AGRI Committee Meeting

STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, October 28, 1997

• 0916

[English]

The Chairman (Mr. Joe McGuire (Egmont, Lib.)): I call the meeting to order.

[Editor's Note: Technical difficulty]

The Chairman: We have witnesses this morning from the Keystone Agricultural Producers, the Saskatchewan Association of Rural Municipalities, and the Wild Rose Agricultural Producers. The format is a 10-minute-or-less presentation from the witnesses, and then we'll go immediately to questions. We have until 10.45 a.m. to deal with any concerns you have, or the committee members have.

Maybe we should begin as you're listed in the agenda. Could you perhaps introduce yourselves, from the Keystone Agricultural Producers?

Mr. Leslie Jacobson (President, Keystone Agricultural Producers): Thank you very much, Mr. Chairman. My name is Leslie Jacobson. I'm the president of Keystone Agricultural Producers. This morning I have with me Mr. Yves Ruel from the Canadian Federation of Agriculture.

I'd like to thank you for the opportunity this morning to make comments on Bill C-4 concerning the amendments to the Canadian Wheat Board Act.

I thank you, on behalf of our 7,000 producer members—which are actually units that we're representing in Manitoba—of the Keystone Agricultural Producers in Manitoba, for the opportunity to discuss these amendments to the agency that plays a key role in our livelihoods.

We would start by commending the government for taking the initiative to propose these changes to the Canadian Wheat Board. Our producers are for the most part supporters of the Canadian Wheat Board concept. However, it has become increasingly clear over the past number of years that the act needed to be revised to reflect a producer concern over accountability.

We believe the amendments being proposed in Bill C-4 are a commendable beginning to creating a Canadian Wheat Board that will be effective into the next millennium. I would like to proceed by giving you some suggestions in relation to a number of the proposed amendments.

Director elections: we agree with the proposal for the 10 elected members on the board of directors, and while we wish to see a democratic process that ensures a fair distribution of representation from across the prairies, we do not necessarily feel that the representation on the board needs to reflect provincial boundaries.

For example, we feel an acceptable distribution would be two directors from within Manitoba, and one who would represent a geographic region that spans the Manitoba-Saskatchewan border. We do, however, believe that the electoral regions must be defined and must have specific candidates for election, rather than an at-large process.

• 0920

In reference to the four appointed directors, we again feel the process should reflect a fair distribution of representation across the prairies. It is important to clarify that we believe the position of president and CEO should not be considered one of these four appointed positions, and in fact should not be a member of the board of directors.

Terms of office: KAP believes that the term of office of the elected directors should be four years. In order to establish a staggered election process, one-half of the ten members of the board should be elected for a two-year term initially, and the other half for four years, with all terms lasting four years thereafter. We believe that a four-year term and a staggered election process are important to facilitate continuity and consistency among the directors. We would also suggest that directors be allowed to serve a maximum of two four-year terms, with two years added to the maximum for those directors elected in the initial two-year term positions.

Qualifications of voters: The producers eligible to vote for the Canadian Wheat Board directors should be Canadian Wheat Board permit book holders, should hold Canadian citizenship or landed immigrant status, and should be Canadian residents.

Qualification of candidates: A candidate for election to the position of Canadian Wheat Board director should be actively involved in primary agriculture production, and should be a Canadian Wheat Board permit book holder.

We believe there should be a conflict of interest clause, and that a set of conflict of interest guidelines must be established that applies to all directors, whether appointed or elected. Perhaps conflict of interest concerns could be alleviated by putting all directors on a retainer with the Canadian Wheat Board, which would preclude them from acting on behalf of any organizations whose interests could conflict with those of the wheat board.

Conditions of candidacy: Candidates for election should be at least 18 years of age, bondable, and of sound moral character.

Nomination procedure: We suggest that valid nomination papers should be signed by a minimum of 50 Canadian Wheat Board permit book holders, which suggests a reasonable base of support for the candidacy.

Timing of election: In light of the loss of time in making these changes due to last spring's election, it is crucial that the government proceed as quickly as possible to implement these amendments. Our suggestion would be to have elections take place immediately following royal assent to Bill C-4.

Process: We would agree that at this point in time the election process and call should be overseen by the Minister responsible for the Canadian Wheat Board. Currently, we believe that the election procedure should allow one vote for each producer.

We recognize that there are some philosophical jurisdictional differences, but because of the criteria that we need, this process needs to be kept relatively simple at this stage, and “one person, one vote” fits these criteria.

Prior to the elections, we feel it is important to put campaign spending guidelines and procedures into place. There should be consideration given to ways of limiting third-party campaigning, as well as some means of restricting negative campaigning. It would be in the best interests to keep the process simple and to declare the candidate who receives the most votes to be the director elected.

Chief executive officer: While we feel that in the long term, ministerial appointment of the CEO of the Canadian Wheat Board may not be in the best interests of our members, we recognize the need at this initial stage in the process for ministerial involvement. We therefore agree that in the short term ministerial appointment of the CEO would be acceptable. We feel it is critical, however, that the CEO be responsible and answerable to the board of directors of the Canadian Wheat Board, and we emphasize the importance of this point. We do not agree with the amendment that allows that “The President holds office during pleasure for the term that the Governor in Council may determine.” It is key that the CEO be responsible to the board of directors.

• 0925

Contingency fund: Keystone Agricultural Producers regard the contingency fund as a reserve fund, to be established by the Canadian Wheat Board board of directors and to be used for the development of Canadian Wheat Board activities identified as priorities by the board. We feel the creation, control, operation, and disbursement of the fund should be under the authority of the board. We maintain that any reference to the profits gained through any activities of the Canadian Wheat Board being directed to the Receiver General for the consolidated revenue fund be deleted from the bill.

The inclusion clause: in light of the fact that the minister has described this legislation as enabling legislation, we agree with the addition of the inclusion clause, which allows for other grains to be included under Canadian Wheat Board jurisdiction. We believe the representative group requesting inclusion should be the single largest group directly affected by the move from a freely traded commodity to a commodity under the jurisdiction of the Canadian Wheat Board and that such a move can only be made following a positive vote by producers of the commodity affected. Both the inclusion and exclusion clauses must have clear processes.

We feel another clause should be added to this bill, where there is Canadian Wheat Board responsibility to the board of directors, which is responsible to the producers. KAP believes the Canadian Wheat Board is an agency of the western Canadian grain producers themselves and, as such, the Canadian Wheat Board has an obligation and a duty to always act in the best interest of farmers of western Canada, whom it serves.

In conclusion, we submit that the wheat board needs the flexibility and mandate to respond to the changes in the economic environment in which it operates, whether those be in production capacity, technology, or trends in world trade restrictions and its opportunities, or any other force that has impact on the board's functions.

With flexibility, a continuing focus on sound business policies, and these changes that presently address accountability, we believe the Canadian Wheat Board can be an effective marketing tool for us in the future. We believe the Canadian Wheat Board Act should be a living document and that we cannot close the door to future improvements once we have accepted these amendments.

Thank you very much.

The Chairman: Thank you, Mr. Jacobson.

Next is Mr. Harrison, from the Saskatchewan Association of Rural Municipalities.

Mr. Sinclair Harrison (President, Saskatchewan Association of Rural Municipalities): Thank you. I have with me Ron Gleim, a director with Saskatchewan Association of Rural Municipalities. We're very glad to have been invited.

I might pass on that I thought I might get charged with indecent exposure this morning. My suitcase was lost on the way down, but fortunately it showed up during the night, so we had the proper attire to come here this morning.

SARM has long been a supporter of the Canadian Wheat Board, but we have had a chance to review some of these amendments with our members. Certainly they feel it's time there is some change. One of the major changes that our people want to see is a producer-elected board, so we are very supportive of that.

We have keyed in on three or four things that we still feel need to be addressed.

Looking at governance, Bill C-4 goes a long way to ensure that farmers have control over the Canadian Wheat Board. Previous drafts of the bill to amend the Canadian Wheat Board Act did not specify that the new board of directors be composed of a majority of elected producers. In a previous draft the chairperson of the board of directors was to be designated by the governor in council. Bill C-4 has addressed both of these issues. Bill C-4 is a definite improvement over earlier versions of the bill.

It still doesn't go far enough in allowing producers to have a completely clear voice in determining the future direction of the Canadian Wheat Board. The board of directors must have the ability to appoint the CEO of the Canadian Wheat Board, referred to in Bill C-4 as the president and CEO. The CEO will be responsible for the daily operations of the Canadian Wheat Board. This is a very important position. It is vital that the board of directors, who will ultimately be accountable for the operations of the Canadian Wheat Board, have the ability to choose the person they feel is best suited for the job.

Bill C-4 outlines a system of governance where the CEO will sit as an equal member of the board. This is an unusual situation. The CEO sitting as a member of the board will have more knowledge than the rest of the board regarding day-to-day operations and will have control over what information is presented to the rest of the board. This could give him or her the ability to steer the board in a particular direction. It will be awkward for the CEO to take direction from his or her equals on the board, especially in cases where the majority of the members of the board are in disagreement with the CEO.

This method of governing the Canadian Wheat Board does not seem workable or sustainable in the long run.

• 0930

[Translation]

Mr. Jean-Guy Chrétien (Frontenac—Mégantic, BQ): Point of order, Mr. Chair. Would you be kind enough to ask the witnesses to slow down a bit? The interpreters can't keep up.

[English]

Mr. Rick Borotsik (Brandon—Souris, PC): You're speaking too fast for the translation.

Mr. Sinclair Harrison: We like to get things done in a hurry on the prairies, but we'll slow down a gear.

Because the CEO will be appointed by the governor in council rather than selected by the board of directors, this solution leads much of the actual governance of the Canadian Wheat Board in the hands of the government rather than passing it on to farmers. A more workable and typical solution to the governance issue would be a situation where the board of directors appoints the CEO, who reports directly to the board and does not sit as an equal member of the board.

The CEO would be responsible for the day-to-day operations and would take long-term directions entirely from the board of directors. If the CEO fails to carry out the directions specified by the board, the board would be free to replace him or her. This structure would resemble that of the Ontario Wheat Producers' Marketing Board, whereby an elected board of directors is free to select a general manager of their choice. The governance structure we have described would more closely resemble that of most corporations and would put more control in the hands of the elected board.

The Canadian Wheat Board is under attack from many farmers and producer groups. One way to end this attack and make the Canadian Wheat Board more credible in the eyes of the farmers is to give the farmers a legitimate and clear voice in the management of the Canadian Wheat Board. This can be done by having a board of directors, with a majority of elected producers, choose the chairman of the board and the CEO.

SARM would also like to see subclause 3.02(2) removed from Bill C-4. This clause stipulates that the directors may hold office for more than three terms of three years each. It is our view that there should be no maximum number of terms imposed upon the service of a director. If a director is serving his or her constituents effectively, he or she should be allowed to serve accordingly. This is part of the democratic process.

We are relieved to see a deadline for the establishment of the board of directors, which is set out in the bill as no later than December 31, 1998. This will give government a definite target to work toward and also allow for an earlier introduction of the new board. We would like to see the new board in place as quickly as possible.

Mr. Ron Gleim (Director (Saskatchewan Association of Rural Municipalities): I'm going to talk a little bit about flexibility in the contingency fund. I'll try to do it a little more slowly.

The legislation is very enabling, and we're glad to see that. It has the ability to make several changes that we think the Canadian Wheat Board needs. Areas in which they will have more flexibility, and which we agree with, are cash buying, borrowing and investing, and excluding or including crops from the Canadian Wheat Board mandate. As Sinc has said, we have faith in the democratic system and believe the new board will make the most of these opportunities and will use them when and where it's appropriate.

One area we do have a concern with is clause 17. It does change the definition of the pooling period. It changes it from exactly one year to any period within one year. I believe by changing the definition of the pooling period, farmers will pick and choose which pooling period they may want to be in. How many pooling periods will there be? Nobody knows. The board will have to figure it out. In times of uncertainty all farmers will be forced to guess which pool will be more profitable to them. We're not sure that clause 17 shouldn't be looked at again.

Our concern with the contingency fund is that it is to be an amount specified by regulation, and I guess that would be by the government. We think the board should have control of the contingency fund, if there is to be one.

With respect to using the contingency fund to guarantee adjustments in initial payment, while the federal government will be guaranteeing the initial price, we feel it eventually may result in a pattern of our ending up with low initial payments and a need for more frequent adjustment payments, even more so than we've seen in the past. This could also mean that the contingency fund may be used to guarantee more funds than it was initially intended to guarantee. So while I guess we say that a contingency fund may serve a purpose, we're not sure that the government should be setting how much it should be.

• 0935

Something else to look at is that there will also be pressure to use this contingency fund for maybe other things. Looking at Australia, they use it in the value-added industry. There could be some good points to a contingency fund.

In conclusion, while some groups will make submissions to tear the wheat board down, we would like to keep the integrity of the Canadian Wheat Board and maintain its fundamental principles. As times are changing, so must the wheat board.

As for a major revision to the wheat board, as I think I said, the governance structure has to be looked at. We believe that the introduction of enabling clauses is necessary and that if farmers are to accept the Canadian Wheat Board some of these changes must occur.

So with changes to this bill to allow the CEO to be appointed by the board and report directly to the board and with the reconsideration of the contingency fund, we believe that the Canadian Wheat Board will continue to be effective for Canadian farmers over quite a few years.

Here are some of the things we think the Canadian Wheat Board can look at. One is the logistics from the farm gate to the vessel. We believe that enabling legislation will do that. It looks at buying grain on the farm. We hope that some day they may be able to bid it to port and create competition in the grain handling industry, which is something that has been lacking for many years.

Thank you very much.

The Chairman: Thank you, sir.

Mr. Wagstaff from Wild Rose.

Mr. Neil Wagstaff (Second Vice-President, Wild Rose Agricultural Producers): I'm the second vice-president of Wild Rose Agricultural Producers. I'm a grain farmer from central Alberta. I'd like to begin by thanking the members of the committee for allowing us, on behalf of our members, to make this presentation.

This bill has the potential to fundamentally alter the method by which grain is sold in western Canada. Of course that's a very simplistic evaluation, but the fact remains that this bill has an impact on nearly every farmer and rancher in western Canada, and probably businesses as well.

Our association strives to create an atmosphere of co-operation and communication to ensure that areas of common concern among all producers are dealt with to the benefit of agriculture as a whole.

Wild Rose Agricultural Producers is Alberta's largest producer-funded general farm organization. It has a membership that's growing.

When Bill C-72 was introduced in the preceding Parliament, Wild Rose made a presentation to the standing committee in Calgary. Many of our concerns with that bill are echoed in this presentation today concerning Bill C-4.

The Canadian Wheat Board should be governed by a method that begins at the farm level. The election of 10 directors is one method of partially achieving this goal, but in our opinion, it's not as effective as it could be, and it creates myriad problems surrounding an election.

For a long time, Wild Rose has been proposing that an effective and democratic system of electing a board of directors to the Canadian Wheat Board would be through a delegate body. To date, this approach has not received the attention it warrants. We strongly urge that a delegate body structure be adopted as an alternative.

Delegates would be elected in districts or areas to be determined in the prairie provinces. Producers would have better access to information as to who would be the best candidates for these important positions. Another benefit of a delegate body would be the two-way communication that could take place between producers and the board of directors.

How this might work is that the delegates would hold an annual meeting, at which time they would elect a board of directors from among the delegates. This would function on a basis that's very similar to how a number of large co-operatives have successfully operated for many years in western Canada.

In our opinion, this method is able to best represent regional differences while at the same time allowing for majority opinion. We also believe that it could go a long way to bridging the gap between the pro- and the anti-Canadian Wheat Board forces.

• 0940

With regard to the elected directors, a number of items should be clarified.

Geographical distribution: It's our belief that there needs to be some type of assurance that there be some degree of geographic distribution of the directors, both appointed and elected. Candidates seeking election should be a resident of the district or area in which they are seeking election.

Candidate qualification: Though not spelled out in Bill C-4, we believe that any candidate seeking election should possess a valid Canadian Wheat Board permit book and be an active producer at the time of the election. Potential candidates should be disqualified from seeking election if they're involved in a legal action against or with the Canadian Wheat Board, or if they're employed with, receiving funds from or sitting as a member at large or volunteer director of a company in the grain industry.

Furthermore, consideration should be given to excluding members of the executive of commodity groups whose commodity is represented by the board. There are also a number of conditions of candidacy that will have to be in place in order to run an election that will result in a truly producer-represented board of directors.

I don't think time really permits me at this moment to discuss a number of other concerns we have with the election process. We can maybe get into that in discussion.

There are a number of issues relative to the whole election process that we feel are extremely important. While Bill C-4 will make the Canadian Wheat Board more accountable to producers, the fact remains that it will continue to be under stringent government control. As such, one of our major concerns is the contingency fund.

We cannot support the concept of a producer-funded contingency fund. Historically, interim payments have never been announced until market conditions warranted an increase. Canadian grain producers have been forced to compete with the treasuries of the U.S. and the European Common Market, as they subsidize their exports. The fact is that the government is still going to provide a number of financial guarantees. To make the producer finance a contingency fund will only further add to the financial burden placed on farmers. Growing transportation and input costs and decreased levels of government support, both federally and provincially, have needlessly pushed the agricultural producer toward the brink of financial disaster. Due to the low risk involved, the federal government should continue to provide all the necessary guarantees.

With regard to cash purchases, our members have very mixed feelings on this issue. It is imperative, however, that producers in the pool not share any price increases that those who choose to cash sell would.... That's kind of a confusing comment I just made. The bottom line is that the system must not undermine price pooling. We do support the early closing of the pool, and we're talking at the final payment stage in particular. We feel that the four-month period that usually has taken place historically after the crop year to make final payments is totally unacceptable.

We support the concept of storage payments for committed grain. The rates should, however, reflect the cost borne by the producer.

There has been considerable discussion surrounding the inclusion clause. From our organization's perspective, we do not see any major problems with the proposed legislation. In fact, some members wonder why commodities other than the specified grains could not also be considered.

Inclusion adheres to our organization's belief that producers should decide how to market their product. Whether the addition of another grain to the Canadian Wheat Board's mandate ends up being a single-desk or potentially a dual marketing system should be clarified at the onset. The latter should definitely be an option. That means the dual marketing system.

• 0945

In addition, some type of electoral process should be included in the legislation regarding the inclusion clause. For example, the questions of who represents a commodity group and does 50% plus one initiate action by the Canadian Wheat Board are questions that should be answered by legislation, not left to regulations or to the judiciary, for that matter, to interpret.

We recognize that the inclusion clause has resulted in a great deal of attention, and it is our concern that not enough attention is being paid to other areas of the bill that affect producers.

While striving towards a greater influence by the producer on the Canadian Wheat Board, the legislation represents one small step. Because Bill C-4 is ambiguous in many respects, it appears to us that the regulations will have an extremely important impact. We hope Wild Rose will have an opportunity to have an input into the formulation of the regulations. One small step forward may be negated by ineffective regulations.

At this time, I'd like to thank you for the opportunity of allowing us to make our positions known to you.

The Chairman: Thank you, Mr. Wagstaff. Thank you all for your presentations.

We will go immediately to questions for the next 45 minutes, which will probably be one round. Mr. Hill.

Mr. Jay Hill (Prince George—Peace River, Ref.): Thank you, Mr. Chairman.

At the outset I'd like to thank each one of you for appearing today as well the organizations you represent for obviously providing the funds and providing you with the time to come and make your views known on this bill.

I'd also like to say at the outset, since this is our first round table, that it's unfortunate the government is speeding this bill through and we don't have the time to cross-examine you and get a full question and answer period with each one of you. Instead you're all lumped together here. That having been said, I only have seven minutes and that was at the start of when I started talking. I want to try to hit about three different areas here, so I ask you to keep your remarks very short if you possibly can.

From my position and the Reform's position, I see that the single biggest failing of this bill—and I believe Mr. Wagstaff from Wild Rose hit on it right at the end of his comments—is voluntary versus mandatory. I would be interested if you could just answer whether you believe your members support fundamentally changing the board to make it voluntary. That's not in the bill. Obviously I have the answer from Mr. Wagstaff that his members support it, but I would be interested to hear from the other two organizations because I want it on record. Do you feel your members support a voluntary versus a mandatory Canadian Wheat Board?

Mr. Leslie Jacobson: From a Manitoba perspective and Keystone Agricultural Producers, at this point in time with the type of legislation that's coming where we have enabling legislation, I think the mandatory aspect would be acceptable as long as we're able to continually look at the bill and amend it, having the board of directors being the people who are responsible and having those, like the Canadian Wheat Board itself, responsible to the producers of western Canada.

Mr. Jay Hill: So you support a mandatory board?

Mr. Leslie Jacobson: At this time, yes.

Mr. Sinclair Harrison: Every time this resolution has come to the floor of our conventions our members have supported single-desk selling, so until we get further direction that's where we're at.

Mr. Jay Hill: The second issue then—

The Chairman: Mr. Wagstaff would like to respond to that.

Mr. Jay Hill: Oh, sorry.

Mr. Neil Wagstaff: I don't want to be misinterpreted in what I said, because I'm not sure how you interpreted what I said. Certainly our members feel it should be the farmers' decision, but at the same time we have a significant number of members who strongly support single-desk selling.

Mr. Jay Hill: So you don't have a position? I assumed from your brief that your members—

Mr. Neil Wagstaff: What we're saying is that if it's a producer-controlled board, if the option is there to have ways of marketing some commodities outside of the board and the producers want that, that's the way it should be.

Mr. Jay Hill: Okay.

The subject of my second round of questions was included in some of your briefs. Presently, the way the bill is structured, the CEO and president, one person, will be appointed by the minister and hold both those positions. Do you support having the CEO not sit on the board of directors, and be appointed and held accountable to the board of directors, not to the minister?

• 0950

Mr. Leslie Jacobson: We at Keystone Agricultural Producers have mentioned in our brief that at this point the CEO could be appointed by the minister responsible, but this individual has to be responsible to, and accountable to, the board of directors of the Canadian Wheat Board.

Mr. Jay Hill: How could he be accountable if they cannot hire and fire him?

Mr. Leslie Jacobson: The question is that the minister would be able to appoint him and hire him, but the board of directors would be responsible for firing him. If he loses the confidence of the directors of the board, then the termination would be at the pleasure of the board. In effect, the CEO would have to be responsible to the board of directors.

Mr. Sinclair Harrison: If we were to prioritize our requests, the first would be that this be amended so that the CEO would be appointed by, and responsible to, the board of directors. That is the way corporations work in this country, and this should be a responsible corporation.

We just don't think it will work the way it is structured in this particular bill.

Mr. Jay Hill: Thank you.

Mr. Neil Wagstaff: I don't think that at this point our organization has a position one way or another on that issue that is clear.

Mr. Jay Hill: Some of you talked about the contingency fund as well. When I talked to farmers....

I just want to throw this in. Interestingly enough—and I'm sure you might know this—we, the critics who sit at this table for the official opposition, who are speaking on this bill from time to time, have been branded as being opposed to the Canadian Wheat Board. Interestingly enough, all of us have produced grain under the Canadian Wheat Board. Many of us continue to farm, and our families farm. I want that on the record, because I don't think the same can be said of the government side, which is levelling criticism against us for being against the wheat board. That is not true, by the way. We just want to see it reformed and made to work for all farmers.

Now that I have said that, the other issue I'd like to talk about is the contingency fund. When I talk to farmers back home, and indeed across western Canada, they view this contingency fund as simply another check-off, another tax. Since the wheat board will retain its mandatory nature, farmers won't be able to opt out, or there won't be dual marketing. They cannot choose to market elsewhere. It is a tax. If they grow and sell wheat and barley, it is going to be taken off their cheque.

Could you clarify how your members feel about this contingency fund. Would you support an amendment to remove that from the bill, yes or no?

Mr. Leslie Jacobson: This fund could be useful if it was used in a number of ways. What we're saying here this morning is that the board of directors of the Canadian Wheat Board, which will be the producers of western Canada, should have the say in the creation, control and disbursement of this fund, what it will be used for. Therefore they should have the ability to make as large or small a fund as they deem necessary.

If that is the case, that the producers themselves, who are elected to the board, have the ability to make that decision, then we are in support of this fund.

Mr. Sinclair Harrison: I might just point out that, like you, all the members of our board of directors produce grain, so we have some knowledge of what we speak about.

We don't agree with the contingency fund in its present form. Someone else has control of the limits on it; that's the government. If it were to be changed so that it was at the pleasure of the board and they could raise funds from their members to use as they saw fit, perhaps we could endorse it.

Mr. Neil Wagstaff: I think my presentation made it fairly clear that we're not in favour of the contingency fund as it is proposed. We see it as another form of downloading.

• 0955

Every farm operator in western Canada is constantly short of cash. Anything that takes a little more cash out of the cashflow availability of the farm operation just makes it that much more difficult to have a viable operation.

The Chairman: Thank you.

Mr. Chrétien.

[Translation]

Mr. Jean-Guy Chrétien: I want to thank you for having agreed to testify before the Standing Committee on Agriculture and Agri-food.

In the traditional manner, Mr. Chair, I'm going to ramble on for a bit at the start to enable our witnesses to settle in, and I would appreciate your not counting the minutes I'm wasting if at the end I run short of time.

I want to thank you, gentlemen, for agreeing to come and testify about Bill C-4 and help us, primarily the members of the opposition, gain a fuller understanding of the Bill, which contains a very important amendment involving the Canadian Wheat Board.

One benefit that isn't generally contested by the witnesses is the way in which farmers' representatives are chosen for the CWB's board of directors.

Currently they are appointed. You know better than I the people who have always represented you on the Board. The appointments are essentially what is known as political appointments, with all the advantages and disadvantages that this entails.

Now for a change the farmers would be able to control the Board. The Board is after all there for the farmers' benefit and not for itself.

The way the election is held will be very important if we want the grain producers to control the Board. The ten new members will have to be real champions of the farmer.

In the past we have heard from witnesses who told us that grain producers with very large acreages could have more votes than producers with 1,000 hectares or less. For the moment they're speaking of one farmer, one vote. You may change your minds in the future so that someone with more acreage has more votes.

Personally I have grave reservations about by-passing the democratic idea of one man, one vote. When I used to go to my co-op's meetings, there were five pork producers in the region who could buy 50 per cent of what the co-op sold. If we had applied any principle other than one man, one vote, those five producers could have taken control of the co-op. If they had taken control, it would have meant the death of the co-op, and it would have been better if they had formed a little private company.

I would like to revert to this issue of one farmer, one vote. I would even like to put a different question. There will surely be a period of campaigning before the election, given the sheer size of the Canadian Wheat Board, which does a volume of business of between six and seven billion dollars. In 1997 dollars, that's a big operation. Will election spending be limited, and will people whose names don't appear on the voters' list be forbidden to contribute to campaign funds, to prevent the Board from being taken over by groups or people with an interest in seeing it deviate from its objectives?

• 1000

Secondly, not much has been said about representation, with the exception of Mr. Jacobson of Keystone Agricultural Producers, I think, who mentioned two representatives for Manitoba and a third for the border area between Saskatchewan and Manitoba.

Last week we heard from witnesses who recommended three representatives for one province and two for the other. I don't want to be too specific about the figures, because my memory could be faulty.

Mr. Chair, I will stop here. If there is still time remaining to me after the answers, I would like to ask one further question.

[English]

The Chairman: Thank you very much.

We'll now go to Mr. Calder.

[Translation]

Mr. Jean-Guy Chrétien: Just a moment, Mr. Chair. The witnesses haven't answered my question. Was I talking in a vacuum?

[English]

The Chairman: Okay, I didn't know you were asking a question at the end.

[Translation]

Mr. Jean-Guy Chrétien: I would like some clarification, and I venture to hope that the witness will provide it if he's given a chance.

[English]

The Chairman: Okay, we have two minutes, then, to respond to Mr. Chrétien.

Mr. Leslie Jacobson: Thank you, Mr. Chairman.

I'd like to say something on the voting procedure. We have mentioned that it should be one person, one vote. The type of agriculture we have in western Canada and all across Canada means a make-up of young, middle-aged and older farmers who are all in different stages of their agricultural production. In order for a small farmer, who maybe would have a limited amount of grain that has been sold...that is his future. That is their future, from the young farmer's perspective. The middle-aged farmer would traditionally have the largest acreage and probably the largest production to sell, and the older individual may be on a declining basis.

For that reason, I think the one-producer, one-vote concept is something that has to be kept as the principle of the election process for the Canadian Wheat Board. The Canadian Wheat Board would represent the interest of every farmer in western Canada. It is imperative that the Canadian Wheat Board would represent the producers of western Canada.

Mr. Ron Gleim: I'll be short, but I agree with everything you said. Producers have to control the wheat board. It's in their best interest to get involved in this industry they pay for, and yet they have absolutely no say in how the industry runs. Every time somebody needs another dollar, they dip into our pockets.

A voice: Oh, oh.

Mr. Ron Gleim: I think this Canadian Wheat Board, with enabling legislation.... I can see a lot of things producers control with respect to that Canadian Wheat Board, a lot of things they're going to be able to do, both in logistics—from farm gate to the vessel—and maybe different ways they may be able to use that contingency fund.

So I agree with you. We could be hijacked if we don't pay attention, but there are many good things in this bill. It seems that when you get in a forum like this, everybody talks about what's wrong with it, but there are many good things about this bill also.

The Chairman: Mr. Wagstaff.

Mr. Neil Wagstaff: We need to make a slight distinction between one person, one vote, versus a permit holder. We're of the opinion that it should be a vote for each person who holds a Canadian Wheat Board permit.

Campaign funding is an area we are extremely concerned about. There's nothing in the legislation. It's going to be left strictly to the regulations.

It's an area where I think, you're right, there is that potential for hijacking. So as far as the campaign funding is concerned, something definitely needs to be done about accountability, including public reporting of campaign funding.

The Chairman: Thank you very much.

We'll now go to Mr. Calder.

Mr. Leslie Jacobson: Mr. Chairman, could I just clarify something?

The Chairman: Briefly, please.

Mr. Leslie Jacobson: Thank you. I agree wholeheartedly with Wild Rose. When we are talking one person, one vote, that means the individual needs to have, and be a holder of, the Canadian Wheat Board permit book.

The Chairman: Okay. Thank you.

Mr. Leslie Jacobson: That was just to be clear.

The Chairman: Murray.

• 1005

Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.): Thank you very much, Mr. Chairman.

I'd like to go to the inclusion-exclusion clause. As you know, in Bill C-72 we only had the inclusion clause. The question I posed last week had to do with the fact that if we had exclusion without inclusion, and somebody got out of the Canadian Wheat Board, there would be no mechanism to get back in again if they wanted back in. Ergo, that's the reason we have the inclusion clause.

But quite frankly, I think paragraph 47.1(2)(a) needs to be tightened up more than it is right now.

Last week Prairie Pools came up with an idea, and I'd like to throw this out to you with due questions. They proposed to tighten it up so it would read:

...a written request is sent to the Minister by the association which can demonstrate that it is the predominant organization which exists solely to represent the producers of that commodity in the designated area.

Therefore, a number of questions pose themselves. How would we determine who represents a producer group? What percentage would represent a majority of that producer group if in fact they wanted to start selling their commodity through the Canadian Wheat Board? Would it be 33%, 50% plus one, as Wild Rose has said, or 66%? I'd like your comments on that.

Then, Mr. Chairman, once that's finished, I'll pass to Mrs. Ur.

Mr. Leslie Jacobson: Thank you, Mr. Chairman. With respect to the wording on that clause, just from hearing it at the initial go-around, I think it would probably delineate what we were talking about. That has to be tightened up so that it includes the direction on who is the commodity group that represents that individual commodity.

As for the percentage of people in that commodity group who represent that total industry, I guess I would see 51% as a majority because of the process you would have to go through anyway. That would mean taking it to the directors of the board of the Canadian Wheat Board, then to the minister, and then back to a vote of the western producers themselves to have it accepted or rejected.

So initially what we're really talking about is just getting a process under way, and in our minds 50% plus one would probably allow that process to start. However, that was not specifically talked about by our organization back home.

Mr. Sinclair Harrison: We also have struggled with this part. I would suggest that we could support the Saskatchewan Wheat Pool suggestion that it should be tightened. Certainly some of it's going to be left in the hands of the elected board of directors, and we expect that.

Mr. Neil Wagstaff: This is an area on which we've had a lot of discussion, but we really do not have a consensus from the total organization. Certainly a number of our organization's members feel there should be a provision for other farm organizations, farm groups, other than just the commodity groups, to have an opportunity to trigger this inclusion process. There's concern about whether commodity groups really effectively represent all the producers of that commodity, versus a segment of those commodity producers.

So a number of thoughts have been thrown out, including the prospect that maybe some provision should be made to accommodate some type of a petition process of qualified producers in order to trigger it. We don't foresee this happening very often. You know, it's the kind of thing that would happen infrequently, and maybe only happen once for any particular commodity over a long period of time. But it's an area where we feel more consideration needs to be given to determine how that process could be triggered, other than just by a commodity group.

Part of the problem with commodity groups is who really represents those commodities on a prairie-wide basis, in some cases.

The Chairman: Could you go into that a little further? That commodity group—

Mr. Neil Wagstaff: Let's use rye as an example. Who would represent rye as a commodity in western Canada? There isn't an organization that exists at this point.

• 1010

The Chairman: Mrs. Ur.

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.): Thank you, Mr. Chair.

The Saskatchewan Association of Rural Municipalities stated that they had a concern with the board, stating that the board should appoint a president and CEO in consultation with the minister. It is my understanding that Bill C-4 states that the government could not appoint the president without first consulting the board members, ten of which are elected farmers to that board. It also states that the board of directors should have the authority to set the salary of the president and CEO, and regularly review their performance and recommend their dismissal, if necessary.

So do you not believe that, with that, there is sufficient direction for the board to address the concerns, whether the CEO or president is actually acting efficiently on behalf of the Canadian Wheat Board and the farmers?

Mr. Sinclair Harrison: Well, I guess the operative word there is “consult.” When someone can consult with you, you may not agree with them, but they can go ahead and do whatever they want anyway. We can give you several examples of that.

As an association we're consulted on several issues both provincially and federally. But we can tell them, no, that's not the way it should be, just as we're telling you your consulting limits here today. You'll go ahead and do what's not right.

Mrs. Rose-Marie Ur: Does anyone else wish to answer? I'll address that statement to them.

The Chairman: Okay.

Mrs. Rose-Marie Ur: Keystone?

Mr. Leslie Jacobson: We were fairly clear in what we were saying. At this time we could accept that the minister responsible could appoint the president and CEO, but it's imperative that the board of directors be the entity responsible for this individual.

I mean, they have to have control. If they lose confidence in this individual, they have to be able to terminate the contract.

Mrs. Rose-Marie Ur: I do believe that as a board they do have the authority to set the salary. I'm sure that if that president or CEO is not working efficiently, there could be dollar ramifications for that salary, for that particular position.

Another question—

Mr. Leslie Jacobson: He may wish to work for a dollar.

Mrs. Rose-Marie Ur: Exactly.

The Chairman: Your time is up.

Mrs. Rose-Marie Ur: Okay. Next round.

Mr. Dick Proctor (Palliser, NDP): Thank you, Mr. Chair.

To start with, my question is for the SARM representatives here this morning. In your brief, I believe it's clear that you don't like the contingency fund, but I didn't read an alternative proposal for it in your brief, or I don't think I've heard one this morning. So I wonder if we could probe a little bit in that area. I wonder if there are some alternatives.

Our caucus, too, is concerned about this contingency fund, for some of the reasons I think Mr. Wagstaff touched on this morning. I just wondered if you could elaborate on that whole area.

Mr. Sinclair Harrison: Well, perhaps in answering the question we referred to regulations, and sometimes the devil is in the detail. Generally the detail is in the regulations.

So suggesting that the limits are left to the regulation.... We would suggest that the limits should be set by the board of directors, and the use of that fund should be set by the board of directors. If such changes could be considered in the bill, then we could live with it.

Mr. Dick Proctor: Do you have any sense of what a viable contingency fund might be?

Mr. Sinclair Harrison: Well, there again, if the federal government chooses to set the initial prices extremely low, and lets the farmers in the contingency fund pick up all the risk, then we would have a lot of exposure, and you'd need billions of dollars in your fund to cover the exposure if you wanted to be fair with the producers.

Again, not knowing the details of what that contingency fund is to cover, we are somewhat nervous about endorsing it at this point.

Mr. Dick Proctor: Would you have a problem, say, if we were able to get some changes so that the Government of Canada could backstop the initial price, or in fact establish the contingency fund so it wasn't a check-off for farmers? Would your organization have any difficulty with that?

Mr. Sinclair Harrison: Certainly we're prepared to sit down with the federal government and explore this further, but we are continually being downloaded upon.

Since we are the first level of government, we end up with nowhere to go but to the producers. So we're getting a little tired of being downloaded on, and this is just another form of it.

Mr. Dick Proctor: Mr. Chair, I have a question for Mr. Jacobson from Keystone.

• 1015

You were very forthright in your comments this morning with regard to the notion of one vote for each producer. We believe that to be the case as well. You used words like “at this point in time”, “one vote for each producer”, and “at this stage”. I wonder if there is some disagreement, or if you see that down the road this may not be viable. Could I get your thoughts on that, please?

Mr. Leslie Jacobson: Thank you, Mr. Chairman. The reason that option is in there is that it was talked about by our committee. Some of this has been done. As for the barley vote, there were questions on this previously. We wanted to define a clear, simple process. If there is any deviation, it should be well discussed down the road. We have absolutely no policy at this time other than one person, one vote.

Mr. Dick Proctor: Thank you.

The Chairman: Thank you. Mr. Borotsik.

Mr. Rick Borotsik: Thank you, Mr. Chairman.

I know most of the gentlemen at the table. Thank you for being here. Again, five minutes is very short, so I will ask very succinct questions for succinct answers. Mr. Chairman, I am very happy that Mr. Harrison did find his clothes; however, I'm very pleased that... [Editor's Note: Inaudible]

I'd like to ask a couple of questions very quickly for very succinct answers. Would your organizations like to see a CEO appointed by the board, yes or no? KAP?

Mr. Leslie Jacobson: Yes.

Mr. Rick Borotsik: Wild Rose, I know you said you hadn't talked about it, but can you speak to it?

Mr. Neil Wagstaff: I believe so, yes, but I can't say that on behalf of my organization. But my judgment would be yes.

Mr. Rick Borotsik: A CEO appointed by the board.

You talked very little about the board itself. Currently, as you are well aware, the make-up will be ten elected board members from producers, and five appointed by government. Would you prefer to see a total board elected by producers? KAP?

Mr. Leslie Jacobson: Ultimately, yes.

Mr. Rick Borotsik: SARM?

Mr. Sinclair Harrison: As long as we're expecting some government guarantees, I think it's reasonable that they have some influence over the decision. And as long as they don't have a majority, and as long as we're living in a democracy, we still should have control.

Mr. Rick Borotsik: Okay, so 15 members of the board should be producers?

Mr. Sinclair Harrison: No, I would still suggest that we have to be reasonable with the government, whoever it is. If we're expecting some government guarantees, as we do on the initial prices, it's reasonable that they are there.

Mr. Rick Borotsik: So you wish to have five appointed by government, then?

Mr. Sinclair Harrison: Being reasonable people, we think that's a reasonable split.

Mr. Rick Borotsik: Wild Rose?

Mr. Neil Wagstaff: Ideally, if the Canadian Wheat Board was totally independent of government, then it should be controlled primarily by the producers.

I'm in agreement with the Saskatchewan municipal people—and our organization would be—that as long as we do expect to have the government looking after the contingency fund they should have some representation on that board.

Mr. Rick Borotsik: That's my next question with respect to government guarantees. Have you in your organizations discussed the long-term ramifications of the contingency fund? Do you believe that ultimately the contingency fund will be the initial payments guarantee? KAP?

Mr. Leslie Jacobson: It's the edge of the slippery slope. If you're going to have any government involvement, it is reasonable to have a percentage of people appointed.

Mr. Rick Borotsik: So my question is, does your association believe that in fact this is the thin edge of the wedge and that the contingency plan could in fact become all the guarantees, including the initial payment guarantees?

Mr. Leslie Jacobson: The coffee shop talk is yes.

Mr. Rick Borotsik: Thank you. SARM?

Mr. Sinclair Harrison: Well, we don't base our decisions on coffee shop—

Mr. Rick Borotsik: Yes, you do.

Mr. Sinclair Harrison: But anyway—

Mr. Rick Borotsik: Yes, you do!

A witness: We do?

Mr. Sinclair Harrison: No, we go to conventions.

Voices: Oh, oh.

Mr. Sinclair Harrison: It has the potential. It appears we're moving in that direction. When we look around the world, Australia has moved in that direction.

Mr. Rick Borotsik: Thank you. Wild Rose.

Mr. Neil Wagstaff: I kind of lost the question, but if it is relative to the contingency fund—

A voice: It's not.

Mr. Rick Borotsik: The question is...and I appreciate that it's something you have to look at beyond what's in the legislation. Do your members feel that the contingency fund ultimately could become the guarantee for everything, including initial payments as well as adjustments?

• 1020

Mr. Neil Wagstaff: Would we prefer to see it that way or is it likely to happen?

Mr. Rick Borotsik: No, not prefer. Is it likely to happen?

Mr. Neil Wagstaff: We can see the likelihood of trends slowly becoming that way, and perhaps there isn't anything that wrong with it as long as the farmers are in control.

Mr. Rick Borotsik: Exactly. That's what I was getting to.

In the inclusion clause and in KAP's presentation it says that the single largest group directly affected by the move...by the way, I have real problems with this one because I don't know who is going to represent that particular commodity. We all have exercised our opinions on that.

Is the single largest group based on numbers or is it based on the volume of the commodity? Is it the number of producers who are going to come forward and say we represent this number of producers and therefore we're the representative in the commodity, or is it in the volume of the commodity that you're suggesting the largest number should be?

Mr. Leslie Jacobson: We haven't really discussed that. We know this is an area that has to be tightened up. We recognized it. Our members have not given us a clear direction. I assume it would be individuals.

Mr. Rick Borotsik: If it was going to have an inclusion of another commodity, let's say canola, would your organization wish to have it as single-desk selling? If canola was to be added to the board, would your organization suggest single-desk as opposed to dual marketing?

Mr. Leslie Jacobson: Our members have not been polled on that issue.

Mr. Sinclair Harrison: You have three general purpose organizations before you this morning.

Mr. Rick Borotsik: You're municipally elected officials. I appreciate that.

Mr. Sinclair Harrison: And we're not a commodity group. I would suggest that if commodity groups feel they would like their commodity on a board they should come and speak with us. If they can garner the support of some general purpose organizations such as the three you see here, it's going to strengthen their case and that should be taken into consideration.

Mr. Rick Borotsik: We talked about canola, flax, rye, oats. Should potatoes be in single-desk selling? KAP? We're very big on potatoes in Manitoba now.

Mr. Leslie Jacobson: Currently there are only six major grains in the Canadian Wheat Board, so I assume that what we're talking about here is the six major grains.

Mr. Rick Borotsik: Actually there are only two on the Canadian Wheat Board right now. Let's not say that there are six majors. There are only two being controlled by the board.

Mr. Leslie Jacobson: But they could have jurisdiction over—

Mr. Rick Borotsik: Should potatoes be on a single desk?

Mr. Leslie Jacobson: We only talked about the potential for six.

The Chairman: The time has expired for that question. We have to go to Mr. Coderre.

[Translation]

Mr. Denis Coderre (Bourassa, Lib.): I would like to start by thanking you for coming here today. Unlike my opposition colleagues, I think we are seeing at this round table not only that you're prepared to show flexibility but also that you have some views in common and are aware of how important it is to have a broad perspective.

As an MP from the province of Quebec, I'm interested in the question of selecting a president. Must he or she be a member of the board of directors or not?

We're talking here about balances and counterbalances. We want on the one hand to satisfy the producers, the farmers, and we should all be working to promote the farmers' best interests. On the other hand, given that the government is guaranteeing production in the amount of six to seven billion dollars, don't you think it may be important, in the context of balances and counterbalances, to have someone involved who represents the taxpayer? And in the circumstances, isn't the best person the president? And for that reason, shouldn't he or she be appointed by the government rather than chosen by the members of the board of directors?

[English]

The Chairman: Mr. Jacobson.

Mr. Leslie Jacobson: Thank you very much. We were very clear in the fact that at the present time, with having the government guaranteeing the initial prices, there is a responsibility to the taxpayer, as you have mentioned. We have accepted that and we are saying that the Minister responsible for the Canadian Wheat Board should have the ability to appoint the CEO. However, once the individual is there he has to be responsible to the board of directors.

• 1025

Mr. Sinclair Harrison: We dealt with this in our brief. Nothing you said will change our minds; we just don't feel it will work in its present form. If you insist on doing this, it will be obvious that you don't want producers to have control of the Canadian Wheat Board. You still want to have your finger in there and to manipulate it. If you can appoint five out of the fifteen directors on the board, we feel that's reasonable and we want a reasonable federal government. Having the federal government appoint the CEO is not reasonable. It's not what the corporate community does and it's not the accepted way we do business in Canada.

Mr. Neil Wagstaff: I think we have to look at the area of government guarantees and what the government's really guaranteeing. I think the need for that guarantee has only been utilized twice in the history of the Canadian Wheat Board. So as long as the Canadian Wheat Board is well managed, the risk is minimal. I don't know if we have an opinion as to whether the CEO should be appointed by the government or the board of directors, or who they should be responsible to. We feel they should be responsible to the board and to the farmers.

[Translation]

Mr. Denis Coderre: Given that the producers have ten members to represent them, or two-thirds of the board, which is a sizable majority, there should be a counterweight, to achieve a balance.

I would like to remind you of the CWB's role, whether in making cash purchases or in any other tool that can be used to control or more effectively prevent disasters.

We have to bear in mind that we're talking about six or seven billion dollars. The government must have a role to play. It can't manipulate the Board as long as you actually control it, and the producers will control it to a much greater extent than the government. I would like Mr. Harrison to reply.

[English]

Mr. Sinclair Harrison: You're taking exception to what I say. Is that your question?

Mr. Denis Coderre: No, what I'm saying is that because you have 10 out of 15 who are members from the producers, and considering that we have.... As a board you can determine such initiatives as cash purchasing, length of pool periods and other risk management tools. So you control the board in a way. The government itself doesn't manipulate because we nominate the CEO. It's a matter of counterbalancing, of having a representative of all the taxpayers. But you control the board. So I don't see why you don't want to see the CEO named by the government.

Mr. Sinclair Harrison: As I pointed out before, it's not the standard way of doing business. Obviously the federal government doesn't want to do business the way we do business in the rest of Canada.

Mr. Denis Coderre: But it's a special business.

Mr. Sinclair Harrison: You have backed out of areas where it's convenient for you to back out of, like the Crow benefit and like things like that. You back out where it's convenient, and where you think it's convenient to interfere, you want to have interference. And we see this as interference in something that is our livelihood.

Certainly the federal government should have and will have an influence with their five directors, and that's sufficient.

The Chairman: That's enough. Let me go on to Mr. Benoit.

Mr. Leon E. Benoit (Lakeland, Ref.): Thank you, Mr. Chairman.

Welcome, gentlemen. I have limited time as well. If you could keep your answers short, I'd appreciate it.

The first question I'd like to get at is probably the most important issue surrounding the wheat board, and that's the issue of maintaining the board monopoly versus the voluntary board. This legislation doesn't deal with that issue at all. Do you think this legislation may actually fuel the debate over the monopoly versus voluntary board even more than has been the case and raise this feud in our agricultural community?

We'll start with Mr. Jacobson.

Mr. Jacobson: Thank you. I think the review of the Canadian Wheat Board Act has been long overdue. We've been hearing about the rumblings in western Canada for for a long time now. I think what we're doing here is starting a process. In the presentation I concluded that if the Canadian Wheat Board Act becomes a living document that we can go back to and look at, making sure it will be the entity we want and need for the next millennium, then I think it can be something the producers of western Canada will look at and endorse as their marketing tool.

• 1030

Mr. Leon E. Benoit: It's been very difficult to get a government to deal with the Canadian Wheat Board, though, through legislation. Governments just don't seem to want to touch meaningful change, so do you really believe that governments will come back to this in the near future, especially after we've been through this process and after they see the backlash this legislation will cause in the farm community?

Mr. Leslie Jacobson: All we can do this morning is to bring our views forward and ensure that what we're talking about is enabling legislation to make sure that it can be amended very easily in the future. Doing the things we want it to do is imperative. You are going to continually have grumblings if it is not what the producers of western Canada see as the entity for marketing grains into the future.

Mr. Sinclair Harrison: We would agree that it should be enabling legislation. Perhaps we haven't explored all the opportunities that the present wheat board has, all the things you can do under single-desk selling. We are working with other associations. The Canada Grains Council is meeting this week to talk about this issue, and we're prepared to work with other associations as to the flexibility that we might have if we get the proper enabling legislation, even under single-desk selling.

Mr. Neil Wagstaff: We see this as the beginning of a long, slow process of change—a good beginning. There is certainly need for further change in the future, and with the opportunity for some farmer representation on the board of directors—and not just farmer representation but essentially control—that process of change should be able to continue. So there is that opportunity to slowly, over time, develop the wheat board into something that should be suitable to the majority of farmers in western Canada.

Mr. Leon E. Benoit: You've all said you see it as a good beginning. You've expressed some concerns in some areas. I'd like to quickly question you on some of those concerns.

You've all made comments on the inclusion. I would like to direct the first question to Mr. Jacobson. You have stated here that you believe the representative group that directly represents most of the people selling or growing that commodity should have the power to initiate action on inclusion.

Mr. Leslie Jacobson: That's right.

Mr. Leon E. Benoit: Would those groups include, for example, grain companies like the Saskatchewan Wheat Pool or Alberta Wheat Pool? Would you consider those to be one of the groups that could initiate an action?

Mr. Leslie Jacobson: No. That's the short answer. I think the producers of the raw product would have to be the representative group to make the initial representation.

Mr. Leon E. Benoit: Okay. You've all expressed concerns about the contingency fund. You say the devil's in the details. Am I to understand from what you have said that you believe Bill C-4 should be amended to clarify what the contingency fund actually will be? Could I have each of you answer that?

The Chairman: Very quickly.

Mr. Leon E. Benoit: Are you all proposing an amendment to Bill C-4 so that there's clarification on the issue of the contingency fund?

Mr. Leslie Jacobson: Yes, Keystone Agricultural Producers would need it clarified. We would see government not having the responsibility of setting the limits and that the board of directors would have control over what that fund would be used for. So the producers of western Canada would be speaking through their board of directors as to how they would utilize the money that the western Canadian producers would put into that fund.

• 1035

Mr. Neil Wagstaff: For the time being, it is our opinion that it should be amended and amended in the fashion it was taken out.

Mr. Leon E. Benoit: Thank you.

Mr. Sinclair Harrison: It appears it will be producers who fund the contingency fund. It should be the producers who set the limits, and the language that's in the legislation right now really doesn't reflect that.

Mr. Leon E. Benoit: Okay, thank you.

The Chairman: Mr. Chrétien.

[Translation]

Mr. Jean-Guy Chrétien: I would like to direct my remarks to the last speaker for the Wild Rose Agricultural Producers.

Could you put into layman's language for me the criticism you made about the election of the ten board administrators, which may cause conflicts? We are proposing a formula that resembles the way a co-op works, the big one and the little ones. A delegate would be chosen who would represent you on the CWB.

According to your brief, I gather that the election of ten administrators could cause distortions. You recommend that the producers be represented by a delegate body. I would like a little amplification on that, as you're the first person who has suggested this option.

[English]

Mr. Neil Wagstaff: Thank you for giving me an opportunity to speak a little further in this regard. It's a proposal that our organization has had on our books for some time that has had very little consideration. As you pointed out, it has been successful with a number of other large co-operatives and even in the grain industry co-operatives.

How might it work? I guess we should talk about why first. Why would we propose this? One of the fundamental reasons is that we feel there's a greater opportunity for two-way communication between that board of directors and the producers, both ways, if a larger body of individuals is involved in actually dealing with the Canadian Wheat Board on behalf of producers.

How it might work is that we would have a division of area throughout the prairies by municipal boundaries and delivery points, and a representative would be nominated and elected to represent that region. That's certainly a smaller geographic region than we would be looking at with only ten directors. That delegate body would then determine who the directors of the board were from within that delegate body, or maybe even outside that delegate body through some election process.

Our concern is that if you look at the size of the prairies geographically, and I think some members of Parliament who have extremely large rural constituencies can appreciate this, it will be very difficult for ten individuals on that board to represent farmers effectively. They have the same challenge, and maybe even bigger in some cases. For farmers to get to know who the appropriate people are and for those directors to get adequate feedback will be difficult.

[Translation]

Mr. Jean-Guy Chrétien: Mr. Harrison and Mr. Jacobson, do you support this idea, this theory?

[English]

Mr. Leslie Jacobson: I think the issue for Manitoba is that we would have electoral districts with representatives from each district and it wouldn't be an at-large process, so I think this process may be a bit cumbersome.

Mr. Jean-Guy Chrétien: Mr. Harrison.

Mr. Sinclair Harrison: We would support each member having a vote, and not going to the delegate system. Vote for the inclusion and exclusion of grains, election of directors—we feel it should be the individual producer because it's his livelihood that's at stake.

• 1040

The Chairman: Mr. Harvard, please.

Mr. John Harvard (Charleswood—Assiniboine, Lib.): Thank you, Mr. Chairman. I have only one question and I want to direct it to Mr. Harrison, who has offered the sharpest criticism of the government's ability to appoint the CEO under Bill C-4.

Mr. Harrison, you made the observation that private corporations don't accept the appointments of CEOs from the outside; they do that themselves. But I think that's specious reasoning, because to a certain extent private corporations don't have their operations underwritten by the government. We do have a partnership here between the government and the producers, and some kind of balance has to be sought. This is what the government has tried to do, to achieve a balance, when it comes to the appointment of the CEO.

I think also you're underestimating the power of the board when it comes to the appointment of the CEO. First of all, there would have to be consultation. It may not be meaningful in the opinion of you or someone else, but if the board of directors, or at least the ten producer-directors, don't like the form of consultation or afterwards if they don't like the performance of the CEO, they can deal with his salary. If they don't want him or her, they can simply reduce the salary to $1, and I would think that would deal with the matter very effectively.

I think you're underestimating the clout of the producer-directors. If they don't like what the government is doing in the appointment process or if they don't like the performance of the CEO, they can do something. Can you imagine a situation where you have ten producer-directors saying they don't want this person any more? What's the government of the day going to do? They don't have much choice. I would think the man would have to go, and certainly if the producers went ahead and reduced his salary, he would.

I appreciate your comments and I understand your concern. I want the producer-directors to have as much influence as possible, but there is a partnership here. Mainly because of the financial guarantees, there has to be some balance. I would just want you to respond to those comments.

Mr. Sinclair Harrison: Again, we want balance just as you do. The fact that you feel you want to appoint the CEO still doesn't give you the balance of power on the board of directors, so what are you after by doing this? That's the question mark that remains in our head. That's one of the main reasons we took the time to come down here. Some of the other things we can live with, but our members feel very strongly about this. We just do not feel.... We had the opportunity to remove a CEO from our board of directors. He was appointed by us; he wasn't an elected member. It's not a nice situation.

What we're trying to steer you away from is a wreck right off the bat. There's no 100% guarantee that we as producers will select the right guy, but I guess we're prepared to take our chances with our own decisions and not leave them in the hands of the government in this situation.

The Chairman: Thank you, Mr. Harrison.

I'd like to ask Mr. Wagstaff a question. In your brief you say you don't see any major problems with the proposed legislation as far as the inclusion clause is concerned. Then you seem to be saying in your comments that as the bill is now written there would never be any chance for any grain to be represented there because there's no one organization representing any commodity group.

Mr. Neil Wagstaff: The reason we don't see any problem with inclusion is the fact that it's there. There seems to be a terrific pile of talk out in the prairies about some concern about why this inclusion is there. The point we want to make as an organization is that we feel it's only fair that there be an equal balance of the opportunity to include or exclude commodities. We do have a concern, though, as to how that process might work to trigger the process to consider whether another commodity should be included or not.

The Chairman: So as it's written right now, no grain will ever be included. Is that what you're saying?

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Mr. Neil Wagstaff: I wouldn't say that. Things could change over time, but it certainly limits the opportunity to trigger that process to determine whether the producers want another commodity under the wheat board as a voluntary commodity or as a single-desk marketed commodity.

The Chairman: Thank you, and thank you all very much for making the trek to Ottawa and giving us the benefit of your views.

I'd like to call to the table now the Canadian Canola Growers Association, Flax Growers Western Canada, the Oat Producers of Alberta, and the Canadian Federation of Independent Business.

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The Chairman: I welcome everyone to our consideration of Bill C-4.

We have four groups now, so we'll have to be a little more efficient with our time. We'll start off with the Canadian Canola Growers Association and their 10-minute presentation.

Mr. Bruce Dalgarno (President, Canadian Canola Growers Association): Thank you, Mr. Chairman.

Sitting here today with me is Eugene Dextrase, vice-president of the Canadian Canola Growers Association.

As you see, my name is Bruce Dalgarno. I'm president of the Canadian Canola Growers Association as well as the Manitoba Canola Growers Association. The Canadian Canola Growers Association certainly appreciates this opportunity to appear before this committee today to represent our views on Bill C-4.

The Canadian Canola Growers Association is a national body, representing provincial grower organizations. Our members include the B.C. Grain Producers Association, Alberta Canola Producers Commission, Saskatchewan Canola Growers Association, Manitoba Canola Growers Association, and Ontario Canola Growers Association. Our purpose is to advance the interests of canola growers in the areas of production, marketing, transportation, research and regulation.

From its humble beginnings 30 years ago, canola has become a major crop, particularly in western Canada, generating income second only to that of wheat. Annually, about half of our canola production is exported and half is crushed domestically.

In the past few years, the Canadian oilseed processing sector has attracted millions of dollars of new capital, adding more value to our product and creating jobs for Canadians. This remarkable achievement in production, processing and exports has been realized under an open market system.

Canadian canola growers are very concerned about the provisions of Bill C-4 that have the potential to put canola marketing under the jurisdiction of the Canadian Wheat Board. Not only is this proposal opposed by canola producers and other players in the industry, it was also opposed by the Western Grain Marketing Panel. In its recommendation, the marketing panel stated that:

No fundamental change in the marketing system for other grains, oilseeds and special crops is recommended.

Some of the strengths of our present marketing system include the fact that that canola is currently marketed in an open market in which anyone can buy, sell, or process canola. Producers are able to sell any amount of their production at any time to a wide range of buyers. This offers farmers a tremendous amount of flexibility in meeting their price and cashflow needs.

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Competition among buyers is very keen. In Canada we have five different canola crushers, which operate ten plants, several grain companies, and numerous independent exporters all competing for our product. This ensures that the returns to farmers are maximized. Farmers have the ability, through a variety of contractual arrangements, to price their crop at any time of the year. This allows producers to project and to lock in profit margins before seeding or as the crop is progressing in the field.

Cashflow can be more easily predicted as no quota restrictions on deliveries apply. Farmers receive payment in full at time of sale. Market signals are daily, and producers have free choice in responding to them. Several instruments are available to farmers to reduce or eliminate risk of price variation. They include futures and options contracts offered by the Winnipeg Commodity Exchange, forward price or production contracts offered by grain companies or oilseed crushers, and the simple staggering of sales throughout the year.

The majority of our customers, including the Japanese, the largest importer of canola seed, and the United States, the largest market for our oil and meal, the Canadian crushers, and the exporting companies have indicated they support the open market system for canola and would oppose any move to place marketing under a single-desk marketing system.

Next are some of the reasons that canola should not be included under the wheat board.

As the bill is now drafted, the government may, subject to certain conditions, extend the wheat board's mandate to include the marketing and the regulation of “any other grain”. Under the bill grain is defined as including wheat, oats, barley, rye, flax, rapeseed, and canola.

The conditions that must be met before any grain is included under the wheat board jurisdiction are listed as follows: A written request is sent to the minister by a producer association that represents the growers of the grain throughout the designated area. The extension is also recommended by the board, and a vote in favour of the extension by producers of that grain must have been held in a manner determined by the minister after consultation with the board.

We have difficulty with several of these provisions. It is not clear what is meant by the term “producer association”. Many groups could lay claim to representing producers of any given grain throughout the designated area. We do not want to see enacted a provision that would lead to disputes among producers and producer associations on the prairies.

Under the proposed legislation, Canadian Wheat Board directors will be called upon to make recommendations regarding the possible inclusion of canola or rapeseed under the board's marketing mandate. We don't think it is appropriate for Canadian Wheat Board directors, who are elected by wheat and barley farmers, to make recommendations regarding the livelihood of canola producers. While most canola growers also grow wheat and barley, a good number of them do not market these crops through the Canadian Wheat Board. Also, a good number of wheat and barley growers do not grow canola. It is simply wrong to presume that directors elected by wheat and barley growers can speak on behalf of canola growers.

Our association represents canola producers in five different provinces. In addition, canola production is growing in Quebec. In 1997 there were 12,000 acres sown to canola in the province of Quebec. The legislation is not clear. Would the designated area with respect to canola be expanded to include producers in other provinces, or would it be confined to canola producers in the designated area? We do not want a situation in which marketing choices and export opportunities for canola producers in one part of the country are different from those afforded canola producers in the rest of the country.

As noted above, any decision to bring additional crops under the wheat board mandate is contingent upon a positive recommendation from the Canadian Wheat Board board of directors. Presumably, all producer members of the board will be from the designated area. It would be wrong for these directors to be making recommendations that could affect the interests of canola producers from outside the designated area when such producers have no representation on the wheat board.

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Perhaps our greatest concern over the adoption of the inclusion clause is the message it would send to our international trading partners. As you know, Canada is attempting to accelerate the reduction of tariffs on vegetable oil exports to Japan and other countries, and we acknowledge the hard work of Agriculture Canada trade officials in this regard. The presence of an inclusion clause undermines their efforts. It is basically telling the Japanese and others that Canada is not serious about liberalizing trade.

Including canola under the Canadian Wheat Board marketing mandate also means the federal government would be required to establish an initial price for canola and guarantee any deficits. Although we recognize the risk of incurring a deficit would be small because the government would simply set the initial prices extremely low, the mere fact that the government is establishing a floor price would be enough to rankle our trading partners, particularly our neighbours to the south.

We point out that the value of canola exports to the United States in 1996 was $716 million. By comparison, wheat exports to the U.S. totalled $446 million. Obviously we do not want to see the friction that surrounds our wheat exports extended to include our oilseed exports.

The mere presence of the inclusion clause also puts a chill on investment in the canola processing sector. The industry has attracted substantial investment over the past decade. Ten years ago Canada was processing 1.5 million tonnes of canola. We're now producing close to 3 million tonnes of canola. This investment and associated jobs flourished with canola under the open market system. We do not want to risk this economic activity or jeopardize the future growth by having this dark cloud hang over our industry.

The Canadian Canola Growers Association strongly recommends that Bill C-4 be amended so there is no risk of canola being brought under the wheat board's marketing mandate.

In considering our specific recommendations to the committee, our first thought was to recommend deletion of the inclusion clause. This would be an acceptable action, although we recognize it is not our place to comment on the inclusion of other crops under the Canadian Wheat Board. Our comments and concerns relate solely to canola and rapeseed.

Our one recommendation is that you amend the definition of grain under the Canadian Wheat Board Act to specifically exclude canola and rapeseed. This recommendation would ensure the inclusion clauses, if they remain, would not apply to canola and rapeseed. Eliminating canola and rapeseed from the definition would also mean these crops would in no way be associated with the Canadian Wheat Board. This might be beneficial in future trade negotiations. It would mean that regardless of the pressure that might be brought against the Canadian Wheat Board in our next round of WTO negotiations, we could be safe and secure in the knowledge that canola and rapeseed would not be affected.

On that, Mr. Chairman, I'd like to thank you for allowing us to present our views.

The Chairman: Thank you very much.

From Flax Growers of Western Canada we have Mr. William Farley.

Mr. Eugene Dextrase (Vice-President, Canadian Canola Growers Association): May I add something, Mr. Chairman?

The Chairman: I think your ten-minute presentation time has been used up. We have to go on to the next presentation. If you can clarify in the question and answer what you were going to say, it'd be appreciated.

Mr. Farley.

Mr. William Farley (Director, Flax Growers Western Canada): I would like to thank you for the opportunity to appear here today on short notice. We didn't think the inclusion clause would be brought forward, but as it is, we are here to present our case.

Flax Growers Western Canada was formed in March 1974. Producers of flaxseed were impressed with the progress of canola or rapeseed and the Saskatchewan canola growers and their parent organization, the Canola Council of Canada.

At that time flaxseed was considered a dying crop by many people and organizations. The result was a climb in research and variability of acreages grown. The government of the day brought forward a belief that rapeseed should be considered a candidate for control by the Canadian Wheat Board. There were several organizations, such as Prairie Pools and the Farmers Union, in favour of this.

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Fortunately, the vote was for maintaining the status quo. If a vote were conducted today, the results should show an even higher degree of support in favour of the free market system.

Flax Growers Western Canada has put its best efforts toward research on this important crop. Research is now being directed to agronomic market development and new varieties. Flax Growers Western Canada is directly responsible for the formation of the Flax Council of Canada, and more recently the Flax Development Commission of Saskatchewan, and the likely formation of flax commissions in both Alberta and Manitoba. However, over the years, we have still experienced problems with the Canadian Wheat Board and some of the co-operative grain companies.

The setting of quotas on flaxseed by the Canadian Wheat Board was such a case. The Canadian Wheat Board would conduct a survey with the Line Elevator Association, grain companies, to indicate whether quotas should be raised. However, if one of the major companies was opposed to an increase, no increases came forward. It appeared there was collusion between the Canadian Wheat Board and a major player involved in marketing flaxseed.

A letter was sent to John Bertrand, director of restrictive trade practices in Consumer and Corporate Affairs. Mr. Bertrand conducted some investigations into this problem. In his letter, he replied that we were correct in our assessment, however, the Canadian Wheat Board was beyond the powers of Consumer and Corporate Affairs. We also went to the corporate crime division of the RCMP. They weren't prepared to act either.

Flax Growers Western Canada conducted more research and held meetings with the Canadian Wheat Board and the Canadian Canola Growers Association. Continuing discussions with then president Garvin Hanley and the board resulted in increasing initial quotas and quotas in general. Quotas are not a problem any more. Non-board grains and these grains do not fill elevators, as they suggested. The price that is offered is the best-quota system.

Flax Growers Western Canada worked together with the Canadian Canola Growers Association and some companies to eliminate street pricing. Now each elevator company sets its own price on a daily basis.

The average exports of flax over the last five years have been between 625,000 and 650,000 tonnes. Acreage has averaged 1.7 million acres. In comparison to other crops, flaxseed is a small crop. For example, in 1996-97 crop exports of wheat were 15.109 million tonnes. Flax exports in the same period were 541,800 tonnes, which is 3% of wheat exports.

If it's such a small crop, why are we even considering it as a candidate? Flax is bought by grain companies and dealers. Most export sales are small, at 1,000 to 10,000 tonnes. Export shipments are generally stored in small compartments of cargo ships. A considerable amount of flax is shipped by truck from farms in southern Manitoba and Saskatchewan to oilseed crushers in North Dakota and Minnesota.

I have some export figures: 85,900 tonnes in 1996-97, 46,200 tonnes in 1995-96, and 42,500 tonnes in 1994-95. These export figures are over and above the figures sent out by the Canadian Grain Commission in their weekly statistics.

There also has developed a sizeable export of flaxseed cleaned to high-quality standards. This flaxseed is used in the condiment trade for food, health and nutraceutical use. This market is growing at approximately 15% to 20% per year. Well over a thousand containers alone were shipped overseas, plus there were truckloads to the United States and eastern Canada.

Solin or low-linolenic flaxseed is marketed exclusively by United Grain Growers. United Grain Growers would be opposed to the Canadian Wheat Board marketing the crop they developed. Presently, solin is grown on 350,000 acres in western Canada. This is out of a crop this past year of 2.06 million acres. If flaxseed was a grain under the control of the Canadian Wheat Board, all this activity would become non-existent.

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Today, as you realize, if you truck a load of wheat across the border, you get put in jail and you're a criminal. That's not so with flaxseed. Flaxseed is a small crop that's marketed by many elevator companies, large elevators, small exporters, and processors.

The Canadian Wheat Board is designed to market large volumes of grain. Generally, a small order of wheat or barley would be a very large order of flaxseed. Also, many wheat and barley sales are larger than the entire flaxseed and solin crops combined. If flaxseed were to become a grain under the Canadian Wheat Board, the acreage devoted to flaxseed would decrease substantially.

Flax Growers Western Canada is completely opposed to the Canadian Wheat Board being the sole marketing agency for flaxseed. We are absolutely opposed to proposed section 47.1 in Bill C-4, which is the inclusion clause.

A resolution was passed at the 1994 annual meeting of Flax Growers Western Canada. The resolution asked the Canadian Wheat Board to remove any references to flaxseed from the Canadian Wheat Board Act.

If conducted, a vote among flax growers would show that they were at least three to one in favour of maintaining the status quo. Flax producers in western Canada are opposed to the inclusion of flaxseed under the Canadian Wheat Board.

We ask you to consider the views and opinions of all flax producers and our opposition to Bill C-4, section 47.1, and exclude flax from the control of the Canadian Wheat Board.

That is our presentation.

The Chairman: Thank you, Mr. Farley.

From the Oat Producers of Alberta, Mr. Leo Meyer.

Mr. Leo Meyer (Vice-President, Oat Producers Association of Alberta): Mr. Chairman, and ladies and gentlemen.

[Translation]

Thank you very much for giving us the opportunity to make a presentation on behalf of the oat producers of Alberta.

[English]

Thank you very much on behalf of the Oat Producers Association of Alberta to have the possibility of making a short presentation with respect to the proposed Bill C-4, or as it was called before, Bill C-72.

My name is Leo Meyer. I farm north of Grande Prairie, Alberta, near Spirit River in the Peace River region together with my family. My wife Kathy and I have six children.

I'm vice-president of the Oat Producers Association of Alberta, Alberta director of the Western Canadian Wheat Growers Association, and a director for the Western Barley Growers Association.

It was very difficult for us to appear in front of this committee on such short notice because we still have about 15% to 35% of the crops in the fields and every possible break in the weather has to be taken advantage of to finish harvesting our valuable crop. Snow is right on our heels and winter can set in at any time and make any further harvesting impossible. This could endanger our livelihood and farm.

However, as a committed oat producer, I cannot believe the intentions of some influential left-wing groups, with help from bureaucrats, to possibly bring oats back under board control into the western Canadian grain monopoly. There can be nothing more important than standing up against this socialistic attempt and vehemently defending oats as an open-market crop.

We suggest that the inclusion clause, as proposed under Bill C-4, be dropped. But also, to be fair, at the same time you should drop the exclusion clause so as to leave once and for all the possibility of adding more crops under the western Canadian grain monopoly. It should be out of the question.

We are very tired of coming back again and again to make the same points over and over without results. We need less, not more, government marketing involvement as we approach the new millennium.

Nobody from the previous grain marketing panel suggested adding more crops under the jurisdiction of the Canadian Wheat Board. It is very difficult to understand why this inclusion clause had to be brought into the bill now. It makes it worse to sell to those who seek significant and meaningful change to the marketing system.

I will not go into all those very valid points being made by the open market supporters in front of this committee before us and after us. However, some points we believe need to be brought up and addressed again.

One, the CEO and chairman of the board should be elected from the members of the board being elected from western Canadian grain farmers.

Two, members of the board, specifically candidates standing for election, need to be proven as good, capable grain farm managers and must have a deep understanding of grain marketing and transportation issues, respectively, and a good understanding of the whole logistics management system in western Canada. Political influence must not be abused to rig the election of those board members.

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Three, nobody gets appointed by the government to the board, except possibly a representative of the finance department, as long as the initial prices are guaranteed by Canada. If the guarantee is ever dropped, that appointee becomes unnecessary and is not wanted.

Four, the new board must then be able to adopt all necessary instruments and systems available to manage the corporation as deemed necessary. First and foremost, accountability must go to the western grain farmers, returns must begin to be optimized, and the new board must ensure that dramatic efficiency changes become immediately evident.

Five, there must not be special protection given to those involved in this new corporation or in the former Canadian Wheat Board when it comes to liabilities and actions of the management at present or in the past. The full force of the Canadian law should apply the same to all citizens and corporate entities, including members and management of the Canadian Wheat Board.

Six, performance must be checked and farmers must have true and honest information from the board so they can properly measure the effectiveness and capability of this new corporation. Much more important information must flow to the main stakeholders, the western Canadian grain farmers.

Seven, pre-price and edge mechanisms must be established for farmers to manage risk and have the choice of triggering some sales of their grain at their own pleasure.

Eight, the new corporation must immediately assess their involvement in grain transportation. It should also consider becoming a port receiver only and, over time, disengage themselves slowly from being directly involved in grain transportation. A subcommittee should be established to deal with the railways and improve the relationship to at least a business-type manner between themselves. The CTA complaint must immediately be dropped and everybody should go back to the business at hand, doing better what they're doing best.

All grain companies operating in Canada must be brought up to speed and informed properly about how their involvement with the new board might change and possibly be adjusted to ensure that no negative fallout occurs and that some of them don't try to torpedo the efforts of the new entity. Let's begin a new era of co-operation and co-existence in the grain industry in Canada and alliances around the world. The business of the new corporation must be conducted much less secretively and more open, like that of similar business enterprises and food powers of a world scale.

Now I have some brief observations about the oats themselves.

As oat producers, we of course produce most other major crops grown in western Canada. Changes to the marketing systems of those crops affect us on different levels, just as they do every other western grain farmer. The oats business has adapted well to the open market, and since its sheer size restricts it from being a viable crop handled by the Canadian Wheat Board, most oats for processing do not even get handled through the elevator and rail system today. Trucks pick up the oats at farms and haul them to regional processing facilities. From there some are shipped by rail, but most are shipped by truck in containers to export markets around the world. It is remarkable to recognize how the quality of oats produced today has increased since it came off the Canadian Wheat Board in 1988.

Farmers have realized quickly that the quality factor of a better product is directly passed on to them and immediately rewarded. Wide-open marketing options in this business are being well utilized and not given up lightly.

Finally, processors have come to western Canada because oats are off the Canadian Wheat Board, and further improvements in the infrastructure will possibly be jeopardized if oats were back on the board. We can only hope some last-minute sense-making is brought back to Bill C-4 before it is passed by Parliament. There is growing dissatisfaction with how grain marketing in western Canada is being controlled by eastern Canadian influences.

To summarize our presentation, we urge you on behalf of the Oat Producers Association of Alberta to drop both the exclusion and the inclusion clauses of the proposed Bill C-4. Hopefully the needed changes are being made in time to prevent alienation here in western Canada. As oat producers, we do not want to be back under the jurisdiction of the Canadian Wheat Board.

We appreciate the opportunity to make this presentation and thank you for your attention—respectfully submitted by the OPAA, Oat Producers Association of Alberta.

The Chairman: Thank you, Mr. Meyer.

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Before we go to the CFIB, we will return to Mr. Dextrase to get his comments.

Mr. Eugene Dextrase: Thank you very much, Mr. Chairman.

I think Mr. Dalgarno has covered our position fairly well. I would like to add two or three things.

As chairman of the Alberta Canola Producers I directly represent 24,000 producers. We have a refundable commission, and over time no more than 2% have requested refunds, so I think we represent the canola producers in Alberta reasonably well.

At the farm level a price distortion could occur under voluntary pooling caused by a supply pool. That's if we were to come under the jurisdiction of the Canadian Wheat Board.

Under a completely open market system there are two cash price variables: the actual price and the basis. Freight, elevation, and so on are included in the basis.

To fill a sales contract companies will attract canola from the producer by lowering their basis, and farmers can phone around or use whatever means they have to get the best price and determine where they're going to sell it. If a pool supply were available, dealers wouldn't have to attract farm delivery. They could purchase from the pool. Consequently, our price would be lower.

Another concern relates to the mandatory marketing of canola under the Canadian Wheat Board. About 50% of the canola we produce now is crushed domestically and moves directly from the farm to the crushers. Under the present Canadian Wheat Board rules, it would all have to be sold to the board.

For example, farmers growing malting barley are not allowed to directly sell to a malt plant. If they wish to deliver to a malt plant, they have to first sell to the board and then buy it back through an agent of the board at a cost of about $27 a tonne. That's the elevation cost, board costs, etc. It would be intolerable for canola producers to be placed in such a costly arm's length relationship with the canola processing plants.

The canola processing organization, COPA, has asked us to represent their views. It's the same. They're very anxious for there not to be government involvement in this.

Another concern we have is with a plebiscite requiring a 51% majority. Since 20% of the canola producers account for about 80% of the production, they would be at the mercy of 80% of the people who have only 20% of the production. This is rather unfair.

I really hope I'm communicating here. Most of the time we don't communicate, we just take turns talking, and I think it's very important that our message gets through. It would be nice if the only people who could vote on this were the people who lived in the designated area. We have canola being grown outside that designated area, but there are people telling us what we can do who I think don't understand the situation we have to live under.

The only other comment is that the rewards in agriculture have come when farmers have had the free choice in where and how they market their production. The open market is where growth has really been generated, and we would like to keep it that way.

Thank you, Mr. Chairman.

The Chairman: Thank you, Mr. Dextrase.

We'll now go to the CFIB. Is it Marilyn or Mr. Kelly?

Ms. Marilyn Braun (Director, Provincial Affairs, Saskatchewan, Canadian Federation of Independent Business): Thank you, Mr. Chairman. CFIB would like to thank you, the committee, for the opportunity to present to you this morning.

I also should mention that I'm from a rural and agricultural background. I actually grew up on a farm. I understand the issues. My family has a mixed farm operation with a variety of crops.

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Also presenting this morning will be my colleague Dan Kelly from the Manitoba CFIB office. Dan is the director of provincial affairs there.

To begin, we thought we would provide the committee with a brief overview of the Canadian Federation of Independent Business and our involvement in the agriculture and the agribusiness sector.

We are a national, non-profit political action group representing small and medium-sized businesses. We have 88,000 members across Canada and approximately 5,000 agribusiness owners from coast to coast. We represent approximately 2,000 agribusiness members in the provinces of Alberta, Saskatchewan, and Manitoba, many of whom are grain growers.

CFIB regularly surveys its members on a variety of public policy issues, including surveys designed to specifically gather the views of our agribusiness members. Certain of these agricultural surveys are confined to the prairie region, while others are national in scope.

Many of our farm members have expressed concern regarding the Canadian Wheat Board and in particular its monopoly on grain marketing in the prairie region. Because of the significance of these concerns, CFIB felt it was extremely important that we present our members' views to you this morning and their concerns on the the wheat board reform.

While we certainly share the view that the Canadian Wheat Board is in need of change, we have very serious concerns with some of the proposals contained in Bill C-4. We are alarmed at what the bill may do, but more importantly we are disappointed with what the bill will not do.

I think it needs to be made very clear this morning that we are not a farm organization. We are a business organization that represents a large number of agribusiness members across Canada. Therefore, this morning we are focusing our attention on a couple of our members' key concerns.

To gather our members' opinions on wheat board issues, as I mentioned we conducted a number of surveys and have conducted a number of surveys on this topic over the last three years. The attached tables for your review provide detailed breakdowns of these survey results and analyses by commodity groups and by province. I'll go through the results briefly with you.

In attachment A you will see that in August 1995, 83.1% of our prairie agribusiness members supported the concept of dual marketing for sales of grain under Canadian Wheat Board control. This support was consistent across all commodity groups and prairie provinces.

Attachment B shows that in April 1996, 86.3% of our prairie agribusiness members voted in favour of dual marketing in the domestic marketplace, confining dual marketing to Canadian markets and local value projects.

Attachment C indicates that in January 1997, 74.3% of our prairie agribusiness members rejected the proposal to keep all barley marketing within the Canadian Wheat Board single-desk selling system.

In attachment D you will see that also in January 1997, 69.3% of our prairie agribusiness members stated they were either somewhat or very dissatisfied with the government's proposed grain marketing changes contained in Bill C-72.

Attachment E shows that a July 1997 marketing board survey reveals that 67.8% of our grain grower members said they were either dissatisfied or very dissatisfied with the performance of the Canadian Wheat Board. In that same survey of July 1997, 77.4% of CFIB's prairie grain grower members said they wanted to have the option of marketing grain outside the board.

Just recently we released some very interesting survey results. In August 1997 we polled our general small business membership in Manitoba and Saskatchewan and found that an overwhelming 78% said that a healthy agricultural sector was either crucial or very important to the future success of their businesses, which is very important to note.

Attachment G shows that in the same August survey, 61% of CFIB's general membership said that farmers should also be allowed, as they are, a choice in who markets their grain.

I'll turn over the final portion of our presentation to Dan.

Mr. Dan Kelly (Director, Provincial Affairs, Manitoba, Canadian Federation of Independent Business): As is demonstrated by the results that Marilyn mentioned, both CFIB agribusiness surveys and our general membership surveys seem to suggest that farmers want more flexibility in marketing their products. In every survey that the CFIB has conducted with respect to the wheat board, our on-farm and off-farm members have chosen a dual marketing approach as their preferred option. Our members' disappointment with the previous bill appears to centre around the fact that there was a lack of options in wheat and barley marketing.

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CFIB believes the government missed an important opportunity last year when it asked the barley question in that it didn't allow farmers to express their views on the dual marketing concept. The government's decision to ask a black and white question I believe served to further polarize the existing community rather than bring it together. I put to you that this bill would accomplish the same end.

CFIB believes it's also important to bring the views of non-farm-related businesses to the table on these important prairie issues. Given that less than 6% of our entire general membership said that agriculture was unimportant to their business, I think they too have a very major stake in the future of the Canadian Wheat Board.

Grain marketing policy does not simply affect producers in rural communities, but in fact affects other businesses like manufacturers, retailers, or service sector firms in large centres like Winnipeg, Regina, Calgary, or Edmonton. In fact, even in Winnipeg, decided small-business owners opted for a dual marketing approach by a ratio of nearly 4:1. In Regina the ratio was 6:1 and in Saskatoon it was nearly 7:1.

One of our major concerns with Bill C-4 is that it does not address the fundamental need for marketing flexibility, as has been expressed by our members. A growing percentage of prairie wheat and barley producers are concerned that the monopoly does not allow them to operate their farms in a true businesslike fashion. They cannot accept that they are not permitted to decide who they can sell their products to, while other business owners are allowed to sell to whomever they choose.

In fact, our surveys demonstrate that a large number of agribusiness owners who are satisfied with the performance of the board still want the option to market off-board. Support for dual marketing should therefore not be viewed as a position held by a small minority of farmers with an axe to grind against the Canadian Wheat Board. It includes those that are actually satisfied with the performance of the wheat board.

We urge the committee to listen to the growing discontent among prairie wheat and barley producers and to allow those who wish to market their own products the option to do so. As has been recently experienced in the hog industry, a dual marketing approach can maximize the number of options available to agribusiness owners.

One of our other major objections is that not only does this act not address the need for increased flexibility, but a section of the bill may actually serve to reduce it. The so-called inclusion clause moves in the exact opposite direction of a dual marketing concept and our members' opinions.

CFIB is alarmed that the federal government would consider any proposal that would create new monopolies when in fact our members and, I would put to you, the general agricultural community are seeking fewer. The proposed legislation flies in the face of the reality of the need for greater flexibility and wider access to markets. We question why the federal government would introduce such legislation when the very groups here before you that represent the potentially affected commodities are opposed to single-desk selling.

CFIB is unaware of any significant movement among flax, oats, canola, or rye growers to be included under the Canadian Wheat Board's monopoly. In fact, even if such a call were made, CFIB would oppose the extension of any government-dictated monopoly.

We're also concerned that the process by which a monopoly could be created would be subject to potential for significant abuse by those that favour a single-desk selling system. Again, I would put to you that this will serve to further cause discontent and make this issue even more important to those farmers who are affected by the Canadian Wheat Board.

We note that our trading partners are already concerned with the wheat board's monopoly status and we feel this would no doubt increase if Bill C-4 is passed, which would create entirely new grain monopolies. The potentially included grains represent some of the fastest growing segments of the agricultural economy. This growth has spun off a variety of current and potential value-added business opportunities throughout western Canada, and we're concerned that such a radical change to the marketing system may limit these opportunities in the future.

Most importantly, we are concerned that the mere existence of this inclusion clause would cause further divisiveness within the agricultural community. I don't know if the committee fully appreciates that I don't think the decision to create this inclusion clause or in fact to put in place an elected board of directors is going to quiet down the concern or that the protest would only happen on the steps of the Canadian Wheat Board. I would put to you that a good chunk of that would still be left on the doorstep of government.

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A cynical person might view this proposal as a means to divert the attention of those seeking additional flexibility away from their fundamental goal. We see no reason to put forward this provision, this option-killing clause, at this time.

We support the need for more options for barley and wheat growers—not fewer options for canola, flax, oats and rye producers. We urge the Standing Committee on Agriculture and Agri-Food to reject the inclusion clause as an unnecessary, divisive, and potentially destructive element to this legislation; and second, to focus on the important goal of reforming the Canadian grain marketing system by allowing wheat and barley growers the option to choose to whom they market their products.

Thank you very much for allowing us to make this presentation to you this morning.

The Chairman: Thank you, Mr. Kelly, and we thank everyone for your presentations.

A fairly uniform point of view, I think, was expressed here by these four groups.

We will go right to Mr. Benoit.

Mr. Leon E. Benoit: Thank you, Mr. Chairman. I'll be splitting my time with Mr. Penson.

Good morning, ladies and gentlemen. Thank you very much for your presentations—much appreciated.

I know two of you have answered this question already, but I'd like you just to quickly tell me how many members your groups represent.

Mr. Bruce Dalgarno: To start with, the Canadian Canola Growers represent approximately 75,000 growers.

Mr. Eugene Dextrase: Yes, 75,000 is accurate.

Mr. William Farley: Flax Growers is a voluntary organization, and there are only a few hundred members, but they are part of Flax Council of Canada and the Flax Development Commission, and of those, it probably represents 30,000 to 40,000 farmers.

Mr. Leo Meyer: We represent about 7,900 oat producers in the province of Alberta.

Ms. Marilyn Braun: Did you get mine? Approximately 5,000 agribusiness members coast to coast, and 2,000 for the three prairie provinces.

Mr. Dan Kelly: But of our general membership we have 4,000 members in Manitoba, 5,000 in Saskatchewan, and 8,000 in Alberta.

Mr. Leon E. Benoit: Okay. Thank you.

We understand this legislation will do nothing to deal with the most controversial, the most divisive issue in western Canada, which is the issue of a voluntary board versus the monopoly, but the clause that I think you all have focused on is the inclusion clause. The minister justifies the inclusion clause by saying it is balanced to the exclusion clause.

I would like to ask each of you to tell this committee if you would support this legislation the way it is now—that is, assuming not too much amendment. If you had your choice, and the choice was strictly to either support the legislation as it is or to reject it entirely, which would you do?

Perhaps we could start with Mr. Dalgarno.

Mr. Bruce Dalgarno: Well, the way it is now, and as our brief showed, we try to deal strictly with canola issues, and we presented that a little bit here. But further to your question, I would say that we would support both the dropping of the inclusion and the exclusion clauses.

Mr. Leon E. Benoit: And the legislation as a whole? It does affect you. This is the legislation that could have a pretty serious impact on your industry. On balance, if you were to vote in the House of Commons on this legislation, would you support it or reject it?

Mr. Bruce Dalgarno: We would reject it. There are far too many problems with producer representation and government control.

Mr. Leon E. Benoit: Thank you.

Mr. William Farley: On flax, we try to stick to the flax part of the industry. However, we are totally opposed to the inclusion clause. If the exclusion clause were dropped, I guess we could look at it a little differently. But at the same time, if the legislation is not changed, we would be opposed to the bill.

Mr. Leo Meyer: As I pointed out in my presentation, we oat growers are producers of all other major crops too, just like most other farmers in western Canada. Specifically as to your question, I would have to say we would be opposed, and would reject it.

Mr. Dan Kelly: We view the inclusion clause as such a negative portion of this bill that on balance, we would have to reject the bill as well, if it were presented in its current form.

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Mr. Leon E. Benoit: Thank you.

Mr. Eugene Dextrase: May I also respond, Mr. Chairman?

We object to having it in there, and part of the reason is that it eliminates the opportunity for farmers to respond quickly to market signals. Also, the inclusion would be going against the wishes of our largest importer of seed, the Japanese, and our largest importer of oil and meal, the United States. It also goes against NAFTA and the whole idea of free trade, and we're very concerned that it gives bad market signals to the people in the canola industry. The crushers are also opposed to it. They feel it would be very damaging as far as their business is concerned. We're very concerned.

Mr. Leon E. Benoit: Thank you all.

Mr. Charlie Penson (Peace River, Ref.): First, I would like to welcome everybody here, particularly Mr. Dextrase and Mr. Meyer, both of whom are from my riding in the Peace River country of Alberta and operate big farms. Our family operates a 2,000-acre grain farm in that area.

It concerns me that we seem to be on a big merry-go-round here. This is not the first time we've talked about these issues in debate. In the last four and a half years this has been a debate across the area where the Canadian Wheat Board has jurisdiction. When I travel around my constituency and other parts, the debate is not about inclusion but whether there should be a voluntary board or not. So it surprises me.

But this isn't the first hearing either. The Minister of Agriculture had a hand-picked committee that travelled around western Canada for about a year and a half. He didn't come up with the recommendations the minister thought he should, in spite of the fact that he was a personal friend of the minister—I think he was his campaign manager in 1993—yet he listened to the farmers there.

That committee listened to the farmers. They said there was something wrong with the grain handling system and there had to be some change, but the minister ignored that. Instead he brought in Bill C-72. I went to some of those hearings as well—I think many of you were there—and we heard the same kind of concerns. But now what do we have? We have this thing being dragged back and reintroduced as Bill C-4. And now we have the inclusion clause, thanks to some members on the other side who have never had to function under the Canadian Wheat Board themselves, Mr. Chairman, unlike many members on this side in the official opposition.

I'd like to ask the members here two questions. First, where is the pressure coming from for inclusion in all of the different commodity groups that are not presently under the board? And if there was a dual market system, would they be opposed to the Canadian Wheat Board handling whatever grains or commodities they wanted?

The Chairman: Very briefly.

Mr. Bruce Dalgarno: The whole industry—the canola growers, the crushers and the exporters—have done very well over the last 30 years with our open market system, and I would propose that we stay with that. We would not even want to consider part of the board monopoly system.

Mr. Charlie Penson: Is there any pressure coming from your group to be included?

Mr. Bruce Dalgarno: Certainly not.

Mr. Eugene Dextrase: The members of COPA—the Canadian Oilseed Producers Association—in the letter they sent to represent their position, request that you remove the proposed inclusion clause from the amendment to the Canadian Wheat Board Act as a declaration of support of your government and the industry's pursuit of its level playing field, trade liberalization regime for oilseed products. I think that's quite clear.

The Chairman: Mr. Farley.

Mr. William Farley: In my presentation I think I explained that we have had a lot of problems with the Canadian Wheat Board and how it's operating. I think at this point in time we don't want anything to do with the Canadian Wheat Board, period.

Mr. Leo Meyer: Mr. Penson, if I understand your question, and it's not an easy question to answer, a significant number of farmers out there are of the opinion that if they could market canola, flax, oats and rye in an open-market scenario, so that the Canadian Wheat Board in a certain pooling system would operate without any government guarantee—and I have to stress that—then I would have to say.... This has to be studied. It's not really an option. We can elaborate on it because we probably did not put enough thought into this, but then in all fairness I think we should give those producers the right to participate. And then the Canadian Wheat Board should have the right to operate that way, but again, without government guarantees.

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Ms. Marilyn Braun: As we mentioned previously, our group does not represent a commodity per se. So in terms of where the pressure is coming from, I think the groups here have discussed that. We have asked ourselves where the pressure is coming from for the inclusion clause to be on the table today to be discussed.

On the dual market system, as we have gone through our survey results it has become clear that our members are very much in favour of a dual market system. They want to be given the choice.

The Chairman: Mr. Chrétien.

[Translation]

Mr. Jean-Guy Chrétien: Mr. Chair, I would like to congratulate the cpommittee that chose the witnesses. This morning, we have had a whole collection of four groups speaking against Bill C-4, which proves beyond a shadow of a doubt that these proceedings have not been rigged.

At First Reading stage, my party announced its intention of supporting Bill C-4. But this morning you've shaken me, especially as regards inclusion. My colleague from the Reform Party, Mr. Benoit, asked you how you would vote if you were MPs and Bill C-4 was presented as it stands. You said you would vote against. As an MP from Quebec, I can tell you that the Canadian Wheat Board is not really very important for Quebec grain growers.

I was going to say that a man is never taller than on his knees, but instead I'll say that only the ignorant and the stupid never change their minds. So it is not impossible that the Bloc Québécois, which is the party to which I belong, might withdraw its support for the Bill if that is the general wish. Of course, we have heard groups and positions that are the opposite of yours here this morning.

In the case of barley, flax and canola producers, the simple fact that the inclusion provision is in the Bill is apparently bad for their current customers. I have trouble with that, because we have a similar problem where I come from, with maple syrup. There isn't a marketing agency like the Canadian Wheat Board for maple syrup, but there are maybe seven or eight bodies that buy up maple syrup, and of course the producers sell freely under the table, by the side of the road. Some of you would like to have that double option for selling.

The system works quite well. There are years when revenues are way down, naturally, and other years when maple syrup producers rake it in.

I would like someone to explain to me why potential customers would be prejudiced against canola or oats if the inclusion clause remains as it stands in the Bill.

Second, if the single window is so damaging, wouldn't it be just as bad for wheat and barley producers as well? If someone else in the group could reply to my second question, I would appreciate it.

[English]

Mr. Eugene Dextrase: If I am clear on that, if canola is included under the inclusion clause, I think it would apply to producers of canola in Quebec, and there are getting to be more and more of them. If they were told the only people they could sell their product to was a government agency, what would they tell you? I think they would tell you they don't want that. That's the message we are getting in Quebec and everywhere else.

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The Chairman: Does anyone else care to respond?

[Translation]

Mr. Jean-Guy Chrétien: For example, why would the buyers [producers?] of canola be dissatisfied that Bill C-4 gives them the opportunity, whether as the result of a referendum or through the procedure provided for this purpose, to one day or another be part of the Wheat Board in the same way as wheat or barley producers?

[English]

Mr. Eugene Dextrase: If I understood the question, what would happen is that the canola producers couldn't sell their product directly to the crusher. It would have to be sold to the wheat board, bought back and then go to the crusher. The price goes up so the viability goes down, and the producer doesn't want that. His income goes down. It's money out of his pocket simply for administration purposes. It also becomes more difficult for the crusher to get it, so they don't want it.

Mr. William Farley: Can I give you an example? We are in the processing business in western Canada and we process crops for export. We also ship across Canada and in the Toronto area we have an organization that we're working with. This particular company asked us if we could supply them with durum wheat, and I said I would have to look into it because the Canadian Wheat Board would be the only agency that could, except maybe through seed.

I went through what I thought would be the proper channels, so I phoned Winnipeg and asked them. This person was buying his grain from Parrish & Heimbecker Limited, from the elevators in Toronto, and it was cleaned to export standards. The durum was good quality and there was no problem. He said it was not cleaned to high enough standards because it had to be recleaned. So we had to go to the effort to get it recleaned. He asked me if I could ship directly and I said I could—containers—so I went to work and found out what I could do.

I approached the Canadian Wheat Board and they wanted $9.63 to ship their durum. I asked them about the transportation and they said they'd take that off. Then I asked about the elevation, terminal and cleaning charges. They said they couldn't take that off, that if I wanted that back I had to go down to the local elevator and ask for it back. It's ludicrous to ask a grain company I'm not selling it through to give me back some money. I looked at this, and after cleaning all I could make was $10 a tonne. You were denying me a marketplace. Do you know what I got for my durum? I got less than $7 a bushel. Thank you.

The Chairman: Thank you. We'll go to Mr. Calder.

Mr. Murray Calder: Thank you, Mr. Chairman.

I'd like to direct my questions to Bruce and Eugene, first of all, and then to CFIB, and then I'd like to split my time with Mr. Easter.

Bruce and Eugene, you said the Canadian Canola Growers Association represents five provinces and 75,000 growers, and Eugene said the province of Alberta represents 24,000. If you're going to make a marketing decision, who out of your commodity group would make it? For instance, if the Canadian Canola Growers Association made a marketing decision, would that be binding on the other five provinces?

Mr. Bruce Dalgarno: The marketing decision—do you mean as a policy of the Canadian Canola Growers?

Mr. Murray Calder: That's right.

Mr. Bruce Dalgarno: That would be made at our semi-annual meeting with all the members present.

Mr. Murray Calder: That's great, because this is one of the things I've been trying to figure out—with the inclusion clause, who would represent a producer group. So you're saying that in your situation the Canadian Canola Growers Association would represent all the canola growers in Canada on a national basis.

Mr. Bruce Dalgarno: Yes, that's right.

Mr. Murray Calder: Okay, great.

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Mr. Eugene Dextrase: Mr. Calder, we would like to think so. Some other groups do not necessarily agree, and there is our concern. We do represent canola, but other people think they represent everybody.

Mr. Murray Calder: This is the quandary that we're going to have to work with here. I'll just let that go because my colleague Mr. Easter will probably pick up on where I've left off there.

I'd like to go to CFIB now. You've talked about dual marketing. Have you done a survey on what your growers think of the government guarantee?

Mr. Dan Kelly: We've not surveyed our members on the government guarantee issue. With respect to a number of the other provisions of the bill, I think that with things such as the government appointments on the board, the other provisions contained in the bill probably would be a lot easier for grain growers to accept if in fact there was the option of using the board or not using the board. When it's a monopoly and when it's compelled to use the board, that's where the rub starts to be experienced by our membership. That's certainly what's come out of our surveys.

But no, on your specific question, we have not asked our members that question.

Mr. Murray Calder: Are you suggesting to me, then, when you say a dual marketing system, that if the price is better if you're within CWB, you stay in there and you enjoy the government guarantee; or the next year if the price is better outside of CWB, you exercise that option? In other words, you're constantly jumping in and out.

Mr. Dan Kelly: Yes. To be fair, if there is a government guarantee involved, to be responsible you would have to be committing to the Canadian Wheat Board for the long term and wouldn't be able to hop between systems back and forth. In a dual marketing system where there was no government guarantee, then the wheat board might be able to structure itself to allow farmers to have the full range of options, of coming to the board one year and not going to the board the next year.

I certainly am sympathetic with the government backing up a guarantee. You certainly don't want people to use that guarantee when it suits them and not use it when it doesn't suit them. A system could certainly be arranged that would allow farmers the maximum amount of choices and yet still provide protection to the Canadian taxpayer.

Mr. Murray Calder: So if we didn't have an inclusion-exclusion clause, as you've suggested here, how would you carry on that process of jumping in and out of the Canadian Wheat Board?

Mr. Dan Kelly: If you eliminated the inclusion and exclusion clause, there would still be a monopoly maintained, I would assume, on wheat and barley.

Mr. Murray Calder: I have a guarantee to satisfy there.

Mr. Dan Kelly: Yes, I understand. I don't think the inclusion clause and the guarantee are necessarily intrinsically linked. There is a government guarantee under the monopoly standpoint. I'm not convinced that would have to be there under a dual marketing set-up.

The Chairman: Mr. Calder, you've left a couple of minutes for your colleague Mr. Easter.

Mr. Wayne Easter (Malpeque, Lib.): Thanks, Mr. Chairman.

There's one point I do agree with Mr. Penson on. This is certainly not the first time around in terms of looking at changes to the wheat board. In fact, the reasons that many of the changes are there in this legislation, including the inclusion clause, is because of the hearings we've held.

I certainly appreciate hearing your point of view and take it seriously, but in all seriousness, I do find the CFIB presentation full of contradictions.

On the one hand, you're asking for a dual marketing system and your question is very misleading in terms of a dual marketing system. If you're going to have a dual marketing system, you can't have a single-desk selling system. You either have a dual market or no single desk. It's that simple. You have to put a question in those terms: Either you have the wheat board or you don't. You either have the wheat board as a single desk or you don't; you have a dual market. No wheat board. It's that simple. If you go to that dual market, all you have is really another grain company.

On the one hand you're saying you want choice, and on the inclusion and exclusion clause you're saying you don't. You can't have it both ways. To me that's contradictory. I wonder what your response is to that.

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Mr. Dan Kelly: I'll answer the second part of your comments first. I think the issue of choice comes down to the fact that there is a monopoly, and I think choice is an important thing that we have to look at. If, for example, the majority of producers opted for a single-desk selling system, then that single-desk selling system would be applied to absolutely everyone. So if 40% of the farmers wanted the option of marketing offside the board, as is the case in barley, they would have zero choice. I think that is the rub for our membership.

I don't think there is any unclear information in the surveys. Our members have been very clear that they don't want to be subject to a black and white option. They would like to have the full range of choice offered to them. There are jurisdictions in the world where this exists. For some reason we in Canada are convinced, without even ever trying, that some sort of a compromise system, one of the unique qualities of Canada, just can't exist for grain and barley marketing. I don't think our members, myself included, can understand why we have to be subject to either having everything or having nothing, with no range of options in between.

The Chairman: I have to go to Mr. Proctor now for the next round.

Mr. Dick Proctor: Mr. Meyer, you said in your presentation that only left-wing extremists and socialists support the inclusion clause. I don't know whether you were here earlier this morning, but the Wild Rose Agricultural Producers made a presentation. Looking back at their brief, I'll just quote from it.

Mr. Wagstaff said, “Inclusion adheres to our organization's belief that the producer should decide how to market their product.” Now, should I be going over and seeing Mr. Wagstaff about taking out a membership in our party?

What is inherently wrong with proposed section 47.1, the inclusion clause, with the limitations that have been placed on it: that it's in writing, that it's considered by the board, and then that there's a vote by the recognized producers association? I fail to see where the problems are for the oat growers of Alberta in that.

Mr. Leo Meyer: I stand behind what I said about left-wing groups and a socialistic attempt. There will be some others, too, who are not necessarily in that camp who support that. There are people in the prairies who support the current system. In all those points being made, before and after us, it's very clear to me that when you're talking about including canola, oats, or flax, then you're dealing with a situation where you possibly could devastate an industry and industries that have carefully built themselves up to a position where they're really getting ready to take on the world.

If you picked up what I said about the philosophical standpoint, then you must also have picked up on the fact that I said very clearly there is a significant improvement in the quality of oats produced today versus what we had before. Before, in essence, a lot of junk was shipped into the Canadian Wheat Board system. What you have right now in the barley, for instance.... I'm not here to speak about the barley, but actually many producers would sell the poor barley into the board and keep the good barley for the open market.

I'm a significant oat producer, and I see like day and night the difference between what we had before and what we have now. You talk about Wild Rose. I believe I represent the producers who produce the oats and I'm not here for political reasons to argue one thing or another. I operate in the system every day. I'm not a politician. I should be running combines at home, but I'm here, and so I want you to realize this. I'm not here to say where I'm standing, left, right or in the middle. The fact is that we would stand up just like the canola growers, the flax growers, the rye growers, triticale growers, etc., to defend the position of an open market, and that's very important to us.

If I might just add 30 seconds to this, what was actually mentioned before about the inclusion and exclusion clause being dropped or not dropped has nothing to do with guarantees. The fact is we're talking about barley and wheat being on there and we're asking why the Federation of Independent Business is talking about the exclusion and inclusion clause to be dropped. It's just a principle of fairness. Instead of coming here and saying we want the inclusion clause to be dropped, we're saying let's drop the exclusion clause, too.

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Again, I speak for myself as a farm operator and farm manager. I operate daily in this system, and in my operation I have adapted barley as an open market crop because my barley goes to the open market. I'm fetching a significant premium. So it needs to be mentioned that markets have changed in the past 10 to 20 years. We have had long periods of depressed prices. Markets today are extremely nervous. We have come to a state where there is a limited amount of grain around the world. We may have a supply of 102%, 103% of the need at one point, but we could be at 99% and then we've got a shortage. If we had 103%, we'd have an oversupply.

If you say give us the choice of a wheat board or no wheat board...look at the hog marketing boards. They are apparently doing very well in the open market scenario. Some 80% to 85% of the people are participating with this board. The board actually streamlined the operation, and they're doing things much better today than before.

The Chairman: We have to go to Mr. Borotsik.

Mr. Rick Borotsik: I really appreciate your comments, by the way, Mr. Meyer. I don't know if it got through to some of the other members on the other side of this particular table, but it's very optimistic and I appreciate it.

I have a couple of questions, particularly about canola. Do you represent the canola producers? Do you and your organization represent the canola producers?

Mr. Bruce Dalgarno: Mr. Borotsik, we most certainly do. We have refundable check-offs in each of the provinces.

Mr. Rick Borotsik: I have to be quick, because I get only five minutes. The point I'm trying to make, and Eugene had talked about it, is will other associations be coming forward that also say they represent canola producers?

Mr. Eugene Dextrase: They may say so, but they do not represent canola, not in Alberta.

Mr. Rick Borotsik: Under this legislation, it says if you can prove that you represent the majority or a greater majority of those producers, you can then trigger the inclusion clause. My point is that you're not the only ones out there who think you represent canola producers. Is that correct?

Mr. Eugene Dextrase: I think the SARM group said this morning that the commodity group could as long as they talk to them first and they said it was okay.

Mr. Rick Borotsik: If somebody came forward saying they were going to represent canola and they wanted to trigger the inclusion clause, would you go to court?

Mr. Eugene Dextrase: That is not the way we like to do business.

Mr. Rick Borotsik: That's not the question. Hurry, I get only five minutes.

Mr. Eugene Dextrase: Absolutely.

Mr. Rick Borotsik: Thank you.

Do you have other members out there, another organization out there, who say they represent the flax producers?

Mr. William Farley: I would think the farmers union figures they represent everybody—

Mr. Rick Borotsik: Thank you.

Mr. William Farley: —but they do nothing. They're a perfect organization.

Mr. Rick Borotsik: No, no, we won't get political here. Would you go to court as the flax producers if somebody else came forward and wanted inclusion?

Mr. William Farley: I think we'd certainly look at it.

Mr. Rick Borotsik: Thank you.

Oats? Now, you're only in Alberta right now. Is there another Canadian oat producer?

Mr. Leo Meyer: I must specify that I said we didn't, but actually we do have affiliations now in Saskatchewan and Manitoba. We do have some members now in Manitoba.

Mr. Rick Borotsik: Who do you think would represent you?

Mr. Leo Meyer: We are beginning to be a prairie-wide organization.

Mr. Rick Borotsik: Who do you think represents the oat producers?

Mr. Leo Meyer: At this point, we do.

Mr. Rick Borotsik: If somebody else came forward and said they represented the oat producers, would you go to court?

Mr. Leo Meyer: Most likely.

Mr. Rick Borotsik: I'll see you in five. I'm coming back to you.

I was not part of Bill C-72. I have heard from my honourable colleagues across the table, however, that they were inundated with presentations of hundreds of people who wanted inclusion into the Canadian Wheat Board. Can you give me some understanding as to whether your producers were part of that inundation of individuals coming forward and saying they have to have the inclusion clause, to have this commodity in the wheat board?

Mr. Bruce Dalgarno: Mr. Borotsik, we certainly did not participate in Bill C-72, primarily because it dealt with wheat and barley and it did not deal with canola.

Mr. Rick Borotsik: Thank you very much.

Mr. William Farley: That's exactly the same answer.

Mr. Rick Borotsik: Thank you very much. Oats?

Mr. Leo Meyer: You bet, Mr. Borotsik. I participated in the Standing Committee on Agriculture that was travelling in Grand Prairie. I represented the wheat growers at that forum. Through what I heard and what was passed on to me, I did not hear any significant number of farmers asking for any inclusion clause. So for us it's a total surprise.

Mr. Rick Borotsik: Thank you very much. It was to me, too.

This is my second-last question.

The Chairman: It's your last question.

Mr. Rick Borotsik: I've still got time.

Very quickly, yes or no, inclusion and exclusion, if they both go, do you support it?

Mr. Bruce Dalgarno: The whole bill before—

Mr. Rick Borotsik: No, no, let's not get into philosophies. I don't think we can sell them on the real way we should be going with this. Let's assume that Bill C-4 is going to go ahead. But they won't take out inclusion unless exclusion comes out—both exclusion, inclusion.

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Mr. Leo Meyer: Oats.

Mr. Rick Borotsik: Oats, both inclusion and exclusion.

A witness: Yes, we said that.

Mr. Rick Borotsik: Thank you. I'm just confirming this for the record.

Governance: You guys are the business side of it. We didn't touch on governance, because we're talking inclusion and exclusion. Do you agree with the governance section of Bill C-4 with respect to an appointed CEO and appointed five members of the board?

Mr. Dan Kelly: We've not surveyed our members on that particular question. But I will say that I think our members would be far more comfortable with the government having a role in the governance of the Canadian Wheat Board if in fact farmers had an option in choosing whether or not they could participate. If the government still wanted to play a role in the governance of the Canadian Wheat Board under a dual marketing system, I don't see why there would be significant opposition within our membership on that particular issue.

The Chairman: Thank you, Mr. Kelly.

We'll go now to Mr. Harvard.

Mr. John Harvard: Thank you, Mr. Chairman.

My comments are directed to the commodity representatives. Explicit and implicit... [Editor's Note: Technical difficulty] ...jurisdiction of the Canadian Wheat Board over the will of the producers.

That's what I'm hearing from you, that their commodities would be drawn into the jurisdiction of the CWB against the will of the producers. But I think, gentlemen, you have a responsibility to demonstrate to this committee how exactly it would happen.

I've listened to all four of you and have not heard one word from you on how a rogue group, an unrepresentative group, a small group of producers, could somehow use the inclusion clause against the will of the majority. I think it's your responsibility to tell us how it will happen.

Let's not get into the argument of whether open market for some commodities is better than a monopoly under the CWB. That isn't what we're talking about. We're simply talking about a mechanism, an availability to a commodity group that may want to use the mechanism.

After all, gentlemen, this is a democracy. Chances are that when I listen to Mr. Meyer, he's probably horrified that the people of Saskatchewan or at least some people in Saskatchewan actually went ahead and elected a socialist by the name of Mr. Proctor, from that province. But you know, we live in a democracy. We have rules and we have procedures and they're set down. People of any political persuasion can use them. Even in this country a communist can run. I don't see too many of them elected. It is because people don't want them.

Now, one of you gentleman said, and I think it was Mr. Farley, you didn't see any significant movement in favour of the Canadian Wheat Board within the flax group. That's fine, end of issue. If a rogue group cannot use this instrument, what in the world have you got to worry about?

I think you used the figure that at least three to one are in favour of the status quo, that you're in favour of the open market system. Well, if you're right—and I'm sure you are right. I'm delighted the flax people support the open market system. I'm delighted the canola growers support the open market system. But if you're so supportive of the system, and I don't doubt your word, that should be the end of the issue.

I don't know how this iniquitous inclusion clause can somehow rise up in the hands of one or two people and have the CWB foisted upon you. I am delighted that you came here with all this good news about your industry. Given the fact that things are going well, I'm sure that most of you don't want to change. I don't know how in the world, just because there's an inclusion clause sitting in a piece of legislation, it can somehow rise up and bite you.

Mr. Eugene Dextrase: When the grain marketing review panel was struck, we were told that the results of the panel would be followed. The results said very clearly that no fundamental change in the marketing system for other grains, oilseeds, and special crops is recommended. That's quite clear. In a democracy it should have been followed. It wasn't.

Mr. John Harvard: Then how did it happen?

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Mr. Eugene Dextrase: It's not a matter of whether it would happen. There is a threat if it is in there, and our—

Mr. John Harvard: How would it be used?

Mr. Eugene Dextrase: It would appear that it couldn't be used, but it also appeared that the grain marketing panel's recommendations would be followed and they weren't. So we cannot tell what is going to happen in government. As long as it is there, there is a threat, and the industry has great fears of this. Every one of the members of COPA will stand up and say there is a threat. The Japanese will say this.

Mr. John Harvard: But you say that your people don't want it.

Mr. Eugene Dextrase: We don't want it, that's correct. But as long as it is there, there is the threat and that—

Mr. John Harvard: Who is going to foist it upon you?

Mr. Eugene Dextrase: It appears government can do it and will do it—

Mr. John Harvard: How? It would have to go back to you for approval.

Mr. Eugene Dextrase: We would hope so.

The Chairman: We will wind up with a small question from Mr. Penson.

Mr. Charlie Penson: I asked the question earlier, Mr. Chairman, and I don't think I got a response.

What I am driving at is if there were a dual market system for those people who wanted to use the Canadian Wheat Board to pool their product and accept the pooled price, would your commodity groups have any problem then with the inclusion clause? In other words, if the Canadian Wheat Board, operating alongside a private system...if the members wanted to pool and decided they wanted canola in the system, would you have a problem with it?

Mr. Bruce Dalgarno: Our biggest problem with it relates to our trading partners, the Japanese primarily as the largest seed importer and the U.S. as the largest oil and meal importer. Even if it were a dual market system, the Canadian Wheat Board still would set initial prices for their board grains. You've got to then have a floor price in Canada for canola. Our trading partners certainly do not like that aspect.

Mr. Charlie Penson: Okay.

The Chairman: Mr. McCormick, did you have a small question?

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): Thank you, Mr. Chairman. I have a comment for the CFIB.

It sure bothered me when I heard the results of your one survey of your members in Manitoba and Saskatchewan. I say this as a former member and a great believer in the CFIB.

I'm often told how people in the remote communities of the west, such as Ceylon and Pennant, recognized the value of agriculture and agrifoods. When you told me than only 70-odd percent of the businesses in the west thought it was most important for the success of their agricultural-based sector, it concerned me. I had always given the west more credit than that. We need to talk to those small business people, so they will recognize, as I hope more people will, the importance of your industry.

The Chairman: Thank you, Mr. McCormick.

Thank you for making your presentations here this afternoon.

Mr. Eugene Dextrase: Mr. Chairman, there was a very fundamental error made this morning, and perhaps I may correct it.

The statement was made that $6 billion to $7 billion is the federal government's contribution to the Canadian Wheat Board. I would like to make the statement that the Canadian Wheat Board funds come from the sale of the grains and are part of what would be the final payment to producers. The only dollars the federal government put in are in the guarantee, which has been triggered only twice in the history of the wheat board. That guarantee would be covered by the contingency fund under the new regime, so there are no dollars being put in by the federal government.

Mr. Wayne Easter: On a point of information, the government guarantees are three, really. One is the initial initial under this act, and previously it was right up to final payment. The government guarantees on borrowings actually did amount to $60 million in previous years and $80 million last year. So there are those guarantees as well, which are very substantial.

You are right on your point about the $6 billion to $7 billion. That is producers' money coming back to them, less administration charges on a very efficient system.

The Chairman: Mr. Meyer, you came a long way from your combine, so we will finish up with you.

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Mr. Leo Meyer: What both gentlemen tried to point out has to be integrated with the fact that when you have exports around the world, those exports could also eventually be financed in other ways than we do it today. I'm thinking about the Canadian export development agency. I'm thinking about different ways of financing grain sales.

What Wayne Easter was pointing out is right. He's talking about the savings the Canadian Wheat Board has when it borrows money to operate and finances temporarily large sales. Then there is a benefit, because the Canadian Wheat Board too can borrow for a lesser rate through the government than it could if it were an independent business entity and had to go to a bank or a financial institution to do so.

We have actually made a presentation in which we said we're sure there could be a more open market system and some middle ground could be found for something in between, where some financial institution, or institutions, would be more than glad to finance those with some type of arrangement together with CIDA.

The Chairman: Thank you all again.

This committee will reconvene tomorrow at 3.30 p.m. The meeting is adjourned.