:
Ladies and gentlemen, we thank the members of the Standing Committee on Agriculture and Agri-food for receiving us.
Let us speak of the role of the Fédération des producteurs de pommes de terre du Québec. The Fédération des producteurs de pommes de terre du Québec (FPPTQ), an affiliate of the Union des producteurs agricoles (UPA), represents Quebec's 392 potato producers. Producers are grouped into four categories, according to their principal market, notably the fresh or table market, pre-peeled (French fry) processing, potato chip processing and seed potatoes.
The role of the Fédération is to promote potatoes, to defend members' interests and to develop the production. In addition, as a producers' marketing board, the Fédération manages and administers the Quebec potato producers' Joint Plan, by virtue of the powers conferred by the Act respecting the marketing of agricultural, food and fish products.
What are the major issues?
The discovery of golden nematodes in the municipality of Saint-Amable, along with the subsequent creation of a regulated area and a listing of conditions for the movement of regulated products, have caused an increase in production costs not covered by existing programs and the loss (or even the absence) of income for 20 farms in the municipality, on an area of approximately 1,250 hectares under potato production.
Although all the parties involved agree that these farm businesses should be compensated through a disaster assistance program, which would be better adapted and separate from the income stabilization program, no one is able to respond rapidly and immediately, within the framework of existing programs, to the urgent cash-flow problem.
What are the facts?
The golden nematode is a quarantine pest requiring compulsory disclosure under the Plant Protection Act. The golden nematode is of no risk to the safety and wholesomeness of potatoes but its presence can cause yield losses in the order of 80%. Furthermore, it can remain dormant in the soil for many years while waiting for a host plant such as potatoes, tomatoes or eggplant in order to reproduce.
The efforts of the Canadian Food Inspection Agency (CFIA) resulted in the rapid designation of a regulated area and the re-opening of the borders to international trade. Officially, trade resumed this morning. In fact, we have been informed that the first delivery truck arrived in the United States this morning. As a result of its work, losses to producers and exporters located outside the regulated area were limited.
In Saint-Amable, producers' efforts and cooperation facilitated the task of the CFIA agents. In total, 20 farms are affected by the restrictions. However, these farms specializing in potato production will no longer be able to grow potatoes in the regulated area without authorization of the CFIA.
There is an urgent need for short-term cash flow.
For some farms, their last potato sales date back to March 2006. Since then, they planted their crops in the spring managed them over the whole summer. Some of the affected producers are young farmers dealing with high debt loads. For all of these farmers, the discovery of the golden nematode constitutes, in itself, a cause of great stress.
Because of pressures by suppliers and financial institutions, the refusal of buyers to take their products and the strain of providing for their basic needs, the situation has become intolerable for the affected families. The region's agricultural producers have grouped together to request immediate assistance to at least pay bills that are over 90 days overdue and to cover the cost of groceries.
None of the existing programs can provide immediate aid. Some producers are in a state of despair. Industry representatives fear the worst and are requesting immediate support before irreversible actions are taken. in this regard, a psychologist is meeting regularly with the producers to give moral support and to counsel them through this crisis.
For the moment, representatives of different levels of government admit their helplessness to support these producers through the existing programs such as the CAlS program, the advance payment program and the various financing programs that require loan guarantees.
The producers of the regulated area have grouped together under the name AMA-Terre Inc. The group is calling for immediate assistance white waiting for a disaster assistance program to be put into place; assistance which it evaluates at $50,000 for farms with less than 60 hectares (150 acres) and $75,000 for the others.
As an example, a farm with 60 hectares of potatoes would generate sales in the order of $250,000 to $450,000. This advance should suffice as long as an ad hoc program is implemented within one month.
If more time is required to put a program in place, the advance should be adjusted accordingly, to include direct costs related to the production, which are about $4,000 per hectare. On the average, this amount represents approximately $240,000 per farm, as shown in the table on the following page.
As the table shows, total direct costs amount to $3,991 a hectare. This represents the total production costs. For a 60-hectare farm, this represents an average total cost of $239,000, almost $240,000. It should not be forgotten that most of these farms did not make any sales in spring 2006.
With regard to the 2006 crop, as a first step, the Fédération, the UPA, Agriculture and Agri-food Canada (AAC),the ministère de l'Agriculture, des Pêcheries et de l'Alimentation du Québec (MAPAQ), the CFIA, the Financière agricole du Québec and other producer and distributor associations have all committed to solve the 2006 dilemma.
Over the years, potato producers have become specialized into four different market categories and produce varieties that correspond to industry needs. Using the powers of the Joint Plan, the Fédération, along with committees for each category, have negotiated marketing agreements with the Association des emballeurs de pommes de terre, the Association des transformateurs de légumes frais ( (ATLF) and with the chip processors. The ATLF agreement, in particular, makes provisions for supplying a minimum of 60% of the processing plants' needs, the balance being left for speculation on the open market.
Over and above the seed category, which represents about 9% of Quebec's potato production area, Table 2 shows details of the various potato market categories. Potatoes for in-store sales represent 53% of the market, potato chips account for 20% and pre-peeled account for 18%, while seed crops account for 9%. This is shown in Table 2, in addition to the market and varieties.
In addition, the Canadian Food Inspection Agency (CFIA) and the American Department of Agriculture (USDA) have come to an agreement on a protocol to reduce the commercial repercussions of the potato cyst nematode discovery to a minimum. This protocol provides for the creation of regulated areas and the setting of conditions for domestic and international movement of regulated products coming from these areas.
According to this agreement, only potatoes coming from a field declared “uncontaminated" from nematodes may be marketed to the fresh or table market. Potatoes coming from contaminated fields must be processed in approved facilities. Presently, analyses have confirmed the presence of nematodes in most parts of the fields, notably on 304 hectares out of a total of 404 hectares.
The potato farms in the municipality of Saint-Amable are mainly specialized in the fresh (table) market, with 62% of their potato production area devoted to this market, as shown in Table 3.
The application of this agreement would cause a significant increase in potato supply to the processing market with varieties that do not correspond to the strict requirements for cooking and size, inevitably resulting in a drastic price reduction, which would compromise the profit-earning capacity of Canadian farms specialized in this market sector.
Consequently, the advisory committee created for the management of this crisis and chaired by MAPAQ unanimously recommends the destruction of the crop in the field and in storage and to compensate the farmers at fair market value.
Regarding the limits of existing programs and the need for an ad hoc program, the CFIA offers financial compensation to producers where their herd or flock are condemned and ordered destroyed under the Health of Animals Act.
As pertains to the Plant Protection Act, although it does hot stipulate a specific amount to cover crop losses natural disasters such as the golden nematode, Article 39 of this Act allows the Minister to issue payments to cover losses suffered by producers in the designated zone. The Minister has already passed regulations authorizing compensation to agricultural producers who are faced with quarantine pests in Canada.
Consequently, the Fédération, the UPA and the other producers' associations are asking for the implementation, in cooperation with the affected groups, of an ad hoc program that will compensate the farms, while considering the following criteria: payment to cover the extra work required by the farm labour force to clean and disinfect machinery, equipment and vehicles within the regulated area, payment of 75% of the purchase price of equipment required to comply with conditions for the movement of regulated products, and compensation for the loss of value of assets, of production losses and loss of markets.
In conclusion, the has enacted a Ministerial Order under the Plant Protection Act. This Order established a regulated area of approximately 4,500 hectares, of which about 1,250 hectares are in potatoes, as well as restrictions and prohibitions on the movement of certain items, in order to combat the golden nematode infection in Quebec.
Work done over the 2007 winter will permit the evaluation of medium and long-term losses for farms located inside the regulated area and the identification of possible solutions on a case-by-case basis for each of them.
We ask that the calculation of losses be conducted by an external agency, as was the case with Quebec tobacco producers. In the very short term, the industry is urging the minister to order the destruction of the crops in the field and in storage in the regulated area, so as not to upset markets for Canadian producers specialized in processed potato production, to rectify prices above the cost of production and to ensure that affected producers, who are unable to find buyers for their produce, receive compensation.
Finally, and most urgently, the minister must intervene to send immediate cash advances to producers who are short of liquid assets. This advance should be adjusted according to the size of the farm operation and according to the anticipated timeframe for implementing an ad hoc program.
:
Good day. I would like to thank you for welcoming me here today. I am very nervous, but I’will do my best. I would like to introduce you to my group.
My name is Philippe Gemme, farmer and spokesperson for AMA-Terre. AMA-Terre is made up of producers of various products. We manage a total of 3,000 acres of potato fields in the municipalities of Saint-Amable, Sainte-Julie, Saint-Marc-sur-Richelieu and Saint-Mathieu-de-Beloeil, among others.
I am here to give you more information regarding the human drama taking place among producers in various sectors.
Each of us has to deal with the disastrous consequences of the discovery of this parasite every single day. I am weighing my words carefully. This discovery resulted in harsh emergency measures with which we have had to comply, which we have done with great diligence.
September 27, 2006 was one of the hardest days of my life. I had to announce to my region’s producers, while accompanied by Canadian Food Inspection Agency and Agriculture and Agri-Food Canada officers, that there would be a regulated area within Saint-Amable, that their lives would be turned upside-down and that our region’s economy would be severely affected.
But that’s not all. There are also extensive consequences on the youth who were here and ready to become the next generation of producers. Most of our children studied at the Institut de technologie agroalimentaire (ITA), where they underwent agricultural training. They were ready to take over our businesses. How can we tell them that their future is no longer here, in the fields where they grew up? How can we tell them that they will have to farm other crops, or even take up another profession altogether? How can we encourage them when their dreams are crumbling? All of these issues are bringing about economic constraints that will affect them more than others, both now and in the future.
Today, the region’s stores are full and none of these potatoes can be found on the consumer’s table. In addition, the golden nematode working group recommended the destruction of all remaining potatoes and financial compensation for producers for losses incurred as a result of this recommendation.
Some producers were forced to buy, with much consternation, potatoes from other regions in order to keep their food markets and their employees. We have had to suspend payments to various suppliers and financial institutions because of the obvious lack of liquidity. This is keeping us awake at night, because we take our commitments very seriously. We are here today to issue a distress call, an SOS. It is imperative that we survive what is going on right now.
Several producers have not sold anything since August, and debts are accumulating. The value of our land is plummeting and our sales are in free-fall, both for 2006 and for years to come. Our farms are threatened.
I would like to add something that I learned this morning. Approximately 80% of our land is currently infested with the parasite. On October 13, a minority of Quebec producers was unequivocally sacrificed in order to lift the US embargo. The Canadian government strongly negotiated these conditions so as to lift the USDA restrictions, while producers in Saint-Amable and the surrounding area were set aside in order to restart the Quebec economy, without negotiating short-term financial assistance.
This raises several questions. What will happen to the potato harvest in the coming years within the municipality targeted by the regulated area? What form of financial assistance will the affected producers receive in the short, medium and long term? Until now, no assistance has been offered by the federal or provincial governments and no ad hoc program has been put in place. The only program proposed was the Canadian Agricultural Income Stabilization program, or CAIS, but it is not adapted, nor is it adaptable, to the current crisis. Lastly, we would remind you that the Plant Protection Act allows the minister to order compensation in the event of such a disaster.
To conclude, since last August, several producers have not sold anything. The value of our land is dropping, our markets are ruined, our sales are in free-fall and our farms are threatened.
We are facing a veritable disaster. Faces with this urgent situation, on behalf of AMA-Terre, we are counting on your immediate support and efficiency to provide assistance to the affected producers. We are asking you to act immediately to meet the growing needs of the producers affected by the ministerial order and included within the regulated area.
Sorry for my language, I am very nervous.
[Translation]
Hello, dear members of the Standing Committee on Agriculture and Agri-Food.
My name is Richard St-Aubin and I am here to speak to you about the ornamental production in Saint-Amable affected by the Ministerial Order. I am a nursery farmer myself, and a spokesperson for AMA-Terre. I am part of an industry that includes 5,000 business in Quebec, generating more than 40,000 direct jobs and revenues of $1.5 billion a year.
On August 16, the CFIA informed us of the presence of golden nematode in our region, a pest subject to mandatory reporting, which led to the closing of the Canada-US border for all agricultural products coming from Quebec. On October 13, following an agreement between Canada and the United States, the CFIA informed us that a ministerial order was decreed, which placed restrictions on agricultural enterprises in our region and put them under quarantine.
Because of these measures, the five ornamental production businesses in Saint-Amable, four nurseries and one greenhouse, have already suffered considerable losses of revenue, estimated at over $200,000. Their short, medium and long-term future is greatly threatened, even if the golden nematode does not directly attack horticultural productions.
For us, the 2007 started yesterday and today in order to meet demand for our respective markets. When we saw the magnitude of the disaster in our region, all of our physical preparation and planning were suspended since the month of September. We have tried in vain to find solutions. On October 13, we practically had our business shut down without having anything offered to us.
Until now, too few questions of a technical or financial nature have been answered. What about soil analyses? Is there some kind of certification that could allow us to sell our products? Who will compensate us for our present and future losses, additional costs, new measures, possible relocations and the loss of value of our long-term assets? It certainly isn’t the current Canadian Agricultural Income Stabilization program that will be able to respond to the crisis currently faced by the region’s farmers.
Our clients are abandoning us, are debtors are worried, our crops are staying in the fields, but the saddest part of all, is that we, our employees and our families believe that things won’t ever be the same.
Until now, we have appreciated the support given us by the Canadian Food Inspection Agency, but time is of the essence. Our questions remain unanswered, and we are now asking them to the Government of Canada. In collaboration with the Fédération interdisciplinaire de l'horticulture ornementale du Québec, we are submitting a memorandum describing the urgent situation affecting horticultural enterprises in our region.
Thank you for listening.
:
I visited all of Saint-Amable’s farms, accompanied by representatives of the Canadian Food Inspection Agency and Agriculture and Agri-Food Canada. It was the worst day of my life. I saw all the emotion, the tears, the despair. People were shaking their heads.
Saint-Amable may not be a large municipality, but every producer markets, whether in the horticultural sector or in another sector. These are proud people, and the youth are ready to take over. You don’t see that in other areas. We can easily count some twenty young men and women managing twenty businesses, which is a lot. The average age isn’t even thirty years old.
The young people are, you could say, pushing the older workers into retirement. There is no lack of young workers to take over the farms. That day, people were wondering what was happening, what they were going to do. Destroying potatoes while the fields are good shape is unthinkable. It is unbelievable that there will be no potatoes in Saint-Amable in 2007. It is one of the nicest regions in Quebec. There’s no irrigation, no rocks. The terrain is flat. We calculate an average of 300 hundredweights, at least, every year. Production costs are relatively low. Yields are high, compared to the provincial average. The boys can’t accept when we tell them to plant corn at $300 an acre when they currently make $3,000 to $4,000. They’ve maybe invested a million dollars in their buildings. For example, I invested over $200,000 this year. In our region, custom work, whether it be leveling or drainage, is estimated at a half million dollars a year. Producers are having trouble coming to grips with the fact that there won’t be any more potatoes.
Every day, the young people ask us what will happen next year. We also have to think long term, and say that next year, we could plant carrots. If we plant carrots, someone will be “bumped” down the line. Processing operations already have their producers, the carrot farmers. Morale is very low. I don’t want to be an alarmist, but morale among the men, women and the young people is very low. People are wondering whether they’ll have work next week, or in two weeks. We don’t know. We don’t have the answers. We are in talks with the federal and provincial governments, but things aren’t moving forward. One thing is certain, the stores are full and bills have to be paid, but there’s no money. This has to stop, and soon.
:
Hello Mr. Chairman and members of the committee.
You already know that the Canadian Wheat Board ensures that producers earn fairer and higher market revenues. It guarantees stable and foreseeable supply for the agroprocessing industry. It generates more than 14,700 direct and indirect jobs and yearly revenues of $852 million. It’s a remarkable formula that maintains family farms that respect the environment, which contribute to the economic vitality of the region while defining the rural landscape.
At this time, all signs point to the Conservative government following up on its election promise to give western producers the choice to market their grain on the export markets. It goes without saying that if this were to become reality, it would serve to dismantle the single desk currently in place and, eventually, spell the end of the Canadian Wheat Board.
On July 27, the Government of Canada held a round table discussion on the marketing of wheat and barley in the Prairies. This in camera meeting was attended by Mr. David Anderson, Parliamentary Secretary, Mr. Chuck Strahl, the Minister of Agriculture and Agri-Food, various academics and industry representatives, as well as representatives of the provinces concerned.
Furthermore, although some farmers were present at the meeting, there was no one representing the Canadian Wheat Board, the Canadian Federation of Agriculture or any provincial agricultural organizations. In fact, the participants did not actually talk about maintaining the current single desk. Assuming that they were all in agreement, they were asked to talk about ways to give more freedom to producers with respect to the marketing of wheat and barley in the Prairies.
Moving forward, the Minister of Agriculture and Agri-Food just created a task force on implementing marketing choice for wheat and barley. This task force must complete its work and submit recommendations by the end of October. In light of this information, we believe that it is imperative that the Standing Committee on Agriculture and Agri-Food intervene in this matter.
I will now speak of our concerns.
We believe the government’s approach to be erroneous, as it disregards the Canadian Wheat Board Act, under which any decision that serves to modify the single desk must be taken by the producers. I am referring here to subsection 47.1.
The federal government’s approach is even more worrisome when taking into account that on October 5, Cabinet passed a bill prohibiting the Canadian Wheat Board from advocating the retention of its monopoly powers. Those are the terms used in the order. In our opinion, the basic tenets of democracy are being challenged.
The producers are also worried about maintaining their right to put in place organizations to control marketing. Do we have to remind you that these collective tools were the wishes of producers who expressed themselves democratically?
The limits of the federal plan.
The majority of Western producers want to decide the future of the Canadian Wheat Board themselves. A survey of 1,303 prairie grain producers conducted by the Canadian Wheat Board between March 15 and April 2, 2006 revealed that 75% of respondents said that a plebiscite or referendum among farmers is the most appropriate way to make fundamental changes to the Canadian Wheat Board. Ninety percent said that any decision to end the Canadian Wheat Board single desk should be made by farmers and not the federal government. Sixty-six percent opposed anything that would weaken the Canadian Wheat Board and 63% said they’d prefer wheat marketing remain the sole responsibility of the Canadian Wheat Board.
The limits of voluntary marketing agencies.
In Quebec, elsewhere in Canada and throughout the world, a number of voluntary marketing agencies failed not long after they were created, whether they were set up to market grain, milk, pork, potatoes, apples or greenhouses, all of these experiments, which date from the 1990s, could not be sustained. The UPA studied why these models failed in Quebec. What they found is that among these cases, they all lacked a critical mass of the product to be marketed and the corollary to that, a lack of producer compliance. Another major factor was the negative reaction by competitors, who used every possible means to bring those systems down.
Based on experience in Quebec, we have every good reason to assume that freedom of choice when it comes to marketing grain in the Prairies will eventually lead to the elimination of the Canadian Wheat Board and will have negative consequences for producers, including lower prices.
Our requests.
It is imperative that the Standing Committee on Agriculture and Agri-Food object to the actions taken by the Conservative Government to dismantle the single desk administered by the Canadian Wheat Board.
Under subsection 47.1 of the Canadian Wheat Board Act, the federal government should give prairie farmers the freedom to decide what changes should be made to the Canadian Wheat Board.
Thank you.
:
Good afternoon to you, committee members. Thank you all for inviting me here to share my thoughts with you on the Canadian Wheat Board. I'd like to start by saying that I'm here not only as the agricultural policy research fellow for the Frontier Centre but, more importantly, as a farmer from southern Manitoba who's running 1,700 acres of land and whose primary source of income is that farm.
I have grown up and have had to live under the thumb of the Canadian Wheat Board monopoly my entire life. Personally, I am very excited about the current government's plans for marketing choice and the role that a new invigorated Wheat Board will play in that.
Let me bring you up to speed a little bit on what the situation is with me and my neighbours since harvest wrapped up about a month ago. I'll mention some of the cashflow issues we're having.
Right now we are in the middle of a really major rally going on in the wheat markets. We're at the highest levels today that we've seen in 30 years. We can't take advantage of it, and it's incredibly frustrating. The little bit that we can price out, we can't deliver, which means we can't get paid for it.
Instead, if we need cash, and most farmers do in the fall in order to pay their bills, we are forced to sell our other crops at prices that right now are lower than where I expect them to be later this year. In some cases, it's below the cost of production. If we were free to sell our wheat, we could hold on to these crops until those prices improved and actually make money on everything.
Equally frustrating in all this is that, if this current rally were occurring in any other crop, I could right now start selling next year's production at a guaranteed profit. But I can't. The primary reason is not the Wheat Board; it's the Wheat Board monopoly.
I can't tell you the number of times in my life that I have seen these kinds of opportunities fly by when it comes to board grains. One of the most frustrating times that I remember was the 2002-03 crop year. In that year we were able to sell most of our non-board crops for anywhere from above-average prices to some record prices. There was a really good general rally going on in all crops, wheat included. Not only did the Wheat Board completely miss this rally, it did such a poor job that it ran an $85 million deficit in the pool accounts, which have to be covered by the taxpayers of Canada. What should have been a banner year for prairie agriculture wound up being another one in which we struggled to make ends meet.
In its current form, the Canadian Wheat Board sits like a wet blanket over the entire prairie economy—starting at the plant breeders, through the farm gates, on to our rural communities, into our cities, and right on out through our ports. This dampening effect is widespread, pervasive, and very tangible. It's high time that we give this wet blanket a well-deserved airing out.
A monopoly may have been appropriate in the days when we were negotiating five-year contracts for millions of tonnes to the Soviet Union, but it certainly is not an effective marketing tool for negotiating small, single-lot sales into individual flour mills and niche markets. The board's own sales records are showing us that this is the trend. They are selling more of less—smaller amounts to more and more customers all of the time. This is not a phenomenon unique to wheat. We are seeing this with more and more commodities and more and more products all over the world. The future of business in general is selling more of less.
Equally important is the fact that we are no longer the lowest-cost producers of grain in the world. We must instead compete on the basis of identity preservation of specific traits, traceability programs, and precise quality standards for each shipment. The current Canadian Wheat Board model was designed for large bulk exports. It's not able to compete successfully in these new specialty high-end, fast-moving world markets. It was just never designed for this.
Some fear that tinkering with the board's monopoly power would result in a loss of jobs. This fear is particularly a concern in my home province of Manitoba. The truth is that under the current arrangement we have been bleeding jobs for decades. The grain industry is steadily consolidating because of a lack of access to new opportunities. We continue to lose farmers because they cannot pursue new markets at home or abroad. Every unprocessed bushel exported is another lost possibility, another lost opportunity, and another lost job.
I am talking specifically about value-added processing. I'm talking about flour mills, pasta plants, malting facilities, and a wide range of speciality products that are all currently being stifled in western Canada. We should be exporting meat pies, not bulk wheat and live animals.
Then there is the development of new wheat and barley varieties, especially the high-yielding ones for feeding livestock. New uses, like nutraceuticals and bioenergy, ethanol, are all currently being hampered with regulatory bias toward the type of grains that the Canadian Wheat Board sold in the good old days.
All of these things I'm talking about will happen, but if we continue along this current monopoly path they will happen elsewhere. In fact, they are happening elsewhere.
For example, when we compare the level of investment in value-added processing in Ontario and in the northern U.S. states, it is two or three times the level that we see on the Prairies. This is according to a study done by the George Morris Centre. The world is not only quite literally passing us by, it's leaving us behind in its dust.
Let me give you a specific example. A couple of weeks ago in Australia, a small farmer by the name of Doug Couche recently fulfilled a dream that western producers would love to emulate, but today in Canada is illegal. He opened his own flour mill. Gasp! This gives him the final link in a chain that takes his farm's durum wheat from the farm gate to the gourmet dinner plate. He is now selling pasta successfully into, of all places, Italy, the home of pasta. This is unbelievable. And he is doing it successfully. That's like trying to take coal to Newcastle.
This pasta of his is now being sold in more than 500 stores all across Australia, Italy, the United States, the United Kingdom, Dubai, and Korea. He is not afraid of the multinational bogeyman, because he, a small farmer, is now a multinational himself.
Many claim that a dual market in wheat and barley is a metaphysical impossibility. They say it's not going to work and it would be the end of the Canadian Wheat Board. That is exactly what the doomsayers said with regard to another monopoly that I am personally very familiar with: Manitoba pork. Not only did it survive the loss of the single desk, it is thriving in the new marketing environment. It retains a full 30% of the market share of what is now--and this is crucially important--a greatly expanded marketplace. It is marketing more hogs now than it did back in the old single desk days. We saw the same thing with Saskatchewan pork, Alberta pork, and we see the same thing with Ontario wheat. It really is amazing how a little choice and a little competition can really improve things.
In sharp contrast to this, the acreage of Wheat Board grains in the west keeps dropping, as does our market share. Ten years ago we had 20% of the world's share. Today it's 15%. Five years from now, it's predicted we will be down to 10%. The writing is on the wall. The status quo isn't working, and things have to change.
I would like to remind you all at this time of one of the recommendations of the all-party standing committee, which talked to hundreds of farmers across the country in 2002. I think a lot of you were on that committee, and I will quote your recommendation directly: “...that the board of directors of the Canadian Wheat Board authorize, on a trial basis, a free market for the sale of wheat and barley...”.
I am pointing this out because it shows that the support for marketing choice is far more widespread than we're being led to believe by a lot of people, and it goes far beyond mere ideological and partisan political positions.
As to the question of a plebiscite on dual marketing, I echo the sentiments of former Manitoba NDP cabinet minister, Sidney Green, who was quoted in the Winnipeg Free Press last week as saying, “The wheat board is an organization that was created by a democratically elected government. Absent government creation, the wheat board would not exist. It is important to remember that what a democratically elected government createth, a democratically elected government can taketh away.”
There is the question of civil liberties in all this. Yes, there are strong economic arguments. The research that I've done with the Frontier Centre shows that. We're talking tens of thousands of dollars of increased income for individual farmers across the Prairies, probably three-quarters of a billion to a billion dollars a year if we look at them as a group; 26,000 extra jobs in value-added processing; another $1 billion to possibly $2 billion in extra economic activity because of that value-added processing. These are strong pervasive economic arguments.
But there is the question of civil liberties. When is it appropriate for the state to allow one group to vote away the civil liberties of another group? There should be no such thing in a free and democratic society as the right to vote away civil liberties. We're not talking about electing a government here, and we're not talking about finding out who likes strawberry ice cream better than chocolate. In this case, if strawberry wins, not only are you not allowed to buy chocolate, but if we catch you with chocolate ice cream, you're going to jail.
What this is all about is finally giving western farmers the freedom to run their businesses in the way they think is best--not how the government thinks is best, and certainly not how their neighbours think it should be run. Western Canadian farmers should be able to enjoy the same rights, freedoms, and civil liberties as the farmers in the rest of Canada do. It is not right, in this day and age, that they are still forced to sit in the back of the bus.
There are two extreme positions that dominate this current debate. The one holds that the forced collectivization of wheat and barley growers is for their own good. The other says that the federal government has no business being involved in the marketing of grain in any way whatsoever. To its credit, the federal government appears to have found a sensible middle-of-the-road compromise between these two very polarized extremes. It's one that recognizes a very simple universal fact: there is no one absolutely right way to sell wheat and barley that works for everyone all the time. The government intends to let individual farmers who want to sell their own crops do so and, at the same time, let those farmers who are more comfortable selling their grain on a collective basis keep that opportunity as well.
I believe not only that moving forward with this agenda will be in the best interests of our farmers, but that it's in the best interest of Canada as a whole, as it would promote rural development across the Prairies by declaring to the world that, hey, the wet blanket is off and western Canada is now open for business.
Let me just turn to your brief on the airing out of the wet blanket. You're basically saying that the Canadian Wheat Board model was built for large exports and that it's preventing sales of high-value crops. Well, Warburtons, which is a company, just announced a little while ago that they'll purchase 250,000 tonnes of high-quality wheat from about 730 farmers, many in Manitoba and Saskatchewan. They will do it in such a way as to not let the lowest seller set the price. That is holding prices up, so I just point out to you that your wet blanket argument doesn't hurt.
Furthermore, I just cannot understand why the opponents of the Wheat Board—and we'll go to your Australian example, Mr. Chair—continue to perpetuate this myth that there can't be any processing or development of pasta plants. The fact of the matter is that western farmers have exactly the same ability domestically. There is the buy-back program for export, but western farmers do have, within their abilities, the same ability to mill their own grain in their own mills and sell that resulting production directly to Canadian consumers from one end of the country to the other. If they sell it outside the country, then they have to do it through the buy-back program.
So you continually perpetuate these myths.
I'll make one last point before I go to answers, Mr. Chair.
Mr. Penner goes to great lengths to talk about the Carter–Lyons–Berwald study, which is a study, Mr. Chair, that I believe you know has been completely discredited by academic people with academic credentials, for one simple reason. It arrived at its conclusion, in terms of Carter–Lyons–Berwald, by comparing farm gate sale prices between the United States and Canada without accounting for the distortion of American subsidies, including the export enhancement program.
Even on spot prices, when you folks get into comparing spot prices of crops, you basically get into comparing a different variety of crops, but not the same grain. The fact of the matter is that I know one variety of grain you're quite enamoured over, Falcon. Yes, the spot price is sometimes higher for it. But what do the Americans do with it? They buy Falcon, a lower-quality grain, and they blend it in with the higher-quality grains and sell the product.
So it's not a fair comparison, Mr. Chairman.
I guess the question is this: where we do have accurate figures? We listened to your figures, and you say probably, probably, probably. I heard the same arguments from many people during the Crow rate fight. Just get rid of the Crow rate, my God, and we'd be wealthy and prosperous in western Canada. Now these very same people are saying the same thing about the Canadian Wheat Board. But you have no concrete studies to prove so, unless it's the discredited Carter–Lyons–Berwald study.
The Wheat Board, though, in response to the task force report that they tabled on their website, claims—and they back it up with documentation, and there is the independent study by Hartley Furtan—that the loss to the industry collectively in western Canada would be between $530 million and $655 million. How are you going to compensate for that loss when we have it? That's my question.
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Mr. Chairman, I would be glad to answer as many of those questions as I can in the time allotted.
Let's start where Mr. Easter left off, with the Wheat Board-sponsored studies that supposedly are legitimate. I've had a good look at those studies and at the Furtan study, which he referred to. The problem with these studies is that they're cost-benefit analyses that don't list any costs. They don't go back to the farm gate, and they're based on a secret data set that no one's allowed to verify. Other than that, they're great, but I'm not going to bet my life on them.
As for the spot price comparisons on Falcon—and yes, I grow Falcon on my farm—as of last Thursday, the difference between the Wheat Board pool price and what I could receive at an elevator in South Dakota, very close to my farm, was $1.11 a bushel. That is a real world number, not from a study. Yes, you can get a bit better with the fixed-price contracts, but that's going to end at the end of this month. On that particular day, I was leaving 60¢ a bushel on the table.
It really is disingenuous of the minister to try to suggest who I should believe—him or my own lying eyes.
As to the Carter-Lyons study, it was done very rigorously, and again it compares farm gate prices, which is where it actually matters.
The buy-back program is again incredibly disingenuous. Yes, there is a buy-back program, and you get to buy your own grain back, which is an absurdity in itself. My bin in Manitoba bases the price out of Vancouver, which many times is the kind of price Tony Soprano would charge, which is why hardly anybody ever does so.
Concerning the value-added processing, again the honourable minister is mistaken—
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As I mentioned earlier, balance will be achieved when there is only one producer and one buyer. Negotiating power would be equally divided. Once this objective is reached, we must be aware that several farms and producers living off of their businesses will have come up short and had to leave the industry.
If this is not the case, they will be in competition. This is what is happening, the producers are competing against one another. For a few, the minority, it will be profitable. This will create a concentration of producers, and one producer will gradually eliminate his competitors.
This is not the situation we’re looking for. We want a large number of producers to be able to make a living off of their farms, that they are a positive part of their community and environment, and that their income is fair, compared to other members of society.
The advantage of collective marketing ensures that the smallest producer can sell at the same price as international marketing networks, which won’t happen when that producer goes to the negotiating table by himself.
Marketing or added value approaches can have certain particular items in the production chain. We have a ways to go to be able to recognize the involvement or added value of a particular product, but we can do it.
As I was saying earlier, this is not an approach that will threaten an institution created years ago, probably for the same reasons, to control the same situation as the one that we would have to deal with if the structure was removed. For grain buyers and negotiators, these structures are a hassle, and they’re hampered to a certain extent because of them, because they can’t deal directly with the producers. The buyer cannot negotiate with one producer, then another, to get a better price. However, we, who represent the producers, want our producers to make a decent living off of their farms.
You also know that the condition of the agriculture industry, generally speaking, in Canada and Quebec, is not in a position to blossom in the near future. Canadian farmers won’t have it any better if the organizations and structures that have an influence on raising prices are removed.