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

[The Chair, Conservative, Blaine Calkins]

Mr. Valeriote, I do believe this is an issue of debate. But I will ask Mr. Hoback, if he wants to keep on this with line of questioning, to do so in a way that is constructive.

[Randy Hoback, Conservative, Prince Albert, SK]

Mr. Chair, I'm going to the justification for the changing of the board of directors and why it needed to happen quickly in order to ensure that the farmers had an entity they could actually use going forward. Apparently the existing board is communicating to farmers that this entity has no chance of survival, and they have already written it off. That type of communication is having a damaging effect on the marketplace for the new entity as it moves forward.

As far as fiduciary duty goes, the board has a fiduciary duty to the corporation. But the corporation is being handed a new change, and now it has a fiduciary duty to make sure the corporation and its employees can move forward, and I feel it's not performing that fiduciary duty.

So again, I go back to my question. Were they cooperative? And if they weren't cooperative, give us some insight into how that worked.

[John Knubley]

Mr. Chair, in terms of the working group.... Again, Ian White was a participant, as an observer--

[Randy Hoback, Conservative, Prince Albert, SK]

Ian White is a board member, but he'd be only one of the existing board members.

[John Knubley]

He's only one. As I said earlier, Allen Oberg condoned the participation of Ian White.

All I really want to say here is that the presentations of the Wheat Board to the working group were focused on two things. One was marketing issues, and the second was access issues and the question of whether regulation was required in terms of access to ports and inland terminals. So that's the kind of exchange that occurred between the working group and the Wheat Board.

With respect to the minister--and I'm now speaking as a deputy minister--there have been exchanges of letters between Allen Oberg, as the chair, and Minister Ritz on the issue of transition costs. The nature of the letters was such that Allen Oberg set out the estimated costs for a windup. I think he assumed the Wheat Board would disappear as of January, which was not the case. There were issues around mitigation of cost. We have not been able to discuss the details of these transition costs. So again, at the end of the day, once there is assent to the bill, with the new governance, the officials can work with the new board to establish a new plan for a viable entity.

[Randy Hoback, Conservative, Prince Albert, SK]

I know that in 2005-2006 they were circulating a plan called “Harvesting opportunity”. Was there no presentation from the existing board on what the new entity might look like?

[John Knubley]

There wasn't one from the board. However, in late July officials did meet with officials of the department to review the elements detailed in the letters exchanged between Minister Ritz and Mr. Oberg.

[Randy Hoback, Conservative, Prince Albert, SK]

As we move forward now, this new entity will be able to take advantage of the futures markets, which we understand are going to be coming into play in January.

What can we say to farmers, as we move forward, to give them confidence that this entity will actually have the support of the government, or actually have the ability to go out and make the sales?

[The Chair, Conservative, Blaine Calkins]

Thank you, Mr. Hoback. Your time has expired.

I'll allow Mr. Knubley to address the question. Do so briefly, please.

[John Knubley]

I think the confidence is demonstrated in the commitment of the Government of Canada to pass the legislation.

[The Chair, Conservative, Blaine Calkins]

Thank you.

Moving on, this is our last questioner before we start round one again. I have Ms. Block, who is splitting her time with Mr. Dreeshen.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you very much, Mr. Chair.

I appreciate the opportunity to participate in this meeting with members from the working group. I am proud to be from Saskatchewan, representing the riding of Saskatoon—Rosetown—Biggar, where some of the finest barley is grown. The community of Biggar is also home to Prairie Malt.

My question is going to be about the maltsters. In recent years Canadians maltsters have said that they have had difficulty finding premium barley to make malt. We've also seen a decrease in malt barley acres in recent years. So how would an open market affect the farming practices of barley producers, and how would grain handling in an open market affect quality and the varieties of malt barley grown?

[John Knubley]

Again, I think there are two issues at play here: the transparency of price signals that will now be in place with the new marketing system; and on the quality side there will again be research that is supported by the check-off as well as the work of the Canadian Grains Commission.

So let me just turn it to Murdoch MacKay.

[Murdoch MacKay]

Thanks, John.

As John mentioned, in today's market the maltsters have to deal with the Canadian Wheat Board for a price, and then the Wheat Board has a contract with the producer and they have a contract with the maltster. But in the future, going forward, the maltsters will be able to deal with contracts and have contracts with the producers.

Also, you'll find that maltsters like to do their business well in advance, so they would probably, in January, be able to put out their prices for the crop year 2012-13. They would be able to put those prices out earlier and farmers would have an ability to see what the prices are and whether they want to grow malt barley well in advance.

That's one area where I think they can do things like that.

With regard to the variety in the development of malt barley, you may find now that there will be commercial entities and companies that may want to get involved in the development of malt barley, seeing that they can now deal with producers directly and contract with producers to grow it. So the variety registration program that we have within Canada would fit in well with that type of thing.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you.

I wonder if Richard Phillips would like to respond to this question as well.

[Richard Phillips]

Actually, Stephen is sitting right beside me. I haven't grown malt barley for two years now, but Stephen grows malt barley every year. Maybe he could respond.

Stephen.

[Stephen Vandervalk]

Malt barley has expanded on my farm. The CashPlus program that came out with the Wheat Board was a step in the right direction, though only partially. But they gave us a price up front, and that's what's most important to us. We cannot have uncertainty as far as what price we will get is concerned. We need to have a contract, a delivery date, and they'll deliver that and we'll get paid 100% of the price.

I know this year I've talked with three different maltsters. They all want to contract grain with me, but they cannot do it legally, so they have not found a way to do that. The uncertainty is huge.

Not only that, but prices have dropped in the last month. We could have signed up for higher contracts a month ago. Cash is coming directly out of our pockets already. So it's very important that we're able to contract directly with them for a price and do that as soon as possible.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you.

[The Chair, Conservative, Blaine Calkins]

Mr. Dreeshen, one minute.

[Earl Dreeshen, Conservative, Red Deer, AB]

Thank you.

Actually, perhaps I'll come back to some of my other points later, but I just want to mention one thing. I know that one of my constituents had talked to me about advance payments, and of course while that does assist in cashflow--so I don't want to leave the impression that this particular option isn't there--I wonder if you could just talk to us about what the plans are as far as advances are concerned.

[Greg Meredith]

Thank you for that question.

One of the things we heard very early on from farmers was that the advance payments program really was a key part of their marketing strategy. The advance payments program provides farmers with cashflow early in their growing season, with up to $100,000 interest-free. And it provides them the opportunity to avoid marketing dips, which they might have to sell into if they were short of cashflow. They can avoid that, holding back their grain until there's a better opportunity price-wise.

The Canadian Canola Growers Association has been administering the advance payments program for canola growers for quite some time. There is about a 40% overlap between the canola growers membership for users of APP and what the Wheat Board was doing.

The working group did hear from farmers that what we needed to do was to keep the APP going, and we needed to do it quickly. So as part of the policy decision when we moved to marketing choice, the assignment of the APP was to the Canadian Canola Growers. They'll continue to administer the winter wheat program and then they will take up the whole program next year.

[The Chair, Conservative, Blaine Calkins]

Thank you, Mr. Meredith.

Mr. Dreeshen, time has expired.

Committee members, that does get us through the first and second rounds, as agreed to in our routine proceedings. However, our witnesses are here for a two-hour block, as agreed upon by this committee, which means that we have approximately 30 minutes remaining for these witnesses.

What I suggest is we simply proceed to the round one of questioning again, if that's acceptable.

Mr. Martin, I believe you had the floor first, in the first round. The five minutes is yours, sir.

[Pat Martin, NDP, Winnipeg Centre, MB]

Very good, thank you.

Let me start by stating how profoundly I resent this travesty of a process. I want it on the record that our party fought long and hard for long, comprehensive hearings on this bill, where we could bring witnesses who are actually prairie producers to argue the relative merits of the bill, not just the regulatory technical details we're limited to here today.

Having said that, let me say that where I come from, in my home city of Winnipeg—Mr. MacKay knows this well—there's a street called Wellington Crescent. Wellington Crescent is where all the rich people live. Every mansion on Wellington Crescent was built by the grain barons and the railway barons, collectively called the robber barons. They got rich and built their mansions by gouging prairie farmers mercilessly throughout the 1890s, 1900s, 1910s, and 1920s.

It was because of that gouging that farmers banded together collectively to protect themselves from the wholesale exploitation. One of the current private grain company owners, Mr. Paterson, has been very honest. Yes, he says, his company will make more money without the Canadian Wheat Board. He's frank. There's no crime in that; there is no law against it. I wish him well. He's a good corporate citizen of Manitoba, but he knows he will make more money because it's as simple as this.

The mandate of the Canadian Wheat Board, the legislated mandate, was to maximize the dollar return to farmers. The mandate of a corporation is to maximize the corporate return to its shareholders. It's as simple as that. This is going to constitute a wholesale transfer of wealth. It will take hundreds of millions of dollars out of the pockets of producers and put it in the pockets of the shareholders of these big corporations.

Am I not reading this correctly? Is this not sort of a fait accompli? Is that not how it's going to happen?

[John Knubley]

Mr. Chair, I think on this issue I'll say two things.

Certainly, in terms of the work we did as a group, we were attentive to what I would call the anti-competitive behaviour of the players in the supply chain. Members did, at the end of the day, want to monitor very closely how the system would work, particularly in terms of access to ports and inland terminals, as well as in relation to producer cars and shortline rail.

[Pat Martin, NDP, Winnipeg Centre, MB]

Maybe I should ask a more specific question, then, about milling capacity and producer cars. One of the canards we hear from the government side, and I presume from your working group, is that value-adding will increase dramatically. I think that's part of your report.

Is it not true that the milling capacity in the last decade has increased 11% or 12% in western Canada, with four new mills built, and that's under the current Wheat Board provisions? And is it not true that malting barley has increased 200% or 300% in the last 20 years? Now 75% of all the barley malted in Canada is malted in western Canada.

Under the current regime, will you not concede that value-adding has increased dramatically, in the same period of time that there have been no new milling production facilities in the northern tier of the United States?

Can you verify these figures?