Agriculture Committee on April 16th, 2007

[Lorne Hunter]

I am not aware of what the position of our provincial and national associations is on it, but just yesterday I went to purchase a load of 46-0-0, which is nitrogen, and the price change from last year to this year is 35%, from $545 to $715 a tonne. That is a direct effect of the support that the ethanol community is receiving and the compounding effect of the ingredients' going to produce ethanol. Last year you had to order your corn supplies before you took last year's crop off, just so you could have corn to plant this year.

Energy will probably be one of our most expensive commodities. For our dairy herds, protein supplements should, in the long term, become cheaper, but because of the hype that's going on right now and the belief that those commodities are in short supply, distilled grains and the ethanol grains currently haven't dropped in price. My personal costs for grains have gone up $50 since September. My cost of production has gone up, and because of the way our cost of production formulas are set--they are usually a year in arrears--the dollar increase won't come until next year.

[Charles Hubbard, Liberal, Miramichi, NB]

In conclusion, in terms of the outlook and where dollars have gone to create this industry, we see who is benefiting and who will.... Does anyone at the table have any concerns or suggestions in terms of who should be the leaders in this? Is it the Exxons of this world, or should other groups be seen as the real beneficiaries of the initiative? In your readings or in your work, is there any concern about who is going to control this business and who will benefit from it?

[John Savage]

Are we talking about ethanol only?

[Charles Hubbard, Liberal, Miramichi, NB]

Yes.

[John Savage]

I don't begrudge--

[The Chair, Conservative, James Bezan]

We're talking biofuels in general, mainly ethanol and biodiesel.

[John Savage]

I understand where Lorne is coming from, but they do have an ability to pass those costs through under the formula. I do not begrudge for one minute some of these grain producers' and corn producers' having a better income. It's going to have to be passed on to the consumer at some point. There's no other way that I can see it can happening, because the grain industry, as we all know, has gone through heck for many a year, and if they can make a few more dollars, so they should. That is the way to go.

I just bought a vehicle with an E85 engine. Do you think I can find ethanol anywhere? There is not a hope. If that's the case, government should be supporting, somehow, the development of ethanol plants. If we're worried about our environment--and I'm just as worried about what's going to happen to our children, our grandchildren, etc.--then really something has to be put in place so that we are greener and we are moving to be environmentally sensitive. I think that the general public accepts that it has to happen, but there has to be a move to get ethanol into production.

[The Chair, Conservative, James Bezan]

Mr. Hunter.

[Lorne Hunter]

Further to what John is saying, when I told you what I was having to pay for fertilizer, I didn't finish the thought: the grain growers and the canola growers are going to need $8 a bushel for their canola just to make the revenues they are currently making at $5 because of the higher input costs, so the beneficiary of the ethanol is not going to be the grain producer. It's going to be the suppliers of the commodities in the background of the production of that product.

Thank you.

[The Chair, Conservative, James Bezan]

Mr. Norton.

[Greg Norton]

I know the grain folks are just thrilled at having an alternative market and I don't want to dampen their enthusiasm. But if I was sitting in government today, particularly in an agriculture portfolio, I'd be really concerned about this, because the price of beef will be driven up through this ethanol biofuel initiative. There's no question about it.

When I was at the--

[An hon. member]

The price of what?

[Greg Norton]

Beef. I mean feed. Finishing cattle off is going to start costing a lot of money.

I look at history and food products in Canada. We all say, well, we'll just get it cheaper from the States, or from Chile, or from China, or from wherever. If I was running a feedlot or a feeder operation anywhere in this country, I would be trembling in my boots. I think it's early enough times that we need to think about how that's going to spin off.

At our minor use meetings there was a fellow from Saskatchewan looking for a herbicide for poplar seedlings, because he stated at that meeting that the Saskatchewan government has an initiative whereby they want to put 10% of their arable land into poplar trees in the next few decades to create biofuels or make fibre. They're either going to make paper out of it or they're going to make fuel out of it. If you take away 10% of the grain production land base of Saskatchewan, I'm telling you that it's going to cost you a lot more to eat bread and it's going to cost you a lot more to eat beef and to feed your chickens.

And poor old Lorne here is going to need $80 a gallon just to make ends meet.

This is coming, though, and I'm interested that you brought that up and I thank you for that. But it's coming, and I think the collective government--and when I say “government”, I don't think parties, I think government--has to start thinking about this very seriously. I sincerely urge this committee to start having a look at this and to run some scenarios ahead 10 years and see what you come up with. I think we'd all be a bit terrified of what you'll find.

[The Chair, Conservative, James Bezan]

Mr. Butler.

[Bob Butler]

On the same issue, if my recollection serves me rightly--I used to be in the grain business at one time--corn sets your feed price and barley follows the corn price, and of course feed wheat follows the barley price. So basically if your corn starts being used for the biofuel, you're going to affect the price of barley and eventually feed wheat. The dairy guys, who incidentally grow a lot of corn as well as forage because it's an alternate product for them, might say, well, dairy is not profitable anymore, so let's go to corn; let's go to something else.

You are going to affect the consumer somewhere along the line. It has to happen. It's just a given. Somewhere along the line, if the farmers start growing acreage for biofuel, other commodities will be affected and somebody is going to have to pay that price. It's as simple as that.

[The Chair, Conservative, James Bezan]

I agree with you, Mr. Butler, that there is no question that we aren't growing more land out there. Commodities that are being used for energy, whether it's cellulose, ethanol, or biodiesel, are going to change the dynamics of the way commodities are priced and the way land is planted. And that's true around the world.

I think you did a great job today with great presentations.

For the committee's information, the government tabled the response to our report today on the Canadian Grain Commission. We will have that for circulation tomorrow. It might not be first thing in the morning, but as soon as we can get it printed off. We could possibly send it to the hotel, but we do have a copy of it electronically, and we'll get that circulated.

With that, I thank all of you for your participation today and look forward to seeing you in the future as well. Thank you very much.

The meeting is adjourned.