Agriculture Committee on May 14th, 2009

[Blair Rutter]

We believe we are the largest non-check-off voluntary organization in western Canada. We currently have about 600 members, but it fluctuates from year to year.

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

Thank you very much. I appreciate that.

I just want to also thank you, Ian and Larry, for the very thorough analysis you've given us. I hope that all members here will read it, partially just to look at what you're saying. I really appreciate some of the clarification in it.

Larry, you mentioned--and we also talked about it--this costing review. It's my understanding that the federal government is announcing a service review of the rail freight and that this will take a long time because it involves other things, not just the costing review. It is my understanding that the CWB, the Canadian Federation of Agriculture, the National Farmers Union, Keystone Agricultural Producers, the Agricultural Producers Association of Saskatchewan, and Wild Rose Agricultural Producers are publicly calling for this costing review.

My question is to the wheat growers. Your organization isn't added to this list. Could you explain why, please?

[Blair Rutter]

Yes, we have supported the call for a costing review as well, but in conjunction with the service review, because in our view, price and service go hand in hand. You shouldn't look at one issue in isolation from the other.

So yes, we do support a costing review of some sort.

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

It's my understanding, Blair, that the reason the costing review has been requested is that it's going to take a long time to do this service review. Your organization supports the other organizations in zeroing in and doing this costing review as the service review continues, am I right?

[Blair Rutter]

Yes. The railways have had a number of productivity gains over the years, they've made a number of efficiencies, so it's always good to make an assessment as to whether the compensation being paid to the railways is appropriate or not--whether it's too much or too little right now. You always want to make sure that the compensation ensures there's sufficient money for reinvestment. We haven't had that benchmark exercise done since 1992, so 17--or however many--years later, it seems appropriate to again have that assessment to make sure that the compensation to the railways is indeed fair and reasonable.

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

Yet apparently there is resistance to the idea of a costing review on the part of the government. That's my understanding. Is that your understanding?

Would anybody else like to...?

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

I have a point of order, Chair. I hate doing this, because usually Mr. Atamanenko doesn't follow Mr. Easter's suit in playing fast and loose with the facts.

The fact of the matter is that this government.... I was part of the consultation process in which we went out to all the shippers that Mr. Atamanenko has already identified as asking for a costing review. A prioritized level of service review under the shippers' bill of rights was one of the key points that they wanted first, and a costing review has come afterwards. You're not getting resistance from either side. I think it's essential that the facts be put out there.

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

I'm glad everybody's on board. Thanks, Brian, for that clarification.

Ian, I'd like you to give an assessment. You've come to the Canadian Wheat Board and you've been here a year. You've had lots of experience on the open market and with other markets, you're a professional, and you've come and assessed the situation. I'd like to get your assessment of how the Wheat Board has been able to help farmers. It it hasn't, I'd like your opinion.

We've talked a lot about value-added and the criticism that the Wheat Board gets, and that seems to be addressed in this memo. Can you see a voluntary Wheat Board functioning in today's global market?

[Ian White]

A voluntary Wheat Board is a deregulated market, so you have to look at what that model might look like. The Wheat Board as we know it today would certainly not easily exist in that deregulated environment.

You can look at the model now being developed in Australia after the deregulation that occurred there in July of last year. I think we need to look back at this over a number of years and see how it played out. In the first year, so far it seems to have been a fairly rocky road for the deregulation that has occurred there, but as I said, I think it needs to be viewed over a number of years.

The Australian Wheat Board, as an example, has a significantly reduced role today and is an organization significantly different from what it was when it was a single-desk operator. It basically just becomes another trader. The ability to extract value out of the marketplace that we see in the sales program from our single-desk operator is arguably diminished in that environment.

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

In other words, if I understand correctly, having a strong Wheat Board that can compete with the big players enables us to get a better deal for farmers. Am I reading it correctly?

[Ian White]

That's the theory. I think I said to the committee previously that there's no question that the Canadian Wheat Board needs to be able to demonstrate that value. We are in the process of looking at how we make sure we have transparency associated with our operations and the right benchmarks to judge us by, and therefore put the information out, good or bad.

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

Do you see a threat to your ability to function coming from the WTO negotiations?

[Ian White]

As the current text at the WTO reads, there will certainly be a phasing out of what they call the state trading enterprises, the STEs. I know this hasn't been an agreed text, but as the text that's being currently put forward reads, there would be a phasing out of STEs. The largest company affected would be the Canadian Wheat Board. There has been a carve-out proposed for a small single-desk operation in New Zealand because it is largely small.

So yes, it would affect the Wheat Board as it currently reads. I think we agree with the Canadian government that this sort of issue should be decided by farmers back in the home country.

[The Chair, Conservative, Larry Miller]

Thank you very much.

We'll now move to Mr. Anderson for seven minutes.

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

The Wheat Board folks referred to a review by Gibson Capital. I suppose that to do your review, you've gone back as usual to someone who has a long history of working with the Canadian Wheat Board and supporting it. Can you make that review available to the committee?

[Ian White]

We have made that review available to government—

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

I'm asking, will you deliver it to the committee, please?

[Ian White]

I think we can deliver you substantial parts of that report. It is a report—

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

So there are parts of the review that you're going to keep from the farmers. Is that correct?

[Ian White]

Well, it's a report that is substantially about very commercially sensitive areas. The only concern we have is associated with—

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

Yes, the commercially sensitive areas are that you lost $300 million last year of farmers' money, and now you're trying to hide this report that explains what happened there, I think.

[Ian White]

Could I correct you on that?

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

Well, I'll go through this.

On your risk management system last year, you managed to lose $89.5 million from your producer payment options. That wasn't all. It was worse than that, actually. The management-related loss that occurred last year was $226 million more in discretionary trading activities. You lost over $300 million last year, and you lost $40 million out of the contingency fund the year before, and now you're telling me that your own report by someone you hired—who supports and who has worked with the Wheat Board in the past—is one that farmers are not going to be able to see?

[Ian White]

Could I just explain a couple of aspects of that?

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

I wish you would, yes.