AGRI Committee Meeting

STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, June 7, 2001

• 0913

[English]

The Chair (Mr. Charles Hubbard (Miramichi, Lib.)): Good morning, everyone. Pursuant to Standing Order 108(2), the study of the future role of the federal government in Canada's agricultural sector, in particular the grain and oilseed sector, I'd like to resume our hearings this morning.

We'd like to welcome a significant number of witnesses. We have a program here, and I guess in terms of our records it would be best if we were to follow that list.

I'm not sure what information the clerk gave you on time, but if each of you could condense your presentation to less than 10 minutes, it would give us a good amount of time to ask questions after you've finished, and we can bring out the information in our questioning.

So with that, I'd like to introduce, first of all, Eric Leicht from Marysburg Organic Producers Incorporated. Welcome, Eric.

Mr. Eric Leicht (Administrator, Marysburg Organic Producers Inc.): I want to thank the members of this committee for the opportunity to express our concerns regarding the Canadian Wheat Board's present policy on buybacks for western Canadian organic wheat and barley.

Marysburg Organic Producers is a group of certified organic growers working together to market our grain. As the administrator and the director of this company, I've experienced and seen how this Canadian Wheat Board buyback causes frustration and, in some cases, hardship to growers. Every time we export wheat or barley, an export permit is required. In order to receive the export permit for our western Canadian wheat or barley in a designated area, we have to do a buyback.

• 0915

I'll briefly explain this buyback and its consequences on organic farmers in the designated Canadian Wheat Board area. Organic farmers in Ontario and Quebec have none of these costs or problems.

To obtain this export permit, we are forced to sell our grain to the Canadian Wheat Board at their initial price and buy it back at the current Canadian Wheat Board asking price. The difference between these two prices is usually $1 to $2.50 a bushel. I've seen it as high as $5 a bushel. That means that if you export one rail car of wheat, you'd have to pay the Canadian Wheat Board over $16,000 just to get this export permit. Part of this can be recovered through interim and final payments, but very rarely does one ever get the full amount back, and even if we do, it could be up to 18 months after the sale.

On average, from the buybacks that we have done, our loss is at least 60¢ a bushel, and lately that figure seems to be closer to $1 a bushel.

That may not seem significant to you, but take a farmer who exports, on average, 20,000 bushels a year. It translates into a loss of $100,000 to $200,000 over a 10-year period.

I'm going to give you a specific example. I'll hand copies out to you after. Basically, this is just what I said: the asking price less the initial price equals the difference we have to pay to get this export permit, and then some of the difference is recovered from final and interim payments.

This particular example is from a producer, Larry Hoffman, an organic farmer from Spalding, Saskatchewan. On this transaction, he lost 97¢ per bushel. I also have supporting documents showing one on barley where he lost 75¢ a bushel last crop year on doing a buyback.

This information was also provided to Micheal Halyk, who is our local Canadian Wheat Board director. We also provided it to the local representative in our area. They could only sympathize with him regarding the situation. Mr. Halyk suggested that Mr. Hoffman simply ask a higher price for his grain to cover the added expense of the Canadian Wheat Board buyback.

While we really wish we could ask a higher price, we must compete with other organic farmers around the world.

I've talked to a number of other organic growers this past week, and they all felt that, based on the Canadian Wheat Board projections for final payments, they would lose at least $1 per bushel on hard red spring wheat and $1.30 per bushel on durum. Since timing can play a significant role in these buybacks, especially on the net effect of the buybacks, these are probably a good average for this crop year.

The question I have today is, how can this government justify this to western Canadian organic farmers?

The Canadian Wheat Board has no part in marketing our grain, and we do not want them involved. It is a small, specialized market where the buyer and the consumer often want to deal directly with the growers. They do not want to deal with a large bureaucratic organization like the Canadian Wheat Board. We find our own markets in other countries at our own expense, yet the Canadian Wheat Board is there with its hand out.

This buyback is like an export tax within our own country. The Canadian government has put up trade barriers for entrepreneurs who have not only worked hard and been innovative to convert their farms to organic, but also developed cleaning and processing plants and went out into this global economy to find their own markets.

If this is not diversification, Mr. Goodale, Minister responsible for the Canadian Wheat Board, then I do not know what is—I hope somebody will pass this report on to Mr. Goodale. How is this fair to western Canadian organic growers who market their own grain?

In the past couple of weeks, Mr. Goodale has made comments encouraging western Canadian farmers to diversify. I strongly agree. I find it offensive that, as minister of the Canadian Wheat Board, he can let this policy of buyback taxation continue, even though it has been pointed out to him in the past.

• 0920

It is a policy that hurts western Canadian organic farmers who have diversified. Not only do we have to compete with grain subsidies of other countries, but within Canada this government has a policy to discourage diversity and innovative entrepreneurs.

The next step for western Canadian organic farmers is to further process their grain. One such venture is FarmGrow in Regina, Saskatchewan, devoted to processing organic wheat flour and semolina. The same buyback procedure applies to FarmGrow when they sell flour to other countries. As you can see from the above illustrations, the buyback costs farmers money. When FarmGrow performs their buybacks, they will have to download this cost onto the organic farmers. How can this buyback encourage diversification for western Canadian organic growers when it penalizes innovative and enterprising individuals and ventures?

In the March 2000 Canadian Wheat Board discussion paper on organic, the first objective is that producers receive the highest farm gate price possible. I fail to see how your recent changes do this. With increased buyback costs, we seem to have less money in our pockets instead of more.

As I indicated earlier, I've talked to a number of organic farmers in the past few days regarding the Canadian Wheat Board buyback, and they are extremely frustrated. Some organic producers, including myself, have reduced or eliminated wheat and barley acres. We have tried other crops, like spelt and kamut, which are granted export permits without buybacks. Unfortunately, these crops only grow well in certain areas.

Not only does this buyback greatly affect our cashflow negatively upon initial sale, and then end up costing us a ridiculous amount of money, even after interim and final payments, but the process for the buyback can be extremely slow and cumbersome. Within the last month, one grower received a recent order on short notice from a buyer. Even though he applied for the buyback immediately, due to delays at the Canadian Wheat Board office, the truck was held up at the border waiting for the export permit. This not only aggravates the trucker, but puts future business at risk with the customer if he does not receive the product on time.

In January 2001, two employees of the Canadian Wheat Board met representatives from the organic industry. This was an all-chapters meeting, so there were representatives from all of Saskatchewan, and there were some from Alberta—kind of the leaders of organic. Rather than asking the representatives of the industry their opinions about hiring an organic representative within the Canadian Wheat Board, these employees from the Canadian Wheat Board insisted they would be hiring this person, even though it met with strong opposition at that meeting. Once again, the Canadian Wheat Board acted on its own, without consulting the industry.

With these levels of frustration with the current buyback policy, it is easy to see why we have support among the western Canadian organic farmers and those who have studied the problem. In Saskatchewan, three organic chapters of organic crop improvement associations and another certifying body are issuing motions to end this buyback policy. There are another three chapters in Alberta. In total, this represents over 600 growers.

Richard Gray, in his value-added report, came to the conclusion that:

Canadian Wheat Board organic producer participation in the Canadian Wheat Board should be voluntary, and this should be implemented within one year of establishing national standards.

The western grain marketing panel also recommended that organic grains be marketed outside the Canadian Wheat Board jurisdiction. The Angus Reid poll, conducted after this study, showed that four out of five respondents supported selling organic wheat outside the Canadian Wheat Board.

I have to ask, how can this government continue to look the other way when faced with this support to eliminate the buyback process for certified organic wheat and barley growers? We're not asking for more subsidies or handouts. We're just asking for fair and equitable treatment and the right to keep the fruits of our efforts.

Since we are forced to compete with other organic growers in the world, we do not need trade barriers initiated in Canada. We're put at a disadvantage within our own country, as growers outside the three prairie provinces do not have the costs or frustrations of the Canadian Wheat Board buyback.

• 0925

We do not need more studies. We are proposing a simple solution. It's one that already exists for certified seed growers, producers of spelt and kamut, exporters of manufactured feed, and producers outside the designated area. It is that the Canadian Wheat Board grant export licences, upon request, for certified organic wheat and barley, without buybacks.

Thank you.

The Chair: Thank you, Eric.

We now will move on to Mr. Schmidt, from Schmidt Flour Incorporated. Welcome, Mr. Schmidt. I'm not sure if you have a visual presentation too, but in any case, you have about ten minutes.

Mr. Arnold Schmidt (President, Schmidt Flour Inc.): At the beginning of April, I applied for a permit to ship 400 pounds of sample flours to the United States. I was refused an export permit unless I paid a buyback on flour.

In the 1980s, I was farming 100% organic. In 1984, I started milling flour. At the present, we have four employees and part-time help, as well as my wife and myself. I grow my own entire product and market it. Every bag that leaves our premises is labelled, “Schmidt Flour has been grown on our farm”.

We grow wheat, rye, lentils, and soybeans. Most of my life I've done research on soil nutrients and the effect on humans. My customers are very happy with my product, and they tell me I have some of the best they can buy.

In the early 1940s and 1950s, I was getting $1.25 a bushel, or $45.83 per metric tonne. I was paying at that time 4.25¢ a litre for farm gasoline. Today I pay 64.1¢ per litre for gasoline, which is 15 times higher than what I paid 50 years ago.

The price of wheat is approximately $3.60 per bushel on 13.5 protein, or $131.99 per metric tonne. This is approximately 2.88 times higher than it was 50 years ago. The average machine price has increased about 15 times. To meet these costs, conventional wheat would have to be $18.75, or $687.50 per metric tonne.

The only hope is to value-add, and grow organic products and process them at the same time—organic flour, perogies, pancake flour, etc. Even with the value-added, and having organic products, we do not even get close to that $18.

We have the costs of marketing, time and expenses. Why do we also need the added burden of paying through the Wheat Board marketing system of conventional farmers? In fact, in 1984, we were getting about 25% more than we are now.

I pray that anyone with a clear mind can see that there is no possible way the organic producer in value-added can afford to pay somebody else who comes along and wants to get their share in marketing. This does not exist when it comes to organic flour. The Wheat Board is asking for buybacks on products such as organic flour, perogies, and pancake flour, which they do not handle or market.

To give you an example, we had a good customer in the United States who imported approximately 18 semi-loads of bagged wheat per year, which he sold to individuals who used small household mills. He could make a living on that. Then the Wheat Board came along and demanded a buyback. This increased his price so much, he lost customers and he had to find other employment.

• 0930

To make a long story short, the Wheat Board killed the goose that laid the golden egg and we lost the market. Therefore, the Wheat Board destroyed our market and created an easy way for us to go broke.

It destroys the organic industry and it creates unemployment, which is not necessary.

In the last seven years technology has increased more than in the previous five thousand years. So let us get away from the horse and buggy days and go ahead to a free enterprise system.

Thank you.

The Chair: Thank you.

Moving next to the Organic Special Products Group, John Husband is speaking for them this morning.

Mr. John Husband (Organic Special Products Group): The OSPG is a voluntary grassroots association of organic farmers. Our goal is marketing choice. We are totally self-funded, and our membership is over 150 producers. We represent all regions within the designated area.

Part IV of the Canadian Wheat Board Act requires that all wheat and barley products must have a licence for export and interprovincial marketing. This applies equally for all wheat and barley grown anywhere in Canada. The licences are issued solely by the Canadian Wheat Board. This is not a marketing arm; this is a regulatory role under part IV.

The Wheat Board arbitrarily grants or denies licences. Licences are granted to producers for pedigree seed. They're granted to the niche market wheats like, for example, kamut, spelt, and einkorn, and they're granted for all wheat and barley grown outside of the designated area.

OSPG also discovered a year ago and revealed that licences are quietly granted to big feed mill companies for processed feed, wheat, and barley products for export to the United States under a form called the Export Manufactured Feed Agreement. Nobody knew about that; it had never been heard of.

I heard about it, and I also got the phone number of the department where these Export Manufactured Feed Agreements were to come from at the Wheat Board. So I phoned up that department and said I'd like them to send me one of these forms. They didn't want to, but they reluctantly agreed to fax me one. So in the afternoon I received a fax, but it wasn't an Export Manufactured Feed Agreement. It was garbage.

This is an Export Manufactured Feed Agreement, and this is what they sent me. The only reason I mention this is because it is so typical of the bad dealings we have had with the Canadian Wheat Board. We've had terrible problems with these people.

Moving on, we also found that there is another example about the Canadian Wheat Board granting licences. When the Creston-Wynndel region, which is a little region in southern B.C., was still part of the Canadian Wheat Board designated area, we found out that licences were granted to these farmers so they could export, no buybacks. In contrast, the Wheat Board refused to grant licences to organic producers. This is what we asked for and they have refused to grant them.

• 0935

We have repeatedly requested, and we still do, that the Wheat Board simply grant licences for us. We don't ask to be exempt out of the act. No one is exempt out of the Canadian Wheat Board Act. We don't ask for any special favours, but we do ask for only the very same as is already granted to other grain that the Wheat Board doesn't market. We believe that is reasonable.

It's all done by statutory declaration. I'm hoping that members have received these statutory declarations. This is a statutory declaration that is signed so that kamut and spelt can be exported, granted a licence. This is one for pedigree seed. This is one stating the province you grow it in. Depending on what province you grow it in, it's granted. If it's Alberta, Saskatchewan, Manitoba, no, it's denied.

We suggested that they could do the same for organic grain, and we even offer verification from the certifying agencies, because we're all identity-preserved and the integrity of our product is crucial to the success of our markets. Anyway, so far we've been unsuccessful.

A very important point is that the Wheat Board attempted to deceive organic farmers. They told us that the legislation would not let organic grain out of the monopoly, and they repeated that. We would not accept that; we would not buy that.

If you read both discussion papers, the 1996 one and the 2000 one, they clearly state that there would have to be a change in the legislation. They couldn't let us go.

When we exposed this information as false, they still refused to grant us licences, and they are now refusing to dialogue with other concerns we have raised about their legislated mandates. I have letters from them saying they are not going to discuss things with us any more.

This can't be passed off among farmers in the prairies to resolve. The Wheat Board is a creation of Parliament. Parliament is ultimately responsible for the actions of the Wheat Board.

This was pointed out back in 1997. Howard Migie, director general for the grain policy, reported to the Standing Committee on Agriculture about the coming changes to the Wheat Board. He said “...the Canadian Government needs to have some involvement with respect to” control that the Wheat Board has over export licences across Canada. “The authority to control exports is clearly an important power that the Canadian Wheat Board has and it's not a power that the government normally delegates”.

There are serious problems at the Canadian Wheat Board. Our experience is that they have become a self-serving institution and they place their own interests over farmers' interests.

For example, they have expanded themselves by hiring an organic employee, at organic farmers' expense, for grain they don't even market. Another example is they give these big feed mill companies free export licences and organic farmers are charged an administration fee for being forced to sell to the Wheat Board. It's totally unfair. The Canadian Wheat Board refers to the small percentage of producer buybacks, implying to you that this is the only organic concern.

Two months ago the Wheat Board was here speaking to you, and this is what they stated to you: “...only about 25% of the wheat that's exported as organic is done directly by...producers”. They tried to make you think they only adversely affect a small part of the organic marketing system. This is simply not true.

Please understand that every prairie organic bushel for export is sold to the Canadian Wheat Board and bought from the Canadian Wheat Board, whether the exporter is a farmer or a company. Remember, the board doesn't market any organic grain. Unless special deals are given to the exporting companies, the same unpredictable and costly impediments are there for every exported organic bushel.

That is hurting our industry. Actually, these exports through companies are even worse than the farmer buybacks. The reason for that is because the process is secretive and hidden. Not only that, but the Canadian Wheat Board Act allows the Canadian Wheat Board the opportunity to secretly favour or economically punish any company they choose. As farmers we haven't had the support of companies in this marketing problem we have.

• 0940

There is another aspect of the Canadian Wheat Board that implicates government directly. The Canadian Wheat Board Act specifically requires that the losses incurred under the part IV licensing provisions of that act are to be paid for by the federal government. This is not being done. The CWB is currently taking the marketing and pooling money under part III of the act to pay for these losses. Arguably, they're not large. Nonetheless, it's the principle. Not only is the act not being followed, but it means the farmers who are denied licences must pay for the cost of those who are granted licences.

Legislators, we need your help. Unless Parliament intended that it is okay for the Wheat Board to give false information to farmers and to discriminate against prairie farmers, we need your intervention in facilitating the Wheat Board to grant licences to organic farmers. There is a precedent. Howard Migie also stated in his 1997 report that in the early 1980s the government ordered the Wheat Board to provide export licences for barley from Ontario.

He also stated that the minister is responsible to Parliament for the actions of the Canadian Wheat Board. Members of the committee, when Minister Goodale ignores serious issues and defers all Canadian Wheat Board problems that are brought to him to what amounts to a special interest group in Winnipeg, he is neglecting his duty to Parliament.

Thank you very much.

The Chair: Thank you, Mr. Husband. We went over by a minute, but we can endure that.

Next is Mr. Allan Graff from the Canadian Organic Advisory Board. Welcome, Mr. Graff. So far we're doing very well in terms of our time.

Mr. Allan Graff (President, Canadian Organic Advisory Board): Thank you.

Mr. Chairman, members of the committee, in opening I'd like to say that the Canadian Organic Advisory Board has no policy on the role of the Canadian Wheat Board in organic marketing. To my knowledge, this role has never been discussed at a meeting of our directors.

What I'm going to present to you is my own view as an organic marketer, processor, and producer. In 1990 I participated in a Canadian Wheat Board conference on organic marketing in Saskatoon, Saskatchewan. At that time I asked the question, “why is the Canadian Wheat Board involved in organic marketing?” It soon was apparent that it was illegal to market board grains without a permit to do so.

When I did my first “buyback”, the elevator agent and I sat down and worked out the details. We worked through the process on paper, removing the common charges the line company normally levies against handling grain. We also worked out the process of payment. He then presented these details to his supervisors, and to our surprise we were correct in our own method. At that time I did small buybacks of one to nine tonnes.

In the early 1990s I was able to access a market in the United States. With the help of the Canadian Wheat Board and the line company, I exported that wheat to the American buyer and gained a good price for the opportunity.

A few years later I was able to meet my other goal of exporting to Europe. At that time I was only exporting my own grain. Within a few months I had inquiries from other farmers who wanted to export. I began to help them do their own buybacks and access the markets they so desperately needed. Some of them are now out of debt.

Today I am marketing my own grain, buying and marketing off-board grains, and marketing board grains on behalf of other farmers.

Over the years I've been involved in many producer-direct sales. The outcome has been positive when working with the Canadian Wheat Board and in most cases the line companies.

I've always paid my bill with the line companies, and my cost of doing business with them is a low $5 per tonne. Initially, I thought the $5 per tonne was an excessive charge, until I looked at the audit trail from the agent, through to the head office, to the Wheat Board, and back again.

• 0945

The unfortunate thing in the whole system was the fact that many of the elevator agents do not understand how to execute a producer-direct sale, and in many cases they do not want to know, because it doesn't count in their operating and accounting systems. Some of the agents also blame the Canadian Wheat Board for delays in receiving export licenses, and in doing so they deflect many concerns on to the Canadian Wheat Board.

The issue under discussion here, as I understand it, is that the Canadian What Board does not allow organic producers access to markets that the producers have found and that through the producer-direct sales the Canadian Wheat Board is taking from farmers both the desire and the financial incentive to market their own grain. As you now are aware, I have been marketing my own grain for many years, and at this time I can honestly say that in most cases the Canadian Wheat Board has paid me out of the pool accounts as much as I've put in.

Over the years I've suggested to the Canadian Wheat Board that it would be good to eliminate the line company role from the producer-direct sale and allow the organic producer to deal directly with the Canadian Wheat Board. This would eliminate a certain amount of paper work that the producer goes through to receive an export licence and would be more responsive to the producer. Apparently, I was not the only one to have such thoughts. Many others I have spoken to think along these same lines.

The producer-direct sale presents three options: number one, a system that still is in use with a line company; number two, a cash system; and number three, a credit system.

Besides the line company option we just discussed, I have also used the credit system, and I have found it to be very responsive. With the credit system I was able to complete a producer-direct sale in about two to three hours from first contact. This is more than adequate time for me to complete my sales to my customers, arrange loads, and ship them the grain.

The other farmers for whom I market prefer to use a producer-direct sale through a line company. The choice is theirs. As long as they have the required papers, I will market their grain.

I have concerns with the idea of removing organic wheat and barley from the Canadian Wheat Board jurisdiction. The most obvious is the possible misuse of the organic mandate by non-organic grain companies. This would lead to the possibility of commingling certified organic crops with non-organic products. That could cause some people food allergy reactions and other complications. This then would lead to the consumer not trusting Canadian organic produce. In the recent past there has been more than one company caught commingling grain, even though these were being certified by the top United States certification organizations.

My greatest concern, though, has to do with the other market options. What, if any, are they? I have heard that we should market our own grain. I have talked to many farm gate marketers in the U.S., and their story is not the same as what appears in the press.

One marketer from the Dakotas comes to my mind, both affectionately and specifically. I was talking with him about marketing echinacea. We also commented on the fact that the Dakota guys had the border shut down against durum on the very day we were talking. His comments, as I remember them, were as follows. He wanted a system that pools our grain; that gives him equal market access, because the good marketers are hitting the high markets; that works for the farmers and let's the farmers farm; and that does market research. We discussed many other points.

As we talked, I said, “it sounds as though you would like the Canadian Wheat Board.” He replied that all he hears is what a monster the Canadian Wheat Board is. I suggested he investigate on his own. As it turned out, he was on the state agricultural committee that later asked to join the Canadian Wheat Board.

• 0950

If the Canadian Wheat Board were to be totally removed, as some are suggesting, I would see a rapid demise of the family farm in western Canada. There are farmers who excel in farming, working the soil, planting, and managing their crops. There are those who are good marketers. Seldom do the two go together. Removing the Canadian Wheat Board means many of the good farmers will be forced off their farms because of missed market opportunities.

In summary, I believe the Canadian Wheat Board is making changes for the betterment of all producers. These include the new PDS format and the recent changes in marketing options. There are changes I would like to suggest that would accommodate those who want to market outside the Canadian Wheat Board. These ideas must be evaluated very carefully. We do not want to jeopardize the many farmers who want to use the Canadian Wheat Board as their marketing agent.

It is my understanding that according to NAFTA, if we change or eliminate an agricultural marketing organization within Canada, we cannot return to a like organization for 25 years. If my understanding is correct, then I would suggest that all changes be made with great caution.

I thank you for your time.

The Chair: Thank you, Mr. Graff.

We're moving along now to the Canadian Wheat Board.

Ken, are you doing the presentation?

Mr. Ken Ritter (Chair, Canadian Wheat Board): Yes, thank you.

Good morning, Mr. Chair and members of the committee. With me is my colleague, Larry Hill, a director from District 3 of the Canadian Wheat Board. He was in charge of the organic consultation process for the board. As well, Jim Thompson, with our administrative staff, is a senior marketing manager for domestic and U.S. sales of grain. They will assist me when the question period comes.

I'd like to thank you for the opportunity to discuss the CWB organic and value-added policies. Over the last few weeks, we have heard critics who've claimed the Wheat Board impedes the growth of organic farming and value-added enterprises. In fact, the organic industry is expanding on the prairies at over 20% per year. In Manitoba the number of organic producers has doubled in the last two years.

In terms of value-added processing, the milling industry has seen a growth in production and exports, and a turnaround to a positive balance of trade in grain products. While the U.S. closed nine flour mills last year alone, eleven wheat and barley processing plants have either expanded or been built in Canada in the last three years. Opportunities are also solid for organic flour millers and farm-grown organic foods. An organic mill outside Regina is testament to that.

Some of our critics have chosen the organic and value-added industries as avenues to attack a western Canadian farmer-run marketing organization. I would like to address the following key questions in my comments. One, what is a CWB organic producer-direct sale, and what is its purpose? Two, what is our new organic policy, and how did we arrive at it? Three, how does the organic producer-direct sale put money in farmers' pockets? And four, what is the CWB's value-added policy?

First, going to the purpose of a producer-direct sale, it's to provide marketing flexibility and preserve the pooling system. How does it work? The producer who wants to market their own wheat or barley pays the pool accounts the difference between the conventional pool price and the conventional daily cash price in a particular market, such as the U.S. or Japan. The difference between that pool price and the daily cash price is called the PDS spread.

Premiums related to the organic status of the grain are negotiated by the organic producer and retained by the organic farmer making the direct sale. The organic producer retains the organic premium. Often this is something like 50% to 100%—or more—over the value of conventional grain.

There are two premiums, though. The second premium is for conventional grain and the value of the specific market. The conventional premium is often the result of CWB marketing power and our ability to command different prices in different markets.

• 0955

The question becomes whether all farmers should share in this conventional premium. We would argue that it is through the single desk and because of the marketing practice of the single desk that a price structure is created where Canadian grain can command a higher price in certain markets, for example, Japan, the U.S., and Europe.

It was mentioned here before that the so-called buyback—the PDS—costs farmers a lot of money. A graph was put on the board showing 97¢ a bushel. But the bottom line is this spread is often very little by the time the smoke clears after a crop year, and often there are producers who actually make money doing that trade. So it's not just a one-sided story.

The question also becomes whether organic farmers should be exempted from the process the Wheat Board operates under because it is different from the conventional. The board has come up with a number of reasons.

First, it is a grain that is visually indistinguishable from conventional and very easy to misrepresent.

Second, organic producers benefit from the conventional price structure, since it affects their own price structure.

Third, organic grain displaces the sale of conventional grain, and therefore is a competitor to other farmers.

Four, exempting organic growers would set a precedent for exempting other distinct products or methods of production.

What is the organic policy? Last year the CWB farmer-elected board of directors re-examined the organic PDS policy. We held a conference of organics in Regina. We developed a discussion paper and solicited submissions from organic producers. We had an extensive consultation process—holding eight meetings with producers. Larry was chair of those meetings. We have heard producers tell us they wanted an exemption. We've heard some farmers say they wanted to have improvements to the current PDS policy. We heard some tell us that they wanted us to directly market organic grains.

After careful consideration, the board made the following decision. First, we created a program to allow organic farmers to make PDS sales directly with the CWB, rather than being required to go through elevators. Our administration fees are $1.50 to $2 a tonne, much lower than the $5 to $20 a tonne the elevators were charging. This program is also self-supporting. It's a one-stop phone call that a farmer can make to the CWB.

Second, we provided a loan program on the upfront cash outlay that the organic farmer makes at the time of his transaction. The reason for that is there is a cash price difference for the conventional grain and the CWB initial payment. Once the organic producer gets paid by the organic customer, he will repay the CWB, then receive the interim and final CWB pool payments. The CWB credit program makes the direct sale easier to manage financially for organic producers.

Finally, we have hired an organic marketing manager. That individual, Donna Youngdahl, is here with us today too. She will ensure that all producer-direct sales go smoothly, provide price and market information to organic growers, and promote organic wheat and barley worldwide in overseas markets.

In answer to Mr. Husband's question of whether the CWB could have granted a no-cost export licence, probably we could have. There's a legal question to that, whether it is in law possible or not. But we obviously could have approached Parliament and asked for that. The board of directors made the decision, though, that they're not hiding behind the law. We feel strongly that we have good, solid, business reasons why this is a good decision.

I would also like to comment on the view that the CWB is a special interest group based in Winnipeg, while the majority of CWB directors are elected by farmers in their ten electoral districts. We represent producers.

The next question is how the CWB puts money in the pockets of organic farmers. First, it's the Canadian system. The marketing, development, and efforts of the CWB and the quality assurance of the Canadian Grain Commission have paved the way to create premium prices and premium markets for Canadian grain. All Canadian producers of wheat and barley benefit from these efforts and high-quality reputation.

• 1000

Second, organic prices are based on conventional prices. So higher conventional prices mean higher organic prices.

Thirdly, the CWB is an important market for organic producers when their grain does not make the grade or quality that our organic buyers are looking for. It is estimated that significantly more organic grain grown is marketed as conventional grain into the CWB pool accounts than organic through the PDS.

Fourth, the CWB is a voice for farmers demanding important stringent guidelines for registration and marketing of GMO wheat in Canada. The Saskatchewan Organic Directorate and other organic organizations have identified genetic engineering as the number one issue affecting the organic industry today.

Fifth, the CWB will be doing organic product promotion, customs brokering and transportation, provide market intelligence and price information and, where opportunities exist, will work with organic growers to ensure their grain moves overseas in bulk vessel shipments.

I would like to conclude my comments on our value-added policies, Mr. Chairman. The CWB value-added policy strikes a balance that facilitates value-added processing for all industry participants and entrants. Can you mill your own flour and sell it? Yes, you can. Export it? If you do a producer-direct sale on the value of the wheat. Why is it required? Because all processors—on farm or otherwise—need to compete on a level playing field. Wheat is purchased at market values and flour is sold on that value, rather than based on a lower discounted value. This protects farmers' grain prices and puts millers on an equal footing.

Our mandate is to optimize farmer returns on wheat and preserve the pooling principle for all farmers. Since the advent of the free trade agreement, the milling industry has grown by 26% in Canada. And this is over a ten-year period.

Why are there complaints about the CWB policy on flour milling when flour milling—

The Chair: One more minute.

Mr. Ken Ritter: —in this same environment has proved profitable enough for wheat exports to the U.S. to have grown over 800% in the last decade?

Mr. Chairman, over the last while, you have been examining the government's role in the grain and oilseed industry. You've heard the dire challenges before farmers today. We are surely in difficult times.

In this climate of low prices, droughts, and floods, one of the few advantages we have for the wheat and barley farmer is the CWB. Why do the Americans want to destroy it?

Larry and I met with Idaho Wheat Commission farmers this last winter. They were up here looking at our system because they think it is the Cadillac system. Surely a farmer-elected board of directors wants to ensure we have and provide flexible pricing options that provide the invaluable benefits of pooling and single-desk selling.

We are committed to enhancing the farmers' bottom line, whether they're conventional, organic, or those who process their grain. Our mandate and primary goal is to maximize returns for farmers.

Thank you, Mr. Chairman.

The Chair: Thank you, Mr. Ritter.

To conclude the witness list this morning, we have Mr. Neil Strayer, an organic producer.

Neil, welcome. And you have about ten minutes again.

Mr. Neil Strayer (Individual Presentation): Thank you, Mr. Chairman.

I'd like to take the opportunity to thank the committee for having us here this morning to share our views with you. I hope we can shed some light on this issue. It's very important at this time.

First, I'd like to point out that I am an organic producer and have been for over 20 years. I have been heavily involved in the development of the organic sector in western Canada at both the policy and the agronomic level. Without diminishing the importance of the issue at hand here today, I believe the greatest challenge confronting this sector today is still the agronomic challenge—developing a professional grower base with the right tools to produce consistent high-quality products for global markets.

Secondly, I am an entrepreneur. I am co-founder and director of Bioriginal Food and Science Corporation, a Saskatoon-based neutraceuticals manufacturer that employs 58 skilled persons and has invested deeply into Canadian agriculture, particularly in western Canada and particularly in the organic sector.

• 1005

I am also co-founder of GEN-X Research Inc., a Regina-based research and development company that employs four skilled persons in developing finola, an exclusive dwarf hemp seed variety with nutraceutical qualities.

I am also founder and president of Growers International Organic Sales Incorporated, or GOC. We trade certified organic grains on behalf of 250 farm families in western Canada to seven countries around the world. We have been incorporated since 1984 and we employ six people.

It was within this context of GOC that I initially confronted the Canadian Wheat Board in 1985. At that time they had no knowledge of organic techniques and did not recognize them as a production methodology. With the support of an attorney, and with substantial supporting evidence of a developing opportunity in Europe, we were able to convince the CWB that organic wheat germ and barley production warranted recognition and that a distinct and segregated marketing approach must be pursued.

At that time, in 1985, we viewed the key issue as maintaining product integrity and allowing the product to enter the mainstream of the wheat trade. The Wheat Board placed the matter of risk management entirely on the private sector and was not willing to take any risk in terms of the quality of the grain or its organic authenticity.

Another important issue was that the Wheat Board required adherence to a baseline pricing discipline. In other words, we had to adhere to the Wheat Board's asking price—as my colleagues here have alluded to. In pricing our grain, we had to factor in the conventional equivalent trading value of the grain.

The net result was a contractual or buyback system—which has been discussed at length today, so I'll try to be brief on this. With some refinements, this is the same basic program extant between producers or trading groups in the Canadian Wheat Board today. The producer-direct sale was a recent innovation. At the time, the producer-trader and the client booked a contract with the Canadian Wheat Board to deliver x number of tonnes of wheat to a prescribed market destination in a prescribed time period.

In essence, the producer-trader sells the wheat to the Wheat Board for an initial price and then buys it back at the price set by the Wheat Board for that specific quality of conventional or non-organic wheat into that specific market region on that given day.

It must be noted that this is purely a paper transaction, because organic grain cannot be allowed to enter the conventional grain system. The net cost of the transaction, or the difference between the initial price received by the producer and the buyback price paid by the producer, can be $10 to as much as $40 a tonne—or even more on occasion, depending on when the producer-trader and his customer book the contract.

I think what needs to be noted here, which perhaps hasn't been noted so far, is that we're talking about a grain market that is dynamic and moving. Frankly, if producers and small trading groups are going to become trading entities, they need to clearly understand that we're dealing with a dynamic, moving marketplace. If we're going to be good traders, we have to be savvy and aware of real market value in the various market regions. We can't ignore that, whether or not the Wheat Board is involved. We have to be aware of market dynamics.

Clearly, this cost—the net difference between the buyback price and the price received by the producer—is a liability to the producer, or the trader, in the case of my own company, because we enact the buyback on behalf of the producers. Historically, it must be noted that the Canadian Wheat Board has returned 90% to 110% of this cost to the grower or trader when pooling accounts are closed for the crop year. I say 90% to 110% because clearly it's entirely dependent on when you enter the market.

I think it should also be noted that after the Wheat Board contract, or buyback, is enacted, growers or traders are free to market their product at whatever price the market will bear.

• 1010

In other words, the grower-trader realizes full value-added market price for his or her product, but is required to factor into the pricing structure the conventional value equivalent of the same grade and grain. As I see it, that's the crux of today's debate. Are organic wheat, durum, and barley unique and distinct products? Should they be removed from CWB authority? The simple answer would be yes. The answer in depth is probably no. I'll try briefly to explain why.

Clearly, the production methodologies and world views of organic producers are distinct from their conventional counterparts. Clearly, the processes of certification, audit trail, and marketing are unique. And clearly, organic producers are blazing a trail of bright lights in an agricultural landscape that's otherwise bleak right now.

But however unique organic agriculture is, it takes place in context with and adjacent to conventional agriculture. Therefore it confronts many of the same agronomic complexes, such as disease, pestilence, weed and drought pressure, and soil fertility. This is not the local but the global milieu within which we work. Given that our market reach is global, and our competitors likewise, we are compelled to access and assess as much market intelligence as possible in order to price our product intelligently.

If the wheat crop in western Australia is under duress, there's a very good chance that the organic wheat crop in western Australia, one of our key competitors, is too. The same applies to Argentina, Hungary, Turkey, North Africa, England, France, Germany, Spain, Italy, and now Ukraine—all competitors with Canadian organic wheat, durum, and barley.

As a taxpayer, and as a shareholder of the Canadian Wheat Board, which is a crown corporation, I submit that we have one of the best vehicles available in the world for price discovery and production and market dissemination. I don't hesitate to admit that as a trader I use it regularly. To walk into a grain deal of any significance, armed only with your instinct and what your customer or broker believes is a fair price, is suicidal.

What's essential to a successful trade is a full comprehension of the global production context, the local market reality, and your own knowledge of regional organic supply-quality parameters. It's simplistic, at best, to claim that organic wheat markets can somehow be disconnected from the much larger production in conventional grain trade.

Furthermore, over 80% of the trade in organic grains is enacted with parties who are substantial players in the conventional grain trade. These people insist on three things: consistency of product, forward pricing, and pricing that parallels the conventional market. Forward pricing demands that we fix a price over a delivery timeframe and that we guarantee it. Parallel pricing demands that we price organic grain with a predictable and parallel price spread to its conventional equivalent counterpart over a set delivery time period.

An example of this might be that an esteemed conventional baker in the U.K., such as Warburton's, can fix delivery of several thousand tonnes of organic wheat with us over a prescribed lifting period at a prescribed price. Furthermore, not only is the organic integrity assured, but so is the precise proportion of prescribed varieties of hard red spring wheat from pedigree seed sources.

This type of identity-preserved grain trade can only take place in a highly regulated system where all parties are confident of being able to deliver on their commitments. The Canadian system is apparently the best suited to exploiting these types of opportunities when the client—Warburton's, in this case—insists on Canadian varieties for its conventional and organic programs.

Is the CWB an impediment to the entrepreneurial spirit and growth of the organic sector? Possibly, although I believe that prevailing attitudes of negativity are a far greater impediment. I can only speak of my own enterprise, which went from trading two small lots of hard red spring wheat in 1984 to trading close to a thousand lots this year.

We have witnessed growth in certified acreage from approximately 10,000 in 1980 to over a million acres in western Canada this year. And we've seen the development of a professional processing and marketing sector that continues to expand into ever-increasing value-enhanced enterprises. As a pragmatist rather than an ideologue, I believe it's more important that the organic sector confront more pressing issues—such as agronomic viability or genetic engineering—that have far greater long-term ramifications than whether or not the Canadian Wheat Board is involved with our wheat price structure.

• 1015

I appreciate your patience in hearing me out. Thank you for this opportunity.

The Chair: Thank you very much for your presentation, Neil.

The clerk tells me we may have to go beyond 11 o'clock. If somebody else doesn't need the room at 11, apparently we can extend it a little bit if need be.

We would now like to move to our questions from members of the House. Howard, would you like to lead off on behalf of the Canadian Alliance?

Just to explain to the witnesses first, as the lead-off questioner, Howard will have eight minutes. That includes time for you to answer. Then the Bloc has an assigned period, and then we go back and forth with five minutes for each member.

In some cases, I know some of you may all want to answer the same question. Howard, perhaps you could say who you want to address your question to particularly. But others may like to reply. We'll start the clock now.

Mr. Howard Hilstrom (Selkirk—Interlake, Canadian Alliance): Thank you, Mr. Chairman, and welcome, gentlemen.

First of all, I'll just mention that Kevin Sorenson went back to the House to speak—he had to give a speech on the FCC. Ken, I believe you're from his riding.

Mr. Allan Graff, do you charge the farmers for your services?

Mr. Allan Graff: Yes, I do.

Mr. Howard Hilstrom: That's to get them through the buyback process and get their grain to the market?

Mr. Allan Graff: Yes. We charge a handling fee. As long as they do the buyback and look after the paperwork required to get it across the border, that's it.

Mr. Howard Hilstrom: So you have a vested interest in seeing the Canadian Wheat Board system continue? Without that, they wouldn't have to use you.

Mr. Allan Graff: I think they would still have to use me, because they have no contacts with the market, as I have.

Mr. Howard Hilstrom: So the Wheat Board didn't establish those markets for you?

Mr. Allan Graff: No.

Mr. Howard Hilstrom: But other people who are able to establish their own markets are also forced through there, though.

Mr. Neil Strayer, you also have a vested interest in seeing the Wheat Board system continue. Because of the complex bureaucracy of the Wheat Board system, farmers find it easier to go through you, don't they?

Mr. Neil Strayer: Yes.

Mr. Howard Hilstrom: Having clarified that, I'll just ask one last question of Allan: what town is your farm closest to?

Mr. Allan Graff: Vulcan.

Mr. Howard Hilstrom: Do you grow other grains than wheat or barley?

Mr. Allan Graff: Yes.

Mr. Howard Hilstrom: Have you sent me—or Ken Ritter or Minister Goodale—any letters asking that other commodities you grow be brought under the Canadian Wheat Board?

Mr. Allan Graff: No.

Mr. Howard Hilstrom: Why is that?

Mr. Allan Graff: The mandate is just for wheat and barley. But by the same token, I understand that a number of other people within the organic system do want everything under it as well.

Mr. Howard Hilstrom: But the whole issue here is that some farmers want to be under the Wheat Board and some don't. That's why the Canadian Alliance, and an awful lot of farmers, stand for a voluntary marketing Wheat Board. Nobody—none of these three gentlemen here, or Mr. Strayer—wants to see the Canadian Wheat Board gone. We want to have the Wheat Board as a marketing agency, but not a compulsory monopoly.

A good example is the Manitoba Pork Council. It was a monopoly in the Manitoba pork industry, selling all the farmers' hogs. But it's now a voluntary organization, and doing very well the last I heard. So the idea that only a monopoly works just doesn't make sense to me.

• 1020

Having clarified the business side of this thing, with the vested interest and whatnot, I will go to Mr. Ken Ritter. You make the statement that you have a farmer-elected board of directors. The fact of the matter is that five of them are appointed by the government, because the government wants to keep control of it, because they only need a couple more directors like yourselves to vote with them and that makes up to eight, and then they outvote any others who are there.

You put yourself in the political arena. Minister Goodale has done a terrible job of standing up for the Wheat Board, and that's why we see in the newspapers the Wheat Board continually putting out information. You've got spokesmen and media people.

It is coming across very clearly from your statements today that the board is approaching total arrogance, in that you as a board and you individually, as directors of the board, seem to think you know what is best for each and every farmer in western Canada. That is the essence of this argument. Do you know what is best for every farmer in the designated area, Ken Ritter?

Mr. Ken Ritter: Do we know what's best for every single farmer?

Mr. Howard Hilstrom: For marketing wheat and barley.

Mr. Ken Ritter: Mr. Hilstrom, we probably don't, but let's go to the reality of our existence. First, we have an elected board of directors, where eight out of the ten directors have a view on the single desk, and it's a very positive view.

The second issue is whether the process by which we make a decision is fair, and I can assure you that prior to making a decision, we thoroughly analyse the economic realities affecting that decision and debate it fully. This is not ideologically based. I'm sure on our board of directors we have supporters of every political party represented in this room here.

Mr. Howard Hilstrom: But your spokesmen are accusing the UGG and the Alberta Barley Commission of being ideology-based, and it's right here in the newspapers.

Can I ask you a question? You're a farmer and you do other things besides wheat and barley. Are you actively working right now to bring all the other commodities you grow on your farm under the Wheat Board? Have you sent a letter to the minister, to me, or any of these MPs, asking that other commodities be brought under the board?

Mr. Ken Ritter: No, Mr. Hilstrom, I have not.

Mr. Howard Hilstrom: And why not?

Mr. Ken Ritter: We have a marketing system for wheat and barley that I work with. I am convinced, after seeing and analysing the evidence—and I am a skeptic, I don't just accept rhetoric—that the CWB makes money for prairie producers in the marketing of wheat and barley.

Mr. Howard Hilstrom: Of course they make money, they've got a monopoly in acquiring it. This is an interesting thing that Neil brought out, that some farmers get back as much as 110%. So under this famous pooling system, obviously, you've taken 10% from somebody else to give to that person, just because of the bureaucratic system.

You can answer that, but this is my last question. How come Ontario, B.C., and the rest of Canada do not want to be involved with the Canadian Wheat Board and have them do their marketing? And you can cover at the same time the matter of who is paying the fees, with the manufactured feed, the seed growers, for all these export permits. Is it not the pooling system, because that's the only money you guys get? I'll let you answer those questions.

Mr. Ken Ritter: We have jurisdiction, Mr. Hilstrom, over grain produced in the designated area. So there's a difference between that and Ontario, the Maritimes, and so forth. As to the fees that are involved with the granting of an export licence, I'll refer that over to Jim, but my knowledge is that it's minimal, and it is a requirement under the legislation that we do that.

Mr. Howard Hilstrom: Who pays those fees?

Mr. Ken Ritter: It comes out of the general pooling account.

Mr. Howard Hilstrom: Right.

Mr. Ken Ritter: But there is an offset. Through the Canadian Wheat Board structure, sir, last year we made $64 million on interest differentials, period. That virtually paid for the whole operations of the CWB system. So that in itself is far in excess of these minimal numbers that are bandied about.

• 1025

Does the pooling account occasionally pay for an individual who's wise enough and clever enough and uses free enterprise expertise to sell at the right time, for example, into the U.S. premium market? Yes, it does. But overall, why do we want to keep that premium market at a value that the CWB sells into? Because it is a long-term premium market that generally pays above the average that we receive in the pooling account. Rather than some of the numbers that were placed on the board showing 97¢ a bushel and so forth, the numbers we have are, on general average, about $6 a tonne or 14¢ a bushel.

Mr. Howard Hilstrom: Do you not agree that the bottom line should be, let the farmer vote with his truck? That'll tell you whether you're doing a good job or not.

The Chair: Thanks, Howard.

I'm sorry, but we've gone almost nine minutes.

Marcel.

[Translation]

Mr. Marcel Gagnon (Champlain, BQ): Thank you, Mr. Chairman.

I listened carefully to all the presentations.

[English]

The Chair: One moment. They're not getting translation.

It's okay now.

[Translation]

Mr. Marcel Gagnon: Is it working? Still, bilingualism is not a waste of time!

I listened carefully to all the presentations this morning. If I understood correctly, there are those who feel that the Canadian Wheat Board is the agency that can best negotiate good prices. And then there are independent producers who would like to sell their products without going through the CWB.

Am I right in thinking that the producers who want to sell directly could not have access to the same markets or benefit from the same advantages if the Canadian Wheat Board did not exist? If they can sell directly, it is thanks to the efforts of the Canadian Wheat Board. My question is addressed to the three producers who want to sell directly without going through the CWB. Is the Board not needed for gaining access to markets and negotiating the best prices?

[English]

Mr. Eric Leicht: Could you repeat the last part of that again? I'm sorry, I missed it.

[Translation]

Mr. Marcel Gagnon: I wonder whether the producers who want to sell directly without going through the Canadian Wheat Board would be able to get such high prices and have access to such lucrative markets if the Board did not exist.

[English]

Mr. Eric Leicht: Yes, I believe so. What we've proposed here is a system where, if Mr. Graff or Mr. Strayer still wanted to use the Canadian Wheat Board buyback, they could go ahead. But as producers, we formed our own marketing group to work together. I believe we have had a tremendous influence in the market. We've been effective in finding markets not only for wheat and barley, but for many other grains as well.

• 1030

I guess that's the point I'd like to make, that because we export probably the majority of these other grains, it can be done without the Canadian Wheat Board.

Mr. Strayer made the comment that he uses the Wheat Board for information. That's terrific. But the Wheat Board is not the only source of information out there. With the information age that we have nowadays, we can find out who is growing what or how the crops are all around the world.

When the Wheat Board was formed, it was a much different situation from what it is now. The dynamics of information are available to all farmers.

The Chair: Ken.

Mr. Ken Ritter: There is no doubt that a single-desk organization like we are requires an element of discipline; that is for certain. We feel strongly that as a single seller on behalf of producers, we make money for farmers.

By comparison, the Australians have fought extremely hard to ensure that their single desk is maintained. I spoke to the chairman of their board of directors a week ago, and he indicated that it looks like it's safe until 2006.

Of course, when you have a premium market, everyone wants preferred access to that premium market without having any of the disciplines that are required of others. We feel strongly that the value of that premium market should be shared with all producers. So that's the point of our policy.

Mr. John Husband: As just a little reply about Australia, they have the Australian Marketing Board, but they have also separated their marketing into the regulatory end, which is the Wheat Export Authority. They are the ones who grant or deny licences. And then there's the Australian wheat marketing group. One group is marketing and one is authority. They're separate. The authority is government, and they do not share all their information with the marketing arm.

Here we have the Canadian Wheat Board. They are the marketers and the regulators, and right on the export licence we have to write who we sold to. They have all the organic buyers. It's on the ones I've seen; correct me if I'm wrong.

Another thing about Australia is that they do grant licences to the organics. They've left the organic out of their monopoly. They still have a monopoly on grain, but they let organic go. That's something that the Canadian Wheat Board staff never told their directors.

That's one more example of misrepresentation, holding back information. They've done it to farmers and they've done it to the directors. I think the staff knew what the directors wanted, but certainly we feel we've been treated unfairly.

[Translation]

Mr. Marcel Gagnon: If, as the Alliance is suggesting, the Board did not have a monopoly, if there was open competition and another agency was set up, what would the result be, in your opinion? Would competition between these two agencies help or hurt the producers?

[English]

Mr. Ken Ritter: I feel very strongly that it would disadvantage producers throughout the prairies. Our studies have indicated that the benefits of single-desk selling are in the neighbourhood of at least $300 million a year for prairie producers. What would occur is that producers would bid against each other for these very limited premium markets and, accordingly, lower the price.

• 1035

We always have trumped up to us this one elevator in Montana, or wherever it is—it seems to be a fleeting figment—that's paying so much more every day. Well, if in fact it were the case, what would producers do? They would all rush there to ensure they filled it up on that very day and collapse the price.

We also have the secondary reality about exporting grain into the U.S. They don't like it. The bottom line is that they're the world's largest grain producers, and they ask the question, why on earth are we buying Canadian grain for any purposes?

So it's a constant struggle for western Canadian farmers to keep that premium market, and we have trade cases launched against us at all times. So the point I'm trying to make is, without the CWB, I'm firmly convinced that prices would be lowered and prairie farmers would be, in general, harmed.

The Chair: Thank you, Ken.

Rose-Marie.

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.): I knew this would be a very interesting meeting, and no one has let me down.

I would just make the statement that if we have individuals out there listening to this committee meeting, with what has been going on in our agriculture industry and the grain and oilseeds sector, and seeing the first three individual presenters versus the remainder of the presenters, being in the same industry and seeing it through different viewpoints, it is totally confusing to someone who is not in the industry. This is a major problem with our agricultural sector.

I'm a farmer, so I feel that I can criticize. We can't get our own act together to bring out one solid, single issue in a collective manner. Until we do that, the government is always going to be wrong. So we need your help to come with one voice.

I'm not going to lecture, but I find this meeting very good. I met with some organic producers this week in my office, and some of the presentations this morning confirmed what these individuals were telling me.

Mr. Ritter said the Canadian Wheat Board allowed farmers to make $300 million more by going through the Canadian Wheat Board. These guys undercut that. They said about $265 million. I'm a farmer. I would be happy to make those kinds of dollars.

Really, who is against the Canadian Wheat Board? The farmers? Our southern neighbours? Or the large multinationals?

Through this presentation I see that the CWB administers a fee of between $1 and $2, but the elevators are charging $5 to $20. You don't have to be a rocket scientist to know who wants whom where.

I don't know whether the first three individuals want to comment on that. Isn't it better, in mathematics, to pay $1 or $2 than $20?

Mr. Eric Leicht: Yes, it is.

Mrs. Rose-Marie Ur: So what's the problem?

Mr. Eric Leicht: What's the problem? Okay, an example I give is that we lost 97¢. So you take $5 per metric tonne, which works out to 13¢ a bushel. You bring that cost down to 84¢, and then you add $1 or $2. So we're still up to over 90¢ a bushel. But this buyback system still costs us.

Mrs. Rose-Marie Ur: But I think Mr. Ritter responded to your statement on that earlier, as to there being many variables, and by the time you get to the bottom line, that isn't part of the bottom line.

Mr. Eric Leicht: If all it costs us is even 10¢ or 14¢ a bushel, I would not be here today. It costs us way more, consistently. I can give you more examples. How many do you want?

Mrs. Rose-Marie Ur: Here you have organic farmers and there we have organic farmers. One group sees it one way and one group sees it the other way.

Mr. Eric Leicht: It is possible to make money at the buyback in a rising market. If you can predict in the fall, when they start out, and you can do a buyback, in a rising market you can make a little bit of money. That is the only case. But if you're in a falling market, you lose way more.

Mrs. Rose-Marie Ur: I've worked under both systems, and I can tell you that I'll work under a board where I can work from morning until night. I don't mind working hard as long as I know at the end of the day I can make a sale and I'm going to cover my costs, and hopefully make a bit of a living. But when you're out there—and this is one thing the buyers say about the Canadian Wheat Board—they say it's great. The only problem with it is that they have to pay too much. They prefer to go to one buyer than 100 people lining up, and I know you can't be a master farmer and a master marketer, so sometimes it's good to get someone to do part of your job.

Mr. Eric Leicht: Well, to an extent, but—

Mrs. Rose-Marie Ur: Are you saying one group is smarter than the other then?

Mr. Eric Leicht: Everybody has different contacts, but....

Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.): That's what you're saying.

Mr. Eric Leicht: Sorry, I lost my train of thought.

Mrs. Rose-Marie Ur: Maybe someone else would like to answer, and he'll get back to his thought.

• 1040

Mr. John Husband: There's quite a difference between voluntarily paying someone for a service.... For instance, an elevator company; you pay them for services they provide.

If Mr. Strayer or Mr. Graff offer a service and I decide, yes, I want to buy it, that's one thing, but to be forced to pay money to an institution that does absolutely nothing for you is quite different.

So I think you're comparing apples to oranges. You can't dismiss that by saying, isn't it better to pay $2 rather than $20? Two dollars for a toothpick isn't as good as $20,000 for a quarter of land, and that's the difference as I see it.

Mrs. Rose-Marie Ur: If we get rid of the marketing board, I think the winners will be the large multinationals and the grain elevators and whatever. They won't have anyone else to direct their sales to.

Mr. John Husband: The other view is that the large companies thrive under a regulated system like the Canadian Wheat Board system. That's their bread and butter. They've become a service industry. They have no risks involved. They do very well. In terms of statistics, look at the big companies that have come in under the Wheat Board system. Mr. Ritter pointed out that flour mills have flourished.

Mrs. Rose-Marie Ur: That's a positive, isn't it?

Mr. John Husband: Certainly we've seen big companies coming in too. You all know that.

Mrs. Rose-Marie Ur: Do I have time?

The Chair: You're over.

Mrs. Rose-Marie Ur: Thank you.

The Chair: We'll move now to Dick.

Mr. Dick Proctor (Palliser, NDP): Thanks very much, Mr. Chair. Like Rose-Marie, I find this to be a very energizing discussion.

I wanted to address my initial question anyway to the Canadian Wheat Board, and maybe I'll pick on Larry this morning because we've heard that he's in charge of the organics.

Mr. Husband made what I would think are fairly serious allegations around how they're asking for the same rules. He was talking about this Export Manufactured Feed Agreement and the fact that there is discrimination, depending on where the farm originates or which province it's in. I wonder if we could get a comment from the board on Mr. Husband's allegations.

Mr. Larry Hill (Director, Canadian Wheat Board): We took an open mind as directors to the consultation process we went through, and we in fact did learn as we went along because we didn't know all the questions. When we would come to a meeting, people would pose new questions we hadn't heard and we would try to get answers to these questions.

When it comes to things like the export licences on other grains, as directors we really didn't know very much about it. So we would ask the question of staff and they would get back to us and give us answers. My understanding of the regulatory issues outside the board is not that great, but we did get answers to the questions that were raised at our meetings.

Mr. Dick Proctor: Did you want to elaborate, Mr. Thompson?

Mr. Jim Thompson (Senior Marketing Manager, Canadian Wheat Board): Yes, I can give you a brief synopsis.

One of the issues in terms of orderly marketing of Wheat Board products is the issue of substitutability. When you look at seed, seed is not substitutable for Canadian Wheat Board wheat. It has a single paper trail through Se Can. Certified seed must be bagged and tagged and is not substitutable for Wheat Board bulk products.

Ontario wheat is primarily a soft wheat; it's either a soft red winter or a white winter wheat. The Wheat Board grows no soft red at all in the designated area and a small quantity of white wheat in Alberta, which is processed primarily in Alberta. So again, there is not a substitutability issue with that.

The Export Manufactured Feed Agreement goes back to 1972, which is before my time, when the federal government adopted a feed grains policy that allowed feed grain to be traded freely within western Canada outside the Canadian Wheat Board. And therefore the Export Manufactured Feed Agreement was adopted in recognition of the fact that feed grains traded freely within western Canada outside the board, and it did not want to hinder their ability to use those non-board grains and process them.

• 1045

In Ontario—to correct that part—there is a marketing board as well. It's a provincial marketing board, the Ontario Wheat Producers' Marketing Board, and organic growers are required to sell through the Ontario Wheat Board pool accounts.

I don't want to pretend to be an expert in Ontario, but the one exception with Ontario is they have a 150,000-tonne exemption, which organic growers can apply for like anyone else, and it's a first come, first served type of exemption.

All their products require export licences though.

Mr. Dick Proctor: Thanks for that.

One thing I think everybody has been able to agree on this morning is that the Canadian Wheat Board has hired an organic marketing manager, and Eric and John, and others, would say there's nothing for that individual to do because we're finding their own markets and selling to those markets.

So my question again to the board is, how busy is that individual or that department, and what is she doing?

Mr. Jim Thompson: That person has just come on. Donna Youngdahl has just started with us May 28 in that role. I think both Mr. Husband and Neil mentioned that only roughly about 20% of producers actually do their own direct marketing. The balance is marketed through agents like Neil's group, and those agents work closely with the board. We hope to be able to enhance what they're doing through our expertise, because most of those buyers are conventional buyers who already deal with us, and we want to be able to tap into that expertise and provide it back to the organic industry.

We also believe there are some other areas of expertise we have that might be able to assist the organic industry. One is in transportation; there is the possibility of assisting with negotiating some freight rates, containerized rates.

We clear a significant amount of product ourselves across the border. We envision that we might be able to assist with brokerage fees, maybe helping to negotiate to reduce brokerage fees or streamline some of that process.

There's also market intelligence, and right now the organic industry is fairly fragmented. In terms of market information on organic premiums—someone mentioned $50 to $100 over—there's a pretty wide range and it's not well known out there. We hope to be able to bring some of that information to producers and help disseminate some of it.

So we're open to ideas on that as well.

Mr. Larry Hill: From the board's perspective, what we were trying to accomplish with our new policy, which has just come into place, is we want to be able to provide a service to the organic producer who wants to do a producer-direct sale. What will happen now is that producer will deal directly with one person, and this will provide the quick turnaround that has been mentioned here today.

In the past it wasn't the same person at the board who dealt with every issue, and we think this will be quite an improvement.

The Chair: Thank you, Dick.

Murray.

Mr. Murray Calder: Thanks, Mr. Chairman.

The Chair: Excuse me. This bell that's ringing means we have about 25 minutes before a vote in the House now. So don't be wondering what's happening. It's simply that it's flashing overhead here.

Mr. Garry Breitkreuz (Yorkton—Melville, Canadian Alliance): I have a point of order.

The Chair: Yes.

Mr. Garry Breitkreuz: Mr. Chairman, I'll pair with you and Mr. Hilstrom can pair with someone and we can keep going here.

The Chair: We'll have to see as time goes on, but I know we can do several things with that.

Mr. Garry Breitkreuz: So we don't have to worry about it. This is a pretty important topic.

The Chair: We have several members who haven't had an opportunity yet to ask questions, and I know each of us will be able to have this opportunity, Garry, before the vote. We'll decide at that point if we want to come back after the vote.

I'm not sure what the vote is on.

It's a vote to start business.

Mr. Garry Breitkreuz: They're just playing games. This is more important.

The Chair: The question is, who asked for the game? But we can decide, as we approach the 30-minute bell, what we want to do.

So with that, Murray, you have five minutes.

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

Ken and Larry, you're aware of the Ontario example, of how the Ontario board sells their wheat. There is the option that if an Ontario grower doesn't want to sell through their board, that tonnage for that year is exempt. It's set up in such a way that it does not allow the Ontario grower to cherry-pick.

Is there any way the CWB could adopt that type of a policy program? Are you looking at it?

• 1050

Mr. Ken Ritter: Mr. Calder, we are not looking at it right now, and I would debate that the issues are very different between Ontario and western Canada. It is my understanding that Ontario produces approximately a million tonnes of wheat, a lot of which is domestically used, a lot of which is used in the feed industry. They are much better able to provide different kinds of options than we perhaps are, because our strength is the single desk and the disciplines it brings, so that all producers who are geographically located over a huge area can equally benefit from them. So that's what we're looking at right now.

Mr. Murray Calder: In that situation, has CWB done any studies? I was on the agriculture committee at the time we were working with your expanded mandate...the directors coming in, which I supported. I thought it was a very good way to have the board grow, because I was a chicken farmer in my other life and I'm used to marketing boards.

Would it be an option, say, with a farmer, for instance, who wants to market outside of the CWB that he signs an agreement with the board, say, for five years that he is no longer underneath the umbrella and/or the protection of the CWB. And he is responsible for any of that tonnage grown during that period of time. You're an adult, here's the real world, and you may get an idea of just the protection the CWB is affording you.

Have you looked at something like that?

Mr. Larry Hill: We are going to have more debates around this issue. I'll just give you one serious issue here. The reason the CWB works is because Canadian grain, which has a very good reputation in the world, does not compete against Canadian grain. As soon as you have two sellers of Canadian grain, arguably of the same quality, you have the tendency to bid the process. And as soon as you have that bidding going on, probably what you'll do is lower prices.

Mr. Ken Ritter: To give you an example, there's a real assumption that the Japanese market provides higher returns than the general averages received around the world. What would happen in the example you've indicated? Naturally, everybody would want to grab that market. Even if it moved into the U.S., it would flow from there as Canadian grain overseas perhaps. The whole point is that the people who want to get out would want to capture the premium markets. They would bid down those premiums to where they were worthless.

Mr. Larry Hill: I'd like to go back to one point you asked earlier about the CWB in Ontario. In the west, under the CWB district, we have a non-board feed market. Ontario producers do not have that. So that's a very substantial difference when you look at what's available in terms of flexibility for producers in western Canada.

The Chair: Mr. Husband.

Mr. John Husband: It's to do with substitutability and the fact that you're saying in terms of grain that's the same...not being sold by the Wheat Board. What about the Creston-Wynndel region? You can use the argument that it's a small and insignificant region, but what about substitutability? Do they not grow the same grains as the Wheat Board markets?

Mr. Jim Thompson: No, in fact, Creston-Wynndel is primarily a winter wheat, again...some soft red winter and some hard red winter, and the products are generally not substitutable for CWB products.

Creston-Wynndel is also some 600 or 700 miles away from the nearest CWB or elevator facility licensed through the Canadian Wheat Board. It is only a few hundred miles, sometimes less, from the U.S. market. So they are allowed that exemption, a no cost buyback to move that particular type of product into the U.S. market.

The Chair: I'd just like to set things right. The members ask the questions. Any problem?

Mr. John Husband: I apologize.

The Chair: That's okay. We're not always operating here according to Hoyle.

Murray, you have perhaps a little time left, because Mr. Husband took some of your time.

Mr. Murray Calder: I'm finished. I'm going to pass on to my colleagues.

The Chair: Are you satisfied? Okay.

Garry, then.

• 1055

Mr. Garry Breitkreuz: Thank you very much, Mr. Chairman, and thank you all for coming before the committee.

I have to correct some information that my Liberal colleagues started their presentations with. Not one of these witnesses was trying to get rid of the Canadian Wheat Board.

The Chair: Garry, just a minute now. I don't know if you're speaking for the witnesses, but they have to speak for themselves.

Mr. Howard Hilstrom: They haven't said that, Mr. Chairman.

The Chair: You put in their mouths—

Mr. Garry Breitkreuz: Let me say the same for myself.

The Chair: Perhaps you can ask them that question.

Mr. Garry Breitkreuz: I'm not trying to get rid of the Wheat Board, either.

Mr. Ritter, under the present legislation, you didn't answer the key question. Can the present Canadian Wheat Board Act grant licences to organic producers without forcing them to go through the buyback program?

Mr. Ken Ritter: Mr. Chairman, through you, I haven't a black and white answer to that. That's subject to legal interpretation. We believe the buyback is required. What I said, sir, was that we didn't make our decision on that basis. We made our decision on economic grounds.

Mr. Garry Breitkreuz: Wouldn't you have to make it on legal grounds? You stated that yourself.

Mr. Ken Ritter: I don't understand what you mean exactly.

Mr. Garry Breitkreuz: You claimed that the Wheat Board Act doesn't allow you to do it.

Mr. Ken Ritter: No, I said it's a questionable legal argument whether it does or doesn't require it. The information we as directors have is that it probably does require that. I'm saying we didn't make our decision on that basis. I said we're not going to hide behind the legislation. If we had decided to do otherwise, we would have gone and asked the government to change it.

Mr. Garry Breitkreuz: Mr. Goodale specifically said that all the power and all the authority of the Canadian Wheat Board is invested in the hands of those directors.

An hon. member: Right from Hansard.

Mr. Ken Ritter: That's true.

Mr. Garry Breitkreuz: You were very misleading in what you said, and many of the members of this committee can be misled by what you said during your presentation.

For example, you made a big deal of the fact that flour mills are expanding in Canada but not in the U.S. Why did that happen, sir?

Mr. Ken Ritter: I'm assuming because of NAFTA and the fact that they like the consistency, the quality of Canadian products...given the fact even probably labour costs...whatever is involved.

Mr. Garry Breitkreuz: Sir, you ought to know the answer to that. It was the doing away of the two-price system within Canada.

Anyway, let me go to another question.

Mr. Ken Ritter: That's the NAFTA answer, sir...the common North American price.

Mr. Garry Breitkreuz: Why did you mislead the committee and make it seem as if it was the Wheat Board doing a good job that created this?

Mr. Ken Ritter: I didn't mislead the committee.

Mr. Garry Breitkreuz: Anyway, how many of those new flour mills that you described were opened up by new generation cooperative groups?

Mr. Ken Ritter: To my knowledge, none.

Mr. Garry Breitkreuz: Why? Were they in fact opened up by large companies?

Mr. Ken Ritter: I'll give you the details, Mr. Breitkreuz. Jim Thompson is in the administration and he can detail exactly what happened, where and how, and perhaps why.

Mr. Garry Breitkreuz: I'm wondering if the new generation co-ops were not essentially shut out of this process by the whole Wheat Board bureaucracy that they would have to jump through, whereas companies like Archer Daniels Midland get to go and set these up. I don't think very many of them went to these new generation co-ops.

Mr. Ken Ritter: In response to your question, a new generation co-op is on equal footing with any other flour mill in Canada. Jim can give you the answer to where and how the new mills are being developed.

Mr. Garry Breitkreuz: The next question I have—

The Chair: Garry, I think you'd want an answer on that.

Mr. Jim Thompson: I would address your first question.

When the two-price wheat act ended and free trade was adopted, and PSEs, producer subsidy equalizations, occurred in June 1991, Canadian capacity contracted from where it had been under the two-price wheat act. There were a variety of reasons for that having to do with Soviet flour contracts and a few other aid packages that had existed. That began to turn around in 1993, and in fact Canadian capacity has expanded under North American competitive market pricing since that time period.

• 1100

At the same time, in the U.S. we've seen expansion through the latter part of the 1990s. They moved into an overcapacity situation and have since closed, as Ken mentioned in his text, some nine flour mills, amounting to about 68,000 hundredweights on that side.

New generation co-ops, as Ken mentioned, are on the same footing in terms of market-based pricing that any flour mill wanting to start up in Canada would be, whether it's the FarmGrow organic mill or whether it's an ADM multinational facility. New generation co-ops are a relatively new phenomenon. The acts, I believe in Manitoba and Saskatchewan, have just recently been enacted—I'm not sure of the timeframe, but certainly within the last year—so there has not been enough time for them to develop.

The other thing the board has done under a new generation co-op policy, which I think is quite attractive, is what we call a stock-switching policy. It allows a producer to participate and invest in a new generation co-op, no matter where he's located in western Canada and no matter where that co-op is located in western Canada. He'll be treated as if he is located close to that particular co-op.

Mr. Garry Breitkreuz: I have to ask, I think, a really a key question here. How does—

The Chair: Garry, I'm sorry, you're up to six and a half, nearly seven minutes.

Now, what other members have questions to ask? Dick? Others?

Dick, I'm going to go to you, then.

And Garry, I can come back to you if we have a little bit of time, okay?

So Dick.

Mr. Dick Proctor: Yes, I guess I'd like to talk a little bit about the future. It may have been Neil who talked about the phenomenal growth in organic products over the last few years.

I'll throw it open to anybody who wants to answer.

How great is this? How big is this going to get? Where's it going to stop? Is it an insatiable demand for organic products, and there's no end in sight? Who wants to have a go at it?

Yes, John.

Mr. John Husband: My understanding is that it's at approximately a rate of 20% per year right now, and that's considered really high.

Mr. Dick Proctor: Right.

Mr. John Husband: From figures that I've seen from the Wheat Board about total numbers, at that rate of growth, we are probably about 10 years away from being the size of the Warburton market, which is presently in existence. And the Warburton market is identity-preserved wheat that's handled outside of the Wheat...they have to do the buyback.

Mr. Dick Proctor: Yes.

Mr. John Husband: But the Wheat Board doesn't market that wheat; it's done privately. And they go through the buyback, but it's strictly Wheat Board grain. And the Wheat Board...it's exactly the kind of grain they market, and yet they're not doing it now. And we're 10 years away from that, so I don't see why they would have any intention of wanting to hang onto us for 10 years until we grew to the point where they might want to market us. And I'm not sure of my figures on that one—I will admit that.

Mr. Dick Proctor: Anybody else?

Yes, Allan.

Mr. Allan Graff: Yes, Dick. A number of years ago I was sitting in a marketing session in Calgary, and there were some business fellows in the next session, and they came over. Everybody talks back and forth—

Mr. Dick Proctor: Sure.

Mr. Allan Graff: —and these fellows, who were economists from the United States at that time, were telling us that they predict that the organic market today is about where computers were 30 years ago. So whereas with computers today, you see all those huge companies on the Internet and all those sorts of things, just think what organics are going to be in 10 or 20 years from now.

Mr. Dick Proctor: So you think the future is very, very bright for as far out as you'd care to look?

Mr. Allan Graff: Yes.

Mr. Dick Proctor: Okay. That was really my question, Chair.

The Chair: Thanks, Dick.

It brings up another rather perplexing question. We talk about organic. If I'm a farmer somewhere, and I want to sell my wheat, who indicates or who is responsible for saying, when I go to market it, that it is organic? Or can I simply take any of my wheat and say I'm suddenly an organic farmer? How do you regulate this? How do you certify to the public or to the purchaser that it really is organic in growth?

• 1105

Can someone answer that? I want one of the organic people, maybe, to answer that. There has to be some....

Mr. Husband, yes.

Mr. John Husband: I'll speak as I understand it.

The organic industry, on their own, have developed over a period of time, as they grew.... They started out with nothing. But they got together, and they formed associations. We now have certifying associations. They send out inspectors. There are some that are kind of associations. Some are done privately.

We're represented here by numerous ones. I'm a member of OCIA, the Organic Crop Improvement Association. It's a worldwide certifying body, but they are headquartered in Nebraska. A lot of Canadians are certified that way.

Then over and above that, there's becoming an accreditation that is kind of a certifier of the certifying association. Within the industry, we have the International Federation of Organic Agricultural Movements, IFOAM. They do accreditation. Basically, we have developed our products so they are accepted worldwide.

The Chair: We have about four minutes before the vote.

Do we want to adjourn and come back? Or do we want to...?

An hon. member: I don't think we'll get back.

The Chair: Howard.

Mr. Howard Hilstrom: I would certainly either agree to pair or else to actually come back here. I think this is the one opportunity for all members to really get a full understanding of this issue. There are many questions left unasked at this point.

The Chair: I'm afraid I can't arrange pairing. Only the whips can arrange that.

Mr. Howard Hilstrom: Okay. Can we return, then?

Mrs. Rose-Marie Ur: I have another meeting at 11.

Mr. Howard Hilstrom: Can I use the last couple of minutes to ask a couple of questions, then, because obviously we're not going to be allowed?

The Chair: Okay. We will agree with that.

I want to make one concluding statement. I want about a minute.

Howard, you go ahead.

Mr. Howard Hilstrom: Ken, can you tell us how much the last sale to Japan was per tonne?

Mr. Ken Ritter: I can't tell you at this moment, sir, but I can—

Mr. Howard Hilstrom: Okay. So we have no way of knowing...I accept your no.

Mr. Ken Ritter: I have the right to ask for it at any time.

Mr. Howard Hilstrom: We have no way of knowing whether you got a maximum price or not on that basis, because we can't get the information.

The Canadian Wheat Board is standing in the way of getting rid of foreign subsidies, and I'll just quickly say this: the Liberals are refusing to sign an agreement among the 29 members of the OECD that would rein in government finance of agriculture exports because the secret details of the Canadian Wheat Board sale transactions would have to be revealed.

So you guys are obstructing the lowering of export subsidies in foreign countries by refusing to...that the government would have to divulge it, the pricing of grains and that. That agreement has not been signed. Do you have anything to say about that?

Mr. Ken Ritter: Sir, how we deal with prices to various countries and various markets is...we have introduced a benchmarking exercise where we as directors developed benchmarks by which the marketing activities of our staff are assessed.

In those benchmarks we ensure as directors that the best prices are received from every market, regardless of where that market is.

Mr. Howard Hilstrom: Subsidies will never come down as long as you obstruct the government there—

Mr. Ken Ritter: Well, we're not obstructing anyone, sir.

Mr. Howard Hilstrom: —from signing an agreement.

The Chair: Howard, I have to—

Mr. Howard Hilstrom: I'm finished.

The Chair: I would like to, first of all, commend the organic producers. It seems to be a worldwide ambition now for a great number of people to become involved with the organic industry. I want to thank you for coming.

• 1110

Mr. Schmidt, I think also, for the record, I would like to draw attention to the fact that you presented here a very strong position in terms of agriculture in general when you talked about rising costs of inputs and the outputs in terms of what farmers get back from the industry. It's certainly shocking to think that we have such multiples and that Canadian farmers have been so efficient in being able to continue when there have been such changes in the marketplace.

With the organic people, again, I sense there is some confusion with the Wheat Board and how they handle this situation. Perhaps it's a matter of communications.

I'm not sure how you pay people back at the elevator level. Are they working on commission, or are they working on an actual salary? We've heard evidence here today—or at least the presentation of evidence—that would indicate that some people back there don't want to help out our organic people. I would think you're doing that at your own peril. Now I don't know what the communications are between the organic people and the Wheat Board, but from what we heard from them, there is a good deal of improvement to be desired. I say that in terms of my own perception of the evidence I heard today.

So thank you for coming. It is a very difficult issue, but I think it is an issue that we have to address. Hopefully, the organic people can work with the Wheat Board, if that's the way the legal system is right now, and the system can benefit everybody. But we do know that, if I am a farmer with something to sell, the greatest difficulty agricultural people have had across this country—farm people everywhere—has been marketing. It's very difficult for each individual farmer to compete against himself and against his neighbour.

So thank you. We've had a good hearing this morning, and I'm sure—

Mr. Garry Breitkreuz: Is it possible, Mr. Chairman, to get these people back to the board, because there's one question that—

The Chair: The committee—

Mr. Garry Breitkreuz: How does the organic-producing industry marketing outside of the board hurt?

The Chair: The committee is master of its own destiny—

Mr. Garry Breitkreuz: We haven't answered that.

The Chair: —and if the committee decides that, we certainly would love to have them back, because we've heard some very interesting things.

With that, we have to adjourn, and we have to run next door to stand up and vote. Thank you for coming. I think we've had quite a productive meeting, although maybe Garry won't agree.

The meeting is adjourned.