Agriculture Committee on May 12th, 2009

[Dr. Brian Fowler]

And it wasn't just a shelf on one side that has the industrial-type bread.

I think this is where we are missing an opportunity in western Canada. I think we also need to look at that much more closely in all of Canada. We tend to look at hard red spring wheat and durum as being the only crops that we produce in this country. This takes us outside of the Canadian Wheat Board argument, that gap in between, which is not being filled. It can be filled by people outside of this country, but our farmers can't produce the products that would go into those markets.

[The Vice-Chair, Liberal, Mark Eyking]

Randy, half a minute.

[Randy Hoback, Conservative, Prince Albert, SK]

Mr. Martin, did you guys do a study on the barley marketing a few years back? Can you just give us a little bit of...? You had some competition stuff on that?

[Larry Martin]

It was a long time ago, but it was during the period when the barley market was open, as I recall. We did a study trying to show what happened to prices during that brief period of time. My recollection is that they rose relative to U.S. prices during that period of time, and then fell back when the barley went back into the Wheat Board. I believe that was the outcome.

[Randy Hoback, Conservative, Prince Albert, SK]

I believe so too.

[The Vice-Chair, Liberal, Mark Eyking]

Thank you.

We'll go to Mr. Easter now for five minutes in the second round.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

Mr. Martin, if you really look at the facts, the Wheat Board maximizes returns back to primary producers. That doesn't happen in the open market. That's the reality, and we've seen it in the last year.

We won't get into the Wheat Board argument, but I want to make a point on Mr. Hoback's questions that you should recognize. There is a great attempt by Conservatives at this committee to shed bad light on the Canadian Wheat Board in any way they can. In fact, it's part of the reason why some of you are here as witnesses.

In any event, on the Wheat Board argument--

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Mr. Easter can't just make up the facts as he goes along. He plays fast and loose with the facts enough as it is. At least stick to the purpose of this.

[The Vice-Chair, Liberal, Mark Eyking]

If I may interfere here for a minute, if we're going to get through this meeting all right, there were some shots on that side and a shot on this side, so let's try to keep it civilized. Otherwise we won't be able to deal with Mr. Hoback's motion at the end.

Let's get her back on track, Mr. Easter.

[Wayne Easter, Liberal, Malpeque, PE]

Yes, Mr. Chair.

The fact of the matter isn't the Wheat Board argument, for all the witnesses and for your information. I think western farmers sent a message to the Government of Canada and us in the last Wheat Board director elections, where 80% of the directors were pro-Wheat Board. They can come forward with as many of these messages as they like.

I have two questions. Our research and development is extremely important, and I think a number of you mentioned that. One of the problems with the current system is with matching funds from industry. A lot of the research is basically targeted at how quickly you can get profits back to your shareholders and investors. As a result, because of the lack of public research dollars we are losing the kind of discovery research we used to have that canola came out of, and so on. I'd like your comments on that.

We're talking about competitiveness at these hearings, but I think one of the key questions is what are we competing against? Our major competition is clearly the United States. Does it come down to the U.S. Farm Bill and how they structure their farm policy? For a long time they had a policy of using cheap raw material, grains, as feedstock for their hog and their cattle industry and their ethanol industry. They virtually subsidized at that level, which brought profits throughout the sector further up the line.

What are your thoughts on that as well?

[Larry Martin]

I've forgotten all your questions.

Let me start with the last one first. I believe that theU.S. Farm Bill, as it's structured, had that impact in the past. At the moment it doesn't because the grain prices are so much higher than the support prices. I would not say that about ethanol, because the ethanol program is very different and basically creates the demand. It subsidizes the people who use the grain rather than the people who produce it, and that raises the price.

The U.S. lost the cotton case at the WTO, which they said was an unfair subsidy--all three parts of it, as I recall. It's the same kind of program they have on wheat, barley, oats, corn, and soybeans.

You asked about research and development. I think you're right that one of the things we've lost is basic research. The other thing is the research and development tax credit. It's one of the best in the world, but the problem is the cost of accessing it, especially for smaller operations. The accounting costs, test costs, and enforcement costs are really high. There are a lot of suggestions for how to improve that, but that's a very specific thing.

[The Vice-Chair, Liberal, Mark Eyking]

You have half a minute left, Mr. Easter.

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Fowler is going to answer.

[Dr. Brian Fowler]

I'm a public researcher, and I could write a book on grant applications. You don't want to get into that.

I agree that there has been a loss, certainly, in the support of public research. I think, probably, that we need to sit back and take a look at where those public funds are going. We keep going back to this business of either being for or against the Wheat Board. I became stuck in the middle, and that's the worst possible place to be, because you get fire from both sides.

If I look back on my career—I've worked in winter wheat for all of my research career—I think it was a waste of money. The reason I say it was a waste of money is that I could never finish anything. You get these niche markets, the things we talk about here, where there are opportunities. Whether you like the Wheat Board or not, the protection that they feel they require of the whole system has really stifled any of the efforts we've made to move into some of these niche markets. I think we have to get away from that.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Thank you very much, Mr. Fowler.

We're going to go to the Conservatives now for five minutes. We'll go to Mr. Shipley.

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

Thank you, Mr. Chair.

Thank you, witnesses.

Mr. Martin, I was interested that in your five recommendations you give credit to young farmers. Quite honestly, I appreciate that very much. You mentioned the 27 best young farmers. Can you just tell me if they are actually practising farmers, or are they students?

[Larry Martin]

No, they're practising farmers. The youngest one is a young woman whose parents were killed in Alberta recently. She's taken over a large farm. She was 21. I think the oldest is about 56 years old. They're all farmers. Eleven of them, by the way, are from Saskatchewan.

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

Okay.

You said that they're from across the country. Are there any from eastern Canada or Ontario?

[Larry Martin]

Yes, we have them in different classes. They're from every province.

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

I think what they said, and one of the things we hear, quite honestly, is that it just needs to be fair--we don't want it to come from you; we should be getting it from the marketplace. That's one of the key things around supply management.

I hear occasionally from my constituents in Ontario, in Lambton—Kent—Middlesex, about the Farm Bill. It's about the U.S. Farm Bill. We need the U.S. Farm Bill. Is that what they're telling you?

[Larry Martin]

No, they're not telling me that at all. What they're telling me is that we need to get rid of the U.S. Farm Bill.

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

Well, we can't do that. It's not our legislation. I guess I'm just asking if we should be developing a U.S. Farm Bill.

[Larry Martin]

I think we should be developing an agrifood policy that is very strategic. I think the day of the farm bill type of legislation has passed. If you look around the world, the U.S. now is spending most of its money on green subsidies that are WTO-green as well as the other kind of green, as is the European Union.

I think we need to get away from that direct subsidization of things that are more indirect.

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

Help me a little bit, because I'm always concerned when we talk about innovation technology. Over the last few years, actually, we've seen more technology in terms of agriculture and maybe food production, but certainly in agriculture.

We've tried to do, through our industry committee and through manufacturing and through our budgets, a number of things to help. You touched on getting rid of some of the tax burden. That's just good for everyone. The other part of it, though, is that they're depreciating faster than they're investing. We've expanded the investment write-off on equipment to 50% for two years straight, but you're saying that this isn't helping.

[Larry Martin]

It's interesting. I just got the most recent data. In fact, for the first time in quite a while we actually, in the last year, 2008, had investment slightly higher than depreciation. Something might be helping.

When I talk to food processors, especially in Ontario, what they say is that this is great, but the other part of the whole thing is the regulatory environment, and especially the Health Canada regulatory environment, in that case.