moved that Bill C-92, an act to amend the Canadian Wheat Board Act, be read the second time and referred to a committee.
Mr. Speaker, before I get into the substance of my remarks today I should advise the House that in a few minutes I have to attend a meeting of the cabinet and I regret that I will not be able to remain for the entire debate this morning. I extend my apologies particularly to the official spokespersons for the opposition parties. They may rest assured I will from the record in Hansard read very carefully what they have to say about this important legislation.
As I open debate on Bill C-92, certain amendments to the Canadian Wheat Board Act, I begin with a sincere request to all hon. members to help facilitate in the House the timely passage
of various pieces of agricultural legislation now before Parliament.
In addition to Bill C-92 I think of the amendments to the Farm Improvement and Marketing Co-operatives Loans Act, FIMCLA, which will double to $3 billion the volume of agricultural loans from the private sector financial institutions which can qualify for government guarantees, thus enhancing the availability of loan capital for farmers across the country.
By the end of July we will have bumped up against the existing $1.5 billion ceiling for FIMCLA loans across the country. To avoid a hiatus in this very useful program Parliament needs to enact the proposed amendments to raise the ceiling before we adjourn for the summer and I certainly trust that can be done.
I think of the amendments to our dairy legislation which will provide the legal framework to allow the Canadian dairy industry to implement certain price pooling techniques beginning this fall.
This initiative is essential to enable our dairy industry to position itself to comply with new international trade rules coming into effect this year under the new GATT. Again, time is very much of the essence. Parliamentary approval before the summer recess is vitally important.
With respect to both the FIMCLA amendments and the dairy amendments there is virtually unanimous support among all the various stakeholders in our agriculture and agri-food sector and there is obviously clear urgency.
I ask all hon. members and also our colleagues in the other place to ensure these amendments are fully completed before we rise for the summer break.
The same arguments apply to Bill C-92. These amendments to the Canadian Wheat Board Act are urgent. They need to be in place before August 1, 1995, the beginning of the new crop year in western Canada. They enjoy broad support among the majority of farm organizations.
In effect we are moving ahead with these amendments at this time in direct response to the requests of those western farm organizations. I trust my parliamentary colleagues will co-operate in facilitating timely passage.
Bill C-92 deals with the long standing system by which freight costs are pooled among prairie farmers under the Canadian Wheat Board marking system. Under this system western Canadian grain producers share common costs of shipping their wheat and barley from Canadian export ports to market destinations around the world.
The ports traditionally used as the points of departure for our overseas sales have been Vancouver and Thunder Bay because the world market value of grain in store at each of these two locations, one going east and the other going west, have been effectively the same.
Over the past decade or so changes in international marketing patterns have altered that historic equilibrium between Vancouver and Thunder Bay. In relative terms the effective world market value of grain in store at Thunder Bay has declined while the comparable value at Vancouver has increased.
To restore the balance in export values between grain moving west and grain moving east the eastern point of departure needs to be located in the lower St. Lawrence region, not at Thunder Bay. This change carries several different implications for prairie farmers in the returns they will receive on their wheat board sales.
Overall it will increase the amount all wheat and barley producers receive because the wheat board's total freight costs will be reduced. This will happen because the board's pooled costs will no longer include the seaway charges. The board's costs will be calculated from the lower St. Lawrence instead of Thunder Bay. The net result will be a general price improvement across the prairies of between $5 and $7 a tonne.
At the same time it needs to be noted that for producers in Manitoba and eastern Saskatchewan who ship their grain east, their domestic shipping costs to get their grain into final export position will increase because they will absorb their own costs to the lower St. Lawrence and not just to Thunder Bay.
Going in the other direction producers in Alberta and western Saskatchewan who ship their grain west will no longer cross subsidize a portion of the domestic freight bill for more easterly located producers. They will pay only their own costs going to the west coast.
For many years farmers in the western part of the prairies have complained that the use of Thunder Bay as the wheat board's eastern point of departure for export sales was both unrealistic and unfair in that it added costs to those western producers and they were bearing those costs unfairly.
Farmers in the eastern part of the prairies have acknowledge this anomaly in the freight pooling system but they have worried, understandably so, about the higher domestic costs they would face if the eastern point of departure were shifted from Thunder Bay to the lower St. Lawrence.
Many discussions on how to fix the problem fairly have been held over the years dating back at least to 1985.
In our February 1995 federal budget we served notice that the time had come to implement a solution. We proposed to provide a final period of time for final consultations with all of the stakeholders with the necessary changes to be made as ofAugust 1, 1996.
Since the budget over the past three months intensive discussions with prairie farm organizations, the grain companies and co-operatives, the wheat board and provincial governments have led to a strong consensus that this issue can and should be resolved more quickly.
The industry has told me we should begin implementing the change in the freight pooling system on August 1 of this year, not next year, with the full impact to be phased in over three years.
As we said at the time of our February budget, a portion of the federal government's multiyear, $300 million transportation adjustment fund will be utilized to ease the impact of the freight cost pooling change on those most affected, namely farmers in Manitoba and in the eastern part of Saskatchewan.
For the 1995-96 crop year, since this change is being announced at a relatively late date and farmers have already made their production decisions for 1995, the available federal assistance will be designed as compensation to offset a very significant portion of the affected farmers' increased costs in the eastern prairies. For two additional years the federal assistance may be more flexible and more in the nature of adaptation encouragement in the affected area. This was the consensus of the western grains industry.
I have undertaken to try before the end of June to be very precise about the portion of the $300 million fund which will be available over the next three years to help address the impact of the pooling change.
While we are still working on all of the necessary calculations, I have informed the western grains industry I would estimate the available funding for this purpose to be in the order of some $100 million in total spread over a three year period. Depending on how we are able to apportion that very substantial sum year by year this level of transitional funding has a high level of industry support.
While the proposed freight pooling changes are now scheduled subject to parliamentary approval to begin to come into effect on August 1, 1995, the same date on which railway subsidies under the Western Grain Transportation Act will come to an end, it should be clear the cost changes which result from the pooling issue are separate and apart from the WGTA changes; the two should not be confused.
The WGTA subsidy is being eliminated for four very strong reasons: to comply with new world trading rules, to increase grain transportation efficiencies, to end freight rate discrimination against greater diversification and value added economic growth, and because the WGTA subsidy in excess of $560 million each year is no longer sustainable in the face of a $500 billion government debt.
By contrast, the freight pooling system has never involved a government subsidy. It has constituted instead a hidden form of cross subsidization among different groups of farmers, with those in Alberta and western Saskatchewan absorbing some freight costs on behalf of those in Manitoba and in the eastern part of Saskatchewan. Bill C-92 will end this anomaly. The cross subsidization will be phased out and significant transitional funding will ease the impact on those most affected.
Like the other agricultural bills I mentioned at the beginning of my remarks, Bill C-92 enjoys good support among the stakeholders in our agricultural sector. It is very time sensitive and must be enacted before Parliament adjourns later this month.
I invite all hon. members to ensure its passage in a prompt and timely manner.
