Agriculture Committee on Sept. 28th, 2006

[Dr. Conrad Winn]

Do you want me to answer the last question first?

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Yes, because my memory is not as sharp as it used to be.

[Dr. Conrad Winn]

Okay.

On the last question, no, we never said we received feedback; these are the people we invited feedback from. There are other people we received feedback from too, but we didn't put their names in because they spoke as individuals and wouldn't want their opinions to be associated with their organizations. Maybe a quarter of those gave sustained feedback, probably more.

You ask two good questions: to what extent this reflects the population and what the weaknesses are. You may not have had a chance to go through the report, but the report is very process-oriented, because we don't believe you can forecast what the economy is going to look like with any kind of precision. On the issue of trying to figure out how to be reflective of the different stakeholders, one of the constant refrains is that we don't have objective information, we don't have surveys.

One of our many recommendations is that Agriculture Canada itself should be surveying producers. This is very important. The grain companies told us.... They are so competitive that some of their people even told us they almost break the rules to give the producers a good deal. Then some farmers told us that nothing has happened in 85 years and that they are still the robber barons of old.

How do we know? We're in no position to know. So you survey farmers.

A key issue, for example, is how, given the decline in the number of elevators and therefore the increase in the distance to elevators, these changes affect competitive opportunities of individual farmers. We have no objective evidence; all we have is hearsay and those people who choose to show up at meetings or send us e-mails.... There is a lack of information.

We dealt with this in one area, for example: the recommendation having to do with the assistant commissioners, who are political appointees. Their role is unclear, because sometimes they are really just part of patronage heaven and sometimes they're energetic advocates for producers, without always knowing the limits of the law that might govern what they can or can't do for producers.

Some producers say they're essential, but we have no objective information. At some forums, no one has ever heard of them. There are even people at forums who live in the same town as an assistant commissioner but had never heard of the person. In other cases we believe they were very active, energetic, and delightful in what they did. So we said we don't have objective evidence, but move them out.

It's so absurd to have a bureaucratic organization where you have patronage appointees brought in at the middle and essentially in a position of insubordination and with an unclear mandate or mission. But some producers say they're needed, so we recommended on a temporary basis a grain farmer advocacy organization until we find out from regular surveys about the proper mission and what farmers really need. Are the grain companies Mother Theresas in drag, or are they throwbacks to the Dirty Thirties? Again, we don't have objective information and we need it.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Just to follow up on this, isn't the process flawed then? You have commissioners who are there to represent the farmer. You're not sure whether they do or not, depending on what you've heard. You're recommending that we throw them out and we have an office of advocacy, which is reviewed in three years.

Is not the potential there that in three years there will be nobody to advocate on behalf of the producers?

[Dr. Conrad Winn]

There are umpteen potentials, but right now we have good reason to believe the assistant commissioner role is ineffective and improper.

[Tom Halpenny]

Conrad, let met add, just to be very clear on the distinction between the commissioners, who are the executive head of the organization, that there are three of them, one identified as the chief commissioner, one as the assistant chief, and one who is called an ordinary commissioner. The assistant commissioners we're talking about are people who are appointed by order in council and who work in eight different regions across the country. They'll have a prescribed region and they work in those areas.

Those are the positions we're talking about when we talk about this change to the office of grain farmer advocacy.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

But I just heard you say there wasn't any objective way of evaluating whether they're really doing their job, and at the same time you're saying you've come to the conclusion that they're not effective. I don't quite understand that.

[Dr. Conrad Winn]

There is no objective way of knowing the demand for the various missions they fulfill. There are pretty good anecdotal and other ways of assessing to what extent they're doing their job well, and there's a very mixed review, with some existing commissioners doing outstanding work historically and others being part of patronage heaven.

But even the outstanding work is a problem. Even if they were all outstanding, we have a problem, and that is the very strange situation where they're below but don't report to the senior people. That is so absurd.

[Tom Halpenny]

And they're politically appointed. Again, there was no job description we could actually compare to what the expectations were. It was very broad and very general. Essentially, they're political appointees.

We felt very strongly that without having benchmarks, check marks, accountability to the organization.... There were some examples we were presented with where it generated some dysfunction and undermined the overall credibility of the organization. Many individuals did an admirable job and generated benefits to producers. We acknowledged that, and we recognized that it should be preserved for the future. That's where we said make the mandate very clear and put it into a new organization called the office of grain farmer advocacy. That is the primary benefit provided by that role, as we understood it from stakeholders.

[Dr. Conrad Winn]

If you look at two principles we can all accept, accountability and transparency, the assistant commissioner role does not meet either of those. There's no transparency because there's no clear mission, and they're not at the top. There's no accountability. Who are they accountable to? How can the chief commissioner be accountable to anyone for people who are not accountable to her?

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Atamanenko.

Mr. Easter, second round, for five minutes, please.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you.

You mention in your report about the balancing of conflicting interests. I think the key to the Canadian Grain Commission is the mandate and governance structures--the mandate itself and in whose interest it operates. The rest are technicalities that can be amended one way or the other. But fundamental to the CGC is its mandate.

I went through your recommendations. With respect to the issue of mandate, how would you interpret that the mandate would change? What are the implications of the mandate you have proposed? The emphasis has always been on protecting producers. From a number of standpoints, in my personal point of view, there has never been greater need than at the present time for protection of producers. Could you respond to that? I think that's key. Would you just interpret the implications of your recommendations on mandate for primary producers?

[Dr. Conrad Winn]

Well, there's the theoretical position and then there's the practical position. Theoretically, everything the commission heretofore has had to do should have been to prioritize producers. In practice, that hasn't been so, and it couldn't be so. It couldn't be so--and I don't think one needs to be a lawyer to know this--because it might never stand up in court. How could one have any regulatory agency prioritize some stakeholders over others?

It's also impossible because you have producer conflicts. Look at biofuels and look at ethanol. Some of the biggest conflicts are not between producers and grain companies; they're between some kinds of producers and other kinds of producers. These are really the conflicts of the future.

Finally, to the extent that you think it's very important to protect producers--and Tom has taught me that Mr. Easter's concern to protect producers is a very valid one--the more focused you make it, the more real it is.

[Tom Halpenny]

Before your next question, I would add that one of the other things we were striving to do was to improve the overall credibility and perception of the organization while maintaining the key fundamental protections for producers. A very easy criticism from non-producer stakeholders about decisions the Grain Commission has made is that it was acting in a biased way in favour of producers and that it was unfair. In some respects they may have had some justification for that, but it may also have been an unfair decision.

With respect to the implications you asked about, in practice I think the Grain Commission has effectively been doing what our mandate prescribes, which is to be fair and judicious with all stakeholders with regard to the standards for quality of Canadian grain and regulating the grain-handling industry. However, to be prioritizing and biasing producers in certain areas, for example, the protections we outlined in the second part of the mandate, where those protections are the main focus of decisions.... So by distinguishing that, it allows the Grain Commission to operate in a fashion to diminish that very easy criticism, in my view, and yet still preserve the protection for producers provided by the act.

[Dr. Conrad Winn]

I can add that it's not a question of reducing the ability of the Grain Commission to exercise influence over one or another category of stakeholders; it's about changing the way they do things. In some ironic ways the commission, under our proposals, would have a lot more power over grain companies, to the extent that you may be concerned about that, because we recommend that they have financial power that they don't have.

Right now all they can do is take a grain company's licence away, and there has been a case of one grain company that, without any consequence, did not fulfill its obligations for reporting information.

[Wayne Easter, Liberal, Malpeque, PE]

There is no argument from me there, on needing more power to control grain companies. Acting in a biased way in favour of producers would be a wonderful change. It wouldn't bother me a bit.

I have two quick points.

The whole object here, and I think most of us around this table would agree, is that we do need the opportunity to get into other crops, whether it's for ethanol or biodiesel. But what is extremely important is that we not jeopardize the quality of our grains. We're world-renowned, and we cannot undermine that in any fashion.

Do you have any ideas on how we can find that balance, in terms of maintaining the quality while opening up those other opportunities? We will be calling some other witnesses in that area.

On the whole issue of budget, the Canadian Grain Commission has been coming back to the government always short of budget. You're proposing some contracting out. How do you see saving money by contracting out? Any time I've seen us contract out, we've lost control, and it has cost money at the end of the day.

I just don't see it as a cost saving, and there is absolutely no way, when we come up with final proposals here, that we can impose additional costs on producers. We should be taking costs off, even if it means the taxpayers of Canada have to pay for it, because this is about quality control; it's about opening up opportunities; it's about bringing foreign dollars back to Canada.

Please comment on the budgeting issue and the contracting out.

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Easter.

Gentlemen?

[Dr. Conrad Winn]

We didn't, for a second, anywhere in that report say that money would be saved by contracting out. We said that service would improve by contracting out because it would give the Grain Commission the power and flexibility it does not now have to lower the costs throughout the value chain. To the extent that needless costs are passed on to shipping companies or grain companies or any other part of the value chain, these are ultimately absorbed by producers, so all we did was argue for more flexibility.

[The Chair, Conservative, Gerry Ritz]

James, you have five minutes.

[James Bezan, Conservative, Selkirk—Interlake, MB]

Thank you, Mr. Chair.

I want to thank the two of you and your company for doing this study. I think it's great that we can all put together this group of recommendations, and it's a great dialogue and debate in the country over the future of the Grain Commission.

One of the things I was concerned about and that you addressed in your report is the whole system. We've already been talking about it, and Wayne was talking about making sure farmers, rather than just grain companies, have a fair bias. Part of that, in my opinion, is the whole grading system--the KVD, the way the research is done, crops possibly even inhibited in this country because of CGC regulations.

When you start looking at things, what's making a little more money on the farm these days versus just growing grains and exporting them is the value added--it's the ethanol, the biofuels, the farm feeding that's happening out there. I really want to know if you think there's a way forward here so that we can have the flexibility in the system. You've mentioned we've got competing groups fighting and that this animosity is increasing. Can we fix that through the regulations of the CGC and its mandate so that it can actually address this whole problem of bringing in place more varieties, quicker approval of varieties--meeting the needs of all segments of the industry so that all farmers can be in a win-win situation?

[Dr. Conrad Winn]

That's exactly it: so that they can all be in a win-win situation.

I'll ask Tom to speak in a moment, but we already see evidence of this in terms of a new class. Our general approach is to say that we can't give you the answer in terms of the end product, but we can tell you the best process. It's similar to saying that we can't tell you which party or politician to vote for, but we can tell you that countries with democratic elections and elected legislators have people who are much happier and much richer than those without.

By that logic, we say we can't tell you exactly how to change your grading and classification and other systems, but we can tell you that in this kind of situation, you need a lot more consultation, a lot more round tables, and a lot more transparency.

[Tom Halpenny]

To follow on that, essentially on the question about KVD, to be very clear, the key grading issues relate to wheat and to KVD. The other concerns and comments that we heard would be a drop in the bucket compared to those particular issues. That's really where some of the malcontent rests, with regard to that and the pressures that you very well identified between competing interests.

That said, it's also generally accepted or acknowledged that we can't compromise the quality that is in place and is perceived by our customers in the very effective segregation that's provided by KVD for those core classes, being Canada western red spring wheat and Canada western amber durum. The process that I think the Grain Commission went through to get there in terms of this recommendation for a new class involved very extensive consultations, according to what we were presented with, so that's what's going to be required as an industry-based approach to move to the next step.

To be very clear, there may be technological changes that help us accelerate in this balance between innovation, which is really what we're talking about, how you foster innovation while preserving and protecting the reputation we have with our existing system, the existing varieties, and the process for registering them.

On the DNA testing, any form of rapid or effective testing, the work is being done now to try to discover that. If there's a breakthrough and it's rapid and cost-effective, this might change very, very quickly.

As to methods to identity-preserve products, the protocols are in place. In fact, Canada, in my view, does a better job than probably anyone else in the world in being able to balance these two things currently. Over one million tonnes per year are sold by the Canadian Wheat Board through identity-preserved or variety-specific programs. The whole designated barley process ensures varietal purity of well up to 95% to 99%.

[The Chair, Conservative, Gerry Ritz]

You have 30 seconds.

[James Bezan, Conservative, Selkirk—Interlake, MB]

Okay.

A different sideline altogether is the whole study you guys did in the area of dispute resolution. There is a real concern out there that there is a perceived bias when the mediator is also the grader and inspector. I want to find out your thoughts on that, how we fix it to remove the real or perceived bias that exists in current dispute resolution.

[Dr. Conrad Winn]

I think there are two issues. I'll ask Tom to talk about the dispute resolution proposal.

The other issue is accountability. We specifically say there ought to be no laws that protect the Grain Commission from legal action. Regulatory agencies and government shouldn't have any special protection compared to business, non-profits, or charities. In a democratic society, everyone should be accountable under the law on an equal basis.

There have been some newspaper reports that misunderstood our recommendation on compensation in the two bankruptcy cases. We did not say that the Grain Commission has to compensate. We don't say that. In fact, if all the stakeholders agree that it's better not to have any kind of insurance or licensing or accountability or compensation system, that's for them to decide. We said, in this particular case, that the communication of the Grain Commission, in our judgment, could be reasonably interpreted as a commitment to compensate. For that reason, we recommended in this case that there be compensation.

Do you want to talk about dispute resolution?