Agriculture Committee on March 31st, 2009

[Randy Hoback, Conservative, Prince Albert, SK]

So in those crops, then, they stepped beyond being a commodity product that's traded on the exchange to something that actually is getting the farmer higher value because of its unique characteristics. Is that fair to say?

[JoAnne Buth]

Yes, that's fair to say. We have a variety of markets that look for the commodity product; China was an example. But when you look at markets that are prepared to pay more of a premium, we're looking for higher-value products, so most of our high oleic canola goes into the U.S. It's based on market and it's based on value, yes.

[Randy Hoback, Conservative, Prince Albert, SK]

Do we have examples of that in the wheat industry, so that I as a farmer could say, “Here's a characteristic or trait in wheat that I want to sell directly through the sector”? Are there examples of that?

[Stephen Vandervalk]

There are a few. There's the Warburton stuff. It's kind of ironic that the Wheat Board touts that as equal to everybody, but only certain farmers get those contracts in certain areas. They do a premium. It's very small; I forget how many tonnes. There are some hard white wheat contracts. When it first came out, they gave you a small premium the first year, then the next year there was no premium but a storage payment, and then in the third year there was nothing; it became just a normal commodity.

I would say 5%. I don't even know if they'd be that high. That's about it.

[Randy Hoback, Conservative, Prince Albert, SK]

Back to Mr. Reid. Why not the investment in wheat? What is the issue? Why? Is there just no profitability there, or no demand?

[Jeff Reid]

Yes. Primarily it comes back to the issue of farm-safe seed sowed. Again, my background with SeCan--we're a private, not-for-profit corporation, and we sometimes joke that it's a good thing we're not-for-profit because there just isn't a lot of profit there in cereals.

We distribute most of the cereal seed in western Canada. What we find is that you'll launch a new variety, and if you have a good availability the first year, you might sell lots. The next year it'll be a fraction of that, and likely even less the year after.

From a private sector perspective, when you look at a 10- to 12-year timeline to develop a new variety and then you might only get one or two years of sales out of it, it's a very difficult proposition to make that pencil out.

The real concern is from a regulatory perspective. Other developed countries are just about all now compliant with UPOV 1991, which does give some additional protection to plant breeders. It affords them a little more incentive to get involved in plant breeding. We see that Canada is really lagging from that perspective, and our plant breeders' rights legislation provides virtually no protection at all for the use of farm-safe seed, which really undermines the investment.

[The Chair, Conservative, Larry Miller]

Thank you. Your time has expired, Mr. Hoback.

Mr. Easter, you have five minutes.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

Thank you, folks, for coming.

I don't want to get into the Wheat Board because I don't think this is the place for it, other than to put on the record that your comment about the imposition by the Parliament of Canada—basically you said the imposition of the Canadian Wheat Board monopoly by the Parliament of Canada—is wrong.

[A voice]

It's true.

[Wayne Easter, Liberal, Malpeque, PE]

It's not true; it's wrong. In 1998, the legislation was changed for the Wheat Board by the Government of Canada, under Ralph Goodale, to change the electoral process so that farmers could have control over their own industry and control it. In fact, farmers spoke in the last election, when they elected eight out of ten of the directors pro single-desk selling. That was the decision they took; that was the decision they made. We have always said, as a party, that it's farmers who should decide. They've decided, and we're going to try to assure that the laws are abided by, not undermined, as some of the folks on the other side want to do.

Anyway, I'll turn to the purpose of why we're here today. All of you spoke about being competitive. I have to ask this question: competitive compared to what?

I hear the free traders. They're before us all the time. We even hear them in the cattle and hog industry. When the national organizations come before this committee, you wouldn't think there was a problem in the world. We're getting farmers going broke every day in many industries. It's as if some people believe that in pure competition out there, God, it's a wonderful world and everybody trades fairly. That isn't the real world.

I might ask, can we get a copy of the pulse crop rotation paper? I don't want to forget that.

Thanks, Gordon.

I have questions in these areas. One, how do we compare in farm policy on a competitive basis with the U.S. Farm Bill? That's our main competitor. What do we have to do, as a country, to stack up against that?

Two, on the regulatory environment, what regulations do we have to do away with?

Three, on the research area, do we need more public research—canola being a result of public discovery research by government at one point in time?

And the fourth area is transportation. We're captive to the rail to a certain extent, even captive to container cars out of the Peace River block. What do we have to do in that area? Do we need a costing review on the railways? What other things can be done on transportation to ensure we are on a level playing field with the United States?

I'll leave it at those questions.

[The Chair, Conservative, Larry Miller]

You have less than two minutes to respond.

[Jeff Reid]

I could take the first crack at it. I know we'll never be able to compete with the U.S. based on the amount of dollars we can throw at agriculture, so I think we have to be smarter in the way we help the industry. That's part of the reason for one of the things we've suggested, a tax incentive for the use of certified seed, which would really stimulate research and investment. That would have that multiplier effect on the agriculture economy and downstream economies as well. That's one area where we can use our dollars more strategically, and in fact recapture those dollars downstream from a greater tax base.

[Gordon Bacon, Chief Executive Officer, Pulse Canada]

I'd like to make a quick comment on research.

Pulse Canada for years has advocated boosting public funding in research. All the presentations this morning talked about how innovation is going to drive the competitiveness of the industry, and that's all going to come out of research dollars. Also, there was an earlier question about whether the government's policy is moving in the right direction. Under Growing Forward, what we're expecting to see is more industry-led research initiatives under programs like the science cluster one. I'm thinking those programs are very much what the industry needs to have. We don't know exactly what dollar amount is going to be allocated to those programs.

Agriculture is a big industry and there will be a lot of competition for what I expect will be scarce dollars. But I think research is what we need to do to make sure we're not competing in the commodity market and can focus on some things that will make Canadian agriculture more unique.

[The Chair, Conservative, Larry Miller]

Just a very quick comment. You've got 10 seconds, Wayne.

[Wayne Easter, Liberal, Malpeque, PE]

I guess, Jeff, on your comment that we can't compete in dollars with the United States, I have to ask why not. Canada's not in a...well, we are in a deficit now since these guys took over, but relatively, as compared to the United States, we haven't been. Why can our country not support our farmers to the same extent the United States does?

[The Chair, Conservative, Larry Miller]

Can you do that in seconds? He went well over.

[Jeff Reid]

Looking at the size of our taxpayer base here in Canada versus the U.S., I think we have to be more strategic.

[The Chair, Conservative, Larry Miller]

Thank you very much.

To the witnesses, we stick to the timeframe, or try to, so that everyone can ask questions. I apologize, because I know sometimes it seems rough, but there is a reason behind it.

Mr. Shipley, for five minutes.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Chair, and thank you, witnesses.

Mr. Bast, a little while ago you mentioned that if you had the wheat to grow, you would be able to get the investment in terms of the further processing of your product. We've heard, more than once, that one of the problems is that we can't get investments in Canada in terms of the opportunities, I guess, to build for mills for the processing. Is there that investment opportunity there, if there was the freedom to just...to market the wheat?

[Mike Bast]

Yes, there is the investment. Speaking just from my point of view as a farmer, I would invest in my own milling, whether or not I go together with a number of other farmers on that. But if I can't source it properly or source it directly, I'm paying a margin to buy my own grain back when it never left my bin. So in terms of a business model, that's hurting me right off the get-go.

We see it from companies that do milling in Ontario and other ones; they would gladly come out here and invest. Just on the efficiencies of transportation, also, with the way our country and the world are heading in terms of an environmental point of view, that would be huge in reducing our carbon footprint in transportation, not hauling things back and forth twice.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Mr. Bacon, you made some very interesting comments...or sorry, I think maybe it was Mr. Grabo.

You talked about four or five areas of significance. One of them was the diversification of health and nutrients in terms of pulse. Can you talk about the trade agreements? You raised the examples of Peru, Colombia, the Dominican Republic, and hoping we might do something in Morocco. We've moved ahead on a number of free trade agreements, as you know. Once you start, you see the value in it. Getting to the end sometimes takes longer than you wish.

Do you have any comments on other areas? I think you recognized the significance of these free trade agreements--for the whole industry, actually. We've heard that from other witnesses. Are there other areas we should be looking at in terms of marketing?

Also, I'd like to have your comment on the secretariat that has been provided in terms of marketing agriculture products. Is there something more we can do in that area, do you think?

[Gordon Bacon]

I'd like to echo JoAnne's comments in terms of support for the secretariat that was set up. I think it's an excellent way to bring the resources of various departments and agencies of government, together with the industry, to sit down and work through some solutions.

In our industry, we've had problems for a number of years with pulse trade into India. That's really getting into the phytosanitary area. One of the comments Pulse Canada has made in the past is that a lot of the discussions with WTO are related to tax tariffs. Many of our trade problems are actually related to phytosanitary issues. It's a difficult issue at an international level for people to want to open up, but that seems to be the area where we run into most of our problems.

From a trade perspective, I think the secretariat will be the way to address some of these issues, such as phytosanitary problems, by bringing together a food inspection agency, international trade people, agriculture, and the expertise of the industry as well.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Mr. Reid, you talked about using your own seeds, which has always been an ongoing issue with farmers. There obviously are some seeds that you use more than others—corn you don't; soybeans, some, but not the Roundup Readys and some of the IPs.

That's part of the issue around research, and you've expressed your concern about it. I'm wondering what you're hearing about farmers' positions. It's always this cost of production per acre if I'm using my own seeds against having to buy certified seeds. It happens in my area when we grow wheat, and actually with soybeans.

Has the position of farmers changed, do you think, in terms of helping? I think most of us realize that if you don't have money going into research and development, if they're not selling enough seeds to justify the dollars to it, then they won't do it.

So do you see a change in the attitude of farmers?

[Jeff Reid]

I think generally farmers understand the need for intellectual property and understand how the system works and what the shortfalls are, in some cases, with our system. In Ontario I think it's probably the case that there is more of a recognition, because when we had higher uses of certified seed in the past, they saw the benefits of that. There were a lot more varieties and a lot more progress was being made. That has somewhat declined in recent years, and they're starting to see the effect of that.

I think in western Canada, though, where we have only maybe about 15% use of certified seed for wheat, the problem is far more systemic. The concern is that it's a short-term decision, but it's having long-term implications. I think what everyone would like to see is just a level playing field so they know that everyone is contributing, or, for example, a certified seed tax incentive whereby that burden is shared, at least initially, across society, and then the larger tax revenue that's generated by that comes back to the government.

I think there are a number of ways to resolve that. Another way would be connecting it with crop insurance as well.

[The Chair, Conservative, Larry Miller]

Thank you, Mr. Reid.

Ms. Bonsant, go ahead, please, for five minutes.