Thank you for your question.
Previously there was an option for a grower to deliver to an unlicensed company at their own risk, and some people recommend that this indeed be part of the new system. Right now the risk insurance for a farmer is covered by a system of bonds. This means that I have to have, in any given month, enough of a bond held in place to cover the liabilities I incur during that month. To assume that there's a difference in cost between risk and bond is not accurate, because you're still covering the percentage of sales. The only time that's different is when a client is over his bond; then they're not covered for whatever percentage is exposed, and not covered by perhaps not reporting accurately or by whatever system is being bought by non-licensed companies.
With the insurance, I really think we shouldn't focus on what the number or the percentage is, because it will vary. It probably will vary per client. It can be a public insurance or it can be a private insurance. Right now we operate under our export insurance. We use EDC to insure our outgoing exports. We use that as a method to protect our investments. So indeed, upon delivery, the farmer would then be insuring his product during that time.
I find there's a very disjointed understanding of the costs. When I talk to farmers, they tell me they won't pay for insurance for their grain. What they don't realize is that the cost is in the equation, whether I pay it for them, they pay it on their own behalf, or there's some type of cost-sharing.
I think the point you made that is important to focus on is that during the initial stages of any program, there will be an outstanding liability. There won't be a big enough fund, and perhaps the insurance won't be willing to take on the enormous amount of risk that perhaps could be involved. It then would be the role of government to pick up the slack in the terms of overexposure at the time, and to protect and to keep the royalties or the premiums at a lower level.
It's also important to realize that if we are going through humongous changes in our industry.... For instance, in terms of the ethanol and biodiesel component that we're seeing reflected in the study, we're looking at 25% less wheat going out of the country and some 30% less canola. And that's just talking about Canadian statistics; it's not talking about how much is going to happen when we get pressure from the U.S. because they need our grain more. There are some people who feel that our trade will become more north and south than indeed export-oriented.
It's important to ask, if we also look at the Canadian Wheat Board and the changes that may happen, what is the most bankable and simple system?