Agriculture Committee on Oct. 25th, 2006

[The Chair, Conservative, Gerry Ritz]

I call this meeting to order.

Ladies and gentlemen, with us today to continue our debate on the future of the Canadian Wheat Board, we have the Honourable Doug Horner from Alberta, the Honourable Rosann Wowchuk from Manitoba, and the Honourable Mark Wartman from Saskatchewan.

Welcome, ladies and gentlemen. It's a pleasure to have you with us today.

As you can see, we're also treated to a TV camera in the room, which doesn't happen that often other than in the designated areas but it is allowed under the Standing Orders.

I will be banging the gavel for decorum if we do tend to fade away. I know what it does in question period when we have cameras running, so take that as a warning, gentlemen and ladies, that I will be very strict in maintaining decorum during this discussion today.

Having said that, we will start off. I'll have Mr. Wartman go first.

[Mark Wartman, Minister of Agriculture and Food, Government of Saskatchewan]

Thank you very much, Mr. Ritz.

Good afternoon to everyone on the committee and those who are attending. I thank you for this opportunity to appear before the committee on an issue that is so vital to western Canadian farmers.

I want to begin this afternoon by stating the Government of Saskatchewan's position on the Canadian Wheat Board. We believe that the loss of the single desk and the supposed implementation of a voluntary marketing system would result in serious financial loss for western Canadian grain producers. We also believe it would effectively eliminate the Canadian Wheat Board as a major Canadian marketer in the international marketplace and reduce the overall competitiveness of the western Canadian grain industry from a producer perspective.

The current debate related to the CWB has been framed by this federal Conservative government as an issue of choice. According to the federal government, they are bound by their electoral commitment to enable farmers to participate voluntarily in the CWB. They continue to voice this position even though farmers who voted for the Conservative government did so for a host of reasons, and many have indicated they did not vote to have the Wheat Board dissolved or changed in this manner. In fact, most Conservative MPs in Saskatchewan had a very low profile on this issue during the last election campaign.

I too would like to talk about choice, but unlike the federal government, my vision of choice sees western farmers choosing for themselves the best way to market their wheat, durum, and barley, options that include the right to market collectively by retaining the board's single-desk authority--a right that, by the way, is enshrined in the CWB Act.

But first, for any informed choice you need access to information, information that the federal government has been slow or outright reluctant to provide. This afternoon I would like to pose a number of questions. These are questions that I would encourage producers and this committee to consider as they engage in the debate over the future of the CWB.

Question one, does the CWB achieve premiums in the marketplace by effectively branding and marketing western Canadian wheat, durum, and barley? Saskatchewan believes the evidence shows the CWB does. So do a number of prominent academics whose independent studies have confirmed that the CWB is able to achieve premiums for producers through branding. In essence, the CWB gives western farmers market power.

The federal government has been encouraging farmers to move up the value chain and to focus more on products and less on commodities. Given the emphasis that the federal government has placed on the value of branding Canadian agriculture products, it is totally inconsistent that they would now be attempting to eliminate the CWB, an entity that has proven itself to be effective in achieving premiums for producers through branding.

To my second question, can the CWB remain in place as an effective marketer without any infrastructure if it has to compete with private grain companies to market western Canadian wheat, durum, and barley? Saskatchewan believes it cannot. An agency without ownership of infrastructure such as grain-handling facilities would be dependent on, and at the mercy of, current grain handler companies, companies that would become their competitors. Realistically, what incentive would these competitors have to do business with the CWB? Yet without the cooperation of its competitors, the CWB cannot function, as it has almost no resources to establish a physical presence both on the Prairies and at a port position. Given that the Canadian Wheat Board currently has no physical assets of any consequence, how could it expect to acquire them and expect to acquire the necessary capital base to truly be a player in this large industry?

“The Canadian Wheat Board Transition Project”, the study prepared for Alberta Agriculture, Food and Rural Development by JRG Consulting Group and released in June 2006, essentially states that the CWB would not be effective in a dual-market environment. That's on page 24 of their report.

My third question asks why the current government is so opposed to the CWB. Is their position simply based on a philosophical or ideological position, or is their position based on objective information showing that farmers would be better off without a CWB? The information that I am aware of from independent academic studies clearly demonstrates that CWB provides value to western producers. For example, estimates of the single-desk premium obtained for western Canadian milling wheat ranged between $10.49 per tonne--the Gray study of 2001--to $13.35 per tonne, from Kraft, Furtan, and Tyrchniewicz in 1996.

Where is the objective and unbiased information from the federal government to support their position that the CWB disadvantages western producers? Why doesn't the federal government share this information, if it has it, with producers, so that they can make up their own minds?

If there is no objective information and if the federal position is primarily based on ideology, I must ask--where will this federal government stop in carrying out its philosophic mandate? If the CWB is currently being targeted, can it be long before this government takes a similar approach with supply-managed industries?

Question four, should the federal government be able to circumvent the Canadian Wheat Board Act, which calls for a producer plebiscite on major changes to the board's fundamental powers? The CWB Act must be respected both in spirit and in law. Why are western wheat, durum, and barley growers being denied a say in accordance with the act in how the CWB is operated? Why is the federal government so reluctant to go to a vote with a clear, honest, and honourable question? Is it because they know that the majority of western producers favour the CWB?

The federal government has continued to use questionable tactics in how it deals with the CWB. This fall the federal government appointed a so-called marketing choice producer to the CWB board of directors. This is a clear break with tradition, as producers have always run for one of the 10 elected board positions that are specifically set aside for producers. The five appointed seats are to be filled by non-producers, who bring specific skills--valuable skills--to the CWB board.

This is a clear attempt by the federal government, albeit by the back door, to shift the balance at the board table. This is both undemocratic and inappropriate, but it shows the lengths the federal government is willing to go to in undermining the CWB. We've seen it on other fronts, including interfering with an election in the middle of the electoral process and the placing of the gag order on the CWB by the federal government. It flies in the face of the need for informed debate.

If the CWB ceased to exist, who would speak for western farmers on grain handling and transportation issues? According to the CWB, the board's involvement in grain delivery, handling, and transportation saves producers over $150 million annually. Who would capture these benefits in a multi-seller environment? Would it still be the producers--or more likely, would it be the grain companies or the railroads?

Question six, who stands to gain the most from the elimination of the CWB single desk? The U.S. has launched 11 separate trade challenges against the CWB in an attempt to get rid of the CWB's monopoly. Each time they have failed. The very fact that the U.S. is so desperate to get rid of the CWB should tell us something. It should tell us that the CWB is able to achieve real benefits for Canadian producers.

Question seven, what will be the impact of the loss of the CWB on producer inland terminals, short-line railways, and producer cars?

The presence of the CWB in the western grain-handling and transportation system provides a level playing field for the smaller producer-owned interests in the industry. Producer-owned, non-aligned inland terminals are able to ship for export because of policies established by the CWB. Without the CWB, many of these terminals would become uncompetitive. Because they do not have port terminal space, they would lose their independence to the integrated grain handlers or they would be squeezed out of business.

It is no coincidence that over 95% of the producer cars shipped contain Wheat Board grains. The committee may wish to ask why it is either too difficult or of questionable value to ship non-board grains by producer car. Producer investments in short-line railways and inland terminals have helped to bolster producer returns, and I want to point out that it is not just producer investment--communities have invested in producer car loading facilities, and communities have invested in independent inland terminals. They stand to suffer significant loss.

What will the removal of the CWB do to the viability of these producer and rural community initiatives? It is Saskatchewan's position that we need a good solid single-desk Canadian Wheat Board because it is an effective marketer of grain. It gives our producers power in the global marketplace and within our domestic grain-handling and transportation system, and it maximizes the return to producers--not to shareholders of a company but to primary producers.

However, it is also our Saskatchewan position that it should be farmers who decide the future of the CWB, not the current federal government. I ask you, the Standing Committee on Agriculture and Agri-Food, to respect the wishes of the farmers, to respect the legislation that governs the Canadian Wheat Board--not to try to go around it, but to call for a producer vote on the future of this agency, and to call for that with a clear, honest, and honourable plebiscite question. Let farmers decide what's best for them.

This concludes my comments. I thank you very much for granting me the opportunity to come and speak on behalf of the people of Saskatchewan today.

Thank you.

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Wartman.

We'll now move to Ms. Wowchuk for 10 minutes, please.

[Rosann Wowchuk, Minister of of Agriculture, Food and Rural Initiatives, Government of Manitoba]

Good afternoon, and thank you very much for giving me this opportunity to speak on behalf of the producers of Manitoba, and to tell you why the Manitoba government is absolutely opposed to the elimination of the Canadian Wheat Board single-desk selling mandate by the federal government.

The Canadian Wheat Board is a western Canadian institute that has preserved prairie farmers well for the past 70 years and provides a number of important advantages for our producers. Studies show us that the Wheat Board extracts premiums from the marketplace from wheat sales ranging from about $10 to $13 per tonne. In Manitoba alone, this means about $36 million added into the farm economy every year. Across western Canada, these premiums can exceed $300 million a year.

Without the Wheat Board's single-desk selling, these premiums would disappear from farmers' pockets, and that is an important fact to remember. For me this is the single greatest reason why we must fight to keep the Wheat Board's single desk. If it is lost, the effects will be dramatic on the farm economy and farm income returns, and it could be devastating for rural communities.

Without the Canadian Wheat Board, farmers will also lose their most powerful advocate with the transportation and grain-handling industries. I want to remind the committee members that it was the Canadian Wheat Board that stood up for the farmers in the level of service complaint against the major railways. It's the Wheat Board that stood up for farmers in trade actions. Without the Wheat Board, who will stand up for farmers in this way?

Without the Canadian Wheat Board, farmers would be selling to grain companies, which have a much different mandate than the Canadian Wheat Board. Their mandate is to maximize profits for their shareholders. The Canadian Wheat Board mandate is to maximize selling prices for the benefit of farmers. Without the Canadian Wheat Board's single desk, Canadian wheat would lose its single recognizable brand, known and respected worldwide as a consistent quality product. In fact we have recently heard from an international buyer that the Canadian Wheat Board's consistent quality and delivery is irreplaceable and that without the Canadian Wheat Board they may look elsewhere to purchase their wheat.

There are those who say that the Wheat Board can still exist without the farmer monopoly, and I say that this is irresponsible and misleading. Without the single desk for wheat and barley, there will be no Canadian Wheat Board, just as without single-desk selling of milk or poultry there will be no supply management, and people should think about what the next step is. If you're taking one single-desk selling away, where is the next move of this government that could affect many producers?

The Canadian Wheat Board uses the elevators in the terminals and the infrastructure of its grain handlers, which are the grain companies. If these suppliers become the competitors, it is highly unlikely that the Wheat Board, without its own infrastructure, would be able to compete.

It is important to note that there will be far-reaching repercussions to the loss of the Canadian Wheat Board, and not just to farmers. The effects will be felt by small grain companies and short-line railways and rural companies. In the communities, farmers will have far less spending power.

In Manitoba, the Port of Churchill will suffer the loss of its number one and, in some years, only customer. The Canadian Wheat Board ships through Churchill because it is cost-effective and provides more dollars for our farmers. In fact it's $10 to $20 of savings for farmers who ship through the Port of Churchill. The Wheat Board does not own facilities in other ports, as the grain companies do, allowing it to ship grain where it is most effective to do so. In many cases, for some farmers it is the Port of Churchill.

The Canadian Wheat Board focuses on what is the best deal for farmers and their customers. At a time when many rural communities are struggling for their existence, the Manitoba government will not endorse a policy that will have substantial negative impacts on our producers and could lead to the demise of a major community in the north. As well, we have to consider the serious, devastating effects this could have on the city of Winnipeg.

For those who are calling for more choice, I point out that through its board of directors the CWB has taken major steps to provide greater choice. The CWB has developed a variety of delivery and payment options; thousands of producers have committed more than 20% of their cereal crops through these marketing options, and these numbers are increasing each year.

I also want to address the notion that we will receive better access to the U.S. market without a farmer monopoly. Canada has endured U.S. trade action on hogs, on cattle, and on softwood lumber. If farmers start selling wheat and barley directly into the U.S., we know it won't be long before there is another trade action launched against us.

The federal government has been moving forward very quickly on the dismantling of the single desk. They held a round table consultation meeting in Saskatoon this summer; there, they consulted only with a small group of people who agreed with them. They created a task force with no representation from supporters of the single desk. The task force mandate is to look at how--not if, but how--to move towards an open market system.

I say to you that the federal government has also interfered with the Wheat Board directors' election by changing the voters list during the election process. They will tell us it is because of a committee recommendation that came in 2005. If it came in 2005, they did not have to make a decision during the election period and create confusion and give people a very complex way to go and get a ballot.

As they push forward, they are forgetting something very important--that the Wheat Board belongs to western Canadian farmers. It is up to the western Canadian farmers to decide if the single desk should be eliminated, not the federal government. It is written in the Canadian Wheat Board Act that farmers themselves should make the decision, and it is the democratic way in Canada. There must be a vote for the wheat and barley producers to make the decision.

I can tell you that Manitoba is calling for a farmer plebiscite on the future of the Canadian Wheat Board, and we are asking you as a committee to help us get that plebiscite for producers. I also want you to know that yesterday I announced that if the federal government is not going to facilitate a vote, then the Manitoba government will facilitate a vote for our producers, because we believe it's very important that they have a say. We are prepared to hold our vote because this is what the producers are asking for. Across the country producers are saying, no matter what the decision, they want to have the say on how the decision should be made.

This is a very important turning point in western Canada. Some may not think this is extremely serious, but I think we have to look back at history and look at what happened to the Crow benefit and what the impacts of the loss of the Crow were on the western Canadian producer. Once that benefit was gone, despite the fact that producers did not benefit, there was no way you could bring it back.

I say to you that the Manitoba government will stand firmly with our farmers and do all we can to ensure that their voices are not silenced. We will fight to preserve this important western Canadian institute, which has many benefits, but ultimately it is the voice of the producers that must be heard.

I just want to add that there is a perception that farmers are forced to sell their product to the monopoly, but you have to realize--and I think you do--that it is the farmers themselves who are the monopoly. This monopoly, the Canadian Wheat Board, and farmers are one and the same. If you remove that monopoly from farmers, you remove the Wheat Board as we currently know it today.

Mr. Chair, with those comments, I want to thank you for the opportunity to share the thoughts of Manitobans. I urge you to act on behalf of western Canadian producers and give them the opportunity to have a vote and make a decision, as the legislation says they should be able to.

Thank you very much.

[The Chair, Conservative, Gerry Ritz]

Thank you, Ms. Wowchuk.

We'll now move to Mr. Horner and his presentation.

[Doug Horner, Minister of Agriculture, Food and Rural Development, Government of Alberta]

Thank you, Mr. Chairman. It is very good to be here today in Ottawa.

I would like to start my comments by getting a bit of a feeling for the audience I'm speaking to. I would ask all members of Parliament who are not members of the Conservative Party but are representative of a constituency in the designated area to please raise their hands.

Okay, so there are none. I think the record should show that.

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Chairman, people are elected to represent their ridings, yes, and to govern for the country. When you make decisions in the Alberta legislature, because somebody does not live in the area where the decision is being implemented, does this mean that person doesn't have a say or a vote?

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Easter.

[Doug Horner]

If that law was applied throughout the province.... Just to answer the question, Mr. Chairman, it's a valid question, and in the case of the example that was given by—

[The Chair, Conservative, Gerry Ritz]

Could we save the questions until the end of the presentation, and then certainly they'll be fulsome and—

[Doug Horner]

Certainly, but I think it's important to note that the law in Alberta applies to all Albertans, while the Canadian Wheat Board only applies to a certain portion of a designated area.

Thank you for including me in the proceedings today. As you probably know, marketing choice and the issues in the grain-handling and transportation system are very important to the Alberta government, and I believe they're critical to the future growth and prosperity of the agrifood economy. Needless to say, I am pleased that the current federal government has chosen to pursue marketing choice, but I am especially pleased with its demonstrated leadership thus far in following through on its commitments.

The federal government's actions clearly support the fundamental principle that individuals should not have different rights and freedoms based on where they live in Canada, and that these same individuals should be free to sell their products—the products they grew on their farm—to whoever they wish. I also believe strongly that the federal government's position reflects the business and economic case for change. It's focused on the future needs of the industry, not on the institutional structures of the past.

Alberta has a vision for our agrifood sector, one that has the support of those making a living in that sector. I'm confident this vision is aligned with that of my provincial counterparts around this table, and this vision is of an agrifood sector that's growing, profitable, sustainable, and enabling.

Participants in the agrifood value chain simply want the ability to prosper based on their management and entrepreneurial abilities. They want to do this free from the many undue regulatory, institutional, and other impediments that tend to plague agriculture in particular. We have conducted surveys in Alberta. They show a significant majority wants choice for wheat, and a larger majority prefers a fully open market for barley. I find it interesting that my colleagues from both Manitoba and Saskatchewan are pounding the table, figuratively speaking, that they would like to see a plebiscite, that they would like to see a vote in their provinces.

I don't have a problem with that, Mr. Chairman, because we did so in 1995, and none of our counterparts around the country rallied to our support when it was discovered that 67% of our producers wanted to have the choice as to whether or not they were in the Wheat Board. We've conducted other surveys more recently in Alberta and the support has not gone down. The Canadian Wheat Board surveys show that 54% want no single desk for wheat, 65% want no single desk for barley, and 60% say competition would bring them better prices.

I find it interesting that my colleagues would say that the Canadian Wheat Board cannot compete. If the only thing the Canadian Wheat Board has to offer is a monopoly, then I suggest to you the management needs to be changed, because they are consistently telling us how good they are. They are consistently telling us how many producers are signing up for this or that program.

If that's the case, Mr. Chairman and members of the committee, then the Canadian Wheat Board need not worry about farmers running away from them because their monopoly is gone. In fact they could end up with a rather large cooperative movement that only sells to them and still has a strength in the marketplace, as well as all of the branding that was discussed.

Even though surveys indicate a strong understanding among farmers that change is needed, surveys don't reflect the full story. They portray a static picture, one anchored to the present and subject to the limits of survey methodologies. My focus, the focus of my constituents, and now the focus of the federal government is on the future needs of the sector. Indeed, the focus must be on the future if we expect to grow and to meet rising competition from existing exporting countries, as well as the new emerging ones that weren't around when the Canadian Wheat Board was formed.

At the same time, Canada is developing new uses for wheat and barley, such as for the biofuel sector, as well as sustaining and growing the livestock feeding industries. The shift from commodity-based wheat and barley markets to more value-based usage is changing the way western Canada needs to approach grain marketing. The status quo is not tenable. It means inevitable, or shall I say accelerated, decline in our sector, and this applies to the farm sector particularly.

The evidence is that Canada's share of wheat and barley markets has been declining, while other products have held their own or increased. Wheat and barley production has been declining. Productivity gains in wheat and barley in Canada lag behind other regions and other crops. The share of farm revenue accruing from Canadian Wheat Board grains is declining. If the net benefits of the Canadian Wheat Board system were as high as some claim and, I suggest to the committee members, if you have a monopoly in a marketplace that's supposedly controlled, the benefits should be self-evident and large, not argued amongst academics. I have academics who tell me that the $10 and $13 are actually negative, not positive.

What are the characteristics that would define the requirements for the future? These are difficult to describe in full in the short period of time allotted, but perhaps I can list a few words that convey the direction in which we need to be headed. They include responsive, nimble, quick, innovative, productive, cost-effective, consumer-connected, diversified, structured for competitiveness, global, and encouraging investments and new ideas.

Frankly, the current system for wheat and barley in western Canada is not accommodating these requirements, in some cases not at all. The evidence confirms this as well. This is not just because of the CWB, although it is a factor. It has to do with the entire system, from marketing through to grain standard setting and control. Of particular concern in Alberta are impacts on the value chain and the constraints on value-added.

For example, we have a surplus of malt barley at the same time as malt plants are establishing just south of the U.S. border. I personally have sat with the chairman of a very large malting company out of a South American country, and when I asked him why he located his plant just south of us in the United States, he stated unequivocally that he did not want to have a single supplier in the Canadian Wheat Board.

Durum processing capacity is increasing in North America, but not here. Investors are wary of the lack of surety posed by dealing with a single desk. They're also concerned about managing their supply chains in a monopoly situation.

I can tell you, members of the committee, as a value-added—

[The Chair, Conservative, Gerry Ritz]

Mr. Horner, we've lost translation for just a minute, apparently.

[Doug Horner]

The point I was trying to make is that we have an institution that was designed, built, and structured so that it would be an exporter of raw materials to the world. The vision of agriculture that we have in Alberta is that we do not want to export raw materials to the world. We want to export value-added products and have our producers have ownership in that value chain.

Put simply, we're not capturing the full potential from the value chain in the province. Rather, we are exporting that value, the product of a traditional and outdated commodity orientation. These examples and trends point to a Canadian Wheat Board system that is unable to meet the requirements for the future that I've outlined.

I know the inevitable comments are going to come. What about the farmers? What about the benefits of the current system to Canadian farmers? These will be lost and farmers will not be able to function in and open market situation. They will be victimized by the large multinationals, the U.S. bogeymen.

I have looked at some of the many and varied numbers put forward. From what I know, they range from hundreds of millions of dollars in benefits per year to a net economic loss of almost $400 million. Given the range that I see, and given the assumptions that must be incorporated in doing the analysis in the Canadian context, the only conclusion I can draw is that the numbers are inconclusive. Again, I state that if it's a monopoly and the evidence is not plainly visible, then something's wrong.

Probably the high variability is due to the underlying assumptions that have always been involved. No economist is going to be able to resolve this issue. One thing that puzzles me, though, is how a system that supposedly produces such huge benefits is generating declining production and revenues for farmers.

Along this line, I'm compelled to mention other crops and products outside the Canadian Wheat Board statutory system. Canola has experienced huge success, and although I hate to say it, it is attracting huge investment in Saskatchewan and Manitoba. We're hoping to change that.

While we debate the Canadian Wheat Board issue, open market crops are moving forward at a rapid pace. Cattle, hogs, and other products all operate successfully in the global markets.

Our farmers are not stupid. They know how to be entrepreneurs and they know how to market their grain. They don't need to be told how to. If they choose to form a cooperative that only they sell to, we have no problem with that. In fact, we are encouraging it. But a state-wide monopoly that does not allow the choice for someone not to do it is un-Canadian.

How will the farmers function under a choice environment? The answer: as they do already in canola, in oats, in cattle, in hogs. I have full confidence in the ability of our farmers to adjust to that. Certainly there's going to be some transition time needed to get price discovery and other mechanisms in place, to enable some to make adjustments, but we can do it. The biggest adjustment required will by the CWB, because the CWB has said it will not be the same entity in a choice environment. I believe it will be better. I believe that we'll have to compete for farmers' grain, and I want grain companies to compete for farmers' grain, because that's better service to the farmers.

How the CWB chooses to organize and structure itself can be up to the board and all of us at this table. At the very least, in my view of marketing choice, the Canadian Wheat Board must provide the opportunity to be a successful player.

I understand that the mandate given to the task force is to address some of those transition-type issues. We believe in Alberta that the Canadian Wheat Board can adjust. Alberta has conducted a number of studies that outline options for transition and provide examples of successful transition. I would encourage you to read the entire studies, not just one page and one line taken out of context.

Before I conclude, I would also like to take this opportunity to raise the issues around grain transportation. Shippers in the western provinces are very concerned about the level of service being provided by the railways and shippers' ability to hold the railways accountable for service levels. These problems are particularly severe for CN shippers.

I understand that Minister Cannon will be introducing, on a priority basis, a bill to deal with rate provisions of the Canada Transportation Act. To resolve shippers' concerns, the railways must be given a sufficient incentive in the legislation to participate in an effective commercial dispute resolution process that includes service disputes.

Accountability for service levels is very one-sided in favour of the railways. Besides legislative changes, there is a need for a special review of the level-of-service provisions in the act to identify redress measures that are easier to access, inexpensive, timely, and effective in correcting service problems. I ask that the members of this committee use their considerable influence to support these measures.

I wanted to touch briefly on some other issues around the Canadian Wheat Board and who is going to stand up for the farmers. I can tell you who will stand up for the farmers in Alberta, and that's the Government of Alberta. I can tell you who speaks for the farmers in Alberta when it comes to transportation issues and issues of trade, and that's Government of Alberta, because that's who it should be.

I have listened to our producers in Alberta. On a consistent basis they are telling me they want to expand their value chains and their value-added. They can't do that right now.

On a personal note, Mr. Chairman, as I close, I'll give you an example. My family started an oat and barley processing facility in 1987. We would have located that oat facility in Montana had oats not been removed from the board, for all of the reasons I have listed above. Oat processing in western Canada has grown, and we are now a very large shipper into many marketplaces because we grow the best oats in the world, and farmers have reaped the benefit of that.

Thank you very much for the time, Mr. Chairman.

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Horner.

Before we move on to the questioning, I'll remind you gentlemen again that I'm going to insist on decorum when you're asking questions. With the television cameras running, it tends to go sideways with us in question period and so on. If anybody steps over the line, I will send a copy of the tape to your mother and we will have her assess it.

We'll start with Mr. Easter, for seven minutes.

[Wayne Easter, Liberal, Malpeque, PE]

It won't do any good sending it to my mother. She's not around, Mr. Chair.

[The Chair, Conservative, Gerry Ritz]

I'll find somebody, Wayne.

[Wayne Easter, Liberal, Malpeque, PE]

My thanks to all three of you ministers for coming.

The governments of Saskatchewan and Manitoba certainly seemed to outline how far this government would go. I don't think there's any question that this Prime Minister has almost a visceral dislike for the monopoly power of the Canadian Wheat Board, which does empower primary producers. Everything we've seen to date shows that he will go to the limit of illegality to get rid of it. We've seen the stacked task force. We've seen a voters list being changed in the middle of an election. You folks outlined a number of those points.

I think the key question is why the opponents of the Canadian Wheat Board are so afraid to allow farmers a vote on whether or not they support the marketing institution in terms of single-desk selling. That's the key question. Why are opponents of the Canadian Wheat Board so afraid to allow farmers to have a voice on this issue through a democratic vote, as dictated under the Canadian Wheat Board Act? That's question one, Mr. Chair.

Moving to Minister Horner's statements, there's a central question. I've listened to Mr. Horner before in other venues and we've had our set-tos. We've heard a lot of hypotheticals—and that's what we continually hear from those who want to take away single-desk selling: hypotheticals—and that their evidence confirms. Well, where is the evidence of these people who oppose the board?

There's a lot of evidence on the side of the benefits. We've heard a lot about Australia and the changes there. Even in your own study, Minister Horner, JRG Consulting must have been trying to come up with the answers you wanted, but even they confirm this: “The majority of growers opposed, and continue to oppose, further change in wheat and barley marketing arrangements, implying a continuation of support for the single desk concept.” That's in Australia.

The central questions that were not designed to be answered by this study remain. That is, what are the benefits of single-desk premiums arising from the current Canadian system? The dilemma is this. We know what the losses will be, and we have studies confirming them, but we don't know what the benefits will be if we undermine single-desk selling.

I wonder if the ministers would answer those questions.

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Easter.

Mr. Wartman, I'll start off with you, and then we'll work our way across the panel.

[Mark Wartman]

I think the first question was why the folks who are opposed to it are opposed to the Canadian Wheat Board. When I look at this, I see why grain companies and grain marketers will be opposed to the Canadian Wheat Board. Their goal is to maximize the profit and the return, if they're publicly traded, to their shareholders or to their owners.

The clear direction, goal, or focus of the Canadian Wheat Board is to maximize the return to the primary producer. They are the marketing agency for the primary producer--not for the shareholder, not for the corporate board, not for the owners, but for the primary producers. My friends, if they do not get the return from their product, they're back here for CAIS payments and income stabilization.

You can pull the numbers out, but I can tell you that the best numbers that we get tell us Saskatchewan would be looking at a loss annually of between $256 million and $327.5 million. You tell me why any farmer looking at the facts would want to lose that premium. The only reason others want that premium gone is that they want to capture it. The major companies want that wheat, barley, and durum trade in the world, and they want to capture that return for their shareholders. They don't give one hoot about the primary producer.

Do you want to know why the value-added people wouldn't come in to Saskatchewan, if they didn't?

[A voice]

But they did.

[Mark Wartman]

I can tell you that I also have numbers on the fact that we have seen more development here. There has been more development proportionately than what they get across the U.S. border, where things are supposed to be open and free.

Over the past fifteen years, the Canadian milling and malting capacity has grown while U.S. capacity has declined. In western Canada, milling capacities have increased over 60% since 1990. Western Canada now has 34% of Canadian wheat milling capacity. By way of comparison, six U.S. northern tier states—North Dakota, South Dakota, Montana, Minnesota, Idaho, and Washington—have 16% of U.S. capacity. The malting industry in western Canada has nearly tripled in size over the last two decades. Let's deal with the facts. It now has over 75% of the total domestic malting capacity in Canada.

But why might some choose not to come where they might have to deal with the Wheat Board? Because they can't exploit the primary producers. They can't make them bargain for the lowest price, and that's what it's about. It's about a marketing agency that is there for primary producers, trying to get the very best price, and they do not keep it for themselves. And contrary to what, I'm sorry, some farmers even think, they don't hand it on to the government to spend through their general revenue fund. That return goes to the primary producer.

[The Chair, Conservative, Gerry Ritz]

Ms. Wowchuk, Mr. Easter's time is up, but we still have to go across the panel, so we'll bear with you.

[Rosann Wowchuk]

Thank you very much.

I want to take a couple of minutes as well.

We talk about the Canadian Wheat Board as if there's some great monster out there. The Canadian Wheat Board is the producers. It is the producers who are the monopoly, and they are the ones who benefit from the Canadian Wheat Board.

Why do people want this changed? I'm not sure. People have not stated clearly why they want the Wheat Board to change, they have not stated clearly why they will not allow the producers to have a plebiscite, and that's a very serious concern. The legislation says producers should have the right to a vote if there is a major change, and the federal government is ignoring that, as if they have the mandate to make changes, which in reality they do not.

Who will benefit from this? Just as Minister Wartman has said, if we make these changes, it is the grain companies that are going to benefit. And there is proof. People will say there is no proof. There have been studies done, showing us that indeed the premiums the Wheat Board captures bring more money into our prairie provinces and give a greater return for our producers.

If we lose the Wheat Board, the issue will be back concerning how we are going to keep the farmers' revenue up. It is going to be governments paying out through farm aid programs, through CAIS. As a farmer, I would much rather get my income from the marketplace. That is what we want to do, and the Wheat Board has served people well here.

I also want to say that I would have to disagree with Minister Horner and agree with Minister Wartman that the fallacy of value-added not growing is not true. Through the 1990s, malting capacity increased by 75%, by almost half a million tonnes, with the majority of the growth occurring in the Prairies. Over a 10-year period malt exports doubled. Wheat milling capacity has increased 28%, compared to only 14% across the border, where they have this free market system. A third of our major milling capacity is on the Prairies, while only 17% of U.S. milling capacity is located in U.S. communities right across the border.

So to say that Wheat Board does not allow for value-added is in fact misleading.

[The Chair, Conservative, Gerry Ritz]

Thank you.

Mr. Horner.

[Doug Horner]

Thank you.

I want to comment about a couple of comments I've heard, not only from Mr. Easter but from some of my colleagues, and that is on this tie-in and this fear mongering about supply management. That quite frankly is irresponsible. You cannot tie the two together. The two organizations are totally different. Just as the federal Conservatives promised, I have promised to stand up for our supply-managed sectors and to help them. The tie is simply irresponsible.

The other thing is being afraid to allow the farmers to vote. Again, I take exception. Gentlemen, we had a vote. Mr. Easter, I believe you were in government at the time and you disallowed it. You told us it wasn't a valid question. I submit to you, Mr. Chairman, that a fundamental right any Canadian should have is to be able to opt out of a mandatory system that says I must sell to you even when I disagree that you give me any value at all. That fundamental right should be upheld, not only for the Canadians in our designated area but for all Canadians. Certainly for those of us who have to live and try to build agriculture in the designated area, that fundamental right must be restored. I applaud this federal government for bringing that fundamental right back to us.

With respect to value-added and the increase in malting, a lot of that malt is “moved business”. I would also suggest that it is very difficult for a wheat flour mill in Canada to export because of the domestic pricing policies of the Canadian Wheat Board. I would rather sell that high-quality wheat in a frozen dough form or a flour form, because the more marketplaces we open up in-country in the value chain for our producers, the better off we are. All of my colleagues have agreed with me on that position many times. We need to open up opportunities for our producers, not close them down.

When you talk about income from the marketplace, I agree. Our producers have enjoyed income from canola and oats over the last few years. Had they not, our support payments would have been substantially higher. The wheat and barley returns to producers have been declining. That is a fact. With canola and oats, the returns to our producers have been increasing. And the evidence, gentlemen, is very simple; it's in the acreage. Look at the growth in the canola acreage.

What moves farmers to grow something? It's the price they get. When a farmer from North Dakota is getting the same price for wheat as a farmer in Peace River, what's the point of having a monopoly that he can't sell to? When a small independent grain company has an opportunity to ship barley to Dubai, but he can't because he's priced out of the marketplace, even though he has the originations and the farmers wanting to do it, that's not only wrong, it's criminal. It's shutting down an industry. It's keeping us where Brazil, the East Bloc countries, and all those other emerging growers are going to blow by us in a heartbeat. We need to move on. We need to grow our industry.

Your committee and the Government of Canada are to be commended for moving forward with growing the agricultural industry and not keeping us as serfs to an entity. I ask for freedom.