moved that Bill C-283, an act to amend the Canadian Wheat Board Act (audit), be read the second time and referred to a committee.
Mr. Speaker, it is pleasure to rise in the House on my private member's Bill C-283, an act to amend the Canadian Wheat Board Act. It would allow the auditor general to audit the books of the Canadian Wheat Board.
We will have a new board of directors of the Canadian Wheat Board. It would be a tremendous asset if these directors had some guidelines to follow to know that the CEO of the board was performing his job properly or whether amendments could be made.
To have an independent audit of a board that is a monopoly is a tremendous asset. Up to now private auditors have done the audit. They probably have done a good job, but no one really knows because there has not been an independent look at the books to see whether they are in order.
Over the past couple of months the auditor general has come out vividly in favour of having some auditing done. He agrees that it is time because the government guarantees that he should have a look at the board's books to see whether there are good internal operations of the board.
Deloitte & Touche did an independent assessment of the board in 1992. That internal audit was never released to the public or to farmers. We do not have an idea of how critical the report was. The facts released after the audit were critical of how the board operated. They did not criticize the way the board marketed grain, but they criticized its business plan, how it operated and other mechanics of the board.
I became interested in how the Canadian Wheat Board operates when farmers came to me with concerns in 1994, shortly after I was elected. In 1992 Saskatchewan farmers suffered from the effects of a huge frost. In 1993 Manitoba farmers suffered from the fusarium outbreak because of excess moisture in wheat. Because the board in 1993-94 put out a notice that it would not be purchasing any of the fusarium wheat that had more than 5% fusarium it was unmarketable. Some farmers burnt their crops because there was no market for them.
The majority of farmers felt that if they harvested their crop they could somehow clean it up and use it as feed or in some other way. Some farmers were using it as fuel in their furnaces. Then some innovative farmers found a market in the United States for it. They had found a way of cleaning up that grain and were quite willing to accept it.
Some farmers along the border started exporting this grain and found out they needed an export licence. They went through legal procedures to get export licences for grain that was not marketable, which was not a big concern to farmers. They thought they should have had the right to sell the grain at the price they could get and keep the money in their own pockets.
The board created a buy-back program so the farmers had to pay the board first. They had to sell the grain to the board, buy it back at a higher price, and then market it themselves. Farmers were not even opposed to that idea because they had a pooling system. If everybody was treated equally the moneys they were charged would go into the pooling system and they would then share in those funds.
Lo and behold, about six months after the crop year ended and the pooling price had been paid out, some of the farmers started getting bills for storage of grain that had sat in their bins until they exported it to the U.S. This grain had never entered an elevator. Because they had signed a contract to export it and the U.S. elevators were full, it could not be delivered at the time and they were charged storage for having the grain in their bins.
When they came to me with these documents I discovered they had been charged storage, freight, elevation and cleaning to Thunder Bay, and the wheat had been in their bins all the time. I then started to investigate further and found out when they bought the gain back the grain companies or the wheat board charged the farmers as much as $1 a bushel more than they sold it to the grain companies that exported the grain. They were getting hammered double and that is where the M-Jay Farms class action suit started.
The board had no way out. It could not defend itself. Its only defence was to say that it had no mandate to sell their grain for the best price possible. The only mandate the board had was to sell the grain in an orderly fashion.
We have sold grain in an orderly fashion for 45 years. In western Canada today we see that the orderly fashion is fast disappearing because farmers cannot survive any longer. This is why I have been pushing for the last three or four years to get an accountable board that will work for the farmers, not for the corporation itself.
To show why it is so important, Mr. Beswick, one of the chief commissioners of the board, resigned in 1994-95 over the issue of feed barley being sold below cost price or below what the price should be. He came out in public and said “We have cost farmers this last year probably $180 million by underselling that feed grain”.
In western Canada $180 million is a lot of bucks to farmers. Not only is it a lot of bucks to western Canadian farmers, but they are lost tax dollars to the government or to the taxpayer. Whatever the loss is in terms of the taxes farmers would have paid on the grain, it has to be picked up by the ordinary taxpayer and somebody loses. It is important that we have a wheat board which extracts the maximum amount of grain, not just for the benefit of farmers but for the economy and taxpayers.
I will give just a few examples because I want to share as much time as I can with my colleagues on this issue. In March 1993-94 when the first farmers started shipping some of their 1992 crop year grain which had been impacted by frost in some areas, U.S. No. 1 wheat sold for $3.99 a bushel. The Canadian export price for No. 1 feed wheat was $109 a tonne. During the summer the prices of wheat in the United States increased by $1 a bushel. By September the wheat was worth $4.93 cash at Minneapolis.
The wheat board raised the export price of No. 1 feed wheat to $116, a difference of $9 or 25 cents a bushel when the wheat was worth at least $1 U.S. more in the United States. That meant farmers were losing at least $1 a bushel because of the failure of the wheat board to raise the export price.
That was not the end of the story. By December the price of wheat increased another $1 a bushel and we had American milling wheat selling in Minneapolis for $5.73. Does anyone know what the Canadian Wheat Board did? It lowered the export price for No. 1 wheat to $104 a tonne from $116 a tonne. Did that make any sense? We knew that because of the fusarium our feed wheat that year had protein of 14.5% to 15%, some of the highest protein wheat that we had ever grown, and the Americans cleaned it up and used it for milling wheat. The loss to our farmers was huge.
From the research I have done, on the 2.2 million tonnes that went into the U.S. as feed wheat, not durum or milling wheat, farmers lost at least $150 million. The spread between feed wheat in 1992-93 was $60 a tonne. The spread between feed wheat and milling wheat in the U.S. in 1993 was $130 a tonne. That is about a $4 a bushel spread. It did not make any sense. The wheat board refused to look into the issue when farmers phoned them and told them what the wheat was worth.
This is why it is important for the Canadian government to insist that the auditor general takes over the books, not just audit them to see if the prices are right but to see whether the board is running efficiently and for the benefit of the country and not just for the benefit of the board itself.
Another thing I would like to raise may be just as important as what I was saying on feed wheat. In 1995-96 when American grain prices were the highest in history wheat sold for $7.25 American a bushel. Corn sold for $5.25 to $5.50 a bushel. Our wheat board refused to sell grain into that market. Instead of selling the 1.5 million tonnes allowed by the Americans into their market, it only sold 750,000 tonnes. It cut the sales by half. The board would not allow farmers to export their own grain because it set the buy-back price at $9 and something a bushel just to eliminate the competition. I call that robbery. It was devastating to our farmers in western Canada.
Not only that, the following winter was one of the toughest in western Canada. There were transportation problems. An extra million tonnes of grain was carried over. It was more than in previous years. We refused to sell because of the board policy. It does not make sense. Now when we see we are to get an elected board of directors maybe we will have some changes. That is why it is so important for the auditor general to have control of the books.
We had 11 elected advisory board members for the last 10 to 12 years who were supposed to guide the board along. These advisory board members had the right to look into every portion of the audit and into every detail. They never once told farmers what was happening to their grain.
Six months before the commissioner of the board, Bill Smith, accidentally passed away he told a group of farmers “If I could walk out of this place today and tell you what is happening to your wheat or your grain it would be astounding, but I have two more years to serve before my term has ended and I can retire. I have to follow secrecy. I cannot divulge what is happening in the board”.
When we talked of human rights issues today, when we look at the APEC issue, people do not have the right to protest with signs. People do not have the right in western Canada to sell their grain for the best price.
