Agriculture Committee on Oct. 9th, 2014

[The Chair, Conservative, Bev Shipley]

I want to welcome everyone to the Standing Committee on Agriculture and Agri-Food. Today we're having witnesses on Bill C-18, an act to amend certain acts relating to agriculture and agri-food. When I looked at the clock and asked if we could start early, I was told I'm a minute late. Those clocks run on batteries, and the clerk has the official time.

As you know, we're studying Bill C-18. We will have a number of witnesses in front of us throughout the next while as we learn more about this bill and get pertinent information from our witnesses.

Colleagues, today, in the first hour we have, from the Canada Organic Trade Association, Matthew Holmes, executive director, and Dwayne Smith, board member. From the Canadian Canola Growers Association, we have Rick White, CEO, and from Partners in Innovation we have Mark Brock and David Jones, who are both members.

On video conference from Saskatoon, Saskatchewan, from the National Farmers Union, we have Terry Boehm, chair of the seed and trade committee.

Folks, I want to welcome you to our committee. When we get to questions, remember we have somebody on video. Please make sure you direct your questions to the person you would like to answer.

I will go first of all to the Canada Organic Trade Association, for six minutes, please.

[Matthew Holmes, Executive Director, Canada Organic Trade Association]

Thank you, Mr. Chair, and honourable members. It's a pleasure to be before you again. I'm going to share my time today with a member of my board of directors and a long-time organic producer, Mr. Dwayne Smith.

The organic market in Canada is now the fourth largest in the world, worth $4 billion a year, and the global market is worth $64 billion a year. We're poised for continued double-digit growth, but our biggest challenge, quite simply, is supply. We don't have enough product or farmers to keep up with demand.

We have closely studied Bill C-18 and are happy to provide some constructive comment today. COTA has certain reservations, but I want to be clear that it is prepared to support the basic elements of Bill C-18 if reasonable safeguards and clarifications are also made to the final text.

We recently conducted a study that was funded in part by the W. Garfield Weston Foundation with partners USC Canada. That study found that the organic sector uses approximately $78 million worth of seed per year. In particular, organic and ecological field crop seed in Canada is valued at over $50 million annually, but 60% of this is from seed that has been saved, stored, and planted by the farmer. Due to specific agronomic needs and a lack of commercialized varieties targeted for organic application, the organic sector relies on essential derived varieties. Organic growers use small test plots of seed for trials: to understand their localized yield, performance in low-input agriculture, and natural pest resistance; or to ensure GMO traits are not present in the seed.

[The Chair, Conservative, Bev Shipley]

Sir, we're going to suspend for two or three minutes to see if we can get the microphones working. We can survive it; the interpreters can't. Getting your remarks on record when it's choppy is difficult for them. It's the whole room apparently. We apologize. You won't lose your time. We will just give the technicians a few minutes to see if we can get the clarity back.

[The Chair, Conservative, Bev Shipley]

We've lost about 10 minutes, folks. I've asked if witnesses are able to stay from 12:00 to 12:10. They have agreed. I've not been able to catch Mr. Boehm to see whether it's possible for him to extend out for another 10 minutes in this first hour.

The witnesses following who are here so far are good to go from 1:00 to 1:10.

Obviously I would need the consensus of the committee to do that.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Chair, I have to leave at 1:00. I think it is a good idea to go until 1:10. I want to make sure that we can put something in place that, if we do extend the committee from 1:00 to 1:10, no motions can be tabled.

[The Chair, Conservative, Bev Shipley]

Yes. I think it's just for witnesses.

Are we good to go?

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Thank you.

[The Chair, Conservative, Bev Shipley]

Thank you.

Mr. Holmes, please continue.

[Matthew Holmes]

Thank you, Mr. Chair.

Can I get a sense of where I am on the clock?

[The Chair, Conservative, Bev Shipley]

You were stopped at two minutes and thirty seconds.

[Matthew Holmes]

Okay. It's not the first time I've been accused of making others late.

To continue, COTA recommends that the farmers' privilege in Bill C-18 clearly indicate the right to store and condition seed, including that organic growers have a right to store and plant seed they have introduced from non-organic seed and harvested as organic. This will ensure organic growers have options available to them and also create market incentives for seed breeders to offer organic varieties. In general, the farmers' privilege should make explicit allowances for all farmers to store seeds harvested for on-farm needs, including livestock feed, storing unsold crop in the farmyard, and storing indefinitely a supply of seed to protect against crop failure, disease, or frost.

Bill C-18 also proposes an end point royalty system, which allows the plant breeder to collect royalties on harvested material. COTA recommends that where a non-organic seed has been used by a certified organic grower, the harvested seed, which is now organic, should be excluded from the EPR system.

Further, for all seed, COTA strongly recommends that the bill include language to the effect that the EPR can never be greater for saved seed than it is for purchased seed. For example, the European Court of Justice ruled that seed-saving costs cannot be more than half the price of seed royalties.

I'll now pass my remaining time to Mr. Dwayne Smith from my board of directors.

[Dwayne Smith, Board Member, Canada Organic Trade Association]

One of the best things about being a farmer is the freedom. It provides the right to self-determination and autonomy. There are wide open spaces and moments of quiet serenity. Oh, sure there are still struggles with weather and the marketplace, but that's what makes farming the quintessential small business.

Part of what makes farming what it is today is the power of the seed. It's a thing of wonder, how it will produce generation after generation of crops for food and fodder.

Bill C-18 is about the power of seed. As it's written, the bill would significantly restrict farmers' rights to self-determination and autonomy.

Bill C-18 would transfer the power of the seed from working for farmers to working for agribusiness. Along with this, the power of earning potential would also be transferred. Farmers would see not only more red tape as spelled out in this bill, but would see narrower margins. Narrower margins would put more pressure on safety nets such as AgriStability and would push more farmers off the land. During today's commodity super-cycle it may not be as noticeable, but if we look back at the agriculture crisis in the late 1980s, narrower margins from higher seed costs would have had lasting scars on our industry.

In the recent past, this government has dismantled the CWB to give farmers more autonomy and self-determination. That was a great day on many farms in western Canada.

This government also rightly is attempting to reduce red tape for small business. Bill C-18 would restrict farmers worse than the CWB and add mountains of red tape.

[The Chair, Conservative, Bev Shipley]

Thank you very much. Thank you for staying within time and for putting up with our technical issues

We'll now go to the Canadian Canola Growers Association and Mr. Rick White, please. You have six minutes.

[Rick White, Chief Executive Officer, Canadian Canola Growers Association]

Thank you, Mr. Chairman.

Good morning to the members of this committee.

Thank you again for inviting me here today to speak to you about Bill C-18, the agricultural growth act, and specifically the amendments that will impact farmers and the growth of our industry.

The CCGA represents 43,000 canola growers and is governed by a board of farmer directors representing all provinces from Ontario west to B.C. We are also the largest administrator of the advance payments program in Canada, offering financing on over 20 different crops.

With 90% of canola grown in Canada exported, canola growers need a competitive regulatory framework at home and the right set of crop input tools to compete internationally. The competitiveness of our industry, which contributes $19 billion annually to the Canadian economy, depends on up-to-date regulations. We welcome opportunities taken by the government to ensure farmers have continued access to the tools required to maintain the profitability of their farms.

A number of the amendments contained in Bill C-18 are expected to foster innovation in agriculture and provide for more responsive government decision-making. In particular, we applaud the government for proposing changes to the Plant Breeders' Rights Act to bring Canada in line with UPOV 91, the international standard adopted by Canada’s major competitors, while providing an exemption for farmers to save seed for use on their farm.

To show our support for ratification, the CCGA joined Partners in Innovation in July 2014, a coalition of 20 farmer, industry, and value-chain organizations formed to advocate for improvements to plant breeders' rights and to foster investment in research and innovation in agriculture.

Additionally, Bill C-18 allows for the recognition of foreign data and reviews for new feed, seed, and fertilizer registrations. This should streamline the registration process, making it easier to bring new products to Canada while still maintaining high levels of safety.

When it comes to changes proposed to the Agricultural Marketing Programs Act, or AMPA, farmers will benefit from a more valuable and responsive advance payments program. The provisions allowing administrators to advance on any commodity and the expansion of producer eligibility are examples of where farmers stand to benefit from this bill. We know first-hand how important this program is to farmers, particularly new farmers just getting established and farmers in need of flexible marketing and financing options.

The challenge with grain logistics experienced last crop year is a good example of how the APP helps farmers with marketing and cashflow needs. The cashflow crunch resulting from extensive delays in selling opportunities led to a substantial increase in the demand for the program and the total amount of money advanced to farmers.

CCGA staff were very busy last January and February processing cash advance applications at a time when historically the number of applications drops significantly and farmers begin to pay down their advances. By accessing financing under the 2013-14 APP, farmers were able to secure the necessary funds to purchase seed and crop inputs for the growing season that is just winding up now.

In total, CCGA advanced $1.59 billion in the 2013-14 program. That's 50% more than the previous year. Funds were advanced to 12,459 farmers, as compared to 9,961 under the previous 2012-13 program. Although, as I said, the CCGA is generally supportive of the proposed changes to the APP, there are key areas where improvements could be made to make the program even more useful for farmers, particularly in a crop year like the one we just had.

First, we think the repayment of advances made directly by farmers to program administrators could be made more flexible by eliminating penalties for repayments made without proof of sales documentation. Farmers complain to us about this feature of the program, and we believe it is one reason the program is not as well used as it could be.

Second, we believe, and farmers tell us, that the cash advance maximum limit needs to be increased. Doubling it to $800,000 would not be out of line, in our opinion. The APP limit was last increased in 2006 when it was set at $400,000 in total, with the first $100,000 interest free.

Since then, Stats Canada’s farm input price index has increased by 40 points from 110 to 150, with a base year of 2002 being 100. If the APP is to continue to be useful to growers, it must at least keep up with inflation. Under the 2013-14 APP, roughly 10% of growers who had an advance through CCGA were near or reached the maximum limit of $400,000, compared to 6% in the same situation the previous year.

In conclusion, there is an opportunity to amend Bill C-18 to make the advance payments program a more useful and valuable tool for farmers. The grain backlog demonstrated very well why the APP needs to be flexible and remain relevant as more farmers turn to the program than ever before. Our suggested changes offer a targeted, low-cost solution to ease cashflow and assist farmers with their financing needs. We hope you will seriously consider our suggestions, which would make the APP a more effective tool now and in the future.

Thank you for the opportunity to speak to you here today. I look forward to taking your questions.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. White.

Whoever's going to start, you have six minutes. Go ahead, please.

[Mark Brock, Member, Partners in Innovation]

Thank you, Mr. Chairman and members of the committee.

We are pleased to be here on behalf of the Partners in Innovation to speak to you today about amendments to the plants breeders' rights legislation within the agricultural growth act, as proposed in Bill C-18.

My name is Mark Brock. I'm a corn and soybean producer in Ontario. My organization is Grain Farmers of Ontario. We are an active participant in the Partners in Innovation coalition.

Beside me is David Jones from the Canadian Potato Council and the Canadian Horticultural Council. We're going to share the presentation today.

First, I want to introduce the Partners in Innovation. It's an informal coalition of 20 provincial, regional, and national organizations across Canada, representing the vast majority of farmers in Canada and almost all the crop production across the country.

These 20 organizations represent producers' value chains in grains, oilseeds, pulse crops, fruits, and vegetables in all provinces. We have come together as Partners in Innovation for two purposes: one, to clearly demonstrate to policy-makers and decision-makers that the majority of farmers in value-chain groups support and need updated plant breeders' rights legislation in Canada; and, two, to make sure that farmers, policy-makers, decision-makers, and the public have access to clear and correct information on proposed amendments.

As a point of clarification, while each of the participants in the Partners in Innovation coalition has individual views on other provisions of Bill C-18, we are all united in our support for the proposed amendments to Canada's plant breeders' rights legislation, to bring them into compliance with the most recent international convention, which is UPOV 91.

All the participants in the coalition couldn't be here for the presentation, but from coast to coast and from crop to crop, they have provided clear reasoning for supporting PBR amendments. I'll give you just a few examples.

The BC Grain Producers Association president says, “Modernization of plant breeders' rights will help stimulate research in the grain sector as well as foster investment in competitiveness with new varieties”.

The chair of the Atlantic Grains Council says, “With up-to-date plant breeders’ rights legislation in Canada, we are hopeful that suitable international seed varieties will become available to our region, helping Atlantic growers with our unique agronomic challenges”.

I hope this makes it clear that the crops sector strongly supports and needs amendments to the plant breeders' rights to ensure that our farmers have access to new and improved varieties developed in Canada and internationally. We just have to look at the new, exciting developments since the government announced the proposed changes to understand how important these amendments are. Recently, sod has been turned for a new research and breeding centre in Saskatoon. A new partnership between Canadian seed companies and international plant breeders has been formed to bring improved varieties to Canadian farmers. All these decisions are predicated on the updated PBR legislation, and the resulting benefits are at risk should these amendments not be implemented.

I will now turn it over to David.

[David Jones, Member, Partners in Innovation]

Good morning.

As Mark said in his introduction, I'm from the Canadian Horticultural Council and Canadian Potato Council.

Plant breeders' rights have been tremendously important to our sector. Before Canada implemented plant breeders' rights in 1990, producers could not get full access to superior genetics that were developed internationally.

In the first 10 years after the introduction of PBR, over 80 international potato cultivars were introduced into Canada. However, as Canada has fallen farther and farther behind other countries, our producers are once again losing access to superior varieties that were developed internationally. We are confident that the updated PBR legislation will continue to bring new varieties to Canadian producers.

I would now like to focus on five very important misconceptions regarding the proposed amendments.

First, plant breeders' rights are not patents. Unlike patents, plant breeders' rights make it mandatory for breeders to make their protected varieties available for use by breeders either for research purposes or to develop new varieties. Unlike patents, this legislation will ensure that farmers can save harvested material they produce on their farm for use as seed.

Second, the proposed amendments will not implement end point royalties, or allow royalties to be collected anywhere on the seed. The legislation is very clear that the only time the breeder can be compensated on harvested material is if the breeder can prove that the seed was acquired illegally. However, if farmers and industry stakeholders want to implement a system in the future that will help to generate funds for investment, and they request this of the minister, the bill does permit the minister to undertake a regulatory process to make this possible.

Third, no matter what terminology is used, the amendments contained in the bill entrench the ability to save the harvested materials they produce on their farm: clean it, condition it, store it, and use it as seed on their own farm. The farmers' privilege terminology isn't even part of the legislation itself, but rather is in the margin for reference. The farmers' exception to plant breeders' rights is clearly in the legislation and cannot be taken away without a legislative change.

Fourth, large seed companies and developers will not be the only ones to benefit from updated plant breeders' rights. In fact, half the varieties protected by PBR were developed at public institutions. Universities, provincial research facilities, and Agriculture and Agri-Food Canada have received royalties from plant breeders' rights to help fund their breeding programs, leading to further innovation for Canadian agriculture.

Fifth, history in Canada clearly shows that PBR did not accelerate seed price increases. During the ten years before PBR implementation, seed prices increased 24%. In the ten years following PBR introduction, the prices of seed increased by just over 8%.

We hope these points have addressed some of the misconceptions that you might have about amendments to plant breeders' rights and the impact on Canadian growers.

In conclusion, on behalf of the 20 organizations that are the Partners in Innovation coalition and the majority of Canadian growers we represent, thank you for the opportunity to meet with you today.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. Jones.

We'll now move to our video conference in Saskatoon.

Mr. Boehm, you have six minutes, please.

[Terry Boehm, Chair, Seed and Trade Committee, National Farmers Union]

Thank you.

I'd like to thank the committee for giving me the opportunity to speak on this extremely important piece of legislation for not just farmers but all Canadians.

The NFU is Canada's largest direct membership, coast-to-coast farm organization. You have to be a voluntary member not simply a producer of a commodity to be considered a member of the National Farmers Union. We establish our policy through democratic, well-developed institutions.

Canadian farmers have a history of developing institutions to rebalance power, such as that of farmers against railways or grain companies. We have the Canada Grain Act, the Canadian Grain Commission, Canadian Wheat Board, co-ops, pools, etc. All of these arrangements came about because of exploitation of farmers very early, particularly in the settlement phase on the Prairies. There was a recognition that there had to be a balancing of power between those who would exploit farmers and the general public interest of farmers' success and, beyond, for the economy of the country as a whole.

Our ancestors who came to this country never imagined having seed wrested away from them. Seed is hope in the future. It's powerful. There's a tremendous amount of power contained in the seed. We are witnessing, with strengthened plant breeders' rights, not innovation but innovation in the extraction tools and control of the seed. This is not in the public interest. It's in the interest of a limited number of seed companies that are continually consolidating. Our responsibility to resist for the future, and not to become quislings endorsing the granting of extensive rights to plant breeders or their representatives, is extremely important. Giving a temporary nod to farmers with a privilege to save seed on their own holdings is completely inadequate and inappropriate.

In the whole question about rights, the breeder is given an extensive list of exclusive rights: saving, reusing, stocking, conditioning, etc. The farmers' privilege gives a slight exemption and if you read UPOV:...each Contracting Party may, within reasonable limits and subject to the safeguarding of the legitimate interests of the breeder, restrict the breeder's right in relation to any variety in order to permit farmers to use for propagating purposes, on their own holdings, the product of the harvest which they have obtained....

It talks about reasonable limits and legitimate interests. The farmers' privilege can be undermined—and this is a presentation by the commissioner of plant breeders' rights here in Canada. It could be determined by the size of the holding, the type of variety, the number of cycles of reproduction, remuneration, proportion of harvested material, etc.

What it really means is that farmers are losing ability over time, as we've seen in the variety registration system, a continuous erosion in the ability of farmers to do what they've done for thousands of years, to have the hope for the future contained in that seed, to utilize that seed. It's one of the inputs they can actually reproduce themselves, quite successfully. They're not opposed to paying for new varieties from time to time, but they are opposed to the restrictions imposed by the mechanisms contained in Bill C-18, essentially UPOV 91.

Some organizations are lulled into complacency that there are no other options, that it won't be so bad, that this is only fair. I feel they're victims of groupthink and brainwashing. There is another way for farmers. I stand on 10,000 years of seed varietal development, developed by farmers. The NFU proposes a document, the “Fundamental Principles of a Farmers Seed Act”, where there would be the unrestricted right of farmers to exchange and sell seed and not be restricted by contracts or other mechanisms including UPOV.

Bill C-18 is extensive. It goes into other areas, incorporation by reference. There's a reverse onus on farmers to prove variety, and ultimately there would be litigation chill causing farmers to buy seeds on an increasingly shorter cycle for fear of the exercise of these measures within Bill C-18.

It is not the only way. There are 196 countries in the world, of which 71 have UPOV regimes. Eighteen of those have UPOV 78 regimes, which we have right now in Canada. We fulfill our trade obligations with that. Our major competitors, Argentina and Brazil, use UPOV 78. It's only in the minds of those who wish to facilitate increasing dependence and a loss of autonomy for farmers to promote this.

I would close by saying that he who controls seed controls the food system and ultimately people. Do we trust a few consolidated seed companies with that kind of power? I think it's short-term thinking to believe that this is the only way. There are many different ways, such as participatory plant breeding and reinvestment in public breeding. Innovation takes place on the farm with breeders in a cooperative setting, not by facilitating the revenue extraction tools that Bill C-18 is making possible.

We have submitted a brief to the committee that goes into other aspects of Bill C-18. I would encourage the members to have a look at that.

Thank you.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. Boehm.

I'll ask you, committee members, to identify who you want to direct the questions to, as we have someone on video and he can't see who you're looking at.

In our first go, we have Mr. Atamanenko, please.

You have five minutes. I will keeping our time fairly tight to the five minutes. Thank you.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Thank you very much, Chair.

My first question is for you, Terry, over in Saskatoon.

By the way, thanks to all of you for being here. It's always a pleasure to be back on the ag committee with my honourable colleagues.

[Voices]

Oh, oh!

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

So much for the mushy stuff. We'll get down to business now.

One of my reasons for existence around this place, as most of you know, has been to look at things through the lens of food sovereignty and the ability for us to control our food supply. I've often spoken out against the erosion I perceive of this, whether it's through trade agreements or other factors.

I want to zero in and look at that, Terry. I and a number of people posed a question to the minister two days ago in regard to saving seeds. We were given the assurance that there would be tweaking of the agreement to ensure that farmers would have the right to save seeds. Is it my understanding that regardless of what we do here, the language of UPOV 91 would supersede this, and that even though we would have that guarantee there still would be that control that could be taken away from farmers? That's my first question.

You folks have done an extensive amount of research on this. I understand that your position would be to retain UPOV 78, as have other major countries, and increase public research. Yet we have a number of other farming organizations, many of which are represented here, that believe it's okay, and that this is the way to go. I'm not convinced either way right now. I would like to get some specific clarification, first of all from you, Terry, and, if time permits, from others.

Thank you.

[Terry Boehm]

[Technical Difficulty--Editor]...determine the extent of the so-called farmers’ privilege and the erosion of it over time as it's developed.

Certainly the UPOV 91 is a template law. Much of this legislation is lifted directly from that template in terms of the amendments, the language, the rights conveyed to breeders. More extensively, once we enact this legislation with its particular elements, and as we're shifting into a period of time when international trade agreements increasingly include investor-state protection mechanisms, the ability to shift the ground in terms of making it perhaps more advantageous to local food production, Canadian farmers, and so on would be lost, because we'd be locked into compensating those so-called players—international players, corporations, whoever it might be—for lost future profits.

We've experienced that with NAFTA. Certainly those pieces come together along with increased enforcement provisions for all intellectual property rights, including plant breeders' rights, that are extremely draconian. I could expand on that; it includes the seizure from farmers—and not just farmers, but any alleged infringer of an intellectual property right—of their properties and of their assets, and the freezing of bank accounts, etc. This is what I talked about in terms of litigation chill that would cause farmers to purchase seed, whether they needed to or not, on a more continuous basis, and result in increased costs for farmers.

If we look at agricultural policy in general, I think we can see a pretty big failure in agriculture policy in this country. The biggest element of that is the massive increase in farm debt that we've seen in the last number of years in spite of a previous cycle of a bit more buoyant agricultural prices—they're down now—and the decreasing number of farms in this country.

So I don't think anyone can pat themselves on the back that agricultural policy has been improving the lot of farmers in general. It's been externalizing costs onto farmers and showing up on their debt register.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. Atamanenko, and thank you very much, Mr. Boehm.

We'll now move to Mr. Lemieux for five minutes, please.