Proceedings of the Standing Senate Committee on
Agriculture and
Forestry
Issue 9 - Evidence - Afternoon sitting
EDMONTON, Wednesday, April 1, 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 1:10 p.m. to give consideration to the bill.
Senator Leonard J. Gustafson (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, we are pleased to have with us this afternoon the Honourable Ed Stelmach, Minister of Agriculture, Food, and Rural Development of Alberta.
We have a good solid hour at our disposal, Mr. Minister, so I would ask you to proceed with your presentation and then we will go to questions, if that is agreeable to you.
The Honourable Ed Stelmach, Minister of Agriculture, Food, and Rural Development, Alberta: Honourable senators, I certainly want to extend a very warm welcome to each and every one of you; I hope your stay in Alberta is most pleasant and that you are blessed with a safe return home at the conclusion of the hearings.
Before I proceed with the presentation, I should like to introduce the gentlemen who are with me. Mr. Ray Bassett and Mr. Joe Rosario are well-known on the policy and trade side, and Mr. Gordon Harrington, who is from our Department of Agriculture as well, is quite involved on this particular issue of grain marketing.
Mr. Chairman, members of the committee, I appreciate the opportunity to speak to you on the proposed changes to the Canadian Wheat Board Act. We have reviewed the proposed legislation thoroughly and, as you are aware, we tabled earlier our written submission with your secretary.
My presentation today will reinforce and supplement the presentation we made on Bill C-72. In the time available for this oral presentation, I will summarize some of the views of the Government of Alberta, but I must make it clear that these views are consistent with the views of the majority of farmers in this province and, really, I suspect, that of Western Canada.
Farmers want the following outcomes for the grain industry in the province: changes in both marketing and the logistics system that are compatible and market-oriented; an efficient and competitive customer grain logistics system; a Canadian Wheat Board that is accountable to farmers and has the required flexibility to compete with anyone; transparent market signals; viable growth of domestic processing and value-added industry in addition to the export of raw grain. Our position, supported by the majority of Alberta farmers, is that the best solution is one based on choice in marketing, handling, and transportation.
Mr. Chairman, Bill C-4 is fundamentally flawed. It fails to address the fundamental reasons that called for a review of the act. Farmers wanted several things: First, more alternatives, including the Canadian Wheat Board, for producing and marketing their wheat and barley; second, accountability of the Canadian Wheat Board to farmers; third, individual accountability to be brought into all aspects of wheat and barley marketing as they currently exist for other commodities and in other parts of Canada; and fourth, transparent market signals and a competitive customer-driven grain logistics system. These are the preconditions to what we in Alberta need.
The outcome of Bill C-4 and the assumptions on which it is built are entirely different. There are, we believe, four flawed assumptions that form the basis of Bill C-4. The first of these is that a single-desk system can be the only basis of a viable and competitive grain industry in the designated area, which is again only Western Canada.
The widespread deterioration in the viability of the western grain industry and the likelihood that it will worsen is in large measure the result of cost increases imposed by a regulated system, which the farmer cannot influence or adjust. It costs approximately $63.28 a tonne to get Alberta grain from farm to tide water. Imagine the impact that this must have on processing value-added within Alberta. We have data in our written submission that illustrate the magnitude of the problem and the trend in recent years towards the deterioration of the relative margin in wheat and barley. The contingency fund, to my mind, is an added cost -- in many ways a compulsory tax -- that will provide further opportunity for cross-subsidization and market distortion.
The second flawed assumption is that a voluntary pooling organization cannot function in an open-market environment, and therefore there is a need for compulsion. Our response to that is that, indeed, there are several successful voluntary pooling organizations in many segments of agriculture all over the world. We provided research on this through the Senechal report, which we commissioned and have tabled and made available.
Closer to home, we now have the Ontario Wheat Producers' Marketing Board proposing voluntary choices for their producers. If Ontario wheat producers can have the choice, why not Alberta producers of wheat and barley? To suggest that we cannot have market choice and pooling operating side by side is an argument designed to protect an old institution, and in many ways it is simply self-serving.
The third flawed assumption is that the federal government needs control because it has financial obligations. You do not need compulsory participation in a single desk as a necessary condition for providing initial payment guarantees. There are other mechanisms. For example, the Ontario Wheat Producers' Marketing Board guarantees under the Agricultural Products Marketing Act, and the Export Development Corporation could be used to undertake credit sales.Indeed, in recent months the federal government provided credit sales into Asia; so why can we not provide credit, as do the Americans, or for that matter, every other major grain exporting country?
The fourth flawed assumption is that we need the single-desk system to manage and resolve cross-border U.S. trade. Granted, we have Canada-U.S. grain trade irritants, but to offer the problem as a solution is a little incredible. For years, at least in the perspective of the U.S. government and of farmers generally, the CWB has been the problem because of the absence of transparency and the monopoly nature of the trade. The CWB is the problem; how can we arbitrate between U.S. and Canadian grain prices if the border remains closed to farmer trading? In such a case, how can you prevent a farmer from Montana or Dakota suspecting that there is price manipulation? That is what we heard, sir, very clearly when we visited Washington, D.C., a few weeks ago; we do have a bit of a problem there.
Is the Government of Canada really in favour of managed trade? That is one key question, and there are several other important issues that we have raised about this bill in our written submission. As a politician reflecting what I believe are the views of our constituents, the majority of farmers in Alberta, I want to put a few points to you as representatives of the Senate of Canada.
We all talk about global competition, the importance of market orientation, and removing impediments to innovation, investment, value-adding, job creation and exports. That message is consistently delivered by the Prime Minister, the Minister of Finance, the Minister of Trade, and, of course, by Mr. Vanclief. At the same time, Ottawa imposes a Canadian Wheat Board marketing monopoly, which regulates what varieties are produced, how they are marketed, at what price and to whom, in the fashion of a command economy in a specific area of Canada only.
Both primary agriculture and manufacturing agriculture have flourished in Alberta. We have increased production and manufacturing significantly. Our exports have grown at double-digit rates. It took us years and almost half a billion dollars in offset payments before Ottawa removed the disadvantage imposed on us to processing and value-added by getting rid of the WGTA. However, the face of agriculture and the grain industry in Alberta has changed dramatically since it became fashionable to have a single-desk selling agency as the CWB.
Though fluctuating, wheat as a percentage of farm cash receipts in Alberta has shrunk from about 40 per cent in the early 1950s to about 12 to 15 per cent in the early 1990s, while the percentage of farm operators with Grade 9 education or less has fallen from 46 per cent in 1971 to less than 15 per cent in the 1991 census. The percentage of those with post-secondary education has increased from 8 to 26 per cent, while those with university courses and degrees have increased from 3.6 to over 12 per cent.
Back in 1951 we had more than 84,000 farmers with an average farm capital of $21,000. In 1996, we have just over 59,000 farms with average capital of $680,000. Even in constant 1996 dollar terms, farm capital value has increased almost five times.
Our concerted attempts to add value to our raw materials, prior to export is frustrated by the single-desk organization, which remains focused on the export of raw grains, with an increasingly costly logistics system.
In terms of world markets, there have also been tremendous changes as indicated by so many of the studies. The point I am making is that we have a significantly different industry operating in an entirely new world industry and economy. This applies as much to the content of global agriculture trade as it does to wheat varieties. And this is true for Alberta. I am sure the picture is not too different for other parts of the designated area. Yet Ottawa and the federal government would have us believe that the institutional environment needs only modest tinkering to make it tick in the 1990s, not to mention what will happen in the years 2005 to 2010.
The majority of the constituents I represent ate the farmers and ranchers of Alberta. Some of them feel that they do not have a voice in the government of Canada. There have been motions in the legislature, a plebiscite, and a number of pleas from the premiers and ministers, but none of these has carried any weight with the federal government either on this or other important agricultural issues.
The failure of Ottawa to appreciate the magnitude of the discontent on this issue in rural Alberta will strain our federal-provincial relations. I am not here to criticize what has happened in the past. We would just like to make certain points very clear this morning.
We have to ask ourselves this question: How can there not be cynicism on the part of our farmers, when their experience, the various studies, the commission and committee reports consistently seem to be ignored by Ottawa?
There is a false picture created by Bill C-4 that farmers will be given control of the CWB, and the red herring is that additional commodities will be brought under the CWB to create so-called balance and fairness.
Is it fair to disenfranchise the participants, other than, say, farmers in the canola industry complex -- that is, for example, the processors, the brokers, and others involved in industry? Our farmers never asked for it. Our international obligations would not allow it. Why would we want to shoot ourselves in the foot?
I think the move to the "elected director" type of structure is in the right direction, but it still does not alter the fact that the CWB will remain accountable to the Government of Canada, and Bill C-4 gives the impression that the entire purpose of the debate, the studies, the commission, and the representations by farmers is all for naught.
Farmers in Alberta want market choice, not the elimination of the CWB. They want us to make the choice and have the choice that the Ontario wheat producers want and may get shortly. The only viable long-term solution is for the federal government to relinquish the use of single-desk compulsion to institute a voluntary pooling organization under effective farmer control.
In the interim, I suggest that we park this bill until Mr. Justice Estey makes his recommendations on the review of transportation and grain handling, because that in itself, senators, is one very important issue for farmers; we feel that if we were to proceed with this bill now, it might really hinder His Honour in bringing fourth a recommendation that, once and for all, will deal with this transportation issue that has been with us for the last 40 years. That review may well require significant changes; it may transfer some risk and accountability to individual farmers, to grain companies and to railways, and some responsibility to seek out efficiencies and to promote competition between the farm gate and port.
Before I close, I want to recount briefly what farmers across the province told the Alberta Grain Commission in the most recent focus-group discussion for input to the Estey process. Again and again they spoke to the cost issues in grain marketing. They recounted almost frantic efforts to get away from CWB grains because of the compulsory associated costs; they said that they cannot make a living by supporting an institution that, instead of being their servant, has now become their master, and, quite frankly, quite an expensive master at that.
To conclude, honourable senators, we need your help as the house of sober second thought; we need you, this afternoon, to listen to the plight of our farmers. With that, we complete our submission and are open for questions.
Senator Hays: Mr. Minister, it is a great tribute to the committee that you and your department have taken the time to prepare this presentation and to appear before us; as a fellow Albertan, I want to thank you for that. There are four of us here today, of course, and not just myself; we do appreciate it.
I have three questions. First, in our discussions we have asked ourselves about the Alberta alternative, if I could call it that, in the event that Alberta does not like what happens; in other words, what will Alberta do if the single desk remains either because nothing is done with Bill C-4 or because Bill C-4 passes and a board continues with single-desk selling? Without trying to say where this comes from, would Alberta set up an entity to buy the grain and sell it, as I have read? Can you comment on that in terms of taking Alberta producers out of the system through use of the Crown.
Mr. Stelmach: Thank you for the question, Senator. Of course that option now is closed. Before the introduction of amendments to Bill C-4, we were to proceed with a court reference on the issue of whether the CWB had jurisdiction over the Crown; we kind of danced around that issue, and not being a lawyer --
Senator Hays: That is to your advantage.
Mr. Stelmach: We danced around this issue for some time, as you know, when we made that presentation to the court, and in the meantime a very specific amendment was introduced in Bill C-4 to close that option to Alberta totally. Let's say this amendment doesn't go through, though, and the court listens to the fairness issue; if we had to come up with some options on how to market the grain, we would suggest a pooling system of some sort for Alberta farmers, but not one that would involve Alberta as a government setting up yet another bureaucracy, or whatever, to do it, because the farmers would do it on their own. The only way we thought there was a possibility in the legislation at that time -- and it is now closed, of course -- was for us to buy the grain, so to speak, and just sell it back to the producer, and then let that producer find a market in the States.
Senator Hays: My second question is with respect to delaying Bill C-4 until the Estey commission reports. We have heard that suggestion from a number of presenters, so obviously it is an issue. We do not know precisely what form the bill will pass in, because we have heard a lot of requests for amendments and so on, but rather than leaving it uncertain would it not be good for Mr. Justice Estey to know whether Bill C-4 had passed, and in what form?. In other words, Mr. Justice Estey would be in a better position to make a recommendation if Bill C-4 were passed in one form or another, rather than remaining in uncertainty until after he reports.
Mr. Stelmach: I just want to make a couple points on that question. First, transportation has been an issue for years, and I can speak at least on behalf of Alberta farmers. It is inefficient, and I would say really totally unproductive compared to some of the other transportation systems in the countries we are competing with today.
The transportation issue, senator, has been with us since I was short enough to run under the kitchen table. My parents talked about it: "Look at all this money we are spending on transportation, and we can't seem to get the product there on time."
This year, when we were in Japan, I was looking at a flour milling operation in Fukuoka. The grain they were milling came from Australia; it did not come from Canada. It had barley in it and it had wild oats in it, but it was not a multigrain flour they were milling. I asked them, "You know the standards we have in Canada. Why did you buy from Australia?" They said, "Because you can't get it here on time. When we want it, you don't deliver it when we need it." That is not something we should be very proud of in this country; more to the point, once we lose that market, we will never get it back, unless some other country screws up. You know, people are not sitting back on their haunches waiting for Alberta or Canada as a whole to do something wrong in terms of market delivery. They are all advancing, incorporating technology around the world, restructuring their transportation systems, and they are getting their products to the customer on time.
Because the issues of marketing and transportation are interrelated, what harm would it do to delay this bill and have Mr. Justice Estey totally review it? I for one have full confidence in his ability to shake up the system and bring out the toughest recommendations requiring some backbone on the part of the federal government and of the provinces, and of the farmers as well, more than likely, to incorporate a logistics and grain handling system. So that is where I am coming from.
We have lived with this for so many years that another eight or ten months would not hurt, and it would give him the opportunity to do something.
Mr. Ray Bassett, Assistant Deputy Minister, Department of Agriculture, Alberta: If I may, I will just add to that a bit. We have been working with the other western provinces and the industry quite extensively in preparing some input to the Estey process, and one conclusion we reached was that we need consistency. We need a consistent approach to how we market, sell, transport, and handle our product.
Various objectives have been put forward by the four provinces in this submission. The first two really show you the conflict between where we might be going with the Wheat Board and where we might see ourselves having to go to correct the problems of the transportation system. The objectives are, first, to establish a legislative and regulatory framework that encourages development of a competitive, logistically driven grain transport and handling system that benefits producers and other stakeholders; second, to develop a customer-oriented system that is a world leader in performance and efficiency by promoting modern logistics practices to increase returns to producers. Another important objective is to promote competition in different components of the grain handling and transportation system to maintain competitive rates, improve service, and reduce overall costs. Finally, we want this to be market-driven with government intervening only when there is market failure.
So there is a different basic set of principles driving what we think needs to happen in the transportation system versus the basic premises and assumptions that we are building Bill C-4 on. That is one reason for waiting to see in what direction Mr. Estey thinks we will have to go with the transportation system, and then matching it to marketing.
As the people who run professional logistics systems and bulk systems will tell you, you have to be able to match your marketing to your transportation; otherwise you are doomed to fail.
Senator Hays: Bill C-4, if it is passed, will put into the hands of farmers, through ten elected board members, the power to change the way in which the Wheat Board operates, including ways that will be responsive to Alberta's and others' concerns. If it is clear that a majority holds that view, what is wrong with letting Bill C-4 go ahead and allowing farmers to make that choice rather than trying to second-guess them at the political level?
Mr. Stelmach: There are two reasons: First, the act does not provide marketing choice; second, the directors, although elected, are still responsible directly to the Canadian government, not to the producers. It is the producers' grain. It is not the government's grain, and that is the fundamental issue.
It is my grain, and I want to market it the way I want to; if I want to join some voluntary pool, so be it; if I prefer to deal still with the Canadian Wheat Board, that, too, is fine. Nobody is telling me to erase it, or eliminate it. It is still there, and these ten directors could still be there, these directors in the Canadian Wheat Board, but allow those that do not want to sell to the Canadian Wheat Board to market on their own.
Senator Hays: Presumably, the majority of the board will be elected based on what they have, either directly or through a delegate process, told farmers they will do to improve grain marketing involving the Canadian Wheat Board. If it is clear that farmers are better served with choice, then that is an option open to the board. From my reading of the act, the government does not run the board. The board will be run by the board. It will have a CEO, whereas it is run now by the commissioners and the chief commissioner.
I suppose there is a relationship to government, but the decisions will not be made in the office of the minister responsible for grain; rather, assuming the head office is still in Winnipeg, the decisions will be made in Winnipeg and will be subject to the supervision and direction of this board that will want the Wheat Board to act in the best interests of farmers, and if that interest takes them this way or that way, surely that is what will happen.
Mr. Stelmach: First of all, as I read the act, and I am sure there are people here who probably know it a lot better than I do, the CEO is still appointed by the minister responsible.
Senator Hays: That is a problem.
Mr. Stelmach: Yes. However, if that is the case, and we want to bring about change from the inside, we can appoint the five directors who will be appointed by the government that are pro choice.
Senator Hays: Or two, two, and one.
Mr. Stelmach: It is one of those points on which I think there is still control by central Canada, and putting all other issues aside, especially what is happening now in Ontario and our visit to Ottawa with respect to Bill C-4, I have noticed a real drawing of the line in the sand on it. It has created a great deal of division in this province, and it is just a matter of giving us that opportunity for choice: "Leave us alone as farmers; we will operate; we will survive."
Senator St. Germain: Mr. Minister, in your request you state that you would like to keep the Canadian Wheat Board around. I would like to know why, because it is to be totally restructured; in its present state, I still think it is a government-run organization, with the president and CEO being appointed by the government, and the board unable to remove the president and the CEO if they see that that individual is not performing. I ask you, Mr. Minister, why would you even want to keep it around if it stayed around by virtue of people wanting it? I would like to know your rationale on that.
Mr. Stelmach:I think that it will definitely survive, if it provides a valuable service to customers, but one good test is allow the farmers to decide if they are going to ship to the Wheat Board or find markets on their own. Second, if we are really going to shake up the system, then we should look at moving the CWB out of the Prairie provinces and into a port. Have them buy at port, which this bill does not allow them to, and create the competition, both in the grain company and the railway company, to get that grain to port at a specified date and a specified price. Try some incentives; if they are late, then surely at this particular time the inefficiency costs or the lateness or inability to get the grain to port should no longer come out of the farmers' pockets, because there is no margin, folks. There is no more margin there to deal with some of these inefficiencies, and we can tell by the shift in the production of CWB grains that we are losing them in that particular area.
Senator St. Germain: Was your experience in Japan driven totally by the inability of the board to meet up with the requirements of the customer?
Mr. Stelmach: Senator, the Japanese are very polite people, and they do not want to say anything that would cause us to suck air; I think those of you who have travelled to Japan -- and Senator Whelan has certainly been there many times -- find that, if you upset them, they do suck air. It kind of hurts.
They have told us many things, but it was the fact that we could not get it there on time that bothered them the most. They talked about the varieties we have, the different grades we have, and we are very proud of the confidence that the consumer has in our product, the fact that it is safe, and is graded well, et cetera.
On the other hand, if a particular customer does not mind a little bit of barley, or a little bit of wild oats, maybe we should be selling that grain to them in the way they want it as the customer, rather than telling them, "No, that is not what you want; that is not what you need. We have this to offer to you." It is a combination of inefficiency in the transportation system, and, again, listening to the customer.
Senator St. Germain: There was mention of the "notwithstanding" clause here this morning. Have you ever thought of invoking it? I mean against the grain only; strictly in regard to grain.
Mr. Stelmach: Yes, in this particular case; again, I am not a lawyer.
Senator St. Germain: Neither am I. That is why I asked the question.
Mr. Stelmach: I do not think it applies here. We cannot do it; although, just based on the representations we have had in our office and at some of the public meetings I have attended throughout Alberta, I am of the opinion that Alberta is a tremendous ally of the Federal Government on the issue of keeping this country united. The Premier has always led in those issues, not being afraid to take the heat here about that.
Senator St. Germain: From your travels, Mr. Minister, is there any doubt in your mind that you are reporting the feelings of the majority of your constituents.
Mr. Stelmach: No. I base this on my travels across the province. I base it on representations made not only to the grain commission but at other meetings that we have had on other issues. You are in there and suddenly this comes up. You could be talking about intensive livestock operations, for instance, and then you hear about the grain issue. It comes up so often. It is just over the choice issue, and it is difficult to defend.
Senator Fairbairn: Mr. Stelmach, on page 7 of your "oral presentation", you say in the second last point:
The only viable long term solution is for the federal government to relinquish the use of single desk compulsion, to institute a voluntary pooling organization under effective farmer control.
Could you draw us a picture of what in your mind that organization under effective farmer control would look like?
Mr. Stelmach: Various studies were done on pooling organizations in other countries. We can use those as an example; there is also the fact that we firmly believe, in this province at least, that farmers would organize their own voluntary pools, market their wheat and barley similar to what is being done by other commodities that are off-board. Furthermore, in this particular case, we are saying the marketing choice will then provide some true competition in terms of buying and selling to the Canadian Wheat Board, so it will keep everybody honest. We will be able to check the performance, measure the performance of both. And farmers will make that choice.
Senator Fairbairn: When you say "voluntary pooling organization," you do not envisage a single entity. It would be a network of individual organizations that would be run by the farmers themselves, operated by the farmers?
Mr. Stelmach: Mr. Bassett has just found it in the presentation.
Mr. Bassett: If you get a chance to read through the blue book that we gave you, you will see examples of different scopes and sizes of voluntary pooling organizations, and there are two or three common elements you will see in them. The first one is that they will form into a shape that benefits the participants and how they organize themselves, how they contract themselves to the organization, the scope that they give the organization. There is one in here that goes all the way through to making blue jeans.
The point is that it will shape itself based on the way it will best add value to the producers. It allows also a huge benefit in allowing producers to move up the value chain, as they will start again, in the way they put these things together in different shapes or forms, and take advantage of some of the profits that might be earned through marketing, through the handling system, or through processing.
There are examples starting to emerge around the province. The processing plant in Red Deer was producing gluten; it has contracts with farmers to sell grain into that facility. They add value to that, and there is a set of contracts and arrangements. It could be a contract arrangement. It could be an ownership arrangement. It is very flexible. If you have a chance to take a look through this, I think you will find it very interesting. The answer is, though, that we do not know what it will look like, because it will form itself based upon what serves the various constituents or people that are involved in it.
Senator Ghitter: Just as an observation, in terms of a two-tiered system, if I might call it that, it seems to me that the farmer and the government really want to have their cake and eat it too. Maybe they want the Wheat Board when things are tough, but they do not want the Wheat Board when the markets are good, and I would like you to respond to that suggestion.
Mr. Stelmach: Sure. Farmers dedicate their production well in advance to the Canadian Wheat Board, if they want to use the Canadian Wheat Board; those that want to produce and sell their crop outside the Canadian Wheat Board just declare it by saying, "I am not going to sell to you for the next two, three, or five years", or whatever it is.
Senator Ghitter: They cannot just move back and forth willy-nilly. They have to make a long-term commitment.
Mr. Stelmach: I suspect those that really want a marketing choice will find ways in dealing with the declaratory side of it and say that they are going to set this up for an X period of time and not deal with the board. Period. That, again, will prove to us whether the board during that period of time will have the measurement of performance, or these voluntary organizations will. It is just keeping everybody honest. That is what it is.
Senator Ghitter: Do you think the corporation can really function in an appropriate manner with all the new uncertainties you are now prescribing for them to face?
Mr. Stelmach: Definitely, and the other thing is how much lower are prices going to go right now? There is no margin now, so how much worse can it get?
Senator Ghitter: What does that mean?
Mr. Stelmach: It means that there is a heck of a lot of room for improvement, but when you impose a single-desk selling system, there is no way you can add any competition to it, because you are telling the producer of that product, or the wheat, that "This is to whom you are going to sell; this is the price, and I will tell you when you are going to ship it, under what railway car, under what time, et cetera, and we will also tell you to which port." Have the farmer decide.
Senator Ghitter: I see some problems if I am one of these new directors on this board that is trying to function and lay out long-term plans for the benefit of the board and the operation of the corporation with all these market forces you are applying. I am not opposed to it, but I do see a lot of problems.
Mr. Stelmach: On the other hand, senator, our board grains are decreasing rapidly, because they are not getting good margins, not getting good returns; and then, what is even worse, if you look at the value chain of wheat in this province, it is a very dismal record, because it has not moved up the value chain. We are not making cookies here or flour, et cetera, or wheat gluten. Is it right that we have to buy wheat gluten from the Americans?
Senator Ghitter: Should the board be there doing those things?
Mr. Stelmach: They are not there now.
Senator Ghitter: Should they be?
Mr. Stelmach: They can be, but have the farmer decide. The farmer will decide if they are going to sell to the board or set up their own marketing option and produce the cookies here in Alberta.
Senator Ghitter: I was interested in your observation on that, Mr. Minister. You did not get an opportunity to deal in your opening remarks with the areas of inclusions and exclusions, although you raise ethical matters with respect to that. I found your detailed material quite interesting, because you raised some issues that I had not seen before.
On page 5 of your analysis of Bill C-4 in bold, in summation, you say:
In sum, the tests appear to enhance the lobbying privileges of farmers and extinguish any ability of other industry participants or affected party to influence regulations.
Would you explain that to me? That is an interesting argument.
Mr. Stelmach: One of the things investors in the agri-food business and processing, et cetera, look for is a very predictable, stable regulatory regime; if you look at those commodities that generally have been under single-desk selling, including pork at one time, and grain, there is a reluctance on behalf of investors, and now especially when countries like Japan and China are going to look to investment in this country for food production. There is some hesitation when a product is controlled by one central-desk selling agency and there is no competition provided in terms of the market, the purchase of the primary product.
At this particular point in time, some people say that by the year 2010 as much as 50 per cent of our agricultural production will be for non-food use, and that companies in the high-tech industries will be converting agricultural products to something other than food for sale around the world. They may not make that investment in this province, or in this country, as a result of this possibility of anything from field peas to canola being included under a central-desk selling system. We just will not get that investment.
For us to grow our industry in this province from what is about $6.7 billion today to $20 billion value-added by the year 2005, we need anywhere from $5 billion to $7 billion of capital, and a lot of that capital will come from offshore, and that will grow the value-added in this province, and I suspect it is not any different in the provinces of Saskatchewan and Manitoba.
Mr. Bassett: An interesting point to give some thought to in terms of the inclusion-exclusion clause is that we set up other marketing boards and other structures. We allow the chicken people or the dairy people, but they all report to a central group, in our case the Agricultural Products Marketing Board, and those people determine what their bylaws are and what rules are relevant to the broader public interest. There is a check and a balance in here that sort of says that you cannot just go willy-nilly doing what you want and affecting other people, such as processors, other investors, or other parts of the industry.
You look at the way this is structured in this piece of legislation; you are giving a group of people, a small group of people -- it would likely be people who have some permit book holders -- the right to vote on the role of an organization that has a very pervasive effect on the whole agricultural economy of the Prairies.
In a way, if you are not very careful, you are disenfranchising a whole bunch of folks who are very much affected by what this organization may or may not do. The way it is set up and structured leaves open the door for a really ugly conflict down the road.
As the minister said, when we start seeing the growth in the value-added, we need to lock in the value chains, the interrelationships that are growing between the producer and the processor; or suddenly these people will not have a say on what may or may not be under the purview of a single-desk seller, and to me that is spooky.
If I were an investor, I would be very careful about what this meant to me, and that is where it kind of ties in. If you compare this to our other marketing board legislation, you will see there are some gaps, where the public interest and the other vested interests are affected by the way this legislation works.
Senator Ghitter: Would you prefer to see the inclusion-exclusion sections removed from the legislation for those reasons? Would that be your recommendation to our committee?
Mr. Stelmach: That is one area, yes. Have you ever seen a larger coalition of farm commodity groups and interest groups that are totally opposing this inclusion? There is another thing that really bothers me, and maybe I shouldn't say this, but I will; was it a Western Canadian member of Parliament who introduced this amendment into Bill C-4? No, it came from the Maritimes. The inclusion was not in Bill C-72, if I remember correctly. It came from the Maritimes, and what effect will this have on the Maritime MP? None at all. But it will hinder the market and our ability to grow value-added in Western Canada; so it just sticks in the craw of too many people. Certainly, if you bring that forward in your proposals and are able to erase it, we will be indebted to you.
Senator Hays: It is just the other side of the issue that you were exploring with Senator Ghitter. You referred to other industry participants having a role in the producers' decisions on how their product is marketed and so on. What about the other side of that? What about producers having some input or some means of influencing the other participants? For instance, in the cattle business there are big players like Cargill. Are they responsive producers? I am just thinking about this from the other side. Do you believe in it both ways or not?
Mr. Stelmach: Producers will have much more choice, because they will have a much greater variety of companies to deal with.
One of the reasons the cattle industry in this province is doing well is that there is a choice. They can sell to the big producers like Cargill, or they can sell to a local abattoir; they do not have to go through any kind of regulatory process, and so that leads to further investment, which then leads to more choice.
Right now, this threat of putting another commodity under a single-desk selling system -- again only in Western Canada, mind you -- will drive away investment here. Do we want to create an unfair advantage and move that investment to Ontario, say? Actually, I doubt that would happen. I suspect that the investment would probably occur someplace else around the world, but not here.
Senator Stratton: Thank you, Mr. Minister, for coming today. I have been really interested in your responses, and you have virtually dealt with the four questions I had in my mind. My first question had to do with opting out or freedom of choice, and you were quite clear on that. You want that to happen. There is no doubt there.
My second question was on inclusion-exclusion. You want that out. Contingency was my third one, and it is not there, as I understand it.
My last question, which was the main item on my list, was on choosing the CEO of the board. The proposal here is to have a board composed of 10 elected members and five appointed members, with the CEO being appointed by the minister. Politics being the art of the possible, perhaps the CEO could be recommended by the minister but would have to be acceptable to the elected members of the board. That might be a more palatable solution for the farmers, and it would recognize the large investment the federal government still has in the Canadian Wheat Board as a marketer for our grains, whether we firmly believe in it or not. In other words, both the minister and the elected members would have to agree on who the CEO should be, and that sort of thing quite often happens in politics.
Would you accept that as a potential solution, bearing in mind that, ultimately, a board's only real power is the hiring and firing of the CEO? After all, the CEO runs the company. If he screws up, then the board's responsibility is to fire him. In other words, not only should the board have the right to approve the minister's choice of CEO, but also, if the board passes a motion to fire the CEO, the minister should accept that. Do you agree with that as a potential compromise position?
Mr. Stelmach: Senator, the way the current system is being set up by the minister responsible for the Canadian Wheat Board, we will at most get two votes out of 15 as the province of Alberta, despite the fact that we produce 40 per cent of Canada's barley.
Moreover, when we talk about votes, who will actually do the voting? You know that, because of their frustrations with the whole grain industry, many farmers do not even take out a Canadian Wheat Board permit, so we would not be going through them for a vote on electing these directors. Nevertheless, in this part of the country, livestock, grain production and forages are all closely interrelated, and as we progress with technology we will see different crops grown on the Prairies that will use wheat and barley in the rotation, whether it be sugar beets, potatoes, or something else. We need those grains grown, but according to the most recent map, we only have two regions or electoral districts in the province of Alberta solely; they do not cross Alberta into Saskatchewan. I do not really think that is fair.
I suspect that if you have five members appointed by the government anybody whose name is put forward by the minister will be accepted by the board.
Senator Stratton: By the elected members.
Mr. Stelmach: By the board as a whole, because you have one third that is appointed.
Senator Stratton: Right now the minister has the right to appoint five members without the approval of the elected members, does he not?
Mr. Stelmach: Yes.
Senator Stratton: What I am trying to arrive at is that, to be effective, the board has to work together; therefore, if you are going to have the CEO appointed by the minister, the elected members have to have the right to approve that CEO as well. That is fundamentally what I am getting at. And as well they must have the right to fire him. Otherwise, what is the point in having a CEO or elected members, because they would have no power ultimately?
Mr. Stelmach: Senator, what if the board does the search for the CEO and it has nothing to do with the minister responsible?
Senator Stratton: I understand where you are coming from, but I do not think we are going to be able to reach that far. My concern is trying to achieve something that would be palatable to the minister, that he could accept, because he could in consultation with the elected members of the board decide on a CEO. The way it is now does the minister have to have the consensus of the board? I don't think he does.
Mr. Stelmach: I don't think so.
Senator Stratton: No, I don't think so.
Senator Fairbairn: No, it does not say it that way. The CEO would not be appointed without consultation.
Senator Stratton: Well, consultation, but I think there has to be a vote at the board.
Mr. Bassett: May I just add one quick point? When you look at that particular issue, I believe you also have to look at the fiduciary responsibility of the board. Is the fiduciary responsibility to the Government of Canada or to the producers? That is fundamental and should be a basic part of the discussion.
If, as part of its mandate, the Wheat Board had to maximize farm gate returns, that would create a fiduciary responsibility for that board to do that on behalf of farmers. However, it does not say that.
Senator Hays: Many people have the idea that the Canadian Wheat Board and the Government of Canada are one thing. Indeed, we had an exchange on that, Mr. Minister, and I believe you mentioned it again. However, as I understand it, the Wheat Board is an independent agency. It is run out of Winnipeg with commissioners, and it would, as envisaged by Bill C-4, be independent. In other words, the minister responsible for the Canadian Wheat Board would not be making the decisions of the board. He is responsible for the legislation and he answers to Parliament and so on, but he would not make the board's decisions, because it is not part of the government. Correct me if I am wrong.
Mr. Stelmach: You raise a very good point, because in the last court challenge, and that was over the Canadian Wheat Board contracts that were cancelled in northern Alberta, the judge very clearly stated that in his opinion the board is directly accountable to the Government of Canada; so that tells me that there is a very close relationship there. Their first and fundamental responsibility is to the government. Producers, of course, are nowhere in there.
Senator Hays: The evolution under Bill C-4 is to make the Wheat Board accountable to producers, but you interpret it as the board working for the government as well. Is that what you are saying? We should clarify that with the federal minister, because that is not my understanding.
Mr. Stelmach: I will let Mr. Harrington answer that.
Mr. Gordon Harrington, Department of Agriculture: The recent court rulings that have come out have proclaimed that the Wheat Board is a federal board and is accountable to the Government of Canada. It has no due care and duty to farmers, and Bill C-4 does not change that. It is still a federal board.
Senator Hays: Is it your understanding that the board is responsible to the government, not to the people who elect the board?
Mr. Harrington: That is correct. Bill C-4 does not change the fact that it is a federal board.
Senator Hays: We can clarify that with the minister.
Senator St. Germain: Just a supplementary. Is that emphatically clear, or is that up for discussion, as to that responsibility?
Mr. Harrington: I am reporting to you what judges have ruled on in recent cases.
Senator Ghitter: My concern has always been that the directors, who are elected by producers, may hold views different than the people who elect them, and thus may be in conflict and in a lot of potential trouble as directors of this new corporation. Do you have a view on that?
Mr. Bassett: That is a fascinating problem, a great topic for debate. A person who runs for election to the board is likely to run on a certain platform or a certain type of bias. Yet, if elected, that person will be legally bound to act on behalf of the organization. They become fully accountable for the operations and due diligence of the organization. That is why it must be made clear what that role is.
Senator Ghitter: The government is saying that they are democratizing the board, but that is a facade, because they are not democratizing at all. They are getting some directors in there who are bound by legislation that they may disagree with, so to me it is not a democratic process. Would you agree?
Mr. Bassett: Yes.
Senator Hays: Just a further observation. If I were on the board, I would act in the best interests of the people that I served in the context of my responsibility to the board. I would not go to the minister, whoever that might be, and ask what I should do today because I owe my position to the people who elected me. I would put my name forward because either I want change to take place, or not. As a producer, I want a board that serves me in a more efficient way.
In your opening words, minister, where you hid hit the nail on the head in terms of an efficient system and so on, I do not see why they are mutually exclusive. I do not see why you cannot do both of those things.
Mr. Stelmach: I do not think it is very clear that we can do both.
One observation: In terms of the Wheat Board cancelling contracts with northwest farmers, you would think that the board, which is elected by the farmers of this province, would have said to them: "It is only fair that if we sign a contract with you, and you do not deliver, we will fine you $18 a tonne. The reverse will also be true. If we sign a contract with you, and you have sat on that grain all year because you have contracted that grain to the board, and for whatever reason, at the end of the year, decide that we are not going to honour the contracts, we will compensate you."
What you are saying, senator, is that these directors are going to say to the Wheat Board: "We should be paying them some type of compensation." The duty of the directors is to the Government of Canada, not to the producers, the way the legislation is now, and unless the legislation has changed in some way, their responsibility is to the minister responsible and to the Government of Canada.
Senator Hays: We will look into that. However, there is a transcendent duty. They want to deal with those people next year. They want a viable entity that facilitates, in the most efficient way possible, the marketing of a commodity that we might or might not choose to produce, namely a board crop.
Mr. Stelmach: I would like to answer in a couple ways. But first let me say again that I am not a lawyer and, as such, I do not know, if there is a test in the future with regard to this, which way the Courts will rule.
Let us suppose that the ten elected board members said to the minister responsible: "You are out to lunch, and this is what we are going to do." Where are the teeth in the legislation that are going to force these directors to respond to the government as opposed to the farmer that elected them?
Second, if you look at the way the electoral wards are drawn up, coupled with the five directors who are appointed by the minister, there is no hope at all that any Alberta position will come forward in terms of bringing changes from within. It is impossible, unfortunately, as a province responsible for 40 per cent of the barley production, and wheat acres are going down; farmers are going to different commodities.
Senator Whelan: Mr. Minister, let me ask you: If there were a vote, say, by the Ontario Wheat Producers, Manitoba, Saskatchewan, Alberta, and the Peace River district in British Columbia as to whether they wanted single-desk selling, and you agreed to the current kind of balance, would you accept the result one way or the other?
Mr. Stelmach: That is a very good question, because there were a couple plebiscites here in the province of Alberta where two-thirds supported choice. But I know there are people who produce a heck of a lot of grain, farm as much as 3,000 acres, who did not get a chance to vote. They were disenfranchised, number one.
Number two, the last time the question was something like: Do you want a board, or do you want to eliminate it? There was no reference to choice; choice was not an option. When that vote was taken, 37 per cent voted to do away with it. I suspect that had there been a third question there would have been an overwhelming support for marketing choice.
Senator Whelan: When you talk about Japan, I remember them very well. In making a comparison to the grain that they got from Australia, I would bet, Mr. Minister, that they were told to take that grain by some Japanese buyer.
Along with a minister from British Columbia, I was at Prince Rupert when we loaded the first boatload of coal to go to Japan. It was not too many months after that that the Japanese began buying coal from Australia, because they bought the coal fields. They bought practically everything. It was a disaster for the coal fields.
I was not the minister in charge of the Wheat Board, but I met the Japanese ambassador about a price commitment we made for canola and he insisted that we honour our contract. We agreed to do so. I had the okay to do this, of course. However, when cheap rapeseed from France became available, the Japanese were not so honourable. They did not continue to buy from Canada at that time. I point that out to say that, in my experience, global trade can be very rough.
On another topic, when you were talking about the Member of Parliament who moved the motion -- and I am not sure, but from what you said about him being from Eastern Canada, I if I remember correctly, it is Wayne Easter. He was the president of the national farmers union in Canada. It did not matter that he was from Eastern Canada. I was from Eastern Canada -- still am -- though I worked in Alberta as a very young man.
Senator Stratton: Tell him about your teacher.
Senator Whelan: I bypassed Manitoba because it was a longer train ride to Alberta.
Senator St. Germain: Should have come to B.C.
Senator Whelan: I just want to say, as humbly as I can, as Mr. Diefenbaker used to say, you can challenge me on any decision I ever made as a Canadian minister that was not fair to all this country. I find it hard to accept that we seem to be pitting one part of the country against another. I hope that is not the intent.
Mr. Stelmach: Let me cover the points. There are about four, possibly five, in terms of pitting Western Canada against Eastern Canada, and I will leave that to the end.
With respect to Japan, you suspect that somebody told them to buy wheat from Australia. My question is concerning that is: Where was our person? Why did he or she not insist that Japan honour its contract to buy from us?
I am not talking about the performance of the Canadian Wheat Board, because we cannot measure it, based on the information we have. Everything is kept secret. Even for the ten years prior to 1990 we still cannot find out where and at what prices the grain was sold. Therefore, I think that openness and transparency would greatly settle some of the farmers' fears. That is one issue.
Senator Whelan: Maybe you misinterpret me. I was thinking that it was somebody in the Japanese system that told them to buy that grain from Australia, because of the coal business, et cetera. I am not saying there should not have been somebody there representing the Canadian wheat growers. The Canadian representative should have been saying that our wheat is better; someone should have improved our bid. That is what I was referring to.
Mr. Stelmach: The fact is that we have lost that sale and a few more. There are many problems, not just the marketing, but also the transportation.
Japan makes its purchases very wisely. They purchase their commodities from multiple sources, and hopefully they will come back to us for grain. We have certainly created a little bit of news because of the two shiploads of barley that we sent that allegedly were contaminated, and that is not very good for our system. I am not saying that that is the fault of the Canadian Wheat Board, the Canadian Grain Commission, whatever. The fact is that it did get through; with all our checks and balances, it still made it through.
One very significant thing is that, heading into the year 2000, we are going to see substantial changes in trade policy. This will occur as a result of some of the meltdown in that part of the world, the Asian world. Japan can no longer subsidize or protect their crushing industries and primary production through high tariffs. They are experiencing tremendous problems in their finances, and as a result, that will open up some opportunities for us in the near future.
Again I reiterate the fact that we have to be prepared to face those challenges, to take on those opportunities, which I think are going to be tremendous for Canada as a whole, in terms of food production. We are looking at a country that is only 50 per cent self-sufficient in food.
With respect to the inclusion/exclusion clause, the inclusion clause moved by Wayne Easter, here we are producing approximately 40 per cent of Canada's barley and did we get a hearing on it? Did somebody ask Alberta about it? No, not until we made the trip and visited with Minister Vanclief, who I found to be very easy to work with, did we talk about this. I would think that he felt uncomfortable.
We certainly have not had any communication to our office informing us of who wrote him a letter from here asking -- that represents the majority of farmers, producers, canola and pea producers, et cetera -- to include that in the legislation, that it is a really good deal. I do not know that the Canola Commission came forward, or any other organization, saying that they favour inclusion. I have not seen that.
With respect to Western Canada, yes, this is kind of the stuff that is going on that does create a little bit of a division, and we do not need it at this particular time. We have enough problems in the country. Why do we do it on an issue like agriculture?
Somebody said one day that there is politics in everything. Politics in health, politics in social services. I do not think there is more politics in any one industry than agriculture. I am finding that out the hard way, in the position of minister.
We do not want to do business that way. We wish to have good dialogue like this, where evidence is brought forward and at the end of the day a decision is made in terms of what is best for all of Canada, where the opinions of Western farmers are considered.
Senator Whelan: You are reviewing it now. This committee is looking at this, and we are very serious about looking at it, too.
In terms of the United States, they can be difficult and very protective at times. The authority of their federal government supersedes ours by about 90 to 10. Under our Constitution, ours is 50/50. The USDA has pretty near total authority over agriculture for trade and everything else. Do you not agree with that?
Mr. Stelmach: Except California, I am informed.
Senator Whelan: Except Texas, too.
Mr. Stelmach: We were in Washington about a month ago to talk about some of these irritants -- flow of cattle down south, grain, et cetera. In working with American senators and congressmen, we were able to deal with some of these issues that have percolated to the top. We reminded them that maybe it was their export subsidies that created a vacuum that we filled with our Durham wheat.
Overall, however, they are our best customer and we are their best customer. Close to $1 billion or more a day in trade, including agriculture commodities, takes place, so we have to pay close attention to them. If we are really going to gain access to the European Union, we are going to have to form a much larger economic region. We are going to have to cooperate and work well with the Americans to try to break through some of those market barriers.
This committee has had positive reviews, at least from the farmers in Alberta, for conducting these hearings.
Senator Spivak: Mr. Minister, I wanted to ask you about the costs. I have been a member of this agricultural committee for a number of years and it seems to me there is always the problem of the input costs continuing to go up. The commodity prices do not go up enough. In my own province of Manitoba, the western grain transportation being removed has resulted in a 39-per-cent increase in rail costs. I am sure you know that.
In your presentation -- and I hope I have understood you -- you seem to attribute a lot of the increase in costs to the inefficiency of the Canadian Wheat Board operations. One of the witnesses this morning estimated that those costs, the costs of marketing wheat, are about a nickel a bushel. I would just like you to comment on that aspect of costs.
Mr. Stelmach: Senator, I think the costs are more in the constraints that producers have to operate under.
Senator Spivak: So the price.
Mr. Stelmach: Yes. As well, I did talk about the removal of the WGTA and, for Albertans, it has put us now in a position where we will be adding further value to our primary production, whether it is red meats or further processing, because we are geographically located much closer to the Asian market-place than any of the other provinces.
Again, because of the current regulatory regime in grain marketing, it does not allow us to add value and bring in those natural market forces that are there, whether it be in malting, barley, wheat, flour; it provides for some inefficiencies in the value added.
Senator Spivak: I just wanted to point out to you that it is not equal across all the Prairie provinces; Manitoba is suffering more from the removal of that than the other provinces.
In the presentations made to us, it has been obvious that choice and dual marketing are of major concern. What about in terms of the input costs? I mean, there are areas which are very concentrated. Do you feel that there is enough choice? By choice you mean competition, not monopoly, so do you feel that the competitive market is working well? Should the Wheat Board be a single-desk seller? Are you not concerned that in that concentrated market we might be running into another monopoly? That is all.
Mr. Stelmach: Although costs have increased for fertilizer, chemicals, and such, I think there still is free market orientation on the inputs even though they have come up.
Senator Spivak: Quite a bit.
Mr. Stelmach: Even on fuel. We say that there is competition. A number of studies have looked at whether there is price gouging, et cetera. We still come to the conclusion that there is competition in that area.
Hopefully in the Prairies, if we do our work right -- and this is where I am putting in a plug for value added, increase the margins for the primary producers by allowing further processing on the Prairies, as opposed to sending the raw commodity to export markets and have them pay all the freight. It is much easier to send a pound of beef than it is the barley that is required to raise that pound of beef. It is also much easier to send the product pre-cooked, ready for the table, to other countries, rather than sending it raw.
There are opportunities. We have to scan the environment. We have got to pay attention to that, and I think we are on the verge of major change, really a small revolution in agriculture in terms of moving to value added. I reiterate that a lot of our agricultural production will be for non-food use, canolas, marine biodegradable oils, and so on. I do not have my little rubber glove with me today, but fractionated oats is used instead of mineral talcum powder in surgical gloves, et cetera. All those little things add a bit more value to the primary production, and it will make a big difference in the end.
The Chairman: Our committee has heard just over a hundred witnesses now. Many of those witnesses have mentioned choice. Farmers operate under a contract system now with the Canadian Wheat Board. We say we are going to sell X-number of tonnes of grain to the Canadian Wheat Board. If we do not deliver, we are penalized.
I understand that in the model proposed in Ontario a farmer could agree to contract 75 per cent of his production to the marketing board and then the other 25 per cent of his production somewhere else. Whatever that number happens to be, I want to have a choice to sell wherever I can. Could that kind of a system work in your thinking?
Mr. Stelmach: Are you suggesting, senator, some amendments to the current bill.
The Chairman: Yes, it would have to be amended.
Mr. Stelmach: I just do not know how it would be worded, because these amendments deal directly with the Canadian Wheat Board and its operation.
The Chairman: If there are not some amendments, there will not be any choice. That is the way I read the bill. Many of the witnesses are calling for choice. That is the point. How could you implement choice?
It would seem to me that you could opt out for five years, or opt in for one year, whatever the time period the regulations would be set at. It seems to me that that could be set on a yearly basis.
We renew our contract about three times a year. It has become a little difficult. It was a lot easier for me when they said: "You can deliver two bushels per acre." However, in the north, that was a problem, and the Wheat Board and people understood that, because there were more bushels of grain produced in northern areas.
Mr. Stelmach: The fundamental issue here is, of course, the monopoly. What you are saying, senator, is that a farmer who has 1,000 tonnes of wheat, 75 per cent of which is contracted to the board, would be able to haul the remaining 25 per cent over the border and sell it in North Dakota.
The Chairman: He would be permitted to contract the whole 1,000 tonnes or any percentage of that tonnage. I have contended for a long time that farmers would use the Wheat Board much more than people suspect, because most farmers do not want to see the Wheat Board gone.
If a choice were given, I think the Wheat Board would do very well, quite frankly, because I do not think there are the markets for wheat out there right now that we think there are. I live on the U.S. border, so I can see what is happening back and forth across the border.
All I am asking is: Do you think this kind of arrangement could be feasible? If it does not happen, in my opinion -- and I am told, as Chairman, not to render my opinion too often -- the Wheat Board may not survive if choice is not given to the farmers.
Mr. Bassett: The Senechal Report says that a move to voluntary choice really has to be producer-driven. The Australians went through a two-, three- or four-year exercise of building an organization that would support it and would be valued by the people.
A provision could be put in place that would allow that it does not have to be compulsory, in which case they would have to enter into a process to build an organization that met and meshed with the needs of those people that would see a value in participating. I agree 100 per cent. There are a lot of people out there who do not want to be marketers of their own grain. They will pay somebody to do that because it adds value to what they are doing.
The whole trick is to get around the notion of compulsory. This organization will be strong if it is built around what people see in value. As soon as the notion of compulsory is introduced, everybody's energy is turned to a different direction.
The Chairman: I have one more question. It related to the continental market in grain, more specifically to trade.
President Clinton made an attempt at fast track on trade. It would appear that that will have quite an impact, especially on grain and beef in Western Canada, probably more so than in Eastern Canada. You said that you were in Washington to discuss this issue. How do you perceive that?
Mr. Stelmach: Senator, when we met with various trade officials, senators, congressmen, it seemed that the majority of people that we talked to away from the public setting really wanted the President to have fast track.
In talking to the senatorial agriculture committee, they indicated that they wanted the President to have fast track. However, it never came to a vote. There were many concerns around the table that an opportunity has been lost to them.
They will be heading into an election, of course. They are concerned that other countries are entering into trade arrangements that may come back and haunt them, because the standard will be sort of set, and they will be coming in much too late. A very wise observation, senator. It is an area of real concern.
The Chairman: I will give you the last word, Minister Stelmach.
Mr. Stelmach: I would like to close by thanking you sincerely for listening to us this afternoon in Edmonton. We have taken great pleasure and honour in bringing forth the views, we firmly believe, of the majority of Albertans. We are trying to work around some of these issues so that we can win back the confidence of many of our Alberta producers. Hopefully this will alleviate those concerns and, as you take the information back to Ottawa, cause you to give serious consideration to our presentations and make some necessary amendments.
The one issue, though, that is really dear to my heart is that of transportation. We believe they are interrelated. No damage will be done by delaying, parking the bill. Let us deal with the issues of transportation, because they are interrelated. Let us once and for all deal with it, because if we do not do it now, when is the next opportunity going to come? How many more farmers are going to go to other commodities and move away from grain production as a result of being unable to bring some efficiencies to the system?
Once again, thank you, on behalf of our presenters. We hope you have safe trip back to Ottawa at the conclusion of the hearings.
The Chairman: I understand that there are five presenters left. We were going to have them separately, but we could do all five at the same time. They are Cory Ollika, Steve Snider, Ken Stickland, Louis Berg, and Ian Bourgeault.
I would ask those gentlemen to come forward to the witness table, please, and introduce yourselves and tell us where you farm.
Mr. Ian Bourgeault, Farmer: I am from Morinville, Alberta. I farm with my son and my wife. I have 150 cows calving.
Mr. Steven Snider, Farmer: I am an organic farmer from the New Norway area, which is near Camrose. I farm with my father, mother and brother, and we farm 13 quarters of grain.
Mr. Cory Ollika, Farmer: I am a mixed grain and livestock producer from near Wasetna, Alberta. I farm there with my father.
Mr. Ken Stickland, Farmer: I am a farmer and farm-management consultant. I have operated a business out of Edmonton for 20-odd years, but like a lot of Saskatchewan farmers, I spend some of my springs and falls farming at our operation in Red Deer. We have 2,200 acres of barley, peas, canola, and wheat. From time to time I have been in the hog industry.
In my work as a consultant, I have spent a fair bit of time on policy issues. As well, I have done three major evaluations on the Wheat Board. This is a subject near and dear to my heart. I have just completed five major seminars across the province, the purpose of which was to help farmers plan how they will survive in these price settings over the next two years.
Mr. Carl Berg, Farmer: I farm in east central Alberta, 25 quarters, along with my son and daughter. We have mostly a canola-wheat rotation. As well, we have a few cattle.
The Chairman: Thank you, gentlemen. I would ask you to begin, please.
Mr. Bourgeault: I have no notes with me today because I did not know I was going to be asked to speak.
I called the Wheat Growers' Association last night to ask them who was going to be here to represent the wheat growers, and they said nobody, so I said I would like to say a few words.
As far as I am concerned, I do not blame the board for everything; I blame the government. It seems as if every time the western farmer makes a buck, the board puts on a wartime grain price, such as happened in 1917 and 1920.
Moving to 1935, there was, to a degree, a kind of dual marketing. Then in 1943, I guess the government figured that this dual marketing was not very good, because the open market was mostly higher than they were all the time, so they knocked the Grain Exchange out put themselves in place as dictators.
We then made a deal with the United Kingdom. I happened to be a young fellow, 16 years old, going to combine in the States. My eyes were opened to the fact that something must be wrong with Canada, that they had lost their democracy. It was more like dictatorship.
I have had it rough throughout my life because I have fought, since 1947, against the board or against the government. I was not pleased then, and I am still not pleased.
As far as I am concerned, we have the open market. If you want to bid on rape, canola, peas, I do not think the board is needed, unless somebody wants to take money off of you. Why duplicate things? We bring cattle to the market. There are buyers there who bid on it, and that is the way I like it. I like competition. Without competition what are we?
In terms of the Senate, there are five senators from Alberta, which has a population close to 2 million. I do not know why they try to push Alberta aside. There are ten senators from Nova Scotia. Who decides who should be a senator or not?
Senator Spivak: The Constitution.
Mr. Bourgeault: The Constitution. Then let us talk about the Constitution. I remember when Trudeau brought the Charter of Rights and Freedoms. Then they put in a notwithstanding clause. As far as I am concerned, we have no Constitution, because any time the government wants to step on somebody, wants to crush them down, they can use the notwithstanding clause. Am I right or wrong?
Klein almost used it over here, and there was a big opposition.
As well, when Klein tried to get the judge to take a 5 per cent cut, I guess the judge won. These are the kinds of things I wanted to talk to you about. I will stop now. If you have any questions, I will be pleased to answer them.
The Chairman: We will go to Steven Snider.
Mr. Snider: It is a little intimidating speaking to a committee of the Senate, but I will do my best. I hope you have all received a copy of my brief.
As I said, I am a certified organic grain grower. We market all of our grain, 1,600 acres of crop production. It is all certified organic. My primary markets are in the United States, so obviously I have a lot of conflict with the Canadian Wheat Board putting grain across the border.
I am just going to run through my presentation as it appears on the brief in front of you. First, price discovery. Due to the daily fluctuations of buy-back prices and the uncertainty of interim and final payments, it is extremely difficult to quote a price to a buyer if you are not sure what you are going to get paid.
When a grain buyer in the United States phones me up, I have to phone the Wheat Board to find out today's price to buy it back. And when I do a buy-back, of course, there are interim and final payments on top of that. I do not know where I am going to end up at the end of the year, as far as my returns per acre on that commodity sold, so I am waiting for a final figure six or seven or eight or nine months down the road. It is tough to do budgets on that kind of a system.
Time delays. Some contracts demand immediate shipment. Processing of buy-back and getting an export license can take anywhere from five hours to three days. I cannot phone the Canadian Wheat Board directly as a producer and get a buy back license. I have to go through an agent of the Canadian Wheat Board, such the Alberta Wheat Pool. They have to go through the Calgary head office to process the buy-back at a terminal point somewhere in the province. They get an export license through the Canadian Wheat Board. You have to go through many people in order to get the license.
If I have a trucker phone me up and ask me if he can put a truck in my yard for loading tomorrow, I am left hanging in the air.
Grain integrity. Our grains must be individually identified by lot number and must not be contaminated by other grains, therefore, making them undeliverable to a grain terminal. In the province of Alberta, there are no terminals currently handling organic grains, so I cannot ship or deliver my grains to those terminal points. I have to ship my grains directly, so another check that does not fit into the Canadian Wheat Board system at all.
Knowledgeable people. There is an acute lack of grain agents who are able to do buy-backs for organic growers. It is getting to the point where people hardly want to talk to me when I phone them up to do a buy-back. They just do not have time for it; it is a hassle to them. They are not making a lot of money on it, or so they say. Also, a lot of them do not know how to do a buy-back for an organic grower because it is not being delivered to a terminal; a whole different process must be used and a lot of them do not have computer systems set up to handle that kind of a transaction.
Market development. Marketing of certified organic grains is done exclusively by the producer. The Canadian Wheat Board does nothing to develop our markets, so why should we be forced to subscribe to their system? Marketing is the mandate of the CWB, yet they do none of that for us. We are on our own. We do our own thing, yet we have to subscribe to their system, and we are under their controls.
Export permits. An export permit is good only for 30 days, and can be extended to a maximum of 60 days. If the customer does not take delivery within the period, the grain has to be bought back again.
There was an interesting case that involved myself. I sold on contract three loads of barley to an American buyer. It was organic certified malt barley. He took delivery of two of the loads and had six months to take delivery of the third load. When I wrote the contract up, I did the buy-back for the entire three loads, and my permit was valid for 60 days. I phoned the Wheat Board, and they told me that I had buy back that third load again, and that is not fair. Again, we are looking at a unique situation for an organic producer, where we are getting hung out to dry.
Unfair deductions. We pay a $5 per tonne processing fee to the Canadian Wheat Board agent for a buy back, and there have been several cases of companies charging freight, elevation, shipping, handling and cleaning charges on a grain they have never seen. That is a problem with their computer system. When I do a buy-back from a terminal point, $48.36, or whatever the current deduction is per tonne, is deducted automatically of that cheque. That cannot be changed, or so they say. That is what I am told.
I found a way of cleaning that up and getting around the system, but I know a lot of organic producers who are scared to market into the United States, because they cannot get that money back. A fee of $48 to $50 a tonne off the top takes your profit margin right out. In my mind, that is not only unfair, that is stealing, because they have never seen that product, shipped it, cleaned it, elevated it, stored it, whatever.
Now I move into the subject area of solutions.
The inclusion clause is a worst-case scenario. Do not allow the rest of our grains to be put under the control of the CWB. I am allowed to move my rye and my peas and my oats quite freely, and it is a very simple transaction. My wheat and barley is a big headache, and I do not want the rest of these grains to go that way.
Direct buy-backs. Currently, all buy-backs have to go through an agent of the Canadian Wheat Board. If we could do our buy-backs directly with the Canadian Wheat Board, it would simplify and speed up the process.
Exempt certified organic grains and certified seed can be exported without doing a buy-back. The process of inspection for seed and certified organic grains are almost identical, so why not exempt organic grains as well?
We are also Canadian seed growers. Some of our products are exported as Canadian seed. I have a bit of barley -- it was the exact same malt barley that I referred to earlier that went to the buyer down in the States. It is also foundation clagis seed. If he would have bought it as seed, it would not have cost me $0.10 to do the buy-back; but seeing as he bought it as malt, it cost me, I believe it was, $.53 a bushel to get it across the line. I told him: "If you buy it as seed, I will sell it to you for $.50 less." But the integrity has to be there. He did not want to cheat, and so he said, "I will get you a permit, and we will go from there."
If seed growers have that specialty status, why do not we? We are inspected. We keep track of field records. Everything is pretty well parallel, but they are allowed to be out of the system, and we are in it.
In conclusion, the government's job in a free and democratic society is to create an environment for fair, equitable trade to take place, not monopolize and control trade. If I cannot compete with other producers on a level playing field, I should not be in business.
I was at a meeting a while back, and a producer from the United States worded it probably the best I have ever heard. He said: "When I look at the situation in Canada, as far as grain producers go, it reminds me of a bucket of crayfish down in the south. You never have to put a lid on a bucket of crayfish, because as soon as one tries to climb out of the bucket, the rest pull him back down." I just want out of the bucket.
The Chairman: We will go to Cory Ollika.
Mr. Ollika: I do thank the committee for coming to Western Canada to hear input on Bill C-4. As a young farmer, the Canadian Wheat Board represents to me common sense and financial stability for my farm and my community. I am not an organic producer; although, I work with a number of people who are.
Price pooling, single-desk selling, marketing, and financial partnership with the federal government make the Wheat Board the ideal risk-management tool. It must be emphasized that every time the Wheat Board is challenged, the majority of farmers repeat their support for it, and sound, reputable studies have shown that the Wheat Board earns farmers $265 million more each year than they could garner as individual sellers. Backed by sound facts and overwhelming farmer support, the Wheat Board must not be weakened in any way.
I am concerned that a vocal minority of farmers speaking in tandem with non-farm special interests, such as the National Citizens' Coalition and the Canadian Federation of Independent Business, are proposing changes to the Wheat Board that are damaging to the pillars of the Wheat Board which the majority of farmers support.
Regarding the inclusion clause, because as we have heard today, choice is important, clause 47.1 outlines a process whereby producers can democratically decide to add grains to the Wheat Board. The Liberal government has vowed to put the Wheat Board and the inclusion of grains into the hands of producers, so this is a useful amendment. It could be further improved by allowing provincial and national general farm organizations to have some role in triggering inclusion.
The committee should be concerned about the wishes of groups claiming to represent farmers who like to take democratic power away from those they represent by eliminating the inclusion mechanism or weakening farmers' control over that mechanism. If such groups really represent many farmers, it seems inconsistent that they fear direct democracy by farmers in the inclusion of grains.
I heard something today about driving away investment and value-added. I do not believe that. In fact, I have talked to some people in the canola and crushing industry who think that consistency of supply through a single-desk marketer and seller would benefit that industry.
Besides, processors are consistently making 17 to 20 per cent return on their equity. Since time immemorial, farmers have been making 1 to 2 per cent return on equity, so from where I sit on my farm, I want a strong single-desk marketer to help me get the best.
As far as accountability is concerned, the elected board of directors, of course, must be responsible and accountable to producers in two ways -- and I think this is a point that earlier had been somewhat missed. First of all, they have to be, and this needs to be clarified in the legislation, directly accountable to producers through the elections; and second, that Crown corporation known as the Canadian Wheat Board needs to be accountable to farmers and all Canadians through the Parliament of Canada.
Regarding initial price adjustments, the partnership between the federal government and farmers, vis-à-vis the Wheat Board, in regards to the guarantee of Wheat Board prices, credit sales, and borrowings saves farmers $60 million annually. Bill C-4 revokes the federal guarantee on initial price adjustments, and since initial payment adjustments have never incurred a deficit in the history of the Canadian Wheat Board, these provisions of Bill C-4 should be repealed.
Regarding cash buying, quite simply, cash buying threatens price pooling, which farmers fought hard to obtain and continue to overwhelmingly support. Clause 39.1, which allows for cash buying, is dubious and is a dangerous solution to a problem which seldom arises in Wheat Board operations, value source in grain. Clause 39.1 should be deleted.
Regarding Canadian Wheat Board flexibility -- because, again, choice is important. We hear a lot about choice. As the gentleman to the far left here stated, Canadian history has proven that the Utopia of dual marketing is an impossibility. It did not work when it was implemented back in the 1930s, and it will not work. We must learn from history and not repeat the dual marketing mistake.
A voluntary Wheat Board is another unnecessary answer to the question of flexibility in an orderly marketing system. The buy-back option that already exists is an excellent representation of marketing choice. The Alberta government has published an excellent how-to guide in utilizing the buy-back program. The buy-back option is 100 per cent legal in terms of exporting to the United States; second, as the gentleman to my immediate left pointed out, while the buy-back system often needs to be streamlined and improved, it immediately offers somewhat of the best of both worlds since grain transferred through the buy-back programs still remains part of the pool, and, therefore, does not undermine farmers' collective marketing strength that they have through the Wheat Board.
If an individual finds a higher profit after the buy-back, he or she reaps it; and if he or she is trying to cut into a niche market by underselling, he or she still benefits by receiving final payments through the pool. In short, the existing Wheat Board system already provides flexibility and choice, which could be improved, and still serves farmers exceedingly well in the international marketplace. These provisions should be strengthened.
On the subject of the Western Grain Marketing Panel, I am sure you are aware the Western Grain Marketing Panel had a survey of our international grain customers. Our customers, world wide, marvel at the Wheat Board's consistency in the quality of product. Pure 60 pound barley or 60 pound wheat alone does not make for high quality Number 1 wheat. It is no wonder that the American system is falling to pieces when it comes to consistency and quality.
Our international grain customers are also impressed by the delivery reliability of the Canadian Wheat Board, so while the Wheat Board serves well here, it is better to regulate the duopoly or monopoly of the Canadian railways.
The only thing that our international customers do not like about the Wheat Board is the fact that the price of the grain is too high, so obviously, from where Western Canadian farmers are sitting, the Wheat Board is doing an excellent job.
In conclusion, I would just like to say that it would be a great mistake to allow the minority of farmers and certain non-farm interests that want to weaken the Wheat Board do so by passing amendments or legislation which threatens price pooling, government partnerships, and guarantees, and democratic farmer control of the Canadian Wheat Board.
The majority of farmers have continually proven that they support a strong single-desk-selling marketing agency, and are aware of and satisfied with the choices and flexibility that already exist in the Wheat Board system.
The Chairman: Order. Order. We will go to the next witness, Ken Stickland.
Mr. Stickland: I will just be addressing the first five or six pages of my submission, with, perhaps, some references to the appendix, which is historical research done in the last two or three years and focusing primarily on barley. I will be arguing in general terms that barley gets lost and that there are some unique issues in Bill C-4 for barley.
In speaking to you today I am building partly on my experience over the past 12 years, which I have spent in dealing with individual farms -- in addition to our own at Red Deer -- trying to sort out what is best to grow and when to price it and how to work with the Wheat Board and how at the same time to manage risk. Risk, especially since the adoption of GATT in 1995, has probably doubled for grain farmers on the Prairies.
Only 15 per cent of the gross income of our farm, which is purely a grain farm, comes from the Wheat Board, so do not let anybody, whether they are for or against the Board, convince those of you who are not from the Prairies and into this stuff that the Wheat Board is as big and as monolithic as it may seem. The Board in some regions of the Prairies and on many farms is a relatively small player, accounting for from 10 per cent to maybe 30 per cent, 40 per cent of gross income, even if you have cows or pigs, which we do not
Finally, before I get into the substance, I have been crazy enough to spend the last five years volunteering time to work on getting to value-adding. I spent a lot of time helping to change the Crow rate and it follows that you have got to have value-adding to feed the grain here as an alternative. What I say today is in the context of various experiences, including some involving my own money, with shares of processing companies and the approximately one-quarter of a million dollars our family invested recently for a pea processing plant on our farm.
First, some general observations.
If you want some detail on barley I have included in Appendix A the table of contents of a study I did for the Western Grain Marketing Panel, which you have no doubt seen. At the last minute they thought they should look at barley explicitly and hired us in late March to do fast trip in six weeks. I had done a lot of work on barley perspectives in Alberta and I spent a lot of time in Saskatchewan and Manitoba understanding the unique problems there.
The executive summary of the study, which is a little too thick to give you, is in Appendix C.
I refer to bullet 2, page 2 of my presentation. While doing the study I finally became wiser as I got older and once you turn 50, as I did recently, you start to see things coming up two or three times. It became very clear to me that if you separate who you are listening to into two types you will find that there are what I call Mind-Set A farmers and Mind-Set B farmers and there are good commercial reasons as to why Mind-Set B farmers have ended up being B just as there are psychological situations -- forms of family and farm organizations -- that make others A.
I am probably an A but I have come in dealing with malting barley to really respect the B mentality. There is nothing particularly good or bad about being a B or an A, but if you have ever been involved with Myers Briggs you will know whether you are extroverted or introverted and that kind of thing.
I will try to identify how you use contracts and other tools to ensure, as the Chairman said earlier, that you can provide choice and make sure that the Mind-Set B person who wants a Wheat Board is protected, can get the marketing system of his choice and let the Wheat Board zing. We need to end up with winners on both sides, which is the realization I came to as I did this research.
Now, Mind-Set B is well respected and reflected in Bill C-4 but if you are Mind-Set A, and I sense you heard a fair number of them today, it is not so good.
In my work at the farm management level, and especially focusing on eastern Saskatchewan at some seminars this winter and in western Manitoba, I found that Mind-Set A, because of the freight rate change, is rapidly expanding in eastern Saskatchewan and in Manitoba, so that while the elements of Bill C-4 were built on a B concept -- rejection of the marketing panel, modest changes to the Wheat Board -- they flew in the face of the future agriculture that is now unfolding.
I would suggest that you have had a heritage on the controlling side of legislation. People like Jean-Luc Pepin and Otto Lang, who I worked with a few times over the years, tried to add self-reliance, Mind-Set A things, rather than dependency and the great hand of government looking after me.
Next bullet. Too many generalities focus on wheat without even talking about barley, which effectively came onto the Board in 1949. In Appendix D I include a backgrounder that I wrote after my in-depth research to try to help clients, and myself, to sort out how a person would vote in the plebiscite -- and it was a very poorly worded plebiscite, the federal one a year ago. I tried to look very specifically at the effects of Wheat Board activity on individual farms.
On 2-A you will see a map of the Prairies. It is labelled Map 4-A and basically it shows how much barley is grown as a percentage of the amount of wheat produced.
The areas that are lighter coloured have to 10 per cent of their acreage in barley. That is southern Saskatchewan and southern Manitoba. The dark areas have about 11 per cent to 20 per cent in barley. That is the Peace River in the upper left corner. All of northern Saskatchewan has about 11 per cent to 20 per cent of their acreage in barley. Now look at Alberta. In the lower left corner, which is Region 3 of Alberta, over 50 per cent of the land harvested -- I believe this was in 1994 -- was in barley. When you move farther north it is 21 per cent to 30 per cent. With those high proportions of land in barley you can be see why people in Alberta are concerned about barley.
The shocker for me is on page 2-B. The people in malting barley were building on Saskatchewan's experience, which showed a very high return. The lower left legend shows you that the dark coloured areas are ones where people get 60 per cent to 80 per cent of the barley they put in for malt accepted. In Kindersley, Saskatchewan, and in other parts of Saskatchewan, that is what you get when you grow barley.
Twenty per cent to 80 per cent of the barley grown in Saskatchewan and submitted for malt is accepted but in Alberta, except for Region 2, that number is under 10 per cent. We grow barley for feed. Saskatchewan and Manitoba, Saskatchewan in particular, grow it for malting barley, so you have a malting barley mind-set in Saskatchewan and a feed barley mind-set in Alberta.
The Chairman: Is the feed barley grown in Alberta a higher yielding variety than malt barley?
Mr. Stickland: As a rule, but there is a real preference in the feed sector for fat kernels and two row varieties. In some cases people grow Harrington and take a discount in yield to be able to play both markets but on our farm we focus on high yield and we budget 85 bushels of feed barley, either of a two or six-row variety.
About three pages on there are two maps to help you understand where feed barley, which is the top map, goes. You will notice the heavy, heavy lines moving south and west into Alberta and increasingly east into the Winnipeg and the Portage la Prairie area.
There are very limited or hatched line movements from western Manitoba into Lethbridge. There are very limited movements into California and the export shipment of Board feed barley is down to a million tonnes. The Wheat Board is a pip-squeak in feed barley. The Wheat Board is exporting 2.2 million tonnes of malting barley this year and a million tonnes of feed barley at the most. In recent years it has done 2 or 3 million tonnes and the feed market alone is consuming about 9.5 to 10 million tonnes.
The bottom map shows you the difference between six-row and two-row barley. The solid lines are two-row malting barley, which usually goes to processing plants in the Prairies and/or are exported, primarily to China. The thatched lines are six-row barley, which goes to Manitoba malting plants or to the States, and that is generally six-row whites. There is quite a difference in six-row malts versus two-row malts.
There is a little bit of an misunderstanding about what we are talking about. We are not talking about wheat. We are talking about the barley component of this Act.
Increasingly the Wheat Board, unfortunately, is irrelevant to feed grain marketers, and I am a little worried -- because the Act did not pick up on the good things in this report -- that there will be continued controversy that will pull the Board down, if you will, and they drop the ball on malt. They are doing a reasonably good job in malt.
This spring, for example, my clients can hedge new crop barley in Edmonton for $30 a tonne or 65 cents a bushel higher than they can get by shipping feed barley to the Wheat Board. I can tell you this: the Wheat Board will get zero feed barley.
The Saudi market, which, with Japan, is the Wheat Board's primary market is shrinking. It is increasingly being serviced from Eastern Europe, so the Board's exports of feed barley are less and less important. That being so you might have chosen in drawing up this bill to exclude feed barley entirely.
Next bullet. In the last few pages of the presentation I try to debunk the idea that the Wheat Board creates a premium. The premium for malting barley is about $43 a metric tonne. Whether you go to Australia or the U.S. or Europe you will find that high bushel weight, very pure, very plump grain commands a premium of $40 to $43 per tonne Canadian. When there is a $48 difference between feed and malt most of that is because of the nature of the barley, not because of the Wheat Board. I document the fact that the Wheat Board, unfortunately, because of the way it sends price signals has a price decreasing effect on feed grain. You have heard John Prentice talk about how he loves feeding cattle in this province or any place where the Wheat Board lowers the feed barley price. If it does create any kind of a gain for malt it is at the expense of feed.
Most of that premium, then, is a discount, and our farm is primarily a feed barley producer, so we are not too happy about that. We think the estimate is in the order of 17 million a year overall cost to barley. I am not talking about the good things they do for wheat.
In the middle of my page 3 I talk about risk management. I really knew the Wheat Board was in trouble when they started saying asked, in a legal way, Stickland, can you help us. What we can do in canola we can do in local barley, we can do in flax. We have got to manage risk. We can not afford to deal with PROs that you cannot count on. We have got to go to the banker with a plan.
In 1990 we started research and gaining practical experience in using American tools and certain Canadian tools for risk management primarily of CPS wheat, primarily feed grades of wheat, but we have even used it, particularly on our farm, we used it in 1966 at a time when Mr. Jackson, who was speaking to you earlier was on a hunger strike. He was, in fact, using our techniques to sell wheat with both fists. Our farm was selling wheat with both fists and we fixed on high wheat prices.
I happen to know the situation because I was doing the barley study at the time. The Wheat Board as a cash grain trader was not selling any wheat at the top of the market and, in fact, they subsequently shut Prince Rupert down and left about a million tonnes more carryover at the end of July than anybody could justify.
Risk management means you try to capture the price when it is high. It might be in January, it might be in April, it might be in July, but capture it. Now, that can be done through the other marketing systems and the Wheat Board can be made to do that. Under the Act they have about 1 1/2 out of the four tools, and I will be mentioning how I think that is a good part of Bill C-4, but we are going around the Wheat Board trying to do this and, my God, does it take money, does it take complexity. It is great for a consultant but it is sure tough on my farmers. They would prefer their Wheat Board to modernize, to use futures options and make all that stuff simple by giving them a price floor contract or something else.
There was discussion earlier in the day as to whether you can make dual or producer-choice systems work, and I document them under alternatives 2 and to a lesser extent of 6 and 7 of the major study I did. It is in the appendix, I believe it is C, the executive summary, whereby you protect the Wheat Board and you protect the farmer, who is primarily a Mind-Set B. On our own farm we would probably contract on the order of 50 per cent of the wheat we grow and we would be quite prepared to do it May 1 and then in the fall you would have to be completely contracted up. Any grain that you wanted to go to the Board. Then another year we might not give them any more by. By October 15, October 1, we give them maybe 25 per cent, for a total of 75 per cent of our wheat and the other 25 per cent we will sell somehow.
On page 4 I mention some things I like, such as risk management and the board of directors but the selection of the president is flawed. It should be done by the board, in my view. Contrary to what the provincial government's representative said I believe a contingency fund is essential because if you are going to have cash trading by the Board there is risk and that risk needs to be covered by equity or a contingency fund.
On page 5 I address the few changes. First, remove both the inclusion and exclusion clauses. What is in or out is a political choice and unless you radically change the Board's terms of reference, which I will argue you should do, so that it is accountable to farmers and not to the Parliament of Canada, and you do a little bit of diddling with who the board of directors is responsible to, and I would argue it is not to the corporation but to the farmers, you are never going to get an exclusion because when I have fiduciary duty as a corporate board of directors I will try to keep all the business I have got, so you would be in conflict of interest as a director if this organization or that organization came and said, "Take CPS or extra strong wheat away from of the Board." You could not make that decision, I do not think, legally.
Point 2. I think it is terribly important that the Board provide these risk management forward contracts all the time. They should be visible and available all the time. There is a drawback under the central desk selling station about the basis, having competition, but there is some good in the bad. I would rather have forward contracts, especially in wheat, and it is there than not at all.
Point 3. Revise the goals to indicate that the primary objective is to maximize, and I am not happy about that word, Mr. Chairman, but something like maximizing the returns or net returns in barley and certainly for wheat growers.
Serving for the general purposes of Canada, I think the Courts tell us very, very clearly Board is responsible to the federal government.
The Chairman: Mr. Stickland, would you please wrap up your points in all fairness to the others.
Mr. Stickland: Under point 4 I suggest that there may be under provincial legislation some wording about the board of directors' responsibilities, because provincial farm products marketing acts and hog boards or poultry boards have a clear responsibility to improve the net income of farmers. As I understand this Wheat Board structure it will not, in fact, allow for that.
I would prefer that barley, especially feed barley, was not in but if you are going to do it please make those changes because, frankly, many of us are sick and tired of court cases. It is time to move on with good legislation.
Because transportation is closely linked to marketing -- I do not mention it in my written submission but I have been rather taken today by the idea -- if you take a look at alternative 2 I support for transportation reasons the Board's buying of barley to the port under alternative 2. You would have to change the Act a little bit. Bill C-4 will not work right if Judge Estey says, "Move the management to the port," so there is some merit in that.
The Chairman: We will go to Mr. Berg.
Mr. Berg: My name system Carl Berg and I wonder if everybody in attendance has copies of my article? I have tried to make it short and to the point. I will just read it and you can read along with me.
In November of 1995 Alberta farmers voted 62 per cent wheat and 66 per cent barley if favour of dual marketing. If you think this number might be less today you are in for a big surprise. We are not trying to eliminate the Wheat Board but we are determined to regain our freedom, which would give us a choice as to how and where we market our grain.
A growing consensus over the last few years is that our rights and freedom are being violated by forcing us to remain in a monopoly which systematically confiscates all of our profits. No other people in agriculture or whatever or in Canada or anywhere in the free world are subject to this class of tyranny. And I use this word, because I could not think of a better one. Sounds pretty terrible.
Marketing boards which regulate quota only, such as the livestock marketing boards and all of that do not even begin to compare with the Canadian Wheat Board. As you are aware, considerable force and intimidation have been exercised, is exercised in maintaining this monopoly.
Another aspect is that we are purposely -- this is my opinion -- we are purposely denied information pertaining to world grain prices. As far as anyone can determine we consistently receive about 40 to 80 cents on the dollar for our grain. That is a pretty wide margin but just try and figure it out.
Hard Red Spring is the highest milling quality wheat in the world, averaging $7.50 on the Vancouver market. If you go to the pricing I get from Alberta Agriculture it will verify this and that is an average so far this crop year.
Our initial elevator price is about $3 and after our freight deductions we are short about $3.20 on every bushel of our wheat, and I am quoting Number 1-RS 12.5 protein wheat, which, incidentally, is the only price that they quote and if you try to find another price on another protein content, good luck, because I cannot find it and I have been trying for two years to do this.
In comparison, European farmers are subsidized to the equivalent of $5.40 Canadian for milling wheat, which is equivalent to a Hard Red Winter wheat, which is priced at $4.75 Canadian out of Kansas. After freight and quality adjustments, and I have just tried to do this myself, I do not say they are exact, whenever you quote wheat prices -- and you will see it in this letter from Christine Anderson who says approximately $198 a tonne -- you cannot nail down world wheat prices exactly but after freight and quality adjustments we end up getting about $2.35 a bushel less for wheat, which is approximately $1.25 superior to the European Hard Red Winter wheat, which essentially gives us $3.60 less per bushel than the European farmers are getting. If we want to compare our Canadian feed white wheat out of Winnipeg, it is priced about $1.20 higher than our Number 1 Hard Red Spring 12.5 protein wheat. That tells you something.
Then I say how can we compete in a world market under these conditions? Many farmers are going bankrupt. The rest of us are struggling financially and are trying like hell to get out of the wheat business. I am one of them. Sitting on a bunch of wheat that is worth $3, what do you do?
Another thing is land improvement in this country. Nobody has the money to do it and it is a major concern which has to be addressed some day and up to this time there has been no land improvement -- the farmers cannot afford it, the government does not do it, so nobody does it.
I would just like to add in here that low Canadian Wheat Board prices effectively lower domestic prices by a comparable amount. That is to say if our Canadian Wheat Board price is $2 lower than the world price our domestic prices are going to suffer comparatively. This is a good country to be feeding cattle in.
This loss of income affects only producers who grow and sell grain. It does not concern senators. It does not concern anybody except us. In comparison, livestock producers, grain companies, consumers, everybody else profits by the lower prices. It is not surprising that many of them are dedicated to maintaining a Canadian Wheat Board monopoly.
The last obstacle to be thrown at us is Bill C-4. That is the way I look at it. It is just another obstacle. It is another smoke screen, a diversion, a stall tactic in my opinion. Soon, we are being told, we are going to be able to elect farmer members who will control the Canadian Wheat Board and I say when and I want to add in that and if this happens the first thing we are going to do is cancel the monopoly.
The Chairman: Thank you, Mr. Berg.
Senator St. Germain: We heard from the Minister of Agriculture here today about anomalies in Japan, where they were buying Australian wheat because they could not buy our wheat and, Mr. Ollika, this basically is the opposite of what you said in your dissertation. How do we reconcile this?
Mr. Ollika: Well, if it would please the committee, I could have a copy of the Western Grain Marketing Panel survey of the international customers sent to you. I did not append it. I was under the assumption you probably had that in your possession, but anomalies certainly exist. I will not disagree with the provincial minister. Anomalies exist in every system. Every reality has anomalies, so does the open market.
What I am saying is that consistently over the history of the Canadian Wheat Board our customers have been extremely happy with our quality of product, our consistency in delivery, everything except price. I cannot speak to individual anomalies. It happens in every system.
Senator St. Germain: We have been told that often the reason that grain cannot move is because the wrong grains are sitting in the elevators in Vancouver and what have you and the orders are lost. I am just repeating what we have been told. I have no first-hand information. You have scenarios like this where you have got a market that cannot be serviced because a mentality exists that concentrates on moving grain rather than marketing it and selling it and getting the highest price for farmers.
Mr. Ollika: I agree. The thing is the Canadian Wheat Board has an important role to play in grain transportation and car allocation but it is not the end-all and be-all. There are grain companies in there, there are the railways. I would absolutely not be prepared to saddle all of those problems and anomalies on the Canadian Wheat Board. You have to take a close look at all the other actors. This may be not a bad suggestion for the deferral of Bill C-4. Judge Estey will have a lot to say after he looks at the evidence on the whole system.
The Chairman: Do any of the other presenters wish to comment?
Mr. Snider: I find their review of buyers quite interesting in regard to the Canadian Wheat Board and the world marketing system. I trade grain across the borders and if I was putting the shoe on the other foot and being a seller, and I am ranking my buyers, I guess the guy that I would like to rank as number one is the guy that gives it to me at the best price for the best quality and when they say that the Canadian Wheat Board is ranked number one obviously it is because we are giving them the best grain in the world at the cheapest price they can get it.
Mr. Stickland: I have read that study and I have some respect for the person who did it. I do not recall the specifics, but the key thing is the uniformity. It is not so much that we have the highest quality. Because we commingle everything in Vancouver or Thunder Bay we have a very uniform quality. That is good for some people but increasingly in Brazil and other countries what we need to do is what you may have heard happens in Manitoba where Manitoba Pool has a special kind of an exemption and has a very specialized contract with a British mill where farmers bring uniquely high protein or a different protein, I think it is called a Haliburton contract. Niche markets can be looked after.
I think in the system we have got -- partly Wheat Board but in many cases Grain Commission -- the logistics create uniformity, not necessarily the right quality and it does not do all that well for niche qualities. Our organic friend is the extreme example of that.
More recently to the research that he quoted out of this study, although it is not detailed here, has been the fiasco over animal droppings and frankly I do not blame that one on the Wheat Board. That comes from poor observation by grain companies and pushy farmers who were in extremely tight financial situation, but incredibly stupid observation in Vancouver in that when they added back the dockage they allowed the dockage that was added back to include deer excrement. That was not a Wheat Board activity but it puts a smell, if you will, on the overall Canadian reputation for pristine quality because we have blown that reputation with that deer dung problem.
Senator Spivak: I would like Mr. Stickland to elaborate on the contract system that the Chairman suggested and outline how that might work in a little more detail, how that might work to the benefit of both those who are interested in choice and those who want to maintain the Wheat Board as an important institution in our country.
The second thing I would like anyone on the panel to address is the issue of the price farmers get for wheat. I understand some of the blame is laid on the Wheat Board but all of the time that I have followed the situation it is always the production costs that go up. The commodity prices are never what they should be, particularly when you consider that we are growing something that people want to buy. It is a hard Durham wheat, stuff that I suppose is unique to our country and it is not easily matched elsewhere, so it cannot be just our marketing system. It must have something to do with the world picture and I would be interested in your comments on that.
Mr. Stickland: On the first one, Mr. Chairman, on page 8 there is an executive summary, and I apologize that it was not numbered a little differently. It is an executive summary of the full study. Alternative 2 talks about significant changes to the existing structures, single-desk selling or the Canadian Wheat Board.
What I tried to describe in here for the panel is that I was an independent consultant trying to sort through the implications of going one way or another way and Owen McCauley from your province, got me thinking about part of this.
The Saskatoon professors are all very concerned about what is called free riders. When the price drops during the course of the year, old thinking said, somebody will jump in and sell his wheat or his barley and then when I go in, and I am a loyal Wheat Board person, my price gets diluted by this late joiner, the so-called free rider.
But if the price is going up the so-called free rider argument -- it is well documented by a professor in Saskatoon -- is that the people who can go their own way stop giving the Wheat Board what the Wheat Board had contracted under a long-term contract or whatever because they can sell in their own way.
What you do is very close to what the senator seemed to say in the question to the minister and I was hoping the minister's answer would be clear and simple, because this man at the front has got it pretty clear.
Essentially, you have gone part way in Bill C-4 to allow cash prices, so I would see the Wheat Board offering two ways to deal with them. I could sell my grain to the Wheat Board at a cash price or a pool price and I am really wanting to use the Wheat Board. Alternatively, I could use our wheat pool to export or I could go into the States on my own like our organic friend. How could you let this choice happen? First, I would strengthen the Wheat Board by having as is partly there in Bill C-4 the charge that they can do cash pricing, so then they can compete with Alberta Pool. If they really want this grain that was not contracted to them they could really get the prices on it. I have skipped ahead a notch, so let us back up.
It is April 1. We are planning. We are going to grow 10,000 bushels of wheat. The Wheat Board tells us what they think the new market value will be but they got competition. I am offered clear contracts by the Alberta Wheat Pool, cash contracts from the Wheat Board and some kind of a pool return and they say, "This is a really good year to grow wheat and I particularly like the Wheat Board spot price." And we would say, "We are going to give half to the Wheat Board and half to a combination of total flexibility. We can sell it any time but we might take that half that we are going to sell and go out and forward contract it right away to the feed market, to Cargill, who will put it in Japan or wherever."
We say to the Wheat Board, "We are going to give you 50 per cent on May 1." Then they can go and put their plans together. It may be still flexible as to whether I am going to give it to them as a spot price or pool it but you can lock me in there if you want to. That is the best way to do it.
There are some who argue because of weather and everything you should not be forced to make that decision I would allow it every year. If the Wheat Board was doing a jolly fine job in 1997, 1998 I might go up to 75 per cent to the Board because I believed in them but if they had a rotten set of prices like they have got this year, but really good movement, which they have got this year, I would sit there and I would weigh and balance.
If you did not want to do it all in the spring I would say that you allow people to go up to 100 per cent decided and I would not limit how much could go to the Board. I would let people go 100 per cent to the Board or 100 per cent not using the Wheat Board. If should be some limitation of a minimum of 50 per cent to the Board, okay, but frankly I would leave it wide open. Then the Board has to compete.
You could make the decision in October. I would want there to be some flexibility to make it a part of the choice. You could say a maximum of 25 per cent or a maximum of 50 per cent of your volume committed in the spring. Then that allows me to go and talk to my banker and say, I have committed to Alberta Pool, to UGG, at this price and it is all together but the other 50 per cent is going to the Wheat Board.
Then in the fall you finalize the contractual arrangement with the Board. Say you did not want to do cash markets because you do not like them, you do not understand them, you really, really believe in pooling, then you get the calls for so much of contract and, in fact, it would not probably be a contract A, B, C because they would know right at away in the fall that that bin has got 10,000 bushels. Fifty per cent is mine to market and 50 per cent is the Wheat Board`s. If I do not deliver my amount to the Wheat Board all the contractual problems of private law come into play.
Senator Spivak: That solves the problem of choice. How does it benefit the Wheat Board or disadvantage the Wheat Board as a pooling institution?
Senator Hays: Is not that a form of dual marketing?
Senator Spivak: Yes. It is a form of dual marketing.
Mr. Stickland: For sure, but it is a form that protects the Wheat Board.
Senator Spivak: How? That is what you told me earlier. That is what I want to know.
Mr. Stickland: It enables the Wheat Board to probably have more certainty because right now they do not know how much I am going to carry over, they do not know how much I am going to use in the local market. I have got to commit.
Senator Spivak: The pooling aspect is what I am talking about.
Mr. Stickland: You have protected the pool. By October 15 I would have to designate that of these 10,000 bushels I was going to sell 80 per cent or 100 per cent into the pool and they knew about the spot market relationships, that they could buy up to 20 per cent but the 80 per cent they knew was going in the pool. I would have no choice.
Right now I have got all kinds of clients and ourselves who are finishing off their extra strong contracts, their CPS contracts and they are going to deliver it just as the Board needs it and that pool is protected.
Senator Spivak: How would it work in a world market where the bottom was falling out of prices for wheat?
Mr. Stickland: In the spring if I had booked my 50 per cent in a high market, I would be happy, happy, happy. In the fall, if you left me any more choice, and you could lock me up in the spring as one of the choices, but in the fall, the market has all gone to heck. I would be probably as likely to give it to the Board as a spot market with the pool, and again the choice is there, and that is all they do most of the time now. They do not sell much ahead of time. That is one of the problems with the Canadian system. They do not have a commitment from farmers so they do not have what is called a position in the system, so they do not forward sell in May, June, July, August. They really only sell about October 1.
October 1, terrible market, which we could very well have this fall. My 50 per cent goes to the Wheat Board and it is really no different than it is now. Say I choose all pooled. Say I think it will get better. It would be in my interest to pool, just the same old plain Jane Wheat Board I have always enjoyed. I think the prices might get a little better in May, June, July. I am an optimist so I say 50 per cent, 5,000 bushels to the Wheat Board. It is yours. You take it all tomorrow. You take it in July, but it is pooled, and really no change.
I have had a perception and a reality of choice and you see the beauty of this is that I think the minister was right-and my work in value-adding backs it up, we need more organics and more processing and they could attract my grain back there in the spring and directly contract with me, but if for some particular reason they were better happy working with the Wheat Board, because they had a kind of grain they needed to come from all over the Prairies and the Wheat Board was best at that, they could do all their contracting with the Wheat Board and say, if you want to sell to AgriPartners at Red Deer you would have to do a 100 per cent contract with the Board.
Suppose I March in there by the fall and I say, "One hundred per cent to the Wheat Board," and it is eventually going to end up, perhaps, at AgriPartners. I think you provide a lot of choice, and you take away their anger. I am getting too old for all this fighting, ladies and gentlemen. It is time to get on with cooperation, collaboration, making trade happen in a positive sense.
There is a second question. I am going to leave that to others.
Senator Spivak: On the cost price squeeze and how you consider the factors that are contributing to that.
Mr. Ollika: As far as the cost price squeeze goes that speaks to regulations. When we talk about cost price squeeze you are looking at world markets in inputs and in end products that are, of course, dominated by handfuls of very large companies. There is nothing wrong with that. I am not saying that big companies are evil. The cost price squeeze in any country in the world on farmers speaks to the lack of regulations to prevent companies from (a) charging you a lot of money for inputs and (b) basically controlling world markets that keep prices of raw products down.
My solution to cost price squeeze has to be an international one so I am not sure that this is the place to be talking about it but certainly when you have that chaotic world marketplace it is in your interest to have a single seller. Mr. Stickland was very articulate in pointing out some of the benefits of pooling but pooling is not the only issue. It is single-desk selling and what cash buying does in Bill C-4 is that it effectively would make the Wheat Board no longer be a single-desk marketing agency because it would be a buyer of grain.
Mr. Stickland: No. You are factually wrong.
The Chairman: Order. Order.
Senator Spivak: The thing I am asking, really, is everybody says competition, competition, but do we have sufficient competition? Why are not input prices going down if commodities are going down?
Mr. Ollika: Just before I let Mr. Stickland try to pound the hell out of me here I will just say that there is I think a fundamental misconception all around the world as to how competition really works. I am a big fan of Adam Smith's -- some of my contemporaries would be shocked to learn that -- but competition when you have a handful of buyers and many, many sellers works in the favour of the buyers. That is all there is to it, so your strength in pooling and single-desk marketing means that you are one seller, the many are one. That is the strength of it.
We can talk figures. We can play around with legislation but basically if you erode those principles of the Wheat Board then you are no longer making us one. You could dabble in more choices and things but it basically just erodes the strength of the one.
The challenge before the Senate and before the people of Canada is to maintain those things and insert elements of choice, the buy-backs, make those type of choice functions work properly for farmers.
Mr. Bourgeault: How will you explain this to me, that I sold some feed barley for higher than what you got for malting barley from the Board. I had some barley going to B.C., they came and got it right in the yard and gave me $2.78 this year, just about a month ago.
Mr. Ollika: I can tell you that on my own farm just two summers ago we sold some feed barley off-board. Of course we got more money at the time than the Canadian Wheat Board was paying. By the time the final payments were in it was a regrettable thing but, of course, I needed the money to pay my inputs. I needed the money right then. I sacrificed what the Canadian Wheat Board would eventually have brought me so that I could pay my bills in the meantime. I agree with you. There is that inconsistency.
Mr. Bourgeault: Two years ago I sold it for almost $3.80 and what was your malting barley was two years ago? You have got to sell it at the right time but it was to Canada. It was not sold out of Canada but they had to truck it to British Columbia.
The Chairman: Thank you, gentleman. I am going to ask you to direct your questions to the Senators. I understand that this is somewhat of an emotional issue at times.
Senator Stratton: Just briefly to Mr. Stickland. On page 4 you talk about the contingency fund. You are an advocate of keeping the contingency plan but you wanted to make sure there is a clear indication as to who owns it.
There has been talk that the contingency fund should be individually held or farm held. How would you make sure there was clarity of ownership?
Mr. Stickland: I must confess, sir, I have not thought too much about that. I identified the terribly important issue of a contingency fund existing a couple of years ago, thought everything was joyous, and yet in the last three or four years I have watched the hog industry really struggle with who owned Fletcher's, because there was a pooling in of the equity but nobody had a share.
I do not know how you do that. I mean, I have played around with sinking funds and pooling and whatever. If you own shares in the Wheat Board, okay, but let us just take, for example, if there was a million dollars collected in year one. There was 10 million tonnes were moved and I put in 100,000 bushels. I would get 10 cents of that contingency fund.
Suppose the Board has problems the next year. It blows away half the contingency fund and private companies lose money. Do not expect that the Wheat Board is always going to make money. In the second year I have a checkoff so that, keeping everything the same, I put in another part of my share of the million. Where did the contingency fund money come out of? Was it out of last year when none of it was used or was it out of this year?
I suppose with computer systems today we could track it by volume. We all have tonnages -- all of us up and down the row here have permit books and we have had too much wheat and if it was a contingency fund for all wheat, for example, you could have some form of a cashout, maybe, like shares in the EGG or the Wheat Pool or whatever when you retire or you could just leave it there. I think we are talking about leaving it there until we decide this is the wrong way and that the contingency fund should be shut down and there is $20 million in it.
I think I would go back and I would do the cumulative tonnage by permit-holder over the period of time that it was built up and I would issue a final payment, if you will, a shutdown payment in proportion to the wheat. I think that is probably the fairest. I was just thinking off the top of my head, sir.
Senator Stratton: I appreciate that. One final question, should there be a cap and what value should the cap have?
Mr. Stickland: Absolutely, a cap is required. I was involved in the structuring of the -- we did not call it a contingency fund on the Crow. In 1982 and 1983 I was on a technical committee about how to work the volume cap and we put a limit on it there. This Act, and I did not read it that closely, does not have a contingency limit. It should be expressed as some percentage of the value of grain traded in the previous two years or something, so it might be 1 per cent of all the wheat traded in a year but there ought to be a cap.
Senator Hays: To this relatively well-balanced panel I would put a question that I have asked before on the acceptability of turning the future of the Board over to an elected board of directors. I appreciate the criticism of the appointed directors and the CEO, and I acknowledge the concern of the Minister of Agriculture for Alberta that the board really is operated as a part of the government, and the Act, as they interpret it, is very restrictive in terms of what it is the board can do. I for one have noted that and I suspect other senators have. Let us assume that we satisfy ourselves that the board is independent in terms of serving the best interests not only of the Board in terms of its business activities but also the future direction of the Board and whether it should use its cash option the way Mr. Stickland advises or some other way or whether they should evolve to a dual marketing of some kind, et cetera, et cetera.
How do you feel about that? Are you satisfied to leave the future of the Canadian Wheat Board in that kind of a board, again assuming we have resolved the issue of the board having the ability to direct its affairs and not just being a creature of the government, as some believe it is?
I would like to hear from you all just very briefly. I know we do not have much time. We have to catch a plane but maybe we have five or ten minutes.
Mr. Ollika: I will try to respond just briefly. I think am I comfortable leaving the future of the Canadian Wheat Board in the hands of a board of directors of whom I think the elected board members should be farmers and elected by farmers. So, yes, I have faith in farmers, absolutely. I have faith in democracy.
As far as being a creature of the government, I share the concerns of many Canadians about what has happened to government. I share concerns of other Canadians what has happened to bureaucracies, both public and private bureaucracies, and therefore I do worry that the Canadian Wheat Board or any Crown corporation might be a creature of the government but I qualify that by saying that I believe in government, because government is the only organized mechanism in society that can ensure the public good.
There are other mechanisms but it is the only one that can ensure the public good and if government is not working it is the fault of the people as much as it is the fault of the big monolithic governments and bureaucracies so I think that the new Wheat Board has to be accountable to farmers and, as I said, both through direct producer elections and I definitely think we need to maintain some Crown corporation status for the Canadian Wheat Board and as such it should be responsible to the Parliament of Canada and, therefore, responsible to the people.
Mr. Bourgeault: I say that a monopoly is dictatorship. I said that right at the start and I will not change my mind because I lived all of these years in agony and I did not only go to combine the States. Every time I went to Arizona I would price their grain in the different states and, in my feeling, the Western farmer has lost billions and billions of dollars.
When I went to the States at different places there was one scale and then you would haul to the elevator you wanted ad you would come back to the government scale. There was not such a thing on the cash ticket as dockage.
If that grain weighed 60 pounds, it was Number One, so you figure it all out that when we were getting $1.18, they were getting something like over $6 and then about two years ago they were getting $8 but at the same time you have got to figure that a lot of times the American dollar is way higher, like 47 per cent higher. You have got to figure that in too.
At the bottom of my heart I am not a dictator. People who want a Board, let them have a Board but I want the freedom to sell my grain where I want to so. I do not want to dictate anybody that they cannot use the Board. If they like the Board, let them sell to the Board. That is their freedom but give me my freedom too.
The Chairman: Thank you. Mr. Berg?
Mr. Berg: I do not really have much more to say except I do not believe you can put a limitation on freedom. I do not think you can say that you have to consign a certain amount of grain for a certain length of time to the Wheat Board. If that is the stipulation they are going to put on us then it is our decision as to whether we accept it or not.
I do not agree with some of these -- even our agriculture minister, who was saying we have to consign a certain amount of our grain for a certain number of years to a certain company, anybody, because once we have consigned our wheat we do not have any control over it anymore. We have to deliver it and then we just take what we get and that is what has been happening to us.
Mr. Stickland: I am a great democrat, provided there is some choice in the bill and no more than an annual commitment for this year of the grain. I would be comfortable with elections. I can tell you the advisory committee has had some bad tastes in some of our mouths so it seems to me that there might need to be some constructive guidance in the elective process, providing a certain amount of Wheat Board funds for each of the parties to run so that one grain company or one particular view does not go and get funny money from somewhere and stack the advisory committee, as is the case right now.
The other thing I would definitely do is to have a vote on whether the Wheat Board handles both wheat and barley. I grew the crops and made my choice every year and I sold to the Wheat Board at least two out of the last three years, or one out of the last three years -- and with the database they have they would know that.
I really hesitate to this bring up, but the UFA Co-op has some interesting ways of mixing capitalism and cooperation. In a pure democratic society is one man, one vote, but in this particular case you might ask this question. What if a farmer was very, very keen and he put 100,000 bushels through the Board every year. I was not so keen but I put 5,000 through. Maybe he ought not to have 10 times as many votes but maybe he ought to have two or three while I only get one.
You might weight the vote a little bit by volume, not totally proportionate but I am a great believer in democracy. I would like to vote for senators, by the way, and if I have to I will want one man, one vote.
The Chairman: Do you really think you could do as good a job as these around the table?
Mr. Stickland: I know I would not have the patience.
Mr. Snider: I guess my concern with the elected board of directors is that it is definitely a step in the right direction but at this time I see it as throwing the problems to another level. It will have to go through the whole same process again as with that board of directors and I have got bills to pay and my bankers are not waiting for me to pay those bills and I cannot wait for this process. It has dragged out longer than I thought it would at this point. My hands are tied quite a bit in my markets and it is not helping me out.
Mr. Stickland: You have the opportunity to provide a watershed service to Canada in how you handle Bill C-4. The Senate has an incredibly interesting role that I have learned a lot about here today.
The Chairman: I want to thank you for appearing. This has been a good day here in Edmonton. I believe we have had 81 individual farmers who have presented their views. We have had 26 farm groups and we have heard from the Minister of Agriculture for Saskatchewan and the Minister of Agriculture for Alberta and we will be hearing in Winnipeg from the Minister of Agriculture for Manitoba.
The committee adjourned.