Agriculture Committee on Dec. 1st, 2011

[Ben Lobb, Conservative, Huron—Bruce, ON]

Okay.

[Greg Stewart]

—and I would say that if you had a sound business plan that would work, it wouldn't be astronomically higher; it's not venture capital rates or anything like that. But proven producers—stability in business—do have an advantage in terms of rates, yes.

[Ben Lobb, Conservative, Huron—Bruce, ON]

We could debate that all day. I would argue that if somebody walks in to buy a farm for the first time and has a great record of repaying their own residential mortgage, say, and has maintained that and kept it in good order, to promote young farmers...you would almost think their rate would be lower than somebody with an existing rate if you're in fact trying to help young farmers. But I'll leave it at that for now.

Mr. Aziz, I thought that was a great presentation, and it's a great product that you're offering. Certainly in Canada we have the best run of the big rail and we have the worst run of the big six railways. If you were going to talk with Mr. Ackman from Pershing Square, which now has a 12% stake in CP rail, what kind of competitive advantage would a railway like CP have by using your new design of rail cars? What would that add to their efficiency as a corporation?

[Gregory Aziz]

First of all, it would be inappropriate for me to comment on a particular railroad, but the efficiencies we've outlined are available to anyone who wants to buy it. The key factor here, and what we tried to illustrate...we made a specific case to the existing grain car fleet in operation now, because that fleet and all its capacities are known. When you go and take this car and put it against a railroad, which has a diverse number of cars all of different capacities, you come to a conclusion that is very nebulous for discussion purposes.

One of the key factors of the merits of the system we're proposing is that we're proposing this be run basically in unit trains. In other words—and we've all seen these out west—where you don't have a mixed freight train, you have a unit train composed of 150 to 200 grain cars, all taking grain to the Port of Vancouver or up to Prince George or wherever, or to Fort William, Thunder Bay, to the elevators there. So the biggest impact this makes is in unit train service. That's why it's important that our proposal, as we've proffered it, be done in the way we've illustrated this afternoon.

[The Chair, Conservative, Larry Miller]

Thank you very much, Mr. Aziz.

To the Canadian Bankers and to Farm Credit, thanks very much for your presentations on the financial side. Very good to have you here again.

Mr. Aziz, I was very impressed with your presentation as well. A very interesting concept. I think we're going to hear more on it. There were a lot of good questions on it.

[Gregory Aziz]

Thank you, Mr. Chairman.

[The Chair, Conservative, Larry Miller]

All of you, thank you again for being here today. We appreciate it.

Merry Christmas to all of you.

We're going to break for 30 seconds. If I could ask the witnesses to leave the table as soon as possible, we'll bring in the next round.

Thanks again.

[The Chair, Conservative, Larry Miller]

We'll resume our meeting here.

Thanks very much, Minister, for being here today, and Mr. Knubley and Mr. Da Pont.

Before we get started, Mr. Minister, I want to recognize a young fellow from my riding, Chad Richards, who is going to Carleton University.

[A voice]

Oh, oh!

[The Chair, Conservative, Larry Miller]

I know, it's shameless.

Chad is sitting in on his very first committee meeting. He comes from a rural town in the heart of beef country, from a small high school with the only agricultural curriculum in my riding.

Welcome, Chad.

With that, Mr. Minister, we'll turn it over to you.

[Gerry Ritz, Conservative, Minister of Agriculture and Agri-Food]

If he would just hang around with you, Mr. Chair, he could learn by osmosis.

[Voices]

Oh! Oh!

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Thank you, Mr. Chair.

It's certainly a pleasure to be here today. I want to thank this committee for your continued hard work to move the agricultural sector forward, particularly around Growing Forward 2 and building competitiveness in the sector.

Like you, our government knows that agriculture plays a vital role in the Canadian economy. We're working hard with industry to help it grow and compete, and to move any barriers to competition out of the way. We're seeing a lot of farm industries firing on all cylinders right now, with higher prices and incomes, strong demand, and a more positive forecast for the future. We're seeing very good results so far in 2011, with farm market receipts up almost 11% January to September, thanks to double-digit gains in prices for grains, oilseeds, cattle, and hogs. Clearly our farmers are making more money from the marketplace, and that's great news.

Even better news, farmers are keeping more of those dollars, with record profits last year, the highest in two decades. And by lowering our corporate tax rates another 1.5%, agriculture from the farm gate up is well served. At the same time, we continue to support Canadian farm families during times of need. That's reflected in the supplementary estimates you have in front of you here this afternoon.

You'll notice that these estimates appropriately reflect the challenges that have been dealt to Canadian farmers. The majority of these estimates are emergency assistance to producers affected by flooding in Alberta, Saskatchewan, Manitoba, and Quebec. At the same time, our government is also investing more to protect consumers and preserve the excellent reputation of Canada's food industry, both here at home and around the world.

As a result of our commitment to continuous improvement in food safety, and under the great stewardship of George Da Pont, president, the Canadian Food Inspection Agency has received the resources necessary to hire a large number of additional inspectors. Over the past five years, the CFIA's inspection staff has increased by 733 people. The agency has launched a national recruitment strategy that will provide an ongoing pool of qualified inspectors for years to come. That's why, in the 2011 budget, $100 million over a five-year period was committed to the agency to support the work of these inspectors.

We're also reducing the red tape burden to help our farmers compete and make their money from the marketplace. As you know, money is made filling out orders, not government forms. In response to a motion from the member for Lambton—Kent—Middlesex to help Canadian farmers get access to agricultural inputs available to producers in other countries, we have worked to streamline regulations. Most of these are under the jurisdiction of the PMRA, under Health Canada, as you well know, but fertilizers fall under CFIA, and George and his team have worked tirelessly to ease that backlog. We've caught right up, and we're moving forward. So that's good news.

Farmers and agribusinesses now enjoy a regulatory approval process, where foreign research and approvals are being leveraged to a much greater extent, to speed up approvals for products here in Canada. We have sent a clear message to the industry that we hear them and we support them. We will continue to work hard to create conditions that support farmers' calls for a more competitive and level playing field.

We're maintaining the confidence that both Canadians and our trading partners have in the high quality and safety of Canada's food. Our government knows that trade is crucial to our farm gate, given that between 50% and 80% of most commodities are exported. That's why we've worked with industry to open, reopen, and expand markets in every corner of the world. Our government's market access secretariat has been a strong driver of success.

Working with industry, we've returned home with some tangible results for our farmers, producers, and processors. And the results show. Last year, our agriculture and seafood exports topped $39 billion, our second highest in history, putting us in the top five agricultural exporters in the world.

The secretariat recently released a report highlighting our achievements in 10 key market areas in the first year. Among them were Russia, where our beef exports more than tripled in value; China, where we negotiated transitional measures for canola seed exports, which enabled farmers to maintain almost $2 billion in canola exports to that vital market; and the United States, where we have significantly extended and expanded opportunities for Canadian canola exports for biodiesel production in the U.S., a market the Canadian canola industry estimates is worth up to $450 million a year. Everywhere we go, we're finding new customers who want to buy Canadian.

Free and open trade creates jobs, deepens prosperity, and makes our country more competitive in the global marketplace. Our government understands this. That's why we've concluded free trade agreements with nine countries in less than six years, why we're in negotiations with many more, including the European Union and India, two of the largest markets in the world, all the while protecting supply management.

As the Prime Minister said in the House the other day:

It is always our intention when we go to the table to ensure…we protect and we promote the interests of all Canadian sectors, including supply management.

Supply management, as you know, is a system that works and is wanted by our industry.

Two weeks ago, we tabled legislation to implement Canada's free trade agreements with Panama and Jordan, two markets that are becoming very important to Canadians. We continue to work hard to level the playing field for our farmers.

A couple of weeks ago, the WTO found in favour of Canada's claim of discrimination because of the U.S. mandatory country-of-origin labelling, or COOL. This is a great achievement for our livestock industry, and we'll be working with our American allies to create a stronger, more profitable livestock industry on both sides of the 49th parallel.

We're also working to level the playing field here at home through the Marketing Freedom for Grain Farmers Act. This legislation will give western Canadian grain farmers long overdue equity with farmers here in Ontario and other parts of this great country. We continue to work with industry and the Canadian Wheat Board to ensure maximum clarity and predictability for producers and the rest of the trade through the transition to an open market.

We have struck a working group to look at crop logistics issues, and we are already seeing some exciting new developments in value-added investments in western Canada. Marketing freedom will drive innovation across the Prairies in value-adding processing and exciting new niche market opportunities.

Our government knows that innovation drives competitiveness. That's why in our most recent budget we committed $50 million to foster new growth for agriculture and new growth for the Canadian economy. The new agricultural innovation program is designed to accelerate the pace of innovation and help innovative products and technologies get off the drawing board and into the market. It will improve the productivity and competitiveness of the Canadian agricultural sector and help capture opportunities in domestic and global markets.

I'm proud of our government's ongoing support for innovation in agriculture. Innovation will be a vital tool for our farmers and processors to meet growing global demand. It's mind-boggling to think that the world's population is expected to reach 7.6 billion by 2020, up from 7 billion today. That's an extra 68 million people to feed each year, and that represents exciting opportunities and challenges for our agricultural sector.

If our producers and processors are going to continue feeding the world, they're going to require the right tools. For the past three years, the Growing Forward framework has been delivering flexible, proactive programming that's helping farmers tackle real issues in the agricultural sector. As you know, the current Growing Forward agreement ends on March 31 of 2013. We will continue to meet with industry and provincial and territorial governments to shape a new agricultural framework for the future that will help us move to a more modern, innovative, competitive, and sustainable sector that will define our success over the coming years.

Federal, provincial, and territorial ministers endorsed the direction of the next framework at their annual meeting last July in Saint Andrews, New Brunswick. Ministers agreed that the next policy framework must help the agricultural industry capitalize on emerging market opportunities, supported by world-class research and development, a new generation of farmers, and an efficient regulatory system. I expect that the next policy framework will be a modern, coherent, integrated approach for a progressive sector confronting the challenges of a fast-paced competitive global economy.

Two rounds of discussions with industry are complete. A third round, focusing on program design, is planned for the new year. Of course, the great work happening at this table will be invaluable input as we shape this new framework for success for our farmers and processors.

Mr. Chair, like you and the members of this dynamic committee, I'm optimistic about the prospects for the Canadian agricultural sector, and I know that everyone around this table, regardless of political stripe, wants to see it grow and prosper. I look forward to continuing to work with you over the coming years to grow new opportunities for our farmers and our food processors.

I welcome any questions you may have, Mr. Chairman.

Thank you.

[The Chair, Conservative, Larry Miller]

Thank you very much.

Is there no presentation from Mr. Knubley or Mr. Da Pont? No, okay.

Just as reminder to our committee members, particular attention is paid to the questioning of public servants. The obligation of a witness to answer all questions put by the committee must be balanced against the role the public servants play in providing confidential advice to their ministers. The role of a public servant traditionally has been viewed in relation to the implementation and administration of government policy rather than the determination of what that policy should be. Consequently, public servants have been excused from commenting on the policy decisions made by the government. And I know all of you always respect that.

So with that, we'll turn it over to Mr. Allen for five minutes.

I understand you're splitting your time with Mr. Rousseau.

[Malcolm Allen, NDP, Welland, ON]

That's correct, sir.

Thank you, Mr. Chair.

Thank you, Minister, for being here. Let me convey our apologies about the late notice. We really appreciate you taking the opportunity as quickly as you did to respond to our request. It's greatly appreciated.

Let me talk a little about what you have termed as the free and open trade that is your government's position, versus what some of our competitors might actually look at. You used the latest Bill C-18 on the Canadian Wheat Board as that open market piece, versus what our trade competitors and future trade partners talk about as a closed market, that being supply management.

Clearly we've entered into a new realm with the EU, which we're in negotiations with, and the Pacific folks as well when it comes, which includes New Zealand. We see the juxtaposition of an open market for wheat, as you've described it, and a closed market and supply management, as our foreign folks see it, and we want to have agreements with them. So how do we square the circle with them, in lieu of the fact that the minister said in the House that supply management goes on the table—as everything does—and then they work backwards to take it off?

There's one last caveat before I let you comment on this. The Minister of International Trade said today, in reply to a question from the opposition about grain, “What do you want us to do with it—make bread here? We'll export it.” That really suggests to me that the Minister of International Trade is talking about an export market for a raw product, but the Minister of Agriculture—rightly and commendably so—is talking about value-added. So how do we square those circles, Minister?

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

We do it quite easily, Mr. Allen. We've been able to have a very aggressive free trade policy in this government and still back-stop the industries that work well domestically. You wrongly point that supply management is a closed shop. Roughly 5% a year of our domestic consumption is allowed in from other countries. That means on an annual basis some $150 million from the EU comes into Canada. We have $30 million of access back.

In the case of New Zealand, I think in the last four years it was in the neighbourhood of between $80 million and $100 million on average, and we have zero back to New Zealand. So it's not a closed shop as such. The Canadian Wheat Board was a mandatory system only in western Canada. The supply managed system is embraced coast to coast to coast in all provinces and territories, and it is well liked by the farmers it serves—and they serve it.

Having said that, I don't see any problem continuing with the aggressive trade agenda we have, protecting supply management yet talking about market access and other issues. Every country in the world has defensive and offensive positions. In the case of the TPP, the United States is very vocal and open about maintaining their support for sugar, cotton, and some dairy. The Japanese are very cognizant of the fact that they will not move on rice protection. Certainly we're not alone in having defensive positions as well as offensive positions.

The last part of your question was...?

[Malcolm Allen, NDP, Welland, ON]

The Minister of International Trade is the person responsible for the trade deal.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Right. We do a combination of both. The domestic market is well served by the top-quality Canadian wheat, corn, and so on that go into the baking system. We still export on average between 50% and 80% of those commodities, so he's right in both ways. You're picking only one part of the equation. Certainly we'll make bread with it at home, but we cannot use up everything we produce and have the ability to produce more.

Canada, very fortunately, is one of the few countries in the world that has the ability and the technology to step up and produce for a growing global demand. We're happy to do that, but it's going to take biotechnology and the tremendous work ethic of Canadian farmers and processors who are willing to step up and continue to do their jobs as well.

[Jean Rousseau, NDP, Compton—Stanstead, QC]

Thank you for being here, Minister Ritz.

Yesterday, I took part in the congress of Quebec's Union des producteurs agricoles. This morning, Mr. Paradis, your minister of state, addressed the delegates at the congress. In his speech, he reaffirmed in the strongest terms the government's focus on innovation and commercialization, as well as its commitment to support the supply management system that regulates a large part of Quebec agriculture.

On the one hand, you unreservedly support the supply management system. We see that. But on the other hand, the end of the Canadian Wheat Board monopoly signals a significant change in the way wheat and barley are sold in Canada. This also worries people in the UPA.

This lack of consistency creates confusion and uncertainty among our farmers. At the congress yesterday, in fact, UPA members passed a number of motions expressing concern about the matter. How can they be sure that the government will not be changing the way they bring their products to market, as you have done for farmers in the west?

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

I can assure you, Mr. Rousseau, that we work with industry, and we work with provinces and territories. We have a very good working relationship across the country and with all sectors of the industry. I've made myself available as often as I can and as quickly as I can in instances like this and in those instances of meeting with the supply managed or the UPA.

I understand there may be some leadership changes there, from Christian Lacasse, who has done an excellent job representing Quebec farmers. I understand Marcel Groleau may be the next president; he's a tremendous gentleman as well. He is serving me well on some advisory boards at this point.

There is no fear that we will arbitrarily change things. We've never done that, even in the case of the Wheat Board. We had the support of three of the four provinces involved in that. We had the support of all of the major livestock, grain producers, and so on in that Wheat Board area, with the exception of the NFU.

We don't operate arbitrarily. We sit down, work our way through, and chat to make sure we're on the right track. We did that with the Wheat Board. We could constantly meet with the UPA, and as you said, my good friend, Minister Paradis, was there to meet with them. He'll report back to me on what he heard, and so on, very soon.

But at the end of the day, we are the party that had support for our supply management in our campaign platform. We are the party that brought it up in the throne speech, and we continue to support them in every way we can, because they help drive the Canadian economy. They do a tremendous job.

[The Chair, Conservative, Larry Miller]

Okay, thank you.

Mr. Zimmer, five minutes.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

Thank you, Minister, for coming.

I'll actually be sharing my time with Mr. Payne.

We had good news Monday with our legislation, but we just heard that Bill C-18 has just passed second reading in the Senate. So that's absolutely great news for those of us who support that.

We've heard a lot of myths dealing with the CWB, a lot of stuff, and a lot of rhetoric in the papers and from the opposition parties. But can you clarify what actually is occurring with regard to the Wheat Board? Are we destroying the Wheat Board, or what is the actual story?

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

The only thing that will change with the Wheat Board is that the single desk—the monopoly—will be gone. The Canadian Wheat Board will still be there, it'll still be at the same address, and we're hopeful that a lot of the really good marketers and analysts and so on, which the Wheat Board has developed over the years, will stay with the Wheat Board and continue to offer pooling and a brokerage.

The Wheat Board now will actually have more tools in its toolbox to offer farmers as well. They can pool any grain, they can broker any grain, they can facilitate, and they can do whatever is needed to make sure they serve farmers in the best way forward. They'll have the ability to strike partnerships with any of the industry players. They'll continue to work on contracting with railways. They'll continue to work with producer cars, but as you well know, producer cars are guaranteed under the Canada Grain Act and administered by the Canadian Grain Commission.

They'll continue to operate in a way that will flow the check-off. We're making sure that the check-off stays there for science and research. The check-off will be done at point of sale, and of course the board will be involved in some of that, making sales. The check-off will then flow back through Agriculture Canada during that five-year transition. That's already geared up to five years, so we make sure the Western Grains Research Foundation and all the other groups are well funded and still able to move forward.

A lot of the situations will stay the same. The only thing that changes is that farmers are no longer forced to deal only with the Canadian Wheat Board. They'll be able to deal with the same multinationals, if they so desire, that they do with their canola and their special crops. They'll be able to deal with other brokers who will pop up and other pooling systems that will pop up.

I met yesterday with Brad Vannan of ICE. They'll be up and running very soon into the new year, offering a pool for wheat. They've had one for canola that's very successful. Farmers recognize their expertise.

So not a lot will change with the actual Wheat Board, with the exception of the single desk.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

You spoke about it a little bit in your statement just now, but can you explain in a bit more length some of the tools the CWB is going to have? We're actually expanding their toolbox versus cutting it off. Could you explain in a little bit more detail what we're doing there?

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

As I said, other than the single desk, they'll now have access to other grains.

Should they desire to keep using the Port of Churchill, we've also put in place an incentive of $5 million a year, but it will incent more than just the old Wheat Board grains. So any pooling that will be done with farmers holding their grain to make use of that Churchill port, the Wheat Board can actually take part in more grains than just wheat, durum, and barley, which is good news for them as well.

There are a number of changes that are coming, working with industry. Of course the Wheat Board is a valued partner on our Crop Logistics Working Group that is co-chaired by my deputy minister, John Knubley, and Gordon Bacon of the Canadian Special Crops Association. The Wheat Board is a vital player on that as well. That'll streamline how we handle and move our products from the farm gate right through to the port.