Thank you very much, Mr. Chair, and thank you, John, for your kind comments.
I think it's important to note that the dealers and the manufacturers all share a common goal, and that is, to get the right equipment into the hands of the farmers and make sure that equipment is working when they're trying to get their crops off.
Let me first say a few words about the Association of Equipment Manufacturers. AEM is the trade association representing the agricultural, forestry, construction, and mining equipment sectors. In addition to Canadian equipment manufacturers, such as MacDon out in Winnipeg, there are about 700 other members, including those that manufacture the tractors, tillage, electronic, and harvest equipment Canadian farmers depend upon to plant and take in their crops.
This afternoon I wish to speak about five areas of interest to this committee. Just briefly, the first is the sales history. I had handed out a chart that shows the sales history over the past 20 years of farm equipment in Canada, or rather tractors and combines in Canada. As you can see, it's not a rapidly growing market, except in those sectors that seem to serve the large acreage sector. You can also almost match those sales numbers with various market influences, such as the BSE crisis in 2003-04, and you can take a look at the tractor and combine sales in those years.
All of us in this room will be familiar with the tremendous productivity improvements Canadian farmers have made over the past 40 years. Work done at the George Morris Centre at the University of Guelph illustrates that farmers have been just as innovative and efficient in their productivity gains as other major industrial sectors in Ontario. Our farmers have much to be proud of in that regard.
These productivity gains result from many different types of technological advancements. For example, if I were still milking cows out in Lanark County 45 minutes from here, I might be thinking about buying a robot to do the milking, like some of my neighbours have who are still milking cows out in the barn.
Another great leap forward in productivity is the application of GPS technology in farming. Precision agriculture systems that are now in place--the assisted power steering systems, monitors for planting, fertilizer and pesticide applications, and harvest yields--all allow farmers to drive down fuel and crop input costs, while at the same time reducing environmental impact and maximizing revenue from an acre of land. So precision agriculture systems can and do address the economic and environmental issues confronted by farmers today.
Engine manufacturers have also made great strides in increasing fuel efficiencies. That's one of reasons why we're asking that the CCA rates be increased. According to the Univeristy of Nebraska tractor test laboratory, the average fuel rating measure in 1981--and I apologize for this measure, but this is the way they do it, and those of us who farm know a little bit about this--was 12.2 horsepower hour per gallon. That's a tough one, isn't it? Regarding the latest technology, last year Deere had a tractor go through the Nebraska tractor test that came out at 18.7 horsepower hour per gallon, so that is a 50% improvement, while at the same time meeting the new EPA tier three emission regulations.
As a result of these ongoing technological improvements, not only in tractors, but across the full line of agriculture equipment, Canadian farmers are replacing their equipment much faster. In the past, innovative farmers might have upgraded their tractors every five to seven years. It all depends, but we'll use round numbers here. Now, and the dealers will know this, those leading edge, innovative farmers are trading in their equipment much sooner, maybe three to five years, in order to reduce the operating costs through fuel efficiencies and increase operator efficiencies as much as possible.
Let me ask you to picture in your mind two things. The first is a horse harness and the second is a bright new 250 horsepower GPS-equipped tractor, maybe down on Doug's lot down in Winchester.
I think you'd agree there's a stark contrast between those “tractors”. Well, under the tax act there isn't; they are the same. They both are classed in class 10 of the capital cost allowance. Both are allowed the same 30% depreciation rate. That's just one example of how outdated our tax code is in this country, and I think it's fair to say that we need to have a good, hard look at that and to say that horse harnesses and new tractors are not the same thing.
Last October, dealers and manufacturers jointly wrote to the Minister of Finance asking the government to modernize CCA rates, and we urge this committee to recommend these changes to the government. By doing so, the agriculture committee would be supporting both the industry committee, which tabled its report on Tuesday and made a recommendation in this regard, and the finance committee. We would be able to go into the budget cycle possibly with three committees making the same recommendation.
Allow me to turn to a matter of significant concern to AEM members and indeed to dealers, a matter that's before Parliament in committee, and that's Bill C-257. I'm sure some of you may have heard a little bit about it.
Dealers and manufacturers require a robust, dependable telecommunications network to ensure rapid delivery of replacement parts for repairs to agricultural equipment. In particular, I would point out that in some provinces, agricultural equipment manufacturers are under a statutory obligation to deliver parts within a set period of time. In Saskatchewan, it's 72 hours. A lengthy strike by telephone company employees without replacement workers to maintain mission-critical telecommunication networks that everybody at this witness end of the table depends on would put into jeopardy our combined ability to get those parts into the hands of the farmers.
In the 20 years leading up to the changes in part I of the labour code in 1999, Parliament had to intervene 17 times to end labour disputes. Since then, not once has Parliament intervened. I trust, therefore, that you would draw these concerns to your caucus colleagues.
AEM in both Canada and the United States supports the ongoing efforts of government to establish a renewable energy strategy. In the U.S., AEM is working with 200 other organizations on the 25X25 initiative, which has a goal of obtaining 25% of U.S. energy supplies from the nation's working lands by 2025.
In Canada, the government has established a mandate for biofuels. However, without tax parity with the U.S., much of the value-added processing will locate south of the border. This means the value of the jobs, equipment, and supplies to build and service the industry will accrue to the U.S. and not to Canada. We simply would become exporters of raw product and purchasers of finished goods.
We have a once-in-a-lifetime opportunity to have a new industry created and developed in Canada, and all producers are asking for is a level playing field. There will be clear spinoff benefits to rural communities and their agriculture-based economies.
In summary, Mr. Chair and members of the committee, manufacturers and dealers have a shared goal, and that is providing Canadian farmers with equipment that does the job of getting the crop planted and harvested. AEM supports the concerns of the dealers brought to this table, and in particular urges the committee to pass a motion calling on the government to increase CCA rates.
Thank you for allowing me to address the committee this afternoon.
