Mr. Speaker, I am pleased to begin the debate on the motion referring Bill C-72 amendments to the Canadian Wheat Board to the Standing Committee on Agriculture and Agri-Food.
Once again we have decided on this route in order that members who serve on the committee and interested groups may, if they wish, make submissions and the opportunity to speak in advance of the proposals that will improve the bill. Today I would like to outline in general the thrust of the legislation before this House which will modernize the operations of the Canadian Wheat Board.
While no set of proposals could possibly satisfy all the sides in that it is all too often a sharply polarized debate among farmers with respect to grain marketing, the government's approach is aimed at meeting the responsible expectations of the majority of western grain producers. Our policy objective is to build upon the improved strengths of our existing marketing system while modernizing the governance structure of the Canadian Wheat Board, enhancing its accountability, improving its responsiveness to changing producer needs and opportunities, providing more flexibility and faster cashflows and minimizing future complications in international trade.
Many of the changes we are proposing will empower farmers with a bigger and more direct say in how their marketing system works, consistent with the majority of recommendations put forward by the western grain marketing panel. Overall, the changes fall into three broad categories, governance and accountability being the first.
The first relates to the governance and accountability of the Canadian Wheat Board. The overall governance of the wheat board will be placed in the hands of a board of directors consisting of between 11 and 15 members, the majority of whom will be farmers. To help make the transition to that new corporate structure a full set of interim directors will be appointed by the Government of Canada in 1997. Again the majority will be farmers. Then beginning in 1998 the producer majority among the directors will be replaced by directors elected by the farmers themselves.
Bill C-72 is written in such a way as to enable all this to happen. This is consistent with the advice of the western grain marketing panel, that is, to structure our amendments in the form of enabling legislation.
A number of farm groups appear to want the new law to be more precise in this area: specifying the date by which directors will be elected; confirming that the number of directors so elected will constitute a majority; and making this governance change irreversible, except of course by future amendments to the act.
The minister of agriculture has no difficulty with these ideas. They are completely consistent with the policy principles announced last October. The existing draft of Bill C-72 will enable them to be implemented. If the arguments presented to the standing committee are clearly to the effect that farmers would be more comfortable with the new law being more precise and less flexible with respect to the election of producer directors, then the minister would be happy to entertain the appropriate amendments to bring that about.
On the matter of accountability, Bill C-72 provides for a big change. For nearly 62 years the Canadian Wheat Board has been a crown corporation accountable only and solely to the Parliament of Canada. Under Bill C-72 it would evolve into a mixed enterprise. For the first time in history it would also become accountable to producers directly.
The essence of the Canadian Wheat Board's accountability to farmers will lie in demonstrating its marketing success and effectiveness. If the Canadian Wheat Board's performance is not satisfactory, then its board of directors including a majority of elected farmers can implement operational changes or ultimately trigger a process to change its marketing jurisdiction.
The essence of the Canadian Wheat Board's accountability to Parliament will lie in demonstrating its financial competence. This flows from the unique guarantee which Bill C-72 provides in relation to all of the Canadian Wheat Board's borrowing, not just initial payments, not just credit grain sales, but also all of its day to day financial transactions on the world's money markets. This amounts to billions of dollars annually backstopped by Canadian taxpayers if and when necessary.
As an agent of Her Majesty accountable only to Parliament, the Canadian Wheat Board automatically had this type of broad guarantee. For this mixed enterprise it is not automatic. It has to be written into law as Bill C-72.
The track record of the existing Canadian Wheat Board in relationship to its global financial transactions as a crown corporation is superlative. It enjoys a strong international credit rating. It has managed its day to day finances in a profitable manner gaining the benefit of the best possible interest rates and thus augmenting its pool returns to producers.
Will these exceptionally high standards be maintained as it becomes a mixed enterprise under a different governance system and will the different accountability expectations be reached? We
fully expect so, but since Bill C-72 will provide the new Canadian Wheat Board with a unique legislated guarantee backed by taxpayers, it is not unreasonable for the new law also to include some safeguards to protect the taxpayers' position.
That is what Bill C-72 seeks to accomplish: getting the balance right between accountability to producers and accountability to Parliament. It will be important to weigh the pros and cons of having fewer safeguards for the taxpayer against having a less comprehensive guarantee.
It should also be noted that the Canadian Wheat Board has now and will continue to have decision making authority over matters which affect producers elsewhere in Canada outside its designated area, the authority to issue export permits for example. This is another reason why accountability to Parliament will continue to be important.
The second group of changes relates to more flexible operations and improved cashflow. Under these changes the wheat board will be able to make cash purchases of wheat and barley; manage adjustment payments during any crop year on an expedited basis; terminate pool accounts at any time and pay out farmers' returns as rapidly as possible thereafter; issue negotiable producer certificates; fully utilize modern risk management tools in dealing both with farmers and with consumers; defray farmers' grain storage and/or carrying costs; allow open farm deliveries to condo grain storage facilities; and procure grain using new technology, such as on farm mobile elevators.
These new flexibilities will help put more money from wheat board operations into the hands of farmers more quickly. To backstop cash purchases and to help the Canadian Wheat Board manage adjustment payments more quickly, the board will be allowed to establish contingency funds as a financial cushion.
The third category of changes relates to the Canadian Wheat Board's mandate. The legislation does not alter the Canadian Wheat Board's existing mandate but we are putting more decision making authority into the hands of the farmers themselves. In future the wheat board's mandate may be adjusted conditionally upon three things: first, a clear recommendation to that effect by directors of the Canadian Wheat Board; second, if the quality control issue is improved, the concurrence of the Canadian Grain Commission that a change can be made safely without damaging Canada's reputation or quality and consistency; and third, if the proposed change is significant or fundamental, then an affirmative vote among farmers would need to be a prerequisite.
The Canadian Wheat Board is a very effective marketer of Canadian grain. It has the support of the majority of western grain farmers. They want realistic and sensible Canadian Wheat Board changes but they do not want a scenario that would lead inevitably to the board's destruction.
Now just how valuable in the overall scenario and scheme of things is the Canadian Wheat Board? It sells some $5 billion worth of grain per year at a marketing cost of a few pennies per bushel. It retains no profit margin; all the rest goes to the farmers.
The board is one of Canada's most significant business enterprises. Doing business in more than 70 countries around the world, it is the fifth largest exporter and our biggest net earner of foreign exchange. It has earned for itself and for Canada a positive reputation in the eyes of the global customers, not so much on pricing issues-the board targets to extract price premiums-but on intrinsic quality, cleanliness, consistency, technological support, long term dependability, customer service and contract execution. The Canadian Wheat Board has been rated by its customers as number one in the world.
These characteristics coupled with the size of the board, its global reach and its marketing clout result in Canada having roughly a 20 per cent share of the world market and realizing the best possible returns from those markets. The Government of Canada believes that it is worth preserving.
The Minister of Agriculture and Agri-Food is much committed to the principles that have been announced and which are embodied in the legislation presented before the House. Nevertheless there are a number of mechanical ways by which these principles to which I have referred can be accomplished. The minister is open to input from members of the Standing Committee on Agriculture and Agri-Food as to how the legislation could be improved.