Evidence of meeting #21 for Agriculture and Agri-Food in the 39th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was producers.
A recording is available from Parliament.
Director General, Fédération des producteurs de pommes de terre du Québec
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
These potatoes will be affected for 20, maybe even 40 years. So that’s it for the potatoes. Are there plans to adapt your businesses? The nematode affects potatoes, but other vegetables could be grown, in principle.
Does anyone have any ideas on this?
President and Farmer, AMA-Terre
Potatoes generate $3,000 to $4,000 an acre. Don’t ask me to grow corn for $300 an acre. If the government, for the greater good, were to agree to reimburse the difference for 10 years, we’ll make a smooth transition and lower our costs. But it remains that it isn’t viable.
Director General, Fédération des producteurs de pommes de terre du Québec
It should be stated that nematodes are present in Europe and South America. They learned to deal with nematodes. That is, they developed resistant strains, they rotate crops more often, they manage. In a few years, if it is discovered that nematodes are present throughout North America, as it is in Quebec, Idaho, Vancouver and New York, we will need to learn how to deal with it. That said, we’re not there yet.
Some studies have revealed new ways for combating nematodes. Long-term measures, that is, those for the 2007 harvest, have yet to be determined. There are still a lot of unknowns. We need to reflect seriously on these questions. Can we live with nematodes? Can we control them? Can we leave fields bare for a few years, or rotate crops more often? These are the types of questions that we have yet to think much about. We’ll have to get the experts involved.
When I am talking about the long-term, I am talking about 2007. The committee, which is spending a lot of time reflecting on the short and medium-term economic impacts, should reorient itself towards the study of this parasite and methods we can use to manage it.
Vice-President, AMA-Terre
We must also consider the restrictions arising from the presence of the nematodes. Equipment must be washed when it is moved from one field to another. If a producer decides to grow grain corn, he would have to wash his equipment between each field, to not contaminate the rest of the harvest.
The populace has been taken hostage. Our children walk and play in the fields. We have to set aside a tray of water for them to wash their feet before setting foot on uncontaminated fields. What we are going through is unbelievable. Everyone is affected. It’s a real shame to see what is happening to our crops.
You asked us whether we can grow something else in our fields. One thing is sure, our markets are profitable. We’ve all said as much. Our profitability is our source of pride, and that’s why we’re fighting. But today, we’re telling you that we can’t make ends meet.
NDP
President and Farmer, AMA-Terre
I am an innovator, but I don’t have any answers today. I don’t know where I’m going. I tell my son, daughter and child that I wonder what we’re going to do next year. Usually, I can always come up with a solution to a problem, but right now, I’m stuck, really stuck.
We still want $3,000 to $4,000 an acre. When we talk about corn or whatever else, this possibility is already out of the question. It is hard to determine what our future holds. What will we do in Saint-Amable next year?
President, Fédération des producteurs de pommes de terre du Québec
We could ask Saint-Amable’s producers to grow something else in their fields, but markets like corn, asparagus or squash, for example, are already cornered.
An increase in supply of a good such as squash, for example, would have an impact on pricing, because the supply and demand curves for fruit and vegetables are very fragile.
When everything is taken into account, maybe, once the problem is analyzed to come up with medium and long-term solutions, that we will ask the producers to grow something else. However, we would have to assess the economic repercussions on the markets resulting from the changes.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
Do you feel trapped between two levels of government who are passing the buck to one another?
President and Farmer, AMA-Terre
We aren’t the only ones who have gone through this. It was like this in the past too.
We don’t care about jurisdictional arguments between the federal and provincial governments. The governments have to work together to find a solution. Let us take a little break. Distributing the money is your job.
I am speaking on behalf of the producers. What we want is to be listened and supported. Similar problems will occur in the future. As president, I have managed to calm down AMA-Terre’s members, who are enduring a period of relatively high stress. I wouldn’t want them to things like spreading their potatoes around. The borders are very fragile.
I don’t have any answers to give them. I try to give them a ray of hope every day, but there is no hope and no money. I won’t be able to keep them settled down much longer. How can we live without money? I said it earlier: no revenues, no money, no payments. That’s our short-term situation. In the medium and long-term, we’ll sit down together and come up with a plan for the future. There will be a solution.
Vice-President, AMA-Terre
Federations are working with us to come up with solutions. It is important for us to all work together in order to come up with most accurate possible overview of the situation. People’s net worth is in jeopardy right now and in the future. It is important to get answers to these questions.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
I would like to add something. I don’t think that it is up to the committee to make a visit. The government must act. We don’t need another visit to know what is going on. The government needs to act to help its people. I don’t think there is any other option.
Conservative
The Chair Conservative Gerry Ritz
Thank you, Mr. Atamanenko. We've actually discussed that option before and I'm sure it will come up again.
Gentlemen, thank you so much for your passionate plea here today. We thank you for that. There will be a report forthcoming from this committee. Certainly, these discussions will carry on.
I thank you again for your presentations today.
This meeting stands suspended. Don't go away, everybody.
Conservative
The Chair Conservative Gerry Ritz
Let's come back to order and move on, folks. Everybody is at the table
With us for the second half, for a briefing on the Canadian Wheat Board, from the Frontier Center for Public Policy, we have Rolf Penner, farmer, director; from the UPA of Quebec, we have Denis Bilodeau, vice-president, and Serge Lebeau, senior international trade manager, fresh from Paris. He came back to join us today.
Thank you for coming, gentlemen. If you would care to start, I'll have you give your presentation.
Denis Bilodeau Vice-President, Union des producteurs agricoles du Québec
Hello, Mr. Chairman.
I will be speaking in French. I will try not to speak too quickly, so that the simultaneous interpretation can be clear.
My name is Denis Bilodeau and I am second vice-president of the Union des producteurs agricoles du Québec, the UPA. I am happy that you have welcomed us this morning to hear about the maintenance of the Canadian Wheat Board. This issue is a constant worry to the Union, and we are happy to be able to file a memorandum today.
You are already aware of the UPA. I just wanted to remind you that we represent approximately 43,000 farmers in Quebec, working on 31,000 farms.
The work and market development context in Quebec is particular. We worked very hard at putting in place marketing agencies, contingency plans and a collective approach to marketing. Our memorandum revolves around these issues.
I invite Mr. Serge Lebeau to make the presentation.
Serge Lebeau Senior International Trade Manager, Union des producteurs agricoles du Québec
Hello Mr. Chairman and members of the committee.
You already know that the Canadian Wheat Board ensures that producers earn fairer and higher market revenues. It guarantees stable and foreseeable supply for the agroprocessing industry. It generates more than 14,700 direct and indirect jobs and yearly revenues of $852 million. It’s a remarkable formula that maintains family farms that respect the environment, which contribute to the economic vitality of the region while defining the rural landscape.
At this time, all signs point to the Conservative government following up on its election promise to give western producers the choice to market their grain on the export markets. It goes without saying that if this were to become reality, it would serve to dismantle the single desk currently in place and, eventually, spell the end of the Canadian Wheat Board.
On July 27, the Government of Canada held a round table discussion on the marketing of wheat and barley in the Prairies. This in camera meeting was attended by Mr. David Anderson, Parliamentary Secretary, Mr. Chuck Strahl, the Minister of Agriculture and Agri-Food, various academics and industry representatives, as well as representatives of the provinces concerned.
Furthermore, although some farmers were present at the meeting, there was no one representing the Canadian Wheat Board, the Canadian Federation of Agriculture or any provincial agricultural organizations. In fact, the participants did not actually talk about maintaining the current single desk. Assuming that they were all in agreement, they were asked to talk about ways to give more freedom to producers with respect to the marketing of wheat and barley in the Prairies.
Moving forward, the Minister of Agriculture and Agri-Food just created a task force on implementing marketing choice for wheat and barley. This task force must complete its work and submit recommendations by the end of October. In light of this information, we believe that it is imperative that the Standing Committee on Agriculture and Agri-Food intervene in this matter.
I will now speak of our concerns.
We believe the government’s approach to be erroneous, as it disregards the Canadian Wheat Board Act, under which any decision that serves to modify the single desk must be taken by the producers. I am referring here to subsection 47.1.
The federal government’s approach is even more worrisome when taking into account that on October 5, Cabinet passed a bill prohibiting the Canadian Wheat Board from advocating the retention of its monopoly powers. Those are the terms used in the order. In our opinion, the basic tenets of democracy are being challenged.
The producers are also worried about maintaining their right to put in place organizations to control marketing. Do we have to remind you that these collective tools were the wishes of producers who expressed themselves democratically?
The limits of the federal plan.
The majority of Western producers want to decide the future of the Canadian Wheat Board themselves. A survey of 1,303 prairie grain producers conducted by the Canadian Wheat Board between March 15 and April 2, 2006 revealed that 75% of respondents said that a plebiscite or referendum among farmers is the most appropriate way to make fundamental changes to the Canadian Wheat Board. Ninety percent said that any decision to end the Canadian Wheat Board single desk should be made by farmers and not the federal government. Sixty-six percent opposed anything that would weaken the Canadian Wheat Board and 63% said they’d prefer wheat marketing remain the sole responsibility of the Canadian Wheat Board.
The limits of voluntary marketing agencies.
In Quebec, elsewhere in Canada and throughout the world, a number of voluntary marketing agencies failed not long after they were created, whether they were set up to market grain, milk, pork, potatoes, apples or greenhouses, all of these experiments, which date from the 1990s, could not be sustained. The UPA studied why these models failed in Quebec. What they found is that among these cases, they all lacked a critical mass of the product to be marketed and the corollary to that, a lack of producer compliance. Another major factor was the negative reaction by competitors, who used every possible means to bring those systems down.
Based on experience in Quebec, we have every good reason to assume that freedom of choice when it comes to marketing grain in the Prairies will eventually lead to the elimination of the Canadian Wheat Board and will have negative consequences for producers, including lower prices.
Our requests.
It is imperative that the Standing Committee on Agriculture and Agri-Food object to the actions taken by the Conservative Government to dismantle the single desk administered by the Canadian Wheat Board.
Under subsection 47.1 of the Canadian Wheat Board Act, the federal government should give prairie farmers the freedom to decide what changes should be made to the Canadian Wheat Board.
Thank you.
Rolf Penner Farmer, Frontier Center for Public Policy
Good afternoon to you, committee members. Thank you all for inviting me here to share my thoughts with you on the Canadian Wheat Board. I'd like to start by saying that I'm here not only as the agricultural policy research fellow for the Frontier Centre but, more importantly, as a farmer from southern Manitoba who's running 1,700 acres of land and whose primary source of income is that farm.
I have grown up and have had to live under the thumb of the Canadian Wheat Board monopoly my entire life. Personally, I am very excited about the current government's plans for marketing choice and the role that a new invigorated Wheat Board will play in that.
Let me bring you up to speed a little bit on what the situation is with me and my neighbours since harvest wrapped up about a month ago. I'll mention some of the cashflow issues we're having.
Right now we are in the middle of a really major rally going on in the wheat markets. We're at the highest levels today that we've seen in 30 years. We can't take advantage of it, and it's incredibly frustrating. The little bit that we can price out, we can't deliver, which means we can't get paid for it.
Instead, if we need cash, and most farmers do in the fall in order to pay their bills, we are forced to sell our other crops at prices that right now are lower than where I expect them to be later this year. In some cases, it's below the cost of production. If we were free to sell our wheat, we could hold on to these crops until those prices improved and actually make money on everything.
Equally frustrating in all this is that, if this current rally were occurring in any other crop, I could right now start selling next year's production at a guaranteed profit. But I can't. The primary reason is not the Wheat Board; it's the Wheat Board monopoly.
I can't tell you the number of times in my life that I have seen these kinds of opportunities fly by when it comes to board grains. One of the most frustrating times that I remember was the 2002-03 crop year. In that year we were able to sell most of our non-board crops for anywhere from above-average prices to some record prices. There was a really good general rally going on in all crops, wheat included. Not only did the Wheat Board completely miss this rally, it did such a poor job that it ran an $85 million deficit in the pool accounts, which have to be covered by the taxpayers of Canada. What should have been a banner year for prairie agriculture wound up being another one in which we struggled to make ends meet.
In its current form, the Canadian Wheat Board sits like a wet blanket over the entire prairie economy—starting at the plant breeders, through the farm gates, on to our rural communities, into our cities, and right on out through our ports. This dampening effect is widespread, pervasive, and very tangible. It's high time that we give this wet blanket a well-deserved airing out.
A monopoly may have been appropriate in the days when we were negotiating five-year contracts for millions of tonnes to the Soviet Union, but it certainly is not an effective marketing tool for negotiating small, single-lot sales into individual flour mills and niche markets. The board's own sales records are showing us that this is the trend. They are selling more of less—smaller amounts to more and more customers all of the time. This is not a phenomenon unique to wheat. We are seeing this with more and more commodities and more and more products all over the world. The future of business in general is selling more of less.
Equally important is the fact that we are no longer the lowest-cost producers of grain in the world. We must instead compete on the basis of identity preservation of specific traits, traceability programs, and precise quality standards for each shipment. The current Canadian Wheat Board model was designed for large bulk exports. It's not able to compete successfully in these new specialty high-end, fast-moving world markets. It was just never designed for this.
Some fear that tinkering with the board's monopoly power would result in a loss of jobs. This fear is particularly a concern in my home province of Manitoba. The truth is that under the current arrangement we have been bleeding jobs for decades. The grain industry is steadily consolidating because of a lack of access to new opportunities. We continue to lose farmers because they cannot pursue new markets at home or abroad. Every unprocessed bushel exported is another lost possibility, another lost opportunity, and another lost job.
I am talking specifically about value-added processing. I'm talking about flour mills, pasta plants, malting facilities, and a wide range of speciality products that are all currently being stifled in western Canada. We should be exporting meat pies, not bulk wheat and live animals.
Then there is the development of new wheat and barley varieties, especially the high-yielding ones for feeding livestock. New uses, like nutraceuticals and bioenergy, ethanol, are all currently being hampered with regulatory bias toward the type of grains that the Canadian Wheat Board sold in the good old days.
All of these things I'm talking about will happen, but if we continue along this current monopoly path they will happen elsewhere. In fact, they are happening elsewhere.
For example, when we compare the level of investment in value-added processing in Ontario and in the northern U.S. states, it is two or three times the level that we see on the Prairies. This is according to a study done by the George Morris Centre. The world is not only quite literally passing us by, it's leaving us behind in its dust.
Let me give you a specific example. A couple of weeks ago in Australia, a small farmer by the name of Doug Couche recently fulfilled a dream that western producers would love to emulate, but today in Canada is illegal. He opened his own flour mill. Gasp! This gives him the final link in a chain that takes his farm's durum wheat from the farm gate to the gourmet dinner plate. He is now selling pasta successfully into, of all places, Italy, the home of pasta. This is unbelievable. And he is doing it successfully. That's like trying to take coal to Newcastle.
This pasta of his is now being sold in more than 500 stores all across Australia, Italy, the United States, the United Kingdom, Dubai, and Korea. He is not afraid of the multinational bogeyman, because he, a small farmer, is now a multinational himself.
Many claim that a dual market in wheat and barley is a metaphysical impossibility. They say it's not going to work and it would be the end of the Canadian Wheat Board. That is exactly what the doomsayers said with regard to another monopoly that I am personally very familiar with: Manitoba pork. Not only did it survive the loss of the single desk, it is thriving in the new marketing environment. It retains a full 30% of the market share of what is now--and this is crucially important--a greatly expanded marketplace. It is marketing more hogs now than it did back in the old single desk days. We saw the same thing with Saskatchewan pork, Alberta pork, and we see the same thing with Ontario wheat. It really is amazing how a little choice and a little competition can really improve things.
In sharp contrast to this, the acreage of Wheat Board grains in the west keeps dropping, as does our market share. Ten years ago we had 20% of the world's share. Today it's 15%. Five years from now, it's predicted we will be down to 10%. The writing is on the wall. The status quo isn't working, and things have to change.
I would like to remind you all at this time of one of the recommendations of the all-party standing committee, which talked to hundreds of farmers across the country in 2002. I think a lot of you were on that committee, and I will quote your recommendation directly: “...that the board of directors of the Canadian Wheat Board authorize, on a trial basis, a free market for the sale of wheat and barley...”.
I am pointing this out because it shows that the support for marketing choice is far more widespread than we're being led to believe by a lot of people, and it goes far beyond mere ideological and partisan political positions.
As to the question of a plebiscite on dual marketing, I echo the sentiments of former Manitoba NDP cabinet minister, Sidney Green, who was quoted in the Winnipeg Free Press last week as saying, “The wheat board is an organization that was created by a democratically elected government. Absent government creation, the wheat board would not exist. It is important to remember that what a democratically elected government createth, a democratically elected government can taketh away.”
There is the question of civil liberties in all this. Yes, there are strong economic arguments. The research that I've done with the Frontier Centre shows that. We're talking tens of thousands of dollars of increased income for individual farmers across the Prairies, probably three-quarters of a billion to a billion dollars a year if we look at them as a group; 26,000 extra jobs in value-added processing; another $1 billion to possibly $2 billion in extra economic activity because of that value-added processing. These are strong pervasive economic arguments.
But there is the question of civil liberties. When is it appropriate for the state to allow one group to vote away the civil liberties of another group? There should be no such thing in a free and democratic society as the right to vote away civil liberties. We're not talking about electing a government here, and we're not talking about finding out who likes strawberry ice cream better than chocolate. In this case, if strawberry wins, not only are you not allowed to buy chocolate, but if we catch you with chocolate ice cream, you're going to jail.
What this is all about is finally giving western farmers the freedom to run their businesses in the way they think is best--not how the government thinks is best, and certainly not how their neighbours think it should be run. Western Canadian farmers should be able to enjoy the same rights, freedoms, and civil liberties as the farmers in the rest of Canada do. It is not right, in this day and age, that they are still forced to sit in the back of the bus.
There are two extreme positions that dominate this current debate. The one holds that the forced collectivization of wheat and barley growers is for their own good. The other says that the federal government has no business being involved in the marketing of grain in any way whatsoever. To its credit, the federal government appears to have found a sensible middle-of-the-road compromise between these two very polarized extremes. It's one that recognizes a very simple universal fact: there is no one absolutely right way to sell wheat and barley that works for everyone all the time. The government intends to let individual farmers who want to sell their own crops do so and, at the same time, let those farmers who are more comfortable selling their grain on a collective basis keep that opportunity as well.
I believe not only that moving forward with this agenda will be in the best interests of our farmers, but that it's in the best interest of Canada as a whole, as it would promote rural development across the Prairies by declaring to the world that, hey, the wet blanket is off and western Canada is now open for business.
Conservative
The Chair Conservative Gerry Ritz
Thank you, Mr. Penner.
Both groups have been short and succinct, and that's fantastic.
We'll move to our first round of questioning. Mr. Easter, for seven minutes, please.
Liberal
Wayne Easter Liberal Malpeque, PE
Thank you, Mr. Chair.
My questions will be to Mr. Penner, who seems to live in quite a dream world, but in any event--
Farmer, Frontier Center for Public Policy
I make my living in that dream world, Mr. Easter.
Liberal
Wayne Easter Liberal Malpeque, PE
I do too.
Let me just turn to your brief on the airing out of the wet blanket. You're basically saying that the Canadian Wheat Board model was built for large exports and that it's preventing sales of high-value crops. Well, Warburtons, which is a company, just announced a little while ago that they'll purchase 250,000 tonnes of high-quality wheat from about 730 farmers, many in Manitoba and Saskatchewan. They will do it in such a way as to not let the lowest seller set the price. That is holding prices up, so I just point out to you that your wet blanket argument doesn't hurt.
Furthermore, I just cannot understand why the opponents of the Wheat Board—and we'll go to your Australian example, Mr. Chair—continue to perpetuate this myth that there can't be any processing or development of pasta plants. The fact of the matter is that western farmers have exactly the same ability domestically. There is the buy-back program for export, but western farmers do have, within their abilities, the same ability to mill their own grain in their own mills and sell that resulting production directly to Canadian consumers from one end of the country to the other. If they sell it outside the country, then they have to do it through the buy-back program.
So you continually perpetuate these myths.
I'll make one last point before I go to answers, Mr. Chair.
Mr. Penner goes to great lengths to talk about the Carter–Lyons–Berwald study, which is a study, Mr. Chair, that I believe you know has been completely discredited by academic people with academic credentials, for one simple reason. It arrived at its conclusion, in terms of Carter–Lyons–Berwald, by comparing farm gate sale prices between the United States and Canada without accounting for the distortion of American subsidies, including the export enhancement program.
Even on spot prices, when you folks get into comparing spot prices of crops, you basically get into comparing a different variety of crops, but not the same grain. The fact of the matter is that I know one variety of grain you're quite enamoured over, Falcon. Yes, the spot price is sometimes higher for it. But what do the Americans do with it? They buy Falcon, a lower-quality grain, and they blend it in with the higher-quality grains and sell the product.
So it's not a fair comparison, Mr. Chairman.
I guess the question is this: where we do have accurate figures? We listened to your figures, and you say probably, probably, probably. I heard the same arguments from many people during the Crow rate fight. Just get rid of the Crow rate, my God, and we'd be wealthy and prosperous in western Canada. Now these very same people are saying the same thing about the Canadian Wheat Board. But you have no concrete studies to prove so, unless it's the discredited Carter–Lyons–Berwald study.
The Wheat Board, though, in response to the task force report that they tabled on their website, claims—and they back it up with documentation, and there is the independent study by Hartley Furtan—that the loss to the industry collectively in western Canada would be between $530 million and $655 million. How are you going to compensate for that loss when we have it? That's my question.
Farmer, Frontier Center for Public Policy
Mr. Chairman, I would be glad to answer as many of those questions as I can in the time allotted.
Let's start where Mr. Easter left off, with the Wheat Board-sponsored studies that supposedly are legitimate. I've had a good look at those studies and at the Furtan study, which he referred to. The problem with these studies is that they're cost-benefit analyses that don't list any costs. They don't go back to the farm gate, and they're based on a secret data set that no one's allowed to verify. Other than that, they're great, but I'm not going to bet my life on them.
As for the spot price comparisons on Falcon—and yes, I grow Falcon on my farm—as of last Thursday, the difference between the Wheat Board pool price and what I could receive at an elevator in South Dakota, very close to my farm, was $1.11 a bushel. That is a real world number, not from a study. Yes, you can get a bit better with the fixed-price contracts, but that's going to end at the end of this month. On that particular day, I was leaving 60¢ a bushel on the table.
It really is disingenuous of the minister to try to suggest who I should believe—him or my own lying eyes.
As to the Carter-Lyons study, it was done very rigorously, and again it compares farm gate prices, which is where it actually matters.
The buy-back program is again incredibly disingenuous. Yes, there is a buy-back program, and you get to buy your own grain back, which is an absurdity in itself. My bin in Manitoba bases the price out of Vancouver, which many times is the kind of price Tony Soprano would charge, which is why hardly anybody ever does so.
Concerning the value-added processing, again the honourable minister is mistaken—