Evidence of meeting #2 for Bill C-18 (41st Parliament, 1st Session) in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was farmers.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

8:15 p.m.

Conservative

The Chair Blaine Calkins

Thank you, Mr. Merrifield. Unfortunately, your time has expired.

Moving on to our next speaker, we have a question from Mr. Allen.

The floor is yours, sir, for five minutes.

November 1st, 2011 / 8:15 p.m.

NDP

Malcolm Allen Welland, ON

Thank you very much, and thank you gentlemen for being here. And thank you for the flow chart, which I think is helpful.

Let me go back to a couple of things you said in your opening remarks, I believe on page 3, which said that the working group assumed three things: a business plan continuing to see the WB as a voluntary marketing agency; marketing and transportation systems; all grains to be removed from monopoly.

As I look through, your first steps talk about reducing the board of directors to five government-appointed directors, so there would no longer be any elected ones. You can check these off: its directors are removed from office, it continues to work, the old act disappears, and the board of five government-appointed directors continues under the interim period.

So the transition period passes. We have the preliminary period. We get rid of the elected directors; we bring on five appointed ones. They stay in place.

And yet when we look at the bill, they're in place. Proposed section 25 talks about direction to the corporation. I will quote proposed subsection 25(1):

The Governor in Council may, by order, direct the Corporation with respect to the manner in which any of its operations, powers and duties under this Act are to be conducted, exercised or performed.

Proposed subsection 25(2) says, of the directors who are to be appointed:

The directors are to cause the directions to be implemented and, in so far as they act in accordance with section 16, they are not accountable for any consequences arising from the implementation of the directions.

In other words, you have a board of directors that doesn't seem to do anything but take orders and then direct that something be done.

Am I misreading the legislation, or have I lost something in your transition plan?

8:15 p.m.

Deputy Minister, Department of Agriculture and Agri-Food

John Knubley

Mr. Chair, I think the particular reference in the bill is exactly the same as what is in the current act, in terms of the powers to the directors. What I would like to reinforce, before I turn it over Mr. Meredith to explain in more detail, is that broadly speaking the intent here is to use the five directors to design and plan the new entity that will be part of the open market. That is the desire of Minister Ritz.

Greg.

8:15 p.m.

Assistant Deputy Minister, Strategic Policy Branch, Department of Agriculture and Agri-Food

Greg Meredith

The section the member is referring to is very similar to what the current arrangement is between the government and the Wheat Board, whereby the government can provide direction to the board on the way they conduct their business. The “section 16” reference is about conducting business in good faith, with the normal due diligence and prudence. But the subsection you read out that talks about not being held liable is really to say to the directors: “You are following a government order in this respect. It is deemed to be in the interests of the corporation; therefore you wouldn't be held liable by a private lawsuit or some such legal intervention from following the order.” This is not terribly different from the current situation.

8:20 p.m.

NDP

Malcolm Allen Welland, ON

The only difference is that the directors presently are elected. And if they actually were to decide to follow through on something they didn't necessarily agree with, they might end up being unelected. These folks are appointed, so if they're taking direction from the person who appointed them, they're hardly going to suffer any consequence related to that appointment. I think the distinction is there.

But the bill continues with “Plans, Borrowings and Guarantees”. I quote proposed subsection 26(1):

The Corporation must submit annually a corporate plan to the Minister for the approval of the Minister in consultation with the Minister of Finance.

You're setting up a corporation and suggesting to it, “You should act like a corporation, but oh, by the way, we want you to take a plan to the Minister of Agriculture first for approval, and then take your business plan, when it comes to actual money—what you might want to borrow—and have it approved by the Minister of Finance as well.”

Now, I heard earlier that there might be taxpayers' dollars involved. I get that piece, that taxpayers' dollars are involved. But why is there a need for the Minister of Agriculture to make a decision on what business the board should carry out? If you indeed want this board to be an entity unto itself at the end of five years, would you not want it to learn how to stand on its own two feet so that it actually can do what it is the government wants it to be at the end of the day, which is a voluntary, successful board that people want to use? If the minister is going to intervene all the time, how do they learn to do that?

8:20 p.m.

Conservative

The Chair Blaine Calkins

Mr. Allen, your time has expired, but I will allow a brief answer from the witnesses.

8:20 p.m.

Deputy Minister, Department of Agriculture and Agri-Food

John Knubley

Again, what I would want to emphasize, Mr. Chair, is that the transition period and the interim period is up to five years. If the Wheat Board can develop a plan that will allow it to be viable in the open market and to go forward earlier than that, that will be considered. The intent, again, of the legislation is such that we are looking to the Wheat Board itself to find how it can be viable.

8:20 p.m.

Conservative

The Chair Blaine Calkins

Thank you, Mr. Knubley.

Mr. Storseth, you have five minutes, please.

8:20 p.m.

Conservative

Brian Storseth Westlock—St. Paul, AB

Thank you very much, Mr. Chair.

I'd like to thank the working group for all the great work they have done on this and thank them for coming today to talk to us about this very important change for western Canadian farmers.

Mr. Knubley, in your opening comments you referred to a 2008 AGRA Informa study. Would that be the study “An Open Market for CWB Grain”?

8:20 p.m.

Deputy Minister, Department of Agriculture and Agri-Food

John Knubley

That's correct.

8:20 p.m.

Conservative

Brian Storseth Westlock—St. Paul, AB

That's the same study that says on page 4 of the executive summary:

Based on the most recent five-year average of grain delivered into the CWB pool accounts, revenue gains from an open market system would total $450 million to $628 million per year.

I'll just say that one more time: “$450 million to $628 million per year”. It continues: “These savings estimates are based on those aspects which can be quantified, while items such as inefficiencies of CWB contracts, lack of price transparency, storage issues and sales timing are not included” in this estimate of $450 to $628 million a year.

Does the working group expect there to be a benefit for western Canadian farmers through an open market?

8:20 p.m.

Deputy Minister, Department of Agriculture and Agri-Food

John Knubley

As I indicated in my opening remarks, the working group anticipates there will be opportunities for new investments, for growth in terms of efficiencies of the grain-handling system, as well as for value added.

I think we are also aware there will be challenges as we move forward in terms of how the new system will work, but we are very confident that at the end of the day the new system will bring growth.

Would any of my colleagues like to comment?

8:20 p.m.

Commissioner, Canadian Grain Commission

Murdoch MacKay

I would talk about the rail freight service review and service level agreements being made between shippers and the railways, and also the fact that the companies will now be in control of their pipeline. When I talk about pipeline, I'm talking about the movement of grain from their country operations to the terminals. I think you will see increased efficiencies in the movement of grain. In the non-board market, the companies are in control of the movement of that grain so storage costs are less than with the Canadian Wheat Board. That is something I was aware in my previous life.

If you look at the throughput of terminals in Canada, there's a terminal on the west coast and its elevator turns approximately 30 times; there are other elevators there that will turn approximately 15 times. When I talk about turns, that's the total amount of grain they will put through their facility compared to the size of their facility.

If you look at some of the throughput they have in the facilities in the U.S., Bunge is building a facility in Washington, on the west coast, and they're looking to turn that facility 80 times. I think controlling the logistics within your own pipeline will enhance the throughput and the efficiency of facilities, and I believe that will allow benefits that go back to the producers.

8:25 p.m.

Conservative

Brian Storseth Westlock—St. Paul, AB

Absolutely. All you need to do is look at what's going on in Europe to see how important market certainty is to markets and to industry.

Mr. Knubley, one of the things you talked about a couple of times in your opening comments was the aspect of market certainty. I couldn't agree with you more.

I have a simple question for you. What is the potential impact of de-monopolizing the CWB on market certainty, and what do you feel is the best way to maintain market certainty going into this transition?

8:25 p.m.

Deputy Minister, Department of Agriculture and Agri-Food

John Knubley

As I said in my opening remarks, market certainty was a fundamental issue that was raised by every person we met as the working group. In terms of the delivery of that certainty, I think it is to move forward and to implement it in a phased way, as set out in Bill C-18.

That will allow for contracting in January as well as re-establishment of the governance of the Wheat Board itself, and then moving to the interim phase as of August 1, 2012, where we open the market.

You repeal the existing act. You create the interim act, and you put in place the government guarantees that allow the Wheat Board to carry on, on an interim basis, and look for ways to reinvent itself.

Then with a third phase after five years, the Wheat Board will again come forward with a plan that will allow it to be a viable participant in the open market.

My answer is that by establishing these clear phases and clear dates as to when the market will be open and what role the Wheat Board will play in terms of developing its plan we provide certainty to the market.