Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 15 - Evidence - Meeting of June 10, 2008
OTTAWA, Tuesday, June 10, 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 7:04 p.m. to give consideration to the bill.
Senator Joyce Fairbairn (Chair) in the chair.
[Français]
The Chair: Good evening, honourable senators, witnesses and all of you watching our Standing Senate Committee on Agriculture and Forestry. Today the committee continues its study of Bill S-228, An Act to amend the Canadian Wheat Board Act (board of directors). There are a number of bills on the CWB currently under consideration by Parliament and one of them, 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 tonight is the Honourable Senator Grant Mitchell, Senator from Alberta. He is the sponsor of Bill S-228 and he will explain to us the reasoning behind the various provisions of the bill.
We have one hour with the senator tonight. I encourage my colleagues to keep their questions short in order to give him an opportunity to respond fully and for everyone to have a chance to participate in the discussions.
Hon. Grant Mitchell, sponsor of the bill: Thank you, Madam Chair. It is a pleasure for me to be back here with the Agriculture Committee. This may be the first committee I sat on in my tenure at the Senate; it is, for sure, the first committee in which I have sat on this side of the table.
I am happy we have such a good turn out. This is an intense and important issue for farmers. It is one of those debates that has gripped the West.
I want to begin by thanking the government members and the leadership on the government side of the Senate for allowing this bill to progress as it has through the readings and into committee. I know this is not a bill that the government side supports. Therefore, I appreciate that whereas they could have held it up for a good deal of time they have chosen to allow it to progress and we are having debate on it now. I would like to thank Senator Bert Brown for his presentation on the other side of the issue which was well presented and appreciated by me and others keen on this debate.
It is safe to say that many issues we encounter in Parliament in the public policy debate today are rather black and white. The lines seem to be drawn and this one is no different.
It is widely known that I have a personal, political position on the Canadian Wheat Board. I support it very much. I do not like to see things that may threaten or undermine its ability to operate in the way it has so successfully on behalf of western Canadian farmers. I can list a number of reasons for my position.
First, it has added value. There are studies that argue strongly its significant value to farmers. I believe the Canadian Wheat Board has been very responsive to the demands of farmers. It is clearly a board under a great deal of pressure. I think it responds well. I have noted, for example, that there are now seven ways in which you can buy grains through the Wheat Board. That may well be more varieties of methods of purchase that directly mimic certain market mechanisms than private sector grain companies offer farmers.
I believe the argument for greater competition is an argument that must be analyzed very carefully. If the Wheat Board were to fail, if the Wheat Board were to be excluded from the process, I do not think it would enhance competition. I think it would limit further a very limited number of actors in what is almost an oligopoly in this particular industry.
There are those who would argue it is not black and white, that the Canadian Wheat Board is here or is not here, it could be a dual marketer. I agree with Mr. Midgie who was the hand-picked head of the government's own review task force who said the dual marketing system cannot prevail, it can not work.
I think it cannot work for this reason: the resources of the companies that the Canadian Wheat Board would have to compete against. The Wheat Board has the capability, expertise, experience and drive to compete. What the Wheat Board does not have is the capital to compete. Over the last many years, the Wheat Board has been giving what would otherwise have been profits, back to farmers. Their competition has been keeping some of those profits and building infrastructure.
If the Canadian Wheat Board actually had to compete head to head with the Cargills of the world, they would have to use the infrastructure of their competitors. They do use it now, but not in competition because they are not in competition now. That is an untenable position in which to put the Canadian Wheat Board or any other corporation. It seems to me, it simply could not work.
Those are some of the elements of my position. The fact of the matter is that what I believe about the Canadian Wheat Board is not really relevant. I would argue that what senators feel about what the Canadian Wheat Board should be or become is not relevant. The government's position is not really relevant.
What is relevant is what the producers want to do. The producers should be allowed to make that decision. We probably all agree on that.
This bill does not take sides or if it takes a side, it takes the side of a democratic, open process that inhibits undue government intervention in this decision making process. It prohibits what some may call undue government manipulation of that process.
There is a lot of concern about what has happened over the last couple of years in the evolution of this debate. I can list some of those concerns. This bill is not happening in a vacuum by any means.
The government early in the process met with a group of people and invited only those who opposed the Wheat Board. Finally, they included B.C., Saskatchewan and Manitoba because of criticism, but those provinces were only observers in the meeting. Alberta, who agreed with the government, sat at the table.
The government rearranged one of the voters' lists for the election of board members and eliminated 16,000 voters. They put a gag order on the Canadian Wheat Board. They had a three-part question on the plebiscite that was controversial, was not clear and, I would argue, did not give a clear result.
We have developed a bill largely in response to that concern. We want this process to be left to the producers. In fact, in a recent Canadian Wheat Board poll of April this year, 77 per cent of producers said that they do not want the government making decisions. They want to be making the decisions through their Canadian Wheat Board.
What you see in this bill is an effort not to direct the result or to impose a result. Clearly there is a great divide on this issue. It is to allow producers to have their say in a fair and clear way so that the result is very clear. Then the decision can be implemented legitimately.
We have essentially three sections to the bill.
First, the government must consult. That sounds, perhaps, not to be a core or central issue with a bill of this nature, but the original bill was based upon an assumption of cooperation. I think it is fair to say that cooperation does not exist. Therefore, we need to strengthen the role and necessity of the requirement for consultation between the government and the Canadian Wheat Board.
Second, we have restructured the selection of the five appointed board members. Given the highly technical nature of the buying and selling of grains, it is conceivable that the 10 elected members may not fill out all the expertise required on a board. Therefore, five members were set aside to be appointed. They have been appointed by government to this point. This bill would have two of those five appointed by the 10 elected representatives on the board. Essentially, we are expanding the role and impact of the democratic process by giving this extra power and jurisdiction to the elected representatives.
Third, we want to have a very clear question. The question on the last plebiscite was three-pronged. None of the three potential answers secured a 50 per cent plus one level of support. Therefore, ultimately the result was subject to interpretation, none of which was definitive.
This bill would require a definitive clear-cut question so farmers know what they are being asked when they answer. The question would have two options. Either you want all domestic and export sales of X grain should be removed entirely from the single desk marketing system of the Canadian Wheat Board and placed on the open market, or you would choose option two, the Canadian Wheat Board should remain the single desk seller of all specified grains with the continuing exception of feed grains sold domestically.
Those are my opening comments. I look forward to questions and ideas from my former colleagues on this committee. Thank you.
The Chair: Thank you very much.
Senator Mercer: Thank you, Senator Mitchell for being here and presenting this bill. I, too, am a very strong supporter of the Wheat Board. I think it has done well for farmers in Western Canada. I also am supportive of what some of my colleagues on the other side are supporting which is listening to what farmers in Western Canada had to say.
In your preamble, you talked about the gerrymandering that happened in some recent votes. This also concerns me. We need to have some discussion of that, although this is probably not the place.
The Wheat Board was recently in the paper because of the firing of the vice-president or director of communications. I cannot remember the young woman's name. Are you aware of the vote to fire this woman from the Wheat Board?
The information from my sources is that the representatives appointed by this government to the Wheat Board voted to remove her from her position. There were four of them in the room at the time. There were also four representatives elected by farmers in the room. The elected members voted to retain her in her position as vice- president of communications, the main spokesperson for the Wheat Board. That meant a tie vote and, therefore, the deciding vote was cast by the current president of the Wheat Board who was appointed by this government. He sided with the government representatives as opposed to siding with the farmers' representatives.
I am simply having this difficulty when I hear the government say they want to listen to western farmers. I want to listen to western farmers. I think everyone believes this is the most sensible thing to do. However, when an opportunity comes along to listen to the representatives of western farmers, all four in the room wanting to retain this employee, the majority in the room who were appointed overturned the will of the farm representatives.
How do you think this bill will help fix some of that?
Senator Mitchell: I certainly share your concern, Senator Mercer. As I outlined in my opening comments, there has been what I would argue is undue government intervention in the process.
I am more reluctant to agree entirely with the point you are making. I sympathize because the government put tremendous pressure on the board to fire Adrian Measner, the CEO. Their argument was that he was advocating for the Canadian Wheat Board, which seems to be a natural thing for the president of the Wheat Board to do.
This bill would have 10 members elected as they are now and two appointed that would be more influenced by the elected members. However, it is not inconceivable that you have a split as you mentioned. In our bill, the government would still have the ultimate right to appoint the chair of the board.
I feel it is important that the government still have input; they have a guarantee on the payouts to farmers and so on. You cannot completely absolve them of that. However, we would be moving in a direction where the elected farmers would have more impact and power, so the line from the producer would be more direct.
It would not be a guarantee that there could not be a disagreement over a personnel matter. I do not know the specifics of this one.
Senator Mercer: I met Adrian Meisner. I have a great deal of respect for him. I would have fired him if he had not spoken up for the Canadian Wheat Board. I would have thought that is what he was being paid for.
Senator Mitchell: What we should have done was allowed the board to deal with him. How can you have an employee who runs your organization whom you do not control? How can you manage that?
Senator Mercer: You did mention in your presentation about the profits. If the profits had been made by Cargill and the Cargills of this world, they would be putting them into infrastructure as opposed to profits from the Wheat Board which go back to the community.
What are the dangers here? It seems to me that one of the greatest dangers is that if the Wheat Board were to disappear, and we went to this open market, we know the Cargills of this world are all pretty powerful. They suddenly fill the void, and when that void is filled, they have control. When they have control, we know that the last two people to get consideration in their process will be the farmers and the consumers. The first people to get consideration are their shareholders.
What do you see will happen if we were to lose the Wheat Board, specifically addressing the issue of infrastructure?
Senator Mitchell: I just spoke with a member of the Wheat Board today who confirmed for me some figures that I had seen. It was a strong estimate that somewhere between $550-650 million a year of extra money gets to Western Canadian farmers because of the work of the board.
That figure has some internal consistency. If you consider the board does $6 billion to $8 billion worth of business a year, $600 million is about 10 per cent. Would that be reasonable profit for Cargill to take? Probably. There is profit in a Cargill that goes to Cargill and shareholders and so on, and that is the way markets work. In this case, it goes to farmers.
What it means is that over these many years, the Canadian Wheat Board simply has not built the infrastructure. A couple of things would occur. One, they would have to utilize, as they do now, the infrastructure of the multinationals, but now they do not compete with them. Were they to be competing with them, as would occur if this were opened up, they would actually be at their mercy for whatever price these companies wanted to charge them. That would not auger well.
The other thing is that it is safe to say that the Canadian Wheat Board has the farmers' interests at heart. That is their focus. That is their objective. I am not being critical of the Cargills or Bungee and Dreyfus at all; they are there to make a profit. It certainly is not that the farmers' interests would be their first interest.
I think all of a sudden, you would have smaller to larger farmers but none of them or very few of them would ever be of the magnitude that they could confront these major multinationals. There are not a lot of them and there is not a lot of competition. I think farmers would be vulnerable to that.
Having said that, what I think does not matter. What matters is what the farmers think. We need to have a process that allows the farmers to make that decision. They are very smart business people; they know what they are up against and they can make that judgment.
I simply think they have not been able to make that judgment. The debate, because the Canadian Wheat Board has been gagged, has been one-sided.
The Chair: I am looking at the clock, honourable senators, so if you can speed up a bit and keep it short, we will get to the end and be able to get on to our various reports.
Senator Peterson: Thank you, Senator Mitchell, for your presentation. Right now, as we sit here today, we have the Canadian Wheat Board Act. Under that act, there are provisions for these things we are discussing. In other words, if you want to do something, if you want to make changes or improve it or whatever, you have consultation. Then once you get consensus, you prepare a plebiscite, have a vote — hopefully it is a clear question with a clear response — and if it is carried, that goes to Parliament. Parliament then makes the decision because it is an act.
Now we have lots of bills — Bill C-46, Bill C-57 and Bill S-228. How do you see all this playing out? What is happening here?
Senator Mitchell: One of the ironies is that the system, as it existed, has worked very well. The problem for this government has been that it has not worked in a way that this government found agreeable to its position, its ideology or philosophy.
To be sure, there are many farmers out there who would agree with the government that they would want it open. What has happened, therefore, is that there has been a lot of different legislation emerging that has kind of sprung out of this debate. Specifically, legislation to allow the government to change the structure of barley marketing has occurred because the courts said that on the basis of the ``consultative plebiscite'' — the minister's words — they could not make regulations to change the structure of barley marketing under the board. Unfortunately, it has become very unclear. We need to make it clear and that is what this bill tries to do.
Senator Peterson: The intent of your bill is to put more authority and responsibility into the hands of producers, is that right?
Senator Mitchell: Clear the deck — allow the producers to vote on a very clear-cut question. It could be the Western equivalent of the Clarity Act, where there is a clear-cut, two-pronged question: Do you want open market or do you want single desk? There should be nothing in between that probably cannot work and that really muddies the outcome and does not give a directive at the end of that vote.
Senator Segal: I will defer to the witness's Alberta roots in these matters. However, but it does strike me, as an easterner, that this whole notion of choice did not emerge out of party A or party B or this platform or that platform. There were actually farmers — as I recall, watching the news some years ago — who were quite angry about not being able to take their own wheat to the border and not being able to sell their own product.
I have been to the West and have sat at the Federation of Agriculture and other gatherings where individual farmers, who ran large and efficient spreads, were pretty troubled about aspects of the Wheat Board. No organization is perfect no matter how hard people try, and I am sure the people in the Wheat Board have always tried to do the best possible job for farmers. Are you not troubled by the possibility that any large bureaucracy or co-op focuses on its own indigenous needs and develops, with the best of intentions and in the best of faith, a kind of mindset about sustaining its own operation going forward? The fact that there are farmers who want choice, or feel frustrated, or do not have access to the market in the way they think makes sense for them and their efficiency sort of gets put aside.
My sense is — correct me if I am wrong — that is where the debate started before the 2004 election or the 2006 election. That is how the matter got into the public domain, and what we are seeing in all the legislation referenced by Senator Peterson, is a reflection of different views about how to address that.
My assumption always is that the motivation on all sides, even if I disagree with an approach being taken, is to try and do the best possible thing for the farmer. I worry that one of the perhaps unintended consequences of your bill might be imposing a measure of paralysis on the system.
Someday, God forbid, we may have a Liberal government and it may want to make changes to policy. We will have statutory consultation processes which will slow them down. Some Minister of Agriculture may say, should your bill pass, where did this come from? If they look up the history, they will find that it came from the Liberals of a certain time and place, who were trying to do the right thing. Does that make you pause and think that we might be a little overzealous with this proposed legislation? Perhaps we should stand back and let the change in grain prices, in the dynamics of the market and in farmers' attitudes sort this out and not step right in with quick particulars, or am I being unreasonable?
Senator Mitchell: I have never known you to be unreasonable. Your argument is legitimate but I happen to disagree with it. Yes, there were farmers in the period you were talking about early on or within the last ten years who did not feel their interests were being represented. Today, if we were to impose their interests on the process, many other farmers would feel their interests were not being represented. My point is that no one should impose interests one way or another on these farmers. Instead, farmers should be allowed to make their own decisions.
The consultation occurred regularly until about two and a half years ago and it was not onerous. The Canadian Wheat Board is under tremendous pressure. It might not be the give and take of market pressure but it might approach the give and take of an oligopoly market pressure. The CWB might be a bureaucracy although I understand it is quite streamlined because of the market pressure. You cannot tell me that Cargill and other multinationals do not have some of that as well.
If there were a non ``open market'' institution that was responsive and under pressure to respond, I would say that few would surpass the Canadian Wheat Board in that respect. The CWB has been under tremendous pressure, and it has responded.
The seven ways that you can buy grains are literally ingenious and very much reflect an open market. There is the pool, there is early payment, you can do target price, or fixed price, or daily price, you can do force majeure and it is all complex and it does mimic the open market processes, with the advantage for farmers that no one is taking a profit and any profit is passed to the farmers. The CWB puts the interests of farmers first. As I say, I do not think you disagree that we want the people affected by this to make the decision. We would adhere to a clear-cut decision on a clear-cut question.
Senator Segal: Senator, you made reference several times to the big corporations their profits. They have invested that profit in their corporate infrastructure to do a better job for their shareholders. The word ``shareholder'' evokes the notion of a kind of Swiss gnome counting cash in a basement. These shareholders are public pension funds, in many cases they are part of the co-op movement or the Saskatchewan Employees Pension Fund and others, who are doing their best to ensure that their retirees get paid when they retire. Shareholders are often institutional and just as interested in the public interest.
When you chat about $650 million going to farmers as part of the return that the Wheat Board has put back into their client group, for which they are to be commended, versus the $650 million investment in infrastructure, does that not define one of the structural problems that the Canadian Wheat Board will face? Let us assume that all your proposed provisions came into effect, and the Wheat Board went forward unchallenged, unchanged, solid, determined and collective but they still did not have the money to invest, while others were investing more and more because of their structure. Would that not begin to produce a core problem for the CWB over the long term? Do we not have to try to find some way to ensure that Canadian farmers can benefit from the changes in the marketplace and have a series of choices as opposed to being locked up in one column or another?
Senator Mitchell: Senator Segal, that would make some sense except for one specific problem: the farmers who truly want out by and large think that they would get a better price elsewhere. They can make t heir decision. I would argue that they are getting a better price is because the Canadian Wheat Board is highly competitive. I recently read that U.S. elevators were buying for $14 per bushel but the CWB was selling directly to malting companies at $16 and $18 per bushel. Following the logical conclusion of your argument, although that money might go into building infrastructure, it would make the farmers' position even worse. Currently, I would argue that they usually get a better price, and the system is working quite well.
Again, it is not for you or me to think it is but rather it is for the farmers to think it is.
Senator Segal: It is your view that this bill increases farmers' choices.
Senator Mitchell: Yes. The problem with the previous question asked was that there was not a balanced debate, given that the Canadian Wheat Board was not allowed to present the other side. Someone likened that to Coca-Cola not advertising for two years — they would lose market share too. It is so important to have a balanced debate because a great deal of it hinges on the notion that you can have a dual market. There is not only a strong argument that you might be able to have that but also a strong argument that you might not be able.
A further problem is that once you get it, if it does not work, you cannot go back because of NAFTA. You cannot restructure because of NAFTA. It is terminal. We would have to be absolutely certain and, therefore, I would want to see a clear question and a balanced debate. Let the Adrian Measners go out and talk about this. What are we afraid of? Let them explain their side of the debate. You are from a party that believes strongly in that and does not like government intervention. That is all I am saying and that is all this bill intends.
Senator Callbeck: Senator Mitchell, you said that producers should make their own decision and that there should be a clear-cut question. Certainly, I agree with that because we have had so much confusion about the vote that was taken. I will ask you about the discrepancy between your numbers and those of the minister. Why would there be such a difference?
In your speech in the Senate, you said that 13.8 per cent of the voters support undermining the Canadian Wheat Board and 87 per cent support the Canadian Wheat Board. The minister appeared before the committee last week, and I asked him about your figures. He quoted a figure of 62 per cent of producers wanting marketing choice and the rest, which would be 38 per cent, wanting a single desk system.
You say that roughly 87 per cent support the Wheat Board and the minister says that 38 per cent are in support. The discrepancy is confusing for the public. I would like you to comment on that.
Senator Mitchell: That is a central question that underlines the inadequacy of the plebiscite question. You get to two completely different conclusions by using the same numbers. The numbers in barley marketing were as follows: 13 per cent of farmers voted for open market — no CWB; 48 per cent voted dual market — both CWB and Cargill could market; and 38 per cent voted single desk — only the Canadian Wheat Board could market barley. Those who want open market say that dual is an indication of open market and they add that percentage to the 13 per cent pure open market and get 62 per cent. Those who want the Canadian Wheat Board take their 38 per cent and add that to the dual market percentage of votes and get 86 per cent.
That is the very problem. It is interesting that after close to two years since the plebiscite, the numbers seem to be changing. To the Canadian Wheat Board's credit, they just released a poll that actually undermined their interest; they came out with information. They are not trying to hide anything. The information now shows that 52 per cent in this poll would support an open market and 40 per cent would support the Canadian Wheat Board.
This should be very encouraging to the government. They should say, ``We should ask the question in that way: Open market or Canadian Wheat Board.'' The dual part is really a moot point. If you have open market, the Canadian Wheat Board could contribute; nobody could stop them from participating if they want to. If they do, that is great. If they cannot, that could be a problem for some.
However, the same poll said that 77 per cent of farmers want to be able to make the decision, even though the majority want an open market. It is one of those fortuitous circumstances in politics where everyone wins. My position in this bill is supported by farmers who want to make the choice and the government should be encouraged by the fact that it looks like farmers might actually vote for an open market, under those circumstances.
My bill is prepared to do that. Let us do it. The government should be truly encouraged and should want to call this plebiscite right now on a clear, open question. We would not then find ourselves in the muddle that you have just alluded to.
Senator Callbeck: You mentioned about what happens if the Canadian Wheat Board cannot compete. What happens for the smaller farmer?
Senator Mitchell: Again, I am not a farmer and I am very reluctant to impose my perspective on that. However, I have spoken to many farmers and I know how hard it is for farmers. Right now, it is thankfully much better and often this kind of initiative finds a resurgence when prices are good. When prices are not so good, sometimes that changes.
However, let us call the question when prices would good. This bill would allow for that if that is what the government wants to do. That said, small farmers could be whip-sawed. They would lose marketing power. One farmer with 120 tonnes is not like the Canadian Wheat Board looking to find buyers.
They would have some advantages perhaps in that they would receive their money upfront. That is one of the big things: if Cargill actually buys it from you, you receive your money. Now, there is a new CashPlus system whereby farmers receive their money upfront and there is an advance payment plan with a zero-interest loan whereby farmers can receive more of their money up front. Seventy-three per cent of the farmers in this poll said the CashPlus system makes them very happy with the barley marketing process.
I would love to see this shown in a clear-cut question. It has taken so much of farmers' and Parliament's time and energy, and it has created divisiveness and animosity. Why not put forward a clean question and vote for this bill? We will receive an answer and move on with it.
Senator Gustafson: Senator Mitchell, I am very concerned about this bill coming from the Senate. I am wondering why the Senate would intervene in a situation like this. If I or Western farmers were to go to Irving or McCain, who both market potatoes around the world, or go to the Ontario wheat producers and tell them how to market their products and so on, I think there would be a serious backlash.
We are trying to tell the farmers of Western Canada what they should and should not do. I do not think it will go over well and I think intervening here in this situation even puts a blot on the Senate.
We are getting along pretty well out there on the farms. We are working hard and we are trying to make an honest living. Then someone comes along and tells us what we can and cannot do.
First of all, nobody is saying get rid of the Canadian Wheat Board. They are saying they want choice. The Canadian Wheat Board, in my opinion, will survive. Most of their wheat is sold to Bungee, to Archer Daniels Midland, to ConAgra and to other big companies. The wheat is sold internationally. They will continue to do a good job for farmers. I would even go as far as to say I think the majority of farmers will support the Wheat Board. I do not know; nobody knows that figure.
I would be very careful. I think the die is cast, unfortunately, and I feel badly about that. I have been a member of this committee for 14 years and was a member of the Agriculture Committee in the House of Commons for 15 years. I do not see how farmers will accept the Senate intervening here in their business. I really have some concerns about that.
The farmers want the same deal that the Ontario wheat growers have. That is all they want. They can sell into the United States or they can sell through the Ontario Wheat Producers' Marketing Board, whichever they choose. They have that freedom.
A lot of farmers see this as an antiquated system. Even Russia does not tell their farmers where they can sell their grain anymore. This is a historical thing that happening here. Give the farmers in the West the freedom; let them exercise their choice. I will tell you, they are pretty capable of looking after their own affairs. If they do not like what is happening, you will hear from them.
I do not have much more to say than that. If we are moving ahead with this, I would like to see us call some of the Alberta barley producers, the Alberta Grain Commission, the Western Canadian Wheat Growers Association, organic farmers and Viterra — the biggest company of all. Let us hear them. Maybe we will be enlightened.
Senator Mitchell: Senator Gustafson, thank you. Lots of information there.
Senator Gustafson: I am sorry for being so direct.
Senator Mitchell: I like you for that and many other reasons. Knowing your background, how long you have farmed and your depth of experience in this area, I do not lightly discount or dismiss your comments. In fact, I think we do not actually disagree much on this.
First, let me address your question about why we started this bill in the Senate. Bills are often started in the Senate. It is not as though the Senate is intervening. The Senate would have to pass this bill first or second. Generally, it would be second. In fact, your Prime Minister has started bills in the Senate before.
Senator Gustafson: Right now, the Senate has enough challenges without the wheat growers.
Senator Mitchell: Starting a bill in the Senate is frequently done and done for all kinds of reason. When we were in government, there was so much activity, legislation and work being done in Parliament that they would often start a bill in the Senate because it would take longer. That is one reason.
It was interesting that Minister Ritz said we are delaying by bringing it to the Senate. We are not; we are speeding up this process. Let us move this bill through. That is why we began it here: to speed up the process.
The Eastern Canada market is very different and is much closer to markets. You are right about that. That would change the structure of how a wheat board might work. However, again, you and I agree: I want to give farmers choice and you do, as well. I am just going further back one step and saying let them choose on their choice. Let us not impose one side or the other on them. Let them make that choice.
From your point of view, you probably should be very encouraged. You have a poll here that would indicate a good chance of success for the point of view you want. I think one of the things that harmed your case is that the three- pronged question limits the possibility of any one answer getting 50 per cent plus one, so it will not be definitive. It is very difficult to get a definitive answer from it. The two-pronged question we are asking is very clear, very concise, very precise, and you will get a clear, non-questioned indicator.
I am not afraid of the outcome. I think farmers should be allowed to make that decision. If you support this bill, we will get all kinds of choice; and if we support it quickly, we will get it through and there will not be any more delays.
Senator Gustafson: I am sorry, I disagree with that completely. I do not think this will be received well, especially now that the price of grain is a little stronger and farmers have a little optimism. I think there will generally be a feeling that the politics of the thing has entered into it and taken over, not allowing the farmers to have their feelings about things.
Senator Mitchell: There are many farmers who support the Canadian Wheat Board, who feel that the politics have already kicked in to their disadvantage.
Senator Gustafson: I want to also put on the record that they are not asking to get rid of the Wheat Board. They are asking for a choice of what they can do. I know that there are those who come back and say that a single desk will not survive. A single desk will survive. They may have to cut back some of their overhead and so on, but I would be very surprised if they did not get a high percentage.
You put yourself in the position of a farmer out there, and he says now you have got to market your own grain. He has had the advantage of the Wheat Board marketing the grain. We are moving into a global economy here very fast. I was just reading about that today. We have to move with it. We have to be prepared to do that. It speaks for itself, as far as I am concerned.
Certainly, I am out of here by November. It will not make an awful lot of difference to me one way or another what happens.
Senator Mitchell: You will still have your farm, so it will.
Senator Gustafson: I would ask that you consider very carefully what this committee is doing.
Senator Mitchell: One of the issues you raise was organic farming, which raises, as an aside, the issue of new products. That, in turn, raises the issue of the kernel visual distinguishability (KVD) and the problem with that.
One of the criticisms has been that the Wheat Board has not responded quickly enough to new products. One reason is because of the visual identification issue. That is almost solved but the government wants to precipitate that before the technology is there to be able to determine different sorts of grains that may be visually the same but are genetically different. If we could just wait a year or two for that, it would probably open up a lot more for the Canadian Wheat Board as well.
Senator Mahovlich: I have three questions that I would like to throw at you. First, is it more valuable to the producer to have a wheat board when prices are down or when prices are up?
Second, you say that you propose that two of the five appointed directors be chosen by the ten elected directors, rather than by the government. How would this improve the governance of the Wheat Board?
Third, will Bill S-228 make it easier or more difficult to amend regulations and the act when there are disputes between the government and the Canadian Wheat Board?
Senator Mitchell: It is very difficult to determine definitively whether the Wheat Board is more of an advantage or less of an advantage in up markets or down markets. This is one consideration: if you buy on the price pooling mechanism, you actually average up in an up market under the Wheat Board, so there is some advantage to that. If you buy, as I understand it, from Cargill, they will give you today's price; but if the price goes up and you have not pooled, you do not get tomorrow's or next week's or next month's price that might be higher, so you do not get averaged up.
That would be one of the reasons why farmers support this, those who do.
Senator Mahovlich: Is there less profit for the farmer?
Senator Mitchell: No, there is more. If I go in today in the market and the price is low, but five months from now the price is high, I will get the benefit of some of that if I go into the pooling mechanism. I go into the pool and as it is sold, I average up. That is a big advantage.
There is a report from one of the wheat growers associations — I think it is North Dakota. In the last year, they got about 50 per cent of the top prices on wheat because they sold early and they sold it all and they did not get a chance to average up.
At the same time, you get to specify a price and you cannot get lower than that price, so there could be a real advantage for farmers when the price is going down. What the farmer who wants the open market is saying is that I would not have sold today. I will wait until it is up because I can pick the markets. Good for them; maybe they can, which is great. If that is what they want, they could vote under the mechanism of this bill and they would get to express that, but many farmers would not necessarily pick the top market.
Senator Mahovlich: That is a risk.
Senator Mitchell: Yes, but being a farmer is a risk anyway. You base your life on two things that we can hardly imagine — commodity prices and weather — and you live your life like that. They are to be vastly and immensely admired for what they do.
On the question of how two of five would improve the governance of the Wheat Board. Senator Gustafson might argue that that will not improve it at all. You could argue logically that it will just make it different. However, the difference will be that the elected representatives will get to have more influence on the board because they will get to pick two of the five instead of none of the five. You will have a board that is more oriented to elected representatives and, therefore, to their constituents.
There are some of us who would think that is probably better — more responsive, with less government intervention. I do not see how Conservatives can argue against less government intervention, but I am saying that with tongue in cheek, of course.
Will Bill S-228 make it easier or more difficult to make changes? I would say it has been immensely difficult to this point because the assumption of cooperation between the government and the Wheat Board, which is implicit in the existing act, has broken down. No matter how legislation or the relationship is structured, if there is not good faith to consult and to cooperate, it is always going to be difficult. This bill says that government cannot run roughshod over the desires of a largely elected board because they will have to consult with them.
Not only that, I think it cuts both ways. The board will have to consult with the government, so the government cannot be cut out either. That is a strength that has been overlooked in this.
Senator Gustafson: On the way of marketing through the Wheat Board. There are three ways you can market. First, you can take the cash price on the day you deliver. Second, you can take 80 per cent of the cash price and wait for the pool, which a lot of farmers took, because they got more cash out of the 80 per cent than just the cash price. Third, you can just wait for the pool to come in.
This year, for the most part, those who waited for the pool came out the best. We started with a grain price of about $5 per bushel, and if you took a cash price you could get $7 per bushel and no one dreamt they might end up with $12 to $15 per bushel. Those who waited for the pool came out the best. Of course, that makes the point: Why not give them the choice? If a farmer chooses to do this, it is up to him. I hope that you will reconsider.
Senator Mitchell: One of the interesting things about this is that not only can you have an initial price and get your 80 per cent but also you can specify futures prices on the pool. There are all kinds of variations. It is sophisticated and operates like an open commodities market because the Wheat Board has responded.
Senator Gustafson: They have also created an opportunity for organic farmers, who have called for it for a long time. It would be interesting to hear the views of an organic farmer on this bill.
Senator Mitchell: That would be great.
The Chair: Thank you, honourable senators, for the lively debate.
The committee continued in camera.