December 15, 2011 - No. 130
Senate Vote on Legislation to
Dismantle Wheat Board
Oppose the Harper Dictatorship's
• Oppose the
Harper Dictatorship's Nation-Wrecking! - Sandra L. Smith
• Where Obeying the Law Is Optional -
Canadian Wheat Board Alliance
• Board Directors Ask Courts to Halt Federal
Bill and Restore Farmers' Right to Vote - Canadian Wheat Board
• Windsor and District Labour Council Passes
Resolution Against Bill C-18
Senate Committee on Agriculture and Forestry
• Young Farmer Explains Importance of
Organizing Farmers as a Collective
• Explanation How Individual Farmers Are
Marginalized in "Free Market"
• Wheat Exporters Describe Strength of Public
Monopoly and Its Importance for Grain Quality and Economy of Scale
• Impact of Wrecking on Producer Cars and
Farmer-Run Short Rail Lines
• Senators Ask Questions
Senate Vote on Legislation to Dismantle
Oppose the Harper Dictatorship's Nation-Wrecking!
Today, the Harper government has mandated that the
Senate vote without fail on Bill C-18, the Marketing Freedom for
Grain Farmers Act, whose purpose is to destroy the Canadian Wheat
Board (CWB). On December 8, Harper appointee and Deputy Leader of the
government in the Senate, Senator
Claude Carignan, tabled a motion to limit the Senate's debate on the
legislation to no later than 5:30 pm on Thursday December 15 and that
"the Senate neither suspend pursuant to rule 13(1) nor adjourn on
Thursday, December 15, 2011, until all proceedings relating to Bill
C-18 have been completed."
For its part, the Liberal
Party sent a letter to Governor General David
Johnston urging him to withhold Royal Assent. The December 12 letter
from interim Liberal Leader Bob Rae noted the
December 7 Federal Court ruling by Justice Douglas Campbell saying the
bill is illegal and the government's
subsequent decision to file an appeal. Rae's letter stated: "As Leader
of the Liberal Party, I would ask most respectfully that full
consideration be given to awaiting final disposition of this matter by
the courts before the legislation received Royal Assent."
"As the intent of Bill C-18 is inextricably linked to
the question of whether the government fulfilled its obligations to
consult with affected farmers, it would be entirely within [Johnston's]
prerogative to withhold royal assent until the outstanding questions of
law and any ongoing court processes were sorted,"
Rae said in a press release.
Meanwhile, given the refusal of the Harper Government to
withdraw Bill C-18, the Canadian Wheat Board has asked the Manitoba
Court of Queen's Bench (the highest trial court in the province) to
pass an injunction to prohibit Bill C-18 from being implemented.
Chair of the Wheat Board Allen Oberg has
also written to the Governor General, asking him not to give
Royal Assent to the bill because of its illegal nature, the CWB
All of this points to the profound political and
constitutional crisis in which Canada is mired and the necessity to
provide it with a solution which favours the people. The Harper
government is moving fast to bring in all the arrangements which serve
the interests of the monopolies and oligopolies it represents. With
arrogance, the Harper government is trampling on
all previously established codes of conduct and uses its Parliamentary
majority and ministerial prerogative powers to go against established
notions of accountability and legitimacy.
Canadians are entitled to know what is going on.
The Federal Court has argued eloquently that what the
Harper government is up to with Bill C-18 is above the rule of law and
it ruled that the manner in which the government has proceeded with
this bill is unconstitutional. The Harper government is intent on
ignoring this ruling and proceeding with the bill.
Minister of Agriculture Gerry Ritz told reporters on December 14,
"Well, we fundamentally disagree with the declaration of the court in
this particular situation. I can tell you at the end of the day, this
[court] declaration will have no effect on continuing to move forward
for freedom for western Canadian farmers."
Opponents of the bill, especially the farmers who are
directly affected by the adverse consequences of dismantling the Wheat
Board, have provided irrefutable proof that the bill is not even
factually sound when it claims that it creates choice between the free
market and single desk. In the Senate Committee, young
farmer Matthew Gehl said it most eloquently when asked by Senator Don
Plett of Manitoba whether he had read the bill in its entirety. He
answered that "I have not gone through every single line of the bill.
[...] The main reason that I feel justified in not having gone through
it with a fine-tooth comb is that it is
still based on the notion that the Canadian Wheat Board can be viable
in a dual market. One thing that all experts on this issue agree on is
that there is no such thing as a dual market. For Bill C-18 to be built
on the foundation of a viable Canadian Wheat Board without a single
desk, the entire bill has no validity
as far as I am concerned, when the experts, the agricultural
economists, line up and say this cannot happen, and when [former
Minister of Agriculture Chuck] Strahl commissions a report that comes
to that same conclusion in 2006."
The question on everyone's mind now is whether the
Governor General will
give the bill Royal Assent and Harper government will get away with
this or whether the courts will issue an
injunction and, if so, whether the government will abide by it.
On everyone's mind is how to hold the Harper government
to account. Most importantly, of course, is the fact that at the end
of the day, the role of the Court of Public Opinion is paramount which
is why so much effort is made to disinform it, wreck it, so that an
effective opposition to the Harper dictatorship cannot be
All of this raises the fundamental
issue facing us at
this time. However scores were settled with the old conscience of
the societies of the 17th, 18th and 19th centuries, giving rise to
the current constitutional and state arrangements, these methods
are no longer suitable to settle scores with the old conscience of this
society and the problems it engenders. Canadians must forge ahead and
political and constitutional renewal so that the state is in their
service and their human right to exercise control over all matters
which affect their lives is provided with a guarantee. The human and
resources of the societies on which people depend for their living must
be put at their disposal, under a decision-making power over which they
can exercise control.
At the proceedings of the Senate Committee, Ontario
Senator Frank Mahovlich
did not mince words when he adamantly stated, "The government is not
above the law. Here we have a case where they're above the law. Now if
this is the case Adolf Hitler would still be here."
All out to oppose Bill C-18 and other measures the
Harper dictatorship is taking which usurp the rights of all. Our
Security Lies in Our Fight for the Rights of All! Let us organize to
give the Harper dictatorship a resounding No!
Where Obeying the Law Is Optional
In very blunt language the Honourable Douglas Campbell
of the Federal Court has ruled that Minister Ritz has broken the law by
introducing legislation to gut our Canadian Wheat Board without
consulting the farmer elected Board of Directors and holding a fair
plebiscite among farmers.
This means the judge has already ruled Ritz's argument
that he is rescinding the law, so he does not have to follow the law,
is nonsense. Yet now we have a Prime Minister contending that following
the law (i.e.: the ruling of the courts) is optional for his
government. The judge called this "an affront to the
rule of law," and it is.
This sort of lawlessness on the part of government can
only lead to further lawlessness, just as Chief Justice Fraser wrote:
"The detrimental consequences of the executive branch of
government defining for itself -- and by itself -- the scope of its
lawful power have been revealed, often bloodily, in the tumult of
history. When government does not comply with the law, this is not
merely non-compliance with a particular law, it
is an affront to the rule of law itself."
A decedent, honourable, and law abiding government would
simply withdraw this shameful legislation and get on with more pressing
issues. At a minimum, it is time for the Senate to table Bill C-18
until the court process is completed.
Certainly the hypocrisy of a tough on crime government
ignoring a court ruling should not be lost on even its strongest
All individual rights to freedom and property are
dependent on the rule of law being respected by government. By choosing
to ignore the law, Prime Minister Harper has stepped into some very
deep water and this is a direct threat to all Canadians.
Board Directors Ask Courts to Halt Federal Bill and
Restore Farmers' Right to Vote
Farmer-elected directors of
the Canadian Wheat Board announced today that they have launched legal
action to stop implementation of illegal federal legislation,
introduced without the approval of the Prairie farmers it affects.
"Farmers were promised by successive federal governments
-- including the current Minister and his predecessor -- that any
changes to the CWB's marketing mandate would be put to a producer vote,
as required by law," CWB chair Allen Oberg said at a news conference
today. "The Harper government has reneged
on that promise. It is now breaking the law and ignoring an order of
the Federal Court. This must stop. We want farmers' democratic rights
to be respected and the government to stop acting as if it is above the
The CWB will file an
application in Manitoba Court of
Queen's Bench, asking it to rule Bill C-18 invalid because it violates
the rule of law. The CWB is also asking the court to issue an order
preventing implementation of Bill C-18 until it makes a decision on the
validity of the Bill.
Last week, the Federal Court of Canada ruled that
Agriculture Minister Gerry Ritz contravened the law when he caused the
Bill to be introduced without first conducting a farmer vote as
required by 1998 amendments to the Canadian
Board Act, which were designed to put Prairie farmers in
their grain marketing organization. Despite this ruling, the government
is proceeding with the legislation.
"Such disregard for a court order is virtually
unprecedented in Canada," Oberg said. "It is unconscionable for a
government in a Parliamentary democracy to proceed with legislation in
the face of a court order that has declared it illegal."
Bill C-18, currently before the Senate, would enable the
government to dismantle farmers' single-desk marketing system by August
1, 2012. It would also remove all farmer-elected representatives on the
CWB's board of directors immediately upon Royal Assent, which could
occur by the end of this week.
Oberg has also written to the Governor General of
Canada, asking him not to give Royal Assent to the Bill because of its
illegal nature, in light of the Federal Court decision.
"I believe it would be an affront to our system of
Parliamentary democracy and the rule of law to grant assent to a bill
that has been declared in violation of Canadian law," Oberg wrote
yesterday to His Excellency David Johnston.
Oberg and other farmer directors were joined at today's
news conference by Liberal leader Bob Rae, MP Ralph Goodale, Senator
Bob Peterson and representatives of the National Farmers' Union, the
CWB Alliance and Friends of the CWB.
Windsor and District Labour Council
Passes Resolution Against Bill C-18
On December 13, the Windsor and District Labour Council
passed a unanimous resolution calling on the Senate not to pass Bill
C-18, the Marketing Freedom for
Grain Farmers Act. Following its passage the resolution was sent
to the clerk of the Senate and the office of Senator Bob Peterson of
The text of the motion reads:
Resolution to Oppose Bill
C-18 -- the Marketing Freedom for Grain Farmers Act
WHEREAS the Canadian Wheat Board (CWB) works in the
interests of farmers and the Canadian people because, as the sole
marketer of the high quality wheat and barley grown in western Canada,
it is able to provide marketing clout to individual farmers who benefit
from higher returns;
WHEREAS by selling together, western Canadian farmers
can exert more power in the global marketplace than if they were
competing against each other;
WHEREAS, by undermining the Canadian Wheat Board's
public monopoly, the Harper government is handing over western Canada's
grain trade from Canadian farmers to mostly foreign-owned private
agri-monopolies such as Cargill and Viterra;
WHEREAS, in putting forward Bill C-18, the Marketing Freedom for Grain Farmers Act,
Harper government is in violation of section 47.1 of the Canada Wheat Board Act that clearly
states producers must vote in favour of eliminating or excluding grains
from the Wheat Board before that can be done;
WHEREAS in the absence of a government-run vote as
required under the the Canada Wheat
Board Act, a mail-in plebiscite was held by the Canadian Wheat
Board, in which farmers gave clear support to the CWB's public
monopoly: Out of a total of 38,261 farmers, 62% voted in favour of
maintaining the Canadian
Wheat Board's public monopoly on wheat marketing sales and 51% voted in
favour of maintaining the CWB's public monopoly on barley;
WHEREAS on December 7, Federal Court Judge Douglas
Campbell ruled that the introduction of Bill C-18 did not comply with
the law and declared it "an affront to the rule of law";
WHEREAS officials of the Harper government have stated
that regardless of the fact that Bill C-18 violates the law, they will
not rescind it;
WHEREAS the Harper government must be held to account
for its violation of Canadian law;
BE IT RESOLVED That the Windsor and District Labour
Council call on the Senate of Canada NOT to pass Bill C-18 on December
15 as currently planned.
BE IT FURTHER RESOLVED That the Windsor and District
Labour Council and its affiliates go on record as supporting the Wheat
Board and farmers across Canada in their campaign to save the Canadian
Wheat Board and defend Canada's food sovereignty.
Senate Committee on Agriculture and
Young Farmer Explains Importance of Organizing Farmers
as a Collective
Posted below are the individual remarks of Matthew Gehl
on December 7 to the Senate Committee studying Bill C-18.
I would like to thank the
Standing Senate Committee on Agriculture and Forestry for the
opportunity to come and present my case today. Clearly this is an issue
that I feel passionately about. I have been in Ottawa for the better
part of the last three weeks meeting with a fair number of people
table. I can say with certainty that I have called all of your offices,
probably more than once or twice. I am happy to be here and I will get
into it because five minutes will run up quick.
I bring a slightly different approach to this than the
gentlemen who are joining me on the panel today, and the other
witnesses you have and will hear from over the course of this week.
I am 27 years old. I come from a farm just north of
Regina, Saskatchewan. It is my family farm, run by my father and uncle.
They are third generation farmers. Farming is the only thing they have
every done. Growing up, I never wanted to be a farmer. I had no
interest and was encouraged to seek other opportunities.
I went to university, finished my degree in political science and
history, and found myself working back on the farm.
The call was needed for labour. I figured with a family
farm, family comes first. I went back and have been working on the farm
for two years. Every day I do it, I love it more. It surprises me that
I can call myself a farmer today. For the first time in my life, my
father posed the question of whether I would
seriously consider taking over the farm. For the 26 and half years
previous it had been an instantaneous, "No." For the first time I
actually had to stop and say, "I need to seriously consider this." I
enjoy it and get to work with my dad on the land. Coming here and
seeing this fight farmers have put up against Bill
C 18 puts that future into doubt for me. I feel the Canadian Wheat
Board gives the average farmer a good, strong hand in a global economy
that is controlled by an oligopoly of extremely large and powerful
grain trading corporations.
I do not see how one of 70,000 western Canadian farmers
will have any clout going up against the likes of Viterra or Parrish
& Heimbecker; they are small fries in the global pond. In the world
of international grain trading, Cargill is worth more than $100 billion
a year. Even the locally grown companies such as Richardson
are small fish. Compared to those small companies, my one farm is
nothing. We are a speck of dust on their lapel to be brushed aside for
the whims of their shareholders. They are there to make money, but that
will squeeze us out. This bill removes the marketing clout the farmers
have by working together. I have
not seen enough over the course of the two or three months this bill
has been put before the house that shows this bill has been probably
thought through. Farmers have a beneficial ownership. All farmers do.
For future farmers like me, that Wheat Board should be there for us to
inherent. That is the work that my
grandparents and father did to lay the foundation to allow strong,
viable, rural farming communities to stand up against the
overwhelmingly crushing forces of massive multinational corporations
looking to make a profit on the backs of farmers' hard work.
I came here and met with a few of the senators. I have
to say my opinion of the Senate was greatly changed. You people do an
amazing amount of work that gets almost zero credit in the mainstream
media. One thing that is lacking is that the Senate is missing a vital
role. John A. Macdonald laid out in the confederacy
papers that the Senate has a duty to take bills that have been passed
to it by the lower house that are hasty and ill conceived, and send
those bills back to the lower house and tell the elected MPs to do
their jobs better. The answers given in the house from the opposition's
questions of what analysis has been done
left so much lacking in terms of analysis. This is too big of a policy
change to go on hopes and dreams. By hopes and dreams I mean the
voluntary Wheat Board or the dual market.
Minister Strahl commissioned a report in 2006 which said
the Canadian Wheat Board will not survive in a voluntary market. I do
not see anything that has changed in the last five years which has
changed that. We have courts set up to ensure justice is not put into
disrepute. I hope that the Senate can seize on
the opportunity of Bill C 18 to ensure our democracy, which has been
ignored with the government overlooking section 47(1) of the Wheat
Board Act. I hope the Senate can send the bill back to the lower
house to save our democracy.
Explanation How Individual Farmers
Are Marginalized in "Free Market"
Posted below is the individual intervention of
Saskatchewan farmer Eric Wilmot to the Senate Committee on December 7.
It is an honour and
privilege to speak with you this morning. I am a grain and oilseed
producer from Carnduff, Saskatchewan in the southeast corner of that
province. My two sons have joined me in our 4,200 acre farming
operation. I have grown variety of cereal crops including spring wheat,
winter wheat, durum
wheat, barley and oats, as well as peas, lentils, beans, flax, canola
and sunflowers. I have an agricultural diploma and a law degree from
the University of Saskatchewan. I have used the Canadian Wheat Board as
my agent to market my grain for 38 years.
In addition to my university education, I have taken
formal training courses relating to the selling of crops that are not
marketed by the Canadian Wheat Board. These courses teach, among other
things, the use of the Winnipeg Grain Exchange, as well as U.S.
commodity markets such as Minneapolis, Kansas
City and Chicago. I have used futures positions and options to hedge
prices and/or as risk management for some of my crops, most notably
canola and flax. I have also used various pricing and delivery
contracts offered by grain companies like Viterra, ADM, Richardson
Pioneer, Cargill and Paterson Grain. Each
crop has a different market. Some are domestic, some North American and
some overseas. The selling expertise required to move further away from
home increases. I have sold grains across Western Canada and legally
sold wheat, canola and flax into the United States. There is a big
difference between selling crops
and marketing crops. Marketing includes selling, but it also includes
market and customer development, the arrangement of transportation and
timing of delivery, after-sales support and branding. The Canadian
Wheat Board, with its single desk, is a marketer to customers in over
70 countries around the world. My
non-Canadian Wheat Board crops are sold in the open market. I contact
grain companies and ask them what the price is at a particular time and
location. They tell me the price and the terms of the contract. I have
no negotiating power in this arrangement. One of the market analysts
that I have used describes this
price discovery as buyers wanting to know the least that will persuade
farmers to supply the market.
I feel powerless in this arrangement,
international companies that provide me with no disclosure or
transparency; I am just a seller, a price taker. I am not a marketer.
With the Canadian Wheat Board, I am empowered by its single desk,
marketing expertise and farmer elected directors. With the passage
of Bill C 18, I will lose this empowerment and the opportunity to
market. This will result in a monumental change in how I derive my
income. There are very few if any producers in Western Canada who did
not start their grain farming careers after the existence of the
Canadian Wheat Board.
Notwithstanding that the Wheat Board existed, we all
decided to make grain farming our careers. Even those who now oppose
the Canadian Wheat Board and its single desk still chose to enter
Unfortunately, the single desk system cannot continue in
a market choice or open market system. Any board would have no security
of supply that would allow it to confidently enter contracts. As well,
a non-single desk board would be trying to sell the same products as
other competitors, without primary handling
facilities or port facilities. They would be relying on their
competition for these services.
I have no problem with people working toward change.
However, I do have a problem with a minority of farmers taking away the
marketing system that the majority prefers. The only fair way to decide
is to let the producers involved in the wheat and barley industry have
a vote on what could lead to a fundamental
change in their marketing system.
My concerns are with a government that is prepared to
use its majority position to change the Canadian Wheat Board Act so that no
producer vote is necessary in order to make changes to the Canadian
Wheat Board, rather than to give producers a vote on the future of the
Canadian Wheat Board, as required
under the present act.
Such actions give the appearance that
the government is using its majority position to circumvent the
democratic wishes of the producers. Any suggestion that a general
election is vote enough is not a fair assessment of the situation.
I am advised that if every single Canadian Wheat Board
permit holder voted in the last federal election, they would have
counted for little more than 2 per cent of the ballots. Only by having
a producer vote on the future of the Canadian Wheat Board would it be
possible to determine what the majority of producers
want. If the result is that the majority want to sell their wheat and
barley without the use of Canadian Wheat Board then that is what should
happen. However, to allow a minority of producers to have market
choice, even though they began as producers knowing that the single
desk was the marketing system for wheat
and barley, would deny the majority their market choice, namely the
single desk system under the Canadian Wheat Board.
The results of the recent Canadian Wheat Board
plebiscite indicate that a majority of producers prefer the desk. If
that number is not correct, at least there is a significant number who
do. What would be wrong with conducting a vote pursuant to the current
legislation? Anti-Wheat Board people suggest that farmers
in Western Canada should not be treated any differently from farmers in
other parts of Canada relating to the selling of wheat. However the
producers of Ontario and Quebec were allowed to vote to decide if they
wanted a wheat board. It was not decided on their behalf by a federal
government without direct contribution
or a vote.
There has never been any analysis conducted as to the
effects of this monumental change in the $108 billion a year Canadian
industry. The government has not provided producers like me with any
comfort or information as to the overall effects of this legislation. I
feel as though the marketing choice of the majority
of producers is being ripped away. We have had no input or explanation
as to what will replace it, except that the market will look after it.
I also feel insulted that some of the ministers of the
present government belittle my honestly and, I believe, reasonably held
position on this issue.
Wheat Exporters Describe Strength of Public Monopoly
and Its Importance for Grain Quality and
Economy of Scale
Posted below is a December 7 exchange between
representatives of the Agro-Hall shipping company and Senator Bob
Peterson at the Senate Committee.
Senator Bob Peterson (Saskatchewan): To
the gentleman from Agro-Hall, I take it you sell into a niche market.
How much product do you sell annually? What is the magnitude of your
Erwan Boubet (President, Agro-Hall):
Between 800,000 and 1 million tonnes.
Senator Peterson: You do this marketing
yourself through your customers, is that right?
Pat Nolan (Senior Export Manager, Agro-Hall):
Correct. We purchase the grain from the Canadian Wheat Board against
inquiries from our clients overseas.
Peterson: To guarantee that delivery, do you have to have it at
the port? You do not have facilities.
Mr. Nolan: No, we buy the grain from the
Canadian Wheat Board FOB [Free-On-Board] St. Lawrence River or FOB
Churchill or FOB West Coast.
Senator Peterson: In order for you to
sell to your clients, you need the assurance you can have that delivery.
Mr. Nolan: Correct. Our clients buy as
necessary. When we have to buy grain for a period, say July 1, 2015,
that grain has to be in position at the elevator. The ship has to be
there, which is our responsibility. It is the board's or the supplier's
responsibility to get the grain to the port for
that date. We have to load the ship and get out and sail in a timely
fashion to meet an arrival in West Africa; and we have to go to four or
five countries to discharge, so it is a real grocery ship. We have to
be there on time. Otherwise, we run the risk of the elevators, the
millers, running out of grain, in which case
they will either shut down or look for an alternative source of product.
We do not want them to do that. Canadian grain is the
most reliable, consistent grain in the world. As we have heard earlier
today and will probably hear more as we go on, the quality is top
quality. This is why we are renowned; Japan knows it, as does Iran,
Iraq and Algeria -- any country that has brought our
tendered grain. Russia many years ago, through Export Club, Cuba with
Alimport, they all know that the Canadian grain is top quality. Of
course, Russia has become our main competitor now. When you help
someone too much, that is what happens, but we have a history. People
want our grain and are willing to
pay for it because they know they will get exactly what they are
looking for all the time.
Senator Peterson: As you have indicated
with this voluntary board, it needs regulatory access to rail and
loading facilities. If that was to fail and does not work, have you any
other way of staying in business?
Mr. Nolan: There is always the option to
purchase from any of the grain companies that would be in business as
of August 1, 2012 -- the Viterras, the Cargills, the Dreyfuses.
However, they do not have the vast space to draw from, as the Wheat
Board does now. The Wheat Board draws
from across Western Canada, from Alberta to the borders of Manitoba and
If we are dealing with a grain company like Viterra,
Dreyfus, Cargill or any grain company you want to name -- Richardson,
Patterson -- they will have vastly smaller areas to draw from.
Therefore, their sourcing may be limited and it might be harder for
them to source, logistically move or position the grain,
whereas if we run out of grain in Saskatchewan in certain parts, the
Wheat Board will draw from Alberta or from Manitoba. They have many
more opportunities to source product. The smaller grain companies are
still big. Viterra and Cargill are huge by any measure, but they do not
have the same resources the
board does. The board has no farms or inland terminals. They have a
limited number of rail cars, two lakers pending, I believe, and they
have an office building. Their assets are their people, yes, and they
have very good staff at the Canadian Wheat Board. They are very
cooperative and friendly and are always willing
to listen and work with people, as I am sure all the grain companies
However, assets only go so far. The other grain
companies currently do not have to market to sustain themselves. They
just sell their product, basically Wheat Board grain I am not talking
about non-Board grains to the Wheat Board and are guaranteed their
money. If the Wheat Board becomes a competitor, it
is a whole new ball game. The mentality may be, "Why should we help the
new kid on the block? What is in it for us?" The Wheat Board will have
to have some space, otherwise, if we choose to buy from the board and
we say we want 30,000 tonnes on June 15, the board will have to try to
find someone who
will take it. If they do not take it, they will come back and say they
cannot get it, and we will try from someone else. We may have to look
at other origins, and we do not want to do that. We want to stay
Canadian. We have shipped 100 per cent Canadian grain for the last 25
years. We have a track record of supporting
Canada any way we can. We have even shipped non-Board grains when we
have had to; feed peas, feed wheat and barley. We have done a lot of
1. Most of Canada's grain is marketed
on a Free-On-Board (FOB)-port basis, i.e. the purchaser arranges and
pays for the insurance and freight charges. Shipping costs are
since they affect the landed grain price. (www.transportdugrain.ca)
Impact of Wrecking on Producer Cars and
Farmer-Run Short Rail Lines
Red Coat Road and Rail
Posted below is the December 7 presentation of Lonny
McKague, Director, Red Coat Road and Rail, a farmer-run short rail line
in Saskatchewan, to the Senate Committee.
Good afternoon, honourable senators, it is an honour to
be here today to speak before you for two reasons. The first is that I
represent a group of people who are very average Saskatchewan, rural
residents and who have done extraordinary things in their lives.
These people that I have surrounded myself with are
local community people, in southern Saskatchewan, who have achieved
some things and have a winning record that shoots above the belt of
Ogema, Saskatchewan, Pangman, Saskatchewan, Viceroy, Saskatchewan and
even Saskatchewan itself. Almost 13 years
ago, we entered into negotiations with Canadian Pacific Railway to
purchase a rail line, 114 kilometres long, from the town of Pangman,
almost to the town of Assiniboia. At that time, there was one other
short line in Saskatchewan, but there had never been a short line rail
line bought. The odds were stacked against
us to say the least. We found that Canadian Pacific Railway followed
the act to the letter. They were extremely good negotiators, from their
point of view, but they were also fair negotiators because of the act.
We thank them for that. We were able to purchase our rail line after 18
months of negotiations, and we
have operated it ever since. The purchase price was just over $1
million for the rail line. It was hard to come up with that $1 million
because my community has fewer than 400 people. We had to come up with
some funding to purchase the rail line. We had to explain it to
financial organizations and government.
We were the first people on the block. We had provincial, federal and
municipal governments and the banks learning from our experiences as we
went along. The learning curve was extreme but we were happy to lead
because the result would have been that within weeks our rail line
would have been ripped up,
sold off and maybe rebuilt in Mexico or the United States or salvaged
Since that time, our rail line has been successful. We
have operated. We have facilities along the line with full time staff.
Facilities that are farmer operated have been put up. We have put in
railway sidings at some locations at the request of farmers. Our
business plan, I would say, is 100 per cent but probably
99.5 per cent producer cars that are Board grains. We do not find, in
the non board market, that the elevator companies are interested in
using us because to retain the profits of a producer car, we have to
cut out the middle man, which is the grain elevator company. That is
where the income for producer cars lies
and where the benefit lies to producers.
In the last 10 to 11 years, we have retained around $3.5
million to $4 million in savings to our local farmers. We have paid
just above $400,000 in municipal and education taxes to our local rural
municipalities. We have retained businesses within the towns, and we
have established a success story that others
have now duplicated and followed. I am very proud of the people that
started this railway line and that went through the problems in order
to bring it to where it is today.
As of September 1, we were able to pay off our original
mortgage and have some money in the bank. Of course, with the floods
this spring and the disastrous weather that you all heard about in the
news in southern Manitoba and Saskatchewan, we had huge rail bed
issues. We were putting new dirt and berms
into places that had never had berms before, even in the seven years
prior when it was owned by CP Rail. We have had extensive costs such
that we are in the neighbourhood of $400,000 in dirt moving this past
summer to put the track back into operations. It has been a significant
amount of cash, but we are hoping
this is a once in a lifetime issue and we have been successful.
However, our success is contingent on producer cars. The
open market system right now does not utilize producer cars and, in
fact, works very, very hard against producer cars; but I am not sure
why. I do not have the reasons. The grain companies have their best
interests of their shareholders at heart and the
best interests of their shareholders are not producer cars. We keep
their tariff rates down. We are their competition. Do they want us to
exist? I do not believe so.
With that, I will be happy to answer any questions that
the committee has. Again, the second reason that I am here, and it is
such an honour to be here, is to be before the Senate. In rural
Saskatchewan, all jokes aside, it is a little hard to explain and be
politically correct. The Senate does not carry a huge emphasis
with some people, whether politically left-, right- or centre-leaning.
However, with me, you do carry emphasis. The sober second thought of
the Senate has always been very valuable. I respect it and am honoured
to be here before you for that reason.
We are 100 per cent reliant on grain movement as of
right now to pay our bills. Almost all of those cars, if not all of
them, are Canadian Wheat Board cars to this date, and most of them are
producer cars. Without those cars come August 1, we have capital bills
to be paid at the start of our fiscal year that we
need to pay.
If the producer cars do not continue, I will use the
example of when we went for loans to a federal government financial
institution. They told us, as a group of four people sitting there in
their office -- this was the president of the federal financial
institution -- that we were going against the wave of the future
when we bought our short line rail lines.
We took that to heart. We were back the next week again
and we were a little more prepared. They retracted that statement, and
they assisted us in some research money to get started and some start
up money, but we were not able to get a loan.
We were right; we were the wave of the future. They were
wrong; they were not. Producer cars have caught on. There were over
11,000 producer cars moved last year, compared to 10 years ago. We hope
we are wrong this time, senator, but our foresight -- that same
foresight that we had 11 years ago when
we started this -- says we cannot see how producer cars will continue
because their only value is reducing the middleman. If the Canadian
Wheat Board -- who did not give us special treatment in any way, shape
or form, but gave us equal treatment to the grain companies -- is taken
out of the picture, we do not believe
the grain companies will have our best interests at heart.
In fact, they have already started targeting our
producers along the line. It has already begun because as grain
companies try to get market share, the first people they are going
after are producer car shippers. That is the easiest target and it has
Why do I believe that we will not succeed? I believe
there is a group out there that does not want us to succeed; and if
producer cars are there in legislation but not there in practicality,
we will fail. That failure will amount to no financial return for us
immediately, starting within months after August 1, 2012.
Senators Ask Questions
Posted below is an exchange between Senators
and farmers participating in the December 7 meeting of the Senate
Committee studying Bill C-18.
Senator Don Plett (Manitoba): I have a
list of questions. Obviously, I will not get to all of them -- at
least, not in the first round -- but I will ask a few.
First, gentlemen, thank you for taking the time to come
to Ottawa and explain your position. It is certainly appreciated. I for
one and all of my colleagues appreciate hearing all sides of this
issue. Mr. Gehl has been in my office and we had a good chat there.
That was certainly appreciated. On that note, Mr. Gehl,
as an aside, since you were in my office, have you read the bill in its
entirety? You had not done so when you were there.
Matthew Gehl: I have not gone through
every single line of the bill. In my defence, I am not a professional
politician; I am not a policymaker. If I could get parts of your
salaries, I would be more than happy to sit and read through any bill
you have for me. The main reason that I feel justified
in not having gone through it with a fine-tooth comb is that it is
still based on the notion that the Canadian Wheat Board can be viable
in a dual market. One thing that all experts on this issue agree on is
that there is no such thing as a dual market. For Bill C-18 to be built
on the foundation of a viable Canadian
Wheat Board without a single desk, the entire bill has no validity as
far as I am concerned, when the experts, the agricultural economists,
line up and say this cannot happen, and when Minister Strahl
commissions a report that comes to that same conclusion in 2006.
Senator Plett: My question was whether
you had read the bill, not your opinion of it, but thank you for the
answer. I am from Manitoba. I am not a farmer but all my life my
livelihood and my sons now have been dependent on the farming
community. I feel very close to it. We have worked
with farmers all our lives in our business, and co-ops and pools are
very popular. You gentlemen are all from Saskatchewan where there is a
very successful pool called North West Terminal. Do any of you market
any of your product with North West Terminal?
Gilbert Ferré: No, because of
the distances involved. I am over 300 miles from them.
Senator Plett: Do you market with any
Gilbert Ferré: Do you have any
idea what it costs to transport grain any distance with a semi? It is
unreasonable to expect anyone to buy a semi or even rent or hire
someone to transport your production off your farm with the kind of
distances you are talking about.
Senator Plett: Sir...
Gilbert Ferré: Let me finish,
please. The distances we have to deal with in the province as a result
of rail line abandonment, the closure of elevators and so on has
brought us to this point. I consider myself a small farmer, with less
than 3,000 acres. I have my 1E licence and I drive a semi.
I bring my grain in large volumes to the elevator because that is the
only way to be cost effective with the distances we have to travel.
Second, on that point, as a result of those rail line closures and the
elevators being pushed over, the roads are taking a beating and the
taxpayers of the province are picking up the
tab for that.
Plett: If I could, please, Mr. Chair, in light of time, when I
ask a question, I really want the questions answered.
Senator Frank Mahovlich (Ontario): Point
The Chair: One minute, please, Senator
Plett. Thank you for the comment. I will hear Senator Mahovlich on a
point of order. Would you please state your point of order?
Mahovlich: These gentlemen come from Western Canada. You have no
idea of the distance. They have offered
their time and money to have a say in this democracy. Let them speak
and give them more than five minutes.
The Chair: Thank you for the comment,
Senator Mahovlich. It was not a point of order. Please continue,
Senator Plett, and then we will move to Senator Peterson.
Senator Plett: Do any of you operate
with any other voluntary pool or co op? I understand North West
Terminal is too far away from you, sir, but there are others.
Eric Wilmot: For the same reason, any of
the producer owned inland terminals are too far away from me. In fact,
I find myself almost trapped to one elevator because of distance. If
their prices are not fair, I cannot necessarily go shopping around
because as soon as I do, the transportation
costs make it not feasible.
Plett: I will lump my last two questions very quickly into one.
There was a plebiscite done and you of course are of the opinion that
there were certain percentages and that should be respected and so on.
You say the majority of the farmers in Western Canada voted 62 and 51
cent respectively for wheat and barley. I talked to the Wheat Board
directly and I asked them whether there were province by province
results, because I was interested in how my province had voted in this.
It is sad to say there were not province by province results. I will
make this my last question. If the province
of Manitoba wants to sell on the open market, and Alberta, Saskatchewan
and the northern part of British Columbia do not, should Manitoba
farmers not be allowed to sell in the open market? Why should they be
subject to the same wishes that Saskatchewan and Alberta farmers have?
The second part of the question
is, you have been very clear on your feelings about democracy and I
think we agree with that. If even one farmer wants to sell his grain on
the open market, why should he be subjected to the wishes of other
farmers where it would be his risk to take to sell on the open market?
I know you cannot all answer the
question, but one or two of you can take a shot at the province by
province question and the democratic right of one farmer.
Matthew Gehl: I will take the
opportunity to answer. The province by province situation is making us
out to be more of a republic than the confederation we currently are.
The provinces do not hold that much power as the states do in the
United States of America where different provinces
can have completely different laws. This is a federal issue and that is
why there is a federal mandate for it. Personally, I feel that the
Wheat Board should be rolled out across the entire country, but that is
because I believe in it. To answer your second question, democracy does
not guarantee the absolute rights of
every single person. There is a social contract involved in democracy.
Liberty -- and I see you shaking your head -- may invoke absolute
freedom for each person, but in a democracy it is the majority. I did
not vote for our current Prime Minister, but he is still my Prime
Minister, whether I like it or not. Should
my wishes as one person not get the same credence you are giving to the
grain farmers in your anecdote? I do not think you would agree with
that, and that is why I do not think that is a valid point. If the
majority of farmers want it under a democracy, it is the minority's
opportunity to use the channels that are
there to try to make the changes. Those channels are there. Those are
the Wheat Board director elections, which have now been scrapped under
this bill making the Wheat Board a Crown corporation in all but name.
Those people have their opportunities, with five director elections
every two years, and since the
Wheat Board has been democratized it has been strongly vocal pro-single
desk candidates winning 80 per cent of the seats. The one seat that was
not won last time was won by 32 votes.
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