Evidence of meeting #35 for Agriculture and Agri-Food in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was tractors.
A recording is available from Parliament.
4:40 p.m.
Director, North American Equipment Dealers Association, Canada East Equipment Dealers Association
Our biggest concern on the parts issue with the Chinese ones right now is that we're asking where are customers going to get parts and what's their value going to be in five years? That's our concern as well.
February 8th, 2007 / 4:40 p.m.
Bloc
Robert Bouchard Bloc Chicoutimi—Le Fjord, QC
Thank you, Mr. Chair.
Welcome and thank you for your presentations.
I believe you're in a better position than I to determine the matter, but I would be inclined to believe that very little agricultural equipment, indeed none, burns biodiesel.
I'd like to know whether farmers would be able to bear the significant cost that converting their agricultural machinery to biodiesel would represent.
4:40 p.m.
First Vice-President, Canada West Equipment Dealers Association
I know John Deere just released a letter and I believe Case New Holland has one out and Caterpillar has one out as far as the amount of biodiesel they will warrant is concerned, if there is a warranty issue.
I don't know that number, as Howard mentioned, but we could get those letters and provide them to the committee afterwards. So there is a small percentage that most of the major manufacturers will accept now. I think because it is so new, they're doing a lot of research and development to continue to increase and expand that, and I think it's pretty safe to say that we will see the manufacturers grow that with the industry. I don't think they will lag behind.
Of course there's a potential challenge for the older equipment that's out there, but then warranty is less of an issue in that case; if it's an older piece of equipment, then the farmer doesn't have the same risk as using biodiesel in a new engine.
4:40 p.m.
Director, North American Equipment Dealers Association, Canada East Equipment Dealers Association
We don't see a conversion cost. In speaking with the people involved in the program at Kemptville College, University of Guelph, there are no costs to the changeover to biodiesel or ethanol-type diesels. They're running those. They burn more cleanly and more efficiently, and there are no problems. They're much more efficient. They're seeing greater success with the longevity of the engine, with no problems.
4:40 p.m.
Bloc
Robert Bouchard Bloc Chicoutimi—Le Fjord, QC
Thank you.
You're also seeking a revision of the capital cost allowance, mainly because, as a result of technology, the economic life of equipment is much shorter. I thought I understood that it was a period of five to seven years and that that could fall to three to five years.
Farmers' incomes are said to be stable or declining. I'd be inclined to think they're falling, since many of the comments from farmers in my riding point in that direction, that is to say that expenses have risen, but that income is stable or has declined.
In your view, how many farmers can bear an equipment replacement cycle of three to five years?
4:45 p.m.
First Vice-President, Canada West Equipment Dealers Association
Of course there's a diversity of farmers out there, and the size, so those that need the proper capital appreciation are the ones putting a lot of acres through the....
Some of our large farmers are putting in 300 to 400 hours or more on a particular combine, and feeding lentils, or some high-wear-and-tear type of commodity, through the equipment. The equipment is going to wear out, or not completely wear out, but be substantially reduced in its life within a five-year window, so the farmers are going to be trading that equipment more often.
Then the smaller farmer is going to buy that piece of equipment and within their capital pool get the benefit of a lower-dollar piece of equipment. They'll still get the benefit, but on a lower-dollar amount. With a higher CCA, this helps everybody in the spectrum of the industry.
4:45 p.m.
Director, North American Equipment Dealers Association, Canada East Equipment Dealers Association
The other concern that farmers have is when they're purchasing higher-technology equipment, equipment that comes with global positioning and advanced computer systems, they're depreciating those at the rate of the iron. It's a computer system, so if they spend $20,000 in technology on these combines and tractors, they're not able to depreciate that at the levels they should be, because they fall under the umbrella of the equipment.
4:45 p.m.
Conservative
The Chair Conservative James Bezan
As a follow-up, you were talking about the biodiesel initiative and how that plays out with new tractors. Now I understand Cummins won't offer a warranty on any of its motors if biodiesel is used. I know this is true for highway tractors. Is it true for any of the farm tractors that are using them?
4:45 p.m.
Canadian Public Policy Advisor, Association of Equipment Manufacturers
What I'll endeavour to do is get back to you with the warranty provisions of AEM members. I'm sure that one of our members puts Cummins engines into their equipment.
4:45 p.m.
Conservative
The Chair Conservative James Bezan
Okay, I'd appreciate that, Mr. Mains.
Mr. Devolin, you have five minutes, please.
4:45 p.m.
Conservative
Barry Devolin Conservative Haliburton—Kawartha Lakes—Brock, ON
Thanks.
Mr. Chair, as you know, I'm new on this committee. As a committee member, do I get a discount on farm equipment now? If I need a tractor, do I get 10% off or something?
4:45 p.m.
Some hon. members
Oh, oh!
4:45 p.m.
Conservative
The Chair Conservative James Bezan
You don't feel new, because you've been around the committee for a while, subbing in.
4:45 p.m.
A voice
See me after.
4:45 p.m.
Some hon. members
Oh, oh!
4:45 p.m.
Conservative
Barry Devolin Conservative Haliburton—Kawartha Lakes—Brock, ON
I was curious about the fellow who had the reverse PTO. How many bales of hay did he feed into it before he realized that he had a problem?
4:45 p.m.
Some hon. members
Oh, oh!
4:45 p.m.
Conservative
Barry Devolin Conservative Haliburton—Kawartha Lakes—Brock, ON
I have a couple of questions. The first has to do with the chart, in terms of tractor sales. My riding is an hour or two north of Toronto, in the Lindsay area. What a couple of equipment dealers have told me is that while the number of units has stayed fairly static, rather than bigger units, they're selling a lot more—and this is an area that's in the outer GTA—for estate lots. They're basically for lawyers who come up from Toronto and cut their three acres of grass on the weekend.
When I look at this chart, is that not what I see? When you say the overall number is holding steady, that's true, but is there not a shift going on in other places? Or is this something unique to outer suburban areas?
4:45 p.m.
Canadian Public Policy Advisor, Association of Equipment Manufacturers
The dealers have been very good at recognizing that those lawyers coming up from Toronto have deeper pockets than farmers. It is true that this is a trend across North America, where the owners of what we call estate lots are buying a lot of smaller pieces of equipment.
As you can see, the 20-year average for the 40-horsepower-and-under is just over 4,000 units per year in Canada, while 9,100 were sold last year. Those ratios are similar in the United States.
4:50 p.m.
Conservative
4:50 p.m.
Conservative
Barry Devolin Conservative Haliburton—Kawartha Lakes—Brock, ON
I have a second question that has nothing to do with this. When you were talking about the capital cost allowance, in terms of incentives to repair or update old diesel engines for environmental reasons, earlier this week I attended a dinner with the Canadian automobile manufacturers association. They had some interesting numbers, one being that a 20-year-old car produces as much greenhouse gas as 37 new cars. There has been such a dramatic increase, and we encourage them to get those numbers out there in the public, so that people could appreciate the benefit of getting some of these older units off the road.
In terms of diesel engine emissions, do you know of any numbers, in terms of a modern unit today compared to 10 years ago or 20 years ago? What have the improvements been?
4:50 p.m.
Canadian Public Policy Advisor, Association of Equipment Manufacturers
No, I don't know any precise numbers, except for those numbers I gave for the Nebraska tractor test. If we go back to it, back in 1981 it was 12 horsepower hours per gallon, and now it's up to 18.7. That is a 50% improvement just in fuel usage.
In terms of the emissions, I think the officials at Environment Canada who worked on what's called the non-spark ignition fuel standards would probably have some pretty good numbers that you could look at, and I know they work hand in hand with the EPA on the tier three standards. They would probably be the best resource, and I can get the—