Agriculture Committee on Oct. 9th, 2014

[Doug Chorney, President, Keystone Agricultural Producers]

Good afternoon. I'm Doug Chorney, president of Manitoba's Keystone Agricultural Producers. I'm pleased to have an opportunity to speak to you today about Bill C-18, the agricultural growth act. While I recognize that this bill improves and modernizes nine existing acts, it's the changes to the Plant Breeders' Rights Act that have received the most attention from farmers in Manitoba. I would like to focus primarily on this act.

The changes to the act will bring Canada into compliance with UPOV 91, the international agreement for protecting intellectual property of plant breeders. It is anticipated that this will pave the way for increased investment in crop variety development. Manitoba farmers recognize the need to remain competitive on the global stage, and accessing new and improved crop technologies is critical to achieving this.

I would like to use the current example of the need for new variety developments. Our cereal crops that have been hit hard by fusarium this season. Fusarium head blight is a disease that has affected nearly 100% of our winter wheat fields. Financial losses due to yield reduction, cost of fungicide application, and downgrading in quality have been very significant, primarily because we don't have access to fusarium-resistant varieties. It has been a reoccurring problem over the past 20 years, since the disease first moved into our region. Manitoba has the highest rate of fusarium on the Prairies because of our moisture conditions.

We anticipate that the changes to the Plant Breeders' Rights Act will create a better climate for investment and research, one that can be more responsive to farmers' needs so that high-performing fusarium-resistant varieties will finally come to the marketplace. I would like to highlight how investment and research made it possible to grow soybeans on the Canadian prairies. Soybean production in Manitoba has grown from 100,000 acres in 2005 to 1.3 million acres in 2014, making it the third largest crop in Manitoba even as it creates new opportunities for our industry.

Keystone Agricultural Producers realizes that the changes to the act are meant to ensure that plant breeders receive the compensation they deserve from all users of their patented varieties through more diligent collection of royalties. I want to stress that we recognize the need for these changes. However, it is important that the Government of Canada and the plant breeders' rights office recognize that there is still considerable concern and unease among farmers and that more work must be done to assure them that there will be a net benefit to their operations.

Many questions have been raised about the possible introduction of end point royalties to Canada as a result of Bill C-18. We know that end point royalties are not a foregone conclusion, but we need to ensure that if they are adopted, the collection process is transparent and fair.

We also know that farmers' ability to save seed is enshrined in this legislation, but some farmers need further clarification and assurances.

We are concerned about the competition between established seed technology companies and smaller plant breeders or new market entrants, and whether this could adversely affect farmers. If a breeder builds novel traits into an existing protected variety, the commissioner of plant breeders' rights should be diligent in ensuring that fair compensation is negotiated between rights holders so that new varieties can be introduced to the marketplace and be accessible to farmers.

Overall, there are outstanding concerns on how the legislation, through its regulations, will affect farm-level costs. It is critically important that farmers are consulted during this regulation development process so that we can ensure that interests are safeguarded. We want to ensure that regulations will be developed in a way that is reasonable for all parties.

Before my time is up, I'd like to address another component of Bill C-18. I want to speak in favour of the proposed changes to the Agricultural Marketing Programs Act. They will make the advance payments program more accessible and responsible to farmers' needs. As weather-related incidents and volatile markets become the norm rather than the exception, this loan program has become an increasingly important component of farm management. It provides advances for improved farm cashflow, which allows farmers to extract profitability from the marketplace. What I do ask, however, is that the interest-free portion of the advance be increased from $100,000 to $400,000, and the maximum limit be raised from $400,000 to $800,000 to reflect farm size changes.

I'll wrap up now, as I believe I'm running out of time.

Thank you for the opportunity to speak. I welcome any questions you might have.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. Chorney.

We'll now move to Mr. Matt Sawyer, chair of the Alberta Barley Commission, via video.

Go ahead, please.

[Matt Sawyer, Chair, Alberta Barley Commission]

Thank you, Mr. Chairman, and good afternoon.

On behalf of Alberta Barley, I'd like to thank you for inviting me here today to discuss Bill C-18. My name is Matt Sawyer and I'm here on behalf of Alberta's 11,000-plus barley farmers.

The amendments to the Plant Breeders' Rights Act as outlined in Bill C-18 are important to farmers and Canadians. By implementing Bill C-18 and adopting UPOV 91, we will finally be on a level playing field with the world's major agricultural exporting countries. A level playing field means more investment in research from international companies and an increase in the number and diversity of crops and varieties. All of that ultimately means more choice for farmers, which we wholeheartedly support.

We also believe the amendments to the Plant Breeders' Rights Act balance the interests of farmers with those of both public and private plant breeders. As farmers, we know the value of hard work and being rewarded for that work. Strengthened breeder protection will foster a positive business environment for investing in plant breeding in Canada.

International harmonization through the adoption of UPOV 91 will encourage foreign breeders to release new and innovative varieties here in Canada. Under UPOV 91, any plant breeder will be able to breed from a protected variety and no authorization will be required to conduct research and experimentation on a protected variety. This means that farmers in Canada will have faster access to better genetics. It's a win-win.

However, we would like to direct some attention to an item that is of critical importance to farmers. Under UPOV 91, an explicit farmer's exemption is required to allow farmers to continue saving, conditioning, storing, and replanting seed of a protected variety. Bill C-18 has included this provision. However, we understand that it is subject to restrictions that aren't outlined at the moment. To be clear, Alberta Barley unconditionally supports the inclusion of this provision. We believe that farmers should have the right to save seed and because of that right, farmers' privilege should not be subject to future restrictions or litigations.

As an organization directed by farmers, for farmers, Alberta Barley will continue to encourage the federal government to consult our members as they develop the regulations to support this bill. We support Bill C-18 but we also believe that the regulations within it need to be arrived at through transparent consultation, directly involving the people who ultimately will end up paying for it.

Alberta Barley's mandate is to create a vibrant, innovative industry that unlocks the entire potential of barley. We will always seek to advance the interests of Alberta Barley farmers through leadership and investment in innovation and development. Because of this, we support the proposed amendments to the Plant Breeders' Rights Act.

Thank you for the opportunity to contribute from Calgary to the committee's review. I am pleased to answer any questions you may have.

[The Chair, Conservative, Bev Shipley]

Thank you, Mr. Sawyer.

For the rest of the time, we'll go to Mr. Otto from the Barley Council of Canada, please.

You've got about two and a half minutes.

[Brian Otto, Chairman, Barley Council of Canada Working Group]

Thank you, Mr. Chairman and the committee.

My name is Brian Otto and I am chairman of the Barley Council of Canada. I farm east of Warner, Alberta.

I'd like to thank the committee for inviting me to present to you on behalf of the Barley Council of Canada. For those of you not familiar with Canada's national barley council, we represent farmers from across Canada as well as the entire supply chain for barley, including members of the research and life sciences community, the malting and brewing sector, the feed and livestock industry, and select grain-handling companies. We are the only national organization that has every stakeholder at the table. We represent every aspect of the value chain, and it is our mission to work together as a value chain to ensure long-term profitability and sustainable growth of Canada's barley industry. This is why we are so pleased to have the opportunity to tell you why we believe that Bill C-18 will positively impact profitability of the barley industry in Canada. Bill C-18, the agriculture growth act, outlines amendments to a number of different acts.

I would now like to comment on the proposed changes to the Plant Breeders' Rights Act as outlined in the bill. The Barley Council of Canada supports the government's intentions to amend the Plant Breeders' Rights Act in order to ensure alignment with the convention of the International Union for the Protection of New Varieties of Plants, better known as UPOV 91. Canada is currently the only one of nine OECD countries that has yet to modernize its plant breeders' rights protection to be compliant with the 1991 convention. We believe that the proposed amendments will strengthen the intellectual property rights for plant breeding in Canada, in turn encouraging greater investment and innovation in research and variety development. The barley value chain in Canada recognizes a tremendous potential that will result from the recent trade deals negotiated between Canada and other regions such as the European Union and South Korea.

To ensure that we are well positioned to take full advantage of these opportunities while we strive to meet the increasing global demand for our quality Canadian barley, it is imperative that we ensure that our plant breeders' rights are aligned with those of our global trading partners. We are confident that this increased investment will ensure that Canadian farmers have better access to new and improved seed varieties that have potential to enhance crop yields, improve disease and drought resistance, and meet global trade demands.

It is also important to note that there are no restrictions on who can be a plant breeder. Plant breeders' rights are not limited to corporations and can be held by publicly funded research organizations, government entities, and educational institutions. In fact, 45% of all protected agricultural varieties have been developed at public institutions that receive royalties on seed sales allowing them to continue to research. Approximately $2.9 million is reinvested in AAFC research stations.

Another key consideration in moving from UPOV 78 to UPOV 91 is the fact that UPOV 91 contains provisions that allow for inclusion of farmers' exemption or privilege. This is not guaranteed under UPOV 78. The Barley Council of Canada supports the inclusion of this privilege. As the regulations of our bill are developed, we will continue to advocate to ensure that farmers' ability to save seed is not limited in any way.

To summarize my comments here today, as part of our mandate to ensure the long-term profitability of the barley value chain in Canada, the Barley Council of Canada supports the passage of this bill.

Thank you very much for the opportunity to speak to you today.

[The Chair, Conservative, Bev Shipley]

Thank you very much.

I'll now go to the vice-president of the Canadian Federation of Agriculture, Mr. Humphrey Banack.

Mr. Banack, go ahead, please. You have six minutes.

[Humphrey Banack, Vice-President, Canadian Federation of Agriculture]

Thank you. It's a pleasure to be here.

Thank you, Mr. Chairman and members of the committee. I'm pleased to be here on behalf of the Canadian Federation of Agriculture to speak to you today about Bill C-18, the agricultural growth act.

My name is Humphrey Banack. I'm a grains and oilseeds producer from Alberta and vice-president of the Canadian Federation of Agriculture. The CFA represents through its member organizations more than 200,000 farm families from across Canada to promote the interests of Canadian agriculture and agrifood producers, and to ensure the continued development of a viable and vibrant agricultural and agrifood industry in Canada. We believe Bill C-18 will contribute to a more vibrant agriculture industry in Canada by modernizing a number of pieces of agricultural legislation. However, we will identify a few key points we believe should be addressed.

Due to time constraints I would like to focus my comments primarily on changes to the Plant Breeders' Rights Act and the advance payments program.

Despite signing onto UPOV in 1991, Canada has remained one of the few developed countries in the world not to ratify it through amended legislation. As you heard in the earlier presentation by Partners in Innovation, of which CFA is a member, this has limited investment in Canadian varietal development and prevented Canadian producers across a wide range of sectors from accessing the most up-to-date and innovative products.

CFA is a strong proponent of the introduction of updated plant breeders' rights legislation, and Partners in Innovation illustrates the broad industry support of these updates.

The issue boils down to making sure Canadian farmers are competitive and aren't falling behind other countries. We believe the legislation strikes a good balance between giving plant breeders the ability to receive a return on their investments in R and D while preserving the ability for farmers to save, store, and condition seed for their own use.

Although a number of concerns have been raised as to the effects that UPOV 91 will have on the diversity of breeders in Canada, international evidence suggests that the implementation of UPOV 91 will result in an increase in the diversity of Canadian breeders. I would also like to point to the fact that 45% of all the agriculture varieties currently protected under plant breeders' rights were developed at public institutions.

I must note our continued concerns with the recent shift away from public funding for basic varietal development, as it may very well reduce the presence of new, publicly funded varieties, and reduce competition from public entities. However, enhanced plant breeders' rights provide a platform for exciting new developments between producers and public institutions. With draft UPOV legislation now progressing through the House, we've already heard mention of a new research centre in Saskatoon, and partnerships between Canadian companies and international breeders. We continue to hear of groups exploring producer-led breeding initiatives in Canada. However, we believe increased funding for producer-public partnerships in this vein is needed in the future.

We see updated plant breeders' rights as a necessary step for the long-term competitiveness of Canadian agriculture, leading to increased investment in varietal development, and providing producers with access to the most up-to-date varieties.

I would like to comment on two specific components of the changes announced to the Plant Breeders' Rights Act: end point royalties and the farmers' privilege.

As already stated, Bill C-18 does not introduce end point royalties into Canada. Instead it creates a legislative framework through which end point royalty models can be developed through regulation. Our primary concern is that producers must have a significant role in future regulatory processes through robust consultation to ensure that any such royalties are reasonable and supported by our industry.

Similarly, we do not believe the term “farmers' privilege” is problematic as long as the legislative text behind it provides the necessary protections. In this vein, we are pleased to hear the minister suggest an amendment that would clarify the privilege to include farmers storing seed for future propagation.

With a wide range of products affected by this legislation, we recognize the need for regulatory authority to amend the privilege where there's industry consensus and it is desirable. It is an important point that we would like to see addressed in any future regulations.

Any regulations amending the farmers' privilege or developing end point royalties will require considerable consultation. We believe this process should require consultation with the plant breeders' rights advisory committee identified in this legislation. This advisory committee has mandatory producer representation, and we believe the consultation with this committee will ensure there is industry support for any amendments to the farmers' privilege or for the development of any end point royalty systems.

I would now like to shift my comments to the changes to the advance payments program. CFA members were pleased to see the changes in Bill C-18, as they reduce the red tape associated with getting an advance, they broaden access to the program for new products and new forms of security, and they provide producers with greater flexibility to market their products.

The ability to repay advances without proof of sale is an important amendment that will allow producers to market their products when it meets their needs rather than those of the program. We were pleased to see the government recently extend a stay of default to producers affected by the transportation difficulties last year, but these changes will provide much-needed flexibility around repayment deadlines for those unable or unwilling to move their product in the future. Similarly, multi-year agreements will reduce a lot of unnecessary paperwork for producers and administrators who were having to fill out the same information year after year. Coupled with the amendments allowing single administrators to offer advances on multiple commodities, this will streamline access for all producers.

While producers will benefit from these amendments, we believe any administrator expansion into new regions should require the approval of affected producers, via their producer groups. One of the benefits provided by smaller administrators in many areas is that they operate as service providers with in-depth knowledge of local regulations and the dynamics of the sectors they advance to. We must ensure that streamlining the program doesn't result in reduced service delivery.

Regulations should require administrators to consult with producers before any such expansion and impose guidelines that ensure that administrators are familiar with the relevant regulations in a particular province, such as collective marketing regulations in Quebec, which can have a number of implications for APP delivery.

Although we appreciate the wide range of improvements this legislation makes to the advance payments program, our members were disappointed to see the maximum advance limits not updated. The limits were last increased in 2006, but since that time the cost of farm inputs has risen dramatically. Farms selling more than $800,000 are increasingly common. For example, my fertilizer, rail freight, land costs, and crop protection costs now individually exceed $100,000, and my annual operating costs are closer to $600,000.

Although a relatively small percentage of all farmers, these farms represent a significant amount of Canadian production.

[The Chair, Conservative, Bev Shipley]

I would ask you to wrap up. You're well over time.

[Humphrey Banack]

Yes.

For producers already receiving advances near $400,000, transportation challenges and banks' reluctance to increase farm debt illustrate the benefit of an increase to the limit come seeding time. An increase to the interest-free and interest-bearing limits that recognize the increases in farm input prices will ensure that the program maintains its utility moving forward.

I'm very happy to be here today on behalf of the Canadian Federation of Agriculture. I look forward to any questions.

[The Chair, Conservative, Bev Shipley]

Thank you very much.

Now we'll move to Mr. Dahl, with Cereals Canada, for six minutes, please.

[Cam Dahl, President, Cereals Canada]

Thank you very much, Chairman and members of the committee. It is a privilege for me to be before you again.

Helping to create an environment that sees Canada as a first or the first choice for agriculture innovation is one of the key priorities for Cereals Canada. Bill C-18, the agricultural growth act, is an important step in that direction and will encourage the required investment.

My name is Cam Dahl. I am the president of Cereals Canada. In the interests of time, I will skip over the introduction of the organization, but I'm very happy to answer any questions you may have about our makeup.

I'm going to be concentrating my remarks on the portion of this bill that deals specifically with plant breeders' rights. These are proposed sections 2 through 51 of Bill C-18. Cereals Canada supports these measures, and we encourage all parties in the House of Commons to come together quickly and adopt them.

Canada has a strong reputation for consistently delivering quality products to the international marketplace. Cereals Canada looks for opportunities to build upon the Canadian brand. Building a strong Canadian cereals brand goes hand in hand with renewed investment in research and development. The Canadian industry today has an opportunity to develop and implement an innovation strategy that will facilitate increased research investment in the quality traits demanded by our customers.

There is a resurgence of interest in innovation and research in cereal crops. This presents the Canadian sector with an opportunity to make Canada a top choice for investments by helping create a policy environment that ensures a return on investment for all stakeholders in the value chain. Taking advantage of these opportunities will increase the value of Canadian cereals production for farmers, grain marketers, and crop development companies, while developing strong value for our customers.

I will not review the discussion of UPOV 91. I believe that's something you have become familiar with. However, I do want to highlight the mission of the convention, which is “to provide and promote an effective system of plant variety protection, with the aim of encouraging the development of new varieties, for the benefit of society”.

All but a few developed countries—Canada, New Zealand, and Norway—conform to the current version of UPOV 91. The fact that Canadian law does not conform to UPOV 91 means that companies face a disincentive to bring to Canada varieties that have been developed elsewhere, as well as an incentive to invest outside of Canada. Bill C-18 will help correct these problems.

The benefits are already evident. You've heard this from other presenters, but the introduction of Bill C-18, even before it has become law, has already had a positive impact on the environment for investment in innovation.

Last month I had the privilege of attending a sod-turning for Bayer's new wheat-breeding facility near Saskatoon, Saskatchewan. Bayer has been explicit. The prospect of Bill C-18 and the adoption of UPOV 91 was one of the key factors convincing the global centre in Europe to invest in wheat breeding in Canada.

This is not the only example of increased investment in cereals research. Canterra and Limagrain have formed a partnership to bring new varieties into Canada. KWS, a company based in Germany, has formed a partnership with FP Genetics to bring a new hybrid rye variety into Canada.

It's important to stress that the benefits of complying with UPOV 91 will also accrue to public entities. My friends have mentioned this as well, but I think it is something that is worth emphasizing.

Universities, government departments, and smaller plant breeders will benefit. Between 45% and 50% of all Canadian plant breeders' rights applications for agriculture crops come from public institutions, such as Agriculture Canada, universities, or provincial governments. Royalties collected are an important source of funding for these breeding programs.

Bill C-18 is a positive initiative, and I don't really want to stray into the negative, but it is necessary to highlight the fact that if Canada fails to modernize our regulatory environment, then the upswing that we are seeing in investment in cereals innovation will not take place in Canada. Instead, these investments will be made in countries such as Australia and the United States, with the benefits like increased yield and improved disease resistance going to farmers who compete with us in the international marketplace.

I want to spend some time doing a little bit of myth-busting. I have heard some questions—and you've heard them today—about the adoption of UPOV 91. These questions are largely based on misunderstandings of what the convention means for Canadian farmers and plant breeders.

One of the myths that seems to have propagated on the Internet is that farmers will be prevented from saving their own seed for replanting. This belief is simply wrong.

The current version of the legislation, based on UPOV 78, is silent on the ability of farmers to save seed. An updated Plant Breeders' Rights Act under Bill C-18 would specifically address the right of farmers to save and plant their own seed.

Would it be okay for a farmer who saved their own seed for a variety that was protected under plant breeders' rights to sell some of this to his neighbour for planting? No, that is not okay. Selling brown bag seed eliminates the return on investment for developers, discourages investment, and is illegal under the current version of the legislation.

I have also heard some express concern that existing heritage varieties will suddenly become owned by some big multinational corporation and become unavailable to farmers. Again, this is just plain wrong. All varieties that are currently commercialized, or will be commercialized before the adoption of C-18, will be covered by UPOV 78. So-called heritage varieties are likely not subject to plant breeders’ rights in the first place because they are already in the public domain. Like all varieties in the public domain, they will remain there. The changes you are considering today will only apply to new varieties that plant breeders choose to protect.

I have also heard some express concern that adopting UPOV 91 will decrease the varieties available or decrease Canadian genetic diversity. The opposite is true. Strengthened protection fosters innovation and increased diversity. Mr. Smith had commented about investment in organic variety developments and some of my members are targeting development of varieties specifically for the organic sector.

These are just a few of the myths that have grown up around UPOV 91. They are not the only misconceptions.

I am happy to respond to your questions and comments.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. Dahl.

I will go on to five-minute rounds and because we have video conferencing I would ask that you identify them because they will have a little trouble identifying who you are putting your question to.

You have five minutes, Mr. Allen, please.

[Malcolm Allen, NDP, Welland, ON]

Thank you, Chair, and thank you to the folks.

Mr. Dahl, five minutes go really quickly.

Your comments were that you were going to bust some myths with certainty, but when you talked about heritage seeds you said most likely. So is it certain, or is it most likely?

[Cam Dahl]

It's certain.

[Malcolm Allen, NDP, Welland, ON]

Okay, good enough, that's all I need to know.

[Cam Dahl]

Varieties that are in the public domain today will remain there.

[Malcolm Allen, NDP, Welland, ON]

Mr. Chorney and Mr. Sawyer, you talked quite a bit about some of the things that you think you need to see that would, I'll use the term, enhance Bill C-18 to the benefit of farmers in your organizations, and made some suggestions. But the likelihood is we're now talking about a regulatory change per se, not necessarily a legislative piece. Clearly for those of us who do this business here, legislation means I have something to say about it and in a sense the text comes before us and we study it. In a regulatory sense it means the ministry gets to do it, the government does it.

I'll remind my friends across the way about the $100,000 a day we agreed to in the order in council that we helped this government work on. When it came to the railroaders for penalties that magically became a $100,000 a week.

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

It's in the legislation.

[Malcolm Allen, NDP, Welland, ON]

I hear the tweaks across the way, but the bottom line is that's not what farmers understood it to be. So how much are you concerned about the regulatory effect not necessarily addressing what you need? Or do you believe that you can work inside that format to get the changes you think are needed as part of Bill C-18?

I'll start with Mr. Chorney, then I'll go to Mr. Sawyer.

[Doug Chorney]

Okay, thank you, Mr. Allen.

We would want to be involved in part of that process of regulatory development. My understanding is that the way legislation is meant to be designed is that it provides a framework and then through regulations you have the flexibility to adapt through time. A case in point would be our cash advance limits. As Humphrey Banack pointed out, we know the economics change rapidly in our industry, and it's quickly becoming very costly to operate your farm every year. Cash advance limits in the past may have been appropriate at that time. Through regulations I believe the minister can make those changes routinely as required. I think that type of flexibility makes the legislation more practical in a lot of respects. I hear your message that you're concerned, but I think our members feel we're going to get a chance to give input as needed on issues like that.

[Malcolm Allen, NDP, Welland, ON]

Fair enough. I appreciate that.

Mr. Sawyer, I know there was mention about an end point royalty that would come through a consultative process at the end, perhaps. Obviously you're not looking to get an end point royalty, per se, I don't believe, on behalf of your members. It would probably be those who are innovating new seeds who might want an end point royalty because it's more money to them.

But perhaps you could speak to this. In terms of the regulations, do you feel your input could be effective? Do you feel you can be a strong enough voice to talk to that issue through a regulatory process? Or would you perhaps be at a disadvantage with some folks who maybe have more clout than your organization at any given moment in time? I'm not suggesting you don't have a strong organization, Mr. Sawyer; I think you actually do.

Perhaps you could comment on that.

[Matt Sawyer]

I think we'd certainly be excited to be part of the regulatory process. With regard to the consultations being transparent and open, if farmers have the voice to help steer and direct the process...because we are, once again, ultimately the ones who are going to be paying for it, whether it be an end point royalty or some type of value capture model.

We do realize that in order to continue to attract the investment and research in Canada that we need, we're going to pay for it, just like under the canola models that we've experienced. We're thankful for the new genetics that we've seen there. In terms of some of the concerns, what comes first, the chicken or the egg? If you're going to be building, paying for an end point royalty to hopefully at some point develop some varieties that might spur on better yields down the road, it's kind of like building a barn first and then having to pay rent for the barn that you built. Certainly I think farmers understand that they will have to pay for technology, but they don't want to have to pay for it twice.

[The Chair, Conservative, Bev Shipley]

Thank you.

We'll now move to Mr. Dreeshen.

Five minutes, please.

[Earl Dreeshen, Conservative, Red Deer, AB]

Thank you very much.

I appreciate all of the comments we've heard here this morning.

There are a couple of things I want to talk about. There has been some discussion on the advance payments program and on some of the other things I've heard today. One of the things I'm looking at and want to talk about is the importance of the advance payment. Last year, as we were going through the difficulties as far as rail transportation was concerned, the basis spread had been moved up because of the fact that grain companies just were not prepared to put any investment in grain that they were going to end up having to store. The advance payment of course became another tool that was able to be used. We've seen that this also changes it to make it even more flexible.

One thing that people have talked about is of course increasing it, pro-rating it from as far as 2006, I believe it was said, but up to $800,000. I think one of the questions is, how much is it being used? I believe we've had numbers that we've looked at, where from 6% to 10% actually are bumping up against the $400,000 level.

Of course the other statement, then, is how much should you be exposing on the other end when you have an interest-free amount on the first $100,000. I think that's kind of another aspect of it. I've heard people suggesting that we double it and make it $200,000, or $400,000, but I think people recognize just what the consequences of something like that would be versus having the ability to simply guarantee beyond a certain amount. I guess that's one of the things I would appreciate some comment on.

The other thing is that I look at the canola we've had over the last number of years, going from crops that were 25 or 30 bushels to the acre that are now 60 bushels to the acre, as far as the norm is concerned. People talk about the fact that we don't want to have investment into new varieties, or we're worried about it because someone might be making a profit on it. Well, there are farmers making a profit by being able to get 60 bushels to the acre off of that land versus 30. It's also the reason why the most expensive seed is the seed that is sold out first. I think the argument that says there will be this added cost and it will be difficult for farmers is perhaps not on the mark.

I'm wondering if perhaps you'd talk a little bit about the advance payment and perhaps what the significance would be of moving it up. As well, what can we expect with regard to new varieties, whether it be in the canolas or the barleys or the wheats? And also, what are the opportunities for our own plant breeders then to be able to sell our knowledge throughout the world with this opportunity?

Cam, perhaps you could start on some of that.

[Cam Dahl]

I will address the second half of your question. I'll leave it to my farmer friends to comment on the advance payment.

I would just make the comment quickly that everybody in the system needs to make money. That includes farmers, absolutely. If farmers aren't making a profit, then nobody makes a profit, and there are no investments in new research and development. We have to have the regulatory environment in place that allows everybody in the value chain to make a profit. If they don't, if plant breeders aren't making a profit, then the small plant breeders in Canada will go broke. Then the large plant breeders are going to invest in the United States or Australia, and it is our competitors who will get the advantage of the new varieties.

We need to have a regulatory environment that allows everybody in the system to make money. That is the kind of environment that will attract investments into Canada and encourage the development of new companies. Not all of my plant breeder and CropLife members are big organizations. Some of them are pretty small companies. They are strongly supportive of this legislation because it gives them an opportunity for growth and development.