Proceedings of the Standing Senate Committee on
Agriculture and
Forestry
Issue 8 - Evidence - Afternoon sitting
CALGARY, Thursday, 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 1:12 p.m. to give consideration to the bill.
Senator Leonard J. Gustafson (Chairman) in the Chair.
[English]
The Chairman: I will ask each of you to introduce yourself, and to tell us where you farm.
Mr. Russell E. Smith: I am from Vulcan, Alberta. My son and I operate a 2,000-acre grain farm and we export organic grain into various countries, as we have done for about 10 years. I know what the export business is like, and I question some of the merits of the present system.
Mr. Richard Strankman:I farm on the Alberta-Saskatchewan border. I am married with two young kids, Pam and Jay, and I am a mixed farmer. I have approximately 2,500 seeded acres of grain, and approximately 130 cows in a cow-calf operation.
The Chairman: Would you begin, please?
Mr. Smith: I would like to thank this committee of the Senate of Canada for allowing me to appear today. My opposition to Bill C-4 stems from the proposal related to the accountability of farmers, as well as the fact that the CWB mandate is to sell all of the grain every year, regardless of the price. The best example of this came this past year, when the first contracting issue was only 60 per cent to 80 per cent accepted. Now that the wheat price has gone down in the world, they have sold a considerably larger amount of grain, and now they are going to accept 100 per cent. In my opinion, the CWB must be the laughing stock of the grain trade, because they always seem to hit the low markets.
The Wheat Board has spent a large amount of money on research to find out whether markets are used to the best advantage of the grain markets. They have to have immunity from prosecution, or else the employees would be in court all of the time. The fact that the CWB does not fall under the Access to Information Act, as well as the exemption of the Auditor General, are two big mistakes that were made when the Wheat Board was first started. If the employees knew some of the huge mistakes that they have made, they would be more careful than they are now.
The open market is the reason that canola has grown so much in popularity in Western Canada. There are people who support the CWB 100 per cent and would like to see canola under the board; even they grow it for cash flow, though, and that would not be available under the Wheat Board.
I think that Bill C-4 was written with a hidden agenda -- which could be to control all the grain produced in Western Canada, but not in Eastern Canada. If the CWB is so great, it should apply equally across all of Canada, then we would see what would happen.
In the past, the CWB has refused to take grain in small quantities. Would this also happen to flax? One year there was an order for bagged grain. It was refused, because Canada does not bag grain for export. At that time, unemployment was at 14 per cent in Vancouver. I don't know why they did not bag it. This is the best reason for a dual market system that I can see.
The Chairman: Did you say you were an organic producer?
Mr. Smith: Yes, 100 per cent organic.
Mr. Strankman: I would like to thank you for giving me this opportunity to express some of my thoughts on Bill C-4. As you are probably aware, there is considerable uproar in Western Canada about this bill. It is significant that the Senate of Canada, the check valve of the Canadian parliamentary system, is concerned enough about the enactment of this bill to take the time to revisit some of the affected farm people. You are to be commended for your actions and, hopefully, your decisions on Bill C-4 will be for the betterment of Canada.
I come to this hearing with uncertainty. The federal government initiated, at some expense, the Western Grain Marketing Panel. Its unanimous findings were ignored. This was followed by a plebiscite, which was also roundly criticized for its shortcomings. I am uncertain if due process will be served. My view of Bill C-4 is simply that it does not allow western farmers enough freedom to market their product as they see fit. Farmers in Central Canada have been given the opportunity for more freedom in marketing their grain. If I had been allowed to market my own grain in 1996, I could have generated $50,000 more on my farm. Those growers who wish to opt out should have some mechanism available to them to do so.
Another point that I feel the bill does not address properly is that of appointed board members. I fail to understand why a whole elected board would not better serve the interests of the farmers. You are representatives of Canada's "chamber of sober second thought," to quote Mr. John A. MacDonald, and I want to tell you that farmers need more options. This bill does not give them those options.
The Chairman: Thank you.
Mr. Bell, would you tell us where you farm and where you are from?
Mr. Stan Bell: I farm at Carstairs. I have been involved in farm organizations for a long time. I have a special interest in these kinds of subjects, and I have made presentations to government bodies before.
The Chairman: Mr. Sackett?
Mr. Ken Sackett: I farm at Crossfield, 35 miles northwest of here.
Mr. John Ross: I am from Gadsby which is 80 miles straight east of downtown Red Deer.
Mr. Chairman, and ladies and gentlemen of the committee, I do not have a prepared statement. I do appreciate this opportunity to speak to your committee. I speak for myself, my son, and my neighbours. As you can see, I am not a young farmer. Along with my 35-year old son, I primarily farm grain on the old family farm. I am a strong believer in the Wheat Board, and I am a little confused or concerned that we seem to be debating the merits of the CWB. I and my neighbours think that we should try to make the Wheat Board stronger and more effective. We want it to do what it was originally set up to do -- market western grain more efficiently, not just for the benefit of farmers, but for all of Canada. I am not referring only to price. When I use the word, "efficiency," I mean getting the right product to the right place, at the right time, for the benefit of our customers. I strongly believe that the board is important in that respect.
I am concerned that we seem to have lost the principles of democracy. After all, we did have a vote in the west, and it demonstrated overwhelming support for the board. That was a democratic decision, and I believe in democracy. As farmers, we are statesmen ourselves, as the government representatives are, and it behooves us to make a better job of improving the CWB.
The CWB was started in 1948 because of farmer demand. The premiers of the three Prairie provinces, each from a different political party, thought it worthwhile to attend that farm meeting. They agreed to lobby the fourth, the federal Liberals, to grant us exclusive rights to market wheat, oats and barley through the board.
I want to make the CWB better, and I hope that, as a result of what you decide at the end of these meetings, it will be better. In many respects, it is regrettable that we are here at all, because it is obvious from the vote that we believe in the Wheat Board. I think this debate has happened because of the private agendas of individuals, political parties, and people with money. In my opinion, the Wheat Board has improved as time has passed.
The Chairman: Thank you. Mr. Sackett?
Mr. Sackett: I would like to thank the senators for taking the time and the initiative to come out west to speak with the farmers. Mr. Goodale has been here to talk to us in the past. Unfortunately, he has not listened to us.
I feel Bill C-4 is fraught with coercive and vague phrases. Western farmers are grossly over-regulated now, and this bill gives the federal government even more power. The common sense approach to this bill would be to kill it outright. As children, we learned that two wrongs do not make a right, yet the federal government is making a wrongly imposed Canadian Wheat Board Act even more wrong by forcing Bill C-4 down Western Canadian farmers' throats.
Here are some of the reasons why I resent not only Bill C-4, but the CWB as well. If I am growing milling wheat, I am forced, by law, to sell it to the Wheat Board, which is a buying monopoly, not a selling monopoly. I am forced to take whatever initial payment is offered, and I am not allowed to take that until such time as the grain is called for. I must then wait 14 or 15 months after harvest to receive any final payment that may come my way. Under those rules, I cannot make a decent living.
On our farm, we grow canola, peas and other non-board crops that I can sell when the time and price suit me. I get full payment on delivery. If the price is attractive, I can use risk-management strategies to sell portions of a crop a year ahead of time. Bill C-4 will not aid farmers in their marketing endeavours.
Over the years, the Wheat Board has proven itself to be unaccountable, inefficient and sometimes even inept. Two years ago, world wheat prices were at historic highs. Under those conditions, you would expect a good marketer to sell as much product as possible. At the end of that year, however, Canada's wheat carryover increased. Why would that be?
During our current marketing year, the Canadian Wheat Board has managed to sell approximately 700,000 metric tonnes of barley. That is about 4 per cent of the barley produced in the Prairies. Why does the board insist on total export control of a crop when they can only muster sales of 4 per cent of that crop? The year the barley plebiscite was held, the Wheat Board sold four times as much barley. What motivates our esteemed salesmen? Is it the good of the Prairie farmer, or is it politics?
Several years ago, the CWB publicly stated that it suspended further export barley sales for fear that the feedlot industry in Western Canada might run short. Shortage has caused prices to go up, though. Who does the Wheat Board work for?
A few years ago, one of the Wheat Board's commissioners quit in disgust. This man had access to sales and accounting records that even the Auditor General could not obtain. Mr. Beswick stated the CWB was costing western barley farmers $1 million a day. Mr. Beswick now grows non-board crops in Costa Rica.
The CWB tells us that its cost to Prairie farmers is $1.80 per metric tonne. A study commissioned by the Alberta government showed that the CWB costs farmers as much as $20 a metric tonne. If you are not familiar with the Carter-Loyns report, it is an interesting read and they can back the numbers up.
Canadian Wheat Board promoters like to say that prices to farmers would drop without the CWB. Canola did not become Western Canada's Cinderella crop until it got free from board control, however. Since oats were wrestled away from the board, the price per bushel and bushels exported have both increased. Last year alone, Saskatchewan farmers replaced a million acres of wheat with peas, another non-board crop. Farmers increasingly switch acres away from the board crops because they are frustrated by the over-regulation and inefficiencies throughout the system. The Canadian Wheat board has not been a friend of the progressive farmer, and passage of Bill C-4 will not help it.
If the CWB is such a good marketer of our grains, why did past administrations not put Ontario and Quebec farmers under its control? Why aren't corn and soy beans grains of the Wheat Board? Under Bill C-4, the minister responsible for the Wheat Board hires and fires the president. If the directors do not have that duty, then they are toothless and simply serve as figureheads. The situation will not be much different on the present board, where commissioners will be appointed for an indefinite time period and accountable only to the federal government. Legally, it would not matter if all 10 elected directors wanted the president fired; they could not do it.
I am further insulted that only 10 of the 15 voted directors are elected by farmers. Mr. Goodale says it is because the Government of Canada has to backstop the financial obligations of the board. The government seems to do the same for Ontario wheat producers, and there are no government appointees on that board. Further to this so-called "election," there are no specifics in Bill C-4 as to boundaries for the elections of these directors. Will the voters only include permit book holders, or will all wheat and barley growers be allowed to participate? If I have four books, will I get four votes? Will the vote be based on one person, one vote; or will it be weighted to acres in your book or total tonnes grown? It should be pointed out that approximately 80 per cent of the grain grown in the Prairies is grown by 20 per cent of the farmers. I feel some weighting should be in place in regards to voting procedures. Unfortunately, all of these questions are left up to the will of Mr. Goodale, and the barley plebiscite showed how he likes to manipulate things.
Mr. Goodale says that farmers elect the majority of directors. In reality, every time there is a vote, the farmers have to spot the government five. How is this democratic? Farmers are an independent and diverse group. By their very nature, complete consensus on any one issue will never be achieved. Only three of the elected 10 have to side with the appointed five to swing any vote in the government's favour.
Both inclusion and exclusion are a joke. To initiate exclusion, the directors must recommend it. Why would they? To give up a crop would be to give up a reason for their existence. It would not be in the best interest of the corporation. To initiate inclusion, a farm organization composed of who or how many -- it does not say -- simply has to request inclusion. Will Mr. Goodale consider one of the Prairie Pools as an association, or will it be producers who represent the producers of grain throughout the designated area? That would be a neat way of forcing more grain in pool elevators. Mr. Goodale is certainly a friend of the pools. Do not be mislead by the pools' membership lists. They have me down as a member, and I hate the ground that their elevators stand on.
Further to exclusion, the Canadian Grains Commission, the CGC, must present a procedure acceptable for preserving the identity of excluded grain. In Canada, this often means kernel visual distinguishability. Will that mean that, in the future, excluded grains will have to have square-shaped kernels? Inclusion and exclusion are not fair, and they are not balanced.
Under Bill C-4, the board may recommend removal of the president, and the board can decide conditions under which elected directors can be removed. There is, however, no reference at all to the removal of appointed directors. This is democracy at its best. Clause 3.13 says that the corporation may indemnify any director against all costs in respect to civil or criminal action as long as the said director acted in the best interests of the corporation. The government must feel that they may take some very onerous actions.
The Canadian Wheat Board presently has accounts receivable of approximately $7 billion; those are past sales which have not yet been paid for. The Wheat Board says these accounts are current, but others dispute that. How many people do you think want to pay for food that they ate two years ago, or five years ago? I am afraid that the proposed contingency fund will eventually finance these past bad debts, letting the government off the hook for incompetent fiscal management. Further, with regard to the contingency fund, the minister shall decide when the amount therein is sufficient. With this clause, the amount will differ with every mood swing of consecutive ministers.
The Alberta plebiscite proved that 60 per cent of Alberta farmers want a marketing choice. Even Mr. Goodale's rigged barley plebiscite showed that 37.5 per cent of Prairie farmers would sooner have nothing than the CWB. Mr. Goodale's own hand-picked marketing panel suggested that feed barley be removed from the board immediately.
No individual or company can truly become efficient without competition. The simplest, quickest and cheapest way to overhaul the CWB is to initiate a dual marketing alternative. It is good enough for Ontario farmers, why not for western farmers? Under a dual market, accountability and efficiency would soon be forced upon the Wheat Board. If this organization is worth saving, it will stand the test. If it does not, then it should die. The contract system is already in place. Farmers can simply contract to the CWB or not, as they do in Ontario.
There are those who favour our central-desk system, though I cannot think of a single reason why. A dual market would satisfy both camps. We had it for six weeks in 1993, and it worked to the farmers' advantage. The bottom line of Bill C-4 is that duty of care is to the government, not to the farmers. Bill C-4 is no good to us.
In closing, I would urge the Senate to send Bill C-4 back to the House of Commons where the government should kill it and bury it.
The Chairman: Thank you, Mr. Sackett. We will now go to Mr. Stan Bell.
Mr. Bell: Mr. Chairman, I do not have a prepared statement. I do have some documents to file with you, and I have done that. One is a document entitled: "The Evolution of Grain Marketing in Alberta." It is really the history of the CWB. I provide it for your perusal because I was involved with farmer organizations during the events of 1978. I was a young person, but I remember the strike. I remember the thousands of farmers who, at their own expense, went to Ottawa to force the Liberal government to introduce the inclusion of feed grains under the CWB. I have been part of the organization of farmers in this province since that time, and I have had some pivotal roles. Through all those years, hundreds of delegates at conventions across Western Canada had the opportunity to question, and to offer some advice on some of the changes that have been made to the CWB. Unfortunately, that has not been the case in the last 10 or 15 years, as the government in this province has seen fit to neuter any group.
There was a question earlier this morning as to why groups in Western Canada do not unite. The answer is that we are completely fractured. Some of the groups that have presented here today have the power of check-off, so they have money. The rest of us are out there on our own. I have provided some documentation that addresses that issue.
This hearing is about Bill C-4. The advisory committee to the CWB came out with a paper last week which comes quite close to meeting many of the concerns that I would raise. However, I would like to address a few of them a little more closely.
The corporate governance paragraphs are important. I fully support the addition of another farm delegate to the board of directors, and the reduction of government appointments to four, although I think even that is high. We have pointed out to the government and to Minister Goodale before, that one of the major problems in trying to address changes to interim payments, or even in announcing initial payments, is the fact that three federal departments are involved. We can understand why that is the case but, at the same time, the government needs to get its act together and have those three people make their decisions quickly. It would speed up the process a lot.
That final payments are not paid out until January, is something that farm organizations pushed for in the late 1960s, early 1970s. I happened to be part of the executive of the committees that brought that to CFA and to the government. Personally, I fought it all the way, but it was passed. It was a mistake because the farmers who were asking for that change did not want two payments in one year, one in the fall of the year. It was ridiculous at the time, and it is even more ridiculous now. Let the pool close as soon as the board members know that they can do so. Pay the money out by September, or whenever it is available. Do not fool around with that one. That can be done quickly.
What is needed in the election process of the farm directors, is a delegate body to back it up. If there are 10 or 11 directors from Western Canada, that means there will probably be three from Alberta. How can three directors possibly keep in touch with all of our producers?
I would suggest that there be at least 10 delegates for each director, and that those delegates should elect the director. The directors should be accountable to someone other than the masses. It is simply too difficult for a director to cover that kind of ground, and a delegate body would help. A delegate body would get to know the directors better and they, in turn, could make the choice of the directors. I realize that this moves away from the director-producer link, but the one system far outweighs the other.
Many groups wanted exclusion, and were rather surprised by the idea that maybe the rest of us wanted inclusion. The whole clause could be dropped, as far as I am concerned. Let the changes to board grains be made under the present legislation. It has to be done by Parliament anyway, so let it be done that way. That will take a lot of the fury out of the arguments.
Senator St. Germain: I have a question for those who oppose the CWB. We have heard about the plight of barley growers, and from those who buy malt barley for the purposes of malting.What would your view be on the exclusion of barley and the continued inclusion of wheat, owing to its international dimension? A review of the process, based on changing trends and global trade, would be made every five years. In that way, farmers would not be held hostage to government-appointed boards. One of my concerns about the Canadian Pension Plan Investment Board which is to be established, and which will handle billions of dollars, is that it will be made up of patronage appointments. Such boards will often work in the direction of the government of the day, as opposed to the best interests of the shareholder. You people are the shareholders. If the recommendation were to eliminate barley and leave wheat, subject to a review in five years, what would you think of that?
Mr. Sackett:I think the common-sense approach is a dual-market system. As to delaying it for five more years, I would point out that it has been delayed for 50 years now.
Senator St. Germain: I don't think a dual-market system will work because, if the price is high, everybody will go outside the system, which they should because it makes sense; but when the prices go into the tank, everybody will rush back hoping to save themselves. I don't think you can have it both ways, although it would be nice if you could.
Mr. Sackett: As I said, there is a contract system in place now. You are either with them or you are not. The Wheat Board does not sell until they find out how many farmers are willing to contract how much grain. They know that at the beginning of the year. In a dual system, they know well ahead of time what grain they have to sell, and those people who want to opt out are no concern to the board.
Mr. Strankman: I have given your question some thought -- and the gentlemen who are with the board may suggest that I have not given it enough thought -- but I believe that this is a societal change. If the Wheat Board is our marketing agent, not a marketing agent under the Crown, I believe that in any free-enterprise system, the best marketer or the person who does the best job will survive. These gentlemen wearing three-piece suits galore will tell you that they are getting us the best price for their grain. Should they be afraid of competition from me? I farm 2,500 acres. I sell, possibly, a thousand tonnes a year. They probably spill more than that.
Senator St. Germain: I do not know whether this is a trend, but I think that fellows my age are more apt to support the Canadian Wheat Board. That is possibly based on historical facts such as having gone through the Depression. Younger farmers see the world in a different light. They have a different view of the markets, and they do not seek the security that those who went through the Depression seek.
Mr. Strankman: I agree with you totally. I am not about to say that history will not repeat itself.
I also agree that our access to information in the world is completely different. People know what is going on in the world today. When my grandfather took his horse and buggy to town, he had to buy and sell whatever he needed in that town. Now a farmer can phone and find out which town will give him the best prices.
Senator St. Germain: When I sell my cattle, and I have very few buyers in British Columbia. It is quite depressing. Is there not a danger that the Cargills and the big buyers could group together and even further limit your options? There is nothing as depressing as going to the auction with your cattle, and there are only two or three cattle buyers there. What is your reaction to that prospect when it comes to you selling your grain without the board?
Mr. Strankman: I was going to say, facetiously, that all cattle in Western Canada should be sold by the Canadian Wheat Board. If these gentlemen are doing the fine job that they say they are, we should have absolutely no fear in allowing them to do that. I have never been to an auction where Mr. Sackett would fight to get a lower price than I am asking for.
Mr. Ross: Comparing cattle with grain is like comparing apples with oranges. It does not take much to recognize that.
As to having a different point of view because we are older, I would challenge you on that, sir. I play the devil's advocate when I go to the elevator. My district is full of young farmers who are fighting the board. The old boys are always telling the young fellows how to do things but, believe me, I get some bloody good lessons. Incidentally, one of the best lessons I learned was in Regina from a young farmer, a university graduate, a computer-smart young man who lives 20 miles from the American border. I played the devil's advocate again and he almost tuned me against the board. This has nothing to do with age, sir.
What is wrong with corporate marketing? The world's commerce is dependent on corporate marketing. If I wanted to stretch things a bit, I could contend that the Alberta Wheat Board is a corporate marketing tool that I and the few other grain farmers in Western Canada have working for us at a cost. That cost is amply demonstrated, contrary to what has been said here by one of the largest respected accounting firms in Canada. What more do we want? How much more would we get from Cargill or whoever?
Mr. Sackett: You mentioned that a lack of competition would not be good for grain growers. Unfortunately, shoving the Wheat Board down our throats creates a lack of competition. Where is the competition there?
Senator St. Germain: I realize that, but if it were to disappear, could you be held hostage to the big companies?
Mr. Sackett: If the Wheat Board disappeared, wheat would be much like canola, peas and oats. We could sell to the highest bidder. We plant the crops that will make money. The Wheat Board is certainly not a selling monopoly. They can't get $1 a tonne more than a South American country or the U.S. for the same quality wheat.
Senator St. Germain: This could end up in a philosophical debate, Mr. Chairman. I respect the opinions of both sides.
No matter what you are selling, if you end up in a market where there are no buyers or a restricted number of buyers, and they can manipulate what they are going to pay you, you are in trouble. If we get rid of the Wheat Board, we get rid of the cheques. I am not the greatest supporter of the Wheat Board because I believe in free enterprise. I am prepared to take my chances, but I like to have a reasonable chance of making a profit when I sell whatever it is I have to sell. That is why I am posing these questions.
Mr. Sackett: I want that chance too, and that is why I want the board gone.
The Chairman: On that point, Senator St. Germain, there are more companies involved in this business now. For example, in Saskatchewan, Archer Daniels Midland bought out United Grain Growers. They also bought an elevator from Pioneer at Stouton and it now has "United Grain Growers" on it. You have ConAgra starting three major plants that can ship 45,000 bushels an hour. You have the Dreyfus company from France, one of the seven large companies of the world. Surely this is some indication that, first of all, they have confidence in the ability of Canadian farmers to produce. They are not going to invest that kind of money in Canada if they do not think there is a future here. Of course, the restriction now is simply, in many cases, by the Wheat Board.
I sell canola from our farm, most of which goes to Valva, North Dakota to Archer Daniels Midland. The price is higher than it is in Canada, and they pick it up by truck.
I certainly agree, Senator St. Germain, that, if you have some options to sell to different competitors, it is an advantage. I just cannot see where it would not be an advantage.
Senator St. Germain: It is when you do not have competition that concerns me.
Mr. Ross: I find myself entering into a debate with all of you and particularly the Chairman.
The main strength of the board is that it is a single seller. I do not regard the board as a buyer. I regard it as my seller. A foreign buyer buys the grain when it is loaded onto the ship. That is when I sell it as a shareholder of the board. It doesn't matter how many Cargills or other companies are competing to handle my grain, it doesn't do a bloody thing for the price. The price is established when it is dropped in the ship. The only variable is the cost of handling. The board grains have been handled cheaper to the coast than what it has cost for rapeseed. Nobody can deny that.
The Chairman: I represented my riding for 14 years as member of Parliament and, more particularly, as a farmer representing my people; the same applies to me as a senator. I have probably produced as much grain as many people in this room. I am an actual farmer and producer and I have some understanding of what is happening. Unfortunately, this has become a polarized political problem and we are probably not moving ahead.
Senator Hays: I would like to pick up on something Mr. Ross said, and that is that we are on this side of the table tending to enter into a debate with the witnesses, and I would suggest that is not a good idea. The witnesses are here to persuade us. If we get into the business of trying to persuade them, it will take a lot of time and it will not be as fruitful or as positive an experience for us as it will be if we simply listen to what the witnesses have to tell us. It is their job to persuade us, not ours to persuade them. Our time will come when we will be able to debate the issue and decide what we should do with this bill. I wanted to make that point because I think this is the first time a witness has drawn this to our attention.
I have a couple of questions. There is an assumption on the part of those who argue against the board's monopoly that it will continue. However, I wonder what that board would look like if, in fact, that happened? Given the way the board functions now, which is as a marketer, it has no terminals, it has no trucks and so on, if it were to not fulfil the marketing role that it has, what would it look like? Do you think it would acquire terminals, trucks and so on? This is an important point. I think a lot of people see it as just disappearing. Those who oppose it say that it will survive or fail depending on how competitive it is.
Mr. Strankman: I have sold canola to companies that do not own elevators. They subcontract the rail services, or the in-house services, or whatever, from other companies. Your point is well taken about whether the board would have to have facilities to blend the grain, and so on. I do not know what the landscape would look like if the board had to function in an open market. Although, as sellers in the international scheme, as I believe Mr. Ross said, they could get a better price. They would be selling into an open market. They are buying in a closed market, but they are selling into an open market, so they have to compete. The only difference is that they would be buying in an open market also, so they would be, basically, a contracted agent or a commissioned sales agent to some extent. Am I answering your question?
Senator Hays: Yes. I am getting the picture. Does anyone else want to describe what might follow in a dual market?
Mr. Smith: I think they would get a lot meaner and leaner. They would not have such a big margin. They would have to cut a lot of the staff in Winnipeg. They would also be in a marketing mode more than they are now.
Mr. Bell: They say that, if you do not learn from history, you repeat the same mistakes. We had a voluntary pool from 1923 to 1931. That operated well as long as the price was going up, but in 1929, when the price broke, the board got all the grain. At that time, it was operated by the three pools, the central selling pool. We had a voluntary pool from 1935 to 1943. The government was guaranteeing it. The government found it was costing them too much money because the same thing started to happen. That was why, in 1943, wheat was singled out and marketed only by the Wheat Board. Farmers pushed over the next five or six years until this was extended to the other three grains in 1948. That experience should teach us something.
Mr. Strankman: This gentleman makes a good point, and you heard this morning from the Prairie Centre that there is some considerable debt owing to the Canadian Wheat Board -- liability. I am not here to ask for a subsidy or a handout. I do not believe that is the Canadian Wheat Board's function. Of course, we can get into a philosophical debate about whether they should doing that. I do not believe they should. If these gentlemen want the security of a government handout, they are certainly welcome to it.
Mr. Sackett: Back in 1929, when prices started going down, the farmers did want to come under a board. Under the proposed scenario, they would not be allowed to do that. That same problem would not recur.
Senator Spivak: They would go bankrupt if we had the same situation occur as occurred in 1929. What would happen if we had the same circumstances?
Mr. Strankman: In the same circumstances, we would grow non-board crops that do make money and we would not go broke.
Mr. Bell:We have heard the accusation a couple of time today that the board is out some $6 billion. That is not true. Those were government-backed loans to particular customers. Poland was one of them. The board is not on the hook for that. The taxpayer of Canada is on the hook for that one. Let's not confuse the two, please.
Senator Hays: You talked about the method of selecting members of the board and referred to a delegate process. Would the delegates be chosen from a district and they, in turn, select from among their number who should be elected to the board? Could you comment further on that? I am not sure I understand why that would be so much better than direct election of the board.
Mr. Bell: Over the last few years when we have elected the advisory committee, we have had three members from Alberta. I would bet that not even 5 per cent of the farmers know who their director is. Only a very small number of voters have ever come out to vote for the candidates. There is no feedback. I know all three members, and all of them have told me that they want some feedback and they want to be able to bounce ideas around with other growers.
The Chairman: If Bill C-4 is passed, do you think there will be more interest in the election of the board?
Mr. Bell: There will be initially, but there is an awful danger of politics getting into this. There is too much money involved in this, and the advisory committee made some recommendations to the pro-Wheat Board group this morning about having some pretty stringent rules on what are the responsibilities of those directors. Those things have to be considered. To me, there is nothing like having to report back to 10 delegates to keep you sharp.
Senator Whelan:You heard me say earlier that I was one of the initial directors of the Ontario Wheat Producers' Marketing Board. No major interest group was in favour of a dual market for Ontario wheat. In particular, the Ontario Flour Millers Association, representing the largest customers for Ontario, stated it was not in favour of dual marketing. Its preference was to retain the status quo, agency marketing, or a complete free market.
Mr. Strankman: It is no wonder the Ontario flour millers wouldn't want that. They get cheap grain the way it is.
Senator Whelan: They bargain for a price, and they do not pit one against another. Senator St. Germain was a chicken farmer, and he negotiated his price.The Dairy Farmers of Canada come under the Canadian Dairy Commission. The dairy industry is probably one of the best off agriculture industries in Canada. Theirs is a perishable product, not like wheat that can be stored for years in good, dry storage facilities. It even improves the protein content.
You talked about export permits. Even if the Ontario Wheat Board goes ahead with this, are you aware that they must get an export permit from the Canadian Wheat Board?
Mr. Strankman: I am aware it is a rubber-stamp process down there. We have to buy it back.
Senator Whelan: Are you aware that their total sales amount to about 1.3 million tonnes?
Mr. Strankman:I believe it has been as high as 2 million tonnes.
Senator Whelan: Very rarely does it get up to 2 million. Approximately 45 per cent is domestically marketed; 30 per cent is exported to the U.S., depending on the demand; and 25 per cent is exported into the world market at whatever price they can get for it. Generally seed is included in that.
As I mentioned, I visited many countries as your Minister of Agriculture, though I never had the authority over the Wheat Board. Not one Canadian group was more highly respected than the Canadian Wheat Board because they live by their word. They were straightforward salesmen who knew their jobs. The Wheat Board representatives knew that they had a high quality product to sell, one of the highest in the world, and the buyers also knew that.
Mr. Strankman: The quality has absolutely nothing to do with the Wheat Board.
Senator Whelan: Oh, yes, it does.
Mr. Strankman: How the hell could it?
Senator Stratton: We are getting into a debate again and we said we would not do that.
Senator Whelan: I have been in public life for 39 years and I resent anyone using that kind of language.
The Chairman: Mr. Ross, do you have a comment?
Mr. Ross: Very briefly, Mr. Chairman, I would object to my fellow witness suggesting that I said I was looking for a handout. There is nothing in the principles of the Canadian Wheat Board that I support, that demonstrates that it gets a handout from the taxpayers of Canada. In fact, there is a benefit to Canada to try to maximize the return from western grain. What has happened to democracy? That would be my question in response to the accusations that have been made here. We will elect a board that can make some of these decisions. I subscribe to Mr. Bell's suggestion that, perhaps, some of these decisions would be better left for that board.
Senator Hays asked about the delegate system. The delegate system has been proven to work well in provincial memberships. The delegates elect their directors. The federal government representatives, through their MPs, do the same. Most of our cooperatives do the same. Incidentally, most cooperatives and many organizations require a two-thirds majority vote to implement any fundamental change to the constitution of that organization.
I recommend all of those principles be incorporated into the proposed changes to the Wheat Board to make a better, more democratic organization, and so that it can satisfy my fellow witnesses and the people of Western Canada.
Mr. Strankman: In the Alberta plebiscite two-thirds of the farmers wanted a dual market. Is that a good enough deal for you -- two-thirds?
Mr. Bell: What happened to the federal plebiscite when there was a straightforward question?
The Chairman: I want to thank you gentlemen for coming and presenting your briefs today. We will call to the table Mr. Spencer, Mr. Hertz, Mr. Young, Mr. Sawyer and Mr. Miller.
Welcome, gentlemen. I would ask you, as other presenters, to give us your name, where you farm and where you are from. We will begin from the right, please.
Mr. Buck Spencer: Thank you for the opportunity to be here. Our farm is currently in the process of being transferred to the third generation, and I have moved to town and my daughter and my son-in-law are now purchasing the farm from me.
Mr. Don Young: I am from Blackie, Alberta. I farm straight grain. Two of us joint-venture together.
Mr. Jim Miller:I farm northeast of the city here about 50 miles at Rockyford. I am farming with my wife and son and daughter at the moment. We produce a variety of crops, some of which come under the Wheat Board, as well as livestock, hogs and cattle.
Mr. Shane Hertz: I am from New Brigden, east of Hanna out on the Saskatchewan border.
Mr. Glen Sawyer: I farm 50 miles northeast of Calgary with my wife and son. We grow canola and various types of wheat, such as CPS wheat and hard red spring, feed barley, hay and cows.
The Chairman: Each of you please make a five-minute presentation and then we will go to questions from the senators. Mr. Spencer?
Mr. Spencer: I have spent my entire life in agriculture in both production and policy. For the past three years, many individuals, organizations and companies have been actively trying to influence Mr. Goodale and his committee as to the detrimental effect Bill C-4 will have on Prairie grain farmers, the western economy and ultimately the rest of Canada. In spite of this, Bill C-4 remains very similar to the original Bill C-72 that was proposed three years ago.
Let us take a look at how the vote went in the House of Commons. No liberal MP voted against Bill C-4. This occurred in spite of the fact that most Liberal MPs were not present for the debate or proposed amendments and at times there were no Liberals present in the House. Only one Bloc supported the bill, whereas all the Reform vote was against the bill. Jean Charest did not vote. Of the 132 MPs that supported Bill C-4, only 14 reside within the boundaries of the Wheat Board designated area, and only four of them come from a rural riding. I want to repeat that. Out of the 132 MPs that supported Bill C-4, only 14 reside within the boundaries of the Wheat Board designated area, and out of these, only four come from a rural riding. That is tough democracy. Bill C-4 fails to bring the Canadian Wheat Board under the purview of the Auditor General of Canada. There is no valid argument that justifies preventing the auditor general from gaining access to the Canadian Wheat Board books. This organization does close to $7 billion worth of business a year and is responsible for almost another $7 billion in foreign debt. While no impropriety is suggested, the government is behaving irresponsibly in continuing the prevent this access. Ultimately, the taxpayers of Canada are responsible and deserve an unbiased audit from time to time.
Bill C-4 fails to bring the Canadian Wheat Board under the Access to Information Act. In 1943, when the Canadian Wheat Board was given its mandate to have a monopoly, no one questioned the absolute secrecy given to the Canadian Wheat Board. After all, we were in the middle of a world war that threatened the very freedom of everyone on this planet. It is not necessary for the Canadian Wheat Board to be still exempt today. In fact, it is morally wrong. No one is expecting market-sensitive information to be revealed, but to have the Canadian Wheat Board totally exempt is unacceptable.
Prairie farmers want a choice when it comes to marketing their grain. I do not believe for one minute that that would end the sacred Canadian Wheat Board. Of course, there would have to be changes and adjustments. Each and every one of us face changes in our everyday lives. If the Canadian Wheat Board does not survive, so be it. No organization or corporation should have the right to maintain its existence by ignoring basic individual rights. Do we have a democracy in Canada? Why are western farmers treated differently than other farmers in Canada? The very fact that there is a Wheat Board designated area is unmitigated proof of this.
The Senate has a very important duty on this bill. If the Senate wants to let Canadians know that they are a viable and responsible part of our government, it is their duty to at least stop the passage of Bill C-4 until two things are brought into the legislation. First, the auditor general must be given access to Canadian Wheat Board books. Secondly, the Canadian Wheat Board must be brought under the Access to Information Act. Neither one of these proposed amendments would change Bill C-4. The Senate has a duty to insist on this.
Mr. Young: Thank you for the opportunity to be here today. I consider it an honour for you to come and listen to us. I will read my brief.
To discuss the future of the Canadian Wheat Board, we have to identify how it relates to grain growers. I purposely refer to grain growers and not farmer because the term "farmer" includes too many bystanders with no interest in selling grains and cereals at a profit. What does a P.E.I. potato farmer who belongs to the National Farmers Union have to do with western grain products and their sale? What interest does a dairy farmer have in the sale of western grain, or a pork producer? The list goes on and on of the number of people who have been allowed to contribute their opinion but who have no interest in selling grain and cereals for a profit. If the word "profit" scares some, I would remind them that grain producers do not grow grain for their health.
Along with any privilege comes responsibility. Continuing to allow the Canadian Wheat Board the privilege to completely control western grain comes with a huge responsibility. As a producer of grain only, I must grow products that the market wants and is willing to pay for. So you plan for 20 per cent domestic sales and 80 per cent for export. If the export price goes up dramatically, you should be able to take advantage of it. But the domestic millers, maltsters and brewers, pork producers and cattle feeders all start crying in their beer that they cannot make a profit, and they start lobbying for the Canadian Wheat Board to control domestic stocks in order to give them artificially cheap feed stocks, to produce cheap food for Canadians. Who paid the bill? It was downloaded to the primary producer of grain because he is not supposed to make a profit. Then because domestic stocks are set so much higher by the Canadian Wheat Board, it adopts a passive export sales attitude and sales are lost. Higher world prices are missed and then we move into a grain glut mode. It is a conflict of interest for the person who is supposed to sell your product to have the privilege to tell you how much you must keep in your bins, undersold.
World trade rules made subsidies unpopular, so we got rid of them. We thought we got rid of them, but let me ask you how big a subsidy a grain producer is providing to the rest of Canada by selling his produce year after year below the cost of production? In a recent telephone call to the Canadian Wheat Board I stated, "I have a suspicion that all last year's wheat crop was sold to the export market below our cost of production; is that correct?" The Wheat Board's answer was, "You are probably right." To me, that is not selling wheat. That is dumping. They dump not because they are working in the best interests of the grain producer, but because the Canadian government has a huge hunger for foreign currency. What an easy way to get it.
I said earlier that with privilege comes responsibility. If the government in Ottawa wants to control western grain via the Wheat Board in order to have cheap food on for Canadians, it should be prepared to subsidize the grain producer. If you want to get rid of subsidies, simply get rid of the Wheat Board.
For a moment, let's consider a Wheat Board that is made up of wheat growers: that is 100,000 people growing and marketing their product worth $6 billion. But Ottawa says, "We, as a government, do not think these businessmen can handle this venture so we will help." Ontario grain producers are okay. They are allowed to operate an Ontario Wheat Producers' Marketing Board, whatever you call it. Let me get it straight. We are going to have a Canadian Wheat Board where 30 million people control 100,000 western grain producers but does not include Ontario? That is very strange, I would say. If they think this can be accomplished without subsidies, it is not possible. Unfortunately, at the moment, it is the western grain producer that is subsidizing. This will not and cannot continue.
The Canadian Wheat Board is presently like a wrecked car and everybody and his dog are working on it. The dairyman says that to fix it, he needs a bag so he can milk it. The pork producer says its new hood ornament should be a snout. The cattleman argues the new hood ornament should be horns. And the body worker is off in the corner in confusion asking, "Why are all these people allowed to express an opinion on how to fix the car?" In his professional opinion he has written it off as not repairable. That is where the grain producer is at present. We have written the Canadian Wheat Board off and we would like to have the freedom to go and find another vehicle to market our grain. As a grain grower, we are being asked to comment on how to repair the wreck, but really the wreck belongs to daddy, commonly known as the federal government. We as grain growers only get to use the vehicle under daddy's direction.
Ralph Goodale and company think they continue to keep the keys to the wreck and that with cosmetic changes it will be serviceable. Not a chance. Many grain growers have already quit growing board grains, but that only distorts the problem. Will we have a glut of peas, off-board feed barley, and a shortage of milling wheat for export. The leadership is not there because there is no incentive, no plan. The grain grower is the only one who is forced to deal in dollars. The elevator companies, railways, Canadian Wheat Board and grain terminals all talk in terms of volume. What is the incentive to get the price up? There seems to be more incentive to get volumes up and not price. Tell me, what would cause the Canadian Wheat Board to hold out for a higher price for producers at the risk of lower volumes if it operates for the benefit of the people of Canada and not the grain producer? They get their paycheques as usual, and the perception is that they are generating lots of foreign currency because of the huge volumes traded. I call it traded because it is not being sold. It is being dumped.
What grain producers want is the freedom to sell their own product when, where and how they wish. Voluntary pooling may be their choice, but each individual would make his own decision. We want faster market signals regarding what will sell and how much it will sell for.
I hope that you as a committee will be careful to listen only to bona fide grain producers.
Mr. Miller: I would like to thank you for the opportunity to voice my concerns about Bill C-4. Bill C-4 is a flawed attempt to amend an outdated piece of legislation, namely the Canadian Wheat Board Act. The original Canadian Wheat Board Act was designed to address the 1935 problems which do not exist today. Bill C-4 does nothing to address any of my concerns with the Canadian Wheat Board. Rather than improving the Canadian Wheat Board and making its membership voluntary, this bill will further entrench the status quo which does not give farmers who own the grain the right to choose how to sell it. It threatens to include other grains which are now marketed freely and with which I am completely satisfied. It proposes to make the board of directors serve the government, not the farmers. The CEO and five of the directors would be appointed by the government and their financial and operational plans would have to be approved by the government.
Bill C-4 is an indication that the democratic process is not working in Canada. There is only one Liberal MP in a rural riding in all of Western Canada. The other four that I think were mentioned were all elected by part-urban polls. Yet the Liberal Party, with its major support in Ontario, has voted for this regressive bill which is discriminatory to western farmers. This legislation does not apply to their own Ontario farmers who have voted for and achieved off-board marketing for their wheat. As an Alberta farmer I want the same opportunities as have the wheat farmers in Ontario, but they are not provided for in this bill. Further, this bill makes the Alberta Marketing Choice Program inoperable.
As a farmer, I am paying for land to grow crops, all of the inputs and labour and machinery. How to sell these crops should be my choice. I should have the opportunity to find markets of my choice freely at any time. Our farm is about 1,500 acres; over half of it is irrigated. It can produce up to 100,000 bushels of grain. We raise cattle and hogs as well. I think marketing boards can be successful in a voluntary scheme as shown by the recent move of the three Prairie provinces to make their hog marketing boards voluntary. In Manitoba, 80 per cent of the hogs still go to the marketing board. We have diversified our crops, including CPS and hard red spring wheat, hulless and regular feed barley, canola, peas for seed, human consumption and feed, lentils, oats, hay and grass seed. I would like the flexibility of marketing non-board crops. In both the spring of '94 and '96, the price of wheat in the U.S. was at least $3 per bushel higher than the average Canadian Wheat Board price. This amounts to about a $90,000 loss of revenue for my farm, which I would not have lost had I had the flexibility to do my own marketing.
I fully support the position of the commodity groups, which represent non-board crops, in the coalition against Bill C-4. Why is the inclusion clause still in this bill when all commodity groups for these crops oppose it? I am getting a little discouraged. I have taken part in the Alberta vote on wheat and barley marketing, the Western Grain Marketing Panel meetings and have pressed in any way I can for the freedom to choose how I sell my grain. Yet the views of those fellow western farmers, especially Alberta farmers, are not addressed in this bill and have been blatantly ignored by the minister. I will not be satisfied until we have a dual market for domestic export grain.
I trust you will consider my concerns in your deliberations to amend Bill C-4 and that you will give us the same marketing options Ontario wheat farmers have.
Mr. Hertz: Thank you, Mr. Chairman, senators, for coming out west to hear us farmers speak on our own behalf against the Canadian Wheat Board. I come before you today representing the young farmers of this generation. We may not outnumber the old one-quarter section farmers, but we sure grow most of the grain being consumed or exported. Our first quarrel is with the one farmer/one vote concept when it comes to how our grain is handled. Farming is a big business, a $6 billion or $7 billion business. In other businesses, we have one vote for a number of shares. In farming, you should have one vote for so many tonnes of grain you sell. The grain farming business is in big trouble here in the west because of too much government control and no chance for private individual expansion and ideas. The cost to produce a bushel of wheat is at least $4. The farmer receives only $2.70 to $3.70 a bushel from the Canadian Wheat Board. Something is wrong here big time.
The very least amendment to Bill C-4 would be to allow farmers the freedom to opt out of the Canadian Wheat Board monopoly. This would allow farmers to develop a new way of selling grain, the same way most other countries sell their grain, by the world price. The Canadian Wheat Board would suddenly find that it would have to sell grain at world prices and return most of that money to the farmer or lose out on more farmers moving to the open market system. One wonders what a bit of competition could do to the performance of the Canadian Wheat Board.
You can rightfully ask what we have against the Canadian Wheat Board. Whenever we try explaining why we do not trust the Wheat Board or how the board costs us $1 to $2 a bushel by using the antiquated St. Lawrence Seaway and handling our grain up to 25 times, we are left with facts we cannot prove because the truth is hidden in the Canadian Wheat Board's secret vaults. This is very frustrating. The Wheat Board tells us what a great job they are doing and how it only costs us a few cents a bushel to sell our grain but, in fact, we lose $1 to $3 on every bushel they sell for us. In any business, if you are treated that way, you simply take your business elsewhere. We want the option to take our grain sales somewhere else.
We were having coffee the other day and a friend was remarking about the Alan Eagleson situation and what a crook he had been, telling his hockey players what a good deal he was getting for them when, in fact, he was stealing part of their money all the time. Then he said, "Alan is just like the Wheat Board."
I will be so bold as to predict that senators will be elected in my lifetime. We would ask you to consider making your presence in Canada felt by adding an opt-out clause to Bill C-4 and showing all who are watching that you are more than just a bunch of rubber stamps that everyone laughs at.
Mr. Sawyer: Thanks very much for the opportunity to present my views before your committee. I am a director of the Western Canadian Wheat Growers, and I am actually wearing two hats. I am also a director of the Alberta Canola Producers Commission and, therefore, I fully support the submissions that you have already heard with the coalition against Bill C-4, which I think is 16 or 17 associations, not just 14. However, it is as a grain and oil seeds producer that I am making this submission.
As a canola producer, I am very happy with the way the industry has blossomed with government and industry and farmer support. We sell to many buyers. There are a large number of buyers and sellers, and I especially like the ability to forward-price part of my production; I can manage my risks that way. As a wheat and barley producer, I am continually hampered by the Wheat Board because I cannot forward-price on wheat. They dangle a carrot out there, a pool return outlook of $6 or $7 a bushel, and so everybody grows wheat and then the sky falls in and you have no way to lock in that price.
The Wheat Board is a very, very small player in the export feed barley market because they cannot compete with our strong domestic industry. I sold feed barley anywhere from $2.60 to $3, FOB farm gate, and the Pool return was approximately $2.50. It is crystal clear to me that the Wheat Board is a non-player in Alberta anyway. They do not source much barley that way.
I would like to present my views on a dual market and how it would work through a system of binding contracts, incentives and penalties. The Wheat Board and the private trade would be free to sell to any buyer throughout the world, including a domestic buyer. Each farmer would determine to sell through the Wheat Board pooling or to sell on the open market for that year. You would be committed for a set period of time and you could not jump in or out. The Wheat Board would know exactly how much grain they would have to deal with for that year, and a system of binding contracts would be required on both sides.
Each farmer would choose a balanced portfolio, just the same way they choose what crops to grow. They would choose a balanced mix of marketing. I would like to see the Wheat Board as a port receiver of grain only. Farmers, grain companies, railways and truckers would get it there with incentives and penalties, which we do not have. There is no accountability in our transportation system now.
I would like to see the Wheat Board's directors elected, as well as the chief executive officer. I see no need for a contingency fund. Wheat and barley could be sold on the open market exactly like canola with futures markets, quoted cash prices of the day, hedging and forward pricing, so the farmers have a way to manage their own risk in wheat and barley as they now do with canola. That is the dream world.
If a dual market is not forthcoming, then I could possibly support Bill C-4 with these amendments. You could remove the words "canola" and "rapeseed" from the act and remove all barley from the Canadian Wheat Board.
I would like to see the 25-per-cent pricing option adopted by the Western Canadian wheat growers where farmers could forward-price up to 25 per cent of their wheat using the Minneapolis, Chicago or Kansas exchanges. They could sell a futures contract for part or all of the allotment and then sometime before the futures month becomes a cash month, the producer would deliver his wheat to the agent at the board, terminal or processor. Upon delivery, the producer would give the hedge position to the Wheat Board, who would then buy back the hedge and sell the grain to the customer. The producer settlement would be the futures price minus the basis, which would be the Wheat Board basis. But it would be transparent, so we are hoping it would give us a decent basis. It would be adjusted for exchange, grade, moisture, et cetera.
There is a deep and growing suspicion about Wheat Board pricing, and a simple cash price mechanism tied to its PROs or EPRs will not suffice. All Canadian Wheat Board directors should be elected and they should be able to choose their own CEO.
I urge this committee to bring the message back to the federal government that this bill pleases very few people. A dual market, with the private grain trade and the Canadian Wheat Board competing for our grain, would be my answer to most of the board grains transportation and marketing woes. We do not have any of these problems with canola, so let's give the dual market a chance.
Senator Spivak: Mr. Sawyer, you mentioned in your brief that the Canadian Wheat Board would be a port receiver of grain only and that farmers, grain companies, railways and truckers would get the grain to destination through binding contracts, incentives and penalties. Could you please expand a bit on how that would work?
Mr. Sawyer: If the board or other buyers are at port and they want number one hard red spring wheat, they would just put that in the system. The farmer he might get an extra five cents a bushel if he gets it in there at a certain time. Then the railways and the elevator system or the grain companies would make binding contracts to get the wheat to destination.
Senator Spivak: In other words, you would contract individually with all of these people: the truckers, railways or grain companies? Is that what you are saying?
Mr. Sawyer: No, not necessarily. I do not have all that worked out, but it would have to be a binding contract.
Senator Spivak: I have another question about the contingency fund. You seem to think it is not a necessary fund, or you are saying it would not be necessary if you changed the system? I wonder whether you think it is necessary now. Why have a contingency fund under the present provisions of Bill C-4?
Mr. Sawyer: My own opinion is that it is not necessary. I mean, if the board, heaven forbid, ever got canola, I am sure we would not see $9.20 a bushel. We would see a $5 initial price because they do not want to stick their neck out very far. I see no need for a government backstop at all.
Senator Spivak: The contingency fund would be a check-off on farmers. That's what I'm saying.
Mr. Sawyer: Yes, I know. I do not want that.
Mr. Spencer: If the board was going to port, it would seek markets and would follow them every day. They would keep offering these contracts, which would go out to the different grain companies to supply a certain tonnage of commodities by such and such a time. At that point, you would go to the railroads and truckers, and somebody else would take on the responsibility of getting that grain there on time. If they did not, they would pay the demurrage, not the farmers.
Mr. Young: In answer to your question about the contingency fund, I think that such a fund is necessary because the pools are 18 months long. If we put fertilizer on our ground last fall, we get paid for the grain in the year 2,000. That is why we have to have the slush fund, if you like. If we shrink the pools, maybe there would be no need for the slush fund. You pay it out, you contract and you get rid of the slush fund. There would be no need for interim payments and all that. You would know what your net profit is. For the moment, I am not saying that we should not have the Wheat Board, but if it has to be a mix or something like that, there should not be any need for a contingency fund if the pools are short. With computers and everything, 18 months is way too long. This is foolishness.
Senator Fairbairn: We have heard, as many of you that have been here all day will know, a great deal about the financial accountability of the Wheat Board. People have suggested that the auditor general is a factor in this. Mr. Spencer, in his presentation, talked about the fact that the taxpayers deserve an unbiased audit from time to time and that the auditor general should have access to the Canadian Wheat Board books. I just want clarification, Mr. Spencer. Do you think the auditor general should actually be the auditor of the Wheat Board or should he periodically review the board and its accounting procedures, as the person who occupies that position now does?
Mr. Spencer: That's right. The auditor general would just be there. The Wheat Board could choose an accountant -- I think they presently use Deloitte & Touche. The auditor general would go in at a given time to make sure that everything was running the way it should be, that nobody was paying $50,000 apiece for hammers. These things go on in private corporations and they go on everywhere else. I have heard rumours -- and they are just rumours -- that some of the grain that we have sold to certain countries on credit was never, ever unloaded in that country, and that the grain was then moved to purchase oil or cash for another country. Yet Canada is on the books. Those are rumours. Giving the auditor general access to the books could put a stop to this. As I said, there is no impropriety suggested in my brief whatsoever.
Senator Fairbairn: No, I appreciate that. I know also that if, for instance, the committee in the House of Commons wants to look into these kinds of allegations, there is nothing to prevent the auditor general from being brought into it. But you propose that this should not be a constant but perhaps a regular overview?
Mr. Spencer: I think the general performance of the board, and how things are going, should be reviewed every five years or so.
Senator Fairbairn: In the presentations this afternoon, with the exception of Mr. Miller, the question of the election of board members was not really a talking point. You heard a discussion among the witnesses previous to you about the method of election. Just for our own interest, would anyone like to offer an opinion on the question of a delegate process as opposed to a straight-out vote? I also hope -- and I speak only for myself -- that within your lifetime, perhaps even within mine, we will see the Senate as an elected body.
Mr. Hertz: That would be good. With regard to the vote, I do not want to see a delegate process set up if Bill C-4 goes ahead. That is just another step towards more bureaucracy and we are trying to end some of that. I would sooner see the 15 directors elected, if that is what we have to go to, but the way I understand the bill, if it passes, the minister still has the last say on whatever the directors come up with. In effect, there is no democracy.
We had a talk with Senator Taylor the other day. He was a guest on an agricultural show in Drumheller and, in response to a question put to him, he made it out that the board of directors had more say over Mr. Goodale. I do not know everything, but the way I understand it, Mr. Goodale does have the final say over what the directors come up with. There appear to be two different scenarios.
If 15 directors are elected democratically and then the minister says to them, "I do not like your idea, fellows, sorry; it is going this way," I fail to see democracy there.
Senator Fairbairn: It is my understanding that the purpose of having elected directors on the board would be to make those elected directors have a far greater direct say in the operations of the Wheat Board than is now the case. Depending on what your view is, that may or may not be even relevant, but if it is slightly relevant, the notion of having farmers elected by farmers on the Canadian Wheat Board, the question would be, is that a better option than no farmers elected by farmers on the Canadian Wheat Board? However, that is an argument, perhaps, for another day.
I was just interested in this notion, strongly felt by some, not by others, as to whether the delegate process was the better choice, but once again, opinions on that seem to be split, as well.
Mr. Hertz: I would like to conclude by referring to the so-called democratic barley vote that Mr. Goodale implemented. I am one of those farmers who did not receive a vote, and I come from a very large grain farm. I got it late, but I am pretty sure it did not count because I was mailing it the day of the deadline, and I do not trust the postal service.
Senator Fairbairn: That is another debate.
Mr. Miller: With regard to selecting the directors, I think it is very important to consider that this has to be a vote that is weighed by production. We just cannot have someone who has marketed 25 bushels of barley voting on an issue with a fellow selling 100,000 bushels of barley. It has to be weighted by production. It is that simple. We will not accept anything else. One vote, one producer does not count in this situation. This is a commercial situation. It is not the same as voting for an MP or an MLA, or whatever. Heaven forbid if you cannot torpedo this whole bill then the election will have to be for the directors and it has to be a weighted vote.
Mr. Young: If I could take that one step further, it is not just who votes, but who we are voting for. In other words, we cannot have a dairy farmer from Quebec to represent us as being the one we are voting for. Do you follow what I am saying? So the criteria for the people that run for office is important to us too, if you follow.
Senator Fairbairn: Yes.
Senator Stratton: Much of the argument put forward by supporters of the Wheat Board, particularly at last week's hearings, pushed the idea that if you have a permit, you get a vote -- one permit holder, one vote. It was also based on the fact that the growers of, say, canola have their organizations and they believe they should decide whether or not they are under the control of the Wheat Board. The other argument that is made by farmers is: "I grow canola, but I do not believe in that kind of system, and if I had it under the Wheat Board and used the Wheat Board as my marketing agent, I would not grow canola." Those folks say, "I have a permit. I have a vote. Even though I do not grow canola, even though I do not grow oats, I should have the right to decide as to whether that grain comes under the control of the Wheat Board." How do you respond to that?
Mr. Spencer: We do not have a problem with the Canadian Wheat Board selling or marketing canola, as long as they do not market it in a monopoly. If they want to market canola, let them compete with any other grain company. There is nothing wrong with the Canadian Wheat Board selling cows, as long as they do not have a monopoly market.
Mr. Young: There is a basis, through other mechanisms, to find out how much grain people have sold, be it canola, wheat, and so on. You can go to one tonne of grain sold on an average for the last five years for one vote. That is a quick assessment, but mechanisms are available, rather than just going by a permit book.
For instance, to give a vote to a farmer who grows, say, canola, wheat, whatever, on a small section of land because he needs to get rid of manure, that is a pretty lopsided vote. We have that. In Alberta, 45 per cent of farmers raise cattle. If each of those farmers got a vote, we would have a very lopsided vote.
Mr. Spencer: The opening of Cargill's plant in High River was the best thing that ever happened to the cattle producer. IBP saw how much money Cargill was making, and it bought out Lakeside Beef. We all benefit when two giants are competing for cattle
I just came back from California, and gas was at 93 cents a gallon. When we went down in November, it was $1.28 to $1.35 a gallon. The price of oil dropped from $19.60 to $12 a barrel and we had an immediate reaction at the pumps in the United States. That did not happen in Canada because we do not have any competition, and we do not have any competition in our banking. There are not enough players in the game.
Senator Stratton: That is my fear with the large grain companies.
Mr. Spencer: The grain companies are all moving here, and they are all providing services. ADM is a worldwide grain company, and it can provide markets throughout the world. It is competing with Cargill, Bunge, and Louie Dreyfus. They came here, in part because they have locked in an $11 per tonne elevation that they love, but they will compete head on with the others.
Senator St. Germain: In the United States, fortunately for them, they have tough combines and anti-trust laws. In this country we do not have anything like that; it is a joke. If we had truly free enterprise with the controls of combines and anti-trust laws, it would be different. What it boils down to is that any government that is big enough to give you everything that you want is big enough to take everything that you have. It does not matter which party forms the government; I sat under the last Conservative government, and it was the same thing. If we do not rectify this, there will be real dangers to farmers and everyone else.
Mr. Young: I have a response to your question on multinationalism. The perception is that there is no competition, but, when Caterpillar was top heavy with machines in 1986, it bartered them off on the worldwide market. They did things like sell them to Romania for suits, and they ended up getting cash out. When barley prices were high two years ago, the CWB did not quote a price to the Saudi Arabians, as their representative told us at a Blackie meeting. In fact, the guy's comment was, "You can strangle your customer, but you cannot kill him." They did not even quote them a price, which to me indicates that the CWB is not even trying to sell. An Oldsmobile salesman does not apologize for charging $40,000. We have a Canadian Wheat Board that will not barter; it will not do anything to try to get top dollar for our grain. They are not salesmen; they are order takers. If they perceive that the nation with whom they are dealing might object, they fold their order books and go home. That is the problem. If they were working for Caterpillar, they would take our best wheat out and they would barter it off.
The Chairman: I have one question. The province of Alberta has indicated it may opt out of the Canadian Wheat Board. If it were to do so, do you think that the CWB would survive?
Mr. Young: We would not care.
Mr. Spencer: Under Bill C-4, I do not think that Alberta would have the option of opting out.
Mr. Miller: We have talked about voting for the board of directors. If we had a free market, farmers would vote with their trucks. Whether the Wheat Board survives or not is immaterial, although it will survive if it is competitive. In this day and age, we cannot put up with a monopoly. It should be illegal.
Senator Hays: Mr. Young, you have commented that the price would be higher if we did not have so much wheat to sell. You also asked "What is the incentive to get the price up?" As you pointed out, the elevator companies, the railways, and the CWB all survive on volume as opposed to on final price, and they encourage high volumes because that is where they make their money. The implication is that the price would be higher if the volumes were lower.
I look at the world market and I see product coming from Europe and the U.S. at a low price. In other words, we are getting a signal from the world market not to grow wheat. It is a false signal, however, because we know that that lower price is the result of subsidies that still persist, even though we have provided the example of withdrawing subsidies. We have negotiated for a better position on subsidies, but we not achieved that position. Could you elaborate on lower volumes as a means of resolving the problems?
Mr. Young: With the CWB, the window is much too large. We will not know until January what we got on this year's crop. We need shorter price signals, and then we will plant. We will cut production; it is as simple as that. At these values, the Prairies are overproducing by 20 per cent. If you cut those values out, prices will go up.
Three months ago Lorne Hayne said, "The Wheat Board is committed to a competitive North American price." To me, that means the lowest price possible to the all of the value added people. We have to cut production and not give them volumes; perhaps then they will move to get the price up. I am not advocating subsidies, but you cannot have an entire industry collapse, and I think that is where we are headed in the next few months. We are going to have some real distortions.
Senator Spivak: To what extent can farmers opt to grow different crops in areas that are suitable for wheat? Would those areas be just as suitable for another crop such as peas?
Mr. Hertz: I come from the eastern side of the province, and wheat and durum are generally king in our area. We have really tried to grow lentils, canary seed, canola and barley, and, because of drought, they do not grow well in our area. It has been suggested that we grow crops other than wheat if we do not like the status quo. Wheat is our main rotation, and, in the farming business, you have to have rotation. We are currently on a four-year rotation with peas, wheat, canola and canary seed, and then back again. Without rotation you run into disease problems, so you have to keep the wheat in there.
Senator Spivak: What kind of wheat are these other countries selling? My understanding is that we grow the best durum wheat in Canada. Are these other countries subsidized? Is there not a differentiation in terms of price for the kind of wheat you are growing? In other words, is there a price premium, for Canada's wheat?
Mr. Hertz: On the world market there is such a premium, but we do not seem to get it from the Wheat Board.
Senator Spivak: Is Canada the biggest and best producer of durum wheat?
Mr. Young: Yes, I would think so.
Senator St. Germain: We have a figure of $4 a bushel for the cost of production. I am not questioning the integrity of the individual who presented this figure, but I would like to know if all of you would find that to be a fair estimate. He also pointed out that it was selling for between $2.97 and $3.97 a bushel. Would it be accurate to say that almost everybody is producing for below the cost of production?
Mr. Hertz: I was the one who brought that up, and it is actually $2.70 to $3.70. In our area on the eastern side of the province, that is a realistic cost of production, but we do not grow the big volumes. Your costs may come down in the west, where they higher volumes are grown. Those figures do reflect our situation in the east, however.
Mr. Young: If you index our farm for the NESA benefit, it costs us $5.02 to grow a bushel of wheat.
The Chairman: We wish to thank you, witnesses, for appearing here.
I would ask the next group of witnesses to come forward, please? Welcome to our committee. I would ask you to identify yourselves and tell us what and where you farm.
Mr. Murray Woods: I am a grain farmer from Linden, Alberta.
Mr. Russell Barrows: I farm at Coutts, right on the U.S. border. My dad farmed there before me, and my son is farming there now.
Ms Colleen Bianchi: I am from Coutts. I also happen to farm on the Montana border.
Ms Alanna Hermanson: I farm east of Calgary, at Strathmore. I also sit as a director on the Western Barley Growers Association and as vice-president of the Western Grains Research Foundation.
Mr. Burt Bystrom: I farm in the Sylvan Lake/Red Deer area, halfway between Calgary and Edmonton. I have farmed there all my life. I grow canola. I am a director of the Alberta Canola Producers Commission.
The Chairman: I will ask Mr. Woods to begin. Each of you has five minutes to make his presentation, and then we will go to questions.
Mr. Woods: On March 6 of this year, the Ontario wheat growers chose dual marketing. At just about the same time, the federal government passed legislation to force Prairie farmer to continue to turn their grain over to the board.
It is interesting to note that Bill C-4 applies only to some of the residents of this country. That is a very dangerous concept. The legislation passed without the support of any of the MPs who represent the people involved, and the party in power has very little representation in the area. It also passed without any support from any of the farm organizations representing those farmers.
It is my belief that Bill C-4 has three purposes. The first is to consolidate power in the hands of the minister, the second is to limit the government's past or future liability for the actions of the Wheat Board, and the third is to create a fund that will be used at the discretion of the minister.
As regards my first point, the bill gives the impression that the board will have elected members, but clause 3.12 (2) indicates that these directors shall -- not may -- comply with directions given to them under the act. The minister will continue to appoint one-third of the directors, including the president. This, in fact, transfers the power from parliament to the minister.
As for my second point, since the creation of the Wheat Board, billions of dollars have been taken from the farm economy of Western Canada. During World War II, the CWB paid less than world prices for farmers' wheat in order to allow the federal government to meet its commitments to Great Britain without bankrupting the federal treasury. It is my belief that this practice continues today, and I believe, in fact, that in the crop year 1996/1997, the CWB lost in excess of 1 billion dollars for western grain farmers.
This year, I have been selling wheat into the domestic feed market at $3.80 a bushel. At the same time, the CWB's estimate of final payment is somewhere between $3.27 and $3.82. This is an organization that has access to every single market in the world, and they cannot do as well as I can do selling into one market.
My third point deals with the fact that this act allows for the creation of a contingency fund. No details are given on how much money will be taken from farmers, how it will be invested, whether or not we get it back or, in fact, if we will ever even be allowed to know these things. Based on the CWB's record, my feeling is that this fund will either be turned over to the federal government or squandered, and we will never know the difference. The CWB and the government will both tell us that this is information is commercially sensitive, and therefore confidential. This reminds me of how our CPP funds have been handled.
There are many Canadians who would say that the Senate is an obsolete body that needs to be abolished. I do not agree. My feeling is that, in any democracy, we need a body to stand up and protect the rights of the minority against the tyranny of the majority. We have seen minority rights trampled in the past, in such situations as the treatment of Japanese Canadians during World War II, the placement of children in residential schools, and the expropriation of billions of dollars from Alberta. In each of these cases, the Senate stood by and did nothing. You are again faced with a choice. Do you serve the prime minister and his party, or do you serve the people? Are you going to stand up for the rights of individuals?
Western alienation and separatist sentiment continue to grow, and it is bills like this that cause that to happen. We are being treated differently than farmers in Ontario. We are being treated differently than people in any other industry. I am a student of politics, and my belief is that governments float trial balloons or bring in bills that are quite oppressive, expecting that the addition of a few minor adjustments will satisfy and relieve the citizenry. I believe that the Senate will likely propose some changes to the appointment of the president, to the inclusion of grains, and perhaps to the contingency fund. I do not believe that any of these are acceptable. I think that western farmers must be put on equal footing with their Ontario counterparts. I think that the Senate must defeat this bill, and that this committee must propose amendments that will make participation in the CWB voluntary.
The Chairman: Thank you, Mr. Woods. Mr. Barrows?
Mr. Barrows: I thank God for the fact that you are listening to us today. If this goes in the right direction, it could change the economy of the West.
My name is Russell Barrows, and I have been farming in the Coutts area, along the Montana border, for 45 years. I live one block from the U.S. border, and about four blocks from the customs house. When we drive out of our gateway, we are in the U.S. and all the farmers on that side, of course, are U.S. farmers. My son-in-law farms in the U.S., and my brother farmed there, so I have a pretty good picture of what goes on along the border.
I am very concerned about Bill C-4. I read something about it on the internet, and I have been following it. My greatest concern is about the lack of accountability to farmers. I was really concerned when the Liberals walked out and would not even listen to the bill. In my view, any cooperative that does not give voluntary participation to join has never been successful and is not democratic.
My dad and I had a vote in the barley situation, but we have never had a vote or a say in the Wheat Board. It has been dominating us and costing us billions of dollars.
Mr. Goodale has not done anything for the good of the farmers, and he does not seem to have their concerns at heart. He only seems to be accountable to the government. He does not even listen to his hand-picked advisory board; he would not listen to them on some of the issues that need to be changed. The CWB is exempt from the Access to Information Act, and now it wants to pass bills to protect it from prosecution for past or future actions. What does that tell us?
A reporter in Lethbridge once asked me what I thought about the Wheat Board. I said, "We have created a giant and we either have to get him under control or get rid of him, because he is eating us up." That is the way that I see it. Consider their books and their costs -- on behalf of farmers, they are sending people all over the world to set up flour mills and to teach in universities, and the pool is doing the same thing. These high costs are eating us up. If the CWB is well though of, it is because they are building their relationships by doing these things for free, but it is costing farmers a great deal.
In the Prairie provinces, farmers are already outraged by our lack of choice on wheat and barley, and now the CWB is trying to include other grains under its control. We want nothing less than dual marketing. If the Wheat Board cannot compete, why do we need it? That is what the Ontario producers said, too.
I thank God that we live in a democratic society, but some forces are trying to destroy our liberty; taking away our civil rights and our property rights, and dumping grain below cost. This is the only country in the world where farmer can be jailed and degraded for grazing and selling their own grain. Andy McMechan traipsed back and forth in shackles and chains, and was strip-searched 52 times to show the power of the monopoly. We do not need that. Some of my relatives died in the war to stop such things, and we too need to stand up against this.
This bill is very vague and would bring nothing but confusion to the farm situation. Many farms will die if this bill goes through. Every year we see more auction sales; farmers selling out because they cannot make it on account of some of these things. When I say "vague," I mean that it would take years to sort some of these things out.
I live right on the border, and we have done everything to keep out of the CWB. We have grown oats, mustard, canola, lentils and peas, and we still do, because those things are open to haul to the States. We have never hauled one bushel across the border and we live right on it. It would be really easy, but there is no advantage in doing it because everything that is not under the CWB is basically the same price on both sides of the border; all those commodities are the same price. Ever since 1929 I could have made significant money by hauling my wheat and barley south across the border, but it was under the Canadian Wheat Board's control.
The border patrol told me that they are averaging 65 B-liners a day going across the border with CWB and pool grain. The pool and some of these elevators seems to buy it cheaper than we could, because we could not possibly make a nickel on it if we bought it at more than cost. And yet they are going across every day. When we were fined, they said "you have to present to the chief officer of customs." I submit to you 65 trucks cross the border every day and are never stopped. A lot of these things are just totally out of line.
If something does not change, I do not know how we are going to stay afloat. The CWB tells us that it always get us a premium, and that is the biggest lie of all. I live on the border, and I have never seen it.
In fact, the Americans are going to have to do something about the fact that the pool dumps its grain at very low prices. I went to Washington, where in 1993 they dumped grain for as low as 98 cents a bushel. Some of that went out as number 2, and number 3 grain was sold as feed wheat on the market. They are still doing it. Last May, my son-in-law and some of the farmers said, "We could not possibly profit on our grain when they are dumping it on the border," and so they just stayed home. They sit at home and wait for the CWB to fill up the markets. That suppresses the price of grain in the U.S., and it also suppresses the market over here.
At the beginning of this whole thing, the prime minister's chief wheat advisor was John McFarlane, who was very much opposed to the Canadian Wheat Board. He stated, "If you abolish the future market, there is only one thing left, and that is a government monopoly. That would be too horrible to contemplate," and you can read it for yourself. That is the saddest thing about the CWB. Without any futures, it never hedges up the market. It always brings the market down.
If dual marketing were allowed, they would have to compete. They would come into a competitive situation or else they would not exist. Adding more farmers to the CWB is not going to change this situation, because it would be the same thing, only with greater expenses. Everything else would be the same.
There needs to be some economic development in Western Canada. I believe that dual marketing is the only way that we are going to see that happen.
The Chairman: Honourable senators, we will now hear from Ms Colleen Bianchi.
Ms Bianchi: Honourable senators, you may think my written presentation looks like a book, because some of what I say has documentation with it and that is why it is so thick. It is really not a Bible, although I might consider it to be. This is a large issue that cannot be discussed in a day. There are many issues that are involved with the grain producer. I have been farming with my husband for 24 years, but I have actually been on the farm all my life. I know nothing else.
This is, of course a very a big issue; a lot of it has been discussed already though, so I am going to try to hit some new territory. I do appreciate the debate that has happened today. Maybe I am out of place saying that, but I do feel that it is important that it happen, and so I thank you.
In 1995, Alberta barley growers voted 63 per cent in favour of an open market for barley. Today, that number would be larger. We know that Ontario farmers are treated differently. In my area, which is against the Montana border, there are smaller farmers growing less Wheat Board grains every year because of the concerns and issues surrounding this board.
The pooling system does have problems. For example, in raising barley that has passed for malt for five years out of six, our malt barley has gone to the feeders. We cannot wait for the Wheat Board system to call for our malt; nor can we afford to wait 18 months for full payment, when we have expenses to meet. When take it to the feedlot, we receive a premium price at the feedlot for the malt barley, and we get the agreed full price within a week of delivery. That is not 18 months. Eighteen months is too long to wait for money owing to the farmers. Urbanites would not have to wait like that for the rest of their wages.
If the board would allow farmers to see grain prices and a list of costs, even if it was for past years, maybe the pooling system could be understood better. However, farmers must operate on blind faith, believing that the Wheat Board gives the highest price, but Brian Hay, who is a Wheat Board lawyer, admitted in the courtroom that the Wheat Board worries only about moving the grain in an orderly fashion, not about getting the best price.
Bob Roehle, the director of communications for the Wheat Board, said on tape that the Wheat Board makes sure that the farmers receive enough so that they will continue to produce. There is documented proof that in 1993 and $94 the Wheat Board dumped in the United States at prices from 98 cents to $2.18. I have heard of other cheap policies on grain, but this is written proof and you have that part of the transcripts behind my written pages. There are cash receipts to back up what is in that transcript and that is only a portion of it.
The Canadian grain companies have been dumping into the grain system, whether it is export or domestic. The feedlot industry, through the Wheat Board, can buy barley for a lower price than if purchased from the farmers. Farmers do not sell unless forced to for less than the cost of production. It does not make very good business sense to sell a product for less than what it costs to make.
Businesses and corporations are accountable to those whose money they deal with. Since the Wheat Board is not accountable to the grain producers as others are, how can the grass-roots farmers know what is happening? After all, this is our money that the Wheat Board is dealing with. All farmers that are in this captive area have part of their earned dollars go into the Wheat Board pool. As a producer, I do not know how much money the Wheat Board has to work with or what any of the costs really are. There are auditors that are hired, but they should be outside the Wheat Board and the Auditor General should be able to see the Wheat Board's complete books.
Urbanites would not stay in a job under these conditions. They would not wait 18 months for their full paycheque. Would you allow someone to hold your money, not knowing the costs involved or the price your work has earned, and not being able to question the procedure, paying people and not knowing what their wage is? Why is the Wheat Board so secretive with the farmers' money? What other work force would continue to work under these conditions?
The "immunity from prosecution" clause raises many questions in my mind. When there are over 500 people in the Wheat Board using your farm income for 18 months, who are not accountable to the grass-roots farmers, wouldn't you have questions? It really concerned me when I realized there was a clause like this. Canada is a free nation and has a democratic government, and I feel that we need to be able to vote when it affects our business. Some farmers have questions, but they cannot find the answers. There were border crossings that were made so that we could find answers in the courtroom.
All of that seems to prove that this whole system is intertwined. The courts have said the answers must come from the legislation, but the government will not listen, so there is frustration amongst the grain farmers. Most realize that there needs to be some type of a change, and one issue already discussed earlier is that, while farmers are strong in their feelings and concerns, there are those who can make changes. But are the Senate and the Liberals, for instance, really going to listen to the producers affected by the Wheat Board Act and Bill C-4?
Producers are the ones that must try to make a living off the land. Does anyone wonder why the farmers are leaving the land, or why sons are not wanting to take over the family farm? Generally, on the land as a whole, farmers are aging. The young people do not want to stay on the farm after they see how their parents are living on the farm. When is the farmer's voice going to be heard and paid attention to? How much money and time must be spent by everyone?
This is a Wheat Board-producer issue. I strongly urge that the grain agencies like the Prairie Pools should not have as much say or clout as the producers. It is the producers' grain and money that are in the Wheat Board system. These grain companies are supposed to be agents only. Bill C-4 is my business, not theirs. This is my grain and my money that are involved.
The problem with this whole system is that we are in an inverted triangle. The producer is on the bottom and everyone forgets how important the grain producer is. When it comes to demurrages and strikes and transportation, everyone forgets where it all starts from. What must happen is that this pyramid must be turned upright, remembering that the foundation is the producers.
I realize that the Wheat Board, if it was doing a good job, would survive even if there was competition. When grain prices are raised, and more money is going to be put into the farmers' pockets, the fertilizer, chemical and machinery prices seem to go up.
We have talked a little bit about the open market today, but no one has mentioned anything about the added-value markets. If there was an open market, it would open up the door for these types of things to happen. In Milk River, which is 30 miles from me, they are trying to start up a pasta plant because we happen to be in a top durum producing area. We, personally, will not get involved with the pasta plant as long as the Wheat Board is involved.
I live on the border, but I have not sold any grain, nor has my husband, across into the States. I advocate having an open market, because I want to be able to sell to the maltsters, to the millers or to the pasta plant, but I think that the price, if it were an open market, could be in the elevator in my home, whether it was in Milk River or Lethbridge. I would not necessarily need to go to the States, because it would be in my home.
Corporations, if things do not change, are going to take over in Western Canada, unless there are some changes for the family farm. I feel that there is going to be a change on the face of rural southern Alberta if there is not change. I am sure it will happen in other areas. Brian Otto mentioned that in our area we do not grow a lot of high volume grain; it is more the quality of the grain, and so our costs in our productions are very important to us.
I want to say that I have tried to stay objective and that I talk to others in my circle. When people realized that I was coming up here today, they congratulated me because, as it has been stated, it is hard for farmers, for one reason or another, to be able to come forward.
We grow barley, canola, mustard and a little durum and we have in the past raised spring wheat and winter wheat. I am a member of the Alberta Women's Institute, which is a rural farm women's group. I am a member of the Alberta Women's Network. I am a member of the Prairie Centre and I am also a member of Farmers For Justice. I have a 15-year-old son who wants to farm, and has wanted to since he was age five. I am not really sure if he is going to be able to continue. If you think I have a hidden agenda, I do. I am concerned about the family farm. It is in jeopardy. If certain things do not happen, the corporations are going to take over, because the small farmer that only has a section or a little bit more is finding it harder to survive.
My MP happened to be here earlier today and he thought that I should let you know that I have been involved with Montana and Alberta Farmers, a grass-roots group that have been meeting for about a year and a half to two years. We feel that the governments are not listening on either side, and the biggest concern for all of us is that the North American continent is going to lose its grass-roots family farms all because of its "cheap food" policy.
I could go on, but I think I should quit.
The Chairman: Thank you very much, Ms Bianchi.
We will now hear from Ms Alanna Hermanson, please.
Ms Alanna Hermanson: Thank you for having me here today. I am going to keep my remarks brief, because a lot of things that I would like to say have been said and redundancy will not help the issue here.
I have some concerns about the drafting of Bill C-4. It appears that certain areas of the bill were taken from the existing Canadian Wheat Board Act without consideration for the application of process. I will provide the Senate committee with one such example. In November of 1994, the Canadian Wheat Board Act was amended by Bill C-50. Sections 33(1) and (2) of the act were to enable check-offs for wheat and barley breeding research to be deducted from the Canadian Wheat Board final payment of all wheat and barley delivered in the crop year. A provision was in place for permit book holders, suffix A and B, to opt out of the check-off by written notification.
A further order in council named the Western Grains Research Foundation as the funding agency to administer the program from 1994 to the year 2016. The deductions were set at 20 cents a tonne for wheat and 40 cents a tonne for barley. November 1 was set as the opt-out date prior to which the written notification must be received.
When you get into the Bill C-4 amendments, as the proposed legislation can accommodate the check-off for producers who participate in the Canadian Wheat Board pooling, that works. However, the cash settlement at delivery needs to be addressed from the research check-off perspective -- that is, a level playing field so that all producers who wish to can contribute. That means that a mechanism needs to be put in place for a refund for those who receive full cash settlement at time of delivery.
My view of this entire bill has been formed by looking at minute portions and envisioning the practicality and workability throughout the entire bill; in drafting Bill C-4, the Right Honourable Mr. Goodale was not careful to think through the implications of all aspects of the bill.
In the 1996-1997 crop year, producers, by their own choice, contributed $5,339,285.45 to wheat and barley research. Of that, the wheat contributions amounted to $4,205,625.77 and the barley was $1,133,459.68. That was the producers' money, taken from their own voluntary contributions. Over 163,000 Canadian Wheat Board producers, suffix A and B, holding a rolling average of over 120,000 permit books participated. Only 6,824 ID holders chose to opt out. That is a voluntary contribution rate of over 96 per cent. Our farm also chose to contribute. This area of Bill C-4 must always remain voluntary, but the Senate is going to have to find a way of making this cash settlement work so that the producers can contribute.
Obviously, the problem lies in an area where the farmers are willing to participate. You have heard the objections to the Canadian Wheat Board and the percentages, and I would simply add that it is best to pay attention to all aspects, because this was sloppy, shoddy work.
I suggest that the Senate review this proposed legislation, Bill C-4, in the same detail as I undertook. The Senate has the resources to do research, and it would be easier for it to correct the errors and to redraft the bill prior to its becoming law. I actually hope that the Senate will reject this bill in its entirety, but I do not know if you have the power to do so.
Our farm is committed to the long-term outlook for agriculture and to our own prosperity. We do not choose to pick our neighbours' pockets by pooling. We are forced to do that by federal legislation and by having to grow wheat in our crop rotations. We will not grow malt barley or hulless barley for food consumption or industrial use. Do not ever consider allowing any other crop to be sold by the Canadian Wheat Board. I would like to formally request the removal of all barley from the Canadian Wheat Board jurisdiction.
Our farm is aware of the marketing options available for the sales of grain. We are aware of the needs of the Canadian Wheat Board needing a steady stream of wheat to meet its sales commitments. We are not prepared to continue to give away, on average over 15 years, our net farm-gate price of 83 cents per bushel on our wheat due to horrible marketing by the Canadian Wheat Board.
With regard to the long-term sustainability of a farm unit, machinery must be replaced. We do not any longer have an ample supply of machinery manufacturers in Canada. The U.S. manufacturers will not consider taking Canadian dollars at par with their dollar. We do not have the climate to increase our crop production to compensate for the exchange-rate difference. This currency difference has to be compensated for by the farmer's own astute marketing. The Prairies must be allowed to develop all segments of agriculture production to the fullest. No longer should the Canadian Wheat Board be allowed to access or interfere with domestic supply and sales of wheat and barley.
I did not want to attend this meeting. I had to. A long time ago a Liberal mover and shaker, C.D. Howe, told his wife, "What goes on inside this house is your business. What goes on outside the gate is my business." Bill C-4 comes inside my gate. I do not like it. That is why I am here.
The Chairman: Thank you, Ms Hermanson.
We will now turn to Mr. Bert Bystrom, who was to appear earlier but somehow received the wrong instructions.
We apologize for that, Mr. Bystrom, and welcome you at this point.
Mr. Bert Bystrom: Mr. Chairman, I have a very brief presentation, so perhaps this works out well and we can get in some questions.
I would like to thank you, ladies and gentlemen, for bringing me in from the back 40, where the mud, snow and cow stuff is deep. I don't mind the look of pavement and storm sewers. They don't look all that bad.
As a canola and rapeseed producer for about 25 years, I have concerns regarding Bill C-4. Canola is a highly developmental commodity that now involves many different players. While there are, from time to time, some hiccups, the exporters, domestic crushers and other participants in the value-added chain have invested and created jobs to help to build a sustainable industry. Speaking from personal experience, canola has literally saved the farm.
None of the above could have been achieved without the cooperation of Agriculture Canada, the provincial agriculture people, the Canadian Canola Council, the Canadian Council Growers Association and many others. Canola is a high-risk crop that demands the cooperation and efforts of all of the above to maintain our competitive edge. The balanced growth of the canola industry to date is a clear sign of something being done right.
There have been a number of indications that Japanese and U.S. exporters and crushers are concerned about the possibility of canola being marketed under the jurisdiction of the Canadian Wheat Board. It also seems apparent that NAFTA and the ongoing WTO and GATT negotiations will not necessarily accept the canola industry as fitting in, if it is included under the Canadian Wheat Board. I feel that the only way to maintain the balance referred to earlier is to remove the names "canola" and "rapeseed" from the definition of "grains" in the Canadian Wheat Board Act.
The marketing of canola is also an area that I am concerned about with regards to its ever being under single-desk selling. In the early rapeseed days, marketing was done either by intermittent selling throughout the crop year or by delivery contract. Now there are a number of ways, which include futures and options contracts, forward price, with basis, or production contracts. With the rapid global communication and information that is out there, the producer can lock in profit, given that one knows his production costs and achieves the level of expected production.
Many producers have adapted to the use of the marketing tools available, and from the feedback that we get in the Alberta Canola Producers Council, there is strong support for the existing open market system. When I say that, I think there is some basis that backs it up. There are 75,000 canola producers in Canada; in Alberta there are over 24,000, from which there is a refundable levy that has to be accountable. We have to be accountable and, believe me, I know. Less than three per cent is ever asked to be returned, so I think that is a pretty fair endorsement for what the canola industry stands for and has accomplished.
Once again, I would ask that you remove the names "canola" and "rapeseed" from the definition of "grains" in the Canadian Wheat Board Act.
The Chairman: Thank you, Mr. Bystrom. I have many questions and so do Senator St. Germain and Senator Hays.
Senator St. Germain: I guess the biggest concern that I see is the "cheap food" policy that we have in this country, as referred to by Ms Bianchi. She was absolutely correct in her description of suburbanites insisting on having cheap food.
If we did go to a free or open market system, do you actually believe that it would improve the farm-gate prices for your products? If so, why, if you can explain it? Any of you can respond to that.
Mr. Barrows: Well, everything else that is not under the Canadian Wheat Board is the same price on both sides of the line. If wheat was not under the Canadian Wheat Board -- although it could be if they wanted to compete with it -- but was on the dual marketing, you would find that we would not have to haul our grain across the line. There are lots of elevators being set up. There are new terminals being set up right now to buy that grain. You would not have to haul it across the line. You may ask why it is, then, that everything else that is not under the Wheat Board would not have to be hauled across the line? It is basically the same price, but everything under the Wheat Board is totally depressed.
Mr. Woods: I would like to answer, too. I grow four crops on my farm. I grow peas, canola, wheat and barley. For the last three years, my peas and canola have done 150 per cent more income per acre than my wheat and barley. I sell those myself. I sell my wheat and barley myself, to a large extent, too. I do not sell a lot of grain to the Canadian Wheat Board anymore, but by the same token the Wheat Board depresses the entire price in the country for those products.
I would like to ask a question to all the senators. Alberta had a vote on barley marketing and it was pretty clear that Albertans wanted out. These hearings and this whole bill is treating Saskatchewan, Manitoba, Alberta and a little chunk of B.C. as one unit and yet Ontario is excluded. What would be the reason that Alberta has to be part of this Wheat Board? If Saskatchewan and Manitoba want it, I have no problem with that. My question is why do we have to be part?
Senator St. Germain: I cannot answer that. Maybe somebody who is much wiser can, and I defer to Senator Hays.
Senator Hays: I believe we are hearing from the Minister of Agriculture for Alberta tomorrow; you may want to watch the transcripts of these hearings to get some comment on this question. I think the simple answer is that to have a single-desk monopoly seller you need federal support, because it is a matter of international and interprovincial trade. The Alberta government, I believe, has some ideas about setting up a board, buying all the grain and perhaps circumventing it that way. Some interesting ideas are under discussion, but don't rely on that as a very informed answer. However, this it is not the first time this has been thought about. As I say, watch, perhaps, for the transcripts of tomorrow's hearing, where the Minister of Agriculture may comment on that.
I had a question for the panel, and I thank them, in particular, for raising issues such as the check-off and so on. It is very helpful for the committee. We sometimes in the Senate look better than we deserve to simply because we get help from people like you in drawing our attention to deficiencies in bills, but, in any event, one of the useful things the Senate does is pick up on errors like that. Most times, those are picked up on because people like you have identified them and told us about them and given us an opportunity to correct them, assuming the bill goes through.
My question is on the issue of the producer's role as anticipated under Bill C-4. I have heard your concerns about its not being a genuine way of involving producers through the election of 10 out of 15 board members, but using the Ontario Wheat Producers' Marketing board as an example, and some of you have commented favourably on the way in which that board has evolved, would you not agree that what is proposed for the Canadian Wheat Board follows that example?
I am wondering if you would comment on that, because it is a way for the board to change through the direction of an elected board. The Ontario Wheat Producers' Marketing board is changing in a way that some of you like. Surely that would be a positive thing in terms of the Canadian Wheat Board. Can you comment?
Mr. Woods: To me, there is one huge difference. The Ontario Wheat Producers' Marketing Board is a producer board. We have those boards in the west as well. They are called pools. They do not have to answer to the minister. Their board is not answerable to or controlled by the minister in any way. The minister is not appointing board members. They are not forced as a province to be joined together with other provinces, when some are excluded, so their board is totally different. If we could go to a kind of wheat board where there was an Alberta board voluntarily and a Saskatchewan board voluntarily, I would say that was great, but that is not what is being proposed at all. We are not even close to that. To me, this is not opening up. This is entrenchment.
Senator Hays: I do not want to get into a debate.
Ms Bianchi: I really don't know enough about the Ontario board, but I would think that if there was even a possibility that we would be allowed to look at it, that would be one thing, but in the past the farmers were not allowed to have any rural input, from what I understand; it just kind of evolved, and now we are given this opportunity and there are a lot of concerns. Even the pro-board people have concerns about it. If we were to look at the Ontario board, I would want to look at it a little bit more closely, because I do not want to ask for it back and get boiling water poured on me either.
Senator Hays: This is clearly a step away from it, but it could be a step towards that. The other question I had was on value-adding and the experience in canola. I guess we have not got as much as we would like in terms of value-adding in canola, mostly because we market a lot of product to Japan, and they do not take oil but they only take seed and so on.
Could you comment on what we might expect in additional value-adding in CWB grains, using canola as an example of what happens and how we encounter problems there?
Mr. Bystrom: I think that is why there has been such a tremendous evolution over the last 25 years. In fact, we are sort of now at a half and half position: half is exported and half is domestically crushed. New things are constantly coming up. Again I refer to Agriculture Canada and other researchers who are doing great work in the genetic field and the various areas that are putting canola in Canada on the competitive edge.
We are not always that far ahead, but this is the total difference between what you have seen under the CWB and what has happened in the canola industry; it is because of this accountability, when each player in that market is accountable back to the profit or the margin or the producer. That is the long and short of it. This sounds simplistic, but that is how it works.
Senator Whelan: If I may just add a little bit about the Ontario Winter Wheat Producers, we organized that with a vote of all the producers. We had to have two-thirds of the producers in favour when we did it, but to say they are not under supervision is not right. They are under the supervision of the Provincial Minister of Agriculture under the Ontario Farm Products Marketing Board. They wanted to vote last fall and he would not allow them to have the vote. I do not know the full reason for that, but I believe it was that the other 42 marketing boards in Ontario were scared that this would start something they could not control, and they did not have enough rules to guide them on how they should vote to get out of that. That is my supposition.
I just want to say to you, Colleen, that I don't know if you are too young to remember my being in Milk River, but I went there for the 50th anniversary of when the citizens had settled in that area. They had come from Hungary and the Falklands, a big percentage of them; that is where my father-in-law came from when he settled in Saskatchewan. So I know your area very well. I was interviewed there about a tremendous milk problem you had at that time, if you remember.
Ms Bianchi: A tremendous what?
Senator Whelan: A milk problem. Barbara Frum interviewed me on milk in Milk River, Alberta, on her national program. I always remember Milk River very vividly and I remember the settlers in that area. A lot of things have been said here today, "It's those Easterners, et cetera." You know, I was your minister for 11 years and I challenge anybody to find that I put the East against the West. Also, I would point out that there were three provincial premiers of different political faiths who asked the federal government, with strong support, to put the Wheat Board into effect and the government in Ottawa did what the Western premiers wanted. I am not saying that we will do what you want but we are here because we wanted to come here. I do not know if we made Mr. Goodale happy by coming here. You have a mixture of senators here from all over Canada but predominantly the group on this committee is from Western Canada.
Mr. Woods: In response to your comment, I agree with you 100 per cent. The Ontario Wheat Producers Board was voted in by producers. It is under control of the provincial ministry under supervision, not control, under supervision. That is exactly my point. If we had an Alberta board, under the supervision of the Alberta government, that was voted into being Alberta producers, I would not dispute it. I would not have any problem with that.
Senator Whelan: All I wanted to do was clarify the fact that you said "was not under supervision."
Mr. Woods: If I said "no supervision" I apologize because I know it is under supervision.
Senator Whelan: It is pretty strict, too, and they are reviewing what they are proposing. I agree with some of the things that they are doing at the present time but when we organized the Board we were called communists and everything else, and we were some of the biggest farmers. It was a good way to beat down your opposition. As far as I am concerned the worst thing you can do in a democratic country is to call people something they are not. No communist country ever let its producers have any say. We have Senator St. Germain here and myself who have long been associated with the marketing boards, poultry boards, the Canadian Dairy Commission, and Senator St. Germain was a poultry producer in British Columbia.
Mr. Barrows: When the Wheat Board went was established in 1935 it was a voluntary thing and it worked well but all at once when the war came along it was put under the War Measures Act and it became compulsory. Up to that time it was working all right.
Senator Whelan: There was one province that did hold a vote. I will look it up, but I think Manitoba had a vote in 1953 and they voted 82 per cent in favour of the Wheat Board. I do not know why only Manitoba was the only province to vote.
Ms Bianchi: I know you are all in a difficult position. You are hearing the pros and the cons and you still do not know how to resolve the problem. It has been indicated that possibly Alberta feels differently than the other provinces in the designated area. I know that different people have talked to Mr. Pakowski and to Ed Stalmach and we have not had a chance, I do not think, to really talk a lot. So I am speaking as an individual, but I think if it was a provincial board, I would hope that we would have more farmer input that we could have better interactions between producer and the board.
The cheap-food policy is a real problem in North American continent because we are too busy spending our money on other things that we think are important. In countries where there have been wars they are making sure that they do not ever again have to worry about where they will get their bread from. We have never had that problem in North America and I think that is an issue. I think we need to educate the urbanites about the importance of their food supply is. I really do feel that the family farm is in jeopardy. I feel that eventually corporations will be telling you how much you are going to be paying for your bread if things do not turn around.
Senator Spivak: Yes. I must say I appreciate your comments about the need to keep the family farm intact and the measures we can take to achieve that. We did study that some years back in this committee under the chairmanship, I believe, of Senator Hays. I think it is important to focus on that because that is what it is all about. We do not want corporations running the farms. We want families to run farms, we want the rural communities to flourish.
I do not believe, unless I was out of the room, that any of you talked about the contingency fund. I wonder what you think of that and why it is necessary in this particular legislation? I am really puzzled to what the motivation behind introducing a contingency fund was.
Mr. Woods: To me the contingency fund exists simply to give the federal government a chance to collect some money off farmers. For the past good number of years they have been taking money out of our pockets and I have no idea whether it is being wasted or whether it is being skimmed off but they certainly have not been doing a good job of marketing. This will, in my opinion, give them a good chance to take that money and actually tell us they are taking it. To me it is another slush fund and we have seen a good number of these and the Canada Pension Plan is a good example.
Senator Spivak: So you would be opposed to having a contingency fund in Bill C-4?
Mr. Woods: I am opposed to having a compulsory Wheat Board. If it is a voluntary Wheat Board I do not care if they have a contingency fund. If we are going to stay with a monopoly I will keep arguing against it. I would still be against the contingency fund because I, quite frankly, do not trust how they will invest it and how they will use it.
Senator Spivak: A lot of your presentations have emphasized the differences between the non-Board crops and the Board crops in terms of wheat. I would like to explore that a little further but maybe not in this forum. It seems to me that it is always the commodity price that goes down. The input price does not go down, it goes up, the processor price goes up, and I wonder if one of the reasons is not the way that grain is marketed here but the fact that all of these other countries have huge subsidies and support systems and have had for a long time. Charlie Mayer used to refer to this as war. He said it is war because when he was minister it was a horrendous time. The United States and the European Union were competing with each other to see who would have the most subsidies and because of that the price of grain just went to nothing. I wonder if you could comment on that whole situation. There are a number of factors, I think, that keep the price of grains low or high. Would you comment on this particular factor and what difference it would make if there was not a Wheat Board and you had to compete in the global market with wheat against those subsidies?
Mr. Barrows: Being along the border when we look at prices we take the subsidies into consideration and they are kind of alongside of the regular price they get at the elevator. They add storage subsidies. Some stored grain for years at 28 cents a bushel a month that way. They add other subsidies. They collect once a year from the government on the amount of grain they had. Some of them took a basic price and then when they sold it, they divided that up, but the basic price at the elevator is based on what it is worth today. That does not mean a whole lot down there. I experienced this not too long ago when the Board's price was $4.06. I met a U.S. farmer who said, "I came in to sell a bunch of grain today. I thought I would sell 10,000 bushels on the February futures. This is grain I hauled in last harvest." I said, "Well, you paid quite a bit of storage on that." He said, "No, they do not charge you for storage down here." He said the Board's price $4.05 or $4.06 and he got $4.52 for it on futures. I said, "Well, then you have to wait until February to get the $4.52." "Oh, no, they write you a cheque today. The grain is long gone. We are just settling the paperwork." So there are all kinds of those deals all the time, it is not just the way it seems. But when they start dumping Canadian grain on the market it goes down there at maybe $3 and something and it sits there. As long as they get Canadian grain that is where it sits and the farmers have to sit there and wait until something happens, until they are not getting enough grain. So it is depleting the price there and it is depleting our price too.
Ms Hermanson: We custom harvest. I have customers all the way up from Texas. I can compare prices all the way up. That is where my 83 cents a bushel came from. That, I know, is an accurate figure. Take that to this year's crop of 500 tonnes and I am going to be out $17,000. I cannot afford that, given that we are paying excessive elevation rates and transportation costs. We have to let this market reach its own level. We cannot afford a slush fund for the pool. We do not pay Cargill for a slush fund, granted that Saskatchewan Pool and Alberta Wheat Pool have our patronage sources held so they can backstop themselves, but we are not going to do that for ABM or any of the other companies. We will not do it for the Canadian Wheat Board either. We do not have to. They should be out marketing and they should have the respect of the bankers of their marketing to be able to carry a year's worth of business through.
To Senator Hays, in regards to the research and where money and stuff goes for that, canola research is being carried on by major companies and they are pushing the price of canola seed up, input costs and everything else, but these companies are coming out there. They are providing a better product for us. Since 1952 we have gained tremendous acreage in a new crop. We have got value added. We have developed an industry here. Our wheat industry has diminished in that time. We have lost flour mills and everything else. We do not have major companies coming in to enhance the wheat. They do not want to do it. It is too long term. There is no return in it. They cannot charge enough for the seed. There is nothing there for them to make money on, so you have a dying industry here unless you let this market open up and let some price gain happen. We cannot afford three tiers of marketing. We cannot afford the first tier, which is your pools and Cargills and everything else, and then we hit the Canadian Wheat Board and then we hit whomever the Canadian Wheat Board sells to to sell to someone else. I am sure that happens all the time so I would like to make sure that you guys think this through very seriously.
Mr. Woods: Your question is whether we could market into an international market. I guess there are a couple of things.
Senator Spivak: Against huge subsidies.
Mr. Woods: We are exporting canola and peas into international markets and we are doing very well at that. We are also exporting wheat into international markets against huge subsidies. The Wheat Board is not giving us a subsidy. If anything it is removing money from our pockets. So I do not see that that part changes. As a good example, the spring before last in Canada we had record world wheat prices. From every bit of information I have been able to get from the Wheat Board, and they have not given me much, I do not think we sold a bushel of wheat in that period of time. We did not sell any of the wheat that was on hand. We did not pre-sell any wheat. I have asked them several times but I have not got any documents. During that same period of time I pre-sold canola for up to two years. I pre-sold barley on the markets because when you are at all time record prices that is the time to sell. When I talked with Lorne Hayne at the meeting in Trochu I said to him, "How much wheat did the Wheat Board hedge?" He said, "Come July when it was dry I would have been very nervous if I had very much grain hedged." I guess that is the problem with the Wheat Board. I would not have been nervous, he was, so we did not sell any wheat during those time periods. My belief is in an international market. I can make money going up, I can make money going down. I cannot make money when we are always down and that is where the Wheat Board keeps us.
As one further point, I disagree with one of my panelists. I do not believe we have a cheap food policy. I believe what we have is an open market, we have supply and demand, and in that kind of market we will have winners and losers and I am willing to play in that market. I want to play in that market, quite frankly.
Ms Bianchi: I do not disagree with that but I do not think that North American people pay a large enough percentage of their income on food compared to what they spend on going out socializing and the lotteries and cigarettes and all that sort of thing.
Senator Whelan: I always figured that research was our most important product. We spent millions of dollars on research on canola, the lentils, et cetera, I could name all kinds of things, one of my first tasks was to develop canola that was acceptable in the United States because the United States said it was not healthy, for five years kept it from going to the United States, and it never was allowed to go in freely until after 1984. They said our scientists were wrong, et cetera. Then a big research centre in Chicago, I cannot remember the name of it, classed it as one of the most healthy oils in the world that you could consume. We knew that before but they held it up by not giving it a bill of approval for five years. We developed those crops so that you could diversify your production. That was the main drive that we had. I give our Agriculture Canada scientists much credit for that. And as to the joint ventures with Monsanto and some of these big companies, I disapprove of them because we are not going to have the independent research that we need to protect U.S. producers and its consumers too.
The Chairman: If I may, on the research and especially on canola, my American neighbours are very interested in many of the varieties of canola that are being grown in Canada and the experience we have had here. They are looking to those varieties.
Ms Bianchi: I agree with you on that. You have been asking why we do not trust the Wheat Board and that sort of thing. When my own MP phoned me and told me that when they were debating Bill C-4 in Ottawa he said that we were lucky that Mr. Easter was there and that most of the time there were no Liberals. All of a sudden I saw red and I said, "What do you mean they are not in there debating and listening to what you are talking about? This affects all of Western Canada. There are only three Liberals in the designated area and they were not in there listening. How can they be voting if they do not know what the issues are that are affecting us?" It really upset me because it is a Western issue and they will not even come in, the Liberals will not listen to what is being said on something that definitely affects Western Canada. Even the pro-Board people have problems and need some changes and they will not listen. I really have a problem with that. I had two other MPs who verified that they were not in there, that this was not just a story.
I had the opportunity to go in 1996 to Mr. Goodale's agricultural policy meeting and the that thing really hit me -- and it is why I wanted to come and speak to you people -- is that this was on agricultural policy and in that whole board they discussed everything and we tried to look at it strictly as producers, that I was not from southern Alberta, we were all Canadians looking at policies. There was not any discussion about the Canadian Wheat Board. Being a stupid little individual woman farmer I decided to ask at an appropriate time about the Wheat Board. I could not believe the number of people who came after me. I asked, "Why isn't there anyone who can talk about the Wheat Board? Why isn't it on the agenda?" It just really amazed me that they were having all these big policies discussions and none of the grains were discussed. They had everything else, we discussed exports and everything else. So I went to that meeting and I have had no feedback. There was supposed to be feedback from it and I really do hope that something will come out of these Senate hearings, that the individual farmers will get some feedback.
Senator St. Germain: One quick question. If the board was totally made up of growers and the CEO and the president were picked by that board would it make any difference to your views?
Audience Member: Slavery is slavery!
Senator St. Germain: The thing is that maybe a step out of slavery towards the exit is what I am suggesting.
Mr. Woods: I would say it would make some difference to my views but I would still ask why the federal government feels it is necessary to treat the Prairies as one unit when the other seven provinces do not have to be included in that unit? It is definitely an improvement because I would say it would not take long until we farmers would say, "We do not need compulsion anymore. We are welcoming free choice." It always bothers me when we have a government, and no matter what government we have at different levels, that thinks that it is a lot smarter than the people who elected them. It is not just with agriculture. We keep getting these bills that say, "We have to look after you. You are not capable of looking after yourselves." That bothers me.
Audience Member: Kill the bill! Kill the bill! Kill the bill!
The Chairman: Order!
Ms Hermanson: I want you to realize this. If the Canadian Wheat Board was not doing our marketing and we had our own marketing boards or we had our own producers selling we would have a larger say in Ottawa. You would know what we are doing out here. You would know what is actually happening out here because you would hear us because we would actually have enough money to come down there and see you every once in awhile.
The Chairman: We will call Mr. Christenson, Mr. Hugo and Mr. Liede. Honourable senators, these are individuals who have asked to appear. We indicated that we could make time for them although theywere not on the agenda. Gentlemen, will you introduce yourselves, indicate who you represent and where you farm and what kind of farming you do?
Mr. Frank Hugo: I am Frank Hugo. I am presently living in Calgary and commuting. I am the third generation farmer out east of Three Hills. I am not a farmer but I am a grain grower. We are getting too much farming mixed up with our grain growing and this concerns our grain growers. I am trying to raise a fourth generation farmer on a farm that my grandfather homesteaded in 1906.
Mr. Norman Christenson: My name is Norman Christenson and I am a farmer from Hanna and Drumheller, Alberta.
The Chairman: Apparently there is another gentleman who will appear. Would you begin, Mr. Hugo, please?
Mr. Hugo: My grandfather came to homestead with his horse and wagon; he thought that he had a future in Canada. As grain growers now, though, a lot of our views on Canada have dimmed. The CWB was forced on us in the 1940s -- I grew up with it -- and we have been under its monopoly ever since.
Accountability is one thing that bothers me. The CWB hauled those who tried to illicitly deliver grain to the U.S. into court. In the courts, however, it denied its own accountability, saying that it had no responsibility for price -- that its purpose was only to transport grain and to dispose of it.
On the coast we are paying demurrage to the shipping companies. It may not sound like much money, but the CWB has not done its job in arranging for shipment of the grain. Supertankers are coming in for grain, and none of the terminals have enough capacity to fill them; they have to come in three or four times, at our cost. The turnaround for train cars is 14 to 21 days, when just across the border in the U.S. it is four days. This issue of accountability really irritates me; they only ever offer excuses, and say that they are just doing their job.
We hear that a reactor has been sold to China. This is just hearsay, but we also hear that the government sold them some grain at a cheaper rate so that they would buy the reactor. We cannot prove it -- but is it there? This goes much deeper than about the CWB. It goes right to the politics of our country. We cannot take this any longer. In the debate on Bill C-4, the minister stated that the CWB has taken $1 a bushel off of us since its inception. Last year they handled about one billion bushels. I am speaking about bushels as opposed to tonnes, because I feel that using tonnes is just a way of deceiving us in our comparisons with the U.S. situation.
In Alberta, we also sell oil. We sell it by the barrel, the same as in the U.S., but we still get the prices in U.S. barrels. To confuse the farmer here, however, he does not even know what he is selling his grain at. They refer to it in tonnes, and say that it has gone up $3 a tonne, or that it has gone down $2 a tonne. Let us use comparable terms, and talk in terms of bushels.
We have had $1 a bushel skimmed from us, and this $1 billion makes it very good for Eastern Canada, because, if they had exported $1 billion worth of grain from Western Canada, they would have had to take in products. As somebody said, Caterpillar had to take in shirts for their machines. These would have to be sold, however, and that would significantly disrupt manufacturing. Most of our clothing manufacturing, most of our manufacturing, for that matter, is in Central Canada. Do not fool yourself; politics is very involved in this.
The Wheat Board wants to hang on to its monopoly, because it is the fourth largest industry in Canada. There are the private industries, which are the automobile makers and IBM, and then it comes down to the Wheat Board. We sold about $6.1 billion worth of grain last year. All of our politicians come from Central Canada, and we are being held hostage by that region. Our politicians do not give a damn; no matter the policy or the party, they use the Wheat Board to take advantage of us. They do not care about the west.
As for the board of directors, you could elect 25 farmers to it, but they would be sworn to the corporation, and they would have to jump the way that the corporation did. At Disney World, they have these little puppet and monkeys dancing. That reminds us of the farmers out here, because they have to dance to the tune of the corporation, which is the Canadian Wheat Board.
I would like to see clause 3.13 changed; that is the clause which says that the corporation may indemnify a future or present officer. I do not want to see that happen. I want this to be an open process, and I do not think that even the present directors should be given that privilege. I do think that this is one of the reasons for Bill C-4. The rest is a bunch of nothing.
Mr. Christenson: Honourable senators, I am very glad that you came out West to hear us. I know that you have heard a lot today. I am the last one here, but hopefully not the least, and I am a very strong supporter of the CWB. Unlike the anti-CWB presenters, I did not bring a rooting section with me, and I know that there will not be any applause for what I have to say. That is fine with me; I can stand up for what I have to say, I mean what I have to say, and I hope that you listen closely to me.
I have been farming for almost 40 years. I farm alone, but I have three sons who also farm. All three are strong supporters of the CWB, so all young farmers are not against the Wheat Board. I have sold every bushel of my wheat and barley to the Canadian Wheat Board. I have heard many negative things against the CWB today, and I want you to know I still completely support it.
I want to share with you some experiences that I had in 1969, when wheat was hard to sell. We had gone through the 1950s with large surpluses of wheat, and we had small quotas to get rid of. It was a trying time for our Wheat Board to move our grain.
I rented a farm, and the farmer told me that his bins were full and that he had 2,000 bushels piled on the ground. He wanted to rent to me, but he could not supply a bin for my crop, and he said that I would have to haul his crop to town whenever it became available at the CWB. That fall, farmers were selling wheat to feeders for 60 cents a bushel. At the time, the CWB was paying $1.25 a bushel, and that is what I got. I never sold a bushel of wheat to anybody but the CWB, and I got the $1.25. A lot of my neighbours got 60 cents.
I have always been satisfied that the CWB gets the best price available. I know that it was not enough in some years, but we need to remember that we are the only farmers in the world who directly compete on the world market. Our competitors are subsidized, which makes a world of difference to our price. We can complain about the CWB and the government, but we have to remember that raising the price is difficult if there is a lot of wheat on the market. We can only get what the world market will pay, and all the other countries have a subsidized price from their governments. With a population of 30 million, Canada cannot afford that. To do that, we would need a much larger population.
This past fall we sold a bin of durum in October. The price of durum increased three times between October and January. It would have been terrible if I had only received the initial price. Thanks to the pooling that we have through the CWB, however, I got three cheques.
I was very disturbed when oats were removed from the Wheat Board without a producer vote. Let us make sure that inclusion or exclusion of any grain is only done after a yes vote from two-thirds of producers.
I am very much in favour of canola being under the Canadian Wheat Board. I have been selling canola for over 30 years, and try as hard as I can, I have never received the top price yet. I do not think that a dual market could ever work. The CWB does not own any storage, nor does it have any elevators. It would be unfair competition. As I am sure those who advocate dual marketing are aware, it would be the end of the CWB.
As long as the federal government backs up the CWB, I do not think that we need a contingency fund.
There are only 4 of us here today who are pro-board, and there are 12 who are against the CWB. I hope that you do not think that this is representative of farmers' feelings towards the Wheat Board; we four are representing a silent majority. The submissions and briefs that you have received today have predominantly been from anti-CWB organizations and individuals. Further, although there are 13 organizations that claim to represent 30,000 farmers, that statement is false. Those groups have never held a vote to allow their memberships to express their opinions on a ballot.
There have been a lot of references today to the ballot in Alberta to remove barley from the CWB. That ballot was not worded so as to give farmers the freedom to choose. The first question read "Do you want freedom to choose?" Most farmers did not understand the wording, and they naturally voted yes; who would not want the freedom to choose? The Conservative government chose 10 members to make up the wording of that ballot, and only one of them was pro-CWB. With that kind of skulduggery, it is surprising that the vote did not come down more firmly in favour of those who are anti-CWB. We did have a fair vote across the West with a properly worded ballot, and the vote was 63 per cent in favour of keeping barley under the CWB. That was true democracy.
The Alberta Canola Producers Commission sent you a resolution which said that it did not want canola to be marketed by the CWB. That resolution does not truly represent members, because a vote was never held to determine members' wishes. I have grown and marketed about 6,000 bushels of canola every year for the past 30 years, and nobody has ever asked me for my opinion. I am very much in favour of canola being marketed by the CWB. A two-thirds majority vote of the producers of a grain should always determine whether or not that grain will be under the Wheat Board.
Those of us who support the CWB were very pleased to read in the paper that Mr. Goodale has the common sense to refer to Reform MPs as babbling baboons. Further, we realize the tremendous task that you politicians have before you in resolving this issue. Please remember that the anti-CWB groups are always there, both vocally and in the press. As the silent majority of farmers, we are not so vocal, but we depend on you, our elected officials, to use common sense. Do not be influenced by noisy minority groups who will do anything to undermine the CWB.
We strongly urge you to always make decisions that will further enhance and maintain the operation of the CWB, so that it can continue to do a good job for all of the farmers in Western Canada. Our forefathers did a lot of planning and work to get the CWB for our farmers. Let us be thankful for what they did, and let us carry on their work. Thank you and keep up the good work.
Senator St. Germain: I have a question for Mr. Hugo. You were making reference to tonnes versus bushels. Are you saying that the negative impact is not felt as much when it is described in tonnes? I have always been concerned about the fact that we have gone from gallons to litres. When the price of a litre of gas is raised, people say "Oh, it is just a couple of cents," but there is a big difference between a litre and a gallon. Could you elaborate on your comments?
Mr. Hugo: The grain has always been sold under bushels. It is a decent way of doing it, and many areas still refer to bushels. When the Canadian government comes out with a price, however, it is mentioned in tonnes. This is an ambiguous figure, because a tonne of barley is 45 bushels. A tonne of wheat is 36 bushels. A bushel has always been measured so many cubic feet. I think it is four-fifths of a bushel in a cubic foot by volume. That has been very sensible.
When you say that so many tonnes of grain have been sold, however, it is an ambiguous figure because you do not know how much grain is in that amount. It is sold by weight. It is just like taking gold and taking aluminum and selling them by the tonne; you are not going to get the same amount. It is also deceiving, because the U.S. deals with bushels. If we were to deal in bushels, we would only have to convert the money, and the farmer would know what he was getting. I am not saying that all farmers are ignorant, but some will take in any information that they can get.
In the 1920s, the Mafia was audited in the United States. Is the Wheat Board the same as the Mafia? They were audited, but does that make them honest, does it make them legal? What is this doing to us? Farmers are committing suicide and families are breaking up, all because the CWB is short-changing them.
Canola sold for about $5 a bushel under the CWB. In the United States, soy bean oil was continually selling for between $6 and $7. Since canola has been taken off the Wheat Board, it has gone up to $9, $10. Soy beans are still at $6, and it is a disaster. Two crushing plants in Alberta have gone broke. That does not even begin to tell the story.
In a survey, it was found that Western Canadian grain farmers get paid less for their grains than any other farmers in the world, even those in Argentina. In the U.S., the National Cattleman's Beef Association has already done a study showing a $58 per head artificial advancing in feed cattle because of cheap feed grain price in Western Canada. We should be concerned that Montana is shipping calves to Alberta to be fed. They do not stop at the Milk River, because the Milk River flows back into Montana. They go to the north side of the Oldman River, and they make sure that their pollution stays here. When their cattle are fattened out, they take them back to Montana to be slaughtered at a $58 profit. They are not shipping our grain over -- they are bringing their cattle up, and leaving us whatever you walk in. Are you still going to tell me that the CWB is good for you? I am a farmer who is out of the Wheat Board. I am still associated with farming, we still have a family farm, and I do not want to follow some of the other farmers.
Last year one of our neighbours committed suicide because of the price of grains. There is a future in Canada, however, and we are Canadians. Let us treat all of Canada as Canadians; let us not one favour one segment of them over another. I used to be a Liberal, but my red has changed to another party, and I am proud to be a redneck. I no longer give a damn about what happens to the CWB, but I am afraid of the repercussions. I am afraid, and you can see the writing on the wall.
Senator Fairbairn: I would like to ask Mr. Christenson, but also Mr. Hugo can certainly respond as well, about the election of producer representatives to the board of directors. The proposal is that two-thirds of the directors would be elected, and they will have the ability to choose their own chair. They would also consult with the minister on the appointment of a president and CEO. I believe that this proposition is an effort to set up a different kind of board; a board that reflects the concerns of the farm community.
We have been hearing representations that express concern about the position of the president and CEO. The board of directors will have a role, however. It will set the salaries of the directors, the chair, and the president. It will have an opportunity to review the president, and to make recommendations for dismissal if it is not pleased with his or her performance. It will also have the opportunity to create its own internal audit. All of these things are contained within the bill.
In one of the clauses of the bill, the board of directors is said to be required to operate in the best interests of the CWB. Various interpretations are being made of this; that these elected directors will be under the government's thumb, and that they will have no influence on the operations of the CWB.
As of today, we have listened to 73 farmers, and to 21 organizations, and there have been extraordinarily vigorous presentations on both sides of the issue. These presenters have demonstrated strength, courage, determination, and independence of point of view. Is it not possible that the producers' representatives would bring those same qualities to the CWB and change the way that it functions? I would be interested in your observations.
Mr. Christenson: What is the difference between this elected board and the ten member advisory board that we have right now? Is there a big difference between those 10 advisory members and the elected members?
Senator Fairbairn: The primary difference is that these elected members would be on the board of directors. They would not be acting in an advisory capacity. There is great power in the elective process, and I question the idea that they would be powerless and unable to exert any influence. I would think that elected producers would be an influence due to their very presence, as well as to the strength of the fact that they had been elected by their peers.
Mr. Christenson: The ten members of the advisory board were also elected by farmers. I do understand, however, that, as members of the board of directors, they would have much more power.
Senator Fairbairn: They would be the board, the majority of the board.
Mr. Christenson: I have to question the change. I have no problem with the way that the Wheat Board is currently run. We already have an advisory board to give the farmers' point of view to the directors. Which one of us farmers would be knowledgeable enough to run a corporation of the magnitude of the CWB? I do not know any farmers who would be capable of doing so. I do know farmers who could be on an advisory board, however. I am not 100 per cent in favour of that elected board of directors.
Mr. Hugo: It sounds very nice, but I have to wonder who would be elected to the board. It would seem to be grain farmers, but I am not certain what you have to do to be a grain farmer. Most farmers are mixed farmers, because they are grasping for everything to survive. We have to designate who a farmer is, and how much he has to farm. On the radio, Senator Taylor said that he is a farmer. If he is a farmer, then I am an oilman, because I recirculate my oil.
A gentleman from Lethbridge was on the advisory board, and he resigned a year or two ago. All he would say was that "It is run by the Mafia." I do not know what went on. Whether they are elected or not, the directors are required to act in the best interests of the corporation, whatever that means.
Senator Fairbairn: Mr. Chairman, I would like to say that I believe that a great number of our presenters today would do a fine job as elected directors of the CWB.
The Chairman: Thank you all for a very interesting afternoon, and for preparing your briefs. Thus far, we have heard from 73 individuals and from 21 organizations, and we have done our best to accommodate all of them.
The committee adjourned.