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

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

That's the same study that says on page 4 of the executive summary:

Based on the most recent five-year average of grain delivered into the CWB pool accounts, revenue gains from an open market system would total $450 million to $628 million per year.

I'll just say that one more time: “$450 million to $628 million per year”. It continues: “These savings estimates are based on those aspects which can be quantified, while items such as inefficiencies of CWB contracts, lack of price transparency, storage issues and sales timing are not included” in this estimate of $450 to $628 million a year.

Does the working group expect there to be a benefit for western Canadian farmers through an open market?

[John Knubley]

As I indicated in my opening remarks, the working group anticipates there will be opportunities for new investments, for growth in terms of efficiencies of the grain-handling system, as well as for value added.

I think we are also aware there will be challenges as we move forward in terms of how the new system will work, but we are very confident that at the end of the day the new system will bring growth.

Would any of my colleagues like to comment?

[Murdoch MacKay]

I would talk about the rail freight service review and service level agreements being made between shippers and the railways, and also the fact that the companies will now be in control of their pipeline. When I talk about pipeline, I'm talking about the movement of grain from their country operations to the terminals. I think you will see increased efficiencies in the movement of grain. In the non-board market, the companies are in control of the movement of that grain so storage costs are less than with the Canadian Wheat Board. That is something I was aware in my previous life.

If you look at the throughput of terminals in Canada, there's a terminal on the west coast and its elevator turns approximately 30 times; there are other elevators there that will turn approximately 15 times. When I talk about turns, that's the total amount of grain they will put through their facility compared to the size of their facility.

If you look at some of the throughput they have in the facilities in the U.S., Bunge is building a facility in Washington, on the west coast, and they're looking to turn that facility 80 times. I think controlling the logistics within your own pipeline will enhance the throughput and the efficiency of facilities, and I believe that will allow benefits that go back to the producers.

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

Absolutely. All you need to do is look at what's going on in Europe to see how important market certainty is to markets and to industry.

Mr. Knubley, one of the things you talked about a couple of times in your opening comments was the aspect of market certainty. I couldn't agree with you more.

I have a simple question for you. What is the potential impact of de-monopolizing the CWB on market certainty, and what do you feel is the best way to maintain market certainty going into this transition?

[John Knubley]

As I said in my opening remarks, market certainty was a fundamental issue that was raised by every person we met as the working group. In terms of the delivery of that certainty, I think it is to move forward and to implement it in a phased way, as set out in Bill C-18.

That will allow for contracting in January as well as re-establishment of the governance of the Wheat Board itself, and then moving to the interim phase as of August 1, 2012, where we open the market.

You repeal the existing act. You create the interim act, and you put in place the government guarantees that allow the Wheat Board to carry on, on an interim basis, and look for ways to reinvent itself.

Then with a third phase after five years, the Wheat Board will again come forward with a plan that will allow it to be a viable participant in the open market.

My answer is that by establishing these clear phases and clear dates as to when the market will be open and what role the Wheat Board will play in terms of developing its plan we provide certainty to the market.

[The Chair, Conservative, Blaine Calkins]

Thank you, Mr. Knubley.

Mr. Storseth, your time has expired.

Ms. Ashton, please, five minutes.

[Niki Ashton, NDP, Churchill, MB]

Thank you very much.

I saw your list of people that were consulted as part of the study, and I saw no reference to any elected Wheat Board directors. As we know, section 47.1 of the Canadian Wheat Board Act refers to the importance of consulting with farmers. One would hope that the working group would have consulted with those who were elected by farmers as part of your important work. I'd like to know why they're not on this list.

[John Knubley]

What I can say on this, Mr. Chair, is that Ian White, the president of the Wheat Board, was a participant in working group activities. He also was initially asked to be a co-chair with me on the committee. That resulted in a discussion with the chair of the Wheat Board, Allen Oberg, who called me in mid-July and indicated that he did not feel it appropriate that Mr. White serve as the co-chair but he felt comfortable that Mr. White could participate in our meetings.

[Niki Ashton, NDP, Churchill, MB]

Mr. Oberg is one of the elected directors. There a number of others, eight to be exact, who are pro the single desk, and it seems to me that we're missing a significant part of the story and perhaps the most important part of the story, which is the experience of farmers on the ground and those who, unfortunately because of this government's limitations and efforts to, quite frankly, muzzle the debate, we will not be able to hear their—

[The Chair, Conservative, Blaine Calkins]

I'm going to hear a point of order from Mr. Hoback.

[Randy Hoback, Conservative, Prince Albert, SK]

Again, we're here to look at the technical aspects of the bill, not to listen to all sorts of speculation and hype based on nothing but her imagination.

[The Chair, Conservative, Blaine Calkins]

Mr. Hoback, on your behalf I will ask Ms. Ashton: while we all have deeply divided opinions on this issue, the nature of questions here is that we do have an opportunity to question these witnesses on the technical merits of the bill, and I would ask you to keep the tenor and the tone of the committee focused on the issue at hand, if you don't mind, please.

[Niki Ashton, NDP, Churchill, MB]

Absolutely. I don't think it's imagining anything to know how many farmers on the ground would have wanted their voices to be heard here today, or tomorrow, or the day after.

My next question is about your first section here that refers to access to elevators, rail, and ports. Having read the section, I don't actually see any reference to ports. As the MP for Churchill, I'm particularly concerned about what the loss of the Wheat Board will mean to Churchill. I think we all know it well, sitting around this table--that with the loss of the Wheat Board, the potential loss of 95% of what goes through the port of Churchill, no small number by any means, spells real danger for the community that depends on the work of people working at the port, certainly those who work on the rail lines that connect to the port.

Not only is there no reference to the impact on ports per se.... I see quite a bit of reference to elevators and rail. At the end, the committee points out that its issues to be addressed by the working group involved looking at access to ports. How is it that you were supposed to be looking at that, yet there is no reference to it? What we do know is that Churchill will be adversely affected.

If I can add to that, what concerns me here is that there is reference to the potential trouble with government intervention. What we do know is that the Conservative government has with great pomp and circumstance announced a $5 million investment in the port of Churchill, which is government intervention, yet your work is speculating about the potential dangers related to that government intervention. So what is it? And why is it that the people of Churchill and the people, quite frankly, of northern Manitoba are being not just not referenced in this document but also seem to be the victims of a very contradictory agenda, where we have the government touting the benefits of government intervention, which we know are completely inadequate if we lose the Wheat Board, and yet here in your very document you express danger with regard to that very government intervention?

[John Knubley]

On the issue of Churchill, this was discussed briefly in the committee. What was discussed much more at length was the issue of access to ports generally, not singling out any one particular port in that regard. I'll ask Murdoch Mackay to speak to that briefly.

Having said that, I do want to say that the government, as you mentioned, has spent a good deal of time looking at the challenges facing the port of Churchill. It is recognized that 90% of the grain that flows through Churchill is Wheat Board grain. It's in that context that at the time of the announcement of Bill C-18 there were really four elements to the response to Churchill: a $5 million per year incentive for the five-year transition period, to ensure the continued flow of grain for this transition period; an additional $4.1 million investment from Transport Canada for port improvements; a re-profiling, if you like, of some of the investments that have already been made and not been used in Churchill under Western Economic Diversification; and then a commitment to continue to consult with those involved with Churchill in terms of diversification and how it will work in an open market.

[Niki Ashton, NDP, Churchill, MB]

Thank you very much.

[The Chair, Conservative, Blaine Calkins]

Ms. Ashton, your time has expired. I'm not going to allow supplementals. We will have more time with the officials. I think you'll have an opportunity to get your question answered.

[Niki Ashton, NDP, Churchill, MB]

Yes. I've stopped.

[The Chair, Conservative, Blaine Calkins]

Mr. Knubley, you wanted another official to address Ms. Ashton's original question. I'll allow a few more seconds to do that.

[John Knubley]

Again, I think Murdoch MacKay will speak to the discussions within the working group on access to ports.

[The Chair, Conservative, Blaine Calkins]

Mr. MacKay, briefly please.

[Murdoch MacKay]

We had lengthy discussions on market access, not only to country elevators that were owned by the grain companies but also to all ports and the access to terminal elevators, be they in Vancouver, Thunder Bay, Churchill, and elevators on the river.

We realize there is excess capacity in a lot of the ports, and we also are aware that today the Canadian Wheat Board, as a single-desk seller, has agreements with the majority of terminal operator owners. If we were to move to a system whereby there would be a voluntary Wheat Board, the voluntary Wheat Board, along with other people, other companies who do not have terminal elevators, would be able to negotiate commercial agreements with them to get their grain handled at their terminal elevators.

One thing that everyone needs to understand is that there is excess capacity and that these companies are looking for grain to handle to increase the volume and the throughput for their facilities. So there are opportunities, and the grain companies have all stated that they are prepared to work with the new voluntary Wheat Board. And Quorum Corporation, who made a presentation to the group, mention in their report that all grain companies they have met with stated they would welcome business at their country and terminal operations from the CWB or any other grain companies. So there are operations and things like this that go on today.

So with regard to Churchill, if it works and it's economically viable for a grain company to put grain through Churchill, or if it works for the Canadian Wheat Board, the new Wheat Board, to work with the Port of Churchill and OmniTrax, they can now work on a handling agreements there.

[The Chair, Conservative, Blaine Calkins]

Thank you, Mr. MacKay.

That was quite a substantive amount of time you received, Ms. Ashton.

Mr. Zimmer, please.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

Thank you.

Thank you, Chair, for keeping us organized.

The B.C. Grain Producers in my riding are certainly very happy with the many opportunities this bill would provide. We've heard from the current CWB, and its systems are discouraging future generations of farmers from entering the agricultural sector. I know that most farmers are business entrepreneurs at heart. I know my grandpa and uncle and relatives in Manitoba certainly were, and they like to make their own decisions when it affects their substantial financial interests on their farms.

Can you tell this committee, with specific examples, how the open market will encourage these opportunities? I would welcome responses from Mr. MacKay and Mr. Bacon as well.

[John Knubley]

Mr. Chair, as a way of opening this discussion, I would say that we did meet with farmers. The working group held a panel and we invited six farmers from across the prairies to discuss the issues they saw in transition. We also met with I think about ten associations representing the prairie industry and producers the day before the panel we had with farmers.

I think all of us were struck by the desire of the young farmers to have certainty and predictability and to get on with it, to allow them to use whatever tools they might opt for, whether it was to use pools or forward contracts. I think there was a great deal of optimism as well among the younger farmers that the changes were going to bring new opportunities in terms of innovation and value added, as we already see in the canola and pulse areas.

Let me turn to either Murdoch MacKay--

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

Mr. Chair, I would also welcome an online response from Mr. Vandervalk. We don't get to see him, so it's easy not to notice him.

Go ahead.