Madam Speaker, it is a pleasure for me to rise to speak in support of Bill C-92, which is a bill to amend the Canadian Wheat Board Act. The bill will result in a fairer method of allocating freight costs among prairie producers of wheat and barley sold through the Canadian Wheat Board.
The change in freight cost pooling has been requested by the western grains industry and by those farmers who make their living doing what they do best, growing wheat and barley on the Canadian prairies. This change, once approved, will allow the
returns received by farmers from the Canadian Wheat Board to more accurately reflect actual market conditions and costs.
My hon. friends may be asking themselves just what wheat board pooling is, how it works and why it is being changed. At this juncture some background explanation may be instructive.
Currently producers within the Canadian Wheat Board who deliver grains to the board have deducted from their initial payment the freight costs incurred in moving their product to export position. That has traditionally been either Thunder Bay or Vancouver, whichever happens to result in the lower freight rate. For example, under the current pooling system producers in my home area, which is Brandon, who live closer to Thunder Bay, would have an estimated $20.34 a tonne in freight charges deducted from their initial payments as of August 1, 1995. A similar grain producer in the Calgary area would naturally be closer to the port of Vancouver and would have a freight deduction estimated at about $22.19. Grain being shipped to Thunder Bay faces an additional cost of about $20 a tonne to move from Thunder Bay east through the St. Lawrence seaway to final export position.
The additional costs are currently shared equally by all producers through the Canadian Wheat Board's pool accounts. For wheat, around $7 per tonne is paid by all producers out of the pool account to cover the additional expense.
The current pooling system means that income from the western part of the prairies is being transferred to the eastern part of the prairies. Even if the grain producer ships all their wheat to Vancouver, they are paying through the pool accounts to have eastern prairie grain transported from Thunder Bay farther down the St. Lawrence to ports that handle more export business.
Farmers in the western prairies are subsidizing part of those shipping costs for farmers in the eastern prairies. Clearly, the situation calls for change. A need for change has long been recognized by many throughout the industry. As some of the previous commentators on the bill have indicated, many producers have been afraid of embarking on a route that would enable such changes to occur. The driving force behind the change has come from industry and farm groups themselves. Parliament is merely carrying out the strongly conveyed wishes of those who work in and earn their living from the western grains industry. In addition, the four western provincial governments also support the necessary changes.
At this juncture some may be asking themselves why the government is carrying out its comprehensive reform to Canada's grain transportation system. More specifically, why is the grain freight cost pooling system being changed now?
There are at least four reasons why it makes sense to take action to reform the grain transport system. First, the new GATT agreement contains a number of rules against trade distorting export subsidies, including the WGTA, which all parties have recognized has been a distorting mechanism. If we do not make fundamental changes to our grain transport system, Canada could see itself being shut out of vital export markets.
Second, it is in our interest to develop a grain transport system that is more efficient, faster, and less expensive to operate. The savings that will come from such a system must be shared fairly and equally among all the participants, most especially by the farmers.
Third, Canada's prairie economy has been stifled for decades by a freight rate structure that promotes exporting of primary products and actively discourages diversification and value added processing. Until we end that discrimination, the west will be prevented from achieving its full potential.
Finally, this government and the people of Canada can no longer afford the luxury of annual rail subsidies of more than half a billion dollars, not when the government is facing a debt load of more than $500 billion and interest charges amounting to $120 million each and every day of the year.
For years now farmers in the western regions of the prairies have complained that maintaining Thunder Bay as the eastern pooling point was just not realistic and that it unfairly added to the cost borne by the producers in the western part of the prairies. For their part, the farmers in the eastern parts of the prairies have acknowledged this anomaly but have voiced concern about higher freight costs they would face if the eastern pooling point were changed from Thunder Bay to the lower St. Lawrence.
It is my belief that this bill strikes a careful balance between the interests of western and eastern prairie producers. It is a product of a long debate, going back as far as 1985, and more recent intensive analysis and close consultation involving the prairie farm organizations, industry, the provinces, and the grain cooperatives. This consultation has resulted in the proposed changes we are debating here today.
The grain farmers of western Canada have spoken. They have told us with a strong and united voice that there is a problem with the current grain pooling system, that the problem needs to be addressed, and that it must be addressed now.
We must act now. The freight pooling system has never involved a subsidy. It has involved a form of cross-subsidization of one group of farmers subsidizing those in another. These same producers are now telling us that they want this current arrangement brought to an end. The people have spoken. Change will be happening.