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, April 21, 1998

• 0810

[English]

The Chairman (Mr. Joe McGuire (Egmont, Lib.)): Good morning. This morning's meeting is pursuant to the order of reference of the House of March 27, 1998, the study of Bill C-26, an act to amend the Canada Grain Act and the Agriculture and Agri-Food Administration Monetary Penalties Act and to repeal the Grain Futures Act.

We would like to invite to the table this morning representatives from the Manitoba Pulse Growers Association; the provincial chair and consultant for SCRIP, Mr. Bill Copland; representatives from the Western Canadian Wheat Growers Association; and the Western Canadian Marketers and Processors Association.

We'll have two groups. That is the first group, for the first half of the morning. After that, we'll bring in the Alberta Pulse Growers Commission; the Saskatchewan Canola Growers Association; the Western Barley Growers Association; and the Saskatchewan Pulse Growers. They will be in the second shift.

Do we have everybody here? Everyone is here.

Who would like to go first? Manitoba? I think we'll get presentations from each of you, and then we'll go to questions from each of the parties represented here on the committee.

Mr. Don Kuhl (Past President, Manitoba Pulse Growers Association Inc.): Good morning. Thank you for the opportunity to be here this morning to present our brief.

Manitoba Pulse Growers Association Inc. represents 2,500 Manitoba producers of peas, beans, lentils and fava beans. Manitoba producers are members through a mandatory refundable check-off system, of which 0.5% of sales go to the association and 96% of the producers are members.

The board is mandated to collect levies on behalf of pulse producers under the Manitoba Agricultural Producers Organization Funding Act. Our mission is to provide our members with production and marketing support through focused research, advocacy and linkages with industry partners. Over 50% of our annual budget is spent on production and marketing research. The balance is spent on domestic promotion, export issues through Pulse Canada and administration.

The board consists of ten producers and five advisory members, including research, government and industry people.

In 1997 Manitoba produced 280,000 acres of pulse crops: 55% peas, 35% edible beans, 5% lentils, and 2% fava beans. The total value of pulses to producers in Manitoba in 1997 will exceed $40 million. These dollars are multiplied several times in the processing industry and create employment in many rural communities.

In 1998 Manitoba will likely be the largest producer of edible beans in Canada, reaching in excess of 100,000 acres. Pulse crop buyers number in excess of 30 at present, and this has the potential to grow as the industry expands.

Our comments on Bill C-26 are as follows.

The Manitoba Pulse Growers Association has been involved with the discussions in the development of this bill for a number of years. The present situation is not acceptable because many of the processors are not bonded because of the cost. This leaves producers vulnerable to financial disasters, which can happen to large or small companies in these times of global economic uncertainty. The smaller processors are a vital part of the industry, as they are often able to develop new export specialty markets and provide required competition for producer crops.

Producers need a program to protect them against the financial failure of a processing company. The programs should be voluntary for producers. There needs to be an extensive educational program to inform producers of the details of this program. It would be preferable that only those producers that choose to be insured pay the levy. Mandatory levies are not popular with producers and may result in a large number of opt-outs, for only this reason.

• 0815

In summary, the Manitoba Pulse Growers Association supports Bill C-26. We also support the suggested amendments by the Saskatchewan Pulse Growers, which will be presented later. This bill will facilitate a healthy and competitive special crops industry in western Canada by eliminating the prohibitive bonding costs for smaller companies and providing special crop producers the option of insurance.

Thank you very much.

The Chairman: Thank you, Don.

Next we'll hear from Mr. Copland.

Mr. Bill Copland (Provincial Chair, Saskatchewan Farmer Consultations for SCRIP): Thank you for the opportunity to speak to your committee about Bill C-26, something that will certainly impact on the industry if put forward.

I am a farmer and a processor of special crops, primarily lentils. As well, I was Saskatchewan chairman of the group that in 1993-94 did the Special Crops Act initiative. We held nine meetings around the province and I attended every one.

This set of meetings with farmers gave us some of their thoughts, which I think are important and should be considered here. Many of them thought the current bonding was working okay. It has a good track record, with about one default in six years. They also realized that some people operate outside the security of a bond. To some this mattered, but most thought it was easily handled with only selling a bit at a time to unbonded dealers. When you get paid, you sell a bit more. Most farmers now deal to some degree in an unsecured world.

Everyone said it must be kept simple, which Bill C-26 is not. It has deadlines to get in or get out. We need to remember to apply for a refund of contribution if we are out. Many will likely forget some of these items, probably the refund, creating very unhappy customers.

Most farmers also wanted it to be optional. Some special crop producer groups told us in no uncertain terms they wanted no part of an insurance scheme—absolutely none.

Bill C-26 most certainly did not come from the farmers of western Canada in the meetings of 1993-94. It was talked about in bits and pieces, but was always rejected as another check-off, and check-offs are unpopular.

The problem today is policing the system we have, to make every dealer get a bond for security. I do not believe this new act will be any different. I am assured by the Grain Commission that this licence will not be given easily to every Tom, Dick, and Harry. This is good, and it may in fact be as difficult to get as a bond. It should be.

However, this tells me the new act gives no reason for the non-licensed dealer to voluntarily come to the table for a licence and financial investigation. People will still sell to dealers who have no licence and deduct no fund for security. To keep a handle on this, we will need a police force of some size, and cost will certainly be higher. The price of grain is currently at a very low level, and this added cost only takes away from an already slim bottom line.

What should we do? I would suggest legalizing today's scenario. Let dealers who want bonds come on a volunteer basis to buy them, and let whoever wants to deal without bonds do it. Do not try to hold the farmer's hand through all his business deals. Maybe do a bit of an educational program to let him know the unbonded dealer is out there and that he should ask about security before he sells.

Farmers need to accept some responsibility for their actions of doing business, and I know they will. The farmers we spoke to were willing to accept this method of doing business, as they have been used to it for years.

A great deal of grain moves in the seed section, feed outlets, etc., with no bonds in place. This has gone on for years, and people think this should also apply to special crops. Companies that are currently bonded would hopefully choose to continue to be bonded and to advertise it to add some customer comfort.

Why not make the current situation in the industry legal? Let us get on with the business. Let the Grain Commission off the hook for shortfalls of bonded or non-bonded dealers. The bonds usually cover most of the shortfall in this scenario. Get the government out of the scene. Let the Grain Commission do a service for a fee.

• 0820

Business gets done by two methods. Either the regulator beats the people into conforming with the rules, or the guidelines of doing business are such that they make business sense on their own, attracting the people of the industry to conform to the rules of their own volition.

Maybe small bonds and simpler reporting will attract more dealers to this route. I much prefer the voluntary method of doing business. I'm also sure that many who are currently licensed and bonded would remain so.

In any of these cases, the farmer needs to be somewhat more wary than he's been in the past. This will only happen over time and cannot be enforced.

I beg you to consider this very carefully and design an act that is acceptable to the farmer and the trader and is not going to cost anything to police—just supervise.

Thank you.

The Chairman: Thank you, Mr. Copland.

We'll hear from Mr. Simpson.

Mr. Greg Simpson (Representative, Western Canadian Marketers and Processors Association): Good morning, Mr. Chairman and members of the committee.

I'll give you just a bit of background on what the Western Canadian Marketers and Processors Association is. We represent companies that process special crops such as peas, lentils and chickpeas. These crops are usually priced in a contract before we receive the product at our facilities, which specialize in removal of foreign materials, sizing and grading before shipping for export standards. There are about 250 to 300 of these operations in western Canada which are a vital asset to the economy. They provide employment to many skilled and unskilled people as well as contributing to the goods and service sector in keeping these operations maintained.

Along with farmers and researchers and other agencies, the processing sector has made possible the development of the special crops industry by investing millions of dollars in efficient, high-capacity operations to meet the ever increasing demand for these products from customers all around the world. The special crop industry is a vibrant and exciting segment of the agriculture industry and contributes over half a billion dollars annually in gross revenues.

The current Canada Grain Act is viewed by the processors as a hindrance to the competitiveness and sustainability of this industry. The Canadian Grain Commission has removed the exemption which once upon a time allowed processors to purchase special crops without being licensed. As a result, there have been instances of the RCMP invading businesses, and many others have received letters threatening to have the RCMP sent out to their operations. This Gestapo style of enforcement is extreme and expensive.

A compromise had to be reached between the two opposing factions. On one hand, you have those who oppose further regulation and view it as being expensive and reducing competitiveness, and on the other hand, you have those who embrace stiff regulation because they want protection for the grower. In our view, SCRIP represents this compromise, provided the main principles behind the amendment are adhered to.

The first point we'd like to make is that even though it's mandatory for processors under this amendment to be regulated, the Western Canadian Marketers and Processors Association wants special crop growers to have voluntary participation. We feel that's vital.

The advisory committee must have the power to determine the fee structure for licensing and who the administrator should be. The cost of administration must be reduced and the amount of audits must be reduced to a more practical level.

Third, the requirement for processors to have bonds and letters of credit needs to be eliminated. Currently, millions of dollars are tied up and secured to the Grain Commission. These millions of dollars are reducing much needed capital that needs to be released to the marketing effort of these crops.

Fourthly, this is an act that should be designed for special crops only.

Last, this act should be given a high priority. We have several processors currently violating the current act. The amendments to the act, its lower cost and the elimination of bonding will allow smaller processors to enter the export market.

Thank you.

The Chairman: Thank you very much, Mr. Simpson.

Keith Lewis, please.

Mr. Keith Lewis (Saskatchewan Director, Western Canadian Wheat Growers Association): Thank you, Mr. Chairman.

The Western Canadian Wheat Growers Association would like to thank the agriculture committee for the opportunity to provide input on Bill C-26.

The association is on record as supporting the move to repeal the Grain Futures Act and placing responsibility for the regulation of the Winnipeg Commodity Exchange with the Manitoba Securities Commission.

Our concerns with Bill C-26 specifically relate to the Special Crops Rural Initiative Program, SCRIP. As a significant number of our members are growers of special crops, we're compelled to provide input on the proposed legislation.

• 0825

The issue of licensing and bonding special crops dealers arose as the production of special crops increased dramatically across the prairies. Underpinning the proposed legislation in Bill C-26 is the government's need to regulate emerging industries and protect farmers in the case of business failures.

The simplest solution to the issue would be to exempt special crops from the Canada Grain Act, which requires dealers to be licensed and bonded.

The special crops industry has flourished in the absence of regulation, and there is limited support for such legislation in the farming community. However, if legislation is to be imposed on the industry, at the very least it should take the form of a fully voluntary participation in any insurance scheme.

The regulations proposed in SCRIP fail, in our opinion, to meet the demand for a voluntary program. The insurance program in SCRIP is intended to be voluntary, however, producers are required to pay a levy of 38¢ per $100 of sales, which licensed dealers will be required to collect at the point of sale.

If producers want to opt out of the program, they must do so in writing to the Canadian Grain Commission. They must apply to the CGC for a refund of the levies they paid during the year. This method of collecting the levy is a form of negative billing. It's as unacceptable to the farming community as it has been for most consumers. As well, the program is not voluntary for special crops dealers, who are required to be licensed by the CGC.

Western Canadian Wheat Growers Association delegates passed a resolution at our annual meeting earlier this year regarding the proposed system of licensing and security provisions for special crops growers and dealers. The resolution is attached for your information.

Similar resolutions were passed by delegates to the Saskatchewan Pulse Crop Development Board, Saskatchewan Canola Growers Association, and the Western Barley Growers Association, although the SPCDB subsequently chose to support the legislation in Bill C-26 in its current form.

Earlier this year, the Western Canadian Wheat Growers Association, WCWGA, met with the CGC president, Barry Senft, and his staff, as well as several members of the SCRIP committee, to discuss our concerns. We expressed our opposition to the negative billing aspect of the proposed legislation and questioned the need for the CGC to be involved at all, given that the industry has managed without them thus far. We also advised the committee that farmers are businessmen and businesswoman who should be prepared to do their own due diligence in dealing with special crops buyers and who don't need to be protected.

In addition to the problems with the pseudo-voluntary nature of SCRIP, we're also concerned that the annual licensing requirements will restrict developments of the special crops industry and will prove to be onerous for both the new and small special crops dealers.

If the licensing and insurance scheme were truly voluntary, dealers who choose to be licensed could use it to add value to their business for farmer customers. Farmers could choose to deal with an unlicensed and uninsured company with the full knowledge that they wouldn't be eligible for compensation in case the company failed to meet its financial obligations. It is likely that most firms would choose to be licensed and insured anyway as part of their business plan.

As wheat growers, we are also concerned that the CGC is considering including cereal and oilseed crops in the program. If the proposed legislation is all-encompassing and will require only regulatory additions to include wheat and other cereals and oilseeds, then we must demand that the SCRIP section of Bill C-26 be repealed entirely.

We acknowledge that there are conflicting opinions about the SCRIP component of Bill C-26. However, one of the underlying principles of the attempt to deal with the emerging special crops industry has always been simplicity. We reiterate that the simplest option would be to exempt special crops from the Canada Grain Act and allow the industry to continue to develop as it has in the past, with few problems. Barring that, we urge the agriculture committee to amend the act to make SCRIP entirely voluntary for both producers and processors.

Thank you.

The Chairman: Thank you all very much.

As you know, the committee is made up of members from all parties, so we'll go first to the official opposition, Mr. Jay Hill.

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

Thank you, gentlemen, for appearing today.

I'll first direct a question to all four of you, because I think I heard that all of you indicated that as for the producers you're representing here today, you feel that they all would rather see a voluntary check-off, if a check-off is necessary, to cover insurance. Is that correct? Did I hear correctly from all four of you on that?

• 0830

Okay. In other words, as it's presently constituted in the legislation, this negative option billing, the check-off and the fact that the farmer has to keep detailed records and apply at the end of the year for his money back—in effect, be taxed up front and then apply for a tax return at the end of year—is unacceptable to you and to the growers you represent.

Mr. Greg Simpson: In cases with regard to the processor, the problem we would have with a voluntary deduction is the administration of all this. In some cases, if you're going to be deducting for insurance, there inevitably could be a mistake made at the beginning of the contract with the grower. There may be a mistake in terms of whether he was in or out of the plan. What would happen if he did go bankrupt and he said, “Gee, I thought you had deducted my money; it should have been in there”? With regard to the $380 per $100,000 of sales, certainly the concept is negative, but I don't think the dollar amount is significant.

If we're going to go ahead with this, I want it voluntary, with mandatory deductions, so that as the processor is dealing with these farmers, we don't have to determine on every deal who's in and who's out.

Mr. Jay Hill: Do you have any concerns, being a processor-dealer, that you will be viewed by the growers as a tax collector once this comes in? I know I've run into that when groups have tried to institute other check-offs. The grain buyers, as it were, were very uncomfortable with collecting that, because they felt they would be the people on the front line, and if there was any animosity towards the program, it would be directed at the person who actually deducted it off the cheques.

Mr. Greg Simpson: I guess in any situation we're trying to look for a means in order to give a farmer an option. I think as long as he has an option, he knows he gets these dollars back. I think that's the main point I want to make, that he does have the option to be voluntarily in the plan or not.

If somebody was to come and tell me I was a tax collector, I'd say not necessarily, because it was going right back to them. This is for those people who want to have protection for their sales. I've heard farmers tell me that's exactly how they have to look after the GST to get it back. It requires extra paperwork and extra administration on the part of the farmer to track that and then actually apply to get it back at the end of the year.

Mr. Jay Hill: Right.

Mr. Greg Simpson: I guess you'd have to weigh the potential for somebody to make an error. If you're going to have it so that the farmer can say, up front, no, they don't want to pay this levy, then what if there is a mistake made, all of a sudden there is a bankruptcy, and he comes back later and claims it?

Mr. Jay Hill: As a buyer of special crops, is there any way you can envision flagging a farmer's name if they chose to opt out?

Mr. Greg Simpson: Not very easily. In every deal I make, the concentration from the grower's perspective is more “How much am I going to get paid for this commodity? When is the delivery? How fast can I get paid?” So the price, delivery time, and speed of payment are more the fundamentals of the contract than worrying about getting paid, quite frankly.

Mr. Jay Hill: Do you have a comment on that, Mr. Copland?

Mr. Bill Copland: On that very point, I guess there's not much reason it couldn't be like canary seed. For canary seed, you need a GST number. When that first started, if farmers came without a GST number they didn't cut a cheque. I'll tell you, after the first deal or two, they brought their number with them. Now it's pretty much automatic that they travel with it.

Further, part of the issue is I think being missed in some of the commentary here. This whole industry began with an idea in somebody's head about growing pulses and selling them, not even knowing that you needed a bond and a licence and all the things that we suppose in this bill should be there to guarantee the grower payment.

But if we do some of these things, the fear lies in the countryside that given a complete involvement of this, we'll maybe never see this again. I think it's a real crime when you take the rules and wrap them around people so tight you cannot have the freedom to move. It may only be a load or three initially, but the spark is taken away for a whole new industry that may be down the road somewhere. Who knows? I have no idea. That's a paramount thing that we should be thinking about here, as well as future protection. I don't mean there are no guarantees in place.

• 0835

The Vice-Chairman (Mr. Jay Hill): Mr. Copland, I think you indicated that there were nine Saskatchewan meetings that you attended. I think you said you chaired them.

Mr. Bill Copland: Well, I was the chairman of some. I didn't chair them all. Different people chaired them.

The Vice-Chairman (Mr. Jay Hill): But you were at all of them?

Mr. Bill Copland: Yes.

The Vice-Chairman (Mr. Jay Hill): How many farmers would you just guesstimate were present?

Mr. Bill Copland: About 200 to 250.

The Vice-Chairman (Mr. Jay Hill): What would you say would be the percentage who supported Bill C-26 as it exists today, through the discussions that took place?

Mr. Bill Copland: I don't know if that would be fair. I don't think very many. I alluded to it being called a check-off. That was the first thing that came to their minds when we spoke about this thing. It's just another check-off, which isn't a very popular—

The Vice-Chairman (Mr. Jay Hill): Mr. Kuhl, did you attend any meetings in Manitoba? Did they have similar meetings in Manitoba?

Mr. Don Kuhl: Yes, sir, we did. We had approximately four or five meetings. We had very poor attendance. The highest numbers were about ten farmers at these meetings. We also advertised it in our quarterly publication that we send to all pulse growers. We had a mail-back in there, but we had very little response to it.

Further to that, as a producer, I'd like to say that I'd like to see my costs come down. Presently, the system is too costly. We're trying to modify the system. There are many faults in it, but I believe and presume that through regulations we can make it suitable for many processors, and many producers as well.

Presently, the system we have does not work. Changes have to be made. This is a compromise. Given time, and if there's enough flexibility left in the act so that things can be changed through regulations... I think it's one of the best ones available presently.

The Chairman: Okay, thank you very much.

Madam Alarie.

[Translation]

Ms. Hélène Alarie (Louis-Hébert, BQ): If I understand correctly, the present system is not effective. If it were optional, you might be interested. I understand that you are absolutely opposed to any system of negative billing and that you would prefer a system of optional participation. However, don't you think that this would make the system weaker? As a matter of fact, there are fixed costs as well as fixed operational costs that will be added to the administrative costs and that would make the system much more expensive for each participant.

If the system is not adapted to the needs of farmers, there is a danger that an optional system would jeopardize the changes that you would want to bring to Bill C-26.

[English]

The Chairman: Anybody in particular?

Mr. Greg Simpson: May I speak on that?

What I want to point out is that a lot of processors who were originally unlicensed were buying outside of the act. It's only since that exemption came in that these processors were now in violation of the act. We had to now be forced into some kind of a system that was a compromise. This is what we have, a compromise position.

Certainly we're going to be regulated as processors, but I don't think we should force this regulation upon farmers. I do believe it's essential that those farmers who want to be outside of the regulatory environment have the opportunity to say no, I don't want anything to do with it.

• 0840

As these gentlemen were saying, they can manage their own affairs. They'll make the decision as to who they want to deal with. They'll make sure that if it's my plant, I'm going to pay them.

Certainly if it has an effect on the cost—which gets right to your issue of fixed costs—if it's going to cost more for those people who are in the plan, so be it. But it's important to not get too focused on the cost; it's more important to get fixed on the idea that the farmers have a choice in this matter.

Mr. Bill Copland: If I might, I kind of agree with what's been said here. Very many farmers absolutely don't want to be forced into doing something like this. If there's one thing I heard when we had these meetings, and I don't think that's changed at all, it's that they just do not care to have a plan like this forced on them. No doubt many will take part in it, but there's a good percentage that don't care to be forced into an issue like this.

[Translation]

Ms. Hélène Alarie: I believe that the main irritants are optional billing and paperwork. Am I right?

[English]

Mr. Bill Copland: I think in many cases the main problem is no choice. They don't like somebody else making up their minds for them.

If I might just back up a minute, the industry has grown, as I said, from a fledgling state to a very aggressive, fast-growing system at the moment. Many of these people were part of that beginning. In those stages of the industry, nobody was bothering them to any degree about complying with rules like this, as it is still in canary seed and some of these others. Canary is not part of the grains act, and that's why some people grow it.

I have no problem paying some insurance for anything if I need it, and I don't think most farmers do; it's just that somebody is telling you to do this, and it's not their lifestyle or nature to go with this.

[Translation]

Ms. Hélène Alarie: Could I ask a brief short question to Mr. Lewis.

[English]

The Chairman: Mr. Kuhl, do you want to answer that?

Mr. Don Kuhl: Yes, Mr. Chairman.

Presently we have been and are in the form of negative billing. Bonding and licensing costs money, and it's indirectly passed on to the product that producers produce.

[Translation]

Ms. Hélène Alarie: My final question is for Mr. Lewis.

[English]

Mr. Keith Lewis: Mr. Chairman, if I might, I'm not getting any translation here. Is there something I'm not doing right?

Mr. Bill Copland: She wants to talk to Keith, so I'll let him use my earpiece.

Mr. Keith Lewis: My apologies.

[Translation]

Ms. Hélène Alarie: No problem. I think it would be worse for you if I'd started speaking English.

Mr. Lewis, your stated that there should be amendments to the Bill if we decided to include cereals and oilseeds. Could you tell us what type of provisions should be added?

[English]

Mr. Keith Lewis: It seems that the proposal to extend this, as I understand your question, to include other grains and oilseeds would replace the current licensing and bonding system that we have right at the moment, which I'm somewhat familiar with. That system, in my view, is adequate and it works quite well for the participants in the grains and oilseeds sector of the grain industry.

• 0845

I really feel that if you were to include other grains and oilseeds while using the same model as SCRIP, you would really change the relationship between the customer and the company. I'm involved in a grain company in southeastern Saskatchewan. We just built an inland terminal, and we operate a couple of other additional elevators. I think it would affect our business adversely if we were to act as a check-off collector on behalf of the farmer in order to ensure that he would have his risk managed in dealing with us as a company. I think that would fundamentally change our customer relationship, and I think that would apply to all companies that operate in western Canada.

The Chairman: I thank you very much.

Mr. Harvard.

Mr. John Harvard (Charleswood—Assiniboine, Lib.): Thank you, Mr. Chairman.

Mr. Lewis, you alluded to some resolutions passed indicating a lack of support for or an opposition to Bill C-26. Do you have any evidence of lack of support for the bill, other than those resolutions?

Mr. Keith Lewis: From the Western Canadian Wheat Growers perspective, we do respond to the resolutions that are passed at our annual general meeting. This one was passed with a substantial majority, and we feel it does reflect the viewpoint of a very significant number of producers. We've had numerous comments from our membership reflecting concern with this legislation as it applies to the marketing of specialty crops. Of course at this point in time I don't think anyone's aware that this could potentially extend to other grains.

Mr. John Harvard: How many people attended your wheat growers meeting, and how many would have voted in favour of that resolution?

Mr. Keith Lewis: I would give you approximate numbers. At our annual meeting this year, I think registration was close to the 400 mark. In terms of the actual numbers supporting and opposing this particular resolution, I can't give you those numbers. I would suggest it was a substantial majority that supported it.

Mr. John Harvard: Even if you had over 200 voting in favour of the resolution, do you really think that's reflective of the farm community in the three prairie provinces?

Mr. Keith Lewis: I would suggest that it is a good reflection of that, sir. I think we have a very significant cross-section of farmers belonging to the Western Canadian Wheat Growers. We do have a membership in the neighbourhood of 6,000 in terms of actual voluntary, paid members. I think we could say we represent a significant body of opinion in the agriculture industry.

Mr. John Harvard: On the matter that you raised about the Grain Commission showing some interest in perhaps drawing cereal grains and oilseeds into the provisions of the plan under Bill C-26, this is news to me. I know of no such intention. Where do you get that information?

Mr. Keith Lewis: I don't think I said the Grain Commission was intending to draw—

Mr. John Harvard: Well, I wrote my note down, and you said the Grain Commission was considering it.

Mr. Keith Lewis: I would have to refer to my notes, but that certainly wasn't the information I intended to provide to you.

Mr. John Harvard: What were you intending then?

Mr. Keith Lewis: I think I was referring to the SCRIP initiative that was to include crops other than specialty crops. That was the impression I intended to leave.

Mr. John Harvard: Okay.

You talked about changing the relationship with your customers at the elevators, and you were concerned about the check-off. If they were concerned about some of the farmers having to pay this levy, Mr. Lewis, would there be anything stopping the dealers from paying the levy themselves and taking ownership of the reimbursement at the end of the crop year?

Mr. Keith Lewis: I think the simplest method would be just to make it voluntary, just to allow the farmer to make the choice.

Mr. John Harvard: But that isn't the question that I asked. I asked whether or not it would be possible for dealers to simply pay the levy themselves.

Mr. Keith Lewis: Why would they do that?

Mr. John Harvard: Well, they're in a competitive situation. I've gone to stores where they've offered to pay the GST or the PST as a competitive scheme. Would the dealers ever consider that?

Mr. Keith Lewis: I'm sorry, but I can't speak on behalf of the dealers.

• 0850

Mr. John Harvard: I'm just asking you to speak on behalf of yourself.

Mr. Keith Lewis: On behalf of myself?

Mr. John Harvard: Yes.

Mr. Keith Lewis: I would prefer not to collect it at all.

Mr. John Harvard: Okay.

Mr. Keith Lewis: If I were wearing my grain company hat, that would be my preference.

Mr. John Harvard: I have a question for Mr. Copland.

Mr. Copland, I think you said that you want a voluntary scheme or perhaps none at all. I think you said that farmers don't want to be held by the hand. Is that right? They're big boys and they can look after themselves.

Mr. Bill Copland: Some of them.

Mr. John Harvard: Most of them?

I noted it on my paper here: farmers don't want to be held by the hand.

Mr. Bill Copland: I think that's right.

Mr. John Harvard: And then earlier, you said that Bill C-26 wouldn't be simple, and that it would be difficult, perhaps, for farmers to remember to apply for the refund. Something doesn't add up, Mr. Copland. On the one hand, you have these strong, individualistic farmers who can stand on their own two feet, and yet in the next breath you say that they can't even remember to apply for a refund. Which is it?

Mr. Bill Copland: Most of these programs are somewhat involved, with deadlines. Deadlines are the key to it all, and I've seen almost everybody in the world forget to do this and that from time to time, and this is a fairly integral part of an operation like this—

Mr. John Harvard: I grew up on a farm, Mr. Copland, and I have a high regard for farmers. If I were a farmer and were told by you that I couldn't remember to apply for a refund, I would take that as an insult. I would take that as a real insult, that I am so stupid that I couldn't even remember to apply. Is that how you think of your fellow farmers?

Mr. Bill Copland: I don't think so.

Mr. John Harvard: That's what you said, though.

Mr. Bill Copland: There's a lot of paperwork. It seems that every time a farmer turns around he gets another piece of paper he needs to slip into a system. If you have a computerized thing that brings it up on a daily basis and says you have to do this today because the deadline is up... It's no different from car licences. How many people do you see driving around with an outdated licence on their car? And driver's licences even—

The Chairman: Don't remind me.

Voices: Oh, oh.

Mr. Lewis, do you want to respond?

Mr. Keith Lewis: Could I respond to Mr. Harvard's comments?

We have a proliferation of check-offs in this industry at the moment. A number of organizations are checking off on our grain sales. I would suggest that a lot of farmers grudgingly accept this, and they're told, yes, this is voluntary, yes, this is mandatory, but it's voluntary. In other words, they're told that it gets taken off their cheques and that they then can “voluntarily” ask for it back.

As Mr. Copland has said, there are deadlines involved and there's paperwork involved. Most farmers resent the fact that they have to sit down every so often and figure out all these check-offs that they have to apply for if they so choose. Doing this becomes a rather onerous task.

Mr. John Harvard: It's just one more thing, in other words. It's just one more in the whole scheme of things that farmers have to do.

Mr. Keith Lewis: It's another thing that they have to do after the fact.

The Chairman: Mr. Proctor.

Mr. Dick Proctor (Palliser, NDP): Thank you very much, Mr. Chair, and good morning, gentlemen.

Mr. Simpson—I'll direct this to Mr. Simpson, but maybe the others will want to participate—I assume that we'll see at least some technical amendments to this bill. Have you gone through it? Has your organization gone through it? Do you have specific recommendations that you would bring to the committee?

Mr. Greg Simpson: As far as more amendments to this are concerned?

Mr. Dick Proctor: Yes.

Mr. Greg Simpson: To Bill C-26?

Mr. Dick Proctor: Yes.

Mr. Greg Simpson: There aren't really a lot in amendments to the bill itself. I think the meat of this will be determined in the regulations. I'm more concerned, actually, with the fact that if we put an act through and it becomes law, then will we have enough say in the development of the regulation so that in fact we have it regulated the way we want it to be? We don't want this to become burdensome. We feel that the current Canada Grain Act is burdensome. We certainly want to see a reduction in the amount of regulation that we have.

Mr. Dick Proctor: I think all of you, to a greater or lesser extent, have reflected that here this morning.

• 0855

What about the other groups here? Are there specific...? We've heard, I think articulated very well, about the negative option billing, about the voluntary versus mandatory. Are there other specifics of the bill we should be looking at as legislators, from your organizations?

Mr. Bill Copland: I guess I keep coming back to the policing of the system. That's what the problem is currently with our existing bonding and licensing program. Currently we've chosen to let it slide. We're not being terribly hard to get along with.

I see us in the same predicament with this bill as it's written. I see no reason for me, as a small—and I'm going to say “poor”, or incapable of getting... If I can't get a bond currently, I'm suspecting I won't have a very good time getting a licence in the new regime. If I can, I think I'll just keep doing business, leaving us in the same boat we're currently in.

That, I would like to see addressed somehow. My solution to it is, don't bother them. Our industry started with these kinds of people. In fact, it's running now very well. I don't know what small dealers are in trouble or aren't in trouble, but it's no different from the car dealer or the ag supply dealer or the feed dealer or somebody I had a little deal with and who went broke and left me.

I'm afraid we may miss a major new program down the road somewhere if we get everything all tied up and don't let these individuals... The Cargills and the Bunges of the world aren't going to start a new program like this, of special crops. It's going to be some farmer in the backwoods of somewhere who has an idea, and a customer somewhere he's going to try to work with around the world. I'd like to see that idea flourish a bit, if I could.

Mr. Dick Proctor: To a greater or lesser extent, all of you I think have said “If it ain't broke, don't fix it, and it's not badly broken at this point”. One of you—I've forgotten who—said there was one default on a bond up until now.

Mr. Bill Copland: I alluded to the bond thing working very well. I think there's a default about every six years, although I could stand to be corrected on that.

So it's not that bad. There are going to be defaults, I don't care what system you bring out there. I think the current bond system—and I may get chewed out here—hasn't been that bad.

Mr. Dick Proctor: Anybody want to chew out Mr. Copland on that?

Mr. Don Kuhl: I don't want to chew out Mr. Copland, but I would like to add a few comments. As the law states right now, I think, all dealers are supposed to be licensed and bonded. I guess those regulations have not been followed up. Any game has to have rules and regulations, and they have to be enforced. Presently they have not been enforced. If they were enforced, it would create tremendous hardship on some of these small processors, and we as producers need these small processors. They are the innovative fellows who get these markets for these specialty crops.

We have to make it easier for these processors to do business, and do it right. Therefore, I believe we have to have rules and regulations. They have to be enforced, and they have to be enforceable.

Mr. Dick Proctor: Thank you very much.

The Chairman: We go to round two, and Mr. Hill, I believe.

Mr. Jay Hill: Thank you, Mr. Chairman. I have a couple of points to follow up on what Mr. Harvard was saying.

Mr. Lewis, as a western wheat grower, do you use a delegate system at your annual general meeting?

Mr. Keith Lewis: No, we don't.

Mr. Jay Hill: So all the members are invited and they represent just their own interests? They don't represent anyone else?

Mr. Keith Lewis: That's correct.

Mr. Jay Hill: What's your membership?

Mr. Keith Lewis: We have in excess of 6,000 members at the current time.

Mr. Jay Hill: I see. So you do feel that even though you don't use a delegate system, where they represent an area or group or sub-group of the overall organization, when they voted on this resolution they were representing a fair reflection of the overall 6,000 members.

Mr. Keith Lewis: I would suggest they were representative.

Mr. Jay Hill: Have you heard back from the members who were unable to attend the annual general meeting that they were in opposition to the resolutions passed at that meeting?

• 0900

Mr. Keith Lewis: Recently we've had some interest in this issue. As you're aware, we deal with a lot of different issues. This particular one has surfaced more recently as being of concern to farmers. We have had representation in our office by our membership to address this issue. Subsequently, we drafted our submission to your committee.

Mr. Jay Hill: I want to pick up on what Mr. Harvard raised about the possible inclusion of the six standard grains.

The Canadian Grain Commission appeared before the committee a couple of weeks ago. I referred to a news release, a communiqué that they had sent out in a question and answer type of format. It's in the minutes of the committee meeting, and I referred to it. A question was put down on their own communiqué as to whether it could be extended to include this initiative, which is that SCRIP would be extended to include cereal grains and oilseeds. Their answer was that it was conceivable that this model could be applied to cereal gains and oilseeds. I wonder if you were aware of that communiqué and that they actually said this.

Mr. Keith Lewis: Actually, at that point in time I wasn't aware they had actually said this.

Mr. Jay Hill: Okay. I just wanted to clarify it, because it seemed that Mr. Harvard was pressing you for why you were led to believe that the Canadian Grain Commission might be, at some point in the future, at least looking at extending this.

Mr. Keith Lewis: I have had suggestions that the Canadian Grain Commission would prefer to be out of licensing and bonding completely. That, I believe, was the source of the comment I made. I think what you suggested only reinforces that.

Mr. Jay Hill: Thank you.

Mr. Kuhl, you referred in some of the questions earlier—I don't know to whom it was in response—that the present bonding is in effect, in your opinion, a form of negative option billing anyway.

Mr. Don Kuhl: It certainly is.

Mr. Jay Hill: How do you see that? There's no way that they can opt out right now. It's an input cost. Many input costs directed at farmers are included in the cost of doing business when they ship their grain. I'm assuming the cost of the insurance would be included in the handling charges, elevation charges, or whatever.

That's not negative option billing. Negative option billing is when you have an option of opting out.

Mr. Don Kuhl: Maybe rightfully so, but still, there's a hidden cost. Let's face it, all costs of licensing, bonding, elevation go back to the product the producer produces.

Mr. Jay Hill: That's exactly right. It's a hidden cost, but this new system would not be a hidden cost.

Mr. Don Kuhl: That's right.

Mr. Jay Hill: I'm having problems with your comparison of them being the same thing. Under the present system, the dealers can shop around for their bond, can't they? They can buy a bond from different... Maybe Mr. Simpson would be able to enlighten us.

Mr. Greg Simpson: You have the option to have a bond or letter of credit. So some companies have LCs, some have bonds, or some have a combination.

Mr. Jay Hill: Would the cost be higher? It would be lower, presumably, as you could shop around for the best price.

Mr. Greg Simpson: That's right.

Mr. Jay Hill: Therefore, I'm assuming that in a competitive world, you would pass that best price on to your producers.

Mr. Greg Simpson: That's true.

Mr. Jay Hill: Under this proposed system, there would only be one person putting up the insurance, right? What is it called?

Mr. Greg Simpson: Export Development Corporation.

Mr. Jay Hill: The Export Development Corporation, thank you.

So there would no longer be any competition. The price would be the same to all dealers, and therefore, by definition, to all farmers.

Mr. Greg Simpson: That's correct. All the farmers would be paying a rate of about 0.19% or 0.2%. The insurance is 0.38%. The other portion is the administrative costs. That's an area where I think we have to get the cost down even lower so that it'll be economical to growers.

You have to realize where we were coming from as processors. There was a group of us who wanted to go the way Bill Copland was speaking about here as having no involvement at all, but the moment we tried to do that, the Canada Grain Act said that we were in violation of that act. So where do you go if you're in violation of an act? You've got to go to an option or a compromise. That's what this is.

As a result, we're able to eliminate the cost of bonding and letter of credit or the removal of capital from small processors so we can effectively do our job of marketing. For those growers who really felt they needed to have insurance, they pay for it. Those who don't want insurance are out.

• 0905

Mr. Jay Hill: To throw out a comparison, why wouldn't the farmers be required to pay for the insurance of the local equipment dealer? Lots of farmers have been penalized in the past. If they have their combine in at the dealer and it goes broke, if they're not carrying adequate insurance they lose their combine.

Mr. Greg Simpson: I don't think that would happen.

Mr. Jay Hill: I know that's kind of a ridiculous comparison, but if we go down this slope of the farmer picking up input costs directly through a check-off, that they have to pay the insurance in order to cover against the eventuality that a company may go broke, that's what we're really talking about here.

Mr. Greg Simpson: Yes.

Mr. Jay Hill: Do I have any time left?

The Chairman: You have one minute.

Mr. Jay Hill: Would the four of you be in favour of some way in which the power of the advisory committee...? I hear this from farmers. I myself used to farm for 20 years up in the Peace country, and one of the complaints I hear from fellow farmers is that they see the existing advisory committee to the Canadian Wheat Board, for example, as having been very ineffective in the past. It's arguable, but that's the view of many farmers.

So the concern here is that this advisory committee, if it's set up, actually act like a legitimate board of directors and have enough power to actually run the thing, and, as was Mr. Kuhl's concern, bring the cost down to the grower. How would you see that this could be accomplished? Have any of your organizations proposed any amendments to the bill to grant the advisory committee more power instead of leaving that in the hands of the minister?

Mr. Greg Simpson: I think definitely we have to have some kind of input. At this point, with the Grain Commission having most of the say in how the regulations...they're getting consultation, but in effect they still have the final say in what goes in.

So I think it would be important that we can have the option to say okay, we have another administrator that can do this better than the current administrator, at a lower cost, and then also be able to make suggestions to the minister so that we can keep this act from being over-regulated and too much of a burden for the people it affects in the industry.

Mr. Jay Hill: Would anyone else like to address the committee?

Mr. Don Kuhl: Yes. In another instance, they probably could be made of a board of directors instead of an advisory committee.

The Chairman: Thank you very much. We'll go to Mr. Harvard, then Mr. Proctor.

Mr. John Harvard: Mr. Kuhl, with the current system of bonding, because they have to pass it along to the producers, do you think the cost of bonding to the dealers is even more expensive than what this scheme will be, that at the end what we're choosing is a cheaper scheme or a cheaper plan?

Mr. Don Kuhl: Honestly, I could say we hope it is, and another basis is that they can opt out if they so feel.

Mr. John Harvard: But you said earlier that the current system is too costly.

Mr. Don Kuhl: That's right.

Mr. John Harvard: Do you think this particular plan that's being proposed will actually bring costs down?

Mr. Don Kuhl: We think so.

Mr. John Harvard: You were mentioning that there was relatively poor attendance at the meetings you attended some time ago. How would you interpret that? Would that indicate that most people would be supportive of this legislation?

Mr. Don Kuhl: We have to have an open ear as directors of organizations and see what farmers say. Many farmers believe they have security, but they don't if they deliver to unlicensed bonded dealers. For instance, in our area we have quite a few that are not licensed and bonded, and some that are licensed and bonded. This puts the licensed dealers in an uncompetitive position. Very often you hear them complain that the unlicensed dealer has an advantage, and still they're breaking the law.

• 0910

Mr. John Harvard: One of the motives behind the insurance plan is to bring more competition to the marketplace, to add to the number of dealers out there, I guess. My understanding is that currently over 95%, maybe 97%, of the special crops business goes to the big boys, the big operators. Do you think there will be more dealers under this insurance plan? Maybe that question should go to Mr. Simpson, but you can answer it as well.

Mr. Don Kuhl: In edible beans, for instance, I'd say about 96% of the product goes to smaller processors. There are very few big processors in the edible bean industry. They've tried it and they've left it.

Mr. John Harvard: Mr. Simpson.

Mr. Greg Simpson: This is a tough question. I have never polled all the processors, because there are a couple of hundred different plants. I really don't have a pat answer that there would be an increase in licensees or not. I can't honestly give an answer to that question. All I can say is that, as a processor, one of the deterrents for becoming licensed and bonded under the current Canada Grain Act was the fact that it removed much of the capital that we needed to expand our facilities and to build expanded sales.

By removing the bonding and letter of credit requirements for processors and by reducing the costs, I feel I was able to open it up and allow it to be more affordable for more processors to be involved. Essentially, I think it should be attractive, and I do believe most legitimate operators will be getting licences. Those who don't have the criteria, the financial strength, will still not be licensed and bonded. There could be an issue there with those guys, whether they're still good or not.

Mr. John Harvard: Mr. Simpson, you were mentioning something about the cost of administering the plan, and that you would like to see the costs brought down. I suppose that's right up there with motherhood and apple pie. Do you believe that if the scheme works out as well as we would like it to work out, the day may come when the Grain Commission will not have to administer the plan; that perhaps EDC will not have to be the insurer; that the plan will work so well it will draw the interest of private operators or private interests; and that perhaps private interests, some time in the future, would like to enter into this field? Can you see that happening?

Mr. Greg Simpson: Very much so. I do agree that it is a potential. I think we could find somebody to administer it more cheaply and effectively, and I think we could reduce the number of audits that are required right now. You could probably have one auditor doing all the work, as opposed to a large group of auditors administering the licensing area.

Mr. John Harvard: I think the scheme as currently constituted is called “mandatory refundable”. Mr. Kuhl, you support it, as does Mr. Simpson. Do you think that, at the beginning at least, there wouldn't be enough producers involved if we went to a voluntary participatory plan, and that it would drive up the costs of insurance—in other words, that kind of scheme just wouldn't work? Of course, if the insurance becomes prohibitive then you leave too many producers outside. As a result of the legislation, they're then not going to go back to the old bonding system, so we would then have the worst of both worlds, I would think. Do you have any comment?

Mr. Greg Simpson: I would agree with that. I would say it is a real possibility. If it were just voluntary, up front you would have so many people maybe not even taking it out that, yes, it would affect the cost. We are planning on a fairly good number of people deciding that this asset, their grain delivery, is worth insuring. I've polled a few people in my area, and they have said they do want to make sure their stuff is protected, so they'll spend the $380 per $100,000.

Mr. John Harvard: I have just one more question. It's a short one for Mr. Lewis.

• 0915

Mr. Lewis, you're concerned about this plan perhaps somehow including cereal grains or oilseeds some day. Would you favour an amendment to the bill that would make it absolutely explicit and clear that no such thing could happen?

Mr. Keith Lewis: At this time I definitely would. I think the system we're currently operating with on the grain and oilseed side is satisfactory and I don't see any reason to change it.

Mr. John Harvard: Right.

Mr. Keith Lewis: And at present, I don't see this as an option to replace it.

The Chairman: Mr. Proctor.

Mr. Dick Proctor: On the question of the negative option billing, do any of you have guesstimates on the number of producers who would probably opt out of such a plan?

Mr. Don Kuhl: Yes, Mr. Chairman. Our association runs under a mandatory refundable system and we have 96% participation in our organization.

Mr. Dick Proctor: So you think that would translate in terms of this, based on your—

Mr. Don Kuhl: That's a guesstimate.

Mr. Dick Proctor: Yes, I appreciate that.

Anybody else? Mr. Lewis?

Mr. Keith Lewis: I don't question Mr. Kuhl's numbers, but I do believe that in many cases it's a grudging acceptance of a tax. The honourable motives for a check-off are always pretty obvious right at the start, but the fact is that many farmers find it a very onerous task to sit down, fill in the papers, submit them and go through the process. I'll use the example of the Canadian Wheat Board check-off currently administered by the Western Grains Research Foundation. I think there is a lot of discontent with that particular program.

I don't think we can assume that just because 96% of the people participate they are all willing participants or happy participants. I think there are certainly a lot of them who would prefer not to be involved, but who in fact just grudgingly accept the fact that it's there. And they don't do anything about it.

Mr. Dick Proctor: Mr. Simpson, you said that most folks would probably sign on. Do you have anything to elaborate on in that area?

Mr. Greg Simpson: I don't have a pat number because, really, until you put the program out there...that will be the only real test. I would say that probably over 50% will be participating. I wouldn't say 90%, though.

Mr. Dick Proctor: Mr. Copland?

Mr. Bill Copland: That's hard. I'm not a dealer and I can only comment on coffee-shop talk I hear, but the first problem I have with it is that it's not known at all in the country.

Mr. Dick Proctor: Yes.

Mr. Bill Copland: When you start to talk about it, maybe somebody has read something or has heard it was in the making, but... I think it's very premature to start to second-guess.

I could believe it. In certain areas it might be good. But I could take you to a part of Saskatchewan where I don't think many will go for it at all, and that's the southwest corner. A lot of pulse crops come out of there, but it's also cowboy country, “I'm my own man doing my own thing and get outta my face” sort of thing.

Mr. Dick Proctor: Yes. Thanks.

The Chairman: Mr. Hoeppner.

Mr. Jake E. Hoeppner (Portage—Lisgar, Ref.): Thank you, Mr. Chairman.

Welcome, gentlemen. I'm kind of sitting back here and just listening. I wonder what it will take for farmers to realize that government isn't there to make them happy, because that is something that I've heard.

And I'll tell you, gentlemen, the most phone calls I get on issues that are disturbing to farmers are about the check-off on the Western Grain Research Foundation and also the Keystone Agricultural Producers' check-off. It's astounding, but farmers want to be independent.

The Canadian Grain Commission will administer this plan and the Export Development Corporation will provide the insurance. Have you done any research into the bill as to what kind of guarantees there are that they will come through if you have claims?

You remember the Econ Consulting issue with the Canadian Grain Commission. You remember the lawsuit that M-Jay Farms launched against the Wheat Board, where Judge Wright said we had more evidence than the Econ Consulting case, that it should go to trial, but you know what politics does to our court system.

• 0920

I'd be very scared to accept this type of plan when government is going to collect the funds and also guarantee them. I think you gentlemen could do a much better job yourself, and that's what I'm hearing you tell me. What's your comment on that?

Mr. Don Kuhl: I think it states in the act that it's a possibility that producers can take over the administration of the insurance program and can look for their own insurers and administration as well.

Mr. Jake Hoeppner: So you would suggest that that should be done?

Mr. Don Kuhl: Hopefully that could happen. In Ontario, your soybean growers and corn growers administrate the instruments.

Mr. Jake Hoeppner: Mr. Copland wanted to say something.

Mr. Bill Copland: Well, I agree. I think many farmers would agree. I think this was alluded to here in Mr. Simpson's comment a moment ago. Some time ago they tried to bring about the legalization of the current situation, whereby bonded folks could go ahead and keep a bond, and small dealers could work without one if they chose to. This sort of system requires no police force because you're there voluntarily. The only thing you would need to monitor is the bond somewhat matched up with the receivables.

I think there's quite a bit of merit to looking at a thing like that. These systems that run voluntarily are much happier, much better, more business-oriented systems than something in which there's a set of rules made and a bureaucracy looking down the back of your neck trying to make it...

Mr. Jake Hoeppner: Okay. I like those comments, because I think we're going in the wrong direction. Are you as an organization prepared to recommend to this committee an amendment that will make it a voluntary, producer-run program?

The Chairman: Is there a person you want to address that to?

Mr. Jake Hoeppner: Well, it's for any one of the gentlemen, because I think the feeling of farmers would be such that you would have tremendous participation if it were voluntary and farmer-run. They have confidence in their own management abilities and people who look after business. I get the feeling in my area—and maybe I'm in a special crops area—that the less they see government involved, the happier they'll be. That's what you want to do for farmers.

Mr. Greg Simpson: I think it should be mentioned in this act that if we're going to go with a board of directors, they have the power to run it separately. If it's not the Grain Commission, it could be one of the grower groups. That would be fine. I'd recommend that. We would pick an administrator who's out of the private sector and we'd buy our insurance from whoever could deliver the best deal on insurance. If it's not EDC, we'll find somebody else.

Mr. Jake Hoeppner: Thank you very much, Mr. Chairman.

The Chairman: We'll conclude with Mr. Borotsik.

Mr. Rick Borotsik (Brandon—Souris, PC): Thank you, Mr. Chairman.

First of all, my apologies. I was at the office at 7.30, but I have other functions. I apologize for not hearing your presentations. I really wanted to. However, I did read the presentations, so I am that far ahead.

I have two very simple questions, I guess. Is there any system in place now? At this point in time, is there insurance available to producers that they can purchase to protect themselves against any potential loss of this nature?

Mr. Don Kuhl: Presently, it's run under the Canadian Grain Commission, and it states that all processors buying and selling from the producers are supposed to be licensed and bonded.

Mr. Rick Borotsik: Yes, I appreciate that.

Is there any private sector insurance that would be available in a situation like this?

Mr. Greg Simpson: Not in western Canada, but I believe there is with beans in Ontario.

Mr. Rick Borotsik: Okay, so there is private sector involvement only in Ontario. In western Canada there has never been any insurance program available to your knowledge, one the producers could go to and could access to protect themselves against it.

Mr. Greg Simpson: No.

Mr. Rick Borotsik: So outside of the private sector, the only way it can be put into place is through government legislation. Is that your opinion?

Mr. Greg Simpson: There was some work done by our organization to find an insurance company that would help us to fund ourselves so that we could be a self-regulated, self-insured operation. It just did not get that far. I can't see us not feasible, with a tremendous amount of work.

• 0925

Mr. Rick Borotsik: Okay. And this doesn't take a lot of work if it is legislated and done through the Canada Grain Commission.

Are there many instances now that you and your producer members have experienced? Are there now a lot of losses being experienced by non-bonded corporations or processors? Are there any examples you can give us?

Mr. Don Kuhl: Not in the past few years. There have been in the past, but not in the last few years.

Mr. Rick Borotsik: But the industry, the special crops, is becoming more sophisticated.

Mr. Greg Simpson: The track record is good for the industry. That is why the insurance that EDC is offering is extremely low, because they view the industry as a low-risk industry.

Mr. Rick Borotsik: Can you give me any examples over the past 12 months where in fact some of your producers have fallen into this trap and lost any of their crop?

Mr. Greg Simpson: That's a good question for maybe the Grain Commission to answer. There was one a few years ago with Klemmer Seeds in Rosetown; that's the last one that I could say really made the media.

Mr. Rick Borotsik: How long ago was that?

Mr. Keith Lewis: It would be about four years ago. It was Mulroney's time, I remember.

Mr. Rick Borotsik: Blame Mulroney again. I would suspect that he was involved in the specialty crops program, yes.

Mr. Don Kuhl: I know one processor that isn't licensed and bonded, and he is behind. Some farmers have waited six months for their money.

Mr. Rick Borotsik: In a situation like that, as you understand this insurance program, would that in fact solve that particular problem?

Mr. Don Kuhl:

[Inaudible—Editor].

Mr. Rick Borotsik: Is there a timeline as to when there is a receivable paid? Is it net 30, net 60, or would you wait until there was a problem with a bankruptcy before the insurance would kick in? I am not so sure six months receivable is going to be protected by an insurance program.

Mr. Greg Simpson: That's a contractual problem. It's not until there's a default in payment.

Mr. Rick Borotsik: Exactly.

Mr. Don Kuhl: This processor would be in this plan, as presently proposed. All producers wouldn't be in, because it would be mandatory refundable. But still it states 90 days. If I don't have my cheque in 90 days I would go to the EDC, and that would put pressure on this processor. That's good. It's probably that he doesn't have proper financing. Then he would get his house in order.

Mr. Rick Borotsik: I think that is fairly simplistic. I think under an insurance plan you have to see an actual loss before it's going to be recoverable. But that is another issue.

I have one final question. The board of directors that you had mentioned, Mr. Kuhl, rather than an advisory group—can you just expand a little bit on that as to how the board of directors would be put into place? Would it be an elected board? How would the board administer this particular plan, as opposed to an advisory committee?

Mr. Don Kuhl: It could be elected by the producer groups or it could be named by the producer groups and then appointed by the minister.

Mr. Rick Borotsik: Do the other gentlemen agree that an elected board of directors is the way to administer this plan—or at least as a proposal? That's not the proposal in the legislation; it's just a balloon that's been floated here. How do you feel about it? Mr. Simpson?

Mr. Greg Simpson: It should have the same representation that we have right now. We have growers, processors, and trades members involved. So as long as it has a balance and it's under elected positions, okay.

Mr. Rick Borotsik: And you would support an elected board to administer it, as opposed to an advisory group that is appointed?

Mr. Greg Simpson: Yes, that would be fine.

Mr. Don Kuhl: Mr. Chairman, as it is funded by the producers, I would strongly suggest that the majority of the board of directors are producers. There is one point I should stress: elected representation gives us problems at times. All we have to do is look at the Wheat Board.

Mr. Rick Borotsik: I wasn't bringing that up in the discussion.

Mr. Don Kuhl: Therefore I think your producer groups are a lot more capable of suggesting and forwarding names to the minister for appointment.

The Chairman: Thank you very much. That concludes our first session. We'll take a five-minute break before our second session begins.

Thank you, gentlemen, very much for your input. Have a good rest of the day.

• 0929

• 0939

The Chairman: Order.

Our next witnesses are, from the Alberta Pulse Growers Commission, Thomas Jackson; from the Saskatchewan Canola Growers, Rob McGregor; from Saskatchewan Pulse Growers, Garry Meier; and from the Western Barley Growers Association, Bill Cooper.

• 0940

We'll ask Mr. Jackson to make his presentation first, and we'll go then in order. Mr. Jackson.

Mr. Thomas R. Jackson (Commissioner, Alberta Pulse Growers Commission): Excuse me, Mr. Chairman, but is Leo Meyer not involved for the Western Barley Growers?

The Chairman: Are there two people with the Western Barley Growers? Okay.

Mr. Jackson.

Mr. Thomas Jackson: Thank you, Mr. Chairman.

I would officially request, respectfully, since we were called at such a late date as witnesses to this committee, that our submissions, which have been given to the clerk, be passed out to the committee members, if there's no objection from the committee.

The Chairman: We have a rule that the presentation has to be translated before we can pass it out.

Mr. Thomas Jackson: I understand, Mr. Chairman, that if no one objects, you could possibly overrule that normal rule and hand out our presentations.

The Chairman: No.

Mr. John Harvard: It can't be done.

Mr. Thomas Jackson: So, Mr. Harvard, you're saying you object.

Mr. John Harvard: It's not a matter of objection. We simply have a rule that presentations have to be available in both official languages.

Mr. Rick Borotsik: But as I understand it, Mr. Chairman, it will be translated and given to the committee at a later date.

Mr. John Harvard: That's fine. That's part of the rule.

Mr. Rick Borotsik: The committee will receive a copy of the presentation.

The Chairman: That's been a longstanding rule of not only this committee but also previous agriculture committees.

Mr. Thomas Jackson: In our discussion with the clerk earlier, Mr. Chairman, we were told that because of the late date we were called as witnesses, we could possibly override that rule. That's why I brought it up.

The Chairman: I don't think that can happen, no.

Mr. Thomas Jackson: Okay. Thank you very much.

Thank you very much to the committee for allowing the Alberta Pulse Growers Commission an opportunity to present to this issue this morning.

I apologize to the committee that a translation of Alberta Pulse Growers Commission's document was not translated, as we did not find out until Thursday of last week that we were to be officially invited here and called down.

The Alberta Pulse Growers Commission represents well over 3,000 pulse growers in Alberta. The Alberta Pulse Growers Commission is authorized under the Province of Alberta's Marketing of Agricultural Products Act, and has a mandatory refundable check-off with an approximately 5% refund rate.

Under section 173/89 there are authorizations to make regulations governing the issuance, suspension, and cancellation of a licence under the Alberta Pulse Growers plan. Legally, under section 2 of these same regulations, it prohibits packers, brokers or processors from engaging in marketing or processing of regulated product except under the authority of the Alberta Pulse Growers plan.

Under section 159/89, paragraph 5(b), the Alberta Pulse Growers Commission is responsible for providing studies and research in connection with the production and marketing of pulses, including help to producers, processors, and packers in implementing proper measures respecting the production, processing, and marketing of pulses in Alberta.

Paragraphs 5(d), (e), and (f) authorize Alberta Pulse Growers Commission to represent the pulse growers' industry, in whole, with any federal or national agencies to improve the pulse industry and to represent the concerns of producers, specifically at public hearings and inquiries.

I myself was elected to the Alberta Pulse Growers Commission on December 7, 1990, and have continued as a commissioner non-stop to today. I was involved in the 1993-94 Special Crops Act initiative, and was a provincial executive member in that particular initiative put on by the federal government. I was also the person who initiated the Export Development Corporation's idea of the special crops rural initiative program. I was the one who invited them in, with the Canadian Grain Commission, to become the insurer of this particular piece of legislation.

• 0945

When you have my brief, you can find out my personal background as a producer and farmer, and what exactly I do as a grain farmer.

On March 30, 1998, we wrote a letter, as the Alberta Pulse Growers Commission, to the Honourable Lyle Vanclief expressing our problems with the present legislation. I will read from the letter:

Dear Minister:

The Alberta Pulse Growers Commission has some serious concerns about the proposed SCRIP. The following issues need to be addressed before we can endorse the program and recommend it to our members.

1. Administration cost...

The 0.2% EDC charges for the insurance is almost equalled by the 0.18% that the administrator is going to charge the farmer.

This is not acceptable to farmers. Mandatory grower participation is one way of reducing this cost...

I refer to resolution number two of our annual meeting on 7 and 8 December, 1995, in which the zone I represented gave to our delegates and the annual membership a resolution, which was passed:

Whereas licensing and security have caused numerous difficulties for Special Crops Dealers, and whereas the Export Development Corporation has developed a low cost (approximately 20 cents per one hundred dollars) Accounts Receivable Insurance for Canadian Special Crop Producers, and whereas, in the interest of a simple, low cost producer security for Alberta Producers, therefore be it resolved that the Alberta Pulse Growers Commission pursue a mandatory insurance premium to be paid by all Special Crops Dealers to cover liabilities owed to Alberta Producers.

I would simply point out in addition to this that the Canada Deposit Insurance Corporation insures the deposits of the bank customer through the CDIC insurance program. The banks are required to submit the levy to CDIC to make sure that this insurance is in fact in place to the $60,000 maximum per account.

Further, as a farmer, say I go to purchase a combine through John Deere, and I go to John Deere finance. John Deere finance makes sure that I have insurance on that combine when I have an outstanding liability so that if there's a loss, I, the purchaser, will pay out John Deere the owed money for that combine.

In fact, this is why we have stated that this should be mandatory for the dealer. It's not the obligation of the producer to provide the security in the same way as the banks, which would of course not provide security unless the Canada Insurance Deposit Corporation required that of them. We would like the same situation in Alberta.

That was passed at our annual meeting. I believe there were only two people who voted in opposition to that.

Number two, the cost of the licence to the dealer is about $2,000 per year, as close as we can gather. This is too high and it does not encourage new participants in the special crops industry. We would consider a $500 fee, which was described many times in the Special Crops Act initiative, to be a more reasonable amount.

Number three, grain receipts or cash purchase tickets, whatever official documents the Canadian Grain Commission normally requests under the Canada Grain Act, must be issued upon delivery and acceptance by the dealer, not just at the request of the producer.

Far too many times in the industry today, grain companies do not willingly give out grain receipts. And if in fact we create this loophole whereby they're not required by law to give them out, you could drive a Mack truck through it. And we have a hard time getting them today in the special crops industry, let alone excusing them legally from doing it.

• 0950

We object to this. How on earth can the EDC and the Grain Commission know what the liabilities are to farmers when they have absolutely no idea because they're not required to issue grain receipts? It makes no logical sense. Farmers must have more than 90 days from the date of delivery to claim special crops security.

For example, most dry edible beans delivered to the Alberta Wheat Pool bean plant are not paid for in full for one full year. Believe it or not, but we redneck Albertans have a pooling plan for our special crops and beans. We run the system akin to that of the Canadian Wheat Board, and we object to the 90-day statement, that you can't have security after 90 days.

So our bean growers will be required to pay this levy and then after 90 days they won't have coverage and they'll just opt out, because they got the cheque, and they'll say they're not going to be covered anyway with regard to geting the rest of their payment, so why shouldn't they just opt out? And in the end, that means Alberta Pulse Growers will have to go back and create a provincial scheme. And we've worked at this since...I myself have worked at it since 1990 and I really disagree with starting all over again.

Small dealers with less than $150,000 of liability should not be required to be licensed. Licensing should be available as an option to them, to allow these small participants to get into the industry. And we have projected, through the Special Crops Act initiative, that the cost is somewhere between $15,000 and $20,000 a year for the total cost of the licence and all the administration that goes with it, through the normal Canadian Grain Commission situation. We do not project that this will change. This is a major disadvantage for our small dealers trying to start up.

Sixth, pedigreed seed must be exempt from the system. In the Special Crops Act initiative executive report, the Grain Commission provided a document they in fact called “Important Information from the Canadian Grain Commission”. They stated that seed is not a Canada Grain Act grain. Seeds, forage crops and canary seed are not designated as grain for the purposes of the Canada Grain Act. Seed is covered under the Seeds Act. And they have said that no non-grains will be allowed into the elevators, under special crops. Seed is a non-grain and we therefore create a conflict.

The Canadian Grain Commission says they ignore it and they believe that seed is under their act. But clearly, the law says that it's not, and we object to this, another intrusion into part of our industry which in fact the Special Crops Act initiative and the SCRIP did talk about, contrary to what the Grain Commission says.

All deliveries must be graded. We have a problem with feed fees, in which the Canadian Grain Commission goes along with non-grading of a grain leaving the country, which is totally outside their mandate. In the interests of producers they are supposed to grade and create a dependable commodity for our producers, and they are doing it in the interests of the grain companies, not grain farmers. We object. There is a big possibility that this ungraded product will never be covered in the insurance program because it's not secured, because it's not in the interests of the federal government, because it hasn't been graded. Several court decisions state this.

EDC will not be allowed to create a competitive environment which I, as one of the initiators of this particular process, am very concerned about. I envisioned a situation where the smaller dealers would pay a competitive amount. If they in fact created a risk of 2% or 3%, they should pay 2% or 3%, and if one of the larger companies creates a risk of 0.01%, they should pay 0.01%. There shouldn't be this... The little guys are not getting in because they create too much risk for the program, and the large guy is cross-subsidizing the little guys. Hence, you have the guys in the middle saying this is great, because it fits them. It doesn't fit the big guy, and it doesn't fit the little guy. We need the flexibility to have, in fact, these variable rates.

• 0955

Therefore, we are very disappointed that those particular aspects of the bill were not straightened out at the Canadian Grain Commission level before this came before your committee. We would respectfully suggest that this bill not be passed until these particular objections have been dealt with, either by in fact making sure the regulations will cover them, or, if it's required, making amendments to the bill to ensure that in fact they are dealt with.

Thank you very much for allowing me to present this morning.

The Chairman: Thank you very much, Mr. Jackson.

Did you get an answer to your letter?

Mr. Thomas Jackson: I am not aware of any answer to the letter.

The Chairman: Was your letter dated March 30, 1998?

Mr. Thomas Jackson: It was.

The Chairman: We'll go to Mr. McGregor from the Saskatchewan Canola Growers.

Mr. Rob R. McGregor (Director, Saskatchewan Canola Growers Association): The canola growers appreciate the opportunity to appear before you today and would like to take this opportunity to make you aware of some of the concerns we have with Bill C-26.

For background information, a motion regarding Bill C-26 was passed at our annual meeting. This same motion and similar ones were also passed at the Western Canadian Wheat Growers convention, the Western Barley Growers convention, and the Saskatchewan Pulse Development Board annual meeting.

The motion at the SCGA meeting read as follows:

Whereas the majority of Saskatchewan Canola Growers Association members also are growers of specialty crops, and

Whereas the proposed Special Crops Rural Initiative Program would appear to favour the Canadian Grain Commission and not necessarily special crop growers, and

Whereas the Special Crops Rural Initiative Program is promoted as being voluntary, it is in reality a form of negative billing which all consumers reject, and

Whereas the scheme has questionable support at the farm level, and

Whereas the Saskatchewan Canola Growers Association rejects the compulsory nature of the Special Crops Rural Initiative Program, and

Whereas the special crops Industry has flourished without such a program,

Therefore, be it resolved that the Saskatchewan Canola Growers Association inform the federal and western provincial ministers of Agriculture of their concerns and at the very least that the Special Crops Rural Initiative Program be truly voluntary for both the growers and the special dealers.

That was passed with a pretty fair majority at our meeting.

There were a number of committee hearings held throughout the province—I have it as 1992-93, but it may have been 1993-94, I'm not sure—where producer opinions were solicited. Several options were also offered through the participants, one of them being very similar to the present bill. This alternative was rejected by a large majority of the people attending, and since the bulk of the people attending were producers who would be most affected by this change and will be the ones footing the bill, it would seem their view should have been taken a little more seriously.

It should also be noted that when the final draft of the special grains act initiative was submitted, the Saskatchewan chairperson would not sign it, as he felt it did not represent the views that were expressed at the Saskatchewan meetings.

Some of our concerns... First, bonding or insurance for any grain purchases is not necessary. This levy implements more red tape and bureaucracy into the agriculture industry. Other businesses and industries run on a seller beware system just fine, without the extra cost of insurance this program would implement. Producers would therefore be forced to pay an unnecessary expense.

Secondly, the vague definition of specialty crops in Bill C-26 suggests the program could be broadened in scope so that it could conceivably include all varieties of wheat, barley, and specialty canolas.

Thirdly, the bill and accompanying news release were introduced as if it were a fait accompli, without first informing the farmers of the bill itself. Most farmers are still unaware that this change may take place.

Fourthly, we feel that it is important that an insurance levy, if instituted, should be both voluntary and with straightforward opt-out provisions or have a refund system that is quick and easily applied for. We feel that this act is too vague to provide this guidance.

About some of the effects of this legislation, buyer beware, or in our case seller beware, is still and always will be the best insurance plan, and with no costly bureaucratic expenses. In many of the earlier mentioned committee hearings, the consensus seemed to be that even if the final report did not indicate this, the dealers should be given the choice of being bonded or not. This information should then be posted in their offices and on sales tickets. The sellers can then decide for themselves whether they wish to deal with the bonded company, and the extra risk of dealing with an unbonded company would be taken on an informed basis.

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Grain producers deal with different types of business enterprises—fertilizer chemical, fuel, machinery, and hardware supply stores, just to name a few. Any one of these enterprises going unexpectedly out of business at the wrong time could be in financial hardship. This does not mean we should contribute to an insured scheme to protect ourselves. There will be the perception that once again farmers are being hit with extra expense, which could merely strengthen the alienation that is already prevalent in much of the farming community.

SCRIP creates great concerns, not only because we feel that an insurance program and bonding are not required, but Bill C-26 is very vague, leaving the actual make-up of the program questionable. The SCRIP program structure and guidelines would be in control of the Canadian Grain Commission or other agency appointment. Although the special crops advisory committee has been established to advise on the process, it appears their suggestions are only being partially considered and that the CGC is maintaining too much control. All regulations for SCRIP should be established according to guidance from the special crops advisory committee.

Our conclusions are as follows.

Buyer beware, or in our case seller beware, is still and always will be the best insurance plan, with no costly bureaucratic expenses. All portions of the act referring to the agreement of bonding or insurance plans for the purchase of any grains or specialty crops should be removed. Honest businesses should be allowed to run their day-to-day affairs without having to look over their shoulder for fear of prosecution because they are not bonded.

The definition of a specialty crop should be clearly defined to include all major crops such as canola.

Finally, if an insurance program is implemented, the plan must be totally voluntary; producers must be able to opt out upon a one-time request and receive the amount of liability deducted from their cheques in an automatic and timely manner.

I'd like to thank you.

The Chairman: Thank you very much, Mr. McGregor.

Mr. Meier from the Saskatchewan Pulse Growers.

Mr. Garry Meier (Chair, Saskatchewan Pulse Growers): Thanks very much.

We represent roughly 14,000 pulse growers in Saskatchewan. That number continues to grow annually as the industry grows in a very dramatic fashion. The industry we have today in 1997-98 is quite different from the industry we had in 1993-94.

All Saskatchewan pulse growers are members through a mandatory non-refundable check-off. Our board is mandated under the provincial Natural Products Marketing Act to provide for orderly and effective development of the Saskatchewan pulse crop industry. The board itself is comprised of seven Saskatchewan-based pulse growers elected from the membership annually.

The industry in Saskatchewan is quite huge, diverse, and dynamic. We're the world's leading exporter of lentils. Saskatchewan contributes 96% of that to the Canadian production. Canadians are also the world's leading exporter of peas, both feed and edibles, and Saskatchewan contributes 66% of Canadian peas for export. We're also becoming a major factor in chickpeas and edible beans.

The 1997 acreage was a little over two and a quarter million acres, making it the fourth largest group of crops in the province of Saskatchewan, exceeded only by wheat, canola, and barley. We're expecting the acreage to increase again in 1998 by another 3% to put us very close to 2.4 million acres in the province.

Primary processing of pulse crops has resulted in significant diversification opportunities in Saskatchewan. Currently, there are 131 processors in Saskatchewan handling pulse crops on a full- or part-time basis. They employ in excess of 650 full-time staff and in excess of 300 part-timers, for a total of well over 900 people involved in the secondary value-added portion of the industry. The value of the crop in 1996 was in excess of $400 million.

Regarding Bill C-26 itself, we well recognize as an industry that the special crops industry in Saskatchewan and indeed western Canada was developed through the efforts of the small processors.

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The board of the Saskatchewan Pulse Growers believes that the retention of the current act as it applies to special crops is not an option, because the bonding requirements are a barrier to the entry of small processors, thus limiting competition in the special crops industry. I think this is evidenced by the fact that the major grain companies are not supportive of Bill C-26.

Of the 70 companies currently registered to collect the pulse levy in Saskatchewan, 33 are not licensed and bonded with the Canadian Grain Commission, and are at risk of prosecution under the current act. Indeed, we've had some situations where the RCMP has moved in. Many of these are small rural-based companies providing valuable employment opportunities, and would be a significant loss to the community.

Saskatchewan Pulse Growers has cooperated with the Grain Commission and other pulse organizations in the development of Bill C-26 since the inception of the concept. The pulse growers discussed Bill C-26 at ten regional grower meetings that we hold every January and February throughout Saskatchewan. This year, in 1998, we had a little over 800 growers attend these meetings. We polled the growers at these meetings, and the first thing that came forward was that there's a lack of information out there—a huge lack of information, a real void, and that has to be addressed.

Once the concept as we see it unfolding was explained, we did a poll, and the majority of the producers at these meetings in fact supported the concept of the legislation. The regulations are a different matter, but the concept of the legislation was supported.

The pulse growers board supports the intent of Bill C-26 because we feel it will facilitate a healthy and competitive special crops processing industry in western Canada, and for us competition is the key to have any industry thrive and succeed.

The two key points of the bill are, first, that all special crop dealers can operate without bonding, provided they are licensed and meet the minimum financial requirements of the insurer. This will facilitate the development of the western Canadian value-added industry by ensuring that small processors can be a competitive factor in the marketplace. Second, special crop producers will be able to choose whether or not they wish to become involved in an insurance plan.

In January 1998, the Saskatchewan Pulse Growers board indicated to Minister Vanclief that it would support the intent of Bill C-26 in its present form. I emphasize that's the bill itself, and not the regulations. That's a different matter.

In consideration of the concerns recently raised by other commodity organizations in the province, we feel that the following amendments are reasonable and will balance the interest of all affected parties. I would emphasize that we support the intent of the bill as it currently exists, but see some areas that have to be addressed through amendment.

In clauses 1 and 109 of the bill, we want to clarify the definition of special crops to ensure that they exclude the standard grains. It's not in the interest of the pulse industry for Bill C-26 to affect other grains. Regulations were to address this issue; however, it is more appropriate that this be addressed in the legislation itself.

In proposed section 49.01, the definition of payment of levy should be modified to allow that it be optional. The bill currently requires the levy to be at least mandatory refundable. We recommend that the bill provide enough flexibility for the regulations to address whether the levy is optional or mandatory refundable.

In proposed section 49.02, we want to increase the powers of the advisory committee and elevate it to the level of a board of directors. Because this bill relies on regulations for the most part for many of the specifics with respect to the insurance program, it is desirable for special crops producers to have direct responsibility for the development of the regulations, as well as the selection of the insurer and the agent.

Proposed section 116: the board of directors should be responsible for fixing the specifics of the levy and the conditions. The bill currently states that the commission is to be responsible for fixing the specifics of the levy and conditions. It is in the best interest of pulse growers that the board of directors be responsible for this area. The commission should be responsible for implementation and execution of the direction of the board.

In summary, we feel that the bill, with the above amendments, will strike a reasonable balance of all interests in the special crops industry and will ensure the continuation of a competitive western Canadian special crops industry.

Thank you very much.

The Chairman: Thank you very much.

Mr. Cooper or Mr. Meyer—who is going to make the next presentation? Mr. Meyer.

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Mr. Leo Meyer (Vice-President, Western Barley Growers Association): Thank you, Mr. Chairman.

I am vice-president of the Western Barley Growers Association. We farm as a family business at Woking in northwestern Alberta, between Grand Prairie and Dawson Creek.

The Western Barley Growers Association would like to thank the agriculture committee for the opportunity to provide input on Bill C-26. While our association mainly represents barley interests, many of our members produce special crops, and they have asked us to intervene on their behalf.

It's not easy for this organization to keep up with all the ongoing proposals and deals affecting the farmers we are and represent. The issues are very complex, and we need to give them our attention, because of the future impact of those changes on agriculture and farm families in Canada. We do this while most of us are also very involved in our farms, at home as farmers, and also as parents of our children.

We have two main concerns regarding Bill C-26, namely the insurance program in SCRIP and the implied idea that this model could be applied to cereal grains and oilseeds in the future.

There appears to have been a calculated effort by the powers-that-be to develop this proposal in secret, as about only about 2% of farmers are even aware of this bill.

As I am sure you are aware, at meetings across all three prairie provinces in 1993, Ottawa proposed to legislate dealer rules for the growing pulse industry. Farmers rejected it at that time.

In a survey done by the Special Crops Act initiative and the Alberta government, 85% of Alberta's special crops producers rejected the proposal for mandatory bonding. After this rejection, the Canadian Grain Commission hand-picked a committee of specialty crop farmers and pulse board members, and is now using this group to claim producer support of this bill.

Once again, farmers in the designated area are having federal regulations imposed on them, when they have stated that they do not want them.

It should be noted that Ontario has a thriving pulse industry. However, regulations are developed on a provincial basis only, not federally. So this bill does not apply in eastern Canada, and it treats some Canadians differently, depending on where they live.

The SCRIP insurance plan is intended to be voluntary. However, farmers will be required to pay a levy of 0.38%, or 38¢ of every $100 they receive for their product. Of that 0.38%, 0.18% is to pay the Canadian Grain Commission for administration, and 0.2% is to go to the Export Development Corporation for insurance.

I think that's a very important point to be made. We didn't allude enough to the fact that a big part of the premium actually goes to the Grain Commission for administration purposes, and is not necessarily for the insurance itself.

If producers want to opt out of the program, they must do so in writing to the Canadian Grain Commission. This is to obtain a refund of the levies they have paid during the year. The method of collecting the levy is a form of what we would call negative billing, and is unacceptable to the farming community.

As well, the program is not voluntary for special crops dealers, who are required to be licensed by the Canadian Grain Commission.

Through this bill it appears as if the Canadian Grain Commission is attempting to shift its responsibility for bonding dealers by making farmers pay the bill, instead of dealers paying for their own insurance and bonding.

At our annual meeting earlier this year barley grower delegates passed a resolution on Bill C-26. It stated that the bill is badly designed, ill-conceived, and should be withdrawn. We felt that Bill C-26 was another added load of paperwork for purchasers and another layer of unnecessary bureaucratic jungle.

• 1015

Further, it was noted that none of the main stakeholders, farmer sellers, commodity organizations or specialty crop buyers, big or small, have requested this program. Rather, it has sprung from the Canadian Grain Commission itself.

In addition, as somebody—I believe it was Bill Copland—mentioned, we are concerned that the annual licensing requirements will restrict the allotment in the special crops industry and impede new and special crops dealers.

If this program were truly voluntary, dealers who chose to participate would do so to entice farmers to do business with them. Some farmers might choose to deal with an unlicensed and uninsured company but with the full knowledge that they would not be eligible for compensation in case the company failed to meet its financial obligations. However, the important point here is that if it's the farmer's choice how he plans to market his own grain, he should have the freedom to choose, and not be forced through federal regulations.

I want to give you an example, because there's somehow a misconception out here about what actually occurs. Let us say a special crops dealer goes bankrupt with, for instance, a boatload of peas en route overseas. Depending on the price of the peas, we are talking about $3 million in outstanding liabilities. And if it was approved for coverage for producers, it would only be a coverage of about $500,000 of that $3 million. The payments to producers would be prorated, and the producers would only receive 90% of 16.6% of what was owed to the producers by the dealer. This would occur if no other assets were available for the producer to help pay for the outstanding liability owed to them.

So it is important to realize that farmers still would only be marginally covered by this bill if a loss of this magnitude occurred.

Our last concern deals with the fact that the Canadian Grain Commission is considering including cereal grains and oilseeds in this program. I must say that I was very surprised by Mr. Harvard's remark this morning when he said that he didn't hear anything about this intention. We have information to the extent that it is very much being considered. I refer, for instance, to remarks being made with respect to triticale and rye, which I personally also have incorporated in my crop rotation. So I have a great personal concern about that.

Barley producers in Alberta currently pay a refundable check-off on all board and non-board grains. In Saskatchewan and Manitoba they pay a refundable check-off on board barley. With this bill you are considering an additional levy for the barley farmer. If this proposed legislation will only require regulatory additions to include barley, other cereals and oilseeds, then we must demand that the SCRIP section of Bill C-26 be repealed entirely.

As I mentioned before, some of us are also rye and triticale producers, and we're very concerned about those crops being included in this bill. We're consulting as producers, and on some of our farms those crops gain in significance every year, because we like the way we can include them in our crop rotation. We also like them from a sustainable standpoint with respect to agriculture, and in a different way from how we maybe knew this in the past.

So we'd very much like to ask that if anything like that is considered, those producers should be properly consulted. We don't think that pulse growers, for instance, speak for triticale or rye growers.

As suggested in the Canadian Grain Commission briefing notes, in western Canadian total grain sales, cereal and oilseed crops might be added later. If these were put through this SCRIP scheme, for $12 billion worth of grain the security would cost about $45.6 million. That refers to a situation that would occur if all the grain would be included in this bill. Under that model the commission would receive $20 million a year just to watch our western grain industry.

In this age of buyer beware, one must ask why the federal government consistently introduces legislation for the supposed benefit of farmers, when in fact it only benefits another federal agency, in this case the Canadian Grain Commission.

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Farmers have been increasingly growing less board grain, thus depriving the commission of about $1.80 per tonne—and by the way, this amounts to about $54 million right now for the Grain Commission on board grains alone—and this trend will continue to grow.

We see Bill C-26 as a blatant tax grab, a bill that is not to the benefit of farmers, but to their detriment. With these concerns in mind, we'd like to ask the committee to withdraw Bill C-26 or significantly make major changes in consultation with all interest groups involved in those crops. If it has to be done, make it a meaningful bill.

Thank you very much, Mr. Chairman. That's my presentation.

The Chairman: Thank you, Mr. Meyer.

We only have forty minutes before we have to vacate this room, so we'll get right to questions, beginning with Mr. Breitkreuz.

Mr. Bill Cooper (President, Western Barley Growers Association):

[Editor's Note: Inaudible].

The Chairman: Well, it's your choice. Do you want questions or do you want another presentation? We'll have a copy of your presentation, which we will read. If you're both from the same organization, we expected just one presentation. Mr. Meyer has more than taken up his share of the time, so I really can't see... Maybe we can direct questions to you.

Mr. Bill Cooper: There was confusion here about whether I would represent the barley growers, Mr. Chairman. I have no problem with that, because I'm an adviser to the board. But most of my work on this bill has been done through the marketing clubs in our region. They were considered important enough that the Honourable Justice Estey came out to our shop last Friday to meet with the fifty farmers who are members of our club to talk about that particular issue.

The Chairman: Did you have anything in particular in your presentation that we haven't heard yet today?

Mr. Bill Cooper: I think there are a number of things, and maybe the emphasis is as important as the—

Mr. John Harvard: Let's hear from him, Mr. Chairman.

The Chairman: I'm at the mercy of the committee if you want to hear him.

Mr. Garry Breitkreuz (Yorkton—Melville, Ref.): Mr. Chairman, he came a long way to make this presentation. I think it would be wrong to not allow him to do so. In fact I have four important questions, but I'm willing to forgo my time to ask these questions in order to hear this person who has come all this way.

The Chairman: No problem, then. It's just that there were two presentations from the same group, and we normally just take one.

Go ahead, Mr. Cooper.

Mr. Bill Cooper: I appreciate that, Mr. Chairman. Thank you very much.

Whether I'm representing barley growers or our marketing clubs, I've submitted a two-pager that I drafted myself on very short notice. Included in that are copies of some letters that I submitted to my good friend Mr. Lyle Vanclief, the Minister of Agriculture.

I'm impressed by some things that happen in Ottawa here occasionally. I would draw your attention, of course, to the submission the Library of Parliament did in terms of the research committee there. They put together an excellent document on Bill C-26, and I'm sure you've all read it. They highlight some of the very concerns we have had.

Just to make about six quick points here, certainly the awareness of the program leaves a lot to be desired. On many occasions during the meetings this winter, we have raised this question. It is not known by the farmers, not understood by the farmers, and they don't even know about it. My solution to that is that we must delay this bill for further consultation with farmers. This was, of course, suggested by others, including the pulse growers and so on.

On crops included, the SCRIP committee that was struck may claim to represent pulses, but there is no evidence that the growers of other crops listed in the proposed acts were consulted: mustard growers, triticale, buckwheat and others. I don't believe these growers have been consulted. In fact, I checked with several mustard growers around my own home farm, and they were not even aware that this bill was going forward.

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Mustard, by the way, has of course developed into a very major crop. I believe Humboldt is known as the capital of the world for mustard production, which developed there without a lot of restrictive regulations.

Furthermore, there is evidence, as mentioned here, and I could quote from the CGC briefing notes that I have with me, that there is an indication that cereals and oilseeds, following a trial period with special crops, could be added here. I believe that is why a lot of these organizations brought it to the attention of their membership, and so on.

So the solution here again is to hold up this bill until further consultation is achieved, and to specifically state here whether or not other grains might be included at a future date.

The next point I want to make was on the voluntary nature of it. This, as it is proposed, is certainly a double-negative billing. It is clearly intended to confuse farmers in terms of their writing in to say they don't want to belong, and then continuing to collect the levy, and following that, farmers having to write in to get the levy back if they chose not to be in it.

The other main point that I think hasn't been emphasized much here this morning, my fourth point, is that this is a tax and not a competitive cost item. The farm industry is burdened with large cost items that are void of any real competition, and I think this is the extremely important part of this.

For example, our whole handling and transportation and drying costs, and so on, all are non-competitive costs, all set about the same level by all companies. These non-competitive costs run 50% and better of the net value of our commodity, right from Foam Lake, Saskatchewan. This is a tax the farmer will continue to pay, and we have no assurance that it would not rise to cover various shortfalls.

That is the important point that I don't think has been mentioned enough here this morning. This is a tax versus a competitive-cost item. If the cost item is in the dealer's cost of doing business, then it becomes competitive. If it's a tax on farmers, it's not competitive.

The grain dealers could be asked to purchase a low-cost business licence; that's fine. On the bonding and insurance, we would prefer that it be optional, at their own cost.

I did want to mention, too, in this regard that in the winter of 1993-94 I was on the Saskatchewan committee. I attended the meetings in Yorkton, Rosetown, Humboldt, Melfort, Saskatoon, and Regina on this very topic, and there was certainly no support for this kind of a program. The only difference in it then was that they were proposing that there be a fund developed that would cover it, rather than ADC handling the insurance.

So there certainly isn't any support and certainly isn't any understanding of the bill thus far.

The other one that's clearly mentioned in the parliamentary research, which I found quite interesting, is this whole matter of moral hazard. I think this scheme leaves a lot of questions here.

How do we ensure financial solvency of grain dealers on a day-to-day basis? Will the insurance scheme encourage careless and fraudulent action, and some of them not necessarily fraudulent but we could have companies setting up various companies, one to handle the insurable items and one to shift your assets into another company? Will the insurance cover the outstanding liabilities in the case of bankruptcy? I don't think there's any evidence that it would. And what is the cost of adequate scrutiny?

There's no evidence in this situation that the industry requires such a scheme, because it has developed very well without a scheme. The only thing that is changed is that the Canadian Grain Commission has decided to exercise its right under the Canada Grain Act to send the RCMP out and close dealers down.

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So I really think it's a case that what we should be doing is legalizing what is presently happening. That has allowed the pulse industry and the special crops industry, including many of those crops not covered by the pulse associations on this committee, to develop and prosper. If the Canadian Grain Commission is now talking about a review of the grain function under the Canada Grain Act, why should we be putting in new legislation if this review is forthcoming, particularly now when the CGC receives approximately 95% cost recovery? The farmer is paying, so he should have a right to decide what services are necessary.

I urge you to at least delay this bill until such a time as the farmers understand it and the Grain Act is reviewed, because I believe that something quite different might come about if we had proper consultation and proper consideration of what the Canada Grain Act encourages the Grain Commission to enact.

I will just leave it at that, Mr. Chairman. Several other points may come up in the question period. Thank you very much. I appreciate you giving me this time.

The Chairman: Thank you very much, Mr. Cooper.

Mr. Breitkreuz.

Mr. Garry Breitkreuz: Thank you very much.

We are really pressed for time here, unfortunately, and I think it's too bad that with $20 million going into this thing every year we don't have some time to really thoroughly examine whether it's going to be effective and meet the needs of everybody out there.

I am simply going to raise five issues, okay? There's been some disagreement on these issues among you and I think there needs to be some clarification. I will allow each of you to pick and choose which of these you wish to address, because I don't think we will have time because of the constraints we have.

One of you said that the concept of the legislation was supported, but not the regulations, and the question raised by that, I think, is what problems are out there at present that you think need to be addressed in some way? If you support the concept of the legislation but not the regulations, what are the problems out there that need to be addressed by government?

Secondly, it's obvious that this applies just to western Canada. It doesn't apply to eastern Canada. Why is this being proposed for the west and not the east? And are some of you suggesting that the provincial governments are in a better position to regulate in this area than the federal government is? Would you prefer to see that, rather than have this done from Ottawa? Would you prefer to get the three western provinces together on this? Would that be a possible alternative to what you see here?

Third, as politicians we have to look at the overall effect of legislation on the constituency that we represent. And the concern that I have is a concern for the value-added industries. Most of you are representing just producers. Some of you, I think, have suggested that there may be a barrier here to smaller businesses getting into the business. That concerns me, because people's businesses start small and become bigger. Is this going to have an effect on Saskatchewan, Alberta and Manitoba in this particular area?

Because this would mean more jobs coming to those provinces. I have to look at the big picture here. Of course I represent farmers, but there are also other people, in businesses and so on, who need to develop, and you knew, with the demise of the Crow, that this would happen. Is this going to be a barrier to that kind of thing happening?

Fourth, should there be a referendum on this? One of you said that only 2% of farmers are aware of this legislation and that for some areas like mustard and triticale and some of these crops, the people growing those crops didn't even know that this was going to apply to them. Should there be a referendum and should that referendum be specific to the growers of that particular crop as to whether they want to come under this legislation?

And the last question ties in with this moral hazard thing: Is it possible that there will be a potential for abuse by either producers or buyers or elements in the special crops industry? And how would you handle this? As I looked at the legislation, I thought to myself that this may just take away some of the responsibility that some of these people may have if the government becomes involved and begins to back them. Could there be a potential for abuse on this?

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There are other things I could raise, but because of time, I'd like you to pick and choose which of those you'd like to comment on.

The Chairman: Mr. Breitkreuz didn't forgo any questions here. We'll go to Mr. Jackson and Mr. Meier.

Mr. Thomas Jackson: Thank you, Mr. Chairman.

In the Special Crops Act initiative executive summary, the Grain Commission states:

As of March 31, 1994, the Commission had exempted over 700 seed cleaning plants from the requirement to obtain an elevator license.

The elevator licence is required because it works to the general advantage of Canada, which is basically a provincial override that allows the federal government to constitutionally take away provincial rights. To that extent, only 13 are licensed by the commission as grain dealers and they deal exclusively in special crops.

I would like to add that many of the special crop processor dealers discipline larger entities that deal in our special crops. They add value by taking specific lots and finding niche markets that add value to those lots of product. The larger corporations that deal in these special crops would normally just try to ship off on a large boat and not do those special value-adding things. Hence, these smaller processor dealers really maximize the returns to our producers.

As the Alberta Pulse Growers Commission, we are really concerned that we will inhibit this function in the industry and thus we need to make sure the ability to do this is maintained.

Further, on the adding of crops, in the last meeting on March 17 I specifically brought up the problem of confectionery sunflower seeds. Mr. Tom Droog of Spitz, one of the major processor marketers in western Canada, has made it very clear he doesn't want his sunflowers involved in this scheme. XCAN, Rob Tisdale, made it quite clear that there was really no reason why he should be, yet the Grain Commission continues to have confectionery sunflowers involved in the program.

Further, in the Special Crops Act initiative, we thought canary seed should be part...and no one has really said why canary seed is now out. So there's a whole number of political backroom dealings that have ended up with a mishmash of a program that really hasn't gained good acceptance.

The Chairman: Mr. Meier, do you want to respond?

Mr. Garry Meier: I'll try to quickly address the five points that were brought up. Regarding the concept of the legislation versus the regulations, it is my understanding that we're dealing here today with the concept of the legislation only and not the regulations, which will be dealt with at a later time.

There are two key points that we see affected there. All special crop dealers will now be able to operate without the bond, provided they're licensed, and that licence fee will be determined.

The second one is that the special crops producers now have the ability to get out of the system if they don't want to be involved in it. Right now, they really don't have a choice. If they're dealing with a bonded grain company, they are contributing to that bond, whether they like it or not.

We're dealing with a western act here. The Canada Grain Act applies only to grains produced in the western area of Canada.

Barrier to entry was another point you raised. Do you want to elaborate on that one?

Mr. Garry Breitkreuz: Will this be a barrier to value-added industries?

Mr. Garry Meier: In the view of many of these small processing groups out there who want to get into the business, the current legislation under the Canada Grain Act prevents them from getting in the game because of the onerous requirements of the bond, the tie-up of the capital, and so on. This would open it up for anybody to get into the game.

If the current legislation is maintained, we're going to have a very small portion of the current industry able to participate, strictly because of cashflow requirements.

The referendum has been tossed around, despite the talk of some of the other groups around here, for quite a few years. It's been published in our newsletter I'm not sure how many times.

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When you have a refundable check-off, you in effect have a referendum every time that fellow decides to get involved. It's my understanding that, of the proposed regulations, if you have one statement of discontent, you're out. End of statement. You continue to be levied, and that levy will be refunded at a prescribed time. You don't have to go through an ongoing process of paperwork.

Consider the potential for abuse. I think that would fall under the Criminal Code's insurance fraud. If you burn your house down now with the intent of collecting the money, that's no different from going out of business in a fraudulent manner.

The Chairman: Mr. Cooper, and then we'll go to Mr. Proctor.

Mr. Bill Cooper: Just a couple of points. Even though it may have appeared in the various papers, there really hasn't been any concerted effort to inform farmers of this particular bill.

The one on value added, though, is an interesting one, I think. I really do see this as a barrier in that even the licence fee itself is a huge expense, and not just the administration and the check-off.

The other thing is that we have potential markets developing here. We've had some excellent research that shows that peameal, for example, is an excellent ration in pigs. We're just getting a lot of pig barns and so on being developed. This would, I suppose, mean that all of these hog barns and so on would have to be licensed. So when I haul my peas into the mill there—we're going to grow probably a thousand acres or so this year—we would have to have every pig barn, every feedlot, every little industry that develops licensed and we would have to collect this fee. I think this is a real barrier, very much a barrier to development.

After all, if we look at what happened in our industry without these barriers, that's what we want. So what we need to do is legalize what's happening today. That's really the essence of good competition in a growing and developing industry. The evidence is in the number of special crops dealers we have, by the way the mustard growers have developed, and also in some of the other crops that are not included here.

So I think we need the openness to allow small dealers and small entrepreneurs to get in business, not a $2,000 fee or a lot of bureaucracy by the Canadian Grain Commission.

I think really the whole intent of this thing is probably in terms of the whole government's cost-cutting, which I understand is necessary, but even in Bill C-4, the contingency fund, and so on, that's a way for government to get out of this business of covering some of these unforeseen costs.

I think this is another thing, and I don't blame the Canadian Grain Commission, as I believe it's coming from higher up where they're saying we should just get out of this as it's too uncertain. But really, we've only had two or three significant bankruptcies. I was involved in the Larry Rigaux one, and that was my own doing. So what? But there hasn't been any problem, so I can't quite see why, if there's no problem, we're trying to fix it.

Anyway, certainly on the value-added thing, Mr. Chairman, you're identifying a thing and it is of concern.

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

Mr. Dick Proctor: Thank you very much, Garry Meier, for a comprehensive brief. Speaking only for myself, I find it helpful when expert witnesses come and have specific amendments to the bill. I find this to be beneficial.

In your little description of the pulse growers in Saskatchewan, you indicated that you currently have a mandatory, non-refundable check-off. Yet as I heard you on the amendments to this, you're proposing a voluntary, refundable one. Did I hear that correctly?

Mr. Garry Meier: Yes.

Mr. Dick Proctor: Can you just elaborate on how you see that?

Mr. Garry Meier: Pulse growers have operated since 1984 with a mandatory, non-refundable check-off in Saskatchewan. I believe it's the only one in western Canada, with the exception of maybe dairy and a few of the other things.

With that in mind, we have to be very cognizant of what our levy payers are telling us, so we go to a great deal of effort to consult with them and keep them informed of what's going on.

• 1045

The proposal we're talking about, under proposed section 49.01, would be to accommodate the concerns of the other growers. We are looking for a middle ground on this whole thing.

Mr. Dick Proctor: Right.

Mr. Garry Meier: We very definitely see the concern these people have. Personally, I think it could be addressed through some regulation or some piece of technology that I haven't yet discovered, which will make it much easier to deal with. But I think this power should move towards the board of directors somehow or other and be dealt with in the bill in such a way that it could be described as either/or rather than the way it's currently described. I'm looking for a way to do that.

Mr. Dick Proctor: You indicate that the pulse growers support the bill in principle—

Mr. Garry Meier: Yes.

Mr. Dick Proctor: —but you are looking for the amendments you've enunciated.

Do you have advice? We don't know, but we think there are going to be some amendments. We haven't seen them yet—at least I haven't seen them yet. If we don't get those amendments, do you think we should continue to support the bill, or should we oppose it?

Mr. Garry Meier: My third and fourth points, on proposed sections 49.02 and 116, were about the advisory role. If it's not elevated to the level of being a director, where you're going to have some bite as well as bark, it's really going to create some problems in the minds of the fellows who are out there on the farms in western Canada.

We also have to deal with clauses 1 and 109, where we're talking about what is included versus what is excluded. We have to address that one as well, because there is, as the rest of the panel has mentioned, a concern out there that some of these other things may in fact be involved.

The key component that I think most guys are concerned about is that it's another tax, another levy, that's going to be there. There were some comments made earlier about the fact that guys tend to forget things. As I mentioned before, we can probably figure out some piece of technology to accommodate that so that once you've indicated that you're out, you're out. It would be your choice.

Mr. Dick Proctor: Finally, do you have a view as to whether there should be appointment by different associations or election? Does your association have any view on that?

Mr. Garry Meier: I have a personal opinion. At the association we haven't discussed it yet. I think the various interested groups probably should have the ability to recommend to the minister—to a point.

As soon as you go into an election process, you're looking at a significant cost, and you could conceivably end up with—how should I put this?—less than qualified individuals guiding this thing.

I think we have an example of that right now within some of our elected bodies here that claim to represent western Canada farmers under the other grains, where we end up with political interests getting involved. I think we would like to see that somewhat avoided.

The directors of these associations, the pulse growers, the barley growers and so on, are duly elected by their memberships, and I think we should have a great deal of confidence in the ability of those elected members to then select somebody from among their peers to represent them on the committee.

Mr. Dick Proctor: Your comments are very helpful. Thanks very much.

Mr. Garry Meier: Thank you.

The Chairman: Thank you.

Mr. Meyer, did you want to make a response to somebody's question? We have very little time left and we still have two questioners.

Mr. Leo Meyer: Thank you, Mr. Chairman. I'll be very brief.

You asked five questions, one of which was about the concept of regulations versus legislation. I think the concept of regulations is sometimes wishful thinking and legislation is more like coming back to reality, where you actually have to put it in some type of a form that can work.

Second, why east versus west? I think you have to allude to the fact that, as I am sure you are aware, the Canadian Grain Commission doesn't have jurisdiction in eastern Canada. It has jurisdiction in the so-called designated Wheat Board area, which of course ends at the Ontario border. It does have offices in eastern Canada, but the jurisdiction ends at the border of Ontario. That's a short answer to your question, not to get into any philosophical type of argument about that.

Third, with respect to the question about the effect of legislation on small processors and other various people who want in to the business, the value-added industries and whatnot, you are raising a very good concern, because I think it was alluded to before by other speakers. Personally, I think, as does the organization, that it will be a very much greater hardship on a small processor than on an existing processor or a large organization, because in those instances they may have persons in place to take care of that, but in the case of a small processor, they might need additional staff to do that.

• 1050

We have made some calculations on that. It's somewhat speculative on what those costs would be, but we figure that beside the licensing and running the administration of a mid-size or smaller processor, it could go up as high as $10,000 a year.

Fourthly, as to whether there should be a referendum on this issue, my personal opinion, because we didn't have time to discuss this around the association, is maybe it would be a good idea.

Fifthly, on the potential for abuse, I don't think there's any greater potential for abuse than there is anywhere else, so I agree with what has been said on that before.

Thank you, Mr. Chairman.

The Chairman: Thank you.

We'll go now to the parliamentary secretary.

Mr. John Harvard: I have a couple of questions. My first one would be to Mr. Cooper.

I think, Mr. Cooper, you referred to the insurance premium, or the levy, whatever you want to call it, as a tax. Why would you call it a tax?

My understanding is that the Grain Commission or powers that be had to come to a costing of both the administration and the providing of the insurance, and it came to 0.38%. That is the least cost they could arrive at. My understanding is that some insurance companies were invited to participate and they weren't interested, that only the ADC was prepared to provide the insurance.

So we have a plan here, part of which is the administration and part of it is insurance, and the cost comes to 0.38%. It's an insurance premium, which includes the cost of administration. I'm sure that if I buy house insurance or car insurance, there has to be an administration cost. They perhaps don't specify it in the insurance premium; I'm paying just for my insurance.

So I'm just curious as to why you would call it a tax.

Mr. Bill Cooper: What I said was it's a tax as opposed to a competitive-cost item. I make a very clear distinction, because as I mentioned, we have so many costs in our grain handling and transportation costs and so on that are non-competitive costs.

What we want to do is get them out in the open and make them competitive. If it's in the basis... And I don't have any objection; my secondary position would be, if you want to make it compulsory for all the dealers, I suppose that would be an option. As long as they're paying for it, then it's not a tax; it's part of the base. But if we have to pay it, it's really like a tax.

I make a clear distinction. If you've ever marketed grain, you know that some of those costs are regulated costs, which are the same. It costs you $12.35 a tonne to elevate it up that leg and into that car. That's when it's regulated; it becomes non-competitive. So I make that clear distinction between a tax here, which we have no control over in terms of it being 32¢ or 84¢ or 95¢...it kind of keeps growing. That is really a tax, as opposed to a competitive-cost item.

On your point about it being voluntary, and so on, remember the western grains research fund when it first came out? The first year it was there, the Wheat Board gave us the option. We had to declare that we wanted that checked off for research. They didn't get any money. The next year, they made it so it was not optional. You had to write in and get your money back and tell them by November 1, or whatever, that you wanted out of it. Then they got lots of money.

So it really is very clear what will happen here. I have no doubt the modus, the method, the intent, the whole of the scheme is to make sure the farmer is not aware that this thing has come, so if he misses that deadline date, you have his money.

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Mr. John Harvard: You mentioned a competitive price or a competitive cost, and I think all of us would be sensitive to that. My guess is that if the plan works out very well and there's a very high rate of participation—90%, 95%, or even 100%—there may be a few insurance companies that would come along and say, “Hey, we can do it for less than 0.20%”. If the participation rate is good, maybe they can offer it at 0.14% or 0.15%. I would say, “Be our guests”. I don't think anyone would want to provide or demand a higher cost than necessary.

I have only one other thing, Mr. Chairman, and it really is for Mr. Jackson. Mr. Jackson was concerned about the issuance of grain receipts, which really has nothing to do with this particular bill. It has to do with the Canada Grain Act, which is not before us at the moment. My understanding, Mr. Jackson, is that when the producer wants the receipt, he gets it. In other words, he's entitled to it. Am I right?

Mr. Tom Jackson: I understand that you are wrong. In the Canada Grain Act there is an amendment that in fact does not require them to issue a grain receipt on delivery. In all the other grains they will be required. This is a special thing just for special crops. That is my understanding of the bill.

Maybe you want clarification from the Grain Commission. But it in fact is going to be treated differently from the major grains that are not under this particular SCRIP program.

Mr. John Harvard: My understanding, Mr. Jackson, is that some producers don't want the receipt right away because that would start the 90-day clock. When they want it, they're entitled to it. That's what I'm trying to say.

Mr. Tom Jackson: That was our point exactly. The special crops industry does not fit the 90-day time period. So we create an exemption—it's hard to get a grain receipt in the beginning—to create moral hazard. The grain producer will not be covered at all. We object to that.

Mr. John Harvard: When do you want the receipt?

Mr. Tom Jackson: I think we quite clearly state that we want it at the beginning and we want it extended to one year security time. Now that we're paying insurance for this, we want the insurance to be extended to one year so we have integrity in the system, so everyone knows where they are, everyone knows what the liabilities are, and the system will work.

Mr. John Harvard: What you want is not 90 days; you want 365 days.

Mr. Tom Jackson: Exactly. That is correct.

The Chairman: Garry, and then we'll go to Mrs. Ur.

Mr. Garry Meier: Subsection 81.(1) of the Grain Act states:

With respect to the purchase of western grain from the producer of that grain, every licensed grain dealer shall, at the prescribed time and in the prescribed manner, issue a grain receipt or cash purchase ticket stating the grade name, grade and dockage...

The Chairman: The House leader wants to finish up here on time, so Mrs. Ur will have the final question.

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex): I have one question for Mr. Jackson. In your presentation this morning you made reference to the fact that pedigreed seed should be exempt from the plan. I don't think seed is covered under the current system and it is not expected to be included under the new program.

Mr. Tom Jackson: Mr. Chairman, perhaps I may refer to the March 17 SCRIP committee meeting. I brought up the fact that pedigreed seed is a non-grain. The difference between seed versus grain was discussed. It was asked whether dealers could be required to collect a levy on special crop seed. It was pointed out that the seed industry was not consulted on SCRIP and that in particular the topic had not been discussed in the past, which was false. It was also asked whether seed was specifically exempt from SCRIP. Val Gilroy pointed out that seed is currently covered under the Canada Grain Act and is not differentiated from grain. She assured the committee that currently the Canadian Grain Commission is ignoring seed and will continue to do so. It was pointed out that the Seeds Act does not provide for security on seed.

With respect to my honourable colleague in the legal profession, we object to the Grain Commission deciding that all of a sudden seed is in their jurisdiction for the purposes of their act when it's not. For them to state on the public record that seed is, for the purposes of the Grain Act, is objectionable.

Mrs. Rose-Marie Ur: I have one more question, Mr. Chair. This is directed to Mr. Cooper.

In your opening statement you said you belonged to the committee. What committee were you referring to, sir?

• 1100

Mr. Bill Cooper: I was referring to the 1993-94 special crops committee, which was in the three prairie provinces. Mr. Copland, who appeared before, was chairman of that committee for Saskatchewan. I was a regional representative and attended the number of meetings that I mentioned.

Mrs. Rose-Marie Ur: And you were just a temporary member of that committee, or you left the committee for—

Mr. Bill Cooper: Yes, that committee was disbanded later on, and subsequently, I believe, the present committee was chosen.

Mrs. Rose-Marie Ur: From that—?

Mr. Bill Cooper: We had quite a number of meetings and quite a number of interested farmers came to them. My point was that was the start of this whole program that has come to this point, yet it didn't seem to be considered in the—

Mrs. Rose-Marie Ur: Right. You also made mention in your letter to the minister that you're with the Foam Lake Marketing Club—

Mr. Bill Cooper: Yes.

Mrs. Rose-Marie Ur: —and that there were roughly 20 farm groups and there are 50 now. There's been a...

Mr. Bill Cooper: We included in these discussions of course two other clubs. We have, which would of be of interest to you, an all-women's marketing club there, which is probably the only one in Saskatchewan. We have also the Kelliher Marketing Club, which is next door to us. We involved all three of those clubs in a lot of these discussions.

Mrs. Rose-Marie Ur: Time and time this morning—and I'm sorry I missed the first presentation, but I was at another meeting—we've heard that farmers weren't consulted or farmers weren't given information. But the pulse groups I was looking through have really large numbers of members. With these people meeting with the Grain Commission, did the information not flow back and forth? Obviously it's not the government's fault in that respect.

Mr. Bill Cooper: No, not exactly.

Mrs. Rose-Marie Ur: If the information is there, I think it would be up to these people who run these different groups to get the information back to the farmers. We can only do so much. In that respect, I think there is maybe a lack somewhere else down the line as well.

Mr. Bill Copper: I would tend to agree. I'm a pulse levy payer and I get the newsletter, and there has been very little discussion about it. In one case, and I didn't bring it with me, there was a comment in the pulse newsletter prior to when Garry was president that we responded to. It was a very brief note saying we are working on your behalf to develop a security system, da da da—about one paragraph. Our Kelliher club wrote a letter to the director whose name was at the bottom of it, and we never did get a response to it, which was unfortunate.

There has been very little in the newsletter. I think Garry, who is now president, would probably agree that if you look back through the newsletters there was very little discussion about this program.

Mrs. Rose-Marie Ur: I must add that I appreciate your comments. It was a good document.

The Chairman: We're going to have to conclude the meeting. People are waiting outside. Thank you very much for coming in and helping us out this morning.

Colleagues, we'll reconvene tomorrow in Room 208, West Block, at 3.30 p.m. The meeting is adjourned.