Madam Speaker, as members will see as I go along, one of the aspects I deal with in regard to this legislation is the lack of democracy in the Canadian Wheat Board. That is related to this bill. I make these comments and they will be tied in to my presentation later.
I can understand the member's not wanting me to bring up the issue of closure. He should be ashamed. It is important that I do, and it will strengthen my argument later when I talk about the lack of democracy in the Canadian Wheat Board.
Three bills now have had closure invoked by the Liberal government. They are bills that are very important to Canadians and they should have full debate in the House.
This follows on the heels of the corruption we have seen in the government on the part of the heritage minister, which has not been dealt with by the Prime Minister, who would have called for the resignation of the heritage minister had he been willing to deal with this issue the way he should. It really makes it difficult for me to gather any kind of enthusiasm to debate any bill, including this bill, Bill C-92, having to follow that kind of performance on the part of this government.
I will discuss Bill C-92 today under three basic categories. First I will talk about what the bill is, what is in the bill and what should be in the bill. Second, I will talk about the impact on grain farmers and on the grain industry of this legislation if it is passed as it has been presented. Third, I will talk about how this bill fails to deal with the broader changes that are needed in the Canadian Wheat Board, including the democratic changes I alluded to.
The bill is another attempt to tinker with a system that needs major change. I am talking about the Canadian Wheat Board, an organization which I think Reformers support. I believe there is widespread support in the Reform Party for the Canadian Wheat Board and our policy demonstrates this. There is also widespread support for reform of the Canadian Wheat Board particularly to make it more responsive to farmers who after all pay for the full cost of operating the board and whom the board exists to serve.
The bill is a move in the right direction and will providea move toward a more market driven and more transparent system, at least in this one very narrow area of freightpooling. However, this bill is tinkering with the system when we should have broad legislation which would completely change the Canadian Wheat Board as it exists today.
The tinkering is because of other changes that have been implemented in the transportation system with the trade agreements in the grain handling system. I believe even these changes are not wanted by the minister and certainly not by the Canadian Wheat Board, but they are needed to keep up with the times.
Bill C-92 if passed will make changes to the Canadian Wheat Board Act which will allow changes to the Canadian Wheat Board's freight pooling system. Farmers from eastern Saskatchewan and all of Manitoba will pay higher freight costs, while farmers from western Saskatchewan and Alberta and the Peace River block of British Columbia which is in the Canadian Wheat Board area will pay lower freight costs. This change in freight costs will reflect more accurately the actual cost of moving the grain from these locations. In this regard the bill does provide a move in the right direction.
I have many concerns about the bill. It includes very little in terms of detail. The bill will allow for the changes which will make the freight costs that farmers are paying much closer to what the market would indicate they should be but there is very little in the bill that will ensure these changes will take place. There is nothing in the bill that says it must happen. There are only changes that will allow it to happen. This is of great concern to me. Any changes that are made will be made by order in council, by the minister and cabinet.
While there is some background information on the numbers and the specifics of the changes, there is very little detail of this in the legislation. We will push for amendments that will add some certainty to the legislation as to just what kinds of dollar changes will be made in the freight costs for farmers across western Canada with regard to wheat board grain.
The bill only applies to board grains which are wheat and barley for export. It does not apply to all the other grains and special crops that farmers produce.
I will go over in a bit more detail what is included in Bill C-92. The stated purpose of the bill is to amend the Canadian Wheat Board Act to change pooling points on which initial payments are based from Thunder Bay and Vancouver to points in Canada designated by the governor in council and to establish
a deduction from the initial payments that reflect the relative transportation cost advantage of each producer.
Through the bill, which will be effective August 1 if it is passed by the House before the session ends, the federal government will change how eastward grain transportation costs are paid. That means eastern prairie farmers who ship through the St. Lawrence seaway will have to pay the full cost of movement, or at least close to the full cost, within three years.
In the past, all prairie farmers have shared the costs of shipping Canadian Wheat Board grain through pooling. The extra cost of shipping Canadian Wheat Board grain through the seaway system, which is on average $22 a tonne, has been pooled. Not only are the farmers who are shipping their grain through Thunder Bay and on down the St. Lawrence paying the extra costs, but all farmers within the wheat board designated area who ship grain to the board are sharing the costs through the pool.
That means all farmers, in particular the farmers from western Saskatchewan and Alberta, have been receiving less for their wheat and barley than they should have been. Farmers from eastern Saskatchewan and Manitoba have been receiving more than they should have been. This has been done by pooling the freight costs so that all farmers take an equal deduction from their price for the cost of freight. I have many concerns about this being done and I will discuss some of them later.
Originally the government planned to change the eastern pooling points next year. However, at least according to the minister, several Manitoba farm groups have called on him to make the change effective at the start of this crop year which begins on August 1.
The minister claimed that the farm groups which have been encouraging him to make the change have said they need the change in order to bring more certainty to the system. In other words, they say they want to know what will happen and they want to know now. They want to know how much more it is going to cost them. That is coming from the farmers in Manitoba who are going to pay more. That is the way the minister of agriculture explained the need for making the change this crop year on August 1 rather than next year.
It is commendable that the minister would want to allow this kind of certainty to at least creep into the Canadian Wheat Board freight pooling system. It is unfortunate that the same kind of certainty will not be in place when the changes are made to the WGTA, in terms of moving grain by the rail system. That uncertainty will be there until 1999, the year before the maximum freight rates may be lifted. The decision will not be made until the year before the rates can be lifted and that leaves a lot of uncertainty in place. I encourage the minister to be as concerned about the uncertainty caused by that change which was implemented by the budget as he is about the change to the pooling of freight through the Canadian Wheat Board.
Consistency is needed. We need the minister to make some decisions which will add certainty to the agriculture industry. I commend him for doing it in this one narrow area.
In terms of transitional assistance, a fund which came about as a result of this budget, $300 million was put in place for a transition fund. It is meant to be used to help different sectors of agriculture deal with the change in the freight rate.
Nothing in the bill states this but through discussions the department has said that about $100 million of this $300 million in transition funds will be paid to farmers in Manitoba and eastern Saskatchewan over a three year period to help them deal with the added freight costs they will find themselves covering out of their own pockets. This is reasonable because it is an additional burden put on the Manitoba farmers even above the burden of paying full costs which, as a result of this budget, have been put in place for all western farmers.
All western farmers will be paying the full freight costs as of August 1. With this change, Manitoba farmers will be paying an additional cost of approximately $6 a tonne. It would be extremely difficult for the farmers to deal with this starting on August 1 of this year. The transition money being paid to these farmers is reasonable. I know some of my colleagues will talk about a concern they have about there being enough money left in this fund to help alfalfa and timothy shippers deal with the radical changes they face in their industry.
I have talked about what is in this legislation. Now I will talk about what is not in this legislation as it applies to the government achieving the goals it has laid out through this legislation.
As long as there is a Canadian Wheat Board where there is a price pooling system in place, it will be necessary to have a pooling schedule for freight. It is necessary for that system to work.
There are very few specifics in this bill regarding the exact nature of the new freight pooling system. For instance, there us very little information about the decision on the actual catchment areas, which will be smaller areas of pooling within these catchment areas, and what they might look like. There have been some proposals put forth but there is no certainty in these. We do not know for sure what the catchment areas will look like.
If the government decides to put in place the national grains bureau recommendation for catchment areas, then there will be four catchment areas for wheat: the west coast, the east coast, Churchill and the U.S. There will still be freight pooling within these areas. Why are we not moving toward a system that fully
reflects the marketplace and the cost to farmers? Why are we just tinkering and going part way? However, it is definitely a move in the right direction.
If the government goes with the national grains bureau proposal on malting barley there would be two catchment areas, the west coast and the United States. Again, it is a move in the right direction even though it does not go far enough.
It is appropriate at this time to explain clearly what this freight pooling does and how it relates to the price pooling which operates under the Canadian Wheat Board. The freight pooling as I explained before causes all farmers who sell grain through the Canadian Wheat Board to pay an equal amount of the freight bill, even if after looking at the market signals they should be paying less, or perhaps more.
This has lowered the price in the price pool which gives all farmers an equal price for their wheat. It has lowered the price by the same amount no matter what the freight costs are. Clearly to have this price pooling system work there must be some kind of a freight pooling system in place. Otherwise it would be extremely difficult though not impossible for the wheat board to calculate the payments which go to all farmers.
To explain a bit more about the pooling system I will give a brief summary from a background document which, while not part of the legislation, is said by the department to be what the legislation is based on. It is a summary of two proposals put forward by the National Grains Bureau and the Canadian Wheat Board.
The first proposal comes from the National Grains Bureau. Under its proposal all producers would be deducted a decreasing freight amount moving east or west of the west coast catchment area.
The proposal was widely discussed in the payment producer panel report. The payment producer panel was established by the Conservative government and was continued by the Liberal government. Unfortunately its proposals really were not considered when the changes were made to the Western Grain Transportation Act which is what this panel was discussing.
The National Grains Bureau proposal was later modified to include shipments through Churchill and directly to the U.S. market. The relative proximity of a producer to these markets would determine the basis for the deduction. That is the National Grains Bureau proposal.
The second is the CWB '85 proposal, as it is called. This proposal recognizes the general equivalence of west coast and St. Lawrence ports in terms of sales returns. It recommended that the eastern pooling point be changed from Thunder Bay to the St. Lawrence. That is what will happen if the legislation is passed as the department says it will.
However this proposal will not work under the current circumstances because of the higher demand for grain from customers in the Japan and Saudi Arabian markets. The proposal will not work until a balance can once again be achieved between the east coast and the west coast shipments.
The Canadian Wheat Board proposes to devise a system of pooling based primarily on the National Grains Bureau model. The Canadian Wheat Board is hoping that because of the increased transportation costs inherent in the National Grains Bureau proposal, producers will compare returns from pool accounts for wheat, durum, feed barley, malt barley and non-Canadian Wheat Board crops and eventually diversify, based on anticipated future rates of return.
The Canadian Wheat Board wants to move toward the CWB'85 proposal as constraints on the west coast catchment area are reduced. It believes in the long term this will be a viable option.
In a nutshell those are the two proposals which were outlined in the background paper given to the committee and to MPs who were interested in Bill C-92.
I will now comment on how the Liberals are trying to rig the entire system in order to keep the Canadian Wheat Board as a monopoly seller even though it is really no longer practical or viable.
The bill seeks to make a new pooling system with the same type of structure, except using smaller catchment areas, so there is an advantage, but using the same type of system. Instead of making major changes to the whole wheat board system and to the freight costs to farmers, the government has chosen to try to modify the old system. Too often this is the type of thinking that creeps into a bureaucracy. It is certainly here in this bill. It is unfortunate because it really does fulfil all of the changes that are needed.
One of my concerns about this legislation is that we really do not know the details. The background paper is there, but it is not part of the legislation.
That summarizes what is in the bill and what is missing at least as it relates to what the stated purpose of this bill is. I would now like to discuss the impact of this legislation on farmers and on the grain industry if it goes forward as it is proposed.
This change reflects at least partially the actual cost to farmers of shipping from different points on the prairies, again limited because they are still pooling within each of the four catchment areas.
At least it moves in the right direction. I will demonstrate using some numbers from the background paper for wheat and for barley. First for wheat. Wheat being shipped from Winnipeg, Portage la Prairie, Brandon under this new proposal will cost
farmers about $5.80 more per tonne than it does under the present system.
On the other hand, farmers from Medicine Hat, Lethbridge, Calgary would pay about $5 a tonne less than they do under the present system. Therefore it will cost about $6 more for farmers in western Saskatchewan and Manitoba, depending on which catchment area they are in, and farmers in southern Alberta will receive $5 more for their grain. The amount in other areas depends on which catchment area farmers are in.
The change for feed barley is even more dramatic. Feed barley is a lower priced commodity. Under this proposal, farmers in the Winnipeg, Portage la Prairie, Brandon area will pay anywhere from $16 to $18.50 a tonne more to ship their grain than they have in the past, whereas farmers from Medicine Hat, Lethbridge and Calgary will pay $7 to $8 per tonne less than they do under the present system.
The change will cause the freight cost paid by farmers to reflect more closely the actual cost of moving the grain. Therefore this is a move in the right direction.
The third area I will discuss is what this bill fails to do in reforming the Canadian Wheat Board. I certainly cannot talk about everything it fails to do but I want to talk about the points that are most relevant to this bill.
I begin by reading an open letter to grain farmers that I sent to papers across western Canada. This letter was picked up by most of the weekly papers across western Canada and some of the larger papers.
I want to read the letter. It certainly ties in with the importance of making the wheat board more democratic:
Over the past year, the Canadian Wheat Board has been greatly debated by both farmers and national media. The publicity and discussion surrounding this issue has resulted in a polarization of public opinion. Farmers who support changing the Canadian Wheat Board are immediately branded as board destroyers. Farmers who do not support changes to the Canadian Wheat Board also find themselves under attack by those who strongly favour change.
During meetings with farmers and farm groups, I have been promoting a mechanism for building a bridge across the gap that separates those who favour changes to the board and those who are opposed. It is a mechanism which all farmers could support. I believe the first real step toward meaningful change to the Canadian Wheat Board is through a farmer elected board of directors which would replace the current system of government appointed commissioners and an advisory board that has no real power.
Farmers should be given the authority, which is rightfully theirs because they pay the bills, to decide what type of wheat board they want. An elected board of directors would replace the current system of government appointed commissioners and shift control away from the federal government to farmers.
Within 6 to 18 months of electing a board of directors, farmers should be given a chance to democratically examine their organizational and jurisdictional options. This will allow grain farmers to carefully consider and vote on a variety of market opportunities.
These options could include introducing greater domestic and international market competition, allowing the purchase of wheat and barley on either a cash basis or a pool basis and allowing the board to operate as a seller from export terminal positions only, which would take the board completely out of the car allocation and grain handling process. These and other issues would be decided directly by farmers through referendum.
An elected board of directors would submit their proposals for initial crop payments to Parliament as the commissioners do now. Elected representatives would then vote to determine if these payments were reasonable. The purpose behind the measure is to provide a government check on the otherwise independent board by having Parliament approve initial payments and loan guarantees because taxpayers' dollars are involved.
Farmers themselves will have their own ideas regarding the Canadian Wheat Board and how to make it work better for farmers. All of these proposals must be considered.
Several people have asked what my personal position is regarding possible changes to the board. I support the concept of opening the board up to competition. However, it is not up to me or the federal government to decide on the future of the Canadian Wheat Board. This decision must be made solely by western Canadian grain farmers.
The Canadian Wheat Board will be a subject of continued discussion until the democratic rights of Canadian grain farmers are restored and they are given a real choice in how their organization will run in the future.
An elected board of directors is the only real option for the federal government. After all, who can argue with democracy?
It has become apparent from what we have seen in the House today that the government can argue with democracy. We do not have a functioning democracy in Parliament and we must get a functioning democracy in the House. The Liberals must uphold their promise in that regard.
They must also make the changes necessary to allow farmers to democratically control the future of the Canadian Wheat Board and to decide what the wheat board should be. Why should government make these decisions? Why should the farmers marketing board be answerable to the minister and be directed by the minister rather than by farmers? It makes no sense.
This issue has been a very emotional one for several reasons. Farmers who remember when the Canadian Wheat Board came into place know that it served a very useful function.
At the time the Canadian Wheat Board was established there was a lack of competition in the grain buying business in Canada. Farmers never had a properly functioning marketplace. There was no competition at a lot of delivery points. Farmers were at the mercy of the grain buyers because the information system in place today was not there. Today's transportation system was not in place and farmers were largely hauling grain
by wagon. It would be too difficult to take a load of grain home again after they had delivered it to the elevator. Therefore, they really were at the mercy of the grain buyers.
When the wheat board came into being it served a very useful purpose. It still does but it is a different purpose now.
The people who remember what the wheat board gave them when it came into place in 1935 tend to forget the changes that have been made since. They also forget the reality of the marketplace we live in now, with good information sources and relatively good transportation to get the grain from the farm to the elevators.
People also forget that when the wheat board was developed in 1935 it was a voluntary board. Farmers had a choice. They could choose to deliver to the Canadian Wheat Board and share in the pool price or they could choose to ship to a buyer to any market and completely bypass the board. That is the way it was when the Canadian Wheat Board was established.
In 1943 under the War Measures Act the wheat board was given a monopoly. Why was it given a monopoly? I found it very interesting to read the newspaper articles and to read the discussion in the House that surrounded this change in 1943 that gave the wheat board its monopoly. This change was made by order in council; it never passed through Parliament.
The change was made to the Canadian Wheat Board to make it a monopoly so that the war effort in Canada and in Europe would be helped. Grain prices at the time were increasing rapidly and the government was finding it too expensive to ship grain to Europe to help with the war effort and to feed the troops in Canada. The choices it had were to borrow more money to pay more for the grain or to make the wheat board a monopoly buyer in the Canadian market. Through order in council it chose to make the wheat board a monopoly buyer in the Canadian market, which it has remained until today, even though the circumstances are much different today.
When people discuss the Canadian Wheat Board there is a lot of talk about the monopoly selling aspect of the board. The wheat board does not have a monopoly on sales. It sells into a market with a lot of competition. Grain companies from around the world compete on the sell side. There is no selling monopoly. The only monopoly the Canadian Wheat Board has is on the buy side. Farmers have been forced to sell grain through the board since that order in council passed in 1943 for any grain, any wheat or barley being sold for export and for wheat being used for domestic purposes in Canada.
This has been an emotional issue for some time. A second reason this has been an emotional issue is that people are generally afraid of change. I will give a few quotes from a paper given by Dr. Larry Martin to the B.C. egg producers in March. I sincerely hope the quotes I use allow the content of his paper to be brought forward. It is a commendable paper. He is talking about change in agriculture generally, not just this change that is being proposed to the Canadian Wheat Board. Dr. Martin says the biggest obstacle to Canadian agriculture competing over the next decade is farmers themselves. The change in thinking that is needed is that the agriculture industry in place today nowhere nearly reflects the agriculture industry that will be in place 10 years down the road.
Here are some of the quotes I thought were particularly good: "Look forward 20 years", Martin challenged, "and you won't recognize the Canadian agri-food industry. We are lucky to be living during the most exciting period for the industry. This is why we have to think seriously about how that change can be managed, because we have only that one chance to get it right". This is from the Canada Poultry Man magazine.
The other quote compares the American system in the supply managed industries, with very large operators, to the Canadian system, which has smaller operators. He says the smaller operators can still compete very well: "Small operations allow for industry flexibility, whereas larger U.S. companies may be low cost but can't switch quickly and have to market using the `here it is, buy it cheap and eat it' philosophy". This philosophy applies as well to the grains industry. Farmers need the ability, even though they are small operations, either directly or through the grain companies to sell to whomever they want, without the regulations and the unnecessary interference from government.
At second reading Reform will be supporting Bill C-92. However, we will be looking for amendments. We will be looking for changes and we will be proposing amendments in committee or in the House at the appropriate time.