16 December 2011
Hon. Grant Mitchell: Honourable senators, I welcome the opportunity to have one final say on this bill. I would like to summarize some of the issues as I see them and then finish with some what I think will be unfortunate predictions.
The first issue is what is at stake in this change. My colleague Senator Day has laid out very well the single most significant advantage of the Canadian Wheat Board for Western Canadian farmers, and that is leverage. Western Canadian wheat farmers face what can only be described as a massive multinational oligopoly.
To give an example, one firm, Cargill, has annual revenues, I think, internationally, worldwide, of $106 billion. One can only imagine how it would be that a single farmer with a crop worth $80,000 or $90,000 would have any leverage in the face of a company that has revenues of $106 billion, not to mention all its resources. That is just one of the three, four, or five major multinational corporations that farmers will be facing in that kind of disproportionate magnitude — very, very small against immensely, infinitely large — so leverage is the key element.
It has often been argued, and it is argued by the other side, that of course farmers need to have the right to choose to market as they would like to be able to market. The Canadian Wheat Board, for which the majority of its board has been elected, has been very responsive to farmers' demands in that regard. In fact, over the years they have put together a basket of pricing and marketing mechanisms that directly reflect what might otherwise be available for a farmer in the open market, except that they also give the farmer in the open market leverage because they back them in so many different ways.
A farmer selling wheat can do a basis payment contract, a fixed price contract, a delivery exchange contract, an early payment option, a daily price contract, or a producer direct sale contract. There are six different ways farmers can market their wheat that are absolutely reflective of the ways they might be able to market their wheat within a free market, except that, of course, the free market will not really be free because it will be smaller farmers — no matter how big they are, they will be relatively smaller — facing an oligopoly.
History tells us there is often a role for government and for collective action to protect and enhance the interests of different social or economic groups and farming groups against oligopoly and monopoly. In our history in Canada, we have had tremendous success in the development of telephone companies, for example, where there was not sufficient competition to make it work properly for the consumer. Therefore, government steps in, builds and nurtures that, until there comes a time — and it happened in the last several decades — when governments begin to sell off those kinds of assets.
In fact, when I was in the Alberta legislature, I voted to privatize the AGT, Alberta Government Telephones. It was time. I also voted to privatize liquor in Alberta. I will chide Senator Plett here, who is the great free-market defender. However, he does not think we should privatize liquor stores in Alberta. The next thing you know, as I said to him, he will want to privatize Tim Hortons because that coffee is so darn good. Let us talk free markets, but the honourable senator wants to control what you can drink. On the other hand, he does not want to have any control over the malt that will make that drink. It seems like an internal contradiction. I do not know how that happened.
We are talking about leverage. The Canadian Wheat Board has given farmers leverage in the market and the opportunity to reflect that market in the many different ways they can buy wheat. It sounds perfect to me, but that is not the way the ideology of the government has seen it, and they have pushed ahead. I would say — and I do not want to be too aggressive about this — they have bullied ahead in many different ways. They have bullied ahead: Listen to what the Prime Minister said with respect to the train that is barrelling down the railway track and those farmers had better get out of the way, or to what Minister Ritz said, that sure, it is the birthday of the Canadian Wheat Board, and he will go over and blow out the candles. Wow.
We talk about the problem of bullying in our society. When the highest levels are doing it, that sends a message, does it not? It does. It starts at the top.
Not only can the Canadian Wheat Board get price advantage because of leverage, but they also get economies of scale and supply-chain efficiencies. There are many of those, and I do not have enough time to go into them in the 12 and a half minutes that I have left. Because they have leverage when it comes to transportation, because they have leverage when it comes to port delivery, because they have leverage when it comes to getting rail cars, they have leverage in getting efficiencies and getting deals from the terminals, from the train companies, and so on.
In fact, in 2009, I think in one set of efficiencies that came to $23 million. Several years before that, the Canadian Wheat Board was able to negotiate with the train companies because they had abused the transportation system. They got a $15-million settlement from CN that went back to the farmers.
How will farmers organize to do that? They will certainly not get help from the government to do that, and the Canadian Wheat Board advocacy role will be gone.
What I would argue, as I said the other night to some discontentment on the other side, is that the government is exceptionally good at creating a deficit-creation program.
One thing I did not mention as an implication of doing away with the Canadian Wheat Board is that there will be pressure on government resources and revenues because there will be immense, increasing, enhanced pressure to subsidize farmers, who will lose price advantage in the wheat market, period. It will happen.
Huge advantages for the farmers will all be lost, with nothing to fill the void. Farmers will be at the mercy of one of the most powerful oligopolies in markets today around the world. There they are.
The second issue, and of course the government is sensitive about this idea that the Canadian Wheat Board will not be there to help the farmers. They say, "No problem, it will be there." In fact, it is one thing to say it, but just read the bill. The bill itself is an admission that the government knows the Canadian Wheat Board will fail because they want to control the board. Why would they? Why would they care? Because they need to control the contingency fund.
Why would they? Why would they care? Because they want that money to help them pay for the unravelling of the Canadian Wheat Board. You can imagine, there will be some layoffs, many, so there might be severance packages. Probably contracts will be broken, so there will probably be some penalties.
They want to increase that contingency from $60 million — the first time they have ever allowed that to happen — to $200 million. That is a clear red flag that they know that the Canadian Wheat Board will fail.
However, the $200 million will give them the chance to roll it down. It will also give them the money to manage it and keep it going, they think, long enough to get past any kind of link between the failure of the Canadian Wheat Board and the implementation of this piece of legislation. That is probably, in their estimation, to get them past the next election.
As sure as I am standing here the Canadian Wheat Board will fail. I do not have to guess. The government agrees with me. We actually agree on this. They are taking steps in their legislation to ensure they can control and handle it. I wonder if they will privatize the liquor stores in Manitoba if they can keep the contingency fund.
Secondly, why would we expect that it could survive? The fact is, as I have said, it will face a huge oligopoly, but it is also true that the Canadian Wheat Board does not have the physical plant with which to compete in any way, shape or form.
When Air Canada was privatized it took billions of dollars of government assistance. When CN was privatized it had billions of dollars in capital of government assistance. Over the 50 years or more of the Canadian Wheat Board, the Canadian Wheat Board put all of what would have been profit, some of which could have gone back into developing transportation systems and granaries and elevators and terminals, back to farmers. They could do that because they had legislation that required that their competition allow the Canadian Wheat Board to use their facilities.
That provision, that legislation, is gone. The money that has gone back to farmers is gone to farmers. There is no physical plant for the Canadian Wheat Board to be able to compete. In fact, they will be left with begging Cargill and the others for the use of their transportation systems, their grain elevators and their terminals.
I cannot imagine why Cargill, with that kind of power, would ever condescend to assist the Canadian Wheat Board in utilizing those facilities. Why would they do that? If the government actually thinks they would do that, then this should not be Mr. Harper's government. This should be Pollyanna's government.
The fact of the matter is, speaking of competition, if you had to know that there is a competitive disadvantage in doing away with the Canadian Wheat Board, you do not have to hear me say it. Just read what the U.S. Wheat Associates have said over and over again. They have said to their negotiators under WTO that the single greatest advantage it could give them is to do away with organizations like the Canadian Wheat Board.
It might be that there would be some reason why a government would want to do that if they thought they would negotiate some advantage in return. I have asked and asked and asked. What advantage did we get in return? Nothing. We did not get entrance into the Pacific Rim trade deal. No, we had to risk our supply management. That will be the next thing. We did not get anything for it.
We have these hard-nosed, ideological negotiators who just gave it away. They opened their pockets, dumped it on the floor and said, "Take it. We will give you all the advantage that we can."
I rest my case just on this single point that the government knows it will fail. They have proven that. They have put their legislative money where their mouth is, as it were. Structurally, the economic imperatives of this are so evident, so self-explanatory, that they cannot compete. The Canadian Wheat Board will die. Now, for the government, it is merely political management. They will manage it as long as they can to get out past an election, probably, so it does not hurt them, they think.
The other thing that will be lost is the question of transportation, which dovetails, as they say, further with the question of competition. We have a problem with competition in transportation for grain in this country. We have two major railroads, CN and CP. If you want to send something on CN and CP to exactly the same point and at the same time, you will find the contract is different by only pennies. There is no competition.
Fractions of cents, my colleague says. I am going to miss him. He is very insightful. Fractions of cents.
The fact is that that is because there is insufficient competition. Perhaps the government could have thought ahead and said what was said to major, controlling monopolistic cellular companies: If you are going function in our economy, in that industry, you have to open up your telephone lines to smaller companies that do not have those resources so that they can compete and create greater competition.
The government did not bother to put that in this, where short-line railway companies could have access to CN and CP rails. That would have been an advantage at least, to give some better competition.
For a government that says it believes in competition, you would think it would at least do that. Instead it kills the Canadian Wheat Board and does not do anything about the fact that our farmers will be even more vulnerable to the lack of competition in the train industry.
Why is that? Farmers will now lose sidings, sidings that gave many communities and farms access to the external transportation system, which they will not have. They will lose short-line railroads, which gave them choice. They will lose access to producer-pay cars, which the Canadian Wheat Board advocated for and organized for them. They will lose competitive advantage in that way as well.
The other thing we will lose is the Port of Churchill. I say so often that I can hardly think of a single thing that the government has ever done right, but I do agree that they are very good at politics. About 90 per cent of what goes through the Port of Churchill is Canadian Wheat Board grain. That will not happen because Cargill has its own facilities and they are not in Churchill. What will happen is that Churchill will die. The Government has taken $5 million to Churchill to make a transition, as they say. I wonder if they will reimburse that from the contingency fund; they probably will. The only transition they will make is for the failure of the Churchill port to take longer than it otherwise would have taken, probably until after the next election. Five million dollars is about $1.25 million a year, probably enough to get it past the next election. Then Churchill will die.
What will also be lost is the advocacy role of the Canadian Wheat Board, which had the farmers —
The Hon. the Speaker: I am sorry to advise the honourable senator that his time has expired.
Senator Mitchell: May I have five minutes?
Some Hon. Senators: Agreed.
Senator Mitchell: Thank you. I appreciate it. Merry Christmas.
An Hon. Senator: Churchill is in Manitoba.
Senator Mitchell: Churchill is in Manitoba, yes.
Churchill is in Manitoba, Senator Plett. They probably have government liquor stores. You bet they do. They create jobs up there.
The advocacy question is that they advocate on the trade issues of farmers. An unfortunate irony of ironies, there will be more trade issues because there will be more independent trucks, which more American farmers will see and they will be provoked to raise trade questions. There will more of that and less support for farmers to fight it.
There will be less access and coordination of producer-pay cars. That program will probably die. There will be more problems of railcar allocation and there will not be a Canadian Wheat Board there to fight it. There will be less possibility for a group like the Canadian Wheat Board to protect the Canadian wheat brand. The quality is the next thing that could fail. There are economic and marketing reasons why that could happen with the big firms.
There will be no one to be an advocate with a focus on research, on where research should go to improve our products and our products' viability in markets.
The final issue is democracy. That is an underlying issue.
Some Hon. Senators: Oh, oh.
Senator Mitchell: I am sorry, I know they are sensitive about that, because they talk a lot about democracy. They talk a lot about democracy, but the proof is in the pudding. There was no vote. The law says there should be a vote. The only vote was done by the Canadian Wheat Board and 62 per cent said yes to it. That is the same percentage of Canadians who voted against this government. That is an interesting coincidence.
That is critical. There is no respect for the democratic process. We are not saying that we or the government should make the decision about the Canadian Wheat Board. We are saying the farmers should be allowed to make that decision. Let us have a plebiscite.
Of course, corollary to that is that the rule of law is critical in our nation and society, one would think, and this is as key and core to the rule of law as any issue. Of any law that the government has broken in the last four or five years, and there have been a number of those, this is a key and fundamental issue with respect to rule of law. They are playing with fire when they deny the rule of law in this particular case.
I will finish with a series of predictions. Honourable senators can hold me accountable, although the government has not had much experience with accountability, so it will be interesting to see.
The Canadian Wheat Board will die. As they said on Monty Python, "That parrot is dead." It will die.
Subsidies to farmers will increase because prices will drop.
The transport costs will go up because competitiveness in transport, as limited as it is, will go down.
Trade cases will expand with the U.S. because the trade will become more evident to the U.S. It will expand and the trade advantage for Canadian farmers with the U.S. and internationally will be reduced.
All of this will be the casualty, the collateral damage of a very critical element of what is happening in politics today. In this case, it is the convergence of ideology trumping common sense and, in many respects, trumping democracy. That will be a fundamental, elemental legacy that this government will leave farmers and all Canadians, as unfortunate, as sad and as tragic as it is.
Some Hon. Senators: Hear, hear!