Agriculture Committee on Oct. 3rd, 2006

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

Do you have a comment on how you see it affecting you? I would imagine it's somewhat different.

[Jeff Reid]

Certainly we would have members of the seed trade probably on both sides of that issue. We don't have an official position on it. First and foremost, we feel it's our job to provide top-quality seed to growers regardless of how they choose to market their crop.

[The Chair, Conservative, Gerry Ritz]

Would either of you gentlemen have an idea of the percentage of commodities grown within the board and outside of the board that run through the Grain Commission, that are graded by it. For example, canola and pulse crops and all those types of things still have oversight by the Grain Commission. Would you have any idea of the percentage of tonnage or acreage inside and outside? You can get back to us about that if you can find out, or if you'd care to.

Mr. Bezan, five minutes, please.

[James Bezan, Conservative, Selkirk—Interlake, MB]

Thank you, Mr. Chairman.

Thank you both for your presentations this morning.

I found it quite profound, Mr. Reid, when you made your comments that western Canadian farmers are at a major disadvantage, and you said that the COMPAS study on the Grain Commission actually underestimated the loss of $200 million. What would you say that the loss is on an annual basis? Essentially, why do you think the benefits have been given to eastern farmers versus western farmers in exploiting new markets and new varieties?

[Jeff Reid]

Sorry, the $200 million was from another third party study, which we could provide, and I'm not sure that was included actually in the COMPAS study.

[James Bezan, Conservative, Selkirk—Interlake, MB]

If you could supply that study, then I would appreciate it, if that's where the statistic came from.

[Jeff Reid]

Certainly.

With respect to the number and why we feel it could be underestimated, I think it's because for many decades plant breeders have been forced to essentially cross within a fairly narrow gene pool in order to meet the requirements of KVD. The effects of that over years and years and generations are cumulative, in that when you're restricted in terms of being able to bring new genetics into the pool, that means every generation after another is restricted, and so you're not able to build on the diversity of the genetics from around the world that are available in regions where they don't have the constraints of KVD.

To say what exactly the yield penalty is or what the penalty has been to not be able to diversify, I think those numbers, as was stated in that report, at $200 million are pretty conservative. Just based on my background and talking to plant breeders, I would echo those thoughts.

[James Bezan, Conservative, Selkirk—Interlake, MB]

Why would you think then that there would be advantage to the eastern farmer versus the western farmer? Here we have another situation where regulation in western Canada is impeding development and profitability.

[Jeff Reid]

Likely it's because for red wheat the western system was evolved a long time ago, and it's something that just hasn't changed. I believe we've been operating under a very similar model for something like 70 years.

We had a situation in the late eighties in Ontario where the decision had to be made, as they saw that it was a huge uphill battle to try to meet the requirements of KVD. It basically came down to the question, are we going to have an industry or aren't we? The decision was that the costs to impose KVD were too great, so the industry went in a different direction.

I think it's probably time--and again I applaud the government for taking the initiative--to take that step back and ask whether this is still right for western Canada.

[James Bezan, Conservative, Selkirk—Interlake, MB]

Mr. McBride, do you agree with that analysis, that western farmers are at a disadvantage compared to their eastern cousins?

[Ken McBride]

I wouldn't argue that point at all. The loss of research dollars that go somewhere else that could benefit our own country is a shame. We should always try to do things that benefit our country, that benefit our citizens. However, we still need to ensure, as I said earlier, that we have some way of maintaining the integrity of that export grain--the high-quality grain. So whatever we can do to ensure that and to also ensure that producers become—it's not a bad word—profitable--

[James Bezan, Conservative, Selkirk—Interlake, MB]

It's a good word.

[Ken McBride]

—we need to do, we believe. But there need to be those regulations, those things in place that ensure that the top-quality export wheat can be upheld.

[James Bezan, Conservative, Selkirk—Interlake, MB]

One of the areas in the Grain Commission study by COMPAS was the issue of dispute resolution. You mentioned, Mr. McBride, the inward and outward inspections, and also your agreement that if they can be done through contracting and are safe for the farmer, to go ahead. My opinion is that if we do allow contracting, which I think is the right step as well, it will actually help with dispute resolution.

In the past, many producers have felt that whenever they've taken a grading issue to dispute resolution and arbitration at the Grain Commission, there's been a bias there, because the Grain Commission is the grader and also the arbitrator, and ultimately the judge and jury. So do you feel that bringing in that third party for grading and inspection would help to offset that bias?

[Ken McBride]

Well, obviously it's important, as I said earlier, to establish the standards and ensure that those standards are adhered to. If somebody can do it more cost-effectively but still ensure the protection of the system, then as I said earlier, as a taxpayer, and wanting this to be borne somewhat by the taxpayer.... It's extremely important that if efficiencies can be achieved, they be achieved so that standards are adhered to.

I've talked to producers on both sides of the issue who have said that the dispute mechanism has worked for them. Some have said the opposite. So I think transparency is extremely important. Protection of the producer is extremely important, and we just need to ensure that it continues.

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Bezan.

Mr. Easter, you have five minutes.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

This is a question for Mr. Reid. This really relates to the production of seed more than to the CGC.

When I was in the United States meeting with some seed-producing multinationals that were talking about the environment—and I really think one of the value-added areas for producers in the future is the benefit of environmental sinks, crops that benefit the environment—I was informed by an individual that they are working on seeds that have an environmental impact. But for a producer to buy that seed, they would have to sign a contract through which the environmental benefit that would accrue as the result of growing that crop would actually go back to the developer of the seed by way of a royalty.

Do you know anything about that? I mean, it is astounding to me that when we grow a crop, we know we're not making a profit from growing the crop. But seed companies, through plant breeders' rights, are now even looking at trying to gain the profit from the environmental benefit of growing that seed. Do you know anything about that?

[Jeff Reid]

I'm not familiar with the specific case you're referring to. I guess, in general, we feel that Canada needs to be competitive in terms of the intellectual property tools we provide, to the extent that we encourage innovation to happen here in Canada. We also believe that farmers will and should only buy technology if it improves their bottom line as individual growers. I can't comment specifically on the situation you're referring to, but again, we would support a system of intellectual property tools that make Canada competitive on an international scale in terms of attracting innovation.

[Wayne Easter, Liberal, Malpeque, PE]

I think it's important that the benefit come back to the primary producers who actually do the production. I was just surprised to learn that, and I thought I'd ask about it when you were here.

Earlier, Mr. McBride, you mentioned that the value of the Canadian Grain Commission in terms of its quality control, exports, etc., is important to the Canadian economy; therefore, those costs should be picked up by Canada as a whole. In fact, I would agree with that. Maybe the researcher could tell me if I'm wrong, but I believe the costs for the Canadian Grain Commission—if they were borne 100% by the Government of Canada—would be GATT green. I do believe that's the way we should be going. We know now that the WTO has fallen, so we do have to find ways of assisting the industry under the current WTO rules. That's an area where the Government of Canada could certainly assist the farm industry.

Could you comment on that?

You mentioned as well that in the future the Canadian Grain Commission needs to be more proactive in enforcing the Canada Grain Act. Can you indicate to us any areas of shortcoming, and whether or not the COMPAS report deals with those shortcomings in terms of operating in the producers' interests?

We had one witness here who indicated to us that this report really takes power away from producers and gives it to the grain trade. I'm not saying whether that's true or not, but that was a comment made, that these recommendations really take power out of producers' hands and give it to the grain trade.

Do you have any comments on those two points?

[Ken McBride]

Marvin is our policy manager, so I'll let him speak to the issue with regard to costs, then I'll try to speak to the other question.

[Marvin Shauf, Policy Manager, Agricultural Producers Association of Saskatchewan]

Thank you.

On the issue of whether or not public service inspection services deemed to be in the public good can be publicly financed without any trade implications related to those expenditures, that piece of it can be something that is publicly funded without any trade implications, as far as domestic support ramifications are concerned.

[Wayne Easter, Liberal, Malpeque, PE]

So as a committee we should be recommending that the government pick up the full costs of inspections, etc., under the Canadian Grain Commission?

[Marvin Shauf]

Given the limitations that Canada has for domestic support, it would increase the ability to provide producers a benefit.

[The Chair, Conservative, Gerry Ritz]

Mr. McBride, do you want to jump back in? Mr. Easter is actually out of time, but we'll let you finish up.

[Ken McBride]

I'm sorry, I'm going to have to ask for the question again.