Agriculture Committee on June 13th, 2006

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

Thank you very much, gentlemen, for being here.

To follow up on the plebiscite again, the way it exists now the board is made up of a board of directors who represent different regions. My question to Mr. Anderson and to you gentlemen is, is this a logical way of finding out in what direction the board should go?

Secondly, in regard to a plebiscite, Mr. Anderson, would it be a commitment of this government to sit down with the stakeholders, with the farmers, if there were a plebiscite, to work out the eventual wording so it did in fact represent the needs of all the farmers?

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

In response to the second question, you may not have the history here, but we had a plebiscite previously and there was a huge issue over the question and a huge issue over the voters list. So all those issues would actually come into play in the event that anything like that took place. But as I said in the past, our opinion has been that individual farmers should be free to make their own marketing choices in western Canada.

Again, to that point, I think the survey shows there's strong support for that open market: 65% of barley growers want an open or dual market; 54% overall want that change. That's the board's survey. It looks to me like there are some pretty strong results there: 69% think the board should have competition; 60% think a dual market would work. So their own survey has shown there's strong support for our position.

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

Are you prepared, then, to have some kind of vote by members? Is that your position?

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

As I said, at this point, our position is that we believe western Canadian farmers should be able to make their individual choices about their own business decisions.

[Ken Ritter]

I have a couple of things.

First of all, in the event of a plebiscite we would, as an organization, want to ensure that the plebiscite was legitimate and perceived to be legitimate by farmers, because that's the only way it has value and makes sense. So we're fully in favour of that fundamental principle.

Secondly, the strongest number in our survey, which everybody seems to be referring to today, is when farmers were asked who should decide the future of the CWB, 75% of them said directly they should decide it and 13% indicated they should do it through the CWB election process. Only 8% said the federal government should make that decision. Clearly, 88% feel that the decision should be made by farmers, either through their own election or through a plebiscite.

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

My next question is one of choice, and maybe we'll look at a farmer, maybe Mr. Bezan, or somebody else who farms.

A lot of people are saying we need a choice, so we need to have a dual-marketing system. Yet it's my understanding that a choice currently exists within the structure of the CWB, specifically when we come to malting. In other words, a farmer right now, can he or can he not sell directly to a processor who's going to malt barley? That's my question.

[Adrian Measner]

He can deliver to a processor or sell to a processor, but he receives the CWB initial price and subsequent prices, or one of our fixed or basic program prices. So he doesn't actually do the transaction directly with the malt plant or with the mill, but he can deliver directly to the malt plant or to the mill. However, he does receive our prices for that grain.

[Ken Ritter]

But the mill can top up that price to whatever it wants. It has perfect freedom to do that.

[Jim Venn]

The price is based on export sales and domestic sales, so there's an arbitrage that's performed on the price. There are difficulties, depending on the type of product you're delivering into, say, a malt house. How is it stratified? How many different types of varieties are involved? What are the quality parameters around that? It's very difficult to set one premium, for example. In the Wheat Board environment, it's more attuned towards generic sales at one price, not quality parameters that are set for malting deliveries.

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

As it currently exists, there is a standard price, and a farmer can sell to a processor through the Wheat Board providing he gets the market price. Is that...?

You're saying no and you're saying yes. I don't understand. Could somebody clarify that for me, please?

[Adrian Measner]

I think we're saying the same thing: the farmer can sell to a processing plant, but it flows through the Canadian Wheat Board into the pool account. So he will get the CWB initial price for that delivery, then the subsequent payments would come to the farmer. So it's not a direct sale to the malt plant or to the processing facility. It goes through the Wheat Board, but he can deliver it directly.

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

So what's the disadvantage to the farmer of that? Let's get down to the.... Mr. Anderson.

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

Maybe it would be easier to explain it in terms of feed barley and malt barley.

With feed barley I can go and sell to anybody, take whatever price I want and find my own market. I can sell it. The board also markets feed barley, so I can go to them as an option on my feed barley as well.

With malt barley, I have to go through the board, take their price on malt barley. I need to deal with them. I need to pay full freight.

On the feed barley side I can go make my own deal on the price, make my own deal on the freight. When I sell malt barley, I sell it at their price, I'm charged full freight on it, then the money goes into a pool and at the end of the year everybody who participates.... Well, I guess you've got two pools, but at the end of the year everybody gets the same price back, so that's how it works. But you have to go through the board to deal with that.

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

But you are getting top price for that, is that correct, when you do that through the board?

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

We get the price they sell it for. Whether it's top or bottom, it depends on who's doing the studies and surveys and has the discussion.

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

If you didn't have to go through them, what would be the advantage to you to do that?

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

There are a couple of potential advantages. One of them is that people can take advantage of projects, like Mr. Venn has suggested, so you can grow specialty niche market amounts of barley or other products. Then you can make your deal with those select maltsters, or with a bigger company, and you can grow your own premium product in very small lots.

Another opportunity would be for farmers to set up their own operations, if they wanted to, and be able to process their own grain. That's the point of Mr. Ritz's bill.

A third option is that you can go to the open market and see if you can find a price that you really like, and take it. So those people who believe we should have choice would like to have those options that we presently don't have.

[Ken Ritter]

Mr. Venn made a presentation here today; he described a unique kind of situation. At the board, we welcome Mr. Venn speaking to our management team and explaining his position. Our management team will then report back to the board of directors for discussion and decision. It's not an automatic yes or no at this table right now, that's for sure.

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Atamanenko.

Mr. Steckle, five minutes, and it will be the final five.

[Paul Steckle, Liberal, Huron—Bruce, ON]

There's probably much more I could say that would take more than five minutes, but I basically want to go back to this whole issue of choice.

I'm going to reference a number of issues. Coming from Ontario, we've had the Ontario Pork Producers Marketing Board. There was a time when people marketed hogs on Monday morning through Friday, and people on Friday usually got less money than the people who marketed on Monday. So they made a decision to pool the price.

So basically you make a choice when it's more convenient to sell your pigs, and you get the same price when you sell on Mondays as on Fridays. I think a long time ago farmers came to believe that choice was their right, and they made it a policy.

At one time, the beef producers accused the pork producers of being at the trough with government, continually asking for assistance. In the last four years there was an experience in the beef industry that has caused them to rethink their position, and they were also here asking for help.

When you hear the beef industry saying when might we consider an orderly marketing of beef, which for beef producers is a more friendly term for supply management in the beef industry.... Twenty, ten, or even five years ago, we would have thought it impossible that anybody would even talk about that.

You might be wondering where I'm going on this, but I'm telling you that sometimes we need big players to play with the big players. If we abandon.... I think the farmers have the ability to have a choice, but I don't believe that.

I've heard arguments here this morning, particularly from Mr. Anderson, that would compel me to believe that he or the Conservatives won the election in the west based on the fact that farmers are making their decision solely on whether they're going to have choice in marketing their grain products. I don't believe that; I think there were other compelling reasons why they made that choice.

I would simply ask you how you rationalize the fact that this issue has been outstanding for so long. We've talked it since I came here 13 years ago. Yet we keep having from the farm community farmers being elected and electing their directors. Now that we have huge representation in the farm community, why is it that farmers keep electing the Wheat Board back again?

Then a final question to Mr. Venn: have you done any studies showing how much money you could have given farmers that was lost in the marketplace because they marketed their product to the Wheat Board?

Starting with you, Mr. Venn.

[Jim Venn]

I have not done a study per se. I've had lots of experience in terms of purchasing barley. I know how the malt barley industry works, with all due respect, because I was involved in it for 15 years.

The Wheat Board operates in differentiating markets, participates in differential selling, and according to my paper here today, there's an opportunity to sell to a premium market. I believe that's an incremental opportunity that could come to the benefit of producers in western Canada, and currently they're not able to do that. That's my point here today.

[The Chair, Conservative, Gerry Ritz]

Anyone else on following up on Mr. Steckle's question?

Mr. Anderson.

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

Thank you, Mr. Chair.

I agree with Mr. Steckle. He said farmers believe choice is their right, and we would say that as well.

We need opportunities in western Canada. I did a study in 2001 in which I had somebody take a look at the number of specialty crop plants in Saskatchewan. At that time, we had 127 specialty crop plants. We also looked at the number of flour mills and had 14. According to my figures, 12 of them were owned by multinational, foreign-owned companies.

With the speciality crops, we had the opportunity to do something. Farmers were doing it; they were setting up plants and trying to do some other things. They didn't have that opportunity with grains.

The industry and the times are changing. We're moving to things like the nutraceuticals, pharmaceuticals, specialized grains, and to things like Mr. Venn. We need the opportunity to be able to participate in that, and the present system does not allow it.

Mr. Ritter can say we'll talk to Mr. Venn, but there is no opportunity. The Wheat Board has not even been able to market organic grain. The farmers have had to market their grain, then do a buyback through the Wheat Board in order to market their own organic grain, because it hasn't been a big enough lot for them to do that.

There are going to be twenty other things coming down the road that we need to be able to have the opportunity to succeed with. We don't have the chance to do that unless the system changes, so that farmers in western Canada have the opportunity to involve themselves in these kinds of things and get the premiums Mr. Venn is talking about.

[The Chair, Conservative, Gerry Ritz]

Mr. Ritter, the final word.

[Ken Ritter]

Thank you, Mr. Chairman.

First and foremost, the CWB will be marketing organic grain, but I want to preface my views like this. I'm not an ideologue. I try to live in what the market realities are. Today the market realities are that if you're not a big fish you generally get smothered. Even some of the details that Mr. Anderson has outlined are already history. As a matter of fact, a lot of those small plants are congregating into big ones, and foreign ownership, and a whole lot of other things.

So the simple reality is you need to have an organization, in my judgment, that clearly has farmers' interests at the core of its essence, and that's what the CWB is. It tries to ensure that farmers get a fair shake in the world market for commodities we produce that are in huge surplus in this country. We're not even talking about a scenario similar to that in the U.S. The U.S. produces about twice as much wheat as it needs. We produce eight times as much as we need. We produce six times as much malting barley and fifteen times as much durum wheat as we need for pasta in this country. So we're a huge producer with respect to our population. Surely, one organization that stands up for farmers in a commercial sense is essential.