Agriculture Committee on May 28th, 2014

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

What you're seeing in this year's estimates is a portion of a package that was put together by the federal government taxpayers ultimately of up to $340 million to help the Wheat Board make the transition into the private sector. That allowed them to get back to zero. I know there are a couple of lawsuits pending about somehow the assets having been absconded with, but I'm here to tell you that it took that amount of money to get them back to zero. The assets were heavily leveraged. The building in Winnipeg and the railcars were actually leveraged more than the property was worth. Then you start to look at paying down the staff pensions that are due and how they transfer all of those types of things. There was a computer system that was worth tens of millions of dollars that had to be rationalized and rectified. So what you're seeing in this year's estimates is $30 million of that overall amount of up to $340 million. I think they'll probably top out in the $310 million range, so they won't spend it all, but we're still waiting for those final numbers.

In its first year of operation as a private trader, the Wheat Board still carried the government guarantee for up to five years. They have that five-year term in which to come to us with a plan on how they will privatize: what it will look like, whether it's a farmer cooperative or however they decide to do it, or whether some international entity or Canadian entity buys them up. In that timeframe, they signed delivery documents with most of the major grain companies, but it's really hard to enforce those and to make those work in a timely way. If you sign a deal with a grain company, it's going to move its grain first before it takes yours. It's that type of thing.

So this year they've done the unprecedented thing again, using a portion of the government guarantee but underwritten by the Wheat Board itself, to buy a portion of Mission Terminal through Thunder Bay and some of the holdings further down the St. Lawrence Seaway. That also included some portions of terminals and short-line rail. In Saskatchewan they have another deal cooking on another privately held terminal and short-line rail, which they already owned a portion of through the Mission Terminal deal. They've also begun construction of two major builds, one in Saskatchewan and one in Manitoba, and they are considering a couple of more strategic locations to start to form their own catchment area to feed into those terminals they're looking at.

[Earl Dreeshen, Conservative, Red Deer, AB]

So they've become another option as far as farmers are concerned.

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

They have. They made money the first year. It was not as much as they would have made if they had had all of the grain moving through them, but it was a significant profit. This year it looks as though they'll do quite well again.

[Earl Dreeshen, Conservative, Red Deer, AB]

I guess the other thing—and Mark mentioned it earlier—was the Canada-Europe trade agreement. Of course you've spent a lot of time there trying to work through all of the different issues we have.

Of course dairy is one of those issues we will be talking about in the next short while in the House. I'm just wondering if you can give us a bit of an idea of what you feel the future is going to be as far as the dairy producers and the cheese producers go, as well as with regard to the concerns that some of them seem to have there.

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

I think the future looks good. They're a very solid, strong commercial entity across Canada. There are some small cheese producers. I was quite happy to see a lot of them come out and say they're already winning awards in Europe for their Canadian cheese and they're not scared of going head to head with the European cheese that will eventually come in here, the 16,000 tonnes of cheese plus some industrial cheese and so forth. At the end of the day, I'm not scared of the competition on their behalf, and they've been telling me they're not scared of the competition either.

The concern will be with whoever handles the allocation of quota on that tonnage of cheese coming in. Discussions as to the best way to handle that are ongoing. We have to be concerned that whatever model we put in play the Europeans will use to handle predominantly our pork and beef as well as other agricultural commodities. So there's some work to be done in that regard.

The Prime Minister early on said that, should there be negative impact on our dairy or our processing sector, the federal government would pick up that point. We're in discussions and we've had some good discussions with the Dairy Farmers of Canada, working through the Canadian Dairy Commission with Jacques Laforge and his team. We've also been working with Laurent Pellerin at the National Farm Products Council on how you quantify and how to set a benchmark now to show that there are fluctuations as that cheese begins to come in.

We're working out the final details with the European Union on the science-based side of the trade. Steve Verheul is very well versed in agricultural issues as well as in trade overall, so I trust him implicitly to make sure there are no non-phytosanitary or non-science-based tariff walls behind what we're taking down. Those talks are ongoing. Those are the final little details that take time to get right. But it's worth that time investment to make sure we get them right.

So at the end of the day, we'll have to set a benchmark working with the dairy industry and with the provinces as to where we are today and how that would be affected negatively or positively. The growth we're talking about in Canada right now when it comes to yogourt manufacturing and cheese and all of those different things that affect the farmers' bottom line is very positive. There's good solid growth. So I think there's every intention that the amount of cheese coming in from Europe will be absorbed into a growing market. There's more consumption out there than there was, so we'll start to see that happen.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. Dreeshen.

Now I'll go to Madam Raynault, please, for five minutes.

[Francine Raynault, NDP, Joliette, QC]

Thank you, Mr. Chair.

Minister, the pork industry and pork diseases were mentioned earlier. Are there any plans to provide funding to the provinces that have already been affected, particularly the three largest pork producers, namely, Manitoba, Quebec and Ontario? Are you planning to provide them with financial assistance?

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

Well, that would be up to the provinces, if they decided they want to use agri-recovery. Of course, for anyone affected, there will be an adjustment on their agri-stability. The good news, though I guess—it's not good news for Ontario—is that the bulk of the outbreak has been confined to Ontario, with 60-some outbreaks throughout. We had one in Prince Edward Island, one in Quebec, and one in Manitoba. It was one barn in each of them, so that's one flight of pigs, one group of young pigs, in each of those barns out of the overall yearly cycle. Whether or not it makes a difference to their overall bottom line, we'll have to wait and see how that all works out.

Some of the outbreaks in Manitoba didn't affect the whole barn. There were pigs that were sick but it really didn't transfer through and wipe out the whole herd, so we'll have to wait and see how that all works out.

[Francine Raynault, NDP, Joliette, QC]

Expenses for business risk management programs were decreased by about $123 million compared with the 2012-2013 numbers.

Did your department conduct a study to determine the sectors in which producers will be hardest hit?

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

Actually, there are no farmers that are hit because of that $123 million. What that speaks to is that these are demand-driven programs. If there's a hailstorm or frost, or if there's an outbreak of something that calls for a business risk program to be implemented, then it's paid out. They're demand driven, so what that speaks to is the fact that there was not the demand last year. There were not the weather-related systems, disease, or other things that we saw the year before. That will fluctuate from year to year.

[Francine Raynault, NDP, Joliette, QC]

Exactly.

Were programs in this category adversely affected by expense cuts?

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

Not at all.

[Francine Raynault, NDP, Joliette, QC]

Do I have some time left, Mr. Chair?

[The Chair, Conservative, Bev Shipley]

You have two minutes.

[Francine Raynault, NDP, Joliette, QC]

Thank you.

As part of the committee's work, we have often talked about bees. They are essential to the survival of agriculture because they pollinate everything we eat. I believe it is very important for them to be healthy.

All across North America, more and more bees are dying because of all the pesticides. In addition, because of monocultures, they can no longer gather pollen from a variety of plant species.

We heard that the full report on the effects of pesticides on bees will be published in 2015. Will this report include any new elements?

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

Yes, it's not our report at Ag Canada. It's actually Health Canada that's doing the report. We look forward to it as well.

At the end of the day, I attended a trilateral meeting in Mexico last week with the Mexican agricultural ministry and with the United States, the USDA, and we did talk about bees. We were all buoyed by the fact that this year the beehive deaths were less, and in the neighbourhood, I would guesstimate, of a third of what they were last year. It didn't translate through to the large wipeout of beehives we had the year prior.

We're excited by that, but we're also concerned that people will drop the initiative to move forward with science on this product. I don't think that's going to happen. I know that Health Canada is forging ahead and moving forward on the adverse affects of a number of different things on bee health.

There's quite a difference of opinion throughout the bee industry. I know that from some of the Senate hearings that were focused on this. I had the opportunity to listen in on some of those. There's quite a diverse set of opinions out there as to exactly what should be done, how it should be done, and how quickly it should be done, and again, how you set the benchmark for when something should be triggered. All of that is taken into the mix. We're waiting anxiously for that Health Canada report, just like you are.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Madam Raynault.

Now we'll go to Mr. Zimmer for five minutes, please.

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

Thank you, Minister, for coming today.

I just want to talk to you about C-30, the fair rail for grain farmers act. I guess we've said it enough. It shouldn't be hard to say but it seems to still be hard to say.

Anyway, I guess the fact that our rail capacity is challenged by all the commodities we have to sell is actually a good problem to have, because it shows that the world wants our commodities. Although it's a good problem, we still are faced with the fact that it is a problem. I just wanted to know, from your perspective, why it's important that this bill is passed and why it is good for our farmers.

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

Well, it's good for all bulk commodity shippers, not just farmers. The title is a bit of an anomaly in that it affects all bulk shippers. Even when you talk to some of the potash shippers that use Canpotex, which is a single desk, they own their own cars but they still couldn't get engines and crews to move the cars. So there was not a happy story at any one of the bulk commodity round tables that we had, and we had a number of them from coal to timber to mining, potash, oil and gas, even right through to the grain systems.

We all agree that rail has to shorten the trains, slow down for winter rates. We get all that, but then they also ran far less trains. I saw an article that said there were 28 days when there wasn't a grain car that showed up in Vancouver, yet we had over 50 boats sitting and waiting to be loaded. A few of them went out short. There wasn't anybody who cancelled a contract with the boats sitting there. There were some contracts where the shipper would phone up the company and say, “Look, we're not going to be able to touch it for three months, so don't send a boat”. There still were demurrage charges.

The problem was there, even as the railways started to pick up their game. They're now to that point where they're delivering the cars that they said they could without interfering with other bulk commodities, and we welcome that. This piece of legislation will entrench that, moving forward to the end of this crop year, to make sure they attack as much of that backlog as possible. But it also gets much more specific in that rather than just scooping the easy-to-get-to commodities, they are actually forced then to work with some of the short-line rail, some of the other catchment areas that get left behind, because in their expediency to get the most to market to measure up without paying penalties, that's what's happening.

Now the piece of legislation will get us the data—that's the most important thing—corridor by corridor, week by week, so that they can tell exactly what's being missed in all of the bulk commodities. Interswitching will give some of the guys a lot better chance at keeping one railway honest over the other, and some of the southern tier, they'll start to have the ability to use some of the railways of the U.S., which already partner with CP.

When we were doing the one round table in Calgary, as I was leaving the airport to go downtown for the meeting, we actually saw a CP train with a BNSF engine on it. I mean, they're already doing those things, so this bill actually allows that to happen in a much more expeditious way.

It's very important that, as I said, the bill was passed through the Senate last night. It will have royal assent. I'm hearing that tomorrow the Governor General will sign it, so that's great. That creates the legislative umbrella that allows us to put the regulatory package in place.

Mr. Meredith and his folks at Ag Canada have been working diligently on the regulations. Andrea Lyon and I have had good discussions with Greg and his team as to what those regulations need to be, so that we make sure that short-line rail doesn't get left out, producer cars don't get left out, all the other bulk commodities, and so on like that, are addressed. So we're working with Transport Canada to make sure those regs are as fulsome as they need to be.

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

Perfect.

Just one more question, we've already talked about CETA, and you and Minister Fast have worked hard on the file. In many of my questions asked to the farmers when we were talking about innovation and how they are planning for this new opportunity that's before us, we talked about the issues. There are concerns definitely, but I guess I'd like you to speak to the potential benefits to the ag sector. To me, it has massive potential, even with the sectors that are concerned a little bit. There's still potential for Canadian cheeses in Europe and all that, as you've said.

Could you just speak to the potential of CETA?

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

I think the biggest thing is the ability to have another bidder, another buyer for Canadian product. Right now when it comes to the beef and pork sectors, we have a terrible one-sided relationship with the Americans. When it comes to beef, we rely on meat packers in the U.S. for 70% of our processing capacity. We're also fighting them on this country-of-origin labelling. So if they have other markets like the Pacific Rim and like the European Union market for our beef and our pork, it helps to apply the leverage we need with the Americans to keep them honest in their dealings with us when it comes to livestock. So that's the biggest factor.

The tonnage means brand new opportunities. Some of it will be for hormone-free beef. There's a stand-alone quota for buffalo, which is fantastic for your area and mine. I know I've been up in your area and you've been though our area. There's a lot of buffalo through there still. So there are tremendous opportunities for a number of smaller livestock groups as well.

We have some growing recognition with the European Union that GM commodities are not bad things to have. I know the farmers on the ground in a number of the member states are starting to say that for them to compete, for them to be able to grow the best on the ground that they have, they have to start looking at these new varieties of crops. So there are some sidebar agreements with the European Union on science-based recognition of some of these new commodities. So that's a tremendous opportunity there as well.

[The Chair, Conservative, Bev Shipley]

Thank you very much.

I'm going to take two more, but I'm going to make them shorter.

You each have three minutes, Mr. Garrison and Mr. Hoback.

[Randall Garrison, NDP, Esquimalt—Juan de Fuca, BC]

I'll have to talk really fast.

Thanks very much to the minister for being here. Since I joined the committee earlier this year, it's the first time we've had this opportunity.

I met with chicken farmers earlier this week, and they reminded me of how many jobs they support in the country—more than the oil and gas industry does—and how much they pay in taxes, which is $1.3 billion. One of the things they were very concerned about with Bill C-30 and the bottlenecks that have emerged is that they tend to get passed by when it comes to production for feedstocks for chickens. They've had to move a lot of their purchasing and shipping of feedstocks onto trucks, which they estimate costs them an average of about $40 per tonne. With feed making up over half their costs, this is a significant burden being passed over to the chicken farmers.

They're wondering when this will get resolved and whether that will be soon enough to actually save them from very serious costs.

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

I absolutely think it will be. The one thing they're not telling you is that feed wheat, with the amount of volume there is in the world, is down about $100 per tonne. So at $40 extra to truck it, they're still saving $60. I know there were a certain couple of people who were saying if they didn't have feed in two to three days, they'd be putting down turkeys and so on. That was complete hogwash—pardon the crossover pun. When I talked to the feed mills in central B.C., they had six weeks' supply of grain, so the crisis wasn't quite as abrupt as it could have been.

We take it seriously though. In business, everybody relies on stability and predictability. So we take that seriously. One of the attributes of getting Bill C-30 passed is to have that ability on a corridor-by-corridor basis, and delivery of those types of grains and so on will be highlighted. That's never been done before under Quorum's oversight—

[Randall Garrison, NDP, Esquimalt—Juan de Fuca, BC]

I think also it's a particular problem for chicken farmers in B.C., more so than in other parts of the country.

I know my time is very short, so I want to ask a little bit more about spent fowl, because you didn't really give us a timetable for action. I know there have been some projections, because the rate of increase of imports under the spent fowl provisions is so rapid—