AGRI Committee Meeting

STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, November 4, 1997

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[English]

The Chairman (Mr. Joe McGuire (Egmont, Lib.)): I call the meeting to order to resume consideration of Bill C-4, an act to amend the Canadian Wheat Board Act and to make consequential amendments to other acts.

I'd like to welcome our witnesses from the Canadian Wheat Board and the Canadian Grain Commission.

You probably know the routine here. We have a 10-minute presentation from each of your groups and then we go directly to questions.

Mr. Hehn, would introduce your group? Then we'll listen to your presentation.

Mr. Lorne Hehn (Chief Commissioner, Canadian Wheat Board): Thank you, Mr. Chairman.

I have with me this morning two members from the wheat board. Mr. Gordon Machej has been with the board for some 26 years and has been a commissioner of the board for the last 7 years. I also have Mr. Ward Weisensel with me. Ward currently heads up our policy group at the wheat board. Both these gentlemen will be participating in the question and answer period.

It's certainly a pleasure for us, Mr. Chairman, to have this opportunity to discuss these amendments to the Canadian Wheat Board Act with the committee this morning.

We appreciate that in all of the planning and the designing of this bill the federal government has always recognized the wheat board's three core strengths—namely, single-desk selling, which provides farmers with market muscle in a highly competitive and, I might also add, highly concentrated international market; the second pillar of annual price pooling, which offers farmers risk management over an entire selling or pool year; and the third very important pillar, the federal government partnership, which provides underwriting of the wheat board's financial operations.

As you consider the submissions you've heard and will hear, I think it's important to keep in mind the breadth and the scope of the business and the organization that we are potentially affecting with this bill.

For example, in the crop year just completed western Canada represented only 5% of world wheat production, yet the Canadian Wheat Board, through its marketing, achieved 18% of world trade in wheat. If we look at durum wheat, Canada represented about 16% of the world's durum production, yet our marketing has accounted for 62% of the world's durum trade. And finally, while western Canada's share of barley production in the world is only about 8.8%, our share in world trade of malting barley was significant at 33.5%.

Clearly these are significant numbers in the context of world grain trade and we are a significant player. In fact, as an organization representing the interests of western Canadian farmers, the wheat board markets more wheat, durum, and malting barley than any other single marketing corporation in the world. Sales revenues last year exceeded $6 billion. This is big business, not just for farmers but for the Canadian economy in general.

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We cover customers across a wide variety of cultures in over 70 countries, and therefore our customer base is very diverse. To be an effective marketer we must meet the different needs of those customers. For instance, some customers have a very sophisticated consumer base. They want and require a high level of quality and a high level of service and are willing to pay for it. Others do not require the same level of quality in the grain they are buying and are not as interested in technical services and follow-up.

Given this environment, the wheat board provides a significant set of products and services to meet the needs of each of its customers in more than 70 countries worldwide.

In terms of its relationship to western farmers, the wheat board has in the past provided all farmers in western Canada with essentially the same level of market services. This is in spite of the fact that some farmers in western Canada obviously have very different needs.

Today there continues to be a large group of farmers who are certainly satisfied with the current system of initial, adjustment, interim and final payments supplemented by a cash advance program. However, there also farmers today in western Canada with more demanding cashflow and marketing requirements, and for these farmers improved cashflow is of key importance.

To address these cashflow needs and other needs in the last few years, the CWB has set up an extensive series of consultations with farmers, addressing both our payment procedures and this whole matter of pricing flexibility. The findings of these meetings and consultations were reflected in our submission to the Western Grain Marketing Panel and we've outlined the eight basic points in that submission in our submission to this committee.

Bill C-4 covers these changes in terms of legislative authority. Perhaps from a committee perspective, therefore, it would be useful to discuss a few of these changes in greater detail with you today.

In terms of the ability to cash trade grain at a price other than the initial payment, our primary interest here is in providing western Canadian farmers with a fixed price or forward pricing option. A significant group of farmers in the Western Grain Marketing Panel town hall meetings and in our own focus groups asked for consideration of such an option. The notion or the idea would be to allow farmers to lock in a forward price on Canadian Wheat Board grains prior to seeding. The forward price would be paid in full to the farmer upon delivery.

I think it's important to underscore here, Mr. Chairman, that this price would be based on the Canadian Wheat Board's price forecast over the 12-month sowing period, with appropriate discounts for risk and the time value of money.

The ability to purchase grain on a cash basis is also a feature that the CWB sees as important in enhancing its ability to serve export and domestic customers and therefore its farmer shareholders. The CWB should be in the position to source grain to meet outstanding and potential sales contracts by acquiring grain on a cash basis as market conditions indicate.

We want to emphasize this morning, however, that these pricing options would be offered alongside the traditional pooling system, thereby leaving unaffected those farmers who choose to remain in the pool and not participate in these programs.

These amendments would in effect allow the CWB to offer different levels of services to different farmers. An individual farmer could choose the service that most appropriately meets the needs of his or her operation.

Those who attended the Western Grain Marketing Panel town hall meetings or the meetings of this committee in western Canada this past spring will testify that there are still many things on which farmers do not agree. However, one thing that most will agree on, and which came through loud and clear, is that many farmers do not believe currently that the wheat board is accountable enough to them. We've been hearing similar views from farmers at our country meetings. Clearly, farmers want a more direct voice in the running of their marketing corporation.

It is important, however, to note that the Canadian Wheat Board commissioners and employees of the Canadian Wheat Board have always viewed the prairie farmer as their employer and their shareholder. Prairie farmers pay our salaries and we are certainly of the view that we are working for them. But rightly or wrongly, some farmers and perhaps even some politicians today do not see it this way.

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We continue to believe that governance matters are an issue to be resolved by farmers and government. Accordingly, we will comment this morning on these issues in principle only.

In restructuring the accountability and the governance of the CWB we believe that three issues need to be considered. First, there is need for an effective voice and a sense of ownership on behalf of farmers, which I mentioned earlier. They've been asking for this in the new legislation.

The second issue is the merits of a continued government partnership and associated government guarantees. Government is involved here in more than just financial guarantees. We operate in a highly concentrated global marketplace, and aside from the financial guarantees the government guarantee on quality and the brand loyalty associated with the maple leaf cannot be overestimated here. When customers buy from us, they deem that they are buying from the Government of Canada with a government guarantee, and that goes a long way in terms of customer satisfaction.

The need for as smooth a transition as possible to a new structure is also a very important consideration. We cannot lose sight of the fact that this is a global organization. It's responsible for business activities of over $6 billion annually, and it serves customers in over 70 countries.

Our more specific recommendations for change in Bill C-4 today deal with two items that affect the operations of the board. In particular, we wish to outline some changes to the format of the contingency fund that we feel are positive and warrant your consideration. We also suggest that the addition of a new section that would provide the CWB with the ability to offer a pool equity loan program also deserves consideration.

Bill C-4 enables the creation of a contingency fund to underwrite exposures arising from initial price adjustments in cash buying operations. The fund, accordingly to the current wording, has been treated as a general accounting reserve. We've also noted that in some of the submissions to date there have been other concerns with the concept of a contingency fund.

We feel the whole concept of a fund would be more acceptable if each farmer's contribution went to an individual equity account rather than a general reserve. Farmers participating in the pool accounts and contributing to equity accounts could be credited on a pro rata basis for their contributions. These accounts would also be credited with earnings on investments made by the fund. The whole objective here would be to ensure that farmers who benefit on a continuing basis through participation in the pool accounts contribute to covering the exposures incurred by those pools in the course of their operation.

Administering the funds as equity accounts would improve the tracking of contributions made by individual farmers. Farmers would retain title to those funds, including returns on qualified investments, assuming they were not used to cover pool deficits should such a situation occur. This is different from the current Bill C-4 words, where farmers who contribute to the fund are not necessarily those who benefit from the fund in future years.

Even with these changes, there's no question that producers will look favourably on their funds being used to backstop Canadian Wheat Board operations. However, if the federal government were to consider making an initial direct contribution to this fund, we believe many of the concerns producers would have when these funds are used for things other than backstopping losses in the pool accounts would likely be alleviated.

As a further positive refinement, the Canadian Wheat Board recommends that Bill C-4 be amended to enable a pool equity loan program. Under this program farmers would be allowed to take loans against their equity in the pool accounts. These loans would be repaid through future pool account payments. The primary advantage of the pool equity loan program is that it would provide enhanced cashflow to farmers who wish to remain in the pool. In this sense it differs from the pool cash-out or tradable producer certificates that are enabled in the current bill.

The pool equity loan program has a further advantage in that it could be made available to all pool accounts. This is not the case for the pool cash-out since there is not a futures market available in durum and barley that could be used to offset the risks of adverse price movements. For these reasons, we believe a provision allowing a pool equity loan program would also be a very positive addition to this bill.

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In closing, I want to commend the government for the spirit behind Bill C-4. I think it's fair to say that this legislation has struck an important balance between the need to provide a new CWB with enhanced operational flexibility, on the one hand, and the recognition of the real value of the three pillars I mentioned, single-desk selling, price pooling, and that very important government partnership with western Canadian farmers, on the other hand.

As the final authority over these amendments, it is up to this committee, and finally up to Parliament, to find the balance that will allow a strong new wheat board the flexibility to offer needed stakeholder services and, at the same time, ensure that we are equipped to meet the marketing challenges ahead in the next millennium while remaining a decisive and competitive force in the global marketplace.

Thank you very much.

The Chairman: Thank you very much, Mr. Hehn.

From the Canadian Grain Commission, we have Mr. Barry Senft. Would you introduce your people and then begin?

Mr. Barry Senft (Chief Commissioner, Canadian Grain Commission): Thank you, Mr. Chairman. Thank you for the opportunity to address the Standing Committee on Agriculture and Agri-Food with regard to Bill C-4.

With me this morning is Dennis Kennedy, executive director of the Canadian Grain Commission. Also with me is Len Seguin, who is the chief grain inspector for the CGC. Again, they'll both be taking part in the question and answer period.

I'm going to confine our remarks to those aspects of Bill C-4 that touch upon our mandate. As you know, the Canadian Grain Commission is a special operating agency reporting to the Canadian Parliament through the Minister of Agriculture and Agri-Food. Our mandate and mission flow from the Canada Grain Act and the Grain Futures Act.

We serve all facets of the grain industry, from plant breeders, grain producers, grain handlers and marketers through to Canada's international and domestic grain customers. We have expressed our vision as that of striving for excellence and adding value to the Canadian grain industry. We believe that our mission is to be a leader in providing grain-quality management and quality assurance, and to be dedicated to excellent and responsive service, supporting producers, all sectors in the grain industry, and their customers.

A proposed amendment in Bill C-4 that affects the Canadian Grain Commission is in clause 24:

(b) a procedure approved by the Canadian Grain Commission as acceptable for preserving the identity of excluded grain, so as to prevent co-mingling with other grain, is in place.

Also, in clause 33, section 118 is amended to:

(g.1) approving a procedure as acceptable for preserving the identity of excluded grain, so as to prevent co-mingling with other grain, for the purposes of paragraph 45(3)(b) of the Canadian Wheat Board Act;

Clauses 24 and 33 pertain to a proposed new responsibility for the Canadian Grain Commission. This responsibility is to ensure that changes in the marketing system proceed only after a procedure for preserving the identity of excluded grain that is in place so as to prevent co-mingling with other grain. This clause collectively empowers the Canadian Grain Commission to ensure that effective systems are in place.

The Canadian Grain Commission believes that this provision is worth while because it supports Canada's commitment to a marketing strategy that emphasizes providing our customers with grain shipments of uniform, consistent quality. It also reflects the realities of today's marketplace.

We will continue to provide bulk shipments of grain because these bulk shipments keep our costs down. But we will also provide more specialized shipments to meet the requirements of niche markets. Some of our customers are demanding grains from specific farms. Some customers may or may not want genetically modified crops. If we do not have the flexibility to ensure the quality of specialty shipments, as well as the quality of bulk shipments, we will not be competitive in the marketplace of tomorrow.

Uniformity and consistency cannot be achieved without systems that allow us to segregate grains into the classes, grades, or quality segregations that our customers require. By making future changes in the marketing system contingent on the development of effective measures to preserve the identities of varieties in the handling system, this provision ensures that we do not undermine the quality of our wheat exports.

Those who followed the proceedings of the Western Grain Marketing Panel closely will support the outcome, as the panel and virtually all who participated in those discussions contend that our quality system gives Canada a marketing edge that must be preserved and enhanced.

We learned that a certain level of quality is often the price of admission into a market. Technical support, after-sales service, and troubleshooting when problems arise all play a role in gaining a foothold into a new market.

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While the quality control systems of Canada's main competitors are less comprehensive than ours, we should not assume this will always be the case. Many countries, most notably the U.S. and Australia, are making great strides in developing technologies for quality control. While other countries may have tended to compete on the basis of subsidies, their ability to subsidize exports has been reduced by the World Trade Organization agreements. This means quality is more important than ever for us, our competitors, and our customers.

We must also remember that we export large portions of our crops. We are more dependent on exports than many of our competitors. This dependence demands that we pay special attention to maintaining the reputation for consistency and quality the Canadian grain industry has developed over the last number of years.

In summary, we are pleased with the provisions, which strengthen our ability to maintain and enhance Canada's worldwide reputation for grain quality.

Again, thank you. I look forward to your questions.

The Chairman: Thank you very much.

Before we go to questions, I would like to caution colleagues that when you are questioning the Canadian Wheat Board you keep in mind they are not a political organization, they are running grain, wheat, and barley for the producers of western Canada. We should stick to criticisms of their presentation and not other aspects we may be involved in with the wheat board.

We'll go to the Reform Party. Mr. Hoeppner, please.

Mr. Jake E. Hoeppner (Portage—Lisgar, Ref.): Thank you, Mr. Chairman.

Welcome, gentlemen. It's always a pleasure to see some of the farm organizations before us to explain a few things.

Mr. Hehn, I imagine you have looked at this bill very closely during its drafting, probably, or after it was introduced. How do you feel about the bill in general? Is it going to take out some of the glitches we experienced in the old Canadian Wheat Board Act? As you know, over the last number of years there have been a number of court cases trying to determine whether the mandate of the wheat board is to sell for the best price or to have an orderly market. What in this bill do you think gives the wheat board a clear mandate to sell grain for the best price on behalf of farmers?

Next, and this is on behalf of my colleagues from Ontario and the eastern provinces, why should we have two wheat boards? Why couldn't we have one wheat board that regulates all the grain sales in all of Canada? To me it's only logical, when you look at the unity issue, that we should be all treated equally.

Another question is this. The Western Grain Marketing Panel, which you did mention, Mr. Hehn, recommended that barley should be completely out of the wheat board, if I remember right. Why wasn't that recommendation promoted by the Canadian Wheat Board?

Then would you be prepared to amend Bill C-4 to give the wheat board a clear mandate...and if that mandate isn't fulfilled, that then the government becomes liable for the losses farmers do have because of improper selling procedures or buy-backs or whatever you would want? When I have somebody come into my home and either rob it or destroy property, I go to law enforcement and ask to be reimbursed by this person if they can catch him. If not, it's my loss. It seems very odd to me that as the wheat board, trying to do a job on behalf of farmers, you would want to put that liability back on the farmers' backs if they have been shafted.

The other thing that really concerns me is that we always hear the buy-backs are the same...and this is a question to the Canadian Grain Commission. You have a mandate that to me almost seems as if it's just a bunch of bureaucrats without any clout, when I see—and I have documents here if you want to see them—that on the buy-backs for feed wheat in 1993-94 we had as much difference as $86 to $140 a tonne on the same day for the same grade of wheat.

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The other thing I wanted to point out is that you set the grades so that the price levels should be the same, I guess, for all farmers. A letter from Mr. Richard Klassen, a wheat board commissioner, about a year ago, said:

The CWB Act does not prohibit payments of moneys in excess of initial payment; it merely requires that the amount of the initial payment, at a minimum, must be made.

These premiums are part of the purchase price, which fails to recognize that these premiums are delivery incentives paid by elevator companies' mills to encourage farmers to deliver to their facility rather than to the competition.

Now, if that is the case, what sense is there in grading this grain if the elevator companies and the mills do set the price or the true value for that grain? At the end of that letter, Mr. Klassen said:

The advice given to Mr. Huyde was a good faith effort by the CWB to assist a farmer in obtaining the full market value of his grain.

Now, that contradicts a statement by the agriculture minister just a few days ago—

Mr. John Harvard (Charleswood—Assiniboine, Lib.): Mr. Chairman, I think Mr. Hoeppner is getting pretty close to his court case. We all know he's a litigant in a case against the wheat board—

Mr. Jake E. Hoeppner: Aren't we discussing Bill C-4?

Mr. John Harvard: Let me speak, Mr. Hoeppner.

I think, just out of decency, Mr. Hoeppner should stay away from anything that could be construed as a reflection on his court case. I ask him, as a fellow member, to walk very carefully, because this case is still before the courts.

The Chairman: Your point is well taken.

Mr. John Harvard: And I don't think—

Mr. Jake E. Hoeppner: I was elected as a member of Parliament—

Mr. John Harvard: I know you were elected.

Mr. Jake E. Hoeppner: —to uphold the law, and I have the right to question the laws in Bill C-4.

The Chairman: Order, gentlemen.

There are already five questions out here from Mr. Hoeppner. Maybe we'll go the wheat board for the first three. We don't have very much time for the last two questions to the grain commissioner.

Mr. Hehn, would you answer the first three questions.

Mr. Lorne Hehn: On the first question, our general impression of the bill is that it does have balance. There are two things that I think farmers were very decisive about. One was that they wanted the board to have more accountability to them. I think by and large it's being taken care of on all the corporate governance measures in the bill.

The second thing they asked for was that they wanted to receive their money in a much more flexible fashion, and quicker, than they received it under the old rules. The bill to a large degree has taken that flexibility of receiving money into account as well with the measures that are in Bill C-4.

On the issue of two wheat boards, we see no reason why there couldn't be one wheat board, Mr. Hoeppner. As it's constituted now, one has been organized under a provincial legislation, and the other, which we are responsible for, has been organized under federal legislation. There's no reason why the two couldn't be combined. We aren't recommending that, but I'm sure it could happen.

The Western Grain Marketing Panel did not recommend that all barley be out of the board. The Western Grain Marketing Panel recommended that feed barley be out of the board and that the board continue with malting barley. Our concern with that is that you cannot differentiate between feed barley and malting barley. We would run the risk, as a country and as a marketing agency for farmers, of losing the premium that we can extract out of the marketplace on malt barley.

Our mandate is clear with respect to backstopping. I don't think I need to comment any further on that. The federal government certainly is guaranteeing the borrowings. I don't think there's any quarrel with the way all of that is set up. I think the obligation continues except the obligation to backstop adjustment payments and interim payments once the new board of directors takes office.

On the question of buy-backs, I could get into that, but I suggest, as it was suggested by one of the members, that perhaps it should be left for another day.

The Chairman: Very quickly, then, Mr. Senft, you can answer the questions directed to you.

Mr. Barry Senft: On the issue of the buy-backs, that has nothing within the Canada Grain Act that we'd take our mandate from.

In terms of the issue of setting the standards, the Canadian Grain Commission does set the standards on advice of the standards committees, both eastern and western. We've set those standards to maximize the extent of what those producers can sell their grades of grain into so that the buyer of that grain, the end user of that grain, knows what they're going to receive on a consistent basis, that if we sell them a No. 1 hard red spring they know how that's going to react in their milling or baking situations time and time again.

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So those are the standards that the grain commission sets. What premium that gives or does not give after that fact is up to the marketers.

The Chairman: We'll now go to Mr. Chrétien.

[Translation]

Mr. Jean-Guy Chrétien (Frontenac—Mégantic, BQ): My first question is for the Chief Commissioner of the Canadian Grain Commission, Mr. Senft. Your brief contains a sentence that I find rather utopian and I would ask that you explain it to me. Perhaps that for me it is a little difficult to get a handle on it because I am from Quebec. You state the following on page 4 of your brief:

Some of our customers are demanding grains from specific farms.

I wonder if that is not utopian. Someone could go to the grocery store hoping to buy eggs laid by free-range hens? It is not written on the egg shell. Someone else could want milk from Holstein or from Ayrshire cows, but that type of information does not appear on milk cartons. In my riding, there is a producer who has put his all into the production of biological milk, but when the milk truck comes, his milk is mixed in with that of the rest of the producers who are not into biological or green production.

Would you, for my information and possibly for that of several of us, explain what you mean when you say that some big customer might want the grain he buys to come from the South of Manitoba? I just do not see what you mean.

[English]

Mr. Barry Senft: That's exactly what I was referring to, and there are particular cases already where a miller and a baker want a specific variety. They want to know what area it comes from for specific reasons.

There always has to be a premium that's reflected back to the person who pays all of the costs ultimately, and that's the producer. But if the customer needs something specific—and we're seeing more sophistication in baking and milling technologies—we will have to be there to fill that, again making sure there's a premium that goes back to the producers of that grain.

If we don't but the competitors can, then that puts us out of the marketplace. What we're seeing is the trend to more sophistication of that technology and something for us to have to use and gear up to in order to compete in the world market.

[Translation]

Mr. Jean-Guy Chrétien: Your explanation is good enough for me.

I would now like to question the Chief Commissioner of the Canadian Wheat Board, Mr. Hehn. I find strange that in your brief no mention whatsoever is made of a change that is to my mind a major one. If this Bill is passed, the Board will be comprised of ten elected members representing grain producers and only five appointed members, which you and your colleagues are.

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There is another important difference. The salary of those who will be appointed will be set not by the Governor in Council, but by the Board that will, at least I hope, be controlled numerically, by definition and in practice, by grain producers.

How then do you see this revolution evolving once democracy has taken over at the Canadian Wheat Board?

[English]

Mr. Lorne Hehn: Well, I don't detect a question, but I think I should comment.

Democracy has always been a part of the Canadian Wheat Board. As I said in my initial statements, we view that we are indeed working for farmers, because they do pay our salaries now. The only difference today is that in the case of the commissioners, the governor in council decides what that salary is going to be. Under the new regime, the salary will be determined by the board of directors for the president and CEO, as you suggest; however, it will be in consultation with the governor in council.

So I suspect that the very close working relationship between the government and the board of directors will continue on matters such as salary for the chief executive officer. They both have a very defined interest in this operation, and I believe they both should have some say.

On the issue of the five appointed members, I believe this is a balanced approach. If you look at most corporations today, I think they demand that a portion of their directors be outside directors. Some even demand that those directors do not have a shareholder interest in the company, so that they clearly come to the board with expertise that is well defined in a professional sense.

Of the five members who are appointed, if the government keeps that in mind in their appointments, this will add to the strength and the balance of that board. We could in fact have those outside members or those appointed members having expertise on the legal side, having expertise on the finance side, having expertise on things like contracting. All of those things are a big part of our operation. So I think the balance is there, and I think that no matter what happens here, there will have to be close consultation between the board and the government in any event.

[Translation]

Mr. Jean-Guy Chrétien: Yes, but you must admit that there has been some discontent and there still is some to a certain extent. We have been hearing witnesses for two weeks and most of then find that we are not going far enough with Bill C-4, to such an extent, as a matter of fact, that we no longer know which way we should vote. Some government members are however getting ready to move some major changes. If things were running so well with the old system, why are there so many farmers complaining about the way the Canadian Wheat Board goes about its business? There must certainly have been some discontent.

I live thousands of kilometres from the most fertile wheat and grain growing land, but people are nevertheless putting pressure on me. Again yesterday I met with two groups who were not very tender towards you.

I have had enough of appointments. To be appointed, the first indispensable condition is that you be a card-carrying member and that you have a certain frame of mind and a certain seniority. You appointed one of your colleagues who had seven years' seniority. That sets me back seven years. The Conservatives were in. It is easy to follow: those who have been appointed since 1994 are good Liberals. I will not dwell on this too much more because my time is nearly up.

Personally, I am thrilled that ten representatives will be elected by grain growers. If they do not do their job, once their contract is up, better people will be elected.

[English]

The Chairman: Respond very briefly, Mr. Hehn.

Mr. Lorne Hehn: Well, your criticism is very constructive, and I appreciate your comments. From a farmer's perspective, under the previous regime or under the current regime, they certainly didn't feel a sense of ownership. Under the new regime, I think they're very definitely going to have that sense of ownership. They're going to have control on the policy side of the business and control on the strategic side of the business, as well as having a very defined say in the operation. So I think this is definitely a move in the right direction.

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I don't think we can downplay the value of the government partnership as a very important pillar in terms of the fact that we do deal in some seventy countries in the world. This business is big, and I think farmers deserve that kind of government involvement and concern on the finance side. So I think the balance is probably correct. At two-thirds to one-third, it seems to me the farmers are in control, but it does allow for that partnership to continue in a well-defined way. I think that is very important to the future of the grain business in western Canada.

The Chairman: Thank you, Mr. Chrétien.

We'll go now to Mrs. Ur.

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.): I'd like to thank you for your presentation.

I have a few quick questions. To the first gentleman at the table, in regard to the contingency fund, how would it be funded in costs per tonne to the producers, and how large a fund would you think there would need to be? Under what circumstances would you propose to use cash buying? Those are the first few questions. I have more to come, but could you answer those?

Mr. Lorne Hehn: On the contingency fund, you ask about the size of the fund and what would be appropriate to backstop both the operations of the board and the risk we might have on the adjustment in interim payment regime. That's a difficult one in terms of being defined in an overall range. Look at what happened to stock markets in the last week; the same thing can happen in grain markets. So it's difficult to put a range on it. I would think, though, that perhaps 5% of revenue is not unreasonable as a base, and maybe as high at 10%. Given what's happened in markets in the last week or so, I don't think that kind of target would be unreasonable. But I think it's going to depend on the kind of involvement that the new board has, some of the options that will be available to it under cash buying, and what exposure the board might want to subject itself to.

So those would be my comments on the contingency fund, but I think there is another factor about the contingency fund. There are really two levels of risk recovery in here. One is to backstop the flexible pricing programs, and one is to backstop the adjustment in interim payments.

A lot of farmers have said that we support a contingency fund to backstop the adjustment in interim payments, but we will have no part of backstopping those other Canadian Wheat Board operations designed to provide flexible pricing, nor do we want to use those options. In cases like that, I think it might be useful if this committee and government gave consideration to a capital injection to kick-start this contingency fund in order to overcome that kind of concern out in the country.

On the cash buying side, on our vision of cash buying, maybe I should get into the wording first. It's very broad and very permissive, and I think it gives the board of directors some latitude in terms of what programs they may want to develop in the future. Our concern is that all of those programs ought to be compatible with the pillars of single-desk selling and pooling. They have to be compatible with those concepts in the long run. The moment you get a cash option that is not compatible with pooling, it becomes competitive with pooling and you put pooling at risk.

We are looking at things like the forward pricing mechanism, which would be a mechanism to lock in a fixed price for farmers prior to seeding, or at least prior to harvest—during the growing season. That price, I want to stress, would be based on the expected pool returns we would get over the twelve- to fourteen-month selling period. It would not be based on a Minneapolis market or a Kansas City market, because if you base it on a market different from the pool market, you are putting the pool in competition with that price. In the long run, I think that would have serious impacts on pooling.

The other cash option relates to the early pool payment option. Once we move into the February-March period, about the time that we announce our first estimated pool return, our pool is probably in the order of 60% to 75% sold. The risk ratio changes a fair bit, and this option, I think, would put cashflow into the hands of farmers, as would the pool equity option. So those are the two things we envision.

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The third one is that we do have periods—and we had one like that two years ago—when we have difficulty in acquiring supply, especially in the feed grains market, because we do compete in the feed grains market with the domestic off-board market.

In cases where origination becomes a really serious problem and we have difficulty servicing our sales contracts and our customers, and our costs get burdensome with respect to things like demurrage and late penalties, it would make sense for us to have the option to cash purchase in those cases. But that would only be in the case where farmers were not contracting sufficient to meet the sales contracts.

Mrs. Rose-Marie Ur: Do you put a cap on the amount of cash buying?

Mr. Lorne Hehn: I think in the case of the forward pricing option we would have to have some sort of cap because, first of all, the risks of selling a huge portion of the crop as early as seeding are enormous.

Secondly, I doubt that the Minneapolis market has the liquidity to handle huge amounts in a short time period. So yes, I think we would definitely be looking at capping that particular option.

Mrs. Rose-Marie Ur: We heard from the advisory committee to the wheat board. Could you tell me what their role is with the wheat board? Are they funded through the wheat board? And what credence does the wheat board put on the advisory committee's information? I think that in their presentation they had a concern from the farmers' viewpoint regarding the governance model and also the loss of crown agency status. Those were the feelings, I believe, that they presented to us when they met with us.

Are the opinions of the advisory committee taken fairly by the wheat board? What status do they play with you?

Mr. Lorne Hehn: The advisory committee in the past has been there to advise us on the operations and services we provide at the farm gate and also to provide counsel and advice on the business side of our operation. We do take their advice seriously. We listen to all 11 advisory committee members. I can tell you that when you get into a farm meeting, at times not everyone agrees, at times their advice can be conflicting. But we do weigh that advice carefully and we take it into account in our operations.

On the information side, I can tell you unequivocally that we have shared very sensitive sales information with our advisory committee on a confidential basis so they would know and understand there is value in the way we are structured and the way we market grain on their behalf. We share actual sales contract data with them, even though that becomes a very sensitive issue from a customer perspective. So far, the advisory committee has been very astute in that sharing of confidential information and it has stayed within the advisory committee.

Mrs. Rose-Marie Ur: Do they have a budget from the wheat board?

Mr. Lorne Hehn: No budget per se. They've set up, along with the commissioners, some parameters and terms of their exposure to outside meetings and that kind of thing, but they have a per diem and we cover all of their incidental expenses.

Mrs. Rose-Marie Ur: Does that limit their travelling to other countries to see how other operations work so that it would be more beneficial?

Mr. Lorne Hehn: There are some limits on that kind of travel, and those guidelines have been set up in conjunction with the commissioners.

The Chairman: Thank you, Mrs. Ur.

We will now go to Mr. Solomon for five minutes.

Mr. John Solomon (Regina—Lumsden—Lake Centre, NDP): Thank you, Mr. Chairman.

First of all, I want to extend regrets on behalf of our agriculture critic, Dick Proctor, who suddenly took ill this morning. I've been pulled out of another meeting to attend very briefly on his behalf.

I've read both of your briefs over very quickly, gentlemen, and I find that you've answered some of my questions, both in the brief and through the questions put by other members.

I had about four questions, but I've only one left. It's part of the downside of being the sixth or seventh person on the pecking order to ask questions.

There is discussion about the elected wheat board advisory committee. There are some suggestions and evidence that I've picked up over time that the wheat board doesn't necessarily listen a great deal to this committee. So I'm wondering, Mr. Hehn, whether you could explain to the committee today how different the elected board of directors would function from the elected wheat board advisory committee in terms of their advice to the board, in terms of their involvement in decisions and in the other aspects of the operations of the board.

• 0950

Mr. Lorne Hehn: I think that a board of directors would function like any board of directors of any corporation. They would assume total responsibility for the business from a policy and strategic perspective.

Currently the advisory committee is confined to providing advice on the services that we provide on behalf of farmers. The policy on the strategic side is in the hands of government the way it sits now, and in the hands of the legislation per se.

The legislation is very permissive in giving that board of directors the authority to set policy and strategy for the business in the long term, and I think that's the basic difference.

Mr. John Solomon: What impact would your pool equity loan program have on one of the pillars of the board, which is price pooling? Would it have any direct effect on that?

Mr. Lorne Hehn: I missed the first part of your question.

Mr. John Solomon: One of your recommended changes in your brief was to amend Bill C-4 to provide the board with authority to offer a pool equity loan program. What impact would this have on price pooling? Would it have any impact at all?

Mr. Lorne Hehn: It would have virtually zero impact, because in this option we are actually asking farmers to assume the risk. In an equity loan program we would say to farmers.... We're talking now about the amount of funds in the accounts in excess of the initial payment, so we're talking about any future payments over and above the initial payment. We would advance a portion of that equity to farmers on a request basis in the form of an advance loan. The loan would be repaid by subsequent adjustment interim and final payments.

Now, if the subsequent adjustment interim and final payments were not sufficient to retire the loan, we would ask farmers to retire the loan by way of cash or by way of deductions from future deliveries in the next pool year. It would work very much like the cash advance program works today on the advance on the initial payment side. In fact, I think it would complement it.

So I don't view the pool as being at risk in this program as it would be in the pool cash-out program.

The Chairman: We go now to Mr. Borotsik.

Mr. Rick Borotsik (Brandon—Souris, PC): Good morning, gentlemen. It's nice to see your smiling faces once again—and I mean that sincerely.

Some voices: Oh, oh.

Mr. Rick Borotsik: You don't think I was sincere? I am sincere, Mr. Hehn. I thank you for being here.

You mentioned the Western Grain Marketing Panel. The Western Grain Marketing Panel put forward a number of recommendations, one of which spoke to inclusion of additional commodities or grains into the Canadian Wheat Board. In fact, what they said was that there should not be any inclusion of other commodities.

In this particular legislation, Bill C-4, there's an inclusion clause. How do you feel, Mr. Hehn, about an inclusion clause sitting in Bill C-4? Do the Canadian Wheat Board see themselves as being the marketers of other commodities?

Mr. Lorne Hehn: I noted your comments earlier in committee with respect to the way we answered that question to you when you were in Winnipeg. When we answer this question, we have to be careful that it is not perceived that we are lobbying for other grain.

Let me say clearly that we could handle other grains. We've all the machinery in place to market virtually any grain in western Canada. So that isn't in question.

I do think the inclusion here gives farmers the final authority to shape the kind of board they want for the future and also to shape what that board is going to handle. There are three criteria that deal with that inclusion clause, which all suggest that the farmers are in control. First of all—

Mr. Rick Borotsik: I've more limited time than the others, so perhaps I can interrupt for a second.

The Western Grain Marketing Panel said that there should not be any other grains included. Do you agree or disagree with that?

Mr. Lorne Hehn: If you're asking me as a person, I disagree. If you're asking me as an organization, I don't think I should have an opinion.

• 0955

Mr. Rick Borotsik: Thank you. In 1992, Deloitte & Touche conducted an internal review. I asked for that. I received a letter back saying it wasn't quite necessary that I receive any internal review or any detail on that. In that internal review, they talked about leadership; they talked about the lack of strategy, planning and accountability. In your reply to me you said all of the recommendations, with the exception of governance, have been dealt with.

Then my question is, if all of those changes have already been dealt with, the recommendations have been dealt with, why are we here with Bill C-4, in your opinion?

Mr. Lorne Hehn: Well, for one reason, the governance issues weren't dealt with.

Mr. Rick Borotsik: Only the governance? Everything else was—

Mr. Lorne Hehn: On the operational side, we weren't getting into issues like flexible pricing options for farmers. We were getting into a real critical microscopic look at the way we are organized as a corporation. It was what we call an operational review. It was very much an internal review.

Mr. Rick Borotsik: Do you not think, Mr. Hehn, that this committee, dealing obviously with the operations of the Canadian Wheat Board and the operations that are going to go into the 21st century, should see that internal document so that we can actually see how the operation is now in place and how we can fix that into the 21st century?

Mr. Lorne Hehn: We shared that internal document with the previous minister. We also shared it with the minister in charge of the wheat board today.

Mr. Rick Borotsik: No, I'm asking about the committee. Do you feel—

Mr. Lorne Hehn: I have some difficulty with that because in putting that whole package together, along with our consultants, we went to our employees and said we want you to open up in every respect, including—

Mr. Rick Borotsik: Your employees are the farmers, the producers, are they not?

Mr. Lorne Hehn: No, those are our employers. They are not our employees.

Mr. Rick Borotsik: Ah, I was just checking.

Mr. Lorne Hehn: We're talking about the operations of the board, not the policy and strategy.

Mr. Rick Borotsik: Are you prepared to table that document to this committee?

Mr. Lorne Hehn: No, I'm not, because—

Mr. Rick Borotsik: You're not.

Mr. Lorne Hehn: I want to say why. It's because I gave full confidence to the employees to open up in every respect, including comments about the business and about their boss. I said if you open up, we will guarantee confidence and confidentiality of what you said. I have no quarrel or qualms about making that thing public, except I would be reneging on that commitment to employees.

Mr. Rick Borotsik: My last question, Mr. Hehn, is on governance.

With the change in governance that's being proposed right now in this legislation, not only from the board's side of it, which is the ten and the five, do you agree with the chief executive officer or president being appointed by the minister and by government? Do you think the operation of the Canadian Wheat Board is best served by having the chief executive officer appointed by the minister?

Mr. Lorne Hehn: I think it's best served by a joint appointment, and I think that's sort of the way the legislation reads. You may want to define that further, but I believe it says the minister in consultation with the board of directors.

Mr. Rick Borotsik: I think it also says that for the Freshwater Fish Marketing...but we won't get into that, as well.

The Chairman: We have to go now.

Mr. Rick Borotsik: Are my five minutes up?

The Chairman: Your five minutes are up.

Mr. Rick Borotsik: Thank you, Mr. Chairman.

The Chairman: Mr. Solomon didn't use all his five minutes, so he has a quick question to the grain commission.

Mr. John Solomon: Thank you, Mr. Chairman.

I represent a constituency in Saskatchewan that has a significant rural population. I address this question to Mr. Senft from the grain commission.

I've met with farmers there, Mr. Senft, regarding their interest in pursuing and expanding the organically grown crops. You make reference in your brief to providing more specialized shipments with respect to niche markets and orders from other farms. What percentage of the grain that the commission deals with is organically grown, and is this a growing niche market for our farmers in Canada?

Mr. Barry Senft. Mr. Seguin.

Mr. Len Seguin (Chief Grain Inspector for Canada, Canadian Grain Commission): Certainly from the standpoint of organic grain, the grain commission and our grading system do not include a mechanism through which to identify that a particular product is organically grown. So if that product is moved through the traditional handling system, it would be graded just as any other grain would be graded and handled in the same fashion.

The product you're referring to, of course, is very special and is a very niche market and of very limited production at this point. I think it's fair to say it's being handled outside the traditional handling system. It's not being brought in through the bulk handling facilities, and so there's limited involvement at that point.

Mr. John Solomon: Thank you very much.

The Chairman: Mr. Hehn.

Mr. Lorne Hehn: I'd like to say that the Canadian Wheat Board works very closely with the organic growers in western Canada, and we're working closely with them to also get national certification so we can move into the international arena with that certification attached. It's a very close working relationship and it seems to be working fairly well.

• 1000

The Chairman: Mr. Easter.

Mr. Wayne Easter (Malpeque, Lib.): Thank you, Mr. Chairman, and welcome, gentlemen. It's good to see here the representatives of the superior marketing agency in the world.

Mr. John Harvard: Hear, hear.

Mr. Wayne Easter: I'm surprised at your request for the cash purchase for a capital injection from the government, Lorne. If this business is so risky, then why the hell are we getting into it in the first place?

My concern is this. Some concern has been expressed by many groups over the cash purchasing and how it might eventually undermine pooling in total, and eventually the system. I wonder if there's any way you can ensure, under cash purchasing, that regarding those who want to be within the wheat board system but still play the market—have their cake and eat it too, that kind of thing—we can be absolutely sure they are going to pay the losses, if there are any, rather than having them come out of the total system as a whole. That may be going to separate accounts in terms of the interim payments and the flexible pricing alternatives or whatever.

What is your view on that?

Mr. Lorne Hehn: I guess I have to turn that around, Mr. Easter, and say the concern now is that we cannot be absolutely sure we wouldn't reflect some of that risk to the people who aren't prepared to use those services, the people who want to stay in the pool accounts and not exercise the options. That's the paradox, and that really was the whole notion of the government perhaps kick-starting this thing so we would be able to overcome that hurdle. It's more of a case of those supporting pooling and not wanting these options not having to pay to underwrite those options.

Mr. Wayne Easter: In your brief, your second reason for seeking cash purchasing authority is basically to meet outstanding and potential sales contracts by acquiring grain on a cash basis, but you do have the ability, as I understand it, to purchase through contract, and you have done that. Why has that not worked?

Mr. Lorne Hehn: It has worked, but in the case of.... We still have to have sign-up on the farmer delivery contract. It has worked by contract only in cases where we have the sign-up but we're not getting the grain into the system fast enough, or not moving it it the west coast fast enough. It really worked in cases where a pro tem was tight. We have to have the farmer contract sign-up to make it work, in any event, and this cash purchase option would be in situations where we don't have the contract sign-up but we do have the sales obligation and we do have the vessel waiting, so demurrage is adding up, the clock is ticking. In some cases there are also shipping penalties.

Mr. Wayne Easter: On a question earlier from Rose-Marie.... I don't think there's any question that at least the majority position of the Canadian Wheat Board Advisory Committee differs from your own. Rose-Marie had asked a question about the changes to the bill. Going to a mixed enterprise we lose crown agency status. I think one of the worries by the wheat board advisory committee is the risk to the Dominion Bond rating. Do you see a risk there; if so, how great is that risk; and is there any other way, from your experience in the industry, to keep crown agency status, so we have that?

I'm going to run out of time, so I want to come back to my original point, on cash purchase. Is it possible to set up separate accounts in that contingency fund to protect against that?

Mr. Lorne Hehn: I'm going to ask the chairman of our audit committee, Mr. Machej, to talk about the risk side on the finance side. We asked our finance department to take a very close look at this. They also went to the people they borrow money from to seek their counsel.

• 1005

Mr. Gordon Machej (Commissioner, Canadian Wheat Board): The indication we have is that the change in the status would not significantly impact in terms of the borrowing rates the board is able to secure in the money markets. As you're aware there will be continuing guarantee by the government. Our understanding in the way this is reflected in the new legislation is it would not substantially change the borrowing costs to the board. Of course markets change, as you know, but my feeling, and what we've heard in terms of the research, is that there should not be a substantial change.

Mr. Lorne Hehn: On the question of the contingency fund, I believe if we went with the equity provision we could have a contingency fund that really worked twofold. The equity side would cover all of the adjustments in the interim and risks associated with the pool accounts. The other side of the contingency fund, if we had that kick-start and were taking the proper basis to maintain that fund, would be used to backstop all of the other operations.

The Chairman: Thank you very much.

Mr. Benoit.

Mr. Leon E. Benoit (Lakeland, Ref.): Thank you, Mr. Chairman, and good morning, gentlemen. Welcome.

I want to make just a few opening comments and then I have two lines of questioning for you. I hope we can at least have a few questions in each area.

Your comment, Mr. Hehn, that all the machinery is in place to handle other grains may be true, but most of that machinery belongs to private companies and co-operatives that are owned by their memberships. So the board doesn't exactly have the machinery in place, as you well know.

Polls have shown that many farmers want the Canadian Wheat Board to remain involved in western grain marketing. A vast majority wants substantial change. A majority wants, as the bottom line, a voluntary board. Up to 67% wants one for barley in Alberta, 62% wants one for wheat in Alberta and 56% to 57% in Saskatchewan. We have the figures. In my constituency it's much higher, from a professional poll that was done. So as a bottom line, farmers want a voluntary board.

This legislation isn't providing that, but let's talk about this legislation. The first major area of concern we've heard expressed by groups is governance, the concern about having an appointed president and CEO and five appointed directors. Your group, Mr. Hehn, has come here and probably supported this new legislation in a broader way than any other group that's come before this committee. That seems a little strange to me, because really you have the most to lose as current appointed commissioners.

Have you or anybody related to you closely discussed the possibility of your becoming this new appointed CEO and president or other commissioners becoming the appointed board? Has that been discussed as something you've thought about, Mr. Hehn?

Mr. Lorne Hehn: In all fairness, Mr. Benoit, the transition is very important for the business, for farmers and for customers. We have discussed the matter of transition with the minister. We did indicate to the minister that should our services be needed we would be prepared to assist in that transition period. However, the final decision, the way this is set up, is left to the minister in consultation with the board. There have been no promises made to us, and we have simply had discussions in a conceptual sense.

Our view on the governance side has been restricted mainly to the business as a corporation, not to the business of governance in terms of whether shareholders should have 100% control. A lot of corporations now have outside directors simply to bring that expertise to the board and provide balance so there isn't strictly totally shareholder opinion on the board. They also make decisions that are best for the business and not necessarily best for the shareholder. You have to keep the long term and the short term in balance.

On your question about the machinery in place, I said to you initially that I didn't want to get into the business of lobbying to put grains under the board. However, I did answer the question that was put to me. In so doing, I prefaced it by saying that I don't want this to be interpreted as us lobbying to put grains under the board. I said that we have all of the support services, such as market intelligence, market surveillance, weather and crop surveillance, the financial package, the risk management package associated with marketing, as well as the risk management package associated with exchange rates. We've all of those things in place, plus we have the customer exposure in some 70 countries. So we could do the job.

• 1010

Now, I'm not saying we would do the job better or worse, but the only way we would do the job is through the pillars of single-desk selling and pooling, so we wouldn't be in conflict.

Mr. Leon E. Benoit: The machinery will be provided by grain companies, private companies, and co-ops really have no choice in the matter. As long as there is single-desk selling, they have no choice in the matter. This is unfair, just as it's unfair that farmers don't have a choice of whether they will market the grain through the board or around the board. That's the bottom line.

Mr. Hehn, do you see—

The Chairman: Mr. Hehn can answer. He's well equipped to answer these questions.

Mr. Leon E. Benoit: I haven't asked the question yet.

The Chairman: Well, others are ready to answer them.

Mr. Leon E. Benoit: I'm sure they are.

The question of the appointed—

Mr. Lorne Hehn: No, you've challenged me and I'd like to respond to the challenge.

Mr. Leon E. Benoit: A question on the appointed president and CEO position: do you honestly believe, Mr. Hehn, that that appointed system can work? We've seen what's happened in the Freshwater Fish Marketing Board, where the government has appointed someone to that position, president, CEO, whom the board rejects out of hand.

The Chairman: Pose your question, please. We're running out of time.

Mr. Leon E. Benoit: It hasn't worked in that case, Mr. Hehn, and there's a serious problem because of that. Fishermen are left paying this bill of a salary of over $100,000 and so on, but they totally reject this appointment.

Why wouldn't this happen under this very similar system that Bill C-4 proposes for the wheat board?

Mr. Lorne Hehn: I'm not sure of how the act reads for the fishermen, but I can tell you that in this case if the board of directors rejected the appointment they could fire him the next morning. The board has some control here.

Mr. Leon E. Benoit: It doesn't work like that, Mr. Hehn, and you understand that.

Mr. Lorne Hehn: I think that the consultation would take place.

I want to get back to your allegation, though, that nothing would change if we had a voluntary marketing board. A lot of things would change.

Mr. Leon E. Benoit: Oh, they would change. I'm not going to argue that. They would change for the better, I believe.

Mr. Lorne Hehn: Number one, Mr. Benoit, the wheat board would be put into direct competition with its agents, the elevator companies.

Number two, you lose the economic benefits of the single desk, and that's been well outlined in terms of the Kraft-Furtan study and also in terms of the Schmitz-Gray study on barley.

Number three—

Mr. Leon E. Benoit: On the other side—

Mr. Lorne Hehn: Let me finish.

Number three, it requires a critical mass or a volume of business to provide those full services I was talking about as an effective full-service marketer with a full complement of support services.

Number four, grain companies, because they are competitors, would not be long in asking for a level playing field and a government guarantee would come under pressure.

Number five, pooling would not be sustainable over time because of the volatility that's surrounded this kind of an equation.

[Translation]

Mr. Jean-Guy Chrétien: Some witnesses have expressed concerns, publicly or in private. They are wondering if once Bill C-4 is passed and comes into force, the government will not, over time, remove itself financially from the grain trade. What is your opinion on that?

[English]

Mr. Lorne Hehn: There's nothing in the current bill that suggests the government would progressively become less of a player on the finance side. It simply defines what that relationship is going to be in the long term.

So I'm having a little bit of difficulty in interpreting your question. Certainly we would expect that the government would continue to underwrite the initial payment. The government would continue to underwrite our borrowings to operate the business, and the government would continue to offer a credit package that's competitive with what other countries are doing in the world and underwrite that credit package.

[Translation]

Mr. Jean-Guy Chrétien: Thank you, Mr. Chairman. It is 10:15.

[English]

The Chairman: Thank you very much.

Our time has run out. It's 10.15 a.m. I want to thank both groups for coming here today and answering these sometimes spirited questions.

We'll now invite the National Farmers Union to the table. We will suspend for five minutes.

• 1015

Yes, Jake.

Mr. Jake E. Hoeppner: I'd like a point of clarification, please.

My questions to Mr. Hehn were taken from answers that I received from the agriculture minister on behalf of the wheat board. I want it on record that Mr. Harvard does not agree that western farmers should know what's in Bill C-4, whether it's the same as the Canadian Wheat Board Act. He refused them the chance to answer that, and if that is the intent of this bill, I want to know.

The Chairman: Leon.

Mr. Leon E. Benoit: Mr. Chairman, as we're changing witnesses here, I would like to raise an objection about the interference in the line of questioning from members on the other side. I don't mind a little heckling, that's fine. But this is getting to be a standard thing at this committee and I do object to it, Mr. Chairman. I think we have to have the ability to really question the witnesses freely.

The Chairman: Your point is well taken.

We'll suspend for five minutes.

• 1016

• 1022

The Chairman: Can we have some order, please? We'll resume our hearings. We'll hear first from Mr. Tait.

Could you introduce your partner? We'll then hear your presentation.

Mr. Darrin Qualman (Executive Secretary, National Farmers Union): On behalf of the National Farmers Union, I'd like to thank the chairman, the hon. members assembled here, and guests. My name is Darrin Qualman, and I'm the National Farmers Union executive secretary. With me today is Fred Tait. He is the co-ordinator for region 5 of the National Farmers Union, that being Manitoba. Our president, Ms. Nettie Wiebe, would have liked to be here. We attempted to schedule for that, but unfortunately she is away today; she is in Brazil, at an international meeting of farm leaders.

As a farmer member organization, the National Farmers Union believes that the real measure of Bill C-4 is whether and how it serves to strengthen the stability, viability and prosperity of western grain producers. In considering this bill, the National Farmers Union urges the members to keep that standard in mind, including in the bill only those sections that pass the test. This is not merely self-interest, it is a recognition of the purpose of the Canadian Wheat Board Act, and that is to empower producers in a market that is increasingly competitive and concentrated.

As I'm sure you have been told by other presenters, the Canadian Wheat Board rests on three pillars: price pooling, government financial partnership and single-desk selling. The National Farmers Union supports increased flexibility for the Canadian Wheat Board—more flexibility in its operations and more options for farmers. However, the desire for increased flexibility should not be used as a pretext to break the structural pillars of the Canadian Wheat Board.

• 1025

Bill C-4, as it currently stands, damages two of the three pillars and has the clear potential to damage the third as well. It also has the clear potential to lead to the demise of the Canadian Wheat Board.

Weakening and partially dismantling the Canadian Wheat Board in this way will increase neither options for farmers nor flexibility for the wheat board. For this reason, the National Farmers Union opposes many of the changes proposed in Bill C-4.

Let me turn first to a section of the bill that we support enthusiastically, the inclusion clause. The Canadian Wheat Board currently has jurisdiction over prairie wheat and barley for human consumption. As mentioned previously, the vast majority of farmers are happy with the way the Canadian Wheat Board markets these crops on their behalf and would be very interested in adding other grains to the Canadian Wheat Board jurisdiction.

Farmers look forward to this option. For this reason, the National Farmers Union welcomes the inclusion mechanism, proposed section 47.1, included in Bill C-4.

Farmers who grow rye and oats are not well served by the current open market system. There's little trade in these commodities and hence little chance for price discovery. As well, there is no systematic market development.

Farmers want choices. The inclusion clause, proposed section 47.1, coupled with the exclusion clause, proposed section 45, will give them these choices. Together, these two mechanisms are fair and balanced. They respect the fundamental right of farmers to choose their marketing systems. These two mechanisms together will ensure that the majority will of farmers is respected.

These mechanisms are prudent and they are measured. Adding or removing grains from CWB jurisdiction will require considerable time, several steps and ultimately producer vote. This will provide plenty of time for producers to acquaint themselves with the issues, the facts, and the evidence, and for the industry to prepare for any necessary adjustment.

The right of farmers to collectively and democratically choose their marketing options is fundamental. It is recognized through numerous precedents and it has led to a balanced mixture of open market and orderly marketing institutions in Canadian agriculture.

There is some opposition to adding an inclusion clause. However, we believe only those individuals and organizations who have a complete disregard for farmers and democracy, or who have a vested interest in denying farmers the opportunity to collectively market their own grains, would oppose giving farmers this power. Only those who wish to confine producers to the open market and fear the results of producers designing their own marketing options would oppose this clause.

Having recently come through a vote on whether to remove barley from the Canadian Wheat Board jurisdiction, it would be hypocritical in the extreme to argue against giving producers the right to vote to add grains. However, farmers do not wish the option of adding grains to a weakened or partially dismantled Canadian Wheat Board.

The inclusion clause is welcome and long awaited, but it will be worse than useless if it comes attached to a set of amendments that weaken or partially dismantle the Canadian Wheat Board. Unfortunately, many of the provisions of Bill C-4, particularly cash buying, variable pooling periods, and the end of the government guarantee on adjusted initial prices will have just this effect.

The National Farmers Union strongly supports an amendment to the Canadian Wheat Board that will allow producers to democratically add grains to Canadian Wheat Board jurisdiction, but only if the bill, which contains such an amendment, protects and strengthens the Canadian Wheat Board and the three pillars upon which it rests.

I want to turn now to price pooling and cash buying. Price pooling is a fundamental pillar of the Canadian Wheat Board.

The Chairman: You have five more minutes.

Mr. Darrin Qualman: Okay.

Through pooling, farmers effectively manage their risks, and do so in a way that is inexpensive. Without pooling, farmers would have to sell their crop when they believe the market was at its peak. This would put impossible demands on a transportation and handling system that is very much constrained. The American system has up to five times as much capacity as ours per bushel of wheat produced. For that reason, they can market their grain on a surge basis.

We do not have that capacity. If we move away from orderly marketing and the orderly delivery that it brings, we would have a congested system that makes the past winter look like a very effective way of moving grain.

• 1030

When farmers fought for orderly marketing between 1910 and 1940, they fought for price pooling. That's what they asked for first and foremost. Single-desk selling is important, but for the farmers who support the Canadian Wheat Board, price pooling is essential.

The cash buying section in Bill C-4, proposed subsection 39(1), would give the Canadian Wheat Board carte blanche authorization to buy wheat and barley from any person on any terms and conditions they wish or from any organization. There are no limits or guidelines on that provision.

There are two versions of cash buying implicit in Bill C-4. One is from the trade and the other is from farmers. Almost unanimously proponents of cash buying point to the 1994-95 barley situation. Cash buying proponents argue that in 1994-95 the Canadian Wheat Board had potential high-price contracts in Japan and other markets that it could not fill because it could not attract barley to fill those contracts.

I think it's important we look at that. Our contention is that cash buying could damage pooling and with it the wheat board and the incomes of farmers. If there is some compelling reason to include cash buying in the wheat board's tool box, we would look at that, but we do not feel there is a compelling need.

If you have the NFU brief in front of you—and for those who do not, we can get you a copy—on the bottom of page 4 is a table taken from the recent Schmitz, Gray, Schmitz and Storey study. In 1994-95 the Canadian Wheat Board, according to that study, lost $7 million by being the single seller of Canadian barley in the world market.

I'll maybe explain this a little bit. In the right hand column where it says “total producer revenue in millions of dollars”, you'll see a number of figures in brackets. Those figures in brackets represent the premium that the Canadian Wheat Board earned over what multiple sellers would have earned. And at the bottom for 1994-95 it shows $7 million and there's no brackets around that. That shows a loss. That's what people are talking about when they point to the 1994-95 barley situation: that in 1994-95 had there been multiple sellers of barley, producers would have had an additional $7 million.

But I want to point out that in every other one of those years the single-desk selling powers of the Canadian Wheat Board earned a premium for producers. That premium as shown there averaged $72 million. The combined premium over the nine years where it earned that premium was $722 million. If you add up those figures in the right-hand column, in the brackets, you get $722 million.

So let's put 1994-95 in perspective. In one year out of ten the Canadian Wheat Board did not surpass what multiple sellers would have got. And in that year they lost $7 million. In nine years out of ten they surpassed multiple sellers and they racked up accumulated gains for western Canadian farmers of $722 million. So that $7 million loss has to be weighed against that $722 million gain.

They failed in one year out of ten. If on my farm in marketing canola I got the market wrong only one year out of ten, I would consider myself wildly successful. If I racked up $100 in gains for every $1 in losses, I would consider myself wildly successful.

My point here, Mr. Chairman and honourable members, is that the 1994-95 barley situation does not point out any structural flaw in the Canadian Wheat Board that needs radical measures to solve. It does not point to a need for cash buying. It points to something we would expect: that any system for marketing grain in a highly volatile world market will succeed some of the time and other times it will not. Clearly the Canadian Wheat Board, using price pooling and single-desk selling, wildly succeeded nine years out of ten and racked up huge benefits for farmers. So for that reason we do not feel there's any need for cash buying.

In terms of cash buying for farmers, I'm sure the committee is aware that such cash buying in competition with pooling would lead to an undermining of pooling, a de facto dual market. We believe that calling for cash buying in conjunction with pooling is a thinly veiled attempt to move the Canadian Wheat Board to a dual market system, a system that would then be very destructive to pooling and to the wheat board itself.

• 1035

In conclusion, cash buying, whether from farmers or from the trade, will destroy price pooling, a fundamental pillar of the Canadian Wheat Board. A vast majority of western Canadian farmers support price pooling because it provides them with inexpensive risk management and predictable and orderly delivery opportunities.

The problem that cash buying is supposed to solve—the wheat board's inability to source grain in exceptional years—is an insignificant and infrequent problem. And while farmers want options and flexibility, the vast majority who support the Canadian Wheat Board do not want these options and flexibility if they threaten the pool or the Canadian Wheat Board itself.

Thus the National Farmers Union strongly recommends that the government delete proposed subsection 39(1) from Bill C-4 and that no bill go forward that contains such a section.

Our brief also touches on other issues like initial price adjustment and contingency fund and we hope the members will read those sections. Given the lack of time, we won't go into those now.

The Chairman: Thank you, Mr. Qualman. You do have a very extensive brief and members will read it before we go into clause-by-clause.

Now we'll go to questions with Mr. Breitkreuz.

Mr. Garry Breitkreuz (Yorkton—Melville, Ref.): Thank you very much. I appreciate the opportunity to ask you some questions.

I have five—possibly six—questions. If you'd like to make notes, I'll ask them very quickly and then let you comment on them. If there's any time left my colleagues can ask questions as well.

One of the points made in regard to the Canadian Wheat Board is that in order to be an effective marketer you have to meet the needs of the customer. The claim is that the Canadian Wheat Board does that better than anybody else. How is that different from any other marketer out there?

Second, would you have a problem—on page 4 you pointed out that the wheat board is doing a very good job and so on—with making an amendment to the Canadian Wheat Board Act that would make the objective of the board the maximization of returns for producers? That at the present time is not the mandate of the board. Would you be willing to support an amendment to make that possible?

Third, in regard to the contingency fund—and you never got to it in your brief—would you support individual accounts for farmers as was suggested by the last presenter, the Canadian Wheat Board, and would you support farmers being eligible to administer those accounts themselves?

Fourth, would you support an amendment to have all provinces treated equally and to have all exports of wheat and barley under the board's jurisdiction?

Fifth, would you support a separate account for barley and wheat going through Churchill? That question comes from people in my riding of eastern Saskatchewan who would like to reap the increased benefits of having that port near at hand. Would you support a separate account for all grain—barley and wheat—marketed through that port?

Last, do you support the minister appointing the CEO rather than farmers?

The Chairman: Mr. Qualman, you can answer as many of those as you can in the time that remains.

Mr. Darrin Qualman: Okay.

Mr. Fred Tait (Co-ordinator, NFU Region 5 (Manitoba), National Farmers Union): I'll attempt to answer the first one.

The difference between the wheat board and the private trades is of course that the whole objective of the private trades role in the grain industry is to maximize the profit for the shareholders. There's a fundamental difference between that and the objective of the wheat board. The wheat board's whole objective and its position in the trade is to maximize the return to us, the producers.

Mr. Garry Breitkreuz: Would that not be the farmers? Are not the farmers the shareholders in the Canadian Wheat Board? Are they not the ones with the primary interest?

The Chairman: There are six other questions.

Mr. Darrin Qualman: Yes, I think we're blurring the lines a little bit here. Clearly there's a distinction to be made between the shareholders in the sense of Saskatchewan Wheat Pool and the farmers as the owners and users of the Canadian Wheat Board.

• 1040

In terms of the second question, the amendment requiring the Canadian Wheat Board to maximize returns to producers, producers believe that is the case now, that they maximize those returns. The independent studies show that they maximize those returns—

Mr. Garry Breitkreuz: Would you support an amendment to put that into the Canadian Wheat Board Act?

Mr. Darrin Qualman: We'd like to look at an amendment, and we'd like to look at how that might be measured. It's not entirely clear to us if—

Mr. Garry Breitkreuz: You have a measuring mechanism that you have already relied upon. Would you not support it, then?

Mr. Darrin Qualman: When you talk about maximizing returns, if the Canadian Wheat Board, as Kraft-Furtan pointed out, earned a $272 million annual premium, would that be a maximized return, or would $300 million? How do we know what maximizing a return is?

Mr. Garry Breitkreuz: Precisely.

Mr. Darrin Qualman: On my farm I try to maximize my returns, but it would be difficult for me to imagine some law that said it was required that I maximize those returns, because it's unclear how you would measure that.

Mr. Garry Breitkreuz: So you'd have a problem with the amendment?

Mr. Darrin Qualman: No, not at all, but we haven't seen such an amendment. We would have no problem with looking at one and commenting on its merits, but as a blanket statement, we don't support or reject that.

In terms of a contingency fund, there simply is no need for one. Cash buying is unwise and unnecessary, and therefore there need not be a contingency fund.

The second reason that a contingency fund might be necessary is to pay for losses on adjusted initial prices. We believe the government should continue to cover those losses.

If those two things were put in place, there'd be no need for a contingency fund, so no need to speculate as to how it should be supported or administered.

On question 4, in terms of supporting all provinces being equal under the board, we support the right of producers to make that decision through a democratic vote.

On question 5, supporting a separate account for barley and wheat going through Churchill, one of the strengths of the current Canadian Wheat Board Act is that farmers are treated fairly and equally under the board. For that reason, it would not seem wise to move to a system where some producers, due to geographic proximity, receive one price for their grain while others receive another.

That being said, of course, there are differences in freight rates, but I don't think farmers who live in northern Saskatchewan would like to see those farmers closer to either the west coast or the east coast receiving an additional bonus on top of the freight rate differential.

On the last question, in terms of the CEO, one of our members said to me one time that there's not a lot of point in arguing over who's going to be the captain if you intend to blow holes in the bottom of the boat. In terms of who does appoint the CEO, whether it's the board or the minister, we think Bill C-4 leaves us with a very leaky Canadian Wheat Board, and we'd like to address the issues of marketing mandate and pooling and not focus on the minutiae of how governance is structured.

Mr. Garry Breitkreuz: That's the precise point. The one who appoints is the one he is accountable to. Should he not be accountable to farmers? If you have leaks there, wouldn't that be one of the ways of fixing the leaks?

As for the other comment in regard to your issue about a democratic vote being held to see if we should have equality of all provinces here, would you then not support a democratic vote in regard to a voluntary wheat board? To be consistent, would you not support that as well?

The Chairman: You can respond to that, and then we'll go to Mr. Chrétien.

Mr. Fred Tait: I think, with all due respect, we've had those votes.

Mr. Garry Breitkreuz: On voluntary support? When?

Mr. Fred Tait: Really, when you talk about the debate that went on in western Canada, the debate has been long and it has been intense. The barley plebiscite we went through last winter indicates really where the majority of opinion is.

Mr. Garry Breitkreuz: But the measures that have already taken place have been mentioned—

The Chairman: Mr. Breitkreuz, we'll now go to Mr. Chrétien.

[Translation]

Mr. Jean-Guy Chrétien: I would like to congratulate the National Farmers Union from the West for the quality of their brief. It was really excellent. Your ten minute presentation was excellent and I would like to apologize for the interruptions I subjected the Committee to with my two telephone calls.

• 1045

You say that you represent all western farmers, but having perused your brief and listened to you, I fail to understand why several associations that appeared before us last week, such as the canola, linseed and oat producer associations, are so fiercely opposed to inclusion. I asked one of these groups how it would recommend the members of the committee vote on Bill C-4 if the inclusion clause is not removed. They were categorical: they stated that we should vote against Bill C-4. You are in favour of inclusion and unless I am mistaken, you represent the very same people. I would like an explanation. Who should we believe? Who is saying the truth?

I noted that your brief is very well structured. You lay out positive arguments, but I remember one group saying that if inclusion came about, we would lose markets and that some customers would buy elsewhere or else diversify their processing methods if they knew that one day their production would be included in the list of those falling under the jurisdiction of the CWB.

What is your position on inclusion, given that some farmers are for and others against?

[English]

Mr. Fred Tait: In reality, the constituency is divided along lines of interest. But if you look honestly at the results from the forums where public opinion was polled on the issue, you'll see that the National Farmers Union speaks on behalf of the consensus of opinion. That's undeniable.

No doubt you have had commodity groups. You have also had business interests come before the committee. The business interests, of course, are speaking in the interest of their business interests. That's only natural. They would say perhaps that they're speaking in our interest, but in reality, I would doubt that.

You had the canola, oat and linseed growers and so on, but they make up that portion of that total farm population that we polled as recently as last winter.

[Translation]

Mr. Jean-Guy Chrétien: I understand. I would like to come back now to the issue of the contingency fund. Obviously, we are in favour of cash buying. If I were a grain producer, I would be all for cash buying, but you are saying that it would perhaps be better if that did not exist. I would like to come back to two things.

You say that farmers are afraid that once the Canadian Wheat Board has accumulated a contingency fund of some 100 to 200 million dollars, the government will increase its importance and all of the remaining loan guarantees.

If I understand correctly, once you are well on your way, the government will step back and watch you administer the Canadian Wheat Board.

[English]

Mr. Darrin Qualman: Yes, the point we're making in that section of the brief is that it's important to look at the context in which these changes are taking place and the combined effects of these changes.

The contingency fund, in conjunction with the loss of crown agency status and of the government guarantee of initial price adjustments, is taking place at a time at which we're coming up to the 1999 round of World Trade Organization talks. During those talks, the Canadian Wheat Board is going to come under intense pressure. The stated aim of those talks is to target state trading organizations.

• 1050

What we worry about, and what farmers fear, is that once this contingency fund is set up and that intense international pressure comes to bear on the wheat board, we might be told as farmers that we must put the wheat board at risk in order to save it. Putting the wheat board at risk would mean a further withdrawal of price guarantees. Luckily, if we have a $600 million contingency fund, the government will be able to withdraw from the initial price guarantee.

[Translation]

Mr. Jean-Guy Chrétien: I would like to come back to my first question regarding inclusion. Some of your members are in favour of inclusion, as you have explained here this morning, and some of them, for reasons of personal, individual or special interest, are opposed to any form of inclusion. That should therefore be removed from Bill C-4.

I therefore respectfully ask you how many members you represent and what type of consultation you carried out before preparing the wonderful brief you gave us this morning.

[English]

Mr. Fred Tait: I couldn't give you the answer on our total membership, but I guess maybe Darrin could.

Within the province of Manitoba it's somewhere in the vicinity of 700 members, but you shouldn't let the actual membership deceive you. When it came to the issue and the debate, our members were present and they put forward a position that the clear majority of Manitoba farmers agreed with. If you look at the structure of the advisory committee, it is again our members who represent us on that advisory committee, and they're both members of the National Farmers Union.

So don't get caught up in the size of the organization. Get caught up in how the majority or the polarity of farmers within the district that we're talking about react. That's really the central thrust here.

[Translation]

Mr. Jean-Guy Chrétien: Mr. Chairman, the interpreter says that there are 500 members in Manitoba. Is that what you said?

[English]

The Chairman: Seven hundred.

Mr. Garry Breitkreuz: What about Saskatchewan and Alberta?

The Chairman: We'll now go to Mr. Calder.

Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.): Thank you very much, Mr. Chairman. I'm going to pick up from Mr. Chrétien and keep on going.

I don't really care too much about the numbers here. I just want to know who you represent. Do you represent a commodity group, a marketing group, or farmers?

Mr. Darrin Qualman: We represent farmers. It's a voluntary membership by farm families.

Mr. Murray Calder: Okay.

Some of the marketing groups, commodity groups, and actually some of my colleagues across the way here have said that if we put inclusion into Bill C-4, the planes are on the tarmacs out west right now and we'll have farmers coming out of our yin-yang here in a very short period of time, because they are all opposed to inclusion. Do you find that with your membership? Your brief doesn't necessarily reflect that.

Mr. Fred Tait: I don't think that's accurate at all. If a majority of farmers is opposed to inclusion, there won't be inclusion.

Mr. Murray Calder: That's the way I look at it, too.

Mr. Fred Tait: And if the majority is in favour of inclusion, there will be inclusion. It seems bizarre to me that we would draft legislation that only allows farmers to weaken the wheat board without a counterbalancing clause allowing us to strengthen it.

Mr. Murray Calder: In chapter C-24 of the Canadian Wheat Board Act, we already have inclusion and exclusion. We have inclusion underneath subsections 47(1) and 47(2), although it's not as broad as what is in Bill C-4. And we also have exclusion there, too, because at one time we were selling flax, oats and feed barley through the board, but now we're not. So obviously there was one in either/or.

In that situation, what I heard from the commodity groups that have appeared in front of us is that they seem to have a problem as to who represents a producer group. I'd like your comment on how a rogue commodity group would bring that commodity into the Canadian Wheat Board against the will of the whole commodity.

• 1055

Mr. Darrin Qualman: I don't know how you'd have a rogue commodity group. The boards of directors of those groups are elected by the farmers, so to some extent the people who administer those commodity groups represent the will of the farmers. But again it all hinges on a producer vote, so clearly nothing can be brought under the Canadian Wheat Board jurisdiction without the support of the producers of that commodity.

Mr. Murray Calder: So that's a concern that's not really a concern, then. Thank you very much, Mr. Chairman. I'll share whatever is left of my time with any of my colleagues.

The Chairman: Mr. McCormick, you have four minutes.

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): Thank you very much, Mr. Chair and gentlemen, for being here.

We've certainly heard enough about the National Farmers Union in eastern Ontario and quite often here in Ottawa. We recognize you represent a lot of good people in this country.

On this inclusion bit, it would come down to a producer vote as to what commodity would be included or not. Back to what my colleague Mr. Calder said about a rogue group, I would like to know your approximate membership in western Canada. The other day when the Canola Growers Association was here, it said it represents canola growers. I believe the question was put on the floor that no doubt some other group might say it represents canola growers, such as the National Farmers Union.

I don't know how often you can have this process start where somebody wants to use the inclusion clause, but I want to hear more of your view on who represents these people and why you think you do if they say they do. They have more members growing canola than you have in your membership in NFU in Alberta or Saskatchewan. That'll give you an opportunity to give me some information on that, please.

Mr. Fred Tait: I can make a comparison, I guess, between what Darrin and I represent here and what you represent. You represent the opinion of your constituents at a point in time. We accept that within our process. During a point in time the National Farmers Union has put forward a view of how the grain marketing should be structured, particularly in wheat and barley, and we're prepared to go further than that into the other commodities.

The test of who we represent would come in the result of that plebiscite, or whatever you'd like to call it. When you talk about the other commodity groups that were before you, the question is whether they are voluntarily funded or compulsorily funded organizations.

I voluntarily belong to the National Farmers Union because the organization fits the model for how I feel my community and rural area should be structured. I'm also a compulsory member of the Manitoba Cattle Producers, an organization I have nothing in common with. I'm also a compulsory member of the Keystone Agricultural Producers, an organization I disagree with very fundamentally. If I marketed canola, I would also be considered a member of the canola producers, an organization into which I've had no input, and so on.

Mr. Larry McCormick: One group from Manitoba supported the wheat board but doesn't have an official slate of officers at this time. Evidently it brought together 1,000 people in Winnipeg for its support. So I just wanted to put that on the table to see if you had a comment. Then, Mr. Chair, I'll hand it off to a colleague.

The Chairman: You can answer that and we'll go to Mr. Solomon after.

Mr. Fred Tait: You're talking about the major pro-board demonstration. That was basically a coalition of farm union, prairie pools—prairie activists that came together almost spontaneously, I thought.

These days, when activism is kind of on the wane and you see 1,000 farmers come out to demonstrate out of a total farm population of about 15,000, it gives a pretty strong indication of where the consensus of support and opinion is.

Mr. Larry McCormick: Thank you very much.

The Chairman: Mr. Solomon.

Mr. John Solomon: Thank you, Mr. Chair.

I just wanted to follow up on the analogy Mr. Tait made with respect to membership. I think you gave a good example of how member organizations tend to misrepresent their numbers. In fact, voluntary membership is really important.

• 1100

The example I would give is that in 1993, when I was first elected to Parliament, I had 3,700 card-carrying current members of the NDP in that particular election, and I won by 1,100 votes. In 1997 my membership fell from 3,800 down to 1,500 or 1,600, and my plurality quadrupled to 4,500 votes.

So although the number of card-carrying members declined, which, by the way is the lowest we've ever had—the lowest in the province is in my riding—I don't think it's a result of their members; I just think it's a result of the lack of commitment to an organization on a voluntary membership basis. However, that's another issue.

With respect to the NFU, you've indicated both verbally and in writing that you're very opposed to the cash buying concept. You have said that it would undermine the pooling concept. The wheat board introduced and recommended earlier today a new proposal called the equity loan program. I'm not sure if you're aware of this, but under the program farmers would be allowed to take advances against their equity in the pool accounts. The advances would be loans that would be repaid through future pool account payments—that is, adjusted, interim and final payments. If pool account earnings were insufficient to retire the loan, the producer would be obligated to repay the difference either in cash or through deductions from future pools.

Would this new proposal by the wheat board meet your approval? Second, would this proposal in your view preserve the integrity of the pooling concept?

Mr. Darrin Qualman: This proposal would not directly attack pooling. We would have some concerns about producers borrowing against, in effect, future years' production. We have a cash advance program right now, a very good one, an interest-free cash advance program, that's widely supported by farmers. We question whether there needs to be additional mechanisms to get cash into the hands of farmers.

Mr. John Solomon: You've indicated in your brief as well that you're strongly in favour of an inclusion clause for grains. Some groups have said that the inclusion and exclusion clauses should be dropped. What do you think of the idea of dropping both of them?

Second, why is this inclusion clause so important to you?

Mr. Darrin Qualman: It's interesting; shortly after certain forces have lost an exclusion vote on barley, they're now willing to give up the exclusion mechanism so long as we're willing to give up the inclusion mechanism. That's not much of a sacrifice on their part, is it?

No, we're perfectly willing to abide by the democratic wishes of the farmers of Canada. As a matter of fact, we're quite enthusiastic about it. We think there should be an exclusion mechanism that's democratic, and there certainly should be an inclusion mechanism that functions the same way.

So, no, leave them both in, definitely.

The Chairman: Thank you, Mr. Solomon. Mr. Borotsik.

Mr. Rick Borotsik: Thank you, Mr. Chairman.

I would like to have a clarification on the membership of the NFU. Let's talk numbers. You're a voluntary organization. Do you have a membership list? Is there a fee that has to be paid for membership in the NFU?

Mr. Fred Tait: Yes.

Mr. Rick Borotsik: Based on that, then, how many fees have been paid, and how many members do you have in the NFU?

Mr. Fred Tait: Nationally, I can't tell you. Within Manitoba, the latest membership—

Mr. Rick Borotsik: We have the chief executive officer here. How many do you have nationally?

Mr. Darrin Qualman: I want to make a point about this, and then I'll give you the number. As far as I know, we're the largest voluntary farm organization in Canada. When you compare our numbers with those of organizations who receive their funding because of a government law requiring farmers to join, they have more members.

Mr. Rick Borotsik: I understand the difference between check-off and voluntary. How many members do you have?

Mr. Darrin Qualman: We send out membership cards to more than 10,000 members. Now, for some of those members there will be more than one member in a family.

Mr. Rick Borotsik: How many paid-up memberships? You send out 10,000 memberships. I take it that each one of those 10,000 is a paid-up membership.

Mr. Darrin Qualman: We believe every member of a family should be a member.

Mr. Rick Borotsik: All right. So there's one paid-up membership for seven in the family.

Mr. Darrin Qualman: Farm families don't tend to be that big.

• 1105

Mr. Rick Borotsik: Five, hell, come on!

Mr. Darrin Qualman: Sure.

Mr. Rick Borotsik: Just give an answer, please. How many members do you have?

Mr. Darrin Qualman: We have 10,000 members.

Mr. Rick Borotsik: You have 10,000, but some of those may be multiple members in families, so—

Mr. Darrin Qualman: Yes.

Mr. Rick Borotsik: How many farm families, then, do you feel you have as members?

Mr. Darrin Qualman: About 2,500 to 3,000 farm families.

Mr. Rick Borotsik: That's paid voluntary membership, no check-off.

Mr. Darrin Qualman: Yes.

Mr. Rick Borotsik: I appreciate all of that.

You also mention in your brief that in 1910 to 1940 the price pooling was the major pillar, if you will, for the inception of the Canadian Wheat Board. Was that not on a voluntary basis initially?

Mr. Darrin Qualman: Yes, initially it was, and unfortunately the voluntary pooling and the voluntary wheat board didn't work, so—

Mr. Rick Borotsik: But originally, from 1910 to 1940, it was a voluntary pooling system, with the farmers obviously wanting to pool their grains and get the best advantage out of that pool?

Mr. Darrin Qualman: Yes, but shortly after that, farmers demanded mandatory pooling and single-desk selling.

Mr. Rick Borotsik: Well, we won't get into that detail on history, but you're right; it was originally voluntary.

Are you aware there's a recent study out, from February 6, 1997, in fact, that is an investigation of voluntary pooling organizations, and they say voluntary pooling can exist without a monopoly? I'd like to hear your comments.

Mr. Darrin Qualman: I've read that study quite thoroughly, and if you'll read it, you'll notice there isn't a single case of widespread and prolonged pooling of any major commodity, especially wheat and barley.

Mr. Rick Borotsik: Okay, so fundamentally you and the NFU are totally opposed to any type of voluntary pooling?

Mr. Darrin Qualman: We're not opposed to it; we just don't see any evidence that it can work.

Mr. Rick Borotsik: Oh, come on, please—semantics.

Mr. Darrin Qualman: No, no. We're opposed to systems that cannot function, of course. Everyone is.

Mr. Rick Borotsik: You're fundamentally opposed to the voluntary pooling then, if it doesn't work. You just told me in your own words that it doesn't work. Therefore, fundamentally you're opposed to any voluntary pooling system.

Mr. Fred Tait: In a voluntary pooling system, past experience shows that in a declining market, farmers would want to sell into the pool accounts, and in a rising market, they would want to sell into the open market.

The problem with that is how does the board organize its sales commitments without any guarantee that it's going to get access to the grain? If the market starts to fall, of course the board will have access to all kinds of grain. In a rising market, it would have access to very little or perhaps no grain, so then the board would suffer huge losses in demurrage and default on contract. Those losses of course would be borne in some manner or another by us, the farmers. So there would be no net gain in it.

Mr. Rick Borotsik: I appreciate that. The question was simply whether you are fundamentally opposed or not, and I get your answer.

Mr. Fred Tait: Yes.

Mr. Rick Borotsik: You represent 2,500 to 3,500 farm families, as you indicated. Do you believe the NFU is a representative organization that in fact could trigger an inclusion clause for canola, flax, oats, or rye? Do you believe the NFU should have the ability to approach the board of directors of the CWB and trigger that inclusion?

Mr. Darrin Qualman: If I recall the legislation correctly, it says it has to be a group that represents the producers of a given commodity in the designated area. By that definition, we would not qualify.

Mr. Rick Borotsik: So here today you're saying the NFU does not qualify, in your estimation and opinion, to trigger that?

The Chairman: That's what he said.

Mr. Rick Borotsik: I just wanted that for the record, Mr. Chairman. Thank you very much.

The Chairman: That's exactly what he said.

Mr. Rick Borotsik: I don't believe I've gone over my five minutes as yet, though.

The Chairman: You have one minute left.

Mr. Rick Borotsik: All right, that's good.

With the inclusion, should there ever be a producer organization that approaches the board and goes through the process and should the inclusion be accepted, do you believe they should follow the same situation, where it should be a single-desk selling at that point, a monopoly situation, with any one of the commodities?

Mr. Darrin Qualman: Yes, it certainly should be. That's the only way the board can function, with the single-desk selling authority.

Mr. Rick Borotsik: So if canola should be included at the will of the producers, definitely a monopoly situation.

Mr. Darrin Qualman: Well, that would be made clear in the vote. Nobody would vote to include canola and then try to decide after the fact how it would be handled. The vote would—

Mr. Rick Borotsik: The NFU's opinion, then, obviously is that it should be single-desk?

Mr. Darrin Qualman: Yes.

Mr. Rick Borotsik: In your opinion?

Mr. Darrin Qualman: Yes, that would be a given.

The Chairman: Thank you very much.

It's been four years since I've been on this committee, but the questions and the view are still the same.

Some hon. members: Oh, oh!

Mr. Rick Borotsik: And the answers are still the same, I suspect.

The Chairman: We'll now go to Mr. Harvard.

Mr. John Harvard: Thanks, Mr. Chairman. I don't know whether I'll use all my time; I really had just one or two questions on the inclusion clause.

In response, though, to Mr. Borotsik, I would assume that if an organization or a commodity group were not interested in a monopoly kind of marketing, they wouldn't be interested in applying for membership or entering into the jurisdiction of the CWB.

• 1110

On the inclusion clause, we had, for example, the canola growers and the flaxseed growers here and they pointed out that their producers, their members, are very happy with the open market system and they wouldn't want to change. Even though they claim that their producers are very much in support of the open market system and don't want anything to do with the wheat board, they're somehow afraid of the inclusion clause. I don't really understand why, but they're afraid of it.

Whether it's with flax or canola or some other commodity, even though the majority of the growers are heavily in favour of the status quo—that is, the open market system—could you foresee somehow a serious effort by someone, a spate of applications to get that particular commodity group into the jurisdiction of the CWB? Could you see that happening?

Mr. Darrin Qualman: No, that would seem to be impossible. In fact, it's probably the other way around, that the well-funded pressure certainly comes from the other side.

Mr. John Harvard: In other words, the inclusion clause would, in effect, just lie there dormant and not be used.

Mr. Darrin Qualman: No, that's not what we're saying.

Mr. John Harvard: But what I'm saying is that if there's overwhelming support for the open market system, then no one is going to come forward from that commodity group to try to activate the inclusion clause. Right?

Mr. Fred Tait: Yes. I understand what you're saying.

When these groups were before you, Mr. Harvard, when they say that their members are overwhelmingly in support of the open market, I think if you asked you'd find that the majority of the canola growers also grow barley and they also grow wheat and the majority of them voted in favour of single-desk selling on barley last winter.

Mr. John Harvard: Are you saying, then, that perhaps their testimony is questionable, that perhaps the support for the open market system is not as strong as they suggested in their testimony?

Mr. Fred Tait: I have some doubt. If it were put to the test, which is to have a plebiscite on the issue, I think there would be an inclusion. That's my observation in talking to people within the community.

Mr. John Harvard: Would you agree, though, given your understanding of the inclusion clause, that it simply sets down a set of neutral rules and thereby it puts down a procedure whereby a commodity can be brought into the CWB? It doesn't advocate anything. It doesn't favour one group over the other.

It's like our election laws. Our election laws are a set of rules. They don't favour socialists. They don't favour any particular political party. There's a procedure there.

Mr. Fred Tait: You're exactly correct, I think, in that.

Also, this inclusion clause is going to breathe some life into these commodity groups, because now there's a reason. If they're going to check me off and make me a member, then I'm going to be at the annual meetings and I'm going to try to get people elected to the board of directors that represent what I believe is the majority opinion. We may form those groups into bodies then, democratically, that will ask to trigger the inclusion clause. That would be the basic democracy at the country level.

Mr. Wayne Easter: We've been talking a fair bit about the inclusion clause and the dual marketing, and it's interesting when you go through the list of witnesses. You were not able to read it out in terms of your dual marketing statements at the end of your brief, so I'd ask the committee to read that section.

It's interesting as you look at the witnesses that come forward. To almost every last one, those that have asked for the inclusion clause to be removed are also in favour of dual marketing, which you say cannot exist. You can't have a dual market and single-desk selling operating in the same market.

I note that in your brief you said.... It isn't written down; I have to refer this to Mr. Benoit based on what he said in the earlier discussion. It says “unfair” in here, but it says that it would be hypocritical in the extreme to argue against giving farmers the power to add grain.

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In light of that, in light of the fact that you feel it to be hypocritical to give that argument, do you think there's a game being played here by those who really oppose the Canadian Wheat Board in terms of their arguing against the inclusion clause and arguing against giving the farmers the authority to have the power and process to have some choice? What they want to do is go to a dual marketing system, which would undermine and eventually put the Canadian Wheat Board on the slippery slope to being lost down the line.

I'd like your comments on that.

The Chairman: Briefly, Mr. Tait.

Mr. Fred Tait: The president of the Western Canadian Wheat Growers Association was on television in Manitoba on Sunday morning and that was exactly what he said. He was talking about their futures proposal and so on, but he said they were going to try to introduce farmers to the concept and then after five years we will have an open market; the wheat board will be done. They were clear on that.

The Chairman: Mr. Benoit, you have two minutes.

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

First of all, I'll ask you a direct question. You've made the statement, but I just want to make sure it is clear. On page 6 of your brief you said that the NFU strongly recommends that government delete proposed subsection 39(1) from the bill and that no bill go forward that contains such a section. Are you serious about that? Do you want us, as the official opposition, to do everything we can to stop this bill if that proposed subsection 39(1) is not deleted?

Mr. Darrin Qualman: Yes. I think we're very clear. We think cash buying is extremely destructive and we think proposed subsection 39(1) should be deleted.

Mr. Leon E. Benoit: I just wanted to make sure that we had your support for that.

I have a comment on the term “orderly marketing”, which was used several times in your presentation and in your brief. Many people now believe that the most orderly marketing you can have is a properly working free enterprise system, and I think this has been borne out by what's happened in central Europe, in eastern Europe, in the whole Soviet Bloc and in other countries where a government-controlled marketing system in fact became extremely disorderly.

I have a hard time matching the words you've used with what has happened in the past, but I'd like to pursue just a little bit further the inclusion and the exclusion clause.

The Chairman: Could you pose the question?

Mr. Leon E. Benoit: You've said that you're in favour of both of those staying in. My greatest concern with the exclusion clause isn't that a vote would actually happen and would include another crop. My greatest concern—and this was expressed very well by previous witnesses—is that in fact the threat posed by this clause harms the industry, and they explained why very well.

Do you not see this concern? Does having the inclusion clause there concern you? Secondly, do you believe that with the mechanism in place now any commodity could actually be excluded under the exclusion clause? The process is so cumbersome and the minister has so much control.

The Chairman: Briefly, gentlemen.

Mr. Darrin Qualman: In terms of the harm to the industry, that's an odd argument. Industry is always talking about accountability, but I think the threat of the wheat board taking over the marketing of a grain should the open market not do a good job would tend to push them towards higher levels of performance and would hold them accountable.

I don't see that it'll harm the industry at all. It certainly won't harm farmers. Someone talked earlier about losing market share if the wheat board were allowed into this market, but the wheat board has a sterling record on finding markets for Canadian grains. We would gain market share should the wheat board take over these grains.

In terms of the exclusion clause, yes, the exclusion clause doesn't seem particularly Byzantine. I'm sure it could function. Had farmers voted to exclude barley in the barley vote, I have no doubt that it would have been excluded, and I hope the same is true for the inclusion clause.

The Chairman: Thank you very much, gentlemen, for coming here this morning and for your brief and your very good answers.

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The Chairman: Our final witnesses before the committee on this bill are from the Canadian Federation of Agriculture. I think you know the routine, Mrs. Rutherford, so perhaps you or Mr. Friesen would make your presentation. You have 10 minutes.

Mr. Bob Friesen (Second Vice-President, Canadian Federation of Agriculture): Thank you very much, Mr. Chairman. Let me begin by thanking you for this opportunity to intervene on the Canadian Wheat Board issue. I only ask that the MPs who come from my riding be very kind this morning and so I will ask for their indulgence.

Again, I would like to say thank you for the opportunity to present our views on Bill C-4.

The CFA is a strong supporter of orderly marketing. Orderly marketing in its various forms is an invaluable tool, which allows farmers to take advantage of collective marketing and maximize bargaining and returns.

The Canadian Wheat Board, of course, is among the first and most important of Canada's orderly marketing institutions. We continue to support the Canadian Wheat Board and the fundamental pillars of Canadian Wheat Board marketing, those being single-desk selling, price pooling and government guarantees. Amendments to the Canadian Wheat Board Act should, as far as possible, accomplish the policy objective as stated in October 1996 by the government while at the same time enhancing the three pillars of Canadian Wheat Board marketing.

The CFA believes that with increased flexibility, the changes to address accountability and a continuing development focus on sound business policies, the Canadian Wheat Board will be an effective marketing tool for Canadian farmers into the future.

To get a little more specific on governance, the CFA has long advocated the creation of an elected board of directors for the Canadian Wheat Board. An elected board would provide more accountability to farmers and ensure that farmer views were reflected in board decisions.

We are also pleased that the early version of the amended legislation has itself been amended to include the recommendations made by CFA and others to designate at least two-thirds of the positions on the board as elected positions and that they be filled as a result of voting by CWB permit holders. We believe this will go a long way in achieving the objective of more accountability.

In order to achieve the goal in a democratic and efficient manner, CFA endorses the proposal that elections take place to fill all of the positions for the 1998-99 crop year.

We have presented our views on the board of directors to Minister Goodale in response to a broad-based request for input on the election, and some of the points are as follows:

There should be 10 districts based on volume and the number of producers, each with candidates representing specific areas. This would be loosely following the existing advisory committee districts.

We have no firm commitment to three-year or four-year terms. Should they be three, however, we would not support an interim one year, and the number of terms during which a director may sit should not exceed three.

Voters should be Canadian citizens or permanent residents who hold permit books valid in the year of the election.

Candidates should be Canadian citizens or permanent residents, and they should be actively involved in primary agriculture and hold valid Canadian Wheat Board permit books. Candidates should be over 18 years of age, be bondable and be able to attain reasonable levels of security clearance.

Nomination papers should be signed by at least 25 permit book holders from the district in which the candidate is running.

The election should be held by spring 1998, with the board to be in place on or before August 1, 1998. The elections, I would further add, should be run by an independent body.

The CFA also agrees that a president or chief executive officer should be responsible, on a full-time basis, for the direction and management of the business and day-to-day operations of the corporation, as directed by the board of directors. The president must be fully accountable to the board of directors, and the president should not be a member of the board.

We should point out that for virtually all farmer-based organizations, the chief executive officer or president is fully accountable to but not a member of the board, and we believe that the relevant subsection should be amended to remove references to the president as a member of the board of directors.

This logic must also be extended to the appointment of the president. We understand that there is a desire that the government should retain the ability to appoint the president in recognition of the guarantee of initial prices. Nevertheless, the appointment of the president must not create a conflict of interest for the president, who, should that person be appointed by the government, may feel more accountable to the government than to the board. The board of directors should then be given the power to hire and terminate the employment of the president. We believe this would achieve maximum accountability to the clients of the Canadian Wheat Board.

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So we ask therefore, as well, that proposed subsection 3.02(1) be replaced with the following amendment: “The president is appointed by the board of directors”.

Our amendment to proposed section 3.09 is: “The president holds office during pleasure of the board of directors for such term as the board of directors may determine”.

We ask that the part of proposed section 3.11 pertaining to the appointment of an interim president be removed.

Provided that other amendments are made, that part of proposed section 3.05 that relates to the conditions for the termination of the new president can then be removed as well. We appreciate that the remuneration of the president shall now be determined by the board itself.

As far as the chairman is concerned, we appreciate the change to the amendments concerning the choosing of the chairperson of the board of directors. We believe that it's in keeping with the CWB's new status as a quasi-private organization that the chairman should be elected by the members of the board of directors.

Let's go on to federal government guarantees and credit. We understand that the change in the CWB's status will alter its borrowing privileges. Nevertheless, federal government guarantees are one of the fundamental pillars of Canadian Wheat Board marketing.

We appreciate that the legislation provides for federal government guarantees of CWB borrowing and of sales of grain made on credit.

We are opposed to the removal of the federal guarantee on adjustments to the initial price. The guarantee represents virtually no financial risk to the federal government, nor is it required to comply with any trade rules. And to our knowledge, there's never been a deficit in a pool account caused by an adjustment to initial prices.

We are very concerned that the withdrawal of that guarantee will begin a process toward a withdrawal of the guarantee on the initial price in the future. Therefore, we believe that proposed section 7 should be amended to remove proposed paragraph 7(3)(a), while allowing the original wording of subsection 7(3) to remain.

Also, the new wording in the last subsection of proposed section 18 should be amended to read: “from time to time afterward by order of the corporation and with the approval of the minister and Minister of Finance”.

As for the contingency fund, the CFA does not believe that a contingency fund, as proposed in the bill, is required to achieve the goals established by the government or to enhance the three pillars of Canadian Wheat Board marketing. As mentioned above, we do not support the use of the contingency fund to replace guarantees on adjustments to initial prices.

There is a general concern that the creation of a contingency fund represents further offloading by the government onto farmers. Farmers are already being increasingly burdened with the costs of government budget reductions and they are increasingly required to bear the costs of services previously provided by the government.

The accumulation of capital, either through deductions from pool accounts or from gains on borrowings, would represent yet another drain on farm income to support an unnecessary withdrawal of the government guarantee on initial adjustments. Therefore, we recommend that the relevant sections that give the Canadian Wheat Board the power to establish a contingency fund be removed.

As for interprovincial and export trade, CFA supports the provisions of clause 24 in Bill C-4, which would protect Canada's identity preservation system and give producers more say in any decision to exempt any type, class, or grade of wheat from the restrictions of export and interprovincial trade.

We're also pleased with the safeguard provisions that have been included in this version of the bill to ensure that there are no adverse effects on those products, such as domestic feed grains, that have already been exempted from the Canadian Wheat Board's control.

As for the inclusion of grain, the CFA is pleased with the intent of part V.1, which is on other grains. We believe it would be beneficial to attempt to make the language of proposed subsection 47.1(2) more precise at this point in time in order to avoid confusion at a later date.

There has been some concern expressed about the definition of “producer association” and “producers of the grain” in proposed section 47 in the English version of the bill. In the French version of the bill, the reference in proposed section 47 translates to read: “a producer association that represents the entirety of the producers of the grain in question”. We don't find that kind of clarity in the English version, and we believe that, at a minimum, the bill should be consistent in both languages.

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In conclusion, we appreciate the government's efforts to enhance the effectiveness and accountability of the Canadian Wheat Board. This effort must not be seen as a finite effort. The Canadian Wheat Board must continue to develop sound business policies that will address future needs. This may mean that in the future further refinements to the legislation would be warranted. We believe the suggestions made in this submission will help to ensure that the Canadian Wheat Board continues to serve Canadian farmers well into the future.

Thank you very much.

The Chairman: Thank you very much, Mr. Friesen.

We'll now go to Mr. Hoeppner for the seven-minute questioning.

Mr. Jake E. Hoeppner: Thank you, Mr. Chairman.

I appreciate your short and precise document. I was interested in your comment on electing the board. Would you support a totally elected board as far as the Canadian Wheat Board is concerned?

Mr. Bob Friesen: Our position states now that it should be at least two-thirds, and we believe that moves us towards that flexibility and accountability that farmers have so long asked for.

Mr. Jake E. Hoeppner: You disagree, though, with the CEO/president being appointed by the government. That should be at the privilege of the board. He should also be able to be fired and hired at their pleasure, as you say. Could you tell me why you take that stand? You said it's more accountability, but what is lacking? Where is the accountability lacking as far as you're concerned?

Mr. Bob Friesen: We believe the president could find himself in an untenable situation if he was appointed by the government, because there could be potential for him to be more accountable to the government than to the board of directors and, by extension, to the farmers and the clients of the Canadian Wheat Board. We believe there should be no struggle for the president as to where his loyalty lies. It should be in maximum accountability and maximum transparency for the clients of the Canadian Wheat Board.

Mr. Jake E. Hoeppner: Thank you for that answer.

The other thing I want to point out to the witnesses is—and I felt kind of sorry for the previous presenters, the NFU, when they were questioned on membership and the number of people they represent—I think if you will look at this standing committee you will see that there is not a single Liberal MP from west of the Manitoba-Ontario border. Am I right?

Mr. John Harvard: I'm from Manitoba, the same as you are, Mr. Hoeppner.

Mr. Jake E. Hoeppner: Not a rural area, a farmer.

I can feel with Mr. Tait and Mr. Qualman that it's hard to represent your people sometimes. Reform MPs were elected right across western Canada in rural areas, pretty strongly. So I imagine we do represent farmers.

The Chairman: What is your question?

Mr. Jake E. Hoeppner: My question is, you are representing—-

Mr. Paul Bonwick (Simcoe—Grey, Lib.): Mr. Chairman, on a point of order, it's established that a member of our standing committee is involved in litigation with the CWB.

Mr. Jake E. Hoeppner: Forget that nonsense. That's a bunch of garbage.

The Chairman: Mr. Hoeppner, please pose your question.

Mr. Paul Bonwick: If I might finalize—

The Chairman: That is not a point of order. We'll go back to Mr. Hoeppner.

Mr. Jake E. Hoeppner: Thank you, Mr. Chairman.

You're representing Canadian farmers under CFA, right?

Mr. Bob Friesen: Yes.

Mr. Jake E. Hoeppner: How many commodity groups do you represent?

Mr. Bob Friesen: We represent several commodity groups, as well as general farm organizations across Canada.

Mr. Jake E. Hoeppner: Do you agree with the commodity groups presentations that they do not want other grains included in the Canadian Wheat Board Act?

Mr. Bob Friesen: To my knowledge, none of those groups would be members of CFA.

Mr. Jake E. Hoeppner: The pools aren't members of CFA?

Mr. Bob Friesen: The pools are members of CFA, but it's our understanding that they would go along with the inclusion clause.

Mr. Jake E. Hoeppner: That's not what I gathered. I wasn't here for that submission, but I was led to believe they did not. But you would represent them as far as CFA is concerned? Which other commodity groups would you represent?

Mr. Bob Friesen: We represent a variety of commodity groups. Do you want a list of them?

Mr. Jake E. Hoeppner: Canola producers?

Ms. Sally Rutherford (Executive Director, Canadian Federation of Agriculture): No, we don't represent the canola producers.

Mr. Jake E. Hoeppner: Flax?

Ms. Sally Rutherford: No, we don't represent those either, but we have, for example, KAP in Manitoba, which represents a broad range of farmers as voluntary members. The position they took to this committee last week was that they were in favour of the inclusion clause.

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Mr. Jake E. Hoeppner: Let's take a little different direction on the contingency fund.

As you heard, the NFU does not support the cash buying, and I have mixed feelings about it. I've looked at the Western Grain Marketing Panel's recommendation that 25% of farmers' wheat could be held back and sold on a cash basis. Would that recommendation suit you better than the present cash buying clause, which says the wheat board can buy grain from any entity other than farmers?

Mr. Bob Friesen: We believe the cash purchases could have the potential of eroding the benefits of the pool and could lead to the pool returns being non-existent or in a deficit.

Mr. Jake E. Hoeppner: That's my concern as a farmer. I'm not talking as a politician now.

If I am disqualified from selling into a market they don't function in, what happens? When I see they can buy grain from any other entity, that tells me it could be a grain company. Well, grain companies are not eligible to buy wheat board grains outside the pooling system. So isn't it a very distinct change in the pooling system or in the fundamental foundation of pooling when that is happening?

Mr. Bob Friesen: Are you referring to cash purchases?

Mr. Jake E. Hoeppner: Yes, I mean cash purchases on a basis from somebody else when the wheat board is supposed to represent the Canadian farmers and work for the best interest of the Canadian farmers.

Mr. Bob Friesen: We don't believe in cash purchases. Further, we think the producers' certificates add enough flexibility that we don't have to go to cash purchases.

Mr. Jake E. Hoeppner: So you would not support proposed section 39.1, the cash purchasing of wheat?

Mr. Bob Friesen: No.

Mr. Jake E. Hoeppner: That is clear, then.

When we talk about changing the Canadian Wheat Board Act, has the old act ever been defined to a point where you understand it? I am talking now of Mr. Richard Klassen's letter stating that paying selection bonuses outside the pooling system is allowable.

Mr. Bob Friesen: I guess I can refer back to the comments I made earlier. We feel the amendments currently in front of us are a step in the right direction. It's probably not the end of further development and fine-tuning, but it's certainly moving us closer to the goal post. That's the way we see it.

The Chairman: Thank you, Mr. Friesen.

We will now go to Mr. Chrétien.

[Translation]

Mr. Jean-Guy Chrétien: You are one of the groups that the Committee on Agriculture meets with regularly and we know that you are serious. You always come with briefs that are well written, well thought out and representative. I nevertheless have two clarifications to request of you. The first one deals with the status of voter. It is very clear. On top of being a Canadian citizen or a permanent resident of Canada, to be a voter a person must hold permit books valid for the year of the election.

Some witnesses who appeared before us stated that they would like to see minors with only one vote, others with two votes and yet others with even more votes, depending on the size of their holdings, on the size of their farm or on the importance of their influence or of their company. But when I read the sections dealing with voting, I am brought to the conclusion that it is one person, one vote.

[English]

Mr. Bob Friesen: Our position is one producer, one vote. My personal opinion is that the ability of a person to make a decision is not necessarily contingent on the size of his portfolio.

[Translation]

Mr. Jean-Guy Chrétien: Thank you. In that regard, we are on the same wave-length. I much appreciate that.

In your brief, you say that you are in favour of the Canadian Wheat Board as it now exists and that you agree with single-desk selling, price pooling and government guarantees.

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Does your federation fear that the government will reduce its guarantees and that over time it will end up completely removing these guarantees in order for the CWB to become completely independent?

[English]

Mr. Bob Friesen: Yes, that is certainly our fear, especially with the movement toward a contingency fund. We believe that carries with it the potential that the government would move out of it more and more. We feel that we have no obligation to let go the right of the government guarantees at this time. It adds stability to the operation of the Canadian Wheat Board.

The Chairman: Mr. Calder.

Mr. Murray Calder: Thank you very much, Mr. Chairman.

Bob, Sally, welcome. I'd like to deal with the same thing Jake was dealing with, the inclusion-exclusion clause. But before I get into that, I'd like to work on just who you represent.

We've heard from commodity groups and marketing pools. You've already said that you represent some of those groups. Would I be right in assuming that the majority of your membership is made up of just ordinary farmers?

Mr. Bob Friesen: Yes, you would be absolutely correct in saying that.

Mr. Murray Calder: Okay. It's very interesting; we have heard from different commodity and marketing groups that out west right now, apparently, the planes are all lined up facing toward Ottawa. If we go ahead with inclusion, they're going to be loaded with farmers coming here to tell us that they don't like inclusion. Yet if the majority of your membership is farmers, it would be a total conflict here when you say that the CFA is pleased with the intent of other grains—in other words, in the inclusion of grains. I'd like your comment on that.

The other thing I would like you to comment on is that obviously you have commodity groups within your membership. I feel we've put enough roadblocks in here that it's going to be difficult enough going through votes and everything to exercise inclusion and exclusion. I would like your comment on how a rogue commodity group would bring that commodity into the CWB against the will of the whole commodity group. How could that be done?

Mr. Bob Friesen: Let me start at the top.

With regard to farmers being loaded on planes and intervening here, we consulted extensively with our members for our position. I don't think you need to fear that. In terms of the inclusion clause, we feel that its emphasis is that it sets down a process. So we feel it's important for that reason.

On your last question, we feel that the predominant organization should represent a commodity, and that's how the decision should be made. We feel that it adds transparency, and as I said before, it lays down the rules, lays down a process.

Mr. Murray Calder: So you feel that within Bill C-4 right now—and there might be a little bit of fine-tuning yet before we get down to the final strokes—we've put in enough checks and balances on inclusion and exclusion that there shouldn't be any major problems.

Mr. Bob Friesen: For the moment, yes.

Mr. Murray Calder: Thanks very much, Mr. Chairman. I'll pass to one of my colleagues.

The Chairman: Mr. Harvard.

Mr. John Harvard: Could you, Mr. Friesen or Sally, give us a little more information on how broadly based your organization is, how many member organizations, how many...[Editor's Note: Technical difficulty]...? My understanding is that the CFA is the largest in the country.

Ms. Sally Rutherford: The CFA is by far the largest general farm organization in the country. We have membership from coast to coast. We represent general farm organizations. We are a federation. I think that's important to point out. We represent both provincial general farm organizations and commodity groups. Of those members of ours who have some import for this particular bill that deals particularly with prairie Canada, certainly the three prairie wheat pools are members of CFA, as is KAP, and Wild Rose is an associate member at this point in time. We believe we do represent the views of a very large group of farmers in prairie Canada, and that those views are held by people who have voluntarily come forward to present them.

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Mr. John Harvard: So what does your membership stand at in terms of numbers?

Ms. Sally Rutherford: In terms of numbers, if you're counting barley, our membership is well over a hundred thousand.

Mr. John Harvard: Thanks, that's all I want to know.

The Chairman: Colleagues, I know the hearings are winding down, but there's the question of privilege, of order, that's been given to me. I would like to address it at the conclusion of the hearings, and there's also a budget that we have to pass at the conclusion of the hearings. So if you would stay around afterwards, I'd appreciate it.

Mr. Rick Borotsik: Mr. Chairman, I have a point of order as well.

There are a couple of motions that have been filed through your office with respect to extension on some of these hearings. Do you wish those filed at the end of the hearing as well?

The Chairman: Yes.

Mr. Rick Borotsik: Okay.

The Chairman: There are two minutes left for the government side. Does anybody want to take those two minutes, or shall we reserve them?

Mr. Wayne Easter: Yes, Mr. Chairman.

I certainly appreciate the views of the federation relative to how to accomplish an election, on the conditions of candidacy, etc. But I want to point out one thing relative to what Mr. Chrétien was saying. This has come up time and time again at this committee in terms of the process of voting, as though a big producer means more than a small producer. That worries me. Are we eventually going to get to a system in Canada in which, if you have so much money and so much wealth, you're entitled to more votes than somebody who has few means? Is that where we're going? I just put that on the record, because I think it's fairly serious.

I've found your concern on the CEO being raised several times. In the legislation, we do point out that the CEO is subject to the resolution by the board. Remuneration is set by the board, so the board has ultimate control.

The proposal under Bill C-4 in terms of a mixed enterprise really is a new entity. There's no question about that. It certainly is given guarantees from the federal government that no other corporation or commodity board is given. And the trade-off basically is that if the Government of Canada does not have some say in terms of the chief executive officer...and as was pointed out earlier by the wheat board itself, there certainly is going to be consultation at the board. The two would have to be able to work together. The chemistry would have to be there. If we're to go to allowing the board to elect its own CEO, what's your view on their giving up those guarantees?

That's the trade-off we're looking at, and I think what we're trying to do through the legislation is establish a partnership, moving from a wheat board system, one in which we've appointed all the commissioners, to one that is substantially different, one in which producers have control by two-thirds majority, while maintaining some sense of assurance for the Ministry of Finance, basically, in terms of those government guarantees for the taxpayers of Canada.

Mr. Bob Friesen: No, we certainly wouldn't agree with that trade-off. We feel that if the government is very serious about adding transparency and accountability to the operations of the Canadian Wheat Board, then it has to allow the board of directors the right to hire and terminate. As I said before, if the president is accountable to the government, there's a risk of the president imposing orders on the board of directors, not listening to their counsel, not listening to their advice or to the decisions of the board of directors. It becomes a shell.

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So we feel that's very important. Nor do we think that there should be a relation between who chooses the president and the government guarantees. To us, the government guarantees are another issue and should not be confused by holding it for ransom on the guarantees vis-à-vis the choosing of the president, or appointment of the president.

The Chairman: Mr. Borotsik.

Mr. Rick Borotsik: Thank you, Mr. Chairman.

It is nice to see a constituent appear before the committee. As Mr. Friesen probably knows, I've always treated everybody as a witness with a great sense of decorum and respect, so I don't think I'll change my tactics with you.

The Chairman: That's a matter of judgment.

Mr. Rick Borotsik: I've had an opportunity to talk to the CFA on numerous occasions, and I'm quite familiar with your positions. I did want to clarify the position you took with the CFO, but that has simply been clarified at this point in time.

I have two questions, Mr. Friesen. First of all, would you describe the CFA as an association of associations? You don't have specific individual membership as such, but you do have association of associations.

Mr. Bob Friesen: We call ourselves a federation. We do have independent memberships by virtue of their paying their memberships to provincial general farm organizations.

Mr. Rick Borotsik: That's what I'm getting to. When KAP is a member of the CFA, you assume that KAP's membership then is a membership of the CFA. But KAP, the association, really belongs to the CFA.

Mr. Bob Friesen: Yes.

Mr. Rick Borotsik: How many associations actually make up the CFA?

Mr. Bob Friesen: Eighteen.

Mr. Rick Borotsik: Are there associations that are represented in Ontario, or Quebec, or the maritimes?

Mr. Bob Friesen: Yes.

Mr. Rick Borotsik: You have those representations as well?

Mr. Bob Friesen: Yes, we go right from Newfoundland to B.C.

Mr. Rick Borotsik: Then it's fair to say you can speak on their behalf.

If in fact the Canadian Wheat Board is the best marketing arm and operational arm, as was mentioned earlier, would your association agree that perhaps then Ontario, Quebec and the maritimes should also be included under the Canadian Wheat Board's umbrella? Why should it just be western Canada?

Mr. Bob Friesen: Ontario has a wheat board.

Mr. Rick Borotsik: I appreciate the Ontario Wheat Producers' Marketing Board. We're going to talk about that later. But do you not feel that the single desk, and obviously the Canadian Wheat Board that is now in place, would better accommodate those commodities of Ontario, Quebec and the maritimes?

Mr. Bob Friesen: When it comes to orderly marketing—that's the fundamental start of this discussion—certainly we have that support in the east, but as for the east being included in the Canadian Wheat Board, that certainly has not been an issue around our table.

Mr. Rick Borotsik: In fact, then, if you have the support as the association of associations, then you would not see any problems in having them included in the Canadian Wheat Board.

Mr. Bob Friesen: That's something I can't answer, too, because we've never entered that discussion.

Mr. Rick Borotsik: As a wheat producer, and potatoes perhaps. We haven't got to that one yet.

Mr. Wayne Easter: The national potato commission.

Mr. Rick Borotsik: I understand the producers defeated that, but we'll get into it.

Mr. Friesen, you're very involved in another commodity, and it's a supply-side management commodity. You're very knowledgeable, and I appreciate talking to you on a regular basis about it.

Do you see that in the future organizations are going to take us to task—and I think of the WTO and the GATT particularly at this time—with particular regard to supply-side management, as well as the Canadian Wheat Board? Where do you see the WTO, for example, in 1999 coming with respect to the Canadian Wheat Board, as we now know it in the form in which it is at present?

Mr. Bob Friesen: Certainly there are members of the WTO who have always criticized us for the Canadian Wheat Board, and not the least of them are our friends to the south.

We always make the case that the operations of the Canadian Wheat Board are transparent. We defend the Canadian Wheat Board unapologetically, and certainly the Canadian Wheat Board has been notified as a state trading enterprise at the WTO. But within the WTO, we feel that we have full rights to operate such a system, and certainly within the context of whether it's trade distorting or not, we feel it isn't. We've been able to defend that.

• 1155

So yes, I think there's going to be pressure on STEs come 1999, but we feel very confident and certainly our negotiators have indicated they're confident that they can be defended.

The Chairman: Anybody on the government side?

Mr. Hoeppner.

Mr. Jake E. Hoeppner: Just for clarification, I thought Mr. Friesen said at the start that the pools were not members of the CFA—

Mr. Bob Friesen: The pools are members of the CFA.

Mr. Jake E. Hoeppner: Then what was my question that you said no to? I've forgotten.

Some hon. members: Oh, oh.

Mr. Bob Friesen: I have no idea.

Some hon. members: Oh, oh.

Mr. Jake E. Hoeppner: Because that's one question...I haven't heard the pools saying there should be an inclusion clause.

Mr. Bob Friesen: Mr. Hoeppner—

Mr. Jake E. Hoeppner: I'm getting confused. I'm getting double—

The Chairman: Order, please.

Mr. Wayne Easter: Mr. Chairman, on a the point of information, I think it's a fair question.

Jake, with regard to proposed section 26, the Prairie Pools said that it should be amended, that there should be:

...a written request...sent to the Minister by the association which can demonstrate that it is the predominant organization which exists solely to represent the producers of that commodity in the designated area.

So yes, they had some concerns in that they wanted to be assured that the producer organization actually represented the commodity group asking for inclusion.

The Chairman: That is correct.

Mr. Jake E. Hoeppner: So they are also members of the CFA, then.

Mr. Bob Friesen: They are members of the CFA.

Mr. Hoeppner, let me assure you that we take our representation very seriously. We consulted extensively with Prairie Pools before we made our submission.

Mr. Jake E. Hoeppner: Okay. I have another question, Mr. Friesen. Is the Cattlemen's Association also a member of the CFA?

Mr. Bob Friesen: No, they're not.

Mr. Jake E. Hoeppner: Were they at one time?

Mr. Bob Friesen: I don't recall.

Ms. Sally Rutherford: Yes, they were, a few years ago.

Mr. Jake E. Hoeppner: It seems to me that they were. Those are issues I have to deal with on a daily basis with cattlemen and canola groups and everybody else, so it's very good for me to know exactly where the CFA stands as far as representing somebody is concerned.

Ms. Sally Rutherford: We'd be happy to send you a membership list.

Mr. Jake E. Hoeppner: I belong to every lousy organization there is.

Some hon. members: Oh, oh.

Mr. Jake E. Hoeppner: I belong to KAP, so I'm definitely a member of CFA.

The Chairman: Mr. Friesen.

Mr. Bob Friesen: I should add, Mr. Chairman, that we are making inroads into the Cattlemen's Association. They are now members of the B.C. general organization, which is turn is a member of the CFA, so we're making progress.

Mr. Jake E. Hoeppner: One thing I want on the record is that I've never hesitated to support farm organizations that represent farmers, but I sure hate to support organizations that say they represent farmers and then really represent special interests.

A voice: Are you a member of the NFU?

Mr. Jake E. Hoeppner: No, but I think they would make me an honorary member because they do agree with recall, you see—

The Chairman: I think it is farmers who belong to the federation.

Mr. Harvard.

Mr. John Harvard: Mr. Chairman, I just want to clarify something.

Ms. Rutherford or Mr. Friesen, we heard from the canola growers, let's say, who were opposed to the inclusion clause. But you people represent canola growers as well, don't you?

Ms. Sally Rutherford: Yes. We certainly have members who are canola growers. It's just been pointed out to me that there's one in the room.

By the same token, I think the point Mr. Hoeppner was making can be taken in reverse.

The Chairman: This is really confusing, because... [Editor's Note: Inaudible] ...organization associated with your federation?

Ms. Sally Rutherford: No.

The Chairman: But you do represent individual canola growers, not the—

Ms. Sally Rutherford: No. I'm not trying to mislead anyone. There are members of member organizations who do indeed grow every commodity under the sun.

The Chairman: Mr. Calder.

Mr. Jake E. Hoeppner: Mr. Chairman, on a point of order, KAP is a member of CFA. Am I right?

Ms. Sally Rutherford: Yes, it is.

Mr. Jake E. Hoeppner: And the canola growers are members of KAP, aren't they?

Ms. Sally Rutherford: No. KAP's membership is composed of individual members.

Mr. Jake E. Hoeppner: I thought they had producer organizations too.

The Chairman: Mr. Calder.

Mr. Murray Calder: Thank you very much, Mr. Chairman.

In fact, I think if you went back to the Prairie Pools' suggestion for cleaning up amendment of proposed section 47.1, their amendment was:

...a written request is sent to the Minister by the association which can demonstrate that it is the predominant organization which exists solely to represent the producers of that commodity in the designated area.

• 1200

The word “solely”, Mr. Chairman, I would read as ruling out farm organizations like the NFU or the CFA, because basically that commodity group is saying that it wants to have the right of distinguishing that. So the word “solely” would read into that amendment.

The Chairman: Mr. Friesen.

Mr. Bob Friesen: I appreciate those comments. I would like to make a comment, though, on something I overheard from this side of the room, and it had to do with check-offs, when we were talking about general farm organizations. It has to be clearly understood that all our general farm organizations work on the principle of a check-off system, but that it's voluntary membership, and that producers may in fact get their money back and opt out.

The Chairman: Are there any further questions? If there are no further questions, we will adjourn this meeting. Thank you all very much for coming in to give us the benefit of your views.

Mr. Rick Borotsik: Mr. Chairman, prior to adjournment we have some business to clarify.

The Chairman: Yes, we're going to sit in camera in five minutes.

Mr. Rick Borotsik: Okay, good.

• 1201

• 1212

The Chairman: Order.

Ladies and gentlemen, we will not consider this an in camera meeting. I understand that the items to be brought up here—the budget and the question from the government member—can be discussed publicly and probably should be discussed publicly.

First we'll go to the budget. You all have a copy.

Mr. Gerry Byrne (Humber—St. Barbe—Baie Verte, Lib.): Mr. Chairman, on a point of order, are we in camera now?

The Chairman: No, we're not in camera. These items are not in camera items. I previously was under the impression that they would be. We can deal with these items in a public way.

So we'll continue with our meeting.

Mr. Paul Bonwick: I have a point of clarification. We're not in camera now.

The Chairman: No, we're not.

Mr. Paul Bonwick: I think the people in the audience feel that we are in camera.

You don't have to leave.

The Chairman: I said it twice. We're not in camera. If they want to leave, they can. If they want to stay, they can.

You have the budget in front of you. Are there any questions on the budget?

Mr. Jake E. Hoeppner: Mr. Chairman, I haven't been informed on this budget, and I'm looking at meetings until March. Are we going to deal with this bill until then? I thought this was supposed to be—

The Chairman: No, this is more than just the bill. This is the bill and the cost of conducting these hearings plus extra funds for our future needs.

Mr. Byrne.

Mr. Gerry Byrne: Has the priorities committee established exactly what will be the discussions between November 17, 1997, and March 31, 1998?

The Chairman: No.

Mr. Gerry Byrne: So this is just a contingency fund. If something comes up, is this subject to amendment?

The Chairman: I'll give you a breakdown of what the budget is.

The first one is Bill C-4. We have listed 20 witnesses at $1,800 each. So far we have received requests for reimbursement from 13.

Two, under “Other subjects”—the legislation and orders in council that may be studied later on—a total of 10 witnesses, $12,000; “Hospitality”, which is coffee and so on, $1,200; and “Miscellaneous”, $3,150, which includes coffee, juice and working luncheons. As well, if we need extra funds in the future we can submit a supplementary budget.

This is what we're asked to approve: the cost of witnesses, basically, and a few dollars for future business.

• 1215

Mr. John Harvard: I'd just point out for new members that this is the traditional approach. The House of Commons Board of Internal Economy sets aside a certain amount of money for committees. This is, generally speaking, our allotment. We don't have to use it. And if we were to use it all, we would have to go back to the board and ask for more money. This is the usual approach.

The Chairman: Mr. McCormick.

Mr. Larry McCormick: Even with my colleague Mr. Harvard's comments, I made a candid remark that it looks like a Reform budget.

I want to say this in front of the clerk. The HRD committee, over the last three and half years, set an all-time record for the most hours ever sat on a committee. You say we can go back and get money, but we're talking about three working lunches between now and March.

Three and a half years ago Dr. Hill said, well, you know, everybody could bring a brown bag lunch. Well, this is a great idea, except I don't know what your time is worth, but it's running out to get a brown bag lunch. I just point out the fact that if we're going to do some credible work, three working lunches seem okay. I just wanted to bring it up and put it on the record. I'm not very impressed.

Thank you.

The Chairman: Maybe the clerk could explain where our initial funds came from and how they were used. This is not the only money we can use between now and March. If we need extra money between now and March, we can ask for it, you know. This is mainly outstanding bills and bills we've incurred over these past few weeks.

The Clerk of the Committee: A sum of $10,000 is allocated to each standing committee or standing joint committee at the beginning of each fiscal year by the Liaison Committee, upon approval by the Board of Internal Economy.

Since we've heard so many witnesses and they've asked for reimbursement, we need funds for that purpose. When we prepare a budget, these are projections, besides Bill C-4, as to what may be coming up until March 31. The chairman has read the breakdown. There's a certain amount for the subject matter, the legislation, the order in council, hospitality, and miscellaneous.

With regard to working luncheons, it's just a projection. The funds are there. And if we don't need it, we don't have to submit a supplementary budget. It's just to keep going with the various things the committee may undertake, instead of not having any funds and then at the last minute asking the board for approval. That's the reason it has been drafted this way.

Mr. John Harvard: I move.

The Chairman: It's been moved by Mr. Harvard that the committee approve a budget up to—

Mr. Rick Borotsik: I have a point of order. Mr. Byrne moved that motion.

The Chairman: No, Mr. Harvard moved the motion—

The Clerk: Seconded by Mr. Byrne.

The Chairman: —seconded by Mr. Byrne, that the committee approve a budget of the committee for the period October 23, 1997, to March 31, 1998, in the amount of $52,350.

(Motion agreed to)

The Chairman: For our next item of business, I'll defer to Mr. Bonwick.

Mr. Paul Bonwick: Thank you.

Mine is a point of privilege, as was brought up earlier. It's with regard to the established litigation that one of our members is involved in with the CWB, which is the topic this committee is dealing with presently. My request—and I will put it forward in the form of a motion—is that we request the House to evaluate, based on their legal counsel, whether in fact Mr. Hoeppner is qualified to sit during these proceedings and debate or question anything relevant to the CWB when in fact it is established that he does have a pecuniary interest, is involved in civil litigation with the CWB, and thereby potentially has a conflict of interest.

So I would like to put forward a motion that we refer this request to the House, and that they come back to us with a decision on whether or not Mr. Hoeppner is in fact qualified to be sitting here and discussing any topics related to the CWB.

The Chairman: Is there any discussion on the motion?

• 1220

Mr. Jake E. Hoeppner: Mr. Chairman, I contacted my solicitors on this issue, on whether or not I'd be in conflict of interest, and on whether or not the question I asked of the agriculture minister the other day was a conflict.

There is no court case before the judiciary right now. Judge Huband of the appeal court in Manitoba ruled on the case. My lawyers have sixty days to investigate whether or not they want to file an appeal, but there is no harm in debating that ruling, because it's a decision that has been made. It will not affect the next court case, because the decision is there for the public to read, for the public to discuss. We've had two different rulings, and there's no conflict as far as the court case or the court challenge is concerned. That's why I ask if this bill is different from Bill C-72, because the court case is on C-72, not C-4.

The Chairman: I think it's the same point we were discussing.

Mr. Paul Bonwick: Since he's covering my point, do I have an opportunity to address it?

The Chairman: Yes, and any member can enter this debate.

Mr. Gerry Byrne: Actually, Paul, I have a couple of things that I think will probably provide some clarification.

The question is not the interpretation by your legal counsel as to whether or not the standing orders are being protected. The question is whether or not the House feels the standing orders and the integrity of the call of witnesses is being protected. The question here is also one of whether or not we're calling expert witnesses to appear before this committee, and whether or not we're setting a precedent such that we will detract or deter future witnesses from coming before future standing committees to discuss issues based on future court cases. There is a precedent to be examined here, and I think it's very, very important.

One of the points here is that this table, this committee, and the evidence that we receive should be untainted. Witnesses should feel they are in an environment that is protected, in which they have complete freedom to be able to provide their testimony. They should be able to do so without any sort of concern about their testimony being brought up in a future potentially pending legal action.

The other point I'd like to raise, Mr. Chair, is that we should extend the question to the House, beyond whether or not the member is qualified to participate in this committee. I would suggest that what we should really be looking at are the specific questions he has raised here today.

It's not so much a question of whether or not he's qualified, because as a member of Parliament he certainly is qualified to be a member of this committee. What I would recommend is that we look at the specific questions that were posed to the expert witnesses this morning—whether or not they fall within the scope of an outside legal action, and whether or not they are in breech of privilege, in the House's opinion.

The Chairman: Mr. Bonwick.

Mr. Paul Bonwick: On my point of privilege, Mr. Chair, what I am suggesting is following on Mr. Byrne's comment. If there is in fact a potential pecuniary interest, if in fact the time lapse for the appeal is not over as of yet, then Mr. Hoeppner should not be, or potentially should not be, speaking to any issues surrounding the CWB—any issue. That is what I'm asking, and if the House or its counsel in fact decides he should not be speaking to these issues until such time as the appeal process is over, then in fact he is not qualified to sit here.

The Chairman: Mr. Harvard.

Mr. John Harvard: I can't imagine what this committee would be afraid of in seeking a legal opinion. All we're looking for is some kind of a clarification. I would hope that Mr. Hoeppner is not in a conflict of interest, but we can at least find out the legal opinion of the House. There is no effort here to try to muzzle Mr. Hoeppner, at least on my part, but I think we should have a legal opinion.

The fact of the matter is that the appeal period is not over, and that could mean the litigation is back on if he chooses to appeal. Until that situation is.... The fact that the appeal has not been filed, Mr. Hoeppner, does not disconnect you from this particular issue of a possible conflict of interest. So I see nothing wrong in just getting a legal opinion.

• 1225

Mr. Jake E. Hoeppner: Mr. Chairman, then we have a real problem. Then we shouldn't be dealing with Bill C-4, because it will be dealt with in the courts later on. It will be conflicting with what you are passing here right now, because this is the issue that's going to be addressed. It was Bill C-72 that we started with. That act is being changed.

So then this whole House is in conflict dealing with this bill.

Mr. John Harvard: Come on, that's ridiculous.

Mr. Jake E. Hoeppner: We're passing legislation.

Mr. John Harvard: I'm not suing. I'm not suing the board. Mr. Bodnar is not suing the board. The chairman is not suing the board. The committee's not suing the board.

Mr. Jake E. Hoeppner: This is on behalf of western farmers. It's not on behalf of me.

The Chairman: I think Mr. Hoeppner can express his opinion. It's debatable, but he can express his opinion.

Mr. Jake E. Hoeppner: The class action suit is on behalf of all farmers. This bill is on behalf of all farmers and this committee is protected by the courts. You cannot take any evidence here and file charges against it. You're immune to any charges in this committee.

But we have to find out what we're dealing with for legislation, Mr. Chairman, what the rules and the regulations in that legislation are. How can we pass it if we don't know?

The Chairman: Mr. Borotsik.

Mr. Rick Borotsik: Mr. Chairman, as I understand the issue, it's whether Mr. Hoeppner is in a conflict or not in speaking to some expert witnesses who may well have an influence on a court case. Quite frankly, I don't believe that it's the members around this committee table who are going to make that decision.

I believe very strongly that the member himself should identify that as being a problem if in fact he thinks it is and bring it to the committee, and saving that, then I think we should go to a third party. And as I understand the motion, it is to ask the Speaker whether Mr. Hoeppner's position here at the committee table is one that is to be accepted by the House.

Is that correct, Mr. Chairman?

The Chairman: We don't have the exact wording yet here; I think they're working on it. But it's in that vein.

Mr. Rick Borotsik: If we can't resolve that amongst the group around this table, I believe a third party should be brought in. And if that's the way it is questioned, I don't have any difficulty and I don't think Mr. Hoeppner should have any difficulty.

Mr. Jake E. Hoeppner: I'll make a suggestion to you gentlemen. I'll withdraw myself from the debate on Bill C-4 if you will accept later on that Bill C-4 is under challenge in the courts.

Mr. Rick Borotsik: I'm more on your side than opposed to you. I'm not so sure you have to withdraw yourself from the board. I think we should find out from a third party as to whether you should legally withdraw yourself from the board.

The Chairman: I intend to do that to defer any kind of judgment here. I'm not going to make any judgment here. I'll defer that and refer to people who are expert in the questions of privileges to members of Parliament.

I find it difficult to believe that members who are not liable for arrest during a sitting of a House can't sit on a committee, but that's only my opinion. I will defer the question and come back with an answer before the clause-by-clause begins tomorrow afternoon.

If the member wants to clarify his request I'll take it in writing or verbally. We're being transcribed here, so you can either say it or give it to me in writing.

Mr. Paul Bonwick: At this point in time, I will table it and revisit it at our next meeting.

Mr. Jake E. Hoeppner: No. I think we should do it right now.

Mr. Paul Bonwick: That's my privilege. Mr. Chair—

The Chairman: Have you given notice of the motion?

Mr. Paul Bonwick: I have given notice of a motion. I will be putting the motion off at this point and retabling it at our next meeting just so that I do in fact have it in a clear sense and thereby allow Mr. Hoeppner every opportunity to clarify the situation.

Mr. Jake E. Hoeppner: I'll give you notice, then, that I will withdraw from this committee during the debate of Bill C-4 and then you do as you please, because the issue will be decided later on if my solicitors decide to appeal this in court. But you're going to put yourself in jeopardy by doing that, because we're dealing with legislation that is changing the legislation that is before the courts.

The Chairman: And I think we're also dealing with the matter of members' privilege here, and I don't think it can be delayed very long. If we're going to be dealing with this bill tomorrow—

Mr. Jake E. Hoeppner: Yes, do it now, not tomorrow.

Mr. Paul Bonwick: I will have it ready for you, Mr. Chair.

The Chairman: Do we need a decision tomorrow or do we need—

Mr. Jake E. Hoeppner: I'm just going to withdraw myself from this committee until such time as this ruling has been made because—

The Chairman: This could hold the whole bill up.

Mr. John Harvard: Could I interrupt? Do we really need a formal motion? We can simply empower the chair to seek a legal opinion with regard to this question and Joe can report back tomorrow.

• 1230

Mr. Paul Bonwick: Mr. Chair, I will put forward my formal question to you no later than tomorrow prior to the meeting's commencement.

The Chairman: The problem is whether we're going to proceed under a cloud here or proceed under a clear sky tomorrow afternoon.

Mr. John Harvard: Let's get the opinion today—or by tomorrow.

The Chairman: The question is made by Mr. Harvard to the chairman to clarify the situation of Mr. Hoeppner's membership on the committee. Is that agreed?

Some hon. members: Agreed.

The Chairman: Mr. Bonwick.

Mr. Paul Bonwick: What I don't want is things of this nature jeopardizing the question either for or against, and I think until we have it detailed, it compromises either way the decision might come down. So I think it behooves us to make sure the question is put in detail.

The Chairman: Will you give the clerk the question?

Mr. Paul Bonwick: Okay.

Mr. Gerry Byrne: We're going to need the blues from the committee so the Speaker or you yourself will be able to examine the specific question that was raised by the member.

The Chairman: Is there any further discussion?

Mr. Rick Borotsik: No.

The Chairman: Mr. Easter.

Mr. Wayne Easter: I have just one thing, Mr. Chairman. I'm not asking this committee to deal with this, but I would like you to report it to the Board of Internal Economy or whoever. I'm entirely dissatisfied with our ability to have minutes of proceedings. When I go into clause-by-clause study I like to be able to refer to the minutes of proceedings. We're not going to have them available by tomorrow, but I'm not going to ask that the sessions be slowed down. But there is a serious problem when six or eight years ago you could have minutes of committees overnight in hard copy and today you can't have them.

I sit on two committees. For discussions tomorrow, I want to find out what happened at the committee I wasn't at this morning, but I can't get the information. In my view, it jeopardizes my ability to function as a member of Parliament.

I'm just putting it as a request that you report same to the Board of Internal Economy or whoever makes those decisions. This is ridiculous.

The Chairman: I agree with that. I got the blues from the minister's appearance here two weeks after he appeared. I don't know where they went.

Mr. Borotsik has two items he wants to bring forward here.

Mr. Rick Borotsik: I have two motions, Mr. Chairman, at the indulgence of the rest of the committee.

I should also tell you initially that I have no court case outstanding and I just want to try to do the best job I possibly can. In order to do that, Mr. Chairman, I'd like to table the first motion.

I move we invite the Minister responsible for the Canadian Wheat Board, Mr. Ralph Goodale, to once again return to this committee. I would like to have that done prior to clause-by-clause, which is the final process in this legislation.

I ask for that because when Mr. Goodale was here he indicated he had a desire to come back and talk to the committee. He also indicated he had a greater desire to actually listen to what was said by the witnesses we brought forward. I would hate to think this was just an exercise in futility, that we brought people forward and spent an awful lot of money and didn't have the minister hear what they wanted to detail.

I have listed most of the witnesses who spoke, and all of them spoke about the CEO and the appointment of the CEO. Most of them spoke to the fact that the CEO should not be appointed by government. I think Mr. Goodale should hear that from the committee and he should be questioned about it.

We talk about inclusion and exclusion. I know a number of members on the other side are talking about some specific amendments that may well make the inclusion clause more saleable and certainly more palatable. I think the minister should hear about that and about what happened with the witnesses who came before us.

That's why I would like Mr. Goodale to come once again to appear before this committee. We will be able not only to impart to him what has been said but also to have his feelings as to what should and could be done with some parts of the bill.

• 1235

That's my motion, Mr. Chairman—that we dispense with clause-by-clause consideration until we have heard Mr. Goodale once again before this committee. I'd like a recorded vote if I could, please, Mr. Chairman.

The Chairman: Mr. Hoeppner.

Mr. Jake E. Hoeppner: Mr. Chairman, just for information, when we go through clause-by-clause, we are allowed to make amendments, right?

The Chairman: Yes.

Mr. Jake E. Hoeppner: Which takes the least time—doing it now on clause-by-clause or during the second reading, which I guess we haven't had? Or is that not possible?

The Chairman: The way I understand it is that amendments brought forward during clause-by-clause cannot be brought forward in the House. So you have a choice of where you want to bring your amendments in—here or in the House.

The Clerk: It's up to the Speaker to decide.

The Chairman: But we're off the topic here.

Mr. Rick Borotsik: Yes. Can we deal with the motion, please, Mr. Chairman?

The Chairman: Yes. Is there any discussion? Mr. Harvard.

Mr. John Harvard: I am naturally concerned about our schedule. As far as I know, we've been operating on the schedule of completing clause-by-clause by Thursday. If Mr. Borotsik can satisfy me that he can include Mr. Goodale's appearance in that schedule, then I think we can talk turkey. If this is simply a move on his part to disrupt the schedule, then I'm going to have difficulty supporting it.

Mr. Rick Borotsik: If I can respond to that, I don't recall this committee ever detailing or discussing the schedule in the first place. It was set by the chairman. I was, to be quite honest, taken aback to hear that we were going to deal clause by clause tomorrow.

The Chairman: We were going to do it today.

Mr. Rick Borotsik: Well, exactly, today, and I was really taken aback by that. I guess if the government members simply want to push this through and have the perception of being honest and open about the discussion and listening to witnesses, if they simply want that perception, then by all means let's do clause-by-clause this afternoon. There's no sense in even dealing with it. I honestly believe that the minister should hear and should honestly detail to us with respect to the matter of the CEO, and I don't think we can do that unless he comes back and appears before this committee.

The Chairman: If I may, I think the minister gets an update every day on what is said in this committee.

Mr. Rick Borotsik: We've never had the blues. I take it the minister has.

The Chairman: Number two, I asked the minister if he would reappear. He said he wouldn't have the time. I think I announced that at the last meeting. If you look at the blues—

Mr. Rick Borotsik: The motion is on the table, and I have asked for a recorded vote, Mr. Chairman. I can see which way the motion is going to go, but I would like a recorded vote.

The Chairman: Yes, and if there's no other discussion, we'll go to the.... Mr. Hoeppner.

Mr. Jake E. Hoeppner: Mr. Chairman, wasn't the minister scheduled for a two-hour appearance here before the committee that Tuesday when he did appear, and said he was cut short and had to leave and could only give us an hour? I think it would be only fair to have another hour with the minister, because it was scheduled to be a two-hour meeting.

The Chairman: Yes, and I did make that request on your behalf. The request came back and it was announced at the meeting last Thursday that the minister sent over word he wouldn't be available for that amount of time.

Mr. Harvard.

Mr. John Harvard: I just want to point out to Mr. Borotsik, if he is concerned about the minister somehow not hearing about all the views expressed at this committee, that his parliamentary secretary has been here every day. His staff has been here every day. I had a meeting with him yesterday and I can assure you that he is up on every presentation that has been given.

So I don't think you have to worry, Mr. Borotsik, that Mr. Goodale has been somehow living in isolation. He knows exactly what has been going on in committee. After all, it's his bill. It's his responsibility to know exactly what's being said, and he knows absolutely everything that's been said.

The Chairman: Mr. Calder, and then Mr. Easter.

Mr. Murray Calder: Thank you, Mr. Chairman.

As I remember, when the minister appeared in front of us the last time, he was supposed to be here for two hours, as was stated, and he was here for only an hour. In the essence of compromise, I'm wondering whether or not, when we start the clause-by-clause, it would be possible to fit it into the minister's schedule that he appear in front of us for an hour, thereby completing the full two hours as promised. Then we could immediately go into clause-by-clause. This would be a compromise.

Mr. Wayne Easter: Mr. Chair, I think Mr. Harvard has made the point that certainly the minister is kept informed of the discussions at committee by both his parliamentary secretary and his staff. As I understand it, when we go through the bill clause by clause there will be technical staff here, including Mr. Migie, who can answer some of the technical questions that may have come up during our course of hearings.

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In any event we, or you people, are the committee, and it's the committee in the final analysis that is going to make the decisions relative to this bill, regardless of what the minister may or may not think. That's what committees are supposed to do.

Yes, I think the minister has given us his views, but if you look at the history of this bill and the previous bill, you'll see that producers out there want some changes to the Canadian Wheat Board, and want them in place as fast as possible. If we get into delays with the minister coming here, which will put us past the break in terms of getting this piece of legislation back into the House, I think we're again going to be going against the wishes of producers, which is to have this question on the wheat board dealt with once and for all.

I would suggest, Mr. Chairman, that you go by what the minister originally said to you, that he didn't think he had the time to come before the committee. He appeared once, he will have his technical staff here, and we as a committee can function in our own right and make the decisions as we see fit.

The Chairman: Is there any other discussion on this motion or this question?

Mr. Rick Borotsik: I'll close debate and call the question, Mr. Chairman.

The Chairman: Okay.

Mr. Rick Borotsik: Maybe I'm taking this all wrong, but I honestly believe this is a very serious piece of legislation and that we should probably take as much time as is absolutely necessary to get all of the information and all of the details. I don't want to be seen as being a part of the committee that is simply going to ram a piece of legislation through without taking the full opportunity of hearing from everyone and every organization that in fact should speak. As well, the minister whose legislation it is should hear what we've heard over the past two weeks with respect to this.

An hon. member: He has.

Mr. Rick Borotsik: Well, I don't know that. I didn't have a meeting with the minister yesterday, and I don't have that opportunity, as others do. That's the only thing I would like on the record, Mr. Chairman.

The Chairman: Okay. The committee has heard the motion.

Mr. Rick Borotsik: The motion is on the table. I've called question on a recorded vote, please.

(Motion negatived: nays 5; yeas 3)

Mr. Rick Borotsik: Mr. Chairman, I did file another motion with you—and I won't even table the motion right now, because it seems I am not going to get the co-operation—to try to obtain other information from other organizations.

What I would have liked to do was have the Ontario wheat board here, for two reasons. Number one is that they have a CEO who is hired by and operating to the board and not appointed by government. The second thing is that they were just in the process of going through a vote in their own organization to try to see whether the Ontario wheat board should stay in existence or not. I would have loved to see the Ontario wheat board here. They had refused or they declined to come forward.

The Chairman: They were invited.

Mr. Rick Borotsik: I was going to suggest that we subpoena them and actually get some other information. I will not put that on the table, though, because obviously, as the support is not going to be there and the decisions have already been made, Mr. Chairman, it seems like a waste of time to do so.

The Chairman: For the record, I'll read the response from the Ontario wheat board.

Mr. Rick Borotsik: Oh, I have a copy of the response.

The Chairman: It says: “Thank you for the invitation to appear before the committee, but the board will be unable to attend.”

Mr. Gerry Byrne: On a point of order, Mr. Chairman—this is a technical question that I will address to the clerk—can committees subpoena witnesses and make it obligatory for them to appear?

The Clerk: Yes, they can.

Mr. Rick Borotsik: We would do it only if we wanted to have an open mind and listen to the information.

The Chairman: Is there any other business before the committee?

The committee is adjourned until tomorrow at 3.30 p.m.