ISSN 0542-5492 Fourth Session - Thirty-First Legislature of the Legislative Assembly of Manitoba STANDING COMMITTEE ON AGRICULTURE 29 Elizabeth 11 Published under the authority of The Honourable Harry E. Graham Speaker - WEDNESDAY, 23 JULY, 1980, 8:30 p.m. Printed by The Office of The Queen's Printer. Province of Manitoba

MANITOBA LEGISLATIVE ASSEMBL V Thirty - First Legislature Membe rs, Constituen cies and Political Affiliation Name ADAM, A. R. (Pete) ANDERSON, Bob BANMAN, Hon. Robert (Bob) BARROW, Tom BLAKE, David BOSTROM, Harvey BOYCE, J. R. (Bud) BROWN, Arnold CHERNIACK, Q.C., Saul CORRIN, Brian COSENS, Hon. Keith A. COWAN, Jay CRAIK, Hon. Donald W. DESJARDINS, Laurent L. DOERN, Russell DOMINO, Len DOWNEY, Hon. Jim DRIEDGER, Albert EINARSON, Henry J. ENNS, Hon. Harry J. EVANS, Leonard S. FERGUSON, James R. FILMON, Gary FOX, Peter GALBRAITH, Jim GOURLAY,Hon. Doug GRAHAM, Hon. Harry E.

GREEN, Q.C., Sidney HANUSCHAK, Ben HYDE, Lloyd G. JENKINS, William JOHNSTON, Hon. J. Frank JORGENSON, Hon. Warner H. KOVNATS, Abe LYON, Hon. Sterling R. MacMASTER, Hon. Ken MALINOWSKI, Donald McBRYDE, Ronald McGILL, Hon. Edward McGREGOR, Morris McKENZIE, J. Wally MERCIER, Q.C., Hon. Gerald W. J. MILLER, Saul A. MINAKER, Hon. George ORCHARD, Hon. Donald PARASIUK, Wilson PAWLEY, Q.C., Howard PRICE, Hon. Norma RANSOM, Hon. Brian SCHROEDER, Vie SHERMAN, Hon. L. R. (Bud) STEEN, Warren URUSKI, Billie USKIW, Samuel WALDING, D. James WESTBURY, June WILSON, Robert G. Constituency Ste.

Rose Springfield La Verendrye Flin Flon Minnedosa Rupertsland Winnipeg Centre Rhineland St. Johns Wellington Gimli Churchill Riel St. Boniface Elmwood St. Matthews Arthur Emerson Rock Lake Lakeside Brandon East Glad stone River Heights Kildonan Dauphin Swan River Birtle-Russell lnkster Burrows Portage la Prairie Logan Sturgeon Creek Morris Radisson Charleswood Thompson Point Douglas The Pas Brandon West Virden Roblin Os borne Seven Oaks St. James Pembina Transcona Selkirk Assiniboia Souris-Killarney Rossmere Fort Garry Crescentwood St. George Lac du Bonnet St.

Vital Fort Rouge Wolseley Party NDP PC PC NDP PC NDP NDP PC NDP NDP PC NDP PC NDP NDP PC PC PC PC PC NDP PC PC NDP PC PC PC lnd NDP PC NDP PC PC PC PC PC NDP NDP PC PC PC PC NDP PC PC NDP NDP PC PC NDP PC PC NDP NDP NDP Lib PC

LEGISLATIVE ASSEMBLY OF MANITOBA THE STANDING COMMITTEE ON AGRICULTURE Wednesday, 23 July, 1980 Time - 8:30 p.m. CHAIRMAN - Mr. Bob Anderson (Springfield). MR. CHAIRMAN: Order please. The committee will come to order. We have a quorum. The first name on the list is the Manitoba Milk Producers' Marketing Board, Art Rampton. Mr. Driedger. MR. ALBERT DRIEDGER: Mr. Chairman, I just had occasion to talk with Mr. Rampton. He will be a few minutes late. We can maybe proceed with the others; he doesn't mind waiting. MR. CHAIRMAN: Very well.

The next names I have are Arni Peltz and Wendy Land, who I understand are appearing together regarding the Citizens' Health Action Centre. MS. WENDY LAND: Mr. Chairman, Mr. i"eltz is not here yet. I was intending to present my part of the brief first and can go ahead, if you wish, but I am anxious that I be follo wed immediately by Mr. Peltz. HON. JAMES E. DOWNEY: Mr. Chairman, perhaps she would like to wait for the other individual who is going to present the case. If they want to wait for a few minutes it's quite all right with us, and call another member. MS. LAND: Perhaps that would be better. MR.

CHAIRMAN: Mr. Dooley of Scarth Simonsen. MR. THOMAS P. DOOLEY: Mr. Chairman, I am solicitor for the Manitoba Milk Producer Marketing Board and I will be appearing with Mr. Rampton when he arrives. MR. CHAIRMAN: I see, thank you. The National Farmers' Union, Jackie Skelton. MR. L YLE ROSS: Jackie Skelton is not here but I am Lyle Ross and I will present on her behalf. MR. CHAIRMAN: Would you proceed, Mr. Ross. MR. ROSS: My apologies because I don't have a copy to hand out to you.

I picked out a couple of areas, in looking at the bill, that are of particular concern , some of the things, then, that we see that could happen to milk pricing. I think earlier on it was evident, with some of the presentations. dealing with

Section 3(2) of the bill regar ding the cost of production form ula, the concern there is the input, or the ability of milk producers to establish the pr ice of wha t the y produce for the marketplace, and it is certainly not clear in that that they have, in fact, any responsibility or power to do that. in establishing the pricin g 33 formula. As a matter of principle, I think it has to be recognized that the producer of a product should be the one that sets the price on it.

I would say a major oversight, if it was missed out intentionally, they talk about providing a reasonable return on investment to the producer. The operation requires a fair amount of labour and I think it needs to be clearly stated that a reasonable return on labour is necessary. I can't speak , in really specifics, in terms of dairying operations as such because, myself, I am a grain producer and not a dairy producer. I think that it is probably debatable in terms of, right now, what we call a reasonable return.

Many farmers probably have gone through situations where they had a negative return on investment and on labour many times in the past. Some industries look at 10 percent, some look at 20 percent being what they would call a reasonable return. To somebody who has got a loan at 15 percent, certainly 10 percent wouldn't be considered a reasonable return. We agree that with the price setting mechanism by farmers of the price of milk, that hearings are not a requirement, saying again that the principle is that the producer of the product should establish the price of his product.

In saying that hearings are not a requirement, I want to make sure that we also are conscious of the problems that can be created for people in the society that do not have the bargaining power to pay an established price, and that must be dealt with, but in a different way, from our point of view. than ha ving them pa rticip ate in the establishment of a farm gate price, which is the responsibility of the farmer, as we see it.

Section 3(5) probably is the one that causes the major concern, dealing with monitoring prices at the distributor and retail level. This

section is completely inadequa te to protect the interests of consumers. Low-income, rural and remote communi ties will be the most severely affected by what has been termed deregulation of the distributing and retail sectors of the industry. And if a cost of production formula can determine producer costs, certainly it can be used to determine distribution and retail costs as well.

There is ju st no doub t in our mind tha t if distributors and retailers are left free to set their own prices, that the criteria that they will use will not be what is quo ted earlier in reference to producer costs as reasonable returns on investment. They have shown that the going philosophy on that will be maximum return on investment and without setting that price. we just open ourselves to faster and more com plete integration of one sector of the food system that we're talking about right now. being the dairy industry.

The concern for people on low income and special needs, or people with special needs that cannot, in our society, don't have the bargaining power. That must be recognized by the government, and it must be dealt with, and we would suggest, dealt with by the federal government mainl y, but needing the cooperation of the provi nces. by establishing

Wednesday, 23 July, 1980 programs that deal in fact with that situation, such as school milk programs and pr ograms for supplementing the diets of low income people. it's something that must be considered, but it must be considered separate from the pricing mechanism to farmers. But it also has to be considered in the light of this bill even more importantly, because this bill allows the retail and distributing sector to set the price that they want, which assures that they will try to gouge people. Just another few more points that I think need to be looked at.

Looking at this particular bill, while it doesn't appear to change an awful lot in the sense that the review commission is somewhat similar, as has been mentioned by others, to the Milk Control Board, if you look at what has happened and is happening in some other jurisdictions, in provincial jurisdictions, to milk and to the whole agricultural sector, and to orderly marketing, as a marketing concept for farmers, as oppo sed to what is called allowing the so-called free market to operate.

In Canada there is a persistent force, pr essure to undermine the orderly marketing structure that are presently existing, or have existed, and prevent the setting up of such structures in commodities which do not now have orderly marketing.

The dairy industry has to be viewed as one of the models of orderly marketi ng, even in the light of criticisms that people have of it and have had over the years, but adjustments have been made. it's the one that]s been in existence the longest, it cannot be argued in any way that the existence of an orderly mark eting system for da iry pr oducts created inefficiencies, when you look at the efficiencies in terms of production that have taken place per animal unit, whatever, over the time say, since the Second World War.

Indeed it probably can be argued that an order ly marketi ng system. in fact , assures tha t efficient produc ers will be remain in production providing there's a constant price because it allows for long-term planning and, as a result, a more orderly operation. I'm concerned that the introduction of this bill, with the change in moving from a regula ted price for pr ocess ors, distributors as they' re called, and retailers, is just possibly a first step in deregulation, as it's called.

That the next step envisioned at some future date is to deregulate the farm gate price and go back to a situation where dairy farmers, in fact, would not have a price but would have to take wha tever was offered to them. I'm sure that there would not be too many dairy producers that would be prepared to go to that kind of a step.

And while it can't be indicated in any way out of this particular legislation, I think it's necessary for us to look at what has recently happened in Ontario, where the move has been to take quotas and put them into what, I belie ve they call, quota exchange, or some kind of an exchange system. And I'm sure that the pressure exists, even here, in spite of our pool price system and our no value on quota, to reinstitute values on milk qu otas, and eventually move them to a trading exchange basis where whoever can pay the most for the quota gets the quota.

I'm saying that because that is being done in Ontario and it seems reasonable to assume that there would be similar kinds of pressures to do the same thin g out here and that, again, would be 34 devasta ting to both consume rs and pr oducers, because you have, what in effect is a deadweight value that has to be passed on, a cost that has to be passed on to consumers. You also have a built-in capital cost that makes it more advantageous for capital intensive opera tions, or at least operations backed by large capital supplies to take over the industry, rather than having family farms as such run the industry.

Another point I wanted to mention in regard to a previous comment I'd made, and I sort of throw it out because it looks to me like that's one of the things that is happening in rural areas, in particular, when I say that deregulating the distributors and the retailers in effect will have the most effect on low income, rural and remote communities.

Distribution of all products right now in rural areas is one of the major costs associated with the product, wha tever it might be, because in most cases manufacturing has been centralized, and in order for people in rural areas to get the product there's a transportation cost associated with it. Certainly we haven't solved the - don't appear to be looking at increasing energy costs and increasing transportation costs, and that obviously has to be passed on - or they're going to try to pass that on in the price of the commodities that move, in this case, milk.

So you may have a commun ity like my own at Basswood, where we have a small store, which we would call a convenience store in our community since it's the only that exists, and it's just ready to re-open after being shut down for a while. It'll be open half a day. They handle a few groceries.

The cost of getting milk to that particular store for a half­ day operation will be one of the major cost s associated with that milk when it gets there. it's becoming increasingly clear in rural areas that the idea tha t the re is in fact competition existing between two dif ferent outfits is wor king to disadvantage of rural areas, because you may have two trucks sto pping at a store deli vering two products that have the same things, same quality, with the high distribution costs associated to them.

So it seems to me that the conc ept of eo- 4 operation is much more applicable to rural areas o· Manitoba now than the concept of competition, in, terms of providing service at lowest cost to rural areas. And for companies that are in the business of doing that, they are faced with the contradiction of continuing to do it as individual companies, and supposedly competing and seeing the cost of their product go way out of reach, or co-operating with each other, which sort of blows the myth that they're competing or colluding with each other; it looks like they're competing, but they're not.

I think that's all I can say at the moment, Mr. Chairman. If there's any clarification or questions I'll attempt to answer them. MR. CHAIRMAN: Thank you, Mr. Ross. Mr. Enns. HON. HARRY J. ENNS (Lakeside): Thank you, Mr. Chairman, it's always of interest to members of the comm ittee when we hear representations, particularly from associa tions or persons speak ing for associations. You know a little bit more about that association. For instance, if we have Mr. Dick Martin from the Manitoba Federation of Labour speaking to

Wednesday, 23 July, 1980 us, he will indicate that he is speaking for x number of thousands of mem bers that belong to th at organiza tion. If we're dealing with a commercial matter such as we were the other day in this comm ittee, where we had a financial bill dealing with mortgages, the spokesman for that group will often give the committee members a list of all the different organizations that he is, in fact, speaking for.

Just this afternoon, in the other committee that I also attend, we're dealing with professional matters, the nurses' bill, a bill dealing with the registered nurses, and the spokesperson for the professional nurses indicate to us that she is, in fact, speaking on behalf of 4,000 or 5,000 registered nurses in the province, and it is a help to members of the committee to know this kind of background. My simple question to you , sir, as spokesman of the National Farmers Union is, can you tell us how many Manitoba farmers are members of the National Farmers Union? MR.

ROSS: Are you concerned at this committee whether - all farmers, or those that are just dairy farmers, within the NF U? MR. ENNS: No, it was a general question of total membership, of farmers in Manitoba that belong to the National Farmers Union. MR. ROSS : Our memb ership at the moment is somewhere between 800 and 1,000 people in Manitoba. That's not people, that's farm families, which is the basis of the farm union membership. MR. ENNS: Mr. Chairman, I want to put on the record and thank the representative of the National Farmers Union, for his candid reply.

I've sat on this comm ittee over the past 12 or 14 years and have often had occasion to ask that question of members speaking on behalf of the National Farmers Union, and ha ve never received an answer, so I'm particularly thankful, Mr. Chairman, that Mr. Ross is forthright in his appearance before this comm ittee. My second question, if I may, this is just a sim ple ques tion. lt is not qui te clear to me in your pres entation , does the Na tio nal Farmers Union support Bill 86? MR.

ROSS: In answer to his second question, no, we cannot suppor t Bill 86 in its present form, because we cannot accept that the retailing and distributing sector does not have control. In reference to the first question that Mr.

Enns asked, I would say that its always been of interest over the years, I suppose, within the Farmers Union, that the people that ask us how many members we've got are always politicians, because it appears that politicians sort of judge the way they move, what they do or don't do, always based on numbers and the political sort of ramifications of that, and within the Farmers' Union, certainly we would like to see more than we have.

I don't want to say that, but we know that we have set about a course of action that is unique in Canada for farmers and we know that that course of action is a long struggle, and it's not easy, and it's what we do within the union that makes that work. We know that what is different from any other organi zat ion is tha t we have a compr ehensive farm policy position and that we have 35 done that in a process of democratic debate and lots of fights, and at the same time, through a process of debate. We are unique as an organization that unites farmers as farmers.

Now, I know, like I say, roughly how many we have in Manitoba because we don't have necessarily an ongoing record all the time. I cannot say how many people are actually dairy producers that are part of those members, but what I do know is that our policy position represents dair y produc ers right across ? - ? the country, not just in Manitoba.

I know that those producers, that dairy policy that has been developed in our convention by dairy producers, is then agreed to by all the farmers at the conve ntion, which includes the beef producers, the hog producers, the grain producers, so that we create a unity amongst farmers of all commodities, not just farmers of one commodity, through that process. I am not ashamed of the number we have; I would like to see more but I know that we have got a policy and a unity amongst the group that we do have that we can build on.

We have been very successful the last, I would say, three years, in increasing our membership in one of the areas that is represented by our Mi nister of Agriculture. So we think, from that indication, that our policy positions that we have as a union are, in fact, being accepted by a number of farmers, even more so than the policies in agriculture of this government. MR.

CHAIRMAN: Before I recognize any further questioners, I would caution all members of the comm ittee, as well as all delegates, that the remarks should be kept as closely as possible to the bills under consideration, namely Bill 86, alt hough I do recog niz e tha t this particu lar delegate was led somewhat astray by the question that was put to him. Mr. Enns. MR. ENNS: Mr.

Chairman, I accept your admonition but I do, again, thank the spokesman for the Nati onal Farmers' Union, that now indic ates, although they don't keep ongoing records, we don't really know how many members there are, but your estimate is between 800 and 1,000. Perhaps, by observa tion, you are quite right, there is an obsesssion with politicians about numb ers. You see, if they had a few more numbers, they would be government and we wouldn't be, as indeed they had for the last number of years.

So politicians do have an obs ession with numb ers when it come s to weighing representation and the weight one puts to that representation. Mr. Chairman, those are my comments. Thank you. MR. CHAIRMAN: Mr. Ross. MR. ROSS: Mr . Chairman, when I made my reference to politicians, I was talking about politicians collectively, all politicians. MR. CHAIRMAN: Mr. Driedger. MR. DRIEDGER: Mr. Chairman, through you to Mr. Ross, you indicate that under the present bill, the

Wednesday, 23 July, 1980 way it is right now, that the National Farmers' Union is not in support of the bill. Does the National Farmers' Union believe in the establishment of a cost of production formula? MR. ROSS: Yes, we believe that for dairy producers to remain in business they must have a return that returns to them their cost of production, plus a reasonable return on labour and investment and management skills. MR. DRIEDGER: Mr. Ross, do you feel that this bill does not make provision for that kind of a situation for the dairy farmers? MR. ROSS: I think I indicated, when I was talking about

Section 3(2), if I didn't, the provision is there for a cost of pr oduction formula; ther e is no provision there for the producers to determine what that cost of production formula is. What I said was that the principle that we need to establish is that it is the producer of a product that should set the price of his product. That's not clear within the bill. But the provision for a cost of production formula is in the bill. MR. DRIEDGER: Just one or two more questions, Mr. Chairman.

In taking a position on behalf of the National Farmers' Union on Bill 86, has there been consultation with dairy farmers on this bill since the time it was introduced into the House, or is the position taken on the basis of the policy statement that you indicate you have? MR. ROSS: The position is taken mainly on the basis of the pol icy statement and on some

interpretations of the bill, the policy statement, but as a result of it being an overall policy statement, our

interpretations of the present situation within the province of Manitoba. MR. DRIEDGER: One more question. I have a little problem, Mr. Ross. Basically, we have had a fair amount of representation by the dairy producers over a period of time expressing concern about the pricing system, the way it was handled under the Milk Control Board , and the various pr oduc er groups, the Manitoba Milk Producers' Co-operative, as well as the Manitoba Milk Producers' Associa tion, have lobbi ed at various times to gover nme nt, indicating that they would want to see changes.

Because our government felt tha t ther e were problems in the da iry indu stry, and we had representation to that effect this afternoon, this is one of the reasons why the bill is here. I am a little concerned when a certain element of the dairy industry promote this kind of a bill, that the position that you take, as the National Farmers' Union, is opposed to it. I have a bit of a problem getting the rationale. MR. ROSS: Well, if you will remember what I said, that we were opposed to the bill primarily because it freezed the retailing and processing sector from any kind of control.

That and, as I have mentioned, it is not clearly stated that the producers are in fact going to be able to set their cost of production 36 formula. I think those are pretty valid grounds to be opposed to the bill on. MR. CHAIRMAN: Mr. Blake. MR. DAVID BLAKE: Mr. Chairman, I just have a quick question for Mr. Ross, we don't want to keep him too long. In his remarks, he mentioned the small fam ily farm, which I think you will find a great numb er of politicians agree with on all sides of the Ho use.

We have heard from dair y people this afternoon that indicated that something less than 30, 35, maybe 40 cows was really not going to be a good economic unit to start with. Do you foresee a return, in the rural communi ty, to the family that would milk six, seven, ten cows, where the hous ewife will milk the cows night and morning while the husband is probably grain farming or doing some other type of mixed farming, on the smaller farms? Do you see, in your visits around the rural communit ies, any return to this type of an operation that was very prominent 30 or 35 years ago? MR.

ROSS: You mean by a return, a monetary t return or more of those showing up? MR. BLAKE: More of those showing up where the wife will milk six or seven cows a day and sell the cream. MR. ROSS: That specific situation, as described by Mr. Slake, you don't see. Possibly, not be facetious, I could say that maybe has something to do with the fact that maybe there's not as many women there prepared to go out and do that now, and suggest at the same time they shouldn't expect to do that and not expect a wage for their labour that they're providing there. MR. BLAKE: They should get fair return. MR.

ROSS: The situation on dairy production. the production unit itself. I think there's a wide variance between producers and I think that's a question that, as time envolves, there will be more information come out. I know of one example, in the area that I live in, of a fellow that has started an operation on a small land base, has started from scratch, and to hear him talk, the way he describes it, he's making out all right. This drough t and lack of hay has certainly made it a big problem for him, I think he's been in the operation five years.

He is in a situation of having to buy all his grain but he's been able to provide all his hay. Now he, apparently, is making out okay. Now, you know, I don't think you can generalize on one example like that. And I believe he's milking about 20-some cows. So I don't think that's a general trend but I think here's one fellow that's proving that maybe it's possible. MR. BLAKE: He's prepared to work long hours and seven days a week. That's li kely the secret for success. MR. ROSS: Yes, he puts a lot of hours in. Yes, there's no doubt about that. MR. BLAKE: That's fine, Mr. Chairman. I

Wednesday, 23 July, 1980 MR. CHAIRMAN: Mr. Adam. MR. A. R. (Pete) ADAM (Ste. Rose): Thank you, Mr. Chairman. Mr. Ross, I want the record to be straight and Mr. Driedger's comments mentioned that your position was different than what we heard this afternoon and that's not necessarily correct, in all respects, because the information, as I recall, and I'm just speaking off the top of my memory now, that the bill in it's present form was unacceptable.

I bel ieve you were here this after noon and you probably heard the same as I did, that without further amendments that this bill was unacceptable to the Manitoba Milk Producers Co-operative. As well, I believe in answer to questions, they agreed or at least thought that they could live with maximum price limi tation at the retail level providing that there were adeq uate fo rmula in pla ce to pr ovide a reas onable retu rn on their opera tion. So the statement that Mr. Driedger made was not accurate, in my op1mon. (I nterjection)- Well we have to get the record straight, Mr.

Chairman, we can't allow qu estions -(I nterject ion)- well we want your questions to be honest, not disho nest. Your main concer n, as I see it, one of your concerns is that by deregulating the processors and the retailers, that this is a first or coulr:l be a first step to deregulating the entire industry. Is that one of your concerns? MR. ROSS: Well that is a concern given the overall sort of pressure against any kind of orderly marketing structures. Like I have no basis, that step hasn't been taken in any jurisdiction yet. I've no basis to say that, in fact, is what will happen.

But I can't understand why in fact, deregulation would occur at this time , on the part of retailers and wholesalers and I suppose another thing that I find strange is that while producers were not satisfied with the Milk Control Board, as it was set up, that the changes, as presented in this bill, appear to affect the retailing and distributing end, in fact, more than most others, and yet they're not presenting any submissio ns. I find that strange. MR. ADAM: Yes, I agree. We haven't heard any briefs from the processors or the retailers up to this point in time, unl ess th ere are some here this evening.

Would you be able to support this bill, with certain amendments to it, such as the maximum price at the retail level? And what other areas in this bill that you believe should be improved in order that the National Farmers Union would support it? Can you give us any . . . MR. ROSS: The one definite requirement would be control mechanism on retailing and distributing. The area on the formula that is a point of concern, I presume, will be spelled out more clearly by regulation. MR. ADAM: Are you finished? I'm not certain, Mr. Chairman, whether Mr. Ross had compl eted his ... MR.

ROSS: I guess what I'm saying is that I'd have to see the amendments that were made to know whether we could support it, as such. Even at that there are obviously still necessary changes that go 37 beyond this particular bill that would have to take place within the dairy industry that are not included in this bill, as I see the lim itations of the bill. You know, we've made presentations on that before in terms of the marketing strategy that needs to be used. MR. ADAM: Mr.

Ross, one of the concerns that was expressed by the other groups that we heard this af ternoon was their opposition to having the commission set the formula. What are your views on that? MR. ROSS: My views are the principle position that its the farmers that should determine the price of what they produce.

And what needs to happen there is that there would be a negotiation process go on between the farmers and appointed commission, which pr esum ably could be this commission, although it is only em powered to - well, it could be this commission, if th ere was some negotia ting pr ocess set up between prod uc ers and the commission, but that process doesn't appear to be there. MR. ADAM: The last question: lt was suggested by the other groups that made presentations that it should be an independent body of some sort.

Now, tha t wasn 't clearly define d who would be an independent body, but that is what was suggested this afternoon. MR. ROSS: I don't believe that an independent body establishing the formula would make any difference. I bel ieve that should be the dairy producers. MR. ADAM: Thank you. MR. CHAIRMAN: Mr. Orchard. HON. DON ORCHARD: Thank you, Mr. Chairman. Mr . Ross, you ind icated tha t of your 800 membership, that you had some dairy producers among that membership. MR. ROSS: That's correct. MR. ORCHARD: Well, it doesn't really matter, the numbers. Did you have opportunity to solicit their opinion on this bill?

MR. ROSS: No, I didn't. The opportunity I had was what I knew of their positions prior to the bill coming in. MR. ORCHARD: So that I wouldn't, Mr. Chairman, be able to draw the conclusion that as a grain farmer, speaking to a dairy bill without consulting your dairy membership, that maybe the opinions were your own and not necessar ily your dairy membership? MR. ROSS: No, you wouldn't because I stated that I was a grain farmer, and that in terms of the specifics of the dairy operation, I was not qualified to answer that.

What I am qualified to talk about is in terms of marketing strategies, whether we should have an orderly marketing system and pursue an orderly

Wednesday, 23 July, 1980 marketing system, or whether we should have a marketing system for farm products where you let the so-called free market have its run. This bill, as I said, the main point in it appe ars to be the deregulation of the distributing and retailing sector, and I am certainly well qual ified to speak on behalf of dairy farmers to say that that is not good for dairy farmers or for consumers in the country. MR. ORCHARD: Mr.

Ross, when you ma ke reference to the orderly marketing, and if I recall some of your earlier remarks, in your study or your fact- finding of the dair y indus try, I believe you indicated that since the mid-Forties, since the war years, that you have come to the conclusion that the orderly marketing system in the dairy industry had stimu lated a fair degree of efficiency in that industry. MR.

ROSS: I said, when you look at the gains that have been made within the dairy industry in terms of the livestock end of it, their increase in production per animal unit and that kind of thing, that the orderly marketing system has certainly benefitted them. What I am really doing is comparing the dairy industry in that sense with the beef industry, which hasn't been - you know, it is sort of common knowledge, in that particular area the dairy industry ha s been mo ving well in advance of the beef industry. MR. ORCHARD: Mr. Chairman, then I would take it that Mr.

Ross would support the orderly marketing system as it has occurred in the dairy indus try, because it has le d to certain effi ciencies, a betterment of the indus try in general, thr ough livestock impr ovement and what not. MR. ROSS: I am saying that the orderly marketing system has been much better than it would have been if it had been a so-called open market system, yes. MR. ORCHARD: Mr. Chairman, then I wonder if Mr.

Ross would agree with the benefits that the orderly marketing system has given to the dairy industry in the last, say, 30 years, where we have seen the num bers of dairy producers drop from possi bly 30,000 down to some 1,300 in the process of improving the efficiency of the industry. MR. ROSS: I think in that situation you have to look at the farm sector in general and the farmers as farmers, and you will find that that change has taken place in every product area, but it hasn't been as severe within the dairy industry as, say, if you look at grain producers, livestock producers, or whatever.

I am saying that that change in loss of producers, to a big degree has been because of overall agricultural policies, primarily at the federal level within Canada, tha t have not been desig ned for Canadian production to be at a self-sufficient level in most commodities, other than grain and oil seeds. MR. ORCHARD: Mr.

Ross, I find it rather interesting that on the one hand we could have the orderly marketing system in the dairy industry applauded for its bringing efficiency to the industry, and at the same time accepting as a fact of that increased 38 efficiency in the industry, a drop in numbers and quite a drastic increase in the size of individual opera tions, both of the latter policies which I think the National Farmers' Union from time to time spoke quite vehemently against, the increase in size of farming operations. MR. ROSS: That's correct.

We are concerned about whether or not the farming in Canada, as production of food in Canada, is going to remain under the control of farm families, or whether it is going to be under control of what we would call the corporate sector or the agri-business sector, and it is clear that the trend is to the corporate sector. lt is very clear that that's the trend and that's why we have been pushin g for policies to in fact assure that farm families are going to be the producers of food. So far as haven't seen the policies that are necessary. MR. ORCHARD: Mr. Chairman, I would like to ask Mr.

Ross if, in polling his dairy producer members of the National Farmers' Union, have they indicated to him that producer returns are adequate in the province right now? MR. ROSS: I don't have numb ers. I have said it is obvious from what I see that some people are saying it is not adequate, and it is obviously not, because people are going out of business, and I have heard some people saying that it is. But without those people testifying on their own behalf, I can't say. MR. ORCHARD: So, Mr.

Ross, you couldn't offer to us whether your dairy membership in the National Farmers' Union would request, as have several other milk producer individuals and organizations today, an immedia te increase in the producer returns. You couldn't say whether your membership would ... MR. ROSS: No, I can say right now without much doubt that there needs to be an immediate increase in dairy returns. I'm saying that I think there are dairy producers out there that feel that there doesn't have to be but without them coming and telling you that, I can't say. MR. ORCHARD: Then, Mr.

Ross, would it be fair to say that that increase, which you've indicated is probably needed, would be needed regardless of what legislation the dairy industry was operating under, whether it was operating under the previous legis lation or the new legislation, tha t need for increased revenue to the producer is there, is real and has to be addressed? MR. ROSS: I believe so, yes. MR. ORCHARD: Thank you. MR. CHAIRMAN: Thank you, Mr. Ross. Mr. Uskiw. MR. USKIW: Yes, Mr. Chairman, I wish to ask Mr.

Ross whether or not the NFU has had any particular viewpoint with respect to the existing legislation prior to the introduction of this bill, as to its adequacy or as to any amendment that may have been made with respect to existing legislation.

Wednesday, 23 July, 1980 MR. ROSS: In commenting on that I have to say that the prior legislation did not, in fact, allow the dairy producers any kind of way that they could in fact say, okay, these are the needed costs and this is what we get and we get ap proval from our membership. I'm saying that because of the delay factors I presume that was the big problem in the previous legislation. MR.

USK IW: Yes, the following question of course flows from the first one and that is, whether or not a simple amendment to the existing legislation is all that is required in order to give the producers a formula-pricing mechanism, as oppo sed to scrapping the whole milk control legislation, which is, in effect, deregulating the industry as a whole, other than producers. MR. ROSS: That could well in fact be the case. Without having looked closely at both bills I'm, at this point in time, not prepared to say. But I suspect that maybe that could have been the case. MR. USKIW: Well, one other point.

Perhaps you're not aware, sir, but in perusing the old legislation, and the new, it becomes very clear tha t ther e are simi larities to the point where one could <•rgue there isn't much of a change in anything because of the wording that is applied in the relevant sections. But, on the other hand, we are in a quandry here because of the Mi nister's statement. it's not so much what's in the bill as much as it is in the Mi ni ster's statement, as to the intent of the new legislation. And his statement suggests that there will be, in fact, deregulation of the industry beyond the producer level.

That's not what the bill says. The bills says that it still may be regul ated "as the commission deems necessary". So we have a problem. We have a bill here that, if applied in one way on a discretionary basis, could be applied almost to a letter the same way as the old legislation was applied. The only difference being that the Mini ster has enunciated that it is his intent that it shall not be applied in that way and that the marketplace shall determine the price of milk at the retail level. But that's not what this bill says. So we have a bit of a conflict between the

interpretation of the bill and the statement and press releases issued by the Minis ter and that is the difficulty tha t the opposition finds itself in with respect to understan ding what the gov ernment's intentions are. Because the Minister is in a position to back up if he wants to back up and rely on those permissive claus es in this bill, to give him just as much clout insofar as intervention in the industry is concerned as he had in the old Act.

I wanted to know from the people presenting briefs here whether or not th ey have' in some way, received a communi cation from the Mi nister as to the real intent of this bill and how it's intended to be applied. MR. ROSS: On my own behalf I can say I haven't had any correspondence but possibly Jackie Skelton has. MR. CHAIRMAN: That's fine. If there are no further questions, thank you, Mr. Ross for your presentation. Mr. Adam. 39 MR. ADAM: Yes. Mr. Ross, the memb ers this afternoon who presented briefs indicated that the Mini ster had been in consul tation with them in regard to this bill.

Has the Minis ter or his staff been in discussion with your organization in regard to formulating this bill? MR. ROSS: In regard to the formulation of this bill, not to my knowledge. MR. ADAM: Thank you. MR. CHAIRMAN: The Honourable Minister. MR. DOWNEY: Mr. Chairman, on a point of clarification or on a point of order if the member would allow me a point of order. MR. USKIW: Of course, we don't want to but we'll let you have the floor. MR. DOWNEV: You can't control whether I have the floor or not, the Chairman will. MR. USKIW: Well, if you make a point of order, that's fine. HON. JIM DOWNEY: Okay then. Mr.

Chairman, I believe there was some discussion with the Farmers Union when they presented their brief to us last fall, I just don't remember the date, but ther e was discussion on the Milk Co ntrol Board at tha t particular time. Am I not right, Mr. Ross? MR. ROSS: Yes, I believe there was part of that presentation dealt with. I think that's correct. MR. DOWNEV: Okay, thank you. MR.

ROSS: think the other thing that I could maybe just sort of end by saying that it's, I believe as you will recal l, in the spring there was a lot of concern at that point in time and we presented a position of emergenc y measu res to both the government represented here and to the opposition represented here, dealing with the critical situation with farming and, particularly family farm operations in Canada, and those presentations were read across the country.

Now the situa tions hav en't changed since the spring for the young farmers and in Manitoba and Sas katchewan the y'v e got much mor e criti cal because of the drought situation.

With the exception last spring, the concern about the very high interest rates, all of the positions taken by the Farmers Union at that point in time, are still very valid today and I just don't want to underestimate the necessity of legisla tors like yourselves - and I'm saying on both sides of this table - if you in fact give lip service to the concept of the family farm opera tion, which I hear both sides of the table doing all of the time, it's going to take more than lip service to preserve that method of farm production in Canada.

We have examples already in dairy; we've got examples with potatoes in the Maritimes; we've got examples of beef, of grain, it's all around us and I think we're going to need more than lip service from our legislators.

Wednesday, 23 July, 1980 MR. USKIW: Yes, one last point, Mr. Chairman. With respect to the drought conditions and how that is affe cting the dairy industry this year, would it be your preference that the consumer milk price be adj usted to cover the extra costs to the dairy industry of the current drought or would you prefer a direct subsidy on the part of the province to the Manitoba Milk Marketing Board, to be distributed to producers, to offset those additional costs? MR. ROSS: Oh, I don't know. Thinking of it I would presume okay, if you make an adjustment directly in the price.

I think it's significant to know that in the spring when we were talking about the crisis in agriculture, when we talked to the banking commu nity as to who they were prepared to loan money to, they were more prepared to loan money to da iry farmers firs t rather than any other enterprise, in spite of what has been heard, like the fact that there are a lot of dairy people in serious trouble.

The interesting thing was as soon as the drought situation hit and it was very obvious that there was going to be no hay crop, the dairy producers knew, they were able to say right away, okay, we need hay and if we're going to pay extra money for hay, then we're going to want more for our milk. Right away they said, we want more for our milk, which again shows up the advantage of the orderly marketing system. I think probably you'll find that within the dairy segment of the province, as oppo sed to the beef segment, that dairy fa rmer s will be mor e inclined, if they can, to hang onto their herds.

Whereas a lot of beef producers have looked at the same program, basically, and said, well, there's no way we can go out and buy hay for our cattle because we have no guarantee at all that we'll ever recover that cost and we'd sooner get rid of them than take that risk, where at least the dairy farmers knew, okay, we've got some chance of getting extra value.

But just sort of respon ding off the cuff to your question, I would be inclined to say that it would be better to treat the drought situation as a special occurrence, as opposed to set a time to put it into a price formula or whatever, because we don't count on droughts every year. We have to put up with them when they happen and try to make it through but that's just a comment. MR. ADAM: Yes, just a last question, Mr. Ross. I ask you again, did the Mi nister contact you in order to formulate this bill? Or did you have to contact him?

That's the only commun ication that you had with him is when you came to the Mi nister last, whenever it was, last spring. MR. ROSS: We had made reference to the dairy position in our representation to the government, but in terms specifically of Bill 86. To my knowledge there was no contact on it. MR. ADAM: Thank you. MR. ROSS: I personally had contacted my ML A about it and he kept me informed on the steps of it, yes. 40 MR. CHAIRMAN: Thank you, Mr. Ross, for your brief and for answering the qu estions of the comm ittee. The next brief is from the Citizens Health Action Centre. I believe Mr.

Peltz is in the gallery. Mr. Peltz and Miss Land. MISS WENDY LAND: Yes, Mr. Chairman. I am from the Ad Hoc Commit tee on Milk Prices, Citizens Health Action Centre. In recent months we have conducted a campaign to gain endorsement for our position tha t the provincial government should introduc e a milk subsidy program for low income, infants, children, pregnant and lacta ting women in the geriatric communi ty and tha t the provincial governme nt should maintain the pricing powers of the Milk Control Board.

To date we have received endorsations from 36 organizations in Winnipeg and the province and I would like at this time to read the names of those organizations into the record since many of them were unable to make their own representations to this committee.

I Th ese organ izat ions are the Consu mer s Association of Canada; the Fam il y Servic es of Winnip eg In corpo rated ; the Winn ipeg Labour Council; the Native Clan Organization; the Winnipeg Police Associa tion; the Winnipeg Society of Seniors; the Manitoba Paramedical Association; the School Council of the School of So cial Work at the University of Manitoba; Machray Day Care Centre; Uni-Vil lage Student Day Care Centre; Thomps on Local of the United Steel Workers of America; the Native Alcoholism Council; the Shaug hnessey Park Communi ty School Council; the Manitoba Association of So cial Work ers; the Learning Assistance Centre, Freight House Day Nu rsery, Inc., Klinic, Inc., Marymound School, The University of Winnip eg Students' Association Day Care, Kid's Centre Co-op, The Fred Dougla s Lodge Senior Citizens' Home, Winnip eg Native Pathfinders, William Whyte Communi ty School, The Canadian Association of Industrial, Mechanical and Allied Workers, Argyle School, Nor' West Co-op Health and Social Service � Centre, Munroe Day Nu rsery Inc., Norquay School � The Independent Co-op Enterprises, Inc., St.

Vital Mo ntessori School, Dufferin Community School, The Commun ity Education and Development Association, Freight House Community Centre, and St. George's Nu rsery School. With that information, I would like to go on with our brief. The first part of the brief, which I will present to you, deals with our concerns in general. Mr. Peltz, our legal counsel, will address specific legal concerns in the bill. For those of you who are not aware, Citizens' Health Action Centre is a commun ity-based health centre located at 425 Elgin Avenue.

Health Action Centre is committed to compr ehensive health care and emp loys a preventive model of health service delivery. Our goal, in a cachement area that is predomi nantly low-income, is to encourage self­ sufficiency in the communi ty through the process of developing good health habits among all of our members. This approach necessitates nutrition and diet counselling programs for individuals and groups in our area.

Wednesday, 23 July, 1980 it is because of our commitment to the principle that good health is dependent on good nutrition that our board has in the past become inv olved in efforts to keep the price of milk within the reach of all consumers. To this end, we have participated at public hearings of the Milk Control Board over the past three years. On July 18 , we met with the Ho nou rable Mr. Downey, Min ister of Agriculture, to outlin e our concerns respecting Bill 86. In our brief today, we shall address ourselves to th ree major concerns respecting Bill 86, which we have already outlined to the Mi nister.

First, the need for the Manitoba Milk Prices Review Commission to continue the investigative study into milk subsidy programs for targeted groups, that was launched by the Milk Control Board in its order of June 1, 1980. Secondly, clarification of the powers of the Milk Prices Review Commission in controlling the price of milk at both the retail and processor level and to ensure that there will be an affordable supply for all consumers. And thirdly, the right of the consumer to appeal prices set for producers. Let me go on, then, with the first concern.

Milk has long been established as one of the most important readily-available nutritive sources, particula rly of high-qua lity protein, Vitamin D, riboflavin, niacin and cal cium. Among common foods, milk and cheese are the richest sources of calci um. Mo st other foods contribute much smaller amounts. Cal cium, along with phosphorous, is essential for effective bone formation and necessary for the development and maintenance of healthy teeth. lt is also utilized in the huma n body in blood coagulation, heart muscle function, muscle contractability and the integrity of varius membranes.

While most adults can manage well-balanced diets without milk, for infants, childr en, pregnant and lactat ing women and the geriatric community, it is an essential part of a healthy diet, primarily because of the increased calcium needs of these groups. In other count ries where cow's milk is not readily available, other sources of these nutrients may be utilized. Certainly, mother's milk assumes greater impor tance for in fants. But in the States, and presumably the trend is the same in Canada, about 85 percent of calcium intake is derived from milk and dairy products.

As a cultural phenomenon, cow's milk has become a nutritional necessity to North Americans. The current Canadian Food Guide supp orts this, recommending 16 to 24 ounces of milk, or milk products, 800 milligrams of calc ium, for children under 11, and 24 to 32 ounces, which is 1,200 milligrams of calcium a day, for adolescents and pregnant and lactat ing women.

Current pediatric opinion, as exemplified by the Comm ittee on Nutrition of the American Acadamy of Pediatricians, maintains that breast milk, or an infant formula such as SMA of Simulac, which are based on cow's milk, should be the only food for the first four to six months of life. Despite recent trends toward breast feeding, the majority of babies in this country are still bottle fed, either with milk-based formula or evaporated milk.

After other foods are introduced, usually at age six months to one year, infants are switched to cow's 41 milk and it continues to supply more than half of the needed calories and is the major source of many essential nutrients for this age group. Present evidence also suggests that the calcium requirements of the aged, for good health, are at least equiv alent to those of young adults. Data on bone mine raliza tion in old age and data on osteoporosis indicate a need in many aged persons for greater dietary intake of cal cium.

This implies a greater consumption of milk, a product which is already expensive for a fixed income population. The sources for the above information are quoted in the brief. To go on: Milk prices in northern Manitoba are already considerably higher than in the more heavil y populated southern areas of the province. While in Winnip eg the current cost of a litre of 2 percent fresh milk is 61 cents, in Chur ch ill, it is 91 cents. According to public health personnel in Churchill, largely because of the cost of fresh milk, many childr en are presently being fed on evaporated milk diluted 50/50 with water.

A can of Carnation milk is about 57 cents, which when diluted, works out to about 50 cents per litre. This mixture is the standard formula also used for infants. Many doctors in the north recommend this mixture to mothers because they know that SMA, at 85 cents a can, is too expensive for the majority of families. Many of the northern communities have welfare rates exceeding 50 percent of the population. Their heavy use of the cheaper forms of milk is ind icative of the combination of low incomes and high milk prices.

Whil e the nutritional value of the 50/50 mixture is equal to that of fresh milk, the danger is that low­ income parents will use extra water in order to stretch each can of milk, resulting in a hazard to the children's diets. The phenomenon has been observed where food budgets are under pressure. We have argued in the past, as have many others, that each price increase threatens the place of milk in the diet of the poor, resulting in malnutrition and all of its consequences.

Many studies, incl udin g those of the Mo ntreal Diet Dispensary and President Kennedy's Comm ittee on Mental Retardation, has shown that poor nutrition for the young can lead to growth defects, lea rning disabilities and mental retardation. it has also been pointed out to the Milk Control Board in the past, notably by Dr. Percy Barsky, who spoke on behalf of the Department of Pediatrics of the Health Sciences Centre and the Manitoba Pediatrics Society, and by Mrs.

Ann Ross of Mount Carmel Clinic, that the lower consumption of milk that results from price increases, causes increased social and health costs as the results of malnutrition begin to appear. We have come to the conclusion that the best solution for both consumers and the industry is a subsidy program that would ensure adequate access to good-quality milk for low-income, pregnant and lactat ing women , infants, adol escents and the elderly.

As we have suggested to the Milk Control Board in the past, and repeated at our recent meeting with the Mini ster, a milk subsidy program could take various forms, including use of food stamps, school milk programs, and special milk depots located in low-income neighbourhoods.

Wednesday, 23 July, 1980 In 19 78, the Milk Control Board recommended that the provincial Minister of Agriculture recognize the vital impor tance of sound nutrition to the health of the entire communi ty and recommended that the depar tment inv estigate means of esta blishing a program to ensure tha t all expectant, nursing mothers, and pre-school children, especially those in remote areas and from low-income families, receive regular adequate supplies of milk.

In its order of June 16, 1980, the Milk Control Board announced its intention to "initiate a review of possible means by which fluid milk may be made available to these particular target groups at a cost less than the maximum prices allowable by the board for regular milk sale." We are most concerned that this review continue. For the reasons already cited, we consider that access to affo rdable milk is essential to the health and well-being of all consumers and specifically low­ income, pregnant, and lacta ting women, young children, and the elderly.

We, and other concerned individuals and groups, have repeatedly called for just such a study. Furthermore, in our meeting with the Min ister of Agriculture on July 18, 1980, we were assured that the review into a milk subsidy program introduced by the Milk Control Board on Jun e 16 th, would continue. The Minister also agreed that the powers of the Manitob a Milk Prices Review Comm ission should be expanded to ensure future studies might be launched by that agency when necessary. Let me go on now to our second area of concern.

The Milk Control Board has been an independent watchdog agency, required by law to consider the interests of producers, processors, retailers and consumers and the public interest demands that this system of checks and balances be retained. Health Action has never argued that producers should receive less than their full cost of production.

I would like to digress for just a minute to point out that it seems most unfortunate to us that, on a regular basis, it app ears tha t poorly-inf ormed members of consumer and producer organizations, and the media, regularly try to set up an enemy kind of relati onship between producers and consu mers. We feel that it is very clear to us, and we would hope it would be clear to producers, that our interests are very closely tied to each other and we are most concerned that producers receive what they need.

The difficulties being faced by the farm sector are well know and we sympathize, particularly with the smaller family farm operators. Nevertheless, it is no easy matter to determine accurately just what the real cost of production is and reasonable persons may well differ in their opinions. There are too many estimates and judgments required and too little hard data available in that area. As a result, we say that there ought to be a forum where producers can ma ke their case for price increases, subject to scrutiny by an independent tribunal, and subject to testing and questioning by other interest groups.

The Milk Control Board fulfilled this function in the past and we doubt that anyone can argue with such a system in principle. The change in legislation setting up the Milk Prices Revjew Commission has not made clear the right of consumers to appeal the price set for producers. In our meeting of July 18 with Mr. Downey, the Mi nister 42 assured us that this was the intent of the legislation. We feel, then, that an amendment is necessary to make access to consumer appeals completely clear.

The effectivenss of a consumer's appeal would, of course, depend upon continued access to cost of production information previously provided by the Milk Control Board. Bill 86 provides that retailers and processors will be able to set their own prices for milk and that these prices will be periodically reviewed by the Milk Pri ces Review Commi ssion . The govern ment's rationale for this change seems to be that this will increase com petition and th ereby reduce prices charged to the consumer.

We wish to draw attention to the fact tha t presently ther e is li ttle or no competition among retailers, in spite of the fact that no minimum price has been set for fluid milk. While there may be some price competition under the new bill, we believe that the general retail price level will rise substantially. This will be particularly true in rural and no rthern commun itie s and in urban neighbourhoods where consumers have access to limi ted retail outlets.

In summ ary, then, on behalf of the Ad Hoc Comm ittee on Milk Prices, Health Action Committee Inc., wishes to go on record opposing Bill 86 as written, and to urge the government to amend this legislation to ensure: 1) that the Milk Prices Review Comm ission will be empowered to undertake a comprehensive study into establishing the means by which fluid milk can be made av ailable to low-income ta rget groups, specifically pregnant and lactating women, infants, adolescents and the elderly, at a price which they can reasonably afford to pay; 2) that the price control powers of the Milk Prices Review Commission be strengthened at both the processor and retail levels of the industry to curtail the possibility of windfall profits at the expense of denying an affo rdable supply of qua li ty milk to consumers at the bottom end of the income scale; and 3) that consumer participation in the appeal of prices set for producers be guaranteed.

I now wish to turn your attention to our counsel, Mr. Arne Peltz, who will present legal arguments respe cting changes to the Milk Prices Review Commission. MR. CHAIRMAN: Thank you, Miss Land. Mr. Uskiw. MR. USKIW: I'm just wondering whether it would be wiser to have some questions of Miss Land so that we wouldn't lose track or context of her presentation and then get into the legalistic aspects of it. Now my understanding is that the next presentation will be based on sections in the bill and if that is so, it wou ld be more pr actical to comp lete the one presentation and the questions that relate to it. MR.

CHAIRMAN: I'm the servant of the comm ittee, if there's an ind icat ion as to the wish of the comm ittee. MR. EINA RSON: I think that's in order, Mr. " Chairman. Mi ss Land, we've heard presentations from farmers who are in the business of producing

Wednesday, 23 July, 1980 11ilk for the consu ming public and I don't know Nhether I understood you correctly but I tried to isten carefully to the gist of what you were trying to tell us this evening and are you aware that the farmers, in the production of milk, have not been happy with the decisions coming from the Milk Control Board? MISS LAND: Yes. We've been aware that they felt that the

schedule used by the Milk Control Board was not adequate to meet their needs, however, we feel that the problem that they express could be addressed by changes to the Mi lk Control Board itself, that would, for instance, introduce a more realistic cost of production formula. Which we would not be oppo sed to as long as we, as consumers, had access to the information upon which that formula was established so that when we made presentations appe aling the pr ices set , we would have the information that would be necessary to ma ke a �omprehensive presentation. MR.

EINARSON: Second question, just to follow up lrom what you've just said and again make sure I hav en't mi sunder stood you, Mi ss Land. Do I Jn derstand you then, from those comments, that the price formula that the Mi lk Prod ucers Market ing Board have presented to the Mi lk Control Board, on behalf of producers, and there are certain things that �o into the input as to the cost of producing a litre Jf milk. Do I understand you say that some of the things as inputs to the costs that the farmers were :>aying were real, yet the Milk Control Board did not accept some of those costs? Is that what you are :;aying?

MISS LAND: I think Mr. Peltz could probably answer that question more fully than I could. I just Nant to make the poin t that we recognize th at Jroducers have certain set costs. We would like to 1ave access to the information on which they base those costs and we would expe ct that that nformation would be fed to an independent tribunal, Nho would consider their needs as well as the needs )f consumers and retailers and processors, as has )een the function of the Mi lk Control Board in the )as!. �R. EINARSON: Thank you, Miss Land. �R. CHAIRMAN: Mr. Uskiw. �R. USKIW: Mr.

Chairman, I think probably its r.�orthwhile to pursue the area which you touched on, lll iss Land, and that is that you have a great concern or the needs of people in society for milk supply and ndeed the ability to afford the milk that they require. �t the same time, I belie ve I detected in your Jresentation, the admission that it should not be �xpected that producers should bear the cost of the ·equirements of low income people who can not 1fford prices based on cost of production?

III ISS LAND: That's correct, in fact, that's why ve've called repeatedly for a subsidy program that vould add ress the specific needs of these groups. -Jot a subsidy program paid for by the producers. 43 MR.

USKIW: I think, maybe, perhaps I can try this to see whether you can confirm or otherwise. lt seems to me that in the hi storical cont ext , presentations that have been made to the Milk Control Board, that dealt with the question of the needs of milk consumers, perhaps did belabour the Milk Cont rol Board unne cessarily in that tho se requests properly belong at the doorstep of the government of the day, not as a matter that should be put before the Milk Control Board, who have two resp onsibili ties acc ording to the Act.

One is to assure that the producers receive an adequate return on their labour and investment and the other is to make certain that there is an adequate supply of milk to the consuming public. I don't belie ve that the existing legislation required the Milk Control Board to take into account the fact that some people in society cannot afford milk at any price, or at whatever price.

That was not their resp onsibility, and therefore, I belie ve that because many people who had a leg itimate need, or expressed a legitimate need on behalf of certain people who are not in affordable position to purcha se milk, that perhaps they were approaching the wrong body and it had the effect of discouraging the industry, with respect to the way in which the Mi lk Control Board was functioning, in that it became very much involved and not preoccupied, but obviously occupied with the question of the needs of society as a whole, as oppo sed to the question of supplying milk at a cost reasonable and based on cost of production and the need of return to the producers in order to keep them in business.

And so, perhaps, what we ought to be doing, and you might want to confirm this or otherwise, is that we should try to separate our presentations so that an agency such as the Milk Control Board, or if this other comm ission is established, is not unnecessarily preoccupied or occupied with those considerations and th at your vie w should be mo re properly presented to gov ernment, to the Department of Health, to the Min ister of Health, who are responsible for the health of Manitobans and whose health will depend, and does depend very much on whether or not they have an adequate nutritional diet, which includes the consumption of milk and milk products.

And I think if we could get that division properly channelled, I don't think we would have the kind of leg islation before us that we now have and it's unfortunate that it has come to this stage, in my opinion. Because I believe that the Mi lk Control Board and producers, who were there waiting in line to make their views, were indeed frust rated by the fact that they had to take all of these position papers, even though they were powerless to deal with those questions. And so perhaps, maybe, you would want to comment on whether you believe that somehow we ought to separate the two areas.

The needs, as oppo sed to the respo nsib ili ty of any agency, tat is established to establish milk prices or milk supply in Manitoba. MISS LAND: I'm going to ask Mr. Peltz to reply to that. MR. ARNE PEL TZ: I think that's an arguable position. I don't really accept a lot of what you've said, Mr. Uskiw, if what you suggest is that the evils

Wednesday, 23 July, 1980 that we now have with Bill 86 were partly due to consumer advocacy and I think it was effective consumer advocacy. MR. USKIW: And they blew it. MR. PEL TZ: I would point out a couple of things. One, the legislation in the Milk Control Board Act, the existing legislation, which is your legislation Mr. Uskiw, says tha t consi derations in fixing prices include a numb er of things and see the interests of consumers. Now that's a hard

section to interpret. I took it, when I read it that you meant, when you passed it the interest in a broad sense, and certainly that's what we argued before the board and we argued it in court with some strength. Now if you want to define the interests of consumers differently, that's fine. But the existing legislation said, costs should be passed thro ugh and the interests of consumers, in many senses, have to be taken into account, and that would include supply, quality and also afford ability. So I think that the legislation, if you like, begged for this kind of advocacy and that's what we did. MR. USKIW: Well, I think its wort hwh il e, Mr . Chairman, to pursue that. My

interpretation perhaps will be different from yours, because I don't believe that it was ever intended that the aff ordabil ity of an individual had someho w to influence the decision with respect to the return to the producer, or in through the system. I don't believe it was intended that there should be a built-in subsidy to consumers at the expense of someone in the chain of supply. MR. PEL TZ: No, the Act doesn't say that. MR. USKIW: That's right. MR. PEL TZ: We never argued that. MR.

USKIW: So that, you know, if you take the worst position, a person that has a large family and has no income shouldn't be expected, or shouldn't expect, to receive his milk from the Milk Control Board at a price that that family can affo rd. That respo nsibili ty is rea ll y the responsibili ty of the Mini ster of Health and that's where it should belong and that's where the submission should be made, Mr. Chairman. I belie ve we are on the same wave length. MR. PEL TZ: I don't think we disagree. We made those submissions, as you know, but we tried to take every tack.

We used the admin istrative scheme, because it was there and it was intended to be used that way. If you believe in regulation and openness and accountability in the process, then this is what you get. You can't have it both ways. You can't be pious and say, consumers and everyone else can have their say, but then when they start to have their say, and start making procedural motions and appeals, say, ah, we don't like it. And that applies to the producers as well. They could have gone to court and in some provinces I think they have.

But the second thing is this, aside from the low income, the hards hip argument, the leg islation contains, and I think it ought to contain, a proviso 44 tha t the interests of consu mer s have to be considered and there should be appeals and that can apply to the Tuxedo consumer as well as the inner city consumer. That's in all the legislation, or most of the legislation across the country, in some form or other and so you're going to have this surface conflict, at least, all the time between consumers and producers. Although as Miss Land stat ed, and I think I agree, it's not really a funda mental conflict. MR.

CHAIRMAN: If there are no more questions at this time, Mr. Peltz could you deliver your brief? Sorry, Mr. Uruski. MR. URUSKI: Miss Land, could I ask you, in your brief you indicated that you wished the right of consumers to appeal prices set by producers. MISS LAND: Prices set for producers, that was a typing error. MR. URUSKI: Set for producers. Would you be opposed if the legislation that's presently before us gave the consumer assocat ion the right to appeal the retail price.

Would that satisfy your group, that is a public hearing was held into the setting of the retail price, while whatever formula the producers had that was agreed upon, or would constitute their end, but that the end price would be the one that could be dealt with? Would that be satisfactory to your group? MISS LAND: I'm not sure that I understood you, Mr. Uruski. The proposed legislation allows us to appeal prices set by retailers and processors. We're not satisfied with that method of regulation.

We feel that prices should be set by an independent tribunal, who considers the interests of all of the interest groups in the chain. MR. URUSKI: But, if you, at that hearing, and all the prices and input costs would be considered at that hearing, but the final price would be determined by the comm ission, would that not satisfy your concerns that the retail price of milk would be able to be reviewed and set, if that was the case? MR. CHAIRMAN: If that question is in the brief. Mr. Orchard. MR. ORCHARD: Mr. Chairman, I just have a couple of questions I'd like to ask Miss Land.

Miss Land is a fair description of the ad hoc comm ittee that, by and large, you are a consumer group? MISS LAND: Yes. MR. ORCHARD: Miss Land, are you aware of some of the most recent producer concerns - and I'm talking about individual producers - in terms of their concern about receiving an adequate level of return. In other words, if I can put it bluntly, we have heard from a numb er of organizations that the price the producer receives today is inadequate possibly, by as much as 5.00 a hecto-litre, which would be 5 I cents a litre. '

Wednesday, 23 July, 1980 MISS LAND: We are certainly very aware of those expressions. We would hope that if the producers truly are not receiving a real cost of production for their product, that they would be willing and able to defend the figures that prove that in front of an audience that includes consumers. MR. ORCHARD: Well, Miss Land, I take it then that properly identified, the consumers that you represent in the Ad Hoc Comm ittee wouldn't object to that 5.00 or 5 cent a litre increase in price. MISS LAND: That's correct, properly identified. MR. ORCHARD: Right.

Quite frankly, I think we have to - although I don't expect you to comment - but I believe tha t tha t is a legiti mate pric e consider ation th at our produc ers face in this province, unique to even our neighbouring people in Saskatchewan, if that is the case to the producer, that price will no doubt be reflected right through to the retail ma rket so that the consum ers you represent may well be paying that 5 cents directly in increased cost. MISS LAND: That's correct.

However, I think that makes even stronger our argument that \here is a need to look at some sort of subsidy program for low inc ome target groups who are right no w squeezed by the cost of milk and will be even more sque ezed in the future. You see, we'r e not suggesting that the price of milk to consumers in general may have to rise. What we are sayng is, that first in the setting of a new price we want to have access to all of the information and be able to make arguments concerning it.

Secondly, that while it may have to rise for consumers in general , if it rises for low-income consumers without some help being given to them, that we are seriously endangering the health of a segment of our popula tion. MR. ORCHARD: Miss Land, fully appreciating that, but basically I guess what you're indicating is that consumer s - at least the con sum ers tha t you represent - would like to avail themselves of the books, the cost of production figures involving the inputs, the return on investments, the level of profit, etc., etc., that are plugged into a cost of production formula to base a producer price.

That's what you'd like to avail yourselves of as consumers. MISS LAND: Yes, and in fact we've had access to that information in the past when we made our report to the Woods Comm ittee report. Our council was able to gain access to the information that allo wed us to make a very detailed and strong argument in response to that report. So it would be, what we're asking for, is a continuation of the same access we've had in the past. MR. ORCHARD: Right. Miss Land, this may seem like a facet ious question, but I want to assure you that it isn't.

What basically the consumer would like to see in the pricing formula is access to, basically, the business records of a dairy producer. Would it be equally fair, since our concern is for the proper nutrition of a - and we've identified the low-income 45 people in our society as being the group that we're most concerned with - would it be a fair analogy to have available to the milk producers the budget of the low-income families so that they can determine that indeed that low-income family is spending their food doll ars wisely and getting value for their dollars?

MISS LAND: it seems to me, sir, tha t if the government would get busy and get that review going, that they would in fact , I would hope, be able to draw that information out very quickly and be able to establish in an objective and informed way what we have been saying all the way along. I agree that that information is necessary but we can't do it. it has to be the government that does it. MR. ORCHARD: This would then become part of the review process that the consumers would put the producers through to prove that they needed an incr ease in product ion.

Likewise, I suppose, the producers could say, well, we want to see the budget of this target group of people to assure that they're not spending, let's say, a little bit too much on coca cola and not enough on milk, etc. We'd go through that process and it would be fair for both sides? MISS LAND: I would like Mr. Peltz to respond in more detail or to correct me if I'm wrong, but it seems to me that we are not asking for the budgets of individual producers. We're asking for industry­ wide information.

In the same way, we would not expect tha t indi vidual low-income fam ilies would have their bud gets reviewed, but rather that we would look at it in the context of such information as what welfare rates are available and etc. MR. ORCHARD: Yes. Just one final statistic that has been developed, using the weekly industrial wage index; in 1970 it took .09 hours of work to purchase a litre of milk; and in 19 75 it took the same .09 hours; in 19 80 it still takes .09 hours to buy a litre of milk.

And I realize we may not be talking the target low-income group, but in relative terms, certainly milk has been one of the most constant values of food products, probably of any that we have, and I'm sure that your group is probably well aware of that. MISS LAND: That's right. it has to be pointed out though that those figures are not applicable to low­ income families. it takes a great deal more on a percentage basis. Thank you. MR. CHAIRMAN: Mr. Cowan. MR.

JAY COWAN: Miss Land, I notice when you opened your remarks you indicated a numb er of groups that are inv olved with the Ad Hoc Comm ittee, and there were a number of groups that were from the no rth and a numb er that would represent northern interests, and you did take a portion of your brief to discuss the specific situation in the north. At that poin t I believe you gave milk prices for 2 percent milk in the community of Churchill. MISS LAND: That's right.

Wednesday, 23 July, 1980 MR. COWAN: I was reviewing some prices before coming in here and I can inform you that in the community of Island Lake, or in that Island Lake area, the cost of a litre of homogen ized milk is 1.15 com pared to .65, or .66 or .67 cents in the city. So the differential is even greater in the more isola ted com mun ities.

And taking that as an as sumption which I think we would all agree to, I would ask you if you bel ieve, because of the transp orta tion difficulties, the geographical isolation, because of the fact that the retail outlets in the north are sparser, there are fewer options and fewer opportunities for people to pick and choose which store they are going to purchase their milk at; if you would agree that this bill is probably going to have more impact on the north and, in specific, on isola ted commun ities, than it will on other geographical parts of the province?

MISS LAND: Yes, I agree, and in fact commented on that in our brief, in that we pointed out that the deregulation couldn't have an effect on competition in a commun ity where there was no competition. Our expectation is that prices will go up, and go up in a particu larl y uncontrolled manner in such communi ties. MR. COWAN: So that the impact on consumers in those commun ities will be more widely felt and more harshly felt than they will in other communi ties.

I would then ask you if the Citizens Health Action Comm ittee has done any work in regard to the necessity for persons in the north to count milk as a part of their diet and if they have done any research in regard to whether or not that necessity is being fulfilled at the present time. MISS LAND: Our research is of a very informal kind. it's largely through conversations with Public Health Nu rses and such perso nnel in no rthern commun ities.

Our comment in the brief that many low-income families were attempting to keep the costs down by diluting evaporated milk at a greater level than is reco mm ended by the med ical profession, that practice was fairly widespr ead and that it became more widespread as money became less available. MR. COWAN: So tha t would be a pa rticular problem in the communities where you might have homogenized milk going for the price of 1.15 per litre. MISS LAND: Yes, for sure. MR.

COWAN: And one could draw an assumption that perhaps part of the high infant mortality rate that is suffered throughout northern Manitoba, which is unreasonably out of line with infant mortality rates in any other part of the province, may be in part due to the high price of milk and the lack of affo rdability for the residents of the north to be able to afford nutritious milk for a part of their diet.

MISS LAND: I'm sure that's the case, and your question or comment leads me to make a comment on a bit of a digression from my own experience. 46 I'm a teacher in an inner-city neighbourhood, and at our school we have a nutrition pr ogram that provides milk to our students. I would like to make a couple of ob servations: One is that the numb er of learning difficulties experienced by my students is absolutely overw helming, and that I strongly suspect that many of them are related to poor nutrition all the way from conception upward.

Certainly their diets today are not adequate, and I strongly suspect, from my knowledge of the commun ity, that the diets of their mothers while they were being carried, were also most inadequa te. I have only been at the school for three years, and the nutrition program has been in place during the whole time that I'v e been there, so I cannot comment directly on the difference in the chi ldren before and after the program.

However, many of my colleagues have commented in terms of what a difference it ma de, particularly for younger childr en, to their abili ty to perform in the cl assroo m, on ce th e Breakfast Program was introduced. I know from my own experience, that those childr en who attend the Breakfast Program regularly, perform much better on those days when I know they've had breakfast than on those days when they haven't.

I guess I'm making those observations just to add a little bit of personal experience to what I'm saying, but I think it backs up our argument that milk is a really important nutrient component and good nutrition, and that the poor, both in the city and in the north, suffer from their inability to afford it. MR. COWAN: Thank you. I do appreciate, and I'm certain other mem bers of the commit tee do appreciate your personal experiences, because they bring a differe nt persp ective to some of our discussions and are welcomed. I would not want to discourage you from making more if you feel it's necessary.

I would ask you this in regard to no rthern conditions, if in fact the level of nutrition, the abili ty of a person to have proper nutrition, will affect that person throughout their life in a negative way.

If they are lacking a proper nutritional diet, they are going to perform less well in school; they are going to be • less health y than other perso ns; tha t if the • assumptions that we have made that this bill will allow the price in the north to increase at a faster rate than it increases in other areas, and if it will have a particularly destructive effect on the ability of low income families in the north to get a proper nutritional diet, that we as a society in fact will have 1 to subsidize this bill through increased health costs, through other costs that are built into the system, that we as taxpa yers are forced to pay.

Would that be again a threat? MISS LAND: Yes, it certainly would be, and in fact, that was the point that we were atte mpting to make when we alluded in our brief to increased social and health costs to the community at large. You've made it very well. MR. COWAN: So we are, in fact, going to have to subsid ize the inaffordability of milk in one way or another, and wha t the Citi zens Health Action Comm ittee is ask ing, is that perhaps a subsidy should be built on the front end so tha t it just I

Wednesday, 23 July, 1980 becomes a financial subsidy, rather than have to provide subsidies on the tail end, which become not only fina ncial subsid ies through incr eased health costs, increased institutional costs, but also become a totally inappropriate and unacceptable subsidy on the value of human life and the value of human health. Would that be a proper way to put it? MISS LAND: Very well put. MR. CHAIRMAN: Mr. Driedger. MR. DRIEDGER: Thank you, Mr. Chairman. I would just like to make a few comments and ask one or two questions.

I have to agree with the Memb er for Lac du Bonnet and his comments that he made that possibly over the years the consumer representatives. in making presentat ions to the Milk Control Board heari ngs, possibly should ha ve dir ected their activities towards government rather than present it to the Milk Control Board. Possibly the groups that you represent, in following up what the Minis ter of Highways commented on before, possibly some concern could have been shown in the direction of how do people spend their money in terms of grocery buying or wha tever their expenditures are.

Produc ers this atterr:oon made comment to that effect, that when they present their case to, for example, the Milk Control Board, they have to give total disclosure in terms of what their costs of production and things of this nature are concerned. Still, nobody has ever looked at the area of how is the consumer spending his money, and if it's right for one it should also be right for the other in terms of showing cost of production on the part of the producer and the money that is spent on behalf of the consumer.

The question that I have is, over the years, when representation has been made to the Milk Control Board regarding the application by the producers for an increase, there has always been a fair amount of criticism brought forward as to whether the figures that were presented were qualified, or stuff of that nature. The people who scrutin ized the cost of production figures, for example, at the hearings, are th ese people who are qu alified and kno w the business of the dairy industry, or is it just sort of a general opposition to the increase or the figures?

MISS LAND: I cannot comment on the questions asked by groups other than ourselves. I know that whenever we have prepared a presentation to the board we have done it in the context of qui te considerable consultation with both legal experts and people familiar with the dairy industry. I might also comment that the Milk Control Board itself has alluded to the value of our submissions in at least one of its orders. I think that your assu mption, or your presu mption, is difficult to respond to on any other level than that. I feel that certainly our questions have been well-informed questions. MR.

DRIEDGER: To follow that up a little further, the producers, in making their presentations to the Milk Control Board, have felt that they have not got proper consideration, even with the figures that the 47 Milk Control Board would accept. Do you feel that the produc ers have been getting iair consideration on a totally consum er-oriented board? MISS LAND: I don't feel that it's appropriate to describe the Milk Control Boar d as a totally consume r-oriented board. Mr. Pelt z kno ws the makeup of the board more specifically than I do, but I do kno w that there are not ju st consum ers represented on that board.

MR. DRIEDGER: Are there producers on the board? MISS LAND: Perhaps somebody else is better informed to respond to that, but I would expect so. MR. DRIEDGER: The reason why I bring this up, because apparently our producers have come to the stage where the various groups do not even bother making representation to the Milk Control Board. They have absolutely no faith in the system the way it is set up right now. At the last hearing, I think no presentation was made on behalf of the producers.

They felt that the treatment they were receiving was not in their just cause and for this reason this is why we have had the pressure on government to try and change the system and subsequently this is the reason for the bill here today. MISS LAND: Are you aware that we also have critici zed the Milk Co ntrol Board and its

interpretation of the legislation setting it up? I think that the question is not whether or not the Milk Control Board was the best of all possible solutions to the problem, but rather whether or not that mechanism was a more just mechanism than the one that is being proposed at the present time. I think that there are very few people in the four branches of the industry that would disagree with the observation that the Milk Control Board needed fixing up. That doesn't necessarily mean that what it needed is the present legislation. MR. DRIEDGER: Thank you. MR. CHAIRMAN: Mr. Uskiw. MR.

USKIW: Miss Land, I would like to pursue the relevant part of some of your last comments with respect to your inp ut into the decisio n-makin g process. You had indicated that you would want to have the right to examine the position taken by any sector of the industry as to its costs, and therefore related needs in terms of prices and markup, which I can't argue against. But what I would like to find out from you is whether or not you wouldn't deem it reason able to simply be. al lowed to make a presentation, based on information that is provided for you, on the formula that is being proposed for producer prices.

The commission is going to set up a formula price for producers, which will then be the base from which the processing industry and the retailing people are going to function, or take off from. Would you be satisfied with at least having the information on which those formulas are established, from time to time, and the right to examine and make comment on them, as opposed to going back

Wednesday, 23 July, 1980 to the old system of having to have hearings, rather than functioning by formula? MISS LAND: I didn't really get the point of your question until that last comment, but I would like to ask Mr. Peltz to respond to that, because I think he can do it in a more cogent way than I can. MR. CHAIRMAN: Mr. Peltz. MR. PEL TZ: lt is obvious from our presentation that the concern is mainly with the retail price and the fact that it's been set free.

In the brief which will follow, which goes into some of the details, in which we basically say, okay, given this bill, what could you do to give it some teeth and make it work within its own context? We have said some thing qui te reasonable, I think, we have just said, well, if the milk commis sion is going to make an order under

Section 3(2) and set a formula which then is used, until it may be changed, then if the producers can appeal that, as obviously they have to have the right to do, then surely the consumers or anyone else who's interested should have an equal right to appeal it. The reason for saying that is obvious, that the setting of the formula is key, I don't think that, to try and an swer your ques tion, I don't think th at we're vehemently opposed to the removal of the hearings, although that's basically what we're saying, at least ins ofar as retail prices goes.

We recognize that there's a problem although delay is somewhat in the eye of the beholder, but we're saying, at least if you go this route, why can't the consumer have an app eal the same as the pr oducer. Ma ybe th e response to th at is, well an appeal isn't an appropriate way to do it. lt seems to me that what you've just said, there should be some opportunity for a proper hearing, is correct, I can't disagree with that. We'r e into these appeals and appeals on appeals, because of a two-tier system, which is hard to understand in an admin istrative sense, why the two tiers?

But we've got the two tiers, and the leg isla tion says the first procedure is secretive basically, it's internal, so there has to be something else and that's why we've said, well, if the first process is internal and secretive, then, of course, we demand as consumers side, the right to some sort of an appeal, just as the producers have. MR. USKI W: Well, le t's pu rsue that one step further. I believe there is credibility on the part of the produc ers who want to change the system of adjustment and would prefer to function from a formula, as opposed to a set of hearings every time they want to change.

I don't believe that that is a bad request. I do have a concern with respect to whether or not their presentation should or should not be challenged by anyone, and therefore I ask the qu estion, if it gets to the stage where it is an appealed decision, would it satisfy the consumers' groups and your groups to simpl y be provided with the evidence, which must be provided to the appeal body by all interested parties and th at you be entitled to make your views based on that evidence? MR. PELTZ: This is at the first instance, you're saying? 48 MR. USKIW: No, at the second instance. MR.

PEL TZ: At the second instance? MR. USKIW: Yes. MR. PEL TZ: Well, that is what I understand by the appeal. Are you saying . . . MR. USKIW: No, I'm saying, would you be satisfied of having the right to all of the information, as to costs and so on, all the arguments that are put forward for the adjustment in the formula, would you be satisfied with having that right at the appeal point in the deli berations? The second approach. MR. PEL TZ: Yes, I think that's what our brief says. Maybe I should go through the brief. MR. USKIW: I think that's reasonable. MR. CHAIRMAN: Mr. Peltz, would you present your brief. MR.

PEL TZ: Mr. Chairman, we distributed copies of the brief which is entitled "The Legal Submission" and I hope there were enough to go around, or at least for most members. If you'll have a look at the Table of Contents, the inside page, you will see that the brief is divided into four parts. The first

part is introductory, but the next three parts are variations on a theme as a result of meeting with the Minister which we were privileged to have last week. The first

section No. 2, presents what, in our view, are matters agreeable in principle to Mr. Downey, on Friday, subject as he said, to some thought and consultation with his advisors and that's the

section that I'll deal, with first because, obviously if it's agreeable to the gove rnme nt, and if it seems reasonable to the other members of this commi ttee, then perhaps tho se amendments could be made. And the subject matters are set out there. No. 3 deals with two particular points we raised and discussed with the Minis ter and he did not tell 1 us he was opposed to, he said he would take them under advisement, and I presume that he's had a chance now to give them some thought.

And if I can I'd like to put him on the spot in answering those although I'm not a member of the commi ttee, that's the job of members. The final area, No. 4, is Other and these basically are things that we didn't get into due to lack of time or just phil osophical differences, if you like, between our group and the intent of this bill and that comes last. So if I can proceed through it. First some introductory comments: Health Action Centre has been on record for some time as supporting the existing price-control powers of the board.

As a result, I supp ose, along with some other members of this comm ittee, we see no need for the introduction of Bill 86. Even if one concedes that the producers have a legitima te complaint about the impact of price control upon them, there is no discernible reason for bringing forward the sweeping deregulation contained in this bill as regards the retail price of milk.

Wednesday, 23 July, 1980 it is strange and ironical that this bill, obviously prepared as a result of the ongoing pr oduc er compaign against the Milk Board, should leave the farmers in roughly the same position as before, while the rest of the industry is freed to engage in the manipula tion of the so-called "free market". In this regard, the producers have our sympathy. And when I've heard the producers complain, it's very hard not to stand with them, at least on that point. There's been some ventilation of the question of the equities of milk pricing, and the aff ordabili ty issue.

I would just like to say at this point that, as Miss Land did, we've never, in some three years of participation in the existing system, we've never said that there should be anything less than a fair return, cost of production return to the producers. We've sometimes quarrelled in hearings with the details. That's part of the process, as I understand it. The process that any regulated industry goes through in justifying what it seeks, and I don't think anyone can validly say that they are entitled to a return, or to a price, especially a publicly set one, without having to justify it.

So we've said, justify X or justify Y, but overall we've said, as the producers have said, that they have to have a return. No dispute about that. And when it's been apparent that there's hardship, we've also said that there should be public subsidies from public revenue, not from private revenue or from a particular part of the industry to meet the har dship cases. Should we ha ve gone to the government?

Perhaps we should have, I think we tried to address the public, to address the board and we also tried to add ress the gove rnment, and in deed, by virtue of our app earanc es and appearances of other groups, the government was approached, and Mr. Downey was approached in 1978, at the end of those hearings. The fact is that his response was extremely curt and to the point, and he didn't recognize, at that time, any validity to the suggestion by the Milk Board and our suggestion that there was a special hardship and this should be met by a special program.

Well, the problem hasn't gone away and so the suggestion is still being made today, and indeed has been made by the Milk Control Board in 19 80. However, I wanted to make it crystal clear that we never said the producers should pay or to respond to some of the comments made by pr oducer spokesmen, which I think were based on misunderstanding which I'd like to try to clear up. it was never suggested that we regarded them as villains or the consumers regarded them as villains.

Our position was clear, and I'm prepared to produce the briefs which we sub mitted two or three years running which contained the statement that fair return and cost of production should be built into the price provided. The Milk Board, of course, said the same thing, and the dispute was always on the exact figure. As, I think it was Mr. Green, pointed out, there has always been that kind of a dispute since time immemorial. I doubt that we're going to resolve it, no matter what kind of legislation is passed.

In any case, that's been the Health Action's position, and it's been a consumer position, but also, I would submit, not an anti-produc er position. Going back to my brief, no one kno ws with certainty what will happen to the retail price after deregulation under this bill. In this day and age, talk 49 about the moderating effect of the market and the value of open competition must be taken with a large grain of salt. Anti-combines' legislation in Canada is a bad joke.

As the Supreme Court of Canada said about a week ago, action which results in a lessening of competition as a result of collusion by industry is legal in Canada, not illegal, but legal. Under our legislation, it is undue less ening of competition which has prohibited, as has been evident by some recent cases, including the sugar case, federal prosecutors are having a very difficult time proving cases where they embark upon prosecutions.

So that particular response that there will not be collusion of any sort because it's illegal, I submit, is not completely well-fo unded, because co-operation and lessening of competition is not illegal in this country. Only when it's undue is it illegal, and then you have a very difficult task of deciding what's undue and persuading a court tha t a particular situation is undue. Ma ny people have said tha t combin es' legislation is a bad joke; I don't think I'm the first person to say it.

The sorry state of competition law in Canada is relevant to this bill because, at least at the processor level in Manitoba, you've essentially got an oligopoly, and while there are many retail outlets in large urban centres, as we've heard a few min utes ago, the situation is very different in rural and northern areas of Manitoba. Consumers, I would submi t, have a well-founded fear of the kind of assurances that have been put forward so far that the market is going to protect them. Now, the Minis ter will point out to you that Bill 86 does not deregula te the retail price - that's been my wo rd.

He will say tha t becaus e the Milk Commission does have the power to intervene where necessary. it is suggested therefore that the bill gives us the best of both worlds, competition where it's possible and regulation where it's necessary. Later in this brief there will be some detailed criticisms of the monitoring and appeal provisions of . this particular bill, but the basic question I think for this comm ittee is, will the government or its appoi ntees on regula tor y bo ards ha ve the will to in tervene aggressively in the dairy industry to protect the consumer interest when that's required?

I leave the answer to that question to be deba ted by members of this comm ittee. However, we can say this much. If the answer to the question is no, that there is not going to be that kind of intervention as required, then clearly what the public will get from Bill 86 is the worst of both possible worlds.

Now, just by way of a short digression on the ques tion of competition and whether the public should have faith in competition in regard to this bill, I would like to read to you a couple of excerpts from Business Week Magazine, May 15 of 19 78, which was sent to me by someone after one of the Milk Board Hearings. it's a feature

article on Beatrice Foods, which of course is the parent corporation of Modern Dairies, which I understand has a plurality or a majority, if you like, of the dairy proces sing busine ss in the province. I don't know what the percentage breakdown is exactly because we failed in our attempt to get that information. This

article concerns U.S. state pr osecutors cracking down on business, and starts off by saying that beginning in the early 70s, state prosecutors

Wednesday, 23 July, 1980 have been dusting off old statutes, working up new legal theories and even putting together co-operative efforts to bring anti-trust, securities fraud, pollution, discrimination and consumer protection suits against such blue chip compan ies as General Mo tors, Bethlehem Steel, Beatrice Foods and a whole list of others, Good Year Tire, International Paper and so on.

And then after some general description, it says the follow ing: Beat rice Foods paid a 200,000 fine and costs to the State of Colorad o, the largest criminal fine ever collected by that state, for violating state milk marketing orders by giving secrete cash discounts to some retailers. The art icle goes on to talk about a recent acquisition being made by Beatrice Foods, I'm not sure what the result was - this was 19 78 - where it acquir ed an orange juic e company called Tropicana and entered into competition with Coca Cola and its subsid iary, which I think is Minute Maid - no, I can't recall the name of fhand.

And as a background on Beatrice Foods, which of course is the parent corpora tion, it's described as havi ng climbed to the pinna cle of the nation's processed food industry; it's described as a 6.2 billion company leading the industry in sales and profits, also being a diversified company, some of the product lines being Danin Yogurt, certain kinds of ice cream, sausages, JB L Stereo Equipment, Samsonit e Luggage and others.

I don't want to be interpreted as saying that Modern Dairies in Manitoba has violated any laws; I'm not saying that, and I'm not saying that they intend to or that they wilL I'm simply saying that the consumer might take the assurances of competition as a control with a grain of salt on reading articles like that in Business Week Magazine. Getting into the detail of our submis sion on amendments which I hope the comm ittee will consider, first of all, amendments which I believe to be agreeable in principle to the Mi nister.

On July 18 th we met with the Min ister and two of his advisors, and although we appeared to differ on the basic phi losophy of milk price regulation, there were nevertheless a numb er of submissions which the Mi nister accepted in principle. We trust that after further consideration, the Mi nister is prepared to reco mm end appr opri ate amendments to this comm ittee or to the House. For your assistance, we will set forth these points in detail, the first one being the authority of the Milk Commi ssion to conduct independent research and investigation. Bill 86 removes the old

Section 5(1)(

a) of the Milk Control Act, which all owed the board to "investigate and study systems of distribution of milk " The

section was used by the present Milk Control Board to begin a study of new ways to deliver lower cost milk to certain tar get groups. The study was announced in June of 1980, but on my reading of the legislation at least, it will not be able to continue because of the absence of any authority under the new Act. The only comparable provision in Bill 86, which is

Section 3( 1) (d), permits an investigation by the comm ission "as ma y be requir ed by the Mi nister". We the refore recommend that the existing

Section 5( 1) (

a) of the Milk Control Act be inserted in its entirety as an additional subsection in the bilL I've set out afterwards the text of the

section which we 50 suggest, and I take it the Mi nister has already agreed ought to be put into Bill 86. If my

interpretation is wrong, if the board is able to do these studies, there is obviously nothing to be lost by putting it in for clarificat ion. But my understanding of the law is that the Milk Commission is a creature of statute; it has only those powers that are given to it specifically, it can't embark on all kinds of activities that it is not mandated to do under some piece of legislation, so mewhere. This legislation only says th at the Minis ter can direct. There are obviously going to be times when the commission, based on its activities, will want to do its own research, and that should be permitted.

Specifically, it should be permitted now so that the study which was begun can be completed. Second point, Mr. Chairman: The consumer appeal against the cost of production formula - there were some questions about this. During our meeting with the Mini ster, we expressed dismay that the producer cost of production formula set under

Section 3(2) of the bill could be app ealed by producers, but not by consumers. The result of this unfair and unba lanced system would be appeals which would be intended to have the effect of raising the price but never appeals which would be intended to reduce it. Depending on the formula, and there's obviously a lot of apprehension on all sides about what this formula is going to be, and its application, producers may or may not be able to earn sufficient returns. And we've stated our position, so have they, that they should be entitled to do so.

Wh atever the merits of a particular formula, or a particular price, however, our point is that rights of appeal should be the same for the industry or for consumers. That seems to us like a reasonable statement. We were advised by the Mi nister in discussion, that under

Section 3(7), a consumer could apply to review ·the price of milk, thereby opening up both the producer and processor portions of the price. If that is the intent, then the bill should be amended for clarification. The bill allows an appeal against the price set under

Section 3(5), or a request to establish one of those prices, in other words, the retail price. That

section in the Act relates to the prices of fluid milk charged by distributors and retailers. From their point of view, if they were facing an appeal under this Act, the producer price is fixed, and on my reading the appeal would only cover their additional costs and profits in their particular situation. lt would not allow the producer price or the formula to be opened up on that appeaL Just to try to make that clear to the commi ttee, if you'll look at

Section 3(6), which talks about what the Milk Commission will do when it does review the retail price, you'll see that subsection (

a) says that one of the things that shall be taken into account is the cost of milk to the distributor or processor as determined by the formula established under 3(2). So my reading of that is, that on an appeal which a consumer or someone might take against the retail price, that the thing to be looked at would not be formula and its practicality or its equity or whatever, but rather what is the price set under the formula. And what are the additional costs after that. That's what the

section says. The Mi nister told us that it was by no means the intent to cut off a consumer appeal, that it was fair to have a consumer appeal as well as a producer l

Wednesday, 23 July, 1980 appeal, and as a result we'v e sugg ested an amendment which is here for your use if you choose to adopt it. There's an additional point. Because the producer formula will be set once and onl y infreq uently amended, if at all, the 30-day time limit for appeals, we submit, ought to be variable. This is a point which wasn't picked up by the producers, but I would think that if I was here on behalf of the producers, I would make the exactly the same point.

Once the thing is set and 30 days go by, I don't see where there's jurisdiction to appeal it, even if the producers feel that it is unfair and ought to be looked at on appeal. Following experience with the new formula, as I say, producers or consumers or both, in fact, might wish to appeal, and obviously more than 30 days' experience is needed. Now this point we didn't discuss with the Minis ter, but again, we don't see that this point could be contentious. We recommend a new

Section 4( 1) as set out here, I see that the legisla tive draftsman is also present and he may wish to have !lis comments on my amateur approaches to drafting. But the intent of my suggested amendment is, first of all, to add any person to the list of parties that can appeal, that is a prod ucer or a board or any person. And secondly, to allo w for the counci l, tha t's the Manitoba Council, to entertain appeals basically at any time, as long as some good reason is given to them, leaving it in their discretion to decide.

So 30 days would be the appe al period, but upon application they could vary that and allow an appeal to be taken any time. I might say that this is a standard type of clause, I think, in legislation, even in legislation where parties are supposed to be aware of their rights, where there's litigation. This is not that kind of a situation.

This is a situation where there's going to be a cost of production formula set, and from my reading at least, 30 days later, any producer in this province who wants to complain about it will have to go the political route, not the legal route which has been set out for him, because there's no jurisdiction.

In fact, you mignt find that if a producer filed an appeal and the Manitoba Council said, well, this is unreasonable, we've got to hear it, then any change in the price would be liable to be quaffed in the court because there was no jurisdiction to hear the appeal, and therefore no jurisdiction to increase the price. So from the point of view of a producer or a consumer, I would submit, you've got to open up the 30 days. That's only reasonable. Our next point, under the heading of what we take to be matters under agreement already or not contentious, is the disclosure of industry-wide costs and profits.

And I would put the emphasis here on industry-wide. There's a major bone of contention of the particular financial sta tements of indi vidual businesses, and we deal with that later, but on the industry-wide information, that is to say the entire processing sector or the entire retailing sector. We understand the Minister to be in agreement with our position. Under Bill 86, the public is unable to gain access to indus try-wide information on costs and profits unless two levels of appeal are pursued. This is because

Section 4(4) on disclosure applies only to a person who is making a presentation on appeal to 51 the Manitoba Council. We suggested to the Mi nister that this information, currently being distributed on an annual basis by the Milk Control Board, should be available to the public at any time, and not only upon the launching of an appeaL Indeed, one of the reasons for launching an appeal in the first place might be that the overall level of industry profits appears to be getting out of hand .

Alternatively, of course, I would submit that if you give the disclosure and let the public know what profits are li ke, then you 're going to discourage app eals, which mi ght be taken simply for the purpose of getting the information. You have to file an appeal under the present system, and then make your representation and say, okay, I'm an appellant, now can I have the information? Thereby putting everybody into the appeal system, and providing the information to the party who might then say, oh, well, profits don't appear to be out of hand, I don't want to appeal.

All you've done is encourage him to appeal to the cost and expense of everyone. So, we're suggesting what's basically publicly available now, should be available at any time, under Bill 86. The Minister indicated that he had no objection to that and as a result we've got for your consideration a drafted amendment on costs and profits and you'll see that this allo ws anyone to request the Milk Commission for information and requires, makes it manda tor y for the Comm ission to pr ovide the information, albeit in a form that doesn't identify any individual perso n, or company.

That's available now and we're saying that it should be changed, so that as in our amendment, it's available any time, upon request. Now the next point that flows from that is when and whether the costs and profits of individual companies should be available. And this is a matter which we took up with the Min ister and which he said he would take under advisement and I trust will report to your comm ittee some time during your delib erations. Health Action has always taken the position that this corporate secrecy clause, which is essentially what it is, is contrary to the public interest.

During the 19 78 and 19 79 Milk Control Board hearings, we moved for full disclosure of the processor financial statements. And I should add here that the question of producer statements, doesn't come up, for the reason which has been mentioned by a numb er of previous speakers. The situation is different for every producer in the province. There's no such thing as, or there wou ldn't be any point in examining a particular producer on his situation, obviously, and we never suggested a particular producer should ever be hauled up and cross-examined or put under subpoena to answer questions.

What we did say, when we argued this, and also in court, was that the prod ucer marketing board, which app ears and makes a presentation on behalf of all producers, should be subject to some scrutiny. But in any case, as far as financial statements were concerned, it was basically the processors that we were concerned with. When we were refused that before the Milk Control Board, we took proceedings in the Court of Queen's Bench. The resulting judgment by Mr. Justice Scott Wright stated that the costs and profits of individual companies were "basic informati on", those were his

Wednesday, 23 July, 1980 words, which consu mers would require for participation in the hearing, the basic information language came from a numb er of cases which said, when you give someone a hearing you have to give them a hearing that makes sense, that works, and you can't ask them to come in make a submission, in the da rk if you li ke, with out giving them any information about the decision that's being made. That was from ottier regulatory jurisdictions. Mr.

Justice Wright said that in this case, however, the Statute specificially prohibited the release of the information that we were seeking and as a result our motion was dismissed. Now we understand the rationale for prohibiting disclosure of individual fina ncial statements. We understand the rationale, we don't necessarily agree with it but we certainly can see that there is an argument to be made. But we argued in our meeting with the Mini ster that disclosure of this type of information would not cause harmful effects to the company concerned in each and every case.

In particular, we pointed out that appeals might be taken un derth is bill with respect to particular localities or even a particular business, such as in a remote area. This might arise especially where a retailer or processor had a monopoly in a particular area. In such cases, it would be essentail for the appellant to have disclosure of costs and pr ofits, and at the same time there might be no significant harm caused to the company by virtue of that kind of disclosure. We suggested to the Minis ter that the prohibition on disclosure should not be automatic.

Rather, the Milk Commis sion should ha ve a discre tion to grant the di sclosur e after full consideration of the pros and cons. This would allow for the protection of business interests where the protection is actually needed, but would not prevent disclosure where there would be no harm caused by disclosure. We suggested that this was a reasonable com prom ise on this rather thorny point, which neit her indu stry nor consumer s could seriously quarrel with. Confidentiali ty is an issue which arises frequently before economic regula tory tribunals.

We're saying that a blanket prohibition on disclosure is simply not a reasonable policy. The following excerpt from a decision of the Canadian Transport Commis sion ill ustrates the way in which we suggest that the Milk Commission should be encouraged and allowed to function, because it's not allo wed to go through this process at the present time, and it wouldn't be under Bill 86. This excerpt, I might say, dealing with

Section 23 of the National Transportation Act concerns an appeal taken by an interested party where there's an apprehension that rates set by a railway are contrary to the public interest, and the particular qu ote comes, from what I belie ve is a famous case. I think it's otherwise known as the Rape Seed Case. I could be wrong. But it is the Saskatchewan Wheat Pool, 1973 decision and the CTC said: "Where information is relevant to a case under

Section 23 and is essential for its determina tion by the Commission , but its disclosure at a public hea ring ma y clearly cause actual and substantial damage to the party giving it, then the i