Thank you for inviting us to speak to you today.
I'd first like to express apologies from Bob Friesen and Marvin Shauf. They were unable to make it today, on short notice. I will be making the presentation in their stead.
We've circulated some documents--I hope they've gotten to you--that include the CFA policy brief on our position on biofuels and renewable fuels and on our desire to see a visionary strategy, a Canadian renewable fuels strategy, to build an industry within Canada.
I'm sure you're all aware of CFA's mission, which is for the continued development of a viable and vibrant agricultural industry in Canada. In biofuels and renewable fuels there is an incredible opportunity for Canada and for agriculture producers. Our objective today is to promote an integrated policy approach, to build a biofuels industry, to build strong primary producer capacity and involvement, and to build a vision of Canada as a world leader in renewable energy and environmental sustainability.
Biofuels are very much an opportunity, an incredible opportunity. Biofuels have great potential for creating a strong, new, innovative, value-added industry in Canada; for creating industries, jobs, and economic contributions in rural communities; for increasing regional tax bases; and for reducing Canada's greenhouse gases while improving air quality, reducing health care costs, and, most importantly for the CFA, contributing significantly to improving the grains and oilseeds producer incomes from the marketplace.
The key objective is improving farm incomes from the marketplace. As we all know, farm incomes are in a long-term decline. We're in a pretty bad situation right now. Net incomes are at critical levels. Global food and feed production continues to grow faster than demand. We need new non-food demands to suck up some of that production and create a new demand force, driving up prices and improving incomes from the marketplace.
Biofuels represent an opportunity to diversify beyond simple commodity production, to help create and meet that energy shortage that's around the world, to move into value-added opportunities for producers, and really to help build industries within rural Canada. We now have in Canada a handful of small programs, some provincial and some federal. We have some really good public research, some federal capital investment programs and some provincial ones, such as the ethanol expansion program, and some fuel tax incentives. But that's somewhat sporadic across provinces.
We would like to see a coordinated approach, much like that in the U.S. The U.S. created their Energy Policy Act of 2005. They have very many vast programs that support the entire value chain of production for biofuels, all the way from the bottom, from feedstocks, all way to the top, to retail. They have federal purchase requirements for their own domestic fleets. They have fuel tax incentives, and their excise taxes. They have a billion-dollar biofuel research program that's coordinated across the country. They even have property tax credits for establishing biofuel stations. They have regional bio-economy development grants. They even have grants and tax incentives for byproducts.
They have been very thorough in their production, and they've had a lot of success. There are many plants across the U.S. for biodiesel as well as bioethanol.
Within our presentation we have included a diagram of a U.S.-style value chain approach. Looking at it from the bottom to the top, you can see feedstocks, processing, distribution, retail, and consumer. The U.S. looked at that chain. They wanted to flow that product through as well as possible, so they created the renewable fuel standard on top of 5%; it depends on the state. That created the demand draw, to draw ethanol or biodiesel through the system.
If we put that in here in Canada, that would be only one part of a plan. It's very possible we could implement that here in Canada, and we would just import biodiesel and ethanol, but that's certainly not what we want. We want to build an industry in Canada. We want to help primary producers. We need a complete plan.
These are just some of the components the U.S. has built into theirs. They've had direct marketing. They have the fuel tax incentive. They have quality standards. They help build partnerships with distributors and processors, producers, and retail. They have capital investments, loan guarantees, and specifically for agricultural co-ops and producer groups, small business is building those capacities in rural communities.
They have a lot of research, and not only do they have research, but they build demonstration plants to prove it's a viable business to attract that capital investment and venture capital.
They have direct supports for domestic feedstocks, and of course they have support for cooperative development and business skill development, to always bring producers higher up in the value chain, to get them into that ownership, so they're not just providers of raw commodities.
There are many facets to U.S. success, and that's part of them--this whole value chain approach, technology treadmill, always trying to improve, innovate and improve that technology, and of course they have support through government regulation and supply chain linkages.
In Canada we have a long way to go. This is what the CFA would like to see. We don't have specific programs. We would like to work with all parties, all governments, with the minister, on building this plan in partnership with many of the other farm organizations, processing and retail and so on, to build this strategy from top to bottom, bottom to top.
This is an incredible opportunity. The window is closing in about 12 to 18 months. The U.S. is making its capital decisions now, and if we don't do that soon, we'll be out of the game. We will have many plants all along the Canadian-U.S. border and we will be providers of raw commodities for them to process, and we will repurchase their value-added product. We don't want to have that happen. We would like to keep that value within Canada, have producers as ownership components of that, so they can see some of those gains.
Thank you.