Bill C-18 (Historical)

Marketing Freedom for Grain Farmers Act

An Act to reorganize the Canadian Wheat Board and to make consequential and related amendments to certain Acts

Part 1 of this enactment amends the Canadian Wheat Board Act to change the governance structure of the Canadian Wheat Board and to make other changes in preparation for the implementation of Parts 2 and 3. Part 2 replaces the Canadian Wheat Board Act with a new Act that continues the Canadian Wheat Board and charges it with the marketing of grain through voluntary pooling. Part 3 provides for the possible continuation of the Board under other federal legislation, while Part 4 provides for its winding up if no such continuation occurs. Finally, Part 5 provides for the repeal of the new Act enacted by Part 2.

Business of the House

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

It being Thursday, Mr. Speaker, and a Thursday before a break week when we will all be back in our ridings commemorating events around Remembrance Day on November 11, I would like to ask the government House leader what the agenda will be for the balance of this week and what it will be in the week when we return? In particular, will Bill C-18 be back in the House by that time?

Finally, perhaps as a follow-up to the question asked by the member from the Green Party, how many more times are we going to have time allocation? We are at seven and counting. He is going to catch the Liberals pretty soon if he does not stop, so how many more times do we get time allocation?

[Niki Ashton, NDP, Churchill, MB]

Right. I understand, though, that initially everything on which the Wheat Board is based comes from farmers' work and their pockets. The concern, and it's a concern that I've heard from many, is that the contingency fund built from farmers' hard labour and the investments they've made in the Wheat Board is going to greatly benefit the private company that will result if Bill C-18 goes through.

Is that not the case? Will the new entity not benefit from this contingency fund?

[Niki Ashton, NDP, Churchill, MB]

Thank you very much, Mr. Rousseau.

Could the committee hear what will happen to the financial resources saved by farmers once the Wheat Board begins to be dismantled according to Bill C-18? Specifically, what will happen to the contingency fund?

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

I guess my next question speaks more personally and is related to my riding. We've heard what you've said about the opinion of Canadians on the ground is.

My relatives in Manitoba weren't allowed to vote. For whatever reason, they didn't receive a ballot, and even then the ballot didn't list the third option that we're providing—the hybrid option, I like to call it.

What are you hearing on the ground? What has been the best news with the progression of Bill C-18 and what it's leading to? What are the good stories you've heard about what is going to come?

[Malcolm Allen, NDP, Welland, ON]

Thank you, Mr. Chair.

And thank you, Mr. Rousseau.

Mr. Bonnett, you've talked about lengthening the period of time to look at impacts of this and how we would roll it out. I understand that your expertise lies elsewhere, as an individual farmer. But overall, when one is laying out that timeframe....

And by the way, I agree with you on the timeframe. To remind folks, the working group to establish Bill C-18 was convened in July of 2011, with a mandate to be finished by mid-September 2011. So basically it was allowed two months to bring disparate viewpoints together, supposedly. One can argue that maybe the disparate viewpoints didn't get to that particular working group, for whatever reason. There are many reasons why that happened.

But one would have thought that if you wanted a working group to think about what we should do and how we go forward.... What sort of timeline do you see for that working group, going forward, to then think about another timeline as to what you should do if you were going to implement it? Are two months satisfactory to simply say, here is how we're going to affect tens of thousands of folks? I'm not judging, positively or negatively. We're talking about tens of thousands of farmers across the Prairies who will be affected by this, and within two months, the working document will come together and we will go forward.

What sort of timeline would you see in your mind, if you were allowed to set out a timeline, Mr. Bonnett?

[Jean Rousseau, NDP, Compton—Stanstead, QC]

My next question is addressed to Mr. Vos.

Do you not think that Bill C-18 could have collateral effects on agricultural sectors where supply management is important, and where the stability and viability of producers is dependent on that system?

[Jean Rousseau, NDP, Compton—Stanstead, QC]

My question is again for Mr. Bonnett.

Let's take Australia as an example; they had a longer transition period. And yet there were disastrous results there. How can we hope for a better result with a shorter transition period, as provided for in Bill C-18?

[Jean Rousseau, NDP, Compton—Stanstead, QC]

My question is for Mr. Bonnett.

You touched on several issues that are of concern to your members, in particular issues involving transport, access to facilities, and financial stress, issues which the board now deals with; you also mentioned other responsibilities that are going to fall onto the backs of farmers now. I think I am not wrong in saying that farmers everywhere in the country do not want and do not need additional responsibilities.

Do you think that the coming into force of Bill C-18 will complicate our farmers' lives?

[Jeff Nielsen]

Thank you for the question, but no, I don't take if from that view. I view it as about being allowed to work on what farmers have wanted. All along, all of the Canadian Wheat Board surveys have shown overwhelming support for a dual market system, allowing the Canadian Wheat Board in some form and without the single desk to still be a market player. Farmers are looking for more market players. We're getting inklings that there will be more market players coming into the western Canadian grain trade once Bill C-18 is passed.

We're looking at a short timeframe between January and July 31, so that the four government appointees will be.... It will still actually be the same act, but with four government appointees. After that, it will be an open market for all of us, and those four appointed directors are tasked with creating and finding a new entity that will survive. I believe we have the strength and the willpower in the office in Winnipeg to get that done.

My intent was that I'd like to be there at that table to see that happen for those farmers who believe in choice in western Canada.

[Niki Ashton, NDP, Churchill, MB]

I hear what you're saying, Mr. Vos, but what I also know is that the plan in Bill C-18 is such that the government will continue to have extensive control over one part of the industry, certainly. And when Bill C-18 passes, the minister plans to appoint the five directors. So the instance of control is very much alive and well in Bill C-18 as a result of this government's direction.

Mr. Nielsen, on July 23 you were quoted in the National Post as saying, “I want to be part of creating that entity”, referring to a new entity, “as a director”, referring again to the organization replacing the Wheat Board. Do you think this kind of a statement puts you in a conflict of interest in indicating your desire to participate in the replacement of an organization that you had every responsibility to protect as a sitting board member?

[Jeff Nielsen, Former Director, Canadian Wheat Board]

Thank you.

I'd like to thank the committee for allowing me to come to speak to you tonight.

Western Canadian grain and oilseed and pulse producers are some of the most innovative, progressive, and adaptive people I know. We've seen the continued growth and value added in our oilseeds, pulses, and other specialty crops. Now, finally, with the passage of the Marketing Freedom for Grain Farmers Act, I know we will see and explore the same opportunities in wheat and barley.

By finally being allowed this freedom, these producers will see a profitable future for their businesses and more prosperous rural communities. But a majority of the directors of the current Canadian Wheat Board want to derail the idea of moving forward and of allowing us to be progressive, innovative business operators in the production of our wheat and barley, just like canola and pulses.

I'd like to speak on a number of intertwining items. First is the total lack of listening to what all of farmers within the Canadian Wheat Board jurisdiction have been telling the Canadian Wheat Board for years. Second is how that lack of listening by a majority of this board has affected the relationship with our federal government. Third, because of this, and coupled with the lack of respect for their fellow directors, these single desk directors at the Canadian Wheat Board have grossly disenfranchised themselves from reality.

On the failure to listen to all western Canadian farmers, I'll quickly go back to 2007 when we had the barley plebiscite. The results came back in favour of allowing marketing choice. At that time Chairman Ken Ritter commented, “The results of the barley plebiscite announced today are not overly surprising. The CWB has been surveying farmers every year for the past 10 years and these results appear to be consistent with our annual findings.”

I had a chance as a director to go back and look at all of our surveys up until the survey published last June. Not once was there ever support for marketing barley under the single desk. Where was there any listening to barley farmers during all those years?

Our malting sector made it clear in 2007 that there would be no new builds or investment in the existing facilities until the single desk was gone. Yet I'm happy to say that will soon be changing. I was pleased to be in Alix, Alberta, yesterday to hear of Rahr Malting Canada's expansion plans and their commitment to build long-lasting partnerships with producers to ensure quality barley for Rahr and, therefore, quality malt products from Rahr to their customers.

The Canadian cattle feeders have recently said that growth and varietal development, along with clearer market signals in barley, will increase the usage and acres once the single desk is gone.

What's really next for barley? Could we see increased food fractionation for health benefits? How about a higher starch variety of barley for the biofuel industry?

I'm also happy to hear that durum producers are excited to hear about a new pasta plant in the west.

Thinking back to our producer surveys, we've seen growth in the number of younger farmers--we categorize them as under 45--who want more marketing freedom. The Wheat Board has to look at its future as well. Who will be producing grain in the future? It will be these people. We have to address the needs of these younger farmers.

We've seen farms getting bigger, with the majority of them supporting an open market. Statistics Canada figures show that there are roughly 20,000 commercial grain producers in western Canada. So why did we send out 66,000 ballots in a plebiscite when there are only 20,000 commercial producers in the west?

A good quote comes from Mr. Oberg himself. At the Senate agriculture committee in 2006, he said that if a plebiscite were held “it should be all inclusive. The Canadian Wheat Board Act presently defines voter eligibility as any producer capable of growing the six major grains....”

The question of a dual market has been asked for years in our Canadian Wheat Board surveys. The results have shown a strong majority wanting the Canadian Wheat Board to stay with a dual market.

Honestly, folks, farmers know what a dual market means. It means a voluntary Canadian Wheat Board. To suggest that we don't know what a dual market means, and not allowing the dual market question on this past summer's ballot, was insulting to all farmers.

In my three years, I've seen a constant standoff between the majority of the board and the Canadian government. We've seen the laker purchase; the spending of farmers' money on a non-verified, non-binding plebiscite; a series of so-called producer meetings where special interest groups, such as the Communist Party of Canada, were allowed to attend and spread their propaganda; and most recently, the legal challenge to Bill C-18, spending more of farmers' pool account moneys. I've seen it go as far as not allowing management to move forward, to start working--

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

The whole campaign. The whole fight on C-18. You've had a survey. You spent close to $400,000 that we know of. Could you explain in order to—

[Professor Kenneth A. Rosaasen, Professor, University of Saskatchewan]

Thank you, Mr. Chairman, and good evening.

I'm Kenneth Rosaasen. I'm an agricultural economist, a professor at the University of Saskatchewan. I grew up on a family farm, and I continue to farm with my family on a farm that started in 1905.

I'd like to outline some of the long-term impacts of Bill C-18, as proposed, and also focus on the uncertainty that it's creating.

The first is the impact of the loss of revenue to the farm sector. Others have already spoken of the approximately $400 million to $600 million per year and the studies done by reputable economists on that. Directors who were not certain when they became directors, as Ian pointed out, soon became strong supporters once they saw the internal operation.

Removing the single desk removes income from farmers, and transfers it to consumers in other nations largely. And it also creates greater opportunities, perhaps, for the marketing margins of grain companies.

The Canadian federal government strongly supported, as did Saskatchewan, the maintenance of Canpotex, a single desk for potash. Conceptually, the economics are similar. Saskatchewan potash received the deserved federal recognition as a strategic resource. Are not the food production resources and the crops produced as important in western Canada?

Bill C-18, as proposed, will remove the entire farmer-elected boards and replace them with five appointed government directors. I call this the government marketing agency, because essentially they're expropriating the assets that now belong to farmers. This is different from simply the wind-up cost, which is also being discussed by your auditors.

Someone suggested that the Wheat Board also has value as an ongoing entity, producing approximately $400 million to $600 million in revenues per year. What is the capitalized value of this moving forward? In some legislation, when changes are made, compensation is negotiated and paid to those who are the losers. The Western Grain Transportation Act paid out compensation because of the loss of the rail freight payments. The tobacco buyout by your government recently did the same thing to recognize the cost to losers. Sometimes it's done by compensation, sometimes it's sought through the courts.

Some assert that a CWB without a single desk can be viable. I don't think this is correct, for several reasons. The new government marketing agency will not have any physical delivery points, either in country or at terminals. It will rely solely on the goodwill of powerful grain companies for access, which I believe is naive, at best. CEOs are rewarded based on their bottom line, not on their goodwill to new entrants in a market.

Second, with no ability to physically control the product, the blending opportunities will accrue to the companies, not the government marketing agencies. Clearly, one should not be surprised that the grain trade is clamouring to achieve these increased marketing margins from people who might deliver to this new grain marketing agency of the government. This agency might be able to operate as a broker and perhaps as a pooling mechanism. I think its survival is highly unlikely.

When the Australian Wheat Board moved in this direction, it had a much longer transition period, and it had assets, and it was given substantial legislative conditions in terms of delivery and access, and other things. Yet is no longer there but was sold to Cargill.

The third component of any organization, including this new government marketing agency, is the directors and the skill set they possess. We don't know who they are and we don't know what type of competent staff might remain during a period of transition and uncertainty.

Based on the current bill as proposed, our farm would not sign any contract to deliver to this new marketing agency. And numerous farmers I have talked to feel the same way. Our farm has used the fixed marketing tools and the ability to forward price. I teach grain marketing classes. We do contract canola and I've already sold the crop I plan to plant for the fall of 2012. I can't do that for wheat. There is no futures market in place and no one has yet taken the risk.

In Canada, we don't have a great record with how our futures markets operate. We've had a failed futures market for flax, rye, peas, oats, feed wheat, and now feed barley has virtually no open interest or delivery volume. This is not something to be proud of.

The major challenge is developing one for wheat, and some people paint canola as a shining example. How many actually look at the contract, the number one contract with 8% dockage as the deliverable grade? That means at $12 a bushel, when I see the quoted price, I don't get paid for the dockage. They subtract that from me, but that's what's deliverable on the contract. They don't let farmers deliver on a contract in cash in futures. They don't let them move together, which is one of the keys.

Ian has covered producer cars. There is legislation that says you can deliver, but that doesn't matter if you can't unload it at the other end. You need revised legislation to reflect the changing reality in the world.

The Wheat Board has been a defender of wheat and durum and barley farmers in countervail actions launched by the U.S. or others. Who will do that now? The EU and others have sought the elimination of the Wheat Board. The U.S. tries to beat it up as a state trader. I asked our negotiator how we were doing. It's pretty hard to negotiate something when your government is giving it away.

Bill C-18 is going to have major ramifications for prairie grain farmers, and the rapid speed at which it is moving is unforeseen. I have followed government activities--the Crow rate, the feed grains policy debate--and nothing has been rushed through like this.

I would suggest that in many areas we use new variety testing, we do small plots for chemicals and other things, so that we get it right. I'd say that we should be doing the same here. Using this rational approach, if the government is determined to proceed, I would suggest that it be done with a continental barley market in August of 2012, with wheat and durum delayed for one year because of all the uncertainty.

The government will still have a majority a year from now. There are fixed election dates, On the farm where I grew up, my father and uncle gave me some advice: When you're building something, measure twice, cut once. A more precise plan than what is outlined in Bill C-18 is needed to foster a smoother transition of the prairie grain marketing and transportation system, with a lot less uncertainty and long-term costs.

Thank you for listening.

[Allen Oberg, Chair, Canadian Wheat Board]

Good evening. Thank you for this opportunity to address this committee.

I'm going to make some introductory remarks, and then Stewart and I would be pleased to answer any of your questions.

I intend to focus my remarks on part 1 of Bill C-18--clauses 2 to 6, and clause 12, which remove the farmer-elected directors--and on part 2, which strips the Canadian Wheat Board of its single desk.

Let me begin by providing some context. I am the chair of the board of directors of the Canadian Wheat Board, and Stewart and I serve as the elected representatives for farmers in Districts 3 and 5 respectively, but we are both farmers as well. With my brother, I run a 6,500-acre mixed grain and cattle farm near Forestburg, Alberta. Like Stewart's farm near Swift Current, and indeed all prairie grain farms, our farm is focused on quality, on producing the food that feeds the world. We are also entrepreneurial, innovative, and market savvy.

I'm not telling you that to be immodest, but because the back story of this legislation you're examining is that Ottawa is telling successful farmers like Stewart, my brother, and me that we don't need the Canadian Wheat Board any more, and it is ignoring the wishes of the majority of western Canadian farmers who voted to retain the single desk.

According to our Minister of Agriculture, the Internet has somehow done away with the benefits we get through marketing together in a global grain system dominated by a handful of giant companies. I know it sounds ridiculous when you put it like that, but that really is the argument in a nutshell--that and the idea that even if a single wheat or barley farmer doesn't want to market through the single-desk system, that system should be abolished, regardless of what the majority of farmers want.

Of course, the same free market rules don't apply equally to all farmers. Dairy, chicken, and turkey farmers can have marketing boards that are fully supported by this government—at least for now. I say “for now” not to try to scare my colleagues in supply management but simply to reflect the reality that what this government promises and what it does are two different things.

The Conservatives have won a majority and have decided that this gives them the right to go ahead and make irreversible changes to Canada's grain industry without consulting the farmers as they promised they would. For example, in an Agriculture Canada news release on January 16, 2007, then Minister Chuck Strahl stated, and I quote:

I'm announcing today that Canada's New Government will hold a further plebiscite on the marketing of wheat at an appropriate time. Western Canadian farmers have the Government's commitment that no changes will be made in the Canadian Wheat Board's role in the marketing of wheat until after that vote is held.

Minister Ritz made a similar promise to a group of farmers in western Manitoba in March of this year, when he said that the Harper government respects the vote of farmers who have consistently elected a majority of Canadian Wheat Board directors who favour the single desk. There wouldn't be any attempt to impose dual marketing on the CWB unless a majority of producers voted for it, he told them, in what was described by the media as a campaign style speech. I quote, “Until farmers make that change, I'm not prepared to work arbitrarily....” And he said, “...they [the farmers] are absolutely right to believe in democracy. I do too.”

How ironic that those who first entered federal politics on a platform of direct democracy, plebiscites, and reform are now calling for the very opposite. Who needs direct democracy and the rule of law when, according to the government, the May 2 general election was all the consultation with the farmers that was necessary?

I would argue, respectfully, to this committee that a majority of government does not bestow absolute power. Parliament is sovereign, but not even Parliament can disregard the law of the land because it doesn't suit a particular agenda.

The Harper government broke the law when it introduced Bill C-18 on October 18. It broke the law because it did not first conduct a vote among the affected producers, as required by section 47.1 of the Wheat Board Act, which is still the law. By ignoring section 47.1, the Harper government has denied all farmers their legal right to have a say in the future of the CWB, whether those farmers are big or small, young or old, organic or conventional.

Because this government refused to hold a vote among farmers, we held our own plebiscite this summer. Almost 40,000 farmers participated. A majority of them chose to retain the single-desk marketing system for wheat and for barley.

Why? Because the single-desk system puts more money in their pockets. It's as simple as that. You can spin this issue as much as you want. You can compare spot to pool prices. You can shout about it until you're blue in the face, but nothing can change the simple economic fact that one seller of a product will always be able to command a higher price for that product than multiple sellers. That is why farmers voted to retain the single desk, but this government refuses to listen to farmers.

I'd like to talk specifically about part 1 of Bill C-18, clauses 2 to 6, and clause 12, specifically. These are the provisions that terminate the 10 elected directors who, along with five government appointees, lead the CWB. These provisions effectively end farmers' ability to have direct control over the organization they pay for. These provisions turn back the clock to a time of complete government control. Far from putting farmers first, as the government says it's committed to doing, it puts farmers last, sidelining them in their own industry. These provisions erase all the advances that the Canadian Wheat Board has made since becoming a farmer-controlled organization.

Parliamentary Secretary Anderson was quoted in a recent media report as saying the purpose of this committee was to, and again I quote, “...focus on the future rather than go over what we have already heard.” One thing not heard by this government during the sham debate is the voice of farmers. I'm not talking about the special interest groups funded by big agribusiness, who represent only a small number of farmers but who happen to have the ear of the government. No, I'm talking about the voice of all farmers—the voice that has spoken, and would speak again, through a plebiscite on a clear and simple question about what they want. We held our own plebiscite and 57% of farmers participated, roughly the same amount who voted in the last federal election. This turnout comes despite a concentrated effort to have farmers boycott the process. However, farmers voted in the plebiscite in record numbers, and their decision is the only real mandate on the CWB, a clear and strong mandate to maintain the single desk.

This government has repeatedly attacked the process and the results, but what they have really been attacking is farmers' rights to a voice. If the problem were with our process, then surely this government would have obeyed the law and lived up to the previous commitments to prairie farmers and held its own plebiscite.

I'll conclude by asking you all to consider the future, as per Mr. Anderson's wishes. Consider a future grain industry in which farmers are reduced to bit players in the global supply chain, a future in which farmer control and farmer influence is a thing of the past, a future in which farmers' voices are silenced, a future in which farmers would not be able to re-establish a single-desk wheat marketing board if they wanted to, because once the single desk is gone, it is gone forever.

Thank you, Mr. Chairman.

[The Chair, Conservative, Blaine Calkins]

Good evening, ladies and gentlemen.

This is the third meeting of the legislative committee on Bill C-18. As discussed previously, from the witness list, we have presenting today, Mr. Ian McCreary, farmer and former director at the Canadian Wheat Board. On behalf of the Canadian Wheat Board, we have Allen Oberg, the chair. Accompanying him is Stewart Wells, director for District 3. And appearing from the University of Saskatchewan is Professor Kenneth Rosaasen.

Gentlemen, the rules we have decided here at the committee are that we will have 10-minute presentations by witnesses, followed by questioning by members of the committee.

Given that we have three presenters here wishing to make 10-minute presentations, I will ask you to keep your remarks as concise as possible. If you don't need to use your full 10 minutes, I would encourage you to use only the time you need. The meat and potatoes of the discussion will likely come during the questioning rounds.

We'll then proceed to five-minute question and answer rounds by members of the committee. Given the fact that we have such little time in this first hour, I will be a little more firm with the use of that five-minute window than I have been in the past.

Who would like to present first? Mr. Oberg, would you like to go? You have 10 minutes, sir. The floor is yours.