Statement made on 14 December 2011 by Senator Joseph Day
Hon. Joseph A. Day:
Honourable senators, I thought I would join in the debate with respect to this particular bill, Bill C-18, primarily because of the number of letters that I have received and the number of farmers and producers who have come to my office to explain their position to me and to ask me to do what I could do. What I can do is to join in the debate and go on record explaining their position and my interpretation of what has transpired.
In essence, I would be content in this matter, and I believe most of the producers would be content, if they were given an opportunity to express what they would like to see as the legislation, what they would like to be operating under. We would all be happy if the vote that was supposed to take place under the existing legislation had taken place and the farmers and producers had decided they did not wish to continue, reflecting the words that are being expressed now by the proponents of the bill. In that case, we would all be content and probably would not be debating this matter to this extent.
That is not the case, and therefore this is necessary. In fact, it is very important in our parliamentary system because of what has transpired and, as you heard in the Honourable Senator Baker's discussion yesterday, because of the fundamental legal issue that is involved here.
I will begin by congratulating Senator Peterson and all those who have spoken on this issue who have attempted to objectively outline the issue and have not relied on subjective matters or tried and true expressions. Each one of these matters is in its own right different and should be analyzed in that regard.
Honourable senators, I confess to being a fan of market forces and generally a supporter of market forces to achieve the best results for our economy and for our people. However, I want to tell you that I am not one who slavishly sticks to a market economy above all else, and I do believe there is a role for government to play in relation to balancing market forces. We have all seen that over many years, in fact centuries.
At one time it was illegal for two or more individuals to get together to withhold their services to try to raise their salary, until we recognized that we needed some balance with the rich landholders and corporate entities. We passed legislation over 100 years ago to allow for collective bargaining and labour laws.
That was one recognition that market forces by themselves do not work, that we needed some balancing of the power. Honourable senators, we have seen that in many other situations along the way in the last 100 years as well. In anti-competitive legislation, when corporations got too large, such that the balance was lost between the corporate entity, the employer, and the employee, we passed anti-competitive legislation. That was again a recognition that market forces by themselves do not work. If a monopoly on one side gets too strong, there is a loss of the balance and we start to have problems, so we passed legislation. We have an entire hierarchy in that regard, and any time there is a takeover or there is too much market concentration, a review panel decides whether this is good for the country, good for our economy.
In my part of the world, in New Brunswick, we are a small economy and a small number of producers. Because the producers and the region recognized the importance of this, we moved towards cooperatives that would help producers work together and share equipment so they do not all have to buy the same equipment, and they can share marketing ideas. My colleague, Senator Hervieux-Payette, just pointed out that a potato farmer — one potato farmer who is an expert producer of potatoes in one of the best potato producing areas of the world, New Brunswick and Prince Edward Island — is off trying to be an international marketer because he is trying to do this all on his own. That is a recipe for disaster, honourable senators, and that we have seen in this instance.
We support supply management. We support forest product marketing boards in our province to help the producers of forest products work together to deal with a concentration of industry from the point of view of buyers. We can see that in potatoes back home, and we can see it in forest products. When only a few companies are operating, they can dictate the price and when the delivery is to take place, and there is no opportunity for individuals to deal or to make a bargain with the buyer. You have to take what is being offered. However, if you can guarantee that you will get a supply to a company, the company then has less risk. The company knows that it will be getting a supply of product, and therefore there is less risk. Therefore, they can pay less and they can guarantee they will buy all the product that is coming.
That, Honourable senators, is the concept behind the Canadian Wheat Board. It is to let the producers do what they do best, while ensuring that those producers will get a fair price for their product and will have a place to sell their product. That is what Parts III and IV of the Canadian Wheat Board legislation provide. The Wheat Board must purchase the wheat that is produced in Manitoba, Saskatchewan and Northern British Columbia, those areas that are within the jurisdiction of the Wheat Board. If you are a producer there you have a place to take your product, and they have a mandate to try to bring the best price possible for that. They will get better prices because they can guarantee volume to the secondary producers, the companies that buy the wheat to make spaghetti and other pasta products and so on.
That, honourable senators, was the original concept of the Canadian Wheat Board. It was initially an agency of the federal government. Then in 1998, at the request of the producers and at the request of the local people, the Wheat Board said, "We do not want to be an agency of a department located in Ottawa, we would like to be more masters of our own fate." In 1998 the government acquiesced and allowed for the board of directors to be elected by the producers; the majority of the board would be chosen by the producers.
Honourable senators, that was a very significant development in relation to the Canadian Wheat Board and a very significant evolution of the Wheat Board. As we have seen, section 47.1, which was passed at that time, was a very significant development.
It is important to keep in mind that the Wheat Board does not cost the Canadian taxpayers one cent. It does not cost the Canadian taxpayers money because it is a self-governance, or shared governance, agency that looks after its own expenses. The government's decision to change this, to change the format and to change something that is working cannot be because the board is costing the government too much money. We will take that one out of the mix.
By eliminating the Wheat Board, honourable senators, we are opening up these individual farmers to be operating at the mercy of the larger multinational buyers of their product. They are going to have to become like our potato farmer in New Brunswick. They are going to have to become marketers facing international marketing issues; they will have to develop all those skills, and that will result in either fewer sales or somehow a concentration of production of the farms. Something will have to happen, because the initial transition will just not be advantageous to the farmer-producer.
As a reminder of what can happen, all we have to do is look at what happened with respect to the Canadian Wheat Board when oats were arbitrarily removed from the Canadian Wheat Board. This had an immense impact on the Wheat Board creating a $10-million deficit in the amount of money that was available to help all farmers.
This occurred in 1989. In that same year, we saw the results of a reduction of U.S. government subsidies for oat production. The U.S. government was subsidizing oat production in the U.S. to try to compete with the marketing board's values here in Canada. They reduced that subsidy in the U.S. and, as a consequence, the price fell out of oats. It led U.S. farmers to drop their oat acreage by 75 per cent, the lowest since 1865. As a result, we saw an opening for more Canadian oats. However, since the price was so low, a good number of farmers in Canada just gave up producing as well. They could not make any money. The Canadian Wheat Board was no longer there to promote. Not only did the Wheat Board handle the sales, but they also handled promotion, and they were gone from that point of view. This led the Canadian share of the U.S. market to decline, and the Europeans, who were still being heavily subsidized, to capturing most of the market.
I will read a quotation from a brochure that was produced at or around the time there was a vote going on for Wheat Board directors. I think it is instructive.
At the Leslieville, Alberta Pool elevator, oat prices immediately dropped from the CWB's initial price of $140.90 per tonne in June of 1989, (with a later final payment of around $45 per tonne from the CWB) to $67.02 . . .
Therefore, from $140 to $67 on the new private market by September of that year.
By February of 1991 oats had dropped to only $51.34 a tonne. This is a disaster that played out across the prairies. The background to this disaster is instructive for farmers contemplating how they will vote in the current CWB directors' election.
I think that is instructive. When you start playing around with an established market, a lot of things can happen; and the one who usually suffers is the farmer, who is your neighbour, and the farmer-producer.
Before making such big changes, we should know what we are doing. I asked the Wheat Board directors who came to visit me whether the government has done any economic analysis of this change. They indicated that none had been forthcoming.
Honourable senators, the minister was very clear in 2010. He said:
Until farmers make that change, I am not prepared to work arbitrarily. They are absolutely right to believe in democracy. I do, too.
That was in 2010. This is 2011.
The point is that we have a marketing scheme that is well developed, works well, achieves the results we would like to believe are important to us to maintain security of supply and security of quality of the product, to keep producers operating and receiving a fair amount, and to let the producers control that marketing agency. All those elements are there. The minister says he would not do anything without letting the farmers and the producers have a say. That was in 2010. This is 2011. They are now making these changes, and the consequences could be very grave indeed.
I submit to honourable senators that from all that has been said, it is clear, from a legal point of view, that the minister has flouted the rule of law. The minister promised to do something that he did not do and will not do. The producers, on their own, held a vote. It was 62 per cent in favour of continuing with respect to wheat, and that is being ignored.
Honourable senators, I say the solution to this matter is clearly in the hands of the government: Do what is in the current act. Let the producers have a say. If the producers say, "We do not want this any longer; we want to go the way the Conservative government is suggesting," we here will all be very content.
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