Agriculture Committee on Oct. 9th, 2014

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

Thank you very much, Chair.

Thank you to our witnesses for being here.

I would like to bring up a point. Minister Ritz, when he was in front of committee at the last meeting, spoke about the future possibility of implementing an end point royalty type of system. Although Bill C-18 doesn't legislate that, it does allow for regulations to follow—probably, I would say, after thorough consultation with the sector on how best to put in place a system like that.

Mr. Jones, you as well mentioned in your speech this idea of end point royalties, which is not part of how business is done right now. I'm wondering if you could share with the committee how you would perhaps see a future system such as that, and what process could be used to put in place a system like that.

[Mark Brock]

I actually might steal the question from Mr. Jones and try to answer that myself.

From a producer standpoint and part of this coalition, I think at some point down the road, where we think we need some further investments in research outside of public dollars and private dollars, there might be a need from a producer and industry standpoint of implementing maybe an end point royalty on something, so that we can collect some of these dollars and further advance research and innovation in these different crop sectors to be competitive in the world on a global scale.

I think sometimes we've struggled to encourage investment in Canada. If we can have a place where we can collect some end point royalties at some time, if it's deemed worthy and it's gone through the proper channels, it could encourage some further research and further investments that would benefit producers at the end of the day.

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

Thank you.

Let me just ask a question of the organics sector.

Mr. Holmes has gone, has he?

[Dwayne Smith]

Yes.

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

Mr. Smith, can you confirm that the organic sector purchases about $78 million worth of seed? I think it registered varieties. So I would imagine that trait development, research and development within the types of seeds that organic farmers buy...this legislation would be very helpful to them because if you get higher yields, lower losses, better traits in certain areas, that would be beneficial to organic farmers.

[Dwayne Smith]

It's a matter of perspective about the size of the industry. We think we're probably small enough that it wouldn't warrant any private investment into organic seed development, which is our greatest concern.

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

Would you agree that the sale and purchase of organic products is growing?

[Dwayne Smith]

Yes.

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

Okay. Dramatically?

[Dwayne Smith]

Dramatically, yes, but as a proportion of the greater agricultural industry we're still quite small, even though we're growing quite dramatically.

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

I would imagine organic farmers would desire it, and this would give them a greater opportunity to acquire new varieties of seed that benefit them. It gives them that opportunity as opposed to the current conditions.

[Dwayne Smith]

It's all crystal ball-gazing, right? I think that the lion's share of the money will go to developing crops that are compatible with proprietary chemicals. The lion's share of the money will go to crops that are more efficient nitrogen users from synthetic conventional systems. From my own farm's perspective, I'd be looking for wheat with broader leaves, which isn't to increase wheat competition in the field. That's not necessarily anything that's on the scope today.

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

If the organic sector is growing and a plant breeder sees opportunity here, even if it's a niche opportunity, you'd think they might step into it, certainly more so if we move to UPOV 91 than if we stay under UPOV 78. That's really what I'm trying to ask you. Surely when you look to the future through Bill C-18 there's a brighter possibility of organic farmers benefiting from future seed technology, especially when the organic sector is growing, than there is to remain under UPOV 78.

[Dwayne Smith]

I'm usually a glass-half-full kind of guy, but in this particular case I think the future would be darker for organic agriculture under UPOV 91.

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

Wow.

[The Chair, Conservative, Bev Shipley]

Thank you for your questions and comments.

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

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

Thank you, Mr. Chair, and thank you, guests, for coming.

As you can see this bill has a lot in it. A lot of good changes are going to be made in the agricultural industry. There's a sense that we need to have legislation. It's difficult sometimes when it's all in one bill. I think overall whoever I talk to in the industry agrees there need to be changes. A lot of good stuff is in this bill, but some say there has to be some tweaking.

Mr. White on the advance payments, my question to the minister on Monday was, why not increase to $800,000. I think he said 94% don't go beyond $400,000 and we have to keep benefiting small farmers and their 6%. I see that you were saying the 6% who use it, that's last year's figure, or whatever, the year before. So now we're up to 10%. Farm sizes are increasing, but you're also increasing your input and whatnot. So it's going to keep going higher and higher. Do you think there could have been a bit of a happy medium when a lot of people are saying $400,000 is not enough and the minister is saying $800,000 is too high. Do you see that percentage going higher and higher? Also, do you think the minister and this committee should look at some sort of middle of the road, maybe $600,000 or something, that's going to help farmers in the next decade?

[Rick White]

The 10% number we use is what we experience at CCGA, the data that we have for the farmers we serve in western Canada. I suspect the minister is using the national averages, which would be a different set of numbers. But yes indeed, the number of farmers who are hitting the limit at $400,000 is increasing, and we hear from them. When you look to the future, farm sizes are getting bigger. Input prices keep going up, and $400,000 doesn't go nearly as far as it used to. So that's one thing.

The second point I want to make is that it may look like only 10% of the farmers are hitting the lid, but what we're not capturing are those farmers who are walking away from the program and not utilizing it because $400,000 isn't worth their time. They're not even using the program. We think there are a lot of farmers who would use it if they could come and get more money, because their input costs are $600,000 or $700,000 or $800,000 and they have to go to the bank anyway. That's what's not being captured here, and we think an expanded limit would capture those farmers and serve farmers large and small equally.

Is there a middle ground? Absolutely. We put the number $800,000 out there, but any increase, I think, would be very much appreciated by the farmers. It would make it more useful to them and it is a very valuable tool for them. It's very cheap financing for them in the balance.

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

Thank you very much. I think the other point you made was that the process, how it's done, also needs to be tweaked.

I have to get my question in. I have only one shot.

To the member from the farmers union, many countries are using the system we're proposing, the UPOV, and I asked one of the department heads the other day about places like France that use the new system. One of the department people said they have no problem with it.

So here's my question to you. You see this big problem with the changes in the seeding rights, and the minister is saying they would entertain some tweaking of terminology. My sense from the organic people and the farmers union is that you want a total overhaul or you want it thrown out. Can you tell me in which countries that have the system in place the farmers are protesting or having a problem with it?

[Terry Boehm]

Certainly. You have to remember that when you talk about a number of countries using the UPOV system, you have 27 member states in the European Commission. That's almost one third of the countries in the world that use UPOV. They're a heavily subsidized agricultural production system. UPOV 91 was introduced only a year or two ago in France, and there were widespread protests. Nevertheless, farmers have difficulty with seed-saving. There are restrictions on access to seed-cleaning equipment in France, in terms of building new plants, which is a key part of the seed system that's a big worry in this UPOV element.

We're talking about a system that actually does increase costs to farmers, which is not universally accepted, however accepting governments are of it in certain jurisdictions as a function of some trade agreements and extensive lobbies from certain parties.

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

We have two totally different opinions at the table here today. Do you think there's a compromise here with this part?

[Terry Boehm]

I think the compromise is UPOV 78. It perfectly fulfills our international obligations. It allows plant breeders to collect royalties on their development. One third of UPOV member countries use UPOV 78, and in the TRIPS agreement on trade-related aspects of intellectual property, UPOV is just one example of plant variety protection. A sui generis system developed in the country, an equivalent system, or an independent system altogether is perfectly acceptable.

We don't need to go down this road.

[The Chair, Conservative, Bev Shipley]

Thank you very much.

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

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

Thank you, Mr. Chair.

Thank you for appearing at committee today.

I'm just looking at an article in the Alberta Farmer Express. The title of the article is ““Debunking myths around Canada's UPOV '91 legislation”. I say this for the NFU member on conference call, but I can't do it any better than David Jones has just done.

Can you list the five points that you made earlier, for the benefit of the NFU member, please?

[David Jones]

The first was that plant breeders' rights are not patents. I explained the background related to that. Second, the proposed amendments will not implement end point royalties.

Third, no matter what terminology is used, the amendments in the bill entrench the ability to save the harvested materials farmers produce on the farm: to clean it, to condition it, and to store it and use it as seed on their own farms. Fourth, large seed companies will not be the only ones to benefit. The public sector institutions will also benefit from PBR.

Fifth, input costs related to seed have actually decreased year after year since the introduction of plant breeders' rights.