[Recorded by Electronic Apparatus]

Tuesday, March 18, 1997

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[English]

The Chairman (Mr. Lyle Vanclief (Prince Edward - Hastings, Lib.)): Order, please. We'll get the afternoon session started.

We have four groups presenting this afternoon. The first group we will be hearing from is the Catholic Rural Life Ministry; however, if any of the other groups wish to come to the table now, they may feel free to do so.

Just so everyone knows the format that we have been using for these meetings, witnesses will make fifteen-minute presentations. We will listen to all four groups, and we will follow with a period of time during which the members can question and comment. There is a period of dialogue time after that, and everyone can take part in it.

So I welcome members of the Catholic Rural Life Ministry to this committee hearing. Thank you very much for coming. Mr. Brassard, we look forward to your presentation, and we would appreciate it if you would start by introducing your colleagues.

[Translation]

Mr. Paul J. Brassard (coordinator, Catholic Rural Life Ministry): Thank you,Mr. Chairman. I am accompanied by Mr. Norman Bray and Mr. George Burton.

The Christian Rural Life Ministry would like to thank you for giving it the opportunity to meet with you today to discuss Bill C-72.

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Our organization's purpose is to invite the population to pursue an ideal of justice in human relations and to respect what God has created.

We defend sustainable farming practices and policies in order to help family farms, which our rural communities depend upon. As responsible producers, we must share. Our individual and collective survival is dependent upon our ability to cooperate together. The fact that one is Christian does not mean anything in one's daily life if one does not care just as much about one's neighbour as about oneself.

The Canadian Wheat Board's marketing system flows from the same principle. Indeed, its system treats everyone fairly instead of leaving it up to each and everyone to manage things on their own. The free market should not decide alone what each and everyone's fate should be.

We are deeply concerned by all of the publicity that has been going on for the last year. Those who oppose the collective nature of the Wheat Board have led people to forget about the advantages that farmers obtained in their fight for a single-desk price pooled system that is managed in close cooperation with the government.

Recent debate has been monopolized by those who have difficulty accepting the collective advantage and would prefer to sell their grain individually. The market can play a useful role in the economy, but for this to occur it must take into account the needs of the population.

I now give the floor to Mr. Burton.

[English]

Mr. George Burton (Catholic Rural Life Ministry): Thank you, Paul. Thank you, Mr. Chairman, members of the committee.

Here are our points of concern and recommendations.

Number one is finance. It appears to be the plan of the Canadian government to retain effective control of the Canadian Wheat Board for as long as it is financing grain purchases.

The short-run plans appear to remove the government from guaranteeing interim payments and to require the Wheat Board to build up a contingency fund, which would eventually handle the interim and final payments. It's assumed that it would eventually handle the initial payment. Since the government guarantee ensures lower borrowing costs for the Wheat Board, it would be much preferable for the Wheat Board to be entirely funded in that way.

Number two is governance. The act must make it clear that at least the majority on the Wheat Board's board of directors must be legitimate farmers who are elected. Any non-farmer member should also be elected by farmers for specific terms. Conflict of interest rules should clearly apply so that any director who demonstrates disagreement with the basic premise of operating a selling monopoly on behalf of grain growers should be removed.

Number three is on cash purchases of wheat and barley and negotiable producer certificates. These proposals must be considered together. For cases where it would be advantageous for the Wheat Board to make a cash purchase of grain from the trade, there should be provisions to permit that. It appears that the case leading to this recommendation was the difficulty the Wheat Board had in accessing feed barley to service high-priced markets in Japan in 1994-95.

We would suggest that all barley should be handled under the Wheat Board. This would avoid such a situation arising again. However, opening up cash purchases to farmer customers of the Wheat Board would be damaging to the performance of a grain pool and is not to be risked.

We are strongly opposed to issuing negotiable producer certificates under any circumstances. This opens up the system for the worst abuses of the moneylender. These certificates would be purchased from a producer only at a heavy discount, with benefits flowing to non-producers. Producers who would seek a spot-cash purchase would be those under the greatest financial pressures, and they would be forced to accept prices well below real value.

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One assumes that the existing quota system is to stay in place. Without this, as quantities of such grain accumulate in the Wheat Board system, they would tend to force down selling prices and reduce the return to grains pooled under the Wheat Board.

To deal with the cash needs of producers, the current system of cash advances should be kept in place, then enhanced as required. The proposal for cash purchases at a price other than the initial payment has hidden side effects. And are there no limitations? It would certainly need to be more specific. Moreover, it does destroy the concept of price pooling.

It is indicated that the proposed contingency fund would cover any losses suffered by the Wheat Board in cash trading. We find this unacceptable. Funds that are intended to provide for interim payments would be at risk from cash trading by the board.

Number four, we support proposals to speed up the process of making adjustment payments during the crop year and to make final payments sooner after the closing of a pool. However, those farmers who wish to defer adjustment or final payments until January 1 of the next year should be able to do so, as is the case now.

Number five, we question the need for the feasibility and the fairness of terminating pool accounts at any time. Any tendency to reduce the period of pooling to less than a crop year reduces the equity to all producers.

Early termination is claimed to entice farmer delivery. The Wheat Board has delivery contracts and other means to achieve that. It is claimed that an early termination would protect the higher selling prices achieved for those who have delivered to date. However, it would also penalize those delivering to a second pooling period, who would forfeit the value of such higher prices. They may be delivering at a later date due to circumstances they have no control over. Of course, the situation this winter I think is a prime example of that.

Mr. Norm Bray (Consultant, Catholic Rural Life Ministry): Good afternoon. I will carry on.

About utilizing modern risk management tools and dealing with farmers and customers, it does seem practical for the Wheat Board to engage in currency hedging, interest rate swaps, etc., in order to control the risk of fluctuation in various currencies. However, price pooling provides the most effective means of managing price risk. It might be feasible for the Wheat Board to forward-sell some grains through commodity trading when the prices are high, but this would be only a small portion of the total Canadian grain crops.

We ask how hedging and pooling can exist side by side. Hedging has its own risks, especially with our transportation system. Also, the Wheat Board could not hedge a large volume if it wanted to as it could drastically distort the market, to its detriment.

As for defraying farmers' grain storage and/or carrying costs, insofar as this would permit more efficient grain gathering and marketing, it seems quite practical to make this change.

Number eight is allowing farmer deliveries to condo grain storage. Such deliveries appear totally practical, insofar as condos should be considered only as alternative producer storage. They are already in use. It is not obvious that any significant changes would be required.

Likewise, to acquire grain using the new technology such as on-farm mobile elevators, presumably the board has already accepted grains by means of the mobile elevators. This would appear to be only a housekeeping change.

More importantly, in number ten, the proposed bill deals with the deletion of classes of grains from the Canadian Wheat Board mandate, presumably by producer vote, although that is not fully clear. It makes no provision, however, for bringing additional classes of grain, such as oats, rye, canola or flax, under Canadian Wheat Board marketing.

This is totally unacceptable. Growers must have control over whether any grain, oilseed or special crop comes under, or is excluded from, the Canadian Wheat Board's marketing mandate. It should never be possible for a class of grain to be excluded or included in the Canadian Wheat Board's marketing by regulation. That applies as well to proposals to exclude organic crops and the unlicensed varieties. It seems particularly foolhardy to attempt to maintain standards for Canadian grain under the Canadian Wheat Board while permitting unlicensed varieties to be sold through the same facilities outside of Wheat Board control.

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Number eleven is the predominance of Canadian Wheat Board legislation over provincial governments. We support the proposal to make it clear that a province could not overthrow Canadian Wheat Board authority in its territory.

As for loading producer cars, it appears that the proposed legislation makes no mention about guaranteeing the right of the producer to ship through the Canadian Wheat Board via a producer-loaded car. We feel that this option should not only be protected, but enhanced and encouraged.

Proposals to make the Canadian Wheat Board accountable to farmers seem to be complicated and vague. It should be clear that a large majority of board members will be legitimate farmers, and perhaps all board members should be farmers. The board can hire the expertise it needs without filling board positions from the trade or from government, etc.

Farmers are concerned that farmer representatives who are hostile to the Canadian Wheat Board could be elected to the board. There should be clear protection in place to avoid this conflict of interest, and provisions to discharge directors who are not in support of the basic concept of a Wheat Board.

Changes that would strengthen the Wheat Board and make it better able to serve farmers efficiently should be welcomed. Changes that are intended to deal with the complaints of a vocal and destructive minority of producers and grain dealers are probably not necessary.

Likewise, for changes that are intended to have the board adjust to NAFTA or the WTO, it is unclear why the Canadian Wheat Board Act should have to explicitly state that the Canadian Wheat Board is subject to NAFTA when it does not explicitly state that it's subject to other laws, such as safety and health laws.

The Wheat Board has served western farmers well. Their prime concern is for the board to be allowed to continue basically as is.

The Chairman: Okay. Thank you very much, gentlemen.

I think there are members in the back of the room from the Back to the Farm Research Foundation. They may wish to come to the table now and be ready, but first we will hear from the Organic Special Products Group.

Mr. Husband, please go ahead with your presentation.

Mr. John Husband (President, Organic Special Products Group): Thank you, honourable members. I'm the president of the Organic Special Products Group. We are an association of organic participants. We are entirely self-funded.

The Organic Special Products Group recommends changes to Bill C-72 that reflect international realities and also organic issues. However, some background information is required to understand the rationale of our recommendations. First I'd like to say a few things about organic agriculture.

Organic agriculture is a minority player in Canada. Consequently, public policy is often inappropriate for our industry, and our concerns, particularly about doing business, are ignored.

There are some important concepts to understand about the organic industry. Prairie organic producers do not operate in isolation. Rather, we are part of a worldwide movement with a common ideology that transcends political borders.

The majority of prairie organic farmers are members of the Organic Crop Improvement Association. OCIA is a large international certifying body serving thousands of farmers in many countries, but all are linked by a common vision. Other certifying bodies in Canada, whether small and regional or international in scope, along with OCIA, share similar principles and standards under the direction of the International Federation of Organic Agriculture Movements, IFOAM, representing ninety countries.

The worldwide vision of organic agriculture is farmer independence and self-reliance based on the fundamental principle of farmer ownership and control. Our industry has self-developed a special production and marketing system that has enthusiastic, worldwide consumer acceptance. Organic farmers routinely command premiums of 50% over conventional prices, and even premiums of over 100% are not uncommon.

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Organic marketing provides more real proof that farmers are perfectly capable of marketing their own product. Self-reliance has led to organic producers being leaders in the field, in diversification, innovation, and in value-added. An interesting point is that due to our premium prices, value-added is achieved right in the growing process.

The Canadian Wheat Board does not market organic grain but is taking profits from the organic farmers and reducing our natural competitive advantage in growing wheat and barley in western Canada. The required buy-back process is unpredictable and sometimes so expensive as to even preclude sales.

Many organic farmers refuse to grow wheat and barley because of the Wheat Board, in spite of our good market demand, our excellent growing conditions, and the importance of rotations in our management.

The Canadian Wheat Board monopoly stands in stark opposition to the worldwide principles of organic agriculture. OCIA international by-laws and code of ethics emphasize a commitment to farmer ownership and control and fair competition in the marketplace, whereas the Canadian Wheat Board is government ownership and control and disallows any competition.

The amendments to the Canadian Wheat Board Act proposed in Bill C-72 do not address the problems that the government has imposed on our industry and thus are unsatisfactory to the organic industry.

I'd also like to talk about some international aspects. Canada is a trading-dependent country and has stated goals of major expansion in the field of agriculture products. World trade negotiations are ongoing and state trading enterprises are under escalating attack. Canada's credibility in future world trade negotiations will be strengthened if our domestic policies reflect the commonly accepted international principles of basic justice.

Much carefully crafted rhetoric has wrongfully attempted to portray the Wheat Board as simply a farmers' marketing cooperative. As parliamentarians, you should be able to clearly recognize the true nature of the Canadian Wheat Board. It is indisputable that the Canadian Wheat Board is the forced placing of private property into the hands of public ownership, and this is expropriation.

In customary international law, expropriation is not necessarily illegal provided four criteria are met.

The first is due process. There should be no questioning or problems with regard to the due process requirement.

The second is non-discriminatory. The defining of the designated area in the act is blatantly discriminatory, and the proposed amendments do not address and correct this.

The third is for public purpose. The public purpose of the Canadian Wheat Board in peacetime is very questionable. Black's Law Dictionary defines public purpose as for the convenience, safety, or welfare of the entire community and not the welfare of a specific individual or class of persons. This means that an expropriation motivated by a desire to enrich private interest would be wrongful under international law.

Growers of unique or unlicensed grains and organic producers who lose money to the Wheat Board question the public purpose. What was the public purpose when feed grains were sold to eastern buyers at below world prices? How is the public purpose served by tying up the courts and charging and jailing productive members of the farming community? How is the public purpose served by uncollectable Canadian Wheat Board export credit sales that become the expense of the Canadian taxpayer? What public purpose did Canadian consumers see when their government restricted them to lower grades of prairie wheat?

The fourth is adequate compensation. At best this is arguable; in fact much of the debate has focused on this issue. However, studies comparing farm gate open market prices to the prices farmers received from the Canadian Wheat Board indicate that the compensation is less than adequate.

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It is common knowledge that the act was originally enacted to hold prices down during the war and even during the post-war period. There is nothing to support the argument of adequate prices for producers in the Canadian Wheat Board Act or in the proposed amendments.

With regard to organic and unlicensed grains, there very clearly is not adequate compensation, which thus is confiscation. This is viewed as illegal in customary international law.

It can only be concluded that the expropriation of prairie wheat and barley by the Canadian Wheat Board is not in compliance with international standards of basic justice. However, it is acknowledged that countries do not interfere with the domestic policies of other countries, and so Canada with the doctrine of state dominance can enact and maintain laws even if they contravene international standards.

As parliamentarians, you can choose to deprive your fellow citizens of property rights and other economic rights. You have the power to colonize the designated part of Canada. You can deprive Canadian citizens of basic economic protections, protections that you are forced by international law and treaties to provide to aliens and foreign investors in Canada. While countries normally respect the sovereignty of others, the domestic policy of another country does become a matter of concern in trade negotiations.

As a trade-dependent country, Canada should want to avoid being in the vulnerable position of having to defend its state trading enterprise under world disapproval of its domestic policies.

Next are our recommendations with regard to Bill C-72.

The first one refers to clause 1, and it's under definitions. We recommend a change so that the designated area means all land in Canada as specified in permit books, which individuals choose to place under Canadian Wheat Board jurisdiction.

Then we would like a change to clause 22, with regard to section 45:

45. Except as permitted under the regulations, no person other than the Board shall

(a) export from Canada designated area wheat or wheat products owned by a person other than the Board;

This is simply a change from ``wheat and wheat products'' to ``designated area wheat or wheat products''. For paragraphs (b), (c), and (d) under section 45 it would be the same; it's to replace ``wheat or wheat products'' with ``designated area area wheat or wheat products''.

Our rationale is that the inclusion of all of Canada removes the discrimination that exists with the present system. It allows all producers the opportunity to participate in Canadian Wheat Board marketing. In addition, voluntary contracting of a land base through the permit book system removes the thorny aspects of expropriation.

In conclusion, international trade goals and the organic vision are compatible. Bill C-72, as presented, is incompatible with both international trade goals and the organic vision. It ignores the reality of what is happening on the prairies and the new world trade environment. Surely it must be obvious that Canada's state agency will be unable to function effectively within an atmosphere of ill will, both inside and outside Canada.

Thank you.

The Chairman: Thank you very much, Mr. Husband, for your presentation.

We will now go to the Back to the Farm Research Foundation. Mr. Laird, your fifteen-minute presentation, please.

Mr. Elmer Laird (President, Back to the Farm Research Foundation): May I stand?

The Chairman: Certainly, sir.

Mr. Laird: I'd like to introduce my colleague Henry Lorenzen. He's a consultant for our research foundation. He builds environmentally friendly houses. That's his work.

The reason I'd like to stand is that I didn't understand your instructions, which I received only on Friday, and I apologize to people that this isn't translated in French. I wanted to be able to hold this up to show you the wheat I have raised on my farm. On this side is the flour that is made out of the wheat. Now, it's made by this mill. I can start it up, but time will not permit it to be started up to show it to you.

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Also, this is the lab report. It's relatively simple, it says that the falling number of this wheat is 386. The falling number is the measure of the gluten content, and the gluten content determines whether the bread will rise properly or whether it will be an inch thick. That's what the gluten content does.

It also shows the protein content. The protein content of this happens to be 12.9%. I have a bin full of this on my farm for sale, if any of you would like to have it.

For the purpose of this meeting, temporarily I'd like to make you all into millers, if I could. I'm trying to sell you some grain - certified organic grain. I believe that this is the best grain in the world.

Attached to this, which you'll receive later, is a copy of my certification. This certifies that my grain has been grown without chemicals and that I've used crop rotations and certain other benefits to develop it.

I had hoped that every one of you would have this. The variety of this grain is Colombus. It was grown in 1995 and the certification is for 1995. I have a certification for 1996, but this is the certification I would produce.

You might say, as millers, what is the significance of this? This would make pretty good bread. The recommendation is here and these measurements are pretty good.

This would bake pretty good bread, but we're living with high-tech agriculture and in a high-tech society and there are automatic breadmakers. Some of you are going to say to me that the measurement there will gum up the knives on your bread-slicing machine, that you must have another measurement, that you must have 14% protein and a 300 falling number.

Well, I don't have that, so what do we do? The only thing I can do is find some other farmer who has the right measurement to balance it. This is why I need the Canadian Wheat Board to market my grain for me. They have the facilities to blend it to a very fine point, and they've been doing this for a long time. That's how the bread industry is developed.

This is why I think the Canadian Wheat Board should market all certified organic grain. They have a monopoly on grain marketing. They should live up to their mandate, and they should start marketing certified organic grain right away. That's recommendation number one.

They have the ability to blend the grain, to get it down to the precise measurement the miller wants. That's particularly important to the miller, because he wants to sell his products. We've got good products, but we've still got to get them into a position whereby we can sell them.

Another reason I believe this is very important to both the buyers and the producers is that if we can ship grain in producer cars and then by freight in the hold of a ship, we can reduce the cost of shipping almost three times. We might split that between ourselves and the buyer. It depends on how hard-headed you guys are as millers. Maybe you'll just say you want that cut. But it's going to deliver the product at a more reasonable price, and that's important.

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The third reason the Wheat Board should be marketing our grain.... And I mean marketing our grain directly. I don't mean selling it to the Wheat Board and buying it back; I'm talking about direct marketing now. I've been marketing grain for 20 years. As a certified organic farmer, I'm a taxpayer. This is a service that the Wheat Board provides for farmer taxpayers, and I should have that right.

You may be interested to know that in Saskatoon, back in 1990, 1991, and 1992, the Canadian Wheat Board held three seminars on marketing organic grain. They had millers there from England and we talked all this over, and by 1991 we had a system figured out so we could maintain the identity of the wheat and deliver it from my farm to a mill in England. That's the point of being certified organic: you have to maintain the identity of that grain. That was worked out at that time.

My next recommendation is this. I recommend that all food products served in the House of Commons that are made from grain particularly, and other foods when available, be certified organic. The restaurants in the House of Commons should demonstrate to Canadians and visitors from all over the world the best and the safest food products we have.

I appeared before this committee five years ago. I tried to sell certified organic flour to the lady who feeds you guys when you're in Ottawa, and she said ``But these guys won't give me the money to buy it''. She'd like to serve it. She said ``I even feed my dog organic food''. That was her attitude, so why shouldn't you be serving this product?

The other thing I'm recommending is that we need a national certification program for organic products. Bill McKnight, who you may have heard of from way back then, promised a national certification program by January 1, 1992. This is 1997.

That just about concludes my presentation. I brought this bread. When I was small, when neighbours came over and asked what I was good for, my father said, ``He keeps bread from moulding''. I don't say this is the best bread in the world, but I'm 73 years old, and this is the best bread I've ever eaten. We'd like to slice some, put some butter on it, and serve it to you, but at your convenience. You tell me when you'd like this done.

Some hon. members: Oh, oh!

The Chairman: Mr. Laird, will you be here for the rest of the afternoon? Do you intend to stay? We're going to have questions and comments from the members. Mr. Upshall hasn't arrived yet, so we can go immediately to the questions and comments.

And yes, the committee members will - well, I know I will; I won't speak on behalf of the committee members.... Before we leave this afternoon, we want to break bread with you.

Mr. Laird: Okay.

The Chairman: We look forward to enjoying some of it.

The next presenter is not here, so we will not waste time. We'll go directly to questions and comments.

Mr. McKinnon, then Mr. Hermanson.

Mr. Glen McKinnon (Brandon - Souris, Lib.): Thank you, Mr. Chairman.

If I might be so free as to commend, that was certainly the most interesting presentation we've had so far, and I congratulate you.

Mr. Laird: We agree on one thing; we both like to eat.

Some hon. members: Oh, oh!

Mr. Glen McKinnon: Organics have been a subject at the committee level for many of us who have served on the agriculture standing committee, and as I envision the problem, the regulatory side of organics is very difficult to put in place for the variety of commodities that are being produced across the country. Certainly, it's no less for grains than it is for apples or any other vegetable production or the ability to put together a food that the general public considers to be more wholesome, with less chance that there have been any sprays - not less chance, but for sure that there hasn't been any other chemicals that may have a potential for residual effect.

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My first question for any of you on the organic side is, if it is that good, how do you feel we can get everybody into it? Or is that your desire, to get more people actually growing these products?

Mr. Laird: Mr. Chairman, do I have an hour to answer that?

The Chairman: It's an interesting discussion, but I would ask the members to try to limit your comments to the bill, which deals with amendments to the Canadian Wheat Board. The organics issue is not there, although I do know amendments to the Wheat Board are of interest to everyone. I'm not so sure -

Mr. Glen McKinnon: I'll rephrase my question. What amendments can we make that would bring this production to a greater scale?

Mr. Laird: I'll be very brief, then. You have just passed a bill to restrict advertising on tobacco, and what you're trying to do is keep people from puffing smoke out in a room or wherever. I would suggest that one of the best ways...the thing that holds chemicals into place is the advertising. If you banned the advertising of agriculture chemicals, that would be the first best step in getting everybody on that road.

Mr. Glen McKinnon: Then I will be more specific, Mr. Chairman. I appreciate your direction.

The Chairman: I had to speak to someone on the other side of table, and I try to keep it balanced, Glen. Go ahead.

Mr. Glen McKinnon: I think your colleague was perhaps more direct in this regard; however, I'm sensing that because many people regard the safety factor as one of the major criteria for organic consumption, you have the sense - and Mr. Husband, particulary - that you would be treated unkindly by the present set of amendments if they were to go forward as far as the organic grain production is concerned. I'm a little bit concerned about your term ``expropriation'' and how it applies in reality. It may be a point of law, but I'm talking in terms of the production and consumption.

The Chairman: Mr. Husband.

Mr. Husband: My understanding is that the Canadian Wheat Board Act is a point of law, so I think from that point of view it is very relevant. It's points of law that have some farmers in jail right now. In terms of marketing, it's selling to the Canadian Wheat Board. The act states that the Wheat Board buys the grain. They are the buyers of our grain. It is a point of law. I don't apologize for that. I realize that the term ``expropriation'' is a tough term, but the definition of expropriation is private property being put under public ownership, and that's what the Canadian Wheat Board is. I didn't do that. I'm just observing it.

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Mr. Glen McKinnon: Do I get the sense that your position is slightly different fromMr. Laird's in terms of whether or not the Wheat Board should attempt to market these products?Mr. Laird, perhaps you would have a comment on that - should it or should it not attempt to be marketing an organic product?

Mr. Laird: That's the only way they can be marketed.

Mr. Glen McKinnon: To keep your knives from ungumming?

Mr. Laird: I would want the Wheat Board to market it because they have the expertise to supply the millers with the product that the millers require. Furthermore, we had an organic marketing co-op, but we didn't have much money, and so we would get a container of grain over in Europe or England and then they'd say maybe they would reject that. What rejecting meant was that we would lose organic premium, we'd lose this expensive freight, and we didn't have any money.... They will collect the bill; this is the important thing.

Mr. Glen McKinnon: I'll conclude with this question, Mr. Chairman.

I'm very supportive of the organic industry at a personal level. We had the national president from my riding until a year ago, and he and I had some long talks about some of the obstacles in some sectors of the organic industry.

Would there be, in terms of the amendments, any way other than putting in exclusionary restrictions on organic grains to suit your position, Mr. Husband, if that is your position - maybe I'm putting words in your mouth - but yet retain the ability to actually do the blending and do the necessary work within the board to actually enhance the marketing of your products? That's my final question.

Mr. Husband: The organic industry is already routinely blending wheats. It isn't done in every case, but I know that it is being done routinely, and in terms of marketing, we have a system that's working. We're getting good returns. Basically, we ask for a level playing field and we ask to be allowed to do our thing. The way it is right now, we're paying money out and we're getting nothing back for it.

Mr. Glen McKinnon: Paying it to the board and, in turn, buying it back?

Mr. Husband: This is correct. You'll all be familiar with the interim payments and the final payments, but quite often the buy-back is so high that after the final payment is done, we're still out of pocket.

I can cite an example for myself. When I had an opportunity to sell into the United States, it was going to cost me $1.07 a bushel to buy back to the Canadian Wheat Board. The final payment was only 3¢ or 4¢ a bushel, so it would have cost me over $1 a bushel to sell my grain. I decided it was too expensive. I sold it into the conventional market to a feedlot in Alberta, because that was legal.

Another thing; this buy-back is unpredictable. We can't forward contract because we never know what the buy-back is going to be. It varies from day to day. I've seen it on feed barley in a three-month period. The actual final cost to the organic farmer can vary by as much as 79¢ a bushel - just the variance alone. It's a hindrance and encumbrance to our industry. In terms of the bill, we would certainly welcome an exemption for organic agriculture to be placed into the bill.

The Chairman: Thank you, Mr. Husband. Mr. Hermanson.

Mr. Elwin Hermanson (Kindersley - Lloydminister, Ref.): Thank you, Lyle.

Thank you, gentlemen, for appearing before our committee. I have a short question to each one of you so that we can get our parameters here. How many members are in your organization and how did they become members of your organization?

Mr. Husband.

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Mr. Husband: Our Organic Special Products Group is a new group that was started up last year. We currently have 33 or 34 members and they're all active organic participants, and we have a few who do some merchandising. We have recently opened our membership up to other associations. At this point, we have one organic chapter that has become an association member. We have two other chapters, one in southeast Saskatchewan and one in Alberta, that have indicated they are interested in an association membership.

Mr. Elwin Hermanson: So basically it's growers.

Mr. Husband: It's growers, yes.

Mr. Elwin Hermanson: Mr. Laird.

Mr. Laird: Our Back to the Farm Research Foundation was sponsored in 1973 by the local 614 of the National Farmers Union. The main body of the farmers union is still dealing with chemical agriculture, but we were not getting anywhere, so Dr. MacRobbie of the Club of Rome asked why we didn't set up our own research foundation. So we're set up under the Societies Act of the Province of Saskatchewan. If I could show your our letterhead, I could show you everybody who's involved in the research foundation.

Mr. Elwin Hermanson: So how many members?

Mr. Laird: We're set up in the Davidson area to function in the Davidson area, and we have about six or seven farmers.

Mr. Elwin Hermanson: Okay.

Mr. Laird: We have quite a number of consultants to advise us on various things as we go along. We're not set up. We never went out and sought wide membership. If that's what you're trying to get at, to put an evaluation on it, forget it.

Mr. Elwin Hermanson: Okay.

Mr. Brassard, how many members are in your Catholic Rural Life Ministry and how do they become members?

Mr. Brassard: The Catholic Rural Life Ministry covers the whole province of Saskatchewan. The committee itself is made up of 12 members; two are appointed by each bishop from each diocese. We also work ecumenically with the Inter-Church Committee on Agriculture, which has four other members, including the Anglicans, Lutheran, Mennonite and United Church.

Mr. Elwin Hermanson: It's good for us on the committee to know where you guys are coming from and what kind of support you have. I do know that in the case of the Catholic Rural Life Ministry, the Catholic church is just as divided over this issue of marketing as are all farmers, because I have several who have come to me and stated one position or the other.

To Mr. Laird, you claim that the Canadian Wheat Board was your best tool for preserving the identity of your organic grains, and yet the Wheat Board has stated that it can't preserve the identity of many grains, unlicensed grains for instance, because visually it can't be done. Certainly, you can't identify organic grains visually from other grains. How in the dickens can the Wheat Board say that they can preserve the identity of organic grains, but they can't preserve the identity of unlicensed grains where first you need kernel visual distinction, and so on and so forth? It just doesn't make sense. Somebody's not telling the truth here.

Mr. Laird: I don't know about the Wheat Board. They didn't consult with me before they gave you that answer. But I do know that we have what we call an audit trail, whether it goes into the spread or whether it's going overseas. And every step of the way the person along the line, whether they clean the grain or whatever they do, has to be certified organic.

You are aware of registered seed grain. If you were a European buyer buying Canadian registered seed grain, I think you would have considerable confidence that it would meet the standards they claimed it would. So with certified organic grain, I think you can have the same confidence.

Mr. Elwin Hermanson: So then you would argue that in fact unlicensed grain should be able to travel back across the border because they can't be identified.

Mr. Laird: No, I'm not arguing anything about unlicensed grain because -

Mr. Elwin Hermanson: You can't argue both ways.

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Mr. Laird: - because I don't know anything about unlicensed grain, so I can't argue about it. I do know -

Mr. Elwin Hermanson: Well, again, neither can be distinguished visually. That's the problem; it's the same as with your organic grain.

Mr. Laird: I've been organically farming for 28 years. I've been marketing for 20 years, so I have had some experience with that. But I have never raised unlicensed grain. So I know nothing about it.

You're asking me a question. I'm saying I know nothing about it. It's not horses, cows, or whatever. I'm talking about one product here.

Mr. Elwin Hermanson: Maybe Mr. Husband would want to comment on that. But I'd also like to ask him about the buy-back.

We've had several people appear before our committee who have said, look here, there's nothing to stop you from exporting your grain, because you can go through the buy-back. The evidence I've heard from farmers who have tried to use the buy-back is that it's a bit like loan-sharking. In fact, quite often the buy-back price is unreasonably high, far higher than the pool return outlook price, and often much higher than the price for which the grain is trading commercially.

So I'd like your comments on the ability of the Wheat Board to identify organic grains, and also your opinion on the buy-back.

Mr. Husband: With regard to the buy-back, first I would like to say that the organic industry has been stalled for years. They've always said that we can't identify organic grain. But at the same time, right now there are regulations and rules within the Canadian Grain Commission and in the Canadian Wheat Board Act that are being bent in order to accommodate organic grain.

In fact, we get a bargain on our buy-backs. I quoted that price of $1.07 a bushel for organic barley to go into the United States as a buy-back; that would cost me a little over $1. A conventional farmer who was trying to do exactly the same thing would have been quoted 30¢ a bushel more than that. That's discrimination against them.

I consider that unfair to them, but I also consider it unfair that I should have to pay a dollar into the Wheat Board pools for a sale that was unique and only for me.

I had No. 3 wheat. A number of years ago it would have cost me...I forget the exact buy-back cost, but it was something close to three dollars a bushel at the time in a January period. I followed through with that pool, and with interim payments, final payments and everything - I also figured the interest on my money that I would have put into it - it would have cost me $1.47 per bushel of organic wheat.

So that sale never happened. I ended up selling that wheat at the elevator, just for conventional prices.

Mr. Elwin Hermanson: Can one visually distinguish organic wheat from other wheat? Is the Canadian Wheat Board the instrument to preserve the identity of organic grains?

Mr. Husband: No, I don't think so. Now, maybe some chemical tests can be done, but we don't even really advertise that our wheat is chemical-free. We assume, and we hope, that it's very low. But we live in the real world. The atmosphere.... You go out on spraying day, and you can smell the sprays all over. We're not totally chemical-free.

As for visually, no, there's no way to visually detect that. We rely on what we call our audit system. We have to keep records of everything we do.

If the wheat is grown in field number one, and goes into bin number five, we have to record that. If we sell it to someone, if it's cleaned, it has to be cleaned at a certifying plant, and they have to keep audit trail records. If it's mixed to blend it...in order to get the proper protein and baking quality, it gets a new lot number.

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But ideally - and I think our system is working - a bag of flour in Europe with a lot number on it is supposed to be able to be traced back through all its processes, and right back to the year and field where it was grown.

Mr. Elwin Hermanson: I just have a short question.

The Chairman: Okay, just one more, short and sweet.

Mr. Laird: There are two ways of finding out whether it's chemical-free or not. When we had our co-op open at Girvin, every day there were customers coming in and buying our grain. They wanted chemical-free grain because they were allergic to chemicals.

Believe me, if we'd had three or four people who said no, your grain is not chemical-free, we'd have been out of business any time. It's tested by the people themselves. That's one way.

The other way is that - as I understand it; I haven't seen them - Agriculture Canada has dogs at airports in various parts of Canada. They can detect grains of various kinds, and chemicals.

I went to the fellow at the RCMP here in Regina, who trains the dogs. I asked, can you train a dog to see if there are chemical residues in our food products? They said, sure, we certainly can. He said, now, it's going to cost you $25,000 to train that dog -

A voice: Oh, oh!

Mr. Laird: - and you have to have somebody who will work as the dog trainer all the time, but it's certainly possible.

If you were buying a million tonnes of grain, one $25,000 dog wouldn't be very much, would it?

Mr. Elwin Hermanson: Thank you. I was trying to relate this to Bill C-72. I think we're moving away from that a bit.

The Chairman: I was going to suggest that you might try harder.

Voices: Oh, oh!

Mr. Elwin Hermanson: We're going to have to stretch a long way to get that one to Bill C-72.

I just have a final question to the Catholic Rural Life Ministry. You made what I believe is an excellent recommendation with regard to the elected board of directors. It's different from the recommendations that any other group has made on this issue.

You suggested that the entire board should be elected; others have suggested the majority or two-thirds be elected. Then you made a comment that the majority of the elected board should be farmers, and that the remainder, a minority, could still be elected as non-farmers.

Do you want to expand on your reasoning behind that? This is different, and I think our committee needs to hear the logic you've put into this recommendation.

Mr. Bray: Assuming that the government is going to be involved in financing and wants to have some representation on the board, that representation could still be elected and designated as their representative.

There is the matter of expertise. It has been pointed out to us that the existing board, the commissioners, may not be legitimate farmers. They may have expertise in the grain trade.

Well, you may want to have some of those people still involved. I think that's been the theory in defending some of the bill. They could be offered as candidates, and you could elect from them. Likewise, we have suggested that they could be put on staff, and their expertise would be available that way. Alternatively, they could be contracted with whatever.

I hope that answers the question somewhat.

Mr. Elwin Hermanson: I guess I'm still not clear on how you're going to elect the non-farm member.

I agree with you. I agree that you can hire expertise and if they were a responsible board, the elected board would hire whatever expertise they need. I grasp the notion of electing farmer directors, but I'm still not sure how you're going to elect non-farm directors. That's what I'm asking.

Mr. Bray: Well, you could designate that three or four of them are going to be non-farmers, and the farmers would elect from them, from the candidates for those four positions.

Mr. Elwin Hermanson: Okay.

The Chairman: Mr. Calder.

Mr. Murray Calder (Wellington - Grey - Dufferin - Simcoe, Lib.): Thanks very much, Mr. Chairman. I'm just going to keep going right along with this, because there are two things I want to talk about: the election of the board, and the government guarantees.

I'm a farmer from Ontario, and quite frankly, since being out here, I've found this a very educational process. In Ottawa over the last little while, I've basically heard that everything was wrong with the Canadian Wheat Board, it should be done away with, or it should be changed. I've come out here, and from what I've heard, my way of thinking has changed drastically. The Canadian Wheat Board isn't such a bad thing after all.

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An hon. member: It's different from what Elwin was saying.

Mr. Murray Calder: Yes, definitely different.

So I want to deal with the election of the boar, and actually get into proposed subsection 3.1(2). Basically it states - and this is not a direct quote - that the board shall consist of not fewer than 11, and not more than 15, directors.

I guess I would like to open it up. First of all, I have three question. How many do you think should be on this board? Should there be 11 or 15? How many should be elected, and how many should be appointed?

Mr. Burton: Mr. Chairman and members, I don't think we have a precise number we're dealing with. It's just that we stated emphatically that certainly a strong majority of the board should be farmers.

Mr. Murray Calder: So a combination of two-thirds farmers, one-third appointed - would that be fair?

Mr. Burton: That's probably not a bad range.

Mr. Murray Calder: Are there any other comments?

Mr. Laird: As I understand the bill, the new board will have a different function from that of the commissioners. The present commissioners are part of the sales group, and they will visit foreign nations on trade missions. They are people who have had a lot to do with marketing, and they've become more expert as they've gone along.

So as I understand it, the new board is a different kind of structure. As the literature says, it will meet every month or two. It will approve what the president and the CEO recommend, or it may reject that, or it may make other recommendations related to that.

But it's sort of like comparing apples and oranges to say...

[Technical Difficulty - Editor]

Mr. Murray Calder: Well, there's definitely a transitional period being proposed here.

Mr. Laird: But if this bill is passed, the proposed board will function much differently from the present-day commissioners.

Mr. Husband: I frankly see nothing wrong with a 100% elected board. MPs are all elected. That is how the country is run.

Mr. Murray Calder: Okay. Now, there's the other aspect here, too, about the chairperson and the CEO. Do you feel that the chairperson should be appointed or elected? I have the same question about the CEO: how should that be handled?

Mr. Bray: We would prefer to see the chairperson and the CEO elected. The chairperson of the board should be elected by the board of directors, and the CEO should be selected by the board of directors.

Mr. Laird: I question how far you're going to get with this. I mean, it might be nice to have all the board elected.

A week ago we had a meeting with representatives, with people who have been drafting the Wheat Bpard bill, two people from Agriculture in Ottawa. Now, I have some grave concerns about what is happening here.

One thing is that the present commissioners are appointed for life, until they're 70 years old. When a new party comes in, they can't wipe them out. We have that stability in the present-day Wheat Board. The new appointed people on the Wheat Board will not have that privilege. When a government changes, they may wipe them all out. So what is this going to do toward instability? I don't really like it.

Whether the government appoints the CEO and the president, or whoever they appoint...as long as it's left in such a way that when a new government comes in, it can wipe all that out, I don't think it's very good.

Mr. Husband: Well, on the basis of organic principles, and the principles of farmer ownership and control, I guess we would have to support the chairman and CEO coming from the farmers, whether it's through elections or the elected directors.

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Mr. Murray Calder: Which brings me to the point I wanted to make. I wanted to demonstrate - to you in particular, Elmer, because I loved the way you started off your presentation - just how difficult it is going to be for the standing committee to figure out the pitfalls that are within Bill C-72 and the different amendments that we have to go back to Ottawa and discuss.

The Chairman: Mr. Laird, do you wish to comment on that?

Mr. Murray Calder: I had one point I wanted to make here. I'm not finished yet, unless you're telling me I'm finished.

The Chairman: No, I thought you were.

Mr. Murray Calder: No, I'm not.

The Chairman: Proceed.

Mr. Murray Calder: Which brings us to the credit risk. It doesn't matter what government is in there. I feel that all the presenters here agree with the three pillars of the Canadian Wheat Board, one pillar being the government guarantee.

I and my colleagues around this table represent the taxpayers of Canada - that's eastern Canada, central Canada, and western Canada. We have a responsibility for that.

You're right that Bill C-72 is going to change the Canadian Wheat Board; it's going to change it from a crown corporation to a mixed entity. By law, we have to have a bill in place, which is Bill C-72, to give us the power to come up with those financial guarantees, which the government currently does.

That means the government itself has to have some say within this board so it can remain responsible to the Canadian taxpayers. That's why I asked the question about how many you feel should be elected and how many should be appointed. Obviously the appointees and the people who are elected have that shared responsibility to the Government of Canada for its guarantees. I'd like your comment on that.

Mr. Laird: These two people from Agriculture, whose names I forget, have been working with people in the Department of Finance, drafting this act.

I've lost your question.

Mr. Murray Calder: It was about financial responsibility to the taxpayers of Canada.

Mr. Laird: Yes. The government is going to hold onto that to a certain extent, and I can certainly understand why they are going to maintain that position. The government has guaranteed $6 billion in finances for the Canadian Wheat Board. That's a lot of bucks.

Mr. Murray Calder: That's right.

Mr. Laird: But as far as I know, in the last 50 years or more, they have not lost one dollar.

Mr. Murray Calder: But it would be the same thing, Elmer, if you went to the bank and said you wanted a $10,000 loan, and as requested here, there's a business plan that goes along with it. If the bank asks what kind of security you are going to put up for that loan, you can't say, ``Nothing, but I still want the $10,000 loan.'' It doesn't work that way.

Mr. Laird: But the other thing, so these people told me, is that the terms of reference of all board members - what they can do and what they can't do - will be written into the act. So they'd only have certain leeways in certain areas. The farmers couldn't all get up and say, ``To hell with it, we're not going to sell any more to China; we'll sell it to Europe'', or something like that.

There are certain written regulations that you will work into that context. That's how we understand the whole board will be controlled.

The Chairman: Mr. Burton, and then we'll wind up from there.

Mr. Burton: If we look at some of the other aspects of this - and I'm thinking in particular of some of the other government involvement - in the past we've had embargoes put on some of our shipments. That's a commitment the country made that compensates for that sort of guarantee for us. Surely it's not too much to give that guarantee to the producers when you look at those different policies that could affect us. And it comes out of our pocket.

The Chairman: Mr. Husband, briefly.

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Mr. Husband: I'd like to comment on the credit risk part. I would suggest you take some direction from something that's in the Canadian Wheat Board Act already. It's part VI, with regard to marketing plans. Voluntary marketing plans for non-board grains are in there and government guarantees are assured in there. Perhaps that could offer some direction in terms of credit risk.

The Chairman: We'll go to Mr. Collins. Did you have a short question? We're going to have to move along.

Mr. Bernie Collins (Souris - Moose Mountain, Lib.): Thank you very much, Mr. Chairman.

Henry, it's good to see you. Mr. Laird, I commend you for bringing your expertise. I commend you for the experts you have brought along with you.

With regard to the previous group, I heard people saying, well, if we get to elect the board, then let me suggest to you that I'll pick the CEO - from the government side. If at the end of the day you, as elected people representing producers, are not happy, then I empower you with the right to be able to say you're not happy with the CEO and you recommend he be removed.

Could you live within that kind of scenario, if I had to go back to the minister and say, look, we have to work through this thing? If you want some of the input, I have to ensure on behalf of the minister that he has some connection with the whole system. I would like to know from each of you if you could live with that arrangement.

The Chairman: Mr. Burton.

Mr. Burton: I would certainly see it as a better arrangement than what's proposed in the amendments.

The Chairman: Are there other comments?

Mr. Burton: It may still leave further room for improvement, but at least it does improve that.

Mr. Laird: I think we're venturing into the world of the unknown, which has been absolute for the last 50 years. So a lot of things are going to have to be worked out. There's no question about that.

The Chairman: John.

Mr. Husband: [Inaudible - Editor] direction comes internationally and it's farmer ownership and farmer controlled. So we're pretty firm on that.

Mr. Bernie Collins: John, if farmer owned and farmer controlled.... All I'm saying is that if the minister says, look, I need to have some kind of liaison here so I'm going to recommend so-and-so be the CEO, you people all represent the board per se. At the end of the day, we're all working in the same interests and towards the same end, and if you find the CEO is not performing, I'm saying to you that you have the option to recommend, in this case to the Minister of Agriculture, that he be replaced.

Mr. Husband: My point of view would be that the farmer should have the final say, but certainly some recommendations from the minister would be very welcome.

Mr. Bernie Collins: Since the chairman has skipped away, I want to ask you one more question. From the advisory committee....

Mr. Bray: I think that's an option, this appointment of a CEO. I'm not sure that's the best option. I think we recognize we're asking for a government guarantee. It's very important and we want to continue it. We have to acknowledge, therefore, that the government has to have some protection for their liability. I think that will be worked out in some way.

It quite likely wouldn't be necessary for the government to appoint the CEO. The government is always going to have the option of withdrawing their guarantee. That's a pretty good weapon. I'm sure they'll reach an accommodation, and the board is not going to do anything to jeopardise that guarantee. But I'm not sure you have to have that rather awkward situation where a board has to work with a CEO they did not appoint. I just see that as being a point of irritation.

The Chairman: We're going with Mr. Hoeppner for a brief round.

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Mr. Jake Hoeppner (Lisgar - Marquette, Ref.): The Liberals always try to steal my time. I think one message that has come through in the last couple of days is that somehow, as a standing committee or as government or whatever, we have to find a way of putting more bucks into the farmers' pockets. I think we all agree on that. I was hoping Mr. Laird would take that knife and show us about what portion of that loaf of bread really goes to the farmer.

The Chairman: That might be interesting, but I would suggest you get to the bill because we have taken a lot of time.

Mr. Jake Hoeppner: It's all coming back to the bill, because this bill is supposed to put more bucks into the farmer's pocket and that's what we're trying to prove.

I think that's what Mr. Husband said, he wanted to have a bigger share of the cake. I think Mr. Laird pointed that out, that had to happen, that he had to have more money for his product. I think the Catholic Rural Life Ministry said the same thing.

What surprises me, though, is that we are recommending certain vehicles that can do this but we never talk about why these vehicles haven't been successful. Why do we need Wheat Board commissioners who need six-figure salaries plus a quarter of a million severance package? Why do we need railway presidents who need a quarter of a million for a wage? Why do we need farmers to go out and have 48% of their net farm income from off-farm jobs? Why aren't we hearing something about this?

When I heard Mr. Brassard saying it's the monopoly system and our physical bread that will give us a better return, I was very glad to hear on the other side that he works with church organizations and that the spiritual bread will probably be not all that was passed out through a monopoly.

Those are issues I think we have to address. If we don't - government and Wheat Board - private enterprise will fail. We'll have no farmers left, because the trend has been for fewer and fewer farmers. We've seen what has happened in the East Bloc countries; we've seen what happened in the South American countries. Once the farming community is gone, forget the country.

The Chairman: I'm going to ask each group if they wish to comment on that and then we will conclude this dialogue. Mr. Burton.

Mr. Burton: I think the best answer for that is that we feel we all work together. We certainly see the Wheat Board as an effective tool for farmers, for working together.

We've heard this proposal of dual marketing bandied about. We might look at the present situation to see how that would work, with a backlog of grain we are presently experiencing. Grain is finally moving now. But what is moving? Canola. That's the prime mover, which is what the elevator companies are trying to cover at their end.

The Wheat Board has to take a back seat and probably pay more demurrage on it, and then they start wondering why the Wheat Board is inefficient. That's the sort of thing where, if you had the elevator companies and the Wheat Board in a choice, so-called, the Wheat Board would always have to take a back seat to what the grain companies are doing. I think we should learn some of these lessons as well as what history has taught us in the past.

The Chairman: Mr. Laird, do you wish to comment?

Mr. Laird: As for the share of the dollar in that bread, the farmer gets about 6¢ or 8¢ of it. That's about our share of that bread. Now, you've raised a whole bunch of questions. I've been farming for 51 years. I was faced with a lot of those things 51 years ago and we haven't resolved them. So I'm not sure you want to hang around that long.

Mr. Chairman, there's one key thing about this bill that really bothers me. It provides for wheat and barley, and oats could be introduced back into it; but there's no provision for rye.

Now, I want to talk to you for a minute as farmers, not as politicians here. I think everybody realizes you have to have a crop rotation. So if you're going to market cereal grains, all cereal grains should be marketed through the board so the same mechanism to establish price is there.

Rye is a good product, but we've never had a long-range program to sell it, no long-range commitments like we've had with wheat. So rye has got left out.

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The Chairman: Mr. Husband, do you wish to comment?

Mr. Husband: We may have some problems in organic marketing, but we don't see them. We have lots of buyers competing for our product. They may be making unreasonable profits and our transportation costs may be too high, but the point is that, FOB our farms, we're getting good prices we can live with.

As one other quick comment, I'd be pleased if all the members would eat organic grain, but I would suggest we have it voluntary.

The Chairman: Thank you very much, gentlemen, for your comments, courtesy, and cooperation and for leaving your thoughts and concerns with us. As you know, the committee will be in Saskatoon tomorrow, Calgary on Thursday, and Grand Prairie on Friday, before returning to Ottawa and continuing with the work on this bill. We thank you for your contribution.

We had one individual who was not able to make it this morning and was scheduled for this time. I understand the minister is here. He was supposed to be with this group, so I'm going to ask the indulgence of the minister to have Mr. Ken Sigurdson come forward.

Ken, I think you understand that you have five minutes. We kept everyone to that this morning within a very few seconds, so please keep it in mind. I know it's not a long time, but that's the understanding all the individuals presenting have had for this week.

Welcome.

Mr. Ken Sigurdson (Individual Presentation): Thank you, Mr. Chairman.

My wife Bernice and I farm in the Swan River area of Manitoba. I'm currently the president of the local 520 of the National Farmers Union and a Manitoba Pool Elevators delegate.

The amendments to the Canadian Wheat Board Act, in my view, cannot be seen outside the things that are happening in Canadian agricultural policy, such as the World Trade Organization, NAFTA, the elimination of the WGTA, and now the proposed privatization of the Canadian Wheat Board. The impact of all these changes is to move power from farmers to transnational corporations. For instance, Dwayne Andreas, CEO of ADM, said at a news conference in Winnipeg that ``free trade is for corporations like ADM, farmers waiting for free trade is just like leaving the porch light on for Jimmy Hoffa''. et all of these things happen.

This is a transformation process, and I'm suggesting that various things have been done by farm leaders in this country. The SEO process, the Western Grain Marketing Panel, the National Safety Net Consultation Committee, the Blue Ribbon Commission, and numerous other committees to eliminate the WGTA have all been created by government. These farm industry leaders and farm leaders have complied and made the changes.

I see the setting up of the board to replace the commissioners of the Wheat Board being the same process, whereby farmers and industry people will be appointed to the board and comply with the necessary changes that the government, NAFTA, and the WTO want.

My next section is farmers and farm organizations. I was among the 1,100 farmers at Oak Bluff, Manitoba, last summer - Mr. Hoeppner was there as well - who passed a resolution supporting the Canadian Wheat Board and rejecting amendments of the Western Grain Marketing Panel. That resolution passed unanimously.

At the 27th convention of the National Farmers Union, the NFU delegates passed a resolution, which is attached, rejecting the amendments to the Canadian Wheat Board Act and Bill C-72.

I talked also about Manitoba Pool Elevators. At a recent spring delegates meeting, delegates attempted to pass a resolution but were told by the president, Charlie Swanson, that it would be in contradiction of the resolution being presented in Ottawa by Prairie Pools. I've also attached a letter concerning hopper cars, which the delegates passed in Manitoba Pool but was never acted on; in fact, the letter tells the Minister of Agriculture, Mr. Goodale, to ignore the delegates, that the pool has a policy and they'll stand by it.

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The Canadian Wheat Board commissioners and advisory committee - I'd like to point out that most of the amendments that are so roundly criticized by the farm community come from the Canadian Wheat Board commissioners. The Canadian Wheat Board commissioners' function is to market grain, not promote policies of the international grain trade. The Canadian Wheat Board commissioners are advising the advisory committee. The process is clearly backwards, and most of these amendments come from the Canadian Wheat Board itself.

I also talk about U.S. and Canadian agricultural policy. There was a good article in the last Western Producer. Under the dismantling of the 1996 Farm Bill, a U.S. farmer will receive $120,000 in benefits annually. A similarly sized operation in Saskatchewan would receive about $100,000 in the one-time Crow buy-out. The U.S. program will continue for seven years. So the U.S. is really adjusting its policies to fit around trade deals. What we're doing is adjusting our policies to the free market system, and I find that totally unacceptable.

I believe the amendments to the Canadian Wheat Board are just an interim step to diminish the power of the Canadian Wheat Board. It makes farmers responsible for the ultimate destruction of the Canadian Wheat Board. Clearly, the government has agreed to the proposed WTO rules to eliminate state trading agencies. Mr. Goodale says that one of the reasons for the changes to the Canadian Wheat Board is to comply with trade rules. The Wheat Board complies with all the current trade rules, so I believe it's anticipation of trade rules.

I'm suggesting that this committee reject the amendments contained in Bill C-72, because it's a process to privatize and eliminate the Canadian Wheat Board.

I talk about grassroots participation. I'm a farmer who supports orderly marketing in the cooperative system, and I'm calling on the members of the committee, particularly government members, to critically examine the discrepancy between the views of farmers and the views of the power system in the industry.

Although the government indicates it supports the Wheat Board, there doesn't seem to be any mechanism developed to include farmers in a grassroots process.

Our industry is going through a restructuring process. Transportation is being deregulated, grain handling cooperatives are being privatized, and the transnationals are openly participating in the political struggle for the control of the Canadian Wheat Board.

The government has implemented an agenda of deregulation, competition, and privatization, through which government is reducing its participation in policy development and assuming the corporate interest will be able to define the common good for farmers.

The Chairman: Would you wind up within the next thirty seconds or a minute, please. We have to be fair to the others who were here.

Mr. Sigurdson: Okay.

I would like to see this committee develop a vision of the industry five to ten years down the road...not just what is being proposed. I believe in order to do that we should have a grassroots process whereby we would elect producers from the farm community to work with the Canadian Wheat Board. We should fill two positions at the board to work with eleven farmers elected from the farm community, to truly represent farmers. The current commissioner's role should be strictly marketing grain.

The message I'm giving this committee is that we're in a process of deregulation and we need to re-regulate the system for the farmers' interest, not for transnationals' interest. I don't see this bill doing that.

The Chairman: Elwin, please.

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Mr. Elwin Hermanson: Thank you, Mr. Chairman.

Thank you for appearing before us. We've certainly had lots of representatives from the National Farmers Union appearing before the committee. You've been very aggressive.

A lot of what I've heard hasn't made a whole lot of sense, particularly the bashing of trade agreements. You would have to agree that if it wasn't, say, for the Auto Pact in Ontario, we wouldn't have an auto industry in Canada. That's a trade agreement. If it wasn't for NAFTA, we probably would have had sanctions against Canadian trade that would have increased a high unemployment of 10% up to 15% or 20%. So I don't understand your logic there in trying to bash trade arrangements of people who want to do business and trade with other countries.

With regards to the Canadian Wheat Board and these transnationals, it was actually the Canadian Wheat Board that have done a lot to irritate our neighbours just to the south, in the northern states, when they sent grain by the truckload into a few elevators in the U.S. to stir up some trouble with our American neighbours.

Do you think that was a responsible act on the part of the Canadian Wheat Board, to designate high volumes of grain to a few elevators in the U.S. to rile them?

Mr. Sigurdson: I really don't know what you're referring to.

Mr. Elwin Hermanson: There were truckloads and truckloads of grain that went through under the auspices of the Canadian Wheat Board. We're not talking about the guys who tried to sell their own wheat. We're talking about the Canadian Wheat Board grain going into Montana and North Dakota to a few elevators. It riled the Americans to the point that they wanted to close the border. Do you think that's responsible on the part of the Canadian Wheat Board?

Mr. Sigurdson: I think you're making a good point, Mr. Hermanson. Just imagine if you had hundreds of individual farmers doing the same thing.

Mr. Elwin Hermanson: It was worse. It was hundreds of B-trains, authorized by the Canadian Wheat Board.

Mr. Sigurdson: The organizations I have talked to in the United States speak very highly of the Canadian Wheat Board. They would like to have a system like that. I am particularly talking about the North Dakota Farmers Union, which I have had contact with. They do not want to see the Wheat Board lose its control over grain shipments because it would just be chaos and it would be piggybacking onto their system in the United States.

The Chairman: Mr. Easter.

Mr. Wayne Easter (Malpeque, Lib.): Welcome, Ken. It's good to see so many from the National Farmers Union out. It's too bad some of the reformers in the Western Canadian Wheat Growers Association...they obviously don't have the numbers.

The Chairman: Are you ready to ask a question?

Mr. Wayne Easter: Yes, I am, Mr. Chairman.

Obviously, Ken, you're opposed to the bill as written. Are we to assume that basically you want the current act retained as is?

One of the reasons the minister brought forward this particular bill is because of some of the dissention that had been seen in terms of some of the demonstrations in the west. It was brought forward to try to find ways of creating greater accountability to farmers under the act and also to try to overcome some of the problems that we had in the Japan markets in terms of accessing the product quickly.

If you're going with the current act, do you see any ways of accommodating, first, that accountability to farmers, and second, that ability to access the product more quickly, to ensure that this product comes into the system for sale?

Mr. Sigurdson: In terms of the accountability to the farmers, as a farmer I find the whole marketing process quite accountable. The commissioners have done an excellent job at marketing.

I am concerned about the commissioners' role in the farm policy process. As I stated in my presentation, I believe what we should be doing, and what this committee needs to be doing, is developing a truly grassroots participatory process of elected farmers. There could be 11 elected farmers from the farm community. They could look at the Wheat Board and devise a plan to deal with all of the structural changes that are being made to agriculture: the deregulation, the privatization, the elimination of the WGTA, the trade deals and so on.

As I mentioned in my brief, the U.S. adjusts their system to suit, to support their industry. The elimination of the 1996 Farm Bill was supported by all farm organizations in the United States. There it's an industry-driven type of government support system.

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Certainly, under the current talk of fiscal restraint, I don't see our government putting up that kind of money. I do see a need for farmers to have control of a system that adjusts for their needs, not for the needs of the corporate sector. That's what I was trying to point out.

The Chairman: Mr. Easter?

Mr. Wayne Easter: That's okay.

The Chairman: Ken, we want to thank you very much for your effort. It's our understanding that you drove some considerable distance today, some several hours?

Mr. Sigurdson: Yes, about five.

The Chairman: It's certainly shows your personal desire to make your views known to the committee, as a number of others did. We thank you very much for doing so.

Mr. Sigurdson: Thank you.

The Chairman: The Hon. Eric Upshall is now with us. I would ask the minister, the deputy minister, Murray McLaughlin, and the coordinator of the policy relations unit, Mr. James Stalwick, to perhaps all come to the table at this time, please.

Welcome, Minister, to the committee meetings and for your presentation on Bill C-72, an act to amend the Canadian Wheat Board Act. I'm sorry you weren't able to make it earlier.

Just so that everyone is clear, Mr. Minister, as we said before, we had allocated 15 minutes for your presentation. We have done our best to have everyone stay to that. As we get down to the last couple of minutes, I will indicate this to you so we're fair to everyone. If you haven't made all of your points completely by then, I would suggest you make them at that time.

After that, we will have a 15-minute period from each side of the table for questions and comments to the minister. I would ask that the members on either side between now and then decide how they are going to go about doing this.

So welcome, Mr. Minister, to the committee meeting today.

Hon. Eric Upshall (Minister of Agriculture and Food of Saskatchewan): Thank you very much, Mr. Vanclief. I appreciate being worked in in this manner, as you can appreciate the duties of the House. So I'll just get right into it. It should only take about 10 minutes. I believe you have or will be getting copies of the presentation.

The Chairman: I don't think so. On the record, we can't circulate the copies to the members unless it's in both official languages. But if it isn't in both official languages, it will be translated into both and then circulated to the committee.

Mr. Upshall: Then what I'll be giving you is a version through my speaking notes.

The Chairman: Yes. Thank you.

Mr. Upshall: We welcome the House of Commons committee to Regina and to the province. I think that it's an important aspect of consultation, especially in such a very important issue as the changes to the Canadian Wheat Board Act.

Saskatchewan farmers provide more than one-half of the wheat, durum and barley marketed by the Canadian Wheat Board. It is very appropriate that they listen to the views here in Saskatchewan and in western Canada in general.

The Government of Saskatchewan can support a number of points that have been incorporated into the legislation. In particular, we support single-desk selling and price pooling, the flexibility provided so that the board can address some of the situations that have confronted it over the past few years to enable it to keep itself as a very vibrant player in the world market. The shift in accountability from the Government of Canada to the partnership between government and producers appears to be a majority position. We just have to make sure this position is handled in the right manner.

There will be significant shifts in the government and the operations of the board. The transition period will be a time to proceed carefully so as to build trust among all participants. It's very important we maintain the trust between the participants because of the nature of our industries and the importance of the board to world sales. We must make sure we have a complete, open and concise understanding of what the board will be doing.

The Government of Saskatchewan believes that several key amendments to the proposed legislation are essential to assist the process of building trust and understanding.

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First amongst these is in the area of governance and accountability. While Saskatchewan appreciates and supports the need for accountability, it is our opinion that the balance of the accountability in legislation remains too much in the hands of the federal government. The presence of some federal appointees on the board of directors will provide the federal government with a window on the Canadian board, in order that they may have a full understanding of what the board is doing and the functions it's carrying out.

Given the various financial and legal obligations and controls, there is no need for government to directly control the selection of the chief executive officer or president as well as the chairperson of the board of directors. To create a democratic institution, one that will foster trust between the Canadian Wheat Board and prairie producers, it is essential that the directors on the board have the opportunity to select the officers.

The Government of Saskatchewan suggests that the board of directors of the Canadian Wheat Board should have it within their power to select their own chairperson and to appoint the CEO or president. Producers clearly see these decisions as part of their role as directors of operation of a newly constructed Wheat Board. I guess what I'm saying is that if you're going to democratize the board, democratize it, don't go halfway.

A second area of concern relates to the flexibility amendments. We feel there should be more discussion concerning cash buying, pooling periods of less than a year, excluding and adding crops and the capital fund. There must be some assurance in the new act that the basic principles of single-desk selling and price pooling cannot be compromised and that the Canadian Wheat Board has a mandate to grow as an organization.

The Government of Saskatchewan feels this can be accomplished with some changes to the proposed legislation.

We would like to see proposed subsection 39(1) changed to specify that cash buying from any party at a price other than the initial price be used for three things, and those are arbitraging the foreign and domestic market prices, offering an option to forward price crops at the time of seeding and the access of special varieties to serve in niche markets.

As far as flexibility of amendments is concerned, we're going to talk now about pooling periods of less than a year. Price pooling was and continues to be a fundamental principle of the Canadian Wheat Board. We have not heard any reasons why pooling periods of less than one year are needed. Saskatchewan proposes that the provision for pool periods of less than a year be eliminated and that the definition of a pool period continue to be the crop year.

As for excluding and adding crops, sections 45 and 47, which define the process for excluding crops, should include a parallel process to add crops either on a voluntary basis or by single-desk authority. Section 45 also requires a statement that assures producers they will be notified prior to any exclusions or additions that will be allowed time for full public discussion.

We're concerned with the support of the Wheat Board because the legislation only allows withdrawal of crops and does not provide a process whereby producers could put forward a rationale and possibly be able to add crops, or also to have the Wheat Board do this on a voluntary basis.

As far as the capital fund is concerned, the Government of Saskatchewan would like to see further discussion of a provision that is not in this bill. This provision would give authority to the Canadian Wheat Board to establish a capital fund to make capital investment and enter into joint ventures. Other major private sector players in the world market, and now even the Australian Wheat Board, are using this capability as an effective part of their marketing strategy.

The Wheat Board must be given the tools to remain competitive in a changing world market. In this way, we think the board would be given equal opportunity, as are the other players in the industry, to secure markets through capital investment and contracts.

The Government of Saskatchewan is aware that producers want assurance that the majority of directors to the board be elected. Producers want this assurance written into legislation, and we support this call. And it is only fair to say that given the contribution of Saskatchewan's grain industry, Saskatchewan producers certainly expect more than 50% of the elected directors to come from this province.

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There are a number of controversial areas we have not commented on but that are very important to producers. They are not issues that impact the basic principles of the board, but are primarily governance and financial concerns. These concerns include the removal of government guarantees on adjustment and interim payments, a contingency fund, risk management authority, and tradeable producer certificates.

It is clear from the debate that farmers want answers to questions about these issues. We are confident this committee and the new producer board of directors will listen to the concerns being raised and arrive at a reasonable resolution.

The approach to these issues will be an early test of the ability of the new governing structure to build a relationship with producers based on trust.

In conclusion, the legislation that creates the Canadian Wheat Board, equipped to meet the 21st century, must be legislation that creates a bridge. This bridge must link the experience and the success of this century's prairie agriculture with a promise that is held up to young farmers for the next century.

The proposed legislation must enable prairie agriculture to surpass its achievements and forge ahead with confidence. I suggest this can be accomplished through continuous consultation with prairie producers on the design of a new legislation. It must be democratic legislation, otherwise prairie agriculture will remain mired in controversy.

I urge you to examine and adopt the recommendations of the Government of Saskatchewan that we have put forward. Thank you very much.

The Chairman: Thank you very much, Mr. Minister, for a very clear and concise presentation.

We'll now go to questions and comments. First, Mr. Hermanson.

Mr. Elwin Hermanson: Thank you, Mr. Chairman.

Thank you, Minister Upshall, Mr. McLaughlin and Mr. Stalwick, for appearing before our committee.

I've watched with interest the Government of Saskatchewan get involved in the debate over the Canadian Wheat Board. I would just like to refer to the fact that the Western Grain Marketing Panel, which began its work in late 1995 or early 1996 and reported in 1996 to Parliament, made several suggestions that are not in agreement with your position, as Minister of Agriculture of Saskatchewan. You can understand that because the Western Grain Marketing Panel was initiated by Minister Goodale.

However, it's come to my attention that the Government of Saskatchewan, and your department in particular, did commission a producer survey on Saskatchewan Agriculture and Food, the port of Churchill and the Canadian Wheat Board, and this was commissioned in November 1995, about the same time the Western Grain Marketing Panel was under way.

It surveyed about 800 farmers in the province of Saskatchewan. I don't think the results of that survey have been accurately reflected by you, as our Minister of Agriculture in the province. It suggested that approximately 80% of Saskatchewan farmers exhibit at least some level of support for the Canadian Wheat Board.

I agree with that. I think that outstanding amount of support is accurate. I would include myself in that 80% because I, as well as my party, do support the continuation of the Canadian Wheat Board. We want to see it be able to serve our producers well into the future.

However, it goes on to ask whether the Canadian Wheat Board should change its price pooling feature to offer several price pooling periods. You've just said in your presentation that it shouldn't, but 53% of Saskatchewan farmers were in favour and only 33% opposed, with the rest being unsure.

Regarding compulsory features, the question was whether the compulsory features of the Canadian Wheat Board give it market power in the international markets. Your survey said that 75% said yes, but interestingly enough, when asked the question about whether the Canadian Wheat Board generally gets the highest prices for Saskatchewan producers, your producers said no. Only 43% said yes and 47% said the Canadian Wheat Board does not get the highest price for producers.

Then your survey went on to ask whether participation in the Canadian Wheat Board should be made voluntary, and 58% of Saskatchewan producers said yes. The majority thought the Canadian Wheat Board should be a voluntary body, again in opposition to the position taken by you, as our Minister of Agriculture.

It goes on to say that the majority of farm producers in Saskatchewan are supportive of allowing grain companies and individual farmers to sell their grain directly to the domestic food market - in other words, not through the board but directly to flour mills and malting plants, without going through the Canadian Wheat Board. Of the farmers you surveyed, 70% said domestically producers should not have to go to the Canadian Wheat Board.

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Your report says the level of support for allowing direct sale into the U.S. market was very polarized, but 50% suggested farmers should be able to market directly into the United States and 42% said they shouldn't. Again, that's not the position taken by your government.

Then it says 77% favoured the support for the Canadian Wheat Board to market additional commodities on a voluntary basis. I agree with that. On a voluntary basis, I and our party would like to see the Canadian Wheat Board be able to market more commodities.

It then asked whether the federal government should have less control and influence over the Canadian Wheat Board. That's been a big issue we've debated, and 67% of Saskatchewan farmers said the federal government should have less control and influence over the Canadian Wheat Board. I think you and I agree that this bill does not accomplish that, and I appreciate your position.

Then it asked whether there should be less control by the federal government if it meant they would no longer guarantee initial grain prices or underwrite the Canadian Wheat Board pooled deficits. Surprisingly, 56% of Saskatchewan farmers said they would still, under those circumstances, support less government involvement.

We've been told for a long time that Saskatchewan farmers, to the tune of 80%, support those three pillars wholeheartedly. Yet your own survey indicates that in fact there's support for a very different Canadian Wheat Board, a much more flexible Wheat Board, a voluntary Wheat Board. I just wonder why, as my provincial Minister of Agriculture, you haven't been a little broader in your representation of our interests on this issue.

Mr. Upshall: Mr. Hermanson, everybody is entitled to their opinion. I've certainly heard yours. It's interesting that you left out one little figure in that litany of figures you put forward, and that is that when asked whether they want to maintain the Wheat Board, 85% of producers said they did.

Mr. Hermanson: No, I said I was in that group.

Mr. Upshall: Are you a farmer, Mr. Hermanson?

Mr. Hermanson: Yes, I am.

Mr. Upshall: If you were asked if you want your cake and eat it too, what would you say? Can you keep the cake and eat it too?

I think the point here is that in the surveys, and there's been a number of them done, the response from producers is whether they can have the best of both worlds. Sure, I want the best of both worlds. That's indicated, and you can analyse and re-analyse that particular survey. But the bottom line is through a logical analysis that producers don't want to lose the board.

The fact of the matter is that I disagree with a number of the things that are advocated, whether it be freedom of choice or a degree of flexibility that would undermine the basic principles of the board. If you want to go back as far as the last advisory committee elections, where that was basically a plebiscite on pro-board versus anti-board support, all but one of those elected were people who support the board.

If you want to continue right through the Western Grain Marketing Panel hearings, we followed and monitored them. There was overwhelming support for maintaining the board and to make sure the board is not undermined by the people who say they want to keep the board but just want freedom of choice, when you know darn well that means the end of the board because it compromises the basic principles of the board.

You could interpret that any way you wish. What we've put forward here today are a number of points. We start out by maintaining the basic principles and adding some flexibility that the board needs to ensure it can compete in world markets. We go along with the government's change but would make sure it, as we agreed, will be accountable to producers in the normal democratic flow process. You should have a producer electing a representative who will elect a chief executive officer or president, and therefore that accountability would flow back down. The federal Government of Canada is a partner in this by ensuring there are guarantees by which the board can maintain its functions and operate in the best interests of farmers.

Mr. Hermanson: In response to that, Mr. Minister, I did suggest in the very first statement that 80% - you said 85% or somewhere in that neighbourhood - of respondents strongly supported the board or supported the board. I said I was in that number. I do want to see a board. You said that to then change the board would be having your cake and eating it too.

I think what you're saying is that you're smarter than the Saskatchewan farmers you surveyed. It seems like Saskatchewan farmers think they can still have a strong Canadian Wheat Board that can be a very different board - a board structured more for the 21st century than one that was structured for the 1940s - and because you and your government disagree with that position, you suddenly make light of it and say they want to have their cake and eat it too.

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I would suggest that you give some consideration to the wisdom of the farmers you're supposed to represent - that actually perhaps they're not asking for their cake and wanting to eat it too, but in fact that they think the Canadian Wheat Board can be vastly improved; that it can be voluntary, and it can serve their needs, and it doesn't need to be as tied to government, and in fact they can access particularly domestic markets without having to go through the board. We might have some pasta manufacturing in Saskatchewan; we might have some flour milling in Saskatchewan. We might have some jobs for Saskatchewan people that we're not creating under the current regime.

Mr. Upshall: With reference to pasta and milling here, you can do that right now through the buy-back provision.

Mr. Elwin Hermanson: Yes, but the buy-back is distortion. It's like loan-sharking.

Mr. Upshall: No, it isn't. I disagree with you, but anyway.... The cheapest durum, basically, in North America is in Lethbridge and Saskatoon, and its the highest quality. We have provisions through the board to allow people to purchase this grain.

I agree with you on one thing - the study. I'm not going to get hung up on our study, because as I said, you can interpret it as you wish.

Look at the recent history of the Canadian Wheat Board, and the threat to it, and the response by producers. If I was asked, as a farmer, which I am, do you want to be able to haul your grain to wherever you want to haul it to when the price is going up so you can access that market, and then, if markets start going down, do you want the security of the board to kick in and have that security...? Sure. Is it possible? No.

People understand that. It's not possible, because you can't have your cake and eat it too. You can't have the flexibility of running to and fro, to any market you want to, to dump your grain when the price is escalating and yet run back and have the security of the board when the price is declining. This is simply because by that time the board has lost its market, as it's built on quality, assuredness of supply and price pooling through the central desk. That's how we achieve that.

Mr. Elwin Hermanson: But I think what Saskatchewan and other prairie producers are prepared to do is to contract, either through the board or off the board. They're not asking to cherry-pick. They're not asking to look at the price board in Chicago or Minneapolis and say, today I'm going to sell to the open market, and tomorrow look at the board and say, today I'm going to market to the Canadian Wheat Board. They're asking for the flexibility to market one way or the other. I don't think you're prepared to suggest they should have that freedom.

Mr. Upshall: If giving a few that freedom would jeopardize the majority of people who would be using the board, then I'd say no. This is a democracy; 51% normally rules. In any democracy there are people who aren't going to be happy with the system. And they have the right to try to change that system till the day they draw their dying breath.

What I'm saying, in the position of minister in this province's government, is that you have to make a decision. We've looked at the analyses. We've looked at the processes that have been put in place. We've looked at the elections of advisory...the marketing panel. We've looked at the letters coming across my desk and the numbers that have gone to the federal government, and I'm convinced that the majority of the people understand that giving the freedom to choose would destroy the board.

If I'm wrong, then people through the democratic process will retire me. But we'll see.

Mr. Elwin Hermanson: Did you want to ask a question, Jake?

Mr. Jake Hoeppner: Yes. Mr. Chairman, I guess we're splitting some time. How much do we have left?

The Chairman: You have three minutes.

Mr. Jake Hoeppner: Mr. Minister, it's a pleasure hearing you. I would just like to ask you this. This last summer I had about nine miles of hopper cars sitting in my constituency that were being used by a farm three miles from the U.S. border. I know Americans would have loved our durum if we could have exported it to them. Farmers tried getting buy-backs on their own to export it; it was ridiculous. I've seen a winter wheat buy-back of $9.38, which was unbelievable. We now have a record carry-over of durum - the highest in 10 years - and a record carry-over of feed grain.

Why didn't the Wheat Board access that market? We were 300,000 tonnes under the 1.5 million tonnes that we were allowed under the old agreement. That's grain that has plugged up our elevator system, and should have been gone before the new crop year came in.

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Why are the pasta plants flourishing in North Dakota? There are, I think, about two dozen of them over there operating on Canadian durum.

Mr. Upshall: I'm not going to answer for the Canadian Wheat Board; you should ask the Wheat Board why. It is my understanding that the Wheat Board was accessing markets that were of equal or greater value to those markets, and they sell on a world basis.

But let me make a point here. How long do you think you're going to be able to do that? How long do you think the U.S. will leave the border open? I talked to the commissioner for North Dakota not too long ago, and he's still complaining about dumping grain a year ago.

The Wheat Board can access the market to the U.S. over a number of years without a peep. Compare the volume the board shipped into the U.S. over the last five years, and the response, to the volume that Saskatchewan, Alberta and Manitoba farmers shipped across the border in the same length of time, and the response there. The response from our U.S. farmer friends with the durum in particular - you know the response. They said, ``You guys are dumping. Get out of here.''

The point is that it won't last long. The board can move more grain into that market than we can because they can do it on a large-volume business basis, because they are a reputable seller, and it's not seen as dumping.

The Chairman: Wayne.

Mr. Wayne Easter: Thank you, Mr. Chairman. I'll share my time with Bernie.

Welcome, Minister. I find the cake-and-eat-it-too discussion interesting because it shows the difference between being in government and being in opposition. In government you have to be responsible and accountable not only to the industry we're talking about here but also to the taxpayer. In all honesty, Mr. Minister, because of that, and your position as minister, and coming from Saskatchewan where you have quite a number of crown agencies, I'm surprised at your position on the appointment of the CEO, at least. I maybe could see it in terms of the chairman of the board.

If you were the minister administering this particular bill, I couldn't imagine putting at risk the three guarantees that are there at the end of the day. There's the initial and there's the credit guarantee, which are contingency funds that really the Government of Canada is the back-up for, by taxpayer. There's the borrowing guarantee, which in the end leaves the taxpayer holding the bag as well - that's at risk in terms of the $6 billion. I just couldn't imagine you as a minister wanting to take the position of basically turning that over to a board in its entirety - a board over which you'd virtually have no say in terms of the appointment process. The act is specific in that it does say that the appointment of the chief executive officer would be in consultation with the board, so there's some protection there.

So I guess, first, I'm asking you to reconsider. Do you not think there can be a better balance than what you have proposed? We are moving from an agency of the Government of Canada to a mixed enterprise. Do you not think there can be a better compromise than what you've proposed?

Secondly, do you have any agencies of like mind at the provincial level? I know you have lots of crown agencies, but do you have any mixed enterprise agencies within this province that we could hold up as an example?

Mr. Upshall: I don't believe we have any that we would term ``mixed enterprises''. I stand to be corrected on that, but I believe we do not.

I will add something, but first let me say this. The intent of the change in governance as far as I understand - and correct me if I'm wrong - was to democratize the board. Am I wrong in assuming that?

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Mr. Wayne Easter: In part, but the board of directors still has the authority.... The minister's power in terms of appointing the CEO doesn't usurp the power of the board in terms of developing the corporate and management plan and the CEO's ability to perform the day-to-day operations. I think we're trying to look at some balance here.

Mr. Upshall: Okay, let's assume we're looking at some balance. Maybe I'm operating from the wrong principle here, but I was led to believe that the change in governance was to democratize the board, to give farmers more control of the board.

If you take that logically one step further, in any non-government enterprise the board of directors is elected by the shareholders - in this case, the people who have an interest are the producers. That board of directors then in turn elects someone from within to be the president and CEO - or could have the CEO as another person outside; there are a couple of different ways it can be done. But that is the logical accountability flow. If we're going to democratize the board, that would obviously be the way to go.

If the board was sitting there running the operations through the president and CEO, but that person was appointed by the minister, by the government, then I ask you the question, who would he or she be beholden to? The person who appointed them, or the board that is working in the interests of the farmers?

Mr. Wayne Easter: Of course it's a good question, and clearly you would be accountable to the board. I mean the minister...the board and the minister.... The minister would operate at his peril, I would think, if the board made a recommendation by strong majority vote that they could not continue to operate with this chief executive officer. We have to understand here that we are going to a new entity, and the government does have a lot at risk. The Government of Canada does have to answer to the taxpayers of the country, so you've got to find a balance in between that is fair to both.

Put it this way. What it comes down to in the final analysis - I mean, we are a committee, but we've got to go back to the Parliament of Canada. If we go back with the unequivocal position that the CEO has to be appointed by the board of directors, then what's the trade-off?

Is the trade-off giving up that guarantee and credit, which you say in your own paper amounted to $60 million last year? Is that the kind of trade-off we would want? We've got to recognize what's on the table here that we're putting at risk in terms of making that request. That's all I'm saying - let's be careful.

Mr. Upshall: I'm sorry, my formal presentation has some things in it that I didn't have in here. One of the things we brought in - and I understand where you're coming from, and we've offered another solution for that. That is, let the board of directors elect the president and CEO, but if the government of Canada thinks there has to be a tie....

I don't know why it can't just be a cooperative agreement, because the government's role is to provide the guarantees, and the board's role is to run the board to the best of its ability on behalf of the producers, to make the maximum sales and work in the trade environment. We have maybe provided a solution to that, and that is, give the minister a veto over the president and CEO.

If that person is taking this operation down the garden path, then the minister would still have the power to remove that person, but it would only be at very, very unique times when that person may not be listening to his board, or whatever. That would maybe offer part of the compromise you are looking for, and yet it would still not be an appointment by the government.

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Mr. Wayne Easter: Would you be willing to give that veto the other way? I don't want to get into a horse-trade in the committee, but would you be willing to have it operate the other way in terms of veto by the board?

Mr. Upshall: Other way, how?

Mr. Wayne Easter: You're saying give the minister the opportunity to veto a recommendation by the board. Could it operate the other way?

Mr. Upshall: No, because I go back to the basics of democracy - a group electing people to represent them or appointing a person. In this case, we have another partner, which is the federal government, providing guarantees that are essential. So if you want to democratize it, democratize it, but then give the minister the -

Mr. Wayne Easter: Okay, I'll have to turn it over to Bernie. I have just one point. You were very specific in terms of wanting inclusion of other crops. Are you making that as a recommendation?

Mr. Upshall: The process to add. We have a process to delete. Let's put in a process to add.

Mr. Wayne Easter: Thank you.

The Chairman: Mr. Collins.

Mr. Bernie Collins: Mr. Chairman, I wish Mr. Easter has let me go first, because he....

A voice: Stole your thunder.

Mr. Bernie Collins: That's right. Thank you, Mr. Minister.

What I'm concerned about - I'll use another analogy of an agency you people have structured here in Saskatchewan of which I know a little bit. I was with the Saskatchewan Health-Care Association. As we went through the process, Mr. Minister, the government of the day, of which you were a member, structured how we would set up boards. If you go back and review the boards, the boards are set up so you'd be elected, but you do have the power to appoint the chairman and vice-chair of those committees.

Mr. Upshall: [Inaudible - Editor]

Mr. Bernie Collins: No, of each of the health boards that are within the province. I'm asking you, structurally, where we see the divergence. If at one point you're saying to me, in health care I will appoint the chair and vice-chair because I need to have some connecting link through to the minister, and here I have to go to my minister in Ottawa and say, look - and what Wayne says I think has some merit - I don't for a minute believe that because in the structure we've set up, given the fact that you may want two-thirds elected to that board, by nature of appointing a CEO, we lose the democratization of the process.... I fail to see how that takes place, because I will go back to what Mr. Easter said, and I'd like you to respond.

If we use the proposal that you said, allow them to remove the fellow from the board, what I'm saying now is put him in place. They work with them on a day-to-day basis. If they feel that in the interests of the Canadian Wheat Board he or she is not doing the job, then they have the power to recommend removal. Now, how do those structures fit for you?

Mr. Upshall: As you well know, the 32 health boards do appoint their own CEO in Saskatchewan -

Mr. Bernie Collins: They appoint the CEO, but your -

Mr. Upshall: - and elect a president from within, the same as I described in the federal model. In essence, what you're saying is that through the structure we put in place we do have veto power if we wanted it, but we don't believe it's necessary to appoint them. That's all I'm saying; it's the same thing here.

Let the democratic process work. If you're going to lay it out, lay it out. I think we've never had to use the power to change the CEO, nor would we want to; but if there is a situation where you have to, you can. That's all I'm saying here. Democratize it, build in safeguards, and that will give you the confidence that your guarantee is being protected.

Mr. Bernie Collins: You did have the power, as you put it into the act, to appoint some of the people on those boards and you still do. What I am saying, Mr. Minister, is that I do not see that because the minister is asking, look, because we back-stop, because we have these other features the taxpayers of Canada have to be aware of...by putting the CEO there, what are we causing in an elected board to force it to become dysfunctional?

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If you, as a minister, put somebody in there and the rest of us were serving on that board with him, I think we'd be working in the interests of agriculture in Saskatchewan. Because you said, look, here's the CEO, we're all working in the same interests, why wouldn't you want to go with the minister having that power? I would certainly say the same to you. If you were the minister, I think you would expect that.

Mr. Upshall: As far as appointing people is concerned, you can draw a similarity between health boards, but it's different because we had to reserve the right to appoint people simply because it isn't just the patient who is involved here. You need health professionals who are varied and wide, and maybe you'd want some other people on too.

In this case it's the producers, who are a very defined group, who are electing that board. The veto would be.... I know you want to try to justify why you're doing this, and we could argue about this for a long time, but I just put forward my case. I think logically that's the way I'd do it and that's the way we're doing it in the health board as far as the CEO matter is concerned.

I don't know off the top of my head of any elected bodies where somebody else does appoint. Maybe there are. Maybe you have precedents. I'm not aware of that. Even if there were, I would disagree in saying that this is a democratic process, give yourself the protection of some control over your guarantees by a veto and let's see where it goes.

Mr. Bernie Collins: In summary, if I could -

The Chairman: Make it very brief.

Mr. Bernie Collins: When you take a look at our proposals overall, Mr. Minister, I would like to know whether in the final analysis we have at least attempted to deal with some of the issues that need to be looked at concerning the Canadian Wheat Board.

Mr. Upshall: Certainly. The Wheat Board has put forward a number of proposals it wanted to see, which I agreed with and which you've adapted - not all, like the point about the capital joint ventures and that type of thing. I think you should really take a serious look at that.

What you have to do, and I'm sure you'll have time, is an analysis of what advantage or disadvantage the board would have by having the ability to joint venture as other companies do and as the Australian board does. When you joint venture with China, let's say, and put some money in, it might help to get that contract noted for 5, 6 or 10 years. If that's going to hurt the board, then we'd better consider doing that, but I think they should do the analysis.

Mr. Bernie Collins: Thank you.

The Chairman: Mr. Taylor.

Mr. Len Taylor (The Battlefords - Meadow Lake, NDP): Thank you very much, Mr. Chairman. May I also take the opportunity to welcome the minister and thank him very much for his presentation.

Listening to the responses to questions and listening carefully to your report, I think it's very easy to see you are close to the producers of Saskatchewan and that you are interpreting their needs with regard to grain marketing very well. I'm glad you were able to pass on that information to the committee today.

Just before you sat down, Ken Sigurdson from Manitoba made a presentation here in which he said we can't divorce the context of our discussion on the Canadian Wheat Board from the broader international context of GATT, WTO and the transfer of power from producers or people to the transnational corporations.

We've seen the federal government at the international trading table in the past, and essentially we lost the Crow benefit to this international debate. Some would argue in spite of the question, and others would argue ahead of it, that in fact we didn't have to get rid of the Crow benefit when we did or we may not have had to get rid of it at all.

We're currently now in a debate about state trading agencies, and some of this discussion about Bill C-72 and the amendments to the Canadian Wheat Board Act has to do with establishing an agency that's now GATT friendly or WTO friendly, and therefore we have to do this, when in fact we haven't been asked to do this yet at all.

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From your position as a provincial minister watching the federal minister work in this regard, do you feel these amendments are simply to democratize the board and make it more friendly domestically, or are we in fact working towards a broader international agenda? While we can democratize the board inside Canada, we may have entirely lost power of marketing through the board at the international level.

Mr. Upshall: That's possible.

Let me back up as far as support for a board in the larger context is concerned, as Mr. Sigurdson was talking about. I think you have to try to be consistent in all the events you carry out as government, or at least be perceived to be. That's when you get into trouble.

If you look at the change to the act in transportation, if you look at the changes to the Canadian Wheat Board, and if you look at the international trade agreements that are constantly changing, I think there are times when there is inconsistency at the federal level. An example would be the fact that if we allow the movement of our grain to be backlogged like it is into the next crop year, it's not just $65 million we're losing for farmers; it's not just the dollars that will be lost, which will escalate; it's the problem of the board functioning in an international marketplace and maintaining its credibility.

That is why you have to have a transportation system that clearly defines everyone's roles and that has penalties for people who do not carry out their roles, because we all have responsibilities; it's in order that we may maintain the level of activity of the Canadian Wheat Board and the confidence that the Canadian Wheat Board will get our product to market in a timely fashion.

This is a long discussion, a long topic, but I'll try to be brief. I think the key here is to decide on the process for change. When that process is carried out, determine the result of that process, a barley vote. If that process says the producers agree that barley should stay, then it's over. Put something in place that says it's over. If you don't, it continues to erode the credibility of the board, because everybody around the world is watching what we're doing.

As I said, this is a very long topic. I could go on, but I'll just say those few comments right now.

The Chairman: Thank you. Elwin.

Mr. Elwin Hermanson: Thank you, Mr. Chairman. I will be brief.

Mr. Minister, I was fairly hard on you on my first go around; I'll be much kinder this time. I still strongly believe what I said before and I think it's something you should consider, but I do agree with you that the purpose of Bill C-72 and the whole issue of governance is to democratize the board. I think you've hit the nail on the head there. It's not only to democratize the board, but to make it more accountable to producers, to build a good relationship between producers - you and I - farmers, and the Canadian Wheat Board.

I would suggest that the Liberals are very much concerned with control and with patronage. That's why they want the minister to be so involved in the selection of the CEO and choosing the chairman of the board and manipulating to an excessive degree.

I would like your comment on the fact that because the minister and the government in fact do guarantee the initial price and credit sales, the minister has tonnes of power. If every director on this board were elected by farmers, the minister would have all the clout and input and control that he needed and more, under a totally democratized board.

Mr. Wayne Easter: I have a point of information, Mr. Chair.

Mr. Elwin Hermanson: Let him answer. You keep interrupting, Wayne.

Mr. Wayne Easter: There's some misleading information. Let's look at what the bill says under proposed subsection 3.92(1). It says:

3.92 (1) The president is the chief executive officer of the Corporation and has, on behalf of the board, responsibility for the direction and management of the business and day-to-day operations of the Corporation with authority to act, subject to resolution of the board

Don't say this is something it isn't.

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Mr. Elwin Hermanson: But the board also has to present a complete financial plan to the -

The Chairman: Mr. Minister, do you wish to comment?

Mr. Upshall: I'm kind of enjoying this.

The Chairman: Yes, I know. You're only going to be enjoying it for about two more minutes, because I'm going to adjourn the meeting, so if you wish to comment, please do. These people have the rest of the evening to talk, and they just may do that.

Mr. Upshall: I'd just repeat what I said earlier, that with the veto power, everybody can be happy, because we achieve what the government wants with some hands on, and yet let democracy work at the same time.

The Chairman: Mr. Minister, we want to thank you very much for taking the time to come before the committee today. We thank you for your presentation.

The committee will review the long form of your presentation. You referred to it, and said it's more detailed than the time that was allowed, so you had to make it in précis form. We thank you for that. We thank you for your cooperation and efforts to collectively improve, even more, the grain handling and marketing situation in western Canada.

Mr. Upshall: Thank you.

The Chairman: To the committee members, that completes the activities for today. We will reconvene tomorrow morning in Saskatoon at 9 o'clock.

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