EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, March 20, 1997

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[English]

The Chairman (Mr. Lyle Vanclief (Prince Edward - Hastings, Lib.)): I welcome everyone to the table for the continuation of discussions of Bill C-72, an act to amend the Canadian Wheat Board Act.

Just so everyone is clear, I think the clerk has informed everyone that we are going to request you limit the time of your presentation to a maximum of 15 minutes so we have fairness. That allows us a period of time after all four groups have made their presentations for questions, clarifications, comments and dialogue back and forth between yourselves and the members of Parliament who are here today. At about 13 minutes I will somehow catch your eye. So far I haven't had to throw anything at anybody and everybody's been very cooperative, so I assume and know you people will as well.

We'll begin with the presentation from the group, Wild Rose Agricultural Producers. Please introduce yourself and any colleagues you have with you at the table so it will be on the record.

Mr. Allan Holt (President, Wild Rose Agricultural Producers): Thank you, Mr. Chairman. Good morning, ladies and gentlemen. My colleague with me this morning is Robert Filkohazy.

I'd like to preface our presentation this morning by giving you a brief overview of Wild Rose Agricultural Producers in the hope that it will increase the credibility of our presentation to you today.

As we noted in the list of presenters today, not all organizations have a vested interest in the marketing of barley, which we feel should be the objective of the outcome of your deliberations on Bill C-72.

Wild Rose Agricultural Producers is strictly a producer-funded organization. We receive no financial assistance for the operation of our organization, aside from membership fees, and all policy is developed strictly on a grass roots basis.

The first step in gathering input for our presentation today was to circulate the information you provided to each of our 15 regional directors as well as all members of our board of directors. The feedback received from this exercise is the basis of our opinions today.

Wild Rose appreciates the opportunity to present our views on Bill C-72 to this committee. Our policy has always been that the producers of any commodity should be the ones to decide by plebiscite how their products should be marketed.

We are confident the outcome of the recent barley marketing plebiscite will be the direction the government takes in future decisions on this very controversial issue. We also hope the forthcoming federal election will not cause decisions to be made in haste, decisions that may be later regretted. We do, however, expect decisions to be made in a timely manner, decisions on a matter that has divided the producers of the province of Alberta as no agricultural related issue has ever done before.

Our presentation this morning is rather brief. We have only addressed issues with which we do not fully agree. There are many good parts of Bill C-72 and the CWB that should be preserved.

The Canadian Wheat Board should be governed by a method beginning at the grass roots, which is the farm level. This would be done by means of a delegate structure, with the delegates elected in regions of areas to be determined in all three prairie provinces. The delegates would hold an annual meeting, at which time they would (not could) elect the majority of 11 to 15 person board of directors. To ensure continuity, we suggest each term be of three years' duration with one-third of these directors being elected every year, and they may be re-elected if the delegation so desires.

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The board of directors would - and I repeat again it is not could - elect a president or chairman from among themselves and appoint a CEO who would be directly responsible to the board. The delegate body would replace the present advisory committee as we know it today. We do disagree that removal of directors should not be at the discretion of the government.

With respect to clause 6 and the contingency fund, we cannot support the concept of a producer funded contingency fund. Historically, interim payments have never been announced until market conditions warrant an increase. The grain producers of Canada have been forced to compete with the treasuries of the US and the EEC as those countries have subsidized their exports. This has occurred at the same time the Canadian Government removed support to their producers in areas such as transportation, program support and inspection, to mention only a few. Due to the low risk involved, we feel the federal government should guarantee interim payments.

Regarding the pool period in clause 16, we support earlier closing of the pool. Modern technology makes the present four-month period from the end of the crop year to the time final payments are received unacceptable.

We do have reservations about supporting a multiple pool concept. Further investigation and clarification are necessary in this matter, so producers are not disadvantaged due to severe price fluctuations.

Our members did have mixed feelings on the issue of cash purchases. It is imperative, however, that producers in the pool would not share further price increases with those who chose to cash sell. This system must not undermine price pooling.

We do support the concept of storage payments for committed grain. The rate should, however, reflect the actual costs borne by the producers.

We advise caution in the wording relating to designated areas so a loophole is not left open that would permit producer importation of grains from outside the area.

With respect to a contingency fund, there should be no need for the contingency fund to be used to cover potential losses from cash purchases as these sales would involve grain sold at a predetermined price.

In conclusion, we trust our suggestion will be implemented for the benefit of all grain producers in western Canada. We feel the original objectives of farmers can be met with a more responsive CWB, accountable to the producers whose needs it was originally designed to meet.

You may have heard the expression, ``We're from the government and we're here to help.'' I would like to state quite emphatically, ``Wild Rose Agricultural Producers are from the farm and we're here to help farmers.''

Thank you.

The Chairman: Thank you very much. I think the challenge, Mr. Holt, is for us to do that together. Thank you very much for a brief and concise presentation.

We'll now go to the Western Barley Growers Association, and I believe the two gentlemen here are Greg Rockafellow and Doug Robertson. I don't know if there are others with you this morning gentlemen. Greg, are you presenting?

Mr. Greg Rockafellow (Vice-President, Western Barley Growers Association): No, Doug is going to present.

The Chairman: I had a 50/50 chance of being right and I was wrong.

Mr. Rockafellow: We threw up a coin and took a chance.

The Chairman: Please go ahead.

Mr. Doug Robertson (Alberta Vice-President, Western Barley Growers Association): We would like to thank the standing committee for allowing the Western Barley Growers to present our views on this highly contentious bill. We are leaving a formal written presentation with you outlining our points in greater detail and we hope it will be of help as a reference in your deliberations.

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First and foremost, let us be clear that although the Western Barley Growers Association recognizes the need to overhaul Bill C-72 as it now reads to make it more workable, our preference is for a voluntary Canadian Wheat Board, not a new and improved monopoly.

Most of the problems in the Canadian Wheat Board Act and the Canadian Wheat Board in general would be gone under a voluntary Canadian Wheat Board. Markets and competition would guarantee that.

We would also prefer a true annual auditing of the Canadian Wheat Board by the Auditor General to make it more accountable to farmers, even if only older records, not current crop year data, were examined in order to remove the concerns expressed by the Canadian Wheat Board about possible competitor advantage from the release of their secret sales information.

We feel these changes would go further to bring the board into the market realities of the late 20th century than any changes proposed in Bill C-72, but we have to work with what we're given.

There are a number of changes suggested in the bill that we feel will be beneficial to the Wheat Board and farmers in general. These are: permitting the Canadian Wheat Board to manage its own risk using futures and options markets; allowing for the issuance and trade of negotiable certificates; the removal of the advisory board, which was nothing more than a propaganda arm of the Wheat Board anyway; the requiring of an annual corporate fiscal plan approved by the finance department; allowing farmers grain condominium storage; the use of variable pooling periods to increase flexibility of the board; paying farmers for storage of grain on farm; and cash and spot buying programs.

This is with the proviso that they're kept separate from the pool so that losses in the cash program aren't paid out for using farmer pool money and vice versa. This cost subsidization is not in the best interests of farmers since manipulation of the domestic cash market by the Wheat Board using pool funds can occur.

The areas of the bill that do require change fall into three main categories, in our opinion. These are the contingency fund, the effectiveness of the board of directors and the loss of exclusion of grains under the act.

We have a minor beef about allowing the Wheat Board to make unsupervised adjustments to the pool accounts but we don't like the existing idea of cabinet sanctioned ones either. Both allow for internal cross-subsidization, which can only be fixed if the Wheat Board is independently supervised anyway. We won't consider those at this time.

With respect to the contingency fund, Bill C-72 would see the corporation responsible for initial payments only and leave any interim adjustments to a contingency fund. This fund gets its money from deductions from grain sales until the minister decides it's big enough. The fund can also be used to finance losses in the new cash contract program. These ideas are not ones we can endorse in any way, for the following reasons.

First of all, because the Wheat Board is no longer responsible for interim payments, there's nothing to stop them from setting the initial at say 60% of what they would normally do and let farmers carry the risk for the rest. The only reason they don't do this now is because they are responsible for all the interims now.

I'm sure the finance minister could make a damned good case for letting farmers take the risk on the increased interim pay-out rather than the Wheat Board or the government paying for it. If farmers thought the announcement of initials drove the domestic price down now, wait until it's at 50% or 60% of what it should be.

Second, farmers have no control over how well the Wheat Board does the job of selling their grain. Since the Wheat Board under Bill C-72 will set not just the initial but each interim as well, farmers pay when the Wheat Board performs badly even more than they do now.

Third, using the fund, which is money extracted from the pooled grain sales, to cover losses in the cash contract program, is cross-subsidization. This would allow even more meddling in a cash market by the Wheat Board than occurs now, financed by those in the pools.

In our opinion, there is no reason to remove the responsibility of paying the interims from the Canadian Wheat Board. Therefore, there is no reason for a contingency fund either, except to act as another screw-up slush fund. If the Wheat Board wants a way to finance losses in the cash contract program, then establish a contingency fund that deducts from that program only.

Regarding effectiveness of the new board of directors, the Western Barley Growers Association has the following suggestions in regard to the newly proposed board of directors.

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First is that the board of directors be composed of individuals who are equally representative of both the agro-political right and left, if appointed. Any elections must be overseen and administered by an independent group completely outside the influence of the minister, the prairie pools, and the Canadian Wheat Board.

Second is that members of the board be qualified to serve. They don't need to be experts on the operation of a grain business to qualify, although we feel some of the directors need to be experts, and not just prairie pool people either. To qualify, directors need to be competent business people who have experience running financially successful businesses in a competitive atmosphere. We don't need a bunch of political appointees who are nothing more than figureheads or rubber stamps. Farmers are paying for a real board and we should get one.

Third, the board of directors should choose its own chairperson and CEO and be able to fire that person if they don't perform to expectations. If they are instead controlled by the CEO, who is in turn controlled by the minister and cabinet, then they are not a real board and we should stop the charade and save farmers a lot of salary costs by not bothering with any board of directors at all.

Fourth, the indemnity and liability sections of the bill must be changed so that all Canadian Wheat Board employees, including the board of directors and the CEO, are not afraid to question Canadian Wheat Board policy and direction. All employees must be independent of political whim and responsive to the marketplace to make them useful to farmers. Furthermore, employees must be responsible and accountable for their performance to farmers.

Fifth, the legislation must specifically state that the corporation act in the best interests of farmers, not itself. The wheat board is not a voluntary organization; since it acts on behalf of farmers, it must do what is best for farmers and not for the corporation whose job it is to serve farmers.

The last area is loss of exclusion of grains from the Canadian Wheat Board Act. Our final concern with Bill C-72 is with regard to the removal of paragraph 46(b), which allowed regulations to be made for the purpose of excluding grains from the control of the Canadian Wheat Board Act.

The minister has stated publicly that this section was not necessary because proposed subsections 45(2), 45(3), and 45(4) do the same thing. On the contrary, in order to be excluded under section 45, a grain must be approved by the board of directors, the Canadian Grain Commission, a producer plebiscite, the minister, and finally the cabinet. It is highly unlikely that any grain exclusion will make it through all these steps.

We agree with our lawyer's legal opinion that this will put not just future grains, but access to present interprovincial feed grain markets, in jeopardy for farmers in Saskatchewan and Manitoba especially. It is irrelevant that this was not the intention of the writers of Bill C-72 or the minister. The courts look to the wording of the act to determine what is allowed under the legislation, not good intentions. Paragraph 46(b) must therefore be maintained and the additions under section 45 scrapped.

Thank you.

The Chairman: Thank you very much for your presentation.

We will now go to the Alberta Soft Wheat Producers. I don't know who is making the presentation. Mr. Eckert, please introduce your colleagues so it's on the record and we'll go from there.

Mr. Arthur E. Eckert (President, Alberta Soft Wheat Producers Commission): Thank you, Mr. Chairman.

I'd like to introduce ourselves. First of all, our executive director is Andy Kovacs. Peter Pepneck will in fact be making our presentation. John Van Tryp is the director of the marketing committee and I am the chairman of the Soft Wheat Producers' Commission. Thank you for the opportunity.

The Chairman: Welcome to the committee. Please go ahead, Mr. Pepneck.

Mr. Peter Pepneck (Marketing Chairman, Alberta Soft Wheat Producers Commission): The Alberta Soft Wheat Producers Commission thanks the Standing Committee on Agriculture and Agri-Food for its time today to discuss our concerns relative to the amendments to Bill C-72. The need for input from the sector directly affected by the amendments is a prime imperative.

Our commission thanks Ralph Goodale, the Minister of Agriculture, for the process of consultation he initiated to generate input from all facets of the grain sector and related industry. The minister and the Government of Canada are to be commended for the vision to give the Standing Committee on Agriculture and Agri-Food the mandate to seek this input on the proposed amendments prior to second reading in the House of Commons.

The Alberta Soft Wheat Producers Commission is one of the five mandatory voluntary Alberta commissions funded by the producers' levies.

Our primary focus is to provide input on the issues that affect our producers and the soft wheat industry.

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The ASWPC has approximately 2,100 producer members in Alberta, who produce in excess of 340,000 tonnes of soft wheat on 170,000 acres of irrigated land. The value of our industry at the primary level is in excess of $70 million.

Our mandate is in the areas of research, production and marketing relative to soft wheat in Alberta.

As much as 80% of our production is traditionally exported internationally.

Our commission is a diverse group of producers with strong support by some of our producers for the exact opposite sides of the present marketing system question. We recognize the need for reform of the present marketing systems and wish to build upon the strengths of our present system, to modernize the governance structure, to provide more accountability, to improve responsiveness to changing producer and marketing needs, and to minimize future international trade implications.

Our presentation focuses on input and amendments to Bill C-72 on which we have been able to arrive at a consensus. We are very specific on these.

The first deals with the board of directors in proposed subsection 3(2)2. Bill C-72 states now that ``The directors, with the exception of the president, hold office during pleasure for a maximum of three years, up to a maximum of three terms.''

The ASWPC would support the following: ``The directors, with the exception of the president, hold office during good behaviour, but may be removed for cause at any time by the Governor in Council, for a maximum term of three years, up to a maximum of three terms.''

This would result in the appointments being more constant, even if the government changed. This is the case with the present act. There is also no distinction between elected and appointed directors, so even elected directors could be removed because of the displeasure of the government of the day. Control therefore would remain very much with the government rather than with producers.

On the president, proposed subsection 3.9(2) of Bill C-72 states, ``The president holds office during pleasure for such term as the Governor in Council may determine.''

The ASWPC would support: ``The president holds office during good behaviour but may be removed for cause at any time by the Governor in Council for such term as the Governor in Council may determine.''

This would allow the president to be removed for just cause at any time, but would allow the president to work more independently from government. We do not believe the first priority of the president is to be the pleasure of the government.

The ASWPC adds that the board of directors - elected and appointed - should also have the power to terminate the president/CEO position for just cause. The CEO needs to be accountable to the board of directors or the board of directors will be quite powerless.

On the election of the board of directors, proposed subsection 3.6(1) of Bill C-72 now states, ``On the recommendation of the Minister, the Governor in Council may, by order, designate one or more positions on the board to be filled through election by producers in accordance with this section and the regulations.''

The ASWPC would support: ``On the recommendation of the Minister, the Governor in Council shall, by order, designate the majority of the positions on the board to be filled through election by producers in accordance with this section and the regulations.''

A timeframe should also be outlined in the act as to when the elected producers will be elected.

Again on the election of the directors, Bill C-72 states in proposed subsection 3.6(2), ``The Governor in Council may, on the recommendation of the Minister, make regulations respecting the election of directors and the removal of elected directors.''

The ASWPC would support: ``The Governor in Council shall, on the recommendation of the Minister, make regulations respecting the election of directors and removal of elected directors.''

There must be clarity in the act as to what the process is. Also, the regulations should be forthcoming as quickly as possible.

Proposed subparagraph 6(1)(c.3) reads ``to establish a contingency fund consisting of the amounts specified by the regulations, that may be used'' and so on, as in the bill before you.

The ASWPC does not support the establishment of a contingency fund of any kind by any deduction from funds paid to producers to guarantee adjustments to initial payments. It further recommends removal of all references to the contingency fund, its regulation, amount, and operation in all subsequent clauses.

The ASWPC cannot support deductions from pool accounts, as this is a direct expense to farmers. This reduction of net farm income comes at a time when too many costs are already being offloaded onto producers. The cost to producers is too high, and the gain to producers too little.

The Alberta Soft Wheat Producers Commission is confident the recommendations we have put forward will enhance accountability, support the proven strengths of our marketing system, and provide the flexibility desired by the government and producers.

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The future control of the corporation by producers and the guarantees by the Government of Canada of borrowings, initial payments, and interim payments will be essential elements of the future success and producer adoption.

Thank you for your time in hearing our recommendations today. The Alberta Soft Wheat Producers Commission wish you wisdom in your deliberations, as the future of western Canada's grain marketing system rests in the balance.

Thank you.

The Chairman: Thank you very much, Peter.

We will now go to the last presentation and then we'll move on to the discussion. The Alberta Barley Commission - Mr. Foster. I don't know who is going to make the presentation. If someone could introduce themselves and then your colleagues, it will be on the record.

Mr. Brian Kriz (Chairman, Alberta Barley Commission): Thank you. I'm Brian Kriz, the chairman of the Alberta Barley Commission. With me this morning are Clifton Foster, the general manager of the Alberta Barley Commission; and Tim Harvie, the past chair of the commission.

The Chairman: Thanks, Brian. Welcome to the committee.

Mr. Kriz: I'm going to take a little slower approach in my few minutes here, and I'd like to start by discussing a little bit of the history of the Barley Commission and where we think our mandate comes from.

The Alberta Barley Commission was established in 1991. We're a refundable check-off commission. We take 40¢ per tonne, and refunds are available. We have a mandate to look into four areas - policy, research, producer services, and marketing.

I heard Mr. Vanclief on the radio last week, on Q-91. In his presentation he mentioned that Bill C-72 was an instrument to enhance and improve the ability of the Canadian Wheat Board to do more things for farmers.

With that, I'd like to offer a quote on liberty by John Stuart Mill:

A government cannot have too much of the kind of activity which does not impede, but aids and stimulates individual exertion and development. The mischief begins when instead of calling forth the activity and powers of individuals and bodies, it substitutes its own activity for theirs.

We feel Bill C-72 doesn't fit. We're not here to talk about fiddling and adjusting, or to talk about a new Wheat Board Act. We're here clearly to offer the alternative - the open-market alternative - and the freedom that comes with that.

The debate, we think, is about where we're headed, not where we've been. We can talk about the past history and we can talk about the Wheat Board Act and things from the past.

In reality, the marketing of barley is not unique. We know that in Alberta. We don't understand why a government regulation would make wheat unique. We have plenty of examples in commerce. We think marketing is an innate ability. Ten-year-old kids know how to sell used comics. These are some of the basics of commerce - that individual initiative, and the reward that comes with owning and producing and selling a product.

I'd like to give an example of a system that works without being designed by government or having bills to legitimize it. In the next month, when spring seeding starts, all across the prairies, on probably May 10, seed drills will be running.

There will be fertilizer in every drill. In Canada, I'm pretty sure, there won't be shortages on May 10. What system is designed to do that? Did we have an act that put that supply out in the field?

Supply and demand works. At that time there will be farmers willing to pay the price, there will be suppliers working in the background, and just the right amount will go into the ground in Canada.

In Russia, where the system is designed, that doesn't work, and that's my suggestion regarding Bill C-72. The mix of commodity, marketing, who buys, who sells - that changes day to day. I don't feel the government act is an important instrument at all for the marketing of barley.

In western Canada, Alberta in particular, proper pricing of feed barley has been a problem. We in the Alberta Barley Commission feel we've had the tail wagging the dog.

Our pooling system - I'll just make a comment. What does that offer the farmer? The pooling system offers one quality of barley at the export shore. It's a barley that I wouldn't be able to sell to the dairy farmer or the hog farmer next to me. Our limit is 2.5% foreign material, and that's what the barley has in it.

We've never offered to Korea or Japan the kind of barley that I need to sell to the feed mill three miles from my house. Why is that? The line companies, because of the act, are allowed to do some mixing, are allowed to bring the quality down, and are allowed to put that into the boat. So we have never offered the kind of product that I sell to the dairy or hog producer next to me.

If we can't offer that product overseas because of our marketing system, how can we take that price signal and have that appear back at the farm for the majority of feed barley that we sell?

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That is a major concern. It's something we've addressed and talked about. That's why we've been in court. That's why the commission has been so adamant about the problems of the Canadian Wheat Board Act. It's a basic pricing issue. It's that freedom to build relationships with a quality product.

At the same time, when we talk about building relationships, who among us has a relationship with the Canadian Wheat Board? I'm a cattle producer. I have a relationship with the Cargill packing plant. I have a relationship with the local auction mart. I have a relationship with the people I buy my bulls from. These are things that are developed over time through good business, word of mouth and honouring contracts.

I can't build that relationship with a monopoly. There is no competition at the farm gate for export barley or export wheat. That's a major concern.

We have to allow the freedom for failure and the freedom to learn from failure. The Canadian Wheat Board pooling system doesn't allow that. We're not treated as experts of any kind when we dump into the pool.

We think farmers need to be able to see clearly the signals for future opportunities. One of the things I've often thought of as a farmer is: who needs export grain markets? That might sound like a strange question, but in reality, I would like to see grain imported into Canada and processed here in hogs, in meat of any kind, and in flour.

As for this idea of an export product, I understand where that comes from, but I think we're very shortsighted in thinking about the exporting of raw material. I think the Crow helped to move grain across the prairie, and the institutions that were set up because of it are very strong and have some strong lobbies today. As for the grain going up the lake, through the elevator and onto the rail through the union resources on the coast, that's commerce that's very hard to fight.

Is it a good thing? Who knows under a monopoly system? Would we have the kind of grain production in western Canada today without these input subsidies that we've seen in the past? Every program that moves money into agriculture leads to increased production. As input costs are subsidized, we see more production at the same time. We don't see the true price signals. We have all of these concerns because of the marketing system. When you design a system, I think these are the things you see.

What about the government marketing system driving efficiencies? Do we have any competition in the handling of grain through the monopoly? Does the single desk force competition between the grain companies? I don't think so. Will this new bill do that? I don't think so.

What about the performance of the sellers themselves under this new act, under any act, or under any design system? Do we have commissions for salesmen? Do we have personal incentives? Do we have penalties for non-performance? Are we really price-setters or price-takers under the monopoly? Do we have farm-gate competition for export barley or wheat? Do we have arbitration for feed barley?

One of the things that isn't being discussed again at this hearing is the result of the eminent-persons panel, the marketing panel. That report was from a consultation process thatMr. Goodale put a lot of faith in. The recommendation out of that panel was clearly that feed barley suffered under this system. The recommendation was clearly that feed barley should be removed from the act. That's been ignored.

The former Canadian Wheat Board commissioner, Ken Beswick, resigned over the same issue. He said he had trouble accepting the direction of the Canadian Wheat Board when it came to pricing feed barley. We had the Alberta plebiscite because we wanted to know the answer to a question that's very clear here. The question was simply: would you like the freedom to be able to market your wheat or your barley to anyone, including the Canadian Wheat Board? That's not a construed question; it's a simple question that people were asking. So 66% of the people in Alberta said clearly that they wanted that freedom for barley, and 63% said it for wheat.

To me, that's significant. The process, after consultation across the prairies, had unanimous conclusions, yet that process is being snubbed. Now we have another divisive plebiscite.

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Do we get to have plebiscites on economic issues about how to collectively sell our homes, used cars, or used swathers? Do we need regulations? Do we need votes on how we do commerce?

That's what we're being asked as farmers. That's the tyranny of the majority.

The answer to this plebiscite will not address the real question. Let me vote individually with my own grain. I'm in business on my own at the farm gate, so let me decide who my partner will be from there on.

Voluntary co-ops are natural, monopolies are not. What moral obligation or justification should there be to maintain this monopoly?

Thank you.

The Chairman: Thank you very much, Brian, for your presentation.

We will now go to a period of questions, comments, and dialogue. Mr. Hermanson, I'll let you begin.

Mr. Elwin Hermanson (Kindersley - Lloydminster, Ref.): Thank you, Mr. Chairman, Thank you, gentlemen, for appearing before our committee. I'll just ask a couple of questions, then I'll share my time with Mr. Benoit.

First of all, I'd like to know how many members are represented by each of your organizations? I don't think you mentioned that in your brief.

We'll start with Wild Rose Agricultural Producers. How many farmers in Alberta are members?

Mr. Holt: About 1,000 pay voluntarily every year.

Mr. Elwin Hermanson: Okay, and how many members are there in the Alberta Soft Wheat Producers -

Mr. Pepneck: We have 2,100.

Mr. Elwin Hermanson: Yours is a little different because you're a check-off, but how many barley growers are there in Alberta?

Mr. Clifton G. Foster (General Manager, Alberta Barley Commission): We don't count membership lists, because it's a little different, as you say. We consider them more constituents. Our producer list is approximately 37,000.

Mr. Elwin Hermanson: As for the Western Barley Growers Association, how large is your organization?

Mr. Robertson: It's in the range of 600, presently.

Mr. Elwin Hermanson: Okay, I appreciate that.

I have some questions. I think the Western Barley Growers mentioned the indemnity clause in the Wheat Board Act. We've done some research into the indemnity clause, and this is not unusual in federal legislation. It's in the Financial Institutions Act, Insurance Companies Act, and Canadian Human Rights Act.

There are a couple of unusual features about this clause in Bill C-72, in that it appears to be retroactive. We've had no clarification from Department of Agriculture officials that it isn't retroactive and will protect former directors. It will protect perhaps even commissioners, but we're not sure.

It also protects employees, which is very unusual. Other indemnity clauses just protect directors and officials.

The other factor that concerns us is that the Canadian Wheat Board is not open to access to information, nor is it auditable by the Auditor General. So if you take that combination, it looks rather dangerous.

I'd like a response from you or any other group on that issue.

I was very interested, Mr. Kriz, when you talked about the standards for export barley actually being a depressant on domestic barley prices. I thought you made an excellent point.

I would like your group to respond to the fact that Mr. Goodale, our Minister of Agriculture, did commission an Angus Reid survey. The question asked to farmers was: do you want a dual market or a voluntary market for barley? The answer was a substantial yes. I think it was close to two thirds, which is the same as the Alberta barley plebiscite.

Then he went on in this poll to ask: if this happened to reduce malt barley prices, would you still be in favour? The answer was about 50:50. He never did ask: if this market increased domestic prices, would you be in favour? I think that was a bit underhanded, at the least, and I could use some more descriptive words.

I'd like your response to that, then I'll let Mr. Benoit ask any other questions.

The Chairman: Okay, who wants to start?

Mr. Robertson: This is our feeling about the indemnity clauses you brought up. We had a lawyer examine proposed section 3.94, which was one of the items that didn't concern us quite as much. We asked him to take a look at it to see if he had ever seen one like that before. I've seen standard indemnity clauses many times before, but this seemed to be a little more inclusive. He said he hadn't seen too many like that before. It seemed to be protecting everybody from everything.

It's one thing to protect the board from special interest groups that want to object every time it makes a decision, but it's another thing to protect it from its performance. If it does a lousy job, it doesn't have to answer in some way for it.

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The problem we see in it is that these indemnity clauses, instead of protecting the individuals, the board and the CEO, actually turn around and act as a damper on their ability to say anything. You're protected as long as you don't step outside of endorsing everything the professionals say, such as the lawyers and financial consultants the board brings up. As long as you don't step out and say that those reports stink, you're protected, but the minute you stand up, you're liable.

I don't know any clauses... He didn't come up with any other instances in corporations where that came back, where there's this huge sword of Damocles hanging over the CEO. Don't object to anything that the corporation decides is a good idea, or look out, Charlie, you're on your own.

Who's going to speak up then? That's our question. Who in their right mind would stand up as a director and say that this is the wrong policy for the board? We have heard from the federal government that the board is not going to disappear, so working within that framework and hoping for a voluntary board eventually, we would like the board to be a successful grain corporation. To do so, they can't be constrained by these type of things, in our opinion.

Mr. Elwin Hermanson: And on the Angus Reid survey?

The Chairman: Any comments on Elwin's questions?

Mr. Foster: I'd like to address the clause that Doug was talking about in terms of the protection to the board of directors and the staff.

I think that generally speaking, yes, even our act in Alberta protects our board of directors from any kind of litigation like that, but it doesn't protect us from criminal activity. I mean, that's bizarre. Why should anybody be protected from criminal activity?

Mr. Elwin Hermanson: Particularly employees.

Mr. Foster: Yes. It's beyond my comprehension as to why that would be in the act. With respect to the... What was the question?

Mr. Elwin Hermanson: Angus Reid. It was the question that Mr. Goodale put to producers, which was: are you in favour of a voluntary market of barley? They said yes. If it lowers malt prices, are you in favour? Then it was a draw. But there was nothing about -

Mr. Foster: I wanted to address that, Elwin. We've done a lot of analyses in the barley market, particularly feed barley. It's not generally well known - we're going to do a better job of making sure that farmers in Alberta realize this - that we've gone back over the last 20 years to analyse prices. We compared Great Falls to Lethbridge in the feed barley market. Farmers in Canada have been taken to the cleaners, at least in terms of feed barley.

We went to our printers to try to get some copies of these graphs done for your committee here, but their copier was broken. I'll leave one copy, the original, with you. You can duplicate and circulate it as you wish, but you will see from these graphs that the Canadian Wheat Board price, compared to the off-board price in Great Falls, right across the border, and the Lethbridge price, which is also drawn down, has become phenomenally lower over the last 20 years.

We've heard all sorts of excuses as to why this is. It's said that you can't maintain a high price in a rising market because you're taking the pool. This has been consistent in rising markets, lower markets, before EEP, after EEP, with the WGTA, and without the WGTA. We've been lower all the way along right through the whole 20 years.

So where's the benefit to barley producers in Alberta? Where's this benefit of pooling that we hear all the time? It's not there, and we've got the evidence to prove it. If there was a benefit to it, we would have certainly heard it in the charter challenge case. It wasn't presented before court, other than the opinion of experts, which is all we got.

The Chairman: Just a point of clarification on the indemnity in the bill, if I read it right in my interpretation. You said that someone's covered for a criminal offence. Proposed paragraph 3.94(b) says:

(b) in the case of any criminal or administrative action or proceeding that is enforced by a monetary penalty, believed on reasonable grounds that their conduct was lawful.

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I'm not a lawyer - and there may be some around the table from whom we can get further clarification - but my understanding of that is if it's proven that the person did a criminal activity intentionally, then he or she is definitely not covered. If the directors, or any of the list of people who are covered, deemed it the right thing to do at the time, then they are covered. If you wish, we can get a further legal interpretation, but I believe I'm correct in that interpretation.

I believe if you look in the Financial Administration Act and the Canada Business Corporations Act, this is exactly the type of thing that's there, if not exactly the wording, for all kinds of private business corporations, etc.

If it's proven that they did it criminally intentionally, there's no coverage.

I won't take that from your time, Leon. Please go ahead.

Mr. Leon Benoit (Vegreville, Ref.): Thank you, Mr. Chairman.

First of all, in regard to the indemnity clause, I asked Mr. Migie, who is responsible for this legislation, about this legislation possibly protecting past commissioners more than the current Canadian Wheat Board legislation does. He said, ``That's interesting; I just started my lawyers looking into that this morning''. So I asked him to get back to us with the results of what their lawyers find.

It's completely unacceptable if in fact this indemnity clause in Bill C-72 would give past commissioners even more protection than they have under the current Canadian Wheat Board Act.

I agree with one of you who said this piece of legislation is almost incidental and irrelevant in a lot of ways, because farmers want substantial change to the marketing system. When you're talking about the whole issue of the Canadian Wheat Board, some members of this committee keep saying there are those who want to keep the board and those who want to get rid of it, but really that isn't the issue. I think most of you would probably agree with that. Not many farmers are saying get rid of the board. Most are saying let's change it in some way. I think that's really the issue.

In Alberta we had a plebiscite, which determined that about two-thirds of farmers in Alberta want a voluntary board in regard to barley marketing and I think something like 62% or 63% wanted a voluntary board in regard to wheat marketing. A pretty substantial majority of farmers indicated clearly that they want a choice, they want a dual market - call it what you like. This legislation doesn't even address that issue. I'd like each of you to comment.

I believe the issue is settled in Alberta. Farmers in Alberta have absolutely determined once and for all, or at least for now, that they want a voluntary board. They've had the plebiscite and the issue is settled. I'd like you all to comment on that. Do you believe that the plebiscite in Alberta in fact has settled this issue, that the debate is no longer about whether we have the board monopoly maintained but really about how we move to the dual marketing system, or call it what you like? And any of you who don't agree that the issue was settled by the plebiscite, I would like to ask you to explain why. I'd like you all to comment on that, if you could.

The Chairman: Peter, I saw you reaching for the mike.

Mr. Pepneck: Yes.

Mr. Hermanson brought up this Angus Reid poll. You simply word it a little differently and you'll get a different result. You put the word ``freedom'' in and you will get that result every time. Nobody is going to vote against freedom. That's the fact of it and that's what happened in the vote.

I can also take specific examples of how the vote was done. Anybody who had any interest at all in cattle production was allowed to vote on that. They didn't have to be a barley producer; they just had to have an interest in it.

There were lots of inconsistencies in there, but if you want to see where it is, just take the Angus Reid poll that Mr. Hermanson brought up. All you do is word it a little differently and you will get a different result. The same thing will happen in any poll.

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Whoever wants to word the question can have a swing if you get a chance.

The Chairman: Mr. Holt or Mr. Filkohazy.

Mr. Robert Filkohazy (Board Member, Wild Rose Agricultural Producers): Robert's just fine.

The Chairman: Robert's fine. Okay.

Mr. Filkohazy: Thank you, Mr. Chairman. I was actually quite glad to see someone bring up the Alberta plebiscite, because I don't think it holds much weight. First of all, only about 15% of producers in Alberta voted. So I think that makes you wonder about the real intentions of Alberta farmers. As Mr. Pepneck pointed out, there was absolutely no voters' list, which I tried to have on the committee. I was on that committee, along with some people who are here today. The vote was on freedom, when in fact it should have been on economics.

Tim Harvie, who is sitting at the table here, was the chairman of the Barley Commission at the time. I don't know whether he's willing to admit it or not, but he said at the very first meeting that if we can have a vote on freedom, we will win. If it's based on economics, we will lose. He was absolutely correct. That should be pointed out.

Mr. Leon Benoit: If I could, Mr. Chairman, I'd just like to ask both of these gentlemen a question.

The Chairman: You'll have your chance.

A voice: We're going to ask the question, and we'll come back, Leon.

Mr. Filkohazy: The other thing that should be pointed out is that nine out of ten people on that committee, as I'm sure you're well aware, were hand picked by the Alberta government through the Alberta Grain Commission. They were very strong anti-Wheat Board advocates. So there's little surprise that things went the way they did.

To reassure the outcome, they hired an independent consultant to further test the question. So I don't think that the Alberta plebiscite holds much weight.

In talking to my Reform MP in the area, I had asked him on several occasions what their thoughts were on the Alberta plebiscite. They said they were not using it as a basis of argument at all, because they thought the same we did at the time - that it wasn't handled properly. Of course now you might hear differently.

Anyway, I think the Alberta plebiscite, as a point of argument, is a poor point.

The Chairman: Tim or Brian. Tim.

Mr. Tim Harvie (Past Chair, Alberta Barley Commission): Thank you, Mr. Chairman. The plebiscite was held in Alberta, and the result mimicked exactly almost two-thirds of polls and surveys that have been done for years here in Alberta. The Barley Commission took the stand it did when the continental barley market came around, because we believe we're reflecting the views of producers in Alberta. Consistently two-thirds showed they wanted some dual marketing choices in the province. The poll just verified that.

We did have the question checked by an independent marketing firm just to make sure it was understandable and valid. In fact we submitted three different questions using the word ``freedom'', using the word ``option'', and using the word ``choice'': ``Would you like the choice?''; ``Would you like the freedom?''; and so on.

The marketing firm told us there was absolutely no difference in the response. It didn't matter how you asked it. Producers knew. This issue's been around for a long time. They knew what they were being asked. There were 16,000 people who took the time to vote on this issue. They knew what they were being asked. Do you want dual marketing and some marketing choices, or do you want to stick with the status quo and the monopoly? You can hide that any way you want if you don't like the outcome or the result. Clearly the Wild Rose didn't like the outcome, so they can put any spin on it they like.

Farmers said they wanted some choices, and it was verified. I don't know where Mr. Filkohazy gets his result of 15% of farmers. There were 16,000 farmers who voted. That means there are 100,000 farmers in the province by his math. I don't think so. Statistics Canada results showed that 98% of the production is done by over 30,000 producers. So even if you take the vast bulk, you come nowhere near the kind of numbers they're cranking out.

Our mailing list is pretty all-inclusive, because every farmer in the province grows barley. We have about a 37,000 mailing list. How you get anywhere near 100,000 is pretty questionable.

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He says freedom would slant the question, that nobody would vote against freedom, yet 34% of the people who voted, voted against freedom. How does that follow through, 34% and some 6,000 producers, didn't want the freedom to market the grain on their own choice. The word ``freedom'' had nothing to do with it. The results were consistent with what has come down through the years in polls and surveys. The plebiscite was extremely valid. Producers in this province want marketing choices, they want a voluntary Canadian Wheat Board.

The Chairman: I have a point of clarification and then I'll go to Greg or Doug. How was it determined, Tim, whether a person could vote or not? If there was a father, and two offspring, or a husband and wife, could they each vote? Or was it one vote, one farm? Was there a voters' list?

I know this has been a debate in western Canada before, during and after the plebiscite. Can you just help me? I'm asking this personally. If my son Kurt and I were still farming together, and his wife and my wife, could we have had four votes? How was it determined whether that was there?

Mr. Harvie: That was certainly a big issue with the committee. We were trying to determine, in order to make this a valid process, who was going to get to vote. We tried to make it as all-inclusive as possible. We didn't want to exclude anyone who had an interest in growing barley and for whom this would have an effect on their farm. It's a couple of years now, but I think the criterion was basically on whether they had a financial interest in growing barley.

The Chairman: Be specific. I'm just trying to be clear. In the example I just gave, if my son and I were still farming together, I would think that my wife would have - I would think she would think she had - a financial interest. At least she's always told me she's concerned about how much money we make. I would assume that Kurt's wife would as well. Would that have meant there could have been four votes from this farming operation?

I see Brian nodding his head. Is that the case, Brian?

Mr. Kriz: Yes.

Mr. Harvie: If your wife's driving the tractor and running the farm and helping out, then she has a financial interest in the crops. You also had to have grown barley once in the last three years, I think. This wasn't open to people who didn't grow barley. You had to grow barley and have a financial interest in the crop.

The Chairman: Did you have to prove that in some way?

Mr. Harvie: You had to sign an affidavit.

The Chairman: Brian, did you wish to make a comment?

Mr. Kriz: On how the voting was done, you had to drive to town and vote or you could vote by mail-in ballot. You could apply for a ballot and then you had to sign the affidavit. There was a physical effort to go vote. You didn't just get them if you had four permit books like I know this next poll is about.

The Chairman: Greg or Doug.

Mr. Rockafellow: I know we're talking an awful lot about the questions involved both on the Alberta barley plebiscite as well as the one that's being held now. I think the fact of the matter is we have to look past all the questions and all the wordings. There are problems in grain marketing, specifically in barley marketing.

The last couple of weeks I've been driving around to seed suppliers and what have you. The people who work in those businesses are telling me that guys are driving in through the door and saying, listen, if this system doesn't figure itself out I'm planting grass, I'm going to cows. I'm not going to deal with the system as it exists today.

The fact is we're talking about plebiscites, we're talking about questions, and we're talking about the polarization in these issues. Nobody at this point is going to change his mind whether he likes the board or whether he doesn't like the board. There are problems for producers depending on where they live, in what specific region. Let's address those problems. Let's fix that, not have this popularity contest going across the prairies to determine what farmers want. I know what I want and I know what I need. That's what I want to go to. I want to go to that marketplace.

Under the Wheat Board system right now, if I grow barley and go to an export position at the coast, it could leave at 3% or 4% foreign matter in 46 pounds. I'm growing barley today that's 58 pounds and 0.5% dockage coming out of my combine spout. I can go to a feeder with it, but I can't go to anybody in the export market and say, I have a great product, do you want to buy it? I can't do that. I have no ability to do that whatsoever.

I don't think the questions are even relevant. Farmers know what they want.

The Chairman: Very briefly, Mr. Benoit.

Mr. Leon E. Benoit: Thank you, Mr. Chairman.

The Chairman: I'm going to balance the time up.

Mr. Leon E. Benoit: First of all, I want to say that I'm disappointed that Mr. Filkohazy would once again get into this type of rhetoric. He said nine out of ten people on the committee designing the question were anti-Wheat Board advocates. I doubt like heck that nine out of ten are against the Wheat Board. They want change possibly. That's what most farmers in western Canada want.

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I'd like to ask both of you gentlemen who responded that by having the word ``freedom'' put in the question farmers couldn't understand the intent of the plebiscite and couldn't understand the question. Are both of you saying you think that the farmers from your groups were incapable of determining the intent of the questions in the Alberta plebiscite?

Mr. Pepneck: No, I don't anybody said they were incapable. That's a pretty blunt question. I can ask you some of the same questions and you'd shake your head the other way, too. The fact of the matter is you just poked fun at 30,000 farmers and then you said, yes, but everybody's wife could vote and everybody who has a vested interest could vote. A 100,000 figure sounds more realistic to me than 30,000. The fact of the matter is, this word was put in there, it was sold to the media immediately as freedom, freedom, freedom. That does have a connotation. ``Freedom'' has a connotation.

The Chairman: Okay, Robert, and then we're going to get back to Bill C-72.

Mr. Eckert: Mr. Chairman, I asked for the mike and you didn't respond -

The Chairman: Pardon?

Mr. Eckert: Do you want me to get back to order? I asked for the mike quite a time ago and you -

The Chairman: I'm sorry. My apologies. Do you wish to comment now?

Mr. Eckert: No.

The Chairman: I'll go to Robert, and then to you.

Mr. Eckert: If you come back, okay?

The Chairman: My apologies. I didn't see you. Thank you for reminding me.

Mr. Filkohazy: First of all, Brian said in his opening remarks that in fact they were not interested in any part of Bill C-72 and that they were interested in the open market. Is that correct?

The Chairman: We're not going to get debating back and forth. So just go ahead, Robert.

Mr. Filkohazy: My point is that Mr. Benoit had said earlier he doubted if there were any farmers in western Canada who do not want to have the Wheat Board here. I disagree strongly. There are a lot of advocates who are not advocating a voluntary Wheat Board, they're advocating strictly open market. And I think that's important to recognize.

As far as your question on whether people could understand the question or not, I agree again with Mr. Pepneck; I don't think it's that simple.

The Chairman: Arthur Eckert, my apologies. It wasn't my intention to ignore you.

Mr. Eckert: Thank you, Mr. Chairman. I want to do a little bit of this micro-math for you people who are in this part of the forum this morning. I want to remind you that 59,000 farmers is a statistic the minister uses very often when it's to his advantage. So you want to double that because most of us are married. You had 118,000 participants in the plebiscite that was held in Alberta; so don't make fun of Robert's figures, 15% is a real figure.

And I want to respond a bit. I was there for one hour when that question was drafted initially, so my sentiments flow with Robert's quite a bit. First of all, I said it's ill-timed because the Minister of Agriculture, Ralph Goodale, had promised that once the transportation issue was resolved he would get to the question. He was never given that opportunity. He was pre-empted by the Alberta government. And I take exception to this, because that plebiscite was always brought out by the media as credible. Now the minister has, in his wisdom, given us the real option, which, in my judgment, is a question: do you want it or don't you want it? If we have the privilege of choosing all three, that's pie in the sky, friends; it's like having your cake and eating it, too. And we did a number with our commission when we asked, where would you vote if in fact the word ``option'' or ``dual'' was taken out. It almost totally swung the other way, to, we want to keep the board there.

And I want to remind you that 64% or 65% of the barley question was, we want to keep the board so we have the option. Of the wheat producers, 62% said, we want to keep the board so we have the option. But I'd like the barley growers to know that it was pretty difficult for me to vote against freedom because I had to vote, no, when I said I'd like to keep the board around. I'm a free-marketer, don't get me wrong, but I want to remind this group there are years when probably 70% of our grain goes into non-commercial markets. And who wants it?

The Chairman: Thank you very much, Arthur.

I'm going to Mrs. Ur.

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Mrs. Rose-Marie Ur (Lambton - Middlesex, Lib.): Thank you, Mr. Chairman. There was some mention this morning by one of the presenters as to the make-up of the board, the numbers, and that the members must be qualified, have some expertise, and be competent business people. Would that not happen when we eventually get to the farmer-elected board? I believe it was Doug.

Mr. Robertson: Yes, I made that comment, and, no, not necessarily.

Mrs. Rose-Marie Ur: So how could you improve it then?

Mr. Robertson: How could we improve it? We have to have the ability to have a process that's not influenced politically. That's the way to do it. Right now, we have a number of special interest groups that at present have the ear of the government. They have the ear of the government because they are back-stopped by a huge grain company, and we all know which one. They have the money to lobby the minister and put forth their point of view. Those are the members who tend to get on the committee, and that is not reality. The problem is that unless you do things in a businesslike way and say to yourself we need a board of directors that's going to treat this as a business, not as a nice free vacation to Winnipeg once every two weeks... Farmers are going to be paying for this board, so if this is the direction we're going to go then let's make dang sure we get people who have business sense doing this.

We were asked for our nomination for a member to this committee by Goodale, and our nomination was a guy who's run Palliser Grain because they have dealt with the open market, they have dealt with the realities of competition, and this is what we're asking. We keep getting back to this whole thing about how we don't have any way to test the other side, we don't have any way to test the dual market so therefore it won't work. This is a real problem for me in that we always hear this little bit in the background where people are saying, everybody's all for having a dual market as long as the market is rising and I can sell better in the United States. As soon as it turns around, it's going to fall on somebody and all the converts will come scurrying back. We have not seen that happen because we have a dual market in Alberta right now for feed grains.

We've had a huge convert of Saskatchewan farmers who are shipping tonnes and tonnes of grain by truck now who never shipped it before out of Northern Saskatchewan. And if you ask them if they would like to go back to a system where the interprovincial trade of grain is taken away from them, there isn't one of them who wants to go back to a system without choice where they have to deliver to an elevator company. Our system has been designed and influenced by certain elevator companies that get their people on the boards. They make the final decision.

We need people who are actually in the business, or can see the business, of competition and see how it can work because we need a board, if you're going to keep the Wheat Board around as the government has said they will, that can act like a grain company and can compete. Right now they're not competing.

Mrs. Rose-Marie Ur: So if governments can't choose the proper people for these boards, and you're almost insinuating that perhaps farmers might not choose the right people, who's left?

The Chairman: I'll let Doug comment and then Allan wanted to comment as well. You answer that, Doug, and then Allan may want to address both.

Mr. Robertson: I think both governments and farmers can properly choose as long as they're given a forum to do that. Right now we don't have a forum to do that. We have a forum where political interest dictates that certain people get picked automatically. Their names automatically get put forth and there's no process to choose that. The minister has taken a bit of a step in that he's asking individual organizations for their recommendations, and I think that's a start. But we need to have a balance.

You're never going to satisfy everybody. You're never going to get a nice 50:50 balance. That's not possible, but at least you can get some people with some horse sense. This is what made me so angry about the western marketing panel, that we had actually had it overloaded on the side of the pro-status quo on that board.

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It was loaded so that it would come up with a pro board answer. They turned around and bit the minister on the rear and came up with a solution that actually was fairly open market, which is why they haven't been asked to talk to him since then.

Talking to Jack Gore, he said, and I agree, that when you have a group of people who can put aside their politics and look at both sides of it, they see what is best for farmers here, not what is best for my grain company or what is best for my agro-political swing of the thing. We need to have some sober second thought on this thing.

The Chairman: Thanks, Doug.

I'll go to Allan Holt.

Mr. Holt: Thank you, Mr. Chairman. I would like to make one observation and then ask a question, if I might.

I find it very interesting that an organization that believes so strongly in the outcome of a plebiscite would publish their own ballot in their own Barley Country News, which they admit would be a spoiled ballot, and then they would encourage the producers to put that ballot in the envelope provided by KPMG.

However, I would like one question clarified. Mr. Robertson asked for an audit of the Wheat Board. I was at a grain meeting sponsored by the Wheat Board last month and part of the handout at the door was an audited financial statement of the Wheat Board. Could you tell us which one of us is in error on this matter?

Mr. Wayne Easter (Malpeque, Lib.): There's an audited financial statement every year, and in fact the books of the Canadian Wheat Board are audited every month internally.

The Chairman: Brian or Cliff, do you want to comment? We would like some comments on Bill C-72, gentlemen, and we haven't had a whole bunch. We are fast running out of time and I would suggest that if you want to have anything that goes into the discussion on Bill C-72, make some of these comments if you wish to. I know single desk versus dual marketing is a discussion as well.

Mr. Kriz: My comment is directly about Bill C-72. If you want the board of directors chosen properly, do away with the monopoly. The Canada Cooperative Associations Act will let them be accountable as can be.

Here we are designing a system through a bill. You don't design marketing systems. You do in Russia, you do in China. I don't want a designed system. It's not flexible. I would just repeat my comment from before; you don't design an accountable board of directors through an act or a regulation. You do it through good business procedures and competition.

The Chairman: Cliff, did you wish to add to that?

Mr. Foster: No. It's basically the same message. If the people who used the system elected the people who ran the system, then there wouldn't be a problem; there wouldn't be a big debate. It's because the government is imposing this system on people that the debate starts to happen, because they have to use the system whether they want to or not. Give them the option. Build that into Bill C-72.

The Chairman: I'm in the chair and I'd like to get something clarified because I'm a bit confused on the message that's being sent, but I'll leave it at that for now.

Arthur.

Mr. Eckert: I'd like to just make an observation.

One of the presenters is coming down pretty hard on the polls, saying that they in fact control our wheat board system. I'd like to remind this gentleman that the past president of the United Grain Growers is in fact our chief commissioner presently.

The Chairman: Rose-Marie, back to you.

Mrs. Rose-Marie Ur: I have another question. The chairman just mentioned single desk or dual selling, but I want to ask that question anyway. Do you really think single desk selling and dual marketing can survive at the same time?

The Chairman: I see a lot of people with their chins in their hands here, so we're going to go around the table and ask each of you to respond. You don't have to. Indicate if you wish to respond.

Mr. Andy Kovacs (President, Alberta Soft Wheat Producers Commission): Can you repeat the question?

Mrs. Rose-Marie Ur: Do you think single desk selling and dual marketing can survive at the same time? Can they work together?

Mr. Filkohazy: My answer is quite simple. No. As far as I'm concerned, as soon as you go to this so-called dual market, you take away the very principle of the Canadian Wheat Board and you no longer have a Canadian Wheat Board. You may think you're going to have the two side by side, but in reality you do not. It is very simple. The two systems cannot work side by side at the same time, because you no longer have the Canadian Wheat Board.

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The Chairman: Arthur, I'm not forcing you, but would you like to comment.

Mr. Eckert: I don't have a problem with that. I'd like to respond to Rose-Marie. My first choice would of course be a dual market. I love marketing, so don't ever get me wrong: if I thought it was compatible and they could co-exist, I would say ``yes''.

Mrs. Rose-Marie Ur: That's the whole thing.

Mr. Eckert: The problem is that I haven't had anyone really put the intellect to them. If my provincial minister would design...and I saw him hold it up today - I'd like to see it, guys - I would be in favour of it.

The Chairman: My guess is he'll give you a copy. I think I can speak on behalf ofMr. Paszkowski. I think he would gladly give you a copy of that document.

Mr. Eckert: I think now he will, yes.

The Chairman: Yes, I know he will.

Peter and then Cliff.

Mr. Pepneck: Just so you're clear on it, as an organization we are divided on this so we speak as individuals sometimes on this.

I believe a pool system and a dual marketing system can exist side by side, but by the nature of the beast, single desk selling means there is no dual system. I'm sorry but that's just what it is. If we want to keep a single desk selling, then we can't have a dual market, but I do believe a dual system and a pooling system could exist together. Yes, you're absolutely right there, but you don't have any mechanism yet.

The Chairman: Cliff.

Mr. Foster: The contradition in terms was going to be my main comment. You can't have single desk and dual market. We've just gone through a rather lengthy court hearing on the legitimacy of this Canadian Wheat Board Act, and there really is no evidence at all that dual market can't work. Even a judge questioned one of the experts from the Crown on why immutable contracts wouldn't work. There is no evidence that they can't work. It's only the opinion of this government, the Canadian Wheat Board and some of their supporters that they cannot work.

There is no guarantees they will work. If they do not perform, like anything else, they will disappear. They have to add value to the farmer if they're going to survive. There is no guarantee they would work, but there is no guarantee that they can't work.

Tim had something to say too.

The Chairman: Tim, and then Greg or Doug, if you wish.

Mr. Harvie: I'll add to what Cliff's saying. The key question is dual marketing. I believe very firmly it could work. You can't have single desk dual marketing. Dual marketing means a voluntary wheat board or the option to sell to the open market. You can have price pooling; it can still provide that average price that some farmers are comfortable with.

The key to this, though, is immutable contracts. The Wheat Board does not have an immutable contract. It has very ``loosie-goosie'' contracts. It allows you to jump in and out, to only deliver 85% of what you said you'd deliver. Their contracts are a real joke in the farming community. They just don't stand up.

When I contract 100 cows to a guy there had better be 100 cows on the truck or if I contract 100 tonnes of canola to Cargill there had better be 100 tonnes in the truck or you pay. These contracts are not...

By going to an opt in and out on a yearly basis or a 10-year basis or why not contract by contract as they offer them, then if you contract you deliver. The Wheat Board would have its assured supply. They could market all the grain that gets delivered to them and they could give a pooled price to the producer if that's what he wishes.

I don't see any reason why it can't work.

The Chairman: Greg.

Mr. Rockafellow: I understand there is an example in the grain world on the dual market and how it works and I believe it's Australia. I don't know how it works exactly, but I understand about 50% of the people are under the pooled contract and about 50% of the people under the open market contract. I do understand that it's working very well. Both sides of the equation are happy.

The fact is that single desk selling for a feed barley producer, as myself, isn't working. Last year we saw the cancellation of the C & D contract. Just two days ago we saw the C contract on prairie spring wheat and hard red wheat cancelled. They're not going to take any deliveries under the C contract. Believe me, today farmers are scratching their heads trying to make flexible decisions on what they're going to plant this spring. It's not because of the market realities, it's because of the policy realities we have today.

So I think dual marketing has to work or would work and yes, the board would have to be very competitive under that system or they wouldn't survive. They would be competitive.

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The Chairman: Mrs. Ur, and then Mr. Easter.

Mrs. Rose-Marie Ur: In response to a comparison with Australia, this came up over the last couple of days in our consultations. A formidable individual yesterday made the statement that in Australia the domestic market is on the open market, but the export market is on the single desk selling. So that's not really a good comparison, would you believe?

Mr. Rockafellow: It was also said that in Australia the board is at port positions and that obviously is their export market. The thing is we need to let the market dictate what price and volume are.

Mrs. Rose-Marie Ur: There is a little bit of difference with Canada versus Australia as well.

Mr. Rockafellow: There is a difference, but my problem is today those producers that grew CPS wheat, as of two days ago, apparently 1.5 million tonnes to 2 million tonnes of their crop is going to be held over into the next crop year. They have to store that stuff for two-and-a-half years, almost three years before they get paid for it. That's not acceptable. Who can cashflow a business when you're making production and having to do that? We have to get out of that system.

Mrs. Rose-Marie Ur: Do I have time for one more question?

The Chairman: One more, yes.

Mrs. Rose-Marie Ur: On that same venue, we only produce about 7% of the world's total supply of wheat and barley. If we go to an open market, at the present time, because we are so small it's not on volume that we're recognized around the world, we're recognized on quality. Do you not think that if we go to a dual marketing system that our reputation abroad would be jeopardized because of quality, supply, for instance?

Mr. Rockafellow: Actually, I think the opposite is going to happen. We saw it in oats before it left the board. There was a drastic change in the world market in the price of grains at that time. I know it's been brought up that the price of oats went down. Of course, it did. All grains had gone down. The fact is that oats used to be recognized at, what, 34 pounds. Now, if you grow oats under 40 pounds per bushel, nobody's going to buy it.

I mentioned earlier that I'm growing 58-pound barley on my farm and I'm not recognized in the world for it. I can't sell it to anybody in the world. The fact is farmers will produce what the market is asking for and they'll find a way to do it.

Just recently, in talks with the Alberta Cattle Commission I understand that in the beef business they're going around the world and everybody has their own specific grading system and they're trying to sell a product. The Australians actually developed a Korea brand of beef and said: What do you want? They said this is what we want. They said: Okay, we'll produce it for you. Farmers and producers will give the world exactly what it wants if they're asked for it. And they'll get paid for it as well.

The Chairman: Just on the lighter side - and I'm not making light of anything - but I had the opportunity a couple of years ago to be on a trade group to Food Ex in Japan. The Australians had developed some system of growing a beef that was very similar to Kobe beef - and we have heard and seen the price that Kobe beef sells for. Two or three of us walked up with our Canadian badges on and asked the gentleman from Australia if he could tell us how they did that, and he said, in typical Aussie style: Yes, we will, but do you realize we'll have to kill you as soon as we tell you? Mr. Chairman, I can't imitate his accent, but he was an excellent Aussie at that.

Andy.

Mr. Kovacs: Mr. Chairman, I feel that I have to comment on the manager of the barley commission's comments about the court cases before the courts. He talked about evidence being presented or not being presented. His comments should be limited to what his opinions are. I feel I'm competent in replying to Cliff. I'm his equal. I'm a manager as well.

The Chairman: Let's stick to Bill C-72.

Tim, do you have a comment? We haven't done a very good job on this group, but you can't say I didn't let you have your say on some things. Whether it pertains to Bill C-72 or not, I'm sure it hasn't too much...

To the grain marketing, yes, Tim.

Mr. Harvie: Thank you, Mr. Chairman.

Just to respond to the question by Mrs. Ur, barley is not recognized and feed barley is not recognized on the international market as a quality market. It's substandard to Australian barley and it's perhaps equal and better or worse on some days than American barley. For the reasons you heard earlier, the system allows it to come to the lowest common denominator. So we certainly can't go anywhere but up in feed barley. The stuff I've seen at port is a disgrace to the barley that I produce on my farm.

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The other part of your question is about our reputation, whether it's in wheat or barley. The system does not produce the quality of grain. Farmers produce the quality of grain. I'm the one who fertilizes it. I'm the one who sprays the weeds out. I'm the one who harvests it carefully to get a good quality product.

Then I put it on the marketplace and they tell me what quality it is. The marketplace, if we had one, would tell me what it's worth. The system has nothing to do with the quality I produce. They only pretend to add value to it after that.

If the system went away tomorrow, am I going to suddenly grow crappy barley or substandard wheat? I don't think so. I think somebody out there would probably be willing to buy the product I can produce and whatever other farmer can produce to the best of his ability.

The Chairman: The system records the quality you produce based on the industry standards though. Is that right, Tim?

Mr. Harvie: Yes, in the marketplace standards. But they do not produce the quality.

The Chairman: No, they don't. Rose-Marie.

Mrs. Rose-Marie Ur: In response to that, you're exactly right. I've worked under both systems. I can say, yes, I produced my product under the marketing board, but I produced it in such a manner that it met the qualifications or the recommendations that board wanted. For my own farming business to succeed, I certainly wanted to maintain or reach the levels that board wanted for premium products.

Mr. Harvie: Yes. Bee, Alberta is renowned as one of the best beef producers in the world. We don't have a marketing board there. Oats were mentioned. The U.S. is a big market; it demands 40 pound oats; so I grow 40 pound oats, to the best of my ability. Canola, we're world renowned in canola as well. We grow the best canola in the world. It's not regulated by a market. It's the farmer who produces the quality for the market.

The Chairman: We'll go to Mr. Easter for a maximum of five minutes, and then toMr. Breitkreuz.

Mr. Foster: Could I just add one thing to that. Did you produce it because it was what your board asked for or did you produce it because it's what they paid you the best price for?

Mrs. Rose-Marie Ur: Both.

The Chairman: Mr. Easter for five minutes and then Mr. Breitkreuz.

Mr. Wayne Easter: In terms of the quality discussion, the fact of the matter is that Canada is recognized around the world. One of the reasons we're the superior seller we are is that we sell quality. Tim is right. You may produce better quality than what the average in the system is, but the system can be improved to maybe come up with a class grade. There are ways and means of doing that.

Mr. Chairman, there's one comment I want to make in terms of the barley commission. You talked about tyranny by the majority. Would tyranny by the minority be any better? Let's be fair here.

The minister has stated he wants the three major pillars to remain, single-desk selling, pooling of returns and government guarantees. The reason in part for the committee being out here and for the legislation is that we recognize there are problems in the grain industry.

I'm pretty hard on the side of pro-board. Everybody knows that. At the same time, I recognize there are problems here. We have to try to find some way of putting some flexibility in the system without undermining it.

My question to the witnesses is, are there any points within the act itself - let's try to get away from the philosophy here, my own and yours too - that in fact do move us towards that flexibility or for the ones on the other side that move us away from the three pillars? That's what we need to know.

As a committee, we've got to make some determination on where we're going on this bill. We're going to re-read what you've said. We're making notes on what you've said, on the good points and the bad. We have to come to some decisions here, down the road somewhere. We do have to fix this system. There's no question about that, regardless of our philosophies.

Have you any comments on that, specifically on the bill?

The Chairman: We'll allow responses to that and that will take us by the balance time. Then we'll get back to Mr. Breitkreuz here. Relax; we've still got some time before we break for lunch. Brian.

Mr. Kriz: The premise again would be that the government has to design a system for my barley. That's the premise we're working on. When you say the three pillars - for me to come here and participate with that premise, you're asking...

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I think I represent a lot of people in the feed barley industry. We're under that act and it impinges on my livelihood, my income and my decisions. So my obligation is to come here today to prevent this bill from happening and to go to an undesigned system for my feed barley. That's what I'm trying to do today.

The Chairman: Okay. Robert.

Mr. Filkohazy: In response to your question, Wayne, there are some things we see could happen in this bill that would be of great value. When you go to that elected directorship, something I think that's very important is to develop a structure to allow that to happen. I think that's probably one of the most important things that will give the board more credibility in farmers' eyes, to allow them to have an arena to elect those people.

They also have to be able to have the opportunity to elect the majority of those directors. That has to happen. The third point that's important is that the elected board has to be able to elect the chairman and the people who are going to oversee the operations. That management has to come from that board.

The Chairman: Okay. Arthur.

Mr. Eckert: Thank you, Mr. Chairman. My response to you, Wayne, is with regard to the interprovincial trade. I think that's one area you need to address very clearly so that what we presently have in the feed industry is not eroded.

The Chairman: You're referring to paragraph 46(b).

Mr. Eckert: Yes. Very clearly that is a concern. We were in Regina. We heard the debate on that. There's a strong sense that some would like it to be brought back under the board, but there was a determined sense on the part of Alberta particularly that this not happen. So we want that clarified in the act.

The Chairman: Okay. Peter.

Mr. Pepneck: I'd just like to say the brief we handed you - the written one - deals with specific changes we'd like to see to Bill C-72. You could sum it up by saying if we're going to see movement, it's not going to happen overnight.

We really are divided on it as a board, as producers in our area. There are those who would like to see the board stay exactly the way it was and those who would like to see it abolished totally. We're on both sides of the issue but we agreed among us this is what we have to work with. We'd like to see these changes. We think that leaves flexibility for the future because if you let a majority of the board be farmers and put that right in the act, there is room for change and I think a positive change that will move over time.

Again, the contingency fund, we'd like to do away with that just because that does away with that one pillar, price support - once you start it.

The Chairman: Okay. Doug.

Mr. Robertson: If you go through our presentation, we tried as best we could to set out what we thought was positive and what we though needed to be changed.

One point on the interprovincial trade side of it, we considered leaving that off. We'd let that fester and hope it got in because you won't believe the hell that's going to fly if you close up the borders to Saskatchewan now they have figured out how to order a super B.

There is an unimaginable amount of grain this year being moved out of Saskatchewan and Manitoba into the Lethbridge market to access a better price than they can get at their elevators. These are people who - for instance, in our former president's area in the north of Saskatchewan he was shunned by most of the people around his area for five years. People wouldn't talk to him at the coffee shop because he was that damned free-marketer.

Those are the same people who are phoning him today to ask when the border's going to be run next. This is the change that's happening. People are not running back to ask for a controlled market any more. When people get a taste of an open-market chance - and that's all that interprovincial trade is allowing - when people see the chance to arbitrage the elevator price with that price, they immediately see grain start to desert the area and Sask Pool and every other elevator in the area jack its prices up to keep the grain going through their elevators. That's competition, gentlemen. That's the way it works.

The Chairman: Okay. I'm going to go to Cliff now.

Mr. Cliff Breitkreuz (Yellowhead, Ref): Thank you, Mr. Chairman. Wayne, you finally let the cat out of the bag because some of us were very unclear as to your position on the Canadian Wheat Board.

Some hon. members: Oh, oh!

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Mr. Wayne Easter: That's good. I'm glad you got it.

Mr. Cliff Breitkreuz: You also talked about those three pillars of the Wheat Board. I think some of us would refer to them as the three pylons of the Wheat Board.

Some hon. members: Oh, oh!

The Chairman: You may have just made yourself clear too.

Mr. Cliff Breitkreuz: There should have been no doubt, Mr. Chairman.

Some hon. members: Oh, oh!

The Chairman: Now that we got that cleared up, do you want to move on?

Mr. Cliff Breitkreuz: This is on Bill C-72, specifically about some clarification. In the Consolidated Statutes of Canada, in the Canada Business Corporations Act, the word ``criminal'', or anything even connected to ``criminal'', is not even in there, but of course we all know the term is used in Bill C-72 under the indemnification clause.

I want to say a little bit about voter turnout and voter participation, because that's been flying around here too. Fully 50% more voters turned out to vote in the Alberta plebiscite than voted to elect the Canadian Wheat Board advisory members. In fact Minister Goodale had this to say in a letter to the editors of rural papers right across the country:

The turnout in the plebiscite was apparently about 30% or less of those who may have been eligible to vote in Alberta, and less than 13% of prairie producers overall.

So that refutes the Wild Rose association as to how many actually participated.

We had a dual marketing of sorts for 40 days here a few years ago. People remember that. That was dual marketing, and if my memory serves me right, the Canadian Wheat Board building on Portage and Main in Winnipeg didn't come crashing down. It's still there. So it certainly could work.

It's a little bit different, but it's also of course connected with Bill C-72, because it's legislation that's going to perpetuate what actually has been going on in this country for a lot of years.

Yesterday again some Alberta producers were in court. They were convicted and sentenced fines of up to $5,000. And of course we've seen the spectacle of prairie farmers being hauled away in chains after government agents come to their farms, whether it be early in the morning or late at night. I guess they do it then so the neighbours can't see them hauling these people away to jail for long periods of time.

I would like the reactions of each group to that kind of thing being done by the Government of Canada to people who are just really protesting what they know in their hearts is wrong. They don't have the freedom to sell what they've spent a lot of money growing. I want some comments from each of the groups represented here, please.

The Chairman: We'll go around the table on that. I'm not so sure that's in Bill C-72.

Mr. Cliff Breitkreuz: It has a lot of ramifications.

The Chairman: You don't have to answer. If you wish to answer, you can, but let's be brief.

Mr. Holt: I would just like to say I don't think moving grain across the border illegally is any more wrong than moving whisky across the border illegally. When I made a trip to the U.S. last month, I wasn't allowed to bring more than one litre of whisky back, but I'm quite willing to follow the laws of this country.

The Chairman: Arthur.

Mr. Eckert: I don't know whether I should say this, Mr. Chairman, but I watched something similar in China, in Guangzhou.

A young lad had gone one foot across the border with a gunny sack a metre square loaded with pistachio nuts. He ended up being intercepted by a motorcycle policeman. Initially he just waved him away from being over the boundary, which was on the pavement rather than on the sidewalk, because the sidewalk was loaded with free enterprisers. The guy cowered back, pulling his gunny sack. If he had done it quickly to obey the law, he'd have lost all his goods. He'd have just had the platform.

That wasn't good enough. The policeman phoned, and moments later there were three more motorcycle policemen to intercept this young lad who had crossed the boundary by one foot. In a matter of a few minutes there was a paddy wagon. That was transgressing the law.

My concern, Mr. Chairman, is if we all do what's right in our own eyes, we ultimately have chaos here too. So I believe we should maintain the law. I certainly support Andy McMechan's right to a good hearing. There was overkill there, without question.

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In a quiet setting I asked a policeman what I would have to do to provoke him to a place where I would be put in chains. He said he would have to consider himself personally at risk. It's a judgment call.

I want to remind this hearing here that neither customs nor the Canadian Wheat Board put Andy McMechan in jail; the judge did that. If you want to play with the judge, you're playing with the legal system of our country, and that's pretty serious.

Mr. Foster: I want to make it quite clear that the Alberta Barley Commission does not condone breaking of the law in any way, shape, or form. What we do say is that the law is bad. It should not be against the law to ship your own grain and market your own grain as you see fit. That's what's ludicrous about this.

I think it was the chairman who brought up the multiple votes in the Alberta plebiscite, and there was some talk on that before. I personally have taken a number of calls in the last week or two from disgruntled producers in Alberta about the current plebiscite that's going on for barley.

Some of us know people, and I know some people myself, who have received multiple votes because they have three, four, five permit books and they have three, four, five ballots. I have other callers who have been calling me complaining that they've sent in signed affidavits and never got a ballot. They have been complaining about it, but they weren't on the list somehow. Yesterday one fellow up in Leduc told me he sent in a signed affidavit and didn't get his ballots. His father, who's a permanent book holder, also didn't get a ballot. So there's something wrong. That's the trouble with plebiscites; they don't solve the problem.

I want to read one little quote from John Stuart Mill again, and I think this is really what's behind what we're saying here. Bill C-72 should be a bill implementing voluntary marketing for wheat and barley in Canada. He says:

The only freedom which deserves a name is that of pursuing our own good in our own way, so long as we do not attempt to deprive others of theirs or impede their efforts to obtain it.

This addresses your tyranny of the minority. We're not saying we should impose our view on others; we're saying let everybody choose the way they want to market their own grain.

He goes on to say:

Mankind are greater gainers by suffering each other to live as seems good to themselves and by compelling each to live as seems good to the rest.

We're saying make Bill C-72 a bill making the Canadian Wheat Board voluntary.

The Chairman: I'm going to wind up with a comment from either Greg or Doug.

Mr. Rockafellow: In terms if cross-border shopping or the taking of grain across the border illegally, our association can't approve of that, but I think that is just a reflection of the sentiment on this whole issue. Maybe the Barley Commission can correct me if I'm wrong, but I think out of the 16,000 ballots in that plebiscite, only 7 were destroyed or marked up because the voters weren't happy with the question. I think the people who are crossing the border...

What I'm getting to is that a person has to give an awful lot of thought and determination to whether they're going to go ahead through that process and actually break the law. I think there are many more farmers who are looking at this thing and pondering it, and yet they probably refuse to break the law. Of those hundreds of people who have already done it, there are thousands more who are agreeing with their cause. I think that's just a reflection of what's going on in the prairies.

The Chairman: I want to thank you very much for your contribution to this discussion, gentlemen. Some of you have been present when I've made this statement in the past. I think the discussion and the presentations we've had this morning outline to us all and show us very clearly the changes and the challenges, but they also talk about the opportunities that are available in the industry we are all involved in.

I've said this before, and some of you have been in rooms before where I personally have said it. If we were to close the door on this room right now, I would challenge all of us to design a system for the marketing of grains in western Canada that would suit and make everybody happy.

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That is absolutely impossible, and that has been made very clear here this morning, in that we have views that go from one side of a spectrum to another side of a spectrum. The challenge for the government and the challenge for the industry is to do as much for as many as we possibly can, because those that we all want to benefit the most are the primary producers and their families on the farm.

We have heard many different suggestions from many different people on how that could be best achieved. That is indeed an incredible challenge. We will all collectively try to do our best, and we thank you very much for your contribution to that.

The meeting is adjourned. We will reconvene at 1:30 p.m. sharp. We have a busy afternoon as well, with four more group presentations, and I believe we have five or six individual presentations this afternoon.

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