CONTENTS
Wednesday 26 January 1994
Ontario Food Terminal Board
Gary Ireland, board chair
C.E. Carsley, general manager
William Northcote, legal counsel
Jeff Wilson, board member
Bruce Nicholas, secretary-treasurer and assistant general manager
Grace Dekker, board member
STANDING COMMITTEE ON GOVERNMENT AGENCIES
*Chair / Présidente: Marland, Margaret (Mississauga South/-Sud PC)
*Vice-Chair / Vice-Président: McLean, Allan K. (Simcoe East/-Est PC)
Bradley, James J. (St Catharines L)
*Carter, Jenny (Peterborough ND)
*Cleary, John C. (Cornwall L)
*Curling, Alvin (Scarborough North/-Nord L)
*Frankford, Robert (Scarborough East/-Est ND)
*Harrington, Margaret H. (Niagara Falls ND)
Mammoliti, George (Yorkview ND)
*Marchese, Rosario (Fort York ND)
Waters, Daniel (Muskoka-Georgian Bay/Muskoka-Baie-Georgienne ND)
Witmer, Elizabeth (Waterloo North/-Nord PC)
*In attendance / présents
Substitutions present/ Membres remplaçants présents:
Abel, Donald (Wentworth North/-Nord ND) for Mr Mammoliti
Murdoch, Bill (Grey-Owen Sound PC) for Mrs Witmer
Lessard, Wayne (Windsor-Walkerville ND) for Mr Waters
Also taking part / Autres participants et participantes:
Villeneuve, Noble (S-D-G & East Grenville/S-D-G & Grenville-Est PC)
Clerk / Greffière: Mellor, Lynn
Staff / Personnel: Richmond, Jerry, research officer, Legislative Research Service
The committee met at 1021 in the Superior Room, Macdonald Block, Toronto.
ONTARIO FOOD TERMINAL BOARD
The Chair (Mrs Margaret Marland): Good morning. We're going to continue the review of the operations of the Ontario Food Terminal. I understand that the committee toured the terminal yesterday in my absence in Ottawa, while I was attending the hearings into Bill 120.
I'd like to welcome the representatives of the board this morning. I hear you've come by sleigh from Hamilton, Mr Ireland; is that right?
Mr Gary Ireland: Actually, west of Hamilton, and I thought that Hamilton would be the only trouble spot this morning so I drove around Hamilton and I never had a problem till I got to Mississauga and it took me three times as long once I got there. I apologize for being late. An hour-and-a-half drive took me three hours this morning.
Mr Rosario Marchese (Fort York): Just got to abolish Mississauga.
The Chair: We just won't tell Hazel.
Does the committee wish to start with questions following your visit yesterday? All right.
Mr Allan K. McLean (Simcoe East): I wondered if the group had any further input that it wanted to make with regard to our visit yesterday. I'm not so sure that they had, but I'm curious if there's anything.
Mr Ireland: The one comment I'd like to make is that there was certainly a concern that was expressed at the initial meeting we had in December and it was raised again yesterday at our preliminary meeting in the office regarding the effect of what we're trying to do as far as the origin of product in the farmers' market, particularly as it relates to NAFTA, and I guess GATT as well. We tried to address that concern, which I felt we did, and I'm just wondering whether after walking around the market and seeing the situation and the product that was there, what we were able to see yesterday, whether that concern had been satisfied or not.
Mr McLean: I had a question on that very issue, if I may proceed with it. You talked about the amount of produce that's coming in, probably from California or from other countries. What is our saw-off? Do we export more than we import? Do we import more oranges, and what is our export? Do we export fruit to the States or to other countries?
Mr Ireland: Yes, we do, some commodities. I have to say we import more than we export, no question.
Mr McLean: What is our trade deficit on produce? About $600 million worth?
Mr C.E. Carsley: I haven't got really hard facts on this, Mr McLean, but I would say it's probably in excess of a billion and a half dollars. That's what our deficit is, because don't forget, things like citrus, bananas, are huge markets throughout Canada. I'm talking Canada when I say those numbers. So I would suggest that even though there's lots of stuff exported from Bradford -- lots of apples, particularly processing apples -- to the States, things like potatoes as well, really it's a large deficit in terms of our trade in produce.
Mr McLean: Is the inspection done here or is it done where it originates from? I'm really thinking about insecticides and chemicals that may be used in other countries compared to our country here.
Mr Carsley: I certainly am not an expert on inspection at all. I think that was addressed a little bit yesterday. The produce is inspected on a spot basis at the border, but the main inspection, I guess, takes place on a random basis by the Ministry of Agriculture and Food in Ontario and Ag Canada. That's as much as I can really say. They were indicating yesterday, of course, that they do it on a sampling basis.
Mr McLean: Does Ag Canada visit the original countries? I'm thinking of California, because I think that's where a lot of our produce comes from.
Mr Carsley: That's right, it does.
Mr McLean: Do they have an agreement with the US with regard to inspecting at random at the growers?
Mr Carsley: I can't comment on that; I'm sorry. Maybe someone else would be able to.
Mr Ireland: Not that I'm aware of. Right now we've got a situation where we're trying to sort out phytosanitary regulations in order to get product into Mexico as a result of NAFTA, and we're having a heck of a time. I know in our industry, the one I'm involved in, the apple industry, we had Mexican officials up here over a year ago. They're going to be coming up here again and we're still trying to get through the red tape in order to move product down there.
Mr McLean: You indicated yesterday that there are around 1,100 jobs at the food terminal. Has that increased or has that held pretty well the same?
Mr Carsley: Over the course of the last five to seven years it's probably held pretty much the same.
Mr Bill Murdoch (Grey-Owen Sound): I had three concerns. My first concern is whether there would be any products there from Grey county, and we solved that problem when we found the apples from Clarksburg and Thornbury. That was one concern I had and it was solved. Then the second one is something Al was talking about, the inspection, and then when I found out one of the inspectors is from Grey county I figured everything must be going pretty good there. So I got two problems solved.
I guess the third one, though, and you people mentioned it, and maybe you can help us out now, is the farmers' market and how do we keep Ontario produce there, in the farmers' market part, the outside one. You asked us for some help. Maybe you'd better elaborate on that. How do we give the board that power you need to make sure that Ontario produce stays out there? We didn't really elaborate on that, because I don't know what you want us to do now. Maybe you'd better tell us what we've got to do as the legislators to help you out.
Mr Ireland: I guess our best option would be to get a change in the act to give us the power to be able to designate what's going to be in the farmers' market. Right now we don't have that authority, that power to be able to do that.
Mr Murdoch: You'd better tell us, then, what you'd like to see changed in the act, someone, either the government or one of the other two parties. Your solicitor would have to tell us, and especially the government, anyway, and it would have to bring in an amendment to the act. I guess your solicitor should tell someone over there what you'd like done, then we'd debate it in the House and whatever. But unless you probably give us the details and push it a little harder, then maybe nothing's going to be done.
Mr Carsley: We do have our solicitor here. Perhaps he'd like to comment on that. We've had a number of drafts of our act over the last seven to eight years that take into account this situation, so that work has all been done. All we have to do is present the act to you the politicians and maybe you could see your way clear to revise it.
Mr Murdoch: You have to get the government to listen to you. That's why we're here, to listen, I guess. I don't know whether the government of the day has turned you down or not, because it hasn't come forward. We on this side of the table don't get a chance to bring in amendments; it would be the government.
Mr Carsley: Our minister, and I don't think I'm talking out of turn here, is very supportive. He wants to try and help us.
Mr Murdoch: The Minister of Agriculture and Food.
Mr Carsley: Yes, Mr Buchanan.
Mr Murdoch: I'm sure he would be. I've had no problems with him and I'm sure that's where you would go, but we have the bureaucrats we have to deal with also.
Mr Alvin Curling (Scarborough North): They're okay, the bureaucrats.
Mr Murdoch: Are they? Alvin says they're okay.
Interjections.
Mr Murdoch: We've missed the Liberals?
The Chair: Mr Villeneuve wanted to speak, and I'm doing it 20 minutes by caucus.
Mr Curling: Sorry.
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Mr William Northcote: I didn't have an awful lot to add, other than to say that in fact a number of drafts have been done over the last few years. They're ready, willing and able to go. I thought that if there was an all-party consensus on the matter, this matter being important, this would be of great assistance.
Mr Noble Villeneuve (S-D-G & East Grenville): Further to my colleague from Grey-Owen Sound's question, the board is being challenged by people who bring produce in from the US, wherever. The vast majority of the produce comes from the US or other countries. What's the challenge? I've got some problems. Is it identifying Ontario-Canadian produce? What we saw there yesterday was 85% non-Canadian produce, I would say.
Mr Ireland: But all you saw, Mr Villeneuve, was the wholesale unit. We didn't see anything out in the farmers' market. If you would have gone there this morning or when the farmers' market is active, the majority of it is Ontario. But the inside market where we were yesterday, in two or three of them, as you mentioned, you have a difficult time finding any Canadian product at all.
Mr Villeneuve: Okay, so what we're dealing with is the farmers' market area and identifying that indeed it is Ontario or Canadian farmers who are there as opposed to an Ontario farmer wholesaling produce that was grown outside of Ontario, I gather. If we are able to accommodate you there, is there a downside to the whole market area or to Canadian and Ontario producers? There's got to be two sides to the story.
Mr Carsley: We don't feel that there's a downside; we feel it will in fact over time be more of a benefit to the market than having a real downside, in that the farmers' market has always been a place where growers could come.
We have daily growers who pay a fee and come in every day. They've never been turned down. They're not actual tenants, but anybody who is a legitimate grower in Ontario can come into the terminal. If something isn't done, the real downside is -- and I think Mr Wilson can comment on this better than I can -- that the farmers' market will become a dumping ground.
In other words, if we don't get some sort of a change in our act to give us the power to control what's sold there, then eventually it will get out of hand and product from, say, other provinces or from the States, Mexico, could end up coming in on the basis of it being a final home for this product. It'll end up being a dumping ground and thus prices would be destroyed, daily growers would have difficulty trying to compete in that sort of setup and so would the other Ontario growers who are regular tenants of the market.
Mr Villeneuve: Okay. Would this stop Mr Wilson, Mr Ireland, who are very legitimate producers, from selling Idaho potatoes or something when they're out of season? I guess that's a poor example. Would it stop them as very legitimate Ontario growers from going to their spot in the market and selling produce that is from elsewhere than Ontario?
That's the area I have some problems with. We have a growing season of 130 days here in Ontario and for the rest of the year for fresh produce, it's got to come from elsewhere. That's my concern.
Mr Jeff Wilson: I think we have to look at it from two fronts because you've raised the issue of me as a farmer -- am I a farmer or am I a marketer? We're certainly finding out that very few people out there can be the be-all and end-all within any sector, whether it's agriculture, manufacturing or what have you.
What we're finding is that in fact we do have year-round production on things like potatoes, like onions, like apples and a number of the fruits, whereas the salad crops are obviously out of season. But the question then becomes, whose interests are we serving? I should remind the committee that the Ontario Fruit and Vegetable Growers' Association is taking a very strong stand on this issue. They represent the 10,000-plus growers out there who are generating the $660 million of fruit and vegetable production in the province. They see a definitive threat to the livelihood of those producers, especially in the context that we have a very good initiative under the Foodland Ontario auspices to promote Ontario-grown product. We feel that also would be threatened, because a wholesaler or retailer buying in the farmers' market currently is assuming that it's locally grown product. So to a degree there's some misleading aspect to the issue as well.
Mr Villeneuve: What I don't want to do is have a legitimate producer be restricted from continuing to serve the market that he serves over 12 months. Will that give the Ontario terminal executive the power to decide who's a legitimate producer and who isn't?
Mr Jeff Wilson: No, it would give the Ontario terminal board the authority to regulate what goes on in the farmers' market so it remains an Ontario farmers' market, not an Ontario wholesalers' market.
Mr Villeneuve: Then that would make it easier for you to deal with the challenges that are coming from the people who are in that farmers' market area under false pretences?
Mr Jeff Wilson: Definitely. It allows me as a farmer to compete on a quality basis, on a competitive basis.
I'll tell you right up front, I can't compete against dumping from out of province. I'd be kidding myself to sit here, and I think we'd all be doing ourselves a disservice to assume that when low-ball, low-priced product comes in because there is no other market for it and it ends up on that farmers' market, that I who believe in orderly marketing and am trying to make a living from this can compete against that.
Mr Villeneuve: Okay. What we saw yesterday, by and large, outside of the farmers' market area, which was vacant at 2:30 yesterday afternoon, has nothing to do with this legislation.
Mr Jeff Wilson: No.
Mr Villeneuve: Okay. You've straightened me up a little bit.
Mr Ireland: Mr Villeneuve, if I could just add to what Jeff is saying, the grower-dealers, or the dealers that want to bring in product from outside of Ontario, use your very argument. They say: "Well, we've built up a clientele, we've built up our customers. We want to service these customers, so when our Ontario product is not in season, we can complement that with out-of-season. Once ours comes on stream, then we stop that." But it's only an excuse, and it doesn't work that way.
Mr Villeneuve: Okay. Thank you for clarifying.
Mr Jeff Wilson: I think one final comment should be made. I think the committee was aware, but we tried to accommodate that type of individual when we looked at expanding the market, and there was an interest in participating and expanding the market to accommodate more out-of-province type production.
Mr Murdoch: Just to carry on, do you have any reason why it hasn't been brought forward?
Mr Ireland: You mean as far as a change in the act?
Mr Murdoch: Yes.
Mr Ireland: We initially spoke with the minister and the deputy. We had a meeting with them approximately a year ago. The feeling at that time was that there was such a backlog in the Legislature that to bring forward a change in the act would be a long process and debate. We felt that we could possibly deal with it with a change in the regulations, which we had attempted to do, but we just couldn't seem to get the right wording. It didn't matter how we worded it; it was still going to be challenged.
It just appears right now that it's not a viable option. It's kind of a weak way around trying to solve the problem. Obviously the proper way to do it would be to get a change in the act so that it would give us a kind of cut-and-dried policy that we could deal with.
Mr Murdoch: Okay. There are people here from the ministry, so maybe we'll get some action.
Mr McLean: I have a final question, Madam Chair, and it's simple. What's the makeup of your board? You're the chairman. How many are on the board?
Mr Ireland: The board is made up of seven individuals. Jeff is a producer rep from the farmers' market. We have a wholesale rep from the inside market, which you saw yesterday. Helen Lahti would be classified as the consumer.
Mr Carsley: Yes, from the public.
Mr Ireland: Diane Baltaz is a similar situation as Helen. We have Grace Dekker, who is a flower producer from the farmers' market. Cameron Rundle is a grower-buyer on the farmers' market as well.
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Mr McLean: How come there are only the three farm reps? They were there yesterday. Three farm reps are here today. How come none of these other people want to take part in these hearings?
Mr Ireland: They do. Harold Brown, our wholesale rep, was at our meeting in December. Unfortunately, he's out of the country. If he'd been anywhere in North America, we'd have flown him back for this meeting yesterday and today, which we did with Jeff last week when we had a meeting because he was in Montreal. Diane is on the east coast and Cameron is very sick. In fact, he was taken to the hospital; otherwise he would have been here too. No, they're very interested. In fact, I think at their initial meeting in December, everybody attended. To my understanding, though, the previous sessions with the standing committee, that had not happened.
Mr Marchese: First of all, I just want to thank you for the tour that you gave us yesterday. We found it very useful. When one sees the operation, visually at least, it helps a lot more than having to abstract about what is there. So I found it very useful. I wanted to tell you that.
Some quick questions before I get to the whole issue of changing the act and how we do that and why we would do that. My first question has to do with a statistic that I saw in your notes yesterday. Approximately 20% of the produce grown in Ontario destined for the fresh market goes through the terminal. I thought it was higher. Does that mean the other percentage of course goes through the different markets that we have around Ontario? Is that the answer?
Mr Jeff Wilson: I could answer that probably best. As an Ontario producer, probably 30% of my personal production is sold right at the food terminal, but I live up north of Guelph, in Wellington county. There's quite a market up there and west dealing with local independent stores, chain stores. So we operate on two fronts: at the wholesale market in Toronto and servicing probably a 50-mile radius of our home town. We're probably somewhat definitive of an average producer out there in trying to utilize all the marketplaces we can.
Mr Villeneuve: Pick-your-own as well.
Mr Marchese: Sure. Oh, of course, right. I just thought it was higher as a statistic.
Mr Jeff Wilson: That still translates to somewhere in the neighbourhood of $180 million of Ontario produce sold at the food terminal, so it's still a significant amount of production.
Mr Marchese: Sure. On the revenue-producing cost centres, do you have a breakdown of what each cost centre makes by way of revenue? If you do, could you provide that to us?
Mr Carsley: Yes, we have that. We could provide it.
Mr Marchese: I'd appreciate that, so we have a better sense in terms of the picture: where we make money, where we don't.
Mr Carsley: Absolutely. We can provide that for you. One thing that should be pointed out is that the reason that you don't see that broken out in our annual report is because it's not audited by the Provincial Auditor. Just one part has an audit, so we don't break it out. If the Provincial Auditor had been prepared to audit that when we wanted to break out the cost centres, to audit it, we would have published it that way, but they didn't want to do it.
Mr Marchese: No, that's fine. I wasn't so much interested as to why not as wanting to see it for my own purposes just to get a sense of the picture.
I'm interested in the whole issue of changing the act, or at least interested in wanting to get to the problems you've raised. I want to explore whether the act is what needs to be changed or whether of course cabinet could by regulation provide what you need to get through the issues you've raised, or, thirdly, asking the lawyer here, whether it's not already provided in the act that should allow you to do that. I was going to ask the lawyer to comment on this until I got the regulation. So I will read that part that I think might allow you to do them and you can comment as to whether or not that's possible.
It's section 13: "Subject to the regulations, the board may make rules with respect to," and it gives a whole list of them. Should I read them out?
The Chair: It's probably not a bad idea to read it out for the sake of the record, Mr Marchese.
Mr Marchese: Sure. Okay. Subsection 13(1):
"Subject to the regulations, the board may make rules with respect to,
"(a) the conduct of the board's employees;
"(b) the conduct of the board's tenants and their employees;
"(c) the conduct of any person on the board's premises for any purpose;
"(d) the use by any person of the board's facilities and equipment."
Doesn't (d) allow you the power to be able to make rules with respect to what goes into the farmers' market or to what uses you want the farmers' market to be?
The Chair: Mr Marchese, there are two regulations apparently. Could you just identify which one it is you're referring to for the sake of the record?
Mr Marchese: It says here chapter 0.15, Ontario Food Terminal Act.
Mr Northcote: The provisions of that section of the act deal with the rule-making power of the board, subject to the minister's approval. In fact, this particular section was tested in the courts and went all the way to the Supreme Court of Canada in the early 1960s as to the nature of a rule-making power as distinct from a regulation-making power, a regulation requiring an order of the Lieutenant Governor in Council. The conclusion of the Supreme Court of Canada was that this section was restricted to really administrative matters. In that case, the question was the power of the board to regulate opening and closing hours.
It's our opinion that this section does not, unfortunately, give us that power, if in fact a rule were to be made, and there is significant doubt as to whether or not it could be accomplished by way of regulation.
The Ministry of Agriculture and Food legal counsel, I gather in consultation with the Attorney General's office, concluded that in order to regulate interprovincial trade, it was necessary to have a change to the act as opposed to a regulation, that this kind of restriction could not be accomplished by subordinate legislation. I wish it was true, frankly.
Mr Marchese: No, you raise a good point. So this section was tested in the 1960s on some particular case?
Mr Northcote: Yes.
Mr Marchese: What was the case all about?
Mr Northcote: It concerned the power of the board to make a rule regulating the opening and closing hours of the farmers' market, I believe.
Mr Carsley: The terminal as a whole.
Mr Northcote: The terminal as a whole, yes. Mr Carsley reminds me it dealt with Saturday opening.
Mr Marchese: What happened with that issue again?
Mr Northcote: Ultimately the board was upheld, as I recollect, in that it did have the power by way of rule to regulate Saturday opening.
Mr Marchese: Okay. So that was the only issue that was tested in the 1960s?
Mr Northcote: That's correct.
Mr Marchese: And the board was upheld in terms of its power to be able to --
Mr Northcote: Use this section to regulate by rule opening hours. But there's a great distinction between an administrative matter like opening hours and a constitutional issue as to the power to regulate interprovincial trade.
Mr Marchese: But this other matter has not been tested.
Mr Northcote: That's correct, it has not.
Mr Marchese: So it's a question of legal opinion as to whether that would hold or not?
Mr Northcote: That's correct.
Mr Marchese: So it's quite possible the board could do this and have it tested out in court, obviously.
Mr Northcote: In fact, there was yet another case in which a tenant in the farmers' market was marketing out-of-province potatoes, contrary to his lease with the board, which restricted that right, and he commenced an action which our firm defended. He obtained what's called an interim interim injunction, which is an injunction of the courts that allows the status quo to continue pending a resolution of the matter. So he was granted an order allowing him to continue until the case proceeded in the courts. He did not press the case forward and the board elected not to pursue the matter further because we had great concerns as to the board's ability to successfully defend the case.
The board's opinion at the time was, and I gather still is, that if they were to proceed on that case and they were to lose, that would be simply opening the floodgates to a massive dumping of produce and they felt that in the circumstances it was best to cope with it on an administrative basis rather than pursue this action in the courts.
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Mr Marchese: This is the uncertainty over the issue, obviously. It hasn't really been tested yet to get a good sense of whether, if you did something, that would be upheld or not.
Mr Northcote: That's true.
Mr Marchese: Part of the problem is that the board has not set a clear direction. Let's forget policy, because you think you don't have that policy-making power, but my sense is if you had a clear policy, or wrote it down, that would give people a better sense of what the terminal wants to do by way of its use or not, and because that isn't clear, that first of all is the number one problem.
Mr Northcote: Something that you're not aware of is that the leases for that area, to my own personal knowledge, since 1975 or so have had an explicit provision whereby the grower agrees not to sell out-of-province produce. In the case we were talking about, he was in breach of his contractual obligations and he sought to assert in the courts that the clause was not effective against him as being a restriction on his rights.
It's been very clear as a matter both of policy, in terms of the way that the board administers the activities in the farmers' market by discouraging the sale of out-of-province produce as well as in all contractual documents that they enter into with the farmers' market tenants, that this is not acceptable from the board's perspective.
Mr Marchese: I guess our job here is to determine whether or not there is anything that can be done without changing the act -- I realize you're raising why that is a problem -- and if not, to explore the changing of the act. The difficulty with that, just to give you a perspective, is that every time we change an act it has to come in front of the Legislature for second reading, then it goes into committee hearings usually, then it comes back and then it competes --
Interjections.
Mr Marchese: If you would allow me to finish the sentence, then it competes with other ministries which have other things that they want changed. That's the difficulty. Now, if the opposition, for example, is saying, "Oh, but that's not a problem. We won't even have a discussion or dispute," then usually that makes it easier; things can just move along. I haven't yet found an issue where things just move along, where the opposition says, "We're okay. The government has done the greatest thing we wanted it to do," and it's facilitated that way. Just to give you a perspective on the difficulties of that, I thought I'd raise that.
Mr Northcote: If I might comment on that, I understand that the legislative agenda is very crowded and that there are many things that need action.
Interjections.
Mr Northcote: I won't comment on what those might be, but in any event this act --
Interjections.
Ms Margaret H. Harrington (Niagara Falls): Madam Chair, we seem to have a problem.
The Chair: In this particular room it's very difficult to hear if there are other conversations going on. Thank you.
Mr Northcote: Mr Marchese, this act has not been amended in any substantial way for a very long period of time, with one exception, when it was amended about three or four years ago, by way of a private member's bill, in fact. One of the sections was removed. I understand the legislative agenda is very full; on the other hand, this is an area of legislation that hasn't been looked at for a very long time.
Mr Marchese: Sure, and I appreciate that. Let me ask you some other questions connected to that. Part of our intergovernmental problems in terms of breaking down barriers or raising barriers -- as you know, we just had some difficult matter that the government has pursued with Quebec in terms of its own barriers that it created for Ontario and other provinces to be able to go into their own markets to compete for contracts, construction contracts and the like. We're dealing with that because part of what provinces want to do is to break down those barriers, and there are many. There are probably approximately 500 barriers of one kind or another in all the different sectors we're dealing with. We're trying to break that down.
Does this create a problem in terms of how we deal with intergovernmental problems with respect to what can come in from other provinces? Because I can appreciate what we want to keep out of the country, and I have no dispute about that in terms of what comes into the farmers' market, but in terms of how we deal with our own problems intergovernmentally, what is your comment about that? Is there an alternative, a compromise that one could look at with respect to what Ontario can produce and sell in the market and what it allows, in a small percentage way, other provinces to bring in?
Mr Jeff Wilson: I think we have to be very clear in differentiating the two distinct roles that are served at the food terminal, those being what we call the A and B wholesale market and the farmers' market. As all of you saw yesterday on your tour, the makeup in those wholesale houses doesn't differ dramatically, summer, winter, spring or fall. What you saw in those houses is predominantly imported product -- from Quebec, from wherever. So the question becomes, are we restricting trade to Quebec, to Manitoba, to Mexico, by saying, "On the farmers' market component we aren't going to allow that product in there"? The answer to that is no, because there's still a very good facility that's very adept at handling that imported product already existing at the food terminal.
Mr Ireland: Mr Marchese, just to give you an example of that, obviously you saw a lot of Washington apples. You could just as easily have seen BC apples as opposed to Washington.
Mr Marchese: You make a good point. I hadn't thought of our provinces competing with their products in the A and B warehouses. I suppose that is in part or fully the answer to the question of the fact that they can bring their products into those warehouses. Anyway, that's another question we would have to look at to see whether or not there are still concerns with that.
Mr Jeff Wilson: There's one other point as well. It goes back to your original question on the 20% and it ties in with what goes on in the A and B units. As a farmer, I do sell to some of the wholesalers in the A and B units, but what I gain on that 20% overall, first of all, and I also sell directly there, but I gain -- I just call them leads. I service a fairly significant market in Orillia, another one in Niagara-on-the-Lake, as a result of my activity at the food terminal, but my business that would be sold in an A and B unit, depending on the year and the product mix I'm producing, is somewhere in the neighbourhood of about 20% in Toronto.
Once again, it's a very competitive place in there. They're only going to allow me one or two skid slots. Right next to me they'll have California broccoli or, in the summertime, Quebec broccoli, and I'm competing head-to-head in there. It's a very competitive, price-oriented marketplace in there, but it's also geared for that competitive, quality, price-oriented marketplace in terms of infrastructure. There is dock-level loading; there is ability to use those electric hand carts all of you saw around there. None of that exists out in the farmers' market. There's no truck-level handling. It's all by hand or by forklift, that type of approach, which the Ontario farmers are geared towards. It's also reflected in the rent I pay. I don't have the service, the infrastructure, for my reduced rent, whereas I'm going to pay a much higher rate of rent in the A and B inside terminal markets for that infrastructure. I don't know how it may have appeared, but in terms of the produce business, it is a Cadillac infrastructure.
Mr Ireland: If I could just add one point, Mr Marchese, if you were to walk around the market when it was busy and talk to the majority of the tenants, whether they be in the wholesale units or in the farmers' market, the comment you would get is that one complements the other. If the farmers' market is opened up, it's just going to create a shambles of the whole terminal.
Mr Marchese: If we change the act, and presumably there would be many opportunities for the farmers' market, what financial benefits are there? What market benefits are there? What kind of opportunities are there for the people of Ontario, for the market, for the board, if we were to change the act? In addition, what other aspects of the act do we want to change to do what, or is this the only change we want to get at in the act?
Mr Carsley: The act, as was pointed out, was an act of the Legislature I believe in 1946 or 1947. It hasn't been changed in any material way since then. There are a number of things frankly that we do that the act really does not give us the power to do. No one has really challenged us on those things. There are things like licensing space, charging certain fees etc that we do now that basically, and I'm going to be quite frank with you, we don't really have the power to do. But in order for the market to function in a proper financial manner, if you want, we should have those powers. That is of concern as well. So it's really a complete revamping of the act.
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The other thing is you've probably read our other regulations -- I go by the old terms -- 703, I guess it is, and 704. What's 703 now, Bruce? It's 872, I think. It's our bylaw and that regulation has to be changed. We have to have a proper business bylaw. I mean, we're working in the Dark Ages with this.
Even though the government has guidelines on things like conflict of interest, we don't have anything. We should have something included in our regulation 872 regarding conflict of interest and maybe even have that included in our act, one or the other.
Also there's our other regulation which is essentially our operational regulation, which I guess is 871 or something like that. I call it 704 still. That needs updating, but we can do that, in any case. We have the power to change that one, but we don't have the power to change regulation 703, which is our business bylaw.
The whole thing needs updating. As we pointed out, we're doing things now as the industry has changed etc and there has been a need for us to create more income for the terminal, and just not getting it from rent but getting it from other areas. Some of those fees that we charge quite frankly are not prescribed in our act. I doubt anybody would challenge us, but if we were challenged we might find that we'd lose a source of income, if we lost in the courts. That definitely is another reason why the act has to be changed to modernize and give the board the power to do these things so we can't be challenged.
The Chair: Do you want to make a response? Would you identify yourself for Hansard, please.
Mr Bruce Nicholas: I'm Bruce Nicholas. The lady from Hansard knows who I am.
I can't shut up if somebody asks me a question about the food terminal. You asked, what would this effect be if through an act we made that Ontario only? The blunt answer to that is for the last 20 years we've been following the guidelines and making it Ontario. We've been bluffing our way through and cajoling and doing the best we can with every level of government that's asked us that question.
If you put that in the act, that'll ensure that there's that industry in Ontario, that those people have a place to come to sell, that they have a livelihood. They compete right now among themselves and with imported product all the time. If they have to compete with their neighbour beside them on dumped product, they haven't got a hope. We would like that in there to finally give us the strength to go out there and ensure that the people of Ontario have an agricultural industry in fruit and vegetables. That's the blunt answer to your question.
Mr Curling: Good to see you back. First I should say that on my visit to the terminal I was extremely impressed in a couple of areas. About the people themselves, I find them quite receptive and really involved and rather pleasant. The employers are rather pleasant. It tells about the organization if one sees that and how tenants in your group operate and how they respond. I like the word "tenants." Being the former Minister of Housing, I dealt with quite a few of them, landlords and tenants. I found your tenants there seem to be happy campers or happy residents from that point of view. They seemed comfortable.
One of the things my colleague was saying to me he was impressed about, and we're not quite sure how impressed we were, is your boardroom, a cramped place. You operate out of that. You're one of those who are not talking about expansion and having luxurious boardrooms and yet you're so effective in what you're doing.
As you speak, I've tried to understand. I've learned so much in the short time that you've come before us about what the food terminal is all about. You changed my perspective about it from the point of view that I understand a little bit more about it.
As I hear you put forward about the changing of the act so you can be more efficient, more effective, more representative and your tenants more or less feel that if they're competing, they're competing in a fair market, and having still provisions for the others who want to bring their outside produce in, still have an area to operate, am I getting that you have put before -- it seems a long time -- all governments, Conservative, Liberal and NDP governments, the changes to this act as you've been carrying on a long time, as it is said, somehow bluffing your way through this? We've now reached a stage where we should have some type of proper legislation or regulation in place. This has been put forward by the government. I don't want it to be confrontational.
I gather too from what Mr Marchese and all who were speaking is that it's really not a priority of the government. He said that, "Well, you have to go through all these processes and have to go through committee," and he's giving an indication of legislation, which you all know anyhow. Of course, as our position, we would like some of the best legislation so it can be effective to you.
So my feeling is that it has been there; it's not a priority. I didn't have the act before me to find out what part of the act you want to change, but it seems to me all that has been put forth. But what is the problem? Could you say the problem is that the government of the day now finds -- and I'll put it in a very diplomatic way -- that it's not a priority right now and it's so busy doing other things and it has promised you it would deal with it, but not right now?
Mr Ireland: I don't know, Mr Curling. I mean, maybe it's partly our own fault because it has never been pushed far enough, because the feeling was, every time we've taken it to the ministry, "There's a large legislative agenda," and it's this problem and that problem, and you go through debate and so on, so as Bruce has already mentioned, we've been able to bluff our way through, so it's a situation that has arisen and then it just kind of subsides for a while and then you go on for a period of time and then it pops up again.
But now, I'm of the opinion that it's at a point where action has to be taken, because there are people, I can assure you, who are out there right now just waiting to see what's going to happen with the present situation, because it has been publicly challenged and they've come forward and they've said, "We are going to sell Idaho potatoes," and they're there and our inspectors have found them there. There are other people sitting back and saying, "Okay, if the situation's going to be done this way on Idaho potatoes, then what's to stop me from doing this on" whether it's apples or onions or whatever, and it is going to happen. I'm of the opinion, anyway, that I just don't think we can continue to bluff our way through any more. Action has got to be taken, of some kind.
Mr Curling: Let me say this to you too, that there is legislation that has come before the Parliament quite often, especially labour legislation, that has seen quick movement, fast. You see, the government is responsible to put things on the agenda, to put it forward, to pass it. As a matter of fact, there are enough rules around here to even hurry it through the House very quickly.
Coupled with that, I think what you're hearing from this committee, which you had the opportunity to sit with all three parties, is that there are cooperations that will come about to see this happening. Now that I understand it more and now that -- I can't speak for the Conservatives; they always speak for themselves, sometimes very well, sometimes -- but the fact is that to see this matter through, seeing that you've put it on the table, seeing that the government feels that it is not a priority or it may be stopped, as Marchese said, by these obstructionists over here -- that we may be so slow in not putting it through.
But I am convinced that you need it and I feel that if it is pushed and we can get some commitment from the government members now who see that you have then gone before the bureaucrats and the minister, that all the minister is saying now is that it is not quite a priority -- they didn't put it in that word -- that there is a backlog and there are many things, that putting it forward now, you will get the cooperation from our side of the House.
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Ms Harrington: Do you speak for your party?
Mr Curling: I speak very well for my party; that's why I'm here.
But you see, the problem is that we're always outnumbered when the vote comes. But the fact is, I feel that the process here can proceed. You want an answer very early one way or the other, not hanging there to say -- if the government says no, you know exactly where you're at; if they say yes, you know where you're at. Right now, it's hanging there because they are too busy doing their work. This is the work itself.
Mr Ireland: First off, Mr Curling, I thank you for your comments. I think on behalf of the board too, we sincerely appreciate you taking your time to come down and see first hand what the market is actually all about and tour the facilities. We would encourage you to come back at some point later in the spring, when the weather's a little better, when the market, the whole terminal, is a little busier, and just see first hand what it's like when it's quite active, as opposed to yesterday, when basically they were just cleaning up.
Mr McLean: At 5 am.
Mr Villeneuve: At 4 am.
Mr John C. Cleary (Cornwall): Any time after midnight.
Mr Curling: I don't know if you know that where I'm from in Scarborough North, there are quite a few farmers and I'm quite familiar with 5 o'clock waking up to the bellowing of cows.
Mr Ireland: You don't have to be there quite that early. But I think, though, that as a result with our initial meeting in December -- somebody commented on who attended from the board yesterday. Under normal circumstances, I think our whole board would've been there. I think that was shown at our initial meeting back in December. I encouraged the whole board to come, which they did, to that meeting. We had the first one back in December. They would've all been here yesterday and today. That just shows the interest that the board does have.
Mr Curling: One of the things I may ask -- and maybe the legislative research could give us that -- I would like to get the section of the act that you were concerned about because I'm just learning that part. That was my question. As soon as I heard your presentation, I didn't know what part of the act that you wanted amended and whether or not, as Marchese was trying to make the point, you were talking about legislation or regulations. Somehow I think maybe it could've been done; I don't know.
The lawyers may know that. Maybe it could be done in regulations. But in fact it was too easy for them to do and they said, "Maybe it's legislation." So therefore legislation then forced you back where it has to go through the House agenda while the regulation itself could take the authority and the responsibility of the minister. Forget about the Lieutenant Governor, because that's the minister we're talking about sitting down there one day and saying, "Do it," and it's been done. I'm not familiar with the regulation or the legislation that it governs -- I mean for the first time -- about section 13 of the act that you're talking about.
The Chair: Mr Curling, our researcher would like to respond to you.
Mr Jerry Richmond: Mr Curling, members of the committee, I do have a copy of the latest version of the act in my office and the two latest regulations, 871 and 872. I'd be pleased, if it's convenient for you over lunch hour or if you wish them sooner, I could go to my office and get copies made for all the committee. If over lunch hour would suffice, I'll do it then. If you want it now, I'll make the necessary arrangements now.
Mr Curling: Over lunch hour is fine with me. I just want to know what we're talking about. As a matter of fact, it really, in a sense if I dare say it, doesn't matter because it's the process I want to speak of more. But when we were speaking about what act I was speaking about, but the fact is that process of having --
Mr Richmond: Maybe I will, if you'd excuse me, go over to my office and get a set run off for all committee members and bring them back.
Mr Northcote: I have a set here you can borrow.
Interjections.
The Chair: All right. Continue, Mr Curling.
Mr Curling: Yes. And so we know exactly what we're talking about, and on the other hand that if there are any other ways in which we can assist you in encouraging the government to move on this -- and I'm not saying to act on it one way or the other; just act on it and decide whether they're going to amend the act or they're going to make it a regulation and change it to make you have that provision in which to do the necessary changes you want there.
I know that my party will be happy to do so and I know that the government has the capability to do this in a very, very short time. But the fact is that having the capability and doing it is another matter. But I know they do have the capability of the numbers in the House in controlling what gets on the agenda. They can do that.
Now, as you know, if there's a legislation change, you're looking somewhere when the House opens back again in March or so before that introduction happens. But if it's regulation, that can be done immediately. I just wanted to make those comments because I think we're arguing about certain things that bother me a bit. One of the things that you had said there is that it's almost through a test, that if you put it through the courts, you are scared to lose your cases. All this does, with all respect to the lawyers around, is give lawyers money. And then the fact is it wastes time and then others sit on the fence and wait to see who are the winners and losers. As you said, if you lose in the process through the courts, there are others who will challenge you beyond. This is completely unnecessary.
The commendable part about the Ontario Food Terminal is the fact you get no money from the government. You run an efficient system, from what I see, and all you need are the proper regulations or legislation to do the job. I don't see why we as legislators can't do that job.
Mr Jeff Wilson: I'd like to respond, if I could, to the comments. They're certainly appreciated, as our chairman stated. But I think also what we're dealing with here is the maturing of an industry out there. While food itself is a significant component of the Ontario economy, it's somewhat vague as to what role the agrarian society or farmers play in this Ontario economy. I think we all accept that because we're really not very many people. We acknowledge when we're talking commercial farmers, we're talking somewhere between 40,000 and 60,000. But nevertheless, we're still contributing an aggregate of about $1.5 billion of economic activity.
In the past, we basically as farm groups backed off on some of these types of initiatives where we felt there was a role to be played by changes in regulations. What we're saying now is, if we're going to be there in the game serving Ontario society consumers and providing employment, we're going to need some tools. We have definitive requests from government that we're going to require as farmers out there in order to get through this. We're not asking for deferential treatment. We're basically asking, especially in this particular context, for a specific regulation that gives us a fair shot in this game that we're dealing with.
Mr Curling: Let me just make some other comments too, because it's important, on what were some of the reservations that I had before. I think I mentioned earlier on when you came before us that the palate of Ontario has changed dramatically because of its demographics and its greater ethnicity. I was worried somehow that the kind of food that Ontario produced only would not really satisfy the palate of many people. Having taken an action to do that, what I saw out there as far as even the ugli fruit from Jamaica -- if I had to comment on one, the fact is that it is there and provisions are being made to accommodate that.
What you're saying now, on the other hand, the Ontario farmers and the growers here, is that somehow they should have an arena, an area, in which they can be protected while making provisions for those other, if you want to call them such, imports, which they are. So I am very comfortable now and I want to put that on record because the first time I was quite aggressive in the fact that, why are you dominating this space only with that? But having seen it and understanding it now, I realize that you are making provision, and that's good.
Mr Ireland: Mr Curling, if I can just add to what Jeff said, as he's commented, our industry, the fruit and vegetable industry certainly, as most of the other agricultural commodities too, is going through major changes right now because the world has become so small, which you saw yesterday. The days of an Ontario producer being able to market his products and just say, "Because it's Ontario," are gone. The consumer's not going to buy just because it's Ontario. If he doesn't supply the quality that the marketplace demands and the consistency of supply, he's not going to be around. You can't blame the retailer. They have to have a consistent source of supply and the quality the consumer demands, because if the Ontario producer isn't going to supply it, somebody else is going to.
Mr Cleary: To follow up on what my colleague said in the way of a comment, these regulations, I guess, you tell us have been of great importance to you for many, many years. I guess that I've learned quite a bit in the last few days about that, and it should be equally as important to each of us as members. I would hope there would be movement that would make your job at the terminal much easier too.
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The other thing I would like to mention maybe in the way of a comment is that in our part of Ontario, and I think I've mentioned it before, there's been a lot of problems in the labour movement between provinces and also our truckers going into another province, facing penalties and everything else that goes along with it. On agricultural produce, some of them have come into my office and they've complained, more so in the summer months when the berry season is on, the strawberries and the raspberries. They tell me they have more difficulty getting Ontario produce than they do the province of Quebec, and that was of great concern to them.
In fact, I think up as far as Brockville or west that it would mostly be produce from another province, and they're very concerned about that. I know that you people, as board members, have been working very hard and you know about the issue. It's more of a comment than it is a question.
My colleagues talked a little bit about pesticides and chemicals on your produce. As board members, I know it affects the federal people and the provincial people. Maybe you'd like to comment on a better way that this could be handled, instead of just the spot inspections that you talked about.
Mr Ireland: I think we have to be clear. There are two issues. There is the grade adherence and there's the issue of pesticide residues. Both of them are the responsibility of the federal inspection, pesticides under Agriculture Canada, as well as the Ministry of Health now, but they also work in conjunction with the related provincial ministries on inspection.
The sampling is not just a hit or miss. It's based upon a model to give a representative sample of what comes in, both imported and domestically produced product, the idea being that if a problem occurs, the problem becomes identified, visible, so that the problem can be dealt with.
When we talk about inspection relating to grade adherence, that originates federally. I think we're all aware there is a big movement afoot to deregulate that completely. So the farmers have a vested interest, along with possibly the wholesalers and consumers as to how that pans out in the real world, because there is talk of doing away with designating a grade as well as adhering to grade standards.
But one of the things we have to be clear on, on pesticides specifically, is that back when we were doing roughly 50,000 samples nationally on all foods, basically what the sampling was bringing out is, bluntly, whether we like it or not, there isn't a problem. What we've been doing in the last six years is increasing that sample base approximately 50,000 samples a year. In other words, we will be sampling somewhere in the neighbourhood of 300,000 food samples this year specifically for pesticide residues and the reality is that other than some spot moments -- and I can give you an example. Last April, Florida strawberries, because of the rains, were coming in with a fairly high detectable level of the fungicide Captan. It was identified and the problem was dealt with very expediently, because the reality is that human health is at issue.
So the question becomes, what could we do better to the system? The problem originated in another country. The problem was identified here through this model of random sampling and the problem was dealt with to the satisfaction of all the related regulatory bodies involved. But, once again, that is strictly a government body that does that initiative, that type of work.
As the food terminal board, we are facilitators of running the entity. As well, we have incorporated and helped the inspection services wherever possible. In fact, Agriculture Canada is trying out a new pilot project now. They have a temporary facility on site at the food terminal to deal with their increasing random samplings of both grade and pesticides.
In other words, we can accommodate the system but the system is devised by the politicians.
Mr Villeneuve: I'm fairly satisfied that I have no problem with opening up the act, the leases. We understand that there are some people who have the original lease subleased with large profits. That's beyond your control. Is there any possibility that this may be a factor if the act is opened and some of the people who are subleasing, or whatever, would bring forth -- what are your thoughts, legal opinion on that area, which tends to be controversial at times?
Mr Carsley: The fact is that the leases are there. They were given in perpetuity. They have been an issue with all political parties. I know that the previous committee received legal advice on this. Frankly, my understanding is that the leases definitely could be broken, if you wanted, if some compensation were paid. That compensation could end up being quite high.
The people at the terminal who have those leases, some of them do change hands for a considerable amount of money. That, I should say too, with the recession has declined somewhat, but one must remember too that in some of these transactions the people are buying a complete business. People tend to look at it being the business changed hands and it's just for the lease. You must remember that most of the tenants have put in fairly significant leasehold improvements and that sort of thing. So when people say the tenants are receiving this great amount of money, you must remember that often a whole business is being purchased, with its customer list etc, and also various other assets. That's a way to defend it.
What the politicians want to do with the leases is up to the politicians. We as a board tried last time and we tried, as our former chairman will tell you, quite hard, based on the committee's recommendation, to get our major A and B leaseholders to agree to a change and to agree to do away with the perpetual feature of the lease. Of course, they wouldn't do it. We were not negotiating from strength. We had no real levers at all.
It's a bit of a conundrum that's been faced by all three political parties. We feel that the lease became the biggest issue, in our last go-round with the committee. I think I speak for our directors that if we get bogged down completely in the lease, we're not going to achieve really very much.
Mr Villeneuve: But is it not going to be a factor if the act is opened that there will be some people kicking over the traces, as we say on the farm?
Mr Carsley: That's why we were sort of hoping that the all-party committee here could give us some help, because it's our understanding, just reading between the lines, that if the act gets in the House and everybody starts chipping away at it, then chances are the thing might fall by the wayside. I think our directors and my associate Bruce Nicholas have put forward their opinions in a very firm manner. We do feel that we need, apart from the leases, some changes in our act, and one of the main reasons we need them is to try to control the origin of product in the farmers' market.
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Mr Villeneuve: I have no problem at all with that aspect of opening up the act, but I think inevitably, where there are vested interests, they would like to see the perpetual leases be looked at while the act is being opened up. That does not affect the farmers' market area, I gather, but it certainly does affect units A and B.
Mr Carsley: That's correct. It doesn't really affect the farmers' market to any degree at all.
I should point out too, subleasing was an issue last time. As far as I know, I think we only have one company now that is subletting space. Am I not right, Bruce?
Mr Nicholas: Yes.
Mr Carsley: Yes, there were several before. There aren't any now.
Mr Villeneuve: I guess as that number of subleases is reduced, it's less of a problem.
Mr Carsley: When we were talking with the last committee, I think we had three or four of them.
Mr Villeneuve: I also recall, I believe, you had one stall which remained unused for a period of time.
Mr Carsley: Yes. I have to refer to my associate.
Mr Nicholas: Was it 18 months?
Mr Carsley: Almost two years.
Mr Villeneuve: Certainly the goodwill that was there prior to it going vacant -- the sublease would not be nearly as lucrative as someone who is taking over from an ongoing --
Mr Carsley: That's true.
Mr Villeneuve: I think people don't differentiate the goodwill that goes with the list of customers and the ongoing business, as opposed to starting up from an empty stall.
Mr Carsley: Right, because there's no question that it's there if you move in right away after acquiring a business, even if you change the name.
Mr McLean: I want to follow up on that. If you had a vacant unit for two years, did you receive any rental from that?
Mr Carsley: Indeed we did. If the perpetual lease has a good point, if you want, during a recession of course we received full rent for that because the lessee wanted to keep that lease intact. So we didn't lose any rent at all. Conversely, with our short-term leases, that short-term leaseholder cost centre, where we had a problem -- well, it was a situation where the business really fell by the wayside and we were left with space to rent in our short-term leaseholder, two sections of it. That space was available for over a year also. We advertised it and nobody wanted it until just recently.
Mr McLean: You have brokers at the terminal. Could that broker buy a carload of potatoes from PEI and have it directed to, say, the state of Maine or to Buffalo, to another country?
Mr Carsley: Yes, I suppose the broker could be an exporter too. I'm not sure that many of them do export. Is that your question?
Mr McLean: Well, he's buying out of province. He's buying from Prince Edward Island, a carload of potatoes, and he is routing them through Ontario to another country. That broker can do that.
Mr Carsley: That could happen, sure. I think the broker can certainly do that.
Mr McLean: Is it happening?
Mr Carsley: I'm not that familiar with how all the brokers operate, but I would say, just based on what I know, it doesn't happen very often if it happens at all. It could happen.
Mr McLean: We talked earlier about the apples coming from Washington and BC, and you have them both there, I'm sure. Would there be a difference in the price of those apples? Would it vary substantially?
Mr Ireland: It could, but not necessarily. Often apples will come in from BC; they can come in on consignment.
Mr McLean: Would the ones that come in from Meaford or the Owen Sound area be the same price, roughly?
Mr Ireland: Yes, they could.
Mr McLean: I would like your clarification on how you think NAFTA is going to affect your terminal, with the trade, with the barriers being changed. How do you think it's going to affect your terminal?
Mr Jeff Wilson: I think one of the things we have to be clear on is that in the past, up until deregulation occurred nationally with revisions of the CAPS act, the Canadian Agricultural Products Standards Act, over the last four years, a product had to come into Canada with a declared price. What we're finding now is that's no longer a requirement. So if you're a big shipper anywhere, say, Mexico, California, what have you, that's packing 20 or 30 trailer loads a day of product, those are going out of your facility; they're not all sold.
So what we're finding now, what's shaking out in the real world is that probably 70% of the product out there is sold at a firm price when it leaves FOB a packing facility in another jurisdiction. Those aren't the problem areas. It's the 30%, give or take, that are leaving that aren't sold, because the reality is that once that load hits Chicago, if it's not sold, the end market potential is reduced substantially. Because Toronto is a huge draw for product, because it's one of the major end-product centre terminal markets in North America, quite often that product can arrive right in the Toronto area without any price associated with it whatever, and the reality is it's going to be sold at some price.
That's where this deregulating and liberalizing trade issues are going to affect both us as producers, as well as foreign producers, because it is bringing some disruption in the concept of an orderly marketplace where you compete on the basis of quality, service and price, but you can't compete if something's being discounted 20%, 30%, 40%, 50%. We're starting to see that on a regular basis.
I think, for the record, we should also add, because the previous comments dealt with how the A and B wholesale units, I read into the question, viewed the changes to the farmers' market that, conversely, they're more concerned that what's happening in the farmers' market, or starting to happen, continues because they see a definite problem with their businesses in having to compete in a similar fashion with someone with nowhere near the overhead they're facing at the inside A and B units. So they're very supportive. Harold Brown, who is in Israel right now, would go on record as stating that they are supporting completely that the Ontario farmers' market be for Ontario farmers only.
Mr McLean: I guess the problem that I have is the dumping of a lower-grade product from another jurisdiction. They want to get rid of it quick because they know that it's deteriorating and they're going to bring it to this market. What do you say about that?
Mr Jeff Wilson: I guess the best way to answer it is that when you talk FOB shipping prices, where you used to see a firm price of, say, $21 a case for asparagus -- asparagus is a good example -- now you're seeing a range of $14 to $23. In other words, there are enough vagaries in the price quotes that you have to specifically quote on a specific day for a specific load. That's how they're getting around the issue of anti-dumping, because to prove in the produce industry that something is being dumped, as the apple producers found in their lawsuit nationally three years ago, is a very difficult and elusive issue to deal with in this day and age of liberalized trade.
Mr McLean: We talk about 300,000 inspections in the services. Are there inspections every day by inspectors at the market, and how many inspectors are there?
Mr Jeff Wilson: Bill could comment on the number. Obviously the number of inspectors -- when we're talking, once again, differentiating between pesticides, which is a separate entity, and grade and phytosanitary adherents, with grade and phytosanitary adherents is where we're seeing the most significant cutbacks in terms of personnel, but I don't personally have the number at the food terminal within Ag Canada.
Mr Carsley: I believe there are 20 inspectors. Their office is at the terminal, but they also inspect product coming into other locations such as a chain store like Loblaws, that type of thing, so some of them do go off the market. Basically, there are 20 of them. They also use the terminal facility as their training area. They train people there as well.
Mr McLean: The other question I have is profit and loss. Are you in a profit position? I see you have to have it audited every year. It has to go to the minister; a copy goes to the minister. What is the financial position? Do you still have outstanding hundreds of thousands?
Mr Carsley: This year, we are profitable for the first nine months; we have an excellent profit, which is good because, I think we're going to have to pay, although our chairman hasn't had a final opinion yet or a final, shall we say, decision yet from the treasurer. Our board doesn't feel we should be in the social contract. However, if in fact we have to pay the $70,000 dividend or tax, however you want to view it, it's a good thing we do have a reasonable profit for the first nine months. I think there's no question about the fact that we will be profitable this year.
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You mention our debt. Our debt, which we took on mainly to finance the refurbishing and addition to our cold storage, is quite significant. We are hoping that we can get the treasury to agree, along with the ministry, to give us a loan guarantee on our major piece of debt, which was taken out to finance our new cold storage.
The ministry has not wanted to do that, but we are hopeful -- we're still working with them -- that we can get that guarantee. That will save us some money, and we believe that the two loans together, the one we have the guarantee on and the major loan we don't have the guarantee on, if we could put them together into a longer term piece of debt and receive the government guarantee on both of them, then we'd be in a much better position financially. We are hoping to be able to do that.
Mr McLean: What are your two major debts? How much are they? What interest are you paying on them?
Mr Carsley: I think it's about $5.5 million in total, but the first loan comes due in 1996. What we'd like to do is take that loan, because we won't have it fully paid off in 1996 so we have to refinance anyway, and put them both together into one loan with our bankers at the Bank of Montreal. We've had a very good relationship with them over the years, and they've been very accommodating. But I think they'd like to see it as well. They'd feel more comfortable with the government guarantee. They have no guarantee at all now. They just lent the money based on the merits of the project.
Mr McLean: They have the facility as an asset.
Mr Carsley: No. They don't have anything. We can't pledge any of our assets without receiving the minister's approval. So none of our assets are pledged to anybody.
Ms Jenny Carter (Peterborough): I'd like to say I did enjoy the tour yesterday, and I think one thing that helped me understand was just why the permanent leaseholders are because you have those pictures of the old street traders who obviously were moved willy-nilly and also I guess some of your lessees have spent quite a lot of money on the facilities, which I guess is another factor.
The first question I wanted to ask has been partially answered at least. Obviously, it is your policy that you only have Ontario produce in the farmers' market. I understand that your main means of controlling that is the actual leases the people sign. I guess that worked for a while and now it's being challenged and the challenge was not destroyed, as it were; that's why you're in danger of having the whole thing blow up on you.
What do you do from one day to the next about this? Do you inspect the farmers' market to see whether other produce is coming in? Do you discourage it?
Mr Carsley: I can comment on that. As Bruce Nicholas said, we sort of bluff our way around. The people did sign leases with a clause in it saying that Ontario product only was to be sold in the farmers' market, so we use that.
However, one of the major operators who's challenging us has a very clever lawyer who has worked against the food terminal before, if you want, on the Grogenwagen potato case that was mentioned here, and so they're fully aware of what the situation is, and they have a very good feeling that unless we get some more oomph behind our act, if you want, that they'll win in court.
They have challenged us, this particular group. Well, it's not a group; it's a company with five brothers. They're tenants in the farmers' market. They started a court action against us in -- now I'm going to forget the year; I guess it was in 1991. Is that right? We went to the minister, who was Mr Ramsay at the time, and said, "Look, Minister, we have to do something," because his senior partner told me, quite frankly, he didn't think we had a hope -- now, he may not agree with the senior partner, but the senior partner, Dick Shibley, told me he didn't think we had a hope in hell of winning against this unless we had at the very least a regulation. We would have a lot better chance of winning in court if there was something in the act, even beyond a regulation, which would give us the power in the act.
In any case, we were challenged. What happened then was that the minister decided at the time that he would not support changing the act, but that there were obviously problems in the farmers' market. That's how the farmers' market task force came about, which did make a number of recommendations based on the farmers' market.
Ms Carter: If somebody is selling potatoes from the States, or whatever, how do they come by those? Do they go down with their trucks and buy them there?
Mr Carsley: They merely phone up a producer or a packer in the States, or talk to a broker in Ontario and buy them that way. It's very easy to buy them.
Ms Carter: In practice, what kind of radius would people who use the farmers' market come from? Parts of Ontario are a long way away. Parts of other provinces may be, in some cases, nearer.
Mr Carsley: To give you an idea, the buyers come from all over Ontario and the tenants are growers from basically all over Ontario -- mainly from southwest Ontario, the Bradford area and the Niagara area, but there are some from eastern Ontario as well. As we pointed out, we have 6,000 listed buyers and they come from all over the province. The backbone of our market, though, are the 400 to 500 greengrocery stores in the Oshawa to Niagara Falls area.
Ms Carter: Obviously, those are the population centres.
I just had two questions I wanted to raise. I don't think I've ever seen kumquats before and there were some other exotic things. It was nice to see. Does much of the produce coming in get used for manufacturing? Is it made into jams, marmalades, or whatever, or is it mostly used fresh?
Mr Carsley: The food processors don't really buy anything off the terminal -- the odd thing maybe, but nothing major -- so really it's just the householder who would do his or her own preserves. That's how it would be used.
Ms Carter: They would have their own lines of supply independently -- the manufacturers.
Mr Carsley: Yes, the processors make very large deals and they don't really buy off the terminal. What we're talking is just really product that's destined for the fresh market.
Ms Carter: We also talked about inspection and pesticides. One thing that bothers me is this whole question of radiation treatment of produce. I believe it is used for potatoes and onions, for example, to prevent them sprouting.
Mr Carsley: I think I'll have to defer to somebody else on that. I think it's legal in Canada now, but I'm not entirely sure. It certainly is in the States, I believe.
Mr Jeff Wilson: Actually, the process isn't an approved process in Canada right now, although we are leaders in developing the technology. Right now, the biggest potential for irradiation appears to be in Third World countries dealing with the phytosanitary component of complying with grade, which could be plant cleanliness, especially insects, as well as diseases and extending shelf life.
The US has set up a protocol that any product that is irradiated is identified by a specific graphic piece that identifies that product as being irradiated.
Dealing with the phytosanitary component, it still has to be dealt with. The other option of dealing with that, especially in developing countries, is to gas it in storage with something like methyl bromide. So the question becomes, we may not like irradiation, but it still has a bit more potential than some of the existing ways we're dealing with this, because we certainly don't want things like the Medfly and a number of other pest products coming into Canada. I think we've seen the result of that, such as the whole gypsy moth issue, to name another as well where we had been lax.
The Chair: Excuse me, our researcher has a technical question at this time.
Mr Richmond: Mr Carsley, following on from Miss Carter's question, I wonder, just for the benefit of the committee, earlier you provided me -- and I believe it was circulated to the committee -- with a sample dummy A or B unit lease. You discussed earlier the lease for the farmers' market which has that provision restricting the lessees, that they're only going to market Ontario-grown produce. I'm sure you can comply with this, could you provide a sample lease like that just to the clerk for the benefit of the committee?
Mr Carsley: Do you mean a farmers' market lease?
Mr Richmond: Yes.
Mr Carsley: Yes, certainly.
Mr Richmond: Just so the committee could see that clause that each of the lessees has signed in their lease.
Mr Carsley: We have one here, Jerry. Our vice-chairperson has just produced it. It's an open grower's stall document, but the clauses in it, I guess they're clauses 3 and 4 which pertain to the Ontario-only feature of the lease. They're basically the same for the dealers and the dealer-growers as well as the growers. So this lease generally, in terms of its format, is the same.
Mr Richmond: I was just thinking, if we wanted to make reference to it in the committee's report, we would have that.
Mr Carsley: We have one for you that you could have afterwards.
The Chair: Members of the committee, I'm going to suggest that because we have a subcommittee meeting which we have to deal with immediately following this morning's session, with your indulgence, we would adjourn the committee meeting at this point and start again at 2 o'clock to continue the portion that the government members are in the midst of. You are only about seven minutes into your 20 minutes. That way the subcommittee members could meet now and then still fulfil their noontime appointments in their own offices. Is that agreeable to the committee? All right. We will adjourn and resume again at 2 o'clock. Thank you to the deputants.
The committee recessed from 1152 to 1406.
The Chair: I call the afternoon session of the committee to order. The government caucus has used seven minutes of its 20-minute rotation. Ms Carter, you had the floor.
Ms Carter: I was asking about radiation treatment of fruits and vegetables, and we did carry on this conversation outside. I was asking whether somebody buying produce that had been irradiated would have any means of knowing that was the case.
Mr Jeff Wilson: As we discussed quickly outside, while irradiation is not allowed in Canada at this point -- although the technology, for the most part, has been developed here -- the United States, where the technology really seems to be taking off, is developing a protocol of identifying products that have been irradiated by a generic symbol on any product so that, as time goes on, people will associate that symbol with an irradiated product.
Ms Carter: But if something had been irradiated and didn't carry the symbol, would there be any means by which you could tell?
Mr Jeff Wilson: I'm not a scientist, but from what we've been led to believe, as in so many things we deal with in food, there's no way to discern technically that a product has been irradiated.
Ms Carter: We were given parts of the act, and I'm just looking at section 13. It says: "(1) Subject to the regulations, the board may make rules with respect to..." and then under (d) "the use by any person of the board's facilities and equipment." It looks to me as though that should cover the question of whether people from outside Ontario can use the farmer's market. Does that not cover it?
Mr Northcote: That was the question Mr Marchese asked earlier. In fact, we don't believe it can, because we don't believe it can be done by way of rule at all.
Ms Carter: In spite of what's here.
Mr Northcote: We have significant doubt as to whether it can be done by regulation, because it's really a legislative matter rather than an administrative matter.
Ms Carter: If the law were changed, how could you be sure that produce appearing at the farmer's market was grown in Ontario?
Mr Northcote: That's something I think management would have to answer.
Mr Carsley: It's generally fairly easy. First, you've got the markings on the container. Second, there are certain things that aren't available in Ontario in the wintertime etc -- there are certain commodities you just know aren't available -- and if they turn up there, you know they're from another jurisdiction. Also, the people in the terminal, particularly the growers, will certainly point to the fact that one of their neighbours, who might be a dealer or a grower-dealer, is selling something that is coming from another jurisdiction. So it's reasonably easy to tell. We can tell pretty easily.
Ms Carter: So you don't have people shipping out boxes labelled "Ontario" --
Mr Carsley: That can happen, but when we get a suspicion about that, the Ministry of Agriculture and Food sends its inspectors up to the packing house to make sure there's no hanky-panky going on. There's a fine for doing that because that's fraud, of course. But it is quite easy to control.
Ms Carter: So that aspect doesn't worry you.
Mr Carsley: No.
Mr Robert Frankford (Scarborough East): One of the things we saw yesterday was that rail usage is declining and is becoming quite minimal. Do you see it disappearing entirely, or are you required to have it?
Mr Carsley: Over time, rail usage has diminished to almost nothing. I think we're down to about 50 cars a year, and at one time all the imported product came by rail. I think we mentioned that to you. We used to get 6,000 or 7,000 cars a year. Now, it all comes by truck.
It's hard to say what might happen. The rail service really is so abysmal, both in Canada and the States, whether it can ever be resurrected I can't say. Certainly from a straight environmental point of view and, one would think, from a cost point of view, rail should be cheaper. But when it's a perishable product like produce, when it could come by truck from California in maybe 72 or 80 hours and from Florida in about 24 hours almost, it seems to be a better way of transporting it.
That's not to say that not many rail cars come into the terminal. Quite a bit of product does come piggyback and then is offloaded up at the freight yard and comes down that way. But generally, most of the product that comes to the terminal comes by truck, no question. But our directors want to keep a rail siding in case rail does become more active.
Mr Frankford: You don't have any particular opinion about the long term?
Mr Carsley: If it goes on like it is, you could probably almost forget about rail. That's my view.
Mr Frankford: I don't know if there are questions about continuing in the present site. Is the congestion of the roads there becoming a problem?
Mr Carsley: Actually, that's one of the issues the last committee addressed. They made some recommendations, some of which we acted on, and we have a much better road system now. We put in a one-way system that has worked tremendously well. The jam-ups, which used to be so terrible, have all but been eliminated, which is amazing, because we're still getting as many users in the market. All it took was trying to get the thing into a bit of order. We probably should have done it 20 years ago. But it works quite well now, so it isn't as congested as it once was.
Mr Frankford: You are referring just to your particular site, not the overall --
Mr Carsley: Oh, I see. Access to the terminal is generally pretty good because it is in a good location, it really is. A lot of our tenants come from the Niagara area, southwestern Ontario. The highway system into the terminal from rural Ontario is good and it's generally fairly good from around the city, too.
Mr Frankford: So there's no real question about moving elsewhere.
Mr Carsley: The board has looked occasionally. We had the odd developer coming along when that seemed to be a good area for development, the lakeshore lands etc. Our board took the approach, "Put your money where your mouth is," and nobody ever did. Right now, we're in an excellent location. I wouldn't think our board of directors would want to move particularly, unless there was a huge explosion in terms of growth.
Mr Frankford: In terms of long-term trends, with the development of megastores, does that retailing trend have the potential of making part of your operation less important?
Mr Carsley: Certainly that's a possibility. As some of these independent chain stores like Knob Hill Farms, Highland Farms, Sunkist, become bigger, they can buy more product direct. What we've found, though, at the terminal is that even though some of these larger players are now buying more product direct, there always seem to be some smaller greengrocer types who are getting bigger, so it tends to be a bit of a cycle; we haven't suffered as much as you might think. If you can believe it, we get about 100 new buyers a month; now, some people fall off at the other end. It's the ethnic population driving this whole thing, the Koreans particularly. They're all in the greengrocery business or the convenience store business, that type of thing.
Mr Frankford: Do things like the Price Club, and I don't know about Wal-Mart --
Mr Carsley: Price Club does have produce in limited amounts, but it's my understanding -- maybe Gary and Jeff know more about this than I do -- that Price Club actually deals through a wholesaler who buys from the terminal.
You must remember that in Ontario the three major chain stores have some 68% of the business, but over the last 10 years that share has declined. We feel the market certainly helps in that regard, because it's a place where the smaller independent store owners can go to buy good quality produce at competitive prices.
Mr Frankford: So there is a strong countertrend to decentralization.
Mr Carsley: Yes.
Mr Jeff Wilson: I think that bears out the fact that different people want different things in their shopping patterns and habits. Some people want strictly price, and there are facilities and entities now being developed to deal with that, with minimal service, a little more effort required to purchase there, but substantial savings. It's just like the same types of options we had when we ate our lunch today: Some of us want to get in and out quickly; some of us want a nice meal. That reflects in the price we're going to pay all along the line and it tends to reflect in the types of businesses that are being set up to reflect the consumer demand.
Ms Harrington: I want to bring to your attention the Toronto Star. I just saw it during the noonhour. It's got a wonderful section about all the new fruits and vegetables coming on line here, and I just wanted to quote. "The diverse ethnic population, a growing nutrition awareness and our desire to enjoy new taste pleasures have brought the global market to our shopping basket." It goes on to explain how to use and how to eat these new things. So it looks like you do have a bright future ahead of you. I'll pass this around for anyone on the committee who's interested.
What we have to do today is resolve the statement you made at the outset this morning that you do not have the power to run an efficient operation. We've heard a lot this morning about what not having the power means. I think you've explained that as much as you can. Are there other ways besides the Ontario-only question, which we've dealt with, in which you feel you are limited in your corporate decision-making? If we're going to look at the act, we have to have a whole list, not just of the Ontario-only question but other ways in which you feel your corporate decision-making is inadequate. Also, at the same time, we should be looking at any other new opportunities for moving your operation into the future that you'd like to be taking advantage of: changes, planning ahead.
Mr Carsley: Yes, there are other parts of our operation which would benefit by an updating of the act. We mentioned that we have put forward a draft of an updated act that covers most of the things our board feels are required. This has been looked at by people in the ministry on occasion, and the legal branch of the ministry found it to be acceptable and covered most of the areas we felt were lacking.
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Ms Harrington: But in what other ways do you feel your power is limited?
Mr Carsley: There are certain other things we can't do. This is a bit extreme, but we have lots of waste wood around the terminal, and say we wanted to go into business, a pallet repair operation. Theoretically, we couldn't do that, because our act doesn't allow for it. That's sort of an outside case.
There are certain fees we charge now that we don't really have the authority to charge. While this has never been challenged, we might have some difficulty getting it through the courts if it became a legal issue.
We can't license anything, for instance. If you've got our act there, it says we can raise money through issuing securities, we can raise money through rents, that type of thing. Bill, correct me if I'm wrong, but our powers are basically limited to those two things.
Mr Northcote: That's correct. To take an example of what you were suggesting, there is a legal difference between leasing premises and licensing premises, and there are some technical difficulties that arise from the way the farmers' market operates. The current practice is that if the person who has leased the premises doesn't show up by a specified time, someone else is permitted to use it on a daily basis. Legally, because of the board's limited powers, that could be problematic if anyone challenged it. It's clearly in the board's interest to have space that's not being used on that day to be occupied because that contributes to the vibrancy of the farmers' market. That's an example.
There are other examples of things that are not in the act and regulations and should be. For example, you mentioned the conflict-of-interest guidelines before, of which there are none at all. There are some matters relating to the way the regulations are prepared that interfere with the board's ability to police and operate effectively. The sections that deal with penalties for breaching the act by people in the terminal are such that the fines are often so low that they're licensing fees in effect.
Ms Harrington: That's another question I wanted to bring up. Even if you had the legislation or the power, how would you actually ensure that your produce was, say, Ontario grown? I notice that in your lease you have a list of things people have to do. I just wondered how you enforced these.
Mr Jeff Wilson: One answer would be that one of the requirements to sell any produce in Ontario is to have the grower's name identified as well as the origin. I operate under the name Birkbank Farms, RR 3 Orton, Ontario. That has to be, by law, on every container I sell. But if, for example, I wanted to circumvent or abuse the system and decided to in my own containers put a product grown elsewhere that I may have got a deal on, just repacked it into my own containers, that's something the food terminal board itself has very little control over but something that inspection services within the Ministry of Agriculture and Food would take great exception to, because that is in contravention of its regulations.
Those types of things tend to crop up. We all hear terms like "whistleblowers." Well, we're all whistleblowers when it's in our own best interest, and the farmers operating out of the farmers' market are very quick to spot something out of the ordinary, especially out of season.
Ms Harrington: So you can ensure, generally.
Mr Cleary: In the last round, I was talking a little to Jeff about the inspection. Are there better ways than the way they're doing it now?
Mr Jeff Wilson: To answer a question with a question: What are we trying to accomplish? If the basic premise is that the product meets a declared grade, has all the requirements of source, country and grower origin, and we have a system in place that's giving us, through a representative model, that it is safe from pesticide residues or other phyto sanitary issues, which could be plant disease or plant insects, then what more do we really want? In other words, anything you want could be accommodated, but there is a balance: At what cost? We'll take 300,000 pesticide samples this year, and from what we've been determining from the various residue labs around, there's about $170 cost per sample. It's proving, as many of us with a vested interest as farmers suspected but the regulators are finding as well, that we really don't have a problem out there, and if there is a problem it's identified and dealt with. The question becomes, we're expending a significant amount of resources into an area and are there better ways we could expend those resources? But anything could be accomplished. We could sample every load that comes in. It could physically be possible.
Mr Cleary: In other words, we could say that your board is satisfied with the way things are now.
Mr Jeff Wilson: The board as running an entity that really has no direct connection with these two issues of inspections, being pesticides and grade adherence. To a degree, the proof is in the pudding, as it were: We find that on balance, the product at the Ontario Food Terminal, in grade terms, is generally noticeably above the declared grade. That's the competitive pressure of the marketplace.
By increasing over the last six years approximately a fourfold number of samples we're taking on pesticides, they're showing once again that the incidence of even pesticide detection is declining over that same period of time. In other words, we know more as growers about how we're managing the whole issue of pest management so we're doing a better job on the farms, which is translating all the way through.
For information purposes, in Ontario we have a grower certification program on pesticides now. We have 42,000 farmers certified. These are all contributing to -- call it assuring the consumer, but assuring in a definitive manner that the food we're producing is safe.
Mr Ireland: If I could add, there are certainly areas at the federal level that I feel could be improved on.
Mr Cleary: That'll probably happen now.
Mr Marchese: Hear, hear, John.
Mr Cleary: Thank you. Another thing, and we got into it briefly yesterday out at the terminal, is the social contract. I didn't understand that we got a direct answer one way or the other about whether you will be involved. I think the figure was $70,000.
Mr Ireland: We took the opinion that we don't get any government moneys, as was stated earlier, and we felt we shouldn't come under the social contract. As of now, of course we do. We have spoken with some of the other government agencies and had support from at least one, wasn't it?
Mr Carsley: A couple.
Mr Ireland: A couple agreed with the approach we had taken. We have sent in a response, our feeling about it. I've had a response from the Premier that he had directed it to the Treasurer, but we haven't had a response back yet.
Mr Cleary: It's your feeling at the moment that you will have to pay the $70,000?
Mr Ireland: I'm assuming we do, but we don't agree with it. We feel we shouldn't come under it.
Mr Cleary: The next thing is producers. In parts of Ontario where I go they tell me that one of their biggest problems in being competitive is the minimum wage changing from year to year. Would you have any comments on that?
Mr Ireland: That was a question discussed with the Minister of Agriculture when he was at our convention last week. He understands our position; in fact, he's asked us as various commodities to give him some background data on what is happening to some of our commodities as a result. Particularly in one industry, one commodity, I just looked at the data yesterday and it was a 41% increase in our minimum wage over the last five years. There's also what's happening with our other costs, but our market revenues have not gone up accordingly; in fact, they've gone the other way.
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Mr Curling: I was going through the contract. I think it's section 3, or maybe there are others; I don't know. Is that the area that says only food grown in Ontario?
Mr Carsley: Is that the farmers' market lease?
Mr Curling: Yes.
Mr Carsley: Section 4 indicates it should be Ontario-grown product sold in the farmers' market.
Mr Curling: Did I hear you correctly that there are those who have brought produce in from outside of Ontario, but that if you challenge them in court you could lose on this section?
Mr Carsley: That's right. We went to court and the injunction was given to the potato grower, Mr Grogenwagen, who challenged us. I don't have it here, but he got an injunction to continue selling the potatoes. The judge had a fairly lengthy description of why the injunction was given in his favour which basically indicates: "You, as a board, don't have the authority in your act nor do you have a regulation that pertains to this situation. Just because a bunch of directors got together and decided they were going to change the leases in 1975, that to me does not hold any water, because basically you're a creature of statute, a government agency, and this is not referred to in any way in your act or a regulation. Therefore, I am granting this particular grower an injunction." The board at that time never took it to trial because we thought we'd lose.
Mr Curling: When did you first put this case before the government? I presume it was a government before this one. How long have you been trying to have this changed?
Mr Carsley: I've been at the food terminal now for 11 years. The first time I went to visit the ministry with our chairman was about 1984, and he was pressing for changes then.
Mr Curling: Three different parties have had to wrestle with this, or ignore this, in some respects. In other words, in 1984 the Conservative Party was just about to give way to a good progressive government called the Liberals, and then after --
Mr Carsley: I'm just being facetious, of course, but I'm afraid the good progressive government let us down too.
Mr Curling: That's exactly what I'm saying. You took away my thunder. The progressive government didn't act on it, and now there's another government.
Mr Marchese: And then the good liberals came.
Mr Curling: And then the wonderful NDP came. There seems to be some reason government doesn't want to implement that. It's consistent among all governments. Is there something you could tell us to help this rather progressive outgoing government prevent this? There seems to be something there, though. When we speak to you, everyone wants to do this thing, but somehow it's not being done.
Mr Carsley: Clearly, what has to be brought forward is what we've been bringing forward to the committee: that this is going to help the Ontario growers who sell at the terminal. That is one of the reasons, and one of the other reasons is that the act is totally outdated. It is an act of government of 1946 and, as our lawyer just pointed out, there's nothing on conflict of interest or anything like that in the act. It's very outdated. Times have changed, and a number of the things we do we don't even have the authority to do. We get away with them, seemingly.
If you want to have a document to support this in the House, we will write you one that will be ironclad, Mr Curling, let me tell you. No one will be able to turn it down.
Mr Curling: Oh, good. Maybe you weren't giving any of the past progressive governments that document. What you have just told me is why we should, but what I asked is that there must be a downside -- I think Mr McLean asked before -- and what is the downside on this? If we know the downside of making that change, we can start addressing that. Everything you told me points to the direction that it's old legislation and it should go; that we need something to protect Ontario growers and ensure they compete in a good environment and not have dumping etc, all those other things. But what I'm searching for is the downside, why it has not been proceeded with.
Mr Jeff Wilson: This isn't the first example where either provincial governments or federal governments have viewed an agricultural issue as being relevantly insignificant. We're dealing with a federal seed issue right now on crossbreeding and a cross-line of seeds that wasn't viewed as in the national interest and therefore was turned down at the Supreme Court.
We're at a point in time now, though, where -- there was a question earlier on about minimum wage -- issues affect farmers as well as other sectors, and we feel it's fully conversant that we accept there are issues out there that are current in how they've originated, whether they be trade issues, labour issues, what have you. Whether or not they're going to have a significant effect in aggregate, certainly they are going to have some effect. It's difficult to measure; I think we all have to acknowledge that.
What we're looking at now as a farm group is that this may not be viewed as a significantly interesting issue to Ontario society as a whole, but it's certainly an important issue to the Ontario farmers. It behooves you to consider this in that context. I would suggest the downside is just that: that it just isn't and hasn't been, through the various governments you've eloquently talked about, viewed as a provincially significant issue and therefore we really haven't dealt with it. But as all these other issues collectively come to a head, we're basically looking at, how do we position ourselves as having a chance to be competitive? You can't legislate me to be a competitive farmer, but you can provide the environment that if I'm efficient and do my job, I'm going to have a chance.
Mr Ireland: I'd just add that I don't feel the present board is afraid to pursue the issue. We're quite prepared to do that, but over the course of the past year we've kind of been -- I shouldn't say discouraged, but looking at other avenues. There's a feeling that it may be a long, drawn-out process to try to change the act when maybe it's not a high-priority item for the government of the day to get it through the Legislature; that maybe an easier way to do it would be to try to get a change in the regulations. But it doesn't appear at the moment that a change in the regulations is going to be the satisfactory way to go. Obviously, a change in the act would be the proper policy, to have in place for the terminal.
Mr Curling: If I should become the Minister of Agriculture, this would be one of my priorities. And don't you say anything.
Mr Murdoch: I'll be quiet.
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The Chair: We'll all try not to say anything.
Before we go to the next rotation, we do have a subcommittee report. Now that all the members are here, I thought we would do that little bit of business.
First of all, two reports are to be drafted tomorrow: the WCB and the Ontario Food Terminal report. If the committee is in agreement, we'll do them in that order: We'll start with the WCB in the morning, however long it takes, and then continue with the drafting of the report on the Ontario Food Terminal. The reason we need an agreement on that is that we will have to get our other researcher here to do the other report. Is that okay, that we do WCB and then the Ontario Food Terminal tomorrow? Okay.
The report of the subcommittee that met at noon is that we are sending a second letter to the Employment Equity Commissioner, Ms Juanita Westmoreland-Traore, to invite her to two days of her choice to be accommodated into her schedule, and we've asked for a response by noon tomorrow.
I think that was all we discussed at the subcommittee. If that's acceptable, I'm just giving that as a verbal report of the subcommittee that met at noon today. Are there any questions? None?
Now it's the third party's turn in the rotation.
Mr McLean: This is the third time we've reviewed the terminal: 1984, and we had another go at it two or three years ago. The first time, I remember, was the perpetual problem with regard to the units. We were going to build 10 more, and there was a lot of discussion around that. There was legal advice received by both the committee and the food terminal with regard to the suites there, that they were perpetual.
This is the first time I've heard that we've really gone in depth with regard to fruit and produce grown in Ontario. Perhaps it's some of the members of your board who have shown the interest and spearheaded the move to define produce that's grown. I don't know whether you've seen this paper, but I wonder if there's anything on that page that is grown in Ontario.
Mr Jeff Wilson: Yes. Collard greens, the kohlrabi, the oyster mushrooms, Jerusalem artichokes, bok choy. I think that's it.
Interjection: And shiitakes too.
Mr Jeff Wilson: Oh, I didn't see that.
Mr McLean: So there are several.
Mr Jeff Wilson: I personally grow several of them.
Mr McLean: That's good to hear. I was curious about that, because it's important we know that.
When we had a tour yesterday, I noticed only one of those units sold flowers. Would those flowers be imported or bought from local producers?
Mr Carsley: Some of the potted plants, that maybe you didn't see -- they were down at the end of the unit -- are all locally grown in Ontario greenhouses, like the daffodils and the tulips. At the front you would have seen some carnations, which probably were not locally grown because nobody in Canada grows those large carnations.
Mr McLean: Would the majority of the flowers that go to the terminal be grown in Ontario?
Mr Carsley: In the farmers' market, yes. Generally, we try to set the thing up so it's Ontario.
Mr McLean: Do most of the flower shops in the surrounding cities and towns come to the market to buy their flowers?
Mr Carsley: Some of the flower shops do, but they generally go to other wholesalers and get product delivered. The bulk of our trade for flowers are the greengrocery stores, who all sell flowers, and the convenience stores. They generally buy at the terminal because it's a better place for them to go as they also buy produce at the same time. But the flower stores as such generally go to where they sell them at the Dutch clock auction, which is the flower growers' cooperative, and as well as local stuff there, they also sell imported product.
Mr McLean: What is the flower growers' cooperative? Do they have a terminal or a warehouse?
Mr Carsley: It's a cooperative which is supported by the growers. At one time they sold mostly local product, but they now sell some imported product as well. It's an option, on the Dutch clock basis, where the clock starts high and then it goes down type of thing.
Mr McLean: Where is that?
Mr Carsley: Somewhere in Mississauga. Grace Dekker is our chairperson. You go there, don't you?
Mrs Grace Dekker: Yes, we go there.
Mr McLean: That's why I asked the question. There's so blooming many flower shops around, and I wanted to know where they all came from.
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Mr Carsley: It's quite a growth market, cut flowers and the potted plants, bedding plants as well.
Mr McLean: I have no further questions.
The Chair: Mr Marchese, you're going to clear up about yesterday, are you?
Mr Marchese: No. I won't comment on that.
There are two things I want to pursue. One has to do with the act again that I want to ask the board members. If changing the act is going to take some time -- let's assume we're going to be doing that and that it will take some time -- what would you propose in the interim that could be done as the government proceeds with looking at changing the act? I'm just putting a hypothetical case. What would you propose we do in the interim by way of regulation if we had to take it in those two steps? What do you propose we could do in regulations that would be useful to the board as we proceed to change the act?
Mr Ireland: These thoughts have been going through my mind as a result of this morning: If we pursue this avenue, how long a process are we looking at? What's the end result going to be? What do we do in the meantime? To my way of thinking, the question is: Can we wait? Do we have to do something in the interim while we wait for an outcome? I'm almost of the opinion that we have to do something in the interim while we're waiting. I don't know whether we can, as Bruce stated this morning, continue to bluff our way through. Maybe we can. The board would have to make the decision; obviously, I can't.
If we're pursuing the avenue of looking at changing the act, then I'm not sure whether we're going to go too far in terms of looking at regulation change to exhaust the other avenue; whether that's going to be feasible or not. We had several options we could possibly look at. I don't know. I get different ideas running through my mind, but it's very difficult.
Mr Marchese: You can reflect on it if you like; you don't have to answer it immediately. I'll ask questions about something else, and if thoughts come to mind about things that could be done in the next three or four months or six months, it would be useful to have your impressions as opposed to us on our own having to direct the government as to what it could do in the next five months. We're asking for your input. If you don't have any quick impressions or impulses or ideas about what that could be --
Mr Jeff Wilson: The dilemma we're facing -- once again, my comments are as an individual -- is that the Ministry of Agriculture and Food put together a regulation it felt internally could deal with the issue and ran it through the Attorney General's department. Their opinion was that it was full of holes, as it were. That keeps taking us back to dealing with it on an act basis.
In the interim, we've got approximately five individuals who are literally waiting to find out whether they can or they can't. They're also suggesting that the minute they can, they're going to document whether that is becoming an integral part of their business, to use, if this thing drags on over a significant length of time, as part of their argument that: "I've been doing this for the last 18 months, two years, three years, and it's such an integral part of my business now that you're going to force me out of business." They're quite open with us as board members individually on how they plan to approach this.
The dilemma we're facing is that if this discussion were five years ago, immediately after the last court injunction, possibly we could have resolved that by way of an interim measure, but we're literally coming up against a hard wall right now.
Mr Ireland: I would almost be of the opinion that if there were tenants just waiting to see what was going to happen, if they were pushing this now but knew that the board had pursued it and it had gone before the Legislature and it was at first reading or wherever, I would think they'd be more inclined not to push until they see what the end result was going to be. I'm not sure whether the board would have to. If we made the initial step as far as you changing the act, I'm sure they would want to sit back and not push it too far until they knew the end result.
Mr Marchese: Obviously, the major one is the authority to restrict the sale of imported produce in the farmers' market. That's key. The other that one of you mentioned has to do with the fees you charge, fees or licensing, that is put into question in terms of your authority to do that. You're saying to both of these, which are major changes to the act, that you need to change the act. Are there things other than those that could be done by way of regulation in the interim that you would find useful? Are these the only ones that are important to deal with?
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Mr Carsley: We know we would have no difficulty with the registrar of regulations in changing our regulation 871, which is really the operational regulation, the one that states opening times and infractions for parking, speeding, that type of thing. That can be done without any change in the act, so that we can do. I don't think we need the committee's help on that particular one. But in terms of things such as charging fees, quite frankly, the registrar of regulations already turned us down on that by saying we didn't have any authority in our act to do that. We've been through that one.
Mr Marchese: But you're doing it. No one's questioned it, so it's not --
Mr Carsley: We do it and nobody's questioning it, but it's a very important source of income for us.
Mr Marchese: I understand that. Let me pursue the matter of regulation versus the act. As we know it, regulation has similar effect to a bill itself. Whatever you put in regulation has the similar effect of law as what you put into a bill. If you change the regulation, my view is that you could do what we need to do, as opposed to necessarily having to create an act for it. That's not your view?
Mr Northcote: No, it's not. It's not the view of the litigation counsel at our firm either, who incidentally was the counsel on the Supreme Court of Canada case in the 1960s. The concern arises from a technical difference as to whether or not this kind of matter has to be done in legislation or can be done in subordinate authority of government under regulation.
If the act itself said the board can make regulations respecting the sale of non-Ontario produce in the terminal, I'd be much more comfortable saying you could do that by way of regulation. Unfortunately, you can only have a regulation in respect to something for which there's a provision in the act that allows that power to be delegated. That's not in section 13, so we have real concerns about whether it would be effective to have it in the regulation.
In my view, if you put it in the regulation and then went back a year later and put it in the act, that's virtually tantamount to a concession that it wasn't properly in the regulation in the first place. I suspect that would call into doubt the acts that happened during that hiatus period.
Mr Marchese: I'm willing to accept that. I suspect that's probably a matter still of legal opinion, opposed to anything that can be proven either way.
Mr Northcote: You're right. I think it is a matter of legal opinion. The Attorney General's office happens to agree with our opinion as well, so that caused me a lot of concern.
The Chair: Has that opinion been given in writing?
Mr Northcote: It's a very informal opinion. It's reduced to a memorandum, not a learned document, as it were.
Mr Marchese: I have a question on the leases. It's been asked already, and I realize it's a difficult one for you to answer and for us to deal with. How to come to terms with it, how to resolve it, is something that obviously has bedevilled many. I wanted to ask your opinion about the breaking of the leases, legal or otherwise. The government could presumably come to an agreement with these leaseholders by compensating them; buying them out, in other words. That's one way of doing it.
Mr Northcote: I personally have doubt that you could reach an agreement with all of them at a reasonable price, in which case you'd be forced to legislate it by way of expropriation.
Mr Marchese: And if you expropriate, you would have a legal battle there as well.
Mr Northcote: I'm probably not qualified to express an opinion on that. As you know, in Canada there's no protection of property under our Charter of Rights so therefore the Legislature can do anything it wants to do by way of legislation.
Mr Marchese: I'm trying to explore what would happen under the various scenarios we consider, because as we consider it we need to look at how it would affect the market. On the one hand, many of us disagree with someone having a monopoly on this; on the other hand, we understand why they did it initially in the 1950s. In order to move them, they had to grant them something, so they gave them leases in perpetuity. I don't agree with it, but I understand why they did it.
But if you want to break that, there is a problem in terms of what the fallout of that is. How would it affect the market? Would it affect the market? If those people were not to be there any longer, let us say, who would replace them? Would that be easy? Would that be difficult? Would that cause some instability in the market? Would it be good, bad, advantageous or not? These are the kinds of questions we need to resolve as we raise this issue. It would be irresponsible for us to simply say, "This is a monopoly; we need to break it down," and the consequences no one is considering. That's what we need to consider, and I'd like your opinion, if you have one, on the possible consequences of any course of action we would take on the market itself.
Mr Jeff Wilson: To answer that, you have to look at the composition of our board, which has representatives of farmers, buyers, the wholesale group, the general public, consumers, what have you. I would argue that's what makes that board work. If that board was just farmers or just wholesalers, you would have such a vested interest that every decision they made would be slanted or biased in that direction so severely that they probably wouldn't stand the test of time.
Back when the market first moved to its present location, the farmers' market moved out either a year a year or two years previous to that and just about died. While at times as a farmer I don't always get along with the wholesalers and I question their motives, we have an uneasy but truce type of relationship because there are times they need me and, to be honest, there are times I need them, and that's what makes it work.
The buyers would suggest that if it were a fragmented system, overall everyone would lose. Right now, especially when we talk about the ethnic greengrocers springing up, they can go to that one end and source everything they need either directly from a farmer or wholesaler or that grey group in between. If that were fragmented and those people were out of there --
The other issue is the stability that exists in terms of farmers getting paid. That's becoming a significant issue in the province right now and they're looking at types of legislation to ensure that, but if the fundamental stability of a new tenant in there is at question, the spinoff is going to affect me in another detrimental way as a farmer.
While we don't necessarily always agree, we've learned to work together on this as an entity, for my benefit, for the wholesalers' benefit and, I would argue, for the consumers' and greengrocers benefits as well.
The Chair: Could we confirm who is who on the board? You have seven members. I think it would be good to know for the record, when you said you've got all this representation. Mr Ireland, you're a farmer?
Mr Ireland: Yes.
The Chair: Mrs Dekker?
Mrs Dekker: Farmer.
The Chair: And Ms Baltaz?
Mr Carsley: She's a public representative, representing the consumer of Ontario.
The Chair: Is she appointed?
Mr Carsley: She was appointed, yes.
The Chair: By whom?
Mr Carsley: By the Minister of Agriculture and Food.
The Chair: It's an order in council so her background is available. And Mr Brown?
Mr Carsley: He is a representative of the wholesalers. He used to have a business at the terminal but is no longer actively involved in a financial way, but he does represent the wholesalers.
The Chair: So he was a leaseholder and he sold his lease?
Mr Carsley: To his son. His son has taken over the business.
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The Chair: So he's a leaseholder through the family currently. And Ms Lahti?
Mr Carsley: She's from the public.
The Chair: Appointed by the government?
Mr Carsley: Yes.
The Chair: And Mr Rundle?
Mr Carsley: He's a buyer. He is a grower, but he is a buyer as well, so he acts as the buyer representative.
The Chair: And Mr Wilson?
Mr Jeff Wilson: I'm a farmer.
The Chair: Sorry to interrupt, Mr Marchese, but it's important, because we've never actually done that.
Ms Carter: You've raised the question of conflict of interest not being dealt with in the act. Could you say more about that?
Mr Carsley: At the last meetings the board had with the committee, conflict of interest became a very large issue. It was the opinion of our legal counsel at the time that in certain matters there really wasn't a conflict of interest. In essence, at the time the whole board was made up of people directly involved in the market, and the committee made a recommendation that there be people appointed to the board from the general public and that sort of thing, which of course the minister did follow.
The makeup of the board has changed, but it depends on how you look at it, I guess, about whether there was really a conflict because this was a working board, and from day one the board members had been people who were generally involved in the market so anything they voted on which pertained to the market one could have looked upon as being a conflict, which is really not the case. If you have a working board that is involved in the operation it's representing, they can't help but vote on things that someone might view as a conflict.
What we're getting at is that we, board members and our lawyers especially, would like to see conflict-of-interest guidelines apart from the guidelines expressed by the government; a comprehensive set of conflict-of-interest guidelines, either in one of our regulations or in our act, that spells it out very specifically, as you would have for a private business, say.
Ms Carter: So you'd know where you stood.
Mr Carsley: Exactly.
Ms Carter: Obviously, there are similar organizations in other jurisdictions, Europe or the States or whatever. How do they compare with the Ontario Food Terminal? Are there some which are privately owned? Are they publicly owned? Are they comparable in other ways?
Mr Carsley: There's a market system right across North America and Europe and South America somewhat similar to what we have here. Some of them are private and some of them are public. It all depends on the jurisdiction and how the market came about. At one time I think the government here would have been quite happy to have this market develop on a private basis, but no one was interested. In some jurisdictions, it has worked that way, where private people have gotten together.
There's an advantage in some respects in having the government involved, because there are certainly some markets in the States which have been taken over by, and I don't mind saying it, rather unsavoury people. Having the government in the act, Big Brother is watching, so to speak.
There are a number of things we do in our market that people come and look at, the way it's been financed and the way we operate. We have people coming from all over the world to look at us, who are now operating much larger markets than ours, but they look at it from the point of view that we seem to have a good reputation for the way we're organized and that sort of thing.
Ms Carter: So you are perceived as being the model, rather than somewhere else.
Mr Carsley: We'd like to think we are. Certainly we have lots of delegations from all over the world coming to see us.
Ms Carter: Do you go and look at others?
Mr Carsley: My associate, Bruce Nicholas, is a director of the market managers' association, and he's probably better able to speak about other markets than I am because he's seen most of the markets in the States. But I think I'm right in saying that we are one of the, shall we say, leaders in certain areas in terms of wholesale produce markets.
Mr Nicholas: We basically lead the pack as far as people in the produce business are concerned. The structure of the market has been copied in Australia. People have looked at that parking deck over the farmers' market as an innovative way of taking care of the farmers and the cars. Our central cold storage is unique; it maximizes the use of the facility. Nobody has a farmers' market like ours. Actually, ironically enough, we get more appreciation from out of the country than from within.
Ms Harrington: If there are other similar markets, what about their legislation? How is their framework? You say you're not enabled to do your job properly, not empowered to do it properly because of the legislation. In Montreal or Canadian cities, how does their legislation work?
Mr Carsley: Montreal is a private market. It has one major shareholder and then about 500 smaller shareholders, yet the land is owned by the municipality. I honestly don't know if they have any legislation, to be honest with you. I haven't seen anything.
Ms Harrington: What about the American counterparts?
Mr Carsley: Many of the American ones do have legislation in terms of the way they're set up. I'm going to defer to my colleague, but I don't think any have as definitive a legislative setup as we do. Maybe Bruce would like to comment on that.
Ms Harrington: Maybe they have more modern legislation.
Mr Nicholas: I'm not that familiar with the specific legislation. There are state systems in most of the eastern seaboard states, Florida, the Carolinas and Georgia, that have farmers' market systems. The specifics of how they treat origin of product within their legislation I'm not aware of, but one of the things that makes this market different from the American markets is that this is a strict wholesale market only and the American markets are basically combinations of wholesale-retail. Some of them do wholesale in the morning and retail later.
That's one of the major differences between our market and the American markets with this growth of the small independents, because our system of being wholesale fosters that independent trade that creates all that employment and all those jobs, whereas there there's more retail. I don't have the specific answers, but they'd be available; any of those states could provide them.
Mr Jeff Wilson: There are two additional points, the first one being that we are hosting an international meeting of market operators in May this year in Toronto, and that will certainly be one of the items we'll be discussing. But pertaining to the US, they integrate a little more their marketing legislation into how some of their terminal markets operate through their state marketing orders, whereas we have no liaison here in Ontario with our counterpart here, which would be the farm products marketing legislation. We've never explored any type of linkage with that. But a US state marketing order is similar to a marketing board decree here in Canada as to what you can or can't do in terms of selling generically within that state for that particular commodity.
Mr McLean: I have a supplementary on the question to do with conflict of interest. I'd like a clarification. It appears to me that most of your members are involved within the food terminal; there's probably one of the consumer groups on. Has anybody ever had to declare a conflict of interest on the board?
Mr Ireland: Not as long as I've been there, upwards of two years. We're all aware of the guidelines put down by the ministry under the memorandum of understanding; everybody's read them and we've discussed it, and to date anyway, no, it's never been declared.
Mr Nicholas: Mr Ireland is right: For the term of this board we really haven't had a conflict. But if a situation arose where a member had a specific issue related to their business, they would declare a conflict; ie, something to do with their lease or some such thing. It hasn't happened with this board so I'm not contradicting the chairman, but in prior boards if an issue came up, they would declare a conflict.
Mr McLean: So it has happened.
Mr Nicholas: Yes, it has.
The Chair: We've completed the rotation. Are there any other questions of the board members and the staff? We'd like to thank the representatives of the Ontario Food Terminal for your appearance here today. We will be drafting the report, as you've heard. We do that in camera, don't we?
Clerk of the Committee (Ms Lynn Mellor): No, it's on the record.
The Chair: All right, the drafting of the report will be on the open record.
Mr McLean: On a point of order, Madam Chair: Would we be able to get a copy of what they're going to draft by 10 am with regard to the concerns they raised that they wanted us to look at?
The Chair: That who has drafted?
Mr McLean: That they're going to draft about the changes they wanted in the legislation.
Mr Carsley: I think we can get something for you, yes. We do have a draft of the act, and while it may not be perfect and may not be ready for complete presentation, it would at least give you an idea of what we're looking at.
Mr Ireland: You want this by 10 o'clock in the morning, Mr McLean?
Mr McLean: I was hoping we'd be able to have something we could include in our report, a recommendation we could put in our report that such-and-such should take place, as recommended by the board.
Mr Ireland: What if we took that revised copy Bill is referring to and highlight the areas we want to concentrate on?
Mr McLean: And the draft of the change you want.
The Chair: You could fax that to the clerk's office. Thank you for your attendance today.
Are there any questions of the committee members? We'll deal with the WCB draft first thing at 10 o'clock tomorrow morning.
Mr Ireland: Madam Chairman, I'd just emphasize that we do appreciate you taking the time to come down to the terminal yesterday. Please keep in mind about coming back and visiting again at some point in the spring, when the weather gets better, and see it when it's at full activity.
The Chair: Thank you for that invitation.
Mr Marchese: Only if we get a basket of these exotic things. Otherwise, we're not going coming back.
Mr Ireland: As long as they're grown in Ontario.
The committee adjourned at 1512.