Evidence of meeting #21 for Agriculture and Agri-Food in the 40th Parliament, 2nd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was farmers.
A recording is available from Parliament.
Liberal
Wayne Easter Liberal Malpeque, PE
It's nice to have you here, Mr. Blaney. This is the first time we've seen you at the committee in a long time.
Conservative
Liberal
Wayne Easter Liberal Malpeque, PE
In any event, I'd just put it on the record that I expect this is what we'll see. The government is not fooling anybody when they try to stack the witnesses against a marketing institution.
The oat growers have talked about the issue of research. This is a problem we're seeing across the country, and I want to be clear on it. You have a dilapidated facility in Winnipeg. Research is where it's at, for the future; there's no question about that. It is a competitiveness issue, because other countries are spending money on research.
You said there was no process for replacing retirees. That's what's happening in my area as well, and we are a microclimate in P.E.I. How many are retiring? Do you have any idea of those numbers?
President, Prairie Oat Growers Association
In Winnipeg, at the Cereal Research Centre, we see that a cadre of five of the leading scientists involved in oat, barley, and wheat research are over 60 years old. Retirement is coming. They don't know whether their facility will be standing, almost literally, when they go to work in the morning. I would think that there's a pretty good feeling among them that they should take early retirement or move on if they lack decent facilities and the backing of their employer.
The history in our area has been the same as that in P.E.I.— when people retire, somehow the jobs don't get filled. We've asked the question time and again, are there no people to fill these positions? Where are the young people in these organizations? How can producers help? Can we help with a research chair? Can we help master's students? Can we help PhD students? There has been no uptake on the question, either from Agriculture and Agri-Food Canada or from the universities. So it's a concern to us.
Liberal
Wayne Easter Liberal Malpeque, PE
I would submit that it shouldn't be up to industry. We need public researchers who aren't just funded by check-offs on the commodities. That's one of the ways that we're becoming less competitive.
I have two more questions. First, with respect to the Canadian Wheat Board in the big global arena, can you explain to the committee the kinds of players that are in the international arena? What do you do to try to maximize returns back to primary producers in this country? We should have a marketing advantage, operating through a single desk.
Next, both the oat growers and the Wheat Board talked about transportation costs. I'm not sure if you were arguing for a costing review, but on this side of the House we believe there needs to be a costing review of the railways. There's no question but that big rail is gouging the farm community, and it has been doing so for about five years.
President and Chief Executive Officer, Canadian Wheat Board
I'll just talk about what the Wheat Board does in the international marketplace and let Mr. Hill talk about the transport issue.
The Wheat Board is selling a large quantity of grain each year, in the order of 18 million to 21 million tonnes of grain each year. As I said, a small portion of that actually goes to the U.S. market, about 5%. The balance is sold domestically to millers and then the vast majority goes to international customers.
The CWB uses a range of marketing techniques to try to extract the greatest premium possible for that grain in the physical marketplace.
I think you have to understand there are two aspects to the price that the farmer gets. One aspect is the actual physical premium that is obtained in the international marketplace and the other is the pricing that is done through either the flat price of that grain when you sell it or by pricing it through the futures markets. A lot of the grain is sold against the futures markets price.
What we try to do is maximize the value of that physical grain in the marketplace. We know that farmers produce excellent-quality grain, and we have a system in Canada that is aided by the Canadian Grain Commission in terms of testing the quality. In the main, we try to understand what are the qualities produced and we try to match those qualities to what we understand to be the needs of a range of customers around the world.
In doing so, we provide customers with a great insight into that quality. We provide them with technical advice through the Canadian International Grains Institute, to which the pool contributes. We try to make sure we brand that product as a different competitive offering to that sold by others in the marketplace. The others in the marketplace are generally the large international grain companies that everybody particularly knows about. They are dominant in the world global trade of wheat and grains, and so we actually compete with our quantity against their large quantities.
Conservative
Chair, Board of Directors, Canadian Wheat Board
Can I reply to the costing question?
Conservative
The Chair Conservative Larry Miller
You'll probably get a chance. We are up to nine minutes. That's supposed to include seven minutes. Mr. Easter used up most of it.
André Bellavance Bloc Richmond—Arthabaska, QC
Thank you.
Mr. Hill, since you wanted to add a comment, I'll let you use my speaking time.
Chair, Board of Directors, Canadian Wheat Board
Thank you.
The transportation issue is a very significant one for farmers. It is one of the largest bills they have. Since the current revenue cap was established, many efficiencies have been implemented by the railways. So we commissioned a study by Edsforth. This study shows that these efficiencies haven't been back to producers. It's in the neighbourhood of $70 million per year that the producers are losing. Every year we wait to do this costing review, that money is taken away for farmers.
So yes, we are asking for a full costing review.
Bloc
André Bellavance Bloc Richmond—Arthabaska, QC
I'm going to continue on this subject because I took some notes.
It seems to me that, in a document you sent the committee, you did a comparative study on the costs associated with rail transport to the United States, to Montana, and to Canada. I don't know whether that study is exhaustive.
I believe I understood it was more expensive in the United States. Isn't that the case?
Chair, Board of Directors, Canadian Wheat Board
American transportation costs are very different from those in Canada. If you're close to waterways in the U.S., the railways are very competitive. In fact, it can cost more money to ship grain to the Pacific northwest from Montana than it does further east in the eastern states.
A lot of things happen. The indexes fluctuate up and down. But in general, we need to be concerned about what Canadian producers are paying. I know American producers, at every meeting I've been at, have expressed great concern over the transportation cost there.
So American producers see themselves in the same position as we are in, by paying too much.
Bloc
André Bellavance Bloc Richmond—Arthabaska, QC
I'm continuing on the same subject, because I previously heard a committee member say on behalf of the government that it was the fault of the Canadian Wheat Board that rail costs were so high. That's not the first time the Conservatives have put the Canadian Wheat Board on trial.
I understand that it's the railways themselves that determine their costs, not the Canadian Wheat Board.
Chair, Board of Directors, Canadian Wheat Board
Yes, that is correct. The railways are responsible for setting their freight rates within the revenue cap.
Bloc
André Bellavance Bloc Richmond—Arthabaska, QC
I'll be going back to you in a while.
Mr. Phillips, earlier you made a comment that surprised me. I want some clarification on what you said when you talked about the election of the Canadian Wheat Board's board of directors. You said you had written to the Canadian Wheat Board to see how the manner in which those elections are conducted could be reviewed.
Are you challenging the legitimacy of the Canadian Wheat Board's board, or do you think that the people on the board weren't elected by the right growers? I'm asking you the question to get some clarification because you say the system should be reviewed. What makes you say that?
Executive Director, Grain Growers of Canada
After every election, when the farmers are voting and electing the directors, there are always disputes, from the pro-Wheat Board people who say this wasn't fair or from the anti-Wheat Board people who say this part of it wasn't fair.
An expert panel was put together about three years ago that did a review of this, and it came out with some very good recommendations on how to clean up some of these disputes. Some of it's around who's funding the candidates, some of the reporting mechanisms, who should be eligible to get a ballot to vote. And when we went through this, as the Grain Growers of Canada, we agreed with many of the recommendations.
In our informal discussions with the Wheat Board, there was agreement with quite a few of the recommendations as well. So we said, we'll sit down together to sort this out, and everything we can agree on maybe we can bring forward to the government together. We can clean up these elections so they are valid and there are no more disputes among all the parties.
Bloc
André Bellavance Bloc Richmond—Arthabaska, QC
Your comments have nothing to do with the fact that there are eight directors who are in favour of keeping the Canadian Wheat Board as it is right now. That's not what you're questioning.
Executive Director, Grain Growers of Canada
No, we're not contesting that at all. What we're saying is let's have it clean, so that everybody agrees in advance that these are the rules, and then whoever wins, wins. We're looking for a clean, fair election process, as is the Wheat Board.
Maybe Mr. Hill can comment, but I believe we're on the same page on this issue.
Bloc
André Bellavance Bloc Richmond—Arthabaska, QC
I'd like to toss the ball to you. Do you think there's a method that should be amended in that regard?
Chair, Board of Directors, Canadian Wheat Board
The Wheat Board has always looked at the process after an election. We also looked at the panel review that was done and their recommendations, and we agreed with a lot that was in the panel.
We need a process whereby we work with the government and other farm groups to look at this election process and agree well in advance as to what the rules are going to be around elections, so that everyone understands and there are no surprises, no last-minute changes. The Wheat Board would support that kind of thing because we need producers to feel they have elected the directors they want to represent them. And we have agreed to meet with the group.
Bloc
André Bellavance Bloc Richmond—Arthabaska, QC
Mr. White, you've virtually just arrived at the Canadian Wheat Board.
With regard to the contingency fund, how do you explain to your members what happened and how can you reassure them that the contingency fund will be replenished? Are you on the right track? Does what is happening to the contingency fund trouble you? We hear nightmare scenarios from the government. In your mind, is this something unsolvable? Can you put the contingency fund back on the rails?
President and Chief Executive Officer, Canadian Wheat Board
You're right that I came to the Wheat Board just over 12 months ago, and most of these issues were already evident. The situation, I think, has been fairly well explained as to what happened in a very extraordinary market circumstance in 2007-08. The Wheat Board has moved to address the issues that were evident then. We have hired an independent risk management consulting firm to look at the situation and actually go to first principles to develop the process and the methodologies. They have come back to say that overwhelmingly the risk management practices that are now in the CWB are appropriate. They did raise further relatively minor areas of operation, which we have addressed or are in the process of addressing.
I think the contingency fund stands alone. Our view has been that it should not get too large on the negative side, particularly in an environment of very difficult financial times like we have been going through in the world. But our aim is to bring the contingency fund over time to around a zero balance, and I think that's entirely possible.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
Thank you very much to all of you. I'm just going to ask this question one more time, Mr. Rutter, and then I promise I'll leave you alone.
Your membership is under 1,000. Is that 900, 800, 500, 300? Could you be more precise?
