[Recorded by Electronic Apparatus]
Wednesday, April 26, 1995
.1619 
[English]
The Chairman: Can we come to order, please?
I would like to welcome this afternoon my former colleague, Nettie Wiebe, president of the National Farmers' Union.
I would apologize for being late. We had a vote and therefore we are going to be limited in our time. So if you have a short presentation, then we can go from there.
Ms Nettie Wiebe (President, National Farmers Union): I want to begin by saying thank you very much for this opportunity for the National Farmers Union to make a short presentation here. I think it signals what I feel is a very positive attitude on behalf of this committee - that you feel, as we do, that hearing from farmers on this crucial issue of transportation is a very important piece.
It's clear to us, and I hope in the course of these hearings it will become clear to you, that the interests of farmers are not always the same as those of other stakeholders. In fact, even when some of those stakeholders claim to speak for us, we need to be quite careful in delineating what our interests here are as primary producers.
.1620
I want to say by way of an opening that I consider this a preliminary intervention on our behalf. I'm urging you to come to western Canada, where many of us grain producers live, and hear from primary producers on their own ground regarding their interventions on this very important question of transportation and infrastructure in this country. I want to urge you to take the opportunity to hear from primary producers. It is, after all, our livelihood and I think the economy of the whole region that is at stake.
I'm very pleased that the committee has a relatively broad mandate, as I understand it, to explore viable options for the post-WGTA era. It's clear to all of us that we're undergoing rapid changes in our industry, and although that produces, of course, a great deal of anxiety and some anger, it also puts us in a place at this time where we can look forward and we can chart a new course.
We don't for a moment believe it's good enough here to merely speak about removing barriers and then watch what happens next. I have the sense that's where we have begun. We've done away with the WGTA and now we're beginning to watch, or thinking we might just watch, what happens next.
I think the whole economy, a whole region, is at stake here. We have to be much more careful and much more thoughtful about charting a course rather than, as I say, removing a barrier and then watching what happens next.
It's like when you go out in spring now to a field and you plough it over once. You cultivate it once and then you wait to see what will happen next. Well, to farmers it's quite clear what will happen next. Some of the last crop you planted here - the barley, wheat or whatever you had there last year - will come in a helter-skelter way, but for the most part what will happen next is a field of noxious weeds. So it seems to me we're making the first cut here but we need to do a great deal of work in charting out what happens next.
The goals that were expressed here and have been expressed repeatedly in other places by the Minister of Agriculture are that our transportation system will become faster, lower cost, more efficient, and that overall our agricultural industry will be more competitive globally. I think that in the course of this discussion I want to ask this committee to focus on some of the larger questions around that agenda, those goals, particularly the question of how we position ourselves as Canadian producers to be more competitive globally. What will it take to make us, as agricultural producers, as an agricultural industry, more competitive globally?
When you're considering that - what I consider a key question and a long-term question - I think you have to consider when we're competing globally who are our competitors there. Of course, in a competition you don't just have to run fast; if you're winning, you have to run faster than. So it matters to us who the competitors are and what they're doing in this global economy.
It comes to our attention that our main competitors, the United States, for example, are not in fact withdrawing public moneys from the agricultural industry. A recent announced reduction to the export enhancement program funding has been more than offset by proposals for a new market promotion fund. Likewise with the Europeans, they are not withdrawing public support from their agricultural industry in order to make it competitive.
So if we're going to be competitive, I think the question we have to address is how will we make ourselves and keep ourselves competitive globally? What will it take?
.1625
As I say, we have to cast our eye first at who else is running in the race and how fast are they, but we also have to take into consideration here what our context is. Our particular context in the grains industry, in the western Canadian agricultural industry, is that we are the farthest producers anywhere from tidewater. So transportation for us continues to be a key factor in terms of competitiveness. If we're going to be competitive, we have to get the transportation question right.
The other thing for us, of course, is that we live in a particular climate. We have a short season, which we don't consider entirely a disadvantage because we also have a climate that allows us to grow very high quality grains. That's our natural competitive advantage, to speak in the terms of the economist, and we've organized that part of it very well by ensuring that we get paid for the high quality we can grow with a quality control system and a marketing system that allow us to capture those premiums. Of course, part of that climate question is that we have to consider what our diversification possibilities are, and I want to return to the question of diversification because it's the favourite word around this discussion.
The other part of our context we have to think about seriously when we're repositioning ourselves to be competitive is that we are export dependent. Given the relatively sparse population of western Canada, we will continue to be far more productive than our consumption patterns will absorb. We will always have excess product, which means we return again to the transportation question. No matter what we produce there, we will have to export at least a great deal of it. So in that sense, too, transportation continues to be a key factor.
When the western region was opened for agriculture, these very obvious points that I've put before you were obvious from the outset and it became clear that transportation would have to be organized in a certain way for any agricultural development there to take place. I think that's what you saw earlier in the Crow rate and also, to a lessor extent but addressing that question, in the WGTA. The Crow rate addressed that issue of the agriculture and the economic development of western Canada by addressing the issues of cost for producers, distance, and control over its transportation system.
It was clear then, as it is clear now, that we are captive shippers. We have, as the economists would say, a natural uncontested monopoly for the railways there, meaning that no matter which transportation scenario you look at, those main arteries to the tidewater will remain the two railways we have there. There is no question of a third and fourth railway being spawned to the tidewater as competitors to the two already there.
So we have to take that very seriously. As producers we know that. It leaves us in a very vulnerable position because we are captive, and because of what I've said here earlier, we obviously need to export and whatever we export will have to be transported.
With the Crow rate and the WGTA the Government of Canada intervened to make that monopoly work for us to some extent by holding some financial sway over the monopolies - and that was the method of payment question - and further, by instituting a regulatory regime that balanced the interests of producers there and the agricultural industry against the obvious financial profit-making interests of the corporate entities, the railways.
.1630
When this committee proceeds with its work, it seems to me one of the key questions that has to be dealt with in this context is how will the monopoly power of the railways be dealt with in the post-WGTA era? We cannot imagine that it will just be erased. Given where we are, given what we need to do in order to be viable as an agricultural industry, we have to address the question of how that railway power can be addressed so that it acts in our interests, so that it allows us to be producers there.
We have to keep quite clearly in mind that the railways are not charities. They never were and they are not set up to be that, either. They will charge what the market will bear. That's not a criticism; that's just the economic reality in which they work. So our question as producers is how will the agenda be arranged in such a way that they are made to serve our interests too, and that our possibility of competitiveness and of rural development are not undermined or completely erased by a monopoly that of course has its own agenda?
We have to ask, for example, are the proposed revisions of the NTA adequate for the job I've just asked about here? For example - and there's a great deal of emphasis on fairness of distribution - how can fair distribution of the efficiency gains that are anticipated be ensured without costing reviews? What kind of re-regulation would serve to balance the interests of the various stakeholders fairly? Who should control or own those parts of the transportation network that are monopoly powers so that they do indeed serve and benefit the industry?
With those bigger questions is a complex array of other related questions that this committee will, in the course of its hearings, no doubt hear a great deal about. Among them is the question of car allocation; will producer cars, for example, still be possible? There is branch line retention; who will be in charge of designating which branch lines are retained and which ones are abandoned? Then we have the question of pooling points, and a whole array of other questions.
But if the goal of agriculture is to get cheaper, faster more efficient transportation, then we have to have all these things in mind, and we have to ask ourselves - and for farmers this is a very important question - what's the definition of efficiency here? We want to insist, as primary producers, that when we're talking about efficiency we have to calculate efficiency from the farm gate, where the transportation of the product to market begins.
The question this committee needs to deal with is will a consolidated rail system be faster and cheaper from the farm gate, where, as I say, the product begins its trek to market? The most obvious solutions..and you hear from the questions I've raised that we, as primary producers, have a large number of worries, concerns, and questions about this future. The most frequently quoted solution for us, to allay our concerns about the loss of the WGTA, is that we must diversify and value-add in order to recover our financial health. I can't tell you how often we've been advised to do this. It's a veritable article of faith, I think, that diversification is what we need and further that the WGTA was a barrier to diversification.
.1635
I read with some chagrin, I must say, recently in an article from the western producer, that the president of the Canadian Cattlemen's Association, Mr. Doug Gear, now says he doesn't think the removal of the Western Grain Transportation Act will make all that much difference for the cattle industry. I say I read that with chagrin because throughout this last decade we've been advised that what we need to do is diversify and that the cattle industry is being inhibited by the WGTA. So I think we need to think carefully about this question of diversification.
Let me just say that we've diversified a great deal already. We have on our farm, and we have on almost every farm in western Canada. We are growing other crops and there's more cattle and hog production. We are diversifying.
But, of course, when we're diversifying on the farm we have other considerations, and among them are that you cannot go just to growing high-value crops and you cannot grow a rotation that includes canola, for example, more than once every four years. So that leaves three years where you must find something else to grow.
One of the ironies about this advice to diversify, it seems to me, is that among the highest-valued crops are those grown in the northeast region of Saskatchewan. That's a very good canola growing area. It also turns out that the northeastern region is threatened with branch line abandonment. It seems to me it would be a great irony if precisely the transportation changes that we've undertaken in order to encourage diversification in fact leads those farmers who have done the best by way of diversification without a means of getting their product to market in a competitive low-cost way.
I think this committee has to address the question of how we will continue to encourage diversification and value-adding in the post-WGTA era. We cannot just assume that this will happen because a barrier has been removed. We must address the question of what we are going to put in place to encourage diversification if that's what the health of the industry requires.
One of the considerations, from our firm point of view from down on the farm, is that with the removal of the WGTA we will have, of course, lower incomes and we will have less money to put into diversification and value-added. So on the farm this will have been made more difficult with a higher input cost on transportation.
The other consideration on the diversification question is that no matter what we diversify into, it will still have to be moved to markets, much of it to offshore markets, in a well-ordered, efficient transportation system. So that kind of system will still be necessary.
We may have, as I said earlier, a natural competitive advantage in growing some grains, and certainly some quality of grains, but we certainly don't have a natural competitive advantage in the processing industry. So in order for that processed product to be competitive the transportation will again have to be cost-effective and efficient.
So I think another of the questions - and I'm posing these questions because I think this committee has a great deal of leeway to do some very important work on these issues - is how will the value-added industries be made more competitive with higher freight rates?
We always considered the WGTA in some sense a transition program, and I think the numbers bear that out. In 1984, under the WGTA, approximately 75% of the shipping cost to export was federally funded. Under the WGTA in 1994, that funding was down to 52%. So in a systematic, relatively orderly way, this transportation system was already in transition toward more producer input in terms of costs.
.1640
I think we farmers - I want to say this in our gallant defence here - used that transition period very well. I think the evidence speaks for itself. We used that period to diversify our operations, and we were given a short breathing space.
But, of course, as of August 1, 1995, we'll have less money to diversify. I guess my concern here is whether the removal of the WGTA actually inhibits diversification, in fact, rather than encouraging it. Will it be the case that the removal of the WGTA will inhibit diversification at the farm level rather than encourage it?
It seems to me that the adjustment fund we have in place now - I don't want to spend a lot of time on this - which is the $1.6 billion that will be distributed to landowners is in fact an indication that it's not going to help diversification. It's a strategy that's backward looking rather than forward looking in terms of operation.
But I think you will, in the course of this discussion, probably spend more time and energy on that than on many other questions. How that transition money will be spent is a short-term question. For me, the significant question is: how will the regulatory structure work so that long-term diversification is in fact enhanced?
I suppose I should wrap up here, but I want to say, just in closing, that the short-term transition money is in fact completely inadequate and will allow us far less leeway, in terms of developing our agricultural industry, to be globally competitive, than a more long-term, regulated transition would have allowed us. So we have in fact arranged shock therapy for ourselves when we were on a much more long-term, health-giving therapy in terms of the agriculture industry.
In order for agriculture to prosper in western Canada, the production, marketing and transportation of goods must be made to work in an integrated fashion. I'm very optimistic that the vital questions this committee will handle will go well beyond the small technical questions that we seem to be fixated on now and with which we are dealing in some isolation.
In fact, this committee will look at the long-term implications for transportation restructuring and will recognize that not only are the livelihoods of many farm families at stake here, but that whole communities and indeed the whole western agricultural region is at stake in this next phase of restructuring.
I think that with a great deal of creative input from the affected parties, and particularly of course from primary producers, and a great deal of careful thought, the work of charting the future in agriculture for western Canada, which is so much the work of charting the transportation system, can in fact be done positively. Thank you.
The Chairman: Thank you, Nettie, for the excellent presentation and thought-provoking questions. You raised more questions than answers. I can assure you that we will be back to you at some point in time for some answers to your questions.
.1645
[Translation]
Mr. Chrétien (Frontenac): Ms Wiebe, I am a farm producer from Quebec and I must admit that I don't know very much about your organization, the National Farmers Union.
Before dealing with transportation issues, could you tell me how many members you have at present, and in which provinces?
[English]
Ms Wiebe: There are two questions here. Our membership is in fact a family farm membership. We have members across the country from the Peace River area to Prince Edward Island. We're not organized in Newfoundland or in Quebec, of course. Our membership base varies, of course, because we have a voluntary membership or a direct membership base of farm families. We have, depending on when you look at the membership list, anywhere between 8,000 to 15,000 members.
[Translation]
Mr. Chrétien: I would now like to ask you two questions and you can take whatever time the Chairman will allow to answer them.
First of all, do you believe that the removal of the WGTA will accelerate branch line abandonment or only the abandonment of lines that seem under-used by the railways?
My second question is on diversification. Many Quebec and Ontario farmers believe, legitimately, I think, that western producers are diversifying their crop and cattle production in order to compete with them, and that it will be easier for the western producers to do so because of the transition fund of $1.6 billion.
[English]
Ms Wiebe: On the first question of railway branch-line abandonment, it's difficult to tell at the outset, but indications are that many of the grain-dependent branch lines will be abandoned. Certainly all the light steel rail will be abandoned quickly, in short order.
The question of how many and where they will be abandoned is one that will depend a great deal on what kind of a regulatory and tariff structure we have and who makes those decisions. It's a matter of whether they're made solely in the interests of the profitability of the rail line or whether in those decisions we'll take into account the entire competitive advantage or position of western Canadian agriculture, particularly producer viability.
On that second question of diversification and whether the $1.6 billion will possibly be used to compete with our counterparts in various parts of the country, I'm not, as I said in my presentation, optimistic that the loss of the WGTA will in fact enhance our possibility of diversifying. You must recognize that the landowners who will be the recipients of this are, in terms of the demography, the more senior population of the prairie grain producers.
If I can just broaden the question a bit, it seems to me that in the entire picture it behoves us in Canada, given that we've entered international agreements, to recognize that what we want to do in order to survive in the international market is to make each part of our industry as competitive as possible. Our real competition for western beef, for example, is not Quebec, but the American cattle market.
.1650
As a farm leader from an organization that represents all of the various commodities that are being produced, I can say that it's always important for us to think beyond our own commodity and beyond our own region to see how the entire industry does. As I raised in my presentation, I think we have to think very carefully about how the Canadian agriculture industry can reposition itself and be competitive internationally and what kind of cohesion and integration it'll take internally to do that.
Mrs. Cowling (Dauphin - Swan River): I want to first of all thank you, Ms Wiebe. I also want to reassure you that not everything is doom and gloom. The massive and major changes to the crow and to agriculture have been received very well by most of the major farm organizations and primary producers right across the country. These were massive changes that were required because of the World Trade Organization and the atmosphere we're in now in the world.
When you started your presentation, you mentioned that we should consider what the options are to compete globally. My first question is: what options has your organization established for this subcommittee on being in a competitive market in a global atmosphere?
You also made some statements about U.S. and European communities not pulling away from subsidization. I would like to know what factual information your organization has to support your comments on that.
Also, under membership, does your organization receive federal funding or any federal assistance to help you along with travel or whatever?
Ms Wiebe: Let me begin by commenting on the comment. I certainly didn't propose that all is doom and gloom. I wanted to be quite clear that we are charting a new course. What I want to hedge against is the attitude that the barriers have been removed and we can sit back now and watch it happen. I think we have to work very hard to make sure that we use this opportunity to our benefit. I want to be quite clear.
I'm not happy - I'd be surprised if you have spoken to many farmers who are gleeful about the rise of input and production costs - with the loss of the WGTA. For the most part, that means we will have smaller margins, and very few farmers are cheerfully contemplating the possibility or the necessity of paying twice as much for their freight bill, with that rider. But for the long-term future, it's certainly not doom and gloom.
What option do we have in our organizations in terms of competitiveness? It's very clear to us. In the presentation, when we look at our context and our competitors globally and at our options, it's very clear that you cannot leave it to the market forces to decide. That's because we are, as I noted, living in a place in which we have a duopoly, as they say. For all intents and purposes, we're dependent on a transportation monopoly.
.1655
At the outset, it's clear that regulation of some kind will be needed. I am not prepared at this point to lay out before you what the options are. There are options being considered, and I'm sure this committee will hear all kinds of discussions of possibilities and ways of approaching this that could keep primary producers viable.
As for the facts on the United States, I don't have my complete file with me. In the Register of United States Barriers to Trade, 1995, the Department of Foreign Affairs and International Trade document, it is noted that the U.S. export enhancement program was $800 million in 1994.
It's noted also in that same document that:
- The export enhancement program has been recapped as a market promotion program, which
will cover more value added as finished product, and the U.S. administration has asked for $959
million in EEP funding for 1996.
On that third question of funding for our organization, we're a direct-membership, voluntarily funded organization. When we have received funding in the past for particular projects, to my memory, it has always been funding only for a particular program or project, usually for a farm women's project. As the main organization, to my knowledge, we have never received funding from other than our members.
Mr. Kerpan (Moose Jaw - Lake Centre): Again, Nettie, welcome to Ottawa. It's nice to have somebody from my neck of the woods down here for a change.
I had the opportunity to spend a couple of hours with you a few weeks ago, so I will be fairly reasonably brief. I don't have a lot of questions. However, one comes to mind on an issue that I think is probably a minor issue here. It's the issue of forage producers. What do you and your group feel about this? Should they be involved in this $1.6-billion payment? That would be my first question.
Obviously there is some argument for that, even though the huge majority of forage produced would be in Alberta, most likely southern Alberta. I'd like to get your thoughts on that.
There's another thing I would like to ask you about. You and I agree on what the issues will be after August 1, which are things like rail-line abandonment, grain-car allocations and those types of issues. I know we talked at some length a couple of weeks ago about your position on short lines or privatizing the possibility of some of those types of things happening in Saskatchewan at least. Would you give the committee your thoughts on that? I'd appreciate that.
Ms Wiebe: On the question of forage producers, we have quite consistently and carefully not entered that discussion of whether it's pay the producer, pay the landowner or pay the forage producers or not pay the forage producers. In our minds, it's an inappropriate gesture to take a transportation subsidy to try to redistribute it. The possibility of redistributing it in a fair way is very remote. I continue to say that there is no right way of doing the wrong thing here.
So I'm not going to answer the question of whether or not they should do that. It seems to me that those discussions are divisive, short term, short-sighted, and they don't take us to the place we need to be to discuss the real long-term issues of how we will restructure this industry and this transportation so it works.
I note that it's an irony in some ways. While we're doing this ostensibly to encourage value added, one of the value-added industries in western Canada, dehydrated alfalfa, is in serious jeopardy because of the loss of the WGTA.
.1700
I know that some of the $300-million adjustment fund is earmarked for them. But that's so because we already know, at the first blush, that this value-added industry is not being aided by the changes in store. We should just file that in a place where we can retrieve it when we're speaking later about value-added industries and how we need them and what place they have in our agricultural economy.
On your second question of rail-line abandonment or instituting short lines rather than abandoning rail lines, it seems to me that the question one really has there is: under what circumstances or regime is it possible to have short-line rail?
When you come to western Canada to hear these questions, you will have interventions from those who operate short lines now. They can tell you quite clearly that under certain regimes they are not viable, such as if the short lines are expected to compete with and pay whatever rent the main lines wish to charge them. So even in that scenario, the ownership, control, and the regulatory regime of the transportation system comes immediately to the fore when you're discussing even the possibility of short lines.
So it seems to me that this committee has a chance to do some careful thinking and get some creative input on the possibilities of diversifying the ownership base and the control over the transportation system so that it works for all the players, including us primary producers.
The Chairman: Before I turn to Mr. Taylor, Nettie, you mentioned in your opening statement that the short-term transition money is completely inadequate. I would suggest that, on that matter, you should address it to the finance committee. That point of view should be made known to them, either through a meeting, by letter, or whatever.
I had a question on quality control in the marketing system, which is extremely important. The Canadian Wheat Board and our quality control system has basically kept us in the market when others weren't in the market. Do you see, at this stage of the game, any impacts on the Canadian Wheat Board and the quality control system as a result of the changes that are ongoing. How do you see overcoming them?
Ms Wiebe: The first part of that question is easier to address than the second part. As to whether there will be impacts from the loss of the WGTA, it is unquestionably the case that there will be impacts. There is already pressure to move toward a system that allows - I wonder how to say this - less control over certain parts of the marketing, particularly the marketing into the United States. It's an integrated system that allows us to have transportation and quality control and central-desk marketing structured in such a way that we're competitive globally.
When you take any one of those pieces out, as we have just now, or at least chipped away at one of the big pieces, which is the regulation of the transportation system, those other pieces of orderly marketing and quality control cannot but be affected. In fact, we're seeing pressure on that now. How one would resolve that is very much a question of how well one can regulate the transportation system and continue to capture those premiums we get from having guaranteed quality in that global market.
I said earlier, and I want to reiterate it, that this really has been one of our advantages in a territory that is relatively hostile in terms of climate for growing products. That has been one of our advantages. We've managed to achieve a high-quality product and we've managed to market it as such. You don't just have to grow good wheat; you have to then be able to sell it into the market and guarantee that it is of that quality. So that's a key factor in our global competitiveness, which we should think very carefully about donating for something else.
The Chairman: You talked about diversification. Your view was that maybe just the changing of the WGTA or doing away with it would not on its own move us toward diversification, but might lessen our ability to diversify. What do you base that on?
.1705
Second, if your argument is correct, then what needs to be done from a policy point of view to assure that we move toward a more diversified industry?
Ms Wiebe: Let me just say, at the opening of the argument, that the WGTA has clearly not prohibited diversification. We in western Canada are living evidence that we continue to diversify. In fact, we diversified at quite a vigorous rate under the WGTA. So those who argued that it wasn't possible clearly didn't have facts on their side.
Is it more probable that we will diversify more rapidly with these changes? I've given you some reasons to think that this might not be more probable. For one, there will be less money in our economy, particularly at the producer level. We've already seen, which I just noted for you, that one of our diversification efforts, the ``dehy'' industry - dehydrated alfalfa - which was quite successful, is definitely looking at major changes and likely losses.
It seems to me that before we just subscribe to this as an article of faith, we should look at the evidence. I think the cattlemen, who have propelled forward for years, as a key issue of their faith, that the WGTA was somehow an inhibition to value adding and the cattle industry, at this key moment, when they've presumably achieved what was necessary, now tell us that it's of no consequence.
It just seems to me that we need to think carefully about how it's structured and not just subscribe to the general view that the loss of the WGTA will automatically result in diversification. None of this is magic; we have to work it all out. We have to have money to do it and we need to do it, but we have to think about how we do it.
Mr. Collins (Souris - Moose Mountain): Thank you very much for being here today. Coming from Saskatchewan, let me assure you that I have done a lot of travelling in my riding. The concerns you raise are concerns that we're not sitting back on. I think that would be a total misunderstanding and misreading of where we're going.
I've asked SUMA. I've asked people from SARM, the pool, and inland terminals - anyone and everyone. If they could get off the Cooey and get into the real world, I'd be so happy. In all the issues I come across, nine out of ten of them - that's in rural Saskatchewan. I found it just appalling that everybody asked me about my Cooey and whether I had it registered. At WGTA, very few questions were raised. In fact, I had to spur them on.
So what I want to leave you with is that I appreciate you're raising the questions, but I think we're here to make sure you give us some of the answers. We need direction. For governments and bureaucrats to just move forward and not have some direction, we may end up at the end of the tunnel without the light turned on. I think it's very critical.
I have done some very close study on the short-line rails with Paul Beingessner and the people down there. I happen to be on the transportation committee. So I think your point is very accurate in terms of what our long-term goals are in terms of transportation. How are they going to be done? I don't read into it that just because rail companies say they're going to ban these lines, we have to give it to them holus-bolus.
I think you're right that if it happens to be in Mortlach or in a northern part of the province, then we want to stop and review every one of those, although the transportation committee may have some other thoughts. But when it comes down to the bottom line, I'm not so sure we have to believe that because the WGTA is gone, we can't move forward and we can't do a better job of what we're doing, notwithstanding that you're saying the impacters are going to be there. In Weyburn, for instance, yes, we're moving into ethanol. I think it's a good thing.
.1710
I am concerned for us to not miss the mark. The whole transportation system really has to change. As I mentioned yesterday, the rail lines that used to run 100 miles in a day now run 250 miles and we're paying wages for two and a half days. That just can't be.
As for CN rail, we suggested to the union people that they buy in. Then they have to sign the cheque at the bottom of the day and take some responsibility for the ownership. But I agree with you that we can't just turn it over and say go to it now and let the rates go up without some thought about where we're going.
Having said that, in essence, what I would like to know from you is how we can collectively go to all of these players and say that, given the opportunity now - it will be there - for us to take a look at a whole new system of transportation, what direction would you like us to go in? We'd say that if you're going to lead the troops in it, then the members opposite and all of us are going to take some direction. What would you like us to focus in on? How do we achieve that so at the end of the day at least you go away feeling that we're working with you rather than in opposition to you to attain those end goals of better ways for farming and the bottom line?
Let me just make one observation. So many people in farming said to me that they never wanted a hand-out. In all the times I ran, I never heard a farmer ever ask me for a hand-out. They just asked for a fair price for the product they produced and they would compete with anybody. I believe that wholeheartedly.
Ms Wiebe: Thanks for the question. That last point is the case for sure. I have never run into a farmer who wants a hand-out. We want a marketplace that's fair and structured. We want to get paid for what the product is worth. Then we'll make a good living, and we won't be worried about that.
I want to go back to something you raised earlier, though, in terms of how one could approach this. It seems to me that there are two things. One is that we really must get past the short-term focus. The day isn't over on August 1, 1995, nor in 2000 when the cap is supposed to come off. We really must move ourselves beyond this.
What we're contemplating here is a multi-billion dollar industry over the long term. Major changes are in the works, but we're not going to be able to even think about them appropriately if we continue to focus only on the short term, which is what we are now doing. How will this amount of money be paid out in the next three years? What will happen to the $300 million? That's why I carefully moved past those questions: to not focus it correctly.
The other focus we need to be clear about is that we are in a global marketplace. We don't just want to be doing our work here at home. We're in a global marketplace and it wouldn't matter what kind of wages CN workers got. If we're not competitive in that global market, they could be making $2 an hour or they could be making $22 an hour. Our agricultural industry is not going to be competitive.
I think we just have to sort through - we have to sort carefully, of course - some of these internal questions about what is and what isn't cost-effective. But we must always be quite clear about who we're competing with here. We farmers aren't competing with wage workers, nor are we competing with farmers elsewhere in the country. We farmers are trying to set ourselves up a system here with the help of government and transportation and so on and so forth that will make us globally competitive.
We have our eye necessarily fixed on that global market. That's our job here in Canada. I guess I see this committee as doing part of that work. It seems to me that the job of the government is to keep us quite clearly focused on that view of ourselves as a Canadian industry that has something to do in the bigger world.
Mr. Collins: You mentioned the global market. If we can't get our product to that market because of those inhibitors along the way, whatever they are, and if we don't run 7 days a week, 365 days a year, we're not going to compete.
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People are going to say, as they do in my area, to go south. If you can't ensure that I can move it east, west or north, then they want to go south. They want to ensure that there's equality. We have to ensure that's there. At this time, unfortunately, I can't give you that assurance.
I think it's unfair to you. We're buying the best product in the world, and then somewhere we put in all the barriers for you to arrive at the product price on time.
If that global market is open, and I don't get Mr. Kerpan's, Mr. Taylor's or your product down there, where are we going? So we have to move. I'm just saying I think that had better not be missed in the whole scenario.
Ms Wiebe: I agree, but it's a small piece. I think we shouldn't get ourselves mired into smaller pieces and watch the rest of the parade going by.
Mr. Taylor (The Battlefords - Meadow Lake): I'm just taking off from Mr. Collins's and Mr. Easter's questions. Mr. Easter talked about the quality control in the Canadian Wheat Board. Mr. Collins talked about the pressures of a deregulated system and moving grain south because of transportation problems.
The Canadian Wheat Board is a very important part of our sales in the international marketplace. The Canadian Wheat Board is crucial to the success of grain farming on the prairies.
How difficult is it going to be to maintain the operations of the Canadian Wheat Board in the absence of the WGTA or in a deregulated marketplace?
Ms Wiebe: Those are two separate questions. The first concerns how difficult it's going to be to maintain the Canadian Wheat Board with the loss of the WGTA. If the regulatory regime is reorganized in order for them to be able to function, that should be possible.
On the second question of how difficult it's going to be to maintain operations under a deregulated environment - not a reregulated environment - it will be very difficult and probably impossible.
Mr. Taylor: The Minister of Finance, in presenting the bill from which this committee's mandate derives, talked about the importance of the removal of the crow rate for the enhancement of diversification and the enhancement of value-added production on the prairies.
The parliamentary secretary to the Minister of Finance echoed that in the House. And yesterday in this committee, the Minister of Agriculture and Agri-Food talked about it in glowing, optimistic terms and said that we're going to see a greater diversification and enhancement of value-added production.
Have you ever seen any government studies that would indicate that there's a reason to be optimistic? Would you believe that there should be studies done that would give us reason to be optimistic, pessimistic or even concerned about the statements made by the ministers?
Ms Wiebe: I'm not aware of any studies that clearly indicate that the transportation was a major inhibition to diversification. There are studies that have various numbers. Some are less optimistic; some more optimistic.
On the second question of whether we need that work done, yes, we need that work done. We need to move past the ideology in which we're imbued and the articles of faith about what gets you where, in order to look carefully at what does indeed get you there.
Look at the North Dakota and Montana experience, for example. You are hard-pressed to find a vital, active, growing, healthy, value-adding diversification industry there.
Our counterparts who live in parallel geographic circumstances in a somewhat more deregulated environment than ours don't give us evidence that this is the automatic out.
Yes, we need that work done. Before we rush with haste here, we should have that work done.
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[Translation]
Mr. Chrétien: Madam, I'll try to get you to skate on political ice.
The WGTA has been in force in the West for almost a century. You were telling us earlier than in 1984, 75% of the transportation costs was funded under the WGTA. In 1994, 10 years later, those costs were funded up to 52% by the WGTA. In August 1995, it will be zero. That was foreseeable. There had been former attempts to modify the Crow Nest Agreement.
Yesterday, I was listening to the results of the elections in Manitoba and the commentator who was a Manitoban, said that farmers were very unhappy with the removal of the WGTA. Given the fact that it is valued at 1.6 billion of tax free dollars, that there is a supplement of $300 million and that $1 billion will be earmarked for farm products export loans, are farmers in the West unhappy or very unhappy or are they going to accept the loss of the WGTA in the short or medium term?
[English]
Ms Wiebe: The silence we're hearing at the moment is not acceptance, but puzzlement. We're not sure just where we'll land. Will we land on our feet or not?
Whether there will be a great deal of anger and unhappiness is very much a question of the work of committees like this particular one and what they do. It's a question of whether we manage to reshape the agenda in such a way that primary producers can see that we can absorb that transportation cost, because other things are in place that allow us to continue to be viable.
It's very much a question here. I think judgment is, in some sense, in abeyance in western Canada, because we're waiting to see what kind of a regime will be created here in the next phase that will allow us to be viable.
If, at the end of this, nothing is done, we allow communities to die and the transportation system to fall into the hands of those who haven't got our interests at heart, and we see a great deal of loss in the agricultural industry, then of course there will be a commensurate amount of dissatisfaction.
The Chairman: Just on your last few points, that's in part what this committee is about. We have decided that we would look at the future. We want to take a futuristic attitude toward it. At the end of the day, as a committee, we want to be able to come out with a package of helpful suggestions.
So as I said at the beginning, we will be coming back to you or to the organization at some point in time for answers to some of the very questions you raised. They're good ones, and we want to look at them seriously. Thank you very much.
The meeting is adjourned.