Debates of June 19th, 1995

Canadian Dairy Commission Act

[Lyle Vanclief, Liberal, Parliamentary Secretary to Minister of Agriculture and Agri-food]

Mr. Speaker, I would like to take a few minutes to comment on the motion that is before the House.

First, I am very disappointed in the lack of knowledge or understanding that the member who has just spoken has concerning the bill that is before us today. He needs a few more trips to some place in Canada where there is supply management and he needs to talk to more producers and more stakeholders in the industry to get a better understanding of it.

I am also disappointed he does not seem to recognize and have faith in the dairy industry that which the rest of us have to adapt to the changes that the dairy industry does know are happening. It is addressing them.

It is very clear that in all sectors of the dairy industry, including the primary producer and the processors, are prepared and are rolling with the punches as the industry evolves not only here in Canada but throughout the world.

The bill before the House does absolutely nothing to change the role and the participation at the present time. Reaching consensus on any major Canadian industry initiative, whether it is in the dairy industry or wherever, is always difficult. Reach-

ing unanimity is even more difficult but that is what has happened with this bill.

The representatives of 26,000 dairy farmers and some 300 processors and marketers have clearly voiced their strong support for the bill. I remind the House that the value of this industry to Canada is $8 billion a year.

The members of the national Canadian milk supply management committee, provincial governments and the milk marketing boards and agencies throughout Canada have agreed to all aspects of the bill. I find it very contradictory for the member to stand in this place, representing a party which continually says that the industry should be able to adapt the way the industry wants, and give a contradictory message. That is exactly what this bill does today. It is an industry decision.

None of the parties involved, and this shows the distance of the member from the issue we are discussing, agrees with this motion. The parties have been to the standing committee. None of the parties involved in this have asked for this.

The administration of pricing and the pooling of milk and of returns by the Canadian Dairy Commission on behalf of the producers requires legislation dovetailing certain provincial and federal powers. There is absolutely no infringement on provincial authority involved in this legislation.

Most provinces currently have legislation allowing milk pricing and pooling within their boundaries. Bill C-86 has absolutely no effect on current provincial powers.

To duplicate the equity which the current levy system provides to the new national pooling system, similar powers must be provided for milk sold across provincial borders and that is interprovincial movement of milk and for export.

There are four points in the bill. The first is the bill provides the power to establish and operate a pool or pools. The second is the power to establish the price of the milk or cream to be included in the pool.

The third is the power to collect the returns from the milk or cream to be pooled. The fourth is the power to establish and operate a special program that will enable processors and further processors to obtain milk or milk components at special prices.

Only the last of the powers is subject to formal agreement between the Canadian Dairy Commission and the provincial milk marketing boards. While the other three powers will be delegated to the provincial authorities under the new pricing and pooling system they are and should remain strictly within federal jurisdiction.

The legislative changes replicate the same federal-provincial power sharing now in effect through the levy system and the special assistance program for processors and further processors. The bill will allow maintenance of the dairy sector's current successful, effective and equitable framework for the orderly marketing of milk and dairy products in Canada.

In closing I emphasize to the member and to other members in the House that the motion would not represent a change from what exists at the present time. It certainly would not be what the industry asked for. I remind the member to touch base closer with the industry so that he can assist us in doing exactly what he keeps asking us to do: provide the industry with what it wants.

More formal agreements between the federal and provincial governments would only be further restrictions on the dairy industry which is not our wish. Our wish is to do what is wanted by the Canadian milk supply management committee which represents the total industry. That is what the bill does.

[Jean-Guy Chrétien, Bloc, Frontenac, QC]

Mr. Speaker, it is with pleasure that I rise this afternoon to discuss Bill C-86 and more specifically the amendment proposed by my colleague, the hon. member for Vegreville.

First I would like to make a statement that contradicts my colleague's assertions about supply management. When you want to fill a glass with water, it's easy, you turn on the tap. If you want the glass to be filled right to the brim, you take care to turn off the tap just at the right moment for the glass to be filled up; if you only want half a glass, you turn off the tap when the water reaches halfway.

In the early 1970s, farmers, provincial governments and processors got together and introduced what is now generally referred to as supply management. Regulated supply management in the dairy industry is profitable for all levels. First of all it is profitable for the farmers, who are the base of the dairy pyramid.

Previously, our producers found it much more advantageous to produce milk in May, June and July, when their herds were at pasture. In those three months they could make a better profit on their milk while in the winter it was less profitable, more costly, to produce milk. The result was that consumers and processors ran short of the raw material, milk, that was needed for a full year, so that there were periods when there were no fresh dairy products the way we always have now.

Today dairy producers are assured steady income throughout the year, and not just for one defined portion of the year. Consumers can get fresh butter and cheese every day, thanks to competent management of dairy production. And processors can run their plants all year round and not just for a few months.

I have to say to my colleague from Vegreville, who has visited dairy producers in southern Ontario who want to keep the existing arrangement, that this is not in compliance with the agreements we have signed with our international partners.

We are not in compliance with our GATT commitments and we have to modernize, we have to position ourselves by the start of August to respect the agreements signed by the Canadian government with the 140 other GATT members.

The amendment moved by the hon. member for Vegreville does not, given the present system, constitute a change that gives more powers to provinces, as its wording might suggest at first glance. Given the system as we know it, this amendment would simply limit the effectiveness of the consultation process that exists at the present time through the Canadian Milk Supply Management Committee.

Currently industrial milk is managed by the Canadian Milk Supply Management Committee. The committee is made up of the chairmen of all the provincial milk marketing boards. The Canadian Dairy Commission just chairs the committee. The committee operates on a consensus basis and in case of dispute on any point that requires unanimity, the budget for example, a preliminary management committee will be struck.

If consensus is still not possible after three meetings of this committee, the majority decides. As in any good family-you know this, Mr. Speaker, you are the father of a family-there comes a time when someone has to wear the trousers and make the decisions. If after three meetings unanimity is not possible, the majority decides. In no case does the Canadian Dairy Commission have a right of veto.

Moreover, it is important to point out that the Canadian Milk Supply Management Committee has never, in living memory, failed to reach agreement. That means that the Canadian Dairy Commission cannot impose its views on representatives of the provincial boards. So why include in the bill that their agreement is necessary?

There are some other anomalies in the wording of this amendment. It refers to amending a clause affecting the Canadian Dairy Commission. That commission has jurisdiction over industrial milk only, while the provinces are responsible for fluid milk.

The proposed amendment means that the Canadian Dairy Commission can exercise certain powers only with the agreement of the provinces in which the power is to be exercised, but the provinces have no say with regard to industrial milk. Most importantly, when the amendment refers to agreement by the province, it does not seem to take into account the fact that the provinces do not sit on the Canadian Milk Supply Management Committee.

Provincial representation is provided through the provincial marketing boards. Thus paragraph (a) of the amendment adds nothing to Bill C-86, because it refers to a level of government that, under the present system, has no direct jurisdiction. Since the agreement needed under paragraph (a) of the amendment will be that of the marketing boards, we now question whether paragraph (b) of the amendment is relevant.

In my opinion, there is even a problem of interpretation with the bill itself and with the principle underlying the amendment; since the Canadian Milk Supply Management Committee operates by consensus, why include in the bill that the commission can exercise the powers mentioned therein only with the agreement of the boards?

Even if the provinces had jurisdiction in the area to which the amendment refers, the amendment's reference to either the provinces or the boards would not succeed in achieving a majority whereas, at present, as I was saying, the committee operates on consensus.

For these reasons, we of the Bloc Quebecois would ask our colleagues to oppose this amendment proposed to us this morning by the hon. member from Vegreville, who represents the Reform Party on the agriculture committee.

Overall, maintaining the system as it now operates beyond August 1 would be illegal. The government, in consultation with the provinces, reached agreements with the vast majority of them, with the result that today six provinces out of nine participate in milk marketing. Six provinces agreed to sign the memorandum of agreement. Those six provinces, including two important ones, Quebec and Ontario, produce 82 per cent of all the milk in Canada.

At present three provinces have signed partial agreements, but on very specific points, still hesitating to jump in with the six other provinces. They are the three western provinces: Alberta, Saskatchewan and British Columbia, which together produce 18 per cent of Canada's milk, an average of 6 per cent each, if we do a very simple calculation.

I am delighted that in 13 or 14 months at the outside, milk producers in all parts of Canada will be paid a single price for their milk. There will be no more discrimination between industrial milk and fluid milk.

You know, Mr. Speaker, right now there is still a discrepancy of more than 10 per cent between prices for these two types of milk. The odd thing is that it is often the same cow that produces the milk. One day she produces fluid milk, the next day industrial milk; one day that cow is 10 per cent more profitable, the next day she is being milked at a 10 per cent loss. You have the same standards for cleanliness, the same care, the same cooler, or ball tank, of milk. You have the same cows, the same

dairy producer, of course-and there is a 10 per cent difference. That is unaccceptable.

If we go back 30 or 40 years, it was logical and even acceptable that there be a 10 per cent discrepancy because fluid milk producers had to be much more careful, they had to produce 12 months every year, and they were subject to supply management: if they produced too much milk, they could not sell it.

In closing, then, I ask my colleagues in the Bloc Quebecois to oppose the Reform Party's amendment. In fact, I have just learned that the party in power does not agreee to this amendment either.

Thank you, Mr. Speaker, for your careful attention to my remarks.

[Elwin Hermanson, Reform, Kindersley—Lloydminster, SK]

Mr. Speaker, I rise today to address Bill C-86, the act to amend the Dairy Commission Act.

This bill is significant because it provides for the replacement of the existing system of levies with a system of pooling market returns from the different classes of milk. The government claims the move to a pooling system will maintain equity among producers and will be consistent with Canada's international trade agreements, NAFTA and GATT.

Changes are needed to allow supply management to continue while meeting the requirement of our agreements. For this reason my colleagues and I can support the stated purpose of the legislation.

We have talked to dairy farmers and others in the industry and they have said they feel the legislation is necessary to allow supply management to continue under GATT and NAFTA. For this reason we can at least support the intent of the legislation.

We do have some major concern with clause 2, which affects clause 9 of the Dairy Commission Act. This bill extends the powers of the Canadian Dairy Commission and could possibly diminish the authority given to the provinces under the original act. Therefore to guard against this possible erosion, my colleague from Vegreville has proposed an amendment which will affect clause 9 of the Dairy Commission Act.

There is a problem in supply management in maintaining the status quo. With respect to supply management, change is inevitable. We have already seen change and nothing stands still in the face of time and advancement. Dairy farmers will be forced to compete more and more with American farmers and the odds are change will come sooner than the Liberal government is prepared to admit.

I am not saying this is what I want, but this is what reality tells us. The rules are changing and dairy farmers will need transition time in order to adapt to more open trade in the future. This bill will allow the supply managed system to continue for some time but there are nagging doubts as to the longevity of the current system if we do not consider changes.

Members of the Canadian Dairy Commission claim this bill properly reflects the changes affecting dairy farmers, but what the bill actually does is maintain the status quo for now. Given that a change to supply management is inevitable, there will be a problem over the long run.

The message the government has been presenting along with the legislation concerns us. I want to speak briefly about a concern with Bill C-86 from the discussions we have had with the minister of agriculture, the parliamentary secretary to the minister, some farm groups and some dairy farmers we have had the opportunity to meet with.

The legislation will allow supply management in the dairy industry to continue in a form quite similar to the present system. This does not mean supply management will continue in this form forever. Several trade issues may lead to more direct competition from the U.S. by allowing more access to dairy products from the Americans.

Before I begin discussing trade issues which could have a substantial impact on our present supply management system, I will make one thing very clear to the House. I am not talking about these issues because I want to see the demise of supply management or because Reform wants to see the demise of supply management. We are discussing these issues because they could have a dramatic impact on the dairy industry, and this discussion will provide an important service to the dairy farmers and others in the industry. Just because change will be difficult and is not wanted does not mean it should not be discussed.

Reformers have had enough courage to talk about probable change while the minister and the parliamentary secretary and even leaders of the dairy organizations publicly pretend the present system will exist indefinitely. This sends a dangerous message to dairy farmers that they can be protected against further competition, particularly from the American dairy farmers. This was the message the previous Conservative government gave to dairy farmers. It said article XI of GATT will not be touched under the new arrangements it was negotiating, and several Liberals echoed that. The NDP said it would not let anybody stand in the way of article XI. None of them could carry out that promise because it was not feasible.

I want to talk about why some change is inevitable and why it may be sooner than later. NAFTA began as an agreement between Canada and the United States. The deal is already being expanded now to include Chile and other countries. The world is forming into international trade blocks and we cannot be

certain that our supply managed industries will be totally isolated from new arrangements being negotiated.

What must the government do? It must acknowledge there is a high probability of more access for American dairy products, therefore a move to more competition. The government must help ease diary farmers' legitimate fears that Americans will not compete fairly unless they are forced to through tough action by the Canadian government

We need a government that stands up for our producers and will not be bowled over by the Americans. We need to make the commitment to our dairy farmers that our government will stand with them.

We must start working toward levelling the playing field between Canada and the U.S. before more competition occurs. Now is the time to set the rules for the new economy. We should not go into this blindfolded and not prepared to deal with the inevitable consequences of relaxed trading agreements with our trading partners.

We must recognize there are different concerns about change to the supply management system among different groups of dairy farmers. They are not homogeneous. Each group must be listened to and asked for recommendations on how to deal with problems which will result from the move to competition for more imported products.

My colleague from Vegreville has put forward an amendment to the bill before us today in report stage. We have spoken to dairy producers and many in the west have expressed concern with certain aspects of the bill. Clause 2 of Bill C-86 extends the powers of the Canadian Dairy Commission which could possibly limit authority of the provinces. That is a concern. The proposed amendments appear to give the CDC very wide new powers. They appear to include much wider powers than would be needed to address the reduction of export subsidies and the provision for national pooling of milk returns. Though delegated administrative functions, the amendments do not necessarily reflect the stated objectives of the CDC to delegate all these powers to provincial boards by way of agreement.

Therefore to prevent this from taking place the motion put forward would make the proposed new statutory powers of the CDC subject to agreement from the province or the board. I think that is very important. I hope hon. members can see the merits of this motion and that they will support it.

My colleagues and I are supporting the legislation despite the fact we feel it is not always sending the right message to supply managed farmers. However, we cannot argue with what the industry and the majority of farmers want.

When change does come we will have to take into account older dairy producers who are close to retirement who want to hold their quota and make sure things stay the same while they are still in the industry, and younger producers who may have borrowed money and bought quota at high prices. Their equity is tied up in their share of the quota. We need to consider consumers, those who consume the products dairy farmers so adequately supply.

[Lyle Vanclief, Liberal, Parliamentary Secretary to Minister of Agriculture and Agri-food]

Mr. Speaker, on a point of order.

We all know the importance of moving the bill through the House for the dairy industry and the unanimity out there. In the spirit of co-operation this side of the House showed a few minutes ago to get debate on the bill, I wonder if there would be unanimous consent to move right to third reading to move this along for the good of the Canadian dairy industry.

[The Deputy Speaker]

Is there unanimous consent to move to third reading?

[Elwin Hermanson, Reform, Kindersley—Lloydminster, SK]

Mr. Speaker, if there is unanimous agreement to accept the amendment as put forward by the hon. member for Vegreville, we would be agreeable to proceeding to third reading immediately.

[The Deputy Speaker]

In any event, we have to deal with one thing at a time. We can have another point of order when we get there.

The question is on Motion No. 1.

Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[Some hon. members]

No.

[The Deputy Speaker]

All those in favour of the motion will please say yea.

[Some hon. members]

Yea.

[The Deputy Speaker]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Deputy Speaker]

In my opinion the nays have it.

And more than five members having risen:

[The Deputy Speaker]

At the request of the chief government whip the vote is deferred until 11.30 p.m.

The House resumed from June 8 consideration of the motion that Bill C-92, an act to amend the Canadian Wheat Board Act, be read the second time and referred to a committee.

Canadian Wheat Board Act

[Deborah Grey, Reform, Beaver River, AB]

Mr. Speaker, I take this time to talk about the Canadian Wheat Board and some of the changes proposed in Bill C-92.

The purpose of the bill is to amend the Canadian Wheat Board Act for several reasons. The first is to change the pooling points on which initial payments are based from Thunder Bay and Vancouver to points in Canada designated by governor in council regulation, and then to establish a deduction from the initial payment which reflects the relative transportation cost advantage for each producer; in other words, to make the new pooling system work using the old system. We cannot see how anything old and new can be mixed. It reminds me of a Bible verse about putting new wine in old skins and vice versa.

To put a new pooling system into place when we are still using the fundamentals of the old system simply will not work. The whole move was partly caused by Alberta's recent move to hold a plebiscite on dual marketing which will include asking farmers if they wish to open up the Canada-U.S. border for direct shipments to the U.S.

The bill, which is supposed to come into effect August 1, will change how eastern grain transportation costs are paid. This means eastern prairie farmers who ship through the St. Lawrence seaway will have to pay the full cost of transportation. In the past all prairie farmers shared the cost through the Canadian Wheat Board pool accounts. The changes will result in higher relative grain prices for producers in eastern Saskatchewan and Manitoba once deductions for transportation are made.

The immediate effect after August 1 will be higher initial prices of about $5 per tonne for wheat across the prairies and $6 per tonne for feed barley. It is expected the increased costs will depress eastern prairie wheat prices by about $5.80 per tonne in the first year. For the transition assistance, partial compensation will be provided from the $300 million Western Grain Transportation Act adjustment fund to offset higher costs as a result of the pooling changes and to facilitate the transition to a deregulated system after August 1. Although these changes sound good, under a new system we have to ask why we are using the fundamentals of the old system to ensure that happens.

One way to real, meaningful change to the Canadian Wheat Board is through a farmer elected board of directors to replace the present system of government appointed commissioners, basically another patronage trough and an advisory board with no real power.

We have seen it happen over the years where people get government appointments to the Canadian Wheat Board. If the whole system is to be democratized and updated we need to pay attention to the requests of farmers, which are in fact becoming demands, to democratize the whole Canadian Wheat Board system and make sure that farmers elect their board of directors. I think of every situation across the country, every board of directors, every community group or whatever. Those people are elected yet somehow the Canadian Wheat Board is still in the old system of government appointed commissioners.

Farmers should be given the authority to decide what type of wheat board they want. After all they pay the bills. It is the very same as it is here in the House of Commons. If people are demanding something from government they will make sure they vote in and elect people who will effect the changes for them.

Farmers are paying the bills through the Canadian Wheat Board just as Canadian taxpayers are paying the bill for this place. We need to make sure that if we are to open up the Canadian Wheat Board, if we are to put new systems in place, it has to basically go all the way. We must make sure that we democratize it fully and that the wheat board directors are elected by the farmers who pay the bills for them.

Farmers should be given the chance to democratically examine their organization and all jurisdictional options. This would allow grain farmers to carefully consider and vote on a variety of market opportunities, for example introducing greater domestic and international domestic competition, allowing the purchase of wheat and barley on either a cash basis or a pooled price basis and allowing the board to operate as a seller from export terminal positions only.

If we are to see any changes in the Canadian Wheat Board these things will have to be updated regardless of who is in power and regardless of their views on the Canadian Wheat Board or on the dairy commission that we have just spoken about. We are getting close to the 21st century and we cannot continue with a system where government appointees who have been faithful political hacks are transferred to some of these boards.

These and other issues must be decided directly by farmers through referenda. My party has proposed national binding referenda in the House since I have been here in 1989 and we will continue to push that.

The Charlottetown accord was a perfect example of that through a national referendum in 1992. It was a really exciting day for everyone in Canada. Politics changed forever in the country as of that October evening when we had a choice of putting down yes or no. Of course the no side won. I was the only federal parliamentarian of a federal party in the House of Commons who was on the no side. It was not really a happy occasion for me in this place but fortunately the lives of most of

us do not just take place in the Chamber. We found incredible support in the rest of the country outside these hallowed halls from people who said they did not want a government dictating to them what would happen in the country. That was really exciting and opened the way for referenda.

As we move now toward democratizing the Canadian Wheat Board we need to continue to put pressure on the government as well as on various groups if we are to open up the system regarding the pools with which the bill deals. Maybe that is a good first step, but we need to open it totally after that and make sure people who are in the positions of power in the Canadian Wheat Board, in fact the directors, will be voted in and have some measure of confidence from the farmers who put them into place.

Referenda are exciting. Because we had one in 1992 does not mean that we have to put it off nationwide for another 40 years or 50 years. It is something that could be worked quite well into the Canadian system.

Reform believes that now is the time for a fundamental evaluation of the role of the Canadian Wheat Board and the grain handling transportation system in Canada. The Canadian Wheat Board will continue to be a contentious issue until the democratic rights of farmers are restored and they are given real choice.

We see the battle around the country about pro-choice. Farmers need to be given real choice so that they could elect the people who will sit on their boards. After all it is their organization, as I mentioned earlier. They are paying the bills for it. If they are paying the bills they should be the ones who decide how it is run in the future.

Obviously the minister of agriculture has made some changes but I am wondering whether he has the political will to make all changes that are necessary to the Canadian Wheat Board. The changes will come anyway and the big question is: Will our producers be prepared for them? That is what we are concerned about more than anything else. It is not with what the government is saying, that it is putting legislation in place or it thinks this is best. Let us be sure the producers are the ones who will be freed up in this and thereby the consumers.

In the earlier discussion on the dairy commission a Liberal member said that all dairy farmers felt that way because the dairy commission said thus and so. We have to be a little nervous about that. I am not sure any particular organization speaks for every one of its members.

We have just lived through the contentious Bill C-68, the gun control bill, in the House last week in which various interest groups had a vested interest. For instance the Canadian Association of Chiefs of Police not only obtained a government grant, which seems rather ironic, but it was supporting the legislation and basically saying that every policeman in the country supported gun control.

I invited you, Mr. Speaker, to Beaver River last week to talk about pensions. I invite you again to come to listen to any producer. Being from Alberta you know they say whatever the organizations are, whether the Canadian Wheat Board or the Canadian Association of Chiefs of Police, they do not speak on their behalf, just as I am able quite freely to say that although the National Action Committee on the Status of Women claims to represent me as a Canadian woman it simply does not.

For us to take a blanket statement that my group speaks for me and we know what every producer thinks because some group said it means that we are making huge leaps in logic. We are pleased to see some changes in the pooling system. However, as I said about the old and the new, if we are to make changes and to make something new then let us make them completely new. Let us not just tinker with the system and try to keep the old in place and put patches of new cloth on the wineskin. It simply will not work. If we are to move in the direction of freeing it up for producers and ultimately consumers, let us go whole hog and make sure the Canadian Wheat Board is changed.

Having spoken of hogs I will sit down.

[Charlie Penson, Reform, Peace River, AB]

Mr. Speaker, it is a pleasure to follow my colleague from Beaver River. I would like to raise many of the same points but it is important that I have an opportunity to speak on Bill C-92, an act to amend the Canadian Wheat Board Act. The bill is very near and dear to my heart. It affects many of the people in my riding. The Peace River riding has a large and very dynamic agricultural community. We are watching with great interest what will happen today as the bill is amended.

By way of background, the bill amends the Canadian Wheat Board Act to change the pooling points on which the initial payments are based from Thunder Bay and Vancouver to points in Canada designated by regulation of the governor in council. The bill also amends the Canadian Wheat Board Act to establish a deduction from the initial payment that supposedly reflects the relative transportation cost advantages of each producer.

The way the system works now shipping charges are determined by the distance a farmer has to ship grain to its designated pooling point of Thunder Bay and Vancouver. In my riding of Peace River approximately 95 per cent of all the grain produced in that riding is shipped west to the Pacific coast although one of our designated pooling points has been Thunder Bay. This means farmers in Peace River and other farmers in the western prairies have subsidized part of the costs of farmers in the eastern prairies through the freight pooling system the Canadian Wheat Board has implemented.

My understanding of what is being proposed is a system of four catchment areas. Each area will have a different deduction for transportation to a new designated pooling point. There are few specifics in the bill so I can only speak to the larger concept of what is being proposed.

The changes will result in higher grain prices for farmers in Alberta and western Saskatchewan and lower relative grain prices for producers in eastern Saskatchewan and Manitoba once deductions for transportation are made.

It is thought that the bill which becomes effective August 1 will raise wheat prices in the west by an average of about $5 per tonne and feed barley prices by about $6 per tonne. Similarly prices in the eastern prairies will drop. This is part of what we call a rationalization that needs to take place in the total transportation industry and grain industry so that farmers can be effective, efficient and able to compete on the world market where they must compete. We must get transportation prices in line and this is a step in the right direction. It goes part way to addressing some of the distortions caused by the blanket pooling system and replaces it with a bunch of mini-pools.

However I have a problem with the whole concept of straight pooling no matter how it is done. As a farmer I do not want anyone to subsidize my freight costs. I certainly do not want to subsidize anyone else's either. I propose that we pay the real cost of moving our grain from point a , in my case the Sexsmith area, to Vancouver or Prince Rupert and let the producer who lives somewhere else pay his or her real costs.

I am opposed to any type of freight pooling system. My preference would be to move to an open user pay system where farmers can decide where they want to ship their grain and where the market decides how much it would cost.

The changes proposed in the bill seem to maintain the control the Canadian Wheat Board has enjoyed in past decades. Just as a bit of history, the board was established first in 1917 for the war period and then again in 1935 to ensure the orderly sale of grain when western Canada faced economic and environmental disasters. In its original form the Canadian Wheat Board was a compromised tool for increasing returns and stabilizing incomes. Participation by farmers was voluntary. I stress very clearly that it was voluntary. It was not the way it is now where it is compulsory on all export grain.

In 1943 when supplying food to Canada's allies once again became an important national goal, the participation of farmers in the Canadian Wheat Board became compulsory. Unfortunately that did not end when the war ended, although that is the time it should have ended.

The board's chief mandate is to market wheat grown in western Canada in the best interest of western Canada's grain producers. Its designated areas include the three prairie provinces and a small part of British Columbia. The board is the sole marketing agency for export wheat and barley and the main supplier of the grains for human consumption in Canada.

Canadian feed grains for domestic consumption could be marketed either through the board or directly through grain companies. The sales of the Canadian Wheat Board fall between $3 billion and $6 billion annually. The board is administered by a chief commissioner, an assistant chief commissioner and three other commissioners. All costs of the board's operation are paid for by western grain producers. It is a user pay system and will lead to the concept that we should have control over the board.

An advisory committee was touted in the House last year elected from the producer group. It would advise the board on policy but would have no real power. It is just an advisory committee. However it has a very important function; it was democratically elected.

I have run through a bit of the background because I want to point out that the Canadian Wheat Board did not always exist in its present form. There was a time when farmer participation was optional. I also want to lead into some other changes that are necessary to bring the Canadian Wheat Board into the times.

The Reform Party has been saying for a long time that commissioners to the board should be democratically elected. Producers should have a real say on how the board operates and what kind of power it has. Only if commissioners have to run on certain platforms in certain designated areas can producers truly have a say in the board's operation.

The government is willing to allow an elected advisory committee, which is what has taken place for the last several years. Why not extend the same democratic process to where it really counts, to the people who run the Canadian Wheat Board themselves, the commissioners? I would like to see a dual system of marketing so that it would be the same for export grain as we currently enjoy on domestic grain in Canada. That would mean there would be a Canadian wheat board type of system where farmers who wanted to pool would be allowed to do so and those who did not would be allowed to sell on the open market.

I would like to give two examples of situations that are nonsensical but exist because the board is not accountable to the people it is supposed to be helping. These two examples are of farmers who have been trying to diversify. The very thing we want is for farmers to diversify however both of them have been frustrated by the rigid structure of the Canadian Wheat Board.

First there is the story of Bob Numweiller, a Saskatchewan miller who lives close to the U.S. border. He wants to mill his own wheat, let me emphasize his own wheat, into flour and sell it from his farm. The board says he cannot do that. First he must sell his wheat to the Canadian Wheat Board. Then he can apply to buy it back but he must also pay the board's price and its administration fee even though he does not go through the Canadian Wheat Board. Then he has to wait a year or more to find out how much money he got for his wheat, his wheat, which he so-called sold to the board. It sounds like something which could have happened in Russia 20 years ago.

There is an absurd twist to the story. Now that the Canadian Wheat Board can no longer control imports because of the passage of Bill C-57 which brought us up to speed with the World Trade Organization, that farmer has discovered he can cross the United States border, buy American wheat and bring it back and mill it on his farm but he cannot mill his own wheat without going through this rigid structure. Something is obviously wrong.

Then there is the story of a farmer in my riding who is a friend of mine. He has gone on to diversify and has started to grow organic wheat. However the wheat board does not sell organically grown wheat. As such it has to be pooled with conventional grain where of course it loses all of its advantages and its distinctiveness.

The board deals in boat loads. There is not enough production at this time to fill a boat and it is too much hassle for the board to administer a container load, or so it seems. The question is: Is Mr. Schmidt allowed to do his own marketing? Only if he goes through the Canadian Wheat Board first. He has to do his own marketing but he has to apply to go through the board first.

Here are the steps he must take: First he has to go to his own local elevator to sell his grain on contract. The elevator writes out the sales ticket. Mr. Schmidt writes out a buy-back cheque for $36.94 a tonne. He also has to pay the elevator a $5 per tonne administration fee even though he does not use it. Now he owns his own grain. I have to emphasize that at this point he now owns his own grain. How absurd. He can sell it as he pleases. However he has to wait a year to get his original $36.94 per tonne back or he may not see it at all depending on how the pool did that year.

If he tries to bypass the Canadian Wheat Board he commits a criminal offence and must pay a penalty of $12,000 and spend two years in jail. What kind of a system do we have in this country? This gentleman has gone out and found his own market for a product which we are trying to encourage, organically grown grain, and the system which we use is inhibiting him and many other farmers who want to diversify.

Those are just two examples of why the Canadian Wheat Board needs an overhaul. I would start by ensuring that the commissioners are democratically elected by producers. After that the board would change its ways and meet the needs of the farmers of the 21st century in a hurry. Otherwise they would not be re-elected.

Today's new generation of commercial farmers want to substitute their management skills for the collective approaches which have dominated the system for the past few decades. They see new opportunities and hot new products such as organic grain. Using their own skills and their own comparative advantages they want to be free to grow new crops and market them themselves. That seems a reasonable approach to me and one which has to be worked out. Otherwise the Canadian Wheat Board will lose in the end.

My experience in my riding is that the farmers who are questioning the Canadian Wheat Board's approach to a single desk marketing agency are those of a younger age. Unless the board adapts they will be gone. These new farmers are not knocking on the government's door asking for new subsidies. All they are asking is for government to get out of their way to let them do business. I hope the government is listening.

[The Deputy Speaker]

Is the House ready for the question?

[Some hon. members]

Question.

[The Deputy Speaker]

Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[An hon. member]

On division.

(Motion agreed to, bill read the second time and referred to a committee.)

The House proceeded to the consideration of Bill C-87, an act to implement the convention on the prohibition of the development, production, stockpiling and use of chemical weapons and on their destruction, as reported (without amendment) from the committee.

Chemical Weapons Convention Implementation Act

[Alfonso Gagliano, Liberal, for the Minister of Foreign Affairs]

moved that the bill be concurred in.