AGRI Committee Meeting
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37th PARLIAMENT, 1st SESSION
Standing Committee on Agriculture and Agri-Food
EVIDENCE
CONTENTS
Wednesday, May 1, 2002
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The Chair (Mr. Charles Hubbard (Miramichi, Lib.)) |
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Mr. Howard Hilstrom (Selkirk--Interlake, Canadian Alliance) |
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Mr. Dick Proctor (Palliser, NDP) |
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Mr. Howard Hilstrom |
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The Chair |
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Mr. Howard Hilstrom |
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The Chair |
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Hon. Ralph Goodale (Minister responsible for the Canadian Wheat Board) |
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The Chair |
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Mr. Anderson (Cypress Hills—Grasslands) |
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Mr. Ralph Goodale |
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Mr. David Anderson |
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Mr. Ralph Goodale |
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Mr. David Anderson |
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Mr. Ralph Goodale |
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Mr. David Anderson |
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Mr. Ralph Goodale |
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Mr. David Anderson |
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Mr. Ralph Goodale |
| Â | 1255 |
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Mr. David Anderson |
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Mr. Ralph Goodale |
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Mr. David Anderson |
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The Chair |
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Mr. Ralph Goodale |
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The Chair |
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Mr. Ralph Goodale |
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The Chair |
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Mr. Odina Desrochers (Lotbinière--L'Érable, BQ) |
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Mr. Ralph Goodale |
| · | 1300 |
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Mr. Odina Desrochers |
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Mr. Ralph Goodale |
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Mr. Odina Desrochers |
| · | 1305 |
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Mr. Ralph Goodale |
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The Chair |
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Mr. Claude Duplain (Portneuf, Lib.) |
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Mr. Ralph Goodale |
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Mr. Claude Duplain |
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Mr. Ralph Goodale |
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Mr. Claude Duplain |
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Mr. Ralph Goodale |
| · | 1310 |
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The Chair |
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Mr. Dick Proctor |
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Mr. Ralph Goodale |
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Mr. Dick Proctor |
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Mr. Ralph Goodale |
| · | 1315 |
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Mr. Dick Proctor |
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Mr. Ralph Goodale |
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Mr. Dick Proctor |
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Mr. Ralph Goodale |
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The Chair |
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Mr. Rick Borotsik (Brandon--Souris, PC) |
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Mr. Ralph Goodale |
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Mr. Rick Borotsik |
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Mr. Ralph Goodale |
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Mr. Rick Borotsik |
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Mr. Ralph Goodale |
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Mr. Rick Borotsik |
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Mr. Ralph Goodale |
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Mr. Rick Borotsik |
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Mr. Ralph Goodale |
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Mr. Rick Borotsik |
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Mr. Ralph Goodale |
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Mr. Rick Borotsik |
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Mr. Ralph Goodale |
| · | 1320 |
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Mr. Rick Borotsik |
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Mr. Ralph Goodale |
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Mr. Rick Borotsik |
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The Chair |
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Mr. Rick Borotsik |
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The Chair |
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Mr. Rick Borotsik |
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The Chair |
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Mr. Rick Laliberte (Churchill River, Lib.) |
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Mr. Rick Borotsik |
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The Chair |
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Mr. Rick Laliberte |
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Mr. Rick Borotsik |
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The Chair |
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Mr. Rick Laliberte |
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Mr. Ralph Goodale |
| · | 1325 |
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The Chair |
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Mr. Howard Hilstrom |
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Mr. Ralph Goodale |
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Mr. Howard Hilstrom |
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Mr. Ralph Goodale |
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Mr. Howard Hilstrom |
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Mr. Ralph Goodale |
| · | 1330 |
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Mr. Howard Hilstrom |
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Mr. Ralph Goodale |
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Mr. Howard Hilstrom |
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The Chair |
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Mr. Murray Calder (Dufferin--Peel--Wellington--Grey, Lib.) |
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Mr. Ralph Goodale |
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The Chair |
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Mr. Howard Hilstrom |
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The Chair |
| · | 1335 |
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Mr. Ralph Goodale |
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The Chair |
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Mr. Ralph Goodale |
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Mr. Howard Hilstrom |
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Mr. Ralph Goodale |
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The Chair |
CANADA
Standing Committee on Agriculture and Agri-Food |
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EVIDENCE
Wednesday, May 1, 2002
[Recorded by Electronic Apparatus]
 
(1235)
[English]
The Chair (Mr. Charles Hubbard (Miramichi, Lib.)): Good morning, everyone, or maybe I should say good afternoon. It's somewhere in between at 12:30 p.m.
We would like to call our meeting to order pursuant to Standing Order 108(2), consideration of the marketing of wheat and barley.
This afternoon we'd like to welcome the Minister responsible for the Wheat Board, the Hon. Ralph Goodale, who I believe will be making a short presentation. He has two officials with him. Mr. Goodale, I'm not sure if they are presenting or just here as resources. We'd like to welcome you, and the floor is yours.
Mr. Howard Hilstrom (Selkirk--Interlake, Canadian Alliance): I have a point of order, Mr. Chairman. Yesterday we heard a presentation from one of the witnesses who's here today, Mr. Rory McAlpine, regarding whether or not the department and the government knew if lentils and dried peas were part of the U.S. Farm Bill. At that time the witness may have misled the committee in that his indication was that he didn't know. The fact of the matter is that at 10 a.m. there was this document, which is the Farm Bill Conference summary dated April 30, showing lentils and dried peas as being part of the U.S. Farm Bill. I'd just ask you today, Mr. Chairman, to caution Mr. McAlpine to ensure we receive full disclosure of knowledge the department holds and not to intentionally not provide us with full information if in fact he knew.
Mr. Dick Proctor (Palliser, NDP): Mr. Chair, on that point, Mr. Hilstrom said it came out at 10 o'clock. Our meeting was at 9 o'clock yesterday morning.
Mr. Howard Hilstrom: If we want to get into a full debate on this, Mr. Proctor, I think the department was well aware of what was in the U.S. Farm Bill because we heard testimony saying that we have been following this very closely. Minister Pettigrew has followed it, and Minister Vanclief, Mr. Hedley, and Mr. Ralph Goodale have been following it. To stand there before us in committee yesterday and say they didn't know what was in that bill is ludicrous, to say the least.
The Chair: I would have to look at the transcripts. But it's quite a serious accusation to say that a witness deliberately misled the committee. When you say “personally knew”, you're looking at something very specifically. I'll ask the clerk about this, and we will review the transcripts. We'll take your point of order under advisement. Are you satisfied with that?
Mr. Howard Hilstrom: Just to be clear that he may or should have known with the testimony that was given that they had been following the U.S. Farm Bill very closely.
Thank you, Mr. Chairman.
The Chair: Thank you, Mr. Hilstrom.
Sorry, Mr. Goodale.
Hon. Ralph Goodale (Minister responsible for the Canadian Wheat Board): Mr. Chairman, first of all, I would like to make an observation. It's not in any way to comment on the committee's other business, but I have, over the years, followed what is an extraordinarily convoluted policy-making process through the U.S. Congress when it comes to agricultural matters. When it comes down to the last stages of the conclusion of deliberations in the House and in the Senate, with the conference that goes back and forth between the House and the Senate, and then the commitment of all of that to writing, I can certainly say it does lend itself to some misunderstanding along the way.
These issues are related, for example, to what is or what is not subject to some element of the U.S. Farm Bill and to perhaps this more problematic question: at what rate might a particular program in the U.S. system apply?
I think it is fair to say that everybody around this table has the best interests of Canadian agriculture at heart.
We are faced with an enormously challenging set of circumstances made even worse by the conduct of legislators in the United States. I for one would certainly want to focus on the substance of how we, on this side of the border, can do our best for Canadian farmers. In that regard, we all need to pull together as strongly as we possibly can.
Mr. Chairman, with me today, of course, are Mr. McAlpine and Mr. Howard Migie from the Department of Agriculture and Agri-Food.
I apologize for my voice. As some colleagues will know, I've been fighting a bout of laryngitis for the last few days.
Perhaps I could begin with some opening comments, and then, as always, I look forward to the questions of members of this committee.
As some members of this committee have already observed, one of the most recent events in relation to the Canadian Wheat Board per se is, of course, the completion and publication of the special audit, which was conducted over the last number of months by Canada's Auditor General. I think a couple of key points need to be noted.
First of all, while the idea of the Canadian Wheat Board being examined by the Auditor General was first set forth in the new governance legislation enacted by Parliament some four years ago, the actual examination that was undertaken turned out to be far more extensive than what was required by the new law. The broader scope of the Auditor General's work resulted from an agreement between the Auditor General and the Canadian Wheat Board's board of directors. They voluntarily went further than they were required to go under the law.
Secondly, the audit report was fully and immediately in all of its detail made public. It was posted on the Internet. The law did not require that disclosure. Again, it was voluntarily undertaken by the CWB itself. Subsequently, the audit report was formally tabled in Parliament, as members of this committee will know, and it was the subject of a series of public meetings across the prairies, convened by the CWB board of directors.
I think while these points are related to process, they do help to demonstrate that the CWB is striving to be more democratic, more open and transparent, and more accountable, as contemplated by the new governance legislation. That, in part, is what the new legislation is all about.
The Auditor General concluded, on the substantive side, that the financial accounting and reporting systems of the Canadian Wheat Board were managed economically and efficiently. The Auditor General also noted that the CWB had a solid reputation as a strong and capable marketer of quality grains. Its key strengths included very good intelligence and market information, well-developed annual sales strategies and plans, competent and tough negotiators, and good relations with customers. These were obviously very positive observations.
The Auditor General also found certain deficiencies in relation to CWB governance, strategic planning, performance measurement and reporting, and information technology.
I would expect, Mr. Chairman, and I know farmers would expect, that the board of directors will take all of the Auditor General's comments, both the good and the bad, with equal seriousness. The identified deficiencies must be corrected, and I look forward to the timely publication of the directors' plan for doing so.
 (1240)
Another recent development pertaining to the board is, of course, the latest chapter in the ongoing saga of American trade harassment and abuse. I'm referring, of course, to the process launched in 2000--and I would note that was an election year in the United States--by the North Dakota Wheat Commission, whereby that most protectionist organization sought to cut off Canadian wheat sales into the United States using section 301 of the U.S. Trade Act as the procedural framework.
The whole thing started with yet another wheat investigation by the U.S. International Trade Commission, as ordered by the then Clinton administration, specifically to satisfy certain election-year pressures.
While this was the first investigation of Canadian wheat specifically under section 301, in substance it was based upon exactly the same allegations that have already been investigated no fewer than eight previous times by various organs of the U.S. government since 1990. The result of each and every one of those previous American investigations has been to vindicate Canada and the CWB as fair traders acting consistently within all of Canada's international obligations.
Thus it came as no surprise that after some 16 months of study, this most recent section 301 U.S. ITC report again confirmed that Canadian wheat exports are not underpriced relative to U.S. wheat, we do not overdeliver on quality, and there is again no evidence of any unfair trade practice.
So the score, Mr. Chairman, is now nine to nothing in Canada's favour. What's disappointing, indeed infuriating, is the signal from the now Bush administration in response to the U.S. ITC wheat report that, notwithstanding the substantive findings favourable to Canada, the United States will continue a pattern of wilful harassment and abuse. The U.S. administration has not taken any direct action at the border, such as a tariff rate quota, as demanded by the North Dakotans, for example, because they know on the basis of their own evidence and analysis that it would be downright illegal. But they are taking steps to launch further examinations and studies and procedures and to otherwise consider their options, again pandering to very localized hot-button politics during a U.S. election year and lacking the fortitude to simply state the facts, which are that the North Dakotans do not have a case.
It's more convenient to blame all of their woes on some phoney foreign bogeyman--Canada and the CWB, for example--rather than face the reality that much of U.S. agriculture has become uncompetitive, high-cost, extremely distorted by government programs, and entirely dependent on subsidization.
The Americans are now poised to do even more damage with their new U.S. Farm Bill. It will increase American subsidization. It especially increases some of the most trade-distorting U.S. programs, and it extends subsidy damage for the first time to some pulse crops markets.
We have opposed, and will continue to oppose, these wrong-headed U.S. policies through officials at all levels in several government departments, through our diplomatic offices, through deputy ministers and ministers, and through both the Deputy Prime Minister and the Prime Minister, in all of our direct contacts with the United States government.
Mr. Vanclief will be at this task again later this week in meetings here in Ottawa with his U.S. counterpart, USDA Secretary Veneman. One of the most ironic and perhaps troubling dimensions of this is that the course in which the United States seems to be persisting with the U.S. Farm Bill is eroding U.S. credibility in its position with respect to the WTO negotiations on agriculture. It is not walking the walk in Washington with the same talk it delivers in Geneva. There are fundamental inconsistencies.
American and European subsidies aggravate what is already an unhappy, downward, long-term trend in some basic raw commodity prices around the world. What we need is a boost and a change that truly distinguishes our Canadian farm output and contributes real and unique value in world markets for Canada.
 (1245)
At the same time, we need to better come to grips with the whirlwind of unprecedented change in so many ways that is swirling around farmers and rural communities: the inexorable march of science and technology, for example; globalization; rising production costs and declining margins; ever more exacting consumer demands; concerns about food safety and environmental integrity; a perverse and changing climate--among many other things.
For all of these reasons, Mr. Vanclief, the Government of Canada, and federal and provincial and territorial counterparts are now engaged in extensive consultations by various means in various fora to seek advice about a new agricultural policy framework, to change some old paradigms, and to lay the foundation for a more prosperous and sustainable future for Canadian agriculture. I have no doubt, Mr. Chairman, that members of the committee will be pursuing the detailed progress with respect to an agricultural policy framework with Minister Vanclief.
In the meantime, we all need to consider what is appropriate in terms of our responses respecting certain immediate issues, such as, for example, the U.S. Farm Bill--the details of which have only become clear in the last 48 hours--and other pressing issues, such as, for example, in some parts of western Canada, the impact of what appears to be an impending drought of very significant proportions.
I certainly take all of these issues seriously. I'm absolutely convinced that the officials within Agriculture and Agri-food Canada do as well, together with all my colleagues in cabinet. I would welcome a dialogue with members of this committee about how we can constructively engage in doing our best job possible for farmers in this country.
Thank you, Mr. Chairman.
The Chair: Thank you, Mr. Goodale. David, are you going to...?
Mr. David Anderson (Cypress Hills--Grasslands, Canadian Alliance): Thank you, Mr. Chair. Thank you, Minister, for coming today.
You are here today as the minister in charge of the Canadian Wheat Board. As the minister responsible for enforcing the Canadian Wheat Board Act, you appoint a third of the directors to the board; you appoint the president and chief operating officer to the board; and although you've made declarations to the contrary, you really control the Canadian Wheat Board.
The winds of change are blowing in western Canada. More than ever, there's an increasing demand for a voluntary marketing system. We see them in a number of areas and examples. Polls consistently show two-thirds to 80 percent of farmers want to have a voluntary marketing board. The agriculture committee travelled extensively. We heard from many farmers that they would like some choice in their marketing.
In Vulcan, six out of eleven had a vote. Six of eleven farmers who voted there wanted to have a voluntary marketing system. In the last election for Wheat Board directors, over half the permit book holders voted in favour of voluntary marketing candidates.
In the Alberta legislature right now, Bill 207, which is a private member's bill on creating a voluntary wheat board situation in Alberta, is already in second reading, and in Ontario the Ontario Wheat Board allows producers to market outside the board.
I guess there are other things involved as well--things with export permits and buy-back schemes that are not equitable across Canada. But just given that there is so much demand in western Canada for a voluntary board, I'm wondering, what are you doing as minister responsible for the Wheat Board to ensure that the Canadian Wheat Board can survive as a cooperative and a voluntary agency?
Mr. Ralph Goodale: Mr. Anderson, I'll say two or three things in response to your comments and your questions. First of all, in the legislation that was enacted by Parliament in 1998--Bill C-4--which made the most fundamental changes in Canadian Wheat Board governance ever in history, the legislation is very clear that all the power and authority of the Canadian Wheat Board is vested in the hands of its directors.
Two-thirds of those directors are directly elected by farmers themselves. That is clearly a controlling majority in the hands of farmers. This, I believe, has achieved a significant degree of democratization and a significant degree of increased accountability, which is extremely important for the future of the Canadian Wheat Board.
 (1250)
Mr. David Anderson: May I ask you a question? Why did you feel it necessary, then, to retain control of a third of the board of directors if you felt the organization needed to be farmer-controlled? Did you not trust the farmers with it?
Mr. Ralph Goodale: We had this discussion in detail at the time Bill C-4 was going through the committee. I see some veterans of that debate around the table who will know the pros and cons of this argument.
The Government of Canada is involved with the Canadian Wheat Board in relation to certain financial matters. Obviously, it is important for taxpayers to be safeguarded in relation to those financial matters.
Mr. David Anderson: Can I interrupt you? I understand this aspect, but there is a change coming in western Canada, whether you realize it or not. You once were from there, and still represent a riding there, but if you do not make some changes and you're not willing to move towards a situation where you have a voluntary cooperative structure there, you will be responsible for the destruction of the Canadian Wheat Board.
My question to you again is, what are you doing to ensure that it will survive as a cooperative voluntary agency once these changes that are coming are made?
Mr. Ralph Goodale: The fundamental thing, Mr. Anderson, is with the democratization of the Canadian Wheat Board, with all of the power and the authority of the Canadian Wheat Board vested in the hands of the directors, with two-thirds of those directors elected directly by farmers, not appointed by government, the shaping of the board, its marketing policies, its methods of operation, the degree to which it is accountable, the way it responds to changing circumstances in western Canada--these are all in the hands of those directors. The kinds of messages that you have referred to here are messages the board of directors, as the people who are legally responsible, need to fully hear and take into account. It is not so much for politicians and bureaucrats to do that shaping for the future; under the new legislation, farmers do that shaping through the people they elect to the board of directors.
Mr. David Anderson: Are you saying, then, that when a majority of pro-choice directors come onto that board you will not in any way interfere with the decision to open up that board to a voluntary marketing system?
Mr. Ralph Goodale: If that is the democratic will of farmers, farmers have that right, yes.
Mr. David Anderson: You still control five appointees. You control a third of it. You know if you can keep the other 10 people split in half, you have control over that board all the time. You always will, the way the situation is set up.
Mr. Ralph Goodale: Mr. Anderson--
Mr. David Anderson: It consistently prohibits us from being able to process our product in our part of the country.
You talked about needing to apply “unique and real value” to our crops. The particular way to do that, especially when crop prices are low, don't you think, is to allow people to process them, to produce a finished product with that low-cost raw product, and then from that to go into the marketplace with their finished product? That's how people succeed. Your system, which you continue to uphold, prohibits people in my part of the world from being able to do that.
Can you tell me why? What is the advantage of doing that, holding people back from that? We spent some time in Ontario. They've developed a hard red spring wheat industry in seven years. They're very happy with the way their processing is going. It's interesting that this has just happened since the demise of the Crow.
Why can't western Canadians do that same thing?
Mr. Ralph Goodale: Mr. Anderson, again, there are several questions there. Let me deal with each one of them in turn.
You questioned pretty directly the integrity or the bona fides of the five people who are appointed by government. I made the commitment when these appointments were first made three or four years ago that they would be based upon quality, on bringing personal characteristics and expertise to the director's table that might not otherwise be there through the election process. Certainly I have received only extremely positive feedback about the role the five government-appointed board members have played over the last three or four years.
I can tell you that neither before nor after Bill C-4 have I ever exercised the authority that is notionally in the act for ministers to give directions to the Canadian Wheat Board. I didn't exercise that power before Bill C-4 and I certainly have never exercised it since, because I believe very strongly that the power is vested in the hands of that board of directors and they are there to make the decisions.
Now--
 (1255)
Mr. David Anderson: Can I ask you a question?
Mr. Ralph Goodale: Let me answer your previous question.
Mr. David Anderson: This is to deal with what you just said. Who then authorized, using the RCMP, Customs and Revenue, and the powers of the Canadian Wheat Board, going into people's homes, to raid their homes, to lock them up and put them in jail? Who was in charge of that operation that put farmers in western Canada behind bars?
Mr. Ralph Goodale: You're confusing a couple of things here, Mr. Anderson. In terms of the structure and the operations of the Canadian Wheat Board, which is what I've been referring to, there has never been an engagement on my part instructing the board as to how to conduct itself.
In the case of the legal matters you have referred to, in those cases there were allegations that laws or regulations had been violated and they were appropriately prosecuted under the law.
Mr. David Anderson: The laws were violated not--
The Chair: Mr. Anderson, I have given you a lot of liberty. You've had over eight minutes.
Secondly, when the witnesses come, I think we have to be careful to treat them with respect, and usually it should go through the chair.
Odina.
Mr. Ralph Goodale: Mr. Hubbard, there's one question outstanding, amongst several there about--
The Chair: I'm sorry, Mr. Minister, but I have to follow my own guidelines on this.
Mr. Ralph Goodale: Let it be known, though, I imagine it is because of time, not unwillingness.
The Chair: You're right, and we may get back to that.
[Translation]
Mr. Odina Desrochers (Lotbinière--L'Érable, BQ): Mr. Chairman, given that this is a far more delicate matter as far as the West is concerned, I'll let Mr. Goodale use my time to answer Mr. Anderson's question.
[English]
Mr. Ralph Goodale: I think the question I was referring to had to do with value-added processing. And obviously I believe that further diversification, further value-added activity, further progress up the processing chain can very much be to the advantage of western Canadian agriculture. In every encounter I have had with the Canadian Wheat Board I have suggested that they need to be sensitive to the value-added and processing aspirations of western Canadian farmers and that they need to be a facilitator of that. The board believes it is in fact playing that role.
Now to be consistent with my previous position, Mr. Chairman, about the board's prerogative in these matters and not being subject to ministerial direction or control, I would invite the committee, as you may already have done, to hear directly from the Canadian Wheat Board in terms of its initiatives in relation to value-added activity. What is it doing, and to what extent is it succeeding in those objectives to foster value-added activity?
I have had the opportunity to meet with producers in western Canada, as you might expect, who are very keen on the advancement of value-added, as I am. One of the impediments that we have discussed is the ability or lack of ability of producer-owned enterprises, whether they be new generation co-ops or other enterprises that may wish to engage in value-added processing, to get access to markets and specifically shelf space in supermarkets so that they're in the face of consumers. It's one thing to bring the raw product in the door and to process it or further process it into a value-added product. The real crux of the matter in terms of turning a profit and being successful and reflecting those dollars back to farmer-owners at that kind of an enterprise is being able to have shelf space in supermarkets so that your product is in front of consumers.
This is one of the most significant challenges that we have to find a way to overcome. Not only are we concerned about the front end of that chain, where the raw product comes in the door, gets milled into semolina and processed into a pasta product, for example, but we are also concerned about how we then take that pasta product and get it on the supermarket shelf so that Canadians and other buyers around the world are buying that product from the Canadian farmer. That marketing plan is a critical ingredient that thus far is not fully developed.
So there are several things we have to tackle, not just one.
· (1300)
[Translation]
Mr. Odina Desrochers: Mr. Chairman, how much time do I have remaining? I never thought Minister Goodale would need five minutes to answer Mr. Anderson's question.
Mr. Goodale, my question for you is as follows: Are you confident that the Canadian Wheat Board will be able to comply with all of the WTO rules? I'm asking the question because we know the Americans bristle at the thought of any organization subsidized by the state.
During meetings with the Cairns Group, I noted that this was also a sensitive issue for New Zealand and Australia. Are you confident that given its present structure and administration, the Canadian Wheat Board will be able to comply with all of the stages as required by the WTO?
[English]
Mr. Ralph Goodale: Certainly, looking at the history of trade negotiations in relation to agriculture, they're no picnic and they're no piece of cake, so one can take nothing for granted. I think we have to be vigilant and vigorous and aggressive in defending those Canadian institutions, those Canadian ways of doing things that we believe are fundamental not only to our current way of life but to our future way of life. Our marketing systems are in that category.
The Americans, and some others, have made it no secret that they intend to attack what they call state-trading enterprises aggressively. The fact of the matter is I have been asking successive U.S. administrations, since I was first elected in 1993, to give me one tangible fact that demonstrates that the Canadian Wheat Board is unfair or transgresses any of our WTO or NAFTA requirements. I'm still waiting for an answer. I get a lot of anecdotes out of the coffee shop in Minot, but I don't get a case that will stand up under international scrutiny. As I pointed out, these allegations against the Canadian Wheat Board have been investigated now nine times by various agencies of the United States government, and in every case the Canadian Wheat Board has been vindicated as a fair trading agency.
So the facts are on our side, but that doesn't mean you should automatically assume victory in the international arena. We're going to have to be very careful and work very hard to defend our position.
[Translation]
Mr. Odina Desrochers: I have one very brief question. You spoke eloquently of past events, but I live in the present. Therefore, I'd like to know if you feel confident that we will survive the negotiation process, given the current operations of the Canadian Wheat Board.
· (1305)
[English]
Mr. Ralph Goodale: We intend to be successful. You're asking me, will the Toronto Maple Leafs defeat the Senators or will the Senators defeat the Maple Leafs? Each side intends to be successful, and we're going to work darn hard at defending Canadian rights and interests in every international trade forum.
The Chair: Mr. Goodale, I don't know if he'll hire you as a lawyer or not after you gave him that answer.
Mr. Duplain.
[Translation]
Mr. Claude Duplain (Portneuf, Lib.): Mostly we hear about the Canadian Wheat Board when Western Canada is involved, and that's understandable. I'm new to this committee and perhaps I'm not familiar with issues specific to Quebec, in so far as the Canadian Wheat Board is concerned. Can you enlighten me a little?
[English]
Mr. Ralph Goodale: The Canadian Wheat Board's jurisdiction applies to a certain designated area that is defined in the legislation itself. That designated area is essentially the three prairie provinces and the Peace River area in northern British Columbia. That is the designated area to which the Canadian Wheat Board applies.
The board does, however, have certain limited national powers that apply across the country. One of those is the issuance of export permits for any entity or individual in the country that wishes to export wheat or barley. That is a requirement that the Canadian Wheat Board discharges nationally. But for the most part, its powers relate to that designated area in western Canada.
[Translation]
Mr. Claude Duplain: When I asked the question, I rather expected that that would be your answer.
When the committee held public hearings in Saint-Hyacinthe, grain producers, and organic wheat and barley growers in particular, told us that they could export wheat without having to go through the Canadian Wheat Board. Is that in fact true? If so, do Quebec wheat growers enjoy some kind of favoured status?
[English]
Mr. Ralph Goodale: They require an export licence from the Canadian Wheat Board. That applies to any export of wheat or barley to anywhere from Canada. So the Canadian Wheat Board does not actually do the transaction for them, but they require an export permit from the Canadian Wheat Board in order for them to do the transaction.
[Translation]
Mr. Claude Duplain: My final question concerns the Canadian Wheat Board and your views on certain matters. There is still talk today in the US of protectionism vis-à-vis the Canadian Wheat Board and Canada. Protectionism is an ongoing topic of conversation in the United States, whether the focus is on softwood lumber, or, as is increasingly the case today, on agriculture. Problems have surfaced, and will continue to surface. Personally, how would you resolve this dilemma? Do you see an end in sight? Where does Canada's strength lie? Is any action on our part warranted?
[English]
Mr. Ralph Goodale: Certainly, based on their most recent conduct, one would be hard-pressed to conclude that the Americans were not protectionist, whether that conduct relates to softwood lumber or a range of other commodities, certainly agriculture, some agricultural commodities, and wheat.
The talk that comes out of the U.S. administration on trade liberalization, the new round of the WTO, better market access, bringing down subsidies, and so forth, and the talks they engage in when they get around the WTO tables in Geneva do not at all correspond to their actual conduct. When you look at something like the new U.S. Farm Bill, for example, or when you look at what they are attempting to do or threatening to do under section 301 in relation to the Canadian Wheat Board, their behaviour has all the trappings of protectionism.
That means we have to be not just vigilant but aggressive in putting forward our perspective and defending the rights and interests of Canadian farmers as well as we can in every forum around the world.
· (1310)
The Chair: Merci, Claude.
Mr. Proctor.
Mr. Dick Proctor: Thanks, Mr. Chair.
There's a bill before the Alberta legislature at the moment, and if it passes, as many suspect it will, it will have dual marketing for wheat and barley. So I'm curious to know, recognizing it's a hypothetical question, how that would impact the Canadian Wheat Board were it to pass.
Mr. Ralph Goodale: I'm not sure if I can answer that question in detail at this time. I am working on some analysis there, to see what the impact might be and how it fits or doesn't fit within the legal responsibilities of various levels of government. I would be happy to share that analysis with you at a later time, when it's done. But at the moment, I think it would be premature for me to comment on the proposed Alberta legislation.
Mr. Dick Proctor: In another area, the Wheat Board directors have indicated on many occasions that most of their customers are not interested in acquiring genetically modified wheat; there's significant resistance at the buyer level. I think we've heard that two-thirds of our current customers are not interested in it.
We get into this whole grey area of market acceptance, and I would just like to get your opinion, as the minister responsible for the Wheat Board, of whether this question of market acceptance should be given significant weight prior to any decision to register genetically modified wheat or barley in the future.
Mr. Ralph Goodale: Mr. Proctor, the time required by the various existing regulatory processes, with respect to new varieties of wheat that may be genetically modified, gives us at least two or three years during which to look at this question very carefully. I think it behooves us all to give it the very careful consideration it deserves.
The Canadian position with respect to matters of this kind has historically been based very solidly upon sound science. We have seen some countries in the world depart from that, most especially in Europe, and it has resulted in very negative consequences for Canadian producers and other producers around the world. Therefore, in how we manage this issue of market acceptability, we would not want to inadvertently play into the hands of the Europeans, who have created a whole series of politically driven positions that turn out to be disguised market barriers.
We have two things here. We obviously want to ensure we're producing products the world wants to buy. At the same time, we do not want to base our approach to that on a technique that would give support to certain techniques like those used in Europe, which turn out to be disguised trade barriers.
It's a tough question, and it's a tough set of issues. We need to be very vigorous and very astute in this two- or three-year window here to make sure that when that time expires, we have the answers that work for Canada and for Canadian farmers.
· (1315)
Mr. Dick Proctor: You're saying two or three years at least. I am actually hearing two or three years at most. If you listen to Monsanto, they're saying they're going to be ready between 2003 and 2005. In fact, they will probably be ready next year, and then I think a lot of indicators would come up with 2004 as the timeline.
Mr. Ralph Goodale: We don't have time to waste, either way.
Mr. Dick Proctor: Yes, right.
Specifically, it's generally recognized that the first country out of the gate on genetically modified wheat is going to pay a price in terms of market acceptance from those wary customers. We could very well be the first or at the same time as the United States. As the minister responsible, how concerned are you about that eventuality?
Mr. Ralph Goodale: I want to make sure that our scientific regime, our regulatory processes, and the other factors that go into our management of science end up, at the end of the day, with better returns for farmers, not impaired returns for farmers.
I don't pretend at this stage to have the answer to the problem. I think you're quite right in flagging it and making sure we all turn the very best intellects we can to getting this right. We obviously want the benefits of science, which can be enormously advantageous to the challenge of feeding a hungry world, but we do not want to do it in such a way that it damages Canadian farm incomes.
The Chair: Thank you, Mr. Minister.
I'm going to go to Rick from Manitoba first, and then back to Rick from Saskatchewan right afterwards.
Mr. Rick Borotsik (Brandon--Souris, PC): Thank you, Mr. Chair. I would not like to pressure the minister's voice, so perhaps his answer to this question will be fairly succinct and brief. I know how difficult it is.
A letter of April 17 from your chairman, Mr. Ken Ritter, and the board of directors from the Canadian Wheat Board, which was sent to Minister Vanclief with a copy to yourself, has indicated quite specifically that all members of the Canadian Wheat Board's board of directors are calling on the government to compensate farmers for trade injury in the amount of $1.2 billion. That comes from your chairman and the board of directors of the Canadian Wheat Board. Do you agree with that, based on the issues you just talked about with respect to the American trade and their subsidies continuing? You mentioned the support of cabinet. Has that issue come to cabinet, and do you support that issue? If it hasn't already, when it does come to cabinet, will you support that?
Mr. Ralph Goodale: I have one small correction to your preamble. Mr. Ritter was elected by farmers in his electoral district.
Mr. Rick Borotsik: Fair ball. He is the chairman of the board. I don't want to get into semantics...please, the question.
Mr. Ralph Goodale: Then he was elected by the directors to be the--
Mr. Rick Borotsik: Fine, no semantics, the question. Has it been to cabinet, and would you support it when it does come?
Mr. Ralph Goodale: I have not, at any time over the course of my tenure as a minister, commented on any cabinet agenda.
Mr. Rick Borotsik: Okay, thank you. Fair ball.
Mr. Ralph Goodale: Mr. Borotsik, let me answer your question more broadly without putting it in the context of the cabinet agenda, which you know I cannot comment on. My point is this recommendation has been forthcoming from a number of producer organizations--
Mr. Rick Borotsik: Do you support it?
Mr. Ralph Goodale: I think it has to be considered carefully. Whether it's appropriate and doable in the circumstances, I don't know at this stage.
Mr. Rick Borotsik: Okay, two other questions, if I may. You are responsible for the Canadian Wheat Board. You said in your presentation there is a real threat of drought across the Canadian prairies. Has the Canadian Wheat Board put into place a drought or business plan dealing with the projected volumes of wheat this year?
We know Saskatchewan is being affected, and it's a large producer of wheat. Is there a business plan or a position put into place where they will look at the reduced volumes and at the cost reductions from their own operations within the Canadian Wheat Board? Have you seen anything of that nature?
Mr. Ralph Goodale: Mr. Borotsik, under the legislation that was passed, the Canadian Wheat Board is required annually to file a business plan, based upon its projected business for the coming year. That business plan for the coming year has been filed and duly approved. Indeed, the financials have been tabled in Parliament.
Mr. Rick Borotsik: Does it deal with any cost or staffing reductions--if in fact there are going to be lower volumes of wheat production this year on the prairies?
Mr. Ralph Goodale: For the details of their operating plan, Mr. Borotsik, again, because I do not meddle in the affairs of the directors, I suggest that you might want to call them and ask them.
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Mr. Rick Borotsik: Okay.
You also suggested, Mr. Minister, that the U.S. doesn't walk the walk. It talks the talk perhaps, but it doesn't walk the walk.
There is a reality. The reality is that, as much as you wish to flail your arms and grit your teeth, the Americans will in fact pay their subsidies--$76 billion more within their proposed farm bill.
Based on that reality--and I know you're not the Minister of Agriculture but are dealing with the Canadian Wheat Board--I have a question that does go back to my first question. Do you see a need for other support systems to be put into place? We didn't have a very satisfactory meeting with the minister yesterday, I can assure you of that.
Mr. Ralph Goodale: With the minister?
Mr. Rick Borotsik: With the ministry staff.
Do you see a need to go beyond the $1.1 billion in the existing crop insurance program? Do you, as an individual who represents a constituency out there, see a need to go beyond that?
Mr. Ralph Goodale: Mr. Borotsik, the amount provided for support systems today is significant, as the figures from last year would demonstrate. They are something like $3.8 billion.
At the present time, we are confronted by some very tough circumstances on the world pricing front and on the drought front. I think all of us are facing a serious situation, you from Brandon and me from Regina, and perhaps me even more so because I'm from further west, where we've been watching the sky and hoping for snow and rain. It hasn't come thus far.
Mr. Rick Borotsik: Are you aware that the Ministry of Agriculture has absolutely no plans in place to deal with drought?
The Chair: Mr. Borotsik, two points. First of all, we're off the topic, and second, we're over the time.
Mr. Rick Borotsik: At the Canadian Wheat Board, it's called volume.
The Chair: I believe our terms today are to look at the marketing of wheat and barley.
Mr. Rick Borotsik: If there is no wheat, there is no marketing.
The Chair: So with that, Rick, I'll go to you, Mr. Laliberte.
Mr. Rick Laliberte (Churchill River, Lib.): Mr. Minister, I'm wondering whether, as part of what is envisioned with the Kyoto Protocol and with value-added, the Canadian Wheat Board has been looking at how wheat and barley farmers could be involved with or complementary to the potential Kyoto commitments and the benefits of carbon sinks out of Kyoto.
Mr. Rick Borotsik: Mr. Chairman, a point of order. Does that have to do with marketing? Kyoto and carbon sinks have nothing to do with marketing.
The Chair: Rick.
Mr. Rick Laliberte: No, it deals with value-added.
Mr. Rick Borotsik: Actually, it was about Kyoto and carbon sinks.
The Chair: It's a point of order, and I think it's undertaken.
I know Rick is also on the environmental committee, but we're talking about marketing of barley and wheat.
Mr. Rick Laliberte: Well, the angle of my question is whether some wheat farmers in the future will consider the benefits that could result from carbon sinks when they are making decisions on crops they are choosing--considering the high energy costs of producing wheat and barley and accessing markets. In the future, is this a decision that some wheat farmers will be making in utilizing the land and how they cultivate it?
Mr. Ralph Goodale: I think the evidence is already there, Mr. Laliberte.
Farmers are already taking that information into account and acting on it. In fact, soil scientists at the University of Saskatchewan--which have, I would think it's fair to state, some of the best accumulated expertise in agricultural science in the world--point out that around the year 2000, the prairie basin as a whole was transformed from being a net source of carbon to being a net sink of carbon. This is based on the improved farming practices that came to predominate in the basin over the last 10 to 15 to 20 years. It's a remarkable accomplishment on the part of western Canadian farmers. So the potential here is important.
Farmers are responding to the signals. I think we have to find the means to move further and faster with the best land management practices. I note that the last budget identified, for the future, the issue of land management with respect to agriculture and forestry. I would also note that under the American system--
· (1325)
The Chair: Mr. Minister, we're running really short of time. I know it's important to Canada, to western Canada, and everyone else. It is getting close to 1:30 p.m.
I want to talk about the Canadian Wheat Board and marketing. That's what we're here for today. I'm sorry.
I'm going to go back to Howard and then to Murray.
Mr. Howard Hilstrom: Thank you, Mr. Chairman.
Wheat prices have been driven down dramatically by foreign subsidies. There's been a large call for $1.3 billion under the proposed trade injury compensation program.
As the minister responsible for wheat and barley, are you supporting this compensation for wheat farmers?
Mr. Ralph Goodale: Mr. Hilstrom, I cannot give you a definitive answer to that today.
What I can tell you is that the case being made by a number of organizations deserves very serious attention in the context of present world circumstances.
Mr. Howard Hilstrom: Well, that's an answer. It's not acceptable, but it's an answer to wheat farmers. The government's own statistics have shown that this trade injury is there. I think your responsibility, as the Wheat Board minister, should be to stand up for those farmers.
We're talking around here about all the things the Wheat Board does or doesn't do under their legislation, and all that. But do you not agree that the basic fundamental question is that you are not willing, as a minister, to put the Ontario and Quebec wheat and barley farmers under the Canadian Wheat Board? You had the chance under Bill C-4 to put everybody under the Canadian Wheat Board. As a result, those farmers in Ontario and Quebec have a marketing advantage. They certainly have the option of marketing separately. They have an advantage over and above western Canadian farmers in marketing their grains.
So that's my first question: why didn't everybody get under the Wheat Board when you had the chance? If it's good for western Canadian farmers, it must be good for Ontario and Quebec farmers.
Second, in the designated region--and you know yourself--one study from the Wheat Board showed that as many as two-thirds of the farmers wanted to have a voluntary marketing board, with the option to opt out. But even if 50 percent plus one want to have a monopoly and 49 percent don't, what gives you the right to tell 49 percent of farmers, contrary to every free enterprise, capitalist system in this country that everybody else operates under, they cannot market their own grain?
I know you have the legislative right, but why would you do that? Why would you force 49 percent of the farmers into something they don't want, thereby disadvantaging them?
Mr. Ralph Goodale: Mr. Hilstrom, on your first point about the off-board marketing option that exists in Ontario with the Ontario Wheat Producers' Marketing Board, the decision to create that option was duly taken in a democratic manner--
Mr. Howard Hilstrom: That's not my question.
Mr. Ralph Goodale: Mr. Hilstrom, do you want an answer or do you want an argument?
· (1330)
Mr. Howard Hilstrom: I want you to answer my question. Why didn't you put Ontario and Quebec wheat and barley farmers under the Canadian Wheat Board under Bill C-4 when you had the chance?
Mr. Ralph Goodale: There are fundamental distinctions and differences in the marketing characteristics of wheat in Ontario and Quebec compared to western Canada. One is just sheer volume and size. The other, of course, is the type and grade of wheat that is produced and the amount of output the domestic market consumes compared to the international market.
But your question, Mr. Hilstrom, was based upon your preamble, and not to dwell on our retired friend, Herb Gray, too much, but your preamble was not accurate. The off-board option in Ontario was created by the duly elected board of directors of the Ontario Wheat Producers' Marketing Board. The duly elected producer-directors of the Canadian Wheat Board have the same right to implement that option if it is their judgment that that is the appropriate thing to do. They have that power under the Canadian Wheat Board Act.
Mr. Howard Hilstrom: Mr. Chair--
The Chair: Howard, your time is up.
Murray.
Mr. Murray Calder (Dufferin--Peel--Wellington--Grey, Lib.): Thank you very much, Mr. Chair.
Minister, I was involved in the process on Bill C-4 when we were looking at getting ten directors and making it a mixed entity. Since that has happened, has the board had a chance to take a look at the Ontario example, whereby if a grower intends to opt out, the grain he has grown can never be sold through the Ontario board? That's the way it is set up.
I realize I'm comparing apples and oranges here, but has the board looked at the Ontario example, and are they flexible enough to adopt something like that?
Mr. Ralph Goodale: Mr. Calder, I'm sure they have had the Ontario situation drawn to their attention. I'm sure that the Canadian Wheat Board has done some analysis with respect to how the Ontario Wheat Producers' Marketing Board operates on this front and on several others. In terms of the detail of their analysis, again, I would invite you to call the Canadian Wheat Board before this committee and question them on their analysis of whether they think it works or not, and if not, why not?
For my part I have always encouraged the directors to be proactive, to be creative, to think about the long term, and to think about putting dollars in the pockets of farmers and how they can innovate and adjust their conduct and their operations to bring the very best benefit to the producers on whose behalf they act. I would hope that all of us would encourage them to pursue that kind of mentality. If that means fundamental change in some areas, then so be it. But again, it must not be driven by politicians or bureaucrats but by the farmers themselves, who must control that board of directors.
The Chair: Howard.
Mr. Howard Hilstrom: I have a question too, and it's a very small one. Why won't you let the farmers vote with their trucks in western Canada?
I'll make one last point. I was in the RCMP in Winnipeg, and I know who controls the Canadian Wheat Board because our orders came straight from the Department of Justice to go and arrest those farmers. That came from you and your department in Ottawa. That did not come from the Canadian Wheat Board. You, sir, are still in charge of the Canadian Wheat Board, and your abdication of your responsibility is questionable.
My short question is, do you think the Canadian Wheat Board should be advocating on behalf of farmers on every issue the way they're doing? I have the last letter from the Canadian Wheat Board to Minister Vanclief advocating things on farm issues that have nothing to do with the Canadian Wheat Board. Do you support the Wheat Board doing that kind of stuff, letting them do what they want?
The Chair: As you can see, Mr. Minister, we do have certain members and some parties in the House who have serious concerns about the Wheat Board. As a committee, we also have to acknowledge the concerns of people who want to, as Mr. Anderson said, have added value to a product, probably from their own farm or their own industry. We get that from the organic group and we get that from some of the small-time millers who would maybe like to do some work in terms of having another look at the present system, where they sell and buy back and get a lot of red tape and added cost.
Overall, I'd like to say thank you for coming today. We are probably not a great deal clearer on this in terms of differences in the House between philosophies, but you did give us very detailed answers. I think in some cases they might have been shorter. I think “democracy” might have been one, yes or no might have been another possibility, but we did appreciate your use of the English language to explicitly give us your answers on how things worked.
On behalf of the committee, I'd like to thank you for coming today. Thank you.
· (1335)
Mr. Ralph Goodale: Mr. Hubbard, thank you for the opportunity to appear. An allegation, though, was made in the last question by Mr. Hilstrom, one I don't think can go without a response. The allegation was that I personally directed police forces in the discharge of their responsibilities with respect to certain events. No such instruction was ever issued by me--
The Chair: Mr. Goodale, I did hit the gavel, but I want to get that on the record. For that reason, I would like to make sure that it was part of the transcript, and Mr. Minister, you may continue.
Mr. Ralph Goodale: I appreciate that, Mr. Chairman. I just want to make it clear.
Mr. Howard Hilstrom: You weren't involved in the decision either? You weren't involved in any cabinet discussions on that? Were you involved in any discussions on that, Mr. Minister?
Mr. Ralph Goodale: Mr. Chairman, obviously Mr. Hilstrom is trying to leave an impression here that is categorically wrong. I would be pleased to respond in detail to the committee and lay this out. As Mr. Hilstrom knows, being a former police officer, what he is alleging here is simply wrong.
The Chair: Thank you, Mr. Minister, and with that we'll adjourn the meeting.