Proceedings of the Standing Senate Committee on
Agriculture and Forestry

Issue 3 - Evidence


OTTAWA, Thursday, February 19, 1998

The Standing Senate Committee on Agriculture and Forestry met this day at 9:09 a.m. to consider future business of the committee.

Senator Leonard J. Gustafson (Chairman) in the Chair.

[English]

The Chairman: Honourable senators, the purpose of this meeting, as you can see from the agenda before you, is to create a subcommittee on the boreal forest. You will recall that we have had several meetings regarding the boreal forest, investigating some of the areas in Manitoba, Alberta and Saskatchewan. That study has become somewhat waylaid so we decided to create a subcommittee. There was a committee of three senators. It was felt that that was not adequate, that there should be a committee of at least five to deal with the subject, so that is what we are about this morning.

I am in your hands as to the agenda. We could probably deal with other business now, if there is any, and then go into selecting the subcommittee. Then the subcommittee could have their organizational meeting.

Senator Taylor: Senator Whelan told me last night that it would be all right to put his name forward.

The Chairman: He did agree to sit on the committee.

Senator Taylor: I was hoping to be a member, also, because I was on the committee last year. Senator Spivak would be interested also. There is another senator who is not a member of this committee but who would like to join, and that is Senator Chalifoux. She would be a very worthy addition. She is from what you would call mid-Canada. She is a Métis, and a lot of those people make their living in the boreal forest.

Senator Spivak: Senator Stratton is interested also.

The Chairman: It seems that there is a consensus to deal with the subcommittee right now.

Senator Spivak: Why do we not deal with other business and then get into the subcommittee? That would allow us to have a brief meeting regarding the work plan.

The Chairman: Let us deal with other business. Are there any suggestions?

Senator Taylor: I understand you have decided on a date for your Washington trip. Is that correct?

The Chairman: There were discussions about that. Perhaps the clerk can speak to that.

Mr. Blair Armitage, Clerk of the Committee: We discussed the trip to Washington and whether or not it would be feasible to do it before the end of this fiscal year. With the arrival of Bill C-4 and the steering committee work plan, it does not look like we will make it by the end of this fiscal year.

The Chairman: With Bill C-4 and the preparations to travel to the Prairies, I do not see how it would work.

Mr. Armitage: The steering committee discussed holding public meetings out west if and when Bill C-4 is referred to it. The discussion seemed to indicate that if we held it much later than the end of March, we would be running into problems both with weather and planting time.

Senator Taylor: The reason I bring up Washington is that the farmers would certainly want to be finished with us before seeding time, which is in April. If we are going to Washington at the end of April or May, we should be picking a date now.

The Chairman: The important consideration with respect to Washington is that you have to inform the people who will be there to meet with you. On other visits, we had problems in arriving and these people were not there. Organizing the trip to accommodate the schedule of congressmen and senators is very important.

Senator Taylor: We would want to meet with their Senate and House committees on agriculture and forestry, which are our two main areas of concern.

Senator Spivak: As well, we always meet with that farm office, which is all powerful.

The Chairman: The joint committee of their farm groups?

Senator Spivak: No.

Senator Taylor: It is a farm organization. Would it be the American Federation of Agriculture?

Senator Spivak: It is situated in Washington.

Senator Taylor: With respect to lumber, the Americans are questioning the royalty system in Canada.

Senator Bryden: What else, other than the wheat bill, do we have on our legislative agenda?

Senator Taylor: We have the subcommittee on forestry. It will conduct hearings that will tie us up to some extent. Those hearings are not as time oriented. We can work around them.

Senator Bryden: I am not be concerned about that, but I am concerned that we look after our legislative duties.

Senator Taylor: Bill C-4.

Senator Bryden: That should be done by then.

I have not participated in one of these junkets before, but if we are to meet with these powerful people, I think we need to be very clear on what it is we wish to talk to them about. We need to be well briefed before they start asking us questions. We want to be able to respond as to what Canada's position is in some of these areas. I assume that it is possible to have a couple of special meetings at which people inform us of the issues between the two countries in the various areas. We all know anecdotally what some of them are and what are the major buttons. I would like to have that type of briefing.

Senator Spivak: The Canadian embassy always has a briefing session for us when we get there. They lay out the issues. We have also had briefings here from people of the various departments before we leave. There is always a briefing paper. There are always issues at the forefront between Canada and the United States.

Senator Taylor: The embassy has a meeting scheduled as soon as we get down there.

The Chairman: Perhaps we could have Mr. Armitage look into the timing issue after Bill C-4 is handled. It might even work well in mid-June. Generally what happens is that we get to the end of June before the crunch really hits. The second week in June may work.

Senator Taylor: I suggest mid-to-late April.

Perhaps we should leave some time to hear their complaints. I think it helps the optics of the situation if you mention there is time for them to raise their issues of concern.

The Chairman: The fast track on trade that President Clinton is proposing to the Senate and the Congress and how that will impact Canada will obviously be a major point of discussion.

Is it agreed that the clerk look into it?

Senator Stratton: What are we trying to accomplish?

The Chairman: There is a lot to accomplish. If you look at the grain industry in Western Canada, people are talking about putting up road blocks.

Senator Stratton: I want to ensure that things are spelled out before we go.

The Chairman: There is no problem with that.

Senator Bryden: What do we do with the result? Do we report to the Senate? Do we report to the government? Do we report to the press?

Senator Taylor: We report to the Senate.

The Chairman: It is important to get our views out to the Americans, and we do not get many chances to do that. In the two times I have travelled down there with the committee, we have had great opportunities to lay our positions before the congressmen, senators and department officials. That is the important part of the trip. They are strong on their positions. They know what they are demanding. It gives us an opportunity to express how we feel about certain issues.

Senator Spivak: The major issues have always been supply management and grain marketing. It is the trade issues. I do not know about the beef cattle, but supply management, grain marketing and the Canadian Wheat Board are their main concerns.

The Chairman: If you read the speech that President Clinton delivered on the fast track on trade, the news release stated that if Canada did not open the doors to the marketing board areas -- that is, the feather industry, the milk industry, and so on -- they would get tough on grain and beef.

Senator Taylor: The last time we were there they were talking about non-tariff barriers to potatoes. Potatoes were high on someone's agenda. This involves not only beef and grain but the entire agricultural area. I have been in the states on matters concerning energy and oil, too, which is a different thing all together.

The U.S. protects their peanut crop but they think it is wrong when we protect any of our crops. There is an amazing difference. There is a blitz on certain products, such as beef and grain, but then there are all the so-called niche agriculture markets that are important to our provinces. Sugar beets is a product that only covers a small part of Manitoba and Alberta, but potatoes were involved the last time and not a lot of us knew much about them.

Senator Callbeck: I am interested in potatoes.

Senator Stratton: As soon as you mention marketing boards, that is a part of MAI. I should like to get our position on MAI. From there, we could find out where they are coming from. I think they will try to use the MAI to rid us of our marketing boards. That is the strong sense I am getting.

Senator Bryden: Our position on MAI is a moving target at the moment.

Senator Stratton: We want exemption on culture and the marketing boards but we are having trouble obtaining that.

Senator Bryden: We try to defend the things we do but, whenever we talk about marketing boards and tariffs with the U.S., the issue that comes up is their hidden subsidies and support systems, and so on. We should be in a position where we are not constantly trying to be simply defensive. We should see if we can find out something about their hidden tariff system, and so on.

There must be experts in our system that make it their life's work to see where all this stuff is hidden. If we are to be clobbered with marketing board protection, and so on, it would be nice to say, "Yes, that is true. On the other hand, in 1989 or 1995, your Department of Agriculture spent "X" number of millions of dollars to support your pig industry." I should like to be in a position where we have a bit of ammunition or some questions that we can ask that would draw their attention to the fact that we are not always the protectors here.

The Chairman: That is a good point. I was discussing that with Mr. Goodale yesterday over the telephone. Going back as far as Bill McKnight and other ministers, one of the problems that we have faced is that we have never been able to pin the Americans down on these subsidies. They cover them up. For example, they have them involved in their program for the armed forces.

I mentioned to them the last time we were down there that while it would seem that their export enhancement program is a way of providing international support to under privileged nations, politically it could be seen as subsidization of farmers. We all know that they sell grain below the cost of production to under privileged countries. I think that is a political thing, but they will not admit it. It is not a simple endeavour.

Senator Bryden: You will probably never get them to confess, but I should like to be there to at least make them aware of these things.

Senator Spivak: Their farm people will admit that. Their committee on agriculture admits that. That information is available. We get that from our trade people. The export enhancement program is not a hidden thing.

Senator Taylor: There may be something hidden such as the barge and locks system on the Mississippi, which allows them to take grain from the central continent to the world market. That is put under the Department of Defence.

Senator Spivak: That is correct. There are other things, but the export enhancement program amounts to billions of dollars. The Americans spend approximately $80 billion to help companies such as Campbell Soup to sell abroad. That is an indirect subsidy, too, involving vegetables, as well as their food program. Those are all subsidies.

The Chairman: I refer members of the committee to the testimony of the witness representing the Saskatchewan rural municipalities, who told us about an 1,100-acre farm in North Dakota and an 1,100-acre farm in Saskatchewan. The difference in net income between the two farms was $40,000. That is not a particularly large farm. A lot of that difference is because of indirect subsidies that come to the farmers in different ways.

Senator Taylor: We use supply management to keep over production from taking place; they use a system of pay-in for cows that they want to retire or land that they want to convert to pasture. Our system is subsidized by the consumer, with higher prices; their system is subsidized directly to the farmer, with cash grants.

[Translation]

Senator Robichaud: Mr. Chairman, before going to the United States, we should schedule some hearings to get a better grasp of how the U.S. system works. I think that this would have an impact on the Americans when they criticize our marketing system. We could invite witnesses from Canada and from American associations just to let them know that we are looking at how their system works. This could certainly help the agricultural sector. We would have this information on hand, information that we could use, when they proceed to make all kinds of complaints about the way our agricultural system operates. However, if we go to the United States without really being prepared, I am afraid that this could lead to exchanges that would not be beneficial to us.

[English]

Senator Taylor: Senator Robichaud is correct. Perhaps the clerk could prepare a schedule for the purpose of our schooling, you might say. We could have an hour's briefing by a representative from the department, regarding things like potatoes and transportation. We could have the briefing just before the trip.

The Chairman: Is there any other business?

Mr. Armitage: I was directed, at the request of the committee, to invite the Minister of Health to discuss with the committee the health issues related to RBST, the growth hormones and steroids being used in cattle, dairy and beef. That invitation has gone out and I am waiting for a response.

The Chairman: On Bill C-4, I understand Senator Taylor is speaking today. We will be speaking on Tuesday, and possibly Wednesday, with the idea of having it referred to committee by Thursday. I understand that the minister can appear on Thursday. Has that time been set?

Mr. Armitage: It has not been confirmed.

The Chairman: The steering committee also had quite an extensive discussion on travelling to the west to touch base in all three provinces. The suggestion was made of Winnipeg, Regina and Saskatoon. There were two meetings suggested for Saskatchewan because of the fact that it produces 65 per cent of the grain grown in Western Canada. Was the other city Red Deer?

Senator Taylor: Edmonton.

The Chairman: Brandon had been suggested but it is a little more difficult to get flights into Brandon. You pretty well have to fly into Winnipeg and then drive to Brandon.

Senator Callbeck: When would that be?

The Chairman: The last week in March. Mr. Armitage tells us it would take two or three weeks to arrange.

Senator Stratton: Why are we not going where the farmers are? Why are we not going to a small town or small farming area?

Senator Taylor: Part of it is the problem of time. We were hoping to do it all in one week when the house was sitting at the end of March, and we could do that if we just keep it to those cities. Not only that, but farmers can always go to the local town. They love going to the big city anyway.

Senator Spivak: I thought we were going to Red Deer.

Senator Taylor: No, Edmonton.

The Chairman: I had suggested Red Deer.

Senator Taylor: That would have been another two-hour drive out of the city.

Senator Stratton: My point is part of the reason we go out there is to meet the folks with whom we are dealing on this issue. I think we really need to get to at least one place, either Brandon or Red Deer, to be able to see them face-to-face, on their turf, instead of in a big city. I really feel that is important.

Senator Taylor: I move that we make the Alberta stop in Red Deer.

The Chairman: How about Brandon?

Senator Spivak: No.

Senator Stratton: If we do one, that might be enough. I understand there are real time problems getting to Brandon.

The Chairman: There is also the consideration that, in a smaller centre, you will probably get better press coverage of the committee than in a big city, where there is a lot of things going on.

Senator Stratton: Senator Sparrow, are you happy with going to Regina and Saskatoon?

Senator Sparrow: Yes.

The Chairman: As the clerk makes the travel arrangements, we may have to be flexible.

Let us now move to the business at hand, the Subcommittee on Boreal Forest. We already have the nominations for the subcommittee.

Mr. Armitage: The nominations are the Honourable Senators Taylor, Stratton, Whelan, Spivak. Senator Chalifoux was nominated but we must wait until she becomes a member of the main committee. It will be a simple matter to change the subcommittee membership once she becomes a member of the committee. Perhaps someone could suggest another Liberal member who would not mind being substituted later on.

Senator Robichaud: I nominate Senator Bryden.

The Chairman: Could someone make a motion that we accept these nominations?

Senator Callbeck: I move that we accept those nominations.

The Chairman: All agreed?

Hon. Senators: Agreed.

Mr. Armitage: We need a motion to resolve into the subcommittee to hold an organizational meeting.

Senator Spivak: I so move.

The Chairman: All in favour?

Hon. Senators: Agreed.

The committee adjourned.


OTTAWA, Thursday, February 26, 1998

The Standing Senate Committee on Agriculture and Forestry, to which was referred Bill C-4, to amend the Canadian Wheat Board Act and to make consequential amendments to other Acts, met this day at 3:38 p.m. to give consideration to the bill.

Senator Leonard J. Gustafson (Chairman) in the Chair.

[English]

The Chairman: Honourable senators, our first witness today is the Minister responsible for the Canadian Wheat Board, the Honourable Ralph Goodale.

Please proceed, Mr. Minister.

Hon. Ralph E. Goodale, P.C., M.P., Minister of Natural Resources and Minister responsible for the Canadian Wheat Board: Mr. Chairman, I welcome this opportunity and I thank you for the invitation to appear before you very early in your deliberations on Bill C-4, to amend the Canadian Wheat Board Act.

Mr. Chairman, I wish to acknowledge the great interest that I know senators have in agricultural policy, and grain policy in particular. I know you will want to examine Bill C-4 with care, and I welcome that.

I would mention at the outset only one strategic consideration, and that has to do with the matter of timing. I hope that honourable senators will bear that in mind as your deliberations go forward.

The heart and the soul of Bill C-4 is the ultimate election of producer-directors to run the Canadian Wheat Board. Everything else hinges upon that major democratic change.

The draft legislation specifies that the elections for these producer-directors are to be held before the end of the 1998 calendar year. Practically speaking, especially from the perspective of the farmers, the earliest possible time for farmers to participate in an election process would be in October of this year, just as soon as harvest is over. An election in October would leave only two months before the end of the calendar year for the new directors to learn their new jobs before assuming their legal responsibilities and legal liabilities.

Past experience has shown that somewhere between five and six months of lead time are required before the voting actually takes place to make all the necessary arrangements for a proper electoral procedure. That would include finalizing the rules to govern the election based upon ample consultation with farm organizations; publicizing the rules so that everyone is fully informed well in advance; selecting the independent authority to conduct the process impartially at arm's length from government; the nomination process for candidates; the appropriate campaigning by those candidates, and so forth.

If you back off five or six months from October of 1998, you very quickly get into the late spring, approximately the month of April, which is when the advance work on the election process needs to be under way in earnest if those directors are to be elected in time to take office before the end of this calendar year.

I would sincerely ask honourable senators to bear these timing matters in mind as you go about your good work on Bill C-4.

I would invite members of the committee to offer the government their considered advice having to do with the rules and regulations pertaining to the electoral process with respect to directors. As you know, I have invited farm organizations to comment on what would or would not be appropriate election rules. I have invited the House of Commons agriculture committee to comment, and I certainly extend the same invitation to this committee.

As I mentioned earlier, the election process is the heart and soul of Bill C-4. It must be an election process that has credibility and integrity, and one in which farmers fully participate. Accordingly, getting it right is fundamental.

I would be happy, on a subsequent occasion, Mr. Chairman, to provide this committee with a discussion paper on the various issues to be analyzed as they relate to election rules and regulations. If senators individually or this committee collectively would care to offer advice or recommendations about how to structure this process, that would be most welcome and, indeed, a very valuable contribution to the process.

Mr. Chairman, I will give members of the committee a brief summary of the historical background to Bill C-4 so it is clearly understood from whence it came.

In 1993, when we came into office, there was considerable turmoil and controversy in the western grains industry about the jurisdiction and the operations of the Canadian Wheat Board. Indeed, there were outstanding legal proceedings before the courts related to the board's jurisdiction.

Along with that controversy, the first and most urgent priority our government faced was the necessity to defend Canadian market access against repeated attacks coming our way from the United States. Early on, we concentrated on that urgent issue of maintaining Canadian market access into the United States, and we did so successfully over a period of some 18 months. That effort occupied virtually every waking moment through 1994 and the first part of 1995.

In the summer of 1995, specifically on the issue of grain marketing, we established the Western Grain Marketing Panel. We asked that panel to do extensive consultation and analysis of grain marketing issues across the Prairies. They worked very seriously at their challenge over a period of one year, collecting all sorts of expert opinions, consulting broadly in a variety of formus and modes with people in Western Canada, and doing a thorough job of the assignment they were given.

In July of 1996, almost exactly one year after they were appointed, the Western Grain Marketing Panel filed its report. That report in many ways forms the basis of the legislation presently being considered. The key recommendations in the Western Grain Marketing Panel report relate to the democratization of the Canadian Wheat Board and the need for the legislation governing the board to be more in the nature of enabling legislation with built-in flexibility for the future. Thus, the board would have the capacity to evolve and change over time as circumstances changed. Farmers would be able to shape the marketing agency as farmers thought best. That spirit of democratization and enabling legislation is very much contained in Bill C-4.

The Western Grain Marketing Panel report was filed in the summer of 1996. In the late summer and the fall of 1996, we vetted the Western Grain Marketing Panel report very thoroughly with farmers. Some 12,000 to 15,000 farmers responded to that vetting process in one way or another. In the late fall of 1996, we came forward with our first draft bill on this subject, Bill C-72, which was tabled in the last Parliament.

Through the winter of 1996 and the early spring of 1997 debate on this matter, particularly with respect to Bill C-72, proceeded through the House of Commons. There were extensive hearings by the House of Commons Standing Committee on Agriculture and Agri-Food, including hearings at various centres across western Canada.

If my memory serves me correctly, as a result of that process before the house standing committee, the legislation was amended more than 20 times to take into account the evidence that had been heard and to find the greatest amount of common ground among farmers and farm organizations.

Unfortunately, as we moved further into 1997, the federal election interrupted the legislative process with respect to Bill C-72, and it did not complete its course through Parliament at that time.

During the election and immediately afterwards, I promised to return to Parliament with a successor bill as soon as the house resumed. I did so, in fact, within four days of the new session of Parliament which opened in the fall of 1997. Bill C-4 was tabled. As you know, it was debated in the house. More work was done by the House of Commons Standing Committee on Agriculture and Agri-Food. Another 15 or 20 amendments were adopted to refine the draft legislation further, and it is now before the Senate for your deliberation.

All of this represents about two and a half years of work. It has been the most open, inclusive and transparent consultative process with respect to the grains industry that one could think of. It has been both exhaustive and exhausting in terms of its comprehensiveness and its consultative approach.

As some senators mentioned in the preliminary debate on this subject in the Senate in the last number of days, this legislation is controversial, and I think it is important to consider why that is so. First, the grain business on the Prairies is a big and important topic. It touches the livelihoods of well over 100,000 Prairie farm families, so anything dealing with grain marketing is a big issue on the Prairies.

Second, the changes we are proposing are certainly the most significant and extensive changes with respect to the Canadian Wheat Board in more than 50 years. The legislation is comprehensive and complex, and something of that magnitude and complexity is naturally prone to a certain amount of misunderstanding or misinterpretation.

Third, it must be acknowledged that there are some strongly polarized positions among a number of farm organizations. A proposition which, to some organizations, would seem to be a straightforward expression of freedom, is interpreted by other organizations as a straitjacket, and vice versa. There is much emotion around this topic and there is a big gap between the poles on either end of the discussion. I think we all readily concede that it is impossible to reconcile those extreme opposite perspectives. We have been trying to seek the largest amount of common ground between those two extremes.

There are four basic principles embodied in Bill C-4. The first is the democratization of the governance of the Canadian Wheat Board. I will not go into all the detail of that. I presume detailed questions will be asked, but the fundamental point is that, for the first time in history, the Canadian Wheat Board will be run by a modern, corporate-style board of directors, and two-thirds of those directors, 10 of 15, will be directly elected by farmers themselves.

The second principle is that of greater accountability. That is accomplished in a variety of ways in the draft legislation. I suppose most obviously, if farmers are unhappy with what the Canadian Wheat Board is doing, they have the democratic right to defeat the elected directors in subsequent elections, and that is the most tangible form of accountability there can be. Obviously, that is a new measure of accountability.

The draft legislation also provides the scope for the directors to identify and pursue all possible means by which they can demonstrate their accountability to their electors. That is specifically referred to in the language of the bill.

Third, new flexibility will be provided by this legislation; new flexibility that has not existed before under the terms and conditions which govern the Canadian Wheat Board. The Canadian Wheat Board would, for example, be able to expedite adjustment payments. It would be able to engage in cash trading if and when the board determined that was in the interest of farmers. It would be able to provide an option of early cashing out of marketing pools. There are eight or ten changes in the draft legislation which some regard as technical -- and in a sense they are -- which provide the wheat board with more options, more flexibility, the ability to be more agile in the marketplace and more responsive to farmers, and the ability to speed up cash flows through the system to put money into farmers' pockets faster.

The fourth principle, Mr. Chairman, is one of empowerment: to provide in the future, more than ever before, the ability for farmers themselves to shape their marketing agency as they would want it to be. In future, what the Canadian Wheat Board does and what it does not do, what it markets and what it does not market, and how it markets, will be matters for farmers to determine rather than governments, Parliaments or politicians, and rather than those in internal bureaucracies, be they governmental or the administrative structure of the wheat board itself. Farmers would have the biggest, largest and strongest say in how they want their marketing agency to function.

Those are the four basic principles: democratization, accountability, flexibility and empowerment.

In order to provide detailed explanations of the provisions in the legislation, we have supplied various information materials. The one item that I would draw to the attention of senators is a four-page set of questions and answers about Bill C-4 and the Canadian Wheat Board which members of the Senate may find useful. During the course of this winter, my staff kept very careful track of the kinds of questions we were being asked about this draft legislation. When we looked over all of the inquiries, we found 10 or 11 very common themes. We have taken those themes and expressed them in the form of questions. We have supplied direct, straightforward, no-nonsense answers to those questions. Those 10 or 11 questions, and the answers to them, provide a pretty good overview of what the draft legislation is about.

I know there has been concern in the House of Commons, and also to a certain extent in the Senate, about the issue of an exclusion clause and an inclusion clause. I would be happy to deal with that in depth in response to questions from senators.

I do want to make the point that, while I or any of you may have a particular viewpoint on the desirability of an inclusion or an exclusion, this draft legislation, in the final analysis, leaves it for farmers to decide. The provisions in the law do not change the mandate of the Canadian Wheat Board, but they do provide a method by which that mandate could be changed in the future if, and only if, farmers decide that is what they want.

The debate about inclusion and exclusion is an interesting one in theory, but the reality is that, in the terms of the draft legislation, that theory is checkmated by the ultimate authority resting not in the hands of government, not in the hands of the wheat board administration, not in the hands of any minority interest group, but squarely under the democratic control of farmers themselves.

Finally, Mr. Chairman, I mentioned that I would welcome the Senate's observations on election rules and procedures. Another matter that I would flag for the Senate's considered advice is any set of regulations that you might recommend pertaining to the structure and use of the contingency fund which is provided for in the bill. The provisions in the law are enabling ones that simply allow a contingency fund to be created, and the provisions in the law limit the use of that contingency fund to three, and only three, purposes: backstopping the adjustments to initial payments, backstopping any cash trading operations, and backstopping the early pool cash-out option.

It will be up to the regulations to provide the full specifications around those broad principles. Again, it will be the Canadian Wheat Board's board of directors, two-thirds of whom will be elected by farmers, who will ultimately be in control of the situation, but it may be useful for Parliament to give some direction, at least in the early stages, about this contingency fund concept in order for farmers and farm organizations to have a higher degree of comfort with the concept.

Again, if it would be useful, I would be pleased to provide your committee with a discussion paper on some of the issues that it may be appropriate to address by way of regulation.If your committee has advice to offer with respect to regulations pertaining to the contingency fund or regulations pertaining to the elections procedure, I would be most appreciative of any advice or recommendations.

I look forward to your questions, senators.

Senator Whelan: Mr. Minister, you talk about democratization of the wheat board. When I see that in Western Ccanada, or in most of Canada, 80 per cent of the flour milling industry is controlled by one company, ADM, I must question whether that is democracy. The World Trade Organization is all powerful in making decisions. Is that democracy? There are high-paid bureaucrats administering those organizations.

The Canadian Wheat Board is an organization that is admired all over the world. From the correspondence that many of us are receiving, many people are concerned that they will lose the protection of agency marketing, single-desk selling. R.B. Bennett formed the wheat board and it was given single-desk selling power in 1943. A vote was held after that and 82 per cent of the farmers turned out to vote.

There seems to be a very real concern that we will destroy something that has been the envy of the world. Farmers from other parts of Canada, who are using agency marketing, are concerned about what will happen to them if we downgrade the system. Perhaps our Senate Committee will hear differently as we go hear from our witnesses, but there seems to be distrust and confusion as to what will happen to the farmers.

We see, for example, Archer Daniels Midland, being fined $100 million for being dishonest, and being sued for another $600 million by the federal government for alleged improper carrying on of business. The soya bean negotiating board is making decisions unilaterally, and my information is they have no authority to do that.

At one time Ontario wheat came under the Canadian Wheat Board. I can remember when it was removed from the jurisdiction of the Canadian Wheat Board, not totally but 90-some per cent, because whenever they made a sale they still had to get approval of the Canadian Wheat Board.

Would you care to make a statement about democratization? You seem to be putting this forward as being a great thing. Yet, a large part of the agriculture business in the world has very little to do with democracy.

Mr. Goodale: Senator Whelan, I understand the points you have made and I know those views are held by a good many who are involved in agricultural debates generally and this one in particular.

The principle of democratization with respect to the Canadian Wheat Board, the principle of farmers themselves electing directors to serve on the board of directors of the Canadian Wheat Board was, in fact, the strongest and clearest recommendation that came from the Western Grain Marketing Panel. In the two years of debate since the Western Grain Marketing Panel's recommendations, that is about the only topic upon which virtually everyone agrees -- that it is a good and a valuable thing to have farmers elected to serve on a board of directors of the Canadian Wheat Board. Almost everything else will draw a considerable argument, but that one is almost unanimously accepted in the farm community.

The only debate that goes around that particular issue of any substance is how far the electoral procedure should go. Should it be half of the directors; should it be a majority; should it be two-thirds; should it be all of them? The debate has focused on the issue of how many directors should be elected, not on the issue of whether there should be elected directors. There seems to be a fairly strong consensus. The legislation, as it is presently drafted, accepted the advice that we had heard by a strong majority of witnesses before the House of Commons Committee on Agriculture and Agri-Food when it was considering Bill C-72, which was to the effect that two-thirds of the directors should be elected by farmers.

The legislation, as I said earlier, will not change the mandate of the board. It will provide for a methodology whereby that mandate could be changed if farmers would so desire. That would be contingent upon a number of things, most particularly, the views of the board of directors of the Canadian Wheat Board, two-thirds elected by farmers. In anything that is fundamental, that goes to the board's jurisdictional core, that would not only require a democratic decision taken by the board of directors, but it would also require a democratic decision taken by all of the affected farmers through a producer vote of all farmers, not just those who happened to be on the board of directors.

I understand your point. However, it does seem to be a point upon which there is a high degree of common opinion that the electoral process vis-à-vis the board of directors is a good thing. That is why, bearing in mind some of the points that you made, Senator Whelan, I said at the outset of my remarks that the electoral process itself is the linchpin to everything else. Those who join the board of directors will be running a $6-billion enterprise. It is the fifth largest Canadian exporter. It is the single largest earner of foreign exchange in Canada. It does business in 70 countries around the world and has a leading reputation among all international grain sellers, and the leading reputation among the buyers for quality, service, standards, contract performance and dependability, all of those things that go into being a successful marketer.

The directors will assume no small responsibility. They will be assuming a heavy fiduciary obligation by taking on this assignment, so electing good directors is critical.

Senator Whelan: I have a list of 12 or 13 questions here which the chairman of the advisory committee says he put to you in November. Some of them, as far as I am concerned, Mr. Minister, deserve answers which would put aside some of concerns.

I am not arguing against the power of elected directors. I am saying that a large part of the world we are dealing with today has nothing to do with democracy, it is a matter of power and more power.

From the correspondence that I am receiving from all over Canada it appears that there is definite concern that this step may destroy the respect that the Canadian Wheat Board has enjoyed in this country as a whole. Single-desk selling was introduced because of the unfair treatment to which farmers were being subjected.

Can you guarantee us that this fair market system will be maintained with the passage of this bill?

Mr. Goodale: Senator Whelan, it is maintained in the draft legislation, subject only to the future democratic will of farmers themselves and, in a democracy, that caveat applies to all of us.

For example, because some of the directors will be elected, the Canadian Wheat Board would no longer be a Crown corporation within the classic definition of that term. It would become a mixed enterprise which involves a mixture of public and private. That is what the name implies. However, we have been very careful in structuring the financial arrangements in support of the Canadian Wheat Board's operations to ensure that, under the new law, those financial arrangements will be just as beneficial as the financial arrangements that existed under the old law.

The Canadian Wheat Board has an absolutely sterling reputation in the financial markets of the world. Being a $6-billion enterprise, some days in the money markets the wheat board would be doing transactions which are, in dollar terms, bigger than some of the transactions conducted by financial institutions. It is a pretty hefty enterprise. It has conducted those financial transactions on such a sound financial reputation for the last 54 years that it has a sterling credit rating, and that credit rating benefits from a guarantee provided by the Government of Canada.

We have ensured in this proposed legislation that the guarantee to this new entity, this mixed enterprise, is just as secure for the future as the implied guarantee in the past would have been in relation to a Crown corporation. I believe that clause 19 of the bill lays out those financial terms.

We have been sensitive to the point you have made about the wheat board's strength and respect in international markets. While enshrining the principles of democratization and accountability in what will be the new law, we have tried to ensure, and I believe we have accomplished, the securing of those values that have made the Canadian Wheat Board so effective in the past.

Senator Spivak: Mr. Minister, the last time we were in Washington, the strength of the hostility of American interests to the Wheat Board was obvious to us. What is your opinion about a challenge to the wheat board through NAFTA or, even more ominously, through the MAI? I refer to the most recent comments in a magazine article of the trade representative.

In terms of a mixed enterprise, you are suggesting that, in the legislation, all of the financial arrangements will remain the same. Does that preclude the majority of the board expressing a desire to change them? It seems to me that, in the name of democracy, many destructive things have happened, and not only in this country.

You mentioned that you wanted us to comment on the contingency fund. I am afraid I have not really looked at the legislation in any depth. Perhaps the answer to the question is self-evident. Is the contingency fund not seen as a responsibility of government?

Would you respond to my concern about the MAI challenge? Certain things have been promised by the Government of Canada, and then they have told us that they cannot fulfil their promises because they are bound by international treaties. The concerns about the survival of the Wheat Board may very well be based on those kinds of restrictions.

Mr. Goodale: With respect to the NAFTA, the WTO, the MAI, or any other international vehicle by which some other country might complain about the Canadian Wheat Board, this legislation makes it no more likely and probably less likely that such a challenge would be forthcoming; and, if it were forthcoming, that it would ultimately be successful. There is nothing in this bill that makes the Canadian Wheat Board more vulnerable to that kind of an attack.

Senator Spivak: Why do I not find that reassuring?

Mr. Goodale: I will try to give you some reassurance. You have said, quite correctly, that the United States complains about the Canadian Wheat Board. We could ask the rhetorical question: If the United States is complaining about the Canadian Wheat Board, are they complaining in order to help Canadian farmers, or is it more likely that they are complaining in order to assist their own domestic U.S. interests? When you see a complaint coming out of Washington, I think you might want to pause to think -- I say this rhetorically to those involved in the debate -- and examine who is on what side, and figure out if that complaint is good or bad in terms of the defence of your own interest.

Will challenges from the United States be forthcoming in the future? I would say, yes, they probably will be, because they have been in the past. However, we have faced them successfully in the past, and that is, perhaps, the reassurance I can offer you. The Canadian Wheat Board has been examined at least twice by the General Accounting Office of the United States Congress. It has been examined under the terms of the NAFTA. It has been examined under the terms of the International Trade Commission. It has been examined by an international audit asked for by the United States conducted by the Arthur Anderson auditing firm. Every time one of those examinations has been conducted, the Canadian Wheat Board has come through with flying colours. The examiner, whether it be the independent auditor or the General Accounting Office or the ITC or whatever, has had to conclude, however reluctantly on the American side of the equation, that the Canadian Wheat Board is a fair trading institution and there is no legal or economic or trade policy basis to any of the allegations that are made against it.

Some encouragement can be taken from the fact that we have faced those challenges in the past and the Wheat Board has always managed to pass with flying colours.

Senator Spivak: The fact is that the MAI is new. It does have a provision which could enable, for example, ADM to sue the government for damages by the Wheat Board. That is what the critics are suggesting. Does this not scare the government in proceeding with the MAI?

Mr. Goodale: I understand that the provisions which might potentially appear in an MAI -- and I would attach the caveat that there is no such thing yet and it may be some time coming, because I understand the negotiations are difficult -- are almost identical to the terms that would appear in the NAFTA. We have successfully dealt with the Canadian Wheat Board under the NAFTA.

For further information, as I do not dismiss this as an unimportant topic, I would ask our officials to provide to the committee, some time during your deliberations, a further analysis on this point with respect to trade vulnerability or investment vulnerability. It is an important issue that does require examination.

Senator, you also asked whether or not the financial terms under which the Canadian Wheat Board might operate could at a future date be changed by the board of directors. Certain provisions and aspects of the operations would be under board jurisdiction, and certain aspects of the operations are rooted in the legislation. The financial guarantee, for example, is not optional; it is spelled out in black and white. The only way that can be changed is if Parliament were to change it.

That backstop with respect to initial payments, credit sales and, most importantly, the day-to-day borrowing operations of the Canadian Wheat Board which I referred to earlier, is guaranteed in legislation. It could not be diminished by an action of the board of directors alone. It would take an Act of Parliament to do that.

You also had a question about the contingency fund.

Senator Spivak: I asked whether you saw the contingency fund as a check off.

Mr. Goodale: The contingency fund concept is in the legislation to allow the board of directors the flexibility to pursue new marketing techniques if the board of directors believe that is appropriate. I mentioned three of them: expedited adjustment payments, cash trading and an early pool cash-out. Those are the three items to which a contingency fund would apply.

Based on past experience, one would assume that those activities could be undertaken by the Canadian Wheat Board without exposing either the board or their farmer customers to any significant degree of risk. The track record has been sufficiently strong that one would assume the risk is very low. At the same time, these are new devices. They have not been tested before.

It is our view that it is only prudent to provide, in the law, for a financial cushion to be accumulated should some of the practices pursued in the past not be as financially successful as those which have been traditionally pursued. We have no reason to believe that there is an inordinate risk here. It is only prudent to provide, in the law, for a cushion in the event that some of these new techniques result in a financial risk that no one could foresee.

There are various ways in which this risk can be contained. This is why I asked for your advice with respect to regulations that could govern the use of the contingency fund. For example, should there be one fund where expedited advance payments, cash trading and early pool cash-outs would be dealt with in an omnibus fashion? Would it make greater sense to have three accounts within the contingency fund with the dollars flowing into the contingency fund with respect to cash trading, for example, which would primarily be drawn from the cash trading operation to which the risk is connected? In other words, you would not run the risk of cross-subsidization among other activities if you had three separate accounts.

What is the appropriate amount to be in those accounts? The draft legislation states the account can either be in surplus or in deficit. That implies that you need not always have money tied up in the account. You can run a deficit for a while as long as you pay it back within a five-year period. Those are items on which I would appreciate the advice of honourable senators.

Another good question is: Would there need to be more than one dollar in the account related to expedited adjustment payments? Never in 63 years has the Canadian Wheat Board made a mistake in calculating what an adjustment payment should be. There is virtually zero risk in that account. Perhaps it makes sense that that should be a nominal one-dollar account.

I repeat my request for your advice on other things that you would think appropriate in the contingency fund.

Senator Stratton: To return to the subject of the MAI, would the marketing boards be threatened if the MAI took a stand on eggs, milk and other dairy products?

Mr. Goodale: That is not our interpretation, senator. The Department of Agriculture has a significant trade policy section within the department. Probably of all the departments of government other than the Department of Trade, the trade officials in Agriculture Canada are the best in the business.

It would be useful to invite Deputy Minister Claydon and acting Assistant Deputy Minister Gifford to address these issues in detail. They could provide a substantial degree of comfort in response to your concerns.

Senator Stratton: My concern is that the Yanks never seem to quit. They lose, but they keep coming back.

Mr. Goodale: They are relentless. However, I would point out, senator, in the last onslaught, we managed to keep them talking from one crop year to the next, thereby, we secured a million extra tonnes.

Senator Stratton: On the question of accountability, every year a set of audited financial statements will be produced. You will rely on the board to ascertain whether or not the corporation is being run well.

The question that continues to arise is: How can we build trust with the producer? How can transparency be increased so that, if a producer or a group wishes to go through the financial statements, that can be granted to them? Are the statements accessible under access to information?

Mr. Goodale: The audited financial statements of the Canadian Wheat Board are published and public.

Senator Stratton: I understand that. My concern relates to the detailed background of those statements. Is the confidence that the corporation is being run well to be based on faith in the board?

Mr. Goodale: Senator, there are several answers to the question. I do not take the question lightly. There is a tendency on the part of institutions to be more secretive about some of their operations than they need to be.

I notice, for example, that in the last two or three years a government entity, the Farm Credit Corporation, has voluntarily, in its annual report, been publishing more and more detail beyond the bare minimum required by accountants. They have gone so far as to publish the attendance records of directors, which the directors were somewhat antsy about to begin with. However, they have now embraced the concept, and there is now a competition to see who will attend the most meetings. It has had an interesting discipline.

As an abstract principle, any institution can do better in the publication of information than merely adhering to the bare minimum provided by law. In that regard, it will be up to these new directors to do so. They will intimately know the internal operations of the Canadian Wheat Board and have access to every fact, figure, transaction and cost. They will also have the best available knowledge of what competitors are doing.

It seems to me most appropriate that those directors would be in the best position to make the assessment about what to release publicly and what, for reasons of commercial confidence, should remain confidential.

Under the new law, senator, an annual audit will be conducted by Deloitte & Touche. I assume the directors will establish their own internal audit committee, like any private sector corporation would do in the normal course. If they are unhappy with the work of the auditor, they will be in a position to recommend that the auditor be changed.

One thing has always struck me as a bit peculiar in the complaints I hear from time to time about the auditing of the Canadian Wheat Board. No parliamentary committee has ever invited the auditor of the Canadian Wheat Board to give evidence. That may be a worthy endeavour for a committee such as yours. When the next annual report is published, which is a month or so down the road, you may wish to invite Deloitte & Touche to appear before the Senate committee to answer questions about how they did their audit and their findings.

To provide this greater transparency or this confidence in the process, which you have quite rightly flagged as a problem, a periodic examination of the auditors before a parliamentary committee could be a useful exercise in laying all the cards on the table and assuring those who may have doubts that the process is an appropriate, professional process.

Senator Stratton: I will not ask another question since I have used up my time, but I would like to hear an explanation on the exclusion-inclusion clause.

Senator Sparrow: Mr. Minister, you used the expression that "timing is important." Why is it important?

The wheat board has been a valuable tool to western farmers. Changes may be required to service the agricultural community somewhat better. It seems to me that not all of us in the game were put under the same time constraints, and that concerns me.

You also mentioned that the consultative process is ongoing, and that is a positive thing. However, there appears to be a great deal of distrust -- and I wrote the words down: "distrust," "discontent," "suspicion," and "concern" -- about the bill, what is in it, and what it will do. The consultative process is ongoing, and all these concerns have come to the surface, yet, we are still pushing the bill forward. It strikes me that there is something wrong.

This process reminds me of the process surrounding the gun control legislation where we were told that there was consultation. However, they did not heed any of the concerns that were raised. That bill was of particular concern to me because, although an area of the country was in favour of the provisions of the bill, the area that would be most affected was against the provisions. It seems to me that that is what is happening here.

In your statement you say there is agreement in only one area, and that is in the election process. The election process means nothing if the changes to be implemented by the bill are not acceptable.

There is a tendency to include all sorts of other provisions when there is agreement to the provision that provides for an elected board of directors. I appreciate that there is some dissatisfaction in the Wheat Board and that they believe that an election process will solve part of the problem. However, they know it will not solve every problem they have to deal with.

It seems to me that these concerns about time constraints and this distrust will not be dealt with in the next 30 days. Can this committee present a report supporting the provisions of this bill?

Mr. Goodale: I take it from your comments, senator, that you concede the point that there have been ample consultations. This process has gone on for nearly three years.

You also make the point that there are disagreements about the proposed legislation. It should be noted that the disagreements are on both sides of the equation. There are complaints among those who believe the legislation does not go far enough, and there are complaints among those who believe the legislation goes too far.

There is a tendency to wrap all of that together and talk about opposition to the bill. However, it is somewhat misleading to roll it all together. The solutions that would satisfy those who believe the legislation goes too far are absolutely opposite to the solutions that would satisfy those who believe the legislation does not go far enough. They are making completely opposing arguments.

In all the market research I have seen on the subject, somewhere between 5 per cent and 15 per cent of farmers would pretty much like to see the Canadian Wheat Board stay just the way it was in 1943. At the other end of the spectrum, between 5 per cent and 15 per cent would be happy if we did not have a Canadian Wheat Board.

Between those two extremes lies the middle ground. It is my view, based on all of these consultations, that we have listened painstakingly and carefully to what is being said and how it is being said. The majority of farmers would want to retain the strengths the marketing system provides but, at the same time, they want more democratization; they want more accountability; they want more disclosure, which was mentioned in the previous question; they want more flexibility; and they want more empowerment.

If there is a fundamental difference between this process and any other government process or consultative process to which you might make reference, it is that the considered views and opinions that have come forward have been heard with care. The legislation, from its first draft to now, has been amended more than 40 times to try to take into account those differing points of view.

It will not be physically possible to accommodate those on the extreme right of the spectrum and those on the extreme left of the spectrum. There is such a gulf, a chasm, between those two that no bridge could possibly be built to span the difference.

However, I believe there is a broad, cross-section of producers who do not send the faxes, who do not issue the news releases, who do not burn the bill in front of the Hotel Saskatchewan, who do not invite themselves into meetings in order to walk out so they can carry out a demonstration for the benefit of the news cameras. The vast majority of farmers do not engage in those kinds of histrionics. They are interested in a serious piece of legislation that improves their marketing system.

Frankly, this proposed legislation makes an honest, sincere and genuine attempt to accomplish that.

From the mail I receive from those who would not issue a news release but who sometimes would like to talk to the minister in private, this proposed legislation, as difficult as it is, does strike the right delicate balance in very difficult circumstances.

Senator Sparrow: Mr. Minister, you misunderstood me when you said that I suggested there had been ample consultation. I, in fact, quoted you as having said that there was enough consultation. Had there been ample consultation, this committee would not be conducting hearings.

I understand that there is extremism on both sides of any issue. We are, therefore, talking about the same special group in the centre which you say would probably represent about 80 per cent of all involved. However, as far as I can see, there is no consensus in that group. When the issues are raised, one finds that, literally, no one agrees with the bill. Everyone wants changes.

You are not alone in hearing individual concerns. I believe that all senators have been consulted by private individuals. I have certainly received letters and telephone calls from individuals who are concerned about these issues. If I could have even a sense that there was a large body of support out there for the bill as it is, and if it were a bill that required one or two minor amendments, then I would be much happier with this process.

There is no question that the wheat board has served the western farmer well for many years, but since international markets have flourished, there have been concerns about making changes to the Wheat Board, and even doing away with it.

If, after consultation, all these concerns still exist, I would conclude that the consultation has been inadequate. A consensus has not been reached. I cannot understand how the House of Commons committee reached a consensus, and our committee has certainly not reached any consensus, nor would I expect that. There is also no consensus among farm organizations that I can discern.

The time constraints put us in a bind, as it does those people who are pushing forward certain provisions of the bill. What difference will it make if we take another six months or a year?

Mr. Goodale: Senator, I am glad to hear your comments indicating that, in your view, the Canadian Wheat Board has performed very well in the past. That really is the substance of the right answer to your question about why timing is important. Delay serves those who would like to see the Canadian Wheat Board crumble.

The controversy with respect to the wheat board is a debilitating thing that gnaws away at the board on a daily basis. Until that democratization is achieved, until those new standards of accountability are implemented, until the flexibility tools are available to allow the Canadian Wheat Board to be more creative, agile and responsive in the marketplace, and until farmers have that greater sense of empowerment within their hands about the future mandate of the Canadian Wheat Board, those doubts and old problems and questions will continue to gnaw away at the board.

It is a very true observation that delay serves the interests of those who would like to do away with the Canadian Wheat Board.

Senator Sparrow: The reverse could also be true. I suppose the delay may help those in support of the Wheat Board in that it will given them time to convince the agriculture community of the value of the wheat board or the value of those provisions.

You refer to the bill having been amended 40 times. That means nothing to me. If there were 40 dumb things in it to start, there is no reason why those 40 things should not be amended.

Mr. Goodale: We rejected the dumb things, senator.

Senator Sparrow: In the gun control legislation, we were told that 385 amendments were proposed. Basically, a big basket of proposals were put forward and they threw out the ones which faced opposition.

The fact that 40 amendments were made, means nothing to me because, in the opinion of your department officials or whoever, those clauses should not have been included in the first place. Would I be correct in that?

Mr. Goodale: No.

Senator Callbeck: My first question is: Are the 10 elected directors to be elected at large or by region? I would presume that the regulations would deal with that. Could all 10 directors come from one province?

Second, is the chairman of the board to be elected by the directors or appointed by the government?

Third, if another crop, such as canola, is added, and 10 times more farmers grow wheat than canola, is it possible that, in the next election, 10 wheat farmers could be elected? If that is so, would the canola farmers feel underrepresented?

Mr. Goodale: With respect to your first question, theoretically, the 10 directors could be elected at large; however, the advice from the farm organizations is to divide the Canadian Wheat Board-designated region, which is the three prairie provinces and a portion of British Columbia, into 10 broad geographic constituencies in a similar manner to the division of electoral ridings for the purposes of general elections.

The farm groups have considered this issue of ensuring equitable distribution. Some people see the value of having directors elected at large so that everyone can vote for everyone, but that runs the risk of all the directors coming from one little corner of the Prairies and none coming from anywhere else. The common advice that I have received -- and this is how I intend to proceed unless someone has a strong contrary argument -- is to proceed on the basis of 10 geographic regions spread across the Prairies, based on a combination of population and agricultural production zones.

The chairman is to be elected by the directors themselves.

Your third question, which concerns the canola producers, I am not quite sure I understood.

Senator Callbeck: The product is not significant. Let us take the example of a group of farmers who grow only one product who are outnumbered by other farmers. Is it possible that they may not have representatives on the board?

Mr. Goodale: You could build in a rule in the regulations that would, in some way, guarantee the producers of different crops a certain minimum representation. However, given the diversity of crop production across the Prairies and crop rotation patterns, it is unlikely that that kind of bias could undermine the electoral process. This is something, though, that the committee may wish to examine.

The Chairman: If the canola growers alone were to vote on the inclusion, they, most likely, would vote not to be included, because it has been a safety net for them and a cash crop for a number of years that they have enjoyed. They are nervous about that.

Would all the wheat growers get a vote on that or only the canola growers?

Mr. Goodale: If we are speaking of the potential vote that might be taken to include a crop, only the producers of that crop would vote. They could not be outweighed by the producers of other crops because the producers of those other crops would not have a vote.

When it comes to the question of inclusion and the ultimate vote, at the bottom line only the producers of that crop would vote on whether or not to be included.

The Chairman: Who writes the question, though? This is somewhat like the Quebec issue on who writes the question.

Mr. Goodale: It must be a clear question. It may have to be expressed somewhat technically, with an explanation of what the technical terms mean.

Technically, the issue is whether something is brought within Part IV of the Canadian Wheat Board Act, which is the part of the Act that establishes the single desk. It could be that farmers will say, "We wish to be under Part III, which is pooling, without Part IV, which is the single desk." The legislation provides for that flexibility. They can say, "We want Part III but not Part IV." That means that you have a voluntary pool for canola. It could also work the other way with regard to exclusion.

Senator Sparrow: How would you determine who is a canola producer? There are big canola producers and there is the canola producer who produces a quarter section every third year in the areas where the production is questionable.

Mr. Goodale: There are precedents that we can consider. Twenty years ago there was a rape seed vote where there were definitions of "producer" that were generally thought of at that time to be satisfactory. Obviously, the canola industry has blossomed significantly in the last 20 years.

When we conducted the barley vote one year ago, there seemed to be a fairly broad consensus that the definition of "producer" was anyone who had produced barley at least once in the last five years. There was a debate about whether it should be three years or five years. However, that kind of definition appeared to be satisfactory. There are those precedents.

We would not wish to have this kind of detail nailed down in the legislation; it should be left to regulations. However, if this committee has good technical advice to offer on how to define "producer," that would be a useful contribution.

Senator Fairbairn: We are about to launch ourselves into public hearings here and out west. It would be helpful to the committee if you would bring us up to date with the discussions surrounding the inclusion-exclusion clause, particularly the inclusion clause. Rightly or wrongly, it has become a flash point in the discussion, and it would be helpful for us to know your views and what, presumably, was in the minds of those in the other place towards the end of your debate. Obviously, we will hear from all sorts of people with all sorts of ideas on this, but it would be useful to know your views.

Mr. Goodale: This is a matter of sufficient technicality that I would be happy to provide the Senate with a complete written explanation of the issues pertaining to inclusion and exclusion.

The Canadian Wheat Board Act provides virtually no rules in terms of how the future mandate of the Canadian Wheat Board may or may not be changed. The law is either silent or confusing. It is certainly not clear.

As a matter of public policy, we thought it was important to clarify that situation -- not to say that a particular crop should be in or out, but to say clearly that, if farmers want a crop to be in or out, what steps must be taken to accomplish that.

The bill provides a procedure for excluding things that are presently within the Canadian Wheat Board's jurisdiction. As a matter of fairness, it also provides a procedure for including in the Wheat Board's jurisdiction things that are not already there. The bill goes to some pains to lay it out in detail and, in every case, at the bottom line, to leave the decision-making authority in the hands of farmers themselves. It is neither a government nor a wheat board decision; it is the farmers' decision. That is fundamental to both inclusion and exclusion.

Toward the end of the debate in the house, after consultation with, particularly, canola producers, the point was made -- to go back to an earlier discussion here about the United States -- that the Americans go after us on wheat and barley for no good reason, just because it is politically popular on the other side of the border. They do not have a correct reason for doing it; they have a political reason for doing it. The canola producers were concerned that, if there was this potential identification between them and the Canadian Wheat Board, they might be subject to the same trade harassment. For no legal, economic or trade policy reason they could find themselves vulnerable to that kind of attack from the U.S. side of the border.

In recognition of their position, and because of the way they presented themselves, which was in a very thoughtful, constructive manner, I made the offer at the end of the debate in the other place that we could take out all the detail about inclusion and exclusion if we simply enshrined in the law the simple principle that no minister responsible for the Canadian Wheat Board could, in future, tinker with the mandate of the board without first having conducted a democratic vote among the producers who would be affected.

Senator Whelan: That was done without consultation.

Mr. Goodale: That was done without consultation, yes. The principle here, senator, is not that someone should not at some future date change the mandate of the board, but if you are going to do it, then, as a first principle, you should ask farmers, through a vote, whether that is what they want. That is the fundamental principle.

It may be that Bill C-4 includes too much detail on that point, by laying out all these technical steps. The fundamental point that I would like to see in the law is that farmers have the whip hand and they -- not a bureaucrat, not an administrator, not the wheat board, not the politicians -- will decide whether the mandate of the Canadian Wheat Board should change.

I would be glad to provide further elaboration on all of this to your committee, because I know this point of exclusion and inclusion is a important one and that you are likely to want to consider it in detail.

The Chairman: You will know, Mr. Minister, that there is a lot of frustration on this subject, to the point where the question is why it was ever considered at this time. It is probably more difficult for the wheat board because it is there. By your own admission, the democratic process is important, so the democratic process could be applied to a vote of farmers to include it at any time, without it even being in this bill.

Mr. Goodale: I think I am in trouble. I am referring to the vote, not to your questions. In the past, Mr. Chairman, there have been votes, with respect to rape seed, for example, and on other occasions with respect to barley and with respect to oats. In one case, with respect to barley, there was not a vote. Farmers want to know that they control the situation, not someone else.

Senator Fairbairn: Can we assume there is a certain openness of mind here to future discussion on this issue?

Mr. Goodale: On this issue, yes.

Senator Whelan: It would make life a lot easier for some of us if you would answer the questions sent to you in November by the chairman of the advisory board.

Mr. Goodale: I am preparing a detailed response to his letter, Mr. Chairman, because, over time, the questions have changed. I have been trying to catch up to his correspondence.

Senator Whelan: Would you send me a copy of your response?

Mr. Goodale: I most certainly will.

The Chairman: Thank you for appearing before our committee. It is obvious that we will have more questions for you at some later date.

Mr. Goodale: I look forward to that.

The committee adjourned.