38th PARLIAMENT, 1st SESSION

(October 4, 2004 - )

Edited Hansard • Number 084

Monday, April 18, 2005

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The House resumed consideration of the motion that Bill C-40, an act to amend the Canada Grain Act and the Canada Transportation Act, be read the second time and referred to a committee.

Mr. Garry Breitkreuz (Yorkton—Melville, CPC): Madam Speaker, I have been listening with interest to this debate as it has unfolded here today. I will take the opportunity to remind those listening what the debate is all about before I address some of these issues and give the views of my constituents.

The bill that we are discussing is Bill C-40. It is a small bill that amends the Canada Grain Act and the Canada Transportation Act. Those two acts are being amended with some minor adjustments to Canada's system for handling and transporting foreign grain and grain products in Canada. These measures of course will reflect a recent decision made by the World Trade Organization dispute settlement body.

I want to point out that this decision was released in April 2004. The decision ruled in favour of Canada on the Wheat Board issue and in the rail car allocation issue but against Canada on three things: the rail revenue cap, the grain entry authorization and the grain mixing issues. That is what is being dealt with by this bill. Canada did not appeal the policy issues which it lost. The U.S. appealed its decision when it lost in regard to the Wheat Board.

The deadline that was created as a result of this is August 1, 2005. The government has delayed until the eleventh hour and now seeks to quickly rush through this bill. That is why we as Conservatives will have to hold our noses and support this as we have to do it at this point, but we will try to make an amendment. Hopefully the government will consider to have a review of this entire issue because there are huge concerns, as my colleagues have pointed out.

The American government has requested that the WTO examine the consistency of certain activities of the Canadian Wheat Board and other policies affecting the importation of grain and whether they adhere to WTO rules. I have just explained how these rulings came to be and the deadlines involved.

Now let me talk about the substance of this bill. This bill amends the Canada Grain Act to remove the requirement that authorization must be sought from the Canadian Grain Commission before foreign grain can enter licensed grain elevators. That authorization requirement will be removed. It no longer has to seek the approval of the Canadian Grain Commission.

The second thing Bill C-40 does is amend the Canada Grain Act and Canada grain regulations to remove the requirement that operators of licensed terminals or transfer elevators must seek the permission of the Grain Commission to mix grain. Third, it amends the Canada Transportation Act, so that the railway revenue cap will be extended to imported grain.

This bill, of course, will have the greatest impact on the Prairies, the western Canadian grain industry. I would like to point out, before I go further in my remarks, that one of the things desperately needed when we make these international agreements, and I think we have to do this for the future, is to negotiate mechanisms that more quickly resolve disputes. Some of these issues in regard to trade drag on and on, disrupt trade, and have a very negative effect on people who are involved in the particular industry that is under dispute.

International trade agreements like NAFTA and the WTO will only work for us if we can make the appropriate changes in Canada to adjust to them. We signed these agreements many years ago, but yet have failed to properly make them work for us because we do not ensure that our economy and the industries involved in these negotiations are structured to take advantage of these free trade agreements.

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Market economics often do not drive the process, yet they should. We have to make a lot of regulatory changes in Canada to adjust to the new realities of our trade agreements, yet we have not properly done that.

I agree with my colleagues who have said that we need to have people come before our committee and explain to us what needs to be done. I also wish, while I am on this topic, that the government would be as quick to fix our agriculture programs, especially the CAIS program, as it is to fix other problems. Here we have something being rushed through. Liberals quickly address it, but we have huge problems in the agriculture industry, such as the CAIS program, which is a huge problem for farmers. It is very costly but not addressing some of the issues that are on the farm in a timely fashion.

As I talk about the regulatory changes that have to be made, let me point out that we have already had two major commissions, the Estey commission and the Kroeger commission, who made recommendations in the nineties to fix our grain handling and transportation system and the Wheat Board. They made very good recommendations and yet the government failed to implement these. This is the problem. We study these things and then we do not make the changes that we should make, and then all of a sudden we are rushing through things like this when we would not have to do so if we would have made the proper changes that we should have made ahead of time.

One of my colleagues pointed out that we need to go to a more commercial transportation system and I would agree with him. We have problems within our system and one of those is that the Canadian Wheat Board takes charge of our grain but then has to negotiate with the railroads. I will point out a little later on how that has created huge costs for farmers because we are not using a more commercial transportation system to drive the process. And it can be done.

Australians have made the necessary adjustments. Their farmers have opened up their wheat board and privatized it. They can buy shares in it and it has helped them. It has not hurt them. The scare tactic that if something is opened up or changed, it will destroy our marketing system is not true. In fact, the reverse may be true, that if we do not make some of these changes, it is going to have a very negative effect upon us.

I have many farmer friends in the U.S. and we compare our grading systems. I farmed for a few years and became quite familiar with it. They are flabbergasted at the archaic method that we use in grading. Very often someone takes wheat to the elevator, the agent there will look at the outside colour characteristics and a few other superficial things, and will grade the grain accordingly. This is so out of date. We have so many different grades that it almost becomes impossible to understand the system.

In fact, the 40 or 50 grades in our grading system tend to be quite arbitrary. When it comes to consumers trying to understand our system, they give up. It is not meeting the needs of a market driven economy and what we should have. For example, wheat should be graded on its milling characteristics, the quality of bread that it can produce. That is really not happening at this point. We have moved a bit to looking at the protein content and so on, but it is still not what it could be. Because the government has refused to implement the Estey and Kroeger commission reports, we have the problems before us.

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I want to read some comments from a farmer in Wawota, Saskatchewan, which is not far from Yorkton--Melville. Keith Lewis writes:
The Grain Commission has become a problem for grain farming. In particular, the grading system. We've got just way too many grades and the segregation creates a lot of extra costs that really aren't necessary. The whole idea has to be looked at. I have talked to a number of grain farmers and we all agree that it is so difficult to manage separate grading factors.

Another problem is visual distinguishing. It is kind of unique to Canada. Our wheat has to be visually distinguishable. It is a factor that costs a lot of money.

We need to make the Canadian Grain Commission more relevant. In order to get a grade, the commission has to give it seal of approval. There are other guys able to do it, but it has to be the Grain Commission. The Grain Commission charges for all these services and in most cases it is not necessary.

There are a lot of issues that surround grading at the elevators-- inland terminals and elevators at the port. The fact that these people work for the Grain Commission and can go on strike when there are other privately-run agencies who can do the same job...Any time there is a disruption, it comes out of the farmers' pockets.

The Canadian Grain Commission is almost outdated, it's not relevant any more. We need to determine the role of the commission.

He makes some excellent points. There are other people who can provide the service. There are private corporations and private companies that can do the job probably for much less cost. Farmers are being saddled with these costs. They have no choice in the matter. They have to comply with this. Yet, it is not a service that is provided at the lowest cost to farmers.

I will not go through all the other points that he makes, but I think we have to listen to people like this who have experience with it and can point out to us the problems.

Another problem with the Grain Commission is that it is very secretive. Just like many parts of government we need to have more transparency. If we had that transparency, we could begin to make it work better.

Farmers are often forced to pay for this and yet they do not have any choice in the matter. If anyone else is interested in this I think the Hansard record will contain that letter.

I would also like to quote from a news release that was put out by the Western Barley Growers Association. I think it is useful for me to put this letter on the record as well because it points out other huge problems that we have.

We have the Liberal government opposite often defending what it is doing and saddling western farmers with its policies. I think this example is just unbelievable. It will point out that we have huge problems and we need to take another look at how we are dealing with the grains issue on the prairies. The title of the news release is “Canadian Wheat Board shipping fiasco costly for farmers”. It states:

“This backhauling of grain by the Canadian Wheat Board is turning top quality wheat into $80 per tonne wheat” said Douglas McBain, President, Western Barley Growers Association, when commenting on the fact that wheat in store in Churchill, Manitoba is now being reloaded and railed west to Vancouver.

I just want to interrupt this. The $80 per tonne is not a price that farmers can receive for their grain and still be economically viable. That is less than a quarter of what they should be receiving. People who are not familiar with this issue may not know that $80 a tonne for wheat is a deplorable price. In any event, I will go on to the next paragraph:

In November 2004, after shipping was closed for the season, the CWB moved wheat to Churchill. The farmers paid all costs of transportation and handling. That wheat is now being reloaded and shipped west to Vancouver to meet a sale commitment. The cost of extra elevations and handling and the additional rail freight charges could cost farmers another $100 per tonne.

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“Why was this wheat shipped to Churchill in the first place, especially when the shipping season would be closed until sometime in June 2005?” asked McBain. “What we have here is the CWB calling contracts on wheat and putting it into commercial storage when they have no sale for it. This kind of action costs farmers some $80 million each year in storage costs with no one being held to account” said McBain.
Wheat and barley exported by the CWB is in the grain handling system some 40 days longer than canola which is handled outside the CWB (59 days versus 19 days).
“In western Canada we have a world class grain handling and transportation system which is capable of responding to market demands. If the system were allowed to function without CWB interference, farmers would save $80 million annually. This fiasco demonstrates that the CWB must be removed from any involvement in the gathering and shipping of grain” commented McBain.

It is astounding that wheat is taken from the Prairies, shipped all the way to a port in Churchill on Hudson Bay, put into the terminals there and then unloaded and taken all the way back to Vancouver. It is unbelievable that this kind of thing is happening. The cost is being borne by prairie farmers and they have no choice in the matter.

Let me also quote from a recent news release by the wheat growers and barley growers:

Farmers questioned Measner on the Board's recent decision to ship wheat from the ports of Churchill, Baie-Comeau and Thunder Bay to meet sales contracts at the Port of Vancouver. “I don't think most farmers were satisfied with the explanation the CWB provided,” says WCWGA President Cherilyn Jolly. “Of course we understand the need to meet sales commitments, but there has to be cheaper options than shipping grain backwards all the way across the country.”

Canadian Grain Commission (CGC) Chief Commissioner Chris Hamblin discussed the many downgrading factors in the 2004 harvest. She also spoke about the CGC's view that the industry needs to retain KVD as the cornerstone of Canada's grain grading system. The Wheat Growers and Barley Growers responded with a joint resolution calling for changes in Canada's grading and marketing system to allow for grain to be purchased from farmers on the basis of its quality attributes, as opposed to its visual characteristics.

This is the point that I was making before. We have to change our grading system. The bill does not address some of the serious problems. That is why we, as Conservatives, will be asking for a review by the government of this entire issue. It just cannot be a review that then is forgotten and gathers dust on the shelf. It must be a review that is acted on. The Estey and Kroeger reports are now gathering dust on a shelf. We have to ensure that this report does not.

Let me continue the quote:

“KVD imposes too many restrictions on our ability to develop and market varieties that both farmers and our customers need,” says Jolly. “We need to move beyond a rigid visually-based grading system to one which is responsive to the quality traits that end-users are seeking.”

Saskatchewan Wheat Pool CEO Mayo Schmidt gave the keynote address last night saying we need to restore the profitability of wheat. Instead of it being a crop most farmers use to get rotation, we want to make wheat win. Schmidt stressed the global competitiveness of Canadian wheat will depend on greater research, improved market access, lower worldwide subsidies and a focus on product innovation.

That is why I was saying that we need to ensure that our international agreements begin to work for us. We need to make the changes here.
There are other things I could mention, but I think that members get the drift. We have to remove barriers that are restricting value added on the Prairies. The present structure is not working, and the wheat board is included in that structure. The claim is it does not hinder that in Canada, but when we talk to some of the people who really are involved in the industry, they will tell us otherwise.

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In summary, we will be supporting Bill C-40. We will hold our noses and support this bill, even though there need to be a lot more changes. We are hoping the government will act as quickly to address many of the other problems in agriculture that do not seem to be on the top of its agenda. We will be pushing an amendment to Bill C-40 to have a review and make sure that Bill C-40 gets passed in time to comply with our agreement at the WTO.

Mrs. Carol Skelton (Saskatoon—Rosetown—Biggar, CPC): Madam Speaker, my hon. colleague talked so eloquently about what is happening in the farm communities. I would like him to tell the House more about what is happening to grain farmers in his area.
Some of the young people in that area know me and they have called me and talked of the things that are happening. I would like him to tell the House what the people in his riding are telling him about the grain industry.

Mr. Garry Breitkreuz: Madam Speaker, I appreciate the opportunity to explain to our city cousins, so to speak, some of the problems that are experienced on the farm. Very often people in the cities will have the attitude that there are a few problems, that people tend to whine and complain, but it is really not all that serious, that people are still going to make a living from agriculture and so on.

I have never seen the situation in agriculture as serious as it is at this point. People have likened it to being worse than in the 1930s when agriculture was at a low point some 70 years ago.

One of the things that really strikes someone when visiting with farmers is that many of them have tried to adjust to the realities of the world situation. They have adjusted by changing their farm operations, but because the government programs that are supposed to provide for a level playing field are not doing what they are supposed to do, the farmers are in really tough shape.

Our major competitors have large subsidies. They support their agricultural industries. We as Canadians do not. That makes it very difficult.
I could describe in detail some of the problems that they have experienced. For example, a devastating frost last August 18 killed many of the crops in a band right across Saskatchewan. It was not an isolated area. Because the frost was untimely and because we had one of the coldest summers ever on record--global warming has not reached our province yet--the crops were not well developed. The frost that hit on August 18 and another one which hit at the beginning of September absolutely decimated the crops.

Wheat, which normally would have gone 60 bushels to an acre if there was a good crop in our area, went two or three bushels to the acre. In fact, the crop looked beautiful but because the frost stopped the wheat from developing, the kernels were virtually green and shrivelled and could not be harvested. They blew out the back of the combine. Farmers were unable to harvest some of those crops. The crops that they were able to harvest were not of a sufficient quality to command the price that would keep the farmers on the land.

Input costs have gone up and commodity prices have not followed. Commodity prices around the world remain depressed, partly because of the subsidies in other countries, but the input costs that farmers are experiencing right now are astronomical.

Natural gas has gone up in price. It is a key ingredient in nitrogen fertilizers. Those fertilizers have risen dramatically in cost. Farmers need to use those in order to grow their crops. Fuel costs are a major expense for farmers. Our city cousins know what has happened to the cost of fuel. It has a huge impact on agriculture.

If only farmers could get a decent price for what they sell, this would not have such an effect upon them, but because these factors are beyond their control, they are in big trouble. Other countries recognize the importance of keeping a large number of middle class farmers on the land. Europeans starved during the second world war. They know that agriculture is absolutely essential to a country. When times get tough, people want good quality food. If we do not do something about our agriculture crisis, we will regret it one day.

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The difficulties on the farm right now are beyond the management of the farmers, who are trying to do their best. The border closure, the BSE crisis, has had a huge negative impact on agriculture. Many grain farmers in my area went into cow-calf herds to supplement their income. Those cow-calf herds of course did not in the last couple of years bring in the income that would have helped those farmers remain economically viable.

All of these things have an impact.

There is one more thing included in the question my colleague asked and that is youth: because of the difficulties experienced by farmers, young people are not entering agriculture. If we do not have a turnover of farmers, if we do not attract young entrepreneurs to the agricultural business, there will be nobody to take over when the time comes for people to retire.

We may think that is not a serious problem. We may think that somebody will come along. It is not easy to come in and take over a farm. People cannot simply go to university to study agriculture and suddenly become good farmers who are able to manage. It is something we have to grow into. Our youth need to be nurtured. They need to be attracted into it. Right now they look at agriculture and they do not see it as viable.

As an aside, it is also an essential part of Canadian culture, I believe. Many people do not realize how important the maintenance of our rural areas in Canada is to our culture as a country. I cannot go into that as it really does not relate to what we are talking about right now, but we need to ensure that we have a strong, viable rural Canada in order for Canada as a nation to be strong.

I hope that people listening will take this to heart. I appreciate the opportunity to make comments in this area.

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Mr. Dale Johnston (Wetaskiwin, CPC): Madam Speaker, I listened with great interest to the comments of my colleague from Yorkton—Melville. Certainly he knows whereof he speaks, because he is also in the agriculture business himself.

I realize this is a bit of a loaded question, but what relation does he see between the fact that this particular bill has not been dealt with before now and the fact that there is a great feeling of alienation in the west and particularly in his area? How does he relate the two?

Mr. Garry Breitkreuz: Madam Speaker, I agree with my colleague. That is a loaded question. One of the issues I am always faced with is that the people in my area have the attitude that the government in Ottawa does not care about our problems. The government will put forward an act on the Canadian Wheat Board that will affect only Alberta, Saskatchewan and Manitoba and it is passed by members in Ontario and Quebec who do not have to live under its auspices. It will put in place an agriculture program such as the CAIS program. It is supposed to address problems on the farm but does not work and the government does not fix it so it alienates the people in the west.
It is just one of a number of grievances people have. This is not just in the agriculture sector. We could go on. Let us go on to electing senators and the Prime Minister not appointing the senators picked by the people of Canada.

We have huge problems on the farm. When those problems are not properly addressed by the government here in Ottawa, that leads people to feel they need to separate from Canada in order to take charge of their own affairs. That kind of attitude is deplorable. It makes people have a very negative attitude to government, to those elected representatives who are sent here but do not seem to take seriously the problems people have.

When we deal with issues such as this one with the Canadian Grain Commission, we need to keep in mind that these problems affect real people. We need to deal with those problems even if we do not thoroughly understand them and they do not affect our region of the country. We still need to deal with them in a timely and fair manner.