Standing Committee on Agriculture and Agri-Food



Thursday, October 26, 2006


Standing Committee on Agriculture and Agri-Food



Thursday, October 26, 2006

[Recorded by Electronic Apparatus]

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The Chair (Mr. Gerry Ritz (Battlefords—Lloydminster, CPC)):
    I'll call this meeting to order.

    Thank you, ladies and gentlemen, for appearing before us today at our ongoing hearings on the future of the Canadian Wheat Board. Thank you all for coming.

    Since we're starting 15 minutes late, we'll stretch into the second hour a little bit. We'll try to hold things as tight as we can.

    I'm going to be very, very stringent with the time. We're going to hold you to ten minutes. I'll give you a one-minute warning, and then we'll have to shut you down. So give me your best shot in the first ten minutes, or shorter, if at all possible, to allow a full round of questioning in this hour as well. We will stretch into the second hour, because we're late getting going. The environment committee went a little longer than it should have.

    The clerk has distributed a calender to the members of the committee. This is what was discussed at the standing committee the other day. Have a look at it. If there is any discussion, take that up with the clerk at the end of the meeting. I'll attend that as well.

    So without any further ado, we have William Van Tassel and Benoit Legault, with the Quebec producers; Wendy Holm, professional agrologist, as an individual; Stewart Wells, president of the National Farmers Union; and David Rolfe, president of Keystone Agricultural Producers.

    Welcome again.

    Who's wanting to lead off? According to my list, we have the Quebec producers up first. Mr. Van Tassel.

Mr. William Van Tassel (First Vice-President, Fédération des producteurs de cultures commerciales du Québec):

    I will do my presentation in French, but I am ready for questions in French and English--no problem.


    On behalf of the 11,000 family farms of Quebec producing grain and represented by the Fédération des producteurs de cultures commerciales du Québec, I thank you for your invitation.

    More than ever, considering the very serious income crisis facing the grain producers in Quebec and Canada, we want to be involved in any issue having an impact on farm incomes. Therefore, you will understand that the changes proposed to the present powers of the Canadian Wheat Board are a matter of great interest to our organization.

    One of the basic principles that is very dear to Quebec grain producers is the right of the majority of farmers to decide what marketing system they want in order to ensure the efficient marketing of their production and to get the best possible fair prices for everyone. We believe that the Canadian Wheat Board exists and works on the basis of this principle.

    Our Federation has received from a majority of farmers who produce wheat for human consumption the responsibility to ensure the marketing of their product. From the very first crop year, we understood how important it is for grain producers to take their place collectively in the marketing chain.

    For example, the pooled marketing of wheat in Quebec has allowed us to sell more than 70 % of the wheat produced in Quebec on the market for human consumption, which is more lucrative, compared to less than 50 % in the past. This collective marketing gives obvious benefits to our producers.

    Furthermore, at a time of increased concentration of buyers and intermediaries and of disappearance of the information required for the good operation of our markets, it becomes absolutely necessary to offer or, at the very least, to maintain the legal and regulatory tools required to obtain some negotiating power.

    The weakening of the balance of power and the growing vulnerability of producers can also be observed in the US where the United States Department of Agriculture, USDA, is more than ever being called upon to ensure the good operation of the markets as well as the implementation of the Livestock Mandatory Reporting Act, a situation made even worse by the existence of farm production boards which have decided, through regulation, to impose the collective negotiation of prices and terms of sale.

    Political decency implies at the very least that the Government of Canada let democracy operate. In Quebec, the implementation of a system of pooled marketing was not done without a clear and rigorous democratic process. All the producers of wheat for human consumption were consulted and 70 % of them spoke on the proposal to set up a system of pooled marketing. Out of those, two thirds have voted in favor of the proposal. We believe that the government has at a minimum the ultimate moral responsibility to respect the most basic rules of democracy.

    For now, we think that the Government of Canada should invest all its time and efforts in helping the grain industry to come out of the crisis and not to exacerbate its difficulties and to divide farm communities that are already in great trouble.

    Let me remind you that our industry generates annual revenues of 8.6 billion dollars, which represents more than 23.5 % of the value of our whole national farm industry, and that it provides jobs to more than 25 % of all our farm families. Our importance is in fact much more than that of a provider of a commodity since we are also a vital component of the farm economy and of the many companies involved in food production. In the end, the farming sector supports a long and complex value chain.

    The grain producers of Canada are also very productive. In Eastern Canada, the average yield for corn is quite comparable to that of 50 % of the farms in the US. As for soybeans, the productivity of Canadian farmers is on average equal to that of two thirds of American farms.

    The grain market suffers much more today from the increase of oil prices and from the spending policies of the US government. The other two factors that are detrimental to our industry are the higher value of our dollar and the weakening of our prices. Finally, the strength of the oil market and the economic growth of several very big countries in full development also have a direct impact on the prices of our inputs, which should have a direct impact on grain prices.

    Unfortunately, the US Treasury, with its investments in farm subsidies, prevents the market from reaching its normal equilibrium. The crisis in the grain industry is very serious and has been deepening over the past 25 years with the various Farm Bills passed in the US and with the increasing supports provided by the American government to its industry.

    Nowadays, the Government of Canada seems more concerned by the freedom of choice being demanded by a minority of producers as well as by the Canadian agrifood sector than by the dramatic life being forced upon grain producing families.

    This situation has been generated by the subsidies provided in the US and Europe which distort the world grain markets. We refer here to the global impact of the 1.3 billion dollars of subsidies paid in the year 2000, and everything leads us to believe that the amount has even been much higher in the past few years. This is only one aspect of the problem where recurring subsidies disrupt the grain industry in Quebec and in the whole of Canada, and not only at the level of the markets.

    Canadian farms are becoming less competitive, their debt increases and their net income is dropping much faster than in the country that is in their main competitor. Added to this is a growing lag in investment in new technologies and, obviously, in the protection of the environment. The impact on productivity is already being felt.

    We believe it will be impossible to compete with the producers of a country whose government has made national security a priority. Everything leads us to believe that US politicians will ultimately make an additional priority of food security. Therefore, Canadian farm producers can expect a continuation of the massive investments in the farming sector in the US, which is all the more an issue in the context of the recent failure of negotiations at the World Trade Organization.

    Obviously, we will not be able to face such developments on our own. Canada does not have the luxury to implement a policy that would be very different from that of its neighbor as far as sectoral priorities are concerned. Each year, the United States invest massively in the grain sector, and nearly exclusively in that sector.

    The Canadian government is now recognizing that its Canadian Agricultural Income Stabilization Program, CAIS, is not meeting the needs of the grains sector. Despite that, its latest initiatives have been characterized by continuity. This has to be added to the elimination of the Market Revenue Insurance Program in Ontario and to the reduced support capacity of provincial programs such as the Programme d'assurance stabilisation des revenus agricoles, ASRA, in Quebec.

    It's quite clear that the grain sector has different needs than other sectors covered by CAIS. Consequently, risk management in the grain sector requires two different types of action: short-term support and long-term planning. The extraordinary situation facing the sector at the present time means that special attention and a specific plan of action are required from the government. Our objective should remain to provide adequate support to the industry.

    In the short term, our plan should be aimed at resolving the problems and limits of CAIS for grain producers through the use of a more realistic measure of yields and prices and through ensuiring enough flexibility to take account of the specifics of the various regions and various products. Our objective should remain to provide adequate support to the industry.

    Transition measures should be implemented rapidly until the 2008 review of the agricultural strategic framework while introducing a new program and improving CAIS in older to compensate for the past, present and future damages -- indebtedness -- caused by US subsidies. This help should be provided with the flexibility required by the provinces which are better able to share the resources between their farmers.

    In the long run, our government should implement in 2008 a new competitive farm policy that will allow us to face the perverse effects of the US Farm Bill. The levels of support should be adjusted according to the level of reduction of the international subsidies following from the commitments made by the various member countries of the WTO.

    In conclusion, since time flies, we recognize that the Board may not be a perfect tool but nobody will be able to convince us that we should not take the responsibility, in the collective and democratic manner, of the marketing of our farm products.

    We're also extremely disappointed and frustrated by the fact that this issue has become more important than the income crisis. Let us not forget that, if we don't react, we won't survive. Farm organizations, MPs, ministers and politicians of all parties have been involved in the development of a farm industry that has eliminated family farms, has sapped the energy of farm communities and, especially, has been detrimental to our food sovereignty.

    Thank you.


The Chair:
    Thank you, Mr. Van Tassel.

    Ms. Holm, please, for ten minutes.

Ms. Wendy Holm (Professional Agrologist, As an Individual):
    Good morning. My name is Wendy Holm. I'm a Canadian agrologist, resource economist, and farm journalist.

    I want to say at the outset I have absolutely no partisan interest in this issue. My concerns are those of an agrologist, and to say I'm alarmed is an understatement. This is why I'm here today, and I thank this committee for the opportunity to speak.

    First my credentials. I'm an agrologist with over 30 years of professional standing in Canada. I'm past president of the B.C. Institute of Agrologists, former director of the Agricultural Institute of Canada, B.C. agrologist of the year 2000, and recipient of two Queen's medals in 1993 and 2002. As a resource economist, I have expertise in economics, competition policy, trade policy, industrial organization, and the effects of regulation on private sector performance.

    As a farm journalist, I have 12 years of published columns under my belt, monthly columns. Because of this, I feel I am qualified to give a professional opinion of the policy implications of the recent actions by Canada's new government to destroy the central selling desk authority of the Canadian Wheat Board, the only entity that stands between farmers and the interests of concentrated market players.

    Other witnesses before this committee have documented in length the importance of the Canadian Wheat Board to prairie agriculture. I myself have devoted four columns to this subject since February. One, “Dual Desk is Code for Disaster” just won the Frank Jacobs bronze award for press columns at the Canadian Farm Writers' and Broadcasters' Awards in Winnipeg.

    Dual desk selling will destroy the power of producers in the marketplace. With the Canadian Wheat Board gone, an estimated $800 million in benefits to western grain producers are rising directly from the Canadian Wheat Board single desk selling authority will flow from the pockets of producers in the western Canadian communities they support to the coffers of the large grain buyers and their shareholders. The real question is why is this government flying in the face of logic and politics to deliver a campaign promise to destroy the Canadian Wheat Board? When in doubt, follow the money.

    The large multinational grain companies have had it in for the Canadian Wheat Board since the mid-1980s. Understandably so, since the Wheat Board confers over $800 million in benefits to farmers, benefits that would accrue to the companies themselves. The Americans have been pestering Canada to get rid of the board too, for similar reasons. They want to high-grade their lower-quality grains with quality Canadian product and have access to our freight systems.

    In April 2002, following a meeting with top U.S. trade officials, North Dakota Wheat Commission chair Maynard Satrom assured growers the common objective of both the U.S. government and U.S. wheat producers is the ultimate reform of the monopolistic Canadian Wheat Board. Two weeks later, in Senate testimony, the U.S. Department of Agriculture argued that the special privileges of single-desk sellers gave “unfair advantage” to Canadian Wheat board farmers, adding that American grain should be able to freely compete with Canadian grain for Canadian rail shipments. Complaining that the practices of the Canadian Wheat Board restrict U.S. access to our market and make U.S. producers less competitive on world markets, the USDA called for “fundamental reform” of organizations such as the Canadian Wheat Board to permanently assure that U.S. producers are treated fairly in the world market.

    In March 2003 an unsuccessful WTO challenge was launched, and again in May it was appealed and again was unsuccessful. It argued that the Canadian Wheat Board has a longstanding history of creating and developing a competitive advantage for Canadian farmers in wheat markets around the world. What is wrong with that? Exactly what they should be doing is giving farmers a comparative advantage. According to the Canadian Business Resource, their status as the only seller of western Canadian wheat and barley positions the Canadian Wheat Board to earn premium prices for farmers on annual sales of over two million tonnes of grain to more than 70 countries. All revenue, less marketing costs, is returned to about 85,000 prairie farmers. The Canadian Wheat Board has a proud reputation for high-quality products, reliable supply and delivery, and unparalleled customer support. A privately held member cooperative, the Canadian Wheat Board ranked number 95 in this year’s list of the Financial Post’s FP 500 companies, just behind SNC-Lavalin, Saputo Inc., and Canfor.

    For the Canadian Wheat Board, dual desk selling is a whistle stop away from gone. Multinational competitors with deep pockets will bid away grain in the short term, and the Canadian Wheat Board will starve to death. Once gone, grower premiums of $30 to $45 per tonne that farm economists attribute to the Wheat Board will disappear forever. But the damage will not stop there. The collapse of the Wheat Board will have a domino effect on the rest of the prairie grain economy. Without the Canadian Wheat Board, the producer car system will disappear, as short-line railways that rely on producer car shipments will also disappear. Independent grain handling facilities that are today supported by the Wheat Board's overseas marketing connections will quickly disappear in a market dominated by transnationals. Highways will further deteriorate, as farmers have no option but to haul grain longer and longer distances to larger and larger elevators. Canadian grain will become generic and be mixed with the grain of other countries, lowering prices to western Canadian grain farmers.

    With the top four firms controlling 73% of world grain markets and the top five controlling an 80% share, with six major North American rail companies controlling freight rates and car access, this is not the time to weaken the power of farmers in the marketplace.

    In response to this threat, the vast majority of western Canada grain farmers, together with Canada's major general farm organizations, have stepped forward.

    On the one hand we have the Americans, the multinational grain companies, and the Harper government trying to dismantle the Canadian Wheat Board, and on the other hand we have Canadian farmers, farm organizations, and the Canadian public trying to stop them. Harper knows that if farmers voted in a plebiscite, as required under section 47.1 of the Canadian Wheat Board Act, the single desk authority of the Wheat Board would remain intact.

    The publicity on this issue has, I suspect, forced Harper to overplay his hand. Muzzling the directors of the Canadian Wheat Board so that they cannot defend farmers' rights under section 47.1 and changing voter rules mid-election in an attempt to influence the outcome in the government's favour would raise concern even in a third world country. Perhaps the new government doesn't know this, but such tactics are not acceptable in Canada.

    I'd like to close today with a story that I think illustrates much of what I have said here.

    As an agrologist, I went to Saskatoon on July 27 to stand with Canada's farmers in support of the Canadian Wheat Board. I felt that they were right, and that professionals should come forward and say so. When I had my two-minute turn at the mike in the Vimy bandshell in the park, I encouraged other agrologists to come forward in support of the Canadian Wheat Board and the right of Canada's farmers to make this decision. I saw it as a professional responsibility

    That afternoon I sat in a packed room and listened to farm leaders from across Canada defend the Wheat Board and the clout it gives to farmers. Later that afternoon, Chuck Strahl emerged from the invitation-only meetings he had been having across the street--with those who agreed with the Harper government's views on the Canadian Wheat Board--to hold a press conference.

    I attended as a freelance columnist with the Western Producer, and asked the minister whether his government was prepared to implement dual marketing without a supporting vote of producers and in violation of section 47.1 of the act. I then returned to B.C. to write my column.

    That Monday, I was about to file my August Western Producer column when I received a phone call from my editor, Barb Glen, who seemed shaken. She said they'd received a call from Chuck Strahl's office--and from one other person--suggesting that my presence at the rally indicated bias on the part of Western Producer. My monthly column, which had appeared on the op-ed page the second issue of every month for the past 12 years....

    A voice: [Inaudible--Editor].

    Ms. Wendy Holm: What?

    I still have time. I have three minutes.

    My column was dropped permanently the next morning. It was cancelled.

    What would cause the paper to fire a prize-winning, very popular op-ed page columnist with four national awards for press column and press editorial in three years?

    Again, follow the money.

    I refer the committee to the handout “Who Owns the Farm Media in Western Canada?”--if we could please have that circulated--in which I list the directors and their affiliations. Note in particular the name of Brian Hayward, CEO for Agricore, Canada's largest grain handler and feed manufacturer.

    In an October 3 letter to a farmer, Chuck Strahl's office said that Western Producer is owned and operated by a private company, Western Producer Publications, in Saskatoon. In fact, Western Producer is owned and operated by a conglomerate, Glacier Ventures International. One of the directors of that company is Brian Hayward, the CEO of Agricore.

    The loss of my column in the Western Producer after one phone call from Strahl's office is not about me. It is, most importantly, about the rights of farmers to have an open and honest discussion on farm issues and to have knowledgeable and articulate advocates like me speak out strongly on their behalf. Instead, I too have been muzzled.

    Because I was called to give evidence before this committee only a few days ago, I do not have copies of my handout in French. Since, properly, unilingual material cannot be distributed to the committee, I have instead posted it on a special website that I feel should be of interest to this committee. It contains, among other material, an expanded discussion of farm media ownership, an interview that Barb Glen and I had on CBC Radio One in Regina, and the column that was dropped by Western Producer. The website is www.theholmteam.ca. Any baseball fan will recognize the root, root, root for the “holmteam” and all that.

    Economists know that when capital concentrates, communities suffer. There's no better example than the agrifood sector. Farmers face this problem all the time. The CWB is critical to offset multinational power and to return equity to farmers and their communities. The Harper government, in lockstep with the interests of American grain farmers and transnational corporations, sees prairie agriculture as just another sector ripe for takeover. Farmers will turn from decision-makers to price-takers. Strong and viable family grain farms will be replaced by mega-farms with farm managers in double-wides.

    If Ottawa can override section 47.1 of the Canadian Wheat Board Act, it can just as easily undermine the legal framework under which other farm commodities operate. It is up to all members of Parliament to put a stop to this nonsense--now.

    Thank you.

The Chair:
    Thank you, Ms. Holm.

    We'll move to Stewart Wells, president of the NFU. Ten minutes, please, Stewart.

Mr. Stewart Wells (President, National Farmers Union):
    Thank you, Mr. Chairman.

    The National Farmers Union thanks the committee for the opportunity to be here today to speak with the standing committee.

    I have two recommendations that I'd like to put before the committee, and then another point I'd like to make if time allows.

    The first recommendation we would put forward is that the standing committee use all means available to investigate the events that led to changes being announced by the Minister of Agriculture to the Canadian Wheat Board director elections halfway through the election process.

    The second recommendation is that the standing committee find a way to force the federal government to reimburse the Canadian Wheat Board's direct costs, as well as the individual farmers' extra cost, resulting from the government changing the Canadian Wheat Board director election rules halfway through the election process.

    As background to the first recommendation, last week the MInister of Agriculture stood in the House and announced changes to the way this year's Canadian Wheat Board director elections would be run. This process had started in the first week of September, and so the election process was roughly halfway finished, or halfway through, when the minister announced these changes.

    In his announcement of the changes, he said that he had made a suggestion to the Wheat Board to make these changes and that the Wheat Board had agreed and said it was a pretty good idea. That was last Tuesday.

    On Monday of this week, the Canadian Wheat Board published on its website a statement of its own, where it actually said it was not a suggestion by the minister, but rather it was a direction by the minister. They also said that they were not given the opportunity to say whether it was a good idea or not. So the Wheat Board has directly contradicted the statements by the minister. That bulletin is available on the Canadian Wheat Board website.

    As well, I would bring to your attention, when we're talking about websites, that there is other information on that Canadian Wheat Board website that I'm hoping members have a chance to review. There's a piece that I would like to enter, if I'm able to, as evidence for the committee. The presentation that the Canadian Wheat Board has made to the Minister of Agriculture's ongoing task force work is also posted on the website, and I would like to bring that before the committee, as well, as evidence.

    So on Monday the Canadian Wheat Board contradicted the statement by the minister, and that moves us up to yesterday. Yesterday, the Minister of Agriculture produced another statement regarding the changes to the election. In his statement he has again tried to implicate the Canadian Wheat Board as being part of this change, and he referenced the Canadian Wheat Board election review panel results. There was an election review panel, which reported almost a year ago--November 2005. The minister has referenced that report, but the changes the minister has introduced are not one of the recommendations in the report. The changes are completely different from the panel recommendations that came forward in November 2005.

    Inside of eight days, we've had two different rationales put forward on behalf of the minister in regard to these changes, and both of the statements he has produced are wrong. We're asking that the committee take this into its own hands. Go back and start at the time that the election review panel was tabled, in November 2005, eleven months ago, and from then, come through to the present and try to find out why these changes were made during the election process.

    People who I trust and who have no reason to lie to me on this issue say that the minister was informed about the review panel, about the recommendations that were in the review panel, and was actually told as early as February that if any changes were going to be made along the lines of the review panel, they had to be implemented before the election process started. Well, that hasn't happened. So what we've seen are changes in the middle of an election process. The National Farmers Union is very upset about changes during the election process. This is Canada, and we don't do those kinds of things in this country.

    That leads to the second recommendation, which is about the increased costs. Farmers in this country, farmers in the Wheat Board region, pay all of the election expenses related to these director elections for the Canadian Wheat Board, but the changes that the minister has introduced in the middle of the election period are leading to extra costs. The original information, the original advertising that was done by the election coordinator, Meyers Norris Penney, now has to be contradicted. There have to be new direct mailings to the 36% of the farmers who have been arbitrarily kicked off of the list, and that's going to be an extra expense, which the Wheat Board, at present, and farmers through the Wheat Board, have to pick up. So there's a direct expense to the Canadian Wheat Board.

    There's also an indirect expense to the farmers involved who go through the declaration process. Thousands of legitimate voters have been kicked off this list. There were the people in Manitoba and Saskatchewan, and in Alberta in Peace River, who experienced the incredible frost in the summer of 2004 and who produced only feed grains. Many of those same people in the next crop year were flooded out and produced only feed grains. If they haven't hauled yet this year--and we're only three months into the delivery period--they are kicked off this list.

    Now, at a minimum, those people, when they fill out their declarations, have to find a notary public or a commissioner of oaths to verify those declarations. There are farmers now who are going to be 25, 50, or 100 miles away potentially from a commissioner of oaths. Granted, it might be a small cost--$10, $15, $20, or $50--for a person to get in their car, drive to find a commissioner of oaths and make that change, but it's a direct cost imposed on the farmers of western Canada by the Minister of Agriculture.

    We've all been talking for the last number of years about the poor financial condition of farmers in western Canada. So, again, with the second recommendation we're asking that the standing committee find a way to force the Minister of Agriculture to reimburse the Canadian Wheat Board for these costs and farmers for any of their incidental costs.

    The last point that I'll make is just to demonstrate a different way of thinking about the Canadian Wheat Board. We've heard a lot of the arguments, and there's lots of discussion to be had, but one way of thinking about the Wheat Board is as a legislated marketing instrument that's there for the benefit of western Canadian farmers, which is very similar to a legislated marketing instrument called “patent protection”. Patent protection is legislated by governments of countries in order to allow companies that are developing products to have a monopoly, a single-desk selling, if you will, of that particular product, so that they can maximize their returns from the marketplace.

    The Canadian Wheat Board works in a very similar fashion. It's designed to help farmers maximize their returns from the marketplace so that we don't have to come back to taxpayers each and every year to try to get tax dollars to put farmers on life support.

    So I just make that analogy to the patent system, which is a legislated system. Monsanto, John Deere, and every other company involved in the business benefit greatly from a legislated marketing instrument like patent protection, and the farmers should not be held up to some sort of double standard and denied use of the same legislated tools.

    Thank you.

The Chair:
    Thank you, Mr. Wells.

    Mr. Rolfe, could we have your presentation, please?

Mr. David Rolfe (President, Keystone Agricultural Producers):
    Good morning.

    It is certainly my pleasure to be before the committee this morning to present Keystone Agricultural Producers' position on the Canadian Wheat Board.

    Keystone Agricultural Producers is Manitoba's largest general farm policy organization. It is our job to represent and promote the interests of our province's farm families. Keystone Agricultural Producers represents approximately 7,000 farmers and farm families across Manitoba. It is from our role as the voice of Manitoba farmers that I am here today. I am pleased to present our position on the Canadian Wheat Board and the issues around a single desk.

    It is not an exaggeration to say that the changes to the Canadian Wheat Board as currently proposed by government will be the beginning of a fundamental change in agriculture in western Canada. I will address some of the issues in a moment, but first let me be clear about this: we cannot underestimate the impacts that a move from single desk will have. Western Canadian farmers must have the opportunity to get the facts on what's at stake and what the implications will be.

    Ultimately it has to be the farmers' right to decide. It is apparent that a plebiscite is absolutely necessary. Point one: legislation requires it--it is in section 47.1 of the Canadian Wheat Board Act.

    Point two: government was not elected in western Canada on a single issue, and it was not just a farm vote.

    Point three: farmers have a direct interest in the Canadian Wheat Board through the director elections.

    Point four: from a business perspective the CWB is run by farmers, and farmers must have the opportunity to decide their future.

    Since GATT was formed in 1984, our policy has been in support of the single desk; however, we have also supported changes made by the CWB to be more responsive to the changing needs of farmers.

    Today our call for a plebiscite has nothing to do with being for or against the single desk; it has everything to do with the farmers' right to make this decision for themselves. It is critical that farmers and government take time to consider the consequences and the implications of any unilateral decision. We need to consider the fate of the issues that follow.

    One issue is farmer empowerment. The Canadian Wheat Board is the only grain marketing structure that returns all proceeds from grain sales directly back to the farmers themselves. No other structure in Canada does that. We have seen the demise of the pools that were farmer-empowerment tools over the last number of years until none of those cooperative pools is left. They are now commercial entities amalgamated with other major and multinational companies, and they are answerable only to their shareholders on Bay Street.

    Certainly there is increased industry concentration. We've seen the number of grain companies reduced significantly over the last number of years, and that has a huge impact not only on who you sell your grain to, but also on who you buy your imports from.

    We have principles of cooperative marketing in place in the Canadian Wheat Board. It can't be either-or; there is no middle ground. In a cooperative system, the majority rules, and we see those examples in the supply-managed industry as well: producers under supply management work together to gain a better price for everyone.

    There are trade implications with loss of the single desk. Certainly we've seen a number of challenges from the U.S. for grain moving across the border to the south; the Wheat Board, every time, has funded the fight on those challenges. If the single desk is lost, the Wheat Board no longer will speak for all farmers in western Canada. One single organization will not be there to take on that responsibility. There will be no agency there to fight those trade challenges, and the trade challenges will be inevitable; there are no two ways about that. We've seen the actions of the U.S. farmers in the past. We've seen the actions of the North Dakota Wheat Commission and others who don't hesitate to put countervail on our attempt to put anti-dumping challenges or trade issues in front of the U.S. government in the trade process.

    A third issue is the effect on transportation. It is certainly not a stretch to imagine that the railways will begin to challenge their obligation to move western Canadian grain at the current freight rates. I expect they would move to try to gain parity with the U.S. freight rates, which are significantly higher than we experience in Canada. That in itself will lead to further chain reactions within our industry.

    Another issue, one we've seen in the past, is service challenges. Who will be there to fight those services challenges, to complain against the railways' lack of service? In the past, the Wheat Board has taken on that challenge on behalf of all western Canadian grain farmers. If the single desk is no longer there and the Wheat Board doesn't speak for everyone, who will take on those challenges against the railways for service complaints?

    The future of short-line railways in western Canada is certainly in doubt if we lose the single desk, as is the future of the producers' opportunity to move grain through the producer car system, which effectively bypasses the handling and elevator charges that most producers experience.

    Also, a direct impact on Manitoba will be whether the use of the port of Churchill will continue at the current rate, or whether it will just disappear off the map, and all those jobs and implications along with it.

    Regarding branding Canada, I don't think there's one other organization in Canada that plays such an important role for western Canadian farmers as the Canadian Wheat Board when it comes to branding Canadian wheat and barley. If we move away from single desk, will this continue, or will the wheat and barley that's sold out of Canada simply become a product of Cargill, Louis Dreyfus, Agricore United, and so on? Will we lose that branding Canada? This will have a significant impact on the international marketplace.

    Will the influence of the Canadian Grain Commission be lost? If the multinationals take over the role and responsibility of making international grain sales, will they need the Canadian Grain Commission? Will they assume responsibility for quality assurance between buyer and seller? Will the Canadian Grain Commission lose influence in its role in disputes between farmers and with the multinationals?

    Who will fund the Canadian International Grains Institute? That's an important tool in research, market development, and relationships with international buyers and customers.

    The Western Grains Research Foundation is a research tool for western Canadian farmers that's funded directly from the final payment system to the Canadian Wheat Board. All western grain farmers who market grain through the Canadian Wheat Board fund that program, and it's invaluable in the amount of research it does for new products and new grain lines in Canada. Who will fund the Western Grains Research Foundation?

    In closing, the move by this government has created a level of uncertainty in the international marketplace, as far as who will be marketing Canadian grain in the future. It has created uncertainty within the farming community at a time when we certainly don't need any more uncertainty than we have. We're already challenged as far as farm incomes and many other issues go. We don't need an added level of uncertainty.

    There is no such thing as a dual market; a dual market does not exist. There is single desk, or there's a completely open market system. There is no in-between.

    Government needs to respect the farmers' right to choose the future of the Canadian Wheat Board. The choice will not be simple. We will have to consider all of the issues I've just mentioned and many others besides.

    Farmers must have the opportunity to make their voices known through a clear and neutral question on the future of the Canadian Wheat Board. It's not only the future of the Canadian Wheat Board; it's the future of the family farm in western Canada.

    Thank you.

The Chair:
    Thank you, Mr. Rolfe.

    That draws the presentations to a close. We'll move to the questioning round.

    We have one bit of housekeeping. We have a security guard posted at that door. He'll keep everybody in until you change your positions. No, that's not true. He's actually here to remind us that the Mexican president-elect is using the hallway outside for some protocol systems.

    The door back there is accessible for us to leave, if need be, until about 12:20 or so. The coat rack has been moved around to that side. Hopefully you'll get a better coat than you wore coming in. So use that door if you have to leave in the meantime.

    Thank you.

    Gentlemen, we're really running behind schedule. Can we limit the round to five minutes, rather than seven? All right.

    Mr. Easter, for five minutes, please.

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

    It's kind of ironic the Mexican president is outside, because if it were the president of Cuba, it would be more democratic than this Prime Minister on this issue.

    Some hon. members: No.

The Chair:
    It's your five minutes--

Hon. Wayne Easter:
    That's right. But it's true.

The Chair:
    —so time's burning.

Hon. Wayne Easter:
    Mr. Van Tassel, my question's really to you. You indicated your disappointment that there's not enough time spent on farm income. And yes, we're disappointed too, but we felt that we had no other choice but to make the Canadian Wheat Board an urgent matter because of the way the government is moving on the Canadian Wheat Board. They seem really intent on taking that marketing institution, which empowers farmers against basically the multinational grain trade, and undercutting that power. And they'll go to any lengths to get their way.

    We've seen the gag orders. We've seen the changed voters list. And first is the Canadian Wheat Board.

    You have single-desk selling in Quebec, as well. If they're willing to take away single-desk selling in western Canada, there's no question in my mind that that's an object for undermining as well, because if the economic powers that be out there want to disadvantage farmers, then this government seems to be on their side and not on the armers' side.

    So my question, really, is on the farm income side, given the WTO and the new reality. And the new reality is that we're not going to get an agreement; all policy is geared towards decoupling farm income, really. What do we really have to do if farmers in Canada are going to survive? In my own view, we have to match the Americans dollar for dollar, whatever we have to do to do it, or our farmers aren't going to survive on this side of the border, and the advantage will go to them.

    We had good presentations from the Canadian Federation of Agriculture in that regard, and I want to thank all witnesses for their presentations today. But start with that question, because at the end of the day, farm income is the bottom line. The Wheat Board helps in maximizing returns back to producers. How does the Government of Canada meet the Americans dollar for dollar?

Mr. William Van Tassel:
    Thank you, Mr. Easter.

    That's why we put out our presentation, because we find that the number one issue, if we want to have viability of the family farm, is farm income.

    What we're asking for in the short term is a companion program with the provincial flexibility to send it back to the grain farmers where it's needed, so it can cost less to do more work. And in the long term, we want to have a program that takes into account the needs of the grains and oilseeds. As I was saying, we need to have a certain flexibility, and like in Quebec, we could work with a certain program. We believe it would cost a lot less to the federal government.

    The way it would work is that of course we would take into account the costs to producers of the United States Farm Bill and also of the European programs.

Hon. Wayne Easter:
    This is really to the other three witnesses.

    David, you outlined quite a number of areas where there's really a lot of potential risk should we lose the Canadian Wheat Board, and you made the point, and this goes to all three of you, that there's no such thing as a dual market. Individuals and government certainly believe that there is. I certainly don't believe that there is. You either have single-desk selling, or you have an open market. It's that simple. But there are some who believe that you could actually take away single-desk selling and that the wheat boards could survive. Do any of the three of you really believe that?

Mr. David Rolfe:

Ms. Wendy Holm:
    Absolutely not.

Mr. Stewart Wells:
    I agree that the answer is no. It's on the official record. If we look back in history to the central selling agency, to the voluntary wheat boards that have gone before, human nature being what it is, people will deliver to the board when they see the price falling, and they will try to go outside the board and sell to some other market when they see the price rising. And under that scenario, it cannot be a viable operation.

    When those agencies failed in the last century, they were spectacular bankruptcies. At the time, they were some of the largest bankruptcies in this country, and farmers and all Canadians came running to provincial and federal governments to clean up the mess.

The Chair:
    Thank you, Mr. Easter.

    Mr. Van Tassel--

Ms. Wendy Holm:
    Can I make just one supplementary comment on that? It's sort of a reverse Wal-Mart scenario. You know, large companies come in, and they drop the price to put out the competitors. We have oligopolies here where companies can determine where they're going to compete and where they aren't. They have a common interest to try to draw product away from the Wheat Board in the short term, and they can raise that price and starve the Wheat Board. That's just what happens with concentrated sectors, and that's the reason economists don't like them.

The Chair:
    Thank you, Ms. Holm.

    Back to my point, Mr. Van Tassel, Mr. Easter's talking about the ultimate control and return of a single desk. If that is so, why do we then have three in Canada? Instead of reinventing the wheel in Quebec, why would you not just join the Canadian Wheat Board?

Mr. William Van Tassel:
    Well, I don't know how the laws of the Wheat Board work; if it's the law for western Canada, but—

The Chair:
    It is the Canadian Wheat Board.

Mr. William Van Tassel:
    Yes, it could very well be, but we looked at the way it was working there and how things work in Quebec. It's a single desk, where it goes all through our.... We don't really buy the grain; our organization sells it, but it belongs to the farmers.

    Why didn't we try to join the Wheat Board? Well, heck, to tell you the truth, maybe Benoit could answer that.

Mr. Benoit Legault (Director General, Fédération de producteurs de cultures commerciales du Québec):
    We haven't thought about it, like—

Mr. William Van Tassel:
    Yes, probably it's more that.

Mr. Benoit Legault:
    We know that it's impossible. The act says that it's only a couple of provinces, but—

The Chair:
    It actually designates any area that can be added.

    Thank you.

    Mr. Bellavance, five minutes, please.


Mr. André Bellavance (Richmond—Arthabaska, BQ):
    Mr. Chairman, Quebec is a distinct society, even in the agricultural sector, but that doesn't mean that it can't work, obviously.

    Mr. Van Tassel, your comparison with the priorities of the government is interesting. One of the priorities or one of the commitments of the Conservative government was to set up a mixed market for Western producers. Another was to replace the farm income stabilization program which has never been effective in your case during the past five years. Whether under the previous government or the new, you've never been able to collect the amounts provided by this program.

    Today, you've come up with concrete solutions. Immediately after my election, people from your organization came to see me. Why do you think this government which claims to be new and to be acting for you is concentrating all its efforts to making changes to the Canadian Wheat Board while forgetting completely your situation?

Mr. William Van Tassel:
    We're here to try to change things and to convince the government that something has to be done to ensure the security of farm incomes. In Quebec, CAIS provides less for grain than supply management provides for milk, for example, even though the need is very high. In fact, for decreasing reference levels applicable to grain, CAIS doesn't work.

    Provincial flexibility which allows to target those sectors with higher need might be much less costly for the government.

    We're here today to tell you about the urgent needs of our grain producers.

Mr. André Bellavance:
    How many members are there in the Fédération des producteurs de cultures commerciales in Quebec?

Mr. William Van Tassel:
    In Quebec, there are 11,000 grain producers. We also work a lot with Ontario where there are about 28,000 producers.

Mr. André Bellavance:
    Do these people have the right to vote?

Mr. William Van Tassel:
    Normally, yes.

Mr. André Bellavance:
    You have used various means to publicize your situation in my region, Trois-Rivières, and in other regions of Quebec. You have started to spill grain in the streets and Jean-Yves has told me that you've also spilled grain in front of some federal buildings.

    After using those rather dramatic pressure tactics, did you get in touch with the government? You're at the end of the rope: farmers are going bankrupt, some have to sell their equipment and land and others can't even buy groceries. Did any member of the new government try to get in touch with you to see how they could help?

Mr. William Van Tassel:
    We've met with Mr. Strahl after our first demonstration. Producers don't want to waste their grain but they're at the end of the rope. It's a way for them to try to call attention to their plight but it also demonstrates their despair. We've met with Mr. Strahl, the Minister of Agriculture and Agrifood. We've explained our position but I don't think anything came of it.

    Benoit may have more to say about this.

Mr. Benoit Legault:
    For the time being, we don't have any information allowing us to believe that a program would be set up specifically for the grain sector. We continue hearing about a general program for all producers, and that's been confirmed in the press. That's what we were told at our last meeting.

    The US Farm Bill is mainly aimed at the grain sector whereas in Canada we want to try and support the incomes of all producers, which is a problem. There's something wrong in this strategy which doesn't seem to change. We have the feeding that nothing moves.

Mr. André Bellavance:
    Has the minister told you directly that he won't do anything for you?

Mr. William Van Tassel:
    No, that's not what he said. At this time, this issue is not on the agenda of the federal and provincial ministers' meeting of November 13 and 14.

Mr. André Bellavance:
    The minister will be here on October 31st. You can be sure that the Bloc Quebecois will more than communicate your message, we will ask very specific questions about this issue.

    Over the past five years, 11,000 producers in Quebec have not had access to income support. How is the morale of your troops? How do your people cope? If you're at the stage now where you're spilling grain in the streets, it means that it's of no value to you anymore.


The Chair:
    Thank you, Mr. Bellavance.

    Short response.


Mr. William Van Tassel:
    We see during our meetings that the morale is very bad. At this time of year, farmers should be getting their crops in. If they take the time to demonstrate in the streets, it shows you that the problem is very serious.

    Farm indebtedness has never been this high and morale has never been this low.


The Chair:
    Thank you, André.

    Monsieur Gourde, five minutes, please.


Mr. Jacques Gourde (Lotbinière—Chutes-de-la-Chaudière, CPC):
    I have many questions and I would like to have brief answers. They are for the panel from Quebec.

    At this time in Quebec, there's a double marketing system: individual and collective. The marketing of wheat for human consumption is collective whereas the marketing of other grains is individual.

    Is that true?

Mr. Benoit Legault:
    Yes. The regulation applies only to wheat. Pooled marketing only applies to wheat.

Mr. Jacques Gourde:
    In other words, farmers can sell all their other grains, whether it be corn, barley or whatever, to any broker in Quebec or anywhere in the world?

Mr. Benoit Legault:
    At this time, the regulation does not apply to those grains.

Mr. Jacques Gourde:
    All right.

    Have the producers chosen this method through a vote during an annual general meeting of the Fédération des producteurs de cultures commerciales du Quebec?

Mr. Benoit Legault:
    Yes. There were consultations during the annual meeting of the Federation, exclusively on wheat, and then there was a referendum separate from the annual general meeting. The referendum was held with all the wheat producers.

    For the time being, producers have only decided for wheat and that's why this file has moved forward. As far as other grains are concerned, the producers do not seem to want to have a collective marketing system.

Mr. Jacques Gourde:
    All right.

    I used to be a grain producer. Do you think that the Fédération des producteurs de cultures commerciales du Quebec gives adequate protection to its farmers?

Mr. Benoit Legault:
    Could you repeat your question?

Mr. Jacques Gourde:
    Do you think that the Fédération des producteurs de cultures commerciales du Quebec gives adequate protection to its farmers?

Mr. William Van Tassel:
    Several hundred producers attend the annual general meetings of the Federation. If they were not well represented, I'm sure they would be very quickly out the door.

Mr. Jacques Gourde:
    As a previous member of the Federation, I may tell that you do provide good representation to your members.

    Do you believe that other grain producers' organizations could do the same thing in the other provinces?

Mr. Benoit Legault:
    The producers of the region have to want to make that decision and to have the regulatory tools to do so. Most of the provinces have passed legislation on the marketing of farm products and can implement marketing regulations. In some cases, they have limited power.

    I know that Ontario has the power to do so and that it has used this power to bring changes to the wheat sector. Other provinces could do the same according to their enabling legislation.

Mr. Jacques Gourde:
    My next question is for all the witnesses.

    Quebec producers have a flexible and effective tool: a mixed marketing system. Couldn't the western provinces have the same tool?

Mr. Benoit Legault:
    Once the majority has decided to take charge of the marketing of its product, the others can't do as they wish anymore. Once the profession has taken a majority decision, there's no flexibility anymore.

    If I can make a link with the Canadian Wheat Board, from what I understand, it's only responsible for the marketing of wheat and barley. The same thing could have been done with other grains but it was decided to limit that to those two commodities.

Mr. Jacques Gourde:
    Is the Quebec system effective at this time?

Mr. Benoit Legault:
    Yes, it's very effective. The bargaining power of our producers has increased significantly. It's never perfect and we have to deal with very powerful buyers that are very concentrated, which means that we must improve our tools. Our producers are convinced that those tools allow them to obtain fair prices both for wheat and for other commodities, such as pork, as well as good terms of sale.

Mr. Jacques Gourde:
    Quebec producers are willing to accept change.


The Chair:
    Mr. Gourde, Mr. Wells wanted in on that response as well.

Mr. Stewart Wells:
    Thank you, Mr. Chair.

    As I understand your question, or your proposition, you're sort of leading down the path of provincially run collective marketing agencies on behalf of the producers, and what you're doing is starting to go down that continuum of more and more and more sellers. Rather than having only one seller, say, in the Wheat Board region, you might have three or four if you include B.C. and Peace River. You'd have one in Manitoba, one in Saskatchewan, a different one in Alberta, a different one in Peace River and B.C. So now you've split the market up so you have four sellers all competing against one another instead of only one.

    I would suggest that probably the creators of the Wheat Board and the original farmers who pushed to have this thought about that and recognized it wouldn't be as good as having one region in western Canada.

The Chair:
    Mr. Gourde, final point.


Mr. Jacques Gourde:
    Since the creation of the Canadian Wheat Board, in the thirties, volumes, needs and markets have changed, as well as Canadian farming.

    Should the Board make changes now in order to improve the incomes of Canadian producers, perhaps in establishing a more appropriate marketing system for the various types of grains?


The Chair:
    You wanted a point of clarification or...?

Mr. Stewart Wells:
    No, I didn't know who the question was to. But if I can respond, I don't actually think the conditions have changed very much. We produce so much grain in western Canada that most of it always has to be exported offshore. That was the case in the early 1900s, in the 1920s. A lot of our production then went to Great Britain, but it still went overseas. We're in the position now where some 80% of that grain still has to be marketed outside the country. That's a very big difference, say, between the Quebec situation and the Ontario situation and the western Canadian situation. We have to export so much of that grain.

    I actually don't think conditions have changed. Farmers are still looking at four or five multinational grain companies that control that business. That has not changed since 1900, since the Wheat Board was invented.

The Chair:
    Thank you, Mr. Gourde.

    Mr. Atamanenko, five minutes, please.

Mr. Alex Atamanenko (British Columbia Southern Interior, NDP):
    Thank you very much for being here.

    One item that we haven't talked about a lot in these hearings is value-added processing. We touched upon it, and the impression I think all of us are left with is that we need to have some flexibility and we need to change our system in order to get better value-added processing.

    I'm going to throw some facts at you and I'd like your comments. I'll try to be as brief as possible.

    It's my understanding that the value-added wheat and barley processing in Canada has grown significantly. Over the past few years, the domestic market has become our number one customer. In 2001-2002, approximately two out of every ten bushels of grain were processed domestically, compared with one in ten a decade ago. Canadian wheat and durum milling has increased 31%. In other words, the capacity has grown from 7,700 tonnes per day to about 10,300 tonnes.

    Milling & Baking News, an internationally respected publication, says that flour production among the leading milling nations since 1990 shows that Canada's mills enjoyed the sharpest increase of any country, including the EU, the U.S., Argentina, and Australia. About 32% of this milling takes place in western Canada, in comparison to 15% in the western U.S.

    Three new mills have been built in western Canada in five years alone. Per capita, wheat processing is greater in Canada than in the U.S. There are new mills being planned and built, one in Chilliwack that apparently has just started operation.

    The picture I'm getting from reading this information is that the value-added industry is flourishing and that the Wheat Board is not hindering the value-added industry. In fact, in comparison with our competitors, we're doing very well.

    I would like some clarification and your opinion on this, if you would, please.

The Chair:
    I believe we'll start with Mr. Rolfe.

Mr. David Rolfe:
    Certainly there has been additional processing growth in western Canada. However, I think one of the limiting factors to the growth has not been the Canadian Wheat Board but lack of an adequate trade deal at WTO for Canada to export the processed products. There are a number of items that we could certainly produce in Canada. However, we've never been able to manage to negotiate a trade deal that will encourage our processing industry to further add value.

Mr. Stewart Wells:
    The information I've seen presented at meetings is that there is more value added in the grain-growing region in western Canada than in the midwestern United States, for instance. Comparatively, value added is doing better there.

    I will mention specific programs that the Wheat Board itself has put in place to encourage adding extra value in Canadian enterprises. I haven't marketed any grain this year, but luckily I did last year, so I may get a ballot in this year's Wheat Board elections.

    My own grain gets a $3 a tonne premium, because it is actually milled in Canada, in Saskatchewan. That is a program the Wheat Board put in place. It is a direct benefit to me, and it encourages value-added.

    As well, if the farmer is truly interested, the Wheat Board has a stock switching program that is unequalled in helping new generation co-ops or other enterprises. What this stock switching program means is that if I am farmer in the Peace River, I can buy a share in a mill in southern Saskatchewan and not actually have to deliver my own grain there. Local grain is purchased and used in that mill, but with the paper transaction, it shows up as if it was my grain going into that mill. This is a tremendous incentive for me to actually purchase a share in that operation, whatever it might happen to be.

Ms. Wendy Holm:
    I would concur with the other two speakers. In the interest of time, I will pass it on to my colleagues from Quebec.

    I would like to say that I've been receiving letters from producers suggesting that they want to see other grains included under the Canadian Wheat Board. For example, the prices of pea crops and canola are very low in comparison to what they feel they could get under a regulated market.

The Chair:
    Is there any response to that at all?

Mr. William Van Tassel:
    Yes. For wheat, certainly in Quebec, we try to have a certain quality for a value-added market. We try to get as much as possible for the farmer.

    Another thing is that we are near the American boundary. I know we are supposed to talk about the Wheat Board, but I am also talking about income. We open an ethanol plant, but the farmer won't get any more for the corn than is the distance from the boundary. The buyer might just as well buy American corn. When you are farther away, then you have the transportation charge to add. When you're next to an American boundary, the farm bill really puts the prices down, even if we do as much value-added as we want.

The Chair:
    Stewart, did you have a final point?

Mr. Stewart Wells:
    Yes, I have a tiny point in response to the last question. The committee might want to invite the Canadian National Millers Association to appear. They're probably already on your list, but they would be good people to talk to on this issue.

The Chair:
    We'll make a note of that. Thank you.

    Thank you, ladies and gentlemen, for your presentations today. I am sorry for the rush. We are condensed on both ends.

    We do have another hour coming right up, so I will have the next presenters come up as quickly as you can.

    We will suspend the meeting at this point, and we will get right back.