Agriculture Committee on Oct. 3rd, 2006

[Ken McBride]

As I said earlier in relation to contracting out the service, it could be cost-effective if standards are adhered to and we can ensure that. If there are savings to be had in the process of doing it, then I don't believe producers would have a problem with it as long as the standards are adhered to and they know it's consistent throughout the system. I think we should look at those particular options. If it's seen to be cost-effective and is transparent, and it can be proven that all those standards are adhered to, then I think it should be looked at.

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Bellavance.

Mr. Miller is next, for seven minutes, please.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Thanks, Mr. Chairman.

And thanks, gentlemen, for appearing before the committee today.

The COMPAS report states that the grain sector is at a crossroad. Of course they call it a once-in-a-lifetime opportunity, and that's biofuels. That seems to be the buzzword today, but the ideal grain for the biofuel industry is basically low protein and high carbohydrate, the opposite of what it is for human consumption, so there has to be a transition in there for producers and what have you.

Mr. McBride, I'd like to hear you comment on how that transition is going to be dealt with by producers and how it should be, whether through market forces or government intervention, and I'd like some comments on how long you think that transition might take.

The report also recommends a major restructuring of the government's Canadian Grain Commission to make it basically more compatible. It sounds like it's really outdated; I'd like to hear your comments on that, and what the impact has been from the fact that it's outdated--if that's your opinion on it--and what it may have cost producers.

I also have a question for Mr. Reid. I'd like to hear a little more from you on KVD. You mention in there that it's a step in the right direction, but you also indicated that you'd like to see it step forward to be more similar to Ontario. I'm from Ontario, so I'd like to hear you speak a little bit about that and tell us exactly what you were meaning there.

I'll turn it over to you.

[Ken McBride]

Thank you for the questions.

With regard to the biofuel--and obviously it is the buzzword--because of what we produce, the volumes we produce, and the land we produce it on, I think that western Canada does in fact produce grain that would be or could be extremely suitable for this biofuel production.

Obviously where producers are situated in the middle of the bald prairie--the beautiful bald prairie, I might add--is a long way from port, so freight is a major concern for any producer in our particular jurisdiction. Anything we can do to enhance the internal consumption of low-quality, but good-quality product for ethanol or biodiesel is extremely important, because freight is a huge cost that is borne by the producer.

Biofuel is an extremely important industry that wants to get going, and we need it to get going. However, the restrictions out there, as far as the KVD and some of those things are concerned, to ensure the quality for export.... We will always export some grain, and we need to export that high-quality grain, but there needs to be protection to ensure our consumers--wherever we ship to-- that the grain they're buying is what they think they're buying. Somehow we have to get to a point where we can have these lower-quality wheats established and developed so they're there for the ethanol industry.

We think it's extremely important to have a regulatory body such as the Canadian Grain Commission in place to establish those standards, but also to have the flexibility to ensure that the integrity is there for high-quality grains. I cannot speak to how long that transition will be; I hope it's sooner rather than later. The producers need this type of industry yesterday. As I said, the freights are huge, and the costs we are bearing to export grain--all types of grain--need to be addressed.

I think there's an opportunity to do that. There's DNA testing; there are a number of things available that can make this biofuel industry go. We need to explore all those options.

With regard to the governance, it needs to take place. But I guess the biggest thing is that the accountability needs to be there. As long as that accountability can be assured and the protection is there, whether it's a CEO or a commissioner, that's what we need to see.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Are you suggesting that accountability hasn't been there?

[Ken McBride]

No, I'm just saying we don't need a political process involved in it. What we need to do is ensure that the regulations that need to be enforced are enforced and that they're done in the right direction. That's what we're saying.

[Jeff Reid]

Thanks for your question.

With regard to the difference between Ontario and western Canada and the opportunities we see, essentially what's being proposed in eliminating KVD from the minor classes means that the minor classes of wheat can look like each other, but they all still have to be distinguishable from the major classes, being CWRS and amber durum. So essentially, kernel visual distinguishability really still applies to all wheat in some form or another. It's just that those minor classes don't have to look different from each other.

So in a sense, there has been very little done to make a plant breeder's life much easier in terms of really making more rapid progress, largely because what we hear from the plant breeders is that the default kernel shape for red wheat is something that looks like a CWRS. They're still really battling with the KVD issue. So that makes progress slow and makes it quite frustrating when you see that on the other side of the fence there are products that offer considerable value to farmers in terms of better disease tolerance, be it fusarium or whatever, or insect tolerance, or simply a higher yield for some of those new emerging markets.

We just feel that there's an opportunity for much quicker and much greater progress, and we feel that given the farm income situation right now, we can't afford to continue to overlook those opportunities that are being held back. So we feel that we need to eliminate those barriers, and when we look at the Ontario situation, at what was done back in 1989, it was that all red wheats were taken out of KVD. Essentially, the handcuffs were taken off. Whatever type of wheat could be brought forward, if it offered more economic value to the farmer and to the system as a whole, it could be introduced and could be grown.

In contrast, we still have KVD on white wheat in Ontario, and that has caused us some issues more recently as the industry has tried to diversify into some hard white wheats, for example. In one case, that product is being grown in Michigan now and imported back into Ontario because KVD prevents the product from being registered here.

So we just think we need to allow, wherever possible, the opportunity to innovate and add value in Canada.

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Miller.

Mr. Atamanenko, seven minutes, please.

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

Thank you, gentlemen, for being here.

Mr. McBride, I'm not 100% sure of who your association is. Could you briefly say how many and who you represent? At the same time, the question was asked whether COMPAS approached you, and how that went and how the people in your association had a chance to give some feedback.

[Ken McBride]

Our organization is a broad-based general farm organization of producers in Saskatchewan, with membership through the Association of Rural Municipalities. So we represent about 130 of those municipalities and a pretty large number of producers.

So what we do and how we establish our direction is through district meetings that we would have with our membership throughout the year, and we take our direction through resolution from those meetings. That is how we try to establish what those resolutions are intended to do, and through that we move policy through our organization. It's a democratic grassroots organization.

As far as our participation in the COMPAS report is concerned, we had members who were invited personally to attend those. We were invited as an organization to forward a submission to the task force--if you want to call it that. So we did take that opportunity, and we took direction from our members on the position we would take.

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

To follow up on that, I have the feeling that it's not really that important for you what kind of structure it is, as long as people get the benefit, as long as the farmer, the producer, gets the benefit.

The role of the assistant commissioners was brought up during our last meeting. I'm wondering whether your members have any comments. Have they found them to be helpful, or are they redundant? Would the structure proposed here serve the producers in a better way?

[Ken McBride]

The role of the assistant commissioners is as a liaison or whatever. I've had good discussions with the commissioner, I've had good discussions with the assistant commissioner. I get back to my original.... As long as the system is there to ensure the integrity of the entire system and is there to protect all those in the system, we believe that's the best possible scenario for the organization. As for how they decide to govern themselves, as long as producers, or whoever, in the system are protected, that is the most important part. It's the integrity of our system so that our consumers, the customers, buy what they believe they're buying and the producers are afforded the protection they need, when they deliver their grain--in getting the value out of the grain that they need. That's extremely important.

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

I have another question. You mentioned that to maintain the integrity and the quality of the system and to ensure that the primary producers benefit, you feel the government or the taxpayer has a role to play because this is part of the economy. I was wondering if you could elaborate on that.

I'd like to get Mr. Reid's opinion on this question also, please.

[Ken McBride]

First, as a taxpayer I never want to ask for more taxes. However, in this particular situation this industry, the grain industry, for the protection of individuals, is also for the good of the Canadian economy. We believe that a large portion of the cost borne by the organization should be for the public good and therefore taxation should have a large part in maintaining that structure.

[Jeff Reid]

Again, our comments here today were really just of a technical nature with respect to the KVD issue.

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

Let's follow up on that. I have a few minutes, I think.

If we take farmer A in Ontario and farmer B in Saskatchewan and we look at it directly on a day-to-day basis when the wheat is ready for harvest or before, how does the fact that you would like a lessening of the KVD requirements, that whole picture, affect the farmer on a day-to-day basis? This is just for my own understanding,

[Jeff Reid]

We believe that ultimately the impact will be that there will be more choice in terms of what farmers in western Canada can grow. Again, we feel that we're just on the verge now of having a bit of a revolution in western Canada with respect to the end use for the products and that we're no longer strictly dependent on the export market for high-quality CWRS type wheat. But there are going to be a lot more value-added opportunities within Canada, be that going into different feed operations or ethanol-type operations.

What we're really looking at is how we maximize the return on a per acre basis back to a farmer. We feel it's pretty clear at this point that there are more options out there that aren't available to that grower, options that would decrease their dependency on other inputs, such as fungicides and so on, by using improved genetics.

We just would like to see that there are as many options and as many profitable options and more profitable options made available to producers so that they're not in the situation where they're growing a product that is unduly constrained in certain ways to meet the requirements of KVD so they end up producing a much higher-quality product, but lower yield, and shipping that into a market that doesn't really require that type of quality profile.

[The Chair, Conservative, Gerry Ritz]

Thank you.

Mr. Steckle, five minutes, please.

[Paul Steckle, Liberal, Huron—Bruce, ON]

First, I want to congratulate both of you for your presentations this morning. I feel that you've been very constructive in not only your criticism but also your observations in terms of moving forward. I value your judgment in terms of taking into consideration the primary producer and the flow-through costs that are associated oftentimes, passed on and then sort of kicked back and picked up by the producer. I think we have to be very cognizant of that.

To both of you, really, I'd like to go back the question from Mr. Miller in terms of the whole industry of the bio-industry, as we see it, and the research that will have to take place, not only for new breeds, as Mr. Reid alluded to, but new varieties as well. We find ourselves in somewhat of a conundrum in that we're developing varieties in Canada that the European Community will not accept because of the GMO context, whether it's for reasons of trade, a non-tariff barrier, or whatever it might be.

How do we function in an environment where we need to create new varieties in our own economy, for the good of the Canadian agricultural economy, and yet we're limited somewhat by what we might be able to do and what we already have? We know that GMO wheat, in terms of the resistance to Roundup, is not going to fly at this moment.

So I'm just wondering, how do we deal with that in this environment? How do we move forward and...seem somewhat restricted by doing so?

That's directed at both of you.

[Ken McBride]

Okay, I'll take a kick at the cat here.

As I said earlier, in my own particular farming operation I strive to grow a high-quality export wheat, because that's what my land can grow. This isn't saying that I couldn't change my operation to grow something else if I could see that there was more money in it. And producers have, over a long period of time, tried to do that.

We always will export high-quality wheat. We need to export high-quality wheat. But there are all kinds of opportunities. As I said earlier, freight is a big issue for people where I am in Saskatchewan. We are not very close to any sort of port.

So whatever we can do to consume that internally is extremely important. There has been research done that would assist me in doing that. However, if there is a possibility that my chance to export a high-quality wheat is jeopardized, I have a problem with that too.

Jeff talked earlier about affidavits. Somehow we have to have some sort of disincentive there so that producers don't misrepresent what they have grown and jeopardize that high-quality wheat. Sometimes you have to have penalties to ensure that what people say they deliver is in fact what they do deliver. There are ways of making this happen that would be beneficial for industry in Canada, the biofuel industry, and would ensure as well that what we export is what we say we export: high quality.

So there are ways of doing it.

[Jeff Reid]

I'd just like to echo some of those comments.

Like everyone, I think, in the seed industry, the Canadian Seed Trade Association is very supportive of a science-based regulatory system. To build on that, though--and to answer your question--we can't predict what is going to be acceptable from time to time in different regions around the world. I think we need to focus on having a trusted, science-based model in place, and trusted not just internationally; we really have to work on building the trust of that system here at home.

We need traceability. We need the systems in place to deal with these things as they come along. In terms of KVD, if we look to the future, we're not going to be able to distinguish genetically modified from non-genetically modified by how the kernels look, clearly. We see a need to move to that next generation, where we can really do an effective job of segregating and streaming these things. I think we really need to focus on the process and the system.

If we look at, for example, the soybeans we're growing in Ontario, the vast majority of what's being grown out there is genetically modified. But we're also leading the world in the export of food-grade non-GMO products into high-value markets like Japan, for example.

So I think things can coexist. We just need to focus on getting the system in place.

[Paul Steckle, Liberal, Huron—Bruce, ON]

I think we realize the value of the Canadian Grain Commission and our ability, as Canadians, through our marketing system, to guarantee and assure to the world market a quality product. We have a tremendous record and we shouldn't lose that. That doesn't mean we shouldn't try to improve the system.

How would the Canadian Grain Commission—how would you, Mr. McBride, who represent a group of municipalities and farmers—see yourselves and the Canadian Grain Commission functioning in a future without the Canadian Wheat Board?

[Ken McBride]

As I said, we represent a vast number of producers and we represent producers who are on both sides of this issue. Obviously it's an issue that is being debated amongst farmers right now. Our organization has taken the position that we believe it's extremely important for farmers to have input into what the Canadian Wheat Board is or may not be in the future, and they need the right to have that vote.

I'm not prepared to comment today on what the future would be without the Wheat Board. I'm just prepared to say that our organization is still considering what's happening out there and we are still talking about having producers have the right to vote on what happens with the Canadian Wheat Board.

[Paul Steckle, Liberal, Huron—Bruce, ON]

Mr. Reid, do you have a comment on that?

[The Chair, Conservative, Gerry Ritz]

Just finish up on that, Jeff, if you have a comment.

Mr. Steckle, your five minutes are up.