[Recorded by Electronic Apparatus]
Wednesday, March 19, 1997
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[English]
The Chairman (Mr. Lyle Vanclief (Prince Edward - Hastings, Lib.)): We have three groups to appear before us this afternoon.
There was another group scheduled, but I guess they felt in essence that their points had been clearly made to the committee this morning. We would have heard them, but we appreciate the fact that this is their view. They were comfortable that their points had been made by others.
So we will have in this first group this afternoon the Advisory Committee to the Canadian Wheat Board, the Saskatchewan Federation of Production Cooperatives, and the Canadian Organic Certification Cooperatives.
I welcome everyone here at the table. Just to outline the procedure in case you weren't here this morning, as you've been made aware, the time allocated to each group is 15 minutes. When you get close to a couple of minutes left in that, I will indicate it to you somehow. If you're not getting to the end of your report or comments, I'll ask you to get there very quickly so we can hear your comments and then go into a period of dialogue, questions, and comments for the next 45 or 50 minutes with both you and the committee members.
I welcome all of you here today in Saskatoon for your comments on Bill C-72, which is an act to amend the Canadian Wheat Board Act.
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We'll start right away with John Clair, who's from the Advisory Committee to the Canadian Wheat Board.
John, if you have colleagues with you, please introduce them.
Mr. John Clair (Chairman, Advisory Committee to the Canadian Wheat Board): Good afternoon, Mr. Chairman, ladies and gentlemen. I have the vice-chairman of the Advisory Committee to the Canadian Wheat Board with me, Terry Hanson, who's from Fillmore.
I believe our brief has been circulated, and I would like to go through it with you.
On behalf of the Advisory Committee to the Canadian Wheat Board, we wish to thank you for the opportunity to discuss the proposed amendments to the Canadian Wheat Board Act. As the elected representatives of western Canada's 120,000 farmers, we have a duty to tell you what we believe the majority of prairie farmers are requesting.
The Canadian Wheat Board has been marketing prairie-grown grains for more than 60 years. During that time, the marketing agency has put millions of dollars into the pockets of farmers and the farm community that wouldn't have existed in a multiple-seller environment. The Canadian Wheat Board's success is based on its three pillars: single-desk selling, price pooling, and the government guarantee.
Still, despite the CWB's success, some groups have pushed for severe changes to the current marketing system. In order to please all farm groups, the Minister of Agriculture and Agri-Food has proposed amendments to the Canadian Wheat Board Act through Bill C-72.
The advisory committee appreciates the increased flexibility some of the amendments will provide, especially in relation to the payment of storage and interest charges on undelivered grain. However, there are some changes that we feel require clarification and/or revision.
First, under corporate governance, the most pressing problem with the Canadian Wheat Board has nothing to do with operations, it has to do with perception. Many prairie farmers and industry observers believe the Canadian Wheat Board requires a new corporate structure. The present commissioner structure is perceived to be outdated and lacking in accountability to farmers, although the advisory committee would dispute that view. While farmers feel they need more accountability, it is clear that they do not wish to give up the federal government guarantee or the crown agency status.
The government guarantee and the crown agency status play an important role in the operations of the CWB. Currently, the CWB borrows at a government rate, saving farmers more than $60 million a year. Two-thirds of our funding is sourced outside Canada, in the United States and in Euromarkets.
The perception of change has the potential to impact our credit ratings and seriously reduce the benefits of the government guarantee. Furthermore, the government currently guarantees all CWB payments. This means that if the world market situation deteriorates, the payments farmers have received will be guaranteed.
However, when the first person is elected to the board of directors, the CWB will no longer be considered a crown agency. Instead, it will be a mixed enterprise. As a mixed enterprise, farmer perception is that the government will be able to move toward the total removal of guarantees.
Whether or not the perception is accurate, farmers will only accept the changes if they feel the government guarantees are in place for the future. Farming is largely without guarantees; therefore, farmers are reluctant to give up those that they have worked hard to establish.
When the advisory committee made a submission to the Western Grain Marketing Panel in spring 1996, we realized that farmers wanted more accountability without threatening the government guarantees. We still believe, as we did then, that the concerns could be met by a more independent and powerful advisory committee with a policy and advisory role to government on commissioner appointments and tenure. Although the specific division of powers was not defined, the committee felt that the concept allowed farmers an increased voice while providing the necessary accountability to continue the vital and unique farmer and government partnership and crown agency status.
This concept would also be flexible enough to accommodate a CEO management structure, or a smaller appointed board of directors and a hired CEO, in conjunction with an elected advisory committee. However, an elected board of directors is perceived by many to be the route to more farmer control and accountability.
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While Bill C-72 would result in an elected board of directors, it will fall short of farmers' demands for three major reasons:
First, the chairperson and president/CEO are appointed by Governor in Council, serve at pleasure, and are not accountable to farmers. In this structure the authority and involvement of the Governor in Council, Minister of Finance, and Minister of Agriculture in the CWB structure and operations would be increased.
Second, the opportunity for farmers to communicate with the chairperson, president, and directors appears to be diminished compared with today's structure. Currently, the commissioners devote considerable time to meeting with farmers. At the same time the communications and accountability link provided by the advisory committee will be lost.
Third, the board structure would result in the CWB being downgraded to a mixed enterprise status.
To provide farmers with a meaningful elected board of directors that allows for full government guarantees, we propose that farmers elect 21 delegates from across the prairies, and from that group the minister would select 7 to 9 farmers to make up the farmer majority on the board of directors. To ensure consistency of operations, the appointments should be staggered. The remaining delegates would serve in an advisory position to the board of directors.
The full board of directors would meet on a regular basis, while the full farmer-elected delegate body could meet quarterly. All 21 delegates would be provided with sufficient funding to allow them to conduct dialogue with farmers in their respective constituencies and to undertake independent policy research and discussion. This would provide farmers with meaningful control over their marketing agency and a sense of ownership. At the same time the minister would be appointing all members of the board of directors so that the CWB can maintain its crown agency status.
Furthermore, we ask that you ensure that the bill clarifies all relevant aspects of the board of directors so that a future government cannot undermine what farmers have worked so hard to achieve in the past six decades. To that end we ask that Bill C-72 clearly provide that the majority of the board be farmers and that the president and chairman be accountable to the board of directors. In order to be accountable the board of directors needs to have the authority to select and dismiss the president and chairman.
Finally, we would like the responsibilities and powers of the board of directors to be clearly defined.
Under CWB authority, clauses of the bill allow the Minister of Agriculture to exclude areas or grains, classes or grades on the recommendation of the board of directors. A producer vote would occur only if the board of directors deemed the exclusion to be significant. The specific meaning of the term ``significant exclusion'' is not defined and if left in, it could have serious ramifications for farmers. For example, the Western Grain Marketing Panel considered the exemption of unlicensed varieties of wheat to be insignificant and would have implemented the recommendations without a vote had it been in their power. However, most farmers saw the idea as disastrous, leading to an open market and the loss of quality control. Given the possible ramifications, we feel that all changes regarding the CWB's authority over areas or grains, classes or grades should be voted on by farmers.
Equally important, the bill will allow significant flexibility and authority to fundamentally change CWB operations. However, that flexibility is geared toward changes that can only weaken fundamental CWB principles.
Provisions to include more grains under the CWB should be specified in the bill so that farmers can continue to design the marketing agency that works in their best interests.
All votes that change the authority of the CWB should require a minimum two-thirds majority, as has taken place in the past. For instance, in order to add canola to the CWB a two-thirds majority was required. This seems to be the norm for most organizations.
With regard to cash purchases, although the CWB has asked for cash buying, we the advisory committee believe cash buying and pooling cannot be sustained in tandem. It is our belief that each use of cash trading increases the probability that farmers will withhold grain from the pools, and pooling could, therefore, not survive in the long term. We emphasize that pooling fairly distributes the benefits of single-desk selling to producers. Cash trading changes the relationship between the CWB and farmers to one of buyers versus sellers and can only undermine the support for single-desk selling.
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Shortened pooling periods invite the same risk as cash buying. Price pooling is a cost-effective form of risk management for farmers. Although market prices fluctuate daily, the CWB uses its marketing expertise to sell at the best possible prices and reflect to farmers the values that are achieved over the course of a marketing year. Shorter pooling periods lessen the risk management provided by pooling.
While some farmers would be lucky enough to participate in the more profitable pools, others would not. The essence of pooling - the fact that all farmers share equally in the markets each year, regardless of when they deliver - would be lost. Also, as pooling periods became shorter, the price fluctuations would be further lessened until the Wheat Board was in a situation where it would be offering a daily spot price.
Producers accept the disciplines of single-desk selling because the benefits are seen to be distributed fairly through pooling of returns. In theory single-desk selling could exist without pooling, but the relationship between the CWB and farmers changes from maximizing and sharing returns for farmers to a buyer-seller relationship. This would open a gulf between farmers and the CWB and would undermine the support for single-desk selling.
Clearly we must continue to investigate options that would give the CWB flexibility to deal with specific problems that may arise without placing the fundamental principles of the CWB at risk.
On the subject of the contingency fund, the advisory committee supported the use of a contingency fund for capital or joint venture investments to enhance sales or market development efforts with new or existing customers. However, this activity was not included in the tabled amendments, and the contingency fund will serve to facilitate withdrawal of adjustment payment guarantees and provide for potential losses from cash trading.
An obvious concern is the further withdrawal of government guarantees and the eventual privatization of the board. Farmers will resent the build-up of a fund at their expense to cover cash trading losses that reward the trade or a minority of farmers.
On the subject of transportation, while much of the attention has focused on changes to the current marketing system, some attention should be paid to the transportation of grain. The Canadian Wheat Board must have sufficient control over transportation to effectively fulfil its marketing function.
Deregulation has thus far not provided efficiency, instead only making it more difficult for producers to have their product moved by the CWB to end-use customers. Furthermore, the recent failure of the Canadian transportation system to meet the needs of Canada's prairie exporters proves it is imperative that a comprehensive review of the railroads be initiated on an annual basis. This review should be undertaken by a legislative committee and should encompass the full disclosure of operating and fixed costs.
In conclusion, the Wheat Board was created on the strength of three pillars, each of which gives the farmers an advantage in the marketplace. These pillars are single-desk selling, price pooling, and the association with the federal government. Farmers have asked for increased accountability, but it is also important that these three pillars remain strong.
Some of the amendments being put forward by the minister are positive. However, some of the other suggestions have the potential of removing the CWB's key advantages and are therefore unacceptable to the advisory committee and to farmers. Our suggestions will give farmers accountability and control over the CWB's operations while maintaining the advantages farmers have come to expect of their marketing agency.
Thank you for listening. We look forward to your questions.
The Chairman: Thank you very much, Mr. Clair.
I'm going to move to the Canadian Organic Certification Cooperatives. The Saskatchewan Federation of Production Cooperatives has given its brief in both official languages, but we're having to get some photocopied right now. Hopefully, the representatives will be here by that time.
So if it's okay with you, Mr. DeMong, we'll go to you now. Welcome to the committee.
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Mr. Ken DeMong (Board Member, Canadian Organic Certification Cooperatives): Thank you very much.
I'm a board member of the Canadian Organic Certification Co-operative Ltd., which is a producer-owned, third-party, organic certification body. We have at present 39 organic producer members, who are all bona fide producers.
The Canadian Organic Certification Co-operative Ltd.'s board of directors wish to take this opportunity to impress upon the committee members our concern about the chaos in the marketing of organic grains.
Many producers' financial plans hang in the balance when they deal with unbonded brokers each time they ship products for sale, waiting sometimes many months for payment. The Canadian Wheat Board grains of course offer some protection to the producers, as they are guaranteed the Canadian Wheat Board payments and are only at risk for the so-called ``organic premium''. But in some instances, Canadian Wheat Board agents who provide services to the brokers do not pay initial payments to the producers until the broker has made the Canadian Wheat Board buy-back. In this case the producer is at risk entirely.
We urge the committee to make recommendations to the minister that the Canadian Wheat Board establish a separate pool or a select grade for organic grains and actively become involved in the direct marketing of organic Canadian Wheat Board grains.
Proposed section 31 of Bill C-72 allows for pooling periods of any length as long as they do not exceed one year. We would support the present pooling period of one year rather than a shorter period.
Further, in reference to proposed section 45, we would urge that the amended act allow provision for expansion of the Canadian Wheat Board jurisdiction to include more grains than just the present wheat and barley. We would urge specifically that a process be established to give producers the right to hold a vote to include grains of their choice under the monopoly control of the Canadian Wheat Board. This process would be similar to the urban process, whereby the town or city council is compelled to hold a vote when a particular percentage of eligible voters requests it.
Organic food production is environmentally friendly and is a sustainable means of providing chemical-free food production. We feel more producers would become involved in organic food production if there were more certainty of marketing.
Thank you for your attention.
The Chairman: Thank you very much, Mr. DeMong.
We will proceed to the presentation by the Saskatchewan Federation of Production Cooperatives. I don't know who's going to make the presentation.
Go ahead, gentlemen.
[Technical Difficulty - Editor]
Mr. Bill Rosher (Secretary-Treasurer, Saskatchewan Federation of Production Cooperatives): Thank you, Mr. Chair.
My name is Bill Rosher. I'm secretary for the Saskatchewan Federation of Production Cooperatives. My colleague is Dan Zazelenchuk, director of the same cooperative. We'll be sharing the presentation.
The Saskatchewan Federation of Production Cooperatives is a voluntary-membership organization of agricultural production cooperatives and machinery agency cooperatives.
Established in 1945, we have represented our members' concerns to all levels of government for the formulation of policy conducive to the advancement of the cooperative model of food production and marketing. Individual member cooperatives are wholly owned and managed by the farm families who receive the services of the cooperative. We are most active in supporting the development of new and existing small-scale food-producing cooperatives in Canada and abroad.
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We have fully supported the cooperative model of grain marketing embodied in the present Canadian Wheat Board Act. As a result of the successful establishment of a Canadian agricultural cooperative movement during the 1920s and 1930s, the Canadian Wheat Board is simply a tool based on our principles and values to balance the economic power wielded by private grain companies, grain exchanges, multinationals, railways, etc. True cooperatives, as well as the Canadian Wheat Board, are not in the business to make profit for themselves. They exist to maximize revenues to farmers by reducing input costs and by extracting a better return from the marketplace.
The success of the Canadian Wheat Board has been attributed to the three pillars: single-desk selling, price pooling, and federal government financial guarantees. These institutional strengths have benefited grain farmers over the past 60 years and no doubt would continue had the regulatory environment in which the board has operated also continued. The board was an integral part of a Canadian grain system in which farmers were the owners of the grain-handling facilities. The government supported and regulated the movement of grain from elevators to ports and the board coordinated movement from producer to the customer.
Today the regulatory framework of the grain transportation system is gone and further deregulation is on the horizon, including the removal of the freight rate cap. Some cooperatives are changing from a service- to member-oriented organization, to corporations attempting to maximize profits for private shareholders. The existence of the Canadian Wheat Board seems to be at odds with the overall government policy of self-reliance, privatization, deregulation, open market, competition, and any other neo-conservative language that cooperatively-minded people feel out of place.
There's no question a massive restructuring of the Canadian grain industry is taking place today. We congratulate Mr. Goodale on his attempt to glean the farmers' point of view on the future of the grain industry. Unfortunately, the message the government has received is one generated by the industrial elite rather than the Canadian grain producer.
The apparent inability to deliver the grassroots message is our responsibility as farmers. Farm organizations in this country represent a broad spectrum of agricultural policies but none truly represent the interests of the farmers. Well-financed and organized groups of farmers are providing the pressure for the government to react. Farmers as a movement are losing control of their large cooperatives, are removed from the bureaucratic centre of power in provincial and federal organizations and institutions, and are so divided that we have been unable to present a clear alternative to the government for our future, for our industry, from a grassroots point of view.
Canadians as a group tend to avoid confrontations or dealing with uncomfortable realities. We are breaking with this attitude because we have run out of options. We are not trying to be offensive, but we must indicate to you our concerns about the future of the Canadian Wheat Board as an economic and social instrument working on behalf of farmers.
The Saskatchewan Federation of Production Cooperatives rejects Bill C-72. We don't believe this bill will resolve any real or perceived problem. In fact, we have difficulties in pinpointing which problems are being resolved through this bill.
Our first concern with Bill C-72 is the timing of its debate in the forthcoming federal election. It is accepted that an election is to take place shortly. It is a fact of life that the overriding concern for each of the members of Parliament present will be to attempt to be re-elected. The political issue of the board's future could well become an electoral partisan issue, having a detrimental impact on the long-term viability of this organization.
We appreciate that second reading has been delayed to allow for more thorough debate on the bill. However, this suggests the government is not overly committed to its passage without change. The government is not risking any political capital on this bill. Farmers are the ones who could lose if we don't address the restructuring in the Canadian grain industry and the future of the board properly.
We believe it'd be better to delay addressing this situation until after the election. The government will be under fewer constraints and the minister could tackle the issue with a new mandate and assume the responsibility of dealing with the national and international implications of the policies adopted by the government at that time.
Our second concern is the government's inability to reach producers by giving them a say in the policy development process. The federal government initiated the process by commissioning a grain marketing review panel. The panel's makeup gave far more representation to the grain trade than to farmers. The anti-board movement was selected to prepare most of the relevant material used by the panel. Members of the panel included retired grain farmers and grain executives, who provided advice on matters in which they will no longer participate or who have in the past had opportunities to make the necessary adjustments and refused to do so for whatever reason.
The amendments introduced in Bill C-72 reflect to a great extent the personal views of the present commissioners of the Canadian Wheat Board on the institutional future of the board. We don't believe the present trio of commissioners are in a position to set policy for the board. They were appointed by a previous government with a different political agenda. Their primary duty is to market grain, not to develop policy that refuses to recognize the changing patterns in farmer culture and the overall trend in government policies in the context of regional and international trade agreements.
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Mr. Dan Zazelenchuk (Director, Saskatchewan Federation of Production Cooperatives): The bill does not suggest the issue of ownership of the board. The board, like a true cooperative, must follow some specific principles and directives to be a farmer-owned and controlled business from which benefits are derived and distributed equally on the basis of use.
Three fundamental principles need to be applied. The first is the farmer-owned principle. The people who finance the operation of the board are those who own the board. Second is the farmer-control principle. The people who control the board are those who use the board. Third, there is the user-benefit principle. The board's purpose is to market the farmers' grain and distribute the benefit achieved to its users on the basis of the level of deliveries.
In our opinion, and in concert with the Canadian Wheat Board Advisory Committee, Bill C-72 does not give farmers accountability for or control of their board. The bill increases cabinet and ministerial involvement and authority in the Canadian Wheat Board, while reducing the role of Parliament and the government's commitment in regard to these guarantees.
Amendments that affect the pillars of the Canadian Wheat Board are permissive and could be very destructive in the hands of a government, board, or management that does not support orderly marketing. It is important to notice that there is nothing in the bill that translates the vocal support provided by the government to the board into legislative provisions to strengthen the Canadian Wheat Board.
In a very candid statement, the Minister of Agriculture has recognized that the future of the board is a farmer problem and should be resolved by the farmers themselves. The group holding power in the present institutional structure of the grain industry is not farmers, and the representation on behalf of farmers is at least questionable.
We as farmers should be allowed to publicly choose the values and policies that will direct the transformation of the power structure of the grain industry. Farmers must recognize the conflicting values that exist within our group, which the government is trying to accommodate. There will be no consensus on the issues of the board's future. We highly regard the right of others to hold values different from our own cooperative values.
The pretence that practical implementation of Bill C-72 will increase the political viability of the board must end. As a result of government policies of deregulation, and major cooperatives pursuing profit maximization in lieu of member servicing, the board is becoming a dysfunctional institution. Any attempt to legislate the viability and acceptance of the board will increase social tension in rural communities and will foster civil disobedience by some. We believe the long-term future of the board will derive from the fact its viability and sustainability arise naturally from the community, and not from enforcing legislation.
There is a stated governmental political position of strong support for the Canadian Wheat Board. With a friendly government in power, we as farmers are looking for a more creative and constructive approach to the future of the industry. It has been a stated government policy to remove governmental interference from the marketplace and leave economic development to the private sector.
We don't expect the government will repress the spontaneous growth process of the citizens and private entrepreneurs in this type of government-induced environment by maintaining coercive legislation. A compulsory, orderly marketing system is becoming no longer acceptable to segments of the Canadian farm community. A government-driven system relies on compulsory - read legal - stipulations. A farmer-driven system is voluntary and will demand more efficiency and accountability at the grassroots level.
We believe with strong government support we can develop a new system that will make possible the offerings of a real freedom of choice and a more democratic control of farmers' power in the market. The institutional form of true farmer ownership and the redefinition of minimum government involvement should be developed by farmers, with government assistance, and presented to farmers for acceptance or rejection by plebiscite.
We believe the process to implement our ideas is relatively simple and that a new system could be in place and running by August 1, 1998, with total deregulation of the industry slated for August 1, 1999. To do it, we believe the government should appoint two new policy development commissioners on the structure of the Canadian Wheat Board and support the election of the new body of farmer representatives in the Canadian Wheat Board district structure to develop the plan presented to the farming community of western Canada.
The terms of reference could be developed by the government and the present advisory committee without any participation of the management of the Canadian Wheat Board.
Thank you.
The Chairman: Thank you very much, gentlemen. All of your briefs have certainly been concise and to the point, and we thank you very much for that.
We will begin a period of discussion, and I'll start with Mr. McKinnon.
Mr. Glen McKinnon (Brandon - Souris, Lib.): Thank you very much, Mr. Chairman.
My first question will be to Ken.
You happen to be the third witness I have observed who has provided information about organic production. What is your feeling about two suggestions I've heard before today? One was that we should be marketing organic products outside the board entirely, and the other was that we should be creating a new class for organic grains and marketing them individually as a class through the Canadian Wheat Board. I'd be interested in your position on that issue.
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Mr. DeMong: As I said, we would like to see the farmers given the choice to market their grains through the Canadian Wheat Board. As I expressed in my brief, there's a huge problem out there in that the companies our brokers are dealing with are sometimes - you could say - shady, and sometimes wait for six months to a year to pay. Our Organic Certification Co-op is firmly in favour of marketing through the Canadian Wheat Board for those reasons.
Mr. Glen McKinnon: Okay, I wanted to clarify that. We've had other information.
Mr. DeMong: Yes, I'm aware of those other views.
Mr. Glen McKinnon: Might I then go to the advisory committee and indicate to you that you are the first group I've seen who has actually put numbers and methodology in place for how a farmer-elected organization would actually function. I appreciate that.
I wonder, however, if you would have a view to how those regions would be selected across the prairies, looking at the three prairie provinces.
I'll ask you to comment on that, and then I have a supplementary.
Mr. Clair: The way I would see it happening is, right now we're divided into 11 constituencies in the Wheat Board area, and we would move to 21 areas. I would view it as a regional membership. There would be one individual, like there is now, from -
Mr. Glen McKinnon: And cross-border regions?
Mr. Clair: I don't think there would be a problem. Right now we have one advisory district that is roughly half in Alberta and half in Saskatchewan. I don't see the border as a problem there.
While we're on this, the number 21 isn't something that has to be in cement. Right now there are 11 of us, and each of us represents roughly 11,000 producers. That is a huge area. Just to give you a little bit of an idea, my area runs from North Battleford on the west side, north of Saskatoon, basically all the way to the Manitoba border. That's a little bit bigger than what a constituency should be for good representation, in my view.
The Chairman: Mr. Hanson, do you have a comment?
Mr. Terry Hanson (Vice-Chairman, Advisory Committee to the Canadian Wheat Board): Yes, I think it's important that these aren't hard and firm numbers. We looked initially at just doubling the number and basically cutting our existing districts in half. It's not a magical number, but it is a workable proposal.
The other thing I'd like to point out is that our preference was still for giving the advisory committee expanded powers and an expanded budget. I'm looking after an area that is as large asMr. Collins' area, and my salary or remuneration for that is $1,800 a year. So I go into my own pocket for anywhere from $3,000 to $5,000, because I believe in what we are working for.
The advisory committee was criticized a bit this morning for maybe not having done the proper communications job. Well, you simply can't do it. You cannot cover that type of area and run two-way communication - not only from the farmer to the board, but back again.
Our role out there in the last while has simply been to try to calm the discussion and get the facts on the table about the barley question, and to bring people into line in understanding how the board really operates. We really haven't been playing the proper role that I think was envisioned when we were set up, of having this ongoing two-way communications role. Our job has just become too big the other way.
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Mr. Glen McKinnon: We had a comment from another presenter earlier this morning about the issue of voice and control. The other comment that came forward was that the advisory committee, as formally structured, really didn't have that. You perhaps had a voice, but you had little or no control. Would you like to comment on how you would see the advisory committee being strengthened and enhanced in the future?
Mr. Clair: Maybe I could speak first on the control we now have. I know that in a lot of farmers' minds it's perceived that we're advisers only. In actual fact, under a number of circumstances - I would point to as recently as when the Wheat Board was part of the SEO recommendation to government - we as advisers were on the other side of the issue. We convinced the Wheat Board to withdraw their support of the SEO group.
Whether the perception is correct in some circumstances or not, I can't answer that question, but there is an issue where we were at odds with the board and they changed their minds. Maybe Terry wants to comment.
Mr. Hanson: Certainly it has to be more clearly defined in any amendments to the act, if there is an ongoing advisory committee, what that role will be especially in terms of policy development. That's because that is where the big hang-up in the act is as it stands today. A lot of people say you've got no business dealing with policy, deal with operations.
We don't have the time to deal with operations. You can't go down there for one or two days a month and take an in-depth, overall look at operations on weekly sales and this sort of thing. Certainly we get an overview, but policy seems to be the area that the western Canadian farmer most wants us to be involved in, and we, by our understanding of the act, are excluded from participating in policy development.
We have many subcommittees on which we all operate, and with all honesty, I can say that the board and the senior people really value our opinions, but we do not have power as specified in the act.
Mr. Glen McKinnon: I wonder how you see Bill C-72, assuming there is a board elected and that there is two-way communication. Say you more or less took a third of the people whose names were put forward. There would be an election in each region, and one of them would be going forward. The other six would be doing two-way communication with the rest of the region. That's what I'm sensing. Would I be correct on that? The one who's elected to the board comes back to his six colleagues in his region, has a discussion, then he in turn goes back to the farmer, the producers, for the communications.
Mr. Clair: I think you've taken it a step farther than we had intended. We had intended the minister to be able to pick from the group of 21 a total of seven to nine.
Mr. Glen McKinnon: No election?
Mr. Clair: No next-step election. Then that steps through that hoop we believe is necessary to maintain the crown agency status. You would have a selection -
Mr. Glen McKinnon: Therefore, not a mixed entity.
Mr. Clair: Exactly.
Mr. Hanson: His position is defensible because he is choosing from people the producers have elected. Through careful wording in different acts you'll see, ``on the recommendation of the board or the advisory committee the minister shall...''. It still lets you operate under the agency status and gives us the kind of guarantees that the farmers are not willing to give up.
Mr. Glen McKinnon: I would therefore ask the cooperative group whether or not that suggestion by these gentlemen would fill any of the shortfalls you see in the bill, or is that too simplistic?
Mr. Rosher: No, I don't think it would satisfy our group at all.
Mr. Glen McKinnon: Thank you, Mr. Chairman.
The Chairman: Mr. Hoeppner.
Mr. Jake Hoeppner (Lisgar - Marquette, Ref.): I appreciate the gentlemen coming forward with some very frank discussions. As we heard this morning, we have certain issues that we staunchly believe in portraying.
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I would like to go to your statement on cash purchases. I'm not saying I disagree with what you're saying, but you say you believe cash buying and pooling cannot be sustained in tandem. Then you go on to say that you emphasize that pooling fairly distributes the benefits of single-desk selling to producers.
On shortening the pooling period, you again emphasize that and say the essence of pooling, the fact that all farmers share equally in the market each year regardless of when they deliver, would be lost. I think you've got some goods points there. Now whether that will prove itself true or not, I don't know.
I'd like to read you a quote from the Wheat Board's commissioner, Mr. Klassen, on the issue of these special selection premiums. It says ``The advice given'' to the farmer ``was a good faith effort by the CWB to assist a farmer in obtaining the full market value of his grain.''
If the CWB cannot on its own get the full market value of our grain from private processors or elevator companies where they have the sole distinction of single-desk selling - there are no other sellers in the market - how does the Wheat Board accomplish that in the wider arena in the world market when it bids against foreign buyers, and quite a few big ones?
Mr. Clair: I'm not really sure I understood your question.
Mr. Jake Hoeppner: If you can't extract these premiums being given by elevators and users in the domestic market where the Wheat Board is the only seller, how can the Wheat Board claim they are extracting these premiums in foreign markets when there's a whole host of sellers, including big ones like the Americans, Australians, and Europeans?
Mr. Clair: I haven't had the opportunity to be in the world markets, so I won't pretend to give you a direct answer from my own understanding.
I would point to the Kraft-Furtan-Tyrchniewicz study as a credible audit of what the board can do with the single-desk selling of a product like ours.
I think it's fair to say that in both studies, the barley one and the wheat one, the higher the quality of the grain, whether it's malt barley over feed barley or number one high protein wheat over extremely high protein wheat, there seemed to be a higher premium obtained from the market, as opposed to the feed barley situation or the feed wheat situation in which the competition is a lot closer.
The board is in a unique position because other countries do not have the quality control system we do, with maybe the exception of the Australians. We are the only ones who put a final certificate on our ship.
Mr. Jake Hoeppner: I always say the proof is in the pudding when you have a belief in some kind of an organization or a system.
When I was listening to the gentleman this morning on the issue of price pooling being one of the mainstays of the single-desk system, I asked the question: are you prepared to accept these premiums being paid by end users or elevators to divert grain from one company to the other? I think about half of them said they were prepared to accept it, and a few said they had accepted these premiums.
Is this also your philosophy as advisory board members? Should this be tolerated? Is this fair that this is really establishing the one fundamental on that single-desk system as far as price pooling is concerned?
Mr. Clair: I think there are a number of premiums that are extracted. There are more than just the one you referred to. I would point to things like mill door premiums or that type of thing in a domestic mill situation. I understand that mills may be prepared to pay an additional premium for a specific protein level that's consistent all the time. If a farmer can deliver that within this range, they're willing to pay it.
If you're discussing what was going on with Manitoba Pool, that was a 90,000-tonne order. At least my understanding for this year is that it has a $20 premium, and there's also another grain company involved as well as Manitoba Pool. If the other grain companies want to get into that, the offer was made to them, ``You source that special niche market and we'll work with you as well''. That's my understanding.
.1520
Again, I'm not at the centre of the operation. We're there roughly 10 times a year, but this is what I found out in looking into the matter for my own benefit so I'd know how it was handled.
I don't see a problem. Some people are asking the board to be more flexible, to get into these niche markets and pick off the 90-tonne or the 9-tonne orders, the small orders. This is an example of their being able to fill that need of a particular customer.
Just as a point of interest, the side agreement was that when they were sourcing grain outside the U.K., it came from Canada only.
Mr. Jake Hoeppner: So you are saying these niche markets should be developed for the benefit of single producers, not for the benefit of the pool.
Mr. Clair: Well, you like to put words into my mouth. I'm saying the board is capable of dealing with niche markets and small markets. You and I have a different view on how the board should operate, and I'm not going to try to mince words with you, sir.
Mr. Jake Hoeppner: I have a view, as a member of Parliament, that I operate in a democracy.
This morning I heard people saying they would accept special premiums outside the pooling system, and then in the next breath saying, ``If you've made a contract with the Wheat Board and you can get a better price from a feed mill or somebody else, we lay the law to you.'' That type of justice system does not belong in a democracy. To me that type of justice system belongs in a dictatorship or a socialist system, where farmers or individuals don't have equal rights. If you have it one way, you also have to have it the other way.
I will tell you very clearly that when I have the advantage of shipping wheat or durum across the line and getting a $30-a-tonne premium, the Wheat Board says that's illegal, even if I go through the buy-back system, because the prices are such that you can't afford to buy it back. And we heard this morning how the buy-back operates.
I am saying what is fair for one side of the equation should be fair for the other. I'm asking you, as advisory board members or representatives, whether you agree with that or think it is the wrong philosophy.
Mr. Clair: If you're familiar with how pooling works - and I'm sure you are - there's a reason the buy-backs are the price they are in every country we're dealing with. The United States is a premium market for premium grain, so it is not the only market that particular grain goes into. The pooling price is blended from the American price as well as from many other places to which the grain is sold. That is why the buy-back is set the way it is.
Maybe we have to take a hard look at this whole buy-back situation. This is just me; this is not necessarily the advisory committee's opinion. Maybe we have to have an outside individual who would, in confidence, get to see what was going on and could work as an ombudsman or something like that so farmers would feel the price that was set for the buy-back was fair and reasonable for the market they were going into.
Talking about organic grain, one of the biggest concerns I have with organic grain going outside the board, again, is do the individuals selling it know what the market is in the country they're going to? In most cases I've heard no, they don't. They don't realize how big the premium is in the U.K., for instance, for just regular wheat, which is a pretty good product too.
You keep coming back to this business of getting extra dollars. There are protein premiums. We'd like to pay people for what their grain is worth. Down the road maybe we'll be paying on things like dry matter basis; who knows? This is an evolution, this business of a small market that someone can search out. There's going to be a premium, but that individual has to buy certified feed, has to keep his grain separate, has to ship it at a specified time, has to step through all the hoops necessary, and if it doesn't qualify, he doesn't get the premium.
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Mr. Jake Hoeppner: One thing you forget is that we have a Canadian Grain Commission that establishes the grades in the protein and what the price is. That is being violated, and the farmers in my area are not going to put up with that kind of system if it isn't fair. You're going to find out you have more problems than you can handle in any direction because if you have a pooling system, it had better be a fair pooling system that is there for the advantage of the farmers, not for individuals or for grain companies. If that is your idea as far as the Canadian Wheat Board is concerned, it's going to destroy itself. There is no way it's going to be salvaged.
I like your idea of having an ombudsman setting the buy-back price because I think that is where the big problem probably arises as far as it concerns disputes between farmers on what is fair and what isn't fair.
The Chairman: Are there any further comments? Okay, I'll go to Mr. Calder.
Mr. Murray Calder (Wellington - Grey - Dufferin - Simcoe, Lib.): Thank you very much, Mr. Chairman. I'd like to speak about the advisory committee. One of the things I heard this morning was that the advisory committee should have more responsibility and that they should meet with the Minister of Agriculture on a regular basis. I would like your comments on that.
The other thing in your presentation I'd like you to explain a little bit more fully to me is on page 4, and that was that the opportunity for the farmers to communicate with the chairman, president, and directors appears to be diminished compared with the existing structure. I'd like you to expand and clarify that statement.
Then you state you consider the Canadian Wheat Board is being downgraded to a mixed enterprise. I would like you to basically clarify what you mean by that. I think I know because the Financial Administration Act defines a crown corporation in part as one whose directors are all appointed by the Governor in Council. That's I guess what you're referring to by mixed enterprise status.
Could you clarify those points please?
Mr. Clair: First of all, in terms of meeting with the minister, I sure would encourage more meetings with the minister. I'm at a little bit of a loss here without going back into a calendar. I think we've met three times face-to-face with the minister as a committee or as a portion of the committee, but I could be wrong.
Thinking back though since I became chairman, I've got an ongoing communication with the minister's office. Sometimes we talk three times a week and sometimes we talk once in three weeks. The last time, for instance, was just prior to the Asian tour. My concern was the message that was going over, and I wanted to make sure the minister had our thoughts as farmers prior to going over there and obviously our concerns about late shipments and whatnot with transportation.
Mr. Murray Calder: Do you think that was accomplished?
Mr. Clair: I wish I could say yes and that all things are great, but I think we've lost serious credibility with a really good customer because everybody has moved to ``just in time''. That's why transportation was in our brief. Transportation and marketing are linked very closely. You cannot separate the two because it doesn't work.
Mr. Murray Calder: Okay.
Mr. Clair: I'll go now to your second point about the business of a part-time board, a CEO and president not being available. I think we've had, in my experience, four commissioners most of the time and they have been available to get out to a lot of farm meetings. I see a part-time board coming in and doing a fair bit of what we do now once a month, setting the policy and going back and not having a great deal of other contact. This is unless there's something in the wings in terms of plans and regulations of which we're not aware, where those people would be going out and meeting with farmers.
I think what we've lost and what we need to deal with is communication. Accountability and communication are very closely linked. You are all members of Parliament, and I'm sure you understand that an election every four or five years is not significant in itself. To be accountable, you must go back out to talk to your constituents and be prepared to listen. If that doesn't happen with this new board, all we've done is put on a band-aid and provided a temporary fix.
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All of a sudden somebody's going to wake up and realize we didn't improve anything because we stepped back, and it's going to be most of us farmers. Yet this is what we have and it's slow to change. Since 1992 I've seen proposals to amend the Wheat Board Act, and we still haven't seen this come to fruition.
On the mixed enterprise, I think it's a perception that could well be carried out into the European and American money markets. This business of losing the direct government crown agency status, in my mind, is very important. I don't want to say we've carried this excellent credit rating to an extreme, but we've borrowed at a very low rate and done very well by it, with the Government of Canada carrying the insurance behind the board's borrowing.
I think we borrow better than the biggest companies in the grain marketing business and probably can operate the board on those savings alone. The board's operations are somewhere in the range of $44 to $45 million a year, and we're talking about a rough saving here of $60 million.
Mr. Murray Calder: We can still maintain the lower borrowing rates by going through the Minister of Finance. But at that point if we're looking at a board of 15, with 10 elected and 5 appointed, we would still be able to satisfy our commitment to the Canadian taxpayer and maintain those lower rates that you're concerned about.
Mr. Clair: But it's outside the country where we will be scrutinized and the rates will be set outside the country for most of our borrowing. It's that perception out there of a change that could be costly. I agree that it could slip through and be unaffected and it could go the other way, but we don't want to give it that opportunity.
Mr. Murray Calder: Okay, that's a new point I haven't heard. Thank you.
The Chairman: Okay, Mr. Hermanson.
Mr. Elwin Hermanson (Kindersley - Lloydminster, Ref.): Thank you, Mr. Chairman and the advisory board - Mr. Clair, Mr. Hanson. I believe, Bill, you're on the advisory board as well. I know you're not in that capacity here, but you are on the advisory board as well.
I just wanted to suggest that it's looking like you may not lose your position here too quickly because there's a very good chance this bill's not going to be passed. That may make you pleased. It sounds like your job security isn't something you would want to maintain for financial purposes, although I'm not sure what your per diem and some of those things are.
I think a lot of this debate about whether it's a mixed enterprise or a crown corporation is fun. It's kind of a theoretical thing, but it's not getting at the root of the problem we're facing.
In your presentation you talked about the bottom line being to try to put more dollars in producers' pockets. I think you quoted various studies that would indicate there are more dollars going to producers' pockets. We all know there are studies on both sides of this issue.
I have mentioned to other witnesses before you on previous days that in fact producers are moving away from Wheat Board crops. During my 20 years of farming I've seen a dramatic increase in the commodities, such as canola, peas, and lentils. The response has always been that the reason people have moved away is not that these are Wheat Board grains but that there have been trade wars that have affected primarily wheat and barley.
That brings to us an interesting observation that in fact the easiest target for trade wars are commodities that are traded primarily by state trading enterprises. It's your wheats and feed grains that are primarily traded by your state-trading enterprises, such as the Wheat Board and the Australian Wheat Board, and purchasers such as the former Soviet Union. That's what always triggered the trade wars. The Afghanistan thing is another example. It didn't affect some other commodities as much as it affected wheat.
So in fact by maintaining single-desk agencies around the world, such as the Canadian Wheat Board, we may in fact have lost billions of dollars for producers rather than made a few dollars because we have this monopoly control.
I'd like your response to that. If that's the truth, what you're going to see is more and more farmers, such as the canola farmer who approached me the other day and said he's not even a Canadian Wheat Board permit holder anymore because he just doesn't think there's any advantage to growing Wheat Board grains. He will change his rotation to grow grains other than Wheat Board grains just to have the freedom to grow what he would like to grow.
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Mr. Clair: First of all, we work on a world price. It doesn't matter if it's wheat, barley, canola, or whatever it is. What I hear you saying or pointing out is the coincidence that trade wars start with the board handling grain.
Mr. Elwin Hermanson: If you look at EEP, it's corn and wheat.
Mr. Clair: But that gives them a monopoly. EEP gives the American system a monopoly because they control how much is sold by how much EEP they are willing to give with that particular sale.
Look into other situations where it's a buyer country. I would point to Brazil, for instance, that went from basic single-desk buying to where the government said, ``This is what you need,Mr. Miller, to mill.'' Then they smattered out and have now come back. They've seen the wisdom of collective buying power.
I think the Wheat Board is able to extract a premium for us because it is the only seller of our grain. I would argue that those trade wars would be there whether we have the Wheat Board or not. I would suggest that as a farmer I'm a lot better off and probably I'm here today because of the Wheat Board.
In an EEP market, for instance, they are able to go in and pick out the higher EEP sales and stay as clear of that country as possible with sales, except with the tail-end, if you like, to make sure our bins are empty.
Sometimes you have to go into those low-price markets but pick on a market that isn't EEP'd at all and expand your sales as much as you can. You can sell in the same day to that market at $1 or $2 a bushel more than, say, into an EEP market.
There are some real positive benefits to this monopoly that we have working for us. There's a big difference when it's working for us as farmers as opposed to against us, like the monopoly we see on a railroad. There are two totally different concepts there.
Mr. Elwin Hermanson: But what I was saying is that actually the monopoly may, in a backhanded way, have been working against us because in the major commodities of wheat and barley we're embroiled in a trade war. We were hit with depressed prices for a number of years in those areas.
I'm not saying it's the Wheat Board's fault. It's because they were trading with enterprises dealing in those commodities in other places. We've been told that when the next round of WTO negotiations occur, there will be immense pressure to move away from state-trading enterprises simply because countries of the world are beginning to learn that these trade wars are a lose-lose situation.
If we stick our heads in the sand on this one and the rest of the world moves away from what we're trying to support, without making it more flexible and perhaps voluntary, we may end up getting the rug pulled out from under our feet, just like we did with the Crow rate and with article 11 of GATT.
I wonder how you, as farm leaders who are supporting the status quo, are going to justify this to your constituents should it happen. We've got people apologizing for the Crow, which the Liberals did away with overnight.
If we get to the WTO trade negotiations and we have no support there for the Canadian Wheat Board as a monopoly single-desk selling agency, it will be gone, no matter whether it's a crown, a mixed enterprise, or whatever.
Mr. Clair: I would suggest there'll be more support in the world than just Canada sitting there with their own people, because there are a number of state-trading agencies of one form or another, both buyers and sellers. Likewise in Europe, you'll see some support there. I think it's a long way from a lost cause.
I'm very willing to go back to my constituents supporting single-desk selling. I don't have a problem with checking to see if I'm representing his or her thoughts.
Mr. Elwin Hermanson: What is the cooperative called?
Mr. Rosher: Saskatchewan Federation of Production Cooperatives.
Mr. Elwin Hermanson: I'm sorry because I didn't follow this as well as I should have, but in your presentation you talked about a new system that will make possible the offering of real freedom of choice and the more democratic control of farmers' power in the market.
I got the gist from your presentation that you are supporting the single-desk selling and then you talk about a freedom of marketing choice. I'm just wondering how you rationalize those two phrases. It seems like a bit of an oxymoron. Just as a matter of interest, I was wondering how many co-ops are in your association. Would you have a few hundred or a few dozen or?
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Mr. Rosher: I think we had 50 co-ops listed last time I checked, and I don't know how much membership in each co-op would -
Mr. Elwin Hermanson: That's fine. If you respond to this freedom of choice statement, I don't understand why you put that in your brief.
Mr. Rosher: In the brief it suggests that in a regulated system the Canadian Wheat Board is the Cadillac of marketing systems. We had a regulated system in which grain transportation was controlled, but we've moved out of that right now. We don't believe the Wheat Board will have the same control in this deregulated system that it needs to be a Cadillac of grain marketing. So it's time for the farmers to start reaching out beyond their farm gate and look at how in a deregulated system if we need a chunk of the action we have to go out and get it, and we hope we have a government that would support us in that move.
Mr. Elwin Hermanson: So in other words you're looking down the road and saying that the Wheat Board is not going to function the way it does now in the future, and you're suggesting some other mechanism, some type of a cooperative marketing consortium to market producers' products should there be a demise or change in the Canadian Wheat Board. I'm trying to figure out where you're coming from here. That wouldn't really relate to Bill C-72, but it's very interesting.
Mr. Rosher: We don't see any political party offering to re-regulate the grain industry. We don't think that's going to happen. We'd like to see it happen. It's not going to happen in my lifetime. What we have to do as farmers then is to get together as a group and decide that this industry is ours and that to buy into it as a cooperative model is the easiest way to have equity among all producers.
Mr. Elwin Hermanson: So going back to the old co-op movement.
Mr. Rosher: With the support of the government this time, yes.
Mr. Elwin Hermanson: Through regulation or through legislation? We have legislation now, we have a cooperative actually.
Mr. Rosher: If you set up the framework, farmers could get into purchasing the branchlines and a little easier system, having some control in negotiating with the railroads as a group. It would maybe even allow us to have access to the ports.
Mr. Elwin Hermanson: I understand now more where you're coming from in your brief. I thank you for that clarification.
The Chairman: Okay. Mr. Easter.
Mr. Wayne Easter (Malpeque, Lib.): Thank you, Mr. Chairman.
I hate to get into this, but I can't let this slide in terms of Elwin's point on state-trading enterprises, because you're trying to throw a red herring in here, Elwin. Let me quote you again what Robert Carlson, National Farmers Union representative in the United States, had to say in the U.S. He's the representative of a strong farm organization there and he said:
- If we destroy the various institutions that farmers in many countries have built to help
themselves survive economically, we will have nothing left but producers standing bare among
the ruins of structures that once empowered and protected them in a marketplace dominated by
giants.
So coming to the Wheat Board advisory presentation, your presentation is not clear, John, in terms of your position. I gather from reading it, but it doesn't specifically state, that you are opposed to cash purchases as it's written in the act, shortened pooling periods as it's written in Bill C-72, and the contingency fund as designed. Am I correct in that?
Mr. Clair: As it's written in the bill before you now.
Mr. Wayne Easter: There's also a perception out there, and I think it would be useful for the committee and for the record, that there is very little communication between the Wheat Board, via the Wheat Board itself, and the Canadian Wheat Board Advisory Committee and producers. I've seen both operate in my time in western Canada and in eastern Canada through marketing boards that have 100% producers on them. In my opinion, there's more communication with the wheat industry on behalf of the board than with any other in terms of your district meetings, etc. I wonder if you might explain that process so that we do have it on the record.
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Also, I'm sure that as an advisory committee you've talked about the danger of going to a mixed enterprise. The thrust of your proposal is to try to retain that crown status, I suspect, perhaps in the advent of further trade challenges and mixed enterprise and so on. Your concept of elections is interesting in the way that you've presented protecting the crown agency status. Do you have any examples from anywhere in the world that we can draw on for experience in terms of that particular concept?
So there are two points. First, how do you communicate? Second, do you have any examples?
Mr. Clair: I'll take them in reverse order, if I may.
First of all, we don't have an example. This is something that came forward as an idea. If my memory serves me correctly, there were three or four different ideas on the table. We melded them a little bit, with some give here and give there, and this is what came forward. It was not something pulled out of Ontario or pulled out of Australia or somewhere like that. We feel that the crown agency status is very significant outside the country.
We have to remember that there is that financial side and that customer side. We hope the customer continues to look at us in the same light. They look at us as very reliable people, as a very reliable, trusting...we can pay back our debt.
In regard to communication, Terry touched on it a little bit, and I'll ask him to comment on the things that I miss. As a board, we spend a pile of money going out to producer meetings, marketing club meetings, whatever. We do attend a good number, but please remember that there are 110,000 to 120,000 farmers, somewhere in that range. It does take a lot...in my six plus years on the advisory board, in my best year I met possibly 1,000 of my constituencies out of 11,000. I don't think that's adequate. If we could figure out a way to get the communication working on an ongoing basis, then you have ownership. And with ownership, there's a certain amount of peace and assurance that things are going forward the way you envisioned or that at least you've had a say in that basic decision.
Terry.
Mr. Hanson: We each operate our own districts differently and uniquely because of the makeup of the clientele. In my area, I am invited to about 30 to 35 meetings per year, on average. They are RM groups or SaskPool banquets or marketing clubs. It gets very frustrating when you drive 120 miles to a meeting and there are only 8 to 10 people there. I'm sure you politicians have gone through the same thing.
We have proposed different structures that might accomplish the communication things better. One thing I would like to see is some regional offices. I fully believe we need two in Saskatchewan. These offices could be in Regina and Saskatoon, or you could have one in the Swift Current area or you could have four. It doesn't matter to me.
These offices might be structured so that three or four of our Canadian Wheat Board reps who are in the country at all times, checking on deliveries at the elevators and keeping the books up to date so there are no problems, could use that regional office along with two advisory committee members or three advisory committee members. It wouldn't be a high-cost item. We could have a couple in Alberta, a couple in Manitoba, and maybe four in Saskatchewan and one in the Peace.
These wouldn't be high-cost things for the budget, but it would certainly allow us to communicate better. It would certainly give the media a better contact instead of their always having to deal with Winnipeg or having to phone us and trying to wait until we get in off the tractor and catch a news clip at noon or something like that.
The problem is that all of these things cost money. In terms of a new structure, if we have to throw out the current structure, I like the Ontario model, but it's a very costly structure. It's a full delegate type of body, and its board of directors is elected from a regional delegate body, similar to that which some of the prairie pools use. However, it's very costly. With the criticism the board has now for administrative costs of anywhere from 4¢ to 4.5¢ a bushel, if it were to go to 8¢ or 9¢ to have the proper structure in the country to accomplish the communications thing, I'm not sure the farmers would buy it. I mean, we've got no bottom line today. Are we willing to give up more to get some sort of perceived better communication system going?
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Mr. Wayne Easter: Quite a number of witnesses have come before us on the point of exclusion of crops from under... Do you have a position on the inclusion of new costs? If the legislation goes, should there be an amendment to allow inclusion in the same way as there is to allow exclusion?
Mr. Hanson: Our brief specifies that.
Mr. Wayne Easter: I missed it then, if it's there.
Mr. Hanson: Yes, in the canola plebiscite I believe to bring canola into the board you needed a two-thirds majority. We think anything dealing with a major change regarding Wheat Board operations, inclusions of new crops or kicking them out, should require two-thirds support by the producers.
Mr. Wayne Easter: There are three guarantees now. One of the ones we're into, in terms of the debates and the tradeoffs and whether the chief executive officer should be appointed - if that's the way we go - is on the importance of those guarantees. You've mentioned it somewhat, but from your experience on the board, how important...? I know the interest earnings on the borrowing guarantee alone amount to about $61 million, but how important are those guarantees for the overall functioning and operations of the board and should they be retained basically to the exclusion of all else?
The Chairman: Mr. Clair.
Mr. Clair: Maybe I'll comment first.
I think the government guarantee is extremely important. That's why I think our proposal, whereby the minister appoints all of the board members and then leaves the board to pick its own chair and CEO... I would suggest that the financial plan come before the Governor in Council, as I understand it does today, to be approved and that this should be sufficient to continue the full government guarantee.
I would go further. If it isn't acceptable, I suggest a total business plan be approved yearly. But I think if the financial plan is out there and the actual appointment of the individuals is there, as farmers we've stepped through sufficient hoops to ask government to continue the 100% guarantee.
Mr. Hanson: The producers aren't willing to trade off all of the advantages of the crown agency status. I've heard the minister refer to it as a crown corporation; it is not truly a crown corporation, it's an agency of the Crown. They're not willing to trade that off simply to have the adjustments come maybe a week earlier. A lot of things have changed, and I want to say thank you to the present administration, because in the past, when the board made recommendations on increasing initial prices and making in-term adjustments, some of those recommendations were sat on for two and a half to three months. That process has sped up under your administration to, I think, a very acceptable timeframe. In a lot of cases, we're seeing recommendations go forward and in three weeks we are allowed to make the adjustments.
To shorten it by another week but give up the crown agency status as a tradeoff...we feel that by simple changes in the administrative process of government, you could simply have the minister in charge of the Wheat Board and the Minister of Finance make that decision.
A voice: Follow the formula.
Mr. Hanson: Yes, follow the formula. If everything works on paper, it's almost an automatic fait accompli.
The Chairman: Are there any other comments?
Bernie, did you have a brief comment?
Mr. Bernie Collins (Souris - Moose Mountain, Lib.): Thank you very much, Mr. Chairman, and again thank you to the presenters.
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I commend you from the advisory board for the insight into the structure of the board and where you would like it to go. From your position, do you see that if we do those kinds of things we will retain the board? I heard some people this morning saying that in five or ten years it'll be gone. I don't believe that. I believe you've gone through an electoral process and have put some people on the advisory board. The only thing I want is to make sure that it's meaningful. If you're going to meet, do so on a regular basis and have some purpose for a meeting, but do meet, so that you have some liaison with the people who elected you. Otherwise, I think you will be spinning your wheels.
Let's go back quickly to the 21 members on the board, if we use 21. You say, ``Well, you select.'' Am I correct in understanding that you people who may make up the seven or nine people on the board, appointed by the minister, would elect a CEO and a president?
Mr. Clair: We would elect a CEO, yes, and select a president.
Mr. Bernie Collins: From your own you would select a president.
Mr. Clair: Yes.
Mr. Bernie Collins: Is it the same with a CEO?
Mr. Hanson: We would select and recommend to the minister.
Mr. Bernie Collins: Okay. In the case of the CEO, you wouldn't see him on the board per se; he would be there in the day-to-day operation of the board, wouldn't he?
Mr. Clair: The job or function of that individual, as I view it, is to run the operations of the board. He's the chief officer in charge, not part of the board.
Mr. Bernie Collins: I think that's really important for us, because it does open a new avenue that I don't think was addressed in the meetings. I think it's very important. You don't want us to move into the mixed concept, you want us to stay within that framework.
At the end of the day, for you people on the advisory committee, what would you do with the members who don't get appointed to the board? I think I would like to know what happened to them, because I don't want to see them go back and become a non-entity.
Mr. Hanson: We're suggesting in the rough draft that these people would be your advisory group, that you as an elected board member would use - and you wouldn't have to necessarily pick from seven or nine specific regions. One board member may find that because of logistics, he has three or four advisory committee members beneath him, whom he would work with on a continual basis.
The fact we're saying they might meet only quarterly really is irrelevant. The fact that communication would be going on continually between this group of three and the one who is actually sitting on the board can only improve communications both ways between farmers.
I also have a concern over the wording ``serving at pleasure''. Having been in politics myself, I think this should be flagged very seriously, because it removes something we have always looked on as pretty important in the operations of the Canadian Wheat Board. Yes, initially we did not like some of the appointees who became commissioners. We wondered why in heck that person was being appointed when he didn't support the pillars of board marketing, etc. But those people had the right to operate in the farmers' interests and they were there, secure in their positions, as long as they did not stray from the fundamental principles the board was operating under or commit some criminal deed or whatever.
When you change this wording ``serve at pleasure'', that means on a political whim that person can be removed. I don't think the farmers want to see that kind of a change in the board's structure as well, because we don't like the politics. The grassroots farmers always said to get politics out of the Wheat Board.
The Chairman: Mr. Taylor.
Mr. Len Taylor (The Battlefords - Meadow Lake, NDP): I'm just trying to get a handle on some of the other things that are involved in Bill C-72. We've had a pretty good discussion of quite a number of the bigger issues, but one of the things that the advisory committee hasn't dealt with, or I didn't hear about, was the tradable certificates, producer certificates.
Of those people who have testified before the committee over the last three days, and those people who support the board, we've had a number of different views on tradable producer certificates, everything from their being a stupid idea to conditional support. I wonder if the advisory committee has discussed these and if you have any comments on it, and if Bill or Dan or even Ken has some comments on the producer tradable certificates.
.1600
Mr. Clair: I can only answer as an individual. To my understanding, anyway, we don't have a position on certificates as such.
To me, it is the best form of an early cash-out. It does not put the pool at risk. Someone else establishes the value. I think it could be used by grain companies to convince me to haul to their facility and it could at times be a premium as such.
I view that far more favourably than, for instance, the board having an early cash-out in which some fund has to be there in case there's a deficit in that corner or else it has to come out of the pool. I don't like the early cash-out handled by the board at all. I would much prefer the producer certificate.
The Chairman: Bill, do you have a comment?
Mr. Rosher: First of all, we have a problem with producer certificates and the fact that they have been tried before as tradable, and it's still a matter of who controls the information.
The farmer has been forced into making payments on loans for whatever reason. He's going to look at the PRO and decide, well, I can take this kind of discount on that certificate, and at the end of the year the PRO is out by $4 or $5 a tonne. The producer took a bigger hit than he had planned to take, to the benefit of whoever is speculating with that producer certificate. So we're opposed to producer certificate marketing.
The Chairman: I want to thank you very much, gentlemen, for your contribution, your presentations, and your dialogue with the committee.
We will continue with individual presentations. Because one group was not with us this afternoon - not that we have a lot of time - it will allow us to have a maximum ten-minute break so the committee members, including me, can get up and stretch.
We will come back in exactly ten minutes. I have a list of individuals who will be present at that time: Mr. McGlaughlin, Mr. Kurtenbach, Mr. Bailey, Mr. McIntyre, Mr. Kelsey, Mr. Knutson, Mr. Orosz, Mr. Atkinson, and Mr. Creighton.
This meeting is adjourned.