Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 8 - Evidence - Meeting of December 8, 2011 (afternoon meeting)
OTTAWA, Thursday, December 8, 2011
The Standing Senate Committee on Agriculture and Forestry, to which was referred Bill C-18, An Act to reorganize the Canadian Wheat Board and to make consequential and related amendments to certain Acts, met this day at 1:46 p.m. to give consideration to the bill.
Senator Percy Mockler (Chair) in the chair.
[English]
The Chair: Honourable senators, we will now hear from our third panel.
[Translation]
Today, in our third hour, we welcome the President of the National Farmers' Union, Mr. Terry Boehm.
[English]
Thank you for accepting our invitation.
We also have Professor Kenneth Rosaasen and Dr. Murray Fulton from the University of Saskatchewan.
Thank you for accepting our request for you to be here and we thank you for being here. I now invite the witnesses to make their presentations, which will be followed by questions from the senators.
The first presentation will be from Mr. Boehm, the second will be from Dr. Fulton and the third will be from Professor Rosaasen.
Terry Boehm, President, National Farmers' Union: The National Farmers' Union thanks the Standing Senate Committee on Agriculture and Forestry for this opportunity to present the NFU's views on Bill C-18, An Act to reorganize the Canadian Wheat Board.
The NFU is the only voluntary, direct membership, national farm organization in Canada. NFU members debate and develop economic and social policies which seek to maintain the family farm as the basic food producing unit in Canada. The NFU represents farmers across Canada, the majority of whom are grain and oilseed producers.
Farmers have become very efficient in growing grain. However, farmers realize that their livelihoods and their futures depend much on institutions and structures that seek to balance the huge powers exerted on them by large railways, international grain companies and consolidated input suppliers, like fuel, fertilizer, seed, chemical and machinery suppliers.
The CWB is one such institution that by virtue of its single-desk marketing power brings some balance into the equation, as it acts in the farmers' interests only. It also brings premiums into the marketplace for farmers' wheat and barley by being a global trader that is able to exercise both market discipline and the ability to price discriminate in the international and domestic markets.
Market discipline is possible because as the sole marketer of Western Canadian wheat and barley it does not depress the price of grains by marketing quality grains all at once when there is a surplus. For example, in those years when the prairie harvests high-quality, high-protein wheat, it would be very easy to erode the premiums on those grains by marketing all at once if it was quickly placed on the market or in a select market.
When one makes fundamental institutional and regulatory changes, if one does not take into account the reason they are there in the first place and the power of relationships they address, you will end up with disastrous consequences. With Bill C-18, this will be the case for farmers, citizens and the economy of the country. The winners will clearly be the transnational grain companies and the two powerful Canadian railways.
The CWB and single-desk marketing structure did not develop out of a vacuum. It was the result of a long genesis of farmer agitation and farmer experience at the hands of big grain companies and big railways. The agitation for the Wheat Board was built on the favourable experience farmers had during World War I with, first, the grain supervisors and then the first Canadian Wheat Board of 1919 — which was disbanded in one year, after which farmers saw grain prices collapse, in 1921, by 400 per cent.
They then formed cooperative elevator companies in the mid-1920s and created a central selling agency to market their grain. This worked well until the grain exchanges refused to deal with them and allowed them to hedge their grain in 1928. Grain exchanges were to benefit the grain companies and not farmers and their cooperatives. The economic collapse of 1929 further added to the already difficult position of farmers.
In 1935, the CWB was created as a voluntary pooling agency much like what Bill C-18 is proposing. It was a huge money loser for the government until the single desk was instituted in 1943. Farmers only utilized the voluntary pool and board when prices were falling and looked to its initial prices as floor price only.
In Canada, countless royal commissions and studies have concluded that it is not in the public interest to lead players unbridled. The Manitoba Grain Act of 1900, the Canada Grain Act of 1912, the Crow's Nest Pass Freight Agreement and the later Western Grain Transportation Act all had been established to balance the interests of powerful economic players, the public interest and, ultimately, farmers.
In the 1960s, Justice MacPherson, in his report on rail transport, recommended regulations to mimic competition where none existed. He understood that the two railways had farmers as captive shippers and acted in concert, to the detriment of farmers. He understood that pure exercise of economic power was not in the public interest and needed to be tempered and directed for the common good. This does not mean ending private enterprise but, rather, forcing it to be a team player in the economy rather than only acting in their interests. To this day, the railways are very punitive to anyone who dares challenge them. Only regulation allows their punitive measures to be moderated.
In Canada, we developed a collaborative system in agriculture with the Canadian Grain Commission and the Canadian Wheat Board working with formerly cooperative grain companies but now largely transnational companies and the railways to efficiently transport, sell and grade our grain. This system earns us premiums and allows a constrained transportation system to move our crop to port for sale in an orderly manner. Clearly, without the CWB and price pooling, grain would not flow into the elevators smoothly during the year but flood in after harvest, or at other times when prices were high, and trickle in at other times.
The CWB's coordination benefits not just board grains but all grains because transportation and elevator space would otherwise be rationed by high or higher prices at times of demand, costing farmers more and lowering their returns. The CWB single-desk selling and price pooling allow all farmers equal access to market and does not force them to compete with themselves for elevator space, transportation, et cetera.
Grain companies are trading on margins. To maximize profit, they pay as little as possible to farmers and sell as high as they can, capturing short-term opportunities. They have consolidated to maximize their power. They are giants.
As Ed Partridge said in 1905, giants may compete with giants, pygmies with pygmies, but pygmies with giants never. This is what is missing with all the government's initiatives in regard to the CWB; they do not recognize that powerful players will capture revenues that are justly the farmers' at the end of the day. Every initiative in recent years that attempted to deregulate and let so-called market forces prevail has had predictable outcomes. Unfortunately, the promises of prosperity to farmers have not materialized because, in every instance, consolidation has taken place, costs have been externalized to farmers and, in general, farm income has dropped and farms have disappeared. It was predictable because the promises were made on false assumptions that a free market does not need to be regulated or that institutions like the CWB need a legislated single desk to be able to benefit farmers and the economy as a whole.
I urge the Senate to reject this bill in its entirety for the good of farmers and the country as a whole. It is bad public policy handled in a particularly odious manner by the minister, who only yesterday was admonished by the courts for acting with a disregard for the rule of law. The majority of farmers support the single desk and always have. So-called marketing freedom has long ago been addressed by the Canadian Wheat Board producer direct sales program. There is not a need or a reason to pass this bill. Farmers pay for the CWB and direct it through a democratic board of directors. The CWB benefits farmers. What is wrong with that?
Murray Fulton, Professor, University of Saskatchewan: Thank you for the opportunity to appear before this committee.
The changes proposed to the Canadian Wheat Board under Bill C-18 represent a fundamental regulatory change in which administration fiat will be replaced by market transactions. Using market price signals to govern an economic system can be very effective. Indeed, as an economist, I often extol to my students the benefits of using markets to organize the provisions of goods and services.
At the same time I, like other economists, stress that there are some fundamental conditions that need to be in place for markets to work properly. Specifically, markets must have a reasonable number of buyers and sellers and there must be no important public goods.
In the case of the grain handling and transportation system, there is considerable evidence that these conditions do not exist. Both the grain handling and railway industries are highly concentrated with a few large firms dominating the industry. Indeed, high concentration has been an issue since the early days of the system in the late 1800s. Today this high concentration is linked to problems with the level of service provided by railways and has resulted in farmers loading producer cars to bypass the higher priced elevator system.
Farmers and the system in general also rely on critical public goods — goods that in recent times have been provided by the board. Over the past 25 years, the Canadian Wheat Board has played a key role in maintaining access to the United States by successfully defending Canada in trade disputes. The CWB has also played an important role in ensuring that regulatory tools such as the revenue cap and the level of service requirements are in place and are used to address market concentration issues, particularly vis-à-vis the railways.
With the removal of the Canadian Wheat Board, both the grain companies and the railways will have significant latitude to raise prices.
Consider first the grain companies. Although much has been made about a voluntary Canadian Wheat Board providing marketing choice and competition, without its own grain handling facilities both on the prairies and at port, a voluntary CWB is either not viable or only viable on a small scale. In the absence of a strong and viable CWB, producer car facilities will no longer have a sales outlet for the grain they handle and thus will no longer be in a position to limit the grain company's power to raise handling fees.
The marketing power of the railways is of particular concern since they control access to the key resource required to get grain to port position, where a much higher value for that grain can be obtained.
Finally, without the Canadian Wheat Board in place, no industry player will have both the desire and the financial wherewithal to supply the public goods required to maintain market access and to deal with market concentration.
Since the conditions for a well functioning market are not present, full-scale deregulation of the grain handling and transportation system is, in my opinion, a poor public policy decision. If enacted, Bill C-18 can be expected to both reduce the overall size of the pie that is available to participants and to reduce the size of the slice that is available to farmers.
Given this, are there policy options or modifications that would improve the situation? The answer is yes. First, regardless of what happens to Bill C-18, it is important to have some transparency about the prices that farmers pay to get grain to market. Simply put, I would like to see any new legislation, whatever form it may take, include a provision for the collection of data that would allow key prices — and here I am talking about the price at port, the price in the country, back on the farm, and the difference between them, the so-called export basis — to be determined and presented on an ongoing basis. The cost of such an exercise is not large, and it would provide significant benefits in terms of keeping the actors honest and being able to determine the extent to which market-power issues would require regulatory attention.
Second, there is an alternative policy option with regard to marketing that needs to be given serious consideration. This option would remove the Canadian Wheat Board as the sole seller of grain to customers located in Canada, the United States and Mexico but retain the Canadian Wheat Board as the sole seller of grain to customers located elsewhere in the world. In effect, the Canadian Wheat Board would become the Canpotex of the grain industry.
Such a policy option would allow farmers to sell their wheat and barley directly to pasta plants, maltsters and flour mills in North America, thereby allowing market forces to guide economic activity and innovation. This option also ensures that the Canadian Wheat Board remains a major player in the industry, a player that is able to provide countervailing power, particularly vis-à-vis the railways and important public goods.
This last policy option involves compromise, a compromise that must take place now. Once the proposed changes to the Canadian Wheat Board are made, it will be impossible to reintroduce the Canadian Wheat Board into the grain handling and transportation system. The compromise I am discussing, however, will not occur as long as farmers, the industry and government each believe that there is only one solution.
The Chair: Thank you, Dr. Fulton.
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The Chair: I will now hand the floor over to Professor Rosaasen.
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Kenneth Rosaasen, University of Saskatchewan: Good afternoon, senators. I appreciate the opportunity to be here to speak about this extremely important piece of legislation.
Bill C-18, which proposes to remove the single desk, is named "the Marketing Freedom for Grain Farmers Act" by the Harper government. Marketing freedom should not mean that the state is free to expropriate farmers' assets without compensation. When the department of highways acquires property, expropriation can be used, but usually there is compensation by agreement or else in the courts.
Bill C-18, as it currently stands, confiscates the farmers' property by nationalizing the CWB agency, one that owns railcars, lake vessels, computer software and a contingency fund, and it proposes to do so without any compensation. It fires the farmer-elected directors and replaces them with five government appointees who are under the direct control of Minister Ritz.
Marketing freedom does not mean that the government is free to trample the democratic process. Andrew Coyne, in the December 5 issue of Maclean's, suggested that Parliament is dying. That is his quote.
Limitations on debate in the House of Commons have allowed the Harper government to be a bully, despite being elected by only 24.3 per cent of eligible Canadian voters. The Sask Party received 64 per cent of the popular vote in the recent Saskatchewan election and it was deemed a landslide victory. In the Wheat Board plebiscite, the Wheat Board had 62 per cent favouring keeping the single desk for wheat, and somehow, some say that does not matter. Do we adhere to democratic principles in Canada or do we not?
As recently as 2006, Quebec farmers implemented a single-desk collective marketing organization for wheat, and they did so with a democratic vote. When the board was removed in Ontario and in Australia, it was done with a democratic vote of farmers.
Prime Minister Harper's roots are in the Reform Party, a party that valued Parliament's accountability to voters. His closure on debate, on enforced party-line voting and no plebiscite on the Wheat Board is a strong denial of the principles on which his past party was founded.
How is this new agency created in Bill C-18 made accountable? To me, that is a nagging question. It maintains the Wheat Board is a corporation, but within the legislation "the Corporation is not an agent of Her Majesty and, despite Part X of the Financial Administration Act, is not a Crown corporation within the meaning of the Financial Administration Act. The directors, officers, clerks and employees of the Corporation are not part of the federal public administration."
Who is this new mongrel organization responsible to in terms of accountability? The Auditor General examines government agencies and has also examined the CWB. However, by stating it is not an arm of government or the Crown, where is the accountability? I see no mention of shareholders. It only reports to Minister Ritz and the Governor-in-Council. Where is the farmer representation and who is running this new entity?
Comparisons of the Wheat Board with the open market are often made. The Canadian canola market is not exemplary, as Minister Ritz would have you believe. The processors have a crushing margin for soybeans in the United States, the value of the oil and meal compared to the value of the seed. Down there it runs about 30 to 90 cents per bushel most times. Do you know what the comparable is in Canada? It is $2 to $4 per bushel in Canada. Canola, at $12, has been a good crop, but with reasonable processor competition it might have been $13.
The removal of the CWB single desk triggers reduced prices and immediate losses of over $500 million to the prairie farmers, communities and Canadians, according to eminent economists who have examined the actual sales records of the Wheat Board. The lower selling price will benefit foreign consumers, and it enables the oligopolies and the prairie grain-handling and transportation sector to increase their margins. These oligopolies have numerous foreign shareholders who will benefit, while Canadian farmers will lose.
This is not only an issue for farmers and rural communities; it is a national economic issue. The present value of $500 million-plus per year into the future amounts to $8 billion to $10 billion. That is the importance of this decision.
The U.S. International Trade Commission, ITC, comes up and investigates Canada. When they looked at the farm records, they concluded that farm prices for durum in Canada were higher than prices in the U.S. for 59 months out of 60. Using an anecdote from one farmer, Minister Ritz states that the spot price in the U.S. on some given day is above the pooled price for a year, and this is deemed as evidence. The CWB actually receives a higher price than the spot price because they bypass the intermediaries and sell to the end-users in the U.S. Anecdotes should not trump analysis. Canadians expect parliamentarians to make informed decisions.
Given the court ruling that Minister Ritz acted contrary to the law, it provides time for a proper analysis. While a farmers' vote is being conducted, I would suggest that the retired Auditor General be asked to work with published and peer-reviewed economists to determine the selling premiums that are achieved through the single desk for the Western grains industry. This study, I think, should be commissioned by the Senate. You have the power to do the right thing. Considering this is the largest change in the past half century to the grain trade, I think it deserves significant analysis. You are the chamber of sober second thought, and you can be true to that descriptive that applies to you.
The Chair: Thank you, witnesses, for your presentations. Now we will follow with questions.
Senator Plett: Thank you, gentlemen. I have a whole list of questions. I know I will not get through them all, but I will try to tackle a couple of them.
First, are any of you gentleman farmers?
Mr. Fulton: I do not. I grew up on a farm, but I do not farm.
Senator Plett: Thank you, I appreciate that. For the record, Mr. Rosaasen and Mr. Boehm said they were.
I would agree with much of what you have said here today if I did not know for a fact that our farmers in Canada are entrepreneurs; they are good business people. I have dealt with farmers for 40 years — selling to them, buying from them — and they are good entrepreneurs.
You said that NFU is a voluntary organization and is doing well. I believe in voluntary co-ops. My question to you, Mr. Boehm, is if the National Farmers' Union is a successful voluntary organization, why would a voluntary pool or voluntary co-op such as the voluntary Canadian Wheat Board — and we are not, contrary to what has been said so many times, wanting to get away with the Wheat Board; we are wanting to leave the Wheat Board there as an option — why would our entrepreneurial farmers not be able to choose where and how they sell, whether they sell directly to pasta plants or malting organizations, et cetera, which would be open to them? Why would they not be able to make a living very nicely, as they do with other crops other than Wheat Board crops right now?
Mr. Boehm: First of all, one of the fallacies in the whole Wheat Board debate — and I mentioned it at the tail-end of my presentation — is the farmers, even with board grains, do have the option of selling directly. There is the producer-direct sales program under the board. They can utilize that program; I have utilized it myself to sell directly to a buyer in Montana, for example.
However, if you have been in business and dealing, you realize that the more control you have of the market, the better price you are able to achieve. The majority of farmers understand that the Wheat Board gives them that power in the international marketplace and in the domestic marketplace and achieves premiums.
They look at it as pure business sense because they are savvy. They say this institution is available on these two grains; we feel it is doing the best possible marketing for us because it has a single desk.
When it shifts to a voluntary pool, the advantage that it has is lost. The Wheat Board does not have assets. It would have to deal with those same transnationals that are very powerful in the country to access facilities, grains and terminals to market them. That would come at a cost, and that cost would come to farmers.
Senator Plett: When you say these organizations are very powerful, I appreciate that; but you are taking away again the business spirit and the entrepreneurial spirit of a farmer or of North West Terminal or any other pool. The people working at the Canadian Wheat Board will still know these people on a first-name basis.
I have it on some authority that one of the reasons Japan likes dealing with the Canadian Wheat Board is because they get the best prices from them. They sell at the lowest price from any of the large corporations. What do you have to say about that?
Mr. Boehm: I am puzzled by that information because my understanding was the dead opposite.
In addition, the reason why many buyers like to deal with the Canadian Wheat Board is because it has market intelligence. It has the ability to enter into long-term contracts with those international buyers, and there is a reliability of supply that flows out of that.
They also understand that the Canadian Wheat Board, along with the Canadian Grain Commission and our collaborative system we have right now assures quality, consistency and, in general, timely deliveries. This is the advantage that is attributed to farmers and has been attributed to farmers.
As Mr. Rosaasen said, numerous peer reviewed economic studies have all come to the conclusion that farmers do better through the single desk than they would marketing on their own. I think farmers are smart enough marketers to understand the power of a single desk to market their wheat and barley.
Senator Plett: On the plebiscite — in my opinion, a skewed plebiscite — that was held by the Canadian Wheat Board, why did they not give the farmers or producers the true option of what was in front of them?
The question was basically, do you want single desk or do you want to do away with the Canadian Wheat Board? That was the ballot question on both the wheat and barley. Why would they not have given the farmers the third option? We believe many studies and polls that have been taken say that if that third option had been there, farmers would have overwhelmingly voted for the third option, and that was never presented to them. Do you know why?
Mr. Boehm: Some years ago, a barley plebiscite took place with the three questions, the three options. We contend a voluntary pool will not survive very long in a dual market, but nevertheless, that style of questioning was asked, and those that selected the dual market and those that opposed the board were added together to get a majority.
Academics, ethics professors, concluded that this was an inappropriate way to structure questions. As a consequence, farm organizations and others got together and at the end of the day, the question that was asked in the Canadian Wheat Board plebiscite came as a result of a distillation of the clearest possible question with the strongest possible connection to the reality in the marketplace.
Senator Plett: They did not give them the options.
Mr. Boehm: That is not an option.
Mr. Fulton: I want to second what Mr. Boehm just said. My analysis, and I have done a fairly extensive one on cooperatives, on pooling systems, is that one can lay the dual marketing question out as an option, but it always ends up disappearing very quickly. That option does not last; it is not viable. What you end up with then is simply an open market situation.
There is quite strong evidence that this is the case.
Senator Plett: If there is a second round, you can put me down for it.
Senator Peterson: Dr. Fulton, you talked briefly about price transparency in an open market. You talked about price at the farm and at the port. Could you expand on that a bit?
The understanding I had was that when we get into an open market, a lot of the price structure would be hidden and not available. How would you envision this working so it would be transparent?
Mr. Fulton: This gets into some of the technicalities of what the open market might look like if it comes about. If we have a futures market, for instance, that would have a West Coast price — the West Coast market is the biggest market for grains coming from Western Canada — and farmers knew what they were getting at their elevator, one could then take a look at what the price was in Vancouver, relative to the price in Seattle or other ports. One then would also be able to calculate the difference between the price at your country elevator and the price at port and find out what that margin is — how much are the grain companies taking, how much are the railways taking, how much is in there for risk and so forth — to get that grain from the country to the port.
These are the things we need to know to be able to determine whether or not these markets are working efficiently or not. We need to be able to compare these with prices in the United States. The U.S. has a price statistics system that collects this particular data. We do not in Canada. We cannot get this information for the canola industry, for instance.
What I am proposing is that regardless of what happens in terms of the bill, we need some kind of legislation that would provide us with the same kind of information that the Americans are providing — to their policy analysts, farmers, and their industry — to be able to gauge how well the system is working.
Mr. Rosaasen: I concur with those comments, and I would also say it is important where they pick the futures delivery point. For example, if you pick Vancouver as a delivery point, when people are pricing into Vancouver you know what the price is at port. I would also suggest that how you define the producer, or the contract, is important. When I go out as an extension economist explaining things to them, most farmers do not understand that the price of canola that they trade — at $500 a tonne or $12 a bushel — includes 8 per cent dockage. That is what is specified. As a farmer, if I have 2 per cent dockage for my grain, when I sell they subtract 2 per cent of the weight. However, the price they are basing it on includes up to a maximum of 12 per cent dockage. That is way they have defined it. It hides the real costs. Even farmers and students are totally shocked when they see how these are defined. This needs to be properly done if you are going to have market with wheat and barley or durum in the future. I do not think the homework is even close.
Senator Peterson: Do you think the multinationals or large grain companies would be amenable to doing this on a voluntary basis? Are you saying it would have to be legislated?
Mr. Fulton: The kind of price transparency I am talking about would have to be legislated. I do not think there is any incentive for grain companies to provide this information.
Senator Peterson: You talked about this compromise with the Canadian Wheat Board with removing domestic — U.S. and Mexico — and the Canadian Wheat Board all doing offshore. If the voluntary domestic was to fail, would that mean that the single desk on the export side could keep going? Would it avoid a NAFTA challenge? You might have a challenge. Would it survive?
Mr. Fulton: I was proposing that the Wheat Board would remain as a statutory body for export sales, so it would survive regardless. One could then ask a question of whether or not it would also get involved in domestic sales. That would be a separate question. Presumably in that case, it would have to be on a voluntary basis because the whole North American market would be wide open.
Mr. Rosaasen: I think if you ran the Wheat Board that way you would still want farmer input and farmer elected directors. It is to ensure you have confidence that they were trying to maximize returns to the farmers, the farm community and the country.
The Chair: I would like to remind the witnesses to transfer their comments to the chair, please.
Senator Tkachuk: We had a little discussion previously about the Canadian Wheat Board and who really owned the Wheat Board. Mr. Rosaasen you mentioned compensation to farmers. I understand that. The shareholder and owner of the Wheat Board is the Government of Canada, is it not?
Mr. Rosaasen: Ownership was actually transferred when Minister Goodale reformed the way the Wheat Board operated. The result is that it has been farmers' money. As they do things now, it is a jointly supervised agency with the Crown appointing some of the directors.
Senator Tkachuk: Its legal structure is not like that. The legal structure is that it is owned by the Government of Canada; by the people. It is owned by the Government of Canada. That is who the chief shareholder — the only shareholder — is.
Mr. Rosaasen: No, some of the assets have been purchased with money from farmers' sales.
Senator Tkachuk: How is their ownership defined? Are not those assets owned by the Wheat Board? Are they not owned by the people of Canada?
Mr. Rosaasen: They are predominantly owned by the farmers of Canada.
Senator Tkachuk: How should we deal with the money that has been advanced? The Government of Canada has been money invested in the Wheat Board over time, a billion dollars or so.
Mr. Rosaasen: There has been some.
Senator Tkachuk: Maybe a little more than that.
Mr. Rosaasen: There have been some guarantees of final payments and other things that have accrued to the farm community.
Senator Tkachuk: It is a substantial amount of money. How would we try and organize that?
Mr. Rosaasen: I am not sure of the answer, but I do think that farmers' assets should be recognized and there should be a negotiation process rather than simply saying they are gone.
Senator Tkachuk: What should the compensation be?
Mr. Rosaasen: I have not attempted to determine that. I just think it should be part of the discussion and negotiation.
Senator Tkachuk: Should the Wheat Board have run advertising fighting the Government of Canada, its owner, on its provision and its impending legislation?
Mr. Rosaasen: The Wheat Board directors have a responsibility to maximize returns to producers. Given that those returns to producers would not be maximized with the loss of the single desk, I believe the directors had a full responsibility to inform people through a democratic process of the benefits achieved.
Senator Tkachuk: Forty per cent of the producers do not want to belong to the Wheat Board.
Mr. Rosaasen: That is how democracy works.
Senator Tkachuk: There is no fiduciary responsibility to them or the Government of Canada. They operate solely on their own? I am trying to get to the answer.
Mr. Rosaasen: What happens in a democracy if I voted for Premier Wall or not, he is still my premier, likewise for premiers before him. When you cast a vote in a democracy — whether you were on the winning side or the losing side — you accept the democratic result. That is what the farmers should do. Have a vote. Do it the right way. I am perfectly willing to accept the democratic results. I do it in all the other areas.
Years ago I was appointed by Premier Devine to the Natural Products Marketing Council. When we were making changes — and letting farmers deciding whether they wanted to have a check-off for pulse or for canola — you prepare a vote, explain it so you get an informed decision, and have a vote. I am a believer in democracy. I think votes are necessary and needed.
Senator Tkachuk: You mentioned the province of Saskatchewan in that election. The Government of Saskatchewan presently — the Saskatchewan Party — supports this legislation. I live in Saskatchewan. If I remember the advertising campaign of the Wheat Board, it said, "Support the Wheat Board" all through that election. They ran a big campaign in Saskatchewan asking people to support the Wheat Board, but what they really meant was, "Vote NDP." That was soundly rejected by the people of Saskatchewan and soundly rejected in the rural areas of Saskatchewan.
The people of Saskatchewan have spoken, and the people of Canada have spoken in resounding numbers about this matter — 64 per cent.
Mr. Rosaasen: In an election people vote on many issues, not just one. When you make those choices, you weigh a whole bunch of those issues. I would have to say that Premier Brad Wall is an extremely popular individual, and I argue that that is extremely important in people's choices. He made the right decision on the potash sector. I think that won him a lot of votes and loyalty, but you vote on many things.
Senator Tkachuk: As did the Prime Minister of Canada.
Mr. Boehm, how many current, paid-up members do you have in the Prairies in the National Farmers Union?
Mr. Boehm: We have approximately 5,500 members across the country.
Senator Tkachuk: How many would you have in the Prairie provinces?
Mr. Boehm: In the Prairie provinces it would probably be about half that.
Senator Tkachuk: How many? Is it 2,500, 2,000, 1,200, 500?
Mr. Boehm: We would have substantially more than the combined resources of the Western Canadian Wheat Growers Association and the barley growers by a multiple, and we are not financed by Cargill to get restarted.
Senator Tkachuk: I just asked a simple question. You are here representing farmers. How many farmers do you represent in my province? How many current members do you have?
Mr. Boehm: In Saskatchewan we have 900 to 1,000.
Senator Tkachuk: Thank you.
Senator Peterson: It has been said that the Canadian Wheat Board was spending money to look after its own interests and the interests of its shareholders. At the same time, the Government of Canada was doing extensive advertising in print, radio and newspaper, albeit with an asterisk saying "subject to parliamentary approval." That would have been paid for by the taxpayers. I wonder how that fits in with the discussion.
Senator Mercer: Good job, Senator Peterson.
Mr. Rosaasen, you gave us a lot of facts in your presentation. Facts do not have much weight around here these days. This place is not driven by facts anymore; it is driven by ideology, et cetera.
I do want to ask about some facts. If this legislation does get Royal Assent, how many people do you think will lose their jobs in Western Canada as a result?
Mr. Rosaasen: That is a tough question. I have not conducted that analysis. One could say that some direct job losses will occur at the Wheat Board building. Some may get other employment. Some job losses may occur at the Port of Churchill, because I am not sure there are adequate provisions to protect it.
The biggest loss will be the loss of revenue to the sector. What does half a billion dollars per year mean in economic activity, jobs and everything else? Also, when things go south, as they say, and income support is required, taxpayers are on the hook to fill some of the holes. As farm incomes become less than adequate, taxpayers will be on the hook for some replacement. It is important to do the analysis and sort out the facts before you make this $8 billion to $10 billion decision. The amount of analysis that the government has done is totally inadequate.
Senator Mercer: Mr. Rosaasen, you mentioned the Port of Churchill. I, too, am very concerned about the lack of protection in this bill for the Port of Churchill. I do not see how it will survive once the big guys get going. They are going west to Vancouver. The cost of transportation is of interest here.
You talked about the cost of transportation at Vancouver. Without the protection of the Wheat Board, how will a single marketer be able to transport his grain at a reasonable price from any part of the Prairies to Vancouver for shipping?
Mr. Fulton: That is an important concern. Mr. Bell spoke about this in the previous session. As a smaller player on the Prairies, he is in a position to pull in grain, but to do so, as he said, he has to be able to provide a competitive price. He is worried that he will be offering $15 per tonne less than what his competitors will be able to offer. He is worried that the only way he will be able to sell this through Vancouver is if he can do it through someone else's facilities. They could receive something for that, but they would much rather handle that grain themselves rather than handling his grain. They will get a margin to handle it themselves rather than him getting the margin. I do not think that they will give much incentive to these smaller players to deliver grain. The producer car facilities will also have this problem. They can pull the grain in quite easily but will likely have no place to sell it.
Mr. Rosaasen: I concur that there will be problems. There will also be problems of congestion, because the Wheat Board currently can time sales with delivery capacity. In Australia and the Black Sea area, where everyone is making decisions on their own, the competitors rush in to get access to the system and there is major congestion. In the Black Sea area they had to shut down the rail system for a week in order to fill backlogs because too much grain got to port.
If you change the system here with no provisions for how to manage it, there will be significant risk.
Senator Mercer: Are you suggesting that if this bill gets Royal Assent we will be headed for a crisis situation and there will be chaos?
Mr. Rosaasen: I would say there is a tremendous amount of risk of all kinds of things not necessarily going as we would hope. There could be congestion. There is no way to figure out how to price. I have already priced canola into next year. I used to price wheat forward for the Wheat Board because I knew that I would need cash flow. All of that will be gone under Bill C-18.
Senator Mercer: I know from the study by the Transport and Communications Committee on containerization that the Port of Vancouver is one of the biggest bottlenecks for shipping in North America. There are always five, six or more ships in the stream, and they are not just container ships. They are bulk ships, grain ships, potash ships, et cetera. We have not addressed that issue by opening Prince Rupert.
Have you any comments on that?
Mr. Boehm: The Wheat Board's coordination activities in that constrained system allow it to function because with price pooling goods move through and farmers are not worried about the exact time that it will hit the market. That benefits not only board grains but all other grains. They coordinate deliveries.
In the U.S. they have invested substantially in their system, so they have much more capacity at port. The Canadian system has much lower port capacity. A high degree of coordination is required to move all that grain through the port in an appropriate and not excessively costly way.
Senator Mercer: The unfortunate thing is that the best and most unused capacity is on the wrong coast, too far away from the grain, at with the Port of Halifax.
Senator Plett: My friend opposite opened the discussion again about the Port of Churchill, which of course always concerns me because I am from Manitoba and it is my port. We do not subsidize the Port of Churchill like we do some other ports.
The owners of the Port of Churchill will be here tomorrow, and I have spoken to them personally. I have spoken to the owner of OmniTRAX through their Canadian president. They have told me personally that they are quite prepared to work with our government and with the plan that we now have in place. They are confident that they will continue to exist and continue to make money in the Port of Churchill.
Do you gentlemen have any information that the owners of the port do not have that they should be aware of just in case, as has been suggested by so many fear mongers, that the port will in fact close if this goes through?
Mr. Boehm: The Canadian Wheat Board's shipping program has moved only board grains essentially through the Port of Churchill. Without the Canadian Wheat Board directing grains that direction, it is very doubtful that the Port of Churchill will have any significant volumes of grain moving through it, given the interests of who will remain to buy grains on the prairies. Those buyers of grains on the prairies have their own handling facilities that they want to maximize their revenues on, and those are all going in other directions, such as out to Thunder Bay and west to Vancouver. Therefore, it is highly unlikely significant volumes of anything will go through the Port of Churchill without the board having a coordinated program there.
Senator Plett: That, of course, was not my question, Mr. Chair, but that is fine.
Senator Eaton: Gentlemen, you use many words like "perhaps," "likely" and probable." You remind me a bit of meteorologists sitting around the table trying to guess what next winter's weather will be like. There are a lot of suppositions and assumptions.
Senator Mercer: It is going to be cold.
Senator Eaton: We do not know. Sometimes we have warm weather.
The Chair: Question, please.
Senator Eaton: Mr. Boehm, you said something about selling grain directly. Was that feedlot grain or feedlot wheat?
Mr. Boehm: In relation to the producer direct sales program, no, it was not. I actually sold durum wheat into the U.S. through the Canadian Wheat Board's producer direct program. Essentially, I buy back the grain from the board, and if I think I can achieve a higher price, it does not costs me anything and I am able to —
Senator Eaton: But you had to buy back from the board?
Mr. Boehm: They have streamlined the process, so it actually worked very cheaply for me. I had to put up very little in the process, and then I marketed directly into a mill in Montana for some organic durum that I was growing.
Senator Eaton: You did have to buy it back from the board.
Mr. Boehm: Let us be clear. The reason I did that is I thought I could achieve a higher price, so it cost me nothing. I had to have the ability —
Senator Eaton: But you will be able to do it directly without having to go through the board.
Mr. Boehm: It cost me nothing because I was able to achieve, at least I thought I could, a higher price than the board could for that durum wheat. I got the full price of that grain, and I can do that under the board system.
Senator Eaton: You still had to go and get it back. Pay the board, get it back and sell it. In the future, you will be able to do so directly.
We have heard many witnesses give many erudite answers, but no one has explained to my satisfaction why, if I am a farmer, I cannot simply opt out of the system. I do not take any of the advantages but I will take all of the risks. Why can I, as a Canadian farmer in the west, not opt out of your system?
Mr. Boehm: You can through the producer direct sales marketing program.
Senator Eaton: No, I have to buy it back from the Wheat Board.
Mr. Boehm: That is opting out. There is a cost to doing things.
On the other hand, if farmers are able to opt out of the system, you do not have a single desk seller. You have farmers competing directly with the single desk seller and then prices go down.
Senator Eaton: You three, and the three people before from the Wheat Board, have told us what a wonderful system it is, how the farmers benefit and how much money you make for the farmers. If you are so good and wonderful, why are you worried about the farmers who would opt out? Surely that will not impact what you can do. You are so good that few people will want to opt out.
Mr. Boehm: That is a —
Senator Eaton: Well? Well?
Mr. Boehm: — very —
Senator Eaton: If you provide a good service —
Mr. Boehm: — facile question, actually. Pardon me. If you have the ability to opt out of a marketing program that brings the benefit of essentially monopoly power, you no longer have a monopoly in the marketplace. Therefore, you lose all the advantage. It is that simple. There is no —
Senator Eaton: It may not be an advantage to me.
Mr. Boehm: You have the advantage that everyone else has through that system, which has been proven time and time again in peer-reviewed economic studies.
Senator Eaton: What you are saying to me, Mr. Boehm, is your choice as a farmer is not to grow wheat. If you want freedom, grow canola or pulses; do not grow wheat.
Mr. Boehm: I grow all of those crops. Let us look at freedom of being able to market canola through the Wheat Board, if you want to talk about freedom.
The Chair: Thank you.
Before we go to the next senator, Senator Eaton, is it okay?
Senator Eaton: Yes. Thank you.
The Chair: Dr. Fulton, you are indicating that you have a comment to add.
Mr. Fulton: Thank you.
The reason that, in the case of the Canadian Wheat Board, there is a need to include everyone is the well-known — and we have all experienced this — free-rider problem. We all know what happens in particular groups where we are all afraid that someone else will not do their fair share. We can all think back to the days when we were in college; we were part of a group. There was always someone who sloughed off and did not do their work, yet got the same mark as everyone else but also dragged the average down for the entire group. This is the rationale for a single desk.
Senator Mahovlich: Mr. Boehm, you talked about the history of the Wheat Board. My gosh, in 1929 there were a lot of voids in the system, and we filled them. Some of those voids are not there any longer. Will new ones appear?
Mr. Boehm: Absolutely. The reason we study history is to understand —
Senator Mahovlich: You cannot go anywhere without it.
Mr. Boehm: — what has happened and how to ameliorate those problems, how to correct them and how to move on. The players, the names may have changed, but the forces and the game are still essentially the same. Your point is very true.
Senator Mahovlich: We are in a world market now, more so than ever before. I get rumblings that Russia is starting to get into wheat and improving their wheat, so that is more competition. China is probably looking to export their wheat because they grow so much of it for themselves. There will be more and more competition out there. Will this affect us?
Mr. Boehm: Certainly. The whole Russian area has tremendous potential to produce grains. Our ace in the hole, for the moment, is our marketing system, along with the assurance of quality grain and consistent delivery. That allows us to be competitive and will continue to do so. Certainly there will be competitive pressures from those players internationally. It will become more competitive as time goes on.
As an individual farmer, I do not want to be left on my own to compete with players that are monsters. I do it in canola. I grow yellow mustard and all kinds of other crops, and I have experienced firsthand the problems you have in marketing those grains. I have to fight and use the Canadian Grain Commission to get a fair grade on those crops. I have to threaten legal action against the buyers from time to time. When I deliver my mustard, they say it is sample grade. I say no, it is not. I have the certificate from the Canadian Grain Commission. That is the kind of system we can move into.
Mr. Rosaasen: I have one comment. If you have made a contract with the Wheat Board, take your product to a company, Viterra, for example, that says it is not number one; it is number three, then you can take it to P and H or another one of the companies. When you have a contract with the Wheat Board, you can get the companies to compete with one another. When you contract for canola or mustard, you are with one company only and your only option is an appeal with the Canadian Grain Commission. Your bargaining power is much better through the wheat system with the elevators. That is why those agencies are so happy with the direction that this legislation is moving.
Senator Mahovlich: I was in the NHL, and when we had a problem, we went to our players' association. What does a farmer do? Does he have an association? If he has a complaint against the Wheat Board, can he go to his association and solve that problem?
Mr. Boehm: The Wheat Board certainly is responsive in attempts to ameliorate complaints. They have been very responsive to any sorts of problems. Since the creation of the Canadian Grain Commission in 1912, it has been the policeman in the grain trade to ensure that farmers are treated fairly and get fair grades, weights and dockage on their grains. That is who they go to. However, that is under threat in the near future as well. This is all part of the collaborative integrated system that has worked well for the Canadian economy, the Canadian citizens and Western Canadian farmers.
Senator Ogilvie: With permission, I would like to explore this issue of governance, which has troubled me throughout this process in pieces, in particular today. If I heard correctly, the current chair of the CWB said that as a board member, he owes his responsibility to those who elected him to the board and not to the corporation or the people of Canada. Professor Rosaasen, I heard you make a similar comment.
I would like to use an example and then turn to the existing CWB Act with a specific reference. This sounds to me like a university attitude. Most Canadian universities have great difficulty with their boards, which generally have representation from faculty students, alumni and so on. I am speaking in general, not to any specific university. Most faculty members will say that because they are elected by the faculty, they owe their responsibility to the faculty, not to the university or to the board. Of course, under Canadian law, that is not the case. Once elected to the board, the Canadian law governing directors' responsibilities states very clearly that the board member's responsibility is to the corporation and, if there is a secondary issue with regard to the corporation, through the corporation to that responsibility. Often universities must bring in people to counsel their university boards in that regard.
I have reviewed the CWB Act a number of times. For the purposes of my question, I will use certain references. I can find no section in the CWBA to indicate that the responsibility of the directors is to be to the farmers. Rather, I found that the responsibility is to the people of Canada through the minister. I will give you general examples. Section 3.05 states:
(e) the manner in which the board may recommend to the Minister the removal of the president.
Section 3.09(1) states:
The president is appointed by the Governor in Council on the recommendation of the Minister and holds office during pleasure for the term that the Governor in Council may determine
Section 9(1) states:
The corporation shall
(b) with the approval of the Governor-in-Council, appoint . . .
(c) report in writing to the Minister as soon as possible after the end of each month . . .
(e) in each year, on or before March 31 or such other date as the Governor in Council may fix, report to the Minister in writing . . .
There are many sections along those lines.
Obviously, I stand to be corrected; I do not intend to be absolute in this regard. As I read the CWBA, it seems very clear to me that the responsibility of the board and, therefore, its members is to the corporation, and that behaviour transmits to the minister and ultimately to the Crown. Perhaps one of you could enlighten me as to how my interpretation is incorrect.
Mr. Rosaasen: I will not suggest that your interpretation is incorrect. I raised the issue about how, in Bill C-18, there is accountability. When I read it, I could not find it. I was raising it more as what I think is a very legitimate question. You are totally right in that proper governance is an extremely important issue, but I cannot find it in the bill. I am not a perfect legal expert, but I thought it was of sufficient importance that it should be brought to your attention.
Senator Ogilvie: Thank you.
Mr. Fulton: My comment is in response to Senator Mahovlich. Farmers who are dissatisfied with something at the CWB can go to one of the farmer directors. The farmer directors have proven to be a very important conduit for farmers' problems and frustrations with the system to get something changed at the board level.
I have looked at the board over the last 30 years. The change in governance system that occurred in 1998, which we were just talking about, resulted in a board that was much more responsive to what was going on in the countryside and the needs of the marketing system. As an effective marketing organization, I believe the board was actually saved from ruin back in 1998. There were a number of things, but one part was that the farmers had people they trusted and had elected to the board. These people could be turfed out if farmers did not think they were doing the right job; that was important to the operation of the board.
Senator Robichaud: The CWB has ten elected members and five appointed members. If I were a member elected by farmers, I would feel a certain responsibility toward them without neglecting my responsibility to the board, as such, which would be in the best interests of farmers.
The proposed new CWB will have appointed members only. They will have no responsibility whatsoever to the farmers. They will be accountable only to the minister.
Would you prefer to have the representation on the new board elected and appointed in the same proportion as they are now?
Mr. Boehm: Certainly, where you can insert democracy in any process is a useful action. From past experience, we know that the life expectancy of the voluntary board as envisioned in Bill C-18 will be very limited and have limited value for farmers.
On the governance side, the relationship to the minister is questionable, current board or otherwise, as Senator Ogilvie raised the point.
However, at the end of the day, the elected directors are elected by farmers to act in their best interests, which I think, at the end of the day, is in the best interests of the country, the government, and the minister as a whole.
Mr. Fulton: I think there has been a lot of discussion about whether or not a voluntary Wheat Board would be viable or successful. One of the reasons I believe it will not be is because of the governance structure that would be put in place under Bill C-18.
As I said in part of my earlier remarks, I have done a lot of research on cooperatives. One thing that comes up over and over again is that cooperatives are only successful if they have boards of directors who are responsible to the membership. Where they are not, these organizations fail, and they fail because there is no commitment by the members. The members do not trust the corporation, the cooperative in this case, to operate in the members' interest because they have no way of being able to, as I said earlier, turf the group out if they are not performing properly.
Senator Plett: Of course, Mr. Fulton, that is exactly what the government wants to do five years from now; they want this to be wound up.
My question is for Mr. Boehm. I will not bother trying to find out how many members there are in Manitoba, considering the length of time it took for Senator Tkachuk to find out how many there were in Saskatchewan. However, I will ask this: There are 900 to 1,000, apparently, in Saskatchewan. Is that farms or is that members of the family, i.e., wives, spouses and children? A family of 10, is that 10 members of the NFU, if the family has 10 members, children 14 years of age and over?
Mr. Boehm: No. The number would be more if we counted that way, although we give those people standing in the organization in terms of voting over 14, et cetera. The number would be more.
Senator Plett: This would be 900 to 1,000 farms?
Mr. Boehm: Yes.
Senator Plett: NFU has apparently opened its membership to urban farmers. I am not sure what an urban farmer is. Is that someone who has a garden?
Mr. Boehm: Anyone who is producing food. We have very few memberships in that regard, but we noticed an increasing tendency that new entrants into agriculture, internationally and domestically, are those people who start market gardens in underutilized urban spaces. Because we are an organization that designs policy and debates food policies, we thought it would be useful to include those people in that milieu.
Senator Plett: Certainly. I am sure it would be. I have a half-acre lot and my wife produces a garden. Would she be able to buy a membership in your organization because of that?
Mr. Boehm: Good question. I think I know what you are driving at in terms of size of farms. There is a myth around the size of farms in the NFU. We have very large, successful farms in our organization across the country.
Senator Plett: Do you have some market gardens and some small gardens?
Mr. Boehm: Yes, we have.
Senator Plett: Some half-acre lots with gardens?
Mr. Boehm: I do not know specifically what individual members would be producing on, but we feel that if they are producing food and they are marketing and participating in the food system, they have the right to debate.
Senator Plett: Is the answer yes, that my wife could be a member of your organization?
The Chair: Order, please. On this, we will conclude. I have been very lenient in providing time for the third panel; I think we will agree on this.
Senator Ogilvie has a supplementary, to be followed and concluded by Senator Mahovlich.
Senator Ogilvie: I want to thank Professor Fulton for making my point that the co-op is an excellent example of where the shareholder owners are the members of the co-op and the board is absolutely responsible to the shareholders. That is my point. Thank you very much.
Senator Mahovlich: I want to make a little statement that we are talking about government owning the Wheat Board. Are farmers not part of government? Do they not pay taxes? They are owners.
The Chair: That is a good statement, Senator Mahovlich.
To the witnesses, thank you very much for accepting our invitation. You have shared your experience and your comments with us, and we appreciate that.
Honourable senators, we will now hear from our last panel of witnesses. It comprises Mr. Brian Otto, President of the Western Canadian Barley Growers Association; and Mr. Kevin Bender, President of the Western Canadian Wheat Growers Association.
On behalf of the Standing Senate Committee on Agriculture and Forestry, in view of our mandate for Bill C-18, thank you for accepting our invitation and being here today.
I am informed that the witnesses will make their presentations starting with Mr. Otto and then Mr. Bender.
Brian Otto, President, Western Canadian Barley Growers Association: Thank you, committee members, for giving me the opportunity to speak on behalf of Western Canadian Barley Growers Association to this important consideration.
Carolyn and I farm south of Lethbridge in Alberta, in a very dry part of the province. I would like to encourage the Senate committee to make a recommendation to pass Bill C-18 as soon as possible. It is a very important to the industry.
When we talk about farmers, I like to talk about what I call true commercial farmers. Those are the farmers who actually make a living farming. That is what they depend on. That is what they live from. When we talk about a true commercial farmer, it is what I am referring to as well.
The plebiscite that has been discussed today does not represent true commercial farmers. There are a lot of retired farmers who are running their farms and do not depend on their income from that farm. When we are talking about farmers, those are the farmers to which Western Canadian Barley Growers Association refers.
There has been a lot of talk about farmers and how they market their grain. I want it draw on my experience to explain why I believe in marketing freedom. I want to refer to my own experience on my farm with durum marketing, and how the present system has not worked for durum producers in Western Canada.
In the 2007-08 crop year, world durum prices were at historical highs. The prices had never been seen by farmers in their farming careers. That particular year, through the Canadian Wheat Board marketing system, we were only allowed to deliver 73 per cent of what we produced. The Wheat Board asked us to carry over 27 per cent of that durum into the next marketing year.
In that time, from one crop year to the next, the price of durum dropped by $136 a tonne, which we were not able to sell into. The following year we were only allowed to deliver 52 per cent of our durum through the Canadian Wheat Board marketing system. In that particular year, durum dropped another $170 a tonne. That cost our farming operation $67,000. That is a serious impact on any farm when it comes to cash flow management. This whole argument is about cash flow management on the farm.
Farmers must be able to determine when they want to deliver, and what price they will get for their crops, in order to manage the cash flow on their farm. We have to be able to pair the two up. You cannot pay your bills if you cannot deliver grain. That is what it boils down to.
I have been in the farming business for 37 years. In the particular instance I just described, my wife and I were able to manage our way through. I have talked to young farmers who were just beginning in the industry and that lack of ability to deliver put a severe hardship on their farms. They needed to deliver that grain in order to pay their bills.
That is what is wrong with the Canadian Wheat Board system. It does not control price, it controls your ability to deliver, and that is where it falls apart.
As a barley producer, 20 per cent of the production on our farm is always allocated to barley production. We target the malt barley industry. That is where we find the premium. In another recent experience, just last May, Rahr Malting came to me and wanted to know what would be the earliest date we could harvest malt barley on our farm. In Southern Alberta we can start to harvest a lot sooner than most other barley growers. I told them we could have it off by the middle of August. They asked if we could contract with them because they would be in need of barley by that time. They were running out of barley. They knew they would not have any barley that they could access. They were in danger of having to shut down their plant until new barley was harvested.
That is another problem with the Wheat Board system. They are not able to offer price incentives, transparent pricing and delivery contracts that will attract barley production. When I say transparent pricing, when they want to offer a price to a producer that will attract them to grow barley for them, they want the ability to be able to do that. Under the present system, through cash plus, they can give the producer an indication of what they might get paid but the producer does not know for sure what he is going to get paid. It is very important that we change this system.
Going back to the durum, Terry Boehm talked about a direct producer payment program. He said that he was able to do it with his durum. He found a market in Montana that he was able to sell into, and he had a very small buyback cost from the board to be able to do that. The key word that was used there was "organic" grower. Organic growers get a preferential buyback from the board.
As a commercial grower who is not organic, I do not get that preferential buyback. The buyback for me, in order to get into a durum market in Montana, takes any advantage away from me. They charge me such a horrendous fee that it takes any premium away. The money from the buyback goes into the pooled accounts and is shared with every other producer in Western Canada, even though I found the market. I still have to share what I might gain from that marketplace with everybody else. It destroys any incentive to go out and find that market.
When it comes to the Canadian Wheat Board being able to survive in an open market, there is this fear-mongering going on that they cannot. I do not agree with that and I will tell you why.
The Inland Terminal Association of Canada, which had representatives here today, is looking for business. The Wheat Board is looking for someone to handle their grain. There is a natural fit. They do not need to own facilities. You can do contractual agreements with the Inland Terminal Association to handle your sales. Go out and find the sale; find someone to handle it for you. It will work.
The other key to this is that you heard inland terminals saying they would be in a bit of a difficult situation financing buying grain. The Canadian Wheat Board, for the next four or five years, will have the government guarantee behind their grain sales. It is a natural fit, once again, for them to work out some kind of contractual agreement with the inland terminals to handle the grain. The grain terminals do not make money from selling grain; they make money from handling it. For every grain company in Canada, that is where they make their money. They do not like to speculate in the marketplace to make money; they make their money on cleaning and handling. That is their business. The board could make these contractual agreements.
Mention was also made of access to port facilities, export facilities. The port facilities in Vancouver and Thunder Bay are not even close to being at capacity in the way they are being used today. When I hear someone say to me that they will be at a disadvantage in these ports, I say, "I do not think so because they will be looking for business." They will be willing to do some kind of contractual agreement to get your grain through their port facility. I am not buying that argument. Again, I call it scare tactics. As a farmer, I have been listening to these scare tactics, and I get quite frustrated about it. That is not how I see business. I am a businessman like everybody else. I will compete with anyone in the world. I can do it. I know I can.
I wish everybody would throw aside the fear mongering. Let us be positive about this industry. The Western Canadian farmer is capable of carrying on in an open market.
In my presentation I talked a little bit about forward pricing. On our farm — and I have been doing this for a long time — I am not looking to price my crop in August when I harvest it. The pricing of my crop starts now. By the time I get to the end of March, or May, I will have a third of my crop priced. Why do I do that? It is risk management. It is good business practice. I have a program that tells me what it could cost me to produce a bushel of mustard, a bushel of durum, a bushel of spring wheat and barley, and it will tell me what I have to sell that for to make a profit. It makes your job very easy when you know that figure. Those opportunities are there long before I ever put that crop in the ground. I will have a third of my crop priced before I pull the drill out into the field.
At the end of the day, this will be good for the industry. We will have price-transparent signals for farmers, and they will not be masked by the Canadian Wheat Board's PRO. We will be getting true world prices that farmers can make a decision on. We are not getting those world prices today. You certainly are not getting them in the malt market. The feed market is being skewed by Canadian Wheat Board feed-barley pricing. It has a huge influence on domestic feed- barley prices.
We have seen investments by Rahr Malting and by Alliance Grain Traders that have come up in the last two months. That is just an indication of what will happen in our industry as we move forward with an open market. ICE Futures will be offering spring wheat contracts, durum contracts, and barley contracts. Guess what? There is a lot of interest from all over the world in that durum contract because there is nowhere else in the world you can offset your risk in the durum. It will be the only durum futures contract that exists of its kind. There is also a lot of interest in the spring wheat contracts because the one in Minneapolis is not working properly, so everybody is watching how ICE Futures sets up their futures contract. There is a lot of interest.
Those are the things that we will see happen in an open market in Western Canada. It will be good for Western Canadian agriculture and good for the Western Canadian economy, but, above all, it will be good for all of Canada. Thank you, Mr. Chair.
The Chair: Thank you, Mr. Otto.
Kevin Bender, President, Western Canadian Wheat Growers Association: I want to thank the committee for inviting me to appear today. For 42 years, the Wheat Growers Association has been a strong proponent of open and competitive markets, free trade and innovation. To introduce myself a little bit, I farm quite a bit further north from Brian, and we have kind of opposite geography too. He is in the dryland area, and we are in the wetland area. We lose crops to too much water and he probably loses some to not enough, so our situation is quite different. I farm there together with my dad and one of my brothers.
The Wheat Growers today urge the Senate to pass this bill quickly. Early passage of this legislation will, as Mr. Otto has said, give farmers the opportunity in the new year to lock in contracts that we have been waiting for. It will give some certainty to the whole market system and some confidence in the marketplace.
This will also provide customers with the ability to capture these sales that might otherwise go to competitors, as well as a voluntary Canadian Wheat Board. There are several reasons why we support marketing choice for wheat and barley, and I will highlight a few of them. First and foremost, we believe it will create higher returns to the farm gate. Over the past few years, farmers in the U.S. open market have received much higher prices for their grain than what we can expect to receive under the Canadian Wheat Board monopoly.
However, the benefits of marketing freedom go far beyond the price. The delivery restrictions and payment delays under the monopoly impose additional storage and interest costs on our farms. Mr. Otto gave the example of the durum wheat and the amount that he was forced to carry over. It also affects our cash flow and forces many farmers to sell their canola and other crops much earlier than the market is telling them to, which, again, negatively affects our income.
As a side note, we are not in a durum producing area, but my dad grew some a number of years ago as a trial, and we did not get the type of grade Mr. Otto would have. I think we got number 3. My dad had a small acreage, and he tried to go through the proper channels through the Canadian Wheat Board, through the buyback program. He had a place across the border in the States. We are probably five hours from the border, but even the freight made it worthwhile. To go through the buyback program took the profit out of the difference. He could have gotten about a 50 per cent increase going south of the border. Going through the buyback took the profit right out of it, so it was not worth him going there. The buyback does exist, but it is cost prohibitive.
We believe an open market will result in much greater private investment and processing in Western Canada. We have already seen Alliance Grain Traders, a Canadian-owned company based in Regina, announce the construction of a $50 million pasta and pulse processing plant. That is not the easiest to say, with four Ps in a row. This is the first major pasta plant announcement on the prairies in decades. It is the first step in reducing Canada's huge trade deficit in pasta. It will give Canadian farmers a local outlet for their durum and give Canadian consumers a greater ability to buy locally grown food, rather than importing it from overseas.
We also believe an open market will result in much greater private investment in wheat research. This will give prairie farmers the ability to have access to improved genetics and more choices to grow those varieties best suited to each individual farmer.
In short, we believe that the creation of an open market will significantly increase farmer incomes and contribute to much greater prosperity on the prairies. We again urge all senators to ensure this legislation is passed quickly. Thank you.
The Chair: Thank you, Mr. Bender.
Senator Plett: Gentlemen, thank you so much for coming out. It is indeed refreshing to hear that entrepreneurial farmers in Western Canada can make money and go out and market their product on the open market. I know this has been a lifelong fight for both of you, and very soon you and every farmer in Canada will have the freedom and choice to sell their grain to whoever they wish. You are to be commended for the work you have done, both you personally and your organizations.
The Canadian Wheat Board has a number of grains under the current act, yet since its inception grains have only been removed from the monopoly. For example, oats were removed in 1989. In my province, we now have a wonderful company called Can-Oat in Portage La Prairie, making a lot of money and employing 125 people as a result of them not being part of the Canadian Wheat Board.
I understand some farmers in Manitoba started a process where they wanted to include canola as part of the Canadian Wheat Board. It was overwhelmingly rejected. Can either or both of you comment on why the farmers of Manitoba did not want canola to be part of it, and they are so happy that they can market their canola on the open market as opposed to having to deal with the Canadian Wheat Board?
Mr. Bender: At the time, I was a director on the Alberta Canola Producers Commission, and we were invited by Manitoba Canola to come to a meeting with them, Saskatchewan and the Canadian Wheat Board to look at this option of including canola under the Wheat Board. We had some good debate with our board about that, and they sent me and our general manager to Winnipeg to meet with them.
We were sent for information purposes only because Alberta Canola believes in an open market. That is part of their policy — an open market for canola sales for farmers. We went to the meeting, and I cannot comment on the percentage of those that were opposed to it, but I know there was some strong opposition to that coming under the Canadian Wheat Board.
I know there was some opposition as well from the strong monopoly supporters, because they did not want that to be a threat to wheat and barley coming off. It went both ways, but I think they realized it was not the best move at the time.
I suggested that if the Wheat Board was a voluntary organization, which it will be coming up, they should be able to have canola under it on a voluntary measure. I believe there are farmers that like pooling their grain, and if they have wheat and barley they should be able to do canola as well, as long as it is in a voluntary manner.
Senator Plett: That was one of the amendments, I believe, that the government put in — that there will be other commodities under that. Mr. Otto, you also wanted to reply.
Mr. Otto: I do not grow canola because I grow yellow mustard. You do not want to grow both on the same farm or you will have a wreck. If you get them mixed, you have a big problem.
I will speak to the growing of specialty crops. As far as canola or any other specialty crop, why are we growing them? Part of it is rotation on the farm; it is good for the farm. However, the main reason we are growing them is cash flow. We have to pay our bills.
As I alluded to with the durum problem, that is not the only grain the Wheat Board handles where we have problems like that. Spring wheat is another one; winter wheat is another one. When you cannot deliver to the board and raise cash, you need to have these other crops to grow in order to pay the bills.
You can imagine that if it was under the monopoly of the Canadian Wheat Board and you have bills to pay, but they do not have a market for your canola and you cannot deliver it, what will you do? You cannot sell it to raise any cash to pay your bills, and every farm is different. At different times of the year, you have different cash flow needs. Therefore, farmers need to have the ability to manage their sales around times of cash flow need.
Senator Plett: You spoke about the buyback.
The Chair: Senator Plett, the chair wants to recognize Senator Robichaud on a point of order, please.
[Translation]
Senator Robichaud: I see that papers have been circulating among some of the senators and have been handed to the chair. If they are being handed to the chair, they should be circulated around the entire table, Mr. Chair.
The Chair: Thank you, Senator Robichaud. Are there any other comments on the point of order?
[English]
Senator Plett: I do not know which document is being referred to. Is it this one the clerk handed out?
The Chair: There was the distribution by one staff of a document. I will take responsibility for this. When I saw the staff member, I asked him if the house was sitting. He said yes, the house was sitting, and he had a document in his hand, which I took. The document has been distributed. The staff member is the staff of the leadership. Senator Robichaud asked that if that letter was distributed to the chair, they wanted a copy of it.
This is my responsibility. When the staff member came to the head table, I asked him if the house was sitting, and at the same time I took the document he had in his hands. The chair will return the document to the staff member. I will ask him to approach the head table and I will give him this document because it was not a document that was meant to be distributed to the committee.
Senator Tkachuk: If you get one, will you distribute it, too, as deputy chair?
Senator Mercer: He is not sitting in the chair.
The Chair: On this, the matter is closed.
Senator Plett: Mr. Otto, you spoke about the buyback. This indeed was a problem, as Mr. Boehm pointed out with his crops — that he gets a better buyback agreement.
I have been told by farmers that the Wheat Board sometimes does that in the middle of a deal; you ship one load of wheat or whatever the product is and you have your buyback. They then find out that they can make a better deal so they will sometimes make the buyback in the second half of that deal a little higher than in the first half. Could you comment on that?
Mr. Otto: Rumour has it that that happens. I will be honest with you; I live within 20 miles of the 49th parallel, and there have been opportunities where I could sell my winter wheat to Harvest States Cooperative in Shelby, Montana. When you do a buyback with the Canadian Wheat Board, the first thing you have to do is go to them and identify where you are delivering it, which tells them the elevator you are delivering into, what price you are selling it for, and if the buyback is not too great and you feel there is an economic advantage, you can do the producer direct sale and go into that market.
However, I do not know how many marketers in the grain industry would be willing to tell their competitor where they are selling their grain and for how much. As a farmer, when you are doing a producer direct sale, they are a competitor at that point. All of a sudden, you are giving them all your market information.
Guess what happens? The next thing you know, you are tripping over the Canadian Wheat Board down there selling the same grain into the same elevator that you are trying to sell into, and it is not the same price. Who ends up getting the sale? The Wheat Board, because they let it go for just a little bit less and cut you out of the market. That happens time and time again.
Senator Plett: Who ends up getting the shaft?
The Port of Prince Rupert, I believe, is the shortest distance off of the prairies for rail shipment. I hear they are begging for grain, but the Wheat Board believes in shipping to Vancouver, whether the rail cars are all full or not. Is there any truth to that?
Mr. Bender: I do not know about that. I know the Peace Country — Alberta and B.C. Peace Country — which I believe is as much or more farm area than all of Manitoba, the grain producing area, would be closer to Prince Rupert. I am not sure that is true for everywhere. I do not know that. I cannot say for sure.
Mr. Otto: Prince Rupert could be utilized more than it is. In fact, it is probably the least-used port on the West Coast.
Part of the problem with Prince Rupert, of course, is that the majority of export terminals on the West Coast owned by different companies, such as Pioneer, Viterra and Cargill, are in Vancouver.
Naturally as a grain company, you will try to ship your grain through your terminal. As I said, grain companies make money by handling grain; they do not make money by trying to speculate on pricing in the grain industry.
It will be an uphill challenge for Prince Rupert. I do not disagree. Mr. Bender is right; it is a natural fit for a lot of the B.C. Peace Country because it is the closest port for them to ocean.
The advantage that Prince Rupert has that Vancouver does not is it has a deepwater port. Vancouver does not have that advantage. There are challenges for Vancouver when you bring the larger vessels in.
Senator Peterson: Mr. Otto, how many members do you have in your association?
Mr. Otto: We have about 250.
Senator Peterson: Is your association fully funded by the members?
Mr. Otto: Yes, it is. It is a non-profit producer membership organization.
Senator Peterson: You said earlier that one year you could only deliver 75 per cent and another year was only 52 per cent. What would be the reason for that?
Mr. Otto: I am glad you asked that question. I can answer it.
I was called into a meeting in the fall of 2008 after the 2007-08 crop year had closed. In case everyone does not understand, the crop year for Western Canadian farmers is from August 1 of one year to July 31 of the following year. That is the sales year. I do not know whether everyone understood that and I thought I would clarify it.
The 2007 sales year for the crop has closed, and the Canadian Wheat Board called the producer organizations to Saskatoon. I am sitting with Con Johnson. I do not know how many in this room know him, but he is a durum grower from south western Saskatchewan. I am sitting there and one of the heads of the grain marketing division for the Canadian Wheat Board got up and made a presentation. He said Canada controls a little over 50 per cent of the world durum market, and we decided we did not want to sell all of your durum into the world market because we would drop the price if we did that. We decided we would ask you to hold 27 per cent of your durum back.
What he did not tell everyone and what we were sitting there wondering about is why Canadian farmers are withholding durum from the marketplace to prop up the price of durum so all of our competitors could sell every bushel they had in the world into that marketplace. We should have been doing that. Yes, it might have dropped the world durum price a little bit, but certainly not by $130 per tonne.
Senator Peterson: That is fair.
Mr. Bender, how many members in your organization?
Mr. Bender: I am going to say approximately 450. It has been growing lately, but about that.
Senator Peterson: Is it fully funded by the membership?
Mr. Bender: Yes.
[Translation]
Senator Rivard: Thank you, Mr. Chair. We have met with several witnesses over the past week, and I have noticed that most were in favour of maintaining the status quo and were dubious about the fact that the future directors will be appointed by the government and not by the users.
Does the fact that they would be government appointees mean these directors might be less competent?
Before we hear your reply, I would like to make a comparison. Look at the makeup of the boards of the main government-owned corporations, like the Bank of Canada, the BDC, Canada Mortgage and Housing Corporation and Canada Post. If you look at the qualifications of these people, you have professionals, engineers and PhDs. In fact, they are all people with experience in the fields related to their appointments. Let me take this a step further. Look at the Senate. All of us were appointed by one government or another. Around this table, we have the chair, who is a former minister of New Brunswick, and opposite me, two former ministers who sat for several years. These people are all government appointees. Are they less competent for that?
Are you worried that the government would be appointing the directors?
[English]
Mr. Otto: It is not a concern to me because, in any business, I want competent people at the board table who are good businessmen. According to the Wheat Board, they are handling billions of dollars per year, and if they are doing that you want people who have good business heads to do that.
On another note, out of the five appointed directors at the Canadian Wheat Board today, two of them are farmers. They are very good businessmen. It just goes to show you do not have to be a farmer to run a marketing organization. It is nice to have the experience, a little skin in the game, but it certainly is not necessary and it does not bother me.
If we will have a voluntary Canadian Wheat Board, we want the most competent business people sitting at that board table. For them to survive, it will depend on the business plan they put together to compete in the open market. It also takes experienced people to do that.
Senator Mercer: Gentlemen, I am fascinated. Senator Peterson asked my first question about the number of your members. Mr. Otto, you took a swipe at the recent plebiscite and said you did not think it was much. My colleagues across the way have been saying that for some time now.
Between the two of you, you represent about 700 members. Going from my own notes here, there were 68,000 ballots sent out for the plebiscite, but others claim there are only 20,000 producers. It seems logical to me that one would say if we have this problem and we have a system in place already under the existing act, that someone should sit down and determine the voters list and figure out who is eligible to vote. Let us all agree on who is eligible to vote, and then let us have a vote.
The farmers in Ontario voted not to sell their wheat through the Wheat Board. The farmers in Quebec decided to have a single desk. It seems to me we are going through this whole process that, if the list were cleaned up and people agreed on all sides who the eligible voters are, we have an election, we will find out what the people who are affected want and we get on with it.
Senator Tkachuk: Can we ask to split the questions?
Senator Peterson: What is the question?
Senator Mercer: Why can we not do that?
Senator Peterson: I knew it was in there somewhere.
Senator Mercer: I was sure Senator Tkachuk wanted to ask me a question.
The Chair: Mr. Bender or Mr. Otto, do either of you want to answer Senator Mercer's question?
Mr. Bender: Thank you. You raised valid points with regard to plebiscites. I believe at Statistics Canada it says there are 20,000 commercial grain farms in Western Canada. The Wheat Board says there are about 50,000 permit-book holders, yet 68,000 ballots were sent out. I take your point, if we could come down to what the voter's list is, but I do not think that would happen. I do not think there would be agreement. We tried a few years ago with regard to the director elections to try and get an establishment of who would be an eligible voter.
We argued it should be commercial grain farmers, those who depend on grain production for their livelihood and their source of income, no hobby farmers, retired farmers or landlords. We had trouble with that. We could not get agreement upon the rules for that election.
Four years ago, a barley plebiscite showed that the majority wanted an open or dual market for barley, yet the Wheat Board rejected that because they did not like the question.
Likely we would see that again. If we set it up the way we want, they would think it is not fair. If they do it, we would say it is not fair. I do not think we would get agreement on that. When you look at the Wheat Board's random surveys they conducted, they show the majority of farmers want the option of selling outside of the Wheat Board.
Senator Mercer: If that is what farmers want I am not against it. However, we have not had a plebiscite that everyone agrees is a legitimate plebiscite with a "legitimate" voters' list.
Mr. Otto: In answer to your question, it is very difficult for us to come to agreement on the plebiscite. In the latest one that the board keeps dragging up — with 51 per cent of barley producers supporting their plebiscite — what they are not saying is the Canadian Wheat Board historically handles about 20 per cent of all barley sales in Western Canada. The only barley producers that got ballots in that plebiscite were the ones that delivered to the Canadian Wheat Board. In other words, 80 per cent of the barley production in Western Canada was not polled in that plebiscite. It is not credible.
Senator Mercer: I am not arguing with that. I have spent a good part of my life running elections. The first thing you do is get an accurate voters list.
Mr. Otto: We have consistently gone to the board in the last five years to try and get the voters list cleaned up. If you want my own personal experience, I ran in the last Wheat Board election against Stewart Wells. He got 53 per cent and I got 47 per cent. I phoned between 1,100 and 1,200 producers in my district. I talked to them personally. I spent hours. My wife added it up and it was two-weeks-worth of phone calls.
When I was phoning around, I found deceased people on that voters list, people that were no longer farming, people that had no interest in farming whatsoever, and yet they were getting a ballot. We had farms that were getting seven and eight ballots. It is not a valid list. They refuse to clean up the voters list.
The other thing is that if you are going to have a vote of farmers, it should be all farmers, whether you deliver to the board or not. The board still has influence over your commodity prices even if you are not delivering to them.
Senator Mercer: My final question is with respect to transportation. Of course, there was mention of the Port of Prince Rupert. It is a one-railway town. There is one line. Halifax is also a one-railway town, unfortunately.
You knew I was going to get there. I always do.
The issue, however, is that Prince Rupert is a CN town and both railways go to Vancouver. I do not understand when you say that the backup in Vancouver is not facility driven. The backup in Vancouver, in my estimation, is driven by the disorganization and multiple labour disruptions that happened in Vancouver. Other ports like Halifax and Montreal do not have the same kind of labour disruptions they have in Vancouver.
Mr. Otto: I have a point of order. There are three railways going into Vancouver.
The Chair: Mr. Otto, witnesses cannot have a point of order.
Mr. Otto: Pardon me.
The Chair: I will accept your comments. Thank you.
Senator Robichaud: It was not a point of order but you made your point. That is usually how we use it.
[Translation]
I would like to come back to a comment Senator Rivard made when he was talking about people appointed to the board. If I gave the impression that I was questioning the competence of these people, that was not my intention. Rather, I was questioning their representativeness in the sense that I would like to see someone representing each party. That is all I was trying to do.
[English]
If there had been a plebiscite like the present law requires, it would have been organized by the minister. It was his responsibility. He would have had all the information and could have come to a list of voters. Then we would not be in the situation we are now where a judge has ruled that it is before us, but it should not be.
Senator Eaton: I am wondering if you are asking a question.
Senator Robichaud: I will. It is a long question, Senator Eaton.
Would that not have settled the question of the plebiscite? It would have been organized by the minister. It was not the responsibility of the Wheat Board or anyone else. That is how the law states it. Then we would have put away that question.
From what I heard from witnesses from the Canadian Wheat Board, they would have accepted the results of that. I think we would have been bound by it. Do you not think that would have been a better idea?
Mr. Bender: Again, I go back to my previous comments. I do not believe that the Wheat Board would have accepted a plebiscite. That is just my speculation. That went against what their wishes were. I cannot speak for the minister, but my personal belief is that he recognized that the majority of actual commercial farmers — again, according to the Wheat Board's own surveys — want marketing choice. Rather than go through all the work, time and money that would have taken to conduct a plebiscite and the uncertainty it would have created in the market place during that process, he said we have to get this done quickly. That is my own take on it because I believe he knew that is what the majority of farmers wanted.
Mr. Otto: I guess it would have been a lot cleaner if the minister had done a plebiscite. However, I am in agreement with Mr. Bender on this one. The Wheat Board has been going surveys for the last 12 years. There has been a plain signal from barley producers in every one of those surveys they have done — producers have paid for them — that barley producers do not want the single desk. They have ignored the results of their surveys consistently.
We held a plebiscite four years ago, where the barley producers — this was held by Minister Strahl — were very adamant that they wanted a dual market or an open market. They did not want the single desk. The board of directors ignored that one.
I do not think the minister holding a plebiscite would have solved this problem. They would have still fought it.
Senator Robichaud: It is not a matter of fighting it; it is a matter of respecting the law of the land. That is the point I am making.
The Chair: With the indulgence of all senators, the chair will recognize Senator Rivard, who wants to make a clarification on a statement earlier.
[Translation]
Senator Rivard: I would like to come back to comments I made earlier. I never alluded to the opposition; I talked about witnesses who were dubious of the competence of possible appointees. I just wanted to make that clear, senators.
[English]
Senator Mahovlich: Are there any members from your area on the Wheat Board right now? Are there any members from your organizations?
Mr. Otto: Yes, we did have a member. Jeff Nielsen was the past president of the Western Canadian Barley Growers Association. He was a director who resigned a month ago.
Senator Mahovlich: Did you bring any grievances to him?
Mr. Otto: We talked to Jeff as much as we could; we brought our grievances to him and he took them to the board.
Senator Mahovlich: It did not help?
Mr. Otto: No, it did not.
The Chair: Mr. Bender, do you want to comment?
Mr. Bender: I do not know for certain; I am not familiar with who all our members are. However, I know that we also talked to Jeff Nielsen and Henry Voss, who are Alberta directors. We would bounce ideas off them and give them feedback. My comments echo Mr. Otto's as well.
Senator Plett: I have a supplementary question to Senator Robichaud's comments. If the minister had decided — and I certainly agree with you that he believed the majority wanted what we are giving them — to do a plebiscite, would you not agree — and again, as you have said, Mr. Bender, no one can seem to get agreement — that the proper number of ballots sent out by the minister would have probably been in the range of 20,000, not 68,000?
Mr. Bender: I would agree that that would probably be a much more representative number of the total number of ballots.
Mr. Otto: I believe the list the Wheat Board is using is not a factual list of true commercial farmers in Western Canada. The other side of holding a ballot would be that you need to have ballots to every commercial farmer in Western Canada, and a lot of barley producers in Alberta refuse to have a permit book. They will not deal with the board, but they are commercial producers and they would not get a ballot under the present system.
The Chair: Thank you very much, Mr. Bender and Mr. Otto. Season's greetings to you both and to your families.
(The committee adjourned.)