Evidence of meeting #32 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 seeds.
A recording is available from Parliament.
Director, Board of Directors of The Canadian Wheat Board, Canadian Wheat Board
I'm not sure what the definition of active politics is. Am I an elected member? No, I'm not an elected member to anything.
Bloc
Roger Gaudet Bloc Montcalm, QC
No, I am not talking about being elected. I mean somebody who goes to party meetings, who is part of the Executive Board of a political party or a riding association. This is what I mean. I am not talking about a political party in general. I am talking about someone who sits on the Executive of a political party. It could be any one, even the Green Party, or whatever.
Director, Board of Directors of The Canadian Wheat Board, Canadian Wheat Board
No, federally I'm not involved at all, and as you probably know, in Alberta we just went through an extensive leadership review whereby all Albertans were allowed to select the new leader of the Progressive Conservative Party and then the premier. So I am a member of the PC Party in Alberta, because that allowed me to vote for my choice for the new premier.
Bloc
Roger Gaudet Bloc Montcalm, QC
No. I do not want to know of which party you are a member. Since you are from Alberta, I can guess anyway.
That is all. I do not have any other questions.
Conservative
The Chair Conservative Gerry Ritz
Monsieur Roy, you have a few minutes left. Did you have any questions? No?
All right, we'll move to Mr. Bezan for seven minutes.
Conservative
James Bezan Conservative Selkirk—Interlake, MB
Thank you, Mr. Chair. I'll probably share my time with my colleagues.
My first question is this. We are in this whole series of potential change with the Wheat Board. Do you feel that you, as new directors on the Wheat Board, are going to be able to manage that change, if that's what the producers decide in the plebiscite?
Also, what do you envision when you do your directors' duties of judicial duty and prudence and due diligence? What ideas might you bring to the table to help them go down that road and be a successful organization?
I'm a farmer and I represent a riding where farmers are on both sides of this issue. It's a divisive issue back home, and definitely the producers in my area who are pro-Wheat Board want to know there's going to be an organization there for them to sell their grain in the future.
Director, Board of Directors of The Canadian Wheat Board, Canadian Wheat Board
Thank you, Mr. Chairman. If Bruce allows, I'd like to start.
The whole issue of the Canadian Wheat Board is an issue of the fundamental freedoms and rights of western Canadian wheat farmers with regard to the fundamental freedoms and rights that other farmers and other Canadians have, other wheat farmers in Ontario or potato growers in P.E.I., for that matter. They have the freedom to market their products however they want. Western Canadian wheat and barley farmers do not have that. That is atypical in North American society and that is what the fundamental issue is here.
I would like to address something that was brought up earlier about my duty to act in the best interests of the Canadian Wheat Board.
The Canadian Wheat Board right now, and the monopoly, is causing a tremendous rift in rural western Canada. Thousands and thousands and thousands of farmers oppose the monopoly. This is not going to go away. We are the last organization like this in the world. The Australian Wheat Board has now lost its veto over the sales of wheat out of Australia.
If the Canadian Wheat Board, as an organization, does not start to adapt to the realities of the world, the board of directors is not acting in the best interests of the Canadian Wheat Board. The realities of the world are that farmers want choice. The government, which creates grain policy in this country, has said they're going to create a policy that allows farmers to have choice.
So it's our job as board members in a co-governance organization to work with our co-governance partner to develop that new group, and that comes right down to the fundamental responsibilities of corporate governance and succession planning. It's very clear in the act. Everybody wants to speak about how well they follow the act. The act says order in council appoints the CEO. The order in council has given notice to the CEO. It's the board's job to look after succession and start working on a new CEO, and not spend all our energy attempting to fight the government. It's the board's job to manage risk, and if the steward of the legislation that allows for our existence says that's going to change, we have to start adapting to that risk. That means making plans for a new future, and we must hold the CEO accountable.
The Wheat Board's main activity is to maximize returns to farmers. Now, I cannot find anywhere how grandstanding with a political leader does anything to maximize returns to farmers in western Canada. I cannot see what kind of an organization we're running when we have vice-presidents of our organization speaking publicly about board policy and about who should set the remuneration and what it should be for a new CEO.
We're quickly having an organization running out of control, and it's this board's job to rein it in.
Director, Canadian Wheat Board
Perhaps I could take a slightly different tack from my colleague.
In managing the change process, my background is in the grain industry, and our reputation for quality, service, and consistency is in large measure a result of a very sophisticated Canadian grain industry. Our handlers have invested billions of dollars in the capability to manage everything from biodiversity to huge shipments, in excess of 100,000 tonnes. Somehow they seem not to feature as largely as they should in this debate.
The other thing is that private trade works with the board to bring about a large volume of the sales.
Another thing worth considering is that the maltsters and Canadian millers are extremely large customers of the Wheat Board. So the domestic marketplace is a key area, and these organizations are sophisticated and could exist with or without a board.
So I think there are some structures in place already that would allow us to go ahead and manage an orderly change. As the minister promised, I would see a plebiscite on barley as the first step, and we'll move accordingly.
Conservative
James Bezan Conservative Selkirk—Interlake, MB
Thank you.
We just went through an interesting discussion in the House of Commons on softwood lumber—I'm a little bit off track here—and the NDP opposed the softwood lumber agreement because they felt that it was shipping raw product out of the country and wasn't adding value and creating jobs here in Canada.
Do you feel that in its current state, the Wheat Board is impeding value-added activities in the prairie region? In Ontario, 115% of their wheat crop is getting processed in the province now. That's not the case in western Canada, where it's well under 10%.
I want to get some comments on that, because as many of my farmers do, I really see more value-added opportunities on agriculture products in the future within the prairie region, and the Wheat Board probably has a major role to play in helping to develop that industry.
Director, Canadian Wheat Board
Nothing is completely black or white. For example, the canola industry has just announced another 1.8 million tonnes of capacity going into the Yorkton area in Saskatchewan. It has been quite a success story. There has been tremendous investment in value-added processing.
There has been some expansion of flour milling in western Canada. On the other hand, maltsters very often make the comment that they're uncomfortable with having a single desk supplier, and they have balanced where they make their capital investments.
I suspect that I would have to give you an on-balance answer, and I would strongly suspect that on balance there would be greater investment in value-added processing without the board.
Director, Board of Directors of The Canadian Wheat Board, Canadian Wheat Board
Mr. Chairman, “impede” is kind of a strong word to address this, because it's sort of a hypothetical situation.
Why don't we have a look at canola and oats processing on the Prairies instead. Both are marketed totally on the open market. Canola has grown to become the largest crop in western Canada now, according to Statistics Canada. It has done so without being marketed by the single desk. It is almost all processed, or much of it is processed. We have two more plants being planned right now, as Bruce indicated. So we can see what kind of processing goes on in canola in western Canada when it's marketed through the open market.
We can also look at what happened with oats after it was removed from the Canadian Wheat Board. Oats processing—and Bruce oversaw a lot of this development, and he might want to comment on this again—increased substantially after it was removed from the jurisdiction of the Canadian Wheat Board.
Conservative
The Chair Conservative Gerry Ritz
Thank you, Mr. Motiuk. Actually, he could comment, but he's out of time, so he'll have to save that.
Mr. Atamanenko, please.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
Let's pursue milling, gentlemen.
By the way, thank you for being here.
Probably you read this. Milling & Baking News, an internationally read and respected publication, stated:
a comparison of flour production among the leading milling nations since 1990, showed that Canada's mills enjoyed the sharpest increase of any country—including the European Union, the U.S., Argentina and Australia. The location of this milling also tells a story about the CWB's success in encouraging value-added processing in the west. About 32 per cent of this milling takes place in Western Canada, compared to just 15 per cent
in the western United States. New mills have been opened.
What's your comment on that, Mt. Motiuk, and also Mr. Johnson?
Director, Canadian Wheat Board
Maybe I'll take it first. There has been a renewal of the Canadian milling industry's capacity, primarily in western Canada. There have been shutdowns in eastern Canada.
As I said earlier, there has been some growth. While there has been some shrinkage in the U.S., we enjoy a fairly good export business, but the millers have some benefits. Because they're dealing with a monopoly, they're allowed to buy essentially in collusion from the board and at a Minneapolis price, with some formula added to it. This puts them in a pretty decent competitive position.
Director, Board of Directors of The Canadian Wheat Board, Canadian Wheat Board
Thank you, Mr. Chair.
As a farm operator and an operator of a farm business, I must manage my risk. It is very risky for me to grow export crops. They're subject to tariffs, trade barriers, non-tariff barriers, the high cost of transportation, and the insecurity of the ability to sometimes get product to market. I therefore like to see things used up as much as they can be on the Prairies.
The only comment I'll make, because I refer back to canola and oats, is that as a percentage of production, a lot more canola is processed on the Prairies, a lot more oats are processed on the Prairies, than the percentage of wheat that is processed on the Prairies. To me, the most secure industries are the ones that are domestic, not export, and that's my comment on that.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
We all know western Canadian wheat is mainly marketed for export, so let's move on.
Earlier on, Mr. Ritter pointed to the spirit of cooperation. He unveiled a five-point plan that the directors could work on with the government to resolve the issue.
Mr. Motiuk, you appear very hostile—I'm not going to mince words—to the whole idea of the Canadian Wheat Board. My first question is this: are you prepared to work with fellow directors in a spirit of cooperation?
The second question is, how much research have either of you done with regard to the future of Canada without the Wheat Board? Obviously the implication is that if you feel there is not going to be any Wheat Board, what are you doing here? I just want to get that on the record. What's your vision?
Mr. Johnson, what's your vision for the Canadian Wheat Board?
Director, Board of Directors of The Canadian Wheat Board, Canadian Wheat Board
Mr. Chairman, sometimes some things are a curse and sometimes they're a blessing. My passion for various issues, including agriculture, is a bit of a passion. In this case, it's a bit of curse. I perhaps came across as hostile, but it's just that I feel very passionate about this issue.
I have always been on the record as supporting marketing choice, and I maintain that record. I feel the Canadian Wheat Board, through its branding.... In today's international world of information, the most important attributes of any successful business are not those of a legislated monopoly; they're branding and personal relationships, business relationships. You've just heard from Mr. Ritter and Mr. Measner about how well Canadian wheat is branded and what a good relationship Wheat Board staff have with their buyers. Why are they afraid to compete against other traders if they have these positive attributes?
I find it somewhat ironic that in the harvesting opportunities initiative that the Wheat Board put forth, they maintained that they could not operate in the competitive environment, exporting grain, when they have a tremendous amount of expertise, good business relationships, and a good brand. However, they want to invade the farm input supply business in western Canada, which is a mature industry. They have no capital assets and they would have to compete against everybody else.
So there's a bit of a double standard coming. They're saying they can't compete in the new world where they've done well, yet they wish to invade and start a whole new enterprise in competition with all the existing players. Those two things just don't play.
In terms of our success as an international marketer, Mr. Chairman, I would suggest that you have a look at what percentage of the world wheat market Canada has had in the past and how it has diminished to something like under 15%.
Again, I apologize if it appears that I have a hostile attitude. It's more my passion coming out, so I'll try to smile.
Director, Canadian Wheat Board
I think everybody would welcome the comments that Ken had to make about the spirit of cooperation. There have been some unfortunate things said in the press, and some fairly hard positions taken, so I'm happy to see that.
In terms of research into Canada without the Wheat Board, as I said before, my background is the grain trade. As somebody mentioned earlier, wheat prices are set primarily in Chicago. There is a capable industry of handlers and merchants. We certainly have the infrastructure to do what needs to be done. But once again, there are things you want to look at very carefully.
Barley and wheat are very different things, as is durum. With barley, when you look at 80% of the crop being marketed outside the board and at its relationship with the Alberta feeding industry, barley might be a natural one to see removed from the monopoly mandate. For wheat, again, its prices are set internationally. There may be some relationships with customers there that you want to look at carefully. And durum is a different commodity again. It has some special circumstances that you'd want to think about carefully as you move forward into a marketing choice environment. I'm not suggesting that you just pull a curtain and that's the end of it.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
Have either of you read the Fulton report? If so, what are your comments on the conclusions?