Mr. Speaker, it is my pleasure to speak to third reading of Bill C-26. When I addressed this House on the occasion of the second reading of this bill, I discussed how this initiative should be viewed in the context of the government's priorities. I will do this again.
The grain industry is currently faced with significant challenges and opportunities. Global competitive and natural forces are leading to and accelerating change and challenges. The grain industry is changing rapidly in order to respond. Legislation must also evolve to assist that industry's efforts to meet those challenges and opportunities. This initiative reflects our government's willingness to meet the express needs of the grain industry and to co-operate in its efforts. The main objective of this government is to build a competitive and innovative economy that will grow to create even more jobs and improve the well-being of Canadians.
Agriculture and agri-food is a key sector of the Canadian economy. It continues to contribute very significantly to the building of our economy. This industry is growing tremendously. Producers and processors are optimistic about the future as they invest in and diversify their operations in order to benefit from new opportunities. I share their enthusiasm. I want to work with them in creating those opportunities.
One of the ways to accomplish the objective of continuing vigorous growth is to work closely with stakeholders. Our government intends to be the catalyst for partnerships with industry stakeholders. Our government is committed to a policy of full consultation with both the agri-food industry and the provinces. I believe we are succeeding in our goal. We recently announced the rural impact test and we want to build stronger rural communities by doing our share in supporting community development. We recognize the tremendous value of rural citizens and communities in Canada.
Bill C-26 is proof of our commitment to rural Canada. It would allow easier access into the special crops processing industry and it would have a very positive impact on rural employment opportunities.
In our federal rural policy we want to increase the participation of rural Canadians in the development of federal programs and services. The main elements of the bill satisfy this goal, especially those provisions that relate to special crops. Special crops producers and processors were involved in every stage of the process leading up to consideration of the bill by this House. They would continue to play a role during and after the implementation of its provisions.
The special crops industry has undergone impressive growth over the last 10 years. Crops that were once considered marginal to western Canada's agri-food economy are now being produced in significant volumes. More producers are planting special crops and a greater number of people want to become special crops dealers. There has been a call by stakeholders for more current legislation to establish a fair and effective licensing system for dealers and an efficient voluntary insurance plan for producers, legislation that recognizes the unique requirements of the special crops industry. With the growth of the industry a need was identified for changes to the regulatory system as well. Current regulations are seen to be unnecessarily punitive, offering minimal deterrent value. The Agriculture and Agri-food Administrative Monetary Penalties Act is proven legislation that provides a broad range of enforcement options.
The grains futures industry has also undergone significant changes recently. The Winnipeg Commodity Exchange plans to develop non-grain contracts. When this happens the Grain Futures Act, legislation used since 1939 to regulate grain futures and options trading, will become obsolete. Repealing the act would allow the Manitoba government to regulate all aspects of a modern commodity futures and options trading industry.
Bill C-26 was developed by the Canadian Grain Commission in co-operation with stakeholders representing special crops producers and dealers, and stakeholders representing the grain futures industry. The proposed amendments contained in the bill would accomplish five main objectives.
They would establish an affordable licensing plan for special crops dealers in western Canada. They would introduce a producer funded insurance plan. They would create a special crops advisory committee that would report to the Minister of Agriculture and Agri-food. They would provide a fair and effective mechanism for enforcing the Canada Grain Act and regulations. They would transfer regulatory responsibility for grain futures to the province of Manitoba.
I will focus my comments on the first three objectives proposed in Bill C-26, the licensing and insurance plans and the advisory committee.
A new special crops licence for dealers in western Canada would be created under the proposed legislation. The licence would give companies the right to buy and sell special crops and to use official grade names when doing so. The plan would eliminate the security requirement for processors which has been identified as a major financial barrier to becoming licensed to deal in special crops. Instead of providing security the dealers would collect levies from producers from whom they buy special crops.
The levies would be remitted to the administrator of the program initially proposed to be the Canadian Grain Commission. After deducting an administration fee the commission would forward the premiums to the insurer. The Canadian Export Development Corporation has agreed to act as the initial insurer for the plan. The insurer and the agent can be changed in the future if the special crops advisory committee recommends it.
The cost of the levy is proposed to be 38 cents per $100 of sales. The levy would be the sum of the insurance premium and administrative charges. Initially it is proposed that the insurance premium would be 20 cents per $100 of sales and the commission's administrative fee would be 18 cents per $100 of sales.
Currently security requirements are designed for high volume standard crops handled by large grain companies. The requirements were not designed for the much lower volume specials crops which are mainly handled by small seed cleaning plants, special crops dealers and processors. The result is that companies that could otherwise be licensed stay on the sidelines. Unfortunately some others buy grain without a licence, exposing producers to the risk of loss. The special crops industry currently operates under a system that was established for the standard crops, wheat, barley, oats, flax, rye and canola. The government through Bill C-26 is responding to the special crop industry's expressed concerns and recommendations.
Removal of the security requirement which is a financial barrier to small dealers and processors would allow companies that had previously been on the sidelines to become involved. It would also encourage companies currently operating without a licence to apply for one.
While licensing would be easier, this does not mean that everyone would be granted a licence. Prospective licencees would be required to demonstrate that they are financially able to deal in special crops before a licence was issued.
A consulting firm retained by the Canadian Grain Commission, Kelly and Associates, estimated an additional 125 firms in western Canada could become licensed under the proposed legislation. The changes could significantly expand the number of marketing outlets available to producers and promote healthy competition.
I would like to talk about the proposed voluntary producer funded insurance plan. Protection would still be available for special crop producers despite the elimination of the current security requirements for licencees.
The new insurance program proposed for special crops producers would replace the current security system which makes the real cost of security transparent to producers. Membership in the new plan would be voluntary and available to those producers who choose to participate.
If a licensed company defaults on payment obligations for special crops that it has bought or if that company becomes insolvent, participating producers would be able to make a claim to the insurance plan.
Producers could choose to opt out of the insurance program. In that case, they would not be eligible for security in case of default by licensed grain dealers.
Producers who choose not to participate would still be required to pay the levy but would then receive a refund from the administrator of the program.
The proposed plan originally required producers who opted out to apply for a refund. Witnesses before the Standing Committee on Agriculture and Agri-Food expressed concern about this aspect of the plan, placing an administrative burden on producers.
The committee agreed and, taking a proactive approach, approved an amendment to make the refund process automatic. A proactive approach was also taken with regard to the clause that provides for special crops to be added or removed from the plan.
There was concern that standard crops such as wheat, oats, barley, rye, flax and canola might also be included. Although this was never the intent of the legislation, the committee approved changes that specifically exclude the six standard crops from the plan.
The mandatory deduction from all producers, whether they are in or out of the plan, was an issue studied at some length by the interim special crops advisory committee.
The committee, which included representatives from a number of stakeholder groups, decided a mandatory refundable model was needed to ensure the viability of the program.
The main factors which led to this decision were as follows. The plan has to be administratively efficient to keep costs down for producers. It is far more efficient and cost effective to deduct the levy from all producers and later reimburse those who have opted out. This is a significant benefit to the industry as it keeps paperwork to a minimum.
Members of the interim special crops advisory committee were concerned that a plan that required producers to opt in might leave some producers, unknowingly, without coverage and open to risk.
The mandatory refundable model has already successfully been used by other plans. It is similar to some provincial pulse crop levies and the Saskatchewan canola levy. For these reasons, the advisory committee felt it should be applied to the insurance plan.
Operating costs of the program are expected to be recovered through fees collected for services provided. The proposed fees are based on estimates of variables such as participation levels and deliveries.
Once the plan is operational the program administrator would be in a position to better evaluate the true costs that would be incurred and make the necessary adjustments. If the administrative portion of the levy is found to be too high, adjustments would be made to reflect actual costs.
During the consultation stage stakeholders called for the establishment of a formal mechanism to ensure continued input into the program. They wanted to ensure that concerns regarding licensing and security would be heard by the minister.
The proposed amendments to the Canada Grain Act address this issue by creating a special crops advisory committee. The nine member committee will be appointed by the Minister of Agriculture and Agri-Food. Special crops producers and dealers from each of the western provinces would be identified to sit on the committee.
The committee will advise the minister on the licensing and security operations of the special crops program. They can recommend to the minister that the administrator of the insurance plan or the insurer be replaced. The committee would also be able to make recommendations on the designation of new crops or removal of crops and on other issues related to special crops referred to the committee by the minister.
A majority of the members of the committee would be producers rather than dealers. This reflects the fact that the cost of the insurance plan would be borne by producers.
I close my speech by talking about the potential impact the bill would have. Special crops processors are important employers in the towns where they are located. For example, Sedley, Saskatchewan, with a population of only 342 people, is bordered by the rural municipalities of Francis and Lajord. Sedley Seeds, located seven miles out of town, employs eight people on a permanent basis, four of whom are town residents. It employs approximately fifteen people during the pre-seeding and post-harvesting rush. Vigro Seed & Supply, located right in Sedley, permanently employs twelve people, seven of whom are town residents. It employs approximately thirty people during peak periods.
Although the two companies do not seem big by Toronto, Montreal or Ottawa standards, they are important local employers. They provide valuable services to the local rural community. As the regular elevator system is rationalizing and closing facilities, special crops processors like Sedley Seeds or Vigro Seed & Supply located throughout western Canada would be in a position to provide alternative delivery options and services to producers.
The bill is good for the special crops industry and for rural Canada. I encourage all members of the House to support it.