Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 14 - Evidence - Meeting of June 3, 2008
OTTAWA, Tuesday, June 3, 2008
The Standing Senate Committee on Agriculture and Forestry, to which was referred Bill S-228, An Act to amend the Canadian Wheat Board Act (board of directors), met this day at 6:59 p.m. to give consideration to the bill.
Senator Joyce Fairbairn (Chair) in the chair.
[English]
The Chair: Good evening, honourable senators, witnesses and all of you watching the Standing Senate Committee on Agriculture and Forestry. Today the committee starts its study of Bill S-228.
There are a number of bills related to the Canadian Wheat Board currently under consideration by Parliament. Bill S-228, has been introduced in the Senate by the Honourable Grant Mitchell, senator for Alberta. Bill S-228 proposes to enhance the powers of the board of directors on policy changes to the Canadian Wheat Board. It proposes to reduce the number of government appointees to the board of directors from five to three. It also amends the voting process and the question to be asked for the consultation required when government wants to make changes to the Canadian Wheat Board's jurisdiction.
Joining us this evening, and we thank him for it, to share his views on the bill is the Honourable Gerry Ritz, Minister of Agriculture and Agri-Food and Minister for the Canadian Wheat Board. We have one hour with the minister, and I encourage my colleagues, as always, to keep their questions short in order to give the minister an opportunity to respond fully and for everyone to have a chance to participate in these discussions.
Hon. Gerry Ritz, P.C., M.P., Minister of Agriculture and Agri-Food and Minister for the Canadian Wheat Board: Thank you, Senator Fairbairn. It is always a pleasure to appear before this illustrious committee. You have done some tremendous work in the past and I know you will continue to do so into the future. As you said, there are a couple of bills before the House on the changes to the Canadian Wheat Board. I am pleased to have this opportunity this evening to speak to you about this particular bill to amend the Canadian Wheat Board Act, Bill S-228, by Senator Mitchell of Alberta. However, actually reading the bill gave me no pleasure whatsoever.
This government is working hard to deliver marketing choice to help our Western wheat and barley producers capture new opportunities and make the business decisions that are right for their farms. The bill before us, however, does the exact opposite. Compare this bill to a really good bill, which the committee should be discussing shortly, Bill C-33. Bill C-33, which enables our biofuels mandates, is good for farmers, good for the environment and good for rural communities.
What we have before us today, on the other hand, does not create any opportunity for our producers. In fact, in the long term, it would hold them back. Farmers want change. They are asking for and demanding that; they want flexibility. This bill is about the status quo and a heavier-handed process.
It is interesting that the sponsor of the bill comes from Alberta, a province where there is strong support for marketing freedom by its producers. The barley plebiscite last year showed levels of support for marketing choice amongst Alberta producers approaching 80 per cent. Alberta Agriculture Minister George Groeneveld said recently:
Each day that the CWB's monopoly continues means another day of lost opportunities for Alberta's produce . . .
. . . The system we have right now with the CWB isn't working.
It's bad for farmers.
It's bad for our province and it's bad for Canada.
Jeff Nielsen, who farms in Alberta and is president of the Western Barley Growers Association, said recently:
Clearly, our government is listening to producers and the need to move barley forward to [the point] which we make the decisions on who, what, where and when we can sell our own barley.
We cannot wait any longer for a solution to this refusal of the CWB to do what farmers voted for.
This government is working to give a stronger voice to the commercial producers who drive the success of Canada's grain sector. Our vision for the Canadian Wheat Board is this: a strong, voluntary and profitable wheat board, one that can offer farmers a viable marketing alternative.
This bill proposes that the board should be consulted on almost every decision related to the Canadian Wheat Board. Let us be clear, this government already consults the Wheat Board on a regular basis, and consulting its board of directors is not wrong. However, to legally bind the minister of the day to consult the board for almost every decision without allowing discretion at all is wrong. Farmers want change and flexibility, and this bill is about status quo and a heavy-handed process.
How can the Canadian Wheat Board operate in a dynamic, changing market when minute details are being held up in bureaucratic red tape? It cannot. The process will become slow and cumbersome and will ultimately hurt farmers and cost them dollars. It does not make sense. It will not work in the real world.
Western farmers have told us and continue to tell us they want the Canadian Wheat Board to be transparent, open and more accountable to them, the producers. This bill does none of that. This bill proposes giving more power to the board of directors, and it drags out new processes to further entrench the Canadian Wheat Board's monopoly power over farmers' own products.
This is occurring at a time when farmers have voted to do the complete opposite, at a time when the majority of farmers said they wanted a say in how they market their barley in a more fulsome way. Do I need to remind the committee what farmers told us more than a year ago when 62 per cent of barley producers voted for marketing choice?
Already too much time has been wasted in rhetoric and further entrenchment of political positions. We risk leaving this opportunity on the table. We owe it to our producers to move and to move quickly. This bill is just another tactic to slow down the democratic process that farmers are asking for, a tactic to create delays, a tactic that will result in lost opportunities for our Western Canadian producers.
This government has built a strong foundation for the Canadian agricultural sector across the country. We have delivered on our commitments to farmers just as we have delivered on our commitments to Canadians. In December I introduced changes to the Canada Grain Act in Bill C-39 that would streamline regulation to reduce costs and improve the competitiveness of the grain sector.
Farmers told us they needed access to new and better crops. In February we announced that kernel visual distinguishability was being eliminated as a criterion for registering varieties of wheat. This will help our grain producers access new wheat varieties, including some that are better suited as livestock feed and as feedstock for biofuels.
Transportation is a major cost input for farmers. In February, the Canadian Transportation Agency announced it was reducing the railway revenue cap by $72 million per year or approximately $2.60 per tonne. This was made possible through our support of Bill C-11, which gives the Canadian Transportation Agency the authority to align the cost of the maintenance of the hopper cars in the revenue caps with the cost actually paid by the railways to do that maintenance.
In February, we announced the passage of Bill C-8 giving Western Canadian farmers new tools to leverage their negotiating powers with the railways. Government has begun a review of railway service that was promised to shippers following passage of Bill C-8. We continue to press hard for marketing freedom for Western grain producers.
In March, we introduced Bill C-46, amendments to the Canadian Wheat Board Act that would clear the way for barley marketing freedom and introduce the requirement respecting commercial dispute resolution.
In May we introduced amendments to the Canadian Wheat Board Act to ensure that board members are elected only by Western Canadian farmers who are commercially producing grain. The government is making sure the Canadian Wheat Board listens to real farmers by introducing this legislation to give actual farmers producing 120 tonnes or more of grain a stronger voice in director elections.
In short, we have put farmers first. We have worked hard to give producers a voice, and we have listened to that voice and acted upon it. We remain committed to protecting the interests of producers. We remain determined to give Western wheat and barley producers the same rights their counterparts in the rest of the country have to choose how and when to sell their products. We as a government are obliged and determined to act on that clear mandate delivered to us by our Canadian producers. We want farmers to have the freedom to make their own choices on barley marketing. We understand that farmers have the will and the know-how to make intelligent and sound choices on how to market their crops, and they have proven that to us with the burgeoning sectors in the canola and pulse industries.
The Canadian Wheat Board was established more than 70 years ago when Canada, the grain industry and the world were very different than they are now. I urge you, honourable senators, to join our Western grain farmers in keeping up with and even ahead of the times. Canadian agricultural producers want and need the chance to succeed and the freedom to make their own choices on how they produce and market their crops. They take all the risks and make all investment in that. They deserve to have the opportunity to seek out the best possible return for their product, just as they would with canola, pulse products, cattle or any other number of farm products across the country.
Why we have other members of this committee standing firmly in the way of our farmers is beyond me and, of course, vexes them as well. We have an opportunity now to do the right thing, to listen to what farmers have been telling us, to give farmers the freedom to make their own choices on barley marketing, to support that entrepreneurial spirit. Honourable senators, a step in that direction is respectfully to vote against this bill. Thank you.
The Chair: Thank you. Honourable senators, the minister can stay until eight o'clock, so I will ask you to be as crisp as you can. It is a big issue and everyone will want to have an opportunity.
Senator Callbeck: Thank you, minister, for appearing this evening. You mentioned this barley plebiscite. I want to ask you a question about that because I am confused about these figures. During a speech given in the Senate, it was said that in March 2007 the results of the barley plebiscite were released. Only 13.8 per cent of the voters supported undermining the Canadian Wheat Board in any way. The remaining 87 per cent of voters supported the Canadian Wheat Board the way it is currently structured.
You gave a figure earlier in your comments, but then you said that 62 per cent of barley producers want marketing choice.
Mr. Ritz: Yes.
Senator Callbeck: There is a conflict in these figures.
Mr. Ritz: You have to go back to the question. The question asked was "Do you support the single desk?'' That is the status quo. That is what we have now. The second choice was "Do you support a dual market?'' The third choice was "Do you want no Wheat Board at all?''
You can add questions 2 and 3 together, but in your reference, you added questions 1 and 2 together. You cannot say that you want a single desk and you want the dual market. They do not fit together in any way, shape or form. Anyone who says that 80 per cent support the board as it stands are disingenuous, at best. You can certainly add the voice for choice in 48 per cent and 14 per cent, roughly, giving us 62 per cent.
We also know in today's terms that those numbers are moving. In my discussions with producers over this past year and over this last eight months or so as minister, I know that those numbers are even more strongly weighted for change.
Senator Callbeck: You say there were three choices: single desk, choice, or no board. Do you know the exact figures for each of the choices?
Mr. Ritz: The single desk, as it stands, status quo, at the time of the plebiscite, roughly a year ago, was roughly 37 per cent. In today's terms, it is around 26 per cent, from the latest numbers I have seen from several different sources.
The centre option of saying we want a dual market; we want the option of a viable Wheat Board and access to the open market as they have with other commodities, feed barley being one of them, for domestic use — that was 48 per cent support and has stayed relatively the same.
The changes in the numbers we are seeing today come in the option totally outside the board. Support for that is now about 24 per cent. At that time it was 14 per cent. That 10 per cent of single desk only has migrated over to a position of completely free and open, no board at all.
Senator Callbeck: The other question I want to ask is on Bill C-57, which is in the House right now, on the eligibility rules for the voters in the election of the Canadian Wheat Board directors. I understand that currently you can vote if you have a permit. Who gets a permit?
Mr. Ritz: Anyone farming a minimum of a quarter section of land in their name and actually doing the work on it is considered eligible for a permit book. That allows you to sell that product, if it is a Wheat Board product, through the system.
There are two definitions within the Canadian Wheat Board Act. One of them is "producer,'' and that is the definition being used now. That basically allows anyone who has a fiduciary attachment to the production of the grain on that land an opportunity to vote with a statutory declaration. Conceivably, the people who supplied your fertilizer, chemical and seed and your banker could all fill out a statutory declaration and receive a ballot because they have dollars tied into the production of that land.
In Bill C-57, we are changing that to "actual producer.'' That is the second situation in the act that is identified, and that speaks to anyone who is actually working the land only. You can still have a statutory declaration under Bill C-57 if you are a landlord or have a share in that property. There are one-third and two-thirds splits and different things that are done there. You can still sign a statutory declaration that you are part and parcel of the management decisions on that particular piece of land and the crops that are grown there.
We are going from "producer,'' which is a broad, widely held definition, to "actual producer,'' the people actually doing the work.
Senator Callbeck: In Bill C-57, it says you have to produce at least 120 tonnes of grain in either of two years preceding the election. The review panel recommended, back in 2005, 40 tonnes.
Mr. Ritz: Yes.
Senator Callbeck: Why did the government come up with a figure of 120 tonnes?
Mr. Ritz: There were different recommendations. The panel report recommended 40 tonnes. There were other recommendations up to 500 tonnes. We have arbitrarily chosen 120 tonnes. That would be the historical average that would be produced on the 160 acres that is required to have a permit book. It is actually a bit under, but in fairness we have rounded it down.
Senator Gustafson: There is no question that freedom of choice seems to have much more support than there has been, especially, as you say, in barley. Most of the barley in the Prairies is supplied to feedlots and livestock operations as well.
One of the questions you get is who would be the additional buyers if you had freedom of choice all the way. We have Archer Daniels Midland, Cargill, ConAgra, the wheat pool conglomerates, all of which can sell into the global market and all of which are worldwide, global companies. Do you see any problem there, making the change?
Mr. Ritz: I do not. As you well know, there was a small window of opportunity roughly a year ago when farmers were availed of this option to market their own product. In that short window of opportunity, some 800,000 tonnes of feed barley was set for the export market. Right now, you can market your own barley domestically. That is outside the board now. That change was made a number of years ago, and it is working very well. As you said, most of the domestic production goes into the feedlots.
In that short window of opportunity, some 800,000 tonnes of feed barley was set up to be exported. A good portion of it — not quite half but close to it — went to Saudi Arabia, a market that we had not been in for a number of years. Farmers made a good dollar on it. We are excited about that.
Where the real change is, and where the demand is now, is being able to market directly to the maltsters, which we are not able to do at this point. Where I used to farm, I was about 40 miles to the bigger malt plant. To market my barley to the bigger malt plant — which was advantageous because it was close — I still had to pay freight and elevation charges as though it went to Vancouver. That is a vestige of the old Crow rate. The Crow rate is gone. The subsidy is gone, but I am still forced to take a price that says it is in store at port. Then I trucked it later, with my own truck, on my own time, with my own dime and my own fuel, and sold it to a bigger malt company through an elevator company. I always had to do that.
This would allow farmers to sell directly to bigger malt companies. Bigger malt companies can enter a contractual, commercialized agreement. The world is short some 500,000 tonnes of malt. Canada has the best malt there is. We sell to Anheuser-Busch in the United States. Farmers will be able to do that directly or through a broker, the same as they market their canola and pulse crops. They built globally acceptable enterprises doing that, and they are asking for the same situation with barley.
Senator Gustafson: If choice to market were accepted, do you see any problem with the Wheat Board competing with these companies in the global market?
Mr. Ritz: None whatsoever. There will always be farmers who take refuge. A major tenet of the Wheat Board is the pooling system. Everyone takes the same risk. You gain or lose as a cooperative. That vestige will still be there. That is one of the main situations that the board would still offer that no one else does at this juncture. Even today, with feed barley the way it is, there are still people who want to sell into the pool to ensure they are not paying attention to the marketing to the same extent they would if the loss were all theirs, because they take some assurance that the pool is a buffer to the real world.
The board is a strong marketer. They have global representation. They have a client list second to none. There is no reason they cannot survive in a dual and open-market situation, none at all.
Senator Gustafson: This question is not directly related to the Wheat Board, but do you envision the higher grain prices being maintained in the next few years? What is your read on the global economy?
Mr. Ritz: I wish I had a crystal ball. Nobody is writing this down, are they?
I think we are into a new era, Senator Gustafson. You probably see that in your farming communities as well. There is this anticipation. We all see in the headlines that there is a food crisis in the world. It is not that we are under- producing; it is that nobody has access to it and gets it to where it needs to go. We are also seeing huge differences in weather patterns. That is what drove the prices up last year, with the Australian and South American droughts. We are also hearing now that with flooding in the central states, a lot of farm land is out of production and will not be available this year. In a global marketplace, all of those factors come to bear on Canadian product.
We also have some of the best in the world, bar none. Our No. 1 red is blended down nine to one and they still make bread out of it. Barley is globally known for its malting capabilities. We do not have to take a back seat to anyone. I have always felt that the more people you have bidding on your commodity, the higher the price will go because they are all hungry for it.
Unfortunately, the reality is that the market share of the Wheat Board has been deteriorating. When you look at today's dollar value, they are approaching the realm of half the market they once enjoyed. You cannot pin it on any one particular thing. Farming is diverse now, as you well know. With direct seeding, the first things that go in are canola or pulse crops and then coarse grains as a secondary crop to get the straw composition back in. You have a lot of nitrogen going back into the soil from the pulse side of things, and barley and durum are excellent second crops on that type of land. You are not getting coarse grains going in on summer fallow like you used to because there is not any. Everyone is going into this continuous cropping, which is much better for the environment than ever before.
Senator Gustafson: If a farmer has a drought or no crop, and there will be some of those, he will be faced with a tremendous challenge on his farm because of the high cost of inputs. Fuel costs have more than doubled. Fertilizer costs have gone, in our area, from $350 a tonne to $700. Getting another crop into the ground will be quite a challenge. There will probably be some fallout.
Mr. Ritz: That is a challenge every year. It is getting to economies of scale. As you well know, in your area and mine, the average farm size now is some 5,000 or 6,000 acres. A number of farms in my area are 20,000 acres and larger. The young brothers that farm my land that I used to farm seeded 28,000 acres this year, and they have some that did not get seeded. They probably farm in the neighbourhood of 32,000 acres. Those are the economies of scale you are looking at, talking about high input bills. With that size also comes diversity in that they are not completely in a path of hail or completely where the drought is. They are diverse and spread out. There is a bit of a salve there for the wound they will have.
Everyone is cognizant of the cost of inputs. I was honest when I was reporting and doing media on the Statistics Canada numbers. We are showing farm incomes up and doing very well, with a 13 per cent to 14 per cent increase over last year, which is great. One year in a row does not make for good farming. We need three or four years in a row to catch up from the problems we have had over the last decade. Input costs are going up as well.
You are getting more for your commodities, but the inputs are going up as well. Then you have property taxes and the cost of equipment and repairs. I bought a little bearing for my swather. I had to replace the other one on the other roller the year before and it was $70, and last year it was $140. That is the type of thing agriculture is facing across the country.
Senator Segal: Minister, I do not have any rural roots. I was born on pavement, and I suspect I was put on the committee by party leadership because I look like I consume the product in some volume, which is encouraging for the producer.
My question is a bit more fundamental regarding your view of what is happening to the changing nature of the grain market globally and how that affects our marketing capacity as a country. I may disagree with Senator Mitchell on the proposals in this bill, but he clearly believes these are in the public interest. He clearly reflects a view that says too much change too rapidly is inappropriate and unhealthy. I assume that by trying to strengthen the Wheat Board's ability to govern itself without any reference to the minister's prerogatives, the Crown's prerogatives beyond that, he is concerned about the change.
On the other hand, I remember as a citizen, long before I came to the Senate, watching farmers in the West and being very upset about how individual farmers who wanted to trade their own wheat and own grains outside the Wheat Board were treated. Some were charged and imprisoned. I remember large demonstrations. I remember seeing them on television and being troubled by Canadians being treated by any government in that fashion. I wonder whether you could give me a sense of how that has changed, where the dynamic is and why this desire for choice is now more compelling and clearly growing. What are the underlying contributing factors, in your judgment?
Mr. Ritz: I will start at the end and go back. My memory is already shot, and you will have to redefine it for me.
The big demand for change is because farmers are seeing that the vast majority of them can now market their own commodities. Even farmers that want no change in the Wheat Board grow a lot of canola and pulse and other crops outside the Wheat Board. I remember having this discussion with Nettie Wiebe at one point when she was head of the farmers' union. They used to farm where we used to farm. I said, "I went by your place and you have a lot of acres in canola this year. Why?'' She said, "That is my cash crop.'' I said, "If the Wheat Board is doing everything you need, why do you need a cash crop?'' That was the end of the discussion.
I think farmers have proven to themselves and to the world that they can do this. They are Internet-savvy and into the marketplace on a daily basis, buying their inputs, and they see no reason why they should not be at the other end of the market selling their product. However, not everyone will do it. Not everyone is up to or wants the challenge. That is why the board and pooling system are there. That is their backstop, and it will continue.
Feed barley came out from under the board a few years ago, and many farmers are growing more feed barley. Over the last few seasons, it has been more beneficial to sell your malt as feed, even though it is accepted as malt, because it was worth roughly a dollar more. Those numbers change depending on the day and who is buying. It is a cash flow situation and being able to sell your product when you need to sell your product. Many companies are taking advantage and making money on the fact that your barley, wheat and durum are not moving so they know you have sell your canola, so the price of canola drops and stays down until you have access to the sales of wheat. If the farmer controls the whole works, they will not play one off against another.
The farmer's biggest competitor is not the elevator company or the United States producer or something like that. It is his neighbour. In some instances farmers are concerned the other guy is getting a better price and more rain and that type of thing. At the end of the day, they know what they are doing. They are big businessmen. They understand the nature of the job at hand.
The role of the Wheat Board and the role of the government in the Wheat Board have changed drastically over the last number of years. We no longer do the country-to-country sales that were the genesis of the board way back when. We still underwrite the sales now. I know you have Larry Hill coming next Thursday to speak to this. The board is a single desk buyer, but it is not a single desk seller. A growing proportion of what they sell goes out through the line companies — Senator Gustafson mentioned a few of them — as well as access to producer cars, where you sell it yourself but you still need a terminal at the other end to handle your product. Farmers are doing that. They are asking for that change.
It would break my heart to see farmers run the border and face arrests and all the things that happened in the mid 1990s. I can see that happening again. The frustration is growing out there. We are in a minority situation. The three opposition parties have said this will never pass. They run the risk of seeing farmers at the border being arrested again. I could not bear that as the minister of the day. That is a huge black mark on all of us involved in government. Farmers are asking for that change, they are demanding that change, and we will deliver it.
Senator Segal: Not long ago, farmers in the grains and oilseeds business were complaining that prices were well beneath their input costs and they were not sure they could sustain themselves. Now we hear some folks complaining that prices are running about double what was insufficient a few years ago. Of course, this contributes to some of the panic about the so-called crisis.
Can you give us a sense of what dynamic the changes this bill might impose would have on farmers' ability to benefit from the full range of price increases in grains and oilseeds, and what that might do? Theoretically, traditional economic theory would say that if prices go up, farmers will plant more, which will produce a greater supply and rebalance and help with the issue of a food crisis. Can you give us your sense of that?
Mr. Ritz: Weather and soil conditions drive the seeding requirements more than anything. I talked to many producers this year and asked them whether with the good prices in durum or barley they were going to grow more of that. They said no, they would stay with the rotation they had because the input costs are in the ground from last fall, or they had a lot of pulse crops last year so they were going to put in barley and durum to recoup that nitrogen, as I talked about. Those decisions are made not on a year-by-year basis, but on a longer-term plan. They know what they want to do and how they want to do it.
The soil variety makes a difference too. If it is a little bit alkaline, you are restricted in what you can grow. If it is a lighter land that will erode, you will grow different products again because they will feed differently on the soil that is there.
The seeding decisions are not necessarily based on prices. Certainly, there will be an amount of extra acres going to durum this year, but the big durum growing area of Saskatchewan is very dry at this point. We are running out of time for it to revive and come forward. Some of that durum land, if it stays dry like it is, will be reseeded into a shorter- season barley or even some lighter canola that is out there. You will lose out on the durum acres, which will hold the price up because there is less of it.
The vast majority of farmers do not react to the peaks. They look at a long-term business plan, the same as you would if you were running a hardware store on Main Street. The biggest change that I would see in Senator Mitchell's bill is the slowdown — the time it would take to change anything at all, regardless of how little it is, in that consultation phase.
I am in constant contact with the board. We discuss things a lot. I speak to the chairman and to the president and CEO a number of times. I have had the opportunity to speak to the full board once. They do not sit on a week-by-week basis; their meetings are prearranged. Anytime something came up and I had to consult, they either had to structure a meeting or get a phone call ready to go.
We adjust the prices on a basis that is driven by the board. They come back to us and we assess it. If I have to start calling back and forth all the time, rather than ramming it through Treasury Board, it is problematic. We will get into a situation where a farmer cannot sell his product in a timely way. He will be forced to let his canola or lentils go a little cheaper. That is the downside of this.
I understand where Senator Mitchell is coming from; but in the long run, I do not think anybody would support more bureaucracy.
Senator Peterson: The amendment in Bill S-228 gives the Canadian Wheat Board board of directors, and thus the producers, more authority in dealing with matters relevant to their industry. In your opinion, is there anything wrong with the board having this authority?
Mr. Ritz: The board has that authority now. For me to change anything within the board's mandate, there are certain things I can do by regulation, but for any of the major changes this seeks to correct, I already have to consult with the board, which is the right thing to do. Producers do that on the same basis as well.
Ten of these directors are elected by producers in the ten districts throughout Western Canada only. Five are appointed by the government. That is the nature of the situation. If the board sought to change that and wanted to go to fewer appointed, as this bill talks about, that would be a choice we could work on with them.
You have to realize that the government still underwrites the sales of the board and the initial prices of the board, along with some of the operating expense and so forth. They take on some pilot projects we are asked to fill in. Sometimes their contingency amount, the $60 million, is not quite enough to cover for the year. In 2003, I think it was, there was an $80-million problem, and the government of the day, the taxpayers of the country, picked up that tab.
There is a trade-off in saying it has to be completely farmer-controlled and in the government's withdrawing its financial support at that point.
Senator Peterson: Your point is that the Western Canadian farmers have spoken clearly; we know the number is well above 80 per cent wanting to get out from under the cloak of secrecy at the Canadian Wheat Board. You have said this evening there is overwhelming support to change.
Under the Canadian Wheat Board Act, there is allowance for that, is there not? Rather than have all these individual bills coming forward — I think there are three now — why would we not follow the procedure outlined in the act, consult with the producers, hold a plebiscite, take it to Parliament and change?
Mr. Ritz: That is what we are doing, but in a minority situation. We have Bill C-46 that came out of the plebiscite.
Senator Peterson: You are following that process, is that what you are saying? You have consulted with producers and they overwhelmingly have said they want to do this. You have held a plebiscite, with a clear question.
Mr. Ritz: I think it was clear. If any producers had a problem understanding the question, they could have had their grandson figure it out for them.
Senator Peterson: If you had four questions, it would have been a higher number in favour. I do not know how you could ask the question in three pieces.
Mr. Ritz: We are using questions that are well known in the industry, senator. There is no trick to them.
Senator Peterson: You have done that. Now is the next step not to take this to Parliament and debate it there? Why not that rather than Bill C-46, Bill C-57 and this one here?
Mr. Ritz: They are specific to needs. Bill C-57 speaks to the election of directors, which is separate from how the board operates. There are different things required. It would be like bringing in one particular bill to cover all the problems in the justice system. You have a number of things that come together that are moved forward that way.
I think this is the right way to go because there are specific needs. Bill C-46 seeks to follow through on the barley plebiscite that was held. It is the right thing to do. The problem is that all three parties in the opposition are saying they will not let anything like that come forward. They are standing in the way of what Western Canadian farmers want.
If this were a Canadian wheat board, not a Western Canadian wheat board, I think you would see some different attitudes in the House of Commons than you do now. Ontario has their own wheat board; Quebec has their own wheat board; Atlantic Canada has no board at all. I think you would see some changes go through quickly if it was a fully Canadian wheat board.
Senator Mahovlich: Has the Canadian Wheat Board outlived its usefulness?
Mr. Ritz: Not at all. I think it has a very valuable role to play.
Senator Mahovlich: Most farmers would want the Wheat Board as it is, is that correct?
Mr. Ritz: No, they do not in the questions that we are asking. You will have to ask Chairman Hill, when he is here tonight, about the results of his polling, if he cares to share them with you. I will not talk about that.
I live there; Senator Gustafson lives there, and he can tell you that there is a growing demand for change. In the results of my own polling, my town halls, the problem I see is that with the intransigence of certain groups and some of the board members themselves, the frustration level is building. If the board does not bend to this direction, they will lose it all because farmers will only go so far. Then they will say, if I have to give it all up to move ahead, I will.
That is the message I am hearing now and that scares me a little bit. I do not think the system is ready for that holus- bolus change. We need a managed, thoughtful response, and I think we have that with taking barley out. As I said, feed barley is already out for domestic consumption. Taking feed barley out for export and malt barley out is the right next step.
Oats came out a number of years ago and it is doing very well. A whole industry has grown up around the oat varieties that have been produced. It is now the basis for cosmetics and all sorts of things that were never thought of before.
Senator Mahovlich: The prices are high for a lot of the wheat. Does this affect the farmer? Is that why he wants to go on his own? Does the present situation have something to do with it?
Mr. Ritz: It heightens the appetite. Everyone thinks they can market better than the other guy. Some will win and some will lose. That is the nature of the free-market system.
Farmers have proven they can do this marketing on commodities that are not under the board. Under the Canadian Wheat Board Act, the board has the right to develop a pool on any commodity. They have chosen to stay with the coarse grains, but they have the right to develop a pool on canola or flax or anything else, if they wanted to, but they have not. Possibly in the future, that is what they will do. They have the right to do that under the Canadian Wheat Board Act.
However, farmers are saying they want to pick and choose the timing, as much as the price, on their commodity so that they are not forced to take less on their canola or pulse crops. Those buyers know their cash flow is tight.
Senator Gustafson: Do you or the federal government have any input on crop insurance in the different provinces?
Mr. Ritz: We foot 25 per cent of the bill. That is it. We pay for the administration on top of that. However, the rates that a province will decide to put in place are ultimately their decision. The cost of the administration and 25 per cent of the overall costs are ours; 45 per cent of the costs are the provincial government's, and 50 per cent are paid for by the premiums that the farmers themselves pay for the insurance program.
Senator Gustafson: I will return to the Wheat Board and the whole question before us. I am amazed that the Wheat Board question has become political. For instance, I do not tell General Motors how they will sell their cars, how much they will receive for them and what they will take for them. However, it seems that, when it comes to the Wheat Board, the whole of Canada wants to tell us how to market our product. It has become political. That is my observation.
Mr. Ritz: I wish I had a response to that. I cannot argue the point. I certainly see the political nature of it in the questions I take in the House of Commons, media interviews and in letters to the editor. However, it is the same groups over and over demanding the same, though there is now a larger and more varied crowd coming forward.
I have not been shy on saying I want marketing freedom in any of the four elections I have run in, nor in the fifth coming up whenever it is. I am elected with majorities that are very comfortable. I always have people take me to task at the all-candidates meetings on this factor, but they are the same people I have been facing for 20 years that I have been playing around with in this political arena.
The exciting thing for me is that in the last year I have seen a growing number of those same people come to me and say, "Turns out you were right. We do need this.'' That is amazing.
The average age of farmers out there is mid-60s. These people have done this a certain way for a long time, and they are starting to realize that the only way they will have a product that is sellable to the next generation coming in is if there is black ink on the bottom of the ledger page. They feel that, by having the rights to market their own commodities, they will have a better chance of doing that.
Senator Gustafson: Three methods were put forward by the Canadian Wheat Board on farmers marketing their grain: the farmers can take the price they were offering; they could take 80 per cent of the pool; or they could take the whole pool. Obviously, some farmers made the wrong choice.
Mr. Ritz: There always will be farmers who do. They did it at their time and place because they had a bill to pay. Waiting for that extra $10 a tonne was more than negated by the interest they would have accumulated in that time frame. Not everyone will catch the spikes. That is the nature of the free market. We do not operate on the Toronto Stock Exchange. There are very few winners and many losers. The same thing happens in any free-market situation.
Farmers are educated to do this and they know how to do this. There are marketing clubs starting up. Many terminals are privately owned by farmers in Western Canada. They are doing very well. I have two in my riding. They are both expanding and moving forward and doing very well. Those premiums are going back to the producers who put the money in to begin with. That is tremendous to see.
The Chair: Thank you. We know this is a difficult question and it always is. It is good of you to be here before our committee. I know if we need you back, you will come back.
Mr. Ritz: Absolutely.
The Chair: Thank you.
Mr. Ritz: Thank you. It is always a pleasure.
The committee continued in camera.