Thank you, Mr. Chair.
My presentation is made at the invitation of the clerk of this committee, strictly in the context of my role as an agricultural economist, a farmer, and as a Canadian citizen who has long-standing interest and experience in agricultural and food policy. I'm not here to represent any particular interest group or any particular view of the world. I appreciate this opportunity to share what little bit of information an economist and a former professor can squeeze in to ten minutes of presentation. I'll do my best.
I've spent 42 years as a professional agricultural economist in this country, mostly in the area of agricultural marketing, and much of that in the areas of market regulation and institutions in grain marketing. My professional knowledge, and I want to stress this, of the Canadian Wheat Board is based on study, on research—I have an extensive publication record—and on teaching involving this particular marketing institution. Being at a university in Winnipeg, where the Canadian Wheat Board is also located, provided an excellent opportunity for exchange through students, research, and people, and we've been involved in that process to a considerable extent.
As a farmer, our operation has produced and delivered both board and non-board grains. In 2006, for example, we harvested 170 acres of winter wheat.
A professional economist has considerable difficulty establishing credibility in terms of analytic objectivity when dealing with marketing boards, and that includes the Canadian Wheat Board. It's much like establishing credibility and objectivity in analyzing religious beliefs. There's a very strong connection between the style of belief in marketing boards and that of religious beliefs. Religious folks perceive that if your conclusions are not in harmony with their beliefs, you're automatically against those beliefs. One is seen to be either for or against marketing boards; there's nothing in between.
The role and performance of the Canadian Wheat Board are extremely important public policy issues in this country. The Wheat Board has been a major component of agricultural and trade policy from the beginning. Information, therefore, must go beyond the for or against dichotomy, beyond beliefs as the instrument for making determination on these policies, and into actual structure and contribution of the Canadian Wheat Board. Hard economic and business information, it would seem to me, is essential to appropriate public decision-making.
I have attempted to contribute to that process for the last thirty or so years of my professional output. In 1996 and 1998, I was qualified as an expert witness in two court cases involving the Canadian Wheat Board. Therefore, in light of the above information, and through being an expert witness, I claim to have some “expertise” on the board from my various perspectives.
I would submit that there are two fundamental questions that need to be addressed in looking at the present Canadian Wheat Board debate. Number one is exactly what the Canadian Wheat Board, as structured, delivers and to whom. Secondly, I won't say much about barley, because there's not much barley handled by the board, but why is wheat different? In terms of what the board delivers, it is a unique organization in contemporary Canadian legislation. If any side wants to deal with how the debate ought to be resolved, presumably there had better be overwhelming evidence, and indisputable evidence, of the output of the board. For the people who want to retain the board, they had better be able to show net positive benefits. For those who are against the board, they had better be able to show that they would be better off without it.
My conclusion is that there is no indisputable evidence of positive net benefits from the Canadian Wheat Board.
On the second question of why wheat is different, history reveals that this institution has very much been an instrument of national policy. Carter and Loyns, in a Donner Canadian Foundation 1998 publication, show that the other major national and provincial policy instruments that were created in the same time period beginning in the 1930s have disappeared. They've been privatized. CNR is one. TCA--for those who weren't around then, Air Canada--has been privatized, as well as airports, port authorities, and several public utilities, including the prairie telephone systems. Most hog boards have been deregulated. All of the crops that compete for the land base with prairie wheat and barley are open market commodities.
So why is wheat different? The short answer is found in the Canadian Wheat Board Act. But with respect, that begs the fundamental question of why. The question is far from trivial in economic and prairie development terms.
Let me turn quickly to some economic evidence. I really urge the committee, if you pick up on my first point, to at least go to the George Morris 2002 report done for the Province of Alberta. It's available on the website. It's the best source of information on this. I can't cover it respectably in one and a half minutes, but I will try.
There are three approaches that have been taken by economists to produce information on what the board does and what it produces. There have been the benefit studies. Kraft, Furtan, and Tyrchniewicz appeared before you in the past. There was the Schmitz family, and Grey from the University of Saskatchewan has done this work. To make a long story short, they demonstrate at port that $10 to $39 per tonne, depending on circumstances, benefits the existence of the monopoly position of the Canadian Wheat Board. They do not, however, generally analyze what happens at the farm level. They seem to resist doing that and do not consider costs.
The second approach is where I've been involved. Colin Carter, Parsons and Wilson, and the George Morris Institute purport to analyze costs. The costs that have been estimated from the existence of the regulation surrounding the Canadian Wheat Board are in the order of $10 to $25 for wheat and higher for barley.
The other area is the cross-border comparisons. You heard one of them here today. I'm going to swing quickly to that. In my experience and view, these cross-border comparisons, whether they're serious economic analysis or casual observations by responsible individuals, provide robust and credible ongoing information. There's been a lot of it available since the middle 1990s.
The conclusion I reach on the basis of review of this information--and I wish I had more time to justify what I'm saying but I don't--is there is no economic evidence available that would pass the test of definitively demonstrating that the Canadian Wheat Board monopoly produces positive net benefits for wheat and barley growers. As a result, a trade-off argument that a little pain comes with an assured gain does not hold. That's an important conclusion.
I'll reinforce the comments that were just made that none of these studies take into consideration the loss of value-added on the prairies because of Canadian Wheat Board pricing policies. That's also an important conclusion.
I want to swing quickly to court challenges. Why is an economist talking about legal situations? They have important economic implications, that's why. First of all, the Wheat Board does not have duty of care to prairie farmers. That's been established in court many times. It was argued in 2003 in a court case in Regina. I've heard that it's just been argued again by the Wheat Board in a court case in Regina.
The Wheat Board annual report says the corporation is accountable for its affairs to both western farmers and Parliament, etc. Considering the duty of care position and the requirement of the act that directors are responsible to the Wheat Board for their actions, one has to ask where prairie producers end up in that mix.
Second is the lack of economic and property rights. There's a fundamental economic and property rights disconnect in this situation, where Ontario wheat producers have property rights and prairie producers don't.
Finally, the one that's most difficult for economists to believe is the conclusion and the argument in court that if you don't like the regulations of the Wheat Board, you can pick up and move to another province--there's nothing in the act that prevents doing that. That's unbelievable to an economist. The loss of capital resources, skills, and the whole bag in doing that is impractical. It might be something the legal fraternity can live with in logic, but it's not something Canadian citizens, or particularly economists, should have to live with.
Finally, the task force report suggests that we have voluntary pools in the new regime, if there is a new regime. Many of my economist colleagues and other people say you can't have voluntary pools. To reject the notion that voluntary pools, properly constructed and run, won't work is to reject the notion that mutual funds work.
A pool is a mutual fund, or a mutual fund is a pool. If we looked around this room and did a survey, I'll bet that 50% or 80% of us are using mutual funds and we're happy with them. They will work if they're properly run. There is no reason why they won't work.
I have a lot more I'd like to say, but I'll stop at this point.