Bill C-18 Committee on Nov. 2nd, 2011

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

That would have been an ideal time to make sure that the new entity had grain on the ground and could move forward. Instead, they just shut it down. That's really unfortunate, because there was an option for that to happen. That's why at royal assent other groups will be able to move forward, including the new entity. We'll be able to start offering those forward contracts in hedging at that point. That's one of the reasons we're pushing hard to get this done as quickly as possible.

I also find it very disturbing that as the board lost favour with farmers, they spent $65 million to $70 million, that we know of, on these lakers, without a lick of consultation with farmers. They took that money right out of the pool accounts, which was really unfortunate. Now they're spending money on lawyers and advertising campaigns without discussing it with farmers. It's actually coming back to bite them a little. Farmers are moving away, saying they've gone over the top.

If I had any warning at all, I'd say, “Slow down, check what you're doing, and come work with us to make sure this new entity has a chance to move forward. We will do our best to make sure it has a chance to get grain on the ground and farmers supplying it.”

At the same time we're also seeing farmers counter-suing the board for using their money like that. I think that's one option farmers will always have. It's unfortunate that it has to get tied up in the courts. From the legal opinions I've seen and been privy to, I don't see this as tying us up at all. I certainly look forward to hearing what any judge has to say about this. As you rightly point out, Mr. Martin has agreed with us on the supremacy of Parliament.

[Randy Hoback, Conservative, Prince Albert, SK]

I have a question about the working group and Mr. White's participation in it.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

He's not allowed to participate.

[Randy Hoback, Conservative, Prince Albert, SK]

Can you explain why? Do you know why he wasn't allowed to participate--

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

We asked for representation from the board on the working group chaired by Deputy Minister Knubley, and we got a flat no. We asked for Mr. White as the chair, and probably one of the directors--or however they wanted to set it up. We asked for representation from the board. They did not want to have anything to do with anything other than the monopoly, period. That was their line in the sand.

[Randy Hoback, Conservative, Prince Albert, SK]

It comes back to that scorched earth policy they've had.

[The Chair, Conservative, Blaine Calkins]

Thank you, Mr. Hoback. Regrettably, the five minutes allotted to you have expired.

Mr. Martin is next for five minutes, please.

[Pat Martin, NDP, Winnipeg Centre, MB]

I don't know if I'll need all that time, Mr. Chair, but I will begin. Maybe I'll share my time with my colleague, if we have some time left.

We're still not satisfied, Mr. Minister. If you want to give farmers more choice in how they market their grain, why don't you let them vote on it? That's what we keep coming back to.

When the legislation was crafted, they contemplated the fact that at some time we might want to add the grains that fall under the act, or remove the grains from the act. Therefore they put in place a section in the act that made it mandatory to consult with farmers before any unilateral action was taken. You tried to act unilaterally and the courts slapped you down.

When you talk about spending money, the board members have a fiduciary obligation to act in the best interests of farmers and to return all proceeds to farmers. Mr. Minister, you were carpet-bombing the prairie region with taxpayer-funded misinformation and propaganda. All of your MPs were blitzing with ten percenters, and at the same time a gag order was imposed on the Wheat Board so they couldn't even defend themselves. They had no right to spend a single dollar correcting your misinformation.

To this day you're cranking out this stuff. I don't know what it costs to print hundreds of thousands of copies of this glossy coloured thing that says: Wheat Board bad, marketing freedom good; Wheat Board monopoly, one buyer, versus marketing freedom many buyers. At the very bottom, with a little asterisk in print so fine you can hardly see it, it says, “Subject to parliamentary approval”. That's how much respect you have for the parliamentary process.

You're spending taxpayers' dollars blitzing this PR campaign, following your own narrow ideological and anecdotal notion that there's going to be some kind of nirvana in the free market as soon as you do away with your nemesis, the Canadian Wheat Board. I want to ask some questions about this myth you're propagating about how this windfall of value-adding is going to start.

Isn't it true that in the last 10 years, the milling capacity in the prairie region of western Canada has increased by 11% with four new processing plants? We have the figures and we can table them with you before you go. In malting, up to 75% of all malting takes place in western Canada, up from 50% 15 years ago.

In actual fact, value-adding has been taking place under the Wheat Board's regime. The examples you keep harping on are narrow and anecdotal, and these may be generated now because they think they'll be able to buy product for less. If they buy product for less, doesn't that mean the farmer will get less, as in selling it for less?

Are we misreading this altogether? Does it not mean that hundreds of millions of dollars that used to go into the pockets of prairie farmers will now go into the pockets of the shareholders of the grain buyers who are going to take over this market share?

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Actually, he started talking about section 47.1 of the Wheat Board Act. What that does is commit the government of the day—if they're adding or subtracting a commodity—to work with the farmers affected, those growing the commodity, and that's it. That's all that section calls for. It does not pre-empt the minister of the day from changing legislation. No prior government can handcuff or shackle farmers or the minister regarding change in the future. That's not on, and we're happy to go to court on that.

We're not operating unilaterally, as the member should know there are four provinces involved in the Canadian Wheat Board area: Manitoba, Saskatchewan, Alberta, and the Peace River area of British Columbia. Manitoba is ideologically against what we're doing, but the other three provinces are fully on board and fully support what we're doing. They're with us every step of the way; and they produce 85% to 90% of the Wheat Board commodities. Manitoba produces 10% to 15%, depending on the year and the weather.

We've got the Grain Growers of Canada, the Western Canadian Wheat Growers, and the Western Barley Growers all with us in this. So we're not moving unilaterally.

Our publications probably cost a lot less than the Wheat Board ones, because we actually target actual producers. We don't just lock shoot. Our list is probably a lot smaller and more concise, because we're actually looking for farmers on the ground, the farmers who are actually making business decisions.

When you talk about milling that's been added, yes, there were a couple of small organic mills. I love this idea that capacity is based on population. It's got nothing to do with capacity; it's based a whole bunch more on population. As you know, with Manitoba, Saskatchewan, Alberta, you're talking four million, four and a half million people. It's a small chunk of Canada.

So when they make these goofy statements about how the milling has increased based on population, it's ridiculous in the extreme.

[The Chair, Conservative, Blaine Calkins]

Thank you. Mr. Martin, the time has expired.

Minister, this actually fulfills your obligation that you've committed to for one hour before this committee. So without any further direction, I will suspend for a few moments to allow you to leave, and then we will resume with a new round of questions, starting in the first round with department officials, which will take us to the end of the hour.

[The Chair, Conservative, Blaine Calkins]

Colleagues, let's resume this.

I've spoken briefly with the witnesses from the department. Yesterday when they appeared before the committee, Mr. Knubley and Mr. Meredith were speaking in the context of the working group. Mr. Knubley has asked for just a couple of minutes of committee time to speak to some technical portions of the bill. I believe that would be in the best interests of the committee to hear that.

Mr. Knubley, how many minutes do you think you would require, sir, three or four?

[John Knubley, Deputy Minister, Department of Agriculture and Agri-Food]

I'm calculating it will be two, but it might be four.

[The Chair, Conservative, Blaine Calkins]

In the interests of not having you go over the time that you've set for yourself, I'll give you three. How does that sound, sir?

[John Knubley]

Perfect.

I think you'll recall, Mr. Chair, that we did provide to the committee yesterday with some charts that set out the staging of the bill, as well as the transition phases. I'd just like to provide an overview of the legislation that is being introduced.

The intent of the legislation is that it be staged to provide for a dual marketing system, with a five-year transition period.

The bill has five parts. The first part is the governance of the board, which has changed to enable stronger collaboration going forward and to ensure that the board is focused on a new marketing environment. Specifically, future contracts will be possible, as of royal assent. The voluntary board will continue to administer this year's pool. The other major elements of the existing Canadian Wheat Board Act would remain unchanged during this preliminary phase, presumably from January to August 1.

In the second part, beginning on August 1, 2012, the Canadian Wheat Board Act would be repealed and replaced with the Canadian Wheat Board Interim Operations Act. The monopoly is then removed and anyone can buy and sell any grain; in other words, farmers would no longer be required to sell through the board. The government would assist the board with the transition costs for up to five years. Under this interim legislation, the Canadian Wheat Board would continue to offer pooling, which would have government-backed initial payment and borrowing guarantees. A temporary check-off would be established at point of sale to support ongoing research and market development.

In the third part of the act, the Interim Canadian Wheat Board would be required to develop a business plan to capitalize itself and operate as a private company. The intent is to look to the Wheat Board itself to define that business plan. The board of directors would be required to submit such a plan to the minister and would need to become a private entity within five years. The intent of the act here, of course, is due diligence, in terms of taxpayer money. It could be a business corporation, a producer co-op, or a not-for-profit corporation. The business model is for the board to decide.

Part 5 would repeal the Canadian Wheat Board Interim Operations Act and would bring the transition period to an end.

As you can see, these are the five phases set out in the legislation for discussion.

[The Chair, Conservative, Blaine Calkins]

Thank you, Mr. Knubley.

There is agreement between the parties to proceed in the following fashion: we'll have a five-minute round from the New Democrats, five minutes from the Liberals, and five minutes from the Conservatives.

We're going to start right now.

We start with Mr. Rousseau for 5 minutes.

[Jean Rousseau, NDP, Compton—Stanstead, QC]

Thank you.

My question is for Mr. Meredith.

Economic conditions can at times favour the free market but only for short periods. The Canadian Wheat Board ensures the long-term stability that is necessary to the survival of this economic sector that is crucial to this area of the country.

What is the ideological basis, the economic doctrine behind the progressive dismantling of the Canadian Wheat Board, when we know full well that the new directors will be appointed by the minister, and the board's business plan will be approved by him also?

[John Knubley]

As I just explained, the purpose of the bill is not to see to it that the minister approve the business plan of a new Canadian Wheat Board. In other words, the idea is simply to review the business plan, in order to ensure that the money paid by Canadian taxpayers in connection with the old organization is well spent.

In other words, that the taxpayers' money was well spent in the transition period.

[Jean Rousseau, NDP, Compton—Stanstead, QC]

I have another question. What will be the consequences of this transition plan on Canada's food sovereignty, which is very important to Canadians, and on small producers, who are often the cornerstone of many rural communities in Canada?

[John Knubley]

Perhaps I'll refer again to the working group report that we discussed last evening. The expectation is that this dual marketing system for farmers, which will give an opportunity to opt for pooling or for spot market prices, will lead to growth.

What we have seen with the non-Wheat Board grains, such as canola and lentils, over the last 10 years, has been significant growth, while the varieties and the yield in wheat and durum growth have been small relative to those other grains.

The expectation is that there will be a growing market and more exports.

[Jean Rousseau, NDP, Compton—Stanstead, QC]

I am going to give the rest of my speaking time to Ms. Ashton.

[Niki Ashton, NDP, Churchill, MB]

Thank you very much, Mr. Rousseau.

Could the committee hear what will happen to the financial resources saved by farmers once the Wheat Board begins to be dismantled according to Bill C-18? Specifically, what will happen to the contingency fund?

[John Knubley]

The moneys in the contingency fund, which is being provided for through the operating activities of the Wheat Board, are not considered to be dollars derived from the farmers' pool. This is the way the accounting procedures are developed at the Wheat Board itself.

These moneys are derived not from the farmers' pool itself, but rather from the operating activities of the existing entity. The expectation is that the contingency fund will be used for future capitalization in a new Wheat Board, in a new viable entity, as we move forward.

[Niki Ashton, NDP, Churchill, MB]

Right. I understand, though, that initially everything on which the Wheat Board is based comes from farmers' work and their pockets. The concern, and it's a concern that I've heard from many, is that the contingency fund built from farmers' hard labour and the investments they've made in the Wheat Board is going to greatly benefit the private company that will result if Bill C-18 goes through.

Is that not the case? Will the new entity not benefit from this contingency fund?

[John Knubley]

It's not the case, in the sense that the contingency fund is derived from the operating activities of the board, not from the pool itself. The use of the dollars would be for the new entity.

[Niki Ashton, NDP, Churchill, MB]

Ultimately, though, the farmers own the board, and the concern is that farmers' money is unwillingly—without a farmer vote—being taken on by this new entity that will no longer be farmer-run.