Agriculture Committee on Oct. 5th, 2006

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

Thank you very much for being here.

Like most people here, I have lots of questions. I don't know if we'll get them in, in seven minutes, so I hope I'll get you to give really good, quick answers.

The first question is a little philosophical, but I'd like to get an answer from each of you.

When looking at the report, some individuals and organizations have questioned the fact that this takes away some of the protection the primary producer has had under the old act, and I'd like to get your feelings. In other words, maybe it's weighted a little more to other steps in the chain, other industry representatives, and I'd like a quick answer from each of you before we continue.

Mr. Johnson.

[Conrad Johnson]

As primary producers, and with our railway, the thing that affects us most is the grading. As long as we have KVD, it takes a lot of options away. It's a hidden cost, a lack of opportunity. We just have to get rid of it.

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

I'm going to pursue that one also. Could you do that?

[Vicki Dutton]

I won't say any more on that.

In terms of security, there's a false sense of security that the farmers have had, in terms of what they were covered for. From what I see in this revision, the farmer ultimately is affected by every cost you put on him. If it's inefficient.... Like in the case of grading, that's probably where the most costs are to the farmer, because what happens is sometimes when you ship inland, it grades one thing, and when you ship at the coast, it grades another.

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

Dr. Fowler, could I pursue that with Ms. Dutton?

You mentioned improper grading, different grading, no consistency. How do we get a solution to this, and what would you suggest?

[Vicki Dutton]

The arbitration committees I think are immediate and effective, and they perhaps remove it from what appears to be the hallowed halls of the Grain Commission, which we aren't always able to penetrate.

Just this fall I had a difference in grading with some cars that were graded inland by SGS, and when they got to the coast they graded lower. I'm sure there isn't an elevator agent around who couldn't tell you thousands of those stories.

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

Thank you.

Could we move on then, Dr. Fowler?

[Dr. Brian Fowler]

Well, I haven't gone through the whole report here, and I deal with plant breeding and the farm and the implications involved in the marketing system in that regard. I don't think you want to get me started on that.

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

Okay.

Let's move on to KVD. I'd like to get a handle on what's happening here. It's my understanding that we have this visual system. We also have a declaration. I don't quite understand how the declaration works when the grain is just delivered. Maybe I'll just throw some questions out, and I can get some answers.

According to you, Dr. Fowler, KVD interferes with markets. For example, it can interfere with the possible markets for biotechnology and feedstock. It's not useful.

My question is, why is it still in place? Maybe that's why we have a report, a commission. There are those who have stated they would like KVD to stay in place because they're not sure if there's anything better on the horizon, yet we're hearing that there's a black box technology that isn't expensive--it's seven hundred and some-odd dollars a month to rent. I'm not sure how it works, but it seems logical that if there is a technology, we could use it. If that's the case, why hasn't it been put in place before?

We're the only ones in the world to identify the quality type by KVD.

What's the solution? I'm hearing a bit. I'd like to start with you, Dr. Fowler. Exactly what do we have to do to make this system better, if in fact KVD is not working?

[Dr. Brian Fowler]

I think the first question you have to ask and the first answers you have to get are that there has to be some real evidence that KVD works within the system.

The fact that the Canadian Grain Commission inspectors will not tell me whether my lines will meet the KVD standards unless they have a control variety that has been grown in the same place so that they can make direct comparisons tells you that if you as a farmer were to bring your variety in to deliver that doesn't have that check in place, they can't use the KVD to identify the variety.

The only reason for KVD is to identify varieties that will fit into the quality package that the Canadian Wheat Board is marketing. But there are things other than the genetic makeup of the variety. Environment is a very, very big factor, and environment has a very, very strong influence on the expression of the KVD characters. So if environment is affecting the expression of these characters, then as you move from one environment to another, you're going to see different shapes and sizes.

If you take a sample of grain from southern Alberta in a good year and then another sample of the same variety that is grown in northeastern Saskatchewan when they have high moisture conditions and a drought, you would not even recognize it as being the same variety. Yet we're using that system to identify varieties that are eligible for different quality types that we're marketing.

So the first question that has to be asked is, does that system work? There has to be some proof. We cannot go on the assumption that it works, because nobody has ever provided any evidence. It has been around for eighty years. Has it ever been looked at in the last eighty years to establish whether it's actually working?

The next issue is whether it actually prevents dishonest people--we won't call them farmers, but people who want to be dishonest--from delivering into the system? Grain handlers are handling the grain, and they can do the same thing.

We have lots of instances where winter wheat--as mentioned earlier--has been blended in with spring wheat on the farm, in the grain handling system, and it's going out as spring wheat mostly, because that's where the extra price is.

There was a time when we had contracts with countries like China allowing us to deliver either 3CW hard red spring wheat or winter wheat into that contract. They're priced about the same, so it probably didn't make any difference.

But if an official inspector cannot tell the difference between a mixture of hard red spring wheat and winter wheat--they will not allow us to release those varieties--if they cannot tell the difference between that and spring wheat, then how on earth can one argue that the system is working out in the field? Anybody could mix.

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

Can the black box tell the difference?

[Dr. Brian Fowler]

I'm not familiar with this black box, but the important thing with the black box is that you have to start measuring the quality components, the things the customer actually wants, not the things that are completely unrelated. If you start measuring the quality as it comes in, then the effect of environment is eliminated. If you get a year in which you have sprouting and you're measuring falling number, that will tell you right away whether you have a grain that has high alpha amylase content and is going to give you problems in the bakery. It doesn't matter what shape the kernel is.

Concerning protein concentration, we went through that in western Canada; it was a battle for years and years before protein concentration was brought in as a measurement of quality. The same thing is going on with KVD. The resistance from the people who are in the position of authority right now is exactly the same. They won't even talk about it.

[Vicki Dutton]

I'll just add something quickly.

Farmer declarations are fairly easily done in the industry. There is a maturity that's approaching our industry, resulting in farms increasing in size exponentially every year--out of necessity, I might add. But there is also provision in the thing for fines. If indeed you make a false declaration, there is a fine. I think expecting farmers to declare is possible; it's doable.

[Dr. Brian Fowler]

The Australians use it all the time. Everybody in the world uses it.

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Atamanenko.

Mr. Boshcoff, five minutes, please.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

Thank you very much.

Mr. Johnson, you mentioned something quite interesting, that people who buy the product get quality they don't pay for. Of course, when we're talking about growing unwanted crops because their physical attributes aren't a marketable thing, and the phasing out of the visual components, the question becomes, should we be reducing our quality or our levels of inspection? Can you address that? It is a pretty dynamic statement, I guess.

[Conrad Johnson]

Again I'll go back to the myth that if you go away from varieties falling within KVD, you're going away from quality. You're not; you're just changing the grading system. As close to the border as we are...I have brothers who farm in the States, and they don't sell under the KVD system, but I'll assure you they grow the same quality of wheat, as good as anything that's grown in Canada. Changing the system doesn't mean we're going to grow less quality. It's just a different grading system, so that we can match what buyers want with what we grow.

I'm sure Mr. Fowler will tell you there are winter wheat varieties he hasn't been able to release in Canada that are grown in the States and that will outyield ours. He can tell you about spring wheat varieties in the States that I know outyield ours by 30% to 40% consistently. It doesn't mean they're not of as good a quality, but that they're matching varieties to what the buyers want.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

When you talked about more grain going to rail, was that as an alternative to trucking it, or did you mean more would be produced because we would have more markets?

[Conrad Johnson]

When speaking of grain to rail versus trucking, I'm talking about our geographical area. If you ever want to see roads you can't ride a saddle horse down, come to southwest Saskatchewan; they're horrible. Yet the inland terminals, because they can make so much money with elevation and getting the board grains in the door, make deals to truck it to the mainland. If they want to do business like that, it's good; it's competitive. With this change, I meant to put more grain on rail on our short line.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

When you talked about the thousands of incidents of improper grading, what kind of percentage is that and what percentage error of samples? How frequent would it be? Is it every third inspection? Can you give us a ballpark about what it means? When you talked about your $300,000 loss because someone was out to lunch, that's a separate category. If we have professional graders, what is the professional error? Are they like a baseball player batting .258?

[Vicki Dutton]

Basically, grading is a human function. It's a visual function. You throw a sample on a desk and you have a set of parameters that the Grain Commission comes up with annually that you compare your grades to. Obviously in a year like this, when the quality is very good, there is very little in the way of parameters, because there's no variation. In a year when quality is bad, what marks a number two and marks a number three can be simply somebody's idea.

The differences often occur between Saskatoon, or the inland graders, who are probably more familiar with numbers and maybe a little more sympathetic, and they get used to looking at it.... What happens in most cases is that when that product gets to the coast, Vancouver grades it lower. It gets kicked back, and then the process is for rechecking to Winnipeg. At this point I don't know what the reference point is to Saskatoon, but I think the big difference is there.

As for a percentage of cases when it happens, I can't state one. Obviously in a poor-quality year it happens more often; in a high-quality year it happens less. There is now imaging technology that will take out the human error.

But I think the big point here is not how much it happens; it's how the problem is dealt with when it happens. The best thing I see in this committee is the ability—which has escaped us—to deal with that problem more effectively, in an expedient and quick manner.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

Is there a difference between the ports of Vancouver, Churchill, Thunder Bay, or Montreal in terms of frequency or margins of error?

[Vicki Dutton]

Most of my shipments to Montreal are in containers. Most of my shipments to Thunder Bay are feed. I could only comment on Vancouver.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

Thank you.

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Boshcoff.

Mr. Bezan, you have five minutes, please.