EVIDENCE

[Recorded by Electronic Apparatus]

Friday, March 21, 1997

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[English]

The Chairman (Mr. Lyle Vanclief (Prince Edward - Hastings, Lib.)): Good morning everyone. I'm Lyle Vanclief, the chair of the Standing Committee on Agriculture and Agri-Food. We certainly are pleased as a committee to be here in Grande Prairie today for further hearings on Bill C-72, an act to amend the Canadian Wheat Board.

We have spent all this week in western Canada. We were in Winnipeg on Monday, Regina on Tuesday, Saskatoon on Wednesday, and Calgary yesterday. It's our pleasure to be here. We look forward to the presentations this morning on this issue.

Personally, I must admit it's my first time in Grande Prairie. I've already told Charlie Penson I'm pleased to be here, but I'd rather be here in August. Having been a farmer all my life, until I was elected a few years ago, I enjoy seeing the country in a different time of the year than March, but I'll believe what I've heard from Charlie and many others about the Peace district. I want to get back in the summertime when I can see it a little greener than the way it is right now.

I believe we have three groups before us this morning. We'll follow the same format we have all week. Each of the groups has been informed they have 15 minutes to make a presentation. As they get to the last couple of minutes, I will in some way indicate to the presenters that their time is fast closing in and suggest if they haven't reached their major points by that time, they quickly get to them. We want to do that in fairness to everyone and be as fair as we possibly can throughout the whole week of hearings we have here.

After that we will have a period of about 45 minutes with all the presenters still at the table so that the members can have points of clarification, ask questions, and dialogue back and forth. We find that is a very worthwhile period as well.

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Then, if we have time, we'll take a very short break so we can grab a cup of coffee. We then have some individuals presenting, and we will go through the same process with the individuals. They have shorter periods of time, as the individuals know, and then we'll have the dialogue at that stage.

We will get started. I'll first call on David from the Alberta Grain Commission. I know you were in the audience yesterday, so maybe you've even rewritten your report, having been influenced in one way or another by the varying opinions and thoughts we had yesterday. I'm not making light of it, but we're pleased that you're here in Grande Prairie with us today. Please proceed with your presentation.

Mr. David Walker (Director, Alberta Grain Commission): I was there yesterday and I enjoyed it very much. It was very informative.

I was corresponding with the clerk of the committee, so my name is there, but Gil Balderston and Glen Goertzen, who are members of the Grain Commission, will be making the presentation. I will turn it over to Gil.

The Chairman: Welcome, gentlemen, to the committee.

Mr. Gilbert Balderston (Member, Alberta Grain Commission): Thank you. Welcome to Grande Prairie, the Peace River country, Alberta, and western Canada. My name is Gil Balderston. I am sharing the job of representing the Alberta Grain Commission with Glen Goertzen. Glen farms at Stettler and I farm at Sexsmith, about ten miles north of here.

Our main job at the commission is to advise the Minister of Agriculture, Food and Rural Development on all aspects of the grain industry.

The commission has six farmer members who have wide interests. They are members of everything from the advisory committee, to the Canadian Wheat Board, to the board of governors of the Winnipeg Commodity Exchange.

We were pleased to learn of your plans to hold hearings in western Canada. Over the five days you have no doubt learned a lot, most particularly that just about everybody is concerned about Bill C-72.

We are pleased you are holding two days of hearings in Alberta. Our commission held eight information meetings on Bill C-72 for farmers in late January and early February. Legislation is pretty dry stuff for farmers, but we had about 850 farmers attend this meeting. It was clear from these meetings that Bill C-72 was not what they expected or wanted.

I am extremely pleased you chose to have one of your hearings in the Peace River country. I think it's a very good decision. The Peace River region has 9.1 million acres of farm land. This is bigger than the province of Manitoba and larger than Ontario and Quebec combined. I'll turn it over to Glen now.

Mr. Glen Goertzen (Member, Alberta Grain Commission): Grain marketing in western Canada is highly regulated, as you know. With the degree of regulation we have, changes do not come easily. We spend too much time reviewing our problems and too little time on the job of solving the problems. Then, even when we are finished reviewing, it seems like it takes forever for anybody with authority to make any decisions.

We have just been through one of these reviews, the Western Grain Marketing Panel process, with a full year of townhall meetings, submissions, briefs, hearings, consultants' reports and such, and everybody got to participate. Jerry Pickard, parliamentary secretary to the Minister of Agriculture and Agri-Food, and one of your members noted in evidence given earlier in the month that without question it has been one of the most extensive consultations in the history of grain marketing - at least in the modern history of grain marketing in Canada.

From what we have heard and read, all prairie farmers were generally pleased with the process of the marketing panel. What was particularly gratifying was that the panel was able to come to a consensus when making recommendations. That was a major achievement. Surely there were compromises, and probably nobody got everything they wanted. That would have been too much to expect. Most of us have long since learned to live in what we consider to be less than a perfect world.

We held a grain marketing plebiscite in Alberta in 1995. This clearly indicated that Alberta farmers wanted choice and voluntary pooling for both wheat and barley. While this is our preferred option, we feel the panel recommendations came a long way in meeting this objective.

What we had, or thought we had, was a blueprint for the grain industry produced by a panel of respected experts appointed by the federal Minister of Agriculture and Agri-Food, and the federal minister said he would be guided by this panel. We thought we would get quick results, which the industry so badly needed.

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We soon learned this was not to be, and with what appeared to be a very deliberate attempt to discredit the panel, the federal minister commissioned a farmer opinion survey that asked farmers to write him about the panel recommendations. He even asked for input on some things that were not recommended by the panel.

Everybody recognized that the panel had to compromise. It does not take a rocket scientist to figure out that the best way to destroy the compromise was to ask individual people what they wanted. Then, to add insult to injury, the minister organized a barley plebiscite, again ignoring the panel's specific and urgent recommendations on barley marketing. The questions asked on the ballot and the way the plebiscite was conducted were, to say the least, divisive.

Mr. Balderston: By December, when we had the first look at Bill C-72, which was supposed to implement the panel's recommendations, we were pretty leery. What we saw justified our concerns.

Bill C-72 does not address the panel's recommendations in an acceptable manner. Some claims that it does are unfounded. The panel made 33 recommendations that were really just four major ones for the board.

On the board governances, there was no need for a compromise, as everybody agreed with the panel's aims to provide for greater flexibility in its operations and services to the farmers - in short, a Canadian Wheat Board more accountable to Canadian farmers. The manner in which the board would be constructed under Bill C-72 ensures the board would be less accountable to farmers and more accountable to the Government of Canada.

At our Bill C-72 farm meetings we used a series of overheads to compare Bill C-72 with the current Canadian Wheat Board Act. I have selected a few to graphically illustrate where we would lie.

Mr. Goertzen: Here we have the graph we used at our meetings. On this side are the proposals under Bill C-72 that would give the powers to the federal government. The other side is a list of things that are currently powers of the Canadian Wheat Board. You can see the significance.

The Chairman: I expect you'll submit that to the committee, Glen.

Mr. Goertzen: Yes.

The Chairman: Thank you.

Mr. Balderston: The column on the right-hand side lists the controls of the Minister of Agriculture and Agri-Food under the current act. Those on the left are what we would have under Bill C-72. They speak for themselves.

We have the same situation with the Minister of Finance, and we'll present that to you. We recognize Finance Canada has a legitimate interest in the board's financial operations, with what has potential liability, but the initial payment and export sale guarantees can be brought in more effectively through amended provisions of the Agricultural Products Cooperative Marketing Act and the Export Development Corporation.

We think the final benefits of the current system were overstated, and we fear the current arrangements are not without risk. They will almost certainly come under international scrutiny and probably be lost during the upcoming WTO negotiations.

Mr. Goertzen: The Alberta Grain Commission believes farmers' long-term interests would be better served by an independent board, which would require some kind of conventional corporate structure for the board: the board of directors should be elected by farmer stakeholders; the chair of the board should be elected by the board of directors; and the president and CEO should be appointed and report to the chair of the board. In this way the board would be accountable. More importantly, farmers would be provided with some sense of ownership of the board.

In the setting of initial payments for the pooling period rather than the crop year and by allowing the Government of Canada the discretion to close the pools at any time, any initial payment guarantee is meaningless and unacceptable.

It is totally inappropriate for accounts receivable from concessionary and other than commercial credit sales, such as sales made for foreign policy reasons, to be carried on the board's books. These items must be transferred before the board is provided with an independent status. Further, Bill C-72 should make specific provisions to ensure such liabilities are borne directly by the federal government in the future.

The panel's recommended provisions for the board to adopt current grain marketing practices, together with the government's recommendations that would allow for future change in grain marketing practices, are essential if the board is to serve the marketing needs of grain farmers effectively into the future.

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The Bill C-72 provisions for board cash purchases, including payments for farm-stored grain, condo storage, on-farm purchases of grain, shorter pooling periods, trading in final payment certificates, use of risk-management tools, etc., are essential if the board is to be competitive. They would allow the board to adopt grain marketing practices that the private trade has been using for five or ten years, or longer.

The lack of flexibility to adapt to the future grain marketing situation is a concern. By reducing the farmers' influence over the board, Bill C-72 effectively sustains the current straitjacket within which the board operates. Bill C-72 might appear to provide for the establishment of a capital base sought by the panel, but the Bill C-72 contingency fund concept appears to fall well short of making provision for the constructive marketing and market-related activities envisioned by the panel. As its main purpose seems to be to reduce the federal government's financial exposure, it is unacceptable.

Mr. Balderston: The panel's wheat marketing recommendations address two important issues. Direct cash, non-pooled sales to the board would provide market-related accountability and provide farmers with a better indication of market value. The inclusion of non-conforming varieties in organic meat would allow the industry to play a role in developing niche markets. This is a small players' game, which is not a reason to expect the board to be effective.

Provisions of Bill C-72 that allow the board to control such activities are not acceptable. The identity preservation issue is an important one. It is not whether the Grain Commission can develop an IP system, but how it will do it. An IP system is essential if Canada is to take advantage of the value-added prospects in the domestic and export markets.

On barley marketing, the panel suggestions are straightforward and they could be effectively legislated or even implemented to regulations. This is one of the issues the panel considered as urgent. It is now seven months since the panel reported and we seem to have moved backwards.

Bill C-72 has even created confusion over the future status of the domestic feed market. The market has been operating under regulations for over twenty years. The existing exclusion of the domestic feed marketing, together with that proposed by the panel for export markets, should be written directly into the bill.

The suggestion that the panel's barley marketing recommendations are not feasible, as barley that is sold for feed might be resold for malting, is a red herring. This potential exists with the current marketing system.

In concluding, we would suggest that what has worked so well for oats would work just as well for barley. We are not convinced that the plebiscite was an effective way of deciding these commercial marketing issues.

Generally, about 70% of the grain in western Canada is produced by about 25% of the farmers. It is too easy for the 75% who produce 25% to hold the industry back. We plan to provide you with a clause-by-clause summary analysis of Bill C-72 before you start the clause-by-clause review. We will have the tabular summary of our recommendations, together with our provisions for Bill C-72 and the CWB Act, transferred so they can be distributed to you.

We would again thank you for coming west and listening to our concerns. We will be happy to answer any questions. Thank you very much.

The Chairman: Thank you very much, gentlemen, for your brief and concise presentation.

We will now go to Mr. Leo Meyer from the Western Canadian Wheat Growers Association. Welcome to the committee, Leo.

Mr. Leo Meyer (Director, Western Canadian Wheat Growers Association): Thank you. Mr. Chairman, committee members, ladies and gentlemen, I farm about three-quarters of an hour northwest of here, just south of the Spirit River. I represent, today, the Western Canadian Wheat Growers Association, which is the largest volunteer farm organization in western Canada.

I would like to make reference to the submission we made in Winnipeg. My presentation today, Mr. Chairman, will be somewhat complementary to the presentation of the wheat growers in Winnipeg. I will focus on some points that perhaps have not been emphasized enough and we will try to pick up on them to make sure they create some kind of discussion today in this forum.

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We realize we have a limited time to discuss this. There are many points we would like to address that we probably will not touch today. Having said this, I would like to try to focus on six main points today, as follows:

1) general observations about Bill C-72;

2) the structure of the new proposed Canadian Wheat Board and its marketing mandate;

3) regulatory involvement of the Canadian Wheat Board in the grain industry and marketing;

4) the World Trade Organization and General Agreement on Tariffs and Trade proof of the new proposed Canadian Wheat Board;

5) binding the provinces to the Canadian Wheat Board Act and Bill C-72;

6) a new approach to logistics management and an alternative paper on grain transportation in western Canada.

On the first point, the general observations about Bill C-72, we would like to refer to the recommendations made by the Western Grain Marketing Panel and support those conclusions as a possible beginning working model. We're not saying they're perfect, but we say they're a beginning.

We cannot understand why we face this monstrous bill, Bill C-72, coming from the federal government as a result of the Western Grain Marketing Panel's proposal. We're really puzzled. While there was a consensus on more accountability and the farmers' influence on Canadian Wheat Board activities, quite the opposite is suggested in Bill C-72.

Farm groups from all sides told you, respected committee members, in Winnipeg, Regina, Saskatoon, and Calgary that this legislation is unacceptable in its current form. To ram this legislation through on the eve of an election, when it will not meet the farmers' fundamental needs and when there are so many unanswered questions, would be totally irresponsible.

With the massive overhaul of Bill C-72 we feel we will be far worse off than we are right now. We urge you to scrap the bill and start all over. There is not enough there to fix it.

On the second point, the structure of the new proposed Canadian Wheat Board and its marketing mandate, under the proposed legislation the Canadian Wheat Board would lose its autonomy. The farmer directors would be virtually powerless, and farmers would again be denied a choice in how they market their grain. The influence in this new corporation of farmers would be relatively limited. The CEO and chairman of the board should be elected by the board of directors and not appointed by the federal Minister of Agriculture or the cabinet of the time in Ottawa.

The business plan presented to the finance department should provide the board of directors enough flexibility to react to the often very hectic marketplace in the best interest of the constituent. A prolonged approval scenario and inflexibility are not workable. The market waits for nobody. The new corporation has to be run like a world-class grain company, and all available market tools and instruments need to be applied. Risk management will become a must. Forward pricing and hedging will become common practice. Letters of understanding are not good enough any more. Arrangements have to be on a firm contractual basis. The grain trading of the Canadian Wheat Board must be fair and become more open and less secretive in its nature.

On the third point, the involvement of the Canadian Wheat Board as a regulatory body in the grain industry and grain marketing system in Canada has to be changed. It is not consistent with international trading rules that such a large commercial enterprise basically makes its own rules and the rules of its indirect competitors without causing a conflict of interest scenario in Canada and internationally.

We propose that those regulatory functions be decoupled from the Canadian Wheat Board, going in part either to the Canadian Grain Commission or another entity to be formed. Export permits are possibly to be obtained from Canada Customs or, as another alternative, External Affairs. This is a suggestion.

More detailed discussions have to be held in this regard with all industry participants in the days to come and a consensus has to be found. Of course, things would change again if we had a voluntary Canadian Wheat Board or an open market scenario. This is in reference to the free flow of grain between the farmers and the market.

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The fourth issue is the World Trade Organization and the General Agreement on Tariffs and Trade proof of the new Canadian Wheat Board and Bill C-72. There is no doubt in our minds that the new corporation that's proposed under this bill will create the trade irritants under current World Trade Organization rules and would become a trade issue in the next round of negotiations, the so-called Singapore Round, beginning in 1999. Possibly all state trading organizations will come to the table in this round, and it would be wiser to stay as GATT green as possible.

A voluntary Canadian Wheat Board would certainly create a much healthier international trade environment. As I have mentioned before, fair trade is of the utmost importance leading into the next round of trade negotiations within the World Trade Organization. Perceptions about those matters are sometimes much more important than facts.

The fifth issue is binding the provinces to the Canadian Wheat Board Act under Bill C-72. One needs to question the real reason the federal government would reinforce the binding nature of the Canadian Wheat Board Act to all provinces, even those in the non-designated areas as we know them now. To me it's clear that this is a direct response to the Alberta government's court challenge to sell the grain on behalf of the province's farmers, the so-called Alberta market choice program. Remember that in Alberta we had a plebiscite in which about 16,500 farmers voted for a choice in grain marketing.

Some would argue that it was a loaded question, but 62% were in favour of having a choice in wheat and 67% were in favour of barley. I have two questions. First, why do we need to be so heavy-handed when it comes to grain marketing? Secondly, why do we need a designated area covering Alberta, the B.C. Peace River region, Saskatchewan, and Manitoba?

The sixth issue is a new approach to logistics management and the alternative paper, Blueprint for a Commercial, Least Cost, Logistics Management System. The current situation in grain transportation and logistics management in western Canada is in chaos. I think we all know what's happening in Vancouver, and we're simply astonished, actually, that there is not more uproar about this. We are somewhat puzzled, because it is a crisis situation and it's really affecting farmers in many different ways. We are amazed that we really don't hear more about it.

We have reached a crisis point, and the loss to western Canadian grain farmers will be multifold. There will be about a $65-million-per-year loss, and our reputation as a reliable supplier is being questioned. It has happened again and again, as it has so many times before. Everybody is blaming somebody else, while the grain farmers lose cashflow and pay for somebody else's mistakes.

Basically, everybody is responsible, but nobody is accountable. Last year we formed the Prairie Farm Commodity Coalition, which is made up of all the major commodity groups of the prairie region, and we struck a committee to deal with logistics management in western Canada. We did create the Blueprint for a Commercial, Least Cost, Logistics Management System, an alternative paper on grain movement and logistics. The core part of our paper proposes fundamental changes in how our grain on the prairies is being sourced and transported to the port.

A contractual arrangement has to be established between all parties involved. We see the Canadian Wheat Board in the future as a port receiver and export agent for grain farmers and as no longer being involved in grain transportation. Remember that the Canadian Wheat Board has no handling infrastructure and uses grain companies now as their handling agents.

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The Canadian Wheat Board would source its grain needed to fulfil marketing obligations through the grain companies, as it does now, doing business in Canada, and not with the farmers directly any more. The grain companies then would seek the needed grain under contractual arrangement with the grain farmer clients on the basis of a specific tonnage and timeframe. There would be no more 85% performance costs. That would be unlike the situation now with the Canadian Wheat Board, where we don't know a timeframe and where the period between two and nine months could be anything. Sometimes those contracts - a series of eight contracts - can last until April and May. It's totally unacceptable.

The railroads would enter into a specific arrangement with the grain companies on quantity and timeframe. Again, this would be on the basis of a contractual arrangement, with incentives and penalties spelled out to encourage prompt performance to move the grain as they do now for coal, potash, or iron ore, just to mention a few examples.

This would dramatically increase efficiency and make everybody accountable for their performance in this type of contractual arrangement. There would be no more finger-pointing, no more saying it's somebody else's mistake. If the railway doesn't perform on the basis of that contractual arrangement, we can say, you were late; you were 14 days late, and that means so many dollars.

Overall, and finally, it seems quite remarkable that the deal has created a rare consensus in our industry, though possibly from a different ideological perspective. However, everyone agrees this is a bad deal. Surely, the minister must be getting the message.

Thank you again for this opportunity to make this presentation. We, the western wheat growers, appreciate that you are listening to us, and we'd like to have an open-door policy in the future.

Thank you very much.

The Chairman: Thank you very much, Leo, for your presentation.

We'll now call Kevin Avram from the Prairie Centre.

Kevin, welcome to the committee.

Mr. Kevin Avram (Projects Coordinator, The Prairie Centre): Thank you, and thank you for allowing me to be here. My name is Kevin Avram. I used to live in Regina; I live in Edmonton. I work with a non-profit member organization called the Prairie Centre. I function as a coordinator. Our organization has 10,000 supporters across the three prairie provinces.

The purpose of our organization is, first, to promote greater freedom for the individual, and second, to carry out an educational role with respect to wealth creation and responsible social policy.

I understand I have 15 minutes; I'm going to time myself.

The Chairman: So am I, Kevin. But since you just introduced yourself, I'll now start this as I do with the other people, when you actually start your presentation.

Mr. Avram: This is one of the most significant debates taking place here, not only with regard to agriculture, but indeed with regard to the future of western Canada, economic development, and the value-added sector.

The Canadian Wheat Board is not a cooperative. It never has been one, and historically it was not designed to be a cooperative. The Canadian Wheat Board monopoly is not about cooperation; it is about coercion.

The first Wheat Board was created after World War I, and lasted for one year. It's purpose was to hold down the price of wheat after the war. When that first board was dismantled, some began to associate the high post-war prices with the Wheat Board. As a result, there was quite a movement in the early 1920s to press for reinstatement of the Canadian Wheat Board. In fact, Parliament in 1922 tentatively tabled a bill that would have given the provincial governments the capacity to create a wheat board. In order for it to go into effect, two of the three provincial governments would have had to give the nod to it; in fact they did not.

The result of that was the creation of the pools in the early 1920s. The Alberta pool was launched in 1923, and Saskatchewan's and Manitoba's began in 1924. These were to be voluntary pooling agencies, voluntary wheat boards.

The pools functioned very well throughout the decade of the 1920s, until 1928 when the pools jointly operated a central selling agency. It was a marketing instrument, a voluntary wheat board.

In the 1928 crop year they found themselves carrying over 50 million bushels unhedged and not price-protected into the next crop year. In fact, at that time the editor of the Winnipeg Free Press referred to this action as the biggest game of stud poker the world had ever witnessed. It was a risk on a colossal scale.

I don't have lots of time, but suffice it to say that the central selling agency collapsed financially. It was handling about half the crop.

Then, in 1930, the Prime Minister of Canada, Mr. Bennett, stepped in and agreed to financially backstop the debts of the central selling agency. In fact, the government took over the operation and management of the central selling agency.

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It's probably even correct to say ``the government.'' The truth is that it was Mr. Bennett, as Prime Minister, who had his hands and fingerprints directly on everything that was taking place. A good buddy of his, a chap named McFarland, the former president of the Alberta Pacific Grain Company, actually ran the central selling agency for the federal government.

At the time the government inherited the central selling agency, they inherited about 70 million bushels, if my memory serves me correctly. I think at the end of 1931 it was 76 million. Throughout the first half of the 1930s the federal government used the central selling agency of the pools as an instrument to attempt to prop up wheat prices on the market.

McFarland actually went into the Winnipeg market and began to go along on millions of bushels. By 1935, through the central selling agency, McFarland, who was financially backstopped by the Government of Canada, had amassed 235 million bushels of wheat. Almost all the wheat in the country was owned by the central selling agency, because they had been using it to prop up prices.

There was political exposure on this for MPs as they were heading into the election of 1935. Many of them were terrified of the potential risk of this thing politically. The result was that in 1935 the government of the day created the Canadian Wheat Board as a voluntary agency.

If you look at sections 7 and 8 of the first Wheat Board Act in 1935, it specifically refers to the grain stocks of the central selling agency, empowers the new Wheat Board to assume those stocks, and gives the new Wheat Board the ``duty'' - that is the word the act uses - to dispose of those stocks. That voluntary Wheat Board functioned until 1943.

That reminds me that those of you who still have some contact with Mitchell Sharp will be interested to know that Mitchell Sharp has done an excellent historical documentation of this era.

In 1941, when the wartime prices control board came in, the federal government was very concerned about inflation during the war. As a result, the wartime prices control board came into effect and froze the price of virtually everything.

In October 1941 wheat prices were about 77 3/8¢, but the prairies had not yet recovered from the Depression of the 1930s, and we really were a one-crop economy at that time. In order to allow for the recovery of the western economy, wheat was exempted from the wartime price cap. The price was allowed to float on the open market, but in order to ensure that bread prices did not rise, the wartime prices control board froze the price of wheat that would be paid by millers at 77¢. Then the federal treasury picked up the difference between the 77¢ per bushel and whatever the open market price floated to.

In addition to this, the government had entered into an arrangement where it was obligated to assist Britain in its purchases of Canadian goods during the war. The bottom line is that it got to the point where every time the open market price of wheat increased by 1¢, it was costing the federal treasury $2.5 million. The finance minister at the time, Mr. Ilsley, was constantly scrapping with Jimmy Gardiner over this. Gardiner was the agriculture minister, and Gardiner was delaying, because Gardiner knew that the longer they held on, the delay was on the side of western farmers.

Finally, in September 1943, open market prices on wheat had climbed to $1.23 a bushel. The pressure that was on the federal treasury was enormous, and as a consequence the cabinet met and created the Canadian Wheat Board monopoly. It was the nationalization of the grain industry in 1943 as an act of war.

I regret that I do not have with me the presentation we have written. Each of you will be receiving it early next week. It will give thorough documentation, Canadian press reports, and other references to this information.

In 1946 during the post-war period.... One of the last paragraphs Mitchell Sharp uses in his memoir describes this. He talks about the fact that after the war this nationalization of the grain business gave Ottawa the power to enter into long-term wheat agreements, about which he had serious misgivings. Those are his words.

The deal he was referring to was the Canada-U.K. wheat agreement, in which the Government of Canada agreed to provide Britain with 600 million bushels of wheat over a four-year period at bargain-basement prices. At times the market price was as much as double the price at which Canada was marketing wheat to Britain during that era.

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In 1947 Senator Walter Aseltine estimated that in the first 3.5 years of forced government marketing the Canadian Wheat Board monopoly had cost western growers $535 million in lost revenues.

Then the international wheat agreements of the 1950s came, and history gets vaguer and vaguer. Now you have people who believe that the Canadian Wheat Board monopoly is a cooperative, when in fact it is not. Okay, that's the first point.

The second point - I have five minutes left - is that one of the difficulties Canada is facing is the whole process of government and the attitude of citizens toward elected officials. It's getting to the point where good people don't even want to run for office any more. The reason is the reputation and the perception citizens have of the performance and behaviour of elected officials.

It's rather unfortunate, because it's not in anybody's best interest to see this happening. Yet one of the most significant things I have seen an elected official do in the last several years, which has fostered a greater attitude of cynicism than just about anything, is the Minister of Agriculture's approach to this Western Grain Marketing Panel. He spent in excess of one year giving great credence to this process, acknowledging that this was the route. In fact, I recall watching several news reports where the minister was quizzed on this issue, one of the most significant issues facing the west. Rather than commenting, the minister would hold his hands forward, palms out, saying, ``The panel, the panel, I can't comment because of the panel''.

Then when the panel came back with the unanimous report - I would have been interested in being a fly on the wall as that process went through - based on what they had understood to take place, the intensity of feeling and economics, and everything that was happening at the grassroots level.... They presented this report, and it seemed to me - I'm not sure of the timeframe - virtually within 48 hours, the Minister of Agriculture did an about-face and ran off the other way. Now what are citizens supposed to think about this process?

One of the things we must value the most in a nation like Canada is the ability to bring about change in a peaceful, orderly, and constructive fashion. It's called due process. If we have elected officials who themselves define what due process is and then turn around and spurn it when the citizens and the process they establish tell them something they don't want to hear, we have a problem that is far more significant than just wheat and barley marketing. That goes much deeper than that.

The third point - I only have a few minutes left - has to do with secrecy and accountability. You are here before the citizens of Alberta, and before that you were in Saskatchewan, and prior to that you were in Manitoba, to discuss the amendment of a government corporation that for 50 years has been operating in absolute secrecy.

It is exempt from the federal freedom of information act. Many have sought information on the administrative side of the board. There are two sides to the board's operations: administration and sales contracts. The administration side - pensions, benefits, salaries, how much a fitness instructor gets paid, and how many fitness instructors there are; all that information - is not available to the producers whose funds are actually financing this. In turn, as you know, the taxpayers have had exposure on this. Yet we are denied access to the internal administrative costs of the Canadian Wheat Board.

The board does produce a one-page summary once a year that gives lump-sum figures for a few categories. It is completely inadequate and does not allow anyone to have an accurate picture of what's taking place within the board.

So the question I would have, and the thing I would suggest, is that even the members of the parliamentary committee on agriculture, who are sitting here today before us as citizens - even you guys and women, as the case may be - can't gain access. You don't know what's going on inside the Wheat Board's administration; you can't find out.

Well, how in the world can you bring a parliamentary panel out here to the grass roots and ask us to give you input into an institution where you guys don't even know how the internal workings work?

What is this? I'm not trying to be melodramatic or to overstate anything. That's what this is.

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The next and last thing is sales contracts. If the Canadian Wheat Board does, as an institution, require confidentiality on sale contracts, what about the sale contracts that were made in the 1950s, 1960s, 1970s, and 1980s? Why is that information secret? Why is there not a sunset clause on Wheat Board contracts? Why is the sunset clause not three years or five years? Why can we not know this information?

Is there some legitimate, appropriate reason that would ensure this institution, which has operated virtually without accountability, and it would appear as a consequence of Bill C-72 is going to continue to operate virtually without public exposure in the sense of its operations and accountability...? I would encourage you and seek to persuade you as much as I know how - and, Mr. Vanclief, I hope you're listening to me - to block this, to stop this process until the Canadian Wheat Board, one, opens up its administration costs and information, and two, sets a sunset clause on sale contracts that are past.

Even cabinet information in Canada at some point in time becomes public information. Why is that available to the public but not the internal workings of the board?

Two of the key recommendations of the Western Grain Marketing Panel are dual marketing for barley and unlicensed varieties of wheat. Let me suggest that the agitation that is taking place in some of what is seen as aggressive illegal border crossings and so on is really a representation of individuals who subscribe to due process, have submitted themselves to due process, and then, after walking through due process, found out that even if they did, the process was not indeed going to be respected.

I'll leave it at that. I wish you well in your deliberations. I want to close by suggesting that here in Canada we're at the turn of the century. We're looking forward to a very good and important and exciting century for us. This is not Poland in 1951 or 1952. This is Canada in 1997, and the idea that this government corporation has been operating for 50 years without public exposure or accountability...let me suggest to you that as parliamentarians and indeed as citizens of Canada this should not be tolerated.

Thank you.

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

We have now completed the three group presentations. We will now go to 45 or 50 minutes of discussion. I'll start with Mr. Hermanson.

Mr. Elwin Hermanson (Kindersley - Lloydminster, Ref.): Thank you, Mr. Chairman, and thank you to each one of you who have welcomed us to Grand Prairie. It's a pleasure to be here to meet with farmers, producers, and your organizations in the community.

First, I have a point of clarification with regard to the transportation issue, and I believe it was Mr. Meyer who mentioned this. I want to assure people here that my party did ask for an emergency debate on the grain transportation issue. That request was refused by the Speaker, probably for procedural reasons, but certainly we were within our rights to make that request.

Subsequently, we did debate transportation issues in the House and we stated our position very clearly. In fact, there was a crisis. Innocent parties were paying for costs that were not of their own making and something needed to be done about this.

Some of you mentioned the Alberta plebiscite. That whole plebiscite process has been slagged across the country. Liberals have criticized the Alberta plebiscite. It seems Liberals only like plebiscites where they actually write the question.

As for the current plebiscite on barley, the way the question is worded is a little bit as though you're standing outside a restaurant and the question is should we go in and order a stew and soup or should we stay out here and starve? Meanwhile, the restaurant offers a buffet and that really wasn't on the menu - or it wasn't on the plebiscite question.

I'd like some response from you folks who are Albertans as to whether or not you thought the plebiscite was understood and whether it was fair, and your response to the federal government's reaction to that.

The other thing I particularly want to bring up to Alberta farmers and your organizations in this part of the country is that over the last two or three years I've had several people say the only people who want to see a voluntary marketing board for wheat and barley are farmers who live within50 miles of the U.S. border. In fact, I had a Liberal member say that everybody so far on this tour who had suggested we have a voluntary market lived within 200 miles of the border. I pointed out to the member that most farmers in the prairies live within 200 miles of the border. But here in Grand Prairie you don't, and I'd like to get some response as to whether there's no support in this area for a voluntary market simply because you don't think you can access markets as well as producers who live closer to the main railway lines and closer to the U.S. border.

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I'll get the response to those two questions and then I'll have a couple of questions on some of the other issues that were brought up.

The Chairman: Just before we respond, I'm not going to prohibit response, but we did have a considerable discussion yesterday on the Alberta plebiscite, or the other plebiscite, which is not in Bill C-72. If that's what people want to spend time talking about, fine, but I remind everybody that we are here to hear comments on Bill C-72. I know the whole grain marketing issue is not simple in any one particular area, but if they want to make brief responses to that, remember that uses the time. The witnesses and the members may wish to discuss Bill C-72.

Mr. Elwin Hermanson: I want to respond very quickly, Mr. Chairman.

Bill C-72 could be drafted in such a way as to respond to the wishes of the Alberta plebiscite; therefore, it does relate -

The Chairman: Okay, fine and dandy.

Leo, do you wish to respond? You don't have to.

David, do you want to start this?

Mr. Walker: Yes, I'll respond to the question on the plebiscite. It was organized by the Alberta Grain Commission. I should warn you that the Liberals may not like the wording of the question when they get the answer. Sometimes it's not until they get the answer that they decide the question is not good. I think the situation yesterday, on Thursday, was that we had an individual who'd been on the committee and had been part of a consensus decision on the wording of the question about a plebiscite. It was not until really after he saw the results that there was opposition to the question itself.

There were also, of course, questions about the number of people who voted in that plebiscite. I would just say on this that they exceeded by more than a third the number of people who voted on an advisory committee election, even though in the advisory committee election you had one or more ballots mailed to you, whereas in the Alberta plebiscite you had to go in and fill in an affidavit, and it was not purely a matter of returning an envelope. I've made those points.

Mr. Elwin Hermanson: Is this a question of geography? Is this part of the country opposed to a voluntary market because you're so far away from the main transportation links? That's the other question I have.

Mr. Walker: I think you heard that from Leo. Leo is three-quarters of an hour north of here. I don't know how far he is from the U.S. border.

How do you feel about it, Leo?

Mr. Meyer: It's 1,000 kilometres, over 600 miles.

Mr. Goertzen: I'd like to respond to that question, too, please.

Those people who say it's only those who live within 50 miles of the U.S. border clearly don't understand what's going on with the movement of grain. Think about the fact that Lethbridge is a deficit grain barley area. There's a big feeding industry there that requires a lot of tonnage of grain. If somebody within 50 miles of the U.S. border finds a better price for his product into the U.S., that deficit he has created then requires at least to be filled from somewhere else. That grain just comes from Saskatchewan or further north in Alberta. It's just as incremental. The only difference is in the transportation costs, and the transportation cost was there before. If you wanted to access the Lethbridge market, you still had the same transportation costs.

What would really happen if some people in southern Alberta moved their grain into a higher-priced market in Montana and that causes the price of barley to rise in Lethbridge? Then everybody in all the catchment area of Lethbridge gets exactly the same raise in the value of that grain. If it raises the value 50¢ a bushel, someone in Peace River will capture that 50¢ a bushel - exactly the same as someone who's 20 miles from the feedlot.

The Chairman: Mr. Meyer, would you like to comment?

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Mr. Meyer: Glen picked up on a very important issue with respect to price recovery, and I think that's what you tried to get at. I would like to point out that, for instance, Sparks Companies Inc. in the United States, which operates today in 54 countries basically evaluating markets and marketplaces, did a study on the western barley future, and it basically discovered, in talking to the MATIF exchange in Paris, in talking to buyers in Asia, in China, in the United States in the big feeding areas, that amazingly enough the western barley future was a tremendous discovery mechanism for prices all over the world, that in fact they knew about how the price developed based on what Glen just explained. To me that's significant, because what Glen really said, in regard to those people who argue an open market or a voluntary Canadian Wheat Board situation will create a situation where 130,000 farmers would run down to the United States to dump their grain, is that it's simply not true. That's not what's going to happen.

What's going to happen is you have a backed-up price here at an elevator in High Level, or in Spirit River, or in Lethbridge for that matter, and that backed-up world market price will reflect the cost of moving the grain to wherever it is the market wants the grain at that time. To have the argument that we would run into the scenario whereby it would cause trade irritants and what not in respect of having an open market is simply not true.

Another observation we are making is in respect of future demand. Ladies and gentlemen,Mr. Chairman, we have an interesting phenomenon happening right at the moment. We have a barley war, a revolt over barley marketing, and what we're seeing here is that most barley in western Canada is really being marketed outside the Canadian Wheat Board, at least in our calculations - and I know it's just a question of how you calculate this figure, but probably less than 25% of the barley is being sold through the Canadian Wheat Board. The rest of the barley is either being fed or processed outside the Canadian Wheat Board.

We look at the hog industry, which holds tremendous potential in the future. There's going to be a tremendous demand on hogs. I could see where here in Alberta we're actually beginning.... We might end up having a feed grain deficit over time, because we are such an opportune place to feed cattle and hogs. Also, simply from the environmental aspect of things, because we do have wide open spaces and we're scarcely populated, in those two areas such as feeding cattle feedlots and hog production, specifically the Peace River region holds a lot of potential.

The Chairman: Kevin, did you wish to comment?

Mr. Avram: Leo mentioned a lot of things I was going to say.

I would just mention that it is about 600 miles to the U.S. border, to the closest market. If we go west, I would guess it's several thousand kilometres. Rupert is not a market, I would remind all of us; it's a port, and there's quite a bit of difference between a port and a market.

I just got back from Washington state. I met with the Cattle Feeders Association there. They're very interested in purchasing western Canadian feed grains, especially barley. Presently, the Canadian Wheat Board holds roughly one-sixth of 1% of the feed grains market in the United States. So the argument that one-sixth of 1% of a market constitutes market power, which has been the position that has been generally put forward, is.... It takes quite an imagination to believe that.

The Chairman: Elwin.

Mr. Elwin Hermanson: My second question does pertain actually to Bill C-72, and I guess it follows a bit out of Mr. Avram's comments about the Western Grain Marketing Panel and some of the cynicism in the industry that the panel was not taken very seriously. It shouldn't be a surprise to you, because Conservative and Liberal governments for years have been launching inquiries and royal commissions. They always sit on a shelf and collect dust, and this one seems to be the same.

You talked about the secrecy. There's an indemnification clause in Bill C-72, which is not an unusual clause in itself. What it does is it protects directors and senior officials on the board from legal action if things happen within the board that are wrong but for which they couldn't have known about or been responsible. That's quite common. It's in the financial institutions act.

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In this particular indemnification clause it also includes employees, which is very unusual, and it appears to be retroactive. We're trying to get a statement from department officials as to whether even former commissioners would be protected under this act. It's not clear.

So there is that, along with the fact that the board is so secret and not open to access to information. In fact, it's not audited by the Auditor General.

Mr. Avram, I think you made an excellent point. The members opposite have said that the board is audited; they have an audit every year and they do present a financial statement. A decent audit, one that is done by the Auditor General, would be a management audit that would show whether or not producers were getting value for their investment in the board and whether or not the board was in fact returning a high price. Farmers aren't so interested in whether they get $4.61 or $4.65 when they sell a million tonnes of grain to Japan. They're interested in the fact that the board did an excellent job for them at the lowest possible price.

I'd like some comment on the indemnification clause. Perhaps some others would also respond as to whether they think the board is too secret under Bill C-72 and not accountable enough, particularly with the governance as well.

Mr. Avram: The first comment I would make is that what is commonly referred to as the audit of the Canadian Wheat Board is just public information. It's a one-page document that appears in the annual report of the Canadian Wheat Board that has lump sum figures of a number of categories.

Our own organization is made up almost exclusively of farmers. We've had a number of them actually write letters to the board inquiring for specific information, and each time the response is that the request that was made should be made pursuant to the Information Act, but because the board is not covered by the Information Act, the information will not be forthcoming.

Mr. Andy McMechan is a Manitoba grain farmer who spent 150 or 155 days in prison last year for marketing barley. If you read the transcript and the interpretation made by the judge, he was convicted on the basis of failing to construe the intent of Parliament in 1943 with respect to a couple of acts, and he went to prison for that. For farmers and many people in the farm community to see proposed sections such as 3.93 or 3.94, which indemnify former commissioners, directors, and employees from criminal consequences, is very grating to say the least.

I don't remember the other part of your question, Mr. Hermanson.

Mr. Elwin Hermanson: It was about the audit.

Mr. Avram: The Auditor General of Canada has done some excellent work over the past several decades. In our judgment, providing the auditor with access to the Canadian Wheat Board's internal operations should not be a threat to anyone. In fact, it should be perceived as an opportunity to avail themselves of that kind of professional expertise.

Mr. Balderston: With regard to your question, I spent seven days last year with the marketing panel, listening to hearings and being involved as well as giving presentations. I don't think I've ever been before a panel that was that dedicated. The people there represented a wide diversity. I think at the end of the day the recommendations they made for the Canadian Wheat Board in the future were excellent. I don't think anybody could disagree; they did a lot of work on that. They came to compromises. I felt it was a lot of work taking us to the 21st century, and from my perspective I felt it was dropped.

Mr. Meyer: Mr. Chairman, I'd like to echo the comments of Gil. We worked very hard making presentations to the Western Grain Marketing Panel, and I want you to realize another aspect too. Some of these organizations do this fully on a volunteer basis. To participate in things like that is very time-consuming, to say the least.

Our operations are not getting easier. It's very demanding to farm today and to stay away for 25% to 40% of the time just to see that we have a choice in marketing and really try to give input in the best possible and fairest way. It's very time-consuming and involving.

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Having said that, I would like to mention one additional thing about the Western Grain Marketing Panel, Mr. Chairman. It has to be remembered that this Western Grain Marketing Panel was picked by the Minister of Agriculture himself. It wasn't a recommendation from us as to who sits on that panel.

This may echo somewhat Kevin's presentation. How can it be that at this stage the Minister of Agriculture didn't have the time to meet with that marketing panel to discuss this? What kind of scenario is this? What kind of respect does this agriculture minister have for those dedicated people? And remember, he picked them.

The Chairman: Mr. Calder.

Mr. Murray Calder: Thank you very much, Mr. Chairman.

Good morning, gentlemen.

Actually Elwin has already asked one of my questions. I'm the one who asks the border question.

I'm a chicken farmer from Ontario, so I'm involved in the supply-managed commodities. I would like to deal with one of the issues in Bill C-72, which is the election of the board; that's in proposed section 3.1.

I'll throw out a scenario to you and then ask for your comments on it. Right now proposed subsection 3.1(2) says, ``The board shall consist of not less than 11 and not more than 15 directors''. I like to use the number 15, with 10 elected and five appointed. The chairman would be elected and the CEO would be appointed. I'd like your comments on that.

The Chairman: David.

Mr. Walker: That whole scenario is alien to us in that we believe the Wheat Board should be an agent of western farmers, and as an agent of western farmers, they should all be elected and the challenge of financial responsibility of guarantees should be handled in a different way.

I understand that you're from Lambton - Middlesex, which is an area -

Mr. Murray Calder: Wellington - Grey - Dufferin - Simcoe.

Mr. Walker: I'm sorry. Okay. But you have the Ontario board, which is under provincial legislation. It has a greater degree of autonomy than the Canadian Wheat Board. Its guarantees are handled in a different way. While in the west we may not like to say the east knows best on this one, there may be something to be learned from that Ontario board.

This is where we're coming from. We're saying this has to be something that farmers have a sense of ownership in, that they have the ability to affect. When things change and they see things going wrong, they want to be able to do things about it. A sense of ownership is probably as much as accountability. The accountability should really come into the marketplace.

It's a compromise, but it's a compromise that possibly we haven't contemplated.

Mr. Murray Calder: Okay.

The Chairman: Leo wants to comment.

Mr. Meyer: Thank you for your question.

I would again like to point out what my presentation said. We believe the whole board should be elected and then the chairman and CEO should be elected out of the elected board of directors. We understand where your concern comes in and we understand the government's concerns in respect of responsibility to the taxpayers of Canada. But again, to us, specifically that issue itself is probably the greatest trade irritant there is: the involvement of the Canadian Wheat Board with the Canadian government.

If we can achieve some form of further disengagement of the Canadian Wheat Board from the Canadian government, then it will be just that much easier to make an argument to keep the Wheat Board in place in the future. We don't see how you could argue....

For instance, I realize the borrowings are a big concern. It's in fact a big issue for those who support the status quo and of course argue very strongly for the Canadian Wheat Board. I'd like to point out that we calculated at the Wheat Growers that there's probably a 0.5% to 0.75% advantage in borrowing the way the Canadian Wheat Board can borrow now versus how a new Canadian Wheat Board with that kind of business magnitude would borrow money on the open market.

It probably is fair to say that the savings as they are now are in the neighbourhood of $35 million to $50 million on an annual basis. It was brought to our attention by Howard Migie in his presentation that the savings are $350 million. I like to think that is most likely false, because that cannot be. How can it be? Let's say the Canadian Wheat Board has a budget of $4 billion to $6 billion; I think last year's sale was $5.6 billion. If you're an ongoing operation, you don't finance everything all the time, do you? So let's say they borrow $4 billion. On $4 billion, an interest advantage of 0.5% would be $20 million. So the argument doesn't quite hold true.

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Of course, we think it could be workable that even in a different type of structure of the Canadian Wheat Board we could have some form of arrangement on a different basis with the Canadian government. In fact, we'd like to mention at this point that there is an organization in place in Canada that helps any business underwrite export guarantees. We see a possibility that grain sales, especially in a larger magnitude, will be looked at by that agency on a one-to-one basis.

I realize this kind of moved away a little bit from your specific question, but I think it's important, because the reason for the appointment of the CEO and chairman of the board has been argued as being a reason of responsibility towards Canada and the government and the taxpayers of Canada because of the financial involvement with the Canadian Wheat Board.

Mr. Murray Calder: That is the quandary I'm faced with. What I have to find the answer to is very simply the responsibility to the Canadian taxpayers, not only up here in Grande Prairie but also from Holstein, Ontario, where I come from, out to Malpeque, where Wayne comes from. What I have to look for right now is that if it were a totally elected board with absolutely no government input and yet you still want the third pillar, which is the government guarantee, how do I go ahead and satisfy that responsibility to the Canadian taxpayer?

The Vice-Chairman (Mr. Glen McKinnon (Brandon - Souris, Lib.)): Are you directing that to Mr. Meyer?

Mr. Murray Calder: It's to anyone.

Mr. Walker: There is an answer to that one. Reading the evidence given by Howard Migie to you earlier in the month was very enlightening to me. I was generally aware of the advantages of the crown corporation status in terms of borrowing, although I agree with Leo that they're probably grossly overrated and grossly overestimated and there's probably a reason that those overestimates are made.

When you sat down and thought about what Howard Migie said to you guys, the point was that in terms of the operating capital requirements and the initial payment guarantee, that could be covered by the Agricultural Products Cooperative Marketing Act, which currently exists. That act excludes the Wheat Board, but it excludes the Wheat Board because they have a separate program for that. You could amend that act so it could work for the Wheat Board. Under that act, you come to agreement with the federal government in advance of the crop year, you negotiate the terms, and you get your guarantee, and then you're on your own.

The initial payment part of it could be guaranteed through that. The export sales credit, which is the biggie, is $6 billion as opposed to maybe a $1 billion to $1.5 billion guarantee for the initial payments. For the big one, the Export Development Corporation is there anyhow, and they do it for the private trade. You get away from the WTO scenario that we're going to run into five or ten years down the road in terms of a state trading enterprise.

Mr. Goertzen: I would just add something to David's comment. The Australian Wheat Board is already doing that, making these changes, because it's becoming a change from what it was. So that's already been done. We have something to look at to see how they've handled it.

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The Vice-Chairman (Mr. Glen McKinnon): Thank you for that structural information. I'll take Mr. Meyer at this point.

Mr. Meyer: Thank you, Mr. Chairman, and thank you, Mr. Calder, for your question. You realize that I had to pause for a moment because in a forum like this, one wants to think first before one speaks.

We were not asked to make a presentation today about how we see a volunteer Canadian Wheat Board working. I'm here to talk about Bill C-72. To make a statement like that, of course we have to consult with each other in respect of coming to a conclusion that really makes business sense and makes sense in respect of all the possibilities being checked out.

Having said that, we also had discussions on how it may be with that. We agree with what David said. Those are certainly available tools for us to consider in a structure like this now.

Having said that, of course we would have to think, in a scenario like that anyway, about how we would structure initial, interim, and final payments in a different type of scenario.

Again, I probably would like to refer to the presentation of the wheat growers in Winnipeg, whom I didn't hear. I think it pointed out the offshore models, pooling periods, cash prices, etc. The fact is that when we get into that type of scenario, I think you would need to have a different type of pooling and pricing structure in the Canadian Wheat Board available to farmers. If that's the case, you would not have a situation where most of the grain would have to be guaranteed under any sort of pooling type of a scenario.

Again, you've got to allow me.... This type of thing needs thinking. Those types of models have to be worked through before you want to make a big-case argument. But the fact is that you will end up having maybe half the grain as you do now flowing into a pooling situation, while the other half would most likely move into a situation where the Canadian Wheat Board would offer cash back.

The Vice-Chairman (Mr. Glen McKinnon): Mr. Meyer, thank you for your intervention.

Do you have another question, Mr. Calder?

Mr. Murray Calder: Just to clarify this, I have to ask these questions. Bill C-72 right now is moving it from a crown entity into a mixed entity. What you're proposing is even moving it out of a mixed entity to just a private entity. Still, we're looking for a government guarantee at the same time.

The next question I want to deal with is basically old section 45, which is now clause 22. It deals with exclusion. One of the things I heard as we went through this exercise is that there should be an inclusion clause incorporated with that. I'd like your comment on that.

Mr. Walker: I think the point about the inclusion comment is under part VI of the act. There is a provision for a marketing plan already there. It has been there for twenty years and it has never been used.

Mr. Murray Calder: Yes.

Mr. Walker: I have to be careful because I'm reacting immediately. I should really be consulting all six farmers in the Alberta Grain Commission before responding, but please appreciate that I think I anticipate where they're coming from. I think it was said very eloquently by Ike Lanier yesterday that it doesn't really matter, provided it's voluntary. You can do what you want with the Wheat Board, provided it's voluntary. That's the bottom line.

You also heard from people yesterday who said no to the inclusion of canola. That is, I think, because they just don't trust the board. Their experience with the board has been adverse. They feel it is the thin edge of the wedge for the board taking over and making canola mandatory.

I think the Alberta Grain Commission would say that if it's voluntary, that's fine. We have accountability through the marketplace, which is the ultimate accountability. Anyhow, we have the right not to deal with it. That is why the voluntary pooling option is so popular in Alberta.

Mr. Murray Calder: I think actually that when we got into that discussion, it was on dual marketing. They were going to see whether or not canola could survive underneath that.

The Vice-Chairman (Mr. Glen McKinnon): I see another hand here. Go ahead,Mr. Goertzen.

Mr. Goertzen: I just wanted to speak to the inclusion thing. I also feel that being voluntary is extremely important.

I can speak better about my own farm, but it's not unique. I have a straight grain farm. As you know, as we get on in the 1990s and into the next century, things just keep moving faster and faster and faster. In order to stay on top of marketing and keep my farm profitable, I have to make decisions on my own in short periods of time. To go through the board, for me and for farms that operate in the nature that mine does, is just too slow. We just can't wait for 18 months for a final payment.

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But I could care less. If there are some people who feel that they need the board to run that part of their operation, then they should have that right. If they want canola under the board, that's fine, but I need to operate that marketing part of my business in order to make it run efficiently.

Mr. Meyer: Again, I probably echo similar concerns. I'll point out maybe a little bit further on what was just mentioned, which was how we operate today on our farms. When we assess what we are going to do and how we market our grain, we may have taken in a whole host of different considerations.

The voluntary aspect of the Canadian Wheat Board is a very important aspect. The question has been raised: what about the question we did ask the farmers here in this province when we had the plebiscite? The choice is very important. It's the key question as far as I'm concerned.

Coming back to our farms and how we judge when and how we sell our grain, this is what we see happening. If there are no major changes forthcoming in this Canadian Wheat Board system as we know it now, some farms will simply change the way they produce and market grain. What I'm trying to say is that either they're going to feed it to livestock, such as hogs, and export it on four legs, or they're going to produce crops they can operate outside the Canadian Wheat Board monopoly.

My own case is not all that unique. When I speak to colleagues in western Canada, I find we grow less and less Wheat Board grain. I would that say 12 or 15 years ago, 80% to 85% of my production was Wheat Board grain. This year it's probably 10%, and it's getting less and less.

The fact is that, as a modern operator, I cannot operate in this kind of market environment. It doesn't allow me the needed flexibility to survive in order to be on top of things I have to deal with as a farm manager. I can't operate when I get signals from the marketplace that there's a need for wheat. I can't ship it because I'm locked into a contract I signed last fall. Second, there's no transportation. Third, the price outlook for that type of grain is locked into that contract, which is already far below the market at that moment. It's a scenario that just doesn't work.

Now I realize that when I go on the market to contract grain, the price can move against me. That can happen too, but that's tough luck. The fact is that this is just how the market works. What you do in a case like that or when you're not too sure about price movement.... I mean, you're not selling everything at once either. You do kind of your own pooling on your farm.

When you have a rising market, for instance, like last year, that's precisely what you end up doing. You start selling grain. The price goes higher and you sell more. Finally, there are times when the price might reach the top, and that's when you sell the last quantities of grain available on your farm.

But the choice is key to this. We need that in order to make proper choices on our farm.

The Chairman: Thank you, Leo. We'll go to Mr. Penson.

Mr. Charlie Penson (Peace River, Ref.): Thank you, Mr. Chairman.

I would like to welcome the agriculture committee here to Grand Prairie, which is in the great Peace River country.

As the MP for this area, I know I did a lot of work to try to encourage the grain marketing panel to come up here as well. Unfortunately, they decided not to, so farmers from here had to make representations in Edmonton. They went out and drove that distance in order to be heard.

I think it's great that the committee doesn't just meet in Ottawa or Winnipeg. It takes it out to where producers are and allows them to be heard in their own communities. There are unique situations that need to be discussed and heard.

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A couple of things came out of the presentation here this morning, gentlemen. I enjoyed your presentation. I'm interested in the comment Mr. Meyer made about the WTO and the possibility of trade irritants with the Canadian Wheat Board. As you know, the last round of the GATT was signed in 1992-93 after about nine years of discussions at the Uruguay Round. Agriculture was included under GATT trade rules for the first time. I think it was recognized there that a lot more work needs to be done, but it was a start. Trade wars were addressed, and subsidies and tariffs were reduced on a graduated scale. The hope was that, at the next round, things would be sped up and other issues that are problems in agriculture would be looked at as well.

I had the opportunity of being in Singapore at the World Trade Organization discussions in December, and the buzz around there was that the working group on agriculture that is going to be meeting in 1999, for which there is two years of preparation work being done, will be discussing a number of things in the next round, one of those being state trading enterprises. Mr. Meyer, you identified that as a possible irritant.

I would just go on to say that, from what I was hearing there - of course, Canada has the Canadian Wheat Board - it's not the only state trading enterprise in the 128 member countries involved in the World Trade Organization. There are many countries that have them, but they are going to be on the agenda next time around.

I want to put it out to you for comment. It seems to me that the discussion is going to be on whether state trading enterprises are transparent or they have some competition. If they have competition, there isn't a need for transparency in the same way that there is if there is no competition. I'm just wondering what your comments would be about opening up competition to lessen the possibility of the World Trade Organization's taking action to make transparency a very real possibility in the next round.

Mr. Meyer: Thank you, Charlie, for your question.

I think I pointed out in a fairly short manner my observations about the World Trade Organization's General Agreement on Tariffs and Trade.

At this point I'd like to mention to all of you present that in Alberta we are preparing what we call an agricultural package that will address 1999 trade negotiations concerns. We formed a group that is basically focusing on this, and it's going to involve everybody associated with the agriculture industry in order for us to be ready for those negotiations.

We had a chance, Mr. Chairman, to be briefed by one of the most senior trade negotiators of Ag Canada, Mike Gifford, four or five weeks ago, and it was astonishing what he had to tell us about the last round of negotiations. Mr. Chairman and ladies and gentlemen, it was interesting to hear him say that there was virtually no opposition from the grain industry. Here the people representing the dairy industry, the poultry industry, the chicken industry, and all the industries that operate in a marketing board scenario were extremely well represented. They had excellent positions, and there was only one position.

What this tells me is that, in the grain industry, we have to pull up our socks when it comes to the next round of negotiations, because as Mike Gifford pointed out, it will actually be the negotiations that will cut into wealth. By wealth he meant that there are still countries that have to significantly reduce agriculture prices in order to become fair world traders.

With respect to your question, you know I mentioned that a voluntary Canadian Wheat Board would certainly create a much healthier international trade environment. A question of choice and open competition in the Canadian Wheat Board would make negotiations in the next round much easier.

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The Chairman: Is there another comment? Kevin.

Mr. Avram: In some of the recent meetings and discussions that we've had with the livestock people south of the border - south of the 49th parallel - one of the most common irritants raised from their perspective is the monopoly of the Canadian Wheat Board and the effect that the monopoly has on domestic feed grain prices, barley specifically, in western Canada. As the monopoly has the net effect of reducing feed grain prices in western Canada, it creates an artificial advantage for livestock producers in the west, specifically in Alberta, to the detriment of the barley grower.

There were several individuals who approached me or members of our group and who were inquiring as to what approach they could take to attempt to put pressure on the Canadian government in order to see that this trade-distorting process would in fact be eliminated. In that case we suggested that a voluntary wheat board or a dual barley market would facilitate their desire to see a level playing field and, at the same time, would facilitate the desire of the barley grower in western Canada.

The Chairman: Gil.

Mr. Balderston: Charlie, in respect to your question, I think anybody in the grain trade now knows that change is coming. It's going to happen whether we like it or we don't like it. It's coming. I have a 33-year-old son on the farm with me. You can't compare what he knows at 33 years of age with what I knew at the same age. It just doesn't exist. He's got a computer. He does lots of other things.

We're going to get to the 21st century, so we will make some changes until we're there. I don't think the rest of us are talking about destroying it. It will just be a different mechanism working in a different way, and I think the marketing panel presented that very well and said what we have to do. The Alberta Grain Commission supports that panel for those reasons. I think we want to be there. We don't want to be standing on the sidelines looking in.

The Chairman: Charlie, one more round.

Mr. Charlie Penson: I just have one final comment on the WTO. As most of you know, Canada went to the last GATT round in support of supply management article 11, and we became isolated there. There were a few other countries that supported us, but eventually we were all by ourselves and ended up losing that border restriction. It was converted to tariffs that will gradually be reduced. I'm suggesting that the strategy this time around be a bit of preventative maintenance rather than get hit unexpectedly.

I have another question that has to do with export credit, and it's been identified by different members of the panel here. Export credit seems to be an issue. I know my colleague Mr. Calder raised it. What should the role of the Canadian government be in export credit? I was wondering what our position should be when it comes to using taxpayers' money to support the Bombardier corporation as well, but we do know that it's a loan that will never be paid back. The matter of foreign policy in terms of export credit can be handled in a number of different ways, and I think there were some comments made to that effect. It doesn't necessarily have to be a guarantee to the Canadian Wheat Board. The United States has used the export enhancement program to top up its export sales, so the Canadian government could do it. I think you identified the Export Development Corporation as a possible source. My question is if the federal government decides, as a matter of foreign policy, that it wants to use export credit, there are a number of different ways that can be used, aren't there?

Mr. Balderston: Charlie, as I've learned over the years, no matter what you do or what happens, if somebody says it can't be done, I've got the feeling they don't want to do it. There's nothing in this world that we can't change or correct to make it happen. If the export programs need to be.... If there has to be some different way of funding the Canadian Wheat Board, it can be handled. It can happen. Whatever's going to be, I think it will be different in the new regime than it was50 years ago. I can't compare my farm of 44 years ago with one of today. It's not possible. The way we handle grain and the way we will move grain.... Whatever has to be done needs to be done to meet those demands and needs, and I think the marketing panel addressed these things. I think that's what they did.

The Chairman: David, then Leo.

Mr. Walker: I think there are a number of situations that arise in international grain markets in terms of concessionary sales.

The Chairman: I'm glad to hear your comments, David. There seems to be a great variance among everybody in this room. I'm just noting with interest that Mr. Hermanson is getting his exercise. He has taken his jacket off and put it back on three times.

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Go ahead, David.

Mr. Walker: I think in the export grain market there's a spectrum of situations. On one end it is a straight commercial sale and you're going to get paid in 30 days, and there's actually no risk because the person is going to come back tomorrow and they're going to buy more grain. On the other side, you sell grain to somebody and you know or you have a pretty good idea they're not going to be able to pay, but you either feel sorry for them or you have some other reason in an External Affairs context for providing them with that grain. Canada wants influence in that area.

Certainly the commercial sales should be the full responsibility of an independent wheat board. When you get to a situation where grain is being sold on a concessionary basis - maybe it's given away or maybe it's being loaned with no great expectation of being repaid - then it strikes me as appropriate that those sorts of loans should be borne by External Affairs in some manner and not by western Canadian farmers. There shouldn't be a risk of that. I think that is covered in Bill C-72.

Somewhere in between, of course, are situations where you have to sell to somebody and you're not sure whether you're going to get paid, and that is the arena of the Export Development Corporation, which operates with non-board grains.

I'm not sure I'm addressing your question. There is a spectrum of situations, and depending on the particular situation, I think there is an instrument to handle it.

Mr. Meyer: Of course, we have to realize that the grain trade isn't always done in cash either. A lot of the trading in the world is done through barter houses. What I mean by that is there might be a million tonnes of wheat being sold to a party somewhere, but that sale is being handled by two or three different parties in between, who do make the transaction possible because it involves maybe oil or coal or potash or silver or gold, or whatever the commodity might be. It's that barter house's involvement then that basically looks for somebody first on the buyer's side for what he has to sell in order to make that sale happen for us here in Canada. Having said that, I think that itself creates a situation where international banking has to come in.

At this point I'd like to mention that I think food is becoming far more important in the new millennium than it has been in the past two or three decades. We are moving into a time where we probably are going to have extremely tight stocks. We're going to have scenarios where developed societies are actually going to be short on food, and that's a much bigger concern to those societies than when a poor society is short of food, because those people have money and they can pay for it.

The Chairman: Now we go to Mr. Easter. Please try to keep the discussions to Bill C-72. We're not doing a very good job today. I'm not going to tell people they can't talk, but I remind everybody that we are here for hearings on Bill C-72.

Mr. Wayne Easter (Malpeque, Lib.): That's fine, Mr. Chairman. I know why you say that. Obviously Mr. Avram and I have a different historical background in terms of the Canadian Wheat Board. I will tell you one thing. What we're here for is to establish the facts and not theory.

I would like to know, though, if you've ever been in the Canadian Wheat Board offices in Winnipeg and seen how the system operates.

Mr. Avram: No, sir.

Mr. Wayne Easter: That's interesting.

Certainly one of the difficulties we're having here as a committee is that part of the discussion is that we're trying to look at market power and what's the best way to achieve it, either collectively or individually, and who the benefits should derive to. We're trying to do that within the context of Bill C-72, which is, I'm beginning to recognize, fairly impossible, because at some point we're going to have to settle the philosophical argument first.

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So in terms of moving to Bill C-72, I want to go to what may be some of the trade-offs. The guarantees have been mentioned a number of times, and there are really three guarantees under the Canadian Wheat Board currently.

There's the initial guarantee, and it's true it can be done in other ways as is done with the Ontario Wheat Producers' Marketing Board. There's the export credit guarantee, and that's true that it can be done another way under the Export Development Corporation. The third guarantee is on the borrowing guarantee.

I would like to point out to Mr. Avram that it is stated in the audited financial statements - not one page long but 53 pages long - that the interest earnings on that borrowing guarantee last year for the Wheat Board was.... Leo's right that it wasn't $350 million; it was $61 million, and the year before it was $48 million, which is substantial.

I wonder if Mr. Avram could get those figures from Cargill on what their interest earnings were in terms of who publishes numbers.

In terms of the trade-offs in Bill C-72, the Alberta commission and Leo as well talked about the fact that the CEO, etc., should be appointed by the board if we want to go to a full board of directors. Are we willing to trade that off and give up that borrowing guarantee, which was $61 million last year, and move to use the other government guarantee?

Secondly, the Australian Wheat Board was brought up a number of times, and you're factually correct. You have to understand that in Australia, yes, they are moving in a different direction, and they're building a contingency fund in order to protect themselves against the losses that may occur.

That's why the contingency fund is in here. If we're going to a cash purchase and the government is not backing the adjustments to initials, then there has to be a contingency fund set up. Are we willing to make some trade-offs there?

The Chairman: Who wishes to comment?

Mr. Balderston: First of all, I'd like to address a couple of little things. You made an inference about the people who didn't go to the Wheat Board, who didn't attend though we did, this whole thing. If you look at those panel members, they were from one end of the spectrum to the other. You have to agree on that. At the end of the day they agreed in the middle. Not everybody had what they wanted, not everyone knew what they wanted, but they agreed to it - a very significant thing. Some gave up something.

I can tell you that Avery Sahl would never have thought that he would agree to some things on that report when he sat down at the table the first day; never ever would he agree to that. So that was a compromise that counts because of the way the grain trade is going and where we're going. He saw enough information to change his mind somewhere along the line. All the things you mentioned I can't argue with, but in the 21st century it's going to be different.

This marketing panel did the best job I've ever seen done. We're ignoring them; we're walking away from it. I'm having a bit of trouble with it after all that time, because what we've done since then hasn't followed what they've given, hasn't been going where they're going.

I guess that answers a couple of your questions.

The Chairman: Do you want to comment?

Mr. Goertzen: I've never figured out what the $50 million, the $60 million we're talking about here would roughly equate to in dollars per acre for Wheat Board grains. Let me tell you that my farm has the capability of growing 3,000 acres of Wheat Board grains because of crop rotations. I would prefer not to, but I can't grow canola every year. So I'm locked into something like 3,000 acres a year.

Because of the inefficiency in marketing, the floor that's set by the initial price, and the inefficiencies in transportation, because the Wheat Board controls the transportation system, that 3,000 acres is coming up short about $120,000 a year in net income from what would otherwise be the case if I could market my product without the board or in a voluntary market. I can show you those numbers.

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One of the things I would like to go back to, Wayne, is that the board - and this is away from your question but really it's not - was reluctant to bring CPS wheat, to legitimize CPS wheat.

Back in 1984 I started to grow CPS wheat. I found it was comparable in yield to barley on my farm. Because of the amount of rainfall we had, we could not grow barley as they could west of us, so CPS wheat yielded very well. Yield-wise it was almost the same as barley. Dollar-wise, as you know, it would be quite a bit more because wheat was always worth more than barley. As soon as the board decided after some years to bring CPS wheat under the board...they didn't think they could do it, but finally they did because they could see there was a market for it, when I and many other people already knew there was years before.

Now the price for that wheat has dropped by about $20 an acre. I'm receiving about $20 an acre less because of the board involvement. Now my transportation system is another $20 an acre. I'm just throwing it away. We're wasting....

The Chairman: Mr. Walker, did you wish to comment?

Mr. Walker: Exactly. Precisely on what Mr. Easter said with regard to the guarantees, if you look at the Wheat Board's statement, balance sheet, you will see that there's about $1 billion or$1.5 billion in grain in accounts commercial or accounts receivable. That's the initial payment guarantee part. There is then about $6.6 billion in credit sales that haven't been paid, which is, my guess, anything from 31 days to 30 years, and that's the Export Development Corporation's sort of stuff.

The general borrowing requirement as a crown corporation is the third one you mentioned, which the board claims they benefit to the tune of $61 million last year and $48 million this year. I don't know how you calculate those, whether or not that is against normal commercial credit, what they'd have to pay in terms of interest. I suspect it is, and I suspect that if they were using the Agricultural Products Cooperative Marketing Act and the Export Development Corporation, those figures would be much less. The gain from the independence they would have from not being controlled by the federal government would be of benefit to western producers.

You may have to give up a quarter of a point on your borrowing rate, but that would be a sacrifice worth making to have the independence of an elected board.

The Chairman: Mr. Avram.

Mr. Avram: First of all, Mr. Chairman, in reference to Mr. Easter's comment on the audit, the administration application of that component of the Canadian Wheat Board report...the administration costs are all compiled on one page provided in lump sums.

Secondly, as I sit here considering the defined advantage of the borrowing arrangement, borrowing guarantee, what immediately comes to mind is some of the findings and presentations made in the Canada-U.S. Joint Commission on Grains. I'm thinking specifically of the regulated tariff cost paid for by the producer as a result of the monopoly. In fact, in that case the commission reported that Canadian producers are paying in excess of 25¢ per bushel more in regulated handling at the primary and terminal elevators as a result of those arrangements being defined in a non-competitive environment.

So even if you have a grower or grain producer who is moving perhaps, let's say, 30,000 bushels through the system on an annual basis at 25¢ a bushel, the tariff there alone is $7,500 on one farm. That is in excess of what our counterparts in the United States are paying for that service delivered in a competitive environment.

Thirdly, that inefficiency is one inefficiency of many that are piled not only onto the growers and farmers in western Canada but indeed on our prairie economy.

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As far as whether or not various people walk inside the door of the Canadian Wheat Board building and that somehow constitutes a greater authority or education.... I don't work directly in all cases with the policy component of our organization, but it is the case that the policy people of our organization have sought repeatedly to obtain information from the Canadian Wheat Board on the processes and operations internally.

I'll perhaps stop there. Thank you.

The Chairman: Leo.

Mr. Meyer: Thank you, Mr. Chairman.

Wayne, you raised a whole host of questions. I appreciate your agreement with me on the amount of difference in respect of the Canadian Wheat Board's ability to be able to save in the neighbourhood of $50 million or $60 million rather than some $300 million, as it has been pointed out actually by more or less the right-hand man of Mr. Goodale, that being Howard Migie. We really don't understand why an official like that would make a wrong statement of such magnitude.

Yes, the Canadian Wheat Board's borrowings are significant. My previous colleagues pointed out what all goes together with that. We apparently have close to $7 billion of liabilities we carry forward. The question has to be how we can address this. For instance, in respect of a contingency fund, Mr. Chairman, how do we establish a contingency fund?

What's going to happen if, for instance, things go well for two, three, or four years and there's a tremendous amount of money building in that contingency fund? Let's say somebody grew 50%, 60%, 70% of their crop during those three or four years on Wheat Board grains and he decides to retire. Can he get that money back from this contingency fund?

Another question, of course, in respect of that fund is how it is going to be administered. Can we be sure that money is going to be used in the future and not for the past?

In respect of the amount of grain we're going to handle for export, ladies and gentlemen, Mr. Chairman, I think the sooner we change this marketing system, the sooner we're going to see a tremendous amount of value-adding happen in western Canada. We're not just going to process2% or 4% of the wheat in this country any more; we're going to process a lot more.

Somebody brought up an issue about varieties and that goes under the influence of the Canadian Wheat Board in respect of what we grow. I'd like to point out the issue of Grandin wheat. That may be a little bit off what you were asking, Mr. Easter, but for everybody in this room, I'd like to point out, of course, that we all know Grandin wheat is not allowed to be grown in this region. It's an excellent wheat. It's not allowed to be grown in western Canada, to be precise. For the past two years it's the choice of wheat in Quebec.

We have Maple Leaf Mills building one of the largest and most modern bread factories in the world in Calgary. Do you know what kind of flour and wheat they're going to use? Grandin wheat. I'd like to point that out because no question has been coming out from the committee members in respect of signals given from the Canadian Wheat Board to us farmers in order to produce what's really being needed. That's a very important aspect of a marketing agency: the signal-giving aspect of a selling agent.

The Chairman: I have a point for clarification. Leo, I think you mentioned that number when I had to go out of the room. Could you get to the committee where Mr. Migie said that and used those numbers? I'm not asking you to do it right now.

In all honesty, we don't know when Mr. Migie made the original presentation to the committee on this bill, and perhaps all the copies are gone, but they were here. The copy of the original presentation is not in there. In all fairness to everybody - and I'm not trying to protect Mr. Migie or otherwise - we just don't know where you got that figure of 300 and some. If you could get that to us, we'd appreciate it.

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I have another point of clarification on the contingency fund - and I'm not saying I'm for it or against it. We want to hear what you say, but remember what it does say in the bill. It's a ``may''. So the questions you ask about that type of thing.... If, for example, there is a board of directors and if the board of directors is a majority of producers, and it says if they decide to have a contingency fund, then it's up to that board of directors, an elected majority producer-elected board of directors, to make the decisions, or to suggest the decisions as you say, about how big is the fund if I die; or if I go out of business, what happens to what I've contributed to the fund - those types of things. We know those are things that have to be addressed, but I'm just saying, as in the bill right now, whether it's cash purchases or tradeable certificates, the word ``may'' is in there. It gives a board of directors an opportunity to consider. It doesn't say they have to be.

So I'm just trying to clarify a little bit, not defending or speaking to.... But if you could get us that other reference, where Mr. Migie said that, we really would appreciate it.

Sorry, Wayne.

Mr. Wayne Easter: Mr. Chairman, I too was going to ask if we could get clarification on that point.

The Western Grain Marketing Panel has been mentioned quite a number of times, that all the recommendations are not there. In fact, most of the recommendations on governance are, and some of the rest.... There's disagreement on most everything, and there's some disagreement on this as well, but the idea of having the bill being enabling legislation was to set up a process where the board of directors, if they wanted to move in this or that direction in the future, would be able to do so in terms of some of those other areas recommended by the Western Grain Marketing Panel. So that should be pointed out.

There are all kinds of people saying they shouldn't be allowed to go in those areas. There are others saying they should.

We'll probably have the debate on single-desk or dual marketing for a while. Certainly,Mr. Hehn has pointed out to us that if we lose the benefit of single-desk selling - and the minister said he wants these principles maintained - then we'd also lose the benefits of that single-desk selling in terms of the market intelligence that the Canadian Wheat Board has and in terms of looking at the political situation and the weather patterns. The Canadian Wheat Board is an agency that's able to compete in the international market very well and maximize returns back to producers. So he's concerned about losing those.

In terms of the dual market, I was intrigued by an idea yesterday that was suggested to us, and Murray alluded to it. It is that maybe we should set up a pilot for dual marketing for canola. What would your view be on that?

Mr. Balderston: If we're going to ask the other markets to do it, if somebody requested dual markets, I think we should go along with it. If this is what somebody wants.... When we stand here and want change, I don't think everybody has to change if they want something different.

I would like to go back to a statement you made, if I could for a second, in regard to Mr. Hehn and the Wheat Board. After I went to those panel hearings and everything I was involved with - this is a personal view I had, nobody else's, and I want to make that very clear. I'm not too sure in this country we have a Wheat Board problem as much as we have a Wheat Board commissioner problem. That's the difference; a whole lot of difference.

We have three men who are there now who are appointed for life. You really can't challenge them. You can't question them. You can't do anything with them. I know two of them in fact are very stubborn to change.

We spend a lot of time arguing over this when I think they could do it with the stroke of a pen to help us. I think in the future markets maybe some people want to pool the canola. If that's what they want and that's what's going to benefit them, so be it. But does that mean I can't change?

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Canola went from nothing 20 years ago to pass wheat two years ago. If it's a terrible market and a terrible lot of things, it should never have happened. When it started out with the decision of single-desk selling...this has one product going to one buyer with generally one grade. We should have had to give it away if you did the reverse of that, because Japan was the market. It didn't happen. Maybe we didn't always get the best price. People argued on both sides of the fence, make no mistake about it, but canola has become a significant factor on a pile of farms and people want it. Ask them if they want to take it away. Ask them what are they going to plant this year. Ask them...14 million acres of canola. They shouldn't be doing it if it's bad product.

The Chairman: Glen, briefly, and then back to Kevin.

Mr. Goertzen: You talked about market intelligence. That may have been the case 10 or more years ago, but now individual farmers can stay on top of the market as least as adequately as the Wheat Board. It's not important any longer.

There was one other part of your question. Go ahead with somebody else and I'll think about it.

Mr. Avram: It is the case that in western Canada we did have a pilot project on a dual marketing system. It occurred in 1993 for a period of 40 days. As members will know, the continental barley market existed, and during that 40-day period there was more barley moved into the U.S. market than the Canadian Wheat Board on its own had ever moved in an entire crop year. In fact, during this time the amount that moved south was four times the previous year, if I remember correctly, and double the previous annual record that moved south in 40 days.

So in fact that pilot project on a dual marketing system has been in place. We did test it in western Canada and it was successful in an outstanding fashion.

A voice: At what price, though?

Mr. Avram: I think the next comment would be that in terms of market intelligence - and I would, in a sense, echo the previous comments. I think to embrace the idea in a firm way that the Canadian Wheat Board, as a government institution, has access to market intelligence, information, or entrepreneurial knowledge of some sort that is not available to the general population in some way is a bit of a misnomer.

Thank you.

Mr. Wayne Easter: I will bring forward the figures and prices at some time, because it's not hard to dump a product.

The Chairman: Leo, and then we'll go back to Glen for a brief comment. Then we're going to move along.

Mr. Meyer: Thank you for your question, Wayne.

Market intelligence. Ladies and gentlemen, last year we had pretty well an all-time high, at least in my farming community, with respect to wheat prices and grain prices in general. Leading into seeding of our crops in 1996, I recall that you probably wouldn't have found anybody who wasn't bullish going into 1996. I really appreciate your bringing up the issue of market intelligence. On that very point, Mr. Chairman and members of this committee, I'd really like to question the ability of the Canadian Wheat Board. I'd like to stand -

The Chairman: If you can raise it that way, but it's not in the bill so we're going to have to move along. You've raised the issue and you say you question it.

Mr. Meyer: No, I'm sorry -

The Chairman: All right, go ahead.

Mr. Meyer: When you have a scenario where we obviously have seen the Canadian Wheat Board being cut on the wrong side last year and this year, then don't come to me and tell me that the Canadian Wheat Board has an edge in respect of market intelligence over anybody else. This is not to offend anybody else in this room who has a different opinion, although of course it might be offending some. The fact is, what are you looking for today when you want market information? Are you looking for the PROs or the EPRs, or do you actually look to a USDA report, or are you looking to a supply and demand report, which really gathers world-wide information and is available in a matter of minutes? If it's being released at 7:30 a.m., I have it on my screen at 7:32 a.m., and that's what moves the market.

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When you have an organization - this point really gets me going - like the Canadian Wheat Board having a big conference in Winnipeg about three or four weeks ago called Grain World, which was probably a very expensive exercise.... I'm saying there's not much potential. We see prices going down on feed grains, barley, and wheat when in fact the Chicago market is just beginning to be on fire. We had a 15% to 18% rise in the market since that statement was made. What kind of marketing intelligence is that? In fact, I'm asking you, maybe they have a certain reason why they're saying what they're saying. That's the point I want to make. This is what really annoys us when it gets down to choice, because we are locked in then to that type of decision-making somehow based on wrong information.

The Chairman: I'm going to move on to Glen - briefly, please.

Mr. Goertzen: Wayne asked about a pilot project to put canola under the board, as I understand it. In fact, it's part VI of the act now. There has been provision to do that, but it's never been used. From a personal point of view, and I would think the Grain Commission would stand behind me, I would say this would be just fine if you want to put canola under the board, but let's get a dual market so that we get barley out from under the board at the same time. Why would you want one and not the other? Let's have it both ways.

The Chairman: Leo, to go back to something you referred to, you brought me a document of the presentation of the Western Canadian Wheat Growers to this committee, with reference to the number of Mr. Migie. In that, you say:

According to the testimony of Mr. Howard Migie, Director General, the adaptation of grain policy directed to your committee on Thursday, March 6, the last is the largest and most important. Mr. Migie pointed out that the CWB's interest earnings in 1995-96 were$340 million.

We have the transcript of that presentation here and I'm sorry, but those numbers are nowhere in there. I would suggest you go back to the Wheat Growers again. They are here, transcribed by the House of Commons, as is this present meeting as we sit. It's going back to Ottawa to be transcribed so that every word I'm saying and you said will be transcribed verbatim.

They're not there, Leo. Maybe they've heard that figure someplace else, but they were not said that day, or they were misheard or misinterpreted by the Wheat Growers.

I thank you for bringing this up. I'll get it back to you.

We are very quickly running out of time. I'll go to Elwin for a very brief question, then toMr. McKinnon for a very brief question. Elwin, please be brief, and let's have brief answers, everyone, please.

Mr. Elwin Hermanson: I'll be as brief as I can.

Mr. Chairman, I think we have got off Bill C-72 a bit, but I think the reason we have is because a lot of people feel they haven't been heard previously. I would suggest that if there aren't some significant changes to the bill, there are going to be some serious problems, if this bill is passed in its current form or if nothing is done at all to change the board. That is significant.

I have been to the Wheat Board. I've toured the Wheat Board. I've heard many of their presentations. They have some good people working there. But their information is available to the prairie pool, to the private grain trade, and to individual farmers now, technology being what it is. I won't say anything bad or good about the board; that's just the way things are today.

We have two MPs here from the Peace River country. Charlie is here and he is going to be representing constituents on this side of the Alberta-B.C. border, and Jay Hill is sitting here. He has to vote on this bill too if it ever does get back into the House given all the criticism we've heard. We have to either vote for it or against it. I'd like to know your opinion as to what the MPs from the Peace River country should do. If this bill isn't changed, should your MPs vote for it just to get some change, or would they be better off voting against it? I'll tell you that we've had NFU presentations saying vote against this bill because they have opposition to it for different reasons. They've told us to vote against the bill.

What changes would be required in Bill C-72 to make it palatable to your organizations?

Mr. Balderston: I think from our perspective, if it has to be approved the way it is, we'd say no to it. I think if you could go back to what was in the marketing panel report, bring that forward and take those recommendations, then we'll support it, and we would gladly support it. It is that important to us. That panel report did not say to get rid of the Wheat Board and make a different forum, and we support that as well.

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The Chairman: Kevin.

Mr. Avram: I would echo that. I support a dual barley market and additional opportunities for unlicensed varieties of wheat in a manner that was consistent with the report of the Western Grain Marketing Panel.

Mr. Meyer: I again agree with my colleagues here. I pointed out in my first point my general observations about Bill C-72. We really can't understand this being the result of a consensus that has been coming out of the Western Grain Marketing Panel.

We urge everybody who has some influence on this bill to use their powers to either scrap this bill or really significantly change it.

The Chairman: Mr. McKinnon.

Mr. Glen McKinnon (Brandon - Souris, Lib.): I'll start with an experience I had as an MP in Manitoba. We had a transition fund set up for WGTA implementation for southeastern Saskatchewan and southwestern Manitoba. The provincial government put in place a panel to hear what the farm organizations wanted to see done with that.

As the federal people, we also went out and had some hearings, just like we're having today. We heard from irrigators, research scientists, and other groups who were working in the value-added. In essence, when they got together the only thing they could agree with was building roads.

I point out to you that when we sat down with them individually, that's really the last thing they wanted, but it was the only point they could agree on.

I'm not suggesting what you're bringing forward about the panel isn't valid, but consensus building does do that. It takes you from position A to position B.

I'm feeling what you're saying, gentlemen, in the light of my personal experience on the other side, that maybe we please nobody when we arrive at the common consensus, but it's a position nobody can refute, because you have your name on it.

I came out here with an open mind. I'm not a farmer but I grew up on a farm. I was a teacher in an agricultural community. I know what the importance of the industry is in rural Manitoba and I'm suggesting it's the same out here.

My vision has been expanded by our visitations in Alberta, and similarly in Winnipeg as well as Saskatchewan. I've pointed out to you that I've seen a vision or heard of a vision, but I have yet to have more detail about how the dual system could actually function without impacting on the pillars of the current board. I have to be very frank with you.

We've been through the experience in the 1990s with subsidies, the EU experience, and we're getting into matching our subsidization with the credit side, trying to match the Americans. We're going to lose if that's the contest we're heading into. I have to say if that's the case, I don't think that is a valid conclusion our committee should be making.

Yesterday I heard the expression - Mr. Walker you did too - about voice and control being an issue with Albertans. I'm hearing it today, but that phraseology wasn't used.

I commend you on the entrepreneurial approach to marketing. I think Mr. Meyer is the person who is articulating that position, as well as Mr. Avram. You created markets. Your illustration about canola, Mr. Balderston, was accurate.

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I think what we have to do is build a system in the west where the interests of those who perceive the Wheat Board to be their strength against the control and will of the large conglomerates versus the small farmer who is relying on the Wheat Board to get the best price he can for it.... Maybe I shouldn't be using the word ``small'', but instead an average farmer who feels that's the way he wants to market his product. That's what I think our committee has to wrestle with when we get back to the nation's capital.

The Chairman: Are there any brief comments on Glen's comments?

I want to wind it up, folks. We're running out of time. I want to catch my flight back. I haven't been home since Saturday morning.

With all due respect, we have six individual presentations, and I think we need and want a dialogue after that. Quickly, Glen and then Kevin.

Mr. Goertzen: I just want to say to the other Glen that voluntary is just so absolutely important. When you go back, emphasize voluntary.

We who do not appreciate the value of the Canadian Wheat Board are not opposed to those who do have a perception that it does a marketing job. But those of us who are of an entrepreneurial spirit need to have the freedom to lead the rest of the country in production, markets, and in further developing the industry. Without that, and when you lump us all into one group, you take away the incentive, the initiative, and the ability for leaders to strike out on their own, fail on their own, or make a success and lead the rest of the economy with them.

The Chairman: Kevin.

Mr. Avram: I appreciate the sincerity of your comments. It is the case that here in Alberta, for example, going to 1993, there was a dual marketing system that existed for a short period of time. But it was here. People experienced it. Some considerable number of months after that Alberta growers voted on that very issue. Having experienced it, and in the vote understanding what they were voting for, they very clearly made a statement. That's number two.

Number three is a consequence of the Western Grain Marketing Panel. Leo referred to the effort that was made by very many busy people to make a contribution there, and when the panel came back with a series of recommendations that were unanimous in the area of dual marketing, there was a real sense of victory.

Today there is a level of frustration, and hostility even, that I have never seen. I've worked in organizations like this for almost 20 years. I've never seen anything like it. There's a level of what is almost bitterness in some cases, as they believe the process they succeeded at, and they've clearly stated an opinion on dual marketing, has been blocked.

The last thing I'll mention is there was a poll, if I remember correctly, commissioned by Agriculture and Agri-Food Canada about eight months ago that indicated 55% of growers across the prairies, if they were asked a question on dual marketing for barley, would have answered yes.

The Chairman: Gentlemen, I'm going to wind it up there. We are going to gain about a total of five minutes. I thought at one stage we might gain more than that. The individuals were asked to be present at 11 o'clock.

I'm going to adjourn for a five-minute recess so we can grab a coffee.

I want to thank the presenters and the members for their cooperation. I think we've had an open and frank discussion. I hope you people see that as well. Thank you very much for presenting to the committee.

I'm going to ask each one to present and then we'll have another open discussion. WouldMr. Dyck, Mr. Watson, Mr. Moskalyk, Mr. Breault, Mr. Hill, and Mr. Carter come to the table, please.

Mr. Darryl Carter (Individual Presentation): Mr. Chairman, I think you are inaccurate that there are only six individual briefs. I actually represent eight individuals, so there will be eight presentations.

The Chairman: Are you each making a five-minute presentation? That's not what was registered with the committee, Mr. Carter.

Mr. Carter: There was no notice in the local newspapers about this meeting, about any prior registration or any requirements. I notified our local MP, Mr. Penson, and he will confirm this. I advised him that I represented a number of individuals who wished to make a presentation together. We don't represent any organizations. I sent that to Mr. Toupin, I believe it was. He wrote me a letter, and I have it if you need it to be shown. He confirmed he was aware of that. So there is no misunderstanding. This committee knew very well there was not an individual, single-person representation being made by me.

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The Chairman: I had a conversation with Mr. Penson, and maybe Mr. Penson should join in this. I made it very clear to Mr. Penson that I understood your views represented more than just your views and that your presentation would represent the views of a number of individuals.

Mr. Carter: Well, you are wrong, sir. I am not making a presentation to speak to other people's views.

The Chairman: Where's Mr. Penson?

Charlie, I thought we had this very clear that Mr. Carter would be making an individual presentation. I indicated my cooperation with you, Charlie, that if we could stretch it past the five minutes for Mr. Carter, we would.

The clerk did not have a list of individual names, other than Mr. Carter's, until this morning. Then somebody came forward with seven other names. That certainly is not the understanding of the clerk nor me.

Mr. Carter: Mr. Chairman, would you allow me to get my letter? I'll get my letter, which will show it wasn't just one presentation.

Mr. Charlie Penson: I want to speak to this as well.

Mr. Chairman, I brought this issue up both with the clerk and you in Ottawa. I said thatMr. Carter was representing a group of farmers in the Peace River country and wanted to make a presentation as a group. We were told that because there are no recognized names, such as Wild Rose, they were not allowed to do that and they'd have to do it as an individual....

I made the case both to you and the clerk of the committee that I thought that should not be the case and that he should be put on as a group, because that's in fact who he's representing here. The consensus was that they would not be allowed to do that. I argued both with you and the clerk that this should be the case. I understood there would be some extra time built in for Mr. Carter and his group to make a presentation.

The Chairman: I agreed to that and I'm agreeing to it now. But what Mr. Carter's telling me is that they want the opportunity to present seven presentations.

Mr. Carter: It's one presentation and there are going to be seven people speaking.

The Chairman: How long will you be speaking?

Mr. Carter: We will take five minutes each, so that's seven times five.

The Chairman: It is to be one presentation, and I said I would allow a stretch of the rules, of the agenda, and of the arrangement that was made with the committee.

Mr. Carter: There was no arrangement with the committee. You're talking about rules and there are no rules. There were no rules put out. There was no requirement of advance notice or anything.

The Chairman: The meeting is going to adjourn at 12:30 p.m.

Mr. Carter: Let me say this -

The Chairman: Order, please. The meeting is going to adjourn at 12:30 p.m. If that's what you insist on, I will allow your seven people to make five-minute presentations.

Mr. Carter: All right.

The Chairman: You will be responsible to the rest of the growers in this room. You and your friends will be preventing a dialogue between the MPs, and even your people, because that means we now have 12 presentations starting about two minutes from now. If I work it out right, twelve times five is sixty, and that's one hour of presentations.

I'm going to take a recess and get a coffee.

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