Bill C-18 Committee on Nov. 1st, 2011

[The Chair, Conservative, Blaine Calkins]

Ms. Ashton.

[Niki Ashton, NDP, Churchill, MB]

Thank you.

Mr. MacKay, will any people working for the Canadian Grain Commission lose their jobs in Churchill?

[Murdoch MacKay]

The Canadian Grain Commission staff who work in Churchill, I'm not totally familiar with all of them, but some of them come from other ports. They come from the port of Montreal, from the port of Thunder Bay, and other ports. We augment the staff up there. I'm not sure whether there is any existing staff--

[Niki Ashton, NDP, Churchill, MB]

A number of them are local staff. They raise families on the income they make by being employed by the Canadian Grain Commission. A number of them are extremely concerned that they will be losing their jobs as a result of the Wheat Board's being dismantled. There is a state of uncertainty that I'm sure you would agree is probably not wished upon any employee of the Grain Commission. I hope this will be looked at in the context of Churchill.

Every time Bill C-18 has come up, the stocks of companies such as Cargill and Viterra have gone up. On the other hand, the plebiscite that asked how farmers feel about the Wheat Board indicated that a majority of farmers across the prairies support the single desk. Anyone watching these trends might come to the conclusion that Bill C-18 is very much in the interests of big agri-business, and not in the interests of farmers. So my question is, whose interests are being represented by Bill C-18?

[John Knubley]

I think, Mr. Chair, what we can say on this is that the working group did look very seriously, as we mentioned, in terms of its mandate, at the issues related to access to producer cars and short lines. We just spoke about those issues. We also looked very seriously at the issue of access to inland ports and terminals, and we were sensitive to the impact on producers and smaller companies. I think the report reflects that.

[Malcolm Allen, NDP, Welland, ON]

Thank you, gentlemen.

You talked about anti-competitive forces. I'm going to draw your attention to your report, on page 10, where it talks about setting the bar. You say that the majority of the group feels that the goal should allow the market to work to favour that type of response and that the minister should put in place monitoring. I'm not sure what that is exactly. It just says that it should be put in place. I'm not sure that I found in the legislation what that monitoring actually is.

Not only that, the trigger for that monitoring system should be high, but there is no definition of what high is. Clearly, your working group said that they wanted certainty and predictability in the market. Yet the one piece you want to put in place that might protect those who are fearful of the change has become “maybe it could be this, or maybe it could be that, or maybe it could be here or there or beyond the ceiling”. We don't know.

Is it somewhere in the legislation that I'm missing? Did I just not see it, or does it not exist yet because we're still waiting for the minister to figure out what the monitoring is and what the bar is?

[John Knubley]

On this particular issue, we did look at what monitoring means, and we discussed it at some length. I think we've already discussed in earlier testimony some of the tools available to us. I'll ask Mr. Meredith to talk to those issues again.

[Greg Meredith]

Thank you.

Maybe as a prelude, I'll just give you a bit of context as to how we came to the notion that the bar should be high. It was merely to avoid the government being dragged into every commercial dispute.

[Malcolm Allen, NDP, Welland, ON]

If I could interrupt, and I don't like to do that, Mr. Meredith, you said that in your paragraph. That's okay. I get that piece. You don't want to be involved in a contract that Mr. Hoback and I get involved with, and I end up charging Mr. Hoback, as every Scotsman would, because I am one, two cents more than I should. He resents the fact that I have made him pay those two extra coppers.

You've already said that. I don't need to hear that again.

I want to know where it is you think the bar is. How high is the bar to be set? Because clearly that impacts those who feel that there's anti-competitive behaviour. If you can't reach the bar, sir, then there is no remedy for you when you can't reach the bar.

[The Chair, Conservative, Blaine Calkins]

Mr. Allen, the time has expired. I will allow an answer, and then I'll close up the session.

Thank you.

[Greg Meredith]

I think it's correct to say that the working group did not define what high means. There's probably more work to do there. As my deputy mentioned, there are a number of tools that allow us to see through what is happening in the grain handling system, from inland terminals right to port. Some come through the CGA, the Canada Grains Act. Some come through the Canada Transportation Act. Some come through our fairly extensive interaction with the industry.

We have a grains industry round table that meets regularly. We have value-chain round tables that bring in other dimensions of the grain industry so that we can see what's happening, and we have a ten-year program and partnership with Transport Canada to monitor, in a very detailed way, the performance of railways in delivering grain to port and then turning around. There is some work to do on how high is high, but we think we have the tools to help us see through that and decide when there are problems and to intervene.

[The Chair, Conservative, Blaine Calkins]

Okay, thank you.

Colleagues, our time for this has passed.

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

Could I have just one second, Mr. Chair?

[The Chair, Conservative, Blaine Calkins]

Just hang on, please.

Mr. Storseth, you have the floor.

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

Mr. Knubley, in his opening comments, remarked about some studies that were reviewed, such as the Informa report and the George Morris Centre report. I was just wondering if in the next day or so the group could table those reports so that the committee could have them at their disposal.

[The Chair, Conservative, Blaine Calkins]

Are these reports public reports?

[John Knubley]

These are public reports, and I can provide a list of the reports.

[The Chair, Conservative, Blaine Calkins]

If you could provide a list of these reports, and they are in the public domain, I think every member of Parliament will be able to access them.

Thank you, Mr. Storseth.

Mr. Knubley, Mr. Meredith, Mr. MacKay, Mr. Bacon, Mr. Phillips, and Mr. Vandervalk, I want to thank you all for participating in our first two-hour block of these particular meetings. We thank you for your good and frank discussion and honest answers.

Committee members, I think, given the fact that we're in the middle of a bit of a marathon here, I'm going to suggest that we suspend for a period of not less than 10 minutes, and maybe up to 15 minutes, so that we can take care of any personal business we might need to.

The committee is now suspended.

[The Chair, Conservative, Blaine Calkins]

Ladies and gentlemen, we're going to resume now.

With us at the table is our witness Mr. Bob Friesen, from Farmers of North America.

Mr. Valeriote.

[Frank Valeriote, Liberal, Guelph, ON]

I'd like to ask a question of you.

Some comments were made in the opening remarks by Mr. Martin, and I just had a question because something he asked confused me. He made reference to two evenings of witnesses. I'd like to know, is it the intention of the committee to have the clause-by-clause portion of our work open to the public and televised, or is it going to be in camera?

[The Chair, Conservative, Blaine Calkins]

Mr. Valeriote, the business that's before us today is to hear from our witnesses. I will go back and review what was decided at the meeting here and I will get back to you in due course. In the meantime, I would like to proceed with testimony from Mr. Friesen.

[Frank Valeriote, Liberal, Guelph, ON]

Thank you.

[The Chair, Conservative, Blaine Calkins]

Mr. Friesen, the way we've agreed to do things here is that we will grant you up to ten minutes to make your opening comments. I encourage you to do so in a respectful cadence so that our interpreters have an opportunity to relay the information in both official languages to us. At that point in time I will open up the floor to an agreed upon order of questions from the committee members and we will proceed for the remainder of this particular committee meeting. So if you're ready, sir, the floor is yours for ten minutes.

[Bob Friesen, Farmers of North America Inc.]

Thank you very much, Mr. Chair.

I apologize that I am the only thing standing between you and either a bar or a bed, but I will try to be as brief as I can.

It is a pleasure for me to be here. As the chair already mentioned, I'm here on behalf of Farmers of North America.

Farmers of North America, for those of you who don't know, is a farmers business alliance that was started by a grains and oilseed producer from Swift Current, Saskatchewan. The head office is currently in Saskatoon. We have about 10,000 members across Canada. We have members in every province, except Newfoundland.

Our number one mandate and priority is to improve farmers' cost-competitiveness and thereby maximize their profit. Even with the subject at hand, when Bill C-18 passes, we want to help be the architects of a system that's going to help farmers with cost competitiveness and maximizing their profits. That's what we're there to do on behalf of our farmers.

I don't want to beat an old quote to death, but as many of you have heard before, Wayne Gretzky used to say he was good because he went where he knew the puck was going to go. He didn't go where the puck was or where the puck had been. That's the kind of mentality we have at FNA. We want to try to determine where the puck will be and then to be there on behalf of our farmers. We want to make sure that we serve their best interests and that we serve them well.

We do know at FNA that there are some farmers who will want to have current CWB services provided for them in a new system. In looking at this pending legislation, we are trying to determine how best to serve farmers, whether that is in grain aggregation, shortline rail, finding port positions, marketing or whatever. That is, building a crosswalk between farmers and the marketplace, much the way FNA has in the past—and it continues to do so—built a crosswalk between farmers and input suppliers.

To that end, we have created a task force of people with experience in grain handling, rail service, marketing, and producer car shipments. The thrust of our task force is to find solutions that will make farmers more cost-competitive and profitable in a new environment created by policy change.

In that process we've already consulted with the academic community, officials from grain companies, farmers, shortline rail groups, and producer car shippers. While that task force work has not nearly completed its work, we would like to point out the following for your consideration.

The bill does include things like government guarantees, and it has already dealt with cash advances. Those were two very important components. But there are some other issues we would like to share for consideration, and certainly there are issues we want to work on finding solutions for with decision-makers.

Having said that, let me very quickly point out a few things. We do know that the changes in the legislation will have far-reaching implications and will change the environment considerably.

For many farmers to achieve benefits in spite of the changes, and to mitigate some of the impact, they will need tools and assistance to successfully navigate the transition process. They will need to raise capital, make equity investments, market intelligence, and business and market management, to name a few.

A changed role for the CWB in the logistic system will also impact how short lines and producer cars function. This has been a great empowerment tool for farmers, so it's imperative that these essential and very important programs remain a viable part of the marketing and logistic system. Farmers have used them to their economic advantage and they've invested a lot of money.

There also has to be assurance of viable port position access and inland terminal access. We need to create and maintain a system within which we enable farmers to fit their individual marketing goals and producer car shipments into an already challenged and somewhat congested port handling system.

We need to ensure that railways will continue to deliver and service producer cars in a way that is economically viable for farmers.

We also need to build, maintain, and strengthen the relationship between class-one railways and the shortlines to capture the maximum benefit of a substantial public and private investment in infrastructure. And those investments, as you know, have already been made by many farmers—investments made to achieve a cost-effective and efficient transportation system. This has to be harmonized in some way with the new marketing regime coming up.

We need to also assist those farmers who want to take a greater role in the management and ownership of a CWB 2 to allow them to create a cost-effective new grain company that will build and maintain competition in the system. And we need to ensure that a new board will have the incentive to transition the new CWB into a viable company in the interest of all those producers who value it as an empowering market tool.

Finally, we know that farmers, in responding to this policy shift, will need to have access to capital. And as a start, we suggest what we call the AgriInvest and agricultural stimulus initiative.

Very quickly, Mr. Chair—I won't belabour it too long—currently there is about $1 billion in the AgriInvest tier, and about $450 million is in fund 2 in the prairie provinces. Now, for those of you who aren't familiar with fund 1 and fund 2, fund 2 is the tier for which, when farmers withdraw that money, it's taxable, and they have to withdraw fund 2 before they withdraw fund 1. So for the prairie provinces, for example, there's $450 million in fund 2 and there's a further about $280 million in fund 1. This is just in the prairie provinces. That's $730 million.

What we're suggesting is that in order to create an incentive and to help farmers raise capital to make whatever investments they might want to make in a grain-handling transportation and marketing system, we waive the taxes on fund 2 withdrawals if a farmer invested in a prior-approved project. That would immediately release somewhere around $450 million.

Now, let's remember I'm not suggesting that farmers be forced to use that money. It's still there for them to keep for a rainy day fund, if they would so like to. However, you must know that there are currently no triggers in fund 2, so farmers can actually withdraw it to buy whatever they want. This would create an incentive for a farmer to say, “you know something, I don't want to withdraw the money because I'm 30% taxable this year, so I'm just going to leave it there”. Instead, we say, “you know something, if you invested in something that will help maximize your future revenue, then we will waive the taxes”, and of course the benefits of taxation will accrue back later to the government, because farmers will have had the ability to invest in projects that maximize their revenue.

Now, what that would do is it would release a potential $450 million immediately. But because currently farmers have to withdraw fund 2 before they can withdraw fund 1, it would also make available the $280 million in fund 1. Hence, somewhere around $700 million to $730 million now is a potential pool of money for farmers to use to invest in something that will help maximize future profits, and we think is a pretty good way to address some investments that farmers perhaps will want to make to make sure that they continue to be empowered in the grain handling, transportation, and marketing system.

And this is my last comment, Mr. Chair.

FNA is in the role of serving farmers, and because we're in that role we would like to be part of any network created to make a collective marketing tool successful for those farmers who want to use it, including grain handling and transportation.

Thank you very much for your time.

[The Chair, Conservative, Blaine Calkins]

Thank you very much, Mr. Friesen.

We'll now proceed to our questions.

Mr. Martin, for five minutes, please.