The Canadian Dairy Commission does a good job fulfilling the terms of its dairy oversight legislation but has been slow in dealing with conflict-of-interest issues, says the federal auditor general.
In his first report tabled in Parliament, recently appointed Michael Ferguson included a review of the CDC that reached this conclusion: “We found no significant deficiencies in the commission’s systems and practices.”
However, a conflict-of-interest issue first flagged by a predecessor auditor general in 2005 has not been fixed, he reported.
“It is difficult for the three-person board to have the full range of skills needed for governance and the board does not have a process for directors to declare and manage conflicts of interest,” Ferguson said in the report on crown corporations.
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The problem is that legislation governing the 45-year-old crown corporation that oversees the operations of dairy supply management requires that at least one of its board members have “significant dairy production experience.”
The board sets dairy support prices each year that indirectly influence prices paid to farmers. And typically, the farmer representatives involved in that price-setting decision also have dairy operations that could be affected by the decision. Two of three current voting CDC board members have milk-producing ties:
- The chief executive officer is Jacques Laforge, a dairy farmer from New Brunswick and long-time Dairy Farmers of Canada president.
- Chair Randy Williamson represents the dairy processing sector.
- Gilles Martin is involved in a dairy farm at Riviere-Ouelle, Que.
Critics of the CDC, notably the Can-adian Restaurant and Foodservices Association, regularly complain that it is biased toward the producer sector because of its membership.
Their proof is that dairy support prices go up every year, and not necessarily in line with production cost increases.
The CDC said it agrees with the auditor general that a process is needed to deal with conflict of interest. It also agreed after the 2005 special audit, but nothing has changed.
“The board will create a provision in its bylaws that will require each member to put on record any existing conflicts under the act and will develop procedures to manage conflicts,” the commission said in response to the 2005 auditor general’s report.
“The board will create a provision in its bylaws that will require each member to put on record any existing conflicts under the act and will develop procedures to manage conflicts.”
It noted in its response to this year’s report that the CDC discussed the issue with the Privy Council Office, the government’s senior bureaucracy, after the last report “in an attempt to find a workable solution.”
In its response to the 2005 report, the commission noted: “The inherent conflict posed by the requirement that a board member have a background in dairy production … is a challenge.”
