EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, March 11, 1997

.0904

[English]

The Chairman (Mr. Lyle Vanclief (Prince Edward - Hastings, Lib.)): Order, please. Good morning, everyone. I certainly see a quorum here. We will begin the meeting. As we know, it is concerning the further discussion of Bill C-72, an act to amend the Canadian Wheat Board Act. Our first presenters this morning will be from the Prairie Pools Incorporated. I don't know who's going to be making the presentation, but perhaps Ray Howe could introduce his colleagues so that it's on the record and then proceed.

.0905

Mr. Ray Howe (Vice-Chairman of Prairie Pools, Prairie Pools Inc.): Thank you very much, Mr. Chairman. Good morning, everybody.

Mr. Chairman and members of the committee, we want to thank you for the opportunity to meet with you today. I'm here today in my capacity as vice-chairman of Prairie Pools Incorporated. As you know, Alberta Wheat Pool, Saskatchewan Wheat Pool, and Manitoba Pool Elevators work together as Prairie Pools on issues of common concern.

All three pools are represented here. Charlie Swanson is the president of Manitoba Pool Elevators and he'll be participating in the presentation along with myself. Marcel Vanden Dungen is on staff at the Alberta Wheat Pool and represents Alberta Pool. I think you're all aware that there's an activity taking place in Alberta today that many people thought they'd like to be around for.

I am also first vice-president of the board of Saskatchewan Wheat Pool.

Prairie Pools provided our submission to the committee well in advance of this meeting, and I'm sure you all have it so we won't be reading the brief today. Where we have concerns with the legislation we have tried in our brief not only to point out the concern but also to propose alternatives to the current provisions. Rather than spend time reading our submission, we'd prefer to present the highlights and then spend time discussing our proposals with you.

I'm sure most of you are quite familiar with the pools and Prairie Pools, but I would like to take a little bit of your time to introduce our organizations again. Alberta Wheat Pool, Saskatchewan Wheat Pool, and Manitoba Pool Elevators are among Canada's largest farmer-owned cooperatives. Together we have over 100,000 prairie farmer member-owners. We handle over half the grain, oilseeds, and special crops delivered to the country elevator system and we employ about 5,000 Canadians.

Together the pools operate more than 700 country elevators. Individually, together, or as parts of larger consortiums we own terminal elevators in the ports of Vancouver, Prince Rupert, and Thunder Bay.

The pools and our joint exporting company, XCAN Grain Pool Ltd., act as agents of the Canadian Wheat Board in many countries around the world. We believe the partnership that exists between the pool and the Canadian Wheat Board is in the best interests of our farmers.

We are also very actively involved in the processing of prairie grains, oilseeds, and special crops. We have interests in Canada's largest oilseed crushing and processing company and western Canada's largest livestock sales operation.

The pools are involved in milling, malting, baking, the production of ethanol, fertilizer and chemical formulation and distribution, insurance, publishing, and more.

The pools recognize the value of the Canadian Wheat Board and in particular the three main pillars of wheat board marketing. Single-desk selling, price pooling, and government guarantees are as valuable to producers today as they were when the Canadian Wheat Board was established more than 50 years ago. However, we also recognize that the world is changing and our marketing institution has to adapt to capture the opportunities presented by the changes.

We support the government's policy goals, which, to paraphrase, is to build on the proven strengths of the Canadian Wheat Board system while at the same time to enhance its accountability to producers and improve its responsiveness to producer needs.

Our submission, which you have all received in advance, focuses on two main themes: first, the goal of increased accountability to producers; and second, improved responsiveness. We support strengthening the three essential pillars of the Canadian Wheat Board marketing: single-desk selling, price pooling, and government guarantees.

I'll now turn to Mr. Swanson to talk about the credibility theme.

.0910

Mr. Charlie Swanson (Executive Member, Prairie Pools Inc.): Thank you, Ray.

Good morning, Mr. Chairman, ladies and gentlemen. I would like to repeat Mr. Howe's thanks for the opportunity to meet with you today.

The future of our marketing system for wheat and barley is of vital importance to our members and to the pools as cooperatives. It is our opinion that for the Canadian Wheat Board there are two accountability streams.

Because its credit, borrowings, and initial price are guaranteed by the federal government, the Wheat Board must be accountable to Canadian taxpayers for its financial operations. We think the provisions of Bill C-72, which include the submission and approval of annual corporate plans and the requirement for ministerial approval - and in some cases cabinet approval - of financial decisions will ensure that the Wheat Board is financially accountable to government and, through the government, to Canadian taxpayers.

Given that the Canadian Wheat Board is a marketing agent for prairie wheat and barley producers and given that its mandate is to maximize returns for producers, it must also be fully accountable to prairie farmers. We believe that Bill C-72 falls quite short of that goal. We support the change in corporate structure to put in place a board of directors and we commend the government for stating that elected farmers must form the majority on the board. However, the legislation does not ensure that majority.

Our first recommendation is that the legislation be changed to make it a requirement that directors elected by producers make up two-thirds of the members of the board of directors of the Canadian Wheat Board. This configuration should be in place as soon as possible.

All of the elections should take place for the 1998-99 year. Half of the first elected directors should be elected for a two-year term and half for a three-year term so that all terms do not expire at the same time. After the first election, all directors could be elected for a three-year term, as specified in the legislation.

In addition, directors should be required to serve on good behaviour, as is currently the case with commissioners, and not ``during pleasure'', as is provided by the legislation. This should apply to both elected and appointed directors.

We support the concept of the appointment of a president or a chief executive officer to manage the day-to-day operations of the Canadian Wheat Board. The president or CEO should be fully accountable to the board of directors and, through it, to prairie farmers.

While we have heard the government's concern that it should retain the ability to appoint the president in recognition of a guarantee of initial prices, as we said before, we think this financial approval requirement in the bill should be more than sufficient.

What is lacking is accountability to farmers. We are concerned that if the appointment of the president remains with the Governor in Council, there is potential for conflict between the president and the board of directors, as the president may feel more accountable to the government that made the appointment than to the board. At the very least, the board of directors must have the power to terminate the appointment of the president/CEO.

We also believe that the chairman of the board should be elected by the board of directors and should not be appointed by the Governor in Council. We don't think the president should be a voting member of the board of directors. For virtually all farmer-based businesses, the president or chief executive officer is fully accountable to but not a member of the board of directors.

In our submission, we have suggested changes to the wording of Bill C-72 to deal with our concerns.

Ray will continue.

Mr. Howe: The second theme of our submission is improving flexibility and producer responsiveness while maintaining and enhancing the three pillars of the Canadian Wheat Board market. Any changes to the Wheat Board marketing system must not put the pillars at risk. Rather, they must be strengthened.

Some of the provisions in Bill C-72, such as storage payments, tradable producer certificates, and giving the Wheat Board the ability to use risk management tools, are positive both for the goal-improved responsiveness and flexibility and for the three pillars of the Wheat Board marketing system.

However, in our opinion, some of the provisions of Bill C-72 are not. We believe the government must continue to guarantee both the initial price and the adjustments to the initial price. There has never been a deficit in the pool account caused by an adjustment to that initial price, so the financial risk to government is virtually non-existent.

There is a risk that the withdrawal of the adjustment guarantee could pave the way to a total withdrawal of the initial price guarantee. The government says the sole reason for removing the guarantee of adjustments to the initial price is to speed up the process. We think that can be achieved by removing the requirement for Governor in Council approval and requiring only the approval of the Minister of Agriculture and the Minister of Finance.

.0915

Prairie Pools Inc. is extremely concerned with the provision in clause 20, which amends section 39.1 of the Canadian Wheat Board Act, the section dealing with cash purchases of wheat. We believe giving the Canadian Wheat Board the power to make cash purchases of wheat will ultimately result in the demise of the single-desk selling and price-pooling pillars of the Canadian Wheat Board marketing.

We have heard arguments that the board needs to be more responsive to the needs of farmers who want full payment up front for their wheat. We think other provisions in the bill, especially tradable producer certificates, will accomplish that goal without jeopardizing the pillars of the Wheat Board marketing.

As farmer-owned grain-handling cooperatives we would be remiss if we didn't also point out our concern from their point of view. The grain acquisition system on the prairies complements the Canadian Wheat Board marketing function. However, if the Wheat Board were given the ability to acquire grain directly from farmers, through cash purchasing, it could technically direct the deliveries of grain and ultimately have an impact on the configuration of the country elevator system and thereby on the many millions of farmers' dollars that are invested in that country acquisition system.

Having said that for wheat, we must point out that we think barley is a different situation. A large percentage of feed barley grown in western Canada is used and/or marketed domestically by individual producers outside the Canadian Wheat Board's jurisdiction. This can and has caused severe problems for the board as it tries to source grain to fulfil its export market commitments. In the 1994-95 crop year, for example, the board had to forgo a major sale of feed barley to Japan because it could not attract barley through the regular, initial price, final payment system.

For producers to continue to benefit from the Wheat Board marketing of export barley, it is clear that we need to give the board the tools it needs to get the barley it needs to meet those export sales. We think some form of cash purchasing will help to solve this problem. For that reason, in our submission we are proposing amendments that would allow cash purchasing of barley, for example, from the trade or grain elevator companies.

Mr. Swanson: Now we get to the contingency fund. The legislation provides for a contingency fund to back up initial price adjustments and to backstop cash purchasing. We believe the government should continue to guarantee adjustments to the initial price so the contingency fund is not required for that purpose. In addition, the limited form of cash purchasing that Mr. Howe just outlined can be backstopped with regular risk management tools such as hedging.

Given that producers are already over burdened with check-offs and user fees and given that there is little need for the fund, we are suggesting the provision for a contingency fund be removed from the bill.

There is one other provision in the bill that we think needs to be tightened up a little. That is the provision in subclause 12(3), which relaxes quota and contract requirements to allow producers to deliver to condominium storage that they own or lease.

We agree with the goal of the subclause, which is to allow farmers to use condo storage as an extension of on-farm storage, but the way it is done in the bill concerns us. The bill proposes that the quota and contract requirement be relaxed for facilities exempted by the Canadian Grain Commission through the Canada Grain Act. It is our information that the commission cannot exempt only condo storage under the act. It is only permitted to exempt the entire facility.

As increasing numbers of exemptions are made for condo storage under the Grain Act, more and more entire facilities would be exempted. This could result in over-delivery. This would impair the Wheat Board's ability to manage deliveries and would erode equity and access for all producers.

We would suggest the exemptions be provided by the Governor in Council as facilitated by the Canadian Wheat Board Act and as recommended by the board of directors.

.0920

Mr. Howe: Mr. Chairman, we realize we have taken a fair bit of time to explain our concerns and recommendations today, but we believe the minister and the government have given us an excellent opportunity to make this legislation right for prairie producers.

In summary, we want to make it clear that the pools are supportive of the policy goals of the Government of Canada in putting forward this legislation. However, we must stress that the fundamental pillars of the Canadian Wheat Board marketing system - single-desk selling, price pooling, and government guarantees - are just as important now as they were when the board was first established and should not be jeopardized.

We are pleased we've had this opportunity to provide our suggestions for fine-tuning this legislation to ensure it is in the best interests of prairie producers. Thank you very much.

The Chairman: Thank you very much, gentlemen. We will now go to questions and comments from the members.

We have another presentation this morning, so we have until 10 a.m. with the Prairie Pools. That gives us 40 or 45 minutes to spend with them. I'll go first to Mr. Calder, then to Mr. Hermanson, and then to Mr. Chrétien.

Mr. Murray Calder (Wellington - Grey - Dufferin - Simcoe, Lib.): Thank you,Mr. Chairman.

Good morning, gentlemen.

I was very pleased to hear that you agree on the three pillars, in particular the government guarantees, which leads me to my question.

The chairman and the CEO are going to be two very important positions, as they are right now. I understand the Canadian Wheat Board does about $5.8 billion worth of sales each year. Under the government guarantees that's something we're going to be responsible for if something goes wrong.

My question is, do you feel criteria should be laid out that the chairman and the CEO should fall into? Obviously, with an enterprise that big, the average farmer... I know I wouldn't have the expertise if I were put into the chairman's position or the CEO's position to run an enterprise that big, so I'd like your comments as to the types of criteria there should be for those two positions.

Mr. Swanson: As you have indicated, that is a very important and very responsible position. Certainly, some of the criteria would be that people in the position have a fair amount of experience in the grain industry and with business management. We know there are people with those qualifications out there.

In addition, the requirements that a business plan be laid out and the initial payments be established at the beginning of a crop year, I think, give the government a fair amount of comfort and protection in that those initials to start the crop year are not going to be so big that they put the taxpayers of Canada at risk. As we look back over the history of the Canadian Wheat Board, the track record has been extremely good, so there are certain people there with those kinds of qualifications who can be appointed to manage this.

Mr. Murray Calder: I have one last question.

Given the way the board is set up right now, when we go internationally to sell our products, the chairman probably is going to have to have a lot of expertise in sales. As I understand it, foreign countries that deal with us deal through the Canadian Wheat Board and they're not really interested in dealing with independents.

Mr. Howe: I think you're viewing the chairman a little differently than we are. We're viewing the chairman as the chairman of the board. The board would elect the CEO. The CEO would be the salesman, and the sales would take place under him. As we understand corporate governance, the job of the chairman of the board would be to make sure the guidelines the board put in place were followed by the CEO and the salesman of the board.

We're viewing it just a little differently. We don't see the chairman of the board as performing that specific role you talked about.

Mr. Murray Calder: Okay. Thank you, Mr. Chairman.

The Chairman: Mr. Hermanson.

Mr. Elwin Hermanson (Kindersley - Lloydminster, Ref.): Welcome, gentlemen, to our committee. It's a pleasure to have you here. I appreciated your presentation and must say I am in agreement with several points. In fact, in many ways what you've drafted is far superior to what was given to us, or tabled by the government itself and our agriculture minister, Mr. Goodale.

.0925

I thought you might touch on the fact that this legislation may be so bad it will never be passed, and I guess because you're looking at it more from a substantive viewpoint rather than from a technical viewpoint as to whether it can actually become the law of the land, that may be why you didn't include it in your presentation.

As you pointed out in your presentation, there are a lot of problems, particularly with the governance area, and there will be a lot of debate on some of the other issues you reflected upon. Our committee is travelling next week, and with the number of amendments that I suspect will be proposed and supported by the many different organizations across the prairies...the bill has to be substantially changed or it will be a flawed bill that is passed. Perhaps it won't be passed at all, which will mean that after three or three and a half years of debate under this current government, nothing at all will have happened with regard to bringing more accountability and flexibility to the Canadian Wheat Board.

On your presentation, I agree basically with what you have suggested in changes to the governance. I would like you to comment on this, though. You suggested that two-thirds of the board of directors be elected. I am wondering why you wouldn't say they should all be elected, with perhaps the government providing an ex officio member or a non-voting member, as long as they do guarantee initial prices or have some jurisdiction over export permits, etc.

I would think farmers in your pools are an example of farmers being able to provide good governance to an organization, and I don't see why the Canadian Wheat Board couldn't be entirely governed by elected representatives, with the caveat that the government appoints an ex officio member, as long as they do maintain an interest in what's happening.

As far as the contingency fund is concerned, you didn't comment on the fact that it has been a trade irritant.

My understanding is that the contingency fund wouldn't have to be huge. Perhaps it would be a method of reducing government involvement in the Canadian Wheat Board. As you have suggested, with the price guarantee and with the requirement that there be Privy Council approval for price increases, the government is very much involved in the day-to-day management of the board and the decisions it makes. Perhaps a contingency fund, which was initially a loan guarantee by the government, could gradually be replaced by a check-off by producers - and I'm just throwing out some ideas. That would reduce government involvement in the day-to-day management of the board, which at the same time might be a positive thing as far as trade irritants are concerned. I would like your comments on that.

As far as the condo storage exemption is concerned, wouldn't it be better to suggest that rather than on a case-by-case basis, condo storage be exempted but the remainder of the facility not be exempted? I'm again throwing this out as a suggestion. It would cover the entire situation, without having to make decisions about individual facilities.

I've covered the experience aspect. Mr. Calder mentioned that he thought there would need to be a lot of experience on the part of the people in place. I think your organizations prove that farmers can put competent people in place to run their organizations, and I mentioned that earlier.

Those are the key points flowing from your presentation that I would like you to cover.

Mr. Swanson: Thank you.

First I'll deal with your comments regarding the bill.

I think that really highlights the importance of dealing with this at committee stage after first reading, rather than after second reading. It gives all of us a little more input into what the final bill will look like and to make some of the changes that we think are important before it comes back for second reading. I think working together we can in fact come up with a bill that meets the needs of all.

I'll touch also on the condo storage question. Mr. Howe will deal with the other two.

As we mentioned in our opening comments, a provision in the Canada Grain Act requires that in a facility the condo cannot be separated from the main workhouse. It's all or nothing.

.0930

I'll repeat the concerns that we identified earlier. If we have a number of these facilities that are in fact granted special status, we all of a sudden end up with facilities providing unequal opportunities for producers to deliver. I think that's the real concern. Because we have to deliver our grain into the system in Canada over a twelve-month period, there has to be some equity, equality, and opportunity to be able to deliver. If we start issuing a special status for some facilities, I think we get away from that and put some people at a disadvantage.

Mr. Elwin Hermanson: What I was suggesting was that when you amend the Canadian Wheat Board Act, you can also make consequential amendments to other acts. If there were conflicting provisions in the Canada Grain Act and the Canadian Wheat Board Act, we could actually amend the Canada Grain Act and standardize things so that condo storage would be exempted but the main grain handling facility would not be. That's what I was suggesting as a better route than approving or exempting whole facilities on a case-by-case basis - and that includes the non-condo storage.

Mr. Swanson: That certainly may be possible, but we'd need to take a look at that to see what the implications are.

Mr. Howe: Mr. Chairman, in regard to the contingency fund, I'll just touch on it and Marcel will then cover off. I thought there were only three specific questions in among a lot of other comments there.

In terms of the contingency fund being a trade irritant, we don't see that as addressing it totally. We think it may still be a trade irritant. At any rate, the problem we face in Canada is that we've pretty nearly given everything away when we're compared to other governments and to what they do to support the agricultural industry, particularly in the export area. It therefore doesn't make any sense at all to give something else away and to put in place a contingency fund that was expressly identified to backstop a situation that has never arisen in the past. In the mind of the government, if you will, the contingency fund must obviously be for something further down the road, for something else. We're suspicious of that and we wonder what the point is.

Farmers are hard-pressed enough now in terms of getting a dollar out of their bushel of grain. All the contingency fund does is take another penny, two pennies, or whatever it is, out of a bushel of grain. It isn't necessary; we don't need it now. We may look at it in the future, we may look at it in trade discussions, but we certainly don't see any point in giving it up now and in starting with a fund that hasn't even been called for, especially when we're not sure this fund will do anything that isn't being done at the present time at very little cost to the government. It doesn't make any sense.

Mr. Elwin Hermanson: But it is an excuse for the government to interfere with the governance of the board, and I think you have to agree, Ray, that it's far more important that we have export credit guarantees than it is to have initial price guarantees.

Mr. Howe: But that's all part of it, and that's where our suspicion comes into play. Certainly the government has to be involved. We'd be naive to think the government isn't going to be involved in the export of grain or in the export of agricultural products. It is going to be involved. Just look around the world; government is involved all over the world. So to do it ourselves doesn't make any sense at all.

I hope I've touched on what you were talking about. In our minds, the contingency fund won't do. For what the bill says it's there for, for what it's designed for, it doesn't need to be there.

Mr. Elwin Hermanson: It's really an insurance policy, that's all. The export credit -

Mr. Howe: That's all it is, and we can't really afford it.

Mr. Marcel Vanden Dungen (Representative, Prairie Pools Inc.): I would like to add to that, Mr. Chairman.

We're still very aware that other countries, particularly the European Union, are using export subsidies. While the Americans have not for over a year now, they still have them in place, and we hear a lot of talk about them possibly re-introducing those subsidies. They've warned the EU that they're concerned about the levels of export restitution payments that the EU is making, and the U.S. is planning on at least making contingencies for maximum use of the EEP in the future. Whether or not they do implement it or not is another matter, but there still is that risk of other governments being able to use export subsidies in competition with us.

In addition to the risk Ray outlined, the other part about the contingency fund is the fact that it is going to be coming from farmers. You mentioned a check-off, but it's important to remember that whatever method is used - through Wheat Board savings on financial transactions, through a check-off, or through whatever form - it is coming out of farmers' pockets. We're seeing more and more costs being passed on to farmers already, so that's another important point that I think can't be lost in this.

.0935

Mr. Elwin Hermanson: If it's not used, income generated through the interest garnered on this would be an asset rather than a liability.

Mr. Vanden Dungen: Yes, there could be interest garnered, but I think it should be up to farmers to decide how they want to invest their money. It shouldn't be a forced check-off.

The Chairman: Okay, we'll move on to Mr. Chrétien, followed by Mr. Easter.

[Translation]

Mr. Jean-Guy Chrétien (Frontenac, BQ): Welcome to the committee. I suppose you have influence with my colleagues since quite a few of us are here to receive you this morning. We were almost on time and that does not happen very often these days. On the government side, everyone is here, eight out of eight, and this morning we even had an NDP member with us. That is a sure sign of the importance of your testimony.

Some of your main concerns, particularly the one that has to do with the role of the CEO, will certainly not please the governing party, or any other party that has been in power. You are certainly aware that the presidency of the Canadian Wheat Board is a position akin to that of a deputy minister and that the person occupying this position can make up to $160,000 a year.

Ever since I became interested in politics, at age 15, partisan appointments have got my dander up. Just because Warren Allmand was a member of Parliament for 30 years does not mean he has the expertise required to be the head of an organization. The same might be said of André Ouellet. Oftentimes, these positions which are filled by appointment free up a riding or serve to reward very handsomely a person who has dedicated himself to the party for years. But, once again, just because one has all those years of dedication or unpaid service does not mean that one has the necessary expertise to manage the Canada Post Corporation, the Canadian Dairy Commission or the Canadian Wheat Board.

My party is obviously in favour of having two thirds of the members of the board of directors elected and in favour also of having them chosen from among farmers, that is to say from among the very people who are most directly involved. I very much doubt, however, whether that will be written into Bill C-72 since the government always wants to maintain its control over the Canadian Wheat Board, and over most of the other boards as well. Be that as it may, you can rest assured that I am in support of items 5 and 6 concerning the role of the president. I also doubt whether the government will give you satisfaction in that regard.

I would, however, like some clarification concerning recommendation number 8. It recommends:

That Bill C-72 be amended to restrict cash purchases by the Canadian Wheat Board to barley from the grain trade.

Could you tell me why this should apply only to barley?

And finally, in your last point, you recommend:

That the authority to exempt producer condominium storage from the delivery restrictions of the Canadian Wheat Board Act, remain with the Canadian Wheat Board.

My colleagues probably understand quite well what you mean by that, but I must confess my ignorance concerning item 10 in particular. I will listen closely to what you recommend.

[English]

Mr. Swanson: On the question of the board chairman - and we're separating the position of president/CEO from that of chairman of the board here - as we say in our comments, we think it's very important that the board of directors has control over who the board chair should be.

.0940

In terms of salary, I think we would have to leave it to the board to determine what the responsibilities are and what the workload is. There are ways of evaluating what that kind of position should pay. I think we should leave that to the board. As for the dollars that you were throwing around, up to $160,000, we have no comment on that. I think we need to leave that to the board of directors. They will determine what in fact the responsibilities are and what kind of a salary should go with that.

Mr. Howe: Mr. Chairman, Marcel will deal with the cash purchasing of barley vis-à-vis wheat and try to explain why we're coming at the two commodities just a little bit differently.

Mr. Vanden Dungen: I think it's important to back up to our original point: fundamentally, we want to see the three pillars of Canadian Wheat Board marketing - single-desk selling, price pooling, and government guarantees - strengthened through this legislation.

We have outlined a potential problem with respect to cash purchasing and the impact it could have on pooling in particular and potentially on single-desk selling. The reason we differentiate between wheat and barley is the fundamental economic difference between these two markets. The Wheat Board does act as a single-desk seller for wheat because the vast majority of wheat produced on the prairies is marketed through the Canadian Wheat Board, either to export markets or to domestic milling markets.

It's a totally different situation for barley. About half of the production of barley on the prairies is used domestically on-farm, and of the remaining 50%, the board markets approximately 60%. So you can see that the vast majority of the production of barley is not marketed through the Canadian Wheat Board, which consequentially makes it very difficult for the board to act as a single-desk seller of barley and which in turn makes it very difficult for the board to source barley under certain circumstances.

We outlined the example of the lost Japanese feed barley sales in 1994 and 1995 and I think we've seen other examples throughout the years of the board's difficulty in sourcing feed barley in particular due to its lack of ability to act as a single-desk seller.

So we're saying that offering a cash price for feed barley may be one of the options the board could use to improve its sourcing on barley. We don't think that is necessary for wheat because it can and does act as a single-desk seller.

Mr. Swanson: There was a question regarding condo storage. Perhaps I can give you a bit of an explanation as to what condo storage is. Condo storage is a facility that is built by individual producers. Rather than investing the capital to build grain storage on his farm, the producer would build a facility beside an existing grain-handling facility, whether that is a cooperatively owned or a privately owned grain elevator.

Our concern is that exempting that condo storage to allow that producer to deliver into it requires a Canada Grain Act exemption for the entire facility, and it doesn't split out the ownership of the condo storage from the ownership of the entire grain handling facility. In effect, as we mentioned earlier, under the current Canada Grain Act it would mean that the entire facility would be exempt from quota restrictions or from delivery opportunity by producers. That means that those people who access that particular facility would have quite an advantage over other producers who did not have similar opportunities.

We're saying that you should exempt the condo storage but not the total facility from the Canada Grain Act requirements.

Does that help to clarify where we're coming from?

[Translation]

Mr. Jean-Guy Chrétien: My question is for our three witnesses and more particularly for the one who is in the best position to answer.

We are regularly told that producers use their own trucks to sell their crops directly to United States buyers, in violation of the Canadian Wheat Board Act.

.0945

Are you in a position to tell me this morning if last week, two weeks ago or last month, any further illegal sales were made? If yes, does the government seem seriously intent on enforcing the law with respect to these so-called illegal sales?

[English]

Mr. Howe: In response to your first question, whether sales are still going on, I don't live close enough to the border to know. I guess I'd be naive to think there wasn't somebody trying to, always. It appears whenever there's a market the borders don't mean as much to some people as they do to others.

Your second question, whether the government is serious about maintaining the law relative to delivery of grain in the United States, contravening the Canadian Wheat Board Act, I hope they are. What more can I say? It would appear they are. There are people in court today over that issue.

[Translation]

Mr. Jean-Guy Chrétien: Am I to understand that this type of thing is not at all wide-spread and that if such sales are indeed going on, it is at a very minimal level and that that sort of thing has practically stopped?

[English]

Mr. Howe: I'm a poor one to answer that, because I'm not familiar with it to that extent. Personally, I have never delivered a bushel of grain to the United States, and I've farmed for 35 years. I think I speak for the majority of farmers in western Canada. But there are some who take a different view.

The Chairman: Thank you. We'll move on to Mr. Easter.

Mr. Wayne Easter (Malpeque, Lib.): Thank you, Mr. Chairman.

There's been a lot of discussion around the three pillars.

Marcel, in terms of the question on cash that you answered for Jean-Guy Chrétien, I know a number of us, even myself, have expressed concern over what impact that will have on price pooling over the longer haul, depending on the make-up of the board of directors.

Just so I'm clear, is Prairie Pools saying it's all right to use the cash option for the barley but it's not to be allowed for the wheat at all? I want to be clear on specifically where you're at here. Is it your view that tradable certificates and other means will accomplish what we're trying to accomplish in the bill with the cash?

Mr. Vanden Dungen: Again, our basic position is that because there's a fundamental difference between the wheat and barley markets we don't think cash purchasing is necessary for wheat, but there is something required for barley.

Mr. Wayne Easter: I understand your barley argument. I just wanted to be clear that you were saying it isn't required for wheat.

I guess I'm a little worried, as we go into this set of hearings and talk about the make-up of the board and what the board can do, and what it can do domestically in terms of its own governance, that we not lose sight of the fact that the bottom line of what's important here is the ability of the Wheat Board, which has always had the backstop of Canada as a nation in terms of going out there and selling grains in the world... There's no agency with as great a credibility. We have to keep that in mind at all times.

I have two questions. The first is in terms of the make-up and election of the board. This is something that has come up already, but I gather you're saying this legislation should be more specific than it currently is in terms of how the board is made up, what the numbers are and when that's going to occur. I want your answer on that.

Second, there is the question of the appointment of the CEO and president. Certainly where I come from, if the government is going to continue to give a lot of guarantees - guarantee borrowing, guarantee the initial payment, give the credit guarantees it has - then we have to have some very strong involvement in terms of the appointment of the CEO. Even in the Wheat Board Grain Matters in November-December they indicate that the interest earnings on some of the guarantees is $61 million. We're talking a lot of dollars here.

.0950

I don't want to get into the question of trade-offs, but if you're strong, if you're firm on your position that the government shouldn't be involved in those appointments, are you willing to trade off those government guarantees?

Mr. Swanson: Mr. Easter, no, we are not prepared to trade off, but I think we have to keep in mind that this is farmers' money we're talking about here in terms of the overall marketing of grain. It is farmers' grain, and the farmers pay all the costs of operating the Canadian Wheat Board. We're saying that it very clearly indicates in the bill that at least two-thirds of that board of directors be elected producers. We don't have a problem with the government appointing the other one-third. They can pick people who have grain expertise, finance, marketing, whatever expertise to that board to have input into the board decisions.

The responsibility of setting those initial payments is certainly very key here. I'm sure even in the last two or three years the board and the government through negotiations have been very careful in establishing those initial payments to avoid the risk of any kind of loss and to create any kind of trade arguments we might get into. I'm sure that same kind of due diligence will continue and that the risk of exposing the government is fairly minimal. However, it is extremely important that the credit guarantees be there and that those initial payment guarantees be there as well. Having said that, I think the due diligence that goes into this will protect the government.

Mr. Wayne Easter: Keep in mind the big one as well is the guarantee on borrowings. We're talking a lot of money here. If you have a chief executive officer who is appointed by the government it perhaps has some credibility for the agency in terms of your involvement around the world. This is a major change, moving to a mixed enterprise from a crown cooperation.

Do you want to go the full distance all at once? Personally, at this stage in the game, I'm certainly willing to hear where farmers want to come from, but there needs to be some government involvement in terms of the appointment process of one of those officers at least, although we're saying two at the moment.

Mr. Howe: I can't add much relative to what Charlie has said. When farmers look at it they want accountability from the board. That's what keeps coming back all the time. How do you get accountability? You get accountability by electing somebody yourself and then holding them responsible, with the proviso that they can be removed if they don't perform to your expectations. For that reason we think two-thirds of the board should be elected by the farmers themselves.

On the other third, we appreciate the government has a very real interest in this and we feel they could sit around that table, and they'll have as much input as anybody else. If you're talking about trade-offs...and I don't know that this is the place to give you the trade-offs and negotiations. It's a large group and we could be here for a long time.

The Chairman: Sometimes small groups don't work, though, Ray.

Mr. Howe: If the government insists on making the appointment of one of these positions...and it would be the CEO president. I'm sure it wouldn't be the chairman of the board, because it depends on your definition of what the chairman is appointed for, and we had a little difference of opinion on that role. When that's identified perhaps this one could be appointed by the board itself. When you talk about the president and the CEO, if the government insists they appoint that individual, then perhaps it would be only fair to suggest that this board can terminate his position if he's not performing as they expect him to perform. A big part of this job is going to be marketing the farmers' grain at a price that is acceptable to them.

Mr. Wayne Easter: That's right. We can't lose sight of the fact that a big part of it is marketing the farmers' grain.

.0955

Ray, if you have a chief executive officer in there that the board overwhelmingly is having difficulty with, and there are discussions with the minister and the government can remove that CEO, then I can't see why the government wouldn't. I just can't imagine it. It would work that way with common sense and communications.

What you have is a direct link two ways. You have a direct link to your board of directors. If, in effect, by majority vote they want to remove that CEO, I can't see the government going against it. On the other hand, you have a direct link from the CEO to the government in the involvement of probably the most important marketing agency this country has.

Mr. Howe: I agree with you. Having said that, what difference does it make who appoints the guy in the first place?

Mr. Wayne Easter: In terms of the government guarantees and the Minister of Finance and the Governor in Council, I think it makes a lot of difference, Ray.

Mr. Howe: I have to come back to our proposal as outlined under ``accountability'' in the draft that we submitted to you. We say we agree with and support the provisions in the legislation, which include the submission and approval of annual corporate plans and the requirements for ministerial and, in some cases, full cabinet approval of financial decisions. What more do you need? Full cabinet approval.

The Chairman: We will have Mr. Benoit for a short round and then Mr. Collins. We're fast running out of time. We have another group this morning.

Leon.

Mr. Leon E. Benoit (Vegreville, Ref.): Thank you, Mr. Chairman.

Welcome, gentlemen. My philosophy on the reason for the board existing is much different from Mr. Easter's. I don't believe the board existing for the sake of the board is particularly important. What is important is how it serves the people it's meant to serve, and it's a basic difference in philosophy.

I'd like to get to the legislation itself, and I'm going to just stick to a couple of different clauses, the first being the cash purchase provisions, again. One of you commented in your presentation or in your response to a question that you are concerned that the cash purchase provisions could affect the institutions, the country elevator system, and of course that system has been affected already dramatically by the board over the years. The elevator companies get a lot of their revenue with no risk through grain handled for the board. Elevation charges probably would be much, much lower if the board didn't happily, it seems, continue to pay for elevation.

I remember a meeting I was at with Dick Dawson, vice-president of Cargill. It was an Alberta Institute of Agrologists meeting in Vermilion, Alberta. Someone asked him whether he wouldn't be much happier if the Wheat Board was gone so you could have more open marketing, and he said there was no way he would want that. What we have here is something that would never happen anywhere else in the world. We have elevation charges that are possibly twice as high as in the United States, more than twice in some cases. They are guaranteed at no risk because the board is there, so he said we want the board there from that point of view because it's money we're making with very little risk and with no outlay of capital. So the board already has affected how the country elevator system works.

What I want to get to is the cash purchase power proposed in the legislation and your proposals regarding this. I'm going to look at it from the point of view of the feed grain market - barley and feed wheat. I've had a concern expressed to me by cattlemen and other feeders that this cash purchase provision would add instability to the feed grain market that they just couldn't live with. If the board at any time starts purchasing grain on the cash market, whether it be from individuals, from grain companies, or from the United States or somewhere else, it could have a huge impact on the Canadian market. The market stability that is there now would be thrown out the door and prices could rise dramatically very quickly. So they had a great concern about having this cash purchase power in barley and feed wheat.

I'd like you to comment on that from the point of view of the possibility of great instability in the market.

.1000

Mr. Swanson: First of all, I'd like to respond to your opening comments. You've left the impression that handling grain is a bit of a golden cow. I want to assure you it isn't.

The grain companies are totally responsible for the capital costs of building the elevators and for the farmers who haul grain to those facilities. It's certainly not financed by the Canadian Wheat Board.

The grain companies are responsible for the grade of grain and for delivering the grade of grain that they've taken in the door and shipping it out. That's a grain company responsibility, not the Canadian Wheat Board's. They're responsible for maintaining the condition of that grain, certainly the kind of quality that's shipped out. Again, if that bin of grain spoils, it's no one else's responsibility but that particular grain company. If it happens to be farmer-owned, then it goes back to those farmers.

There's a bit of a misconception here on what the responsibilities are and who assumes financial responsibility for some of this.

Mr. Leon E. Benoit: I would just like to clarify that this was not what I was saying at all, though.

Mr. Swanson: But that's the impression you were trying to leave.

Mr. Leon E. Benoit: What I was saying is the elevator companies handle a large percentage of the board grain business. It really does allow for less competition. We would have seen a quicker change in the elevator system had that not been the case, had there been more competition in the system. That was the only point I was making. I fully understand and appreciate the risk that elevator companies take. I know it's a very difficult business right now.

Mr. Howe: Number one, the Wheat Board isn't responsible for the tariffs. It's the Canadian Grain Commission where that comes into play.

Mr. Leon E. Benoit: I understand.

Mr. Howe: If you think it's a cash cow, I wish you'd take us and show us where it is, because that isn't where we make our money.

Mr. Leon E. Benoit: That's not what I was saying, though. It's not what I was saying at all.

Mr. Howe: That's the insinuation you left with everybody else here.

Mr. Leon E. Benoit: No. I was saying the system would have changed a lot more rapidly and would be a lot better able to compete if competition had been allowed, instead of the board really providing such a large portion of the grain with no competition.

Mr. Howe: That's your opinion. I don't think we export as much grain out of this country, upwards of 30 million tonnes a year, as we do without a system in place that has some regulations in it to some extent. They all cooperate and work together, and the board's part of that.

If you're going to start using the argument you're using relative to the board's position causing some of the high costs that are involved with handling grain, then you have to go right through the whole system. You have to include the railways; you have to include everybody. We could move 20 million tonnes of grain out of this country rather than 30 million tonnes. I'm not sure that would be in the best interests of the farm community either, but that's where it could end up.

Mr. Leon E. Benoit: What's more important, of course, isn't the amount of grain we move out of the country, it's the amount of money the farmers make.

Mr. Howe: That's right. If you can make twice as much off one bushel of grain, well, of course, you'd just as soon sell one bushel as two bushels, but that's not the way it works. The margin often is on the volume. If it's going to be on the volume, you have to be able to deliver the stuff and get rid of it. Our system has accommodated that at this point, but that's another point. You and I could probably talk about that one for a long time.

Mr. Leon E. Benoit: Back to the cash purchase and the effect that could have on feeders -

Mr. Howe: Right.

The Chairman: Quickly then, gentlemen. We have to move on.

Mr. Howe: Feeders haven't told us that, but I can understand where they're coming from. They would feel that way because it's one more buyer in the market. If they're going to drive the price up at their expense, then they're going to see that as something they don't want and that's how they're looking at it.

If I were buying and had to bid against somebody else, I'd think I could have had it cheaper if he hadn't been bidding on it, too.

Mr. Leon E. Benoit: Come on now. It's not just a matter of one more buyer. That buyer happens to be the only organization that can sell grain outside Canada. When the panel recommended this cash purchase they also recommended that there would be competition to the board for export sales of barley and some types of wheat. They have those two recommendations together.

What has happened is that the part of the panel recommendation that would have allowed competition by grain companies or by individuals on sales outside of Canada has been left out, but the cash purchase section has been left in. So this one more buyer, as you put it, happens to be the only buyer. It's the buyer who controls all -

Mr. Howe: The other side is the domestic side of it that they're talking about. So you have two different fields. That's all. I'm not arguing that point.

Mr. Leon E. Benoit: It's the same commodity that's being purchased. One affects the other.

The Chairman: We'll move on to Mr. Collins.

.1005

Mr. Bernie Collins (Souris - Moose Mountain, Lib.): Thank you very much, Mr. Chairman. I want to say that we're very happy to have the members of the pool here. We always look forward to your presentation.

I think it's significant - and certainly Mr. Chrétien noted it - that we have a very deep concern about this bill, and that's why nine or ten of us are here today.

We're not tinkering around the edges, as some have suggested. That would be faulty on all of our parts. We're dealing with you, the farmers of western Canada, in putting together what I think is going to be a future direction in the governance of that board.

Having said that, I should point out that my friend from Kindersley - Lloydminster made the observation that farmers can put competent people in place to serve on the board. I agree with that. I think the election of the advisory board showed that; they wanted competent people.

The bottom line is that whether it's two-thirds, Ray, or the majority - and I have no problem with two-thirds serving on that board - they will be accountable to all of you. I agree with you that we have to retain the pillars of that board.

Let's get back to one thing, that is, the president and the CEO. Wayne touched on it. I have some concern that if you are board members and the minister puts in place someone who is not functioning, if he's not functioning in your interests on the board, he's not functioning in our interests as the government. I don't think it would be too long before we, through the minister, would dismiss him.

I would just like you to react to that kind of thing. Would that be a stumbling block for us to move forward? I think there are a lot of things in this bill that are really significant. With your work and with those who want to keep the board, we're going to do the right thing.

Mr. Swanson: Thank you. The only comment I would make is that, as we've mentioned at a couple of other points during our brief, our concern is that some of the issues we have identified have not been spelled out in the bill. Two instances are the issue of two-thirds of the elected board and how the president/CEO may be hired or fired. Let's put a little more clarification in there on where those responsibilities fall so that, going into this, everybody knows that, yes, there are certain obligations and responsibilities and that those rights would be there if things weren't working as everyone had hoped they would.

The Chairman: Briefly, please.

Mr. Bernie Collins: That's why I think maybe there's some open-endedness. We want you, along with the others... I'm sure the Canadian Federation of Agriculture and others are going to give us some thoughts on that matter.

We write it all in stone and say, see, you've made up your minds, you're not flexible. I'm sure that we and the minister are flexible.

I appreciate what you're saying, sir. I think we're going to be able to work out those things so that at the end of the day, as that board comes into place, we can leave it some leeway to take some direction on where you'll go now and in the future. Thank you.

The Chairman: Ray, do you have closing comments?

Mr. Howe: Just in conclusion, Mr. Chairman, we're on side with you. We want to make the board a stronger entity to serve the producers of western Canada. That's the only reason we want it. If you want to call it tinkering, whatever you want to call it, we want to make the bill work, and we think that many of our suggested amendments to the bill will help do that. Thank you very much for hearing us.

The Chairman: Gentlemen, I thank you very much for your contribution. As you know, we will be spending a fair bit of time on this issue over the next two to four weeks, and we appreciate your input. If you have further comments, Ray, you will get them to us one way or the other over the upcoming days and weeks. Thanks again.

We do have the room for just a few minutes past 11 a.m.

Jack, I hope you don't think we were cutting into your time. That's the last thing we want to do.

Jack Wilkinson and Sally Rutherford, would you come to the table, please. Welcome again, Jack and Sally, to the committee. We have a copy of your brief. I don't know how you're going to handle it, but let me turn this over to you. Thank you for coming and giving us some input on this important issue before us.

.1010

Mr. Jack Wilkinson (President, Canadian Federation of Agriculture): Thank you very much. We actually don't necessarily need a whole hour, unless there are a lot of questions, because we have a relatively short presentation.

I think we would like to start off by giving a general overview, and that is that we very clearly favour many parts of what is being proposed here. We have always been long-standing believers that the Canadian Wheat Board should be an elected board; that's been CFA's policy for a long time.

We have supported a host of parts of this legislation for a long time, although, like your previous presenters, and I'm sure other presenters, we do have recommendations on some of the points we are concerned about and/or suggestions about what we would like to have changed.

Just so you're clear before we start our presentation, I should point out that on the first page there's a summary of recommendations in bullet-point form. This is a page and a half of changes we would like to see. They are also incorporated in the overall presentation as we move through it. So I'll just quickly go through our presentation.

On the governance question, as I said, we're long-time supporters of an elected board. We do think, though, that it's critical that the majority of the board be elected from the farm community - farmers. Therefore we're suggesting something for proposed subsection 3.6(1). It now states that:

the Governor in Council may, by order, designate one or more positions on the board to be filled through election by producers

We would recommend that the wording of that be amended to read as on top of page 2:

the Governor in Council shall, for the 1998-99 crop year and thereafter, designate a number of positions equal to two-thirds of the total positions in the board of directors to be filled through elections by producers in accordance with this section and the regulations.

As far as the orderly transition is concerned, it's critical that the integrity of the board be maintained as we move into the new operational structure. So we suggested some terms of office there, and we have indicated another recommended change to proposed section 3.8:

the first director elected pursuant to sections 3.6 and 3.7 shall assume office on August 1, 1998

Obviously there should be staggered terms in the starting-off time periods so that we have a transition through elected boards. That's the type of system most organizations work with so that only a number of positions come up each time period and we don't have a radical shift at any point. Stability is critical.

The president or chief executive officer of the corporation should be responsible for the direction and management of the business on a full-time basis and basically should be accountable to the board and be directed by the board of directors. The president/CEO must be fully accountable to the board of directors and must not be a member of the board of directors.

We should point out that in virtually all farm-based organizations, the CEO is fully accountable to but not a member of the board. Therefore, we have that recommendation that would follow in the bold. It should be amended to remove references to the president as a member of the board of directors.

Let me turn to the top of page 3, where we say that the president should hold office during the pleasure of the board of directors for such a term as the board of directors may determine. That again is a suggestion for an amendment. We also recommend that the president shall be paid such remuneration as the board may determine. It is our sense that this follows naturally. If they're going to be accountable to the board, then they should be at the pleasure of the board as far as making sure they have the ability to either hire or fire the CEO of that corporation. Therefore, we have made that suggestion for change.

Let me turn to our suggestion on the chairperson. Basically that is following the same logic applied to the president/CEO. The chairperson of the board of directors should not be a Governor in Council appointment in keeping with the Canadian Wheat Board's new status as a quasi-private organization. The chairperson shall be selected from the members of the board of directors by the board of directors. This, therefore, again requires an amendment as indicated:

The chairperson shall be a member of the Board of Directors and shall be elected by the Board of Directors.

When it comes to the federal government guarantees and credit, we are very clearly opposed to the removal of the federal guarantee as it applies to adjustments on the initial price.

.1015

We would then support the proposition that changes to proposed subparagraph 6(2)(c.3)(i), which specifies the use of a contingency fund to guarantee the adjustments to the initial payments, be removed from Bill C-72.

We also recommend that proposed paragraph 7(a) of Bill C-72, which specifies amendments to the act to provide only for guarantees of the sum certain at the beginning of the crop year be removed and that the original wording from the Canadian Wheat Board Act remain.

We suggest as well that proposed subparagraph 32(1)(b)(ii) be amended to read:

(ii) from time to time thereafter, by order of the Corporation and with the approval of the Minister of Finance

From our point of view, I guess the guarantee, the financing of the guarantee, and the financing of credit sales are very critical to the operations of the board. No matter how you skin the cat here, if those changes take place, they will be financed out of the operations of the sales. In fact, it is our sense that with the setting of the initial guarantee, with the pressure from the U.S.A. and other trading partners, that initial guarantee should not be viewed as a subsidy.

There is a great deal of attention given to the setting of initial prices to almost guarantee that unless there is a massive catastrophe, there wouldn't be a pay-out on initial prices. If anything, there's pressure to keep it as low as possible, versus stretching it at the top end. That probably was the thinking many years ago; that is, trying to keep it as high as the pool price as absolutely possible. As I said, because of pressure from the United States and others, that is not the thinking any more. So the contingency risk on the government is marginal.

In building up a fund with such a change, it would take significant amounts of money to build up the same sort of reserve, to give that equal ability to purchase and guarantee that is currently available under the guarantee from the federal government. It is just a further erosion of the powers and ability of the board to operate.

Let me turn to cash purchases. We know there's more than one opinion out there in relation to the impact of cash purchases, in particular as this applies to barley. Our view is that two issues must be looked at.

The first issue is the effect cash purchases would have on the impact on pooling. We view pooling as a critical aspect of the ability of the board to function. It's our sense that we're quite happy to leave this issue up to the newly elected board of directors to deal with. We're making it clear that we do not want this to have a negative impact. There are ways of doing that with respect to the level and their ability to come into the market. As I said, we're quite happy to let the board deal with that question.

I will now speak about the contingency fund. I think I covered this issue with the guarantee. Effectively, we view this as further erosion, if in fact the contingency fund is in any way weakened. Therefore we have two recommendations on the top of page 5 that would deal with this question.

We recommend that proposed paragraph 6(1)(c.3) and subclause 6(3) be removed from Bill C-72.

We also recommend that the changes mentioned in clause 8, which refers to the contingency fund, be removed.

Let me turn to producer-owned storage. We think there needs to be flexibility so that when it comes to the condo storage, this should be included. I think the point has been covered by the previous presenters. We therefore have a recommendation, an amendment to the legislation to deal with that question.

When it comes to interprovincial or export trade, we believe that, from a Canadian point of view, the identity preservation system is critical when it comes to sales. It also gives producers more say in any decision to exempt any class, type, or grade of wheat from the restrictions of export and interprovincial trade.

We encourage the government to thoroughly examine the amendments provided in this section to ensure that they do not have an adverse effect on those products, such as domestic feed grains that have already been exempted from the Canadian Wheat Board.

.1020

In conclusion, we have a list, as indicated beforehand in the executive summary, as to suggested recommendations and/or amendments as they apply to the act. I would like to make it clear that we are very strong supporters of the Canadian Wheat Board, and there are a number of absolute principles and powers that must be given to the board if it's going to function effectively.

At the same time, we also believe that farmers in whose jurisdiction the board operates must have an absolute majority say in the direction of this board into the future. We think that most of the points we're suggesting are strengthening those issues and clarifying them from our point of view, but they're generally supportive of the overall move in this direction.

The Chairman: Thank you, Jack.

Mr. Reed, you had questions earlier, but we couldn't get to you. So we will go to you first, and then to Mr. Hermanson.

Mr. Julian Reed (Halton - Peel, Lib.): Thank you very much, Mr. Chairman.

Welcome to you both this morning. This is a very interesting exercise to me because I'm on quite a learning curve when it comes to the Canadian Wheat Board.

But there's one observation I can make that hopefully will be helpful. One is that, as elected people, we are accountable to those who put us here. We are expected to be accountable. Some of the people are farmers in the riding I serve and some of them aren't. When it comes to the federal government participating financially in any kind of exercise, we're obliged to be accountable to everybody, the whole works.

I think the question for me is that when you are changing the area of responsibility and accountability within the Wheat Board, how are we seen to be maintaining that accountability to the taxpayer? Perhaps the way it has been structured up to now has not been weighted enough in favour of farmers - I couldn't agree with that more - but now we're in a situation that asks, where is the saw-off point at which we can still say we are thoroughly accountable to the taxpayer when it comes to guarantees?

I realize the Wheat Board has functioned incredibly well over the years and has a wonderful track record, but now we have a real experience in Ontario with the Ontario Wheat Producers' Marketing Board, which because of weather and extenuating circumstances may be calling upon government to exercise its guarantee. Where is that line through which we can say to the taxpayer that we are still thoroughly accountable to them?

Mr. Wilkinson: I hope when the Ontario wheat board asks you to help you will do so - this is just to put that on the record - because I think that was an extraordinary circumstance. Consider anybody who studied what took place in those circumstances in terms of the limited degree of forward contracting they were doing. Anybody's business point of view would have viewed that as a reasonable hedge to meet a market there. Really extraordinary circumstances in fact caused that problem, and they do deserve reasonable consideration.

I'm not being tongue in cheek here. I would think that the taxpayers of Canada, if this was viewed honestly, would find that they too would see an opportunity for government to help out in these circumstances.

In relation to initial guarantees, I believe we have circumstances in some provinces whereby initial guarantees have been made available for a number of years under elected boards and under CEOs who were hired and fired by those elected boards. I think it's fair to say that in negotiation with the federal government, in which this always takes place as to what those levels will be set at, those boards do not have the ability to say they think the market will be $230 a tonne, while the federal government thinks it will be $175, so it wants 70% of their $230. It doesn't work that way, as I think everybody knows.

Effectively, you have to convince the federal government that your market forecast for that time period in your peaks of sales are legitimate, real, and match other people's forecasts, and then those percentages are set. They do not have the unilateral ability to highball things that in fact are going to put the taxpayer at risk. We do have a history, as I've said, in a number of provinces where that has taken place.

.1025

So to some extent, I think this is a bit of a red herring. Granted, this is the Canadian Wheat Board, which is by far the biggest of any, and therefore there's reason for concern, but I honestly believe a system can be built that will not put the federal government at risk of any more exposure.

Because we're a general farm organization, we didn't go into the detail that the pools have put forward, but I think their suggestion of basically being willing to submit the entire financial statement of the operations of the board and others to back up the fact that it's a well run operation, etc., sounds reasonable.

There are areas like that, so I don't think the accountability of the MP has to be given over by holding back on changes to that. I think you have to balance one or two things.

First, there is a transition, and it is a transition that is moving and responding to the minority, at least in my opinion, of producers whose view is that the board has not been accountable enough to the producers in the prairie provinces. This is a move to help with that.

I think it is important, then, to do the whole package so that the sense is that the producer elects the board, who elects the president, who elects the CEO. So there is a sense of a board that's accountable through the electoral process to the producer. Having it otherwise becomes difficult.

Mr. Julian Reed: I have no difficulty in acknowledging that the Wheat Board has been well run and certainly will be in the future, regardless of what structure there is there. But I hope there's a realization that if there is a catastrophe and we have to pony up, we can go to all our electors and say it is legitimate and we should be doing this under a structure that continues to give the federal government sufficient control.

Mr. Wilkinson: From my point of view, I don't think we're advocating a relinquishing of responsibility by the federal government. We think there will be a process that will continue into the future and that will determine what the appropriate initial prices are for the marketing time period.

All I'm suggesting is that a number of boards have operated and are operating under that sort of system, and generally speaking they've been well run and the federal government has still had the responsibility of determining that. I don't think that accountability is necessarily lost. You still have a great deal of influence on what those initial guarantees will be.

Mr. Julian Reed: Thank you, Mr. Chairman.

The Chairman: Mr. Hermanson.

Mr. Elwin Hermanson: Good morning to you. Thank you for your warm hospitality at your recent convention in Victoria. I enjoyed myself thoroughly and appreciated being there.

I want to ask you a few short questions, Jack, about the Ontario Wheat Producers' Marketing Board, just in comparison to the Canadian Wheat Board. How many elected directors and appointed directors are there on the Ontario Wheat Producers' Marketing Board?

Mr. Wilkinson: To the best of my knowledge, they're all elected. I have not had a seat on the Ontario wheat board, but my understanding is that they're all elected.

Mr. Elwin Hermanson: And the provincial government, I guess, or the federal government, guarantees the initial price?

Mr. Wilkinson: Yes. The price is negotiated as to what's appropriate, and a percentage thereof, and it works under some guarantee. It is certainly not the identical guarantee the Canadian Wheat Board has. There are some differences. I can give some examples of how it's different. It's not an identical set of circumstances. It requires more signatures and what not from cabinet to guarantee sales, and there's a host of areas around that, but it's similar.

Mr. Elwin Hermanson: The Ontario Wheat Producers' Marketing Board's record is a good record, equal to the Canadian Wheat Board's, as far as not running deficit pools.

Mr. Wilkinson: I think there's an open process. To the best of my understanding, when they go in to talk about what is expected to be the forecast price, it's very similar. I believe that within the legislation, or at least by regulation, a percentage of that is available under initial price guarantees.

.1030

So I think there's a very rigorous process taking place under both systems to make sure the federal government is not going to lose its accountability or have at risk a pay-out.

Mr. Elwin Hermanson: Of course, the Ontario Wheat Producers' Marketing Board can't export it unless they have an export permit from the Canadian Wheat Board, as does everyone else.

Therefore, the Ontario wheat board is totally director-controlled. The federal government does have a role to play through the Canadian Wheat Board as far as exports are concerned, but no role on the board itself as far as setting initial prices are concerned.

I think I understand that correctly. They don't appoint a director to sit on the board to help determine what the initial price will be.

Mr. Wilkinson: I think there is a misunderstanding by some as to how the initial price is set. The board of directors does not sit down and muse about what the forecast price will be for that crop for the year and then say 98% of that would be good, and if it doesn't materialize, then the federal government's on the hook.

It's my understanding that they fly to Ottawa with reams and reams of sales by month and by day, historically back and looking forward, and what world prices are from numerous sources. They sit down with the experts within the federal government and whatever and go through a very lengthy process as to what is inappropriate.

Last week, for example, at the Wheat Board they lowered the forecast for next year by $50 a tonne on the initial payment because of what was projected to be market forecast. So I think there's an assumption made by some that all of a sudden the federal government is not going to be involved in this and they will just be on the hook. I think that's an inappropriate assumption as to the way things work.

Mr. Elwin Hermanson: I'm agreeing with you, but what I'm saying is that this happens whether it be five appointed commissioners of the Canadian Wheat Board, whether it be a totally elected board - the Ontario Wheat Producers' Marketing Board - or whether it be some mix of the two.

Mr. Wilkinson: Possibly you could just ask the question on the Canadian Wheat Board as it applies to the legislation versus a comparison. I may be able to answer that better. I'm not sure where we're going here.

Mr. Elwin Hermanson: What I'm suggesting is that the entire Canadian Wheat Board board of directors could be elected and it wouldn't change the process for determining what the initial price would be and the federal government guaranteeing the initial price.

Mr. Wilkinson: You said ``could be''. I guess it could be. We've accepted the recommendation put forward by the panel of two-thirds being elected. Other people have suggested, for example, that there be other interests involved in this.

I think it's inappropriate to compare the Ontario wheat board territory and the system in place there as an absolute equation to the prairie provinces. A totally different structure has been accumulated. There are totally different players in the grain trade. It is not an identical comparison - from my point of view, anyway, and from my experience base as an Ontario producer - because there is a lot of history and structural difference there.

So I don't think it's fair to make a direct comparison. Our recommendation is clear - that is, we agree with the two-thirds being elected and how it is to be done, and the revolving of the other third.

Mr. Elwin Hermanson: I think it is important, though, that we do look at how other marketing bodies work. It's not wrong to compare one against the other. I think you'd agree, Jack, that's not a bad exercise to take.

The other thing that I know is happening is that there is a debate in Ontario amongst producers as to whether they want single-desk selling or whether they want to be able to market their wheat like they market their corn and soybeans. I've talked to Ontario producers. That's why I know this debate is going on within their organization. But it has not been a political event. You don't have federal MPs talking about this debate in Ontario.

This is in stark contrast with what's happening on the prairies, where it's very political simply because the Canadian Wheat Board is a government-controlled marketing agency versus the Ontario wheat board, where the directors are democratically elected by the producers.

I think the Ontario experience is far more positive and far less divisive than the prairie experience, where you have people like Ralph Goodale and myself thrown into the fray simply because the Wheat Board is such a political creature the way it now exists.

Therefore, I would agree with several of your recommendations that in fact the board of directors be more elected - I would like to see it entirely elected, but certainly more elected than Mr. Goodale is proposing - and that the chairman and the CEO or president be selected by the board rather than the minister.

This will go miles and miles toward ending the division and the controversy on the prairies, but the minister doesn't seem to have gotten the message yet. I think the legislation that the minister has put forward to this committee would exacerbate the problem, making it far worse than it is even today with the five commissioners appointed under the current scenario. He's putting in place a partly elected board to be the scapegoat for everything that goes wrong, while he is in fact pulling all the strings and is running the whole show. I think that's very unfortunate, and I'd like you to comment on that.

.1035

The other thing I would like you to comment on is this contingency fund, along with the fact that it's the excuse for the -

The Chairman: Make this the last thing you want him to comment on or you're going to run out of time and he's not going to have time to comment.

Mr. Elwin Hermanson: The guaranteed initial price provides the excuse for the federal government being so terribly involved. Theoretically, we could have a minority Bloc Québécois government in Canada, with the minister of the Wheat Board being someone who could care less about what happens on the prairies. I don't think that will happen, but in the past we actually have had Liberal governments with no members from west of Winnipeg, and those governments were responsible for the Canadian Wheat Board. I would far rather see prairie farmers in charge of their own Wheat Board.

Mr. Wilkinson: It appears that people are anticipating an election.

The Chairman: You don't want to get into that, Jack.

Mr. Wilkinson: No, I don't want to get into that.

The Chairman: My guess is that you would, Jack, but not here.

Mr. Wilkinson: Well, I just won my third term as CFA president, but I don't automatically get a pension for winning three terms.

The Chairman: Touché.

Mr. Wilkinson: Anyway, I think our recommendation on the beginning page is fairly clear, with that being two-thirds.

Without commenting on some of the presumptions or assumptions that you have made over control and what not, I think the recommendations that we have put forward give substantial and adequate resources as far as producers having control over their board in a meaningful way are concerned. We would like to see the minister and government amend the legislation to meet those, because we think they're legitimate.

[Translation]

The Chairman: Mr. Chrétien.

Mr. Jean-Guy Chrétien: There are four issues I would like to raise, but I would first like to welcome particularly Jack and his general manager since every time I've had the opportunity to meet Jack, whether here or abroad, I have always seen him stand up for his members. That is probably why he was elected and reelected and probably why he will no doubt be again reelected to the presidency of the Canadian Federation of Agriculture.

When I started out as my party's agriculture critic, I use to receive, perhaps not every day but certainly every week, complaints from individuals or groups in Western Canada concerning the Canadian Wheat Board. I very rarely received letters supporting the Canadian Wheat Board's actions. Well, you might say to me that when things are going well people don't speak up and that complainers are the only ones who write letters. For once, 53 years after its creation, the Canadian Wheat Board has made an effort to improve its operations through Bill C-72.

My first concern is with the make-up of the board of directors. Jack, could you take just two minutes to explain to us how the board of directors works? Will there be a chief executive officer? Will there be a chairman and a chief executive officer? Your group also favours a board of directors where two thirds of the members would be elected by farmers. These directors would probably either be farmers themselves or people representing the farming community. How would the other third work, the one that Mr. Hermanson has spoken of several times?

You don't have to make a half hour presentation. I am just asking you to take two or three minutes to tell us very simply how you see the board of directors interacting with the minions appointed by the federal government. When I use the word minions, I mean that in quotation marks and not in any derogatory way of course.

.1040

[English]

Mr. Wilkinson: I think there were suggestions in the panel report that indicated what the thought is on who that body of appointed people should be and where they should come from. There will be various participants in the overall grain trade. In my opinion the marketing structures in the prairie region are different from those that exist in the east. Because of its history and its make-up, it's developed a different structure. The board make-up would reflect that.

Our concerns are twofold. One is that at least a two-thirds majority come from producers, so that if there is predominant thinking in the producer community on any issue, they will be able to go in that direction. Contentious issues will have to be sorted out amongst themselves. Very clearly, we want the chairperson to be a member of the board and be elected by the board of directors. The majority again would be in the hands of the producers to choose the type of individual they wish to chair their board. If they choose to elect someone from the grain trade as one of the other third, so be it, but at least it is the majority of producers who are picking that person. We've indicated as well that we think the CEO or president should not be a member of the board.

In our opinion all of our suggested changes are to put more power in the hands of the producers to make sure they take very seriously those elected positions, so that at the end of the day the people they appoint to the board will influence, operate, and direct where that structure should go and so that it will be truly a marketing arm viewed by the producers as their marketing arm.

[Translation]

Mr. Jean-Guy Chrétien: We are going to have to get together and build-up some support in order to try to convince our friend Jerry.

Mr. Wilkinson, let me raise a second point concerning cash purchases. Let me quote from your brief:

CFA is extremely concerned with the provision in section 39.1 of Bill C-72 for the CWB to make cash purchases directly from farmers because of the impact on the pooling system.

I do not understand why you disagree with this provision.

[English]

Mr. Wilkinson: We're trying to reflect the cash purchase - depending on how aggressively it's done and under what circumstances - as it could destabilize the ability of the pool to work and still have a pool pricing system. All we're suggesting is that there is a risk when you have an initial payment, an interim, a final, a clean-up at the end of the marketing year to pool those returns. Depending on the percentage you cash purchase and how it's done, you can make the pool irrelevant.

We are flagging this as an area of concern. It has to be done right, because we believe the single-desk selling approach and the ability to pool prices are integral parts of this system. We're not opposed to cash purchases, but they have to be thought through very carefully, keeping in mind that however the purchasing is done it not destroy the pooling mechanism and effectively drive people away from it because you've brought in a spot cash purchase program.

We're referring it back to the board to think it through and put a caution on it.

[Translation]

Mr. Jean-Guy Chrétien: I have two further points to raise, very briefly.

Mr. Wilkinson, let me ask you a question that I asked the preceding witnesses earlier on. As president of the Canadian Federation of Agriculture, you bring together thousand of members. Do you think that some of your members might have, last week, last month or in February, sold wheat or barley directly to American customers?

.1045

[English]

Mr. Wilkinson: I have absolutely no way of knowing that, to be fair. There are approximately 200,000 family farms that belong to our member organizations, through the various structures - the UPA...you know, the farmer belongs to UPA, UPA belongs to us, etc. So it's just an impossible question to answer.

They don't call me before they run the border...mercifully.

[Translation]

Mr. Jean-Guy Chrétien: Let me quote something, Mr. Wilkinson, and I will then ask you to tell me whether it is true. Some 90% of your members want the Canadian Wheat Board to continue but also want it to be improved. Do you think that if the Canadian Wheat Board were done away with, farmers would be as well off as they are today?

[English]

Mr. Wilkinson: I believe if the Wheat Board disappeared, both in the medium and the long term, Canadian producers would be worse off. We are absolutely convinced that the Canadian Wheat Board, in both the present and the future, can in fact give a better return to the Canadian grains and oilseed producer, period, end of discussion. I am absolutely convinced of that.

When you talk about the vast majority of our membership base, the CFA does not go out of the way to deal with one person's concerns. We have a very broad-based membership, and we truly believe that when you look at the region as a whole the board has benefited the producers.

Mr. Jean-Guy Chrétien: Merci.

Mr. Wayne Easter: The CEO, Jack -

Mr. Wilkinson: Can you ask me a question similar to the one you asked the previous witness?

Mr. Wayne Easter: No, it will be a little bit different, but it will be the same thing.

Some hon. members: Oh, oh!

The Chairman: It's the same thing, only different, Jack.

Mr. Wayne Easter: We're talking about the corporate plan and the business plan coming forward to the government. That should give the government some view of where the board's going, yes, but when you get into initial and ``initial-initial'' guarantees, you're talking more about the day-to-day operations of the board. I think you have to understand where the government is coming from in terms of its belief, and I think many in the farm community believe as well that the government has to be tied into this thing directly through some appointment process. If we go with what both you and the Prairie Pools have proposed, we're talking about an absolutely new entity.

I would agree with you that there are strong feelings that the board is not accountable enough to producers. I'll agree there are strong feelings on that. But there is also the view that the board has been extremely well run - one of the best in the world - and that has been with commissioners appointed by the Government of Canada. They've done a damned good job. If we're going to your proposal whereby the government virtually appoints no one, other than three or four people, who are in a minority position, you're going to a new entity and the past performance of the current structure cannot apply to the new structure.

You have to understand. As I said, if I wanted to play the devil's advocate...

Mr. Wilkinson: Please do.

Mr. Wayne Easter: On the one hand you're saying we are potentially going to a cash system. Cash purchase opens up all kinds of avenues. There will be a board, but there will be nobody on it who has been appointed by the government. You still want the government guarantees, but by God, you don't want to put up your own contingency fund in case there's a loss. You want your cake and you want to eat it too.

Mr. Wilkinson: I think that's a low blow, considering what the federal government has done in cuts to the agricultural community.

Mr. Wayne Easter: We're not talking about those.

Mr. Wilkinson: To basically say that we want our cake and eat it too...

In relation to this particular bit of legislation, I have explained when answering other questions that it will not be a unilateral decision by the board as to what the initial prices will be. I think you know very well there is a process for checks and balances before Treasury Board gives a guarantee. A lot of work is done as far as marketing time periods, volumes, expected forecasts, and a host of others are concerned. I think there will still be substantial control in the setting of all of those by... The control still exists in that people around Treasury Board and others are going to say we have to convince them the numbers are good and they are real. I don't think this will change. There are track records of boards that have offered initial prices and have run for years. There is a process for them as well.

.1050

It's almost as if you're implying, by having these federal government appointments, the federal government is viewing the elected board simply as a smokescreen, that the Minister of Agriculture still wants to have absolute control over the board. I'm finding that conclusion difficult. You imply in your question, Mr. Easter, that the government is taking a hands-off approach to the operation of the board if it doesn't appoint a CEO. I didn't think this was all about that.

Mr. Wayne Easter: It's not, Jack, but are you willing to...? If the government is going to, as I said earlier, give credit guarantees, initial payment guarantees, and guaranteed borrowings, you certainly want some semblance of the old system in place. Under what you're proposing, that semblance is not necessarily there. Are you willing to forgo those guarantees? We have no way of knowing directly whether or not the new system is going to work in the same way as the older if you go as far as you're suggesting.

Mr. Wilkinson: I disagree with you on that point. I think very clearly no one, either the previous witnesses or us, is advocating a hands-off approach by the federal government when it comes to negotiating appropriate initial price guarantees and others. We are making suggestions, however, about the make-up of the board. What is in the legislation, we think, does not go far enough to deal with the concerns of the farm community. I don't believe anybody has advocated that the federal government have no say.

I think the examples I gave on some other operations of elected boards are very clear. There still is protocol and a system of checks and balances to guarantee that you do have some responsibility as government and that you still can act there. We do not think you need to have the presence on the board that is being proposed by this legislation and we've therefore suggested some amendments.

Mr. Wayne Easter: This is my last point, Mr. Chair.

It's on the election of the board, Jack, and it's basically the same question I raised earlier with Prairie Pools. From your point of view, is the legislation specific enough in terms of the numbers? I know you're saying it should be two-thirds. Should the government be making an announcement very soon that it is willing to make the legislation more specific about the make-up of the board? If so, who should be eligible to run for election for that board of directors? Should it be permit book holders or should it be anyone?

Mr. Wilkinson: I think we are suggesting the two-thirds.

Mr. Wayne Easter: Yes, I got that.

Mr. Wilkinson: We think that should make it clear. We're suggesting as well within that recommendation a date of August 1, 1998, for the directors to be in office, so there is a timetable to give some degree of confidence that this is moving in that direction.

I don't think we have any recommendation on where those people should come from. We've made it clear that the farmers in the area...our assumption would be that they would be permit book holders of the product under the board. I guess we didn't see the need to go that far. I can't imagine anybody wanting to run for the operation of the Wheat Board if they didn't have a vested interest. We made it clear we want them to be farmers, that it's to be two-thirds, and that there is to be a time period.

Mr. Wayne Easter: Okay, thanks.

The Chairman: Next is Mr. Benoit. Then we'll have Mr. Collins and Mrs. Cowling.

Mr. Leon E. Benoit: Thank you, Mr. Chairman.

Good morning.

.1055

First I'd like to say I think the Wheat Board has a role to play in marketing wheat for export, and I believe a majority of western Canadian farmers support that. They would like a competitive export environment - a dual marketing system, I believe. Unfortunately under this government that will never be found out for certain, although polling has certainly indicated that. But this legislation certainly isn't going to give that.

It seems to me that this legislation is weak, ill thought out, and in some cases completely off track, as you have pointed out in your brief and as the pools have in their brief.

If you just go through what is covered in this bill, in the area of accountability - and both you and the Prairie Pools and others have pointed this out - really there is very little or no improvement, it could easily be argued, in the area of accountability.

The way Bill C-72 is right now, Jack, it's really not necessary that the minister appoint even one director. Nowhere does it say that a majority of directors will be appointed.

Mr. Wilkinson: Elected, you mean.

Mr. Leon E. Benoit: Will be elected, pardon me. There's nothing in here that says even one will be elected. That was either intentionally put in this legislation or it shows that it's ill-thought-out legislation and not ready for the discussion we're having on it.

Of course we have the appointed chair and CEO, which you've commented on, and I think you have some good suggestions there.

In terms of indemnity in the section on indemnity of directors and the CEO and employees - the employees normally aren't included in the indemnity section of such legislation, but they are in this - when I asked Mr. Migie at committee last week if this legislation could also give added protection to past commissioners of the board, he indicated that really he didn't know that for sure and he was having their lawyers look at it.

It would concern me if this legislation gives added protection to past commissioners, because I think it's important that the law can get at and examine the activities of the board in the past. I think that's really important.

This legislation could give that added protection, and that's either an oversight or a problem with the legislation.

To do with the removal of paragraph 46(b) of the existing act, it is argued... I know that the department's lawyer said they thought removing that clause wouldn't allow the board to limit interprovincial trade, or to in fact have some control over non-board grains, but the lawyers for one major farm group have said otherwise. They've said that in fact this change could allow the board to limit interprovincial trade and even have some control over non-board grains. So that's another indication this is really shoddily drawn, or that it's not what it has been presented as.

The cash purchasing power, in a case where there isn't competition in the export market, is an area of great concern. Again, I'm really concerned about the possible instability in the feed grain market as a result of the board being able to purchase grain when we don't have a competitive export market. I think that's a real problem.

The panel recommended the cash purchases, but they also recommended that we have an open market in the export market on barley and also in some types of wheat, so there's a problem in that area.

The difficulty in making future changes that will result from this legislation is a real concern to me. It's not how the legislation was portrayed, as actually making it easier for this partially elected board of directors to make future changes. When you look at it, Jack, and you think about how it would operate, to make a significant change to what the board is you would have to go through a really intimidating process.

First you'd have to have the board of directors approve it, and that's with the appointed chair and with all the appointed directors. They could all be appointed, the way the legislation is now. I know what the minister said, but the way it is now, the fact is they could all be appointed and we wouldn't necessarily have one elected director.

Then you have to have the approval of the Canadian Grain Commission, which is controlled by the minister - the minister certainly has an awful lot of say about what the Canadian Grain Commission does. You have to get the commission's approval, so that could stop any change that the minister doesn't like right there. The Grain Commission could just say, hey, this change doesn't work - done.

.1100

For example, we could never get competition, never get rid of the monopoly, under this process. We couldn't change the Wheat Board to end the monopoly under this process.

Finally, you have to have the approval of farmers, which is a good step, but under this legislation, even after the vote the minister can say he isn't going to accept it. That's clearly in this legislation.

All of these things, Jack, are either a result of shoddy drafting of the bill, which I really doubt, or some things have been presented as changes that are supposed to take place that really aren't intended to be there.

The Chairman: If you want Mr. Wilkinson to respond, you'd better wind up in about 15 seconds, because your time is well over what's fair.

Mr. Leon E. Benoit: I was moving right to the question, Lyle.

With all the consultation that has taken place regarding these changes to the board...and the minister says all kinds of consultation. Others have said lots of consultation. Why is it, then, Bill C-72 so poorly reflects what the consultation has said should happen, including even what the minister says?

Mr. Wilkinson: Having not had the pleasure of being the Minister of Agriculture, I can't answer your question directly, but I would like to point out that we've made a number of suggestions for changes to very clearly clarify issues you've raised around the make-up of the board, the make-up of chair and CEO, a host of those, to put a very definite point to this.

Quite frankly, I think the minister and the government and this committee will look at those very seriously and make those suggestions to change so that it clarifies those points.

You made a number of points with which I fundamentally disagree. To imply that the majority of the farmers, by polling - I think this is what you said - want to do a marketing system I don't think is accurate at all. I think it's very clear that the majority of the producers want the Canadian Wheat Board with sufficient powers to in fact deal with this question.

In relation to the feed grains, imports or what not, with the spot-pricing buying ability that's here in the legislation, and how cattle feeders and what not and other feeders are concerned about that, this basically implies that barley prices in fact are not set more or less on world price. If a producer in southern Saskatchewan or Manitoba or Alberta view that spot barley prices are out of whack, they have the ability to import corn, which they do. There are lots of other mechanisms in there that in fact guarantee that there is a relatively good ratio between those world prices.

So I do not agree with a bunch of your assumptions. We've made suggestions to make this clearer, and I think if they're done, they will. Our brief stands as is.

The Chairman: Mr. Collins.

Mr. Bernie Collins: Thank you very much, Mr. Chairman.

Jack, I want to thank you for the submission you put forward. It's always a pleasure. I think your conclusion really hits to the heart of the topic we're talking about.

It says:

We appreciate the government's efforts to enhance the effectiveness and accountability of the Canadian Wheat Board. We believe that the suggestions made in this submission will help to ensure that the CWB continues to serve prairie farmers well into the future.

Your belief is I'm sure held by the majority of us here today. That's the essence of what we're trying to do. We're working together.

Let me touch on a couple of topics quickly. I know there is a time constraint. Let me get to the cash payment.

If, Jack, we could collectively say to you, if if you're going to go along with that cash percentage...would you have a figure you might want to have us review so that we wouldn't disturb the pooling as part of that whole process?

Mr. Wilkinson: No, I think there are a lot of scenarios as to how you would determine that spot price. We would be quite interested in talking in the future, but I guess from our point of view a whole group of scenarios have to go with that. A single percentage is probably in itself not enough. I think it's the way it's done and the bits and pieces around that.

Mr. Bernie Collins: So it's a combination of things that we -

.1105

Mr. Wilkinson: All we're saying is that it deserves some very serious thought, because going down the road does run some risk. That's very clear from the consultations. There was a group that was in favour of that approach to meet certain needs as far as the market conditions were concerned. They weren't happy with the old system, but at the same time there was a fairly large body that was very concerned about what that could do. We're just saying, don't have a knee-jerk reaction on this one. Think it through very carefully, because the way it's done will be very critical to whether or not you destroy that pooling ability, which we think is important.

Mr. Bernie Collins: You raised that point before and it's a very significant one.

They talk about a part-time board of directors. There was a reference to it in there somewhere. Had you seen something about the directors being part time?

Mr. Wilkinson: We made the suggestion as far as who should be a full-time employee.

Mr. Bernie Collins: I'll try to pull it up some time. It was a reference, and it bothers me that we might be looking at part-time posts. Whether elected or not, we're going to have a full commitment to -

Mr. Wilkinson: Please, we'll clarify. I don't think we are saying anything negative here. We'll find the sentence and we'll get back and clarify it. We just want the people in the position of power to effectively be accountable to a board. I don't think all the board people have to be full time and still be able to do their job. We'll clarify anything you find in there.

Mr. Bernie Collins: I didn't want to leave you with the suggestion that you had it in yours. I saw it in the legislation per se.

Mr. Wilkinson: I'm sorry.

Mr. Bernie Collins: I have one last question with regard to the CEO and the board of directors, and I know Mr. Easter has raised it. I have some concern that we have to have some liaison. If you have a board of directors made up with a two-thirds...and those kinds of things, how much difficulty would you have with the president being that appointed individual in the whole structure of working in the best interests of what you have put forward, what the pools have put forward. We're prepared to support that and I'm sure you're going to see some amendments coming forward very quickly with regard to this.

Mr. Wilkinson: Our membership thinks this is not required. The CEO should be accountable directly to the board of directors. I think enough other checks and balances can be put into the system to deal with the concerns that have been raised around the absolute assurance that the federal government still has the type of accountability it needs in relationship to initial payments and credit guarantees. I don't think there's a chance there wouldn't in fact be a very close link and some consultation taking place when you have that situation where they desperately need those guarantees for their operation and initial payments. I believe there would be that sort of liaison back and forth to meet the needs of Treasury Board and other people in getting to that point.

The Chairman: Mrs. Marlene Cowling.

Mrs. Marlene Cowling (Dauphin - Swan River, Lib.): Thank you, Mr. Chairman. There have been a number of statements made at the committee today. For the record we should have some clarification.

First of all, Jack, it's my understanding that the Canadian Federation of Agriculture is very supportive of a strong, revitalized Canadian Wheat Board.

Mr. Wilkinson: Yes, it is.

Mrs. Marlene Cowling: And of single-desk price pooling in the government guarantee. Is that correct?

Mr. Wilkinson: That's absolutely true.

Mrs. Marlene Cowling: With respect to proposed subsection 3.6(1) and your amendment that two-thirds of the total positions be elected to the board of directors, you made a statement that all those positions could be elected to the board of directors. I want you to clarify that.

Mr. Wilkinson: There are many other commodity boards outside of the Canadian Wheat Board jurisdiction, which I'm familiar with because I'm a farmer in Ontario, that have fully elected boards and still enjoy the ability of initial pricing and pool pricing - the white bean producers, the Ontario wheat board, and there are some others.

I also made it clear from our point of view that a different structure has been developed in the prairies over recent years. There are different players. It's a different system. One should not get too carried away by drawing parallels outside of one region and another. I was responding to a question that by having a fully elected board, somehow by implication that meant all of a sudden the federal government did not have any more control or jurisdiction over initial pricing and price guarantees.

.1110

I was giving an example, I think, of an Ontario wheat board that had a fully elected board and they appointed their CEO. They still had those sorts of negotiations. Our recommendation is clear: two-thirds producers. There are other players in the prairie region who have interests around the board and we're not opposed to their being there at all.

Mrs. Marlene Cowling: Mr. Chairman, there was a sweeping statement made by the member from Vegreville who suggested that polling suggests that we go to dual marketing.

Mr. Leone E. Benoit: That's true.

Mrs. Marlene Cowling: For the record, I would request that Mr. Benoit table the factual documentation that supports what he has said so it can be used by this committee, if that is in fact true.

The Chairman: You heard the request, Mr. Benoit.

Mr. Leon E. Benoit: I'd be happy to do that.

The Chairman: Is there anything further, Mrs. Cowling?

Mrs. Marlene Cowling: No, that's all, thank you.

The Chairman: A quick comment from Mr. McKinnon.

Mr. Glen McKinnon (Brandon - Souris, Lib.): Jack, if there were a level of antagonism between the department and the elected board, is there a process in place where that can be easily resolved?

Mr. Wilkinson: Absolutely. The board, at the end of the day, if it's going to... There's a system that's designed there. For example, they're going to want to offer initial prices coming into a crop year and be able to tell producers in advance what that is. So, very clearly, if they're going to be able to offer this, then they have to have the guarantee. That means negotiations with the federal government. So there's a system in place with a deadline that drives it that there has to be a resolution. This cannot drag on forever or you're going into a crop year with no initial price guarantee. I'm quite comfortable that history has shown that this will work its way out under the current system in the future.

Mr. Glen McKinnon: Great.

The Chairman: That will conclude the meeting. I thank everyone for their presentations and their participation. I will remind the committee that there will be an in camera meeting on Thursday morning to go over the final planning for our activities in western Canada next week.

Thanks, Jack and Sally.

The meeting is adjourned.

Return to Committee Home Page