing 50 or 60 bushels of barley to the acre. In Saskatchewan, they were growing 12 or 13 bushels of wheat an acre, and they were both allowed the same initial quotas. It is obvious who had to have more bins and who had to wait longer for cash flow. This led to a change in the quota system, and we have had incremental changes to address the basic monopoly problems. We are interested in one big final change, and that is a voluntary system which would sort it all out.
Senator Whelan: We talked about the free market system. The province of Alberta is very rich in oil. In our daily lives, each of us uses products from the energy industry -- cars, tractors, home heating, et cetera. I have been watching this very closely, and even Gadhafi is now involved in this great movement to fix the price of oil, as are the free market system and OPEC. I saw an article in the Calgary paper yesterday, and it said, "We are hoping oil goes back up to $17 a barrel." They wanted a fixed price, and they cut their production back. Would you be willing to have that kind of system for the world wheat system?
Mr. Criz: It has not worked in oil, and it did not work in oil before. It is a bad example. There are always cheaters -- you see it in all supply-managed commodities. You end up pushing up the price of the quota, and the stuff that has no value has value. It gets capitalized, and it gets bid into the price that everyone pays.
Senator Whelan: In 1974, when we wanted to develop the Tar Sands, we talked about the controversial energy policy. Oil was $7.50 a barrel, and the great advisors in finance told us that we could not afford to charge that much, because, at the time, oil was $2.20 in Saudi Arabia. That was the great economic advice that we received.
I remember that we lost a big barley sale to Saudi Arabia because, since it was a poor country, the Americans used their subsidy program and took the barley market away from us. I do not pretend to know everything, but fair market system is often quite unfair.
Mr. Criz: We are inevitably moving to liberalization because that is the only thing that will work and be sustainable. If you look at the history of the trade, we are moving that way. This is one example that we would like to see move that way.
Senator Stratton: How many producers do you represent?
Mr. Criz: There are roughly 43,000 participants on our mailing list, and commercial barley operators would probably make up half of that figure. It is pretty inclusive. Alberta grows just over half of the volume of barley in Canada, which, on average, is 6.5 million tonnes. It is a very significant crop to Alberta and to the livestock feeding industry. There was a question about Alberta becoming a deficit area; that will not happen. The price will quickly move to push more acres into barley if the demand is there. That is the open market.
Senator Stratton: Is the fact that they are going to double cattle production, and double or triple hog production, good news for you?
Mr. Criz: We are hoping that it is good news. We are hoping that it is based on the real value of barley. As Albertan barley farmers, we feel that we have been underpaid for quite some time, owing to improper price signals, and to the fact that we have not found a better price for our barley by offering our best product overseas. We are hoping that this industry is not being built on sand; that the real price of barley will be reflected here, and that, if barley rises, others can compete. As farmers, we are really concerned that we may have trade problems if it is proven that our policies have left barley underpriced across the Prairies. We are hoping that that does not happen.
Senator Stratton: There are groups that want free trade, and there are groups that really want to push for dual marketing, which I prefer to call opting out. Why wouldn't you present to us on a unified basis, indicating to us the numbers that you represent? We have seen evidence to indicate that there are fairly significant numbers of you. You may differ in some of your opinions as to inclusion and exclusion, for example, but why would you not come together as a unified group to talk to us?
Mr. Criz: I have a little story to tell you as to why we cannot come together, and it has to do with who we are. We are producers and farmers and hands-on people. Seven years ago, I was home raising cattle and a few kids and running a feedlot, and I never went to any meetings. I did not know what was going on politically. I got a phone call about the formation of the Alberta Barley Commission, and I was asked if I would like to be on the original board. I went to the first meeting in Edmonton, which was a research meeting, dealing with how the federal government would spend new research dollars. I was asked to speak and I would rather have done anything than speak. Although I have been to university, it is almost impossible to get up and speak to people like yourselves if you have been home actively farming. I was up at 6:00 this morning, did my feedlot chores, delivered twin calves, and put them in the separate shed; these are just normal procedures for farmers. To come and be coherent at a meeting is not easy, and it takes time. The people that you do not hear from are important.
Senator Stratton: I understand that. So far this morning, we have heard from several groups. Why would you not come together to show us that there are significant numbers of you? Why would you not do that? Why would you not go to Saskatchewan and Manitoba and find the folks there?
Mr. Criz: Because farmers are individuals.
Senator Stratton: I am talking about organizations, sir.
Mr. Criz: We have done some coalition things, but there are some breakdowns over some of the fine details. In the end, people have their own autonomy. Some of these organizations exist to lobby; they have a vested interest in lobbying and putting position papers forward. Others, like ours, exist to allow farmers to do something collectively. The commissions have come about because they deal with different products, and have different market development problems and policy development concerns.
The coalition against Bill C-4 in Winnipeg represented 30,000 people. We did not participate in that coalition, because we felt that the debate over inclusion and exclusion was a bit of a red herring, and we did not want to get drawn into it. We wanted to talk about the voluntary aspect.
The Chairman: I believe that some 13 groups were involved in that coalition; barley growers, canola growers and so on.
Mr. Criz: We agreed with a lot of their concerns, but we did not want to be drawn into it.
Senator Hays: In terms of its use in Western Canada, barley is increasingly becoming a non-board commodity in any event, and to some extent the CWB is irrelevant anyway. I appreciate that you cannot market to the U.S., but it seems to me that the Wheat Board is increasingly irrelevant to barley. There is one exception to this, and that involves the underpricing of barley as a commodity.
I wonder if you could explain how this happens, as well as responding to my first request for comment, which dealt with how, unlike other commodities like wheat, barley is increasingly traded interprovincially and within the provinces.
Mr. Criz: We are barley boosters because we are the Alberta Barley Commission. Another reason, however, is that, once you look into the uses of barley, its fractionation and its properties, it has health properties that are ahead of grains like oats. It has some tremendous potential as a human food in flour use and for non-insulin-dependent diabetics. Our research has forced us to realize that we have not even touched barley's potential.
Our marketing is based on a bulk commodity. The grain pooling system dilutes quality, and then cleans at port, adding back whatever the allowable standards are. That is not a very comfortable situation if you are trying to isolate good quality barley to go directly to an offshore market. We think that more barley could be grown, but the price signals for a port product at export are not high enough to attract that. We also think there is worldwide potential for malt barley.
In some cases, we think, our standards are too high. They protect the Canadian domestic industry by offering it a tremendous amount of malt barley, of which it selects about a third. They have it all one way in Canada; they can pick the cream of the crop, and they do, and they pay a premium price for it. We say that we would like to see secondary quality malt barley offered overseas -- to China, for instance. We think that market is bigger, and we think that it could pay its own freight. We could then grow more barley across the Prairies. Those signals that we do not get, then, keep things from happening.
With the change in the Crow, we are seeing the problem with freight. The Crow offset paid up to $25 a tonne for feed grain on farm. In Alberta that kept barley on farm, to some degree. Saskatchewan and Manitoba matched the program to avoid losing their feeding industries. Those government policies recognized the problem with freight, and the end of the Crow has just made it more apparent.
Mr. Logan: I do not think that it is in the best interests of the barley farmer to be captive to the livestock industry. We need some market access around the world, so that, if there were a premium, we would have the opportunity to access it. We do not have that choice at the moment.
Senator Hays: Why is barley less worse off because of the CWB than it would be through opting out?
Mr. Criz: Politics is involved here. There is a desire to move wheat and durum; because of that, we do not see a lot of barley moving south into the premium markets. It is pretty easy to make that accusation, and I cannot back it up. I am sure, however, that the barley market is not being actively pursued for political reasons. When we had the Continental Barley Market in 1993, the tonnage tripled in a short period of time, and both the CWB and the accredited exporters were very active, because they were competing head to head. We have not seen this since that time.
Senator Hays: Is there any other reason that barley is underpriced?
Mr. Criz: The kind of quality that we offer for export is not the kind of quality that I can sell to a farmer next door. We have to be able to offer a better quality that will pay its own freight -- pay the shipping, the cleaning, and all of that -- and we think that there is a better market for that.
We are doing some research studies right now in Mexico, in cooperation with the CWB, I might add. Our purpose is to show barley competing well with corn and maize in the Mexican cattle diet. They are a big importer of feed grains, although we have some political problems now, in that we have some limits on tariff. Barley works very well around the world in the cattle and pork diets. We have not explored all of those options.
Senator St. Germain: Do you think that Bill C-4 takes globalization and the current changes to the trading world into consideration? From one of today's witnesses, as well as from other hearings, I have the feeling that the proposed legislation just tinkers around with a situation that is already redundant, and that we are not dealing with this as we ought to.
Mr. Criz: I agree that it is tinkering, and it will not make our trading partners any happier. It cannot be that hard to be a CWB salesman; you do not have to own the product until you have covered all of the costs. You have top quality, and you have all of Canada's grain behind you. It is your job to sell all of that grain in that particular year.
If you were that salesman, and you were at a mill somewhere overseas, you could beat the quoted price of the day, no matter what it was. That is the reality. I do not know much you want to beat it, but that is the truth about the CWB. You might say that this is a tool, but our competitors do not like it very much. As a farmer, you probably do not like it very much either, but that is the reality. The CWB can beat the price because they do not buy the grain until all the costs are covered. That is the present system, and it will continue under Bill C-4.
Senator Fairbairn: What is the market for malt barley in Canada?
Mr. Criz: In Canada, there are rules which stipulate that grain must be malted in the province where the beer is consumed. Although Canadians are good beer drinkers, there are not that many of us. The real market for malt barley, therefore, is the American market.
The grading system in Canada does not recognize the kind of barley that the Americans use for their beer. They have a different colour and a different selection process. We cannot grow their varieties of barley very well, because the CGC does not allow us to grow them for fear that they will mix into the Canadian system, and do something to our market.
Except through a straight contracting program, then, our entry into the American market is not easy. There have been limits on our ability to move malting barley into the U.S.; as individuals, we have to buy the grain back, and you have doubtless heard horror stories about that process.
We think that there is more potential for malt barley than we have seen. It is a high value commodity, and it is particularly suited to the drier harvest conditions in Saskatchewan.
Senator Fairbairn: There are restrictions?
Mr. Criz: There are restrictions on the type and quality, and there are restrictions on selling. As a farmer, I cannot sell directly to the maltster, even though he might be ten minutes from my farm.
Senator Hays: Senator St. Germain questioned what all of this had to do with Canada's efforts to make world grain trade more fair. We have moved ahead of our competitors. We have eliminated the Crow benefit, as well as questionable safety nets. There are still provincial programs, like FIDP and FSIP, which attract 70 per cent support, but we have come a long way.
In the U.S. there is some movement in the most recent farm bill, and the indications seem to be that the agriculture budget will be lowered. They have more support than we have, however, and they have retained programs which give them higher prices. What is your comment on that?
A lot of the pain that we are experiencing today comes from the fact that we are not financing farmers the same way that we used to, because we believe our interests to be better served by a more level international trading environment. I am not sure that Bill C-4 has much to do with that, other than the concern of a state trading corporation. As you say, they do have to sell their grain competitively, but they do not have an export subsidy and they do not have export enhancement.
Mr. Criz: We intend to build a lean, mean, fighting machine, and people will be attracted to the agriculture sector because of that. When my dad was growing up in the 1930s, the dumb kid stayed home, and the smart kid went to college and eventually ended up in the city. I think that this lean, mean agricultural industry will attract the smart kids, and that they will stay home. I think that that is what you will see. Those are the people who will come forward in this debate; leading edge thinkers who want the opportunity to differentiate themselves and their farms. I think that is to the credit of Canada. Our exports will be as big as they need to be.
As a farmer, the idea that we will service all the grain handling facilities, that the port workers will be happy, and that the ships will be full, is not that big an issue to me. It really is not, and yet we are constantly faced with it, with the capacity to export the balance, the payments and all of the rest. As an individual farmer, however, it does not matter much to me.
The Chairman: I want to thank you for your appearance. I also want to thank all of those who made presentations here this morning.
The committee adjourned.