Agriculture Committee on Oct. 3rd, 2006

[The Chair, Conservative, Gerry Ritz]

Thank you, Alex.

Are there any last points the panel wants to make in closing?

David.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

I have an observation, first of all, on KVD. I'm glad to see both of you come today and say that this is an important issue. I think APAS, in their presentation, said that there has been a cost to KVD. They'd like to see us move to some other system as soon as possible, and I'm glad to hear that because I think we need to make some changes, and this needs to be a focus of the committee's work on this CGC report.

I was concerned that the report and the recommendations on that really didn't touch at all on the issue. It talked for a couple of pages in the report about it, but it did not focus on it. To my mind, it's one of the primary issues in this review in western Canada--what we do with varietal designation and how we determine them--because it's going to set, to a huge extent, the direction of our industry and the success of it in the future.

So I want to thank you for being willing to focus on that today.

Mr. Reid talked about the fact that they'd be willing to go to more of an affidavit-type system with some certification. You've talked about penalties or disincentives. How much of a priority does your organization see this issue as, and would you be willing to move in that direction in terms of...? You said we need changes; it's costing us some money. What do you see as the solution, other than just that idea of penalties for introducing incorrect varieties?

[Ken McBride]

I guess it would be nice to always come up with the perfect solution.

I think I've said a number of times that I like to grow high-quality wheat. I believe there's value in doing that, and there's value in promoting high-quality wheat to a consumer somewhere and ensuring the consumer knows that. I still believe the customer is always right and the customer should get what the customer believes he or she is getting. We need to ensure that this does in fact happen.

I also said that for our industry, especially in western Canada where, as I said, freight is high and the biofuel industry is coming, there are tremendous opportunities in our neck of the woods that need to take place. They need to take place based on varieties that are built, designed, and researched for that industry. We need to ensure the integrity of one system versus the other. If it's affidavits or penalties for misrepresentation, there are a variety of solutions out there that can make it possible. Whatever it is, we need to move ahead.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

My concern is that we're losing customers. It's not only the fact that Ontario has a jump on us. A lot of the varieties have been developed in Saskatoon and the research station in Swift Current, have gone onto the shelf, and then been finished off in the United States. It is affecting our ability to market, as well.

I'd like to take whatever time I have left and talk to you a little bit about inward weighing again.

When I deliver my grain—and you know this, but maybe some of the others don't know this—we go to the elevator and agree on the grade. I have the option that if I want a review, I can do that or whatever. I don't think the report is suggesting that should change at all.

But for the most part, what happens is that the grain companies in the terminals use inward weighing when they're loading into the cars. They use the CGC to make sure they can blend to the standards of the grade and cut it as closely as possible to what they're grading. It happens again when they're loading the ships. Isn't there some duplication here?

The protection for the farmer is in place. When we deliver the grain, we take the grade. If we don't like it, we have the option of appealing that. But once it's in the elevator and in the grain handling system, what is the advantage of inward weighing that isn't available at outward weighing?

[Ken McBride]

I guess part of it is that there are producer car shippers and certain other players in the industry that need inward weighing and inspection, whether you call it a duplication or not. There's an opportunity there because of a change in standards between inward and outward.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Doesn't this address that? It says it's optional, so it would be available to the producer loading facilities or whatever. If I load a producer car, it is checked at the port anyhow. It's done individually now, and it's not inward inspected unless I appeal the grade.

What is the advantage of making inward weighing mandatory versus the suggestion that it be optional so it's open to those producer facilities? The appeal is still open to me as a producer. What is the advantage of having mandatory inward weighing over the suggestion that it be optional?

[Ken McBride]

I'm going to defer to Marvin.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

I'm only interested in this because I understand your position, but I don't see the advantage of duplicating. We're also talking about costs here and the benefits to producers.

[Marvin Shauf]

Presently there is a process where it's inward weighed and inspected and it's outward weighed and inspected. Terminal gains are then shared back with producers through the Canadian Wheat Board on Canadian Wheat Board grains.

I think the issue on inward weighing and inspection is to ensure transaction integrity as grain moves through the system. I think what you're talking about—and some grain companies are doing it—is where shipping out of country, they use CGC to blend to the bottom of the grade, which is again inspected inward at terminal. There is absolutely a duplication there. It's what was referred to in the report as a company benefit, the cost of which should not be picked up by producers.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

But the inward weighing is done on delivery. I have a weight and everybody who delivers to the grain company has a weight. They are audited, as well.

[Marvin Shauf]

That's correct.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

I'm trying to understand why we would make that extra service mandatory.

[Marvin Shauf]

The issue becomes one that inward weighing and inspection for intra-company transactions are not a huge deal. For inter-company, because not all companies have their own export facilities, when a terminal is taking grain in from another company, it's very easy to be able to push down the value of that. This effectively will lead back through the system and disadvantage producers, because the companies in the country will have to enlarge their margin for risk relative to what they're going to be inspected inward. It will only be the company's integrity as they're receiving the shipment at that point; it won't be a CGC or a third party unbiased reception that it gets coming into the export terminal.

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Anderson.

Mr. Easter, two quick minutes.

[Wayne Easter, Liberal, Malpeque, PE]

I don't really have a question for the witnesses, Mr. Chair, but as a committee it would be absolutely wonderful if we could do a tour of a grain elevator and see Canadian Grain Commission personnel do the grading and verification. I know James and David have seen them, as I have. If we don't have time, in the absence of that, the Canadian Grain Commission or somebody must have available footage of how that's done. I think it would give people a very good perspective on the importance of the Canadian Grain Commission in terms of how it's actually technically done and what it means.

In P.E.I. we have both systems, although not in grain. We have a system in which potatoes are graded according to Canada grades, and we also have in the processing plants a plant grade. The difficulty in the plant grades is that if the plant says you're docked 20%, then you're docked 20%--you have no recourse--whereas under the Canada grades you have the recourse of an independent verification system that's going to protect the interests of producers. It's extremely critical for us, I think, as a committee to understand the technicalities of that and what it means for producers at the end of the day.

Could you can take that under advisement?

[The Chair, Conservative, Gerry Ritz]

Okay.

David.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

In response to that, I would of course like to invite any members of the committee to come out to the area where the best grain in the world is grown, in my riding of Cypress Hills—Grasslands. We'd be glad to show them around and let them see an elevator operate.

[The Chair, Conservative, Gerry Ritz]

It's a little north of that.

[Wayne Easter, Liberal, Malpeque, PE]

And marketed by the best agency, the Canadian Wheat Board, I might admit, Mr. Chair.

[The Chair, Conservative, Gerry Ritz]

Point and counterpoint. All right, let's move on.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

Mr. Chair, I would like to say that if you want to see the whole package--a grain terminal, grain inspection, and all of these things--then you're welcome to come to Thunder Bay. It's only a short hop--

[The Chair, Conservative, Gerry Ritz]

At port, not inward. We can only do port at Thunder Bay, unfortunately.

Gentlemen, are there any closing remarks?

It's been a great discussion. Thank you so much for your presentations here today. You can be assured all of this will go into the report that we will be tabling in due course.

The meeting will move on now to a bit of housekeeping that we have to do. Thank you so much. You're free to go, if you care to.

The Canadian Cattlemen's Association is putting on a luncheon in the East Block courtyard. I'm sure the invitation would extend to the folks who prepare the feed that goes into a lot of those cattle. I understand it starts at 11:30, and we have an invitation for all of the members of the committee to attend as well. That's out of the road.

Next on the agenda, there is no meeting tomorrow, as was originally scheduled. We were shuffling around to make up the two extra CGC meetings. That meeting is postponed at this point. There is a report coming down on the nematode on Friday that would be more helpful to have prior to the meeting rather than after the meeting. So that's what's happening.

There has also been some discussion with the dairy producers on the MPC situation. They're asking us to hold off a little bit, to give them some time to finish the negotiations. Mr. Bellavance is up to speed on that issue, as is Mr. Gourde. They've also made presentations to me. That takes care of that issue.

Is everybody okay with that? No meeting tomorrow. Do we need a motion to that effect? Does everybody agree that the meeting is postponed tomorrow? On a show of hands, it's concurred. Thank you.

Next on the agenda, we had a motion from Mr. Easter to call Ms. Charlton before the committee. We have a response from her. It hasn't been circulated. She is wondering why she's being called, of course. But having said that, her schedule is such that her earliest opportunity to meet with us is November 13. Apparently her husband is away on business, and kids and so on, throughout October, which it makes it problematic. I'm just using that date; she is available after that point.

Jean-François will have her e-mail to us translated and sent around. But that's the first response we've had back from her. It's an ongoing discussion.

[Wayne Easter, Liberal, Malpeque, PE]

I expect she knows that if we so decide we can subpoena her.

[The Chair, Conservative, Gerry Ritz]

Yes.

[Wayne Easter, Liberal, Malpeque, PE]

But we want to be as cooperative as we can with her in November.

When is the task force report? The task force is not really meeting with anybody; do we know when it's reporting?