ISSN 0542-5492 Second Session - Thirty-Second Legislature of the Legislative Assembly of Manitoba STANDING COMMITTEE on AGRICULTURE 31-32 Elizabeth 11 Chairman Mr. A. Anstett Constituency of Springfield VOL. XXXI No. 4- 1:00 p.m., THURSDAY, 14 APRIL, 1983.

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

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

Rose Springfield Thompson La Verendrye Minn edosa Rhineland Gimli Brandon West Ell ice Churchill St. Bon iface Aiel Elm wood Kildonan Arthur Emerson Lakeside Brandon East River East Tuxedo Concordia Swan River Vir den Kirkfield Park The Pas Rupertsland Logan Portage la Prairie Sturgeon Creek Seven Oaks Niakwa Radisson Charleswood St. James St. Johns Morris Roblin- Russell St. Norbert Assiniboia Gladstone Pembina Selkirk Transcona Fort Rouge Wolseley Dauphin Turtle Mountain Burrows Rossmere ln kster Fort Garry Os borne River Heights Flin Flon lnterlake Lac du Bonnet St.

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LEGI SL ATIVE ASSE MBLY OF MANITOBA THE STANDING COMMITTEE ON AGRICULTURE Thursday, 14 April, 1983 fiME - 1:00 p.m. .OCATION - Swan River, Manitoba CHAIRMAN - Mr. Andy Anstett (Springfield) ATTENDANCE - QUORUM • 6 Members of the Committee present: Hon. Messrs. Bucklas chuk, Plohman, Uruski and Uskiw Messrs.

Anstett, Slake, Carr oll, Downe y, Gourla y, Harapiak, Mann ess WITNESSES: Dorothy Minish, Big Woody Women's Institute; Roy Hamilton, Local Comm ittee of Kenville Pool Elevator; Bob Seidel, Don Lindsay, The Pas Chamber of Commer ce; Leonard Harapiak, Private Citizen; Mervyn Minish, National Farmers Union Local 520; Mur ray Wenstob, Private Citizen MATTERS UNDER DISCUSSION: Western Transportation In itiative proposed by the Government of Canada MR. CHAIRMAN: Com mittee come to order please.

Ladies and Gentlemen, this is a continuation meeting of the public meetings of the Standing Comm ittee on Agriculture which is holding hearings with regard to the Western Transportation In itiative. Before we begin our hearings I'd like to introduce to you the members of our committee. Starting on my left, at the end of the table, the Member for Swan River, the local mem ber for this constitue ncy , Mr. Doug Gourlay; sitting beside Doug, Mr. Clayton Mann ess, the Member for Morris constituency; sitting beside him, the gentleman with the beard, is Dave Slake, the Member for Mi nn edosa; beside hi m, Mr.

Jim Down ey, the Member for Arthur; beside Jim, the Honourable Sam Usk iw, Minister of Highways and Transportation and the Member for Lac du Bonnet. Starting at the far end, on my right, Mr. Henry Carron, the Member for Brandon West; beside Henr y, Mr.

Harry Harapiak, the Member for The Pas; beside him, the Honourable John Plohman, Minister of Government Services and Member for Dauphin; beside John, another John, the Honourable John Buck laschuk, Min ister of Co-operative Development and Member for Gimli; and last but no t least , the Honourable Min ister of Agriculture, the Honourable Billy Uruski, Member for ln terlake. 63 I am your Chairman. My name is Andy Anstett; I'm the ML A for Springfield. On March 15 , 1983, the Legislative Assembly of Manitoba unanimo usly passed the following resolution which sets out the authority for this hearing.

Before I begin reading the resolution and the fact sheet on the Western Transporation Initiative, I would like to ask if anyone in the audience does not have copies. If you don't, the Clerk will hand out copies. Please raise your hand if you don't have a copy and would like one. The resolution reads as follows:

WHEREAS, on February 22, 19 83, the Saskatchewan Legislature unanimously passed the following resolution: Because the proposals advanced by the Mini ster of Transport for Canada to replace the statutory Crow rate: 1. Do not recognize the principles of a statutory rate for grain; 2. Do not provide cost protection for farmers; 3. Do not recognize that grain must be sold in a competitive international market; 4. Do not remove the distortion in rates by including all prairie crops and their products under the new structure; 5. Do not deal with una cceptable high taxation levels on farm input such as fuel; 6.

Do not provide sufficient performanc e gu arantees for the future gr owth and development of all facets of pr airie agriculture; 7. Prescribe an unacceptable limit of 31.1 million tonnes for subsidized shipments; 8. Provide central Canada with further artificial processing and livestock incentives; and 9. Are not supported by a consensus of Western Canadians. And because these are fundamental concerns and must be dealt with in any plan for the western rail transportation system this Assembly therefore rejects the Pepin plan.

THEREFORE LET IT BE RESOL VED tha t the Legisla tive Assembly of the Province of Manitoba concur in the above resolution passed by the Saskatchewan Legislature, and BE IT FU RTHER RESOL VED that the Standing Com mittee on Agricultur e of the Legislat ure be authorized

a) To inquire into matters relating to the Western Transportation Initia tive proposed by the Government of Canada;

b) To hold such public meeti ngs as the Comm ittee may deem advisable;

c) To report to this Session of the Legislature. The main focus of our meetings then relates strictly to (

a) of the RESOL VED portion of the resolution, the Western Transportation In itiative, and the committee has asked that all comments be directed to that Ini tiative. To that end, staff have prepared a

summary

Thursday, 14 April, 1983 of that In itiative, which I will read through before we commence the briefs. I believe everyone should have copies of that Initiative now. 1. The Federal Government will implement the principle recommendations of the Gilson Report for the four-year period, 19 82 through 1985-86. 2. The Federal Government has defined the Crow Benefit Payment as representing the difference between the amount paid by producers, under the Crowsnest Pass Rate and the actual cost of moving grain during the crop year 1981- 82 and has calcula ted it to be $65 1.6 million.

The average Crow rate was $4.89 per metric tonne for the Prairie region and $3.65 per metric tonne for Manitoba. 3. Starting in the 1983-84 crop year, producers will pay: (

a) The total cost of any future volumes of grain and grain products exceeding 31.1 million tonnes. (

b) The first three percentage points of railway cost inc reases, due to inflation in the crop years 19 83/84, 19 84/85 and 19 85/86. (

c) The first six percentage points of railway cost incr eases due to inflation for the crop year 19 86/87 and beyond. 4. Blended freight rates set by April 30th of each year for the following crop year by the Canadian Tran sport Commission, after consu ltation with gr ain shi ppers and railways. 5. Freight rates will remain generally distance­ related. 6. (

a) Under the Gilson recommendation, the federal contribution will be divide d between the railways and producers. In 19 82-83, 10 0 percent of the federal contribution will go to the railways; after that the proportion paid to the railw ays will decrease over time to a minimum of 19 percent by 19 89-90. In 1989/90, 81 percent will be paid by producers. (

b) The method of paying the government contribution will be that recommended by Dr. Gilson, but the method will be reviewed in 19 85/86 when the split is approxima tely 50 percent to each party. Parli amentary approval will be required to continue any further progression of payments to the producers. 7. Payments to producers will be on a acreage basis, including cu ltivated acreage devoted to non-Cr ow crops and to Crow grain used on the Prairies, not on the basis of tonnes of Crow grain shipped by rail.

Since this would mean less money per tonne of grain shipped, the Federal Government will pay the producers an additional $204 million for the crop years 19 83/84 to 198 5/86, as an agricultural adjustment payment. The Federal Go vernment will commit an additional $56 million after 1985/86 if the phased payments continue to 19 88/89. 64 8. Canola oil and meal and linseed oil and meal will be included under the new statutory rate regime in 1983-84.

For the crop year 19 82- 83, these products will be assisted through an existing program in the absence of legislation tha t will pay the difference between the statutory rate and the current minimum compen satory rate west of Thun der Bay. However, the Federal Government beli eves that the commercial rates for these products beyond Thunder Bay to eastern markets should be established. Current ly, the railways charge a lower minimum compensatory rate on these products. 9.

A new grain transportation agency will be established to perform the current duties of the Office of the Grain Transportation Co­ ordinator and will have an enlarged mandate including car allocations, performance and service guarantees and improved efficiency and capacity in the transportation system. 10. The Canadian Transportation Commission will undertake necessary major cost reviews every four years in consultation with grain shippers and railways. 11 . The Federal Government will purchase up to 3,840 more hopper cars over the next three fiscal years.

Timing of the purcha ses will be made with the advice of the new Grain Transportation Agency. 12. The Federal Government will commit an additiona l 670 milli on to branch line rehabilitation in this decade. The future of the Branch Line Rehabilitation Program will be reviewed in 19 85-86. 13 . In accordance with the Gilson Report, the railway compensation of 100 percent of the long-run variable costs with a 20 percent contribution to overhead costs will be phased in. 14. The railways will receive $3 13 million for the crop year 19 82-83 as a payment towards their shortfall in revenues in that year. 15.

Cost savings due to branch line abandonment or acquisition of government hopper cars will accrue to the Federal Government and shippers. 16. The Federal Government has agreed to extend special additional capital cost allowances to the railroads for inv estment in railway assets during the period of January 1, 1983, to December 31, 19 87. 17. In return for the imple mentation of the new rate regime on grain and the extended capital cost allowances, the two railroads have indicated they will: (

a) Incr ease inv estment in 1983 in Western Canada by $242 million and inv estment in Eastern Canada by $33 million. (

b) Increase investment in the period 19 84- 87 in Western Canada by $2,592 million and investment in Eastern Canada by $395 million (

c) Meet specific gr ain transp oration performanc e and branch line maintenance obligations.

Thursday, 14 April, 1983 18. Under industrial and economic development init iativ es, the Federal Government will commit $75 million over the next five years to: (

a) Develop rai lway equipme nt manufacturing industry. (

b) Develop processing of agricultural products in Western Canada. (

c) Assist suppl iers of equ ipment and ma terial for future resource devel opm ent projects in Western Canada. (

d) Assist western firms to develop new products and improve productivity and competitiveness. 19. Under agricultu ral and devel opment in itiatives, the Federal Government will un dertake a five year, $17 5 million package of agricultu ral devel op ment in itia tives including: (

a) Improving local feed grain self-sufficiency in non -Canad ian Whe at Board designated areas of Canada. (

b) Assistance to farms and farm organizations for activities leading to improved, susta inable incr eases in production of grains, livestock, and special crops in the designated area of the Canadian Wheat Board. (

c) Assistance to the food processing industry in Quebec. (

d) Soil and water cons ervation research in the Prairie provinces. (

e) Deve lopment of a crop information system by Agriculture Canada. (

f) Development of an electronic marketing system by Agriculture Canada. 20. In 1985-86, the Federal Government will review the following: ( 1) The sharing of grain trans'Jortation costs between producers ant: the Federal Government.

(2) The system of payments to producers and progress in reducing distortions in the western agricultural economy .

(3) The possible im pact on eastern agriculture.

(4) The system of railwa y performance guarantees.

(5) The freight rates required to provide appropria te comp en sation to the railways.

(6) The future of the Branch Line Rehabil itation Program. Ladies and Gentlemen, that is the Federal Western Transportation Initiative. The purpose of our hearings today are to hear your comments on this initiative. We have received notification that the following people wish to speak to the comm ittee: Dorothy Minish on Big Woody Women's In stitute; Roy Hamilton for Kenville Pool Elevator; Don Lindsay and Bob Seidel of The Pas Chamber of Commer ce; Leonard Harapiak, private citizen; Mervyn Minish, NF U Local 520.

Is th ere anyone hear who wishe s to make a presentation to the comm ittee today whose name was 65 not read out? If there is, please come forward to the microphone at the table in front and give your name, so that we can add you to the list. Is there no one else? Then I would like to call on Mrs. Dorothy Minish of the Big Woody Women's In stitute to make her presentation. Mrs. Minish. MRS. DOROTHY MINISH: Thank you, Mr. Chairman. The Big Woody Women's In stitute is a local group affiliated with the Manitoba Women's Institute.

Women's Institutes were founded in 18 97 in Canada because women needed to voice their concerns for issues which affected them. Our motto is "For Home and Countr y." Women's institutes are not aligned with any poli tical party but ha ve sought to in fluence governments regarding issues affecting home and coun try. To date, the issues of the changes to the Crowsnest Pass Agreement mainly have been taken up by farm groups as an issue affecting farmers. W.l. members, who are mostly rural women with farming backgrounds, have watched the events from the sidelines as farm wives.

As the proposals have been advanced and farm groups have reacted to them, we have as a local W.l., become inc rea singly aware tha t change s to the Crowsnest Pass Agreement will have far reaching implications for all of Canada and all Canadians. We believe the changes will be particularly devastating for farmers and for rural communi ties. lt is this realization that has prompted us to submit a brief to this task force. Initial ly, the pol icy of our Canadian Government regard ing the building and operation of the transportation system was set out to uni te Canada from sea to sea.

A transportation system was developed, which encouraged settlement wherever suitable land existed, not only close to the original population centres of the St. Lawrence River basin, the Maritimes and British Columbia, but into the vast interior of the Prairie provinc es. lt was realized then tha t government participation was necessary for settlement to be viable. To this end policies regarding regulated statutory rates based on distance on ly, not variable rates based on com pensatory formula, were negotiated with the railroads. A package deal was made in order to carry out this concept.

In return for these rates, which recognized that the railroads would not recover their costs on the branch lines, land grants, including the mineral rights, and large sums of monies were provided to the railroads. May we suggest that the reasons for the original Crowsnest Pass Agreement are just a valid today as they were in the 18 90s and later in the mid-1 920s when changes were made. The railways are wanting a renegotiation of the agreement on the basis that grain transportation is not paying its way.

Surely any renegotiation should look at the total package deal that was entered into, not just the reported losses in curr ed from su pposed uneconomic branch lines. lt is unr ealistic to expect that any profit-oriented transportation system will ever provide satisfactory service through any branch line system serving the wide

Thursday, 14 April, 1983 expanses of rural Canada. The railways have been and are being well com pensated for any supposed shortfall on the grain haul by the income gene rated by the package that they received in the Crow Agreement. The advertising that we see on TV regarding CN with its slogan, "We're in business for Canada," indicates a vast network with considerable assets has been established. We feel that this has been possible through the development of the assets gained through the Crow Agreement.

A similar picture could be drawn for the CP which we under stand is one of the largest corporate bodies in Canada. If it is now necessary to renegotiate the agreement, the total picture including all the assets amassed as a result of the agreement must be taken into cons ideration in dete rminin g whether or not the transportation companies are in fact losing money on the agreement. Our country cannot afford to give any more concessions to a profit oriented rail system.

Any monies given to the railroads should be lin ked to an equity position which will eventually give control of the railroads to the people of Canada to be run not for profit but for the service of all Canadians. A second point we would like to make is that the concessions made in the Crow Agreement originally were made to farmers because it was felt necessary if they were to compete on a world market. The validity of these concessions applies as much today as it did then.

Canada has always had a "cheap food" strategy which has been of benefit to W.l. members as consumers but has usually been ach ieved at the expense of low prices, many of which are set by governments, to farmers. We see declining farm income as a threat to a rural way of life, and a real danger to the economy of the whole coun try. Any increase in the cost of farm inputs, particularly in the cost of transporta tion, can only increase the effects of a cost-price squeeze which is causing an increasing number of farm bankruptcies. Farmers are finding the need to borrow increasing amounts of money just to operate.

The amount of money invested in a farm enterprise should be sufficient to ensure a reasonable standard of living without the farmer having to seek additional off-farm employment to keep going and to press all family members into his unpaid labour force in order to break even. Farm bookkeepers, many of whom are W.l. members, would be delighted to use the same costing formulas used by the railroads in arriving at the fair market price for their produce. 1t would be delightful to then go to the government and expect it to guarantee this level of profitability by statute.

The government already has the power to ensure the performance levels of the railroads. lt does not need to change the Crowsnest Pass Agreement to the detriment of not only the farmer but the whole Canadian population. The inv estments of the railroads do not need to be guaranteed in perpetuity while farmers' costs are allowed to increase without check and, in fact, by government decree. No other segment of our society has this kind of a guarantee. Many more arguments could be put forward, but we are sure you have heard them all.

Our own Manitoba Government has done a study on the overall effects of changes to the Crow Agreement and are much more aware than we of its adverse effects on the Manitoba economy. 66 We are also aware that the Farm Bureau, of which the Manitoba Women's Institute is a member, has gone on record in support of the Gilson proposals and in favour of changes to the Crow. Our W.l. would like you to know that we are solidly opposed to any changes in the present Crowsnest Pass Agreement. We were not consulted by our representatives on the Farm Bureau in this matter.

We perceive the proposed changes to the Crow to be a detriment to our homes in rural Manitoba, and to our coun try, Canada. Respectfully submitted by the Big Woody Women's Institute. Thank you. MR. CHAIRMAN: Thank you very much, Mrs. Minish. Please remain seated, there may be questions from members of the committee. Are there any questions by members of the comm ittee? Mr. Man ness. MR. C. MANNESS: Yes, on Page 3, you say the government already has the power to ensure the performance levels of the railways. Specifically, what do you mean? How can the government today ensure that the railways perform? MRS. D.

MINISH: Well, it's my understanding that when they were given the land grants and whatever they were given to set up the Crowsnest Pass Agreement in the first place that under that agreement the railways made some commitments to provide for transportation, and I believe that included providing the rolling stock as well as the track beds and the whole bit.

I find it very difficult to und erstand why the government has now found it necessary to provide hopper cars, for example, to the railway companies in order for them to function. it's my understanding that they already had agreed that the railroads would provide this. Now, am I wrong there? I don't know, this is just my understanding of it. MR. C. MANNESS: Well, you m"ay very well be right, but I'm wondering again if you make the comment "the government has the power to ensure," it seems to me the governments today don't have an awful lot of power to force anybody to do anything in this countr y.

I'm wondering how in fact you can see the government forcing the railw ays to handle freight. MRS. D. MINISH: You have brought up a very important thing. Why should then the people of Canada accept a promise now that the railroads are going to perform? What guarantee do we have now, other than the word of the railroads, that they are going to perform in the future? They have given no greater gua rantee than they have in the past. MR. CHAIR MAN: Further questions? Mr. Uruski. HON. B. URUSKI: Mrs.

Minish, are you therefore indicating that just because the rates are going to go up or proposed to go up will not guarantee service, are you basically saying that? MRS. D. MINISH: Yes.

Thursday, 14 April, 1983 MR. CHAIRMAN: Further questions? Mr. Uskiw. HON. S. USKIW: In your statement you make the point that - this is on Page 2 - the railways should provide a service to the coun try. Are you making the argument tha t the y should not generate profits to their shareholders? MRS. D. MINISH: I'm making the arguments that it is unr ealistic to think that they ever will on a branch line system in rural Canada, that they were never intended to make profit on the branch line system, that the overall system might be profitable.

Again, it is inconceivable to me th at any government should in perpetuity guarantee the railroads an overall profit like they are doing. HON. S. USKIW: On Page 2, though, you make the point that we should not give the rail system any more concessions and you refer to them as being profit­ oriented rail systems and that's why I raised the question. Are you trying to suggest that railways should not make any money, or am I misreading your intent in that particular section? MRS. D. MINISH: I'm sorry, come again? HON. S.

USKIW: Your brief suggests our country cannot afford to give any more concession to a profit-oriented rail system. I simply want to clarify through you whether you mean that railways should operate as a public utility or whether you believe that profits at certain levels are reasonable but you would want them controlled in some way. MRS. D. MINISH: I am not denying that any profit­ oriented system should make a profit.

What I am saying is it is unr ealistic to think that a transportation system serving Canada will ever make a profit on the branch line, and to that end, yes, I am indicating that the overall picture that eventually the only method of transportation. in Canada that is fair is a government run transportation system for the good of all Canadians. HON. S. USKIW: So then you're making the argument that we should have an integ rated rail system that is owned by the people of Canada ultimately. MRS. D. MINISH: I think I've made that point in saying that any monies given to the railroads must include an equity position.

HON. S. USKIW: If that were to happen, if through government subsidies in exchange for equity on the part of the CPR in particu lar, if in a matter of a decade or two decades that results in the Government of Canada owning the CPR, should then the CNR and the CPR, which would be pu blicly owned, should the y then make money on their operations? MRS. D. MINISH: I would say no. If they make any mone y, it should be for the good of all of Canada. Crown corporations, as I understand them, are never set up with the primary purpose of making mone y, but of serving the public benefit. 67 MR. CHAIRMAN: Mr. Plohman. HON.

J. PLOHMAN: Yes, Mrs. Minish, I'm particul arly interested in your statement on the first page that these changes will be particular devastating for farmers and for rural commu nities. Could you elaborate on that a bit and explain how you feel that will come about, that will be the case. MRS. D. MINISH: Well, if one farmer goes broke, simply he will have to go on welfare. He will have to find another job or else be a debt burden to the municipa lity, to the government. it's just that simple. Now maybe one farmer can get a job, another one won't.

If a fellow is unable to make a living at his job, he will eventually wind up being supported by the government. As I understand welfare rates, they usually provide a subsistence allowance. If I have been buying groceries and I have been looking at Canada's Food Guide and I have spent in the past - off the top of my head - $2,000 in 1982 for groceries in my household, and suddenly I am in a welfare situation and my husband comes to me and says, look wifey, we have a problem here, you and are not making enough income from this farm, we're on welfare.

I'm afraid that my purcha ses in the Swan River Valley are going to be reduced quite considerably from what I would be purchasing if I were a paying member of society. Now, to that end supposing I buy from Cox's or supposing I buy from the Co-op, my purcha ses to the Co-op are going to be reduced. That in turn is going to make the Co-op's viability questionable. So the Co-op, as you know, it's a fact that Red River Co-op has had to close most of its outlets. lt puts more people unem ployed. That in turn will put more people on the welfare rolls.

I don't know how much the Provincial Government, I don't know how much the Federal Government can afford in the welfare rolls. I notice they can afford, according to Fifth Estate last night, to finance our air industry quite considerably. Maybe they can finance all the farmers. Even if they can, the amount that they will finance to a welfare system will not be sufficient to genera te the stimulation in the economy that we need to have any good effect on the present economic recession we find ourselves in. HON. J. PLOHMAN: You say then, Mrs.

Minish, that you feel this won't only negatively effect the farmers then, it'll also lead to greater unem ployment and more closures of busine sses and so on in rural communities, and that's how you see it being devastating to rural communi ties? MRS. D. MINISH: Yes. In that respect, yes it will be. May I also say there's another aspect that will happen. If farmers do not operate their land, who will? it's my assumption that corporate farms will be formed. We see this happening in the potato industry in the Maritime Provinces.

McCain's has bought out the farmers, whom they, because they control the price of potatoes, were able to mani pulate the price and put the farmers out of business. They then took over their land the farmers are then farming the land for McCa in's. Now follow that through and we come into the same situation as we had in the feudal system. We called

Thursday, 14 April, 1983 them lords and we called them serfs. I see a situation similar to this developing in Canada in the very near future. lt has been said that there is no country in the world - even a country like Bangladesh - that hasn't got the arable land to feed its own people. If the people are not in control of that land, we find the people farming the land for the rich landowners and for themselves, they're farming the marginal land and devastating their lands. I see the same situation happening in Canada. lt is a very grim prospect for me and for any thinking farm wife. MR. CHAIRMAN: Mr. Downey. MR.

J. DOWNEY: Thank you, Mr. Chairman. Mrs. Minish, as I understand your comments in response to some of the questions, if I understand it correctly you would be recommending that all the railways that now handle the prairie grains in Western Canada should become basically a public utility. Is that correct? MRS. D. MINISH: No, I have not said that. I have said that they are asking for a change in the Crowsnest Agreement. I have said that if they wish this, they should put back all the benefits that they have been given in return for the grain transp ortation system as we know it now. MR. J.

DOWNEY: Well I'm sor ry, there was a misunderstanding. I understood that you felt that the people of Canada through an equity position should take over the railroads and hold them in a Crown corporation. MRS. D. MINISH: Mr. Down ey, I did not say that. I said that if there were to be any changes made, if you didn't like the system we now had, that this would be a way to go. I inti mated that no transportation company could be expected to make money on the rural transportation branch line. MR. J. DOWNEY: Then I would ask Mrs.

Minish, for clarification of my own mind, what she was saying then is if we are to continue on with the current system, the current statutory rate system that's in place; that if we were to go back to the period of say 1979 when we saw approxima tely half the grain sitting on the prairies, what would be her recommendation then to improve the situation in light of the fact that she's indicated that she doesn't feel that the taxpayers or farmers, I believe - she didn't say farmers - but the taxpayers shouldn't be providing rolling stock, what would be your alternative recommendation to getting the grain moving and to provide it to the markets of the hungry people in the world?

What would be the alterna tive to what is taking place today? MRS. D. MINISH: I don't know the exact timing, but I do know that the Farmers Union felt that the railways were not performing and the Farmers Union attempted to have a class action suit against the railroads to force them to perform un der their contract un der the Crowsnest Agreement. it's my understanding that class action was dismissed, not because there was no case, 68 but it was ruled that the farmer was not the one to make the case against the railroads.

I would suggest to you that if the railroads are not performing under their contract, then the government has not only an opportun ity, but an obligation to inv oke the full resources of the law to make them perform. MR. J. DOWNEY: Would you then, Mrs. Minish, suggest that those people who are working in ports and within the rail system that move grain should have the same kind of rules put on them and the same kind of service provided for the farm commu nity? MRS. D. MINISH: I don't understand the question. MR. J.

DOWNEY: What you're suggesting is that the government take tough action with the grainto force them to live up to the current legislation that's now in place, that would be what you've suggested? MRS. D. MINISH: Tough action against whom, the workers or the railroads? Because the railroads are the ones that are responsible for hauling the grain. Their workers are working for the railroads, they are not - they only work under contract. MR. J. DOWNEY: Well, Mrs.

Minish, there are people who work for the railroads and people who work for the grain system that work in the elevators at Thunder Bay or at Vancouver or Churchill, within the system, people that work for those particular companies as part of the system.

If you were to force the railroads to perform, railroads being made up of iron, steel, roadbeds and people who operate them, if you were to force them to make sure that grain was moved would you as well think that it's not - isn't it equally as important to have everyone else in the system perform their duties to provide service for the grain farmers of western Canada. Would it not be as fair to go right through the system and place it all in essential service legislation? MRS. D. MINISH: Mr.

Downey, do I understand you to be asking about the specific ins tance of the dockworkers in Vancouver who were on strike and who were being labelled as being un co-operative? MR. J. DOWNEY: Mr. Chairman, I'm talking about the total system. You have the railroads that move it; you have the farmers that produce it; the grain companies that take it off the hands of the farmers at the point of delivery; you have the railroads that move it to the ports. What I'm asking is if you're going to force the railroads to do it, is it not equally as fair to force the total system to work, to deliver, and to move grain.

The whole works of them, the whole grain system, railroads included. MRS. D. MINISH: Mr. Downey, I can only presume that you refer to the workers who work for the railroads in moving grain and may I suggest to you that when the matter of a strike on the west coast was a problem I heard a lot of outcry against the workers that they should be legislated back to work, to work for the railroads and the shipping companies. I heard no outcry

Thursday, 14 April, 1983 from hardly anyone to say, let the government intervene to provide a fair settlement for both the workers and the railroads so that the grain could be moved. Now it is not my thinking that the worker should be compelled by law to produce a service when he has a colle ctive agreement and he has rights under that colle ctive agreement. I did not understand that the strike at the west coast was an illegal strike nor do I think that government should intervene and compel any worker to the detriment of the colle ctive bargaining system in this countr y. MR.

CHAIRM AN: I would like to caution members of the committee that the Legislative Assembly addressed the question of whether or not labour-management relations should be included in our public meetings as a subject for discussion and the Assembly decided that specifically labour-mana gement questions as they relate to grain transportation would not be part of the subject of our hearings because then we would be covering a much wider question. So I would ask members to try to direct their questions more to the transportation initiative. Mr. Downey. MR. J. DOWNEY: Thank you, Mr.

Chairman, I just have one final question, Mrs. Minish. Do you feel in your own mind or does your organization feel in your own minds tha t the Federal Gov ernment are going to proceed with the current Pepin plan regardless of what is taking place in western Canada at this time? MRS. D. MINISH: Mr. Downey, I cannot begin to perceive what the government might or might not do. My purpose in presenting this brief for our organization was to do whatever we felt we could do at this point to prevent the disaster that we see in the changes proposed to the transportation system.

If we do nothing then certainly the Pepin proposals will be implemented and by making every protest available to us including lobbying in Ottawa it is my hope that, yes, governments do respond to public pressures and, yes, we can prevent this disaster from taking place. MR. CHAIRMAN: Mr. Harapiak. MR. H. HARAPIAK: . . . believe in the democratic system where we all ha ve a role to pla y in the government and you still feel strong enough to come and make a presenta tion. I was just going to follow up in one area and that's in the area of corporate farms.

You brought up the possibility of more corporate farms springing up because of small businessmen going bankrupt because of the increased cost. Swan River is surrounded by many small commun ities. What effect would this have on small commun ities if these corporate farms did come into being? MRS. D. MINISH: I can only look to what's happening in any country where large corporate farms are the norm.

Where you have large landowners you invariably have poor peasants and I would suggest that a lot of the problems that have developed in Nicaragua, Guatemala, Argentina, Chile, you name it, are partly because the people do not have control of their land. 69 MR. CHAIRMAN: Mr. Bucklaschuk. HON. J. BUCKLASCHUK: I want to make some reference to the second last paragraph of your brief in which you disassociate yourself from the position of the Manitoba Farm Bureau. You state, "We were not consulted by our representatives on the Farm Bureau in this matter." Who are you referring to by "our representatives"? MRS. D.

MINISH: Well, the Big Woody W.l. is a member of the Manitoba Women's In stitute, which I mentioned at the start, and the Manitoba Women's Institute as I understand it has two members on the Manitoba Farm Bureau and it is my understanding that those two members did cast their ballots and did function in representing us, the Manitoba Women's Institute, on the farm bureau.

Now, I have been an active member of the Big Woody Women's Institute, I have been an active member of the Manitoba Women's In stitute, I am fami lair with what ha s gone on at provincial conventions, I have been familiar with what has gone on at board meetings, they have been reported back to the local.

I am not aware of any position statement that has ever been taken by the Manitoba Women's Ins tit ute regard ing the Crowsnest Pass frei gh t agreement and it is very - I was absolutely astounded when I realized that our membership on the Farm Bureau were representing us, without our knowledge or consent - no, we were not in any way consulted. HON. J. BUCKLASCHUK: Are you normally consulted on other issues whether they be transportation or agriculture by the representatives on the board of the Farm Bureau? MRS. D.

MINISH: I'm sorry I do not know what positions our membership have taken there so I do not know if they are responding in statements that have been approved as policy by the Manitoba Women's Institute. H ON. J. BUCKLASCHUK: So then it would be a reasonable conclusion that your feeling is that the position taken by the Manitoba Farm Bureau does not necessarily reflect the positions of the memb er organizations? MRS. D. MINISH: I would say not necessarily. I do not kn ow what the Ma ni toba Women's In stitute, in convention, what position we would take. I just know that we have never been asked. MR. CHAIRMAN: Mr.

Uskiw. HON. S. USKIW: Yes, Mrs. Minish, given the fact that the Government of Canada is proposing to change the method of subsidy for the transportation of grain, what is your view with respect to whether any subsidy that is paid, should it be paid directly to producers or should it be paid to railways if there is going to be one? MRS. D. MINISH: Mr. Uskiw, I don't pretend to know the ins and outs of that one but I do know this, that if it's paid to farmers it's going to be an awful hard way that's figured out as to how it should be fairly

Thursday, 14 April, 1983 distributed among farmers. I also know that if its paid to farmers, it will be received by the public to be a subsidy to the farmer instead of a subsidy to the railroads. To that end, I would have to presume, that it is not a good thing for it to come to the farmer direct. MR. CHAIRMAN: Mr. Gourla y. MR. D. GOURLAY: Mr. Chairman, Dorothy, on your comment about the W.l., I would like you to know that we are solidly opposed to any changes in the present Crowsnest Pass Agreement. I take from your brief that you and your organi za tion would like to see the Crowsnest Agreement stay as is.

The resolution that we are dealing with covers some nine points objecting to the Pepin proposal. Are you suggesting that the committee should take a firm stand relative to your brief, that no changes be implemented; or should the comm ittee try to salvage as much as possible from the Pepin proposal. MRS. D. MINISH: Mr. Gourla y, I can only speak on behalf of the Big Woody Women's Institute. I am not speaking on behalf of the Manitoba Women's In stitute in this and I believe that I made it abundantly clear that our Women's In stitute is opposed to any changes in the Crowsnest Pass Agreement at this time.

I think I also made it abundantly plain that if there was to be negotiation for change that it was our feeling that the total package of the benefits that the rail roads received also under the Crowsnest Agreement must put on the table before any negotiation be entered into. MR. CHAIR MAN: Mr. Gourla y. Any further questions for Mrs. Minish? Seeing none, Mrs. Mini sh thank you very much for appearing here today. MRS. D. MINISH: Thank you. MR. CHAIRMAN: The next name on our list is Mr. Roy Hamilton, Kenville Pool Elevator. Mr. Hamilton. MR. R. HAM ILTON: Mr.

Chairman, lad ies and gentlemen, I am presenting this brief on behalf of the local committee of Kenville Pool Elevator to oppose the Pepin plan that would totally destroy the Crowsnest Statutory Freight Rate on grains. The Crow rate in the past has protected the western farmer from changes of political parties and change of government policies. But the Pepin plan removes all protection from the farmer but guarantees the railroad's protection.

They would be guaranteed a compe nsatory rate plus 20 percent of their investment, after four years another 20 percent toward off-line costs. lt has been well document ed by the number of permit holders and the total volume of grain shipped that farmers in the Swan River Valley would lose $8.4 million if the Crow rate was removed and these rates were applied. By the crop year 2000 - 2001, under these rates it would cost us $2.06 to ship a bushel of wheat and $1 .69 to ship a bushel of barley. The initial price we will be paid for barley at the new crop year August 1, 1983 will be $2.07 per bushel.

The Pepin plan has no cost protection for farmers. Our ability to pay has not been considered. There is no relationship between 70 freight charges and the price received for the grain. lt does not recognize that export grain must be sold on the competitive market. The Crowsnest Statutory Rate was put in place at the turn of the century by the government of that time and was kept in place by all following governments up until the present one today.

All of these governments have recognized that the prairie provinces were so far removed from export market, that there was no way that producers could afford to pay the full cost of transporting their product to the sea port, and at the same time stay in competition with other exporting countries. So what has changed? Our shipping point of Kenville is as far from a sea port today as it was back in 1897. The sea port has not come any closer to us. Up to the present time, western farmers are trying to market their grain through one ice-free export port. Uni ted States farmers can use 30 ice free ports.

The Canadian economy as a whole benefits from the export of grain and grain products, so the whole of Canada should pick up the incr eased cost of transporting grain. Respectfully submitted, Roy Hamilton. MR. CHAIRMAN: Thank you very much Mr. Hamilton. Are there any questions for Mr. Hamilton from members of the committee? Mr. Plohman. HON. J. PLOHMAN: Mr. Hamilton, you mentioned that the Pepin plan removes all protection from the farmer. Could you explain that a little bit more as to your feelings on that and why you arrive at that conclusion? MR. R.

HAMIL TON: Well, at the present time we are supposed to be guaranteed shipment of our grain under a certain cost. But under the Pepin plan that is removed entirely and the railway is the one who is guaranteed cost plus a percentage on their investment. HON. J. PLOHMAN: Do you also connect this to the matter of variable rates and did you have a comment as to how the lack of protection against variable rates in the Pepin plan could affect the farm communities such as your own? MR. R. HAMIL TON: Yes, there are a numb er of points that I haven't mentioned in this brief, a great num ber. Variable rates is another one.

We feel that under the Pepin plan that variable rates are going to be scrapped. They have never ever said anything very definite on them. I think that is more reason for us to be doubtful about them. Farmers in this area could suffer quite a bit from variable rates if it is going to cost a great deal more to ship from Swan River than from, say Kamsack, for instance. HON. J. PLOHMAN: Mr. Chairman, explain that a little further as to what you mean if it's going to cost them a great deal more, what will that lead to if it's going to cost more to ship grain by rail from Swan River, say, thAn from Kamsack?

Could you just take that further and just explain what you think that would do to communities? What would happen?

Thursday, 14 April, 1983 MR. R. HAM IL TON: Well I see on TV last night that farmers are going bankrupt now who are living on branch lin es and who are not that far from their elevator system. If farmers in this area, everybody had to buy twice the size of a truck they have today to haul to a distant shipping point, and otherwise, if the shipping point was still at Swan River but the rate was twice as much as Kamsack, it would be the same difference. People would be charged an exhorbitant price that there's no way, I don't think, that they could afford to pay it. MR. CHAIR MAN: Further questions for Mr. Hamilton.

Mr. Usk iw. HON. S. USKIW: Mr. Hamilton, you're noted here as coming from Kenville Pool Ele vators. Are you representing Kenville Pool? MR. CHAIRMAN: Mr. Hamilton. MR. R. HAMIL TON: I am prese nting the brief of the local committee, Kenville Pool Elevator. HON. S. USKIW: I see. Can you tell me whether this brief is in accordance with or contrary to Manitoba Pool position on this issue? MR. R. HAMIL TON: I think it's reasonably close to Manitoba Pool's position. Some of the figures I have used I got from correspondence from Manitoba Pool. HON. S.

USKIW: What in your opinion is the best mechanism that can be employed at the present time in order to get the kind of restructuring that is most acceptable to the grain farmers of the Prairies, in your opinion? What mechanism can we now use and it's obviously got to involve political action, since the legislation is to be introduced in the House of Commons next Tuesday. What do you think can be done and by whom to accomplish a policy change that would be representative of what the farmers on the prairies would want? MR. R. HAM ILTON: That's a pretty big question for a farmer from Kenville.

I feel that it's almost out of our hands now. We have been making representation to Ottawa for a year to a year and a half now. I think it is more up to people who I am addressing today to take this forward and I think that if you want to, you can make more in pressions than what we can, from Kenville. HON. S.

USKIW: The Manitoba Pool position to date has been one of not arguing with the need for reform but rather centering on the method of how that should take pl ace and the apportionment of added trans portation costs between the users of the transportation system, namely the grain producer and the Government of Canada which represents the taxpayers of this cou nt ry. You said a moment ago that you're not too far apart, that is, your local views as com pared with that of your Pool executive of Mani toba.

What differences then are there between your local opinion and that of your parent or your cent ral organization? 71 MR. R. HAMIL TON: Well I think it's the opinion of our local committee that if our parent company had taken more of a firm stand at the start and not flip-flopped around, that we might be in a better position today. That's what the people on my comm ittee feel. They are more militant, if I might use the word. HON. S. USKIW: Would I be accurate then in assuming that you feel that Manitoba Pool may have been somewhat used in this process then or eo-opted by the Government of Canada? MR. R.

HAM IL TON: I believe they represent the views of a lot of their delegates. Perhaps our delegates and ourselves felt a little differently. HON. S. USKIW: Just on that point, did your delegate then present a different opinion or take a different message to your delegate convention than what is now the position of Manitoba Pool Elevators? MR. R. HAMIL TON: Yes, sir, I believe so. MR. CHAIRMAN: Mr. Harapiak. MR. H. HARAPIAK: The Priestville sub on which community of Kenville is located received the benefit of a rehabilitation program approximately five years ago.

Has the railroad service improved after that rehabilitation program has gone in? MR. CHAIRMAN: Mr. Hamilton. MR. R. HAMIL TON: You're referring to the railroad service on grain? MR. H. HARAPIAK: Right. MR. R. HAMIL TON: I don't know that it has made any difference on grain. The subdivision was upg raded and is a lot better now than it used to be, but that was done mainly on account of the rock coming through from the quarry. lt was done for that purpose not for the purpose of hauling more grain or giving better service for grain. MR. H.

HARAPIAK: In your opinion, is the railroad offering a good service for the movement of grain, or are other commodities receiving priority over the grain movement? MR. R. HAM IL TON: On our subdivision, I think they have given us a pretty good service on grain, but they have only done so since we have made them a gift of 14 ,000 boxcars or hopper cars. That made the biggest difference. MR. H. HARAPIAK: Mr. Hamilton, do you feel the rail roads should be receiving some incentive or a bonus to ensure that your grain is moved? MR. R. HAMIL TON: The railways should certainly be paid the compens atory rate.

We are not suggesting that the railways should haul grain at a loss. We are saying that they should be paid for doing the job and

Thursday, 14 April, 1983 that the people of Canada should pay them for doing it. lt shouldn't be loaded on the farmers' backs. MR. CHAIR MAN: Mr. Downey. MR. J. DOWNEY: Mr. Chairman, the brief has indicated that the additional cost or loss of money to the Swan Valley would be $8.4 million. What kind of a freight rate or what kind of assumptions have you made to come up with that? For example, what would be the volume of grain that is now going out of Kenville or the Swan River Valley, and what would be the rate, which you're assuming would take place, would give you that kind of a figure? MR. CHAIR MAN: Mr.

Hamilton. MR. R. HAMIL TON: The total volume of grain out of the Swan River Valley in 1978-79 crop year would be 20 1, 140 tonnes. MR. J. DOWNEY: How much is that in bushels? I am still on the old system. I'm sorry. MR. R. HAMIL TON: I'm sorry. I seem to be in the same age bracket as you are, Mr. Downey. MR. J. DOWNEY: 201 ,000 tonnes, so we're talking approxima tely 5 million bushels, 7 million bushels? MR. CHAIRMAN: Was that a question, Mr. Downey? MR. J. DOWNEY: I just want to make sure. I think that - if my assumption is - maybe somebody else could the answer that's approximately 7 million bushels.

In other words, you've used the calculation of the assumed freight rate. I'm not sure precisely what is the current cost of transportation out of the Swan River Valley now on the current Crowsnest rate? MR. R. HAMIL TON: 19 cents a hundred. MR. J. DOWNEY: The figures which you are using as an assumption of inc rease, where did those figures come from that the incr ease would go up to that particular figure and how have you used the calculation of funds paid to the railroads? If the $650 million were paid to the railroads, would that offset the incr ease that you feel will be charged to the farmers? MR. R.

HAMIL TON: I don't believe I'm using any assumption, Mr. Downey. We're taking those figures and the total number of bushels and using the figures that the railways would receive for acquiring the grain. The price goes up year after year. I believe I quoted you the year 2000-200 1 that the rate per tonne then would be $75.90 per tonne, which amounts to $1 .69 for barley. MR. J. DOWNEY: Is that considering the $650 million that is paid into the railroad system on an annual basis? Has that been deducted from those figures? MR. R. HAMIL TON: No.

Whatever money the railway gets has nothing to do with the cost that they're charging us for the grain, for freight. 72 MR. J. DOWNEY: I still have a hard time in trying to find out what - you're using the figure of - was it 79 cents? - what was the per hundred weight again? I didn't mark it down. MR. R. HAMIL TON: 19 cents. MR. J. DOWNEY: lt's 19 now, but you're assuming that it'll go to? MR. R. HAMIL TON: Here again it's rather confusing, it's rate per tonne now - $75.90 per tonne. MR. J. DOWNEY: That's what the multiplier is. The reason I'm asking these questions, Mr.

Chairman, is just to try and explain it is that I have heard assumptions made that the rate would incr ease by five times the present rate. We've heard, as my colleague from Morris just indicated, an incr ease of up to 12 times, but now you are suggesting that it could in fact go as high as 16 times the current rate, and that's by the year 2000 is what he's indicating. I think in view of that kind of information tha t your own organization would be prepared to sit down and discuss it with you, Manitoba Pool, so they could in fact put a little stronger case forward.

Have you made this case to your central body of Manitoba Pool Elevators so that they could carry this cost figure forward to the Federal Government? MR. R. HAMIL TON: Mr. Downey, these figures I'm giving you, we received from head office, from Manitoba Pool Elevators. They are their own figures. I didn't calculate this myself. MR. CHAIR MAN: Mr. Uruski. HON. B. URUSKI: Thank you, Mr. Chairman. Mr. Hamilton, in your submis sion you ind icated the increased costs for freight of going up to $1 .69 for barley, $2.06 for wheat.

In the Pepin proposal, it's intima ted tha t li vestock produc tion will in crease substantially if there is a change in freight rates. How do your people view that analysis and what impact do you see those changes having on the livestock sector here in the valley? MR. R. HAMIL TON: Mr. Uruski, we feel that is a very silly thing to project something like that. I could put it plainer if this wasn't a mixed audience. HON. B. URUSKI: Mr. Hamilton, I wanted to know what your definition was of compensatory rates. You said that the railways should be paid compensatory rates.

What is your definition of comp ensatory rates and what does it include in terms of the railway's costs? MR. R. HAMIL TON: I expect it would cost all the cost of hauling grain from shipping points to the point of export. HON. B. URUSKI: Would that include the acquisition of boxcars and the building of tunnels and terminal points of the railways? Would that be included in your definition of the costs? MR. R. HAMIL TON: No, it wouldn't. Tunnels, I believe, are used by all traffic on the railway, not just by the trains that haul the grain.

Thursday, 14 April, 1983 HON. B. URUSKI: If, as you say, that the people of Canada should pay the railways for their operating costs or compe nsatory rates on the basis of your definition and as noted the people of Canada should also pay towards the capital investment of the railways or for the tunnels and the boxcars, who should get the benefits of that inv estment into the railway companies if the Canadian taxpayers are expected to put those funds into the railway? MR. CHAIRMAN: Is the question clear, Mr. Hamilton? MR. R. HAM IL TON: Not exactly. MR. CHAIRMAN: Perhaps I could ask Mr.

Uruski to pose it again, ple ase. HON. B. URUSKI: If the people of Canada are to put up the money for the tunnels, boxcars and capital that you say is not part of the operating costs, who should get the benefits in terms of the return on that investment that they put in? MR. R. HAMIL TON: Mr. Uruski, I feel that the people of this country should have a railway just as we should have an airline or a shipping system and so on. MR. CHAIRMAN: Mr. Mann ess. MR. C. MANNESS: Thank you, Mr. Chairman. Mr.

Hamilton, I'd like to pursue a little questioning on the rationale you've used to determine your cost of shipping in 2001. You indicate that your freight rate today is 19 cents a hundred weight, which by my calculation makes it 11 .5 cents a bushel for wheat and roughly 9.5 cents for barley. If you divide that into the total num bers that you have presented to us in paragraph 4, you would come out with a factor of some 16 times Crow.

Now, the only information I've seen that is projected to 2001 was presented in the Manitoba Co-operator dated March 31s t, and they make the assumption that possibly using the full rates of inflation, the Crow would be multipl ied by twelve and a half times, so maybe you can tell me why there is that difference. But I'd be more interested to know how you can justify the fact that starting in - particularly as a Pool member, and by the way, I'm a Pool member also - how in the 1930s the rate of elevation that was charged by Pool, and indeed by all elevators, was some 1 cent a bushel.

Today it's roughly 20 cents a bushel. The freight rate in the 19 30s was 11 .5 cents a bushel by your own calculations from Swan River and today it's still 11. 5 cents. Using the extension of those figures and applying the same 16 times factor to elevation as indeed you have to your present cost of transpor tation, would have you paying an elevation in your own Pool Elevator and, indeed, in my own Pool Elevator of $3.20 a bushel in 200 1.

Can you tell me how the farmer of the day will be able to pay that cost of elevation and I guess it then begs the qu estion what can we ha ve the government do about our own elevator companies to ensure that they maintain proper costs? MR. CHAIRM AN: Mr. Hamilton. 73 MR. R. HAMIL TON: Are you comparing the cost of operation of a grain company to the freight rates? MR. C. MANNESS: Well, I guess I'm trying to determine the cost of hauling a bushel versus handling a bushel and the net impact that it has on your income and my income as farmers.

I suppose all I did was applied the same inflation factor that you used in your elevation and I've somehow come to $3.20 to elevate and to put into a car, the bushel of grain in the year 2000. I'm wondering how we are going to be able to meet that particular charge against our operations? MR. R. HAMIL TON: I hadn't heard that elevation charges were going to escalate at that amount to that date. I would like to point out to you that Manitoba Pool Elevators is a grain company, they don't get any subsidy at all from the Federal Treasury. MR. C. MANNESS: Well, Mr. Hamilton, I would hope it would not be that rate.

All I've done is always used the same rates of inflation that Manitoba Pool Elevators have assumed will occur for the next 17 years out in rail. In other words, whatever rates of inflation apply to rail movement and rail costing, would obviously apply to grain elevation. So I haven't attempted to bring forward any new information. Now you say that maybe we, as farmers, have to look at elevations in a comp letely different light. That may very well be, but the net effect of paying 20 cents a bushel today in eleva tion, and maybe $3 dollars 15 years from now, has the same impact upon our net income posi tion.

I'm wondering if you accept my argument and if you don't maybe you could tell me why. MR. R. HAM IL TON : No, sir, I don't accept your argument. The figure that I have given you on what it'll cost us to ship a bushel of barley by the year 2000 - I don't know what that has to do with inflation. I didn't mention inflation. This is just the cost that Manitoba Pool assures us that it's going to cost us, according to the figures brought out in the Pepin proposal. MR. C. MANNESS: Well, Mr.

Hamilton, let me assure you that in deed the biggest reason for the 12.5 or the 16 times Crow figure that we seem to be using relatively loosely in our discussion here, is indeed, inflation. That's the major factor - 3 percent over the next three or four years and then after that 6 percent, and you start compounding that numb er over the years, and you very quickly arrive at the 12.5 times Crow figure that indeed the co-operator has seen fit to put into your March 31s t edition. So I say to you that inflation is the major cause for the inc rease in perspective, or the estimated incr ease in freight rate. MR.

CHAIRMAN: Do you have a further question, Mr. Mann ess? MR. C. MANNESS: No, again, I'm just wanting a comment from Mr. Hamilton. If not, fine, we'll leave it there. MR. CHAIR MAN: Any comment on that remark then, Mr. Hamilton?

Thursday, 14 April, 1983 MR. R. HAM lLTON: Nothing further. There seems to be disagreement here on what's inflation and what's projected charges. MR. CHAIRMAN: Thank you, Mr. Hamilton. Mr. Usk iw. HON. S. USKIW: Yes, I'm interested in your suggestion, Mr. Hamilton, that you want the grain moved and you want adequate service in moving your grain to market, but you want the railways to get full compensation for moving it, based on a profit rate and you want the taxpayers of Canada to pay for it. I'm trying to understand that scenario.

In bringing forward to you the problem I have with that proposition, I have to note that CN and CP, according to Jean-Luc Pepin, are going to spend $16 .5 billion in improving the railway system throughout Canada, of which $9.5 billion - that's over a 10 year period - will be spent in Western Canada, $4.5 billion in Ontario, $1. 4 billion in Quebec, and $1.1 billion in the Atlantic Region. That's based on the assumption that Crow will be changed and the economy will improve - those are their figures.

The revenues they're going to receive from cha nges in the Crow on gr ain transportation are $1 3.3 billion in that same period, which is $9.4 billion more than they would receive for hauling your grain over the present rate that they get for hauling grain - that's over Crow. Now, they argue that the expansion of rail capacity in Western Canada has to do with the grain industry and the fact that it is going to increase its production. Statistically the projections show that grain will only represent 16 percent of added production of bulk commodities in Western Canada. lt will be moved in the next decade.

Eig hty-four percent of expansion is related to coal, potash and sulphur , which means that of this $9.4 billion of railway expansion in Western Canada, under the changes proposed, the farmers will be putting up $4 billion over that 10 years, which is 42.5 percent of Capital Expenditures of CN and CP, and the Government of Canada, which is the taxpayers, will be putting up $5.4 billion. MR. CHAIRM AN: Do you have a question, Mr. Uskiw? HON. S. USKIW: Yes.

My question has to do with the fact that 99 percent of these railway expansion costs are going to be paid for under this package by the farmers of Western Canada and the taxpayers of Canada, which means that the railways will only be putting up 1 percent of the cost of expansion out of their earnings. Therefore, how can you arrive at the proposition tha t the taxpayers should further be burdened with picking up the entire incr eased cost of transportation for grain. Shouldn't we be looking at grain prices as somehow being adequate to pay for incr eased transportation costs from time to time?

How can we justify loading this kind of burden on to your friends and your neighbors who work in the stores in Swan River, who work in the highway department yards in Swan River, who pay income taxes? How can we ask them to pay the bill for transporting grain as opposed to asking the railways to finance a good chunk of this out of the earnings of the movement of coal, potash, and sulphur which is 84 percent of new capacity requirements? 74 MR. R. HAMIL TON: lt was a pretty large question Mr. Uskiw.

I would hope that wage earners in Swan River, and other centres would not have to pay a cent more in paying the compensatory rate. We have a great deal of natural resources in this countr y. There's a great many ways for the federal treasury to raise money without taxing the wage earner any more. HON. S. USKIW: Are you not aware that CPR is a compa ny, or CP, which owns large coal deposits in British Columbia, which are going to be developed and which require this upgrading and transportation? MR. R. HAMIL TON: Yes, sir, I've heard that many times. HON. S. USKIW: Well, that is a matter of fact.

The question I'm putting to you again is why should the taxpayers be asked to upgrade the railways in order that CP can move its coal at minimum cost to get that coal shipped out to Japan and why should the Canadian farmers do that? MR. R. HAMIL TON: No, I'm not saying the taxpayers should pay it. I'm saying the Canadian farmers should not pay it definitely. HON. S. USKIW: But you did say you want railways to receive a compensatory rate. Then that must mean that your compensatory rate must be different from that which is recommended by Sna vely. Would that be a fair assessment? MR. R.

HAMIL TON: Yes, it certainly would. I have disagreed with Mr. Sna vely for a long time. HON. S. USKIW: Okay, that answered my question. Thank you. MR. CHAIR MAN: Thank you, Mr. Uskiw. Are there any further questions from members of the committee? Seeing none, Mr. Hamilton, on behalf of the committee I'd like to thank you for making your presentation here today. The next presentation is on behalf of The Pas Chamber of Com merce, Mr. Don Lindsay and Mr. Bob Seidel. MR. D. LI NDS AY: Well, Mr. Chairman, we are representing The Pas Chamber of Commerce, so we'll get right to the point here. MR.

CHAIRMAN: Sir, could you speak up just a little more please, or pull the mike a little closer. MR. D. LINDS AY: The Pas Chamber of Com merce wishes to go on record here as opposing totally the Pepin plan to abolish the Crow Rate, and following we list our reasons for this stand: 1. Since our grain is the largest annually renewable resource of our countr y, we consider its transportation a national responsibil ity, rather than a farmer-oriented one. 2. There is no provision in the Pepin plan for tying the price of transportation to the world market price

Thursday, 14 April, 1983 of grain and could thus easily wipe out the entire returns from our grain sales as we experienced during the '30s when cattle and grain prices were often less than the freight bill to market. 3. Nowhere in the plan is there any mention of the Port of Churchill. At the present, excl uding rail shipping costs which are about the same for both destinations, it costs us $4.94 per tonne for cleaning and elevation fees loaded on the boat at Churchill. The same fees are $4.35 per tonne at Thunder Bay but with the St.

Lawrence Seaway tolls, lake shipping costs, extra loading fees, fuel, etc., it costs us $21 .29 per tonne loaded on the ship at Montr eal which is still some 11 00 miles or 18 00 kilo meters from European ports. If the Crow Rate is dropped, Churchill could lose the protection of equal treatment. This is what happened in the Uni ted States where railway companies charge varying per-mile rates. Farmers who presently earn more by shipping through Churchill, because it is a shorter transportation route to Europe, may be charge excessive rail rates in order to force them to ship their grain through another port. 4.

If the freight rates are incr eased as projected in the Pepin-Gilson plan, it will become less expensive to ship Canadian grain through U.S. ports such as Duluth or New Orleans than thr ough Cana dian ports, th reate ning Canadian jobs in handling and transporta tion. 5. The Manitoba Pool Elevators have presented alternatives which are far more accep table. They are as follows: The government payment for the shortfall and any additiona l costs for which the government ha s respons ibility should be paid directly to the railways.

Payments would be based on volumes moved and would be subject to satisfactory performance. The upper limit of 31.1 million tonnes should be removed. Any incr eased sales will benefit all Canadians and produc ers should no t be discouraged from increasing production. All grain crops should qual ify for the statutory rate. This is the simplest and cheapest way to elimina te discrimination between crops. The producer would be protected from freight cost incr eases which become prohibitive in the event that grain price levels are inadequa te.

The gov ernment should maintain its previ ous commitment to the branch line system which has been declared necessary and protected until the year 2000. The freight rate structure must be strictly controlled so tha t the producers, grain companies, and communities· are not threatened by a discriminatory rate structure which would drastically re-shape the grain handling system. 6. A letter from an Edmonton MP publis hed in the Open Forum of the Western Producer, March 24, 1983, quotes a government ad placed in the Montr eal Star and headed, "The Crow Goes Without a Flap".

The governmemt of Canada recently put a full-page ad in the Montreal Star at a cost of about $4,500 celebrating its controversial policy on the Crowsnest Pass grain freight rates.

"The Crow Goes Without a Flap," the ad began and went on to tell readers how the new policy will not favour Westerners, and quotes again, "Hi gher transportation costs," the ad trumpeted, "will prevent Western pork and beef producers from 75 bec oming more com petitive with their eastern count erparts in their traditional markets." El sewhere it implied, not very subtly, that western producers might in effect be penalized by "possible corrective measures if the program is detrimental to eastern farmers." This was written by David Kilgour the member of Parliament for Edmo nton-Strathcona, Edmonton, Alberta.

Thus it can be seen that Mr. Pepin is telling western livestock producers they will gain by the abolition of the Crow. At the same time he is telling eastern producers that the West will not be allowed to gain any advantage. 7. The Pepin-Gilson formula demands the western farmer give away something gua ranteed him by statute in return for absolutely nothing but a vague concept that he will get a more efficient grain handling system. Experience has taught us that the most efficient systems can be totally paralized by events beyond our control as in the case of labour disputes at the west coast recently. 8.

The snowball effect of inflation in such farm necessities as machinery, fertilizer, fuel, etc., and interest rates, are things over which a farmer has no control, but these factors have already placed him in economic jeop ardy. Another uncontrollable and rising cost could well imperil his survival, as he must compete in a world market which dictates his returns while operating in a domestic climate that is not playing by the law of supply and demand. That is something that seems to die at the farm gate on the way out. MR. CHAIR MAN: Thank you very much, sir. Your name is? MR. D. LINDSAY: Don Lindsay. MR.

CHAIR MAN: Okay, and the other gentleman then is Bob Seidel. Just so I can keep you straight when the questions start coming. I take it either one of you will answer the questions depending on the nature of the question? That's why you're both here? Okay, members of the committee, any questions for either Mr. Lindsay or Mr. Seidel? None? Mr. Plohman. HON. J. PLOHMAN: Mr. Chairman, I want to thank the gentlemen for their excellent brief and particularly for the concerns that they raised about Churchill.

I agree with those concerns that you have raised about Churchill and what effects the Pepin proposal would have on Churchill. Would you also agree, though, that the variable rates would also have a detrimental effect on communi ties? Would you agree with the first presenter, Mrs. Minish, when she said that it would have a devastating effect on rural communi ties and farmers in these commun ities and I think extrapolated from tha t on busine sses and empl oyment in rur al communities, would you agree with that? MR. CHAIRMA N: Mr. Seidel and Mr. Lindsay. MR. D. LINDSA Y: Yes, I would agree with that. HON. J.

PLOHMAN: I wonder whether you could elabo rate on how the variable rates would affect the community of The Pas or areas around The Pas? Are

Thursday, 14 April, 1983 there branch lines there that could be affected by variable rates? MR. CHAIRMAN: Mr. Seidel. MR. B. SEIDEL: We just have the one main line we wouldn't be affected that way. HON. J. PLOHMAN: Would your reference then to the concerns that you have about rural communities be more to other commun ities in the Province of Manitoba as opposed to The Pas? MR. B. SEIDEL: Yes. MR. CHAIR MAN: Further questions? Mr. Manne ss. MR. C. MANNESS: Thank you, Mr. Chairman. The presenters ha ve jus t indi ca ted in ans wering Mr.

Plohman's question that indeed variable rates and large incr eases in freight rates would have a very negative im pact upon commun ities such as The Pas. I'm wondering if they would also agree though that in the year '78-79 when Western Canada carried over roughly $2 billion worth of grain they could not move to market because of a transportation system that was not adequate, that indeed that has a negative impact on commun ities in Western Canada, including The Pas also? MR. CHAIR MAN: Mr. Lin dsay. MR. D. LIN DSAY: Well, it would have an effect, yes. We'd have to do our own storage. MR. CHAIRMAN: Mr. Mann ess.

MR. C. MANNESS: That's fine, thank you. MR. CHAIRMAN: Mr. Uskiw. HON. S. USKIW: Yes. Would it be fair to describe your submis sion as one of supp orting Ma ni toba Pool position? MR. CHAIRMAN: Mr. Lin dsay. MR. D. LIN DSAY: A good bit of it would be, yes. HON. S. USKIW: You wouldn't want to elaborate where, if any, you differentiate or deviate from the position of Manitoba Pool? MR. D. LIND SAY: I'd have to look at that for a moment. These alternatives, I might add, are not necessarily a good thing either. The statutory rate of the Crow, if it remains, would be better. MR. CHAIR MAN: Mr. Blake. MR. D. BLAKE: Yes.

Just in the final or the seventh paragraph in your presentation, Mr. Lin dsay, you mention the experience has taught what we can expect with the most efficient handling system that we can devise that experience has taught us that these systems 76 can be totally paralized by events outside of the control and I'm sure you're referring to labour disputes. I take it from that, that you would be in favour of considering the transporation of grains as a national renewable resource and should be protected, or movement should be guaranteed in some way. Could you elabor ate on that? MR. D.

LIN DSAY: My own belief in that is, that it is a national problem and should be handled national ly. The taxpayers of Canada have got a great deal more clout than the farmers. MR. CHAIR MAN: Mr. Downey. MR. J. DOWNEY: Thank you, Mr. Chairman. I'm pleased to note ... MR. CHAIR MAN: Mr. Downey, would you use a mike please? MR. J. DOWNEY: I'm pleased to note the mention of Churchill and the support for the Port. The area of The Pas is pretty much - I guess I'll ask the question directly - does the majority of the grain from The Pas now go through the Port of Churchill? MR. CHAIRMAN: Mr. Seidel. MR. B.

SEIDEL: Some of it goes that way but our wheat and barley goes east and our rapeseed goes west. We do ship some carloads of wheat and some carloads of barley up there but it doesn't all go up to Chur ch ill. MR. J. DOWNEY: What is approximately the total grain production in The Pas area now in the Saskeram area? MR. B. SEIDEL: Last year it was 1. 3 million bushels. MR. J. DOWNEY: Mr.

Chairman, The Pas Chamber of Com merce may want to or may not want to comment on this. lt is my un derstanding - and this would have a direct relationship to the Crow rate and to the amount of grain that would come out - if the Saskeram area were to be developed for agriculture and the land base incr eased by some several thousands of acres that have identified agricultural capabil ity, would that have a bigger impact on the development of the whole The Pas area and the grain producing, the amount of grain that would be available to go out the Port of Churchill and the total agriculture and community development?

MR. B. SEIDEL: Yes, I believe we could triple our output, yes. MR. J. DOWNEY: In other words, the Chamber of Com merce feel if the whole Saskeram and all of the potential agriculture acres were developed you could triple your grain output which would have a major impact, it's correct, would have a major impact on the whole community growth and as well the potential output of grain that could go through the Port of Churchill, so that as well would be one of the priorities that your Chamber of Commer ce would see take place.

Thursday, 14 April, 1983 MR. B. SEIDEL: That is correct. MR. J. DOWNEY: Thank you. MR. CHAIR MAN: Mr. Harapiak. MR. H. HARAPIAK: it's unfortunate that Mr. Downey didn't realize the potential of Saskeram when he was the Min ister of Agriculture and he has also pre-empted many of my questions. The Communi ty of The Pas was lin ked at one time very closely as a transportation town and it has, in recent years, gone down from where it was as a railroad terminal.

If there were variable rates, do you think that commun ity probably would be in a position to benefit, to handle more grain because of its location to the seaport? MR. B. SEIDEL: You mean if it would handle any more? MR. H. HARAPIAK: Yes. MR. B. SEIDEL: I think that if it was upgraded, yes. There would be more grain going up through the Churchill Port. Does this answer your question? MR. H. HARAPIAK: Has there been upgrading carried on on the Churchill line in recent years? MR. B. SEIDEL: There has been some upgra ding, but it isn't finished.

We can't use the hopper cars. lt is not upgraded enough to use hopper cars yet. MR. H. HARAPIAK: Has the Chamber of Comm erce submitted any briefs or made any presentation to support the improvement of the Churchill line? MR. B. SEIDEL: Not lately, to my recollec tion. MR. H. HARAPIAK: The view of the Chamber of Comm erce that you have put forward here, is that consistent with the view of the other Cham bers of Comm erce in the Province of Manitoba? MR. B. SEIDEL: I believe the Winnip eg Chamber of Commer ce has different views, but all the farm areas certainly have had the same views we have. MR. CHAIRM AN: Mr.

Blake. MR. D. BLAKE: Mr. Seidel, The Pas Chamber of Commer ce, I imagine, are members of the Hudson Bay Route Associ ation and the Hudson Bay Rout e Association has vigorously over many, many years, all the years that I have been associated with the Chamber of Comm erce movement, supp orted the development and the upgrading of the line to the Port. Would that be correct? MR. B. SEIDEL: Yes, that's correct. I have sat in the Chamber on the executive up there for 21 years now and I think we've supported it every year. MR. D. BLAKE: You have my full support too on that. Mr. Seidel. 77 MR.

CHAIRM AN: Any further qu estions from members? Mr. Gourla y. MR. D. GOURLAY: Mr. Chairman, I had a couple of questions regarding the production of the area and also just how much grain was being shipped to the Port of Churchill, but you have already answered those questions. I would just like to go on record as thanking Bob and Don for taking the time to come this far to make their presentation today. I think they've contribu ted a very good brief to the comm ittee and I would thank them for their efforts. Mr. Blake had mentioned about the Hudson Bay Route Association and their tours to the North.

Are they still being hosted in The Pas and toured in the area, or is that no longer taking place? MR. B. SEIDEL: They're sort of passing us by. They are still making tours, but they're not stopping at The Pas anymore. MR. CHAIR MAN: Further questions by members of the committee? Seeing none, Mr. Lindsay and Mr. Seidel, thank you very much for your presentation here today. The next individual on our list is Mr. Leonard Harapiak, private citizen. Go easy on him, Harry. Please proceed. MR. l. HARAPIAK: Thank you, Mr. Chairman.

I am ple ased to ha ve this opp ortu nit y to ma ke a few comments respecting this crucial issue. Just to give you some backgrou nd in formation in tha t I am presenting this as a private citizen, I am a farmer from the Cowan area. Our family farms approxima tely 1, 000 acres in grain and we run a cow-calf operation of approxima tey 100 head.

I present this brief as an individual rather than a representative of an organization, but as has already been evident to me in listening to the presentations and as will become evident to you, there is a degree of overlap between my concerns and those presented by organizations opposing the Pepin proposal to replace the statutory Crow rate. In opposing the Pepin proposal, I am concerned about the impl ications for my own family farm and for the family, and I am concerned about the impl ications for the future of rural communi ties.

In following the material related to this issue, I was particularly concerned about one of the opening sentences in the february 1st statement on the Western Transportation Initiative. I would like to quote that. "The government expects that its decision will provide a major stimulus to economic development in the 1980s and beyond." I am not opposed to this major economic stimulus. However, as a farmer, I guess I have to question what the main purpose of that entire exercise is. If it is to create an economic stimulus, I am concerned that it is being done at a price that the farmers can ill afford to pay.

I have a strong feeling that agriculture is the mainstay of the economy of Manitoba and, indeed, of the prairies. I am not convinc ed that a large - or perhaps I should reword that and say that I am concerned that there are many people who don't appreciate sufficiently the role of agriculture in providing that building block

Thursday, 14 April, 1983 from which so many other things develop. Perhaps it's because only 3 percent to 4 percent of the Canadian popu lation - I'm speaking there of the Canadian population as a whole - is involved directly in agriculture as a primary industry. lt is perhaps because our num bers are so small that we are politically vulnerable and that our concerns are not heeded to as much as we would like. We are aware, and I'm sure you are aware from the discussions that you have had, as to what is happening to net farm incomes.

We have seen them declining and the projections for the coming year are not at all encouraging. Costs are up in virtually all areas and prices are down. Farmers are facing a very difficult short-term future, short-term at least. Farmers, it seems, are eternal optimists and I personally am optimistic about the long run, and sometimes I wonder whether that optimism is well-founded in fact or whether it is out of a hope for survival that we say that there has got to be a better future. The proposal calls for increases in transportation costs which have already been referred to.

I am concerned when we tal k about the transportations costs, the increases, that they would appear to be relatively small when we talk about the gross figures or the net figures. The net figure, the net cost to the producer - if you want to talk in terms of bushels - apparently the net average increase will be something in the range of 10 cents per bushel for 19 82 and 1983.

However, I thin k it should be kept in mind that the actual cost, the gross will be much larger, and that will, in fact, if the proposal goes through from August 1st, there will be a much more sign ificant deduction and I'm not sure of what the mechanism will be to reimburse the farmers if, in fact, that happens. So that particularly in this period of time, where farmer are facing very tight cash flow situations, I thin k it is much more critical than looking just at an incr ease of 10 cents per bushel for 1982 and 19 83. For 19 85-86 the net figure will have doubled.

So I think what I'm saying there is that people should be clear in trying to address this, that there is much gr eater signif icance attached to tal king about a percentage increase on the compen satory rate, which may not appear that large, but when you convert that as a percentage incr ease to the current rate that we are paying, it is a much more serious situation. Then, of course, as other people have mentioned here today, beyond 1986, it looks much more ominous, but yet, it's not clear even from the government's own statements - what happens beyond 1986 is not clear.

I notice from following the proceedings of the debates in the Provincial Legislature, that that is one point on which there is a lot of common ground, a lot of common thinking, that there is a great deal of uncertainty beyond 19 86. Mr. Hamilton made reference in his presentation to some of the increases, and I just want to make reference to what has been quoted from other sources by 19 90 and 19 91. The compen satory rate is to be 9.2 times Crow and the net cost will be 5.5 times Crow. Earlier , in discussions today, there was some question as to preferences as to how the payments would be made.

I have some difficulty in addressing that because that seems to concede the fact that there will be some sorts of revisions. But certainly, if it came to the point of 78 distribution of these, my preference would be that they not be made to farmers, because I don't think that what we are looking at is a subsidy for farmers but, in fact, a subsidy to fulfill a shortfall in an agreement for transportation of grain which was entered into some time earlier.

I think it'll be viewed by people as another subsidy to producers and I think in many instances, it is difficult to separate what is actually a producer subsidy and a consumer subsidy. We already have some difficulties in those areas. I have some difficulty, as well, with one portion of the proposal which deals with a ceiling of 31.1 million tonnes, as far as being the limits to which these rates would apply, and everything in excess of that, we would have to pay the full compe nsatory rate.

This is of particular concern to me, in that there are a num ber of people who are suggesting that we should really look at this in a more open way, because by an expansion of the railway system, we will have the opportunity to move a great deal more grain. Now I can see that there is need to look for incr eased production and expand the world markets, but we have to keep in mind that we have very nearly reached that level at this point - 31.1 - so that any incr eased production beyond this date would really be transp orted at the full compen satory rate.

I think it also ties into the concern I have that - you know I think we, as farmers, have done a great job over the years in becoming more efficient and producing more. But I think there may be the expectation out there that if the farmers are squeezed a little harder, they will simply produce more. I'm not sure that that is the only answer that we should accept; that the solution to this problem is to produce more and just consider volume in isolation of all other matters.

The prospe cts for diversification in agricultural production in Western Canada concerned me as well, and I think it was well addressed by the people from The Pas, when they indicated that there seems to be a different posturing in both Eastern and Western Canada. I am a beef producer at the moment and I guess I have some difficulty in becoming excited about incr eased levels of production when I have to sacrifice, or to give up a very attractive - I must admit - rate on transporting grain.

But in order to have that incr eased opportunity to raise beef, I have to sacrifice in another area and I have a concern about where will this beef production go? Because we already know that we are facing a very difficult market situation. You have to question the sincerity of the Federal Government in this whole matter when, in fact, they are saying to us in the west, we will have the opportunity for incr eased production; and they are saying in the east, very openly with ads in the newspaper, as has already been indicated that, don't worry, we will see that you don't lose your share of the market.

Well, I just don't think it's possible to have it both ways. I would also just briefly like to state that I am opposed to a variable rate structure, because I have the concern as to what this will do to the structure of our elevator system and, in turn, how it will im pact on rural communities. I have a fear that an implementation of a variable rate program would see the decline in the viability of small rural communities. I think we should also keep in mind that this proposal, if it goes through, will see a very significant tran sfer

Thursday, 14 April, 1983 in buying power from the prairies. lt will see a reduction in the net income of farmers, and as a result of that, you have a negative multiplier effect which is going to take place. I think we have to be careful in that we are not taken in too much by the prospect of the capital projects. There certainly is going to be a benefit from some of those but I am concerned that the attraction of the capital projects will be fairly short-term, but the negative effects of incr eased transportation cost will be there in the long term.

We have to keep in mind that in a multiplier effect of something in the range to two or four occurs for incr eased agricultural production, so I would suggest that if there is a reduction in net income for farmers, that there will be a similar negative multiplier effect. So that the cost that has been referred to - I'm not sure what the total projections are for the province - but I think that rather than just taking a look at the loss as the incr eased cost, the loss to the gross domestic product would be, I would suggest, something twofold more accurately.

As has already been indicated in one of the earlier presenta tions as well, there seems to be a discrepancy or an unfairness in the concerns in the proposal for the fair return to the railways, without similar concern - at least it's not evident to me - for a fair return to the farmers. One of the statements says that it is imperative that railways receive adequate compensation for transporting grain. As I said, there's no expression for a concern for adequate compensation for farmers.

I guess I, personally , could be more receptive to the proposal if it included a compensatory rate for more agricultural products - some products are now close to that. I would like to, in closing, congratula te the Legislature for showing some - well, let's say perhaps reserved co­ operation in putting forth this resolution. I've had the opportunity to review the debates in the Legislature.

I guess I would have hoped that there would have been a higher level of commitment to retaining the Crow, but I think I can appreciate the strategy right now that despite the differences that exist, the main effort has to be to stop the Pepin proposal So in closing I would ask the committee to conv ey a strong message to Ottawa to stop this plan. The impact will be devastating on the majority of producers, and will have a negative effect on rural commun ities and urban centres in Western Canada. Thank you. MR. CHAIRM AN: Thank you, Mr. Harapiak for your presenta tion.

Are there questions from members of the comm ittee? Mr. Harapiak. MR. H. HARAPIAK: You mentioned in your presentation that there's only 3 or 4 percent of people who are directly involved in agriculture and it's a widely accepted figure that for every dollar that comes out of the agricultural field, it creates $7 - do you not think then that many of our brothers who are emp loyed in our surrounding commun ities are employed because of the agricultural base and should they not be, as taxpayers, willing to share some of the transportation costs of grain? MR. L.

HARAPIAK: Well, I agree as I said in my presenta tion, that agriculture is in a sense the mainstay 79 of the economy and it is the building block from which a great deal else happens. All I have to do is speculate what would happen here in Swan River should we, by some stroke of a pen, remove the agricultural component of the valley. lt would be a much much different community with many fewer opportunities. So yes, in that there are benefits that accrue in that direction I would hope that people would not be opposed to making a contribution through the public purse to a transportation system. MR.

CHAIR MAN: Further questions. Mr. Uskiw. HON. S. USKIW: Yes. How would you recommend, or what would you recommend that might be done in order to bring about a dropping of the present proposal on the part of the Government of Canada? What is in your opinion a method that might achieve that objective? MR. L. HARAPIAK: I'm glad that I have the opportunity to address that. But without wanting to shirk any responsibili ty that I as a private citizen might have, I have to say frankly that I think it rests in the court of the politicians because it is a political issue in its origin, and it'll be a political resolution.

So I think that though we all have a role to play in it the main impact in Ottawa will be felt from people such as yourselves. I think that you have a much larger role. You are much more visible and I have to suggest to you that they will listen to you to a much greater degree than they will to myself as an individual, or perhaps even an organ ized group from the rural commun ity. HON. S. USKIW: Well, that statement of yours does concern me somewhat because what you are suggesting is that the politicians know the answers and that they have the responsibil ity.

The politicians will reflect what they think is out there in the countryside and if you're talking in terms of liberal politicians representing the Government of Canada they don't have very many ears out in Western Canada that are politicians and that presents a real problem. Outside of two urban members in Winnipeg they don't have a single member representing farm commun ities in the prairie region. So I'm worried about that analysis and that formula to turn this question around.

The Mini ster of Transport for Can,da when he annou nced this decision - and that's a very key word, decision - he said the decision was already made, all we're going to do is develop a means of doing it. That's what the announc ement was. He didn't ask us for our opinions. He said the decision has been made. But we now have to negotiate with the farmers and their organizations on how to do it. So don't talk about whether we're going to do it or not, talk about how we're going to do it. That was the context in which it was announced.

He also said that the provinces would not be inv olved - that was his decision - that he would inform us but not consult with us, or not negotiate with us, so my question comes back to Squa re One. Given the fact that the politicians are, by Pepin's own statement, that his politicia ns other than those in the House of

Thursday, 14 April, 1983 Commons are excluded from this process by his unila teral decision, how then can we achieve a turnaround on this question before it is too late? And too late is June 30th. That's the date at which this is either going to be law or not law. MR. L. HARAPIAK: Well, to suggest to you that in the time frame that you've allotted me from when you posed the question until I get a chance to respond that I could come up with an answer which people have been struggling with for a couple of years, I think they're exaggerating things somewhat.

But I would say that certainly , I think one of the comments that Mr. Pepin made, and I think the Prime Minister of Canada made, is that they would not proceed unless there was consensus. But that's a rather vague term as to how you define consensus. I think what we have to do and I'm pleased, I must say again, I'm pleased that there is a degree of consensus within the Legislature here and also in Saskatchewan. I can't help but think that it has some impact even though he may have decided that you people should not be involved directly. I don't think that he can ignore that.

Again, I want to say that I think, without sounding disrespectful, I agree that politicians don't have all of the answers. I think that is your purpose in coming here, is to find out what the people in the commun ity are thinking. But having had that input I still maintain that in terms of conveying that, we certainly have to rely to a large degree on people in public office. HON. S. USKIW: Well, my last question is, would you not believe that it would be much more productive if farmers through their organizations were able to present a unified position on this question?

I'm talking about farmers who are going to be directly affected and who are producers of grain in the prairie region? MR. L. HARAPIAK: Absolutely. MR. CHAIRMAN: Mr. Plohman. HON. J. PLOHMAN: Mr. Chairman, much has been said here today and at other hearings, and has been stated often that people have talked about the negative effect, and the word used today was a "de vastating" effect that the Pepin proposal, if implemented, would have on rural commun ities. I know that you feel strongly about maintaining viable rural commun ities.

I believe we would agree that many farmers are in a critical situation today financial ly, and can ill afford additional costs that would be thrust on them with the Pepin proposal, if it was implemented. I don't know whether we're overstating that fact. I have a concern about that and I am wondering, would you think it would be using too strong a word to say that the Pepin proposal, if implemented in its present form, would have a devastating effect on rural commun ities, on the emplo yment situation, on bankru ptcies and so on. MR. CHAIRMAN: Mr. Harapiak. MR. L.

HARAPIAK: I would agree with that, and I want to elaborate on it, because I think you people are well 80 aware of what is happening without the proposal being implemented just during this period of time when it's being discussed. There is a lot of attention being given in the media to the difficult situation that farmers are already facing. Now, if this move is implemented, I think we would all agree that in the short term, certainly it is going to have a negative impact on net incomes and on cash flows. So that can't help but accentuate the problem. MR. CHAIRMAN: Mr. Downey. MR. J. DOWNEY: Mr.

Harapiak, I think it's important to touch somewhat on the process and the comments you made about the politicians and their responsibili ties. I will ask you the question and you can respond and make comment on it if you care to or not. But I will ask you if you are familiar with some of the happenings up to the current time, particularly you being a farmer and aware of the past grain movement in this country where, some time about 19 79, approximately half the grain was left on the prairies at the end of the crop year.

One of the major things we were hearing coming across the news wires was that the Canadian Wheat Board has identified millions of dollars worth of sales, that they were unable to get the grain to those markets, and that there was a shortage of rolling stock, and that there was just a breakdown in the total system.

Are you aware of the fact - you could concur or disagree, it's your prerogative - that there was an initia tive started to solve the short-term difficulties here in Mani toba, which in fact encouraged the development of Prince Rupert; which encou raged the purchase of hopper cars by Saskatchewan, Alberta, the Canadian Wheat Board, the leasing of hopper cars by Manitoba; and in the short term resolved some of the problems that were facing Western Canadian grain farmers?

During that particular process, there was involvement by the labour people, the grain companies, the railroads, the Federal and Provincial Government, regardless of their political stripe, but there was a positive step being taken to get on with the job of moving grain.

At the change of government, when the now Minister of Transport was appointed, that he in fact continued to carry on with a lot of the negotiations and discussions, but in fact did leave the provincial governments, as the Min ister has indicated the provincial governments were not invited to participate in negotiations and discussions even though there were quite a few millions of dollars being committed by Saskatchewan, by Alberta and in fact by Manitoba, and by the farm community through the Canadian Wheat Board dollars.

So it was very difficult for the provincial governments, whatever government it was, to have a direct influence during those negotiations. As well, Mr. Chairman, to Mr. Harapiak, I believe, and I will ask him directly the question, that he was invited as a farmer or whatever - I think that's what he said his occupation was - to or the farm community was invited to, as a private citizen, make representation through a written document. I don't think that he would have a chance for an audience, but he had a chance to provide in writing to Dr.

Clay Gilson his thoughts on the proposals or the kinds of changes or the kinds of initiatives that might be useful to the changing or the

Thursday, 14 April, 1983 process that was involved. Given the fact that the provin ces were not, and wher e all pol iticians representing provincial constituencies could have done the same thing, but it would have been, I think, through tradition a cou rtesy on the part of the Federal Government to involve the provinces. But the question more directly is, did you sit down and write a proposal to Dr. Gilson so he could have had your thoughts in the negotiations that were taking place? MR. L. HARAPIAK: I did not. MR. J. DOWNEY: Thank you. MR. CHAIRMAN: Further questions? Mr. Uruski. HON. B. URUSKI: Mr.

Chairman, could I ask Mr. Harapiak, in this whole debate that is going on dealing with the Crow and the changes in the statutory rate, has the debate turned into a direction as to an attempt to pit the Canadian taxpayer against the farmers of Western Canada about who is going to pay? MR. L. HARAPIAK: I don't sense that. HON. B.

URUSKI: If the Government of Canada, and by their own admission have indicated that, and the railways have indicated that they are going to invest, by announc ements at the same time that Pepin made his announcement, that they're going to invest, both CN and CP, just under $3 billion of additional investment in Western Canada by the end of 1987, and the Government of Canada is going to put in to the railways or on behalf of the Canadian public over almost $4 billion of investment to offset some of the losses that the rai lways say that they have sustained as a result of moving grain, is it your impression that what may end up is that the people of Canada, all the taxpayers of Canada, will end up paying for all the capital improvements of the railways with virtually no cost to the railways over the next number of years in the expansions that they say they are going to make?

MR. L. HARAPIAK: I think some of the comments that have been made and I think some of the comments that were indicated here today - if I can recall the Mini ster of Transporta tion's figures accurately - it was going to be done at very little cost to the railway. HON. B. URUSKI: Just one more question, do you know what the average cultiv ated acreage per farm in the Swan Valley area would be approxi mately? MR. L. HARAPIAK: I would guess that it would be in the range of 600 to 700 acres. I cannot indicate that's quoted from a particular source. That is my own impression just in discussions with people.

I would say to 600 and 700 acres. MR. CHAIRM AN: Further questions? Mr. Manness. MR. C. MANNESS: Mr. Chairman, I would like to ask Mr. Harapiak about the comment of his that he is concerned about the future of rural communities.

Putting it into a 20-year or 30-year perspective and 81 having seen what impact that rail line abandonment may or may not have had on some communi ties and, secondly, what the terribly low grain prices of the four­ year period, 1968-7 1; in the context of those two items, does he see a change in the Crow as a greater threat to rural communities than indeed those two particular times in our grain history might have been? MR. L. HARAPIAK: In the short-term, I would say, yes. MR. C. MANNESS: When you make the comment, Mr.

Harapiak, that you are talking about the future of rural commun ities, are you talking about the whole overall context related to income or are you dwelling specifically as to, let's say, consolidation of elevator companies or something like that? MR. L. HARAPIAK: I think it has to include both. You know, I think you have to concern yourself about what will happen to income levels in these commun ities, but I'm concerned about whether there will be a further consolidation of the kind that went on in the years that you referred to.

Personally , as one who lives in a very small communit y, I would not want that kind of a trend to be accelerated. I suppose to some extent it's going to continue but I would not want to see it accelerated, for example, if you lose an elevator - every time you lose a component of a particular communit y, that in most instances, will be difficult to replace right now. So, it's a broad concern as well as a specific concern about income levels. MR. C. MANNESS: I agree with you.

I guess I wanted to ask the question because some 20 or 25 years ago, I believe there were some 3,500 small towns in rural Western Canada that had elevators at their location. Today, I believe it's some 1, 700 in total, as the process of rationalization has gone forward, either quickly or slowly depending upon the economic situation at the time, and I guess it begs the question, is the structure of rural Western Canada today, worse than it was 20 or 30 years ago, in your view? MR. L. HARAPIAK: That's a broad-ranging question and I'm not sure in just what context I should be answering that.

When you're talking about the structure of the commun ities and we get into discussions of lifestyles and things of that sort, I wish the question could be more specific. MR. C. MANNESS: Specifically, as related to the having of rail transporation, as related to elevation of grain facilities within the local communi ties, as a whole, is Western Canada better off, worse off, or is there any difference as to what it may have been 30 years ago? MR. L.

HARAPIAK: lt has certainly changed and I suppose it's unr ealistic that all of the things were in place 20 or 30 years ago we would say have to be maintained, they must stay in place for ever. So, I think there is going to be a degree of change, but I suppose the concern I have is that it be, in a sense, a logical change which takes into account the interests of the various parties involved, for example, that the change we are talking about now not deal with the concerns

Thursday, 14 April, 1983 of the railways in the absence of the concerns of the farmers. MR. C. MANNESS: I bring up the point because I've seen this particular comment concerned about the future of rural communities. I live in a very small one myself and I've made the same type of comment myself, but I'm beginning to challenge it. I'm beginning to ask people to try and identify some of their real concerns. I believe - changing the subject - do you feed beef cattle at all, Mr. Harapiak? MR. L. HARAPIAK: Yes, I do. MR. C. MANNESS: I'm told by some that if the Crow rate changes, the cost of feed back on the prairies will be available at a lower value. Is that your

interpretation about the change in the Crow rate? MR. L. HARAPIAK: Certainly if transportation costs go up, the value of the grain at this particular point is going to be lower, if we're looking at feeding that grain alternatively into an export market. MR. C. MANNESS: Well, would that then directly improve your net income as a cattle feeder? MR. L. HARAPIAK: Theoretically you are right, but what I have a concern about is, when you were speaking about this market, how much grain can we put through that channel without depressing the price.

If we can mai ntain current pric es and reduce our costs of production, you're right, it will improve my net income. But if we have lower grain prices and we see a massive attempt at incr eased livestock feeding in Western Canada and that reduces the price; my spread may not necessarily increase. MR. C. MANNESS: One final question. Is there anything of value whatsoever in the Pepin proposal as far as you're concerned? MR. L. HARAPIAK: I'm not prepared to say that it's totally useless; I'm not prepared to say that. I think we do have to look at our grain transportation system.

I don't think we can ignore the fact that in terms of handling grain, transporting as time itself takes its toll, elements change and we have to be prepared to some degree to adapt. But it's a question of how that is done, at what price and at whose expense. So, I'm not saying that we should close our eyes and forget about the whole issue and just pretend it's never happened, no. MR. CHAIR MAN: Mr. Bucklaschuk. HON. J. BUCKLASCHUK: Thank you, Mr. Chairman.

I'd like to get back to some of the opening remarks that you made during your presenta tion, and relate to the question you just answered to the Minister of Agriculture. You had indicated that your feeling was that the average farm in the Swan Valley would be between 600 and 700 acres. What would be the production from the acreage? Would it be reasonable to assume 12, 000 to 15 ,000 bushels? MR. L.

HARAPIAK: I think we've got some very productive land in the valley here and depending on 82 what kind of crops you're talking about, I think in a good year our wheat crops I'd say would be 30 bushels to the acre, so I think if you put the figure that you gave there, would translate in 20 to 30. I would say that it would in fact be highe r. HON. J. BUCKLASCHUK: But for argument's sake, perhaps we could use 15,000 bushels. You had indicated a number of steps in this Pepin plan and you had started off with an additional cost of 10 cents a bushel for, 1 believe, 19 83-84, for the first three years. MR. L.

HARAPIAK: The paper I have indicates that there will be an increase of approximately - that's the average on the prairies - of 10 cents per bushel for 19 83-84, that's the net. HON. J. BUCKLASCHUK: And that would increase incrementally over the three-year period. What I'm trying to get at is that 10 cents a bushel, while it doesn't sound like a large figure, would translate to an additional $1 ,500 in transportation costs for the first year, per farm, increasing to - I believe you had said the additional cost would double by '85-86 - so we could be looking at about $3,000 per farm at that point in time. MR. L.

HARAPIAK: Yes, but if I can be permitted to comment, I think there's an equally serious

part in this, in that the reduced value of that grain at the time of delivery is more than just the 10 cents, I'm told. Because if we are asked to pay an increased rate and then receive perhaps some adjustment on it afterwards, it could be much more signi ficant than that. MR. CHAIRM AN: Further questions? Mr. Bucklaschuk. HON. J. BUCKLASCHUK: Yes, I just want to continue with that.

So my premise that the additional cost would be $1 ,500 the first year, rising to about $3,000 in the fourth year would be quite correct and we could say that $1 ,500 for the first year, perhaps $2,000 additional costs for the second year, $2,500 for the third, and we're up to $3,000 in the fourth year. I believe you had also indicated that for the remainder of the decade of the 10 -year period, the net additional costs would increase from double that 10 cents to about 5.5 times the Crow, which would represent about what figure? MR. L.

HARAPIAK: The Crow is calculated now to be 20 - that's the compen satory rate - $4.89 - so you take that times five, roughly $25, $26 on a metric tonne. HON. J. BUCK LA SCHUK: Have you done any calculations and what I'm trying to get at is the total cost over a 10 -year period on the basis of an average farm producing about 15 ,000 bushels a year? MR. L. HARAPIAK: I have not calcula ted a cumula tive figure, no. But it's obvious that it's going to be a large figure.

As you indicated, if you just take the natural progression of that, starting at $1 ,500 to $2,000 to $3,000, but to give you a figure - no, I have not taken a cumula tive figure. HON. J. BUCKLA SCHUK: Yes, I have a further comment. I have done some rough calculations and it

Thursday, 14 April, 1983 is conceivable that in about year 10 we could be looking at perhaps $7,000, $8,000 a year. If you just take this 10 -year period, we're probably looking at an average incr ease in cost of $5,000 to $6,000 per farm per year. Now what kind of an impact would that have on the viability of the farming industry in the Swan Valley? MR. L.

HARAPIAK: Given the factors that are in place today, if none of those change, no other factors change, and we had freight rates going up as you suggested, I would suggest to you that not very many farms in the Swan Valley would be projecting a net income. lt would be a net loss. But, of course, you are all aware that in agriculture there's so many variables. If you give us $10 per bushel wheat by 19 86, it gives a totally different picture, but I don't think I would hang my hat on that one. HON. J.

BUCKLASCHUK: Well, that was the next question I was going to ask. lt seems to me we have had a history of increasing costs of operation. We have a fairly good idea of what is happening there. lt would be reasonable to expect that costs will increase, but unfortunately that situation hasn't developed in terms of prices. How realistic would it be to expect $10 a bushel in the next five years, 10 years? MR. L.

HARAPIAK: I wouldn't want to make that kind of a prediction, but what I would be prepared to predict is, that it's more likely that the rate of escalation of cost of input will exceed the rate of escalation of grain prices. HON. J. BUCKLASCHUK: As a final question or comment then, the proposed increase in transportation costs in fact will be of a very serious significance in terms of profits or ability to stay in farming. MR. L. HARAPIAK: Given the circu mstances as they are right now, I would say yes, it's very critical and particularly , as I said in my presentati on, in the short term. MR. CHAIRM AN: Mr.

Mann ess. MR. C. MANNESS: Mr. Harapiak, was Mr. Bucklaschuk correct, particularly in light of the fact that I know there are many modern producers in this area who grow very high yields, would he be correct in assuming away, or assuming the fact that many of your neighbours are able to deliver all their grain every year - the 15 ,000 bushels which he uses. Would he be correct in assuming that there's never a carry-over? MR. CHAIRM AN: Mr. Harapiak. MR. L. HARAPIAK: That there is never a carry-over? No, it wouldn't be safe to assume that. MR. C. MANNESS: Well, furthermore Mr.

Harapiak, would it be fair to say that there's a carry-over in most years? MR. L. HARAPIAK: That is certainly going to vary from one operation to anoth er, so to say in general terms 83 that there would be some carry-over in the valley - I would say yes, there is some carry-over. Some of that is planned, some of it is not planned. MR. C. MANNESS: Well, Mr.

Harapiak, would you not say indeed that a great numb er of people lose sight of the fact - all of us that grow grain, I might add - what the true cost is of carrying over grain that we would rather not carry over in a given year; and that indeed, for instance, if one of the Swan River farmers of which we use - the 15, 000 bushel producer - if that individual was to carry over 3,000 bushels, particularly anywhere over the last six or seven years when the price of wheat has been somewhere in the $5 a bushel range - I realize it isn't that now - and that the interest at 15 percent on the value of that $1 5,000 would amount to something around $2,250, far in excess of $1 ,500, might be needed to move that particular grain at an incr eased freight rate, would you say that represents fairly the opposite side of the argument and that indeed, we can't assume away the fact that we carry over grain, which seems to be done in so many analysis?

MR. L. HARAPIAK: There is certainly a cost associated with carrying over grain. Sometimes it's the storage costs, it's an opportunity cost, or interest loss, so I don't think we can ignore that. But I wouldn't want to say that I would be prepared to pay any kind of a price or the ultimate price, just to avoid carrying over grain. If I'm going to have the opportunity to reduce my carry­ over, I want to know what kind of a price I will have to pay to do that and right now I'm a little bit concerned about that price. MR. C. MANNESS: Certain ly, Mr.

Chairman, I too as a farmer, would wholeheartedly support that statement. But do you not agree, in some respects, that when we're trying to resolve this whole argument and we're trying to discuss intelligently and find conclusions to this particular problem, that indeed sometimes we lose sight of what the true cost is of carrying over grain on our farms? MR. L. HARAPIAK: Yes, but I would also have to say that it is not the only factor that we sometimes lose sight of and I think it gets to be a very emotional issue.

So there are other factors that enter into it, but that is one that we sometimes don't attribute a cost to. MR. CHAIRMAN: Further questions? Mr. Plohman. HON. J. PLOHMAN: Just briefly, Mr. Chairman, I know that many people are anxious to leave, but something that Mr. Manne ss said earlier concerns me, he said he's starting to challenge the validity of the argument that there will be negative effects on transportation on the rural communities - changes to the transportation system - that he's starting to challenge the negative effects it would have. MR. CHAIRM AN: Order please. Mr. Manness on a point of order. MR.

C. MANNESS: Mr. Chairman, I never did make that assertion whatsoever. I said that I was