Agriculture Committee on Oct. 25th, 2006

[Wayne Easter, Liberal, Malpeque, PE]

They did. They broke the law.

[Rosann Wowchuk]

Thank you very much.

You started out talking about supply management and the Wheat Board and the WTO. I think it's very foolish on our part, at a time when other countries are looking to dismantle our orderly marketing system, that we would say, oh, we're just going to give it up.

I've lost your question. You talked about New Zealand looking at orderly marketing. Somebody asked about how supply management has.... God, I'm going to let Mark go here, because I've lost my...I've got so many notes in front of me about things that I've--

[Doug Horner]

Do you want me to organize those for you?

[Rosann Wowchuk]

No, no. I don't want your notes.

[A voice]

Doug will speak for you.

[Rosann Wowchuk]

I will not let Doug speak for me.

It's about producers having a say; that's what this is about. Producers want to have a say about whether or not they dismantle. I think the question that we put forward is very important. If we say, do you want choice, everybody will say, oh yes, we want choice. But even with that question, Alberta only got 65%--because you want choice.

If you asked the question about whether to maintain the single-desk selling of the Canadian Wheat Board--and that's the question we should be asking--I think the numbers would be very different. But to ask a question about whether you want choice, anybody would say yes, I want choice, without looking at the details.

[The Chair, Conservative, Gerry Ritz]

Okay, thank you.

Mark.

[Mark Wartman]

Thank you.

One of the things I have to say clearly is that if there were a clear, straightforward, honest question about the Canadian Wheat Board--do you want single-desk selling of the Canadian Wheat Board or not?--and 67% of the people in my province or the western Canadian farmers said they didn't, I would live with that, and I would work with the department and the agricultural organizations to try to build the best system we could possibly have that would maximize returns to producers, that would be progressive, and that would allow us to build a strong agricultural future.

That's the focus. Today you are asking about numbers. I have major farm groups that have very clearly identified what their wishes are. The Saskatchewan Association of Rural Municipalities put forward a resolution at their last meeting. Eighty-five per cent of the people supported the resolution to maintain the Canadian Wheat Board. APAS, SARM, the National Farmers Union, Wild Rose Agricultural Producers from Alberta, and Keystone Agricultural Producers from Manitoba are all standing together and saying they want a good strong progressive future, but they want to have this Canadian Wheat Board as a single-desk seller. At the very least, we want to have a clear and honest plebiscite question.

[The Chair, Conservative, Gerry Ritz]

You have one last point, Mr. Atamanenko?

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

Let's talk about value-added. There seems to be some conflict on whether it's been beneficial. I have some information in front of me that says that actually value-added wheat and barley processing in Canada has grown significantly, and that Canadian wheat and durum milling has increased 31% since 1991. I'm hearing, on the other hand, that companies don't want to locate here, but I'm also hearing that they do and that they are and that they're processing and milling.

I would like just a couple of comments from each of you on this whole idea of where you think we have been heading and where we're going with regard to value-added.

[Mark Wartman]

Clearly, in terms of value-added, if we're looking at the feed component, farmers can market the feed component where they want to. If it's value-added through feedlot development, they can market there.

You have to understand that one of the vital parts of the duty and the responsibility of the board is try to make sure they're getting the best return they can for the producers. So in an attempt to enable value-added, in any attempt to get that best return, they design different ways that farmers can market, whether it's producer direct sales, whether it's organic sale and organic spread contract or feed sales, whether it's daily price contract or whether it's basis contracts. There is a variety of ways. I know this is complex, but I also know that the board is progressive and that it is looking to enable farmers to get the best value they can. It is trying to work with them to make sure there will be value-added developments.

That's why we've got the malting we've got. The malt barley that we sell into China for Tsingtao beer, which represents one of the most significant sales, is as a result of the marketing work that was done by CIGI and the Canadian Wheat Board. They have branded and marketed a product in the world. Without the Canadian Wheat Board, we would not see the value-added development or the markets that are a result of the work they have been doing and the branding they have been doing. No grain company is going to market a Canadian brand, because every other company will benefit from the money that they expend on doing that.

So this is a very unique and precious part of our democratic structure that does provide a return that is progressive and is looking for a strong positive future for western Canadian producers.

[Rosann Wowchuk]

I think the Wheat Board has made many changes in order to accommodate value-added. Our producers were looking at how they could be exporters, and I think all of us as provincial governments have changed our direction, and we want to see more value-added going on. The Wheat Board has changed as producers want to do more value-added.

They have met those. They have done the variety of things that Mark has talked about. Our value-added is going up on quite a quick scale compared to others, I think.

When you talk about the Wheat Board being a hindrance to value-added, I think we have to look at North Dakota. In North Dakota, just south of Manitoba, where they have a free market system, they are not building pasta plants and they are not building flour mills. In fact, they are at a slower pace than Manitoba is. Pasta plants that have failed have failed because they couldn't get the lowest common denominator, the lowest price possible.

I want to see farmers get a better return. I don't want them to be sacrificed for value-added.

[Doug Horner]

Well, no, I want my farmers to own that value-added. I want them to be part of that value chain, and that's what we're working towards. I have spent 23 years in the export business. A lot of the pasta plants that were started in western Canada have failed because they weren't competitive. You have a single-desk seller and a single supplier. It's that simple.

On the malt growth that my colleagues were mentioning, when was the last time you heard about a brand new malt plant coming to Alberta? When was the last time you heard about a brand new malt plant going into northern Idaho? It was very recently, and the reason it went there was because it does not want to have a single source of supply. So would you rather be an exporter of malt barley or have that industry in Canada? That's really the crux of it.

To say that no grain company would spend the money to brand Canadian wheat...the Wheat Board uses 26 agents of the board. Guess what? They're the grain companies. They do a lot of these sales. In fact, it would be interesting to understand how many of them they actually do and how much of the marketing they actually do. To say that the beef companies or the beef guys don't do any marketing simply because they're not in a monopoly is ridiculous.

If I own the plant or I'm a farmer involved in the plant, damn tootin' I'm going to be doing some marketing. But I'd rather have that plant down the road from me so I can ship to it, make a deal with it, and grow the type of organic grain it wants. I can make that contract directly between myself and the plant, rather than having this huge middleman in between who is supposedly taking premium for the producer. I am the producer. I want to make the deal myself, and I think it's important we look at that.

[The Chair, Conservative, Gerry Ritz]

Thanks, Mr. Atamanenko.

We are now going to move to our five-minute round. I'll try to hold you guys to nine or ten.

I have just one point of clarification before we move on. There's been some talk--I've heard it a couple of times--about the percentage of increase of value-added. Thirty percent of zero is still zero, so can anybody give me the tonnage rather than the percentage? You can send that back to the committee at some other time. I won't hold you to that at this point.

[Doug Horner]

We'll give you an analysis of what the actual value-added growth is in the wheat and barley sector, and a comparison to the value-added growth in the non-board sectors.

[The Chair, Conservative, Gerry Ritz]

It's near and dear to my heart because I had a private member's bill that got shot down in flames. Anyway, I'd like those numbers. I have mine and I just want to correlate them.

[Doug Horner]

Taken in individual context, it's a very important question.

[The Chair, Conservative, Gerry Ritz]

Mr. Thibault is next, for five minutes, please. And I'll hold you to your point of order.

[Robert Thibault, Liberal, West Nova, NS]

Thank you, Mr. Chair.

I want to welcome the three witnesses and thank them for their excellent presentations. I have to say that I am unbiased on this question, and I see value in the three different ways of looking at the two points. I think there's value in all arguments.

I'm from an area that doesn't have any wheat, but it does have a lot of supply management, and my farmers are nervous. They understand the government is currently saying it's not attacking supply management and is committed to it. But they also know that in 1998 Harper said that supply management was a government-sponsored price-fixing cartel. They know what he said in the past about the Wheat Board. Now, they see that, as in any large institution, perhaps there are some amendments to bring, but rather than fixing the Wheat Board, it seems that all moves are toward “the fix”--that there is a fix in for the Wheat Board.

I see at first blush the 16,000 disenfranchised producers, I see a task force that seems stacked, and the way it works seems to be coming to a direction.... I see the appointment to the board for the first time of a producer who is against the board. I see all these questions, and I can understand why dairy farmers and poultry producers across this country are worried that if a movement begins in a few years against supply management because some people can see an advantage in operating alone, they might face the same thing.

So I think the process we go through is very important, and people are looking at this as a barometer. Again, I don't want to express an opinion on how western farmers should market their product. I think that's a decision for them to make. It needs valid debate, and people must know all the facts before these decisions are made. I agree with that.

A couple of points were brought forward by Mr. Wartman, and I have two questions.

It seems sensible to me that if we undo the single desk thing we will never be able redo it. It will be very difficult. I understand it was brought about in very difficult circumstances during the dirty days when there was an entire collapse in the industry. It started at that time. How would you do it now? I don't know. If I'm wrong on the history, I'm sure I'll be filled in. But can you operate realistically with a single desk and a free system? Can those work together? You pointed out the question of infrastructure.

On the second question, I'd like you to answer, Mr. Wartman, and if there's time, the other two may be able to answer. Is it possible to have part of the prairie provinces under a single desk system and part of them under a free system?

[The Chair, Conservative, Gerry Ritz]

Mr. Wartman.

[Mark Wartman]

As for the ability to ever reconstruct, the Canadian Wheat Board has gone through a number of transitions. It has changed often and continues to evolve to meet the needs of producers. There is nothing in NAFTA or the WTO to prevent a re-establishment. But here's the problem: if the Wheat Board were eliminated, and then some time down the road the federal government decided to re-establish it, all the companies that managed to scoop up the board grains and market them would sue the federal government under NAFTA for damages and lost income. This would be huge. So practically speaking, once gone, the Wheat Board could not be re-established.

Secondly, you want to know whether we could have both a Canadian Wheat Board and a separate seller, whether we could maybe have something like the Man-Sask Wheat Board and the Alberta chaos. Well, you could do that, but the point I want to make, and I'll try not to be a smart aleck, Doug--

[The Chair, Conservative, Gerry Ritz]

It's too late. You can't put that back in the bag, Mark.

[Mark Wartman]

Well, that's the way I see the world.

Anyway, the point is that it would make marketing and branding very difficult, and I am told it would be difficult as well because one of the key elements is that when you have the Canadian brand and it's shipped through our singular system, it would be very hard to keep differentiated in the marketplace and get the gains that we get because we are able to differentiate in the marketplace. Canadian wheat, barley, and durum would not be as easily differentiated.

Now, if I know my friend Doug, and I think I know him fairly well, I'm sure he'll say that what you'd get would be Alberta wheat, like Alberta beef. But let me tell you, every year 700,000 to 800,000 head of Alberta beef actually come from Saskatchewan.

[The Chair, Conservative, Gerry Ritz]

Mr. Thibault, Mr. Horner wanted to respond to that too. But it's your call because you made that point.

[Robert Thibault, Liberal, West Nova, NS]

I'd like him to answer. I just wanted to say that if they don't have time they can submit documentation for their answers.