Thank you, Mr. Chairman.
Thank you to the committee for this opportunity to appear before you.
My name is Stephen Vandervalk. I'm a farmer from Fort Macleod, Alberta, and I'm the Alberta vice-president of the Western Canadian Wheat Growers Association. With me today is Blair Rutter, our executive director. We were initially invited to speak to the Canadian Wheat Board, so that's where our introduction will proceed.
We are here today to discuss our proposals for reforming the Canadian Wheat Board into an effective marketing tool for prairie farmers. We are building on a proud tradition. For the past 36 years, the Wheat Growers have been at the forefront in advocating many positive changes at the Canadian Wheat Board, including protein grading, a separate pool for durum wheat, freeing up of the feed-grain market, changes in governance, pool return outlooks, and forward pricing options. We see marketing choice as the next logical step in the Canadian Wheat Board's evolution.
We provided the committee with a position paper on the Canadian Wheat Board that our association prepared in March. I wish to provide a few highlights from that paper. What we were seeking is simply the same marketing freedom that is available to Ontario farmers. Quite frankly, we do not understand how farmers in one region of Canada can have the right to market their grain to whomever they please, whereas farmers in another part of Canada are denied that right.
The Ontario Wheat Producers' Marketing Board started to loosen its grip over its provincial monopoly in 2000 and granted full marketing freedom in 2003. Since 2000, wheat acreage in Ontario has increased significantly. In fact, last fall Ontario farmers planted a record amount of winter wheat. By almost all accounts, the Ontario experiment with dual marketing has been a resounding success. We are convinced that model can work as well in western Canada.
The Wheat Growers see tremendous benefits flowing to western farmers once we are free to choose whether to market our grain on our own or through a more focused and effective Canadian Wheat Board. Marketing choice means that farmers will decide for themselves when and where it makes best sense to deliver and sell their wheat and barley. This past year, for example, many farmers watched in vain as their piles of wheat downgraded in value due to lack of delivery opportunity. That's one of the problems of the Canadian Wheat Board monopoly. It assumes one size fits all and that every farmer's storage, pricing, and cashflow needs are virtually the same. That's not the case. Providing marketing choice gives each of us the ability to decide for ourselves the delivery and marketing options that best suit our farm.
We are convinced that marketing choice will also provide farmers with a greater opportunity to lock in profits on wheat and barley. As we outlined in our letter to the committee members last week, in recent months we've seen a rally in U.S. wheat markets. Under marketing choice, we'd have a greater opportunity to capture the prices under this rally. As we pointed out in our letter, we find it disturbing that the Canadian Wheat Board's projected prices have actually gone down at a time when the U.S. prices have climbed significantly.
You're talking about some real-life examples, and I have about three or four, if you want to ask about them later in questions and answers. I have one here on winter wheat. On Kansas versus Minneapolis, the futures for winter wheat are 30¢ higher than red spring wheat. Yet the PRO for spring wheat is $5.63 and the PRO for winter wheat is $4.38. That's $1.30 less for winter wheat when the price should be 30¢ to 40¢ higher. That's one example, and I have more, specifically from my farm, if you want to ask.
The Wheat Growers also believe that freeing up the wheat and barley market will lead to all sorts of entrepreneurial activity, as new investment in value added takes hold. We have seen it happen in oats, canola, and the pulse industry. We are convinced it can happen in wheat and barley too. More processing facilities here at home mean more competitive choices and lower freight bills for farmers.
The Wheat Growers also want to make sure that any prairie farmer who wishes to market their wheat and barter collectively remains able to do so. We are not wanting to take that option away. In fact, we believe many of our members would want to market some of their grain on their own and contract a portion of their grain with the Canadian Wheat Board.
For this reason, we are recommending several structural changes to the Canadian Wheat Board that we believe are necessary to ensure it becomes a strong competitive choice for farmers. We are recommending the Canadian Wheat Board be transformed into a truly producer-owned and -controlled company.
Part of our reason for suggesting this is because the Canadian government has already agreed, as part of the WTO negotiations, to give up the government guarantee of Canadian Wheat Board borrowings and the initial payment. The timeline for giving up these guarantees has not yet been negotiated. However, we are likely to have a few years to undertake the necessary structural reforms and create a capital base.
As discussed in our position paper, we believe the capital base should be formed by allowing the Canadian Wheat Board to retain its existing equity, including the contingency fund, and by allowing farmers to elect whether they wish to invest their portion of interest earnings into CWB shares. We estimate that half of farmers would elect to invest their share of interest earnings with the board.
The Wheat Growers Association is not wedded to any one particular ownership model. The growers would take one of several forms. For example, the ownership model could be a traditional co-op structure, a new generation co-op, or a normal shareholding company. We believe the federal government, in consultation with the CWB board of directors, should determine the ownership model that it believes will allow the Canadian Wheat Board to raise the capital necessary to become a viable, producer-owned and -controlled operation.
The Wheat Growers Association is convinced that the CWB can be transformed into a viable marketing tool for prairie farmers. Of course, there are no guarantees, but the successful transition of the Ontario Wheat Producers' Marketing Board from a single-desk marketer into an effective marketing competitor demonstrates that this can work. The Wheat Growers Association is not seeking preferential treatment. All we ask is that the laws of this land be harmonized so that we have the same rights and privileges that are afforded farmers in Ontario and elsewhere in Canada.
Again, thank you, Mr. Chairman, for the opportunity to present our views here today. We look forward to your questions.