Agriculture Committee on Sept. 26th, 2006

[Christine Hamblin]

COMPAS is recommending that all overtime costs be considered infrastructure and that they be paid for by government. It gets back to the funding question and who should be paying for services. We are in a situation where our dollars are tight and we have some challenges. As a result of some of those challenges for service, we've had some of these concerns raised through the COMPAS report. It's one way of dealing with it. I ultimately think the decision is about who should be doing the services and how it should be funded. If government is going to fund it, then that's a decision you make. If it's going to be done through contracting out, then I'm not sure it's appropriate for government to fund on a contracting out basis.

Those are decisions that have to be made before we can move this issue forward. It's really a funding issue. A lot of those issues are driven because of the dollars that have been available for our inspectors to do their work. Can there be some efficiencies through using the private sector? Perhaps there can, and I'm not ruling that out.

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Bezan.

Mr. Boshcoff.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

Thank you, Mr. Chair.

Further to Mr. Bezan's question--because we had raised it earlier in the year and we had a meeting on it--I just want to let you know that I haven't heard anything further from any of the shippers at this time. I know the season is coming on again. It is an interesting perspective, because the Port of Thunder Bay has exactly those concerns that the previous speaker mentioned.

When we talk about the relations and operations of the Canadian Wheat Board, if the government succeeds in their plans to alter the mandate of the Wheat Board, how would that affect your operations?

[Christine Hamblin]

It really has minimal effect on our operations. We do have a good relationship with the Wheat Board; we have a lot of discussions with them on numerous issues. Obviously, a change in their structure would change our relationship with them. Ultimately, our mandate is independent of the marketing agency. We're not involved in buying or selling grain in any way, shape, or form. We are a neutral third party that does the inspection and weighing of the grain--21 different grains. Wheat and barley are not our only responsibility; we have responsibility for many other grains as well.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

When we read these recommendations--and I found the report quite interesting because of the number of recommendations--it talks about the atmosphere of disharmony and mistrust of perhaps.... “A war of all against all” is the quote they use. That's got to be a challenge in itself when people are already coming in with pretty hard and set perspectives on who's at fault, and what can be done.

In terms of trying to address this as an organization, how do you take up this challenge? How are you going to deal with that, which is as important as any of these cost factors?

[Christine Hamblin]

It's not going to go away, no matter what decisions are made here and within the next few months with regard to our mandate. COMPAS talks about consultation and the importance of consultation. Clearly that is part of the solution. Communication is part of the solution. We are always going to have the challenge of different viewpoints, and any time a decision is made that is contrary to your personal view, you are critical of that decision. I think that's a reality of much of what we see, not just in the grain industry, but in all regulatory capacities.

The challenge is to balance all those different viewpoints and to create policy and, as in the case now, legislation that takes into account the bigger picture and the best interests of the industry as a whole.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

We talked about how you and the Wheat Board have gained the reputation for the fact that so many countries are proud to label Chinese beer, Polish products, super Manitoba, 100% Canadian, all those kinds of things. Do you see this report geared to enhancing that? Do you think it wanted to be helpful, or is there the feeling the Grain Commission wasn't living up to its efforts?

[Terry Harasym]

The report is written from the perspective of recognizing what the CGC does currently, and what it can do for the sector does add value. My own personal view, and it would be echoed through most of the people consulted, is that the CGC is a unique Canadian institution, and it confers huge competitive advantage to grain and oilseed producers in Canada specifically, and to the grain handling and marketing agencies in Canada generally. It's as relevant in terms of how we need to move forward today as it was when it was first introduced in 1912.

The big issues coming at us, and the ones the CGC is trying to deal with, are in the areas of the increasing competitiveness in the international marketplace, the new demands of our customers--which are sometimes difficult to meet--in the area of grain quality assurance and in the area of grain safety assurance. That is where the game is being played, and those are the reasons the CGC can confer a huge value on the industry from producers right through it.

You asked the question a minute ago as to the tone in the industry and how we could move forward, and whether that is accurate or not. The grain industry in Canada is one that is extremely good at finding problems in the industryand extremely bad at finding solutions. Part of the way to find the solutions is that, as Chris said earlier, we need to be talking to each other more, communicating, consulting in a real way, and ultimately getting to the point where solutions are a product of more than one perspective. It takes a lot to do that, and ultimately it boils down to leadership and the decision on the part of everyone in the industry to accept the leadership role to do that.

[The Chair, Conservative, Gerry Ritz]

Thank you, Terry.

Alex, do you have any last points to make?

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

With regard to the whole consultation process—we have a recommendation by COMPAS—in your opinion, is this is a true reflection of the feeling specifically among the primary producers?

Also, were there stakeholders outside the western provinces that were consulted?

[Christine Hamblin]

The process that COMPAS followed did provide lots of opportunity for consultation. They had numerous written comments; they also held public meetings. They had one in Montreal, I believe; they had one in London, Ontario; and they had two in each of Alberta, Saskatchewan, and Manitoba. Invitations for those meetings did go out to many stakeholders, including producers, grain handlers, producers groups, and so on, and they advertised in the papers. So I think there was ample opportunity for input.

Did people take the opportunity? That's another question. It was at a time of year when some felt it difficult to get engaged. And it's a topic that a lot of people don't understand—the depth of what the Canadian Grain Commission does. They just accept the value we provide and perhaps aren't engaged in the details, in the manner that COMPAS and others had hoped. But there was certainly lots of opportunity for them to be involved, if they so chose.

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

Thank you.

[The Chair, Conservative, Gerry Ritz]

Thanks, Alex.

Mr. Gourde, do you have a short point to make?

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Good day. My question concerns the evolution of the grain market over the next few years.

It may be that grains grown are destined for biodiesel fuel and ethanol production. In terms of primary elevators, if the percentage of grains destined for biodiesel fuel production increases substantially -- which may depend on the different regions -- will problems arise in terms of these elevators' storage capacity and grain grading for human consumption? Could this potentially lead to some problems for you?

[Terry Harasym]

In terms of what is going to happen with biodiesel or ethanol production, my crystal ball is a little fuzzy right now. I think there are a great many options or variables in play in terms of whether it will take off or not. But there is definitely an opportunity for additional grain to be used in the production of ethanol and biodiesels, and it will happen.

For example, I believe that the numbers—which I haven't generated—are that if in fact the ethanol-biofuels strategy of 5% by 2010, which the government has announced, is actually reached, it would account for something in the order of two billion additional litres of ethanol. To produce this would require somewhere in the order of five million tonnes of wheat. To put this into perspective, it's ultimately about 20% of the current production of wheat in western Canada. So it is not an insignificant issue that we're talking about here.

[Christine Hamblin]

If I may, I would add to that. Certainly if the biodiesel and the ethanol industry takes off in Canada—and the signs are indicating that it will—as Terry mentioned, we may see that there's going to be a lot of grain pulled out of the system to be used in those processing facilities. It may have an impact on the overall exports from Canada, but my belief is that it's not going to have an effect on the high-premium markets.

We have a lot of international markets that put a high degree of value, for example, on our red spring and durum wheat markets—the two classes we protected in our restructuring. I don't think we're going to see a reduction in those markets. Our buyers are going to continue to want the high-valued product.

What we will see, if there is an overall decline in exports, is that the lower-end markets are going to drop, and that product will be used domestically instead.

So I think there's still ample opportunity for gains or maintenance of our high-value markets, but there may be some changes in some of the other markets.

[The Chair, Conservative, Gerry Ritz]

Thank you.

Do you have a short redirect?

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

With respect to regional grain production in Western Canada, will some regions have a greater capacity to grow grain for biodiesel fuel, whereas other will be able to produce better quality red wheat? Will production be regionalized, or will growers be free to grow what they want, with grains shipped from one plant to another? Could this create some problems?

[Christine Hamblin]

Again, the crystal ball is going to have to come out.

That's difficult to answer. Every area is going to try to maximize the returns for products that can be grown locally. It may be that there will be some shipping of product between regions, but what breeders have been asking for is the opportunity to develop better varieties for those specific markets. It's why we went with our wheat reclassifying and creation of the general purpose class.

Canola is traditionally.... High-value markets are identity-preserved already. We will see mechanisms continue that will allow for the creation of varieties that are better attuned to the new end uses that biodiesel and ethanol are going to require, but that's a process that takes some time.

[Terry Harasym]

Again, it depends to a large extent on the feedstock you're looking at putting into the ethanol or the biodiesel markets. Regionally, if you're going to be growing something for ethanol in the east, my guess is it would be corn. It isn't going to be corn in western Canada; it will be wheat or something like it, and eventually it will probably be trees or some other cellulosic type of product, once the technology gets us there.

So it's a difficult question to answer. I think farmers are rational in their decision-making, and they will grow whatever they think will give them the highest return.

[The Chair, Conservative, Gerry Ritz]

Thank you.

Mr. Easter, do you have a point?

[Wayne Easter, Liberal, Malpeque, PE]

Yes, I have a question on process, really, maybe for the parliamentary secretary, Chair.

What is the process from here with the COMPAS review and the Canadian Grain Commission and potential changes to legislation?

We're going to hold one more hearing, certainly, on Thursday, but what we're finding more and more—not just this government, but the previous government as well—is that consulting firms, for whatever reason, end up doing the hearing process, and the parliamentarians who eventually have to make the decisions are left out of that hearing process. They get a report written by some consulting firm instead of hearing the views directly from those affected in the industry.

My question is, what is the process from here in terms of getting to potential proposed changes to the act, if you know, David?

[The Chair, Conservative, Gerry Ritz]

I'll let David take a shot at it, and then you folks.

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

Go ahead, Chris; I'll fill in.

[Christine Hamblin]

The process is to evaluate the recommendations that are put forward. As I indicated earlier, we will be trying to package our vision for the minister to review. Much of it will include the recommendations from COMPAS. There are some areas where we feel there are some inefficiencies, if we try to go down all of the recommendations COMPAS has presented.

Ultimately it's going to come back to the legislators to make some decisions. I'm not sure what the agenda looks like for legislative changes. It needs to be put on the agenda, and the speed at which it makes its way onto the agenda will dictate how quickly this process is going to move forward.