ISSN 0542-5492 Second Session - Thirty-Second Legislature of the Legislative Assembly of Manitoba STANDING COMMITTEE on AGRICULTURE 31-32 Elizabeth 11 Chairman Mr. A. Anstett Constituency of Springfield VOL. XXXI No. 8 - 7:00 p.m., THURSDAY, 21 APRIL, 1983. Printed by 111e CHflce of the a.- Printer, Province Of Mllnil oba

MANITOBA LE GISLATIVE ASSe MBLY Thirty-Second Legislature Members, Constituencies and Political Affiliation Name ADAM, Hon. A.R. (Pete) ANSTETT, Andy ASHTON, Steve BANMAN, Robert (Bob) SLAKE, David R. (Dave) BROWN, Arnold BUCKLASCHUK, John M. CARROLL, Q.C., Henry N. CORRIN, Brian COWAN, Hon. Jay DESJARDINS, Hon. Laurent DODICK, Doreen DOERN, Russell DOLIN, Mary Beth DOWNEY, James E. DRIEDGER, Albert ENNS, Harry EV ANS, Hon. Leonard S. EYLER,Phil FILMON, Gary FOX, Peter GOUR LAY, D.M. (Doug) GRAHAM, Harry HAMMOND, Gerrie HARAPIAK, Harry M. HARPER, Elijah HEMPHILL, Hon. Maureen HYDE, Lloyd JOHNSTON, J.

Frank KOSTYRA,Hon. Eugene KOVNA TS, Abe LECUYER, Gerard LYON, Q.C., Hon. Sterling MACKLING, Q.C., Hon. AI MALINOWSKI, Donald M. MANNESS, Clayton McKENZIE, J. Wally MERCIER, Q.C., G.W.J. (Gerry) NORDMAN, Rurik (Ric) OLESON, Charlotte ORCHARD, Donald PAWLEY, Q.C., Hon. Howard R. PARASIUK, Hon. Wilson PENNER, Q.C., Hon. Roland PHILLIPS, Myrna A. PLOHMAN, John RANSOM, A. Brian SANTOS, Conrad SCHROEDER,H on.�c SCOTT, Don SHERMAN, L.R. (Bud) SMITH, Hon. Muriel STEEN, Warren STORIE, Jerry T. URUSKI, Hon. Bill USKIW, Hon. Samuel WALDING, Hon. D. James Constituency Ste.

Rose Springfield Thom pson La Verendrye Minnedosa Rhineland Gimli Brandon West Ellice Churchill St. Boniface Aiel Elm wood Kildonan Arthur Emerson Lakeside Brandon East River East Tuxedo Conccrdia Swan River Vir den Kirkfield Park The Pas Rupertsland Logan Portage la Prairie Sturgeon Creek Seven Oaks Niakwa Radisson Charleswood St. James St. Johns Morris Roblin-Russell St. Norbert Assiniboia Gladstone Pembina Selkirk Transcona Fort Rouge Wolseley Dauphin Turtle Mountain Burrows Rossmere lnkster Fort Garry Osborne River Heights Flin Flon lnterlake Lac du Bonnet St.

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LE GISLATIVE ASSEMBLY OF MANITOBA THE STANDING COMMITTEE ON AGRICULTURE Thursday, 21 April, 1983 TIME -7:00 p.m. LOCA TION- Brandon, Manitoba CHAIRMAN -Mr. Andy Anstett (Springfield) ATTENDANCE - QUORUM - 6 Members of the Committee present: Hon. Messrs. Buckla schuk, Plohman and Uruski Messrs. Anstett, Blake, Carroll, Downey and Harapiak WITNESSES: Mr. Dennis Heeney - Private Citizen Mr. G. Jones presented a brief for Mr. Wayne Sotos of the National Farmers Union, Local 505 Mr. Bill Nicholson - Vice-Chairman, Shoal Lake Committee, Manitoba Pool Elevators Mr.

Ken Sigu rdson - Manitoba Pool Elevators delegate Messrs. Larry Maguire and Laurie Howe, Souris Valley Farm Business Association Mr. Brad MacDonald -C anadian Wheat Board Advisory Committee, District 2 Mr. Tony Riley - Private Citizen Mr. Alla n Riley - Private Citizen Mrs. Claris Nicholson - Private Citizen Mr. Alex McWilliams - President of Turtle Mountain NDP Mr. lan Robson - Private Citizen Mr. Henry Rempel - Private Citizen BRIEFS SUBMITTED IN WRITTEN FORM ONLY: Mr. John Mitchell - R.M. of Rossburn and Manitoba Pool Elevators (Rossburn Sub-District) Village of Rossburn Mr.

Emil Shell born - Chairman, Erickson Pool Committee MATTERS UNDER DISCUSSION: Western Transportation Initiative Proposed by the Government of Canada 198 MR. CHAIRMAN: The committee will come to order. We have a quorum, ladies and gentlemen. The next person on our list is Mr. Wayne Sotos, National Farmers Union, Local 505. Do you expect him to be returning? Mr. Bill Nicholson, Shoal Lake Local Committee, Manitoba Pool Elevators. Mr. Nicholson. Mr. Dennis Heeney. Mr. Heeney, please come forward. Please proceed, Mr. Heeney. MR. D. HEENE Y: I'm here on my own.

I'm not representing anyone and I think I'd just like to make reference to the fact today that there have been several people including farm groups as well as politicians who have been presuming to speak for me. I want the committee to know that nobody speaks for me and that I think most farmers would agree that if the politicians and the other vested interests want to find out what the people want, then why don't they ask them with a referendum or some similar method.

However, be that as it may, I'll take the opportunity to present some of the points that I feel are important to me as a Western Canadian grain producer. I've heard today, again, conflicting representation as to how much money, in fact, is being lost. There appears to be conflicting views on how this money is accounted for by both the CN and the CPR and most of the emphasis has been on the losses incurred by the CPR. I understand that the CNR hauls approximately 45 percent of all the grain in Western Canada, so I would think that they should have been a little more in the limelight along with the CPR.

The Snavely Report suggested the loss figure of $600 mill ion which I believe was re ferred to in one of the Federal Government documents. Dr. Gilson suggested it was slightly less and the prairie Pools came up with an even lesser figure and I believe in this pamphlet here suggests $300 million or $350 million. Now there are two newspaper articles which came from Canada Press and I wouldn't want to say how authentic they are, but they do refer to CN matters which indicate that during the period when Snavely and Gilson were compiling their reports, CN actually showed a profit.

In 19 81, this was reported to be 193.2 million. They also indicated a loss of 223 million in 19 82 and I believe Mr. Campbell said that was $350 million. So, there's conflict of actually how much they lost. The President of CN, Mr. Lawless, stated that CN had an operating loss of 35 mill ion in one article, the other

article confirmed that as a loss to CN Rail, 34.9 million. Yet, the same

article goes on to claim a $250 million loss from hauling grain. I would suggest that somebody should clarify these figures, so that we might be able to better judge exactly what is going on. Especially, I th ink Mr . Pepin as being Minis ter respo nsible for Western transportation and the CN should take steps to clarify these issues. I also need to know how and why CN, which is a Crown corporation and whose original purpose was to transport people and commodities, now consists of

Thursday, 21 April, 1983 several subsidiaries in this country and in the United States and possibly others. Many of these subsid iaries are not directly related to transportation. So, I wonder where did they get the money to finance these non­ related assets? And if they got it from profits, why were these profits not returned to the Federal Treasury instead of being invested in non-transport related ventures? And if they were financed from subsidies it's obvious that the Federal Government was irresponsible since the subsidies were not needed.

There have been claims that CPR have, through federal subsidies and large land grants, etc., which was alluded to today, been adequately compensated for any losses incurred in hauling grain. If there is any comparison between CN and CP types of operations, then it's quite possible that these claims could be justified, but the fact remains that the questions have never been answered. We've had several people making the claim that they have been adequately compensated and no one has said they have or haven't and I think it's time the public had an accounting of both organizations.

However, at the present time and under the present conditions, it may well be that both rail roads are losing money, both on grain hauling and possibly on their total operations. Appendix 2, there are figures compiled by Manitoba Pool and the Provincial Government which relate to production costs and other factors related to production of western grains, including oilseeds. The Pool figures for 19 81, cost of wheat production of $1 60 per acre; the Provi ncial Government figur es for 19 82 were $171. 35.

They use the figure of $42 and $45 respectively for land investment costs, which I think in the current situation, could be far too low based on current interest rates and prices of land which vary from $500 to $1 ,500 per acre and interest rates of 12 to 15 percent. The Wheat Boa rd 's Annual Report shows tha t Manitoba's 10 -year average for wheat yield is 26.3 bushels and the prairie yield is 26.2.

The Minister for the Canadian Wheat Board, Honourable Hazen Argue has indicated 1983 initial wheat prices will be 4.63 for No. 1 Red Spring basis Thunder Bay, so when you deduct the present freight rate of 16 cents per bushel or 13 cents, whatever the case may be - it says in here is the average freight cost under the Crow - then farmers in 19 83 will be receiving $4.47 per bushel basis No. 1 Red Spring.

If you take a 10 -year average yield at 26.2 bushels per acre times the projected price for 1983 of $4.40, shows a projected return of $11 7. 11 per acre or a net loss based on the figur es I just mentioned of $54.24 per acre. If this per-acre loss is multiplied by the 1982 Canadian acres supposedly seeded to wheat, out of the Wheat Board Report which is $29 million, the yearly loss to Western Canadian farmers is projected to be $1, 571 ,960,000; these figures are based on No. 1 Red Spring and 19 82 production costs.

We'll have to consider that there are more No. 2 and No. 3 wheat produced than there is No. 1 and therefore the price would be less and the production costs for 19 83 can be considerably more. We know for sure that fuel prices are going to be higher in 1983, so then these losses could be much higher. We consider th at every dolla r of agricu ltur al production is multiplied seven times when it's generated 199 into the total economy. lt becomes very obvious what a tremendous negative impact these losses will have on the total Canadian economy.

This may not be directly related to the transportation problem but there nevertheless are implications to the total system. The obvious conclusion that is reached then, is that both the railroads and the farm community are losing money. The Federal Government has conceded that the railroads should be compensated for their losses by increases in the present statutory freight rates for grain. They are not suggesting that farmers should also be compensated for their present and expected losses; instead, they are suggesting that farmers should pay a portion of any inflationary increase beyond 19 83.

Inflation is the fault of the Federal Government and, I believe, farmers are victims of inflation and not contributors to inflation, so inflation is beyond the control of both the rail roads and the farmers, and then surely neither should be expected to pay for something which is not their fault, nor over which they have absolutely no control. The federal and provincial deficits are higher now than they have ever been in our entire history, yet the Federal Government is suggesting that farmers pay even more freight costs on all production in excess of 31 million tonnes.

Agriculture represents one of the few bright spots in our economic future, both from the previously mentioned spinoff effects of the multiplication of the original doll ar, and from new dolla rs generated by export sales. To attempt to stifle these sales is surely regressive thinking on the part of the Federal Government, and anyone else who thinks that way. The Federal Go vern ment, Department of Transportation are presently circulating literature on their proposals and it indicates, or at least is interpreted to indicate, that if farmers pay higher freight rates now it will be in their long-term benefit.

There's a little thing in the paper there where one of the people for the Public Relations is interpreting and suggesting that if we do pay higher rates now, it will be to our benefit in the long run. The simple mathematical fact remains that if losses are presently being incur red by the farmer , then producing, shipping and selling more simply results in correspondingly larger losses.

If you lose $1 a bushel shipping 10 bushels, I think if you ship 1, 000 bushels you're going to lose that much more, so it doesn't make any sense to say, if we could just sell the grain at a loss we'd be better off; it doesn't make any sense to me at any rate. Any suggestion, otherwise, is I think, untrue and the assumption that a rise in commodity prices may improve the present situation, is purely guesswork at this time.

I think if you had it in the Budget that the Federal Government is gambling that the economy is going to improve, and get them off the hook, we'll be able to pay higher taxes and I don't think there's anything to substantiate that. So I would like to recommend that in the short term there should be no increase in the freight costs being paid by farmers at this time, regardless of whether or not the present statutory Crow rate is changed, and I don't happen to be a member of the Farmers Union. 2.

That the present costs apply to all cereals, and I believe it should include all oilseeds up to and beyond the proposed 31 million tonne ceiling proposed by the Federal Government.

Thursday, 21 April, 1983 3. The bureaucracy I think should be instructed to stick to presenting the facts and cease editorializing and distorting the truth. I think when you look at this document here, there's a lot of allegations that aren't necessarily true in that. 4. The Wheat Board should not sell to any country who cannot pay for the products they receive, and we should expect to be paid in either gold, real dollars, or in goods of equal value.

We cannot continue to sell to foreign countries financed by loans from Canadian banks, and having these loans gua ranteed by the Federal Government or the Canadian taxpayers. If they cannot pay we should either refuse to sell to them, or simply give them the grain, which would be cheaper in the long run than giving them grain and our money, too, which is what is going to happen if the countries can't, or won't, pay. 5. In the long term legislation should be amended to permit freer trade, less taxes and promote more genuine competition, at both corporate and labour levels.

In this way the market could once again be allowed to function as it should and thus establish true values in all areas of our economy. However, that's not likely to happen. 6. If we fail to achieve the changes in No. 5, then both the railroads and the farmers should be adequately compensated by the public Treasury to a level that would permit both to be economically viable. Since both the Provincial and Federal Treasuries are virtually bankrupt, and further subsidies must be financed by additional borrowing and, in all likelihood, charged to and paid for by future generations.

I feel that, as a society, we have no more right to defer our debts to succeeding generations, which obviously leaves us in a bit of a dilemma. Since I just received this in the mail, after presenting this brief, I would like to make a few comments, if I may, Mr. Chairman, on these two documents that I received from the Federal Government at the taxpayers' expense. "What's in it for the farmer?" lt says on this one here. More diversification, obviously oilseed crushing and livestock. I think that is going to occur mainly because there's going to be an awful lot of cheap barley around.

If the freight rates are 75 cents on $1. 67 barley I don't think we're going to be shipping too much to Thunder Bay, and for a short time we're going to have some pretty cheap barley for feedlots and then we won't have any at all, so we won't have either barley or livestock. The crushing industry, I think the same thing applies, that we will produce the rapeseed for the crushers if the price is right and, if not, I guess we can't afford to. We're going to have increased production because of all this change, it says. Well, I think nature dictates the kind of production we're going to have.

Price incentive also helps to indicate whether or not we produce. If more production is desirable, and if it's profitable, then I think that the farmers will respond to the best of their ability. We're going to have lower farm storage costs, it says. Well, I believe that no matter whether we had storage or not we cannot physically move an our production in a short period of time.

We have to store some of it and most of the farmers at the present time, I believe, 200 have enough storage to take care of about one crop and it's paid for, so I don't think that's a valid argument at all. lt says why the Crow has to change. In 1897 the Crow rate wa s 13 cents. lt paid th e full cost of transportation, but in 1982 13 cents covers only 18 percent of the real cost as a result of inflation. So the key here seems to be that inflation is the problem.

Why did freight rates go from 13 cents, and wheat was 70 cents a bushel in 1897 and it's now been up to $6 and back down to $4.50, but the cost of production, including freight rates, has continued to rise and has never gone down. Again, inflation, I believe, is strictly the responsibility of the Federal Government, so I think, therefore, the additional costs for moving grain has to be their responsibility. "The railroads must increase their capacity," it's stating here and that they will under this.

I believe all the indications in here is that this is the biggest make­ work project we've ever seen in our history since probably the first railroad we built, because there's going to be tremendous spinoffs for all the people in Canada and they're all going to be building railroads, that's what it says in here, and all of these other things may come after. I believe if you have a dollar generated out of production, then it will multiply seven times, but if you don't have that doll ar, what are you building a rail road for? So I think they're getting the cart before the horse.

I think they could also move an awful lot more grain today if they had co-operation from labour, or if they took the bull by the horns and said to labour that you have to contribute to the national economy by getting to work; you can't go on strike and stop us losing these billions of dollars of sales which we apparently were losing. "What's in it for Manitoba?" Well, it looks to me like Winnipeg is going to benefit mostly because of all the rail road activity that's going to go on there.

I can't see that we should be really concerned about what happens exactly to Manitoba - we're talking about western grain production and the future of Western Canada - and if Western Canada agriculture is healthy I don't think we need to worry too much about the whole national economy. I believe, again, that inflation is the key and that would be the responsi bili ty of the Federal Government. That is why I don't believe, at this time, that farmers should be expected to pay any more of an increase, regardless of what the new statutory rate may be. Thank you, Mr. Chairman. MR. CHAIRMAN: Thank you, Mr. Heeney.

Are there any questions for Mr. Heeney from members of the committee? Mr. Uruski. HON. B. URUSKI: Thank you. Mr. Heeney, in your presentation you've indicated that you believe that farmers should not, and cannot, pay anymore, that there should be no increase in freight costs to be borne by the farmer. You also indicated in your remarks here toward the end, you indicated that there may be some benefits to Manitoba from these changes. Could you tell us,

Thursday, 21 April, 1983 from your analysis, where you saw some benefits to Manitoba from this initiative? MR. D. HEENEY: I wasn't suggesting that I didn't believe there was too many benefits for Manitoba. I was simply referring to the Federal Government's document which said that, in their opinion, there would be a great many benefits for Manitoba. In my opinion, I didn't think that they would be much benefit to agriculture, but a good deal of benefit to the railroads and those people employed by railroads. HON. B.

URUSKI: You're not opposed to the upgrading of the railway system as has been envisaged in the Pepin proposal? MR. D. HEENEY: No. HON. B. URUSKI: How should that upgrading take place and who should pay for that upgrading? MR. D. HEENEY: Well, I believe, Mr. Minister, that if we had a competitiv e system, and tha t include s exporting and world markets and competition between railroads and competition of labour, I think we would see a lot lower prices and a lot lower costs. I would agree that the Crow rate by being fixed for so long has gotten behind the times and needs to be upgraded.

I just am saying that on the basis of what has happened to farm prices, I don't believe the farmers can pay at this time. So I would think that shortfall should come from the Federal Treasury, from the country, from the citizens of all of the country to pay for the rail roads. I think then over the longer term, by better competition amongst labour and amongst other groups, that the railroads then could haul competitively and they could charge more and we could pay more if the price was . there. lt may include subsidization.

Lord knows, there's enough subsidization now and I don't suppose anybody knows how much, but I would prefer to see that over a long term the railroads could charge enough to replace their capital assets and make a profit, and then we could also pay it and also maka a profit. Now that's a long term. In the short term, I think it has to come from the Federal Treasury. They're responsible for what goes on in this country and I think they have to pick it up at this time. HON. B.

URUSKI: Is it an unreasonable proposition that if the people of this country put up the money to put into place the capital infrastructure that railways need - not their operating, but the capital infrastructure - that they should be guaranteed a return on that investment? MR. D. HEENEY: Well, I think for the short term I would say, no, it's not, because for whatever reason, the railroads obviously are losing money and have gotten behind. Whether or not it's been legitimate, whether their money has been filed out, or whether it's just because of the cost price freeze, I wouldn't like to say.

I haven't had availability of the facts to me, but I would think that the Federal Treasury should pay the cost and, therefore, the railr oads should not expect any 201 return on investment until such time as they can get things squa red around to when it is paying again and then they should expect to be able to charge enough to make a return on their investment. How long that takes or how the mechanism's going to be, I wouldn't like to say. HON. B. URUSKI: As you started out in your brief, you were confused by the railway's figures.

If the railways, on their total operations, are shown to be making money on their operations, making a profit by their standards, is it reasonable for them to say that now we need as much profit on all sectors of our operation, even though we're making a profit on our total operation? Is that a reasonable proposition? MR. D. HEENEY: I don't think it is reasonable to expect that you should get a profit on all parts of your operation all of the time.

I think that certainly they should expect overall to have a profit, but they have diversified to probably a greater extent than maybe they should have as a Crown corporation, and it seems strange to me I that they have assets in the United States which they can use to write off or charge as a loss against something in Canada, which has nothing to do with hauling grain. That to me doesn't make sense in this particular argument.

But the CPR, for instance, is a private corporation and if they do it as a private corporation, they're entitled, and competition between the two should indicate that they'll be able to charge whatever they need to make a profit. Sometimes they're going to have to lower the rates as our prices go down and as our prices go up, we can maybe charge more. So it seems to me the competition would dictate when they make a profit and when they have to take a loss. HON. B. URUSKI: But, truly, is there competition? MR. D.

HEENEY: I think competition is something that we - if we ever had it, I don't know when, but it's been many many years since we've had genuine competition anywhere. HON. B.

URUSKI: If the railways over the last 60 years have shown an overall profit on their operations, on their books, and of that 60 years they may have had losses on their grain operation for maybe a decade, accepting their figures, is it now reasonable for them to say that because we are losing money on grain and grain becoming less and less of the amount of load hauled, that we have to be totally compensated for hauling grain, even though we did quite well for, say, 50 of the last 60 years? MR. D.

HEENEY: Well, if in fact there is competition, then that should have taken care of itself, but I would have to think obviously there isn't competition and, of course, there couldn't be competition with the statutory rate. So who knows what it should be? That's what confuses me when I read this annual report of CNR. I don't rea lly kn ow wha t the y'r e lo sing because apparently in 1981 they made a profit, and in 1982 they had a loss, and yet, the loss figures don't jive. If there was - I believe Mr. Snavely said - a $600 million loss in 19 81, when he did his report, it must have all

• Thursday, 21 April, 1983 been CPR, because CN made a profit. So who knows what's going on, and I think that we have a right to know and it's hard to make a judgment when we don't have the figur es available to know exactly whether they're losing money or not, but I think that they should be obviously. Everybody seems to need more money as prices go up but we would like to have more too. Unfortunately, we don't seem able to get it. HON. B. URUSKI: Just one more question.

Do you find it unusual that the CPR has basically stood aside from this whole debate and has allowed the executives of the CNR to carry the debate in these changes? MR. D. HEENEV: I thought it was the other way around. HON. B. URUSKI: At all public meetings that I have been at, I have yet to see the CPR participate in the debate, but I have always seen, as we have seen today, executives of the CNR at those mee tings. MR. D.

HEENEV: I would find that rather strange because all of the references in the media and all of the literature we have read and all the studies we have done have completely omitted the CNR, and yet, obviously, they're hauling almost half of the grain. So I wonder what they've been doing, or whether they've been doing badly or well. I think that should be disclosed at this time completely to the public and I would hope that it would be done in such a case. Then we could make a legitimate and valued kind of a judgment, but at the present time I don't see how we can really judge.

I can just judge from my position and I'm saying that from a farmer's position, I don't think we can afford to and I don't believe that realistically we should be expected to pay. I just read the other day that the DEC is subsidizing in France, or subsidizing barley prices to the tune of $10 8 while the market value of the commodity is $1 00 a tonne and we don't get any subsidy of that nature so therefore it puts us in the awkward position of having to pay these increased costs without any subsidization. I don't like subsidies but I don't know what else we're going to do. MR. CHAIRMAN: Further questions. Mr.

Downey. . MR. J. DOWNEV: Mr. Chairman, through you to Mr. Heeney. Page 3, you refer to No. 1, that in the short term there should be no increase in the freight costs by farmers. Would you subscribe to some of the principle of the idea that the changes in freight rates therefore to come about in the longer term should in some way be tied to the return that the farmers get for their grains such as was suggested earlier the safety net concept? Do you subscribe to that principle? MR. D. HEE NEV : Wh at I heard toda y it sounds interesting but I without, you know, it was very detailed and I couldn't really comment.

I'm a little concerned about that kind of an approach. I think in principle it may be alright but I'm afraid it would get tied into something that we could never get out of and it might work to our disadvantage. I would prefer to see a more competitive system which would find out what the value was, which does fluctuate from time to time instead of always going up. But I would see some merit in that, certainly I would think it would be better than what the government is suggesting that after two years we pay all inflationary costs. I just can't accept that under any circumstances. MR. J.

DOWNEV: Coming from some areas, Mr. Heeney, there's certain feeling in society that if the government were to own, through a Crown corporation, or through shares owned by government, that if that were to come about that all at once the cost of operating of the rail road would disappear. That it would automatically just be less of a problem on society. What, in Federal or Provincial Governments today, has given you the assurance that they can manage business, or the affairs of your money better than the private sector can do? In view of the deficits we have federally and provincially just to further. 202 MR. D.

HEENEV: Well, are you referring to a possible nationalization of the railroad? MR. D. ORCHARD: That's right. What would make you feel more comfortable if the government were to operate it the way they operate the rest of the country. That it was going to make money, or provide service like the Post Office or that type of thing? What would make you feel comfortable about that? Is there anything? MR. D. HEENEV: Well, I think I could be reasonably comfortable with nationalization perhaps with the road­ bed similar to the airports, and the highways.

The rolling stock I think should be competative and anybody should be able to haul on those road-beds and then we could have some competition and I believe that the, yes, I could accept that kind of a thing. But at the present time I can't trust either, because of the CPR's massive conglomerate I don't know where there money goes, and they have so many subsidiaries. But obviously CN does too, so why should I trust the government anymore than, but I don't trust either.

Yet I think why not if we're going to nationalize the road­ bed, or have a Crown corporation for transportation then it should only be for transportation. They should have no subsidiaries because obviously that had to be taxpayers money that went into the CN tower, and the hotels, and the grand trunk and I don't see what business they had doing that. MR. CHAIRMAN: Further questions for Mr. Heeney. Seeing none. Mr. Henney, on behalf of the committee thank you very much for appearing here today.

Before we proceed any further I would like to advise the committee of the unavoidable absence of two of our members this evening. The Honourable Sam Uskiw, Minister of Highways. And Mr. Don Orchard, The Member for Pembina. The Estimates of the Department of Highways are presently before the House. Oh, and also Mr. Manness for Morriss. The Estimates of the Department of Highways are currently before the Legislative Assembly and they came up after these meetings were scheduled.

Thursday, 21 April, 1983 Mr. Uskiw being the Minister responsible for the High ways Estimates had to return to the House for the 8:00 p.m. sitting tonight. Mr. Orchard is the opposition critic, and Mr. Manness assists him as opposition critic in the House. So the two of them are both occupied with those Estimates. So we're missing three members tonight. The rest of us will try and fill in their shoes and make sure we fire just as many questions at you in their absence. I'm going to return back to the two names we skipped on the list earlier just in case those people are here now. Mr. Wayne Sotos.

Please come forward then. Would you state your name for the record please. MR. G. JONES: Goldwin Jones from Tilson, Manitoba. MR. CHAIRMAN: Mr. Jones, are you a member of Local 505, of District 6, of the NFU? MR. G. JONES: No, I am on the National Board, of The National Farmers Union for Region 5. MR. CHAIRMAN: Please proceed. MR. G. JONES: Thank you, Mr. Chairman, Mr. Sotos, who is the President of Local 505, had to go home. He asked me to present this brief because of the high level of concern in that area over the possibility of the loss of their branch line if this proposal goes through.

We as local 505, of District 6, of the NFU voice concern on the Federal Government's proposal to implement a change in the Crow Rate. The farmers that deliver grain to the Neepawa-Rossburn branch­ line are concerned that if the Crow Statute is removed, existence of this line is short-lived. Variable rates will encourage movement of grain from this line to the neighboring CP line. Volume will be reduced giving the railway a reason for closing the Rossburn subdivision.

The effects of this will be: 1. increased trucking req uiring high er road­ maintenance, resulting in higher taxes. 2. in crease costs to farmers namely: bigger trucks, and longer hauls. 3. loss to local businesses. 4. an increase in local unemployment 5. less efficient use of energy 6. a decrease in grain production. We are not denying the need for an adequate up­ to-date rail system for transportation of grain, but we simply cannot afford the Feder Government's proposal. In the last decade, production costs have risen 135 percent while in the same period grain prices have only risen 13 percent.

We as farmers have no control over either. The Crow rate is our only guarantee in our cost of production. By the year 19 90, freight rates will be six times the Crow according to Mr. Pepin's proposal. Do farmers have any guarantee that grain prices will rise accordingly to cover the extra cost? We as farmers cannot afford to lose the Crow.

We stongly request the Government of Manitoba to pay concern to the financial impact of the Crow changes to the farming community across Manitoba. 203 Furthermore, that the Provincial Government of Manitoba put pressure on the Federal Government to a complete audit of all CP holdings to give a true picture of all net-worth. We urge an increase in the provincial duel tax on CN and CP trucks and eliminate the fuel tax on locomotives, also to produce maps of all lands in Manitoba, Saskatchewan, and Alberta, known to have been given to the CPR between 1881 and 1905 and to make these maps available to the public.

The Mani toba Government should pressure the Federal Government to amalgamate CN and CP Rail and run it as a public utility, since they are already being heavily subsidized with public money. The Pepin proposal clearly will be very detrimental to Canada, so it is essential that everyone fights to maintain the Crow. Thank you, Mr. Chairman. MR. CHAIRMAN: Thank you, Mr. Jones. Are you prepared to answer questions on behalf of Local 505 of District 6? MR. G. JONES: Yes, I will do my best. MR. CHAIRMAN: Are there any questions for Mr. Jones? Mr. Harapiak. MR. H. HARAPIAK: Mr. Chairman, through you to Mr.

Jones, the third paragraph on Page 2, "We urge an increase in the provincial fuel tax on CN and CP trucks." I misunderstood the sentence. I've straightened it out in my own mind now. I have no question now. MR. CHAIRMAN: Further questions? Mr. Slake. MR. D. BLAKE: Yes, just in the final paragraph, Mr. Jones, you indicate the Manitoba Government should pressure the Federal Government to amalgamate the CN and CP lines and run as a public utility, which I assume, is taking over the CP Rail. I'm sure the CP would be very glad to get rid of their rail operation if they could maintain their other holdings.

So what benefit would you see in taking over the CP lines? Were you thinking along the lines of Mr. Heeney's presentation of maybe nationalizing rail beds? MR. G. JONES: No, I think our position on that is that the system would be a lot more efficient if the two rail systems were operated as one system, for the benefit of the people of Canada.

We feel that transportation is such a vital issue in this country, due to our geography, etc., that we cannot allow transportation to remain in the hands of a sector that believes in profit only, and profit at any cost, even if it means abandoning branch lines, you know, that sort of thing. MR. CHAIRMAN: Further questions from Members of the Committee? Mr. Plohman. HON. J. PLOHMAN: Yes, just briefly, Mr. Chairman, you have given some suggestions as to action that you feel, I guess, the province should take, on Page 2, the one about maps and fuel tax and so on.

Do you feel that this is being advocated by yourselves as a public

Thursday, 21 April, 1983 relations campaign, to make the public more aware of what the CPR got in the first place, the matter of maps? Is that the purp ose of this? MR. G. JONES: That is correct. There's a lot of misunderstanding amongst the public on just what was given and what the arrangements were. HON. J. PLOHMAN: Is this being suggested to all of the Provincial Governments involved? Then, of course, you wouldn't expect the Manitoba Government to be doing this for Saskatchewan and Alberta. MR. G. JONES: If I misunderstand you, Mr. Plohma n HON. J.

PLOHMAN: Yes, are you asking for this to be done by the province, I would assume, or are you asking the Federal Government to do this? I don't know whether you'll get their co-operation. But I'm trying to get this clear as to who you want to do this and certainly in which provinces, which holdings you would like to see dealt with in these maps. MR. G.

JONES: I think our position is tha t the Government of Manitoba produce the maps that show all the lands given in Western Canada, because I have seen the maps and for rail lines that were built in my area in southwestern Manitoba, which have now been abandoned, the CPR received a vast tract of coal­ bearing lands in Southern Alberta, as well as a lot of farmland that is now under irrigation, as well as land on both sides of the right-of-way. HON. J. PLOHMA N: Mr .

Chairman, what yo u'r e suggesting is that these maps would be an outline of all of the benefits given to the CPR originally or both railways with regard to the original decisions that were made, and the deal that was made at the time the railways were extended through to B.C. MR. G. JONES: Yes. HON. J. PLOHMAN: Thank you. MR. CHAIRMAN: Further questions by members of the committee? Seeing none, Mr. Jones, thank you very , much for appearing here this evening on behalf of Mr. Sot os. MR. G. JONES: Thank you, Mr. Chairman. MR. CHAIRMAN: Mr.

Bill Nicholson, on behalf of the Shoal Lake Local Comm ittee and Mani toba Pool Elevators. MR. B. NICHOLSON: My apologies to the committee, first of all, for not appearing when originall y called. I am the Vice-Chairman of the Shoal Lake Local Committee of Manitoba Pool Elevators. I am making this presentation because our committee feels that our views are not adequately represented by Manitoba Pool Elevators and certainly not represented by the Manitoba Farm Bureau. 204 The position of the Shoal Lake Local Committee of Manitoba Pool Elevators is one of support for the Crow rate as it presently stands.

We are totally opposed to the Western Transportation Initiative, Mr. Pepin's plan to scrap the Crow rate. This proposed legislation would inflict tremendous financial losses on farmers in rural communities and eventually destroy the political and social make-up of the world economy. The only guarantee that farmers have received from this plan is that their freight costs will immediately and continually increase. Using the Federal Government's own projections, farmers will pay six times Crow by 19 90.

Billi ons of dolla rs will be transferred from producers to the railways and neither farmers nor your rural communities can afford these costs. Manitoba Pool calculations indicate that a delivery point with 207 permit holders will lose an additional $9.2 million in 10 years if the Pepin plan was implemented; 207 permit holders is approximately the size of our delivery point at Shoal Lake. MR. CHAIRMAN: Could you speak up just a little, Mr. Nicholson. I think people are having trouble hearing further back in the hall. MR. B.

NICHOLSON: The government's insistence on paying the Crow benefit to producers allo ws this payment to be easily discontinued, leaving farmers with an even greater share of freight costs. lt is evident that the government intends to phase out the Crow benefit, since the draft legislation states that new farmers and new land will not quali fy for the benefit. Another disastrous provision of the Pepin plan is the allowance of incentive or variable rates.

Variable rates would permit the railways to determine the configuration of the western rail network, guided only by their own greed. lt is very likely that this would bring about the collapse to the prairie grain handling co-operatives since variable rates can only result in wholesale abandonment of rail lines and elevators. Other effects are increased trucking and on-farm storage costs as well as deterioration of roads in rural communities. lt has been predicted by many prominent Canadians that if the Federal Government succeeds in dismantling the Crow rate, the next victim will be the Canadian Wheat Board.

The erosion of Wheat Board authority has already begun with the creation of the Grain Transportation Author ity and would be further weakened by the Pepin plan. The proposed legislation allo ws the whims of the Transport Minister to override the Wheat Board Canadian Grain Commission and The Canada Grain Act. The Wheat Board and the Canadian Grain Commission have done an outstanding job of selling prairie gr ain and maintaining Canada's reputation for high quality grains. We cannot allow their role to be diminished.

The Federal Government claims of massive diversification into special crops and livestock are ridiculous, as is their assurance of the booming food processing industry in the west. Markets for special crops are small and any significant production increase will result in hopeless oversupplies and depressed prices. A similar situation exists in the livestock sector. Since Mr. Pepin has assured us all that the gains will not be made at the expense of eastern livestock

Thursday, 21 April, 1983 producers and large increases in exports to the U.S. will not be permitted, one must ask where these massive increases in livestock production will be absorbed. In any event, the attempt to build up the livestock industry on the backs of grain producers by depressing feed grain prices, already below the cost of production, cannot result in a stable and successful livestock ind ustry in the lo ng term . Claims of incr eased agricultural processing in Western Canada are equally improbable.

Note that some 55 grains and grain products travel on the Crow rate, including flour, but the western flour industry has deteriorated until it is nearly non-existent despite the freight rate advantage. 1t should also be noted that for many years, the Crow rate was fully compens atory and com parable to commercial rates. A western agricultural processing industry did not develop under these conditions and there is no reason to expect that this would occur in the future. The gua rantees given to the railways in the Pepin plan are astou nding, even considering their colourful history of corporate welfare.

The railways are promised a 20.5 percent return on farmers' and taxpayers' investment and on deferred maintenance, which is money that no one has spent, while farmers are stripped to the statutory protection of the Crow rate. In an extra ges tur e of kind ness towards the rai lways, the government will not require them to give performance guarantees until 1986, and the maximum penalties chargeable are insignificant compared to the amounts of money involved. lt is our opinion that meaningful performance guarantees would never be enforced.

The plan is so one-sided that the National Farmers Union has aptly described the Pepin plan as the greatest attempted swindle of farmers ever un dertaken in Canada. it is our position that the required improvements to the rail system can be made with the Crow rate in place.

The Crow statute is an important cornerstone of the political foundation of this country and a historic right of western farmers. lt was needed to overcome the geographical disadvantages of exporting grain from the prai ries and to provide protect ion from the monopoly power of the railroads for farmers who had no control over the price of their product. The reasons for the existence of the Crow rate are as valid today as they were in 1897. We believe the consensus in the west is in favour of retaining the Crow rate.

In order to convince federal politicians of this, our local committee has initiated a postcard campaign to the Prime Minister and to our member of Parliament, Charles Mayer. We will also circulate a petition in our local area and copies will be forwarded to all three federal political parties. The petition has been endorsed by the Shoal Lake Village and Rural Municipal Councils and by the National Farmers Union, Local 525, as well as our Pool local.

We are pleased with the resolution opposing the Pepin plan, which passed unanimously in the Legislature, and we urge the Provincial Government and all MLAs to continue to actively oppose the plan to destroy the Crow rate. On behalf of the Shoal Lake Local Committee, I thank you for the opportunity to present our views to this hearing. MR. CHAIRMA N: Thank you very much for your presentation, Mr. Nicholson. Are there any questions by members of the committee? 205 Mr. Bucklaschuk. HON. J.

SUCKLASCHUK: I have just one question. it's in reference to your fear that the Crow benefit may cease to exist after a short period of time. You had I stated that - I'll quote the sentence: "it's evident that the government intends to phase out the Crow benefit since the draft legislation states that new farmers and new land will not qualify for the benefit." I think you have probably been the first person to raise this and I'm wondering what your source of information was. MR. B.

NICHOLSON: My source of information for that quote was the Manitoba Pool Elevators at a meeting in Oakburn, Manitoba, several weeks ago now. Mr. Str ath gave out tha t informa tion, and if I have interpreted it correctly that is what he said. MR. CHAIRMAN: Further questions? Mr. Blake. MR. D. SLAKE: Yes, I just have one question for Mr. Nicholson. If you have a fixed rate for carrying or transporting a bushel of grain, what do you think will happen to the handling charges over the next, say, by 19 90, your grain handling charges in your elevator, in view of what's happened in the past 10 years? MR. B.

NICHOLSON: I would be the first to agree with Mr . Bla ke tha t elevator handling charges are scandalous, but I see no relationship to the Crow rate. Just because we're paying too much for elevator handling charges is no justification to offer to pay more for freight. MR. D. SLAKE: If those rates are getting out of hand as much as you say, it's pretty obvious that the transportation costs of a bushel of grain must be getting out of hand also. Is there no way that those handling charges can be - they are within your own control and your own local.

I realize the transportation charges are not within your control, but if those handling charges, and they have gone up astoundingly in the last 10 years, have gone up like that, you must relate that to the costs that the other people are faced with in transporting their product? MR. B. NICHOLSON: First of all, at the local level we have absolutely no control over handling charges and while inflation has had effects on the handling charges, I would point out that if we had the same benefit of this Crow rate with respect to handling charges, then they too would be fixed and it would be in our favour certainly.

I would simply point out that it is in the national interest of this country to export grain; it is in the national interest to see that that grain gets to port; it's in the national interest to see that farmers can afford to grow and move grain. MR. D. SLAKE: In having the assurance that your grain would be transported at a fixed rate, would you be prepared to support some legislation that would prevent labour disruptions that have cost millions and millions of dollars over the years to the farm economy by grain tie ups at the west coast or shipping ports?

Thursday, 21 April, 1983 MR. CHAIRMAN: A point of order. Mr. Slake, as you know, the subject of the resolution was the Western Transportation Initiative, and although some members had wanted the subject of labour management relations to be part of the subject of our hearings, an amendment to that effect was defeated by the Legislature and we have no mandate to inquire into those matters. Do you have another question for Mr. Nicholson? MR. D. BLAKE: Mr. Chairman, my reason for asking it was because it ties directly into the transportation of grain which Mr. Nicholson and I were discussing. MR. CHAIRMAN: Mr.

Slake, I'm sure you are familiar with the arguments you made in the Legislature trying to make that connection, and a majority of the members of the Legislature weren't in agreement with you, so I'm bound by their decision, whether I like it or not, that's the direction I have to give you. MR. D. BLAKE: Before I ask Mr. Nicholson my next question, then I'll point out to him that the amendment that we brought in the House was voted down. Mr.

Nicholson, I don't think anyone wants to see grain tied up for any reason, and if there's some way that they can have it flow more freely I'm sure would be to the benefit of all western Canadian farmers. You mentioned you had no control over the handling costs at the local level of your elevator, where would the control for handling costs be then, at the terminals? MR. B. NICHOLSON: lt is my understanding that handling charges are established by head offices of grain companies according to limitations established by the Federal Government. MR. CHAIRMAN: Mr. Uruski. HON. B. URUSKI: Mr. Chairman, to Mr.

Nicholson, following up on the questions that were raised about handling charges. Would it not be possible if the grain companies, including Manitoba Pool, decided not to show a healthy return to farmers in dividend payments? Could they not keep their handling charges basically at cost and keep them as low as to break even on their actual costs but thus maybe preventing some of the dividend payments, that would be a possibility would it not? MR. B. NICHOLSON: I suspect that may be the case. I wouldn't want to make a guess at any figures. MR. CHAIRMAN: Mr. Uruski. Mr. Down ey. MR. J. DOWNEY: Mr.

Chairman, you indicated that this is from your local pool organization. Basically, how did you differ with what was initially the policy of the Manitoba Pool Elevators organization? What were the main differences? MR. B. NICHOLSON: The Manitoba Pool Elevators according to their policy established at recent annual meetings agreed to negotiate the Crow rate. The position of our local is that we would not negotiate the Crow rate. 206 MR. CHAIRMAN: Mr. Plohman. HON. J. PLOHMAN: Yes, Mr.

Chairman, I think one of the serious statements that I'm concerned about, one of the things that you said and it was just mentioned by Mr. Bucklaschuk earlier is the statement about the fact that new farmers or new land will not quali fy for the benefit. Are you interpreting this to mean that if anyone is to break new land that any grain produced on that land the person would have to pay the full cost of transportation. Is that your

interpretation? MR. B. NICHOLSON: That is my understanding, yes. HON. J. PLOHMAN: And you have no further evidence to that? I'm very alarmed at hearing that and I feel it's a very important point and I just wanted to know whether you had any further information on it at this time. MR. B. NICHOLSON: I can only suggest that contact with officers in Manitoba Pool Elevators might give you more specific answers. HON. J. PLOHMAN: Yes, Mr. Chairman, just on one other point.

You made a very strong statement which I agree with that you feel the proposed legislation would inflict tremendous financial losses on farmers in rural communities and you said it will destroy the political and social makeup of the rural economy. That is rather a strong statement. I wonder whether you could elaborate on that in terms of your own situation, in terms of what you see happening at the Shoal Lake area. MR. H. NICHOLSON: Well, I think it's quite obvious that taking the kind of amounts of money out of the community that I mentioned, $9.2 million over 10 years, has to have very serious effects.

I think it's common knowledge that any time farmers are short of money everyone is short of money and no doubt, farmers will be immediately and seriously affected by higher freight costs and local businesses will be right behind them in feeling the pinch. Eventually it can lead to the death of entire communities. I certainly don't want to see that happen. Our agricultural economy would be made up of huge empty spaces of land where there was nothing but grain growing or perhaps nothing at all. HON. J. PLOHMAN: Just one other question with regard to that.

The 207 permit holders that you referred to in the $9.2 million, are you referring to delivery point at Shoal Lake? Is that what you're referring to in that amount of money and permit holders? MR. B. NICHOLSON: These are Manitoba Pool figures, they did not give the name of the delivery point. I'm sure they must have known the name to establish these figures but I do not have the name of the delivery point. I'm guessing it is roughly the size of our delivery point, a town with about 1,000 people. MR. J.

DOWNEY: Given the fact that if the Crow rate were to be changed such as was sugg ested by the Member for Dauphin, that if the Crow rate were to be

Thursday, 21 April, 1983 changed then new grain produced or new land broke for grain production would not, in fact, quali fy for a Crow subsidy or be involved in the new proposal. How does that figure with the following statement that you just made, that if the Crow rate were imposed or put in place that, in fact, it would open up or put out of business many farmers and that you'd have large acreages of land that are currently producing grain would, in fact, lay barren and the towns would die or disappear? There's something in that.

Would you not agree that it's somewhat contradictory that there wouldn't be any need for new land broken if, in fact, the Crow rate were changed? MR. CHAIRMAN, A. Anstett: Mr. Nicholson. MR. B. NI CHOL SON: I'm not sure I comp letely understand your question. MR. CHAIRMAN: Try again, Mr. Down ey. MR. J.

DOWNEV: Well, basically what I was following on was the Member for Dauphin where he indicated if this Crow rate was implemented that any new land broke or brought into production which followed on the fact that that grain would have to be marketed someplace, that it wouldn't qual ify for a Crow subsidy or wouldn't be a part of the package.

Su bsequent to that your answer suggested that if the Crow rate as well was implemented that it would leave several thousands of acres - I'm not sure of that - of land barren or unused because the fact the farmers wouldn't be able to produce and make money on it because of higher transportation rates. Would you not agree that that's somewhat conflicting? MR. B. NICHOLSON: I don't think he completely understood my reply. MR. J. DOWNEY: Well, that's why I'm asking again. MR. B.

NICHOLSON: I guess what I am referring to if the Crow rate was lost, certainly some farmers would survive and those who are not carrying any debts could effectively take over from the ones who are forced out of business. The number of farms would be greatly reduced and I've heard the word "corporate farms" and that's certainly what they would be. While these may be wonderful large operations they don't contribute too much to their neighbouring communities. These rural communities would suffer, there's no question about it. MR. J.

DOWNEY: What would allow large corporate farms to be able to borrow money, pay interest and move grain at higher rates that wouldn't allow other farmers to do it? What would give them the ability to do it? MR. B. NICHOLSON: Well, depending on the base that they are working from. In my own operation I can go and buy a new piece of equipment by subsidizing its purchase by not letting my wife have a new sofa or something like that. What can I say other than it can be done. 207 MR. CHAIRMAN: Further questions for Mr. Nicholson? Seeing none, Mr. Nicholson, thank you very much for making your presentation.

The next person on our list is Mr. Ken Sigurdson. Mr. Sigurdson, please. Mr. Sigurdson, before you begin, I don't mean to tell everybody to leave the room by saying this, but there is coffee in the room next door if anyone would like to get a coffee while we're ... Well there may be some dispute as to whether or not it's coffee, but I can vouch for the fact that it's warm and wet. MR. K. SIGURDSON: Thanks, Mr. Chairman.

First of ali i welcome the opportunity to meet with the committee and express my views pertaining to the Pepin proposal on the statutory rate and I am making this presentation as a Manitoba Pool Elevators delegate. I'm also the past District 7 Director of the National Farmers Union. I'm probably not going to be able to tell this committee anything that they don't already know and I feel the decisions that the committee will be making should be an easy one. There is only two sides, one is Pepin and the railways and the other is the farmers, and I think in that scenario the decision should not be a hard one.

In 1982 the National Farmers Union in District 7, and that's roughly District 7 of Manitoba Pool Elevators, we met with many pools, pool committees, co-ops, rural municipalities, etc., and we encouraged them to pass reso lutio ns. Among those resolutions were four resolutions from sub-districts of Manitoba Pool, four out of the five sub-districts in District 7, and these represent delivery points at The Pas, Bowsman, Swan River, Benito, Durban, Kenville, Mi nitonas, Robl in, Gi lbe rt Plains, Gr and view and Ethelber t and I understand that Fork River, in the other sub-district, also passed a res olution.

Sub- District 703, of Manitoba Pool Elevators, that's the Roblin area, the resolution that they passed - and this was Februar y 1, 1982, - that our council go on record as being violently opposed to any increased freight rates be charged to the farmer and that no change be made to our statutory Crow rate.

Su b-District 70 1, that's the sub-district that I'm part of, passed this following resolution on March 30, 19 82: BE IT RESOL VED that Sub-District Council 701, Manitoba Pool Elevators, declares that the statutory Crowsnest Pass rates are not bargainable and that we affirm these rates as the historic right of western farmers in Western Canada, and that was carried.

Sub-District Council 702, and that's Benito, Durban, Kenville, Minitonas area, passed the following resolution on March 29, 1982: WH EREAS the economic effect of any change to the rate of shipping grain would be disastrous to farmers in the community, and WHERE AS the railways have been adequately and handsomely paid for hauling grain, and that the historical Crowsnest Pass rate was enshrined in law and was one of the reasons for the growth and development of Western Canada's economy, THEREFORE

BE IT RESOLVED that Sub-District 702 of Manitoba Pool Elevators oppose any change in the amount of money that farmers pay in hauling grain, and that was carried unanimously by their sub-district. I

Thursday, 21 April, 1983 Sub-District Council 704 of Manitoba Pool Elevators, March 24, 1982 passed the following resolution, and that's Gil bert Plains, Grandview and Ethelbert: BE IT RESOL VED that the Crow rate be retained as is, non-negotiable. So what we have seen in Manitoba Pool is a lot of the sub-districts supporting retention of the Crow rate but the delegates not seeing fit to follow through with the view of their sub-districts.

I guess what I also will say is that, to start with, the Crow rate and the Canadian Wheat Board both came about by struggles by farmers and now we see a proposal where we are in the position of losing both. Through the Canadian Wheat Board and the Crow rate we have developed a pretty good grain handling system. That system last year moved 29.4 million tonnes of grain, almost reaching the Canadian Wheat Board target of 30 million tonnes by 1985, two years ahead of schedule.

While I'm not here to argue against improvements in the transportation system, the plan being put forth by Pepin does not improve the transportation system; it merely adds money to the railway's coffers. We have had three Royal Commissions study the transportation over the last centuries and all have recommended retention of the Crow rate; the latest being the Hall Commission. When the Hall Commission came down with its report in 1977, every major farm organization as well as four prairie governments agreed to the basic Hall Report recommendations.

Although with this type of consensus the railways or the Federal Government still didn't act, and they didn't act because, in my view, it wasn't the railway's plan; it didn't give the railways the kind of control of the system that they needed. The whole Pepin plan, scheme or proposals or whatever you might call it, will probably go down in history as not only one of the greatest swindles of farmers in Western Canada, it is also probably one of the greatest scandals. We've seen Snavely do a costing of the railways in 1977.

He updated that in 1982, even though he stated that he deliberately overestimated many of the costs, nobody ever questioned it. We saw the Pepin proposal of Februar y 28th of the past year, again inflate Snavely's figures. We saw the Gilson process inflate those figu res even further and then we saw the last Pepin proposal inflate those figures even further yet. Again, we've never had anybody challenge them, the press, or nobody else has ever challenged the costing. The move to change the Crow rate has been a very cleverly orchestrated scheme.

Nick Mul der, who is in Pepin's office, his former job, he was in Trudeau's office as one of the Directors of Strategic Planning. Some farm organizations were led to believe that the Crow rate was a detriment. Other farm organizations, and notably the Pools, were coerced into believing that change was inevitable and that in order to improve the transportation system, the Crow had to go. Farmers, because of Pepin's heavy-handed tactics, feel nothing can be done to stop the proposal. Provincial governments were told they were not involved so they remained on the sidelines. The National Farmers Union did not take

part in the Gilson process or the massaging exercises, as Pepin preferred to call it, because the real decisions weren't made by Gilson, they're made 208 in Ottawa and they're made between Pepin and the railways. When you look at the whole proposal there's more involved than just the Crow and grain movement and 1 say, it's coal, grain and politics. The former Cabinet Minister, Ron Basford is with B.C. Coal. The late Robert Andras is with CAT, one of the coal companies in British Columbia.

Alastair Gillespie was heavily involved with the coal industry in Eastern Canada; Joel Makalusa, a Li beral MP, is Chairman of the Coal Association; Louis Desmarais, Liberal MP is with Power Corporation, Bombardier and Canada Steamships. Canada Stea mshi ps' power corporations are both subsidiaries of the CPR, and Power Corporatio n moved to take a 15 percent controlling interest in the CPR just lately. His brother is Paul Desmarais, Chief Executive Officer of Power Corporation, also a chief friend of Trudeau's.

Otto Lang, who was the former Transport Minister, has recently been appointed as Chairman of Harbours Canada. His former Executive Assistant, Ma rion Robson, has been name d Chairman of the B.C. Harbours Commission. Arthur Krue ger, who is the Deputy Minister of Transportation and instrumental in developing the whole Crow process change or in part the Pepin sel l-out. He was appoi nted by Don Mazankowski un der the Clark admin istration. His brother is Henr y Krueg er, Deputy Min ister of Transportation in the Alberta Government.

Jack Horner , former Li beral Cabinet Min ister is President of the CN Rail; his brother, Hugh Horner, former Deputy Premier of the Province of Alberta. Pepin, himself, has interests in Power Corporation, Bombardier and Canada Steamships. So the people involved in politics, coal and transportation are heavily involved with the whole Crow change. When we are looking at the Pepin scheme, what is being proposed, or what the railways claim to be guaranteeing is 16 billion in expenditures over the next 10 years, and that is less than is currently being spent.

Of that $16 billion, $10 billion will be paid for by the farmers and the Federal Government. So the Federal Government is asking the farmers and the taxpayers to build a whole infrastructure in Western Canada. Nowhere in the Pepin scheme do I see a better transportation system being developed. I see nothing for improvements to Thunder Bay, nothing for Churchill. In fact, what we will receive is a more costly system because farmers will be required to do the co-ordination of the product to greater distances through a centralized system, centraliz ed ar ound inland terminals, high throughput points and so on.

Apparently in the proposal, there is provision for variable rates. What they intend to do is establish a base rate and then lower that rate to certain points. Pepin calls it an - what does he call it? - incentive rate. He says, if they can pick up 20 cars at a spot, they should have some incentive rate to do that. There is a proposal for a central co-ordinating agency which will be composed of Ottawa bureaucrats, railways, gr ain companies and some selected farmers. The central co-ordinating cgency will be given the powers presently handled by the Canadian Wheat Board over transportation.

In order for a marketing agency such as the Canadian Wheat Board to be effective, it must have control over the transp ortat ion because transportation is functional to marketing.

Thursday, 21 April, 1983 If we looked at the economic impact of the whole Pepin proposal by 19 90, John Twig, writing in Saskatchewan business - and John Twig is the financial editor of the Regina Leader Post - states that by 1990, the Pepin proposal will have the same impact on Saskatchewan as if you removed oil and potash from Saskatchewan. In Manitoba, by 1990, 430 million will be moved annual ly. In the Swan River Valley where I come from and all the delivery points in the Valley, $7 million to $10 million will have to be spent by farmers to move their product to market by 19 90.

For a farmer selling 20,000 bushels, he would pay an extra $1 5,000 in freight costs by 1990. So what is needed, and what I feel is needed, is that we need a transportation system in this country run not for private entrepreneurial profits, but run for service so that we have communities and we don't see the continual abandonment of branch lines and so on. I don't think many people that live in a city would accept a public transit system that had to return a 20-some percent return on investment to the owners.

Some of the things I would like to see done by this committee and the Provincial Government, aside from taking a very strong stand on Crow retention, which is only natural for them to do, I would like to see them selectively tax all CP and CN properties, place a tax on all CP and CN trucks - this could either be done through fuel or licences or so on - remove the tax on locomotiv e fuel; do not provide crop insu rance information re land classification for the Federal Government, which apparently they are requesting in order to give some kind of a Crow benefit payout to farmers.

I would like to see the members of this committee be prepared to attend and participate in lobbies in Ottawa with farmers re retention of the Crow rate. I would like to see them go further than that and I would like to see them be prepared for actions including civil disobedience re retention of the Crow rate. That, Mr. Chairman, is my presentation. MR. CHAIRMAN: Thank you, Mr. Sigurdson. Are there any questions for Mr. Sigurdson from members of the committee? Mr. Harapiak. MR. H. HARAPIAK: Thank you. Mr. Sigur dson, you are consistent with your local Swan River group.

You have always been very strong in your opposition to the Crow. I'm wondering if you feel that if the rest of the National Farmers Union around the province would have been as consistent as you have, if that would have been much more help to the Provincial Government. MR. CHAIRMAN: Mr. Sigurdson. MR. K. SIGURDSON: I guess, Harry, while Swan River has been one of the active places, I think, in terms of support for the Crow, you can pretty well find that anywhere in Manitoba. I don't think I have talked to 20 farmers that didn't want to retain the Crow.

There are a lot of people get caught up in this thing of paying a little bit more, but they really aren't in the realities of what is going to happen to them. As for the Manitoba Government, faced with the type of economic things that are going to happen and the 209 type of things that are going to happen to the rural communities, I don't think the decision should be a difficult one for them. MR. H. HARAPIAK: In your opinion, Ken, by paying a little bit more if we do lose the Crow, will there be many farmers in the Swan River Valley who will be losing their farms? MR. K.

SIGURDSON: I don't really understand what you are getting at. MR. H. HARAPIAK: Are there many that are operating at a sort of a break-even level now, they can't afford any more? Will there be many farmers that will be losing their farms because of an increased cost in the Crow? MR. K. SIGURDSON: Very definitely, Harry. I guess the cost price squeeze is on every farmer, but what I was referring to was that some farmers had got caught up in, what I would term, a mental midget argument of paying a little bit more, when in fact we know these people aren't talking about little changes. MR. H.

HARAPIAK: Just further in following up to Mr. Downey's questioning a little earlier about corporate farms. If many of the farmers do lose their farms and have to leave the small communities and there's a danger of a corporate farm moving in, do you see that have an effect on the small communities? MR. K. SIGURDSON: Very definitely, Harry. I guess in the whole agrofood strategy, they talk about removal of the Crow, and that is a document being promoted by the Federal Government and Eugene Whelan.

They talk about removal of the Crow not to improve the transportation system, but to lower the farm gate price of grain for industrialization. That industrialization certainly won't be with the small family-type farm. MR. CHAIRMAN: Further questions, Mr. Downey. MR. J. DOWNEY: In dealing with one of the items on the resolution that was passed by the Legislature, No. 5, the level of high taxation on farm fuels. Do you not feel that is one of the major reasons that a lot of farmers are faced with a difficult cost of productions right now, or higher costs of production? MR. K.

SIGURDSON: Yes, I would very definitely agree that the National Energy Policy has been one that's been very favourable to the oil companies and so on. MR. CHAIRMAN: Mr. Sigurdson, did you have more to add? MR. K. SIGURDSON: No. MR. CHAIRMAN: Mr. Downey. MR. J. DOWNEY: When you say, to oil companies, are you aware of the percentage of taxation that is taken by the Federal Government on our fuels today? MR. K. SIGURDSON: I haven't got those figures. Maybe you could enlighten me on that.

Thursday, 21 April, 1983 MR. J. DOWNEY: Are you aware that in excess of 50 percent of the cost of fuel today to farmers is Federal Government fuel tax? MR. K. SIGURDSON: I wasn't, but I am now. I think, when you talk in terms of taxes, how much is fair? We're talking about a tax here on transportation to move coal, so we're probably paying more than our share through things like energy and so on. MR. CHAIRMAN: Further questions? Mr. Bucklaschuk. HON. J. BUCKLASCHUK: You had made reference to the financial editor of the Leader Post in Saskatchewan. What was the figure for Manitoba for 1990? MR. K.

SIGURDSON: According to our figures, John, it was $430 million; and were projecting, I believe, a 1.1 million tonne increase in grain exports every year. HON. J. BUCKLASCHUK: This is $430 million a year? MR. K. SIGURDSON: Annual ly, yes. HON. J. BUCKL ASCHUK: This is assu ming what increase in the present rate? Would that be the 5.1 or 6 times? MR. K. SIGURDSON: Around 6 times, I believe John. HON. J. BUCKLASCHUK: You had indicated that you felt that most of the farmers were in support of a retention of the Crow rate.

Previous to this afternoon, we had the Manitoba Farm Bureau, which allegedly represents a good part of the farm community, come out in support of the Pepin plan. Wherein lies the truth? MR. K. SIGURDSON: I guess, John, with the farmers; not with alleged farm organizations. I think Manitoba Pool Elevators pulled out of the Manitoba Farm Bureau last year, so I don't think their credibility is that great. They probably represent certain commodity interests; people in the poultry and the livestock industries, and so on.

I don't believe they have ever solicited the opinions of farmers into the development of their policy. They have some type of federation structure. HON. J. BUCKLASCHUK: I have a further question. I won't fault the Manitoba Farm Bureau. But I guess what I want to point out is that if most of the farmers are concerned about the Crow rate, most of them are in favour of retention of the Crow rate, how do we explain, let's say, the attendance we have at the present time? We've had many excellent briefs; we've had 60- 70 observers.

How is it that we are going to convince the Federal Government that in fact farmers are very concerned? MR. K. SIGURDSON: First of all, I guess we did have a pretty good group of farmers starting off here today, but the hour is getting late. A lot of it is, in my view, the tactics that have been put forward by Pepin; some farmers feel that there is nothing they can do. That's one of the things that's happened. I think one thing that's needed, and particularly is needed from the 210 Minister of Transport in this province, is his attitude.

I have talked to him on several occasions and he has an attitude that very little can be done. I don't think that type of negative attitude does much to help the cause. I think we need real leadership from everybody concerned. I am not saying only government; I am saying farmers too. HON. J. BUCKLASCHUK: A further question and maybe this will end it. I always like to think that the media are some barometer, or act as a barometer, as to what is going on around them. We had some media here, I believe, at the - (I nterjection) - Pardon me? No, no, you have to give them some credit.

We did have some media here for the first 15 minutes, half-an-hour of a presentation, and suddenly they have scattered. Now, is it that what people are saying here is not important enough to be reported throughout this area, which is the heart of the grain producing area in Manitoba? lt should be very important, and I would gather that the media who would certainly, I hope, react to their readers, don't consider it as such. How do you explain that? MR. K. SIGURDSON: Well, I don't know how to really explain that for you, John, any better than you . HON. J. BUCKLASCHUK: I'm puzzled. MR. K.

SIGURDSON: Yes, I think there are media that do care about farmers and farmers' problems, but apparently they're not here right now. MR. CHAIRMAN: Further questions? Mr. Plohman. HON. J. PLOHMAN: I just wanted to follow up maybe on that a bit too. You know, there seems to be some magical transformation by the delegates for the Pool according to what you've said, that the locals have all said they want to retain the Crow, and yet the delegates they send somehow when they get to the meetings, a number of them here have changed their opinions when they get to these meetings. I wonder whether - is that the case?

Do they change their minds? Are they not representing their locals when they get there? Can you comment on that? MR. K. SIGURDSON: I would say, John, in view of the resolutions that I have received, the delegates that do go to the conventions definitely do not represent the views of the farmers in the subdistricts. Part of that is due to the type of structure and the election process that goes on at the Pool where subdistrict councillors elect the delegate and he's not responsible to the people at any time.

The delegates elect the director. lt's just like having the Municipal Governments elect the Provincial Government, and the Provincial Government elect the Federal Government; that's the type of structure. HON. J. PLOHMAN: One other point. You seem, you know, from what you've said, that you would like to see the Provincial Government pull out all the stops and do everything - I don't know what that means - to stop the Federal Government from doing this.

Thursday, 21 April, 1983 Selective taxat ion and par ticipating in civil disobedience, you mentioned, and so on. Do you not think that we as a government provincially should be concerned about retaliatory action from the Federal Government with regard to this in terms of considering where our money comes from, and so on? MR. K. SIGURDSON: Yes, that's a great concern to me, John. A concern that is, may not do as much as you can, because of the fear of that But, you know, I think you've got to deal tough.

I don't think you worry about cutbacks and funds or transfer payments or the whole thing, because this is a big issue and it's the whole structure of our community system that we've got in Western Canada that is really at stake. HON. J. PLOHMAN: So you are saying to us then that shouldn't be a major concern. The major concern should be this particular issue and deal with it issue-by-issue as they arise when we're dealing with the Federal Government MR. K. SIGURDSON: Very definitely, I think this is probably the biggest issue that we're going to face in some time.

If you start looking at costs, $430 million by 1990 in Manitoba - I don't know what the current deficit is - but you start adding something like that onto it and that's economic activity that's going to be taken right out of the province. MR. CHAIRMAN: Mr. Plohman? Any further questions for Mr. Sigurdson? Seeing none, Mr. Sigurdson, thank you for being here today and making your presentation. MR. K. SIGURDSON: Thank you, Mr. Chairman. MR. CHAIRMAN: Mr. Larry Maguire, Souris Valley Farm Business Association. MR. L. MAGUIRE: Thank you, Mr. Chairman.

I'd like to introduce our Chairman from the Souris Valley Farm Business Association, Mr. Laurie Howe who is with me. In opening this presentation, I'd like to say that the Souris Valley Farm Business Association is happy to be able to make a brief to the Standing Committee on Agricultur e on such an important viewpoint. The members of our association are pleased with the initiative taken by the Federal Government in trying to resolve the problems created by our present grain transportation system.

We feel in spite of all of the negativ e promotions towards the Western Transportation Initiative that the Honourable Jean-Luc Pepin deserves some applause for holding fast to his proposal. We would be satisfied to see this program tabled in the House of Commons so that its substance could then be further scrutinized. lt is our view that the better than normal grain movement achieved on the prairies in the last year has been as a result of the recessionary affects that our economy has had on the movement of natural resources.

We feel that farmers have only been able to cope with rising input costs of the last few years because of this greater movement of grain. Therefore, we are concerned as farmers, that if we are not in a 211 more acceptable freight position when this recessions lessens that we will be in a similar position to the late sixties, one of poor prices coupled with poor grain movement. We feel that the Western Transportation Initiative would cause less hardship to prairie agriculture than would be felt by rejecting a proposal which would allow grain to compete with other commodities for rail service.

The Sou ris Valley Farm Bu sine ss Assoc iation welcomes the indication by the Western Transportation Initiative to pay a Crow benefit according to the federal definition of 651 .6, rather than the 644 as Mr. Gilson had indicated, in statute in perpetuity. Our concern is that the government share of inflation should form part of the Crow benefit payment so that the government payments will not be distorted by future inflation. Our membership agrees that the method of payment of the Crow benefit should be to the producer and not to the railways.

We feel that having the method of payment to the producer is the best way of providing equitability amongst all producers. Our concern is that the Pepin proposal calls for only a 50-50 share of this payment I after 1985-86. Prairie agriculture would benefit most by having this payment made comple tely to the producer, or at least adopt the Gilson recommendation of working towards 81 percent to the producer and 19 percent to the railways.

Perhaps the greatest concern of our association is that the Western Transportation Initiative indicates that farmers pick up 6 percent of future inflation costs in grain transportation. If future inflation could, indeed, be pegged at 6 percent, then farmers would be paying all future inflationary grain transportation costs. We believe that these costs should be lowered to 3 percent paid by the farmers and 3 percent paid by government The Western Transportation Initiative also indicates that producers will pay all freight past the present production of 31.1 million tonnes.

We are concerned with having this volume "cap" in that it may tend to act as a disincentive to expand production in the future. Also, as railroads are seen as the only viable means of moving grain to ports, any legislation regarding grain transportation by rail should require the railroads to make public their cost data each year. This procedure could allow for rail costs to be scrutinized annually and would allow for input into any discrepancies which might arise.

Lately there have been discussions in favour of a transportation cost system being set up to protect farmers from excessive inflation or unr easonable transportation costs relative to the initial price of grain. Such a program for grain freight, whereby the producer's cost of freight becomes tied to a certain percentage of the blended price of the six major grains could be acceptable. lt acts as an insurance to farmers in that they would not pay more than a percentage of their expected returns.

However, we have concerns that the Federal Government may not be willing to pay the Crow benefit payment and its share of freight over the set producer percentage. In closing, we would like to reiterate that our main concerns lie in having the payment of any Crow benefit paid to producers; in having the inflation rate of future freight shared between the government and producers and in having the 31.1 million tonne "cap" removed. If no movement can be gained from the Federal Government once this program has been tabled, then •

Thursday, 21 April, 1983 our members would be willing to examine a program of transportation cost insurance as part of the WTL However, as we foresee some problems arising from such a program, we would rather see the Pepin proposal realigned by the Agriculture Committee of the House of Commons, as outlined. Thank you. MR. CHAIRMAN: Thank you very much, Mr. Maguire. Are there any questions for Mr. Maguire or Mr. Howe? Mr. Uruski. HON. B. URUSKI: Mr. Chairman, Mr. Maguir e, your association how is it composed? How does one join your association? How many members would you have in your area? MR. L.

MAGUIRE: In our own Souris-Eigin area, we have about 30 volunt ary mem bersh ip with a membership fee due each year. HON. B. URUSKI: This matter would have been discussed at one of your meetings and put to all the members. MR. L. MAGUIRE: Several of them. We had a specific meeting last week to discuss the final preparations of it, but everyone had input into it. HON. B.

URUSKI: In your brief, on Page 1, you indicated, and I quote, "We feel that the Western Transportation Initiative would cause less hardship to prairie agriculture than would be felt by rejecting a proposal which would allow grain to compete with other commodities for rail service." Implicit in that, am I misreading you where you're saying that it is better to pay more and be guaranteed service? Do I get that meaning from what you're saying there? MR. L.

MAGUIRE: We feel that if farmers aren't prepared to pay some more, well, yes, I think we have to be able to realize that the percentage of payment of our initial price of grain right now, the percentage that we're paying is not possibly realistic as compared to, if you want to go back to 1897, the 20 percent that it was tied to at that time. HON. B. URUSKI: Then, basically your assumption is that if we pay more this might guar antee us better service. MR. L. MAGUIRE: No, I don't think that's the case. I don't think you can pay somebody and legislate them to transport more commodity.

You can to the effect of setting standards whereby they would have to meet a commitment to become paid for their haul. HON. B. URUSKI: Then what are you saying, and what would the gu arantees be to the producer if they were to pay more money, as you suggested? MR. L. MAGUIRE: Part of the guarantee the farmer would receive would be the guarantee that you would have more grain grown, as they indicate in the program that you are producing 31. 1 million tonnes now and in 1992, you would go to 41 million. That's a third more production.

You would have that opportunity to move the extra third of your production off your farm by 19 90. We feel it would be more viable to the farming industry. HON. B. URUSKI: Basically then you are agreeing with me, or at least as I understand it, that if we do pay more, there would be better chance of getting that better service to move all that grain we might produce by 1990. If we look at our cattle industry, we ship cattle now on the basis of compensatory rates. We do ship cattle at the commercial rate.

Yet, we realize that the number of cars available and the quality of rolling stock has deteriorated and is going down annually which leads to the question, can we be guaranteed that if we are going to pay more, we will get the rolling stock and the better service. MR. L. MAGUIRE: Only to the extent I think, Bill, that the gu arantee has to be built in to part of the presentations to the railroads from the government, that if they move the grain they will receive the payments for moving that quantity of grain. HON. B.

URUSKI: On Page 2 of your brief, you indicated that the method of payment to the producer is the best way of providing equitability amongst all producers. On what basis do you make that statement? Who do you include in that statement as "all producers" having heard when you were here sitting through the brief that was presented by the Manitoba Farm Bureau where they have indicated that their position is that not all agricultural producers receive benefits from the Crow benefit, whether they be livestock producers and/or grain producers? 212 MR. L.

MAGUIRE: I think our main thrust is that it would be more equitable than it is at the present time. We feel that there is a discrimination against a lot of the people producing special crops in Manitoba at the present time, in that they are not included in the area of discussion. The livestock people, we feel, it would make them more equitable between the livestock production and the grain producer in that some organizations discuss slippage that would be involved, Bill, with the program.

We don't feel that this is a problem in that today, some of the groups were wondering where our future exports would be if you had this viable livestock industry and a lot more beef produced on the prairies. lt is not that you're going to produce that much more beef but if you take the total beef production away, you end up having to move the feed grains off the prairies at present under a Crow Rate. If those commodities, if the grain can be fed in fact, then that's for me, as a grain producer, a market for my product. So we see that as making things a little bit more fair through this type of a presentation.

HON. B. URUSKI: Would your position be different if the special crops that you're talking about, having been developed in Manitoba and didn't have the same

Thursday, 21 April, 1983 favourable position as coarse grains have under the Crow Rate, if those grains were included under the statutory rate? Would your position still be the same? MR. CHAIRMAN: Did you want to answer that question, Mr. Maguire? MR. L. MAGUIRE: I think to the extent that, if we could move the special crops at the Crow rate, that would be desirable, but to have the special crops sitting in inventory the same as our barley is doing right now, then that would not be acceptable to us. HON. B.

URUSKI: Taking that analogy that you have given that there are special crops sitting in storage, is the reason they are sitting in storage because of the inability of the transportation system to move them, or is it because of the lack of markets and price? MR. CHAIRMAN: Mr. Howe. MR. L. HOWE: In this particular year, I would have to say that there is just not the market for barley; the special crops are pretty well all moved out. But there have been lots of years when there have been markets for barley when we haven't been able to move them off the prairies into the marketing channels. HON. B.

URUSKI: A qu estion. You' ve heard the presentation of the Farm Bureau analyzing what they believe will be the course of the legislation dealing with payments to farmers and which farmers will be excluded this morning, or which land will be excluded will be on the basis of land and assessment. Can I ask you whether you would support the exclusion if the changes that are proposed in the Pepin Proposal and Farm Bureau's analysis of the legislation? Do you support the exclusion of certain livestock or certain farm groups from receiving payments because you talk about providing equitability?

Do you support that kind of position as was enunciated by the Farm Bureau in terms of direct payment to farms? MR. L. MAGUIRE: Are you talking there, Bill, about any new breaking or this sort of thing? HON. B.

URUSKI: The Farm Bu reau , in their presentation, said that land that was used for range land and primarily for pasture, that land would be totally excluded from any benefits, which means you have several regions in the province, namely, a good portion of the lnterlake and a good portion of the Westlake area and southeastern Manitoba and part of eastern Manitoba which would be excluded from any benefit payments under the direct payment which you are advocating.

The Farm Bureau, having been involved in the drafting of the proposed legislation or on the committee, have put forward what they believe will be within the legislation. That's why I ask the question. Having heard the presentation, how do you view those kinds of payments as to your statement of equitability? MR. L. MAGUIRE: I understand you, Bill.

We go along with that idea to the extent that if those acres are not cultivatable acres; if it's cultivated, arable land to the extent that it has been sowed to alfafa, brome or clover, 213 this sort of thing, it would be included in the payment method . lt would be on a productivity basis, as indicated. MR. L.

HOWE: I think one thing that you have to remember is that the cow-calf producer and the ranchers at this point in time now are not getting any Crow benefit because they're not hauling grain to the elevator, and so there's no particular reason at this point in time why they should get an acreage payment from the Federal Government for a Crow benefit, because they're not receiving that benefit now.

Now, if they were to bring that land into production in the future, then I think the mechanism is there to review that in '85 or '86, when it's reviewed, if that land is m to be cultivated and is cultivated in '85-86, then it may be brought into the program. MR. CHAIRMAN: Mr. Uruski. HON. B. URUSKI: I don't disagree with your comments.

Would you not believe that many of the livestock people in Western Canada, including the cow-calf people who are members of the provincial organization of MCPA, would have been sold a bill of goods, as I would say, believing that there would be some direct benefits if payments were made to farmers as a result of changes in the Crow rate? MR. CHAIRMAN: Mr. Maquir e. MR. L.

MAGUIRE: I think that the benefit would accrue to livestock as well as grain farmers, Bill, and as is indicated today, the price of that feed grain would be correlated, taking up the amount that the producer would be paid as myself, as a grain producer, in the cost of the feed grain to the livestock producer and I don't see why myself, if I had a feed operation, I should be penalized for producing a thousand acres of barley on my farm or a hundred acres, whatever, and marketing that grain through my own feedlot.

All I'm doing there is making more available space in the elevator system tor someone else to haul his grain out under the freight rates HON. B. URUSKI: I don't argue that through your feedlot, but for the cow-calf producer, he would have no feed lot and would have no direct benefits.

But going on that line, do you believe that the developments of either livestock or the dis-benefits to livestock and/or special crops has been hindered in Manitoba, primarily because Manitoba is one of the few provinces, or the only western province, that has expanded in the special crop area over the last decade as much as we have, do you belie ve that these two areas would have expanded even more had the Crow rate been not in place? MR. L. MAGUIRE: Yes. HON. B. URUSKI: Can you give me your views on how you believe that would have happened and where would that expansion have occurred and to what degree? MR. l.

MAGUIRE: We feel that the livestock industry would have been more viable because of the payment,

Thursday, 21 April, 1983 because the grain at the present time has to leave the country on box cars, and if it is a benefit to the cow­ calf operators or to the feeders in the end, they're going to gain on the price of the feed that they're putting through those livestock. Rather than exporting all of our product, we only feel that now we would exporting - and we have to find markets, one or the other; it has to be for grain or for livestock. Some of them may not be on this continent but . . . MR. CHAIRMAN: Mr. Downey. MR. J. DOWNEY: Mr. Maguire, I want to just follow up a little bit on the membership.

You indicate the Souris Valley Farm Business Association is made up of some 20-30 members. Is that correct? MR. L. MAGUIRE: Yes. MR. J. DOWNEY: You're affiliated with the Manitoba Farm Business Association. What would be the total Manitoba Farm Business Association membership throughout Manitoba? MR. L MAGUIRE: I'm not sure what the total is, Mr. Downey, but it would be over 200. MR. J. DOWNEY: Over 200. And this basically is the same policy that is being advocated by the Manitoba Farm Business group which you put forward here, basically along the same guidelines and principles? MR. L.

MAGUIRE: Yes, we feel it would be, and we feel that it would be a representative presentation from our Ma nitoba execu tive, but we ha ve made this submission on our own and would not speak for them at this time. MR. J.

DOWNEY: One of Western Canada's largest grain companies, probably the largest in numbers of memberships as one single co-op, the United Grain Growers, has advocated a policy position that I would say maybe differs a little bit in that they, as I understand it, su pp ort th e Gilson report or the Gi lson recommendation with the removal of the cap and the concern over the amount of inflationary cost that the farmers are going to have to pick up. Would you say basically, in your

interpretation of that company, that you could align yourself, that this pretty much aligns with the United Grain Growers' position in Western Canada? MR. L. MAGUIRE: I think it would. MR. J.

DOWNEY: Following on the questioning of special crops, the major concern has been brought forward recently, particularly by the oilseed crushing industry, whether it be Harrowby or whether it be the Altona plant, would you see this kind of a proposal that is being presented by the Federal Government as one that would encourage you or your membership at large to grow greater numbers of sunflowers, canola seed, canola oil, would produce greater numbers of bushels or tonnes, however you want to put it, for those processing plants, not only in Manitoba but in Western Canada, if this proposal would give them the stability that would give you the encouragement for long-term development in those crops and have the kind of processing of special crops in Western Canada that has been pointed out as being desirous by you?

Do you feel that would give you the kind of security and, in most cases, producer-owned oil companies or crushing companies, the kind of change that would be needed to stop implementing of such subsidy programs as Alb erta introduced a year ago, creating some anomalies between the provincial bounda ries with taxpayers' money, that this kind of thing would remove the need for those kinds of provincial subsidies? 214 MR. L MA GU IRE: I can't speak for the Alberta Government.

I know what you refer to of the tonnage payment to the crushers in Alberta but, yes, we feel it would be an incentive for Manitoba producers to grow more special crops in the area of sunflowers, that sort of thing, and that can only help keep such plants in operation and, we feel, maintain jobs in Manitoba and other prairie provinces. DEPUTY CHAIRMAN -Mr. David Blake (Minnedosa): Mr. Down ey. MR. J.

DOWNEY: Specifically in your area - and I should kno w this, but you could probably help me out somewhat - what percentage of your membership or what type of non-statutory crops would be grown there and what percentage of the producer's acreage? Would half your acreage be in, say, sunflowers or crops that could be processed in Western Canada, canola seed, that type of thing? MR. DEPUTY CHAIRMAN: Mr. Howe. MR. L. HOWE: You're talking about including canola seed too? MR. J. DOWNEY: I'm considering canola seed as one that could be thrashed at Altona or in Harrowby - or sunflowers. MR. L.

HOWE: I would think that about one-third of the acreage in our area would be in oilseeds and special crops. MR. J. DOWNEY: Thank you. MR. CHAIRMAN, Andy Anstett (Springfield): Any further questions? Mr. Harapiak. MR. H. HARAPIAK: Mr. Maguire , in the United States they've got compensatory rates and the performance of the rail road has not been efficient enough to move the grain. What makes you think that the railroads will move the grain in Canada with the Crow if we receive these additional funds? MR.

L MAGUIRE: think, as outlin ed in the Transportation Initia tive, the difference here would be a format by which the railroads are only paid on an interim basis and they're only paid according to the amount that they move by rail. We're at the point where

Thursday, 21 April, 1983 we're making this proposal; the United States has set it up without such a guarantee. MR. L. HOWE: Yes, I'd just like to make one comment on your view on the United States transportation system. Between 1970 and 1980, they increased their transportation system by 30 million tonnes a year, which is what we handle in a year, so they may have been restricted by a lack of transportation but they were doing a heck of a lot to improve the situation at the same time. MR. H. HARAPIAK: According to Mr.

Nicholson's presentation, farmers in their area will lose $9.2 million over the next 10 years and I'm not sure if the Souris Valley is smaller or larger or the same size. Could your community afford to lose in the vicinity of $9 million or $10 million over the next 10 years? MR. L. MAGUIRE: I'll answer that first. I feel that there wouldn't be any loss in our area from a Western Transportation Initiative. The Swan Valley is a productive area, I'll grant you that.

But what we call our Souris Valley Organization only because the Souris River bends around a few areas in our towns, we don't look at it as a loss of income in prairie producers. We feel that there are definitely advantages to bringing such a proposal in, in that we are only going to be charged those freight rates that we hear about, if there's a 41 or 42 million tonne handle off of the prairies in 19 91- 92. At the present time . . . MR. CHAIRMAN: Order please. MR. L. MAGUIRE: Pardon me. I'll ask Bill to . MR. CHAIRMAN: If Mr. Uruski has a question for you, I'll put him on the list. MR. L. MAGUIRE: Okay.

We feel that at the present time it's only about 27 million tonnes and that you're moving roughly 50 percent more grain by 19 91- 92. If that can be moved off my farm by that time, I am prepared to pay some more towards having that grain moved, and I think it would be an income - you know, a management decision - but I think it would be profitable for me to do so. MR. L. HOWE: Yes, another thing we've got to consider, at least in our area, and I know some other productive areas around the province, we have a fleet of trucks steadily hauling flax to Thunder Bay. We're hauling rapeseed to Har rowby, to Altona.

There's barley being shipped out of Brandon and going east in trucks, if you can imagine that, and still getting a price that's pretty comparable with what we can get at the elevators and the freight is certainly a lot more than the Crow rate on what's going out by truck. So what we're actually paying for freight, and what it looks like we're paying for freight, are two different things. MR. H. HARAPIAK: Are you thinking then that if this Crow goes, that trucks will also receive compensation that the railroads are receiving? MR. L.

HOWE: Well, under the Gilson proposal, at least the farmer will be getting the money, so he can decide how he ships his grain. But if we had an efficient rail transportation system that could be handling this grain on rail - it's got to be cheaper to ship this stuff by rail than it is by loading it on a semi and putting it on a train and sending it down east - so hopefully, we'd be shipping more by rail than by truck in this situation as it exists right now. MR. H. HARAPIAK: With this increased traffic on your highways, what is going to happen to your hig hways - highway roadbed? MR. L.

HOWE: I suspect that depends on where the grain has to go. I don't think you'll see much shift in our area from where the grain is hauled to the elevators. MR. H. HARAPIAK: I believe you misunderstood my question. You were saying that grain would be moved to the Lakehead by truck. With this increased traffic, what is going to be happening to the roadbed of the province that's handling the ... MR. l. HOWE: What I'm saying is that right now we're shipping it by truck to the Lakehead, or to Toronto, or wherever it's going to.

With a more efficient rail transportation system, we shouldn't have to be loading it on trucks. We should be loading it on a rail car. MR. CHAIRMAN: Mr. Harapiak. Mr. Bucklaschuk. Mr. Uruski, you had a question you wanted to pursue. HON. B. URUSKI: Yes, just one point. You're aware that the proposal calls for a cap of $3 1 million? 215 MR. L. MAGUIRE: Yes, oh yes. HON. B. URUSKI: So that anything beyond that is not at the new rate, but at whatever the traffic will bear. MR. L.

MAGUIRE: Yes, we indicated that in our brief, Bill, but we realize that it's there, but one point that we feel is that anything over that inflationary value of 6 percent should be picked up 3 and 3. lt is until 19 85- 86, according to the present proposal, but we see that isn't tied to the cap, but the cap is 31.1 but we are prepared to pay more over and above that cap. But as I say, it's only tied in if more grain is moved than that. MR. CHAIRMAN: Any further questions from members of the committee? With your permission gentlemen, I have a couple of questions I'd like to ask the person making the brief.

Are there any objections from members? I'll leave the Chair if you wish. Mr.

Magu ire, with reference to the question of increased trucking that has been suggested by some members in their questions to you because of the change in the rate structure proposed under the Western Transportation Initiative, I get the impression that what you're saying is, even if the cap isn't removed - if it's left at 31.1 million tonnes - you're suggesting that there wouldn't be a substantial change in your area in transportation habits now, which involve some trucking, but I gather still substantial movement by rail through elevator points.

Thursday, 21 April, 1983 MR. L. MAGUIRE: Yes, we feel that this is a fear that some of the companies have, that if they go for this, that there'll be a dramatic shift. We see it as a problem right now that a lot of this grain is going down the road. We know several farmers in our area that are shipping at least 30 percent of their grain off their farms on rubber tires at the present time, and there's no reason why that grain - you know, outside of being mostly special crops and that sort of thing, there's a lot of barley - but it's more efficient and economical as well to ship it by rail. MR.

CHAIRMAN: I guess what I'm not understanding about your answers to these questions then, or maybe I'm missing a point here, is if trucking is now competitive in the Souris Valley area with rail, or competitive enough that substantial use is being made of this mode, why would trucking not increase when it became more economic, as it would under the Western Transportation Initiative? Can you tell me why you wouldn't expect an increase, in fact a very dramatic increase, when the rate goes to five times Crow? I guess that was the one thing I was ... MR. L.

MAGUIRE: First of all, the rate only goes to five times Crow, and if that amount of grain is being marketed - 41 million tonnes - there are still going to be the people growing special crops, corn, grain corn, this sort of thing that, due to short-haul distances, aren't going to be loaded on boxcars and definitely it may increase. We feel that this is one area that will, as indicated in Mr. Downey's question, we feel there will be more incentive for the fellows to produce crops that would help keep some of these industries viable in Manitoba, such as our crushing industry and these sorts of industries. MR.

CHAIRMAN: So you could then see a dramatic increase in trucking of special crops in particular, but also of grains out of the Souris River Valley under the Western Transportation Initiative? MR. L. MAGUIRE: I don't know if you would say a dramatic increase. I think as Laurie indicated, no, there probably wouldn't be a dramatic increase. There would be the same quantity of grain proportionately anyway going through the elevator system. MR. CHAIRMAN: Okay, thank you very much. Any further questions? Seeing none, Mr. Maguire, Mr. Howe, thank you very much for being here today and for making your presentations.

Next person on the list is Mr. John Whitaker. Mr. Brad MacDonald. MR. B. MACDONALD: Before beginning, I would like to tell the committee that my brother and I farm at Strathclair, a grain and hog farm. I'm a member of the Canadian Wheat Board Advisory Committee for District 2. Before I begin my presentation I would like to inform the committee that the advisory committee has, by resolution, completely rejected the Pepin proposal. As a promoter of the Crow rate, I would like to identify a number of concerns surrou nding the debate to change the historic statutes.

Notwithst anding the historic 216 aspects of our transportation policy and large public gifts to the CPR, it is vital that we maintain the Crow rates if the prairie region as to remain competitive in the internat ional grain market. Cur rent market conditions can be simply described as fierce. In both historic and current terms, Canadian farmers have received a relatively lo w level of support from government when compared to our counterparts in the U.S. and the EEC.

A study was done that in the last 15 years Canadian grain farmers received about 11 .4 percent of their income in terms of government support - that includes transportation assistance- compare this to 21. 8 percent in the U.S., it rises to 25.8 percent if you include the assistance to their waterway system, and 39 percent in the EEC. If we are to increase our share of value-added markets for agriculture products on the international market, it will require considerable government fundin g and patience.

Farmers will produce for this market when it is attractive for them to do so; to force the process by reducing the income of grain farmers is stupid. I might add, on our farm where we process our own grain, we don't have any Crow hurt, something that has been mentioned from time to time. This complaint appears to come particularly from the large commercial theatres. On the contrary, if Mr. Pepin's proposal was implemented, it would be to our detriment, because farms like our own would then have to compete with very cheap feed grains. I'd like to leave my written brief for a second.

I believe you've got another page of information. lt was given to the members of the advisory committee at our last meeting last Friday by the people who do the foreign analysi s. The first four paragraphs are pertinent, especially to those people who believe that we're to blast our way into the value-added market. U.S. subsidized wheat flour, sale to Egypt, export payment in kind. In retaliation to EEC agriculture export subsidies, the U.S. will subsidize the sale of 1 million tons of U.S. wheat - 1. 3 million tonnes of wheat equ ivalent - to Egypt from March '83 to April '84.

The agreement signed on Janua ry 17, 19 83 sets the price of 1 million tonnes of bagged U.S. flour at 155 per tonne, C&F Egyptian ports. This price is approximately $20 per tonne below competitive EEC flour prices and $135 per tonne below U.S. costs. In addition to the 375,000 tonnes of U.S. flour shipped under PL480, the 1 million tonne sale effectively force EEC out of the Egyptian flour market. Egypt traditionally imports 1.4 million tonne of flour per year, of which EEC supplies .7 million tonnes.

Furthermore the U.S.­ Egyptian contract specifies that Egypt will notify and consult with the CCC for additional commercial flour purchases over the term of the contract. Sales under the 1 million tonne contract will be financed by U.S. commercial banks; 77.5 percent of credit guaranteed by the Commodity Credit Corporation under GSM 102 Program. The Egyptians preferred this option at $15 5 per tonne to a price of $16 0 per tonne with blended credit financing and 72.5 percent of the credit gua ranteed by the CCC.

In order to meet the contract price, Commodity Credit Corporation stocks will be provided without cost to U.S. millers on a bid basis. Initially it was estimated that a total of 37 million bushels of CCC wheat stocks would be required as in-

Thursday, 21 April, 1983 kind subsidy payments to millers. However, the U.S. Government subsequently ruled that 50 percent of the flour shipments must be carried by U.S. flag vessels according to cargo preference rules. The cost of using U.S. flag vessels is approximately $57 per tonne above the cost of foreign vessels. As a result, we estimate that an additional 16 million bushels of wheat will be required as subsidy payments raising the total to 53 million bushels. Excluding the 147 million bushel food security reserve, the CCC currently has only 37 million bushels available for disposition.

Unless the CCC can acquire sufficient stocks as loan forfeitures, cash subsidies may be requir ed to make up the difference. We should protect our market for export grain, which is a proven track record by retaining the Crow rate and extend that attitude by reducing costs to farmers on the winter movement and water movement of export grain into the St. Lawrence and eastern ports. My second concern is with the pro posed transportation authori ty. The proposal would give the Minister of Transport the power to override both The Canadian Grain Act and The Canadian Wheat Board Act. Transportation is part of marketing.

Any loss of power in this area and the Wheat Board marketing function would be severely impaired, so the loss is going to the producers and the economy. My third concern is with the proposal to introduce variable or incentive rates. This proposal would give the rail road presidents in Montr eal the power to determine the future of our grain handling system. Since the cost of maintaining provincial roads will increase along with the decline in the small towns under such a rate structure, I'm surpris ed the Provincial Government hasn't released an impact study of the effects on Manitoba.

My last concern is with the very low profile the Government of Manitoba has treated the proposed changes. As late as last Friday, the president of the Farm Bureau was justifying his arguments for change by your silence. I would think that the least you would consider is some real money to counter the Federal Government advertising and funding for those groups lobbying for the Crow, I might add, as opposed to current funding, compulsory funding, to those groups that are opposed to the Crow, such as the Manitoba Cattle Prod ucers' Assoc iation.

In addition , the Government of Manitoba could explore what legal means are at your disposal to mess up the Federal Government's plans. From documentations available, it is now evident that the Federal Government has employed a well-conceived plan to manipulate farmers. Earlier this afternoon, we heard from the Farm Bureau indicating that the Crow rate was the reason that the Wheat Board had problems exporting a couple of years ago, and I reject that the Crow rate was the problem, but rather part of the plan on the Federal Government to manipulate farmers into accepting change.

Some well-intentioned people have been drawn into the plan. While a degree of confusion still exists, we are now seeing a large buildup of opposition to Pepin's proposal. I have consistently promoted the Crow as being valuable to farmers in Canada. I expect the same support from the Government of Manitoba. MR. CHAIRMAN: Thank you, Mr. MacDonald. 217 Questions for Mr. MacDonald from members of the committee? Mr. Bucklaschuk. HON. J.

BUCKLASCHUK: Just a question in reference to your comments about the alleged silence of the Manitoba Government and the statement you had made: "As late as last Friday, the President of the Farm Bureau was justifying his arguments for change by your silence." Would you care to expand on that? MR. B. MacDONALD: I am referring to - we had our last Canadian Wheat Board Advisory Committee last Friday. We had a rather long, and at times, vigorous debate of the transportation authority; the sole member of the committee defending the Pepin proposal being the president of the Farm Bureau.

One of the reasons for justifying his position was, in his words, he said, "The Manitoba Government has been very quiet." Direct quote. MR. CHAIRMAN: Further questions. Mr. Plohman. HON. J. PLOHMAN: Would you consider the hearings that we are carrying out right now as part of our silence? MR. B. MacDONALD: Well there's - it's sort of like farming, John. You know, there's a time to do things, and you don't seed in July . I've been involved in this process since 19 75 and when the time comes to act, you have to act whether you're ready or not. I suppose what I would have liked to have seen is, you know, when Mr.

Pepin made his proposal in February, a concerted effort to quickly get some facts and figures in place right then and there within a two or three week period, and it should have been possible. HON. J. PLOHMAN: Are you suggesting that it is a good expenditure of public money here in Manitoba certainly that we should be engaging in an agressive advertising campaign to counter the - you mentioned the kinds of things that have been sent out to everyone by the Federal Government.

A lot of people have said that they consider that a waste of taxpayers' money, but you feel it would be justified if the Government of Manitoba would put something that's counter to that out? MR. B. MacDONALD: Well, how much effect this advertising really has, you know, I can't give you a firm answer, but I know you can't just let it build up and build up unopposed.

What we've seen in the media over the last - since about 1978 - constant references to the old statute the last couple of years - constant references that the Crow only covers 20 percent of the cost; and if you analy ze Snavely's report, that's completely inaccurate, yet it's been treated over and over and over again and it's still being treated in the media as gospel. MR. CHAIRMAN: Further questions. Mr. Down ey. MR. J. DOWNEV: Mr. MacDonald, you make reference to the fact that the government has been silent. Earlier

Thursday, 21 April, 1983 today we heard the presentation made by the Farm Bureau and reference made to the fact that there's a task force put in place. I guess you may or may not be aware, but it is my understanding and tell me if I'm incorrect, that the Minister of Municipal Affairs within the Provincial Go ver nment is now, through his department and in co-operation with the Federal Gov ernment, prov idin g information through his assessment branch so as to help accommodate the kind of direct payment to the farmers that is being proposed. Am I correct in that assumption, or maybe you're not aware of it? MR. B.

MacDONALD: No I'm not aware of it. I'll let the government answer. MR. CHAIRMAN: Mr. Uruski, on a point of order. HON. B. URUSKI: Mr. Chairman, just for Mr. Downey's information. He should be aware that there is a request. There's been no decision in terms of any information being passed on. MR. CHAIRMAN: Further questions. Mr. Downey. MR. J. DOWNEY: Just one. Mr. MacDonald, you make reference to the fact that the Wheat Board Advisory Committee did pass a resolution rejecting the Pepin proposal, is that correct? MR. B. MacDONALD: That's correct. MR. J.

DOWNEY: You're here tonight as the Canadian Wheat Board Advisory member of the committee, or as spokesman for the Wheat Board Advisory Committee as a total? MR. B. MacDONALD: No, I'm here speaking on my own behalf. I represent District 2. MR. J. DOWNEY: You'r e speaking as tha t representative? MR. B. MacDONALD: