Antiquated system | In 2005, the auditor general advised creating a conflict of interest management process
The Canadian Dairy Commission’s failure to have a conflict of interest process illustrates the need to modernize the organization, say critics.
“This just shows how antiquated the whole system is,” Canadian Restaurant and Foodservices Association chief executive officer Garth Whyte said.
“It was written 40 years ago on a typewriter and the world has changed. These days, if you don’t have a conflict of interest process, you don’t hire from the industry.”
In a March report to Parliament, auditor general Michael Ferguson said the CDC is a well-run crown corporation that fulfils its legal obligations.
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However, he also noted, as did a predecessor five years before, that there is no rule for how to deal with the fact that active dairy farmers who are CDC commissioners could personally benefit when the commission sets it annual dairy support prices.
Two of the three current commissioners are actively involved in dairy farms, including CEO Jacques Laforge.
The CDC sets industrial milk price supports each December that indirectly influence prices paid for milk produced on dairy farms.
“The board does not have a process for directors to declare and manage conflicts of interest,” said the report.
The CDC agreed and promised to work with government officials to develop conflict of interest guidelines, but it also made the same promise in 2005 when a previous auditor general report made the same point.
Whyte, whose association has been one of the most vocal critics of supply management and CDC pricing policies, said the conflict of interest issue is part of the problem.
“This highlights a system that is made by dairy farmers for dairy farmers,” he said.
“It clearly is biased to dairy farmer interests, but who looks after our sector? Next to retail, we are the largest buyer of industrial milk and we have no say.”
Don Jarvis, president of the Dairy Processors’ Association of Canada, was an adviser to the auditor general when the 2005 recommendation to deal with conflict of interest was made.
“Our point is that there has to be a consultative committee that opens up the process to other parts of the industry,” he said.
“I was party to the 2005 auditor general process that said we have to address that, and dairy farmer conflict of interest is part of that.”
Jarvis said the fact that active dairy farmers can set a price that helps dairy farmer income shows the CDC rules were created in an earlier, perhaps simpler time.
“I really think it is showing its age,” he said. “That sort of a potential conflict would not be written into a crown corporation these days. And I don’t think it responds well to points made about the need to modernize.”
Jarvis and Whyte both said they have a good working relationship with the CDC and were not criticizing existing commissioners.
“But in this age, modern conflict of interest guidelines are just assumed,” said Whyte.
