Agriculture Committee on June 5th, 2007

[The Vice-Chair, Liberal, Paul Steckle]

Is there anything further?

Go ahead, André.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Unlike Barry, I believe that the original motion referred more to the department, and thus perhaps to public servants. We've just added the political component, political players.

When you call for an investigation, you don't necessarily presume that people are guilty. I think it's after the investigation that you know whether people have something to hide or not. We could investigate some very interesting things. For example, there is a lady, Ms. Charlton, whom we have never heard here in committee. We wanted to summon her with regard to the propaganda that was to be spread about the Canadian Wheat Board and its adversaries. So I think that's an asset that could be interesting. If people have nothing to hide, there is no problem in conducting an investigation on that subject.

[The Vice-Chair, Liberal, Paul Steckle]

I was looking the other way and I don't know who is first. Larry, are you first?

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Mr. Chairman, this motion, further to what Barry and André just said, is certainly trying to imply that something out of the ordinary went on, and of course that isn't right.

The thing--and I guess I shouldn't be surprised--really shows Mr. Easter's true colours. The original motion deals with the NFU, and I don't know whether he's here speaking as a Liberal MP today or as a past president of that group, but obviously he's trying to get a little bit more skin or hide for the sake of politics.

I don't know whether this motion is procedurally out of order or not, but the intent of it I think we all know. Sure, we all want to make sure everything flows right here, but when you're going to investigate something, you should investigate it all. You can't pick and choose.

Mr. Chairman, if the opposition parties decide to gang up and get political and not really look into anything else, yes, they have the numbers to do that, but it's not right, and this motion isn't right in some of the things--

[The Vice-Chair, Liberal, Paul Steckle]

Well, that's--

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Mr. Chairman, I have the floor. I think I can speak to this amendment.

I think this issue has gone beyond the debate of fairness. We have some high priorities, sitting right here, that we should be working on today, and we're not. We're dealing with crap like this.

Do you want everybody to sit here while I recite the birthdates and birth weights of everybody in my family? I could do that. I'm not going to, but I could do that. And I have a large family.

I guess my point here, Mr. Chairman, is let's cut the crap. Let's get down to business on the things we've worked hard on for the last year. Let's get on with them. The original motion and the amendments are purely political, and nothing else.

I'm going to leave it at that.

[The Vice-Chair, Liberal, Paul Steckle]

Mr. Anderson.

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

Thank you, Mr. Chair. I appreciate the opportunity to have the floor and I thank you for that chance.

I want to talk a little bit about this. I think once again Mr. Easter has gone over the line that he likes to cross to try to get a reaction.

I made it clear on Thursday that I thought that if Mr. Atamanenko was going to bring the motion forward and it was going to be appropriate, he should bring it forward in his name, call for the investigation, and take the third party out of that. He has done that. We're not going to support the motion, but I actually think the motion is written in a form that the committee can consider and vote on. Of course we've got a situation now in which someone has taken it to the nth degree and to a point where it's basically ridiculous. Probably the result will be that the Auditor General may say it is just not worth trying to cast this net, because it's gotten so broad and so wide that there's no point in even getting involved in this.

What's also important is that I brought up the consideration earlier of talking about what the provinces are doing and what their involvement is and what the Canadian Wheat Board's involvement is, because I think that if we're going to do an investigation, as Larry said, we need to take a look at what each of the players has done in this barley plebiscite. Actually, the committee has the authority to do some of that stuff themselves. If we were to choose to go looking for those kinds of answers, we can do that. Wayne actually challenged me and the minister to do it, and I think the truth is that we can do it. I don't know how much of that information can be considered confidential, but the reality is that it's important that the committee begin to do that as well.

The Canadian Wheat Board certainly has a vested interest in this. A number of the directors in particular have been very clear that they have an interest in what's going on here. I had a chance to attend a Liberal function in Saskatoon a couple of months ago and saw a number of the directors standing on the stage with Mr. Easter and the Liberal leader. I had to wonder what the political connection was, because they'd made a decision that they were going to take part in a particular political situation. At that level we need to talk about whether we should be investigating that Wheat Board's conduct and possible spending in the period of the plebiscite.

There's good reason for doing this, because we have a long history of the Wheat Board's being involved politically. I don't know if you're familiar with that, but it goes back to the fact that there were times when they were actually buying tickets to Liberal fundraisers in Winnipeg. They did that; they bought them, and I think they later were reimbursed, because they decided it was politically wrong for them to be doing that.

Certainly after the 2004 election, when Mr. Alcock was made minister, it was only a short time later that the Canadian Wheat Board made the decision that they were going to hire his campaign manager to do their government relations for them. They did that, and clearly they had an interest in being involved politically.

They made a number of other decisions that were political as well. They hired David Hurley to do polling for them. He's done polling for them over a number of years. He was the Liberal federal campaign manager working with Paul Martin, and he's working with the Canadian Wheat Board. There's a long history, and there's a reason we would certainly want to take a look at the Canadian Wheat Board's role in the plebiscite over the last few months.

I think it's also important that we take a look at what the two provincial governments on the Prairies are doing, if we can possibly find out what they've been up to. They were using Saskatchewan egg and food facilities for meetings and for sending information, so clearly the forces that did not want change in the Canadian Wheat Board had access and opportunity to use Government of Saskatchewan resources as well. When we challenged them on that, they said they hadn't done it and then later admitted that actually they had, but said they had only supplied the room. Somehow the fax machine, I think, or one of the computers was involved as well.

Clearly the Saskatchewan government has been interested in this issue, and it would be very interesting for us to find out what role they've played over the last year as well.

Even more than that, the Manitoba government and in particular the agriculture minister have been very clear on their position on this file and the fact that they would like to make sure no changes take place to the Canadian Wheat Board and the marketing system, in spite of what western Canadian farmers want.

Once again I would remind people, as I did the other day, that 68% of the farmers in western Canada had chosen in the plebiscite to support choice, and that those results were entirely consistent with the annual report we had from last year--which I have a copy of here--in terms of the choice farmers wanted for barley and for wheat.

I think we can certainly make an argument that we need to take a look at what the governments have done, and I would also argue that it would be interesting to know what they're going to do. Farmers have made a decision that they want change on August 1. We're going to bring that change about, I hope. It's clear now.

Mr. Easter, we heard today in question period that the Canadian Wheat Board forces are lining up with the big multinational companies and they're going to try to stop farmers from getting an improved return from the marketplace in the new crop year, it appears.

That is a real concern for me, because the board and these companies have been signing these contracts for years. It's been impossible for farmers to find out what the contracts are or their conditions, even what the prices on the contracts are. Now we're finally in a situation where farmers will be able to see clearly what the marketplace has to offer, and it looks as if a group of people is going to be lining up to try to keep farmers from being able to see that. So I hope that doesn't happen.

It's important to farmers, who are eagerly anticipating the change in price at the new crop year. They're looking forward. It could be up to $2 a bushel difference just on barley. I'm reading some of the material that's being put out by the maltsters; they claim there's a loss of $50 million to them in the system if we go ahead with this, and I don't know if it's to them and to the board. That indicates to me that somebody has been signing contracts at far below the present market value of the grain. It'll be very intriguing to find out what that amount is after the new year when farmers are able to sign their new contracts and have a price that is market-related. For years, we haven't had that.

Particularly this last year, as we've gone through this whole debate about the Canadian Wheat Board, we've been in a situation where the PROs, the Canadian Wheat Board pool return outlooks, as I understand it, have been below the spot price; they had been below it for 11 months, and I think they've continued to be below that mark. So if you say that the Wheat Board gets average prices, how can they be below the average market price for at least 11 months in a row? That's one of the reasons farmers want the choice they're demanding for the new crop year.

There's certainly some vested interest in this thing. If we're going to begin to look at them, I think we need to take as wide a look as we possibly can, ask some questions of the two provincial governments that have the resources, certainly, to use against farmers. I hope they will not be combining with the big companies and the Canadian Wheat Board to squash western Canadian farmers. I would hope that if they do that, members on the opposite side would reconsider their position on this and say they need to stand up for farmers and not just go with what they've always gone with, which is that the system needs to be maintained as it is. Clearly there are opportunities for farmers to benefit in the next year, and we need to be able to provide them with that.

This committee also has a bit of a history on this issue as well. I don't think I need to remind some of the members of the committee that the committee itself took a strong position in...what year was that? Was it 2002 when we made the report? In 2001-02, we came with the report from the Standing Committee on Agriculture, and it was a good report, a strong report. It was one that, as far as I remember, was unanimous.

Recommendation 14 was in that, which read--and I'm going to read it in here because it was supported by all the parties here today--and that is, “Whereas additional on-farm activities...”.

I may be wrong, because I think our NDP agriculture critic at the time wrote a minority report to that, but the rest of the parties here supported it. This is how the recommendation reads:

Whereas additional on-farm activities and local value-added processing are an excellent way to give farmers more influence in pricing, the Committee recommends that the board of directors of the Canadian Wheat Board authorize, on a trial basis, a free market for the sale of wheat and barley, and that it report to this Committee on the subject.

So in 2002, this committee made a recommendation that we set up, on a trial basis, a dual market at least, or it says a “free market”, for the sale of wheat and barley. That was agreed to by the Bloc, the Liberals, and us at the time.

So we thought that was important. There were four parties then, because at the time we sat, I think Mr. Borotsik was on the committee as a PC, and those of us who were Alliance agreed with it, the Liberals agreed with it, as did the Bloc. There was a consensus at that time that we needed to do something different.

I find this intriguing. Mr. Easter constantly refers to his report, but this deals with this issue prior to his ever writing that report: that whereas we need additional on-farm activities and opportunities, we need local value-added processing, which is an excellent way to give farmers more influence on prices. So even at that time we realized that farmers needed other opportunities and that we were not giving them a chance to take advantage of those.

I want to talk a bit about some of those opportunities. Come August 1, there are going to be opportunities for western Canadian farmers.

One of those opportunities was the Prairie Pasta project, which was put together in my part of the world, southwest Saskatchewan, where folks wanted to be able to bring their own grain to their own processing plant. They were going to be able to deliver their own grain without having to go through the Canadian Wheat Board, and they would realize, as our motion said, the additional local “value-added processing” opportunities from that.

The project went ahead. It went in fits and starts, and then the Wheat Board said no, we're not going to let you do that. Those growers actually thought they had an agreement from the board that they would be allowed to deliver their own grain to their own processing plant. It was moving along well. It looked as though the plant would be profitable, and it was the Canadian Wheat Board that said they were not interested in doing that.

At that point the farmers said, if we can't have that opportunity of delivering our own grain, then there's no point in going ahead with this project. If we do go ahead, we would lose control of it. We don't have control over deliveries. We have no way of knowing if we're going to have the proper supply for the project. And so the Prairie Pasta plant in Swift Current, Saskatchewan, was not able to go ahead.

There was another group that said, well, how about trying to deal with the Americans? There's a pasta plant in North Dakota, and how about making a deal with them? We'll basically have an identity-preserved type of situation. There will be a certain amount of grain committed to that plant, and you give us the opportunity to deal with them. The project was moving ahead. I can tell you a bit about it so you understand more clearly.

The Prairie Pasta Producers were formed in 1999. They wanted to form a large-scale pasta plant, as I mentioned before. There was lots of farmer interest in this project, and there still is.

If you talk to prairie farmers about the possibility of marketing their durum at a processing plant, they will get excited about that. That's one of the reasons we had such strong support for Mr. Ritz's bill last fall. I think it was Bill C-300, the private member's bill that would have allowed farmers to deliver grain to the processing plant that the producers themselves owned. It was a great initiative--a great bill. Unfortunately it was one that the opposition voted down, for political reasons. Once again, farmers in western Canada were denied the same opportunities extended to farmers in Ontario, and farmers in Quebec, the Maritimes, and British Columbia. We can begin to see why farmers in western Canada are a bit frustrated by this.

Anyhow, when the Prairie Pasta plant project was announced there was a lot of interest in it. Farmers saw it as an opportunity for them. They began to raise money for that plant, and they were able to do that. But as I said, the Wheat Board was not going to allow them to do farmer direct delivery to their own plant.

In 2001, they came back as a new generation co-op. I think people had told them, we like co-ops, and let's see if we can't set it up as a new generation co-op. They were trying to set up a direct working relationship between themselves and the Dakota Growers Pasta company in Carrington, North Dakota. It seemed to be a logical fit for everyone, and negotiations began. Actually, the Canadian producers were going to buy shares in the Dakota company as well.

There were a couple of direct trial shipments. I assume that people on the board went along with this and let people deliver these trial shipments of bin-run durum to members in Dakota. They were using the Canadian Wheat Board buyback. The durum was good, as western Canadian durum always is, and the plant wanted to buy more. They felt it was important that they have the opportunity to access western Canadian wheats. Trucking costs were expensive there, so they set up a rail project to move the grains.

These farmers are innovative. They are moving ahead. They're trying to find a project that will work. They're making the adjustments that need to be made in order to make this work. The rail project and the whole concept was actually agreed to by the Canadian Wheat Board. The frustrating part was that once it was set up and appeared to be feasible and appeared to be going ahead, the Canadian Wheat Board then started to change the price. If you understand the buyback, you know a little bit of the frustration that farmers have, because when, for example, as a producer, I have my grain in the bin and I want to market it to somebody else, I have to go to the Canadian Wheat Board and say that I'd like to buy my grain back from them. It is sitting in my bin. It never leaves my bin, but I have to deal with them. I have to say that I am going to sell it to them at the price they say, and I'm going to buy it back from them at the price that they tell me I have to pay. That price varies. It just moves back and forth depending on their decision.

At that point, for the Prairie Pasta plant, the Canadian Wheat Board started moving the buyback up, and all of a sudden it began to be non-feasible for the producers.

I should note that this Dakota Growers Pasta plant is the third largest miller of durum in the United States, so these guys weren't just dealing with somebody who was working off their farm. Prior to this whole operation, they had never before purchased Canadian durum. They thought it was good. They wanted to set it up.

This was frustrating for the farmers. They never got access to the United States through this even though they thought they had this project going ahead. They've gone ahead in the future. They've changed the structure of their company to try to make it more palatable, to make it work. They've gone to the Canadian Wheat Board in the past. They've asked them to give indication that they would allow deliveries under the arrangements that they've made, and the Wheat Board basically finally told them, “Sorry, we're not going to allow that”, and so that deal was cancelled.

That deal was worth up to three million bushels of durum annually out of western Canada. It is a deal that was cancelled because there was a political decision made that western Canadian farmers could not have that choice.

Mr. Chair, that obviously ties into the opportunity that people want to have with barley come August 1.

In 2005 and 2006, the Dakota Growers actually came back with another suggested strategy. They said, “Why don't we set up a strict IP program so that you provide us with one type of grain? We'll hire you to grow it, and you deliver it right to us.” It would really be a closed loop system. The seed would come from the Dakota Growers, and it would go back or be grown under contract, and returned to the mill. Once again, negotiations just dragged on and on, and the opportunity was lost, so there is a real frustration. That's the area of durum. There is the real frustration among producers that they never had the opportunities they thought they should have had and would have had if our recommendation had been followed.

The Standing Committee on Agriculture and Agri-Food at that time had a lot of wisdom in making that recommendation. Hopefully we'll have enough to actually reject this motion that's been put before us today.

It's important that we do something with barley, Mr. Chair. I have had a number of letters from people over the last few months about the differences they have found between the barley pricing in the United States and that in Canada. They point that out to me as a reason we need to do something in western Canada in order for us to be able to access the same opportunities as U.S. producers have had.

Brian Otto is a farmer from Warner, Alberta, which is right by the Montana border. He grows barley as well. He's actually a sharp producer. He keeps track of what the prices are doing on both sides of the border, and that's brought some real concerns to him.

I just want to talk a little bit about what's happened over the last year and the necessity of our moving.

I see Charlie is holding up his beer-tasting card, and I hope he's not getting too dry just yet.

[Charles Hubbard, Liberal, Miramichi, NB]

That's the barley now. It's over there.

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

Exactly, there's an opportunity for us to use more barley as well. As soon as we're done here, everybody can race over there and use up their share of barley, if they possibly can.

Mr. Otto did a comparison on a number of different varieties of wheat last fall. He felt that was important and he felt farmers needed to understand what's going on in the system across the border. He had done a comparison between the price of spring wheat with protein at 13.5% under the Canadian Wheat Board monopoly and spring wheat with protein of 14% in the United States. Because we use a different system of measuring protein, those two levels are pretty much identical; they're equivalent.

He thought he would try to be as fair as he possibly could, so he took the October 19 Minneapolis December futures quotes of $211 for his comparison. That day in Shelby, Montana, the cash price for 14% protein spring wheat was $4.75 per bushel in U.S. funds, which at that time amounted to $5.32 per bushel in Canadian funds. If he delivered his grain in Shelby, Montana, he would have been able to get $5.32 a bushel for it.

He went back and said let's do something comparable in the Canadian system. He took the Canadian Wheat Board's fixed price contract for October 19 to use his comparison. They quoted hard red spring wheat at a fixed price off the Minneapolis futures of $211. They always include a basis in there to protect themselves, and it was about $12. They take off their own adjustment factors, so they took $5 off per tonne in an adjustment factor and it ended up being $219 Vancouver. He took off his elevator deductions for freight, handling, and cleaning, which are well over $1 a bushel. That brings us to another important issue for western Canadian farmers and that, of course, is the cost of transportation and handling fees. Mr. Otto's fees on that grain alone were $45 a tonne. You're looking at almost $1.25, or more than $1.10 for handling and freight on the grain. That put his price at $174 when compared to Shelby. His net price was $174.

That shows, Mr. Chair, if you do the math, that $21 went missing out of that. On the Canadian side of the border on that day, his discount was $21.43. I know that may not be important to most of the people who are sitting here, because it's just a number, but I think that's around 65¢ to 70¢ a bushel. If you take your average farm and you've 100,000 bushels of grain in the bin--and in that part of the world that's not unusual, but at 60¢ or 75¢ per bushel that's a lot of money--you begin to see why farmers are frustrated with the system.

Larry is a producer, and I know some of the other people here are. When you think about $60,000 going out the window just because you can't access a price that's available somewhere else, it's surprising that farmers aren't a lot angrier than they are. I'm often surprised why that isn't the case.

He compared hard red spring wheat as well, and winter wheat, and he found some of the same things had happened. I won't read it all to you, but he says that in the end it cost his farm $45,000 just on one winter wheat crop alone. If he's got $45,000 on just his winter wheat on his farm, how much is it costing western Canadian farmers? It's tens of millions of dollars at the very least. It's really frustrating.

He makes the point and says he often hears people say that if we open things up in western Canada, that leaves people at the mercy of the big multinationals. The question he asked is, why is the price higher in Shelby, Montana, than it is under the single desk system? What's going on? Why do we get less money for our grain than producers do who use the open markets in the United States? What are the reasons for that, especially when people say there's the threat of the multinationals who are going to be taking our--

[Wayne Easter, Liberal, Malpeque, PE]

Point of order.

[The Vice-Chair, Liberal, Paul Steckle]

On a point of order, Mr. Easter.

[Wayne Easter, Liberal, Malpeque, PE]

Would the parliamentary secretary provide the documentation for that? He's talking spot prices now and again, but all the documentation shows historically over time the Wheat Board always did far better than the open market has. That's what the empirical studies show. If the parliamentary secretary wants to table some of those, we're willing to listen.

[The Vice-Chair, Liberal, Paul Steckle]

Okay, the point of order--

[Wayne Easter, Liberal, Malpeque, PE]

But we're not willing to listen to this hypothetical stuff he's producing.

[The Vice-Chair, Liberal, Paul Steckle]

--has been made in query to comments made by Mr. Anderson. Could you provide those?

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

I can absolutely provide them. I can't give them to you right now, but after the meeting, I can give the clerk a copy of what I'm using.

[The Vice-Chair, Liberal, Paul Steckle]

I would greatly appreciate it if you would do that.

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

I think you may be surprised where these documents have appeared when you see where they're from.

That's good. I appreciate that Mr. Easter wants the facts. I don't know how many empirical studies have really been done out there. There have been a number of political ones done. It's interesting, because when the Canadian Wheat Board does a study, they usually go back to the one or two economists they use on a regular basis. And sure enough, they reconfirm what they've said before, and I guess it would be a real surprise if they didn't, because then they'd be contradicting what they said before. So I don't know how he would expect them to take a different position from what they have in the past.

I'm going to give him some empirical data. He wants to listen to that. I'm going to talk about barley, because this is important. This is directly tied into this motion and the barley plebiscite and all the things that are important to farmers on August 1.

He actually addresses the issue by saying that the Wheat Board claims that they give premiums, and they've used Mr. Richard Gray to try to substantiate that. But Mr. Otto says he doesn't know where they're getting their information from. He did a comparison of barley prices in Shelby, Montana, and again, the Canadian Wheat Board system. He said that in January 2007 barley prices freight-on-board in Shelby, Montana, were $7.50 a hundredweight. This worked out to about $3.60 U.S. a bushel or $4.25 Canadian a bushel net to the producer. Now, that's a pretty good price for barley. I think most people would be pretty happy if they could get $4.25 a bushel for their barley.

But the malt market price, according to the Canadian Wheat Board's PRO at that same time, was $205 a tonne, which, after taking off the freight and handling, works out to be $3.37 a bushel.

So if Mr. Easter wants empirical data, there's a figure of $4.25 on one side of the border and $3.37 on the other side. And that is, I think, 88¢ a bushel. So again, if the--

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Chair, I have a point of order.

Empirical data means a long-term study backed up by sound analysis, not a spot price today and tomorrow. You have to do it over a year. That's what you need for empirical data.

This is hypothetical malarkey.

[The Vice-Chair, Liberal, Paul Steckle]

Is that understood? Mr. Anderson, do you understand the term?

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

Well, I understand what Mr. Easter's trying to do, which is to distract attention--

[The Vice-Chair, Liberal, Paul Steckle]

He's given a definition of what empirical studies are. Are you in agreement? Is that your understanding of it, as well?

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

In terms of my understanding of the data, as I see it, Mr. Otto went down and compared prices. He did it on a number of occasions. And on each of those occasions, it showed that the Canadian producers were not getting an amount equivalent to that of the Americans. So I would consider that, over time, to be empirical data as well. I think it's important data.

When you say that you can't compare spot prices to PROs, well, you can over a year, because the PRO over the year ends up being what the farmers get. You can take a look at what the spot prices were through that whole year, and then you'll have an idea of what people in a more open market had. When people tell me that the spot price for 11 months in a row was above the PRO, that tells me that somebody is marketing the product at a discount. I think that's about as empirical as you can get, and Mr. Easter knows that. He's well aware of that.

Anyway, farmers are smart enough. When they elected us last year they knew full well what our policy was, and that policy was that we wanted to give them some marketing choice in barley and wheat and grain transportation issues, as well as grain marketing issues. We've been moving ahead on that. We've been clear about what we're doing.

Actually, we've done a number of things since last year. I think it's probably important that the committee be reminded of them, because those are the kinds of things that apparently some of the opposition think are important to spend some time studying.

Last year on July 27 we had a round table in Saskatoon. We invited a number of organizations. We had representatives from, I think, 30 organizations. Representatives from the provinces were invited. One of the Wheat Board directors was there as well. So we had a round table to discuss marketing choice and how it could work in the future. It was actually a very good meeting. We sat down and got a number of good suggestions about how we should go ahead implementing marketing choice.

[Wayne Easter, Liberal, Malpeque, PE]

I have a point of order again, Mr. Chair.

Just to clear up the facts, would the parliamentary secretary answer this: was the Wheat Board director there representing the Canadian Wheat Board in an official capacity or was he there as a producer who was elected to the Wheat Board? That's important to know. There's a big difference.