:
Thank you very much, Mister Chairman.
I will limit my observations to three points so as to give you enough time for questions.
[English]
There are three ideas why I think it's important to look at the issues we're here together for. One is global, the other is continental, and the third is Canadian.
The international/global situation is one in which there are so many changes and so many new competitors that Canada's traditional position is not as sure as it once was. That's not to raise any questions about any player in the value process; it's just a true fact that the international situation puts us in a state of potential competitive threat we haven't had to face in the past.
A second reason to look at these issues is the continental situation and the unique role of ethanol in biofuels, as one member raised a moment ago, simply as a result of the security situation. It's the international security situation that gives ethanol an extraordinary place it might not otherwise have.
The third reason to look at these issues is that values and public expectations about accountability, transparency, efficiency, and ways of doing things change with every generation. On a lot of these issues, especially the ethical issues, public expectations rise greatly with each generation, and that's another good reason to look at some of the issues we raised.
We presented 100-odd recommendations. Rather than go through them, I thought—and Tom agreed with me—we could simply open it up to questions.
:
That's a good question. I'll answer that initially, and then I'll ask Tom to answer.
We obviously met far more farmers than grain company executives. If the criterion were initial happiness with us, then you'd have to say the farmers loved us and the grain companies didn't. That wasn't the criterion by which we made our recommendations, nor were we particularly interested in the conflict between grain companies and farmers. We were much more interested in issues of accountability and transparency.
We live in a modern, democratic age, and it is extremely important that everyone feel it's easy to know who makes the decisions and it's easy to know the basis of their decisions. An example is our proposed modification in the act about “in farmers' interests”. The act, which Tom can speak far more eloquently on than I can, talks about that in general.
Whenever you have anything in general there's a huge risk that nothing in particular will ever happen. Why is the air polluted? Because nobody owns it. Why are public desks written on? Because no one owns them. Try to write on your mother's desk and see what happens to you. Because someone owns it, it's your mother, she's going to kill you.
We looked at what is viable, what would work, and how to protect farmers. We believe producers are far more adequately protected by making the protection very specific.
Tom, do you want to talk?
:
Thank you, Mr. Chairman.
Thank you, gentlemen, for coming here. I'm going to ask all my questions and then let you answer them.
Your report states that the grain sector is at a crossroads. Of course, one of the things it mentions is biofuels, which I had mentioned earlier, and I think it's an important part of this process. Animal feed grain, and with it the ethanol that's basically low protein, that kind of thing, which is the opposite of what we're using for human consumption.... Basically, there's going to be a transition in there for government through the market and this kind of thing. I'd like to know how long you think that transition will take.
When it comes to research undertaken by the Grain Research Laboratory, it's probably going to require government funding. I'd like to know what you think the cost to the government is going to be. Basically, it's a cost that's attributed to modernizing the Canadian Grain Commission.
On another item, our high quality of grains are recognized worldwide. Can we ensure that a reform of the agency that's responsible for this quality won't raise concerns among our trade partners around the world? We don't want to lose our place globally that way.
Also, do other countries that import and export grains have a similar agency like the Canadian Grain Commission? Can you give us some examples?
:
I'll be really brief, and then I'll ask Tom to also address your questions.
Let me summarize that with biofuels, ethanol, and the global situation, we're in an era of tumult. The history of economic forecasting is that people aren't very good at forecasting tumultuous times. That's why we're not recommending solutions. We're not saying that biofuels are going to take over, that hog production is going to sweep the country, or that everyone is going to be driving ethanol-fuelled cars at 25% ethanol. All we're saying is that these changes are taking place, so what processes do you need to enhance Canada's competitive position?
First, you need a lot of research. It's dumb not to have a lot of research. We're in a knowledge-based era, and we've been underfunding research. Other countries, like Australia, have been investing more in research than we have.
Two, we can't forecast exactly how much each of these areas is going to contribute to the economy or to agriculture. What we can say is let's be as transparent and open as possible. A lot of our reporting has to do with recommended forms of consultation, forms of round tables, between the commission and all the interested parties. I mean, we can't even know who the interested parties are, because in this case there are so many of them. That's why one of the headaches we had was deciding what a board of directors might look like. In the end, we decided not to recommend one, just because there are so many interested parties.
So we can't even know who the interested parties are, we can't forecast the demand for ethanol or biofuels or hogs or anything like that; we can just come back and say that process really matters, that transparency and accountability--
:
If I could, I'll perhaps answer some of your questions directly. But first, with regard to biofuels, we could probably have a whole afternoon in discussion on the policy requirements and the timing and the reaction from the marketplace in terms of meeting the commitments that Canada has put forward for four years' time for standards for renewable fuels and transport fuels.
But let me come back to the four questions you originally posed. You asked about the transition of new feed varieties, how long it would be. I think you're aware of the proposal for a general purpose wheat class, which basically preserves kernel visual distinguishability for the two main wheat classes--Canada western red spring wheat and Canadian western amber durum--but allows the requirements for visual distinction of the other classes of wheat to not be a registration criteria for varieties. That's in the works. I believe CGC is looking to implement that in about a year's time.
There are varieties that are on the shelf that may very quickly be registered that have different characteristics, and of course new ones will be developed, given this policy. That's the timeframe. You asked how long. That's a rough estimate.
You asked what the impact of our recommendation on government funding for research was. In general terms the research budget is approximately $10 million, which rests with the Canadian Grain Commission. We recommended over a seven- to ten-year time period an increase of four times, or fourfold that amount, to take it to $40 million. We also recommended that this money be given not only to the Grain Commission but also to establish a separate fund that would provide funding for universities and other private research groups, so it's collaborative, so it's not just money for the Grain Commission.
We're targeting research overall, and this is research primarily relating to quality and quantity control for grains. The budget for research in agriculture and specifically for grains is considerable, so we're talking about that piece.
On the third point, ensuring that reform of the agency doesn't cause concern with customers and our reputation, this was something we considered very seriously. For example, on the inspection of grain for export, although we recommend that the inspection of grain on inward movement into export terminals may be optional, at the request of shippers, we recommended that the outward inspection and weighing continue to be mandatory. It's for that very reason. We felt very strongly that there's an expectation of third-party unbiased documentation of quality and quantity assurance by customers. It's a competitive advantage in a reputation that Canada has that we feel strongly needs to be protected and preserved. That was the basic rationale for our recommending that the outward inspection continue to be mandatory.
Lastly, just very quickly--I won't take too much time--on your question about other countries, there are other countries that have agencies similar to the Canadian Grain Commission. Of course, the aspects in each country are considerably different, but take, for example, numerical grading, which is a part of our framework in Canada. The U.S., France, Australia, the Ukraine--you can go down the list--all those countries have numerical grading for grain that is essentially established by governmental regulation and standards.
There are a number of different agencies. I won't take too much time there, but we can go into some more.
On the last question, no, we never said we received feedback; these are the people we invited feedback from. There are other people we received feedback from too, but we didn't put their names in because they spoke as individuals and wouldn't want their opinions to be associated with their organizations. Maybe a quarter of those gave sustained feedback, probably more.
You ask two good questions: to what extent this reflects the population and what the weaknesses are. You may not have had a chance to go through the report, but the report is very process-oriented, because we don't believe you can forecast what the economy is going to look like with any kind of precision. On the issue of trying to figure out how to be reflective of the different stakeholders, one of the constant refrains is that we don't have objective information, we don't have surveys.
One of our many recommendations is that Agriculture Canada itself should be surveying producers. This is very important. The grain companies told us.... They are so competitive that some of their people even told us they almost break the rules to give the producers a good deal. Then some farmers told us that nothing has happened in 85 years and that they are still the robber barons of old.
How do we know? We're in no position to know. So you survey farmers.
A key issue, for example, is how, given the decline in the number of elevators and therefore the increase in the distance to elevators, these changes affect competitive opportunities of individual farmers. We have no objective evidence; all we have is hearsay and those people who choose to show up at meetings or send us e-mails.... There is a lack of information.
We dealt with this in one area, for example: the recommendation having to do with the assistant commissioners, who are political appointees. Their role is unclear, because sometimes they are really just part of patronage heaven and sometimes they're energetic advocates for producers, without always knowing the limits of the law that might govern what they can or can't do for producers.
Some producers say they're essential, but we have no objective information. At some forums, no one has ever heard of them. There are even people at forums who live in the same town as an assistant commissioner but had never heard of the person. In other cases we believe they were very active, energetic, and delightful in what they did. So we said we don't have objective evidence, but move them out.
It's so absurd to have a bureaucratic organization where you have patronage appointees brought in at the middle and essentially in a position of insubordination and with an unclear mandate or mission. But some producers say they're needed, so we recommended on a temporary basis a grain farmer advocacy organization until we find out from regular surveys about the proper mission and what farmers really need. Are the grain companies Mother Theresas in drag, or are they throwbacks to the Dirty Thirties? Again, we don't have objective information and we need it.
:
There is no argument from me there, on needing more power to control grain companies. Acting in a biased way in favour of producers would be a wonderful change. It wouldn't bother me a bit.
I have two quick points.
The whole object here, and I think most of us around this table would agree, is that we do need the opportunity to get into other crops, whether it's for ethanol or biodiesel. But what is extremely important is that we not jeopardize the quality of our grains. We're world-renowned, and we cannot undermine that in any fashion.
Do you have any ideas on how we can find that balance, in terms of maintaining the quality while opening up those other opportunities? We will be calling some other witnesses in that area.
On the whole issue of budget, the Canadian Grain Commission has been coming back to the government always short of budget. You're proposing some contracting out. How do you see saving money by contracting out? Any time I've seen us contract out, we've lost control, and it has cost money at the end of the day.
I just don't see it as a cost saving, and there is absolutely no way, when we come up with final proposals here, that we can impose additional costs on producers. We should be taking costs off, even if it means the taxpayers of Canada have to pay for it, because this is about quality control; it's about opening up opportunities; it's about bringing foreign dollars back to Canada.
Please comment on the budgeting issue and the contracting out.
:
To follow on that, essentially on the question about KVD, to be very clear, the key grading issues relate to wheat and to KVD. The other concerns and comments that we heard would be a drop in the bucket compared to those particular issues. That's really where some of the malcontent rests, with regard to that and the pressures that you very well identified between competing interests.
That said, it's also generally accepted or acknowledged that we can't compromise the quality that is in place and is perceived by our customers in the very effective segregation that's provided by KVD for those core classes, being Canada western red spring wheat and Canada western amber durum. The process that I think the Grain Commission went through to get there in terms of this recommendation for a new class involved very extensive consultations, according to what we were presented with, so that's what's going to be required as an industry-based approach to move to the next step.
To be very clear, there may be technological changes that help us accelerate in this balance between innovation, which is really what we're talking about, how you foster innovation while preserving and protecting the reputation we have with our existing system, the existing varieties, and the process for registering them.
On the DNA testing, any form of rapid or effective testing, the work is being done now to try to discover that. If there's a breakthrough and it's rapid and cost-effective, this might change very, very quickly.
As to methods to identity-preserve products, the protocols are in place. In fact, Canada, in my view, does a better job than probably anyone else in the world in being able to balance these two things currently. Over one million tonnes per year are sold by the Canadian Wheat Board through identity-preserved or variety-specific programs. The whole designated barley process ensures varietal purity of well up to 95% to 99%.
:
Thank you, Mister Chairman.
My questions are for Dr. Winn. But before I ask them, I’d like to share my opinion with you.
I’m from a sector where we tried contracting out, that is Fisheries and Oceans Canada. In fact, I think Wayne must remember this. I’m going to tell you where this process took us.
Inevitably, contracting out has led to higher costs and lack of government accountability. It’s quite clear that when you contract out, you give subcontractors a certain responsibility and you award them a one year contract and then you start having problems. But the government says that it’s a subcontractor, that they’ve signed a contract with him, and that when the contract is over, they’ll try to solve the problem with another subcontractor. I know my opinion won’t be mentioned in your report because I wasn’t consulted. But contracting out has in fact brought on a lack of accountability on the government’s part.
Some words are often repeated in your presentation. First of all, you mentioned an impartial report. I don’t think your opinions are impartial. I find it difficult to conclude that your opinions are impartial.
Secondly, you told us that your mandate was to reflect various opinions that were being circulated concerning the commission. Have you heard any positive opinions concerning the commission, or have you only heard negative opinions? If you wish to present these opinions, you should hear not only negative opinions but positive ones as well. Have you heard any? I heard nothing in your presentation today that would lead me to believe that you heard even one positive opinion regarding the commission.
Then you talked about transparency. You told us that no one was responsible. I don’t think it’s impartial to say something like that. You talk constantly about transparency. In my opinion, transparency is a catchall word. I could say the same thing concerning just about anything. If I’m badly informed, I’ll turn to my neighbour and I’ll tell him it’s because he’s not sufficiently transparent or because he hasn’t told me everything. The notion of transparency doesn’t mean anything.
Tell me what you mean, with regards to the commission, when you talk about the notion of lack of transparency.
:
Thank you for the opportunity to speak with you today. My name is Colleen Ross, and I'm the women's president of the National Farmers Union. I'm also a grain and oilseeds farmer in the Seaway Valley, about an hour south of here.
I'd like to introduce you to the National Farmers Union. We're a democratic direct-membership farm organization made up of thousands of family farmers across Canada. It is the only farm organization in Canada to be chartered under a special act of Parliament, on June 11 of 1970.
The NFU is a non-partisan organization. Our goals include economic and social policies that maintain the family farm as a basic food-producing unit in Canada. To realize these goals, we work to create, expand, and safeguard orderly marketing and supply management systems. We work to promote policies that safeguard the interests of farm families, and we work to ensure that Canadian food is safe, nutritious, and available to all who need it. We also work to encourage farming practices that protect, enhance, and sustain the environment.
In all the work that we do, we ask two very key and basic questions, and I encourage the members of this committee to always ask these questions. Those questions are: who profits and who pays?
As we move into today's discussion, I'd like to introduce my colleague and friend, Terry Boehm. Terry is a grain and oilseeds farmer from the Prairies, from Saskatchewan. He farms over 4,000 acres on the prairies.
I'd like to hand it over to Terry now.
Thank you.
Colleen mapped out our mandate, criteria, and reason for being an organization. This mandate is essential and fundamental to the goals, action, and analysis undertaken by the organization.
Mandates and terms of reference are critical components of the functioning of institutions, acts of Parliament, and even the tone and character of private consultant reports, such as the COMPAS report reviewing the Canada Grain Act and the Canadian Grain Commission.
This report recommends altering the mandate of the Canadian Grain Commission, and as such the consequences flowing from this temper all the other recommendations that follow, positive or negative.
Under the current act, section 13 of the Canada Grain Act reads as follows. The terms of reference of the Canadian Grain Commission are under the title, “Objects of the Commission”:
Subject to this Act and any directions to the Commission issued from time to time under this Act by the Governor in Council or the Minister, the Commission shall, in the interests of the grain producers, establish and maintain standards of quality for Canadian grain and regulate grain handling in Canada, to ensure a dependable commodity for domestic and export markets.
“In the interests of the grain producers”—I want to repeat that, “in the interests of the grain producers”—is not a superfluous line. It is fundamental.
This is the result of and recognition of the abuses and domination of farmers that took place at the hands of the grain companies and railways a century ago. Farmers were forced to take or leave a price and a grade deemed by the grain company of the day, regardless of the quality of grain the farmer was trying to sell. They were cheated on weight and even access to delivery.
The possibilities for this behaviour and other untoward behaviour are today even more threatening with the increased concentration of grain companies and the likelihood of further concentration. Today a handful of companies dominate the grain trade around the world. Without a strong regulator with a mandate to act in the interests of these grain producers, the consequences will be grave for farmers. These grain companies recognize the economic gains they can make on the backs of farmers if the mandate changes over time. This will be an incremental but relentless process.
The COMPAS report removes this critical line, “in the interests of grain producers”, from the general mandate of the commission and narrows it down to specific rights. This is where our fundamental critique of the report rests.
Their text would read:
Subject to this Act and any directions to the Commission issued from time to time under this Act by the Governor in Council or the Minister, the Commission shall: 1) establish and maintain the standards of quality for Canadian grain and regulate grain handling in Canada, to ensure a dependable commodity for domestic and export markets.
It's very similar to the original text except that “in the interests of grain producers” is missing.
They then define it in part two:
2) in the interests of producers, provide the right of delivery access by grain producers to primary or terminal elevators, provide the right to third party grade and dockage verification, provide the right of a grain producer to access a producer car for shipment of grain and to have third party weighing and inspection of that unload, provide the right of grain producers that their commercial grain transactions with licensees under this Act be secure.
Section two of this text narrows “in the interests of producers” to some very specific but not unimportant rights for farmers. The flaw is that the role of the CGC under this scenario is narrowed to ensuring quality standards for Canadian grain and to regulating grain handling to ensure a dependable commodity is now no longer focused on grain producers' interests, but it is left loosely open to interpretation. Quality standards beneficial to grain companies may result in grave economic consequences to producers.
Under this language, there's no distinction made among grain companies, farmers, or other players. The economic power and balances are the obvious divergence of the interests. The divergence of the interests are less clear but important nonetheless.
The regulation of grain handling may ensure a dependable commodity for domestic and export markets, as the act requires, but it could very easily accomplish this with onerous conditions placed on grain producers by the grain trade: either over time, by excessive quality demands, resulting in downgrades and price discounts; or by excessive handling requirements and pricing that could still fulfill the mandate of dependability and quality but that could leave producers in even more dire economic straits.
Placing the interests of grain companies and farmers on equal footing is a folly that does not recognize the power imbalances existing between them. In the strongest possible terms, we recommend maintaining the language of the act as it exists now, within the interests of grain producers, as the raison d'être for the Canadian Grain Commission and the standards of quality in grain handling regulations in Canada.
We do not object to the further definition, as written by COMPAS in clause 2 of their text, in the interests of grain producers, but we object strenuously to it being limited to those specific rights.
I think the mandate is critical. What I'd also like to address are some of the recommendations within the report itself. There are positives and negatives in the report.
One of the things that was debated earlier with the COMPAS people was the issue of governance and the issue of the assistant commissioners and what appears to be an ambiguous relationship to the chief commissioner. This was a studied construction and not an attempt to create patronage heaven, as referred to in the report. The assistant commissioners have the ability, when necessary, to act in the interests of producers, sometimes putting them in conflict with the chief commissioner, who is a government appointee.
This was absolutely fundamental as grain handling tariffs increased and producers attempted to alleviate this problem by constructing their own producer carloading facilities where they could, along tracksides. The chief commissioner of the day was adamant that these facilities should be licensed as primary elevators, and then under the act they could not load producer car facilities.
It took one assistant commissioner in particular, acting on behalf of producers, pointing out that the chief commissioner was in contravention of the intent of the act. There was very real pressure from grain companies for this particular individual to be dismissed or to be shut up.
In the end, the Grain Commission decided that because no monetary transactions take place—this is just a service where the producer carloading facility loads the car, gets to the terminal and is unloaded, and the Wheat Board makes payment to the producer and it's administered and weighed by the Grain Commission—they weren't required to have licences as primary elevators. This allowed producers to maintain the fundamental right, which they've had since the turn of the past century, to have an option in moving their grain to port other than through the elevator companies. This is a very real control and cap on the level of tariffs and fees that a producer can be subjected to in the handling of his grain.
While some definition as to the duties of the assistant commissioners perhaps would be appropriate, the office of grain farmer advocacy, as envisioned in this report, is very unclear. If it is an office operating outside the Grain Commission, how would it access records in times of dispute on grades, etc. Would these be separate jurisdictions? Would that be available to them? The fact that they suggest that after three years this office could disappear is extremely worrisome. First, we see it as little more than an ombudsman with ill-defined or no powers. Second, what would happen then to producers, particularly in reference to this changed mandate as suggested by COMPAS?
On the issue of inward inspections, COMPAS recommends this be optional. Inward inspections are the weighing and grading that takes place when railcars or trucks arrive at transfer or terminal elevators. The Grain Commission conducts third-party grading and weighing services. We think this is a value that's important to maintain in the system because it prevents the contamination of large lots with possible off-types of grain, etc. It also serves as an auditing process to make sure that the volumes in and out are equivalent and that there aren't any losses taking place in the transfer system, which would be detrimental to producers.
On contracting out, there were points made here about the costs and the accountability. The other question is, as the COMPAS report suggests that you need competition with contracting out, the reality is that these are very specific services that tend to be consolidated in one private company when this happens. We see this in Industry Canada with weights. And often there are significant relationships formed between these private contractors and/or the grain companies, which we confront right now, which are just a handful.
On cost-recovery and government payments, we agree that the government should be financing the Grain Commission and covering its deficits. We disagree with the COMPAS recommendation that the government finance not only the infrastructure but also the services the Grain Commission provides. We feel that the taxpayer should contribute to that too. Where deficits arise, producers are paying a significant portion of that.
I'd like to address--and Colleen will very quickly--the consultation model proposed by the COMPAS people in their report. They suggest on numerous issues that the consultations between so-called stakeholders should take place based on the Canadian Food Inspection Agency's model of consultation. I am very familiar with one of those models in particular, as I sit on the National Forum on Seed, which they have been touting as a template for consultation for all other government agencies. It presents particular problems as a mechanism for producers to participate in a consultation-model system.
The other model, which Colleen will address, is the idea of doing surveys online.
:
The process is flawed. The CFIA model is not one that we want to emulate. The CFIA model, which they used quite often throughout their different departments, which is online consultation, is really impossible for farmers to access.
For one thing, farmers don't go to the CFIA website, nor would they go to the COMPAS website. Very rarely do they go to the Agriculture and Agri-Food website.
Understanding the complexity of the issues...and then having the opportunity, as a public consultation online, to give feedback, is really not public consultation at all. Even in the example of the National Forum on Seed, the national forum on fertilizer.... You have these national forums that are public consultation by invitation only. They are also extremely flawed.
For farmers, who are not publicly funded, not privately funded, but self-funded, to participate at these national forums is literally impossible. It's very difficult. And the online consultation is ridiculous. It's not something you want to emulate.
For example, we have the CFIA regulating certain GMOs. Recently they regulated high-lysine corn, and there was an opportunity to speak to the issue of high-lysine corn. Now, they regulated it based on substantial equivalents, but countries around the world have not regulated high-lysine corn because the science is flawed.
But they did not do it on a science base. The CFIA says they are science-based, but they actually regulate based on substantial equivalents. It's one example of its being highly flawed. Unless you understand the science and you understand the process, it's very complex.
The consultations done online or through public or national forums are flawed, and it's impossible for the public to participate.
:
Thank you very much, Mr. Chairman. I have to say right at the beginning that Cam and I feel a little inappropriately dressed, based on the comments earlier about the grain companies being Mother Theresa in drag, so next time we are invited before the committee we'll make sure we dress appropriately.
Thank you for inviting the Western Grain Elevator Association's views on the COMPAS review of the Canada Grain Act and the Canadian Grain Commission. The WGEA is an association of eight farmer-owned public and private grain businesses operating in Canada, and they collectively handle in excess of 90% of western Canada's bulk grain exports. WGEA members own grain-handling facilities throughout the country and at the ports of Prince Rupert, Vancouver, and Thunder Bay.
While we do not agree 100% with all aspects of COMPAS's report, we do believe that the report's recommendations would reform the system to bringing in the flexibility required for the changing markets. We applaud this committee for its work to initiate this legislative review that has generated the COMPAS report.
One of the very positive aspects in this report that we would like to highlight right at the beginning is the premise that all stakeholders, including the CGC, should be liable for their mistakes or misrepresentations. This is an important policy shift and one that we support.
On the issue of mandate, the report splits the mandate into two parts, which you know. Establishment of standards of quality for Canadian grain and regulation of grain handling in Canada for markets would be for the good of Canada and therefore the industry as a whole. The CGC's role in the interest of producers pertains to the right of delivery access, etc., and this clarification retains the CGC's role as a producer advocate. However, the change removes the ambiguity from the mandate.
We believe the recommendation brought forward by COMPAS would help resolve some of the internal conflicts while maintaining the commission's mandate to function in the best interest of producers. The WGEA believes that the report brings forward a balanced suggestion for change and should be supported by the standing committee and the Government of Canada, and it should be brought forward in amending legislation.
On the issue of governance, the change from a three-person board of appointed commissioners to a single CEO with vice-presidents and other senior executives is a positive change. This would take out much of the politicization that has arisen from the current structure. This model would give clear lines of accountability and responsibility, with ultimate authority lying with the minister, as it should.
The recommended changes to governance are strongly supported by the WGEA, and we ask the standing committee to support this recommendation and request that the changes be quickly drafted into legislation that can be brought before the House of Commons.
On the grain farmer ombudsman issue, the removal of the assistant commissioner position is a good change, for the reasons Conrad talked about earlier and for the reasons he has described in the report. The creation of the grain farmer ombudsman is a positive suggestion that would ensure the farmer's ability to have concerns addressed, and it's an enhancement from the current approach.
The creation of an ombudsman independent from the CGC might also help remove politics from policy decisions made by the CGC. The role of ombudsman is common in both federal and provincial jurisdictions, and these existing models could be used to help develop the structure.
On funding, we wish to preface our comments with a note of concern that the current funding of the CGC's operations may hamper Canada's ability to export. For example, there's a concern that CGC's policies governing the inspection of vessel loading on late shifts or on weekends may result in inspectors being unavailable. The COMPAS report acknowledges these concerns and specifically recommends that all overtime costs associated with inspection services be absorbed by the federal government. We suggest that this particular recommendation be implemented immediately, before the arrival of this year's peak shipping season.
COMPAS's recommendations regarding funding in general are necessary and are fully supported by the WGEA. We strongly believe that costs for activities undertaken by the CGC for the good of the country and/or the grain industry as a whole should be funded by the government and that cost-recovery components be limited to the marginal costs associated with individual services necessary for commercial transactions. Stable funding would help ensure long-run availability of a Canadian quality assurance system.
On the Canadian quality assurance system, we support the recommendation that the CGC collaborate with independent providers for customized inspection services.
One of the few positive items from the COMPAS discussion paper released in May was the recommendation that primary and export standards be harmonized. This recommendation is absent from the final document, and we respectfully request that consideration be given to preserving this change.
The report would make inward weighing and inspection optional, and the CGC's capacity to carry out inward weighing and inspection would be maintained at public cost in order to provide service to small handlers and farmers. We do not believe this recommendation would require legislative change, and we recommend the regulations be brought forward immediately. A move forward on this item would help relieve the budgetary pressure on the CGC in the short term.
COMPAS recommends the continuation of outward inspection and weighing. In our opinion, in the event that the CGC cannot provide these services, companies should be allowed the option of using third-party services. For example, we have a current situation in which the CGC may not be able to provide overtime services for outward inspection, yet they will not grant terminal exemptions.
:
I'd like to continue to talk a little bit about liability, misrepresentation, and the Certificate Final.
The recommendation that the CGC be liable for 33% of the harm incurred by revision to their Certificate Final is both positive and a concern. The recommendation would ensure that the government, through the CGC, would be liable for the integrity of the Certificate Final, which is a concept we can and do support.
However, limiting the CGC's liability to only 33% of the losses sustained when it initiates a course of action that causes economic harm to a stakeholder is unacceptable. If the CGC causes loss to a third party, either intentionally or negligently, it should bear the entire resulting cost. The principle of accountability would suggest that those who are responsible for damages should be held financially accountable for the impact of their decisions.
Furthermore, the recommendation itself assumes that the Certificate Final can be changed in the first place, which misses the point that Certificates Final are final. This runs contrary to general commercial principles.
We would recommend that the regulations governing the Canadian Grain Commission be amended to better ensure the integrity of the Certificate Final, to help assure that adjustments are not allowed after the certificates are issued.
The concept of CGC liability brought forward in the COMPAS report should also apply to situations in which the CGC makes changes to their interpretation of grain standards in the middle of the crop year. We have had three instances in the last two years in which the CGC has clarified their interpretation of grading standards. This has resulted in financial damages to the industry. We cannot purchase grain on one standard and then be expected to ship it on another, higher standard.
I will touch on the topic of licensing and security. While it is positive that the report carries forward the idea of accountability for the CGC when they fail to protect farmers, the point is missed that recent bankruptcies are simply the most current demonstrations that this expensive system does not work as advertised. COMPAS understands that the current system does not provide farmers with the protection they believe they have and it acknowledges the cases involved. However, COMPAS does not recommend reform.
Similarly, with respect to licensing, COMPAS has heard the concerns from new processors, such as trackside loading facilities, regarding the cost of becoming licensed. The recommendation, however, was not to reform the licensing system overall but to exempt some facilities.
COMPAS does recommend that the CGC initiate a consultation process as to whether any facility should be exempted or placed in a separate class. We would welcome such a review.
In touching briefly on dispute resolution, I will try to hurry along. The recommendations brought forward by COMPAS are positive and would provide structured and predictable protection for all members of the value chain, from farmers to shippers of various sizes. A structured dispute resolution process in which the CGC is compelled to participate would help ensure impartial application of regulation and rapid resolution of issues.
On the research side--again, in the interests of time I won't go through a deep review of our opinion--we do feel that research is critical and government funding of research is critical, so we think COMPAS has made some positive recommendations in the report.
:
Mr. Chairman, perhaps I could briefly address an issue that runs through the report. It's an apparent conflict between companies and farmers. We feel it is important to directly address this particular issue because there appears to be an underlying premise that there is a conflict between farmers and grain companies.
In our view, this is very concerning and an observation we take very seriously. It is a fundamental fact that the profitability of grain companies is directly tied to the viability of Canadian farmers. We recognize that the consultant did not invent this sentiment and that it is an accurate feeling of some producers who participated in the consultation process.
One of the sources of this belief is the feeling that there is inadequate competition between the various grain companies. However, objective measures of the competitiveness within Canadian grain handling paint a different picture, one of an industry which is competitively driving down farmers' costs. For example, the Quorum Corporation, the independent impartial grain monitor charged with measuring how savings are passed on through farmers, has issued the following quote in its most recent report. I would like to read it in full:
...this result can partially be explained by the heightened degree of competition that has existed between the grain companies themselves, whether it be in terms of the deeper discounts they put forward in their bids to secure tendered grain movements or in the higher trucking premiums they have been willing to pay producers in order to draw grain into [the new] facilities.
We ask the committee and the Government of Canada to consider this objective evidence of competitive behaviour in bringing forward changes to the Canada Grain Act. We also recognize that additional work needs to be done to bring farmers and grain handlers together. COMPAS attempts to address this by recommending round table processes to enhance the ability of stakeholders to work well together and by creating an arm's-length farmers' ombudsman. We suggest that these recommendations would help alleviate the concerns, at least to a degree, that have been brought forward. Improvements to this area would be helpful and would assist you to bring forward reforms to the Canada Grain Act.
In closing, I would like to say that we believe the COMPAS report has provided the government and this committee with a path forward for reform. Some of these suggestions require only regulatory changes. We ask that they be brought forward very quickly. Some will require legislative changes, but we do ask you to move quickly on that as well. For example, we see no reason why legislation could not be brought forward before the next budgetary cycle. We look forward to working with you throughout that process.
Thank you very much.
:
First, in regard to the consultation, I would say I did have the opportunity to meet with Mr. Winn and Mr. Halpenny. I also attended the public forum that was held in Saskatoon. Our president, Stuart Wells, attended a public forum in Regina. We had other NFU members attend other public forum meetings.
Although it was recognized at the beginning of the report that the National Farmers Union was consulted, we were puzzled that listing of any particular individual involved with the National Farmers Union was excluded; yet those people who were invited to comment but didn't were included. Barring that, in reference to the consultations, I was very troubled by Mr. Winn's comments that he didn't hear positive things about the Grain Commission per se. That is paraphrasing his language and it is probably not exactly right.
I was at that forum, and I have reasonable cause to be confident in the information about some of the other forums, where producers, one after the other after the other, got up and said, leave the Canadian Grain Commission alone; it works. It works for producers. The assistant commissioners work for us. We don't want any substantive changes made to the Canadian Grain Commission, in particular to its mandate. Yet we see that key point being deleted from the first sentence in the mandate, and that changes everything for us.
There were numerous examples in the meeting I attended in Saskatoon of producers having very positive experiences with the Canadian Grain Commission.
In terms of changes to the commission per se, there's a recommendation from COMPAS, for example, suggesting that samples need to be maintained for at least 24 hours after the producer or his agent unloads his grain at an elevator. Well, I really think that should be extended until settlement, because oftentimes a producer is confronted with a situation where he loads up a semi-trailer with his grain, it's delivered, and it's graded by the agent at that point, and he doesn't find out what happens until settlement time and he gets his cheque. If there's a dispute, a sample hasn't been retained. In my own experience, I've been told, well, we dumped it in the pit and that's too bad. So I think the recommendation COMPAS makes for 24 hours is in recognition of this problem that farmers are not delivering directly themselves any more but there are agents doing it for them. It's positive, but it does not go anywhere near far enough; those samples should be mandatory and should be official samples and should be retained until settlement is made. And give the producer the opportunity to exercise his rights under the act.
Another thing that I think is positive in the COMPAS report is they suggest that at the bottom of all contracts and whatnot that a producer signs, there should be a footer specifying what the producer's rights are underneath the act. That's positive; it should be there.