Mr. Speaker, I am pleased to speak on behalf of the Bloc Québécois on Bill C-39, An Act to amend the Canada Grain Act. I would like to start by saying that the Bloc Québécois supports the principle of this bill, which would modernize the Canada Grain Act.
We are uncertain about some parts of the bill, though. For example, what would replace payment securities for producers? The Bloc Québécois therefore reserves judgment on the bill. We hope to hear comments from producers, but unfortunately very few of them testified before the Standing Committee on Agriculture and Agri-Food.
In addition, we need to recognize that the bill does not affect Quebec producers directly. We remain vigilant. The reform of the Canadian Grain Commission is taking place in a specific context. The Conservatives are trying to dismantle the marketing mechanisms that protect the interests of producers, such as the Canadian Wheat Board and supply management.
The Conservative government has appointed a friend of the minister to head the Canadian Grain Commission. The Bloc Québécois wonders whether the new commissioner will defend producers' interests or the minister's.
As for the details of the bill, the Bloc Québécois notes that the government is implementing some recommendations of the Standing Committee on Agriculture and Agri-Food, such as modernizing the mandate of the Canadian Grain Commission and eliminating mandatory inward inspection and weighing.
However, the Bloc Québécois is skeptical about the elimination of the Grain Appeal Tribunal and the payment security program, because we do not know what will replace it.
The Bloc Québécois also condemns the fact that the government has not introduced an office of grain farmer advocacy, as the Standing Committee on Agriculture and Agri-Food recommended.
The Canada Grain Act has been amended several times since the early 1970, but not substantially. The legislation was last amended in May 2005 to enable Canada to meet its WTO commitments. During the legislative process, stakeholders called for an amendment to require a comprehensive review of the Canada Grain Act and the Canadian Grain Commission.
On August 1, 2005, clause 2.1 of Bill C-40 came into force, adding section 120.1 to the Canada Grain Act, which requires a review of the Canadian Grain Commission. COMPAS Inc., a consulting firm, was hired to conduct the review, which was based on reviews carried out over the previous six years. COMPAS Inc. held extensive online consultations with industry stakeholders as well as public meetings across the country.
The COMPAS report, which was tabled in the House of Commons and the Senate in September 2006, was referred to the Standing Committee on Agriculture and Agri-Food for review. The committee issued its report in December 2006.
In summary, Bill C-39 amends the Canada Grain Act.
It clarifies the Canadian Grain Commission’s objects; combines terminal elevators and transfer elevators into a single class of elevators called “terminal elevators”; eliminates mandatory inward inspection and weighing as well as some requirements for weigh-overs at elevators; extends the right to require the Commission to determine the grade and dockage of grain at process elevators and grain dealers’ premises; eliminates the Grain Appeal Tribunals; eliminates the Commission’s ability to require security as a condition for obtaining or maintaining a licence; creates additional regulatory powers for the Commission; modifies enforcement provisions and creating certain new offences; and ensures that some of the requirements and procedures set out are clarified and modernized and that certain language is updated.
The bill also amends the Act to amend the Canada Grain Act and the Agriculture and Agri-Food Administrative Monetary Penalties Act and to repeal the Grain Futures Act as well as another act, and includes transitional provisions and coordinating amendments.
It is important for the Bloc Québécois to quickly describe grain production in Quebec.
The grain grown in Quebec is primarily for domestic consumption, especially for feeding Quebec poultry, cattle and hogs.
For these two reasons, producers in Quebec have never felt the need for a marketing system as centralized as the one in western Canada. Marketing in Quebec is governed by the Act respecting the marketing of agricultural, food and fish products. Under that act, the Régie may, on the application of any interested person, designate a person to inspect grain facilities or to grade or inspect grain. After the inspection or grading, the Régie shall issue a grain grading or grain inspection certificate to the interested person.
The Plan conjoint des producteurs de cultures commerciales, which was adopted and implemented in October 1982, gave the federation of Quebec producers of cash crops the means to negotiate the terms and conditions under which certain crops would be sold.
Until very recently, that federation had a fairly limited mandate in respect to the marketing of crops. In 2005, however, two-thirds of the affected producers agreed to the cooperative food-grade wheat marketing regulations—Règlement sur la mise en vente en commun du blé destiné à la consommation humaine—and that marked the beginning of their collective assumption of control over marketing. This was followed by a mandate from the Quebec National Assembly to establish terms and conditions for the sale of other grains, in particular, centralized payment management, the obligatory provision of information about transactions and a floor-price system.
There are more than 11,000 farmers in Quebec who grow and market such grains as oats, wheat, canola, corn, barley and soybeans on nearly a million hectares of land. Total grain production is about four million tonnes, worth a total of $750 million at the farm gate.
Our grains do have some special characteristics and uses. Quebec is especially responsive to niche export markets, such as GMO-free soybeans for human consumption. Quebec oats are also particularly prized in the United States for horse feed.
Bill C-39 obviously makes some changes to the Canadian Grain Commission. I want to turn now to the most important issues for grain producers—issues that were actually already addressed when the parliamentary committee considered the 100 recommendations from COMPAS.
Let us look at the change in the Canadian Grain Commission's mandate. Through this bill, the government would change it in such a way that, in addition to the interests of grain producers, the Commission would also consider the interests of the industry as a whole, including grain processors.
The Canadian Grain Commission’s mandate will be split into two parts. Part one will set out the CGC's core mandate to establish and maintain standards of quality for Canadian grain and regulate grain handling in Canada to ensure a dependable commodity for domestic and export markets. Part two will establish that the CGC shall specifically protect producer interests with respect to deliveries to elevators and grain dealers, access to binding CGC determination of the grade and dockage of grain deliveries, and the allocation of producer cars.
At present, the mandate of the Canadian Grain Commission is to, “in the interests of producers, establish and maintain standards of quality for Canadian grain and regulate grain handling in Canada, to ensure a dependable commodity for domestic and export markets”.
Clause 3 of the bill amends section 13 of the Canada Grain Act by removing the words “in the interests of producers” from the purpose for which “standards of quality for Canadian grain and regulate grain handling in Canada to ensure a dependable commodity for domestic and export markets” are to be established and maintained.
Like the Standing Committee on Agriculture and Agri-food, the Bloc Québécois supports modernization of the Canadian Grain Commission’s mandate. Our party recognizes that the commission must be able to consider broader interests, such as public health, preserving the enviable reputation of Canadian grain producers, and other interests.
Obviously, the Bloc Québécois is sensitive to the concerns of grain producers who believe that Bill C-39 is drafted in such a way as to reduce the protection it affords grain producers. That was one of the questions we had and we will pursue it in committee.
The National Farmers Union has told us, for example, that it is essential to preserve the language of the existing Act, which includes the expression “in the interests of producers” to describe the purpose of the Canadian Grain Commission and the standards of quality in the regulations respecting grain handling operations in Canada.
We know that the Conservative government is allergic to collective marketing mechanisms and instruments that enable producers to earn a fair market return. Deregulation and reducing constraints on the free market are key components of their ideology.
Agricultural producers in Quebec and Canada are quite right to distrust this government, which has set its sights on the Canadian Grain Commission and would like to dismantle supply management in the milk, poultry and egg industries.
On the question of the object or mission of the Canadian Grain Commission, the Bloc Québécois would support any amendment proposed in committee that could provide grain producers with satisfactory protection.
For that reason, the Bloc Québécois will be very vigilant. It is important that this bill be sent to committee so we can examine it in depth, to ensure that producers feel properly protected. That is what is important to the Bloc Québécois. If the producers have doubts about this bill, the Conservatives will find the Bloc Québécois standing up to them.
Obviously governance is going to be an issue with this bill. It is therefore necessary that the Canadian Grain Commission not be politicized. It is important to have a commission in the Canadian quality control system for grain. That is what guarantees the quality of Canadian exports.
The Commission cannot allow itself to be exposed to criticism. It cannot give the impression that its decisions are based on anything other than science and protecting the economic interests in the grain and oilseed supply chain.
It was extremely unwise of the Conservative government to appoint a former Reform Party MP, Elwin Hermanson, to head the Canadian Grain Commission in December 2007. While he has been a grain producer himself, we believe that his close political ties to the present Prime Minister, with whom he sat from 1993 to 1997, cast doubt on his credibility.
It must also be pointed out that there are very close ties between Mr. Hermanson and the present Minister of Agriculture and Agri-food. According to the minister’s website, the minister was Mr. Hermanson's campaign manager in 1993. He was even Mr. Hermanson's constituency office coordinator from 1993 to 1997. The close ties between the minister and Mr. Hermanson, the Chief Commissioner of the Canadian Grain Commission, could not be clearer.
Those close ties prompt us to ask the question that is on everyone’s lips: will the new Commissioner of the Canadian Grain Commission stand up for the interests of producers, or the interests of the minister?
Thus, there ought to be an office to defend the rights of grain farmers. As regards the protection of the interests of agricultural producers, the Bloc Québécois deplores the fact that the government rejected the third recommendation of the parliamentary committee, proposing the establishment of an office of grain farmer advocacy that would have reported directly to the Minister of Agriculture and Agri-Food.
The mandate of the office of grain farmer advocacy, whose role would have been similar to that of an ombudsman, would have been to ensure that producers understand their rights under the act, and to defend their interests in disputes with other stakeholders.
Like the parliamentary committee, we think that such an office would have ensured that the interests of producers are defended in disputes with other stakeholders involved, including the Canadian Grain Commission.
We believe that the communication, consultation, liaison and complaint investigation responsibilities assumed by such an office would have helped strengthened Canada's grain quality assurance system.
As for the elimination of grain appeal tribunals, it goes without saying that the Bloc Québécois has a problem with that part of the bill. Let me explain what the bill does. The grain appeal tribunal hears the complaints of grain producers and companies that are not satisfied with the grades given by the Canadian Grain Commission's inspectors. The chair of the tribunal is an authorized grain inspector, but acting at arm's length. The other members of the tribunal come from the grain industry.
The tribunal's position within the Canadian Grain Commission limits its legitimacy and perceived effectiveness.
Clause 14 of the bill proposes to abolish grain appeal tribunals, which are currently established under sections 35 to 38 of the Canada Grain Act.
We understand that, in case of a disagreement over a ruling made by the chief inspector, who is the first level of appeal, grain producers will no longer be able to turn to the grain appeal tribunal. They will have to turn to the regular courts, which is a costly, long and frustrating process.
That is why the Bloc Québécois maintains that the parliamentary committee did not rule on this issue, and notes that the COMPAS report stated that the Canadian Grain Commission's grain appeal tribunal “has earned some plaudits for effectiveness”.
COMPAS continued, saying, “We believe that the tribunal is respected for the role it plays in disputes over grades, even though some stakeholders may have occasionally felt that the office of the Chief Grain Inspector exerted undue influence”.
The Bloc Québécois is waiting for the government to explain this amendment. We think it is important to refer this bill to committee as quickly as possible so that our party can change it, fill in what is missing, and improve it.
With respect to eliminating inspection and mandatory inward weighing, this is what the bill would do. Weighing and inspection of grain is carried out by the Canadian Grain Commission and is mandatory on bulk shipments overseas but not for container movement or for exports to the United States, where these are optional. Inward inspections are the weighing and grading that take place when railcars or trucks arrive at transfer elevators or terminal elevators. The Canadian Grain Commission then provides third-party weighing so as to forestall errors and to provide assurance to producers.
The government is proposing that inward inspections take place only at the request of the shipper, but that outward weighing and shipping remain mandatory. Terminal and transfer elevator operators will be required to allow access to service providers who will do the weighing and inspection.
While the Canadian Grain Commission will no longer be involved in the delivery of this optional service, both shippers and elevator operators will have access to binding Canadian Grain Commission arbitration in the event of dispute over a grain grade.
Like the Standing Committee on Agriculture and Agri-Food, The Bloc Québécois supports optional inward inspection, as proposed by the government. We agree with this provision of the bill because inward inspection is no longer universally required. Such inspection does not seem to be required in the case of grain shipped to the United States, among other destinations, or by container. The cost of this inspection makes Canadian products less competitive. Grain companies, particularly those that ship grain to companies abroad, want to avoid costs that are not essential to their ability to manage their affairs efficiently. According to COMPAS, “half of the cars unloading grain at terminal elevators come from primary elevators belonging to the same company.”
Mandatory outward inspection and weighing of grains is maintained, and this will help protect the reputation of Canada’s grain products at the international level. We must be careful, however. Since inward inspection is optional, this could increase unit costs and prices by decreasing economies of scale. Making it optional would likely put smaller grain companies that do not have a terminal elevator at a disadvantage in terms of competitiveness. Inspection and weighing fees are collected from the farmer at the primary elevator. Optional inward inspection would benefit larger companies that have a terminal elevator by allowing them to avoid payment of the fees and offering a better price to farmers. Grain companies that have a better geographic location will be in a better position to take advantage of mixed shipments.
The Bloc Québécois believes it is important to promote competition in the grain handling system by helping the smaller companies. That is why our party believes that the Canadian Grain Commission must have sufficient funding so that the commission can maintain efficient and timely services for both producers and smaller handlers who need such services for transactional purposes.
What does the bill do in terms of guaranteeing payment for farmers? The Canadian Grain Commission has long been demanding that licensees provide farmers with guaranteed protection in case of bankruptcy. The guarantee can be in the form of security bonds, cash deposits, credit letters, guarantee insurance or payables insurance in sufficient amounts to cover the eligible liabilities, that is, the amount to be paid to the farmers, or any other acceptable financial instrument. All companies must report their eligible liabilities to the Canadian Grain Commission on a monthly basis. In the past, the amount of the guarantee has been enough to cover most of their obligations to the farmers in most cases of bankruptcy, but not all.
According to COMPAS, since 1982 there have been 19 failures of licensed, bonded companies. Of these 19, there are three instances where the payout was less than 100%, one of which was 98.4%. There are two other instances where the CGC paid producers 100% for failures of companies that were not licensed or carrying security. The CGC made payments in addition to or in the absence of security provisions in a total of five cases.
The Bloc Québécois recognizes, as did the Standing Committee on Agriculture and Agri-Food, that modernization of the system requires an effective and flexible mechanism for contractual security for all participants. Because they are at the beginning of the chain, grain producers need to be contractually protected against breakdowns that could occur down the line.
Our party has noted that the federal government does not require eastern Canada's grain industry—or producers of other crops—to participate in similar guarantee programs.
The Bloc Québécois has noticed that the current system has created a great deal of dissatisfaction. For example, the Western Barley Growers Association recommended a study of costs and benefits.
It is therefore important to understand that the Bloc Québécois believes that this bill should be sent to committee quickly because it is important that changes be made in the interest of grain producers.
We need to take a hard look at this position. This bill must be modernized, but in the interest of producers. The Bloc Québécois will see to it that the interests of producers are respected.