Mr. Speaker, I am pleased to speak on Bill C-51 this morning, an act to amend the Canada Grain Act.
Bill C-51 represents a consensus among Canada's western grain producers and the grain industry. This bill contains the changes to the Canada Grain Act these communities have told us they need.
There are four key elements to Bill C-51. The first is to renew Canada's commitment to quality and therefore reinforce the uniqueness of the Canadian quality control system. The second is to eliminate the obligation for government to set maximum elevator tariffs. The third is to improve the financial protection available to grain producers. The fourth is to reduce the exposure of taxpayers in the event that licensees of the Canadian Grain Commission fail financially.
I will now give some detail on these four particular aspects beginning with commitment to quality. Bill C-51 renews this commitment to quality. When we talk about quality, what we mean are the measurable characteristics that end users of these products tell us they need. Bill C-51 restates the need to meet the requirements of end users through visual and other quality determination methods. Until instrumental means are developed to rapidly and efficiently determine quality, visual methods must still be relied upon.
Grain quality, which is the primary reason for Canada's success in international markets, is more important than ever given the post-GATT climate in which freer trade rules reduce the role of export subsidies. Our competitors are going to have to become more like us. For this reason it is important that Canada preserve its tradition and widely acknowledged leadership in this area.
On the issue of maximum elevator tariffs, Bill C-51 provides that the Canadian Grain Commission will no longer be required to set maximum elevator tariffs. Tariffs are the charges grain elevator operators levy for their elevation, storage and cleaning services.
In the absence of maximum tariffs, elevator operators will be able to decide what to charge for their services. Operators will also no longer be required to provide the commission with 14 days notice when changes to tariffs are to be made. These measures will provide companies with more opportunities to be flexible and competitive.
Removing the obligation of the commission to set maximum tariffs is being done at the request of the industry. Elimination of the maximums should encourage more capital investment by elevator companies and result in a more flexible and competitive elevator industry.
Producer reactions to this provision have been mixed. Some do believe there is a risk that companies will charge excessive tariffs unless they are regulated but we are convinced that Bill C-51 addresses these concerns. There are safeguards within the bill and within the structure of the industry.
For example, the majority of primary and terminal elevators are owned or controlled by producers through the Saskatchewan Wheat Pool, the Alberta Wheat Pool, the United Grain Growers, and the Manitoba Pool Elevators. These operators are responsible to their producers, so it is expected they will consider the interests of producers when setting these tariffs.
Some may argue that the corporate interests of producer organizations will override the producers' interests. It would be presumptuous for government to tell producers they are incapable of directing their own organizations. I am very much convinced that producers know what they are doing and they are in the best position to determine whose interests their organizations will serve.
In the unlikely event that producer owned elevators are not able to protect their producers Bill C-51 does include some legislative remedies. Specifically for a two-year transition period the Canadian Grain Commission will have the power to immediately establish maximum tariffs by order if the investigation of a complaint from an elevator user finds that a particular tariff is unjustified. The two-year period should be
sufficient for the industry and producers to adapt to a deregulated tariff environment.
The commission will continue to have the power to set maximum tariffs by regulation as a last resort if elevator operators set tariffs that are excessive. Furthermore, the commission will continue to investigate complaints and to mediate disputes.
However, if the past behaviour of Canada's elevator companies offers any indication of their future actions they will behave responsibly. The recent experience where the commission issued an order which removed elevation tariff ceilings for terminal elevators for the current crop year has shown this. Limits on these maximums were removed to allow operators to recover overtime costs, enabling the industry to deal with backlogged orders. The resulting tariff increases were modest and responsibly applied.
It is significant that the tariffs companies are charging for their other services are below the ceiling established by the Canadian Grain Commission.
The next point has to do with the licensing and security provisions contained in the bill. The Canadian Grain Commission plays an important role in helping maintain the integrity of grain transactions and thereby protecting the interests of grain producers.
The Canadian Grain Commission licenses elevators and grain dealers and holds security posted by licensees. This security which is mandatory for all licensees is intended to help protect farmers against losses in case a licensee defaults on payments to farmers.
In the past the industry viewed this security as insurance to cover licensee liabilities only up to the amount of security posted.
However, in 1990 the Federal Court found the CGC liable in the case of the bankruptcies of two former licensees. In both cases the security held by the Canadian Grain Commission was insufficient to cover the licensees' obligations to farmers and the government had to pay the shortfall in security which was approximately $3.8 million.
The payments that resulted from these court decisions came out of general revenue, more specifically out of taxpayers' pockets. We feel it is important to change the act to protect taxpayers from further payments by clarifying the government's responsibility in any further bankruptcies. This view is shared throughout the grain industry with which the licensing and security provisions of Bill C-51 were thoroughly discussed.
The new licensing and security provisions are as follows. There is currently a one-year limit on security. The act will allow the time limit to be prescribed by regulation and it is the government's intention to fix this period at 90 days. The change is based on one of the major recommendations flowing from consultations. That recommendation was that farmers should take more responsibility for their transactions. This includes promptly pricing grain on delivery and cashing payment documents.
The vast majority of those consulted agreed that security is not intended to help farmers speculate on rising grain prices. By limiting their time to claim the act will place the responsibility on farmers for promptly obtaining payment and cashing documents.
Another provision is that farmers will have 30 days to notify the CGC of a licensee's failure or refusal to pay. If the CGC is notified promptly of a default, it can investigate a licensee that is potentially in financial difficulty and may be able to prevent the licensee from incurring further liabilities.
The onus will be on farmers to determine whether they are dealing with licensees. This is because the CGC only holds security posted by licensees. If farmers want to be eligible for security they will have to ensure they are dealing with a licensed organization. They can do this by contacting the CGC or by monitoring regular CGC advertisements in the farm press.
Farmers will have to hold prescribed documents to be eligible for security. Security posted by licensees applies only to cash purchase tickets, elevator receipts and grain receipts. To be eligible to claim against security farmers must obtain one of these prescribed documents. Only licensees will be entitled to use them. This will prevent non-licensees from misleading producers about their licensing status.
Security available to producers will be limited to the amount held by the commission. If the security held is less than total liabilities, the monies will then be shared on a pro rata basis. Government will not be liable if the security held is not adequate. The commission will monitor companies to make certain their security is adequate to cover their liabilities.
Finally, Bill C-51 will enable the commission to set by regulation the percentage of losses that would be covered by security. The government intends this will remain at 100 per cent of any losses. These are very important provisions that will resolve some of these long outstanding issues.
There is another point here that should be discussed that has to do with special crops. When Bill C-51 was reviewed by the agriculture committee some members and witnesses expressed the view that Bill C-51 should be held back until issues of specific concern to some members of the special crops industry could be addressed in the legislation.
The answer to the problem does not lie in holding up this bill. Rather, the answer is to proceed with developing legislation that is geared to special crops. What does special crops mean? This refers to products such as canary seed, sunflower seed, mustard seed, lentils, buckwheat, beans, peas, corn, safflower seed, soy beans, triticale, fava bean.
At one time special crops played a relatively small economic role when compared with other Canadian grains such as wheat, barley, oats, canola and so on. However, the industry has grown significantly, particularly in western Canada where special crops have grown by about 30 per cent in the last 10 years.
Special crops are regulated under the Canada Grain Act. This act was designed to regulate an industry largely devoted to the bulk handling of cereal grains. Many industry participants have observed that because special crops differ significantly in terms of handling and marketing the act does not meet all the needs of the special crops industry.
This general assessment has some merit. Over the past several years the Canadian Grain Commission has consulted widely on this issue, mostly through the special crops initiative which was conducted by a committee of special crops producers based in the three prairie provinces. These reviews have confirmed that the special crops industry operates differently than the sector of the industry that handles the major grains and that legislative changes are needed to address these special needs.
These reviews have also consistently underlined the need expressed by producers to have access to companies which are licensed and to financial security should those companies default on their payments to the producers.
The commission has examined numerous suggestions and a combination of suggestions that have come forward from participants in the special crops industry. Some suggestions had to be rejected because they were administratively complicated and unduly expensive.
More consultation is planned because the commission wishes to determine which regulatory option is most acceptable to special crops producers and the industry.
The commission recently circulated a discussion paper which outlines options and it will be holding discussions with the special crops industry in western Canada over the next two to three months. From these discussions will emerge recommendations for legislation in 1995.
The conclusion to be drawn from all of this is as follows. First, a special crops industry has special needs which must be addressed. These needs are being addressed in a thoughtful and timely fashion. Second, because the needs of the special crops industry will be the subject of legislative proposals, the minister of agriculture intends to bring it to the House in 1995. We should not delay the passage of Bill C-51. Delays will aggravate problems C-51 is designed to overcome.
In conclusion, we should all thank the many people who have been involved in one way or another in the development of Bill C-51. They include many members of the multitude of Canada's producer and industry organizations, staff of the Canadian Grain Commission, Agriculture Canada and many members of the House, all of whom have contributed to make this bill a success in addressing these issues.
