Agriculture Committee on June 15th, 2006

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Lebeau. Jamaica didn't have a bobsled team either, until John Candy made the movie!

[Some hon. members]

Oh, oh!

[The Chair, Conservative, Gerry Ritz]

Mr. Gourde, for five minutes, please.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Good morning. One thing I should say is that, before we can decide where we are going, we have to understand where we have come from.

Agriculture in Canada developed over the past 100 years, in the wake of World Wars and everything else that happened in the world. Western Canada had huge expanses available for farming, and grew its grain industry until it became an enormous success for the Canadian economy. In Eastern Canada the dairy and meat industries were also very successful. Now we are seeing two huge successes coming up against each other, because they each want to continue being successful. This is a very important factor, which we must bear in mind.

At present, Canada's agricultural industry is at a turning point. As everyone says, we would like all industry participants to be able to make a living and we would like the sectors in eastern and western Canada both to continue growing.

Canada has 161 million acres of viable land. That is quite a garden for 30 million people. Of course, we will always have to take our production and turn it into products which are exportable, or which we can consume and which will improve Canadians' incomes. At present, the average revenue for those 161 million acres we have in Canada is $192 per acre. That certainly is not enough for everyone to live on.

Let us talk about the ethanol industry. Do you believe that investment in ethanol over the 10, 15 or 20 years to come could reduce our dependence on exports? Could it solve part of the problem and make it possible for our industries in the east and west to be sustained? I will give you a chance to answer. Thank you.

[The Chair, Conservative, Gerry Ritz]

Would anyone care to take a shot at that?

Go ahead, Ms. Koch.

[Alanna Koch]

With respect to the question you had on reducing Canada's dependence on exports, I guess I would like to say that I could predict very accurately what might happen in the next 10 to 20 years, but I think I can just broadly say that Canada will always be a great exporting nation in this world. We simply don't have the population to consume everything that we produce in this country, and we, as you said, are blessed with a great land base that is very productive. So we simply will continue to be very efficient and very productive farmers and, therefore, processors in this country. And I don't believe that we will ever be able to decrease, in a significant way, our dependence on exporting to other countries around the world.

[Darcy Davis]

I believe the same thing. We have this huge production capability. We have a growing population in Canada, especially in western Canada. However, our climate allows us to grow certain products.

Alberta is a semi-arid region that is very suitable to beef. It produces 50% of the cow herd and 70% of the fed cattle production. The trucks that haul our product, our beef product, south to the U.S. and Mexico return loaded with vegetables and fruit that we can't grow in our climate. So trade is good for everyone involved. If we can export beef to Japan and then in return, as everyone knows, we import things from Japan, like electronics and those types of things, we create a balance of trade in different products.

So if we can value-add by processing these products in Canada, we can increase jobs and do those kinds of things. But I always believe that we will have things that we do best, and those are the things that we'll have to export.

[The Chair, Conservative, Gerry Ritz]

Mr. Fuller, go ahead, please.

[David Fuller]

It was a very good question, and through you, Mr. Chairman, I'd like to respond to it in a different way.

I think first and foremost the most important thing we have to ask ourselves is whether there is going to be agriculture left in Canada, because unless we can somehow get some handles on the subsidies that are paid by other major exporting countries in the world--if we look at the trend line showing where agriculture and profitability has been, and the trend line showing where farmers are going, the trend line that I have seen, if you go out 25 years, at the current rate of profitability in Canadian agriculture—there won't be any farmers left. So more importantly, the first thing we have to do is to get a handle on some of these domestic supports that are being paid out. Some of these countries are paying significant money. These kinds of things have to come into play in order for this country to even think of having agriculture in 25 years.

Will we be moving more offshore? I can't answer that question. My concern right now is where agriculture is going to be in five years. I am also a grain and oilseed producer, and I have watched my fellow farmers disappear, no matter what sector they're in. And unless we can get a rules-based system at the WTO that provides opportunities for Canadian agriculture in all aspects, there will be no Canadian agriculture left. So we have to identify profit as the key thing.

It is no good to find market access around the world, or anything else, if we're losing money on everything we ship.

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Gourde.

Mr. Thibault, you have five minutes, please.

[Robert Thibault, Liberal, West Nova, NS]

Thank you, Mr. Chairman.

First, I would like to thank all of the witnesses for the presentations, which gave an accurate reflection of reality, and the answers they have given us. You can see the desire, the willingness to find solutions to protect all sectors. It is not exactly easy, but I think that is what the country needs.

The part of my riding where I live is the Annapolis Valley. When the BSE hit, you wouldn't think it would have immediately affected that part of the world as hard as it did. But we do have some cow-calf operators. We do have a lot of mixed farmers and beef is part of their income. Also, we have our supply-managed sector in the dairy industry. The revenue from cull cows is important as part of the mix at the end of the year. That evaporated overnight and created some great difficulties.

We have hog producers. We have some SM5 producers. We have mink producers, producers of grains and oilseeds, vegetables, and fruit trees. All of them have cyclical difficulties, but the one thing that's very disconcerting is that the trend line has not been good, in every sector except the supply-managed sector. The supply-managed sector has maintained and sustained those communities for a long time. What's more important, it's one of the only sectors--the mink industry perhaps being the other one--where there is confidence in the future, where people are still willing to make investments and young people remain in those communities because of stability that they foresee in that sector. So losing it is absolutely something that cannot be considered.

We saw some vegetable and fruit juice processors leave our area because of imports we're getting out of China. Concentrates are coming out of there at prices we can't compete with. So it's important for us, in that sense, to maintain that stability in the agriculture field. It's also important for consumers, because the price we get comes out of supply management.

The case has been well made for open access. I don't think there's a soul in this country who would not agree with that. Farmers in my area always talk about the level playing field, that if we have a level playing field internationally, Canadians can compete effectively. So we have what sometimes is portrayed as an opposing view, and we get those questions. I've heard some tell us this morning that because of our position on supply management--which I certainly would support and hope we maintain--we are isolated. Others are telling us that we aren't.

I certainly hope that we can achieve a balanced position. In your view, is it achievable that Canada maintain, for the next two generations, supply management in this country and improve our access to international markets, therefore stabilizing agriculture from one coast to the other?

[The Chair, Conservative, Gerry Ritz]

Mr. Fuller.

[David Fuller]

Just so it's clear in my mind exactly what the question is, you're asking if it's conceivable that Canada could come out this round with a win-win. I am 100% positive that we can do this. I think we have the opportunity to do this. As I've said earlier, Canada is seen as a bridge builder, to try to bridge the gaps to make this round move ahead.

Our chief negotiator has lots of credibility. I think he has the opportunity and he has the tools he needs to do this. The biggest thing we have to do in Canadian agriculture is to be there to support him and make sure he does deliver what the Canadian agriculture industries need, and that is a very balanced position. I think it is achievable, absolutely.

[The Chair, Conservative, Gerry Ritz]

Does anyone else want to comment?

Mr. Thibault, you have 30 seconds.

[Robert Thibault, Liberal, West Nova, NS]

Perhaps the last point I would ask is whether there are tools that can strengthen that position, that could be given to our negotiators, and what would those tools be? How should Canada change its tack or its actions, if we should, and in what direction?

[John Masswohl]

One thing that has been done is obviously to have an open dialogue with all the sectors that are involved, that before the ministers go to the negotiations we have discussions like this, forums where everybody is represented and we talk about defining what a win-win situation is. Cattle producers would be very uncomfortable if, for example, the chicken farmers were defining what is a win for the cattle producers, as I think we've heard him attempt to do a couple of times already this morning.

As long as we could have an open dialogue where everyone is involved, and we're at the ministerial meetings and there are round tables and daily, or perhaps several times daily, interaction with the ministers, I think those might be some of the tools you're getting at. Those are the sorts of things that are useful--the more information, the better.

[The Chair, Conservative, Gerry Ritz]

Mr. Devolin, five minutes, please.

[Barry Devolin, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Thank you, Mr. Chair, and thank you to all of you for being here today.

My riding is in central Ontario, and like Mr. Thibault, I have a really mixed bag of farm producers in my riding, from fur to beef to organic dairy to mainstream dairy to corn producers. I have a non-partisan farm council I meet with regularly, and we talk about this. I'm usually asking questions, and sometimes the folks at the table agree and sometimes they disagree with each other.

But I had a specific question, mostly for the Canadian Cattlemen's Association. You mentioned bilateral trade agreements, and I know Canada is at the table at the WTO and we are continuing to pursue an agenda with multilateral trade deals. Recently I was in Taiwan as part of a parliamentary group, and it was clear they are aggressively pursuing bilateral deals. I think Korea is doing the same thing. I don't think Canada is the only country Korea is in negotiation with. It seems the United States is doing it.

I don't know whether it's two schools of thought, the multilateral school of thought versus the many bilateral deals school of thought, but where are you on that? I think you mentioned Korea and Japan, and I'm just wondering if you think that's an area the government needs to focus on more.

[Darcy Davis]

Thank you very much for the question, because it's a very pertinent issue, and I couldn't agree more with David's earlier comments. We in the beef industry have benefited tremendously from a trilateral agreement, the NAFTA agreement. That's where we've seen growth. But when you get to bilaterals, that's where we've seen more cattle, more producers on the land in the last 15 years. We've gone from exporting unprocessed product to adding value to what we're bringing out on the land.

In bilateral agreements something gets left behind, and it's often domestic support. That's what's happened to our grains industry as we've gone forward with NAFTA. Our cattle-feeding industry in southern Alberta is in a really tight spot because of the corn subsidies in the U.S. They're having to compete for feeder cattle, and these feeder cattle are a mobile product. We can move them to Nebraska or Texas or wherever, and these guys have to compete against those corn subsidies.

In the multilateral world of the WTO, this is where these answers come from. We deal with market access on one hand and domestic support on the other. This is where, if we can get a 65% to 70% reduction in U.S. subsidies, we could see a real market decrease in what they're doing with grain and possibly even dairy products. We operate, and we're willing to operate, in a competitive environment, but we need that level playing field, and that happens at the WTO.

If it doesn't happen, I will be here again and I will be talking to you about bilateral agreements in dozens of countries, and it's going to take a tonne of effort on this government's behalf to get those done. It's going to take a lot more work to get those accomplished, but we won't stop if we don't get what we need. We'll have to go on to those with Korea, with Japan, with those nations that can afford our grain-fed product.

Thanks very much.

[Barry Devolin, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Does anyone else have a comment?

[Alanna Koch]

That's why it's so important that the WTO is about three pillars: it's about eliminating export subsidy and trade-distorting domestic support, and it's about market access, because bilaterals have really only addressed the market access issue, and the distortion side of subsidies is what creates a lot of the damage to many of our exporting interests.

[Barry Devolin, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

I have another quick question.

A lot of dairy farmers--I have a lot of dairy farmers in my riding--believe opening up access, giving a little over here to get a little over there, just won't work. I throw it back to the more export-oriented people.

That's the sense I get from supply management people--how many times do you guys have to get whacked before you realize our trading partners are going to take what we'll give them? But at the end of the day they won't actually do what we want them to do, and therefore we just lose twice.

[Alanna Koch]

That's why it's so important that we get a comprehensive deal at the WTO to ensure we have a good set of rules. International trade negotiations have gone on for decades and they have addressed many issues, but with respect to agriculture, we have never really had a good solid set of rules to ensure that.... Not every country is a boy scout, so we need to ensure that those that are bullies and those that are prone to stretching things are disciplined with a strong set of rules. That's what's really important.

With respect to much of the trade we're involved in around the world, much of it does go on undisputed. We have been successful in exporting our product. We need to improve that environment, improve our ability to be competitive, to be profitable and to understand that this country is very dependent on exports.

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Devolin.

Mr. Bellavance.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Thank you, Mr. Chairman.

To answer Mr. Thibault, who was asking a bit earlier whether we could win on both scores, I would say that the House of Commons already gave a unanimous answer on November 22, 2005. That was when the Bloc Québécois tabled a motion to protect supply management while allowing for increased market access. Ms. Koch claims that this motion did great harm to our WTO negotiations, but the unanimous opinion of the Parliament of Canada is that we can defend supply management and increase market access. Ms. Koch, by saying that, you have insulted not only Canadian parliamentarians, but also the elected officials of the National Assembly of Quebec and other provinces—New Brunswick and Ontario, I believe—who have also passed unanimous motions. I do not think that all parliamentarians are off the mark in mentioning that we could at least negotiate to try to win on all scores. That is what any good negotiator should do.

We have heard your opinion on this, Ms. Koch. I find it puzzling because the opinions that I have heard from farmers in Quebec were to the contrary, that this motion had probably saved a good part of our agriculture. I would like to know Mr. Lefebvre's opinion on this. The motion is still there and still very helpful.