Agriculture Committee on Nov. 6th, 2012

[Frank Valeriote, Liberal, Guelph, ON]

You suggested a reform that, to me, coming from the corporate sector in my past life, looked a lot similar to a corporate governance model: president, vice-president, and stakeholders who have input and say on what's going on. I gather you don't have that input right now necessarily—input, but nothing that they're really accountable for. They don't have to come to you and seek, ultimately, your consent, only your input.

Are you looking for a model that actually requires the kind of input and consent of the stakeholders before they apply these fees?

[Richard White]

I guess what we're looking for is a structure. We had proposed this during the consultation process leading up to this legislation, so we're disappointed that the governance issue wasn't addressed. But we are looking for a more business-oriented governance structure, appointed by the government, because it is a government-legislated institution.

However, with user fees, that kind of changes the parameters now, and having a government-controlled agency just passing the cost to farmers doesn't really work for us. What we need is a governance structure that's more responsive to the needs of the farmers it serves and the customers it serves, and to be more business oriented in the approach to the movement, the grading, and the services they provide going forward. If I'm going to pay the bill, we can't afford to have waste, duplication, and excessive overhead in the organization.

We need the right accountability brought into this. We think that accountability comes with a proper governance model that will listen to farmers, that will respond to customer needs, and be more business oriented in the actual commercial movement of this grain through the system and into customers' hands.

[The Chair, Conservative, Merv Tweed]

Thank you.

Mr. Hoback.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

Thank you, gentlemen, for coming here this evening. We appreciate you giving up your evening to be with us, because this is fairly important.

There is one thing that I want to get cleared away with you, Mr. White. You talked about the fact that you'd like to see more changes. I agree that more changes are needed. But I think if you look at the budget and the changes that you see happening in front of us...they're actually implicated in the budget; they have an impact in the budget directly. I think that's why you see these types of changes here.

Like you, I hope we see legislation down the road, and I hope we see some of the governance changes that you propose and some of the other issues that you were talking about, because there is more to do in this file, for sure. I guess the NDP won't have the option to hoist the bill like they did in the past, to block it, so hopefully we'll actually see some progress, that we take this old wagon and actually turn it into something that's relevant to today's technology.

One of the things I think we need to highlight here, and it's always tough and difficult when you see a situation where fees have been frozen at 1991 levels, and all of a sudden now we have a day of reckoning.... There has to be a day of reckoning. I think everybody at the table here would agree there has to be a day of reckoning. When you do that, that day of reckoning, depending on how long you wait, gets worse and worse and worse. Where do you think we need to be on that day of reckoning?

Now I understand that we have a consultation process. You've got a proposal in front of you at this point in time. You've got 30 days now to come back with your proposal. For you guys, this should be no surprise because you've been thinking about this for a long time. This has been telescoped back to 2006 and 2008, about changes, so there are no surprises there. But what do you think these fees should look like?

Obviously, as a farmer, or as a former farmer, I don't want to pay any fees at all. I agree with you; I don't want pay them. But the reality is that the taxpayer doesn't necessarily want to pay them either, so the government has to find an appropriate balance. You said 9%. I guess my question to you on 9% is, are you talking about the $5 million? We also found $20 million in savings that the farmer doesn't have to pay. How much credit do we get for that $20 million, going to that formula of 9% versus 25%?

[Richard White]

We certainly appreciate the $20 million in cost savings that are coming here, because that is significant. I think farmers are currently incurring about $38 million of CGC costs. If the $20 million savings hadn't come along, we'd be looking at overall fees of $80 million plus, maybe even closer to $90 million. So the $20 million saving is appreciated. But it still creates a gap between the $38 million we're paying now and the potential to go to $50 million or $55 million going forward under full cost recovery. That is still a big hit.

Even though we appreciate the $20 million cost savings that we anticipate, it's still going to be a net increase to farmers that will probably almost double their fees, going from $1.60 a tonne to possibly $3 or $3.50 a tonne after that. On a typical farm with 5,000 acres and growing a tonne an acre, that's 5,000 tonnes that a farmer produces. Those fees would have been $8,000 last year; going forward they're going to double. It will be about $16,000 for the average farmer. It is still significant, and that's including the $20 million cost savings.

We're not looking for a subsidy or for the taxpayers to subsidize farmers for services that benefit farmers specifically, but we do want some recognition for this brand that the CGC has provided Canada. It's good for all Canadians that the maple leaf says something, not only for grain sales, but for Canada's reputation around the world. We think those are the kinds of things that the public purse is probably more appropriate paying for, rather than specifically and solely farmers.

As for the 25%, I think what we're saying is that we think that $5 million number should be upwards of around $15 million or $20 million coming from the federal government for the public good component.

[Randy Hoback, Conservative, Prince Albert, SK]

Again, using your math, you say $15 million or $20 million. You're basically suggesting still leaving things frozen at 1991 levels.

[Richard White]

Yes.

There's one thing that people—

[Randy Hoback, Conservative, Prince Albert, SK]

Is that fair to the taxpayer?

[Richard White]

The one thing that people haven't been talking about in the consultation document for the user fees is that we have not really come to grips with the possibility or probability of 1.6% inflation, let alone the catch-up. We have the catch-up plus inflation staring at us in the face. That's why we are so interested in making sure this organization's costs aren't any more than what they actually need to be, and that farmers don't pay any more than their fair share going forward. There is a big catch-up.

You're right, Randy, but going forward on an ongoing basis, we've also got inflation to deal with as well.

[Randy Hoback, Conservative, Prince Albert, SK]

Yes, no doubt.

[The Chair, Conservative, Merv Tweed]

I'm going to ask Mr. Banack to make a comment and then we'll go to our next....

[Humphrey Banack]

I know from the initial consultations that were held last spring, our membership said that the drive...as Rick said, on a farm of my size it is going from $8,000 to $16,000. Our membership said to roll this in slowly; we can do this over a couple of years. We're looking at an instantaneous bang from $8,000 to $16,000. Our membership has told us to roll this in, not to make this a one-step thing. In the proposal we've seen since November 1, there will be inflation built into this. I guess our proposal should come back and say let's roll this in slowly.

We realize that the fees are there. Operating the business is part of where we're at. We need security. We need to know where our grain is in order to survive in the future. As an industry, we see the instruments that are provided by the Canadian Grain Commission, and the changes here are important to that. We recognize that the cost will increase. Our membership says let's roll them in; let's not double the cost in one day from July 31 to August 1.

[The Chair, Conservative, Merv Tweed]

Go ahead, Ms. Ashton.

[Niki Ashton, NDP, Churchill, MB]

Thank you very much.

I just want to respond to a comment I heard earlier.

Mr. Bacon, in relation to not having heard concerns from people around what is being proposed here, you may or may not know that actually this committee is not listening to anybody who disagrees with what is being proposed by the government. Even though we don't have the chance to hear from people, that is not the case. For example, it was very important for me to hear from people from Churchill, in my constituency, who will lose jobs directly as a result of the removal of inward inspection. We're not hearing anything from anybody from my province, Manitoba, a proud grain-producing province that will also lose jobs in Winnipeg. That becomes a problem in terms of the kinds of decisions we're making based on the feedback we're getting.

[The Chair, Conservative, Merv Tweed]

Mr. Hoback, on a point of order, please.

[Randy Hoback, Conservative, Prince Albert, SK]

Chair, this bill has been through the process in the House for numerous years. They've had many chances in previous sittings to have input into this legislation as it has moved forward. It hasn't changed that much. It has just been contracted to what its original intent was before the NDP actually hoisted the bill.

I don't care how many hours we give Ms. Ashton, the member from the NDP, to look over this bill. She will not be satisfied with it. Let's face the facts. The NDP is not here to represent farmers; they are here to represent the big unions that empower them.

[The Chair, Conservative, Merv Tweed]

I'll stop you there. It's not a point of order.

Ms. Ashton.

[Niki Ashton, NDP, Churchill, MB]

Thank you very much. I appreciate the fair ruling, and also the fact that committees are actually meant to listen to Canadians. For us, it may or may not be fun to listen to each other talk. I have my own personal views about Mr. Hoback's or anyone else's comments from that side. My concern is that Canadians who have some very different views from the ones we are hearing tonight aren't actually being heard at this committee.

Having said that, Mr. White, you did mention the continued commitment, which I believe is an important point that you would like to see from the federal government when it comes to grain research. In Manitoba, the Cereal Research Centre, based at the University of Manitoba, has been shut down. Research jobs have been lost. The Canadian Grain Commission office in Winnipeg that focuses on research is expected to lose jobs as well in that area. Is this a promising trend?

[Richard White]

I'm not sure. I'm here to talk about the Canadian Grain Commission. All those services they do provide are valuable. Many of those are for the public good of Canada, so my comments are basically about.... Yes, they are valuable. We have a world-class grain institution in Winnipeg, and the centre of Canadian grain is right in Winnipeg. But I think some of the research initiatives you're talking about are more about public and agronomic research and in other areas than what I'm here to talk about today specifically.

When it comes to the Canadian Grain Commission, those points about research and quality assurance issues are very important. They do a very good job at that institution. It's just a matter of how we are going to pay for it and who should be paying for it.

[Niki Ashton, NDP, Churchill, MB]

Sure. Our point is that there is a concern that research, especially when it comes to grain, is being cut substantively under this government.

But let's take a brief moment to go to the point of optional inward inspection. We are seeing some really dangerous trends around deregulation. XL Foods is something that has gripped Canadians. Obviously, we are not talking about the same—I'm glad it's a laughing matter on that side.

When we are talking about grain and the potential bacteria that might be there, while it might not be as attention-grabbing, there still are some dangers that inward inspection is able to trace. My particular concern is around eliminating inward inspection and the impact on perceived biosecurity weakness for the U.S. food import system. If grain is shipped to the U.S. by lake freighter and by rail from the terminal elevators and it's no longer inspected, the question is, how can we maintain that prime reputation that Canada has? Really, what is the problem with having optional inward inspection?

[Gordon Bacon]

Again, I'm not here representing terminal elevator operators, but certainly the 110 companies that are exporting grain, pulses, and special crops to more than 150 countries around the world...our whole reputation as a trade is based on having long-term relationships and being a reliable supplier. The emphasis on grain quality assurance and reliability doesn't hinge upon a single inspection on inward movement into a terminal. This is a system we have that goes from the farm gate right through to a follow-up on sales.

My view of this is that inward inspection was really something that was facilitating financial settlement in a marketing system that has now changed. The focus on quality assurance, safety, reliability, and meeting consumer needs doesn't change with that. We still have terminal managers who are not going to want infested grain coming into their facility. We haven't changed anything in making a good-quality product move to terminal position. I don't see there is a link, other than this financial settlement one. It certainly doesn't change the view of any of the exporters whose financial future and reputations are based on this ongoing assurance of quality. I certainly don't see how that is going to change by removing the mandatory inward inspection. I don't believe it undermines grain quality assurance in Canada.

[The Chair, Conservative, Merv Tweed]

Thank you.

Mr. Payne.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you, Mr. Chair.

Thank you, gentlemen, for coming out tonight to enjoy this nice evening with us. It's important that we hear your testimony.

I just want to follow up a little bit. It appears that the NDP wants to continue to have the inward inspections, but as you so eloquently suggested, Mr. Bacon, that is not necessary. The outward quality is where it really is necessary. I fully support that. We need to make sure that whatever we sell abroad has that Canadian brand, has that quality, and we know for sure that whoever is buying it knows they're getting the best grade that they've approached us for and have bought.

I want to just step back a little bit in terms of the consultation period. I think you were here when Mr. Hermanson talked about the consultation process on the fees starting November 1. I'm just wondering whether you all have had an opportunity to get your feedback into the CGC on that issue. And where do you stand on that right now?

[Gordon Bacon]

The meeting hasn't been scheduled. We haven't had the meeting yet, but we have been informed of the consultation to talk about that. We have had a call with the Grain Commission, where they outlined to grain companies the changes that were being proposed, where we raised some of these same concerns that we've raised here in terms of the lack of detail around the replacement of a mandatory bonding with a mandatory insurance program, and the concern we had about whether that was going to ensure that we weren't providing an unlevelling of a playing field between companies in Canada.

[LaVar Payne, Conservative, Medicine Hat, AB]

Mr. Banack.