EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, March 19, 1997

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[English]

The Chairman (Mr. Lyle Vanclief (Prince Edward - Hastings, Lib.)): Would the persons who are presenting please come to the table? They are Mr. McGlaughlin, Mr. Kurtenbach,Mr. Bailey, Mr. McIntyre, Mr. Kelsey, Mr. Knutson, Mr. Orosz, Mr. Atkinson and, I believe I read out before, Mr. Creighton. I'm informed by the clerk that he has decided he doesn't wish to make a presentation.

I believe I've listed everyone who has indicated to the clerk that he wishes to make a five-minute presentation. I wonder what happened to the committee members.

Mr. Easter, are you going to join us at the table? Good, it wouldn't be the same without you.

So that everyone is clear, you have all been informed you have been allocated five minutes. I'll give you a sign when we get close to your last 30 seconds. If you haven't reached the conclusion, then please get there very quickly. We will listen to everyone and then have a period of dialogue with the members back and forth. We have a reasonable length of time this afternoon to spend with you.

We will start. I'm going to go down through the list of names as I have them here.

Glen McGlaughlin, would you like to start, please?

Mr. Glen McGlaughlin (Individual Presentation): Thank you, Mr. Chairman. I'll get right into it.

Let me say at the outset that I am pleased to have this opportunity to appear before the Standing Committee on Agriculture and Agri-Food regarding Bill C-72. This is an extremely important piece of marketing legislation that is fundamental to the organizational renewal of the Canadian Wheat Board.

Before I present my perspectives and some of the inadequacies I see in the current bill, allow me to briefly give you a bit of background on myself. First and foremost, I own a farm northeast of Regina and value the marketing services provided by the Canadian Wheat Board.

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In addition to my farm interests I have recently established an agricultural consulting practice. My professional career has spanned over 30 years of involvement in agricultural policy in the area of farm finance and general policy with both government and the cooperative sector.

I want to comment basically on four areas.

Number one is organizational renewal. In today's highly competitive global economy it is absolutely crucial that organizations have the mandate and the flexibility to respond quickly to a rapidly changing, competitive environment. Bill C-72, with appropriate amendments, is necessary to create a new dynamic marketing arm for western grain farmers.

For far too long the Canadian Wheat Board has had its hands tied by successive governments who are unwilling to give the CWB the necessary marketing authority to do its job. This has tarnished the prestige of the board in the eyes of farmers in recent years.

Examples of unacceptable government interference in the operation of the board include the removal of domestic feed grains in 1974 and the unilateral action taken in August 1989 that resulted in the total removal of oats from the CWB jurisdiction.

In the minds of many board supporters, including me, the 1989 action in particular triggered a need for a significant reform of the CWB governing structures, including the need to establish a truly producer-controlled organization decoupled as much as possible from government interference in its marketing mandate.

Unfortunately, for nearly seven years farmer concerns have been cast aside, including many of the recommendations tabled in the September 1990 report by the review panel to the Canadian Wheat Board. I'm sure the committee is aware of the Steers report, and it's worth rereading. Many of the things that were recommended in that report are on the table today.

This unnecessary delay in bringing about reform has served to intensify serious divisions among farmers with respect to the future role and mandate of the Canadian Wheat Board.

I present these background thoughts as a preamble to both encourage and ensure that Bill C-72 provides for maximum flexibility in CWB operations and does not become another straitjacket that hinders the new grain marketing corporation in performing its mandate on behalf of western grain producers.

Point number two is corporate name. While the Canadian Wheat Board over its 62-year history has enjoyed considerable name recognition and prestige among its international customers, it is now timely to consider a name change. This reflects the fact that this new organization will become a prairie-based, producer-controlled grain marketing corporation, albeit with continuing government support with respect to the initial price and export credit guarantees.

As we contemplate the next round of GATT, it is important to recognize that marketing boards and state trading agencies will be under significant scrutiny and that efforts will be advanced by our competitors for their elimination.

Given this threat, by the United States particularly and others, I strongly recommend a new, modern name be developed as a substitute for ``the Canadian Wheat Board''. As we move into the next round of GATT, it is important that we structure our marketing agencies now to be GATT-compatible. Removing any reference to ``board'' in the new corporate name is the necessary first step. I would add that this was also referenced as a point in the 1990 report.

I would recommend therefore that Bill C-72 be amended to provide for a name change, not to identify what the name would be now, but to make it permissive that if a name change were proposed by the board of directors, it could be accomplished through regulation and by approval by the Governor in Council, thus avoiding further amendments to the act.

Under corporate governance, one single issue that emerged from the 1996 Western Grain Marketing Panel proceedings was the importance of greater accountability of the board to farmers who pay its costs. I attended several of those town hall meetings myself.

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Bill C-72 falls far short of meeting farmer expectations in this regard, since the proposed legislation continues to perpetuate a government appointment process in selecting members of the board and the president and CEO.

Notwithstanding the need for some government representation on the board, it is important that farmers and only farmers elect remaining board members through a democratic election process.

I have three or four points in regard to governance. Given the regional area and size of the democratic representation required, the board should consist of at least 15 directors, of which not more than three are appointments from the federal government. The board should elect from amongst the 12 producer-elected directors a chairperson and a vice-chairman. Based on my experience in the cooperative sector, I would recommend that the chairperson position be a full-time, salaried position.

The chairperson can provide the ongoing direction to senior management as the link to farmer shareholders. The board would be accountable for the hiring, evaluating, and removing of the CEO, if necessary, and for ratifying all appointments reporting directly to the CEO. The board would be responsible for creating by-laws of the corporation and amending them as necessary.

Finally, the new corporation and its governing structure will require significant enhancement of corporate communication activities to ensure that the accountability with farmers is fostered and adequately recognized across the designated region.

An important adjunct to support and enhance the democratic structure will require, as a minimum, the establishment of producer advisory councils in each electoral district.

I'll wind up with my last point, Mr. Chairman. Under the marketing mandate - and you've heard this from others - a serious shortcoming is the silence on the question of a broader mandate for the Wheat Board in respect to the marketing of grains in addition to wheat and barley.

Bill C-72 is basically silent on the expansion of additional grains. I would therefore propose that clause 22, in proposed subsections 45(2) to 45(4), be expanded to accommodate the addition of other grains within the corporation's marketing mandate, subject to confirmed majority support by prairie grain producers.

Thank you very much.

The Chairman: Thank you very much.

Mr. Kurtenbach.

Mr. Leo Kurtenbach (Individual Presentation): Thank you, Mr. Chairman.

I'm presenting this submission on behalf of three other grain producers and myself. I'm feeling for you people, who have been at this for a couple of days. I'm the senior guy here, so I'll probably fall asleep while reading it before you do. If I do fall asleep, you'll be off the hook.

The Chairman: We'll wake you up.

Mr. Kurtenbach: Okay, thank you.

Just before I get into the brief itself, someone said the young farmers are asking for a drastic change to the Wheat Board. I was a young farmer before we had the Wheat Board. There's the old saying you can't teach an old dog new tricks, but perhaps you can teach an old dog some old tricks.

Anyway, we appreciate very much this opportunity to comment on just a few aspects of Bill C-72 and we thank the Minister of Agriculture for making this possible. We also thank the committee for finding space in today's busy proceedings to hear us. We'll be brief and comment on only a few items in Bill C-72.

Clause 3 concerns the democratization of the Canadian Wheat Board. If that means true democratic representation of the primary grain producers, then we need to ensure that the board of directors, except those representatives from the Government of Canada, do not include others who have an interest in grain.

We would hope that the board would consult and work with other stakeholders in the grain industry. This would be done better by meeting with industry representatives whenever the board deems it necessary. We would see this as a safeguard against jeopardizing the confidentiality of the board in a very competitive world market.

In clause 6 we are opposed to the establishment of a contingency fund. We'd prefer to see the current system of government guarantees continue. This would certainly include the present cash advance program for producers. It is particularly important to maintain cashflow to producers when the producer does not have the kind or grade of grain that the board requires to meet the needs of our customers.

We have to be aware that we're different from the U.S. They have a lot of terminal storage and here our storage is on the farm, so the board has to access the grain they can sell. If the producer is in a position where he doesn't have that kind of grain that he can sell, then he's short of cash money, and that's why we need the continuance of the cash advance.

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In clause 20 we strenuously object to the addition of proposed section 39.1, which we understand would make it possible for the proposed corporation to buy grain in order to fulfil its sales commitments. This proposed section, which seemed necessary to some who are involved in grain sales, arose simply because we had established some years ago...I don't know how many years ago it was.

I have been a hog producer for many years of my life. In the early part of that we could buy barley and it never really concerned me that the board had control of the barley. What has happened here now is that we have a dual market system for barley, and this has resulted in the unfortunate situation of the board not being able to meet its barley requirements for a market that had definite potential for higher returns to producers.

We are flabbergasted that clause 22 stipulates only the exclusion of any kind or grade of wheat. It almost appears as if this clause could erase the Canadian Wheat Board in one fell swoop. The clause should read that the board should have the power to include, as well as to exclude, any kind of grain.

To facilitate a democratic procedure to include or exclude a grain, we would like to see a provision in Bill C-72 that would make it possible for the board to initiate proceedings to include other grains under the jurisdiction of the monopoly control of the Wheat Board. Such proceedings leading to a producer vote could be facilitated by a process used in urban jurisdictions when a certain percentage of producers would petition to have this done.

In conclusion, we wish to state our support for the Canadian Wheat Board. It's a tested, unique Canadian achievement. We are not opposed to changes in how the board operates. However, that change must be made in the interests of the majority of the producers. I respectfully submit this on behalf of Ronald Dierker, Verdun Dutertre, Raymond DeMong, and myself.

The other concern that worries me a good deal is clause 24, proposed section 61.1. I have a concern that if the Wheat Board is no longer a crown agency, definitely over time that means the death knell of the Canadian Wheat Board.

I just had the opportunity of visiting the Sask Wheat Pool terminal and Mr. Wudrick last week. We found there wasn't enough grain in the terminals to fill the ships. What is worse is that even though we got rid of the Crow, we as farmers, who are not responsible for the shortage at the ports, are now going to have to pay the demurrage. It seems to me this is grossly unfair. If I couldn't deliver my grain to the elevator because I didn't have a tractor or a truck or an auger, I would have to pay for it, and I'd be willing to do that.

We have to do something about this, because as I mentioned before, in the U.S. most of the grain is stored in terminals. Here it's on the farm. We have to have a system whereby the grain can be delivered when the Wheat Board needs it.

We've talked a good deal about single-desk selling today, and I certainly support that. When the people who had all the oil formed OPEC, they certainly showed us what single-desk selling power can do.

Thank you very much.

The Chairman: Thank you very much, Mr. Kurtenbach. We'll go to David Bailey.

Mr. David Bailey (Individual Presentation): I'd like to thank the committee for coming to western Canada.

As a little bit of background, we operate a family farm in central Saskatchewan 40 miles north of North Battleford. We started farming a quarter section in 1976, with one member working off the farm. We presently farm approximately 1,700 acres.

You might ask: Dave Bailey, who are you representing today? First and foremost, I'm representing our family farm and all family farms who believe in orderly marketing, single-desk selling, and price pooling.

Secondly, I'm representing those producers who are concerned - no, I would say outraged - at the way oats were taken out from under the jurisdiction of the Canadian Wheat Board. All that has happened since that time is a few processors and grain companies have made a profit at the expense of the primary producer.

Thirdly, I represent eight producers who started a letter-writing campaign to Prime Minister Chrétien, Ralph Goodale, and some agriculture committee members and other MPs, requesting that the Canadian Wheat Board have a stronger mandate by putting more grains and oilseeds under its jurisdiction.

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Fourthly, I represent those producers who feel that previous decisions that you as a government and previous governments have made with respect to agriculture were made before safeguards were put in place for primary producers.

An example is ending the Crow. The government of the day made it ``unGATTable''. It wasn't ``unGATTable''; you made it ``unGATTable'' so you could get it out from under the budget.

With the ending of the Crow and the opening up of the act, there were no safeguards to protect producers. An example is that CN had no penalties of performance. CN and CP started closing lines faster. CN started to raise freight rates by 7% in August 1996. We hear rumours that it's going up again.

Grain companies are storing more off-board grain. Producer cars are storing this grain, which is waiting to get dried, on sidings or beside processing plants or elevators.

What are the reasons for locomotives sitting idle in Edmonton? The water is drained out of them and they aren't in use. They aren't in for inspection or anything else.

We once had safeguards in place so elevator companies could not overload their facilities with off-board grains, but it doesn't seem to exist now. They're loading them up with off-board grains. When board grains are needed, they are not in the system.

Is this planned or just by chance? You be the judge. Is it bad management in elevators, a combination of transportation, etc., or the grain companies? The grain companies have an agenda. Railways have an agenda. The government has an agenda. Why are we not pulling together for the economy of this country, especially western Canada?

As primary producers, we're getting hit with increase after increase, and it seems that everyone in the system except farmers thinks we can keep paying. Our bottom line is so thin you can hardly see it with a magnifying glass. This is just a small sampling of why I'm making a presentation to the committee today.

Proposed section 31, on shortening pooling periods, should be eliminated altogether, because we are now getting faster interim payments, and if this is maintained, then we do not want or need a shorter pooling period. A longer pooling period gives a producer a higher return. A shorter pooling period would penalize those who could not deliver, again because of plugged elevators, road bans, etc. We have that example right now: off-board grain stored in grain cars. It's on page 2 of my brief. There's too much off-board grain in the system.

As for those who want quicker cash, well, maybe what they have to do is sell their grain. As the open market people keep telling us, go buy futures. Go buy paper wheat or paper canola. They say it makes the money, but I'm not willing to gamble on that situation.

As for the cash purchase of wheat, barley, oats, etc., in proposed section 39.1, this proposed section should be eliminated, as cash prices will diminish pool returns.

If that hidden agenda I mentioned is in existence and the government is going to go ahead with it anyway, then I think you have to go back to the drawing board to find out what brought this forward. I think it was the Canadian Wheat Board and the advisory committee who said to go to this type of system.

Originally it was only under certain circumstances. The way it reads now, it could be at any time. I don't think we can go for that.

Finally, cash pricing or buying under those circumstances could only be done if it would increase the returns to the pooling account. I don't think it will. All this proposed section does is give the open market trade more information on the daily workings and happenings at the Canadian Wheat Board. It also forces the Canadian Wheat Board to pay a higher price to procure from the trade and penalizes those producers who have already committed to the Canadian Wheat Board if the Canadian Wheat Board has to buy with cash from other producers.

Existing section 45 is renumbered as proposed subsection 45(1). It must be rewritten. If you're going to have exclusion, you have to have inclusion. This is so wheat, barley, oats, rye, and canola can be included and reinstated under the board. An example is when you took oats off. That was just a disaster. If the act is saying now that certain grains can be excluded, you have to have it so they are included.

In conclusion, the Canadian Wheat Board has always been accountable. Are those calling for everything to be up front or transparent working behind the scenes for the grain trade, including the commodity exchanges?

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By getting producers thinking this way, the trade gets to obtain important information the open market needs to use to its advantage. Does GM tell Ford their trade secrets, or does Cargill tell Pioneer? No, they sure as hell don't.

We hear so much about a new global market. Funny, the Canadian Wheat Board has been selling into that global market for years and returning the extra dollars in bonuses to farmers. The trade is now realizing that if the Canadian Wheat Board were not a single-desk seller and price pooler, then the excess profit could go to the grain trade, not farmers.

So to all members of the agriculture committee who are guaranteed good wages and pensions, be careful to not destroy the Canadian Wheat Board, our marketing agency.

Am I done?

The Chairman: Yes, you've actually had more than six minutes. You'll have an opportunity with questions and comments, okay?

Mr. Kurtenbach: Fine, thank you.

The Chairman: Mr. Greg McIntyre.

Mr. Greg McIntyre (Individual Presentation): Before I start, I'd just like to say how exciting it is for a small-town Saskatchewan boy to be given the opportunity to make a presentation to the Standing Committee on Agriculture and Agri-Food, and how amazed I was when I walked in the door and found you all sitting.

Some hon. members: Oh, oh!

Mr. McIntyre: Mr. Chairman, panel members, and fellow farmers, I thank you for this opportunity to speak to the proposed amendments to the Canadian Wheat Board Act. There are many areas of concern in these amendments. The allotted time of five minutes, however, allows me to only touch briefly on a few of the more major concerns.

First, I take exception to the definition of the ``designated area'' and at the same time referring to this act as pertaining to the Canadian Wheat Board. If it is Canadian, it should be for all Canada, not just imposed on three prairie provinces.

In 1995, after much controversy about the Canadian Wheat Board's role as single-desk seller, Mr. Goodale appointed the Western Grain Marketing Panel to examine the Canadian Wheat Board and discover ways to improve it and make it more accountable to farmers.

In July 1996 the minister received the findings of a year-long panel study. He promptly rejected most of the recommendations, but retained the ones pertaining to the governance of the board. These, he claims, will make the Canadian Wheat Board more accountable to farmers.

It is proposed to initially appoint the director by the federal government. Why is this necessary? Why not farmers? Why are the elections put off until 1998? Why does the Governor in Council decide on the number of producers to be elected to the board? Are these new changes going to make the board more accountable to the producers it serves? Why are the president and the chairperson to be appointed by the Governor in Council? Why is the president's term fixed by the Governor in Council?

Clause 10 specifies that directors would be responsible for complying with the Governor in Council's direction to the Canadian Wheat Board. In other words, they are free to do as he says. These amendments do nothing to strengthen the producers' voice, but they leave a suspiciously awesome power in the hands of the government again.

Perhaps what I find most startling about these amendments, which already have had one reading in Parliament, is the one that will in effect pardon any employee of the Canadian Wheat Board for any criminal or civil wrong, now or in the past. As wrong as this would be now, why was it made retroactive? Have crimes been committed? Is this the way wrongdoing is rewarded?

The Wheat Board is exempt from the Access to Information Act. This amendment will protect from the law any director, bureaucrat, or any other employee of the corporation from this time forward, and retroactively to 1942. Perhaps this type of protection should be allowed to all government employees and politicians. Then if they wish to steal from the people they serve, they won't have to endure prison sentences, which is the case for some ex-members of the Saskatchewan legislature.

Should there be a reward for dishonesty? While watching the news coverage of these committee meetings in Regina last night, it was deemed strange by the media that at least one of the committee members, the Canadian Farmers for Justice, has not made a presentation. Is this really strange? Canadian Farmers for Justice have only one goal: dual marketing. They don't want the demise of the Canadian Wheat Board, just dual marketing.

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The Western Grain Marketing Panel made recommendations for a dual market. Numerous polls across western Canada have supported the idea of dual marketing, but nowhere in these amendments is there anything that remotely hints of a dual market. Perhaps Canadian Farmers for Justice was tired of speaking to deaf ears.

We have been told by our agriculture minister that dual marketing will not work. This has been echoed by some of the smaller lobby groups. I submit that it will never work if it is never tried. In Australia dual marketing is alive and well. They have politicians with courage and foresight who work hard to overcome the obstacles and move forward, embracing change for their farmers, who've had a dual market since 1988, I believe. Did someone tell them it wouldn't work?

If these amendments are passed, the Canadian Wheat Board will still be operating under the secrecy of information act, as it has been since its beginning over 50 years ago. This is simply ludicrous. Even cabinet documents that are held in secrecy are released to the public after 20 years. By denying the producers this privilege, they are denying us our history. This must be changed. If this present lack of accountability is to be continued, I submit that turning over a family farm to our children should be grounds for a charge of child abuse.

In closing, I would like to ask the committee members to remember why the Canadian Wheat Board was first installed: as voluntary protection for farmers. Let us not lose sight of that, for it is one of the most important concepts. There is nothing in these amendments that gives the farmers more control over the marketing of their products, but there are certainly areas that ensure more government control and exoneration for the employees of the board.

Why remove responsibility and individual dignity from our way of life? We owe it to our ancestors and our children to see this does not happen.

Thank you.

The Chairman: Thank you very much, Greg.

We'll move on to Donald Kelsey.

Mr. Donald Kelsey (Individual Presentation): As the other people have done, I'd like to welcome the committee out west. If we had known you'd change the weather this dramatically, we would have invited you out in January or early February.

Some hon. members: Oh, oh!

The Chairman: You wanted to get us down before it all floods, so we'd get blamed for the flood.

Mr. Kelsey: We'll take the flood - slowly, of course.

I farm at Choiceland, Saskatchewan, which is about two and a half hours to the northeast of here. When you get approximately 10 to 12 miles north of my farming operation, there is no more farming, unless you're into bush work or blueberry picking or whatever. So I can say that I represent probably the northern area of the central part of Saskatchewan.

I hate writing papers, as Wayne will probably tell you later on, but I scratched out a few notes, stroked them out, and then wrote some more. So this is strictly from the pocket.

To begin with, I want to address a couple of issues with regard to cash buying, in proposed section 39.1. The barley study that came out recently was very important in that it identified, as would the majority of farmers, that with regard to the Canadian Wheat Board, the issue of barley selling was a problem in 1994-95.

In that respect, we had a fast-rising domestic market and an initial price that remained significantly below that level. Farmers chose not to deliver to the barley pool and to cancel their contracts and pay their $6-a-tonne penalty rather than deliver to the board. That cost those of us who delivered to the board approximately $20 a tonne in our returns, while the people who didn't honour their contracts gained from it - somewhere around a $20- to $25-a-tonne premium.

We have to remember one significant thing: if they were indeed in an open market and they had a contract signed with any company other than the Canadian Wheat Board, they'd be paying one hell of a lot more than $6 a tonne. They would pay the full restitution cost of that company to access the supplies.

When we take a look at the cash buying section, proposed section 39.1, I would say that's one thing that's not required. Farmers have to honour the commitments they make.

Under the pooling period, proposed section 31, it's very necessary that the pools remain in 12-month periods, and that we take a look at the whole grain marketing system, such as why prices fluctuate over a yearly period, and at the whole strategy behind the Canadian Wheat Board.

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The pooling periods are the way they are so farmers can retain an average price. As farmers, they do not get the highest price; they also do not get the lowest. If we try to break up the pooling periods into anything shorter than 12 months, it's going to cause a great deal of consternation among people trying to figure out which quarterly, monthly, or biannual pool to put their grain into.

We all know now that under the contracting system of the Canadian Wheat Board, farmers make the decision about when they put their grain into a particular contract. The pool indicates by acceptance of that contract the amount of grain they are able to take and market. That's a good way of doing it at the present time. Farmers can make the decision about whether to go into that pooling period or sell into the domestic market.

Therefore it's very necessary that the pooling period remain in 12-month periods.

One other thing I noticed in the legislation part is the issue of the government guarantee on borrowings. If the documentation I've seen is right, that guarantee on borrowings remains higher than the annual cost of operating the CWB.

The borrowing has not cost the federal government anything. It is simply their name of their worthiness to the Canadian Wheat Board, and it's a small price, which farmers are prepared to pay, to keep the federal government guarantee on those borrowings.

There's also the issue of the contingency fund taking care of interim payments after that. I'm not sure how many of you receive cheques from farming, but most of the guys around the table have. With almost every cheque we get there's a check-off in some form or another. Most of us get fed up with taking a look at them; we're not really pleased about why they're there. We sometimes even forget why they're there, we get so burned with them.

The federal government should again take a look at guaranteeing the interim payments that the board deems necessary over the year. It comes at very little cost to the federal government, but it is a simple form of showing support for the Canadian Wheat Board.

The Chairman: Thank you very much, Donald.

We'll go on to Lyle Knutson.

Mr. Lyle Knutson (Individual Presentation): I appreciate the opportunity to be here, and I'm really glad that you folks decided to come out and give us this opportunity.

There's lots in this Bill C-72 to talk about, of course. In a short time I'm going to talk about three areas in particular: the board of directors, the federal government guarantees on the payments, and the ability of the Canadian Wheat Board to make cash grain purchases.

I'd like to preface my remarks on these amendments by commending the government on the recent barley vote. I believe the question was fair. I look forward to seeing the results, as I'm sure most of us here do.

It's my opinion that the Canadian Wheat Board, to function effectively, must enjoy broad-based support throughout the region it represents. I believe the board has that support, and once it is ratified through the democratic process, it must be given the tools to market aggressively and obtain the highest prices available on behalf of all the producers.

In my opinion it is not in the best interests of farmers to have amendments made to the Canadian Wheat Board Act that try to make the board all things to all people. The fundamental principles of the Canadian Wheat Board, as you've heard umpteen times I'm sure, are single-desk selling, price pooling, and government guarantees. In my mind these strengths must be built on, not watered down.

The government is proposing an amendment to replace the existing commissioners with an elected board of directors and, I understand, a chief executive officer. As I understand it, the purpose is to provide more grassroots control over the operations of the board and more producer input into its operations.

There's no doubt that in the past there's been somewhat of a remoter relationship at times between the board and the farmers it represents, but a number of changes have been made in recent years to address some of these problems, and some of them have been mentioned here today.

Nevertheless I view this amendment as positive. I believe a majority of members of the board of directors should be democratically elected, with a minority available for appointment by the government of the day.

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I also recommend that the CEO be an employee of the board of directors, solely responsible to that body. The proposed amendment, as I understand it, would have the CEO appointed by the Minister of Agriculture. This could create an atmosphere of confusion about responsibility from time to time, so the most effective chain of command should flow from the board to the CEO exclusively.

Amendments are also being proposed that would limit government guarantees to initial payments only. A producer-funded contingency fund would be established to cover possible losses on these adjustment payments. I have to say I am not in support of this amendment.

As I said earlier, government guarantees are a fundamental part of the CWB. Though very rarely required in its history, the guarantees do provide a level of confidence to producers when seeding decisions are made. It's well known that there is not a level playing field in the world wheat and barley markets against which the Canadian Wheat Board is competing. Political interference in these markets has devastated prices in the recent past, and there are some indications that they could appear again in the near future.

Food has been used as a strategic weapon for political purposes by a number of countries, including ours. So long as these unstable conditions exist, government guarantees of initial and adjustment payments must continue.

Amendments have been proposed to allow for cash purchases of wheat and barley by the Canadian Wheat Board and for tradeable certificates to be made available to producers who wish to get early pay-out of deliveries. I am opposed to these changes in the act as well.

I commented earlier that there is pressure to make changes to the CWB in order to accommodate those who would prefer to market their grain in the open market. To me, attempting to set up a speculative trading arrangement within the CWB marketing system just does not make sense.

A system for tradeable certificates is in place now, namely the commodities market, which has open access to everyone. If prairie farmers democratically choose to move away from the fundamental principle of price pooling and single-desk selling, the open market mechanisms are there for all of us. The least effective option would be a hybrid Canadian Wheat Board that diminishes producer confidence by being somewhere in the middle.

Regarding cash purchases of production, the existing contract system is the most effective way of providing the CWB with information for qualities and quantities of grain to be marketed. Their quest for cash purchase was, in my opinion, a result of product shortages in the barley market a couple of years ago. Valid contracts were broken with the CWB because of price differentials in the domestic and foreign markets, and that instance simply demonstrated the major weakness of having a dual domestic barley market and an inadequate contract structure at that time.

If the Canadian Wheat Board feels barley sales opportunities are being missed due to this weakness, perhaps it could examine sales on a cash basis, on a very restricted and limited basis and criteria, but this should be made very clear in the legislation.

In conclusion, Mr. Chairman, the findings and recommendations of this committee are very important. They are important to the government, which has the responsibility to enact legislation that will be beneficial to the country as a whole. More particularly, they're important to farmers like me. We make our living within the parameters of this bill.

I'd just like to say that I believe all of you here do represent your constituencies and have their best interests at heart. I can only wish you all the best in your consideration of the recommendations of this bill.

Thank you.

The Chairman: Thank you very much, Mr. Knutson.

We'll now go to Frank Orosz.

Mr. Frank Orosz (Individual Presentation): Thank you, Mr. Chairman.

I have with me Eldon Funk and Roy Wudrick to answer the tough questions at the question period. Eldon will pass out the brief to committee members.

The Chairman: Perhaps he could just leave them with the clerk. If you wish to hand them to committee members later, that's fine, but because they're not translated, we're not to circulate them at committee.

Mr. Orosz: I represent farmers from the north central part of Saskatchewan. As a group, we support the Canadian Wheat Board and recognize the importance and possible impact of some of the changes being proposed under Bill C-72. Much of the reason for our being here today is based on emotion and personal philosophy rather than on economic and academic concerns.

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The constant call for change, for so-called deregulation, and for freedom of choice is not constructive to a responsible, unfettered review of a serious issue. Let us recognize that democracy and the freedoms that come with it are effective only because we operate in the framework of guidelines and regulations. Let us remember that over the history of the Canadian Wheat Board there has been constant change and review that has responded to farmers' needs and to the markets.

Recognizing the emotional content of the debate around the Canadian Wheat Board issues, we hope the committee will as much as possible make recommendations not just to appease the vocal minority but also to strengthen and enhance the role of the Wheat Board. With that in mind I will refer to some specific areas of Bill C-72 that need sober review.

On the issue of an elected board of directors, the question has to be asked: what is the purpose of an elected farmer board? The purpose presumably addresses the issue of accountability. At first blush it seems to satisfy the critics leading the charge about freedom of choice. But where is the accountability lacking under the present structure and how will it be improved under an elected farmer board?

Under the present system the Canadian Wheat Board is accountable, but many farmers are cynical about the process. They do not even accept the information as presented in audited financial statements. This says more about the state of mind of Canadian producers than it does about the accountability of the Wheat Board. I'm not so sure an elected board will change these attitudes.

Along with the process of electing farmer representatives there must be a recognition of the need for regulation and guidelines in this democratic process. For example, who will qualify as a candidate? Will there be limits on campaign spending? Will representation be based on region?

A lack of clarity and detail can result in a distorted sense of democracy, where a well-financed minority could become very influential in the operations of the Canadian Wheat Board. Addressing the issue of accountability by an elected farmer board will require specific attention to new guidelines and regulations.

So we begin to see that even in the call for deregulation and freedom we will require regulation in this revised system. We will be replacing one set of regulations with a new set of regulations.

There should be some regulatory changes to prevent the sorts of knee-jerk, politically motivated changes that took place with the removal of oats from the Canadian Wheat Board. To that end it will be important to initiate a mechanism to prevent ad hoc decisions that have a significant impact on the board. This mechanism must involve sober second thought and it must give farmers a final word on major structural change. Entrusting a farmer-elected board with major structural change to the board is not a satisfactory alternative.

Concerning the importance of continued federal government support in terms of guaranteed prices, guaranteed loans for more attractive interest rates, and international sales, it would be reasonable that the Minister of Agriculture make board appointments. We see no reason for removal of the guarantee on the adjustments to the initial price.

We do have serious concerns with the provision that gives the board the authority to make cash purchases. We see this process as leading to the eventual erosion of the pooling system. There is some risk of overpricing cash purchases, which would ultimately affect the pool price.

The proposed contingency fund is problematic. There is a danger that in a short time the contingency fund will be used to replace government guarantees of initial prices and sales supports. The withdrawal of government support will mean higher interest costs and possibly lost sales to customers with questionable credit.

Undoubtedly you have heard and will hear from people with technical and academic concerns. But part of my reason for appearing at the hearing is to emphasize and remind the committee that right from the start the Canadian Wheat Board debate has been more an emotionally charged issue than one of grain marketing and the effectiveness of the board.

An honest economic review of the Canadian Wheat Board shows it has consistently realized a premium price for western Canadian grains. On both fronts of accountability and economics the board has performed well. Let us be very careful as we make changes to what is already an excellent, producer-supported agency.

Thank you for your attention and interest.

.1705

The Chairman: Thank you very much, Mr. Orosz.

Mr. Atkinson.

Mr. Roy Atkinson (Individual Presentation): Mr. Chairman and members of the committee, in my usual way, I won't thank you for being here, seeing as you are public servants and it is a responsibility, and in order for you to be accountable, we expect it.

The Chairman: In our usual way, it's a pleasure to be here.

Mr. Atkinson: Thanks a lot, Lyle.

The subject matter we have before us under discussion, while it's been dealt with on technicalities, is really not a technical question, although there are technicalities involved. It's really about policy. From that point of view it should be analysed on the basis of the policy requirements and the objectives.

I might say for the record that I spent 29 years as an adviser to the Canadian Wheat Board, both as an appointed adviser and as an elected adviser. I spent some time as a member of the Economic Council of Canada. I have on occasion been an adviser to the Canadian delegation at international negotiations with respect to grain.

So I come here not without some comprehension and understanding of what is involved in the Canadian Wheat Board and its original mandate, which carried on until about 1982.

Initially the Canadian Wheat Board was formed as an alliance between the grain growers of western Canada and respective and subsequent federal governments. Almost without exception during that time the people who were appointed as commissioners to the Canadian Wheat Board came there in support of the whole concept of single-desk selling.

With the advent of the Mulroney government that changed. All of the appointments that came there came in opposition to the Canadian Wheat Board and single-desk selling. Let's be clear about that. One could say the exception might be the commissioner, who came from the internal workings of the board, but that's open to question.

The other question one has to recognize is that with this change in values - and I want to use the word ``values'' - as enunciated by the current administration in its objective to have a much more equitable society and civility in society, the staff began to change, and people with a different set of values became appointed to strategic positions within the board.

I want to say unequivocally that the proposals on the table with respect to sustaining the Canadian Wheat Board's principles of single-desk selling are purely unsustainable. It is impossible to expect they can be sustained over time.

Just think about the multi-level, multi-dimensional, dynamic attack that's been launched against the board. Think about that. Think about those forces that are at work and the finances they have available to them that have permitted this sustainable attack to continue.

One has to look at the whole thing, and not in the sense of just our domestic situation. We have to look at it in terms of the international conditions today and we have to look at it within the framework of the trade agreements we've entered into - the Canada-U.S. trade deal, the NAFTA, and the World Trade Organization - and see that the direction we have taken is to deregulation and privatization.

.1710

I would submit to you today that if this proposition before us is proceeded with, even with amendments, inexorably, under the pressures and the dynamics of the situation, the board is not sustainable. You might have the name on the door, but it won't do the job.

Let's then look at the issues.

The Chairman: You only have about two minutes, to be fair to the rest of them, so you'd better list them quickly, please.

Mr. Atkinson: On the whole question of accountability and the question of farmer representation, I submit to you that the proposal under the current situation to have a few farmers elected, or even if they're all elected, is really a poisoned pill to suck us into agreeing to it.

Look at the grains panel, which was mentioned here earlier, the blue ribbon commission. All these people were chosen to come out with their recommendation that would make some hold water, I guess. Even the minister is unhappy about it. Incidentally it's significant to note that overwhelmingly the people who sat on that grains panel were from the trade.

The dynamic in the trade today is not toward single-desk selling, but rather to competition and to everybody looking after themselves. As for the whole notion of a dual market, regrettably for those who believe it's possible, there's no such thing as a dual market. It's an open market.

In the barley business, why didn't it work? It can't work. You can't marry those two opposing marketing systems together and make it work. So this report should surprise no one.

On the whole matter of flexibility, that's a nice code word for undermining and making damn sure the board isn't sustainable.

The Chairman: Thirty seconds, please.

Mr. Atkinson: The foundation of the board has been and may continue to be a joint undertaking and an alliance between successive federal governments and prairie grain producers, for those grain producers are atomized price-takers in the market by themselves. Through the board you have horizontal integration, which gives a benefit not only to the producer, through higher returns for what he does, but to the community he lives in, to the province, and very significantly, to the country.

If we move in the other direction, it's fragmented, there's no coordination, there's no integration, and the whole thing collapses and the load falls back on the community. The costs are out of this world, and it's all based on waste.

The Chairman: Thanks very much, Mr. Atkinson.

I'll go to Mr. Hermanson first.

Mr. Elwin Hermanson (Kindersley - Lloydminster, Ref.): Thank you, Mr. Chairman.

Thank you, gentlemen, for your presentations.

Certainly the National Farmers Union has been well represented here today. We had the president appearing before our committee this morning, we have a past president sitting here at the table as a Liberal MP, and another former president just made a presentation. I know Mr. Kurtenbach said he was a member of the NFU.

Are any others of you members of the NFU? Mr. Kelsey. You've done very well in organizing today.

The Chairman: We'll see how well you do in Alberta.

Some hon. members: Oh, oh!

Mr. Elwin Hermanson: I congratulate you on appearing so many times in so many different ways.

I'll try to go in the order. I won't ask all of you questions.

I appreciated Mr. McGlaughlin's presentation. I've known him for quite some time, and I know him to be a very thoughtful person.

I have to say I agree very much with what you said about the fact that we keep politics out of the board. I have said many times and I restate right now that I would much rather this debate be occurring with farmers in a farmer-run marketing agency, rather than between Ralph Goodale, me, and other MPs federally, and even a few provincially, who are involved in this debate. I concur with you 100% that the more we can get politics and ministers out of the operation and involvement in the board, the better off we will be.

You even suggested a name change for the board. That's a new recommendation. We also had Mr. McIntyre mention that in fact it's not the Canadian Wheat Board, and I think you concurred that perhaps we should be more realistic in suggesting what this thing really is.

.1715

You suggested decoupling it from government. I think we would agree here that you can decouple government from the Canadian Wheat Board, or whatever we call it, and still maintain any government guarantee, any export credit arrangements, and so on. You don't see a problem there, do you?

Mr. McGlaughlin: I know there are some trade-offs, and I know yesterday in Regina you discussed that balance. But I personally think that with three government appointments on the board, there's nothing to say that two of those people, for example, couldn't be the deputy minister of agriculture and the deputy minister of finance. It seems to me that is more than enough presence by the government on the board of directors to ensure that the stewardship of the organization is maintained in a manner consistent with the interests of taxpayers. I don't see any problem with that at all.

Certainly the Australian board functions quite adequately in this respect and maintains its export monopoly, though admittedly the government in recent years has backed away from some of their guarantees in the Australian situation.

My premise is that the three government-appointed board members should be sufficiently adequate to represent the federal government's interests. Therefore the elected board should have the authority to hire its senior management, fire its senior management if it's not doing the job, and be directly accountable to the farmers who pay the bill.

Mr. Elwin Hermanson: Thank you. I agree with that observation.

I've also said - and I don't know if you'd agree with this, Mr. McGlaughlin - that in fact governments are not infallible. Governments make mistakes; they have made mistakes with the Canadian Wheat Board. If farmers run the board, they may make mistakes as well; we're not saying they're infallible. But I guarantee you that if farmers, whose primary interests are involved here, do make a mistake, they will correct it very quickly, whereas politicians will never admit they made a mistake. That is a crucial difference, and members ought to consider that.

Mr. Kurtenbach just made a statement that I thought was rather funny. He said to see the power of monopoly selling, just look at OPEC, the oil cartel.

Mr. Kurtenbach, what really happened was it created a few wars and a lot of people died. You'll find that quite often when you have a monopoly situation there's a lot of tension and frustration, and it can even create violence and some things that are very ugly. You have to recognize that with that power comes a challenge to that power, and it's not always very positive. In fact a lot of times it can be more ugly than allowing freedom and not having a monopoly at all.

Mr. McIntyre, you're either the first or second witness who brought up the indemnification clause in the bill. You are correct in some of your statements regarding that.

This is not new; this is not unique to the Canadian Wheat Board. We've actually done some investigation as to the indemnification clause, and it's in the Financial Institutions Depositors Compensation Act, it's in the Insurance Companies Act, and it's in some kind of commission act.

But there are some unique things about its inclusion in this bill that are a bit worrisome. One is that it is retroactive and would also impact on employees. None of the other indemnification clauses in any other act protect employees. They do protect directors of boards, and that's not uncommon.

The fact that it covers former directors, former officials, and former employees is quite disconcerting to me. But then you add to this the fact that, as you pointed out, the Canadian Wheat Board is not subject to the Access to Information Act, and in fact as a crown corporation has not been subject to audits by the Auditor General. Even though the Auditor General can audit the defence department, with all of its military secrets, and come forward with management audits, the Auditor General is forbidden to enter the doors of the Canadian Wheat Board and do a management audit of the board and provide that report back to Parliament.

So if you put this indemnification clause in there, which may be retroactive - we've asked the officials and they haven't given us a good answer yet on that - and deny access to information and deny auditing by the Auditor General, this combination makes a very dangerous scenario. I'd be interested in your comments, if you have any more on that.

You're maybe the first or the second member of Farmers for Justice who's appeared before the committee. There haven't been very many of you, and you've vented some frustration with this process because no one is listening to you. If Bill C-72 goes through, do you believe it will end the acrimony? For instance, will Farmers for Justice just fade away and say they've lost - or they've won, if Bill C-72 goes away - or do you think Farmers for Justice will get a new breath of wind in their sails?

.1720

The last question is this. I've had several constituents appear before me, several from the National Farmers Union, and I believe they have told me - although they haven't said directly, and I'd like them to tell me - that I should vote against Bill C-72. I think what I heard you say as well - and you're also one of my constituents and I believe a Farmer for Justice - is that I should vote against Bill C-72, at least in the form it's in now.

If that's the case, of course there would not be any reform to the Canadian Wheat Board, after three and a half or four years of Liberal government. There's been a lot of talk and a lot of money spent talking about how to fix the board, but not one inch of progress. In light of that - and there are NFU people here as well - are both sides on this issue telling me as an MP that I should vote against Bill C-72?

There are a lot of questions and I'd like answers.

The Chairman: We'll go to Greg McIntyre first and then any others who wish to comment on Mr. Hermanson's comments. Then when those comments are finished I'll go to Mr. Calder.

Greg.

Mr. McIntyre: I should stipulate first that I'm not speaking for Farmers for Justice. I am a member of them.

As for whether voting against these amendments is going to make any difference or not, personally it doesn't matter to me. I think you should scrap the whole thing, but there's nothing in here that's going to satisfy anybody who is looking at a dual market system or wants a dual market system. It's not even hinted at, and yet we've had all these surveys across all the different provinces that have suggested that in some provinces, 70% to 80% - and even in left-wing Saskatchewan here, over 56% - are in favour of the dual market system.

Why is this not looked at? It keeps getting turned away all the time. Is the government not listening?

It doesn't matter to me whether or not these are passed because I don't believe the Canadian Wheat Board is going to be able to maintain a monopoly in years to come, strictly because, thank goodness, we have some constitutional laws in Canada that should be protecting us from being forced to do something we don't want to do.

As I said before, it is the western Canadian provinces this is being forced on and eastern Canada isn't included. So right there you have two different laws or rules for two different Canadians. That isn't acceptable under our constitutional laws.

I hope I answered your question.

The Chairman: Does anyone else wish to comment?

Mr. Atkinson: Seeing as my name was taken in vain, I'd just like to say to Mr. Hermanson and all the members of the committee that in light of what I've said, I'm certain the National Farmers Union wouldn't want to have it believed I am representing them as an organization today, because what I have said -

Mr. Elwin Hermanson: That's not what I said.

Mr. Atkinson: No, you painted with a wide brush.

Mr. Elwin Hermanson: I said that you and Mr. Easter are former presidents and that there are some current members here.

Mr. Atkinson: You painted with a wide brush.

On the question of monopolies, the Canadian Wheat Board isn't a monopoly. The Canadian Wheat Board is a competitor in the international market. Cargill, for example, had a cashflow in 1995 of $57 billion. What about ConAgra? What about ADM? How can we sit here and say it's a monopoly? That's nonsense. It's one of the competitors in the market, and as such we can get some extra because of the way we are able to manage our supply and allocate it into the different price markets to maximize our income opportunity. That's number one.

Secondly, on the question of this bill, I want it clearly understood, Mr. Hermanson, that if you wish to vote against this bill, you do so with my blessing, not because I agree with where you're coming from, but because I believe this bill is absolutely flawed.

.1725

I would recommend to the federal government that this bill be withdrawn and they establish a farmer-driven process with a couple of representatives from the Canadian Wheat Board to develop a plan to be implemented by 1998. That's my proposal.

The Chairman: Thank you very much.

Does anyone else wish to comment? All right.

I'll go to Mr. Calder.

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

I'm involved in a marketing system in Ontario as a chicken farmer, and I'm a very strong supporter of that.

As a member of Parliament I have a responsibility to the Canadian taxpayer. I think everybody here, or the majority anyway, agrees and supports the three pillars of the Canadian Wheat Board. I want to go to the government guarantee.

That responsibility to the Canadian taxpayer is not only to the taxpayers out here in western Canada, but also to the taxpayers in eastern Canada and in central Canada, where I'm from. There's a nationwide responsibility.

When Elwin says the government should be removed from the Canadian Wheat Board and yet we still want the third pillar being the government guarantee, I really wonder how I can keep that responsibility to the taxpayer. At that point in time we could have a board that agrees with Greg, saying we should go to dual marketing.

Quite frankly, the different points I have heard over the last few days are that under the dual marketing system, the Canadian Wheat Board would be just another grain company, the price pool would be smaller and diluted, Canada's reputation as a reliable world supplier would be jeopardized, and Canadian quality and consistency would be difficult.

Those are some points that would put my responsibility to the Canadian taxpayer in jeopardy, because I could see, in a very short period of time, the possibility of the government guarantee being needed. Currently under single-desk selling I think it's only been needed twice in history; correct me if I'm wrong. That would be a really good selling point for single-desk selling. That would be a really good selling point for government involvement. I'm not saying the government has to be involved in it to a very large extent, but there definitely is a need for government involvement in the board. I'd like your comment on that.

The Chairman: Who would like to comment further than they have?

Glen.

Mr. McGlaughlin: I'd simply reiterate what I said initially, and it was certainly referenced in the Western Grain Marketing Panel report as well. An appropriate balance of the board representation with government appointments is a way to accommodate the concerns you've raised, Mr. Calder. If you have government-appointed representatives on the board, you can debate about how many you think is appropriate - that's fair enough - but it seems to me that adequately protects the taxpayer interest.

I'd also remind the committee that the Ontario Wheat Producers' Marketing Board has had the guarantee of their initial price with a strictly producer-elected board, with no government appointments. My point is if it can be done in Ontario - and it has been done for very many years - then we're certainly going part-way by permitting the government to appoint some members of the board and still protect the taxpayers. That balance is quite achievable and defensible.

The Chairman: Does anyone else wish to comment?

Mr. Atkinson and then Mr. McIntyre.

Mr. Atkinson: With respect to the Ontario wheat board, it really operates under the umbrella of the Canadian Wheat Board in terms of its exports. So to say the Canadian Wheat Board doesn't have jurisdiction over the Ontario Wheat Board is to lack information and is a misrepresentation, because it absolutely does. It's very important to the Ontario Wheat Board to have that kind of working relationship within the context of Canada's legislation.

.1730

With respect to your comments about borderly marketing - and you come from the feather industry - and this whole question of state trading as defined by the U.S., we have to understand that the U.S., in terms of their legislation and in adopting the World Trade Organization trade agreement, legislated to protect themselves. Nothing in those agreements takes precedence over U.S. law or U.S. state law, whereas in Canada we're fiddling around.

So this whole question of the state trading enterprise is on the table, and unless this government or the subsequent governments are to face the Americans on this question, the heat is going to come on.

They've already cooked up an arrangement with the Argentinians to attack our practice. When one thinks about the Argentinian situation, they've completely deregulated. Who's managing their grain exports now? It's the international grain trade. They're dumping the grain out onto the market and we're blaming the Argentinians.

Well, hell, we should look at who in the world is doing it and project forward the impact of these proposals: we will be dominated by the U.S. or international grain trade. We can surely understand that then there will be less here for the people doing the work, whether they're in the grain business or the chicken business or whatever. They're all interlinked.

The Chairman: Mr. McIntyre.

Mr. McIntyre: I have a possible solution you might want to consider if you're worried about the guarantees that the government's going to be putting up. Why not set up a system, if there is going to be something like a dual market system...?

For the people who want to get out of the Canadian Wheat Board, let them out and lock them out for 10, 15, or 20 years or for life - it doesn't really matter - and make anybody else sign a contract to stay with the Canadian Wheat Board for 10 or 15 years or whatever. Then you can guarantee that portion of the people who have subscribed to the Wheat Board's expertise in marketing. The people who have gone outside it wouldn't be covered; let them worry about themselves. That's about all I have to say on that.

I just wanted to point one thing out. I understand the Canadian Wheat Board may have some jurisdiction in Ontario, but it certainly isn't being enforced there as it is in western Canada. I was involved in a crossing in Lyleton, Manitoba. We all had our trucks seized for bringing barley across. At the same time we had three semis going across at International Falls down at Ontario. They were asked, ``Do you have any cigarettes on board?'' No. ``Do you have any alcohol on board?'' No. ``Have a good day.''

Mr. Murray Calder: Mr. Chairman, I have just one quick question to Greg.

The Chairman: Mr. Kelsey wants to comment.

Mr. Murray Calder: Yes, I realize that, but this -

The Chairman: Okay. Then we'll hear from Mr. Kelsey.

Mr. Murray Calder: Greg, can you give me an example of a successful dual marketing system in existence today?

Mr. McIntyre: I would suggest Australia is definitely moving in the right direction. I'm not positive, but I think they've been at this since 1988, and I think by 1999 or the year 2000 they have to be able to prove that they have actually been getting a premium for any of the export sales they've made, because they still do retain that export monopoly on wheat, but I don't believe they do on barley. That sounds to me fairly successful. At least it's a move in the right direction that's going to satisfy everybody.

Mr. Murray Calder: Okay.

The Chairman: Mr. Kelsey.

Mr. Kelsey: With regard to the federal government guarantees, from a personal standpoint I have no problem whatsoever with the current structure of the Canadian Wheat Board Advisory Committee and the federal government-appointed commissioners. I would think that would give the federal government ample coverage with regard to guarantees. I have no problem with that system whatsoever. I actually think that's a far better system to go with than what is proposed under Bill C-72.

To comment on the so-called dual market, we do have that in Canada now. A person has the choice of either selling into the domestic open market or signing a contract for export with the Canadian Wheat Board. That option is there now. We don't need another one.

The Chairman: I'll just give a bit of information and then I'll go to Mr. Bailey and this gentleman here - I can't see your card, but I'll get to you.

.1735

On the difference between the guarantees in Ontario, with the Ontario wheat board, and here, with the western wheat board, as we know, here there's a 100% guarantee on the borrowings of the established pool equity, etc., and the initial payments are fully guaranteed. In Ontario there is no guarantee on the pool equity and the initial payments are mostly guaranteed, but there is a cap negotiated on that guarantee at the beginning of the year; it's not an unlimited guarantee. Needless to say there is a considerable difference in the amount of money involved as well.

Those are just some of the differences. I'm not arguing; I'm just trying to get some of the information out.

David.

Mr. Bailey: We keep hearing about dual marketing, and I have a problem with it in that every time we hear about it - and it was mentioned here again today - they always pick some place where dual marketing is working, and it's 5,000 or 6,000 miles away, maybe even further.

My question is this, and I want to be able to have a rebuttal on it: is the dual market really working in Australia, first of all? The farmer has this grain in the bin and all of a sudden he decides to sell it to open market. He has the choice to haul it to some place that's going to give him a spot price on the open market or dual market, or to haul it to the board.

I forget the fellow's name, but I'd like -

The Chairman: You raised the question. I don't think we're going to have time to debate back and forth.

Mr. Bailey: No, but I'm just asking, and then I just want to make a comment.

The Chairman: Okay. Roy Wudrick and then Lyle Knutson.

We're going to have to wind it up with this, Mr. Calder, and then I'll turn to Jake.

Mr. Roy Wudrick (Individual Presentation): The comment was made that Australia has a dual marketing board, but Australia doesn't have a country the size of the United States, with 250 million people and the cattle industry and whatnot, just across the border. To compare Australia to Canada is like comparing apples to oranges.

The Chairman: Lyle.

Mr. Knutson: Thanks, Mr. Chairman.

I want to get back to that point on the government guarantees that Mr. Calder raised. I think everybody agrees that if we're going to have a Canadian Wheat Board, let's have the strongest possible board. As I said in my remarks, those crops that are under the Wheat Board are the targets of international competition and subsidies. It's as simple as that.

Through the media, I've heard representatives of all the parties here saying they're willing to step up and backstop the farmers when these unfair trading practices take place. The U.S. government has just announced it's going to put up to half a billion dollars, I understand, on the line for the export enhancement program.

This is a very small part of us responding to that, I would think. The dollar amounts that have been paid out in the past through government guarantees are very small, over the number of years the Wheat Board has been in operation.

We can make a very strong case to the taxpayers of Canada, as you have to do, that this is an important part of this program.

The Chairman: Mr. Kurtenbach, did you wish to make a comment? I think I saw your hand up.

Mr. Kurtenbach: On dual marketing, we live in a democratic society, and we'll know more about dual marketing after the barley vote. Farmers will make a decision on whether they want that kind of thing or not.

The Chairman: Jake, we're going to have to move quickly. We only have about 18 minutes before the committee has to leave to catch a flight.

Mr. Jake Hoeppner (Lisgar - Marquette, Ref.): Thank you, Mr. Chairman.

Mr. Bailey: I would still like my question answered. I asked a question about the board in Australia, and I want to know about dual marketing. We've had comments here that -

The Chairman: I can't answer the question.

Mr. Bailey: Well, somebody made a comment here and I'd like to have -

The Chairman: Roy, can you answer that briefly?

Is that okay, David?

Mr. Atkinson: Yes, very briefly. The domestic market in Australia is an open market. The export market is a single desk. They do not have a dual market in the domestic.

The Chairman: Okay.

Mr. Bailey: I would just like to make this point. We aren't being told... Somebody down there stated that it is working in Australia.

The Chairman: You've put the challenge to that individual, David.

.1740

Mr. Bailey: No, it should come forward here. We have to know whether a farmer who has grain stored on the farm can all of a sudden go to the open market and get a spot price. That's dual marketing, true dual marketing.

The Chairman: Well, I don't know what the definition of true dual marketing is. Roy just said there is single-desk selling for export and open market for domestic.

Mr. Bailey: What bothers me is the fact that somebody can make a statement here and it's gospel truth.

The Chairman: Okay. Who made the statement?

Greg, don't take me the wrong way, but I'm blunt. Can you back up what you just said?

Mr. McIntyre: Well, I concur with what Roy said. I did state that it is an export monopoly, and I'm not sure if I understand the rest of the question.

Mr. Bailey: The rest of the question is this. Does the farmer have the grain stored on the farm, and can he go out and get a spot price and then sell it either to the open market or to the board?

The Chairman: Elwin, can you clarify?

Mr. Elwin Hermanson: I think I can clarify it. In the domestic market in Australia, both the state trading enterprise, which pools returns, and the open market can buy wheat within the borders of Australia. That is a dual market.

Mr. Atkinson: Yes, but what about the state trading? Can it sell it in the domestic market?

The Chairman: I don't know. I think we're going to need an education on the Australian wheat market. With all due respect to most people, if not everybody, in the room, we probably don't understand it as well as we should.

If you would like the committee to get the best explanation we can of how the Australian market operates, if you leave your name and address with us, we will get that to you. That's all I can offer today on how it operates.

I guess it's up to each individual whether they see that as a dual marketing system or as another type of marketing system.

Jake, your time is short, because I want to get to Mrs. Ur as well before we finish.

Mr. Jake Hoeppner: I just have a comment. We've had some good discussions and some good comments. I liked Mr. McGlaughlin's remark about more marketing tools. I think that's what farmers in my area are talking about.

Mr. Bailey said there's no margin on CWB grains. This becomes more evident in my area, where we have a lot of special crops. The few farmers who are still forced to sow CWB grains have a terrible time making ends meet. I see crops developed that I never dreamed of seeing in my own area - white beans, pinto beans, and what have you. It's all due to the fact that there is no margin on the CWB grains. Land is getting more expensive and it's becoming harder to grow CWB grains. That is my comment.

Mr. McIntyre talked about dual marketing, and I've had proposed sections 3.94 and 3.93 looked at by three different legal firms. They are not worried about 3.94, but they are sure worried about proposed subsection 3.93(3), where it says:

Directors, officers and employees are not liable for a breach of duty under subsection (1) or (2).

Then proposed paragraph 3.93(3)(b) says it would be on the basis of:

a report of a lawyer, notary, accountant, engineer, appraiser or other person whose position or profession lends credibility to a statement made by that person.

They tell me that is so wide open that you will never be able to prosecute anyone, whether it's criminal or civil. You people had better be very careful that that gets deleted, or else your board is in big trouble.

The other thing I want to point out is that when Mr. Knutson said food is used for political purposes, he was dead right. That's been evident for the last 20 or 30 years. Just make a trip to the Soviet Union or to South America and you'll very soon see what is meant by that.

I've made those comments, and if somebody wants to respond...

Oh, there was one question I wanted to ask all of you people here.

The Chairman: Don't ask too many questions.

Mr. Jake Hoeppner: I have one simple question. If the barley plebiscite goes against single-desk selling, are you going to honour it and forget the problem, or are we still going to have a debate over it?

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Mr. Bailey: First of all, he made a point that I had said my bottom line wasn't good because of board grains. That is false. My return is better under the Canadian Wheat Board.

I was saying to you that the minute they took oats off the Canadian Wheat Board, my friend - and I used to market between 30,000 and 60,000 bushels of oats - my bottom line dropped, because we have never had the same return. Since 1988 we have not had the same return. This year we finally got oats up again, a little bit. But I'm telling you the bottom line has been lower.

Don't put words in a guy's mouth and say, hey, it's because of the board, your bottom line. If it weren't for the board, I wouldn't be here today.

Mr. Wayne Easter (Malpeque, Lib.): Would that be an example of dual market?

Mr. Jake Hoeppner: I would like to say to you, Mr. Bailey, that in my area we can't afford to grow oats.

The Chairman: Excuse me, Jake. You asked for comments and I'm going to get them.

Eldon.

Mr. Eldon Funk (Individual Presentation): I wanted to comment about the impression that may be left by some here that the board is somehow functioning with less than honesty and integrity. I take exception to that, because my understanding about accountability boils down to how the board has functioned historically.

There's some real, credible evidence to suggest the board has made profits for farmers over the last 61 years and will continue to do so. If it was so problematic for how the board was functioning, you'd think somebody over the last 61 years would have made some more serious charges and allegations than have been made.

For 5¢ a bushel, most farmers I know and talk to suggest the board is operating with honesty and integrity and they go about their business knowing the board is doing a functional job on their behalf. I don't want the impression to be left that farmers somehow are suspicious of the board or that it's an old albatross that needs dramatic changes. That is certainly not the case.

The Chairman: Glen.

Mr. McGlaughlin: I'd like to elaborate further on Mr. Hoeppner's comment about more marketing tools.

I didn't make specific reference to the cash purchase issue, but quite frankly I have to have some respect for the presentation that the commissioners of the Canadian Wheat Board made a year ago in Winnipeg and reiterated on Monday to your committee with respect to their belief that occasionally the use of cash purchasing is a tool they want to have in their toolbox.

I don't see why we should be prejudging right now that they don't need that. That option should be left with the management of the board, under a producer-elected governance structure, to make it at least permissible in the event it's needed. I would not support the deletion of that provision of the act.

The Chairman: David, quickly.

Mr. Bailey: To Mr. Hoeppner's question - if the vote goes a certain way, will we back off? - I'll say to him, if it's 51% or 70% in favour of the board, are you going to back off?

Mr. Jake Hoeppner: Sure, that's the -

Mr. Bailey: Bullshit! You haven't backed off yet.

The Chairman: Order!

Roy.

Mr. Atkinson: I have a couple of points with respect to the flexibility of the board and this whole business of more flexibility. Supposing they hedge on the futures market and they lose; who's going to pay for that? They have a pooling system now that does all of that without any risk.

With respect to cashing out, that makes no damn sense at all. What about this business of trading certificates? Trading certificates are to put another disturbance in the market that's going to really help undermine the board. It's like Mr. Leeson trading derivatives. Somebody's gone mad down in that house to come out and make these kinds of... No, no, no. That came right out of the board itself. You'd better be looking at who the hell's sitting in there now and what they are doing.

I want to finish up by saying -

The Chairman: No, Mrs. Ur's going to finish up. Unfortunately we didn't go ladies first, but we're going to go ladies last.

Mrs. Rose-Marie Ur (Lambton - Middlesex, Lib.): I'm used to it.

A voice: No, you're not.

The Chairman: Hear, hear. I never get a chance at all.

Mrs. Rose-Marie Ur: I want to make this comment and get a reaction. Under the elected board as proposed in Bill C-72, what would be the reaction by those who want more freedom if their wishes were not enacted by this new board? What would their next venue be?

Maybe, Greg, I could start with you.

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Mr. McIntyre: Are you asking if we're going to back down and accept the status quo?

Mrs. Rose-Marie Ur: As I stated, if your requests were not met by the newly reformed board - for example, if you brought forth your concerns about dualling and the majority did not agree with that - what would your position be then?

Mr. McIntyre: I don't expect my wishes will be met by these new amendments anyway, because nowhere in there does it refer to dual marketing.

As I said before, it doesn't really matter whether these amendments or anybody else figures we should all be compelled to operate within the Canadian Wheat Board or not, because as it stands right now, we aren't all operating under the same circumstances. It's only western Canada.

There are laws that will eventually prove that what's going on here is not constitutionally correct, so I think we'd just be continuing down that avenue.

I actually have a hard time understanding something. Maybe I could ask this question of you or the people here. Do you see any problem with just letting go the people who want out of the board? Are there any drawbacks to that? It's been suggested that less than 1% of the farmers want out.

Mr. Wayne Easter: Can I give an answer to that, Mr. Chair?

Mr. McIntyre: Could I finish here? It's been suggested that less than 1% of the farmers actually want out of the Canadian Wheat Board's control, so if there are 120,000 farmers, that's fewer than 200 farmers. What possible damage can that do to the Canadian Wheat Board?

Mr. Wayne Easter: Greg, we have a prime example in the Prince Edward Island potato industry. The fact is, when you give up the benefits of single-desk selling, even if it's just one or two sellers, and they sell below the price, the lowest seller in fact sets the price and it brings down the whole price structure. You lose the benefit of the whole system.

The example of the Prince Edward Island potato industry, which is an export industry to a great extent, is that sometimes we have three sellers in the export market competing against each other with our product, driving prices down in order to attract a market. They still get their commission on sales, but it's the farmer who takes the loss back home.

There has to be a recognition that the two systems just cannot work together. That's the problem.

The Chairman: Mrs. Ur.

Mrs. Rose-Marie Ur: Okay, this is my last question, Mr. Chair.

There was a recommendation made earlier that commissioners in the CWB Advisory Committee be retained but given more authority regarding policy development and perhaps more financial support to get their message out to the farmers. The statement was made that perhaps if there were good communication, it would be seen as showing more accountability to the farmers.

In retrospect, how will the proposed partially elected board of directors, as it is structured, be more accountable? Do you not see that this new board being set up would endanger the government guarantee process? Would you be able to support this recommendation?

Mr. Kelsey: From my own perspective, regardless of whether or not we do amendments on the board, I see nothing wrong with the type of advisory board we had before. If people wanted to go ahead and make some changes or recommendations to supposedly empower the board, they could have done it through the advisory committee, simply by changing some of the powers they had. The fact that the federal government got to appoint the commissioners was very adequate with regard to the ability of them to guarantee any borrowings the board had.

As for going to a new type of elective body, I have some deep concerns on how producers are going to view that out in the country, especially given the fact that under the current structure of the bill, some of them are going to be appointed by the government.

Mr. Funk: That's a concern I've had, and local producers as well. The issue of an elected farmer representation was never an issue until it was brought up. My question is where did this whole issue really come from? What was the groundswell? Was it through the marketing panel study or was it to address the question of accountability? I think that's the question you're getting at.

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I fully agree with the comments that have been made that a strengthened Wheat Board Advisory Committee would certainly go a long way towards answering some of these questions about accountability.

As indicated, their budgets are low. If they want to have meetings with producers, which is their mandate, give them the tools to be able to do that. When spread out over the cost of the pools, it doesn't work out to very much at all.

If we really want accountability, that is the way to do it. We do have it already. I don't agree that accountability is not present under the existing system; rather it's the perception of what is or what isn't happening. I wouldn't make wholesale changes.

The Chairman: Okay, ladies and gentlemen, we'll have to wind up the meeting for today.

I want to thank everyone very much for your presentations, your input and comments, and your cooperation as well.

The committee will be continuing its hearings tomorrow at 8:30 a.m. in Calgary.

In summing up, we want to make it very clear that it is the intention of the government to maintain the three pillars of the Canadian Wheat Board and strengthen them. It's evident from the discussion just in the last couple of hours this afternoon that there is divergence of opinion on how that should be done, if that should be done, and to what extent it could be done.

It's the goal that the Wheat Board be able to serve as many farmers as possible, to the best of its ability, so that every farmer in western Canada can reap all that's possible as the result of their labour and the labour of their families on their farms.

It is a controversial issue. The bottom line in reality is that it's very obvious that at no time will the Canadian Wheat Board or any marketing agency be able to do everything for everybody, whatever it might happen to be. But if we can empower it and give it more tools, if it needs more tools, to do more for more people, that's the intention. It has worked very well in the past and we just want to make it work better, if possible.

We appreciate very much your input and the opportunity for us to be here in Saskatoon today and hear from you.

Thank you very much. The meeting is adjourned.

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