Agriculture Committee on April 17th, 2007

[Leona Dargis]

Yes, we've discussed it numerous times. How can we make agriculture look sexy? How can we tell people that it is a wonderful industry to be in? Of course, as farm kids, we were raised to take pride in watching the canola field bloom in spring. Harvest time is one of the most amazing times of the year, as well as seeding.

But as far as the other group, the urban group, I definitely see it as the next generation or the younger generation. We want to be our own bosses. We want to be entrepreneurial. We want to take risks, make mistakes, make our own decisions, and whatnot. We need to let them know that being involved in the agriculture industry is evolutionary and full of change. There are tons of opportunities to climb up the ladder and be managers.

I think one of the most important things is to get that education out there, as well as to provide funding and support to the Canadian Young Farmers, for example. We have the connections and we have the resources. We know what we want to learn and we know who we can get it from. If you give us the funding, we'll make it happen.

[The Chair, Conservative, James Bezan]

Thank you. I want to follow up on what Mr. Miller was just talking about with the country-of-origin labelling. I'm a cow producer myself, and I'm pretty confident in the product I produce and that this country, on average, produces. We produce a high-quality product that can win anywhere in the world. So if we're labelling at home or if we're identified as Canadian abroad, I think it's a positive thing, whether it's beef or pork or any of our other agricultural commodities.

My concern is the cost. There is, as you said, the segregation at the counter and the confusion it may create with some consumers. I don't believe that consumers anywhere in North America, including Canada or the U.S., are that dedicated or that patriotic that they're going to buy their own country-of-origin—If that was the case, New Zealand lamb wouldn't exist in the United States or Canada. If that was the case, we wouldn't be buying French wines or German cars or Japanese electronics.

So that's my concern. We might go through the whole effort, increase the costs—it's going to be passed back to the producer—and not see necessarily a gain of market share because of it.

Anyway, Mr. Atamanenko, for five minutes.

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

Thank you very much for being here. I'd like to talk about the whole topic of biofuels, but before we get into that, Mr. McBain touched on an issue that I wasn't going to talk about or bring up.

For the record, you talked about the Wheat Board and mismanagement. I'd just like you to clarify for the record, for all those thousands of farmers who support the Wheat Board and who are worried about the future and the future of agriculture in Canada, what you mean by that.

[The Chair, Conservative, James Bezan]

I will just interject. We are talking about the APF. It has to relate to the APF.

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

Well, that's what I thought too, but it was brought up. I think we should get it clarified.

[The Chair, Conservative, James Bezan]

He related it to the APF and to the GRIP and CAIS programs, so he has to be specific to that.

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

Yes.

[Douglas McBain]

The specific subsection I think is 32(1), that the Wheat Board is required to market all grain offered to it. They have failed to do that, and they have not been called to account for that. That is the effect on the CAIS program relating to that specific part of the act. If they're not going to do that, how are farmers supposed to remain profitable?

So it's a policy decision by the board not to do that, and they have openly made statements that they had intentionally withheld grain from the market because they felt the market was not appropriate to sell into. That's not their mandate. The requirement is to sell all the grain offered to it. It's a farmer's-only choice.

So when you come out with a program to address risk management and market shortfalls on an individual basis, how can you have the two and not be competing? You have a program to address income shortfalls, but they're not allowed to use it because we're dependent on the Wheat Board to market our product and they refuse to do it.

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

Thank you for your clarification.

On biofuels, this morning I read in the newspaper that there's going to be probably the biggest plant in North America here in Innisfail, which will have a production capacity to crush canola...also ethanol and biodiesel.

From the perspective of all of you folks, what are the implications—the positives, the negatives—for food production, the cost of feed? What specific direction should the government be going in? The government has said it's supporting the biofuel industry. Is it an advantage to the farmers? Would that have a positive effect on young farmers as they go into this profession on the family farms?

We know that corn, for example, is not the most effective way of producing biofuel. I think the ratio is something like 1, 1.5, whereas for cellulose and switchgrass there's a 14:1 ratio. It's a lot more effective as far as input and output are concerned. Are we going in the right direction? Does it fit in with our food security or is it going to damage the food supply?

These are all the big questions that I think all of us are thinking about. In the time remaining, I'd just like to get some comments from each one of you on that.

[Douglas McBain]

As far as this plant is concerned, a 100-million-gallon or 400-million-litre ethanol plant will require one million tonnes of cereal grain. Last year we had a 10-million-tonne wheat carry-out in this country, most of it low quality or low grade, not food-grade quality, but a huge amount that keeps a cap on high-quality grain, because we have a huge carry-out.

I see it as using up not even a significant amount of this excess production. So ethanol and biofuels will always be a consumer of excess capacity.

[The Chair, Conservative, James Bezan]

Is there anybody else?

Mr. Butters.

[Erik Butters]

I agree with what I heard you say about the cellulosic thing. It's probably the way we need to go long term, but the technology is not clear yet, and we're not sure whether it's one year or forty years out for that. Brazil produces ethanol from sugar cane with an 8:1 energy ratio. Close to the 1:1 that we see with corn or wheat looks a little inefficient compared to that.

My concern—and the concern of most cattle producers in Alberta—has to do with having to compete with a steady stream of government dollars. I want to emphasize that I don't want to rain on the grain farmers' parade, because they have needed a break for a long time, but I want to talk about the long term. If the livestock sectors have to compete with government dollars long term, it's going to put them at a disadvantage, and we'll trade one value-added industry for another value-added industry, which, as we discussed before, has perhaps questionable environmental benefits.

[The Chair, Conservative, James Bezan]

Ms. Dargis.

[Leona Dargis]

Your last comment, Erik, got me thinking about the opportunity we can have in Canada for biofuels. For example, on our farm, the next step in what we have been looking at is biofuels. My father attended the Canadian conference, and he also went down to San Antonio to go to the international conference. He was just blown away by the Americans and by what they are doing in their process in this whole industry.

For us, starting to look into this, we've looked at applying for ACAAF funding and whatnot, but really it wasn't worth our time. When I was talking to other agriculture and food council members, there was a fellow that said it right on the button. He said the ones that are going to be having these plants won't be waiting on federal funding. They're just going to go out there and do it, because they'd rather have the investment interest to go ahead with it, and they'll make it happen. I can definitely agree with that, because on our farm, we just make things happen no matter what. We aren't reliant on the government for funding.

Where I think the government can play a greater role is on the regulation side of things, and in letting science and innovation play a big role in helping the research get done, and in providing that research to the public. If the research is done, that's all great and dandy, but I've heard that in some instances they weren't able to go ahead in the marketplace in Canada because of regulation restrictions, so they went down to the States. The States was able to capitalize on this new chemical or variety of seed or what have you.

As far as the young generation goes, with biodiesel, I would definitely return to the farm full-time if I were able to manage or have the opportunity to manage our own biodiesel plant. Of course, the effects of that would be to make the community viable because we would be supporting the commodity markets or the commodity, buying canola from our neighbours and having that by-product fed on the farm, and finding out what that seed value is. There are a lot of livestock-intensive feedlots around our place, so that would make us work.

I've heard a few comments about the one coming up in Innisfail and how this one fellow didn't think it was going to fly because there's no support such as there is in the livestock industry, where the by-products are going to go. The input cost in either drying it down or trucking it to the accessible markets is going to increase your input costs like crazy, and how can you compete with that?

The one comment I wanted to make on Erik's last comment was that tons of discussions go on about how we can go international. I think we should be looking at providing for ourselves and making a local market for it first, and then an interprovincial market for it and supporting that, and then maybe growing bigger and better. I think we need to take a step back, because for us, we would be looking at local markets, and that's where I think it really needs to start. I've given you a few different thoughts all over the place.

I guess you might think I'm French because I talk with my hands.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Atamanenko.

I just have a follow-up question for Mr. Butters. If we ended the ethanol biofuels program here in Canada, do you think it would change the price of barley?

[Erik Butters]

No. The price of any grain is an international thing, and the situation in the States rises all ships.

[The Chair, Conservative, James Bezan]

Essentially, the U.S. ethanol program, especially since they have drafted 20% content by 2018, is going to have a greater impact on grain prices than anything we do here in Canada.

[Erik Butters]

I'm sorry to say that I agree with you. I think what goes on in the States—I mean, they're saving so much money on their corn subsidies, they funnel that subsidy money into ethanol production. It's an easier deal for them. And of course, being importers of foreign oil, a situation we don't have in Canada, it's easier for them. So it's a political win-win-win thing in the U.S. I think our industry is gearing up for higher feed grain costs for the foreseeable future.

[The Chair, Conservative, James Bezan]

We'll go to Mr. Hubbard.

[Charles Hubbard, Liberal, Miramichi, NB]

Thank you, Mr. Chairman.

The further we go and the more we hear as we look for solutions, the more problems we seem to get as we cross the country each time.

Robert has left, but it seems, Mr. Chair, that many of these programs are so complicated, with both levels of government involved with them, that there must be a great amount of frustration at the farm level in terms of where to go, who can give answers, and how long it is before the solution or the reply comes as to whether or not the projects are feasible. It's rather disconcerting. Maybe we should make suggestions to better define what area of agriculture each level of government should be dealing with. In terms of disaster, we've talked already about crop insurance. We talked about infrastructure yesterday as being federal involvement and about what the provinces should do.

When we look at the so-called payments from different levels of government, it's rather disconcerting that without those payments, most provinces and most agricultural sectors would be in debt. Certain writers and a lot of the evidence that comes says that if these payments weren't out there—It would also reflect, from what Stats Canada tells us, that the bigger the operation, the bigger the debt.

If you look at what J.D., our researcher, put before us, farms grossing incomes of something like $250,000 and more take nearly 58% of the payments that come from the different levels of government. How are we going to make suggestions to do all of that?

Eric, I want to go back to what you asked about in terms of the surge in production. When you suggest to our committee that we should attempt to make a surge in production with corn and grains, are the margins there, or are there simply other groups taking more out of the system to promote their own businesses?

You can apply more fertilizers for bigger gains. You can pay more to the seed companies to get better seed. But are the margins there if we increase production? Have you or your group made any studies on that to see who's going to benefit from a surge in production?

[Erik Butters]

Thank you, Mr. Hubbard.

In terms of who would benefit, it's clear, and I think we touched on it just a few seconds ago when we were talking about expecting higher feed grain costs for the foreseeable future. What that tells me is that we need more feed grains. The Americans have done a very good job of figuring out how to grow more feed grains, and they do that. We have not done that in Canada. We have this flat line, in terms of production, in our grain sector. And we've seen pure research and applied research funding from governments, at all levels, drop off drastically, to almost being eliminated.

We can't create any more acres in Canada, or in North America for that matter. We can fiddle with which crops draw which acres, but we can't create more acres. What we need to do, facing increased marketing opportunities—be it export, be it feed grains, be it biofuel—is produce more from the same land base we have. There's clearly an opportunity to do that if we have better varieties.

In the barley research—and, again, really, this is Doug's domain more than mine—it's my understanding that most of the research has been directed toward malt varieties and very little has been towards feed varieties, which I guess implies that we like to drink beer more than we like to eat barley products.

One of the things we can do is direct more research to get better yielding varieties to produce more product from the same acreage.

[Charles Hubbard, Liberal, Miramichi, NB]

But can we make more money? That's what I'm asking. In terms of what Doug was saying about his barley, when you increase production/supply, demand has to be there and sales have to be there, but is there more profit?

There has to be some concern that apparently the bigger the farm the more money will be needed from the government. Do you accept the premise that Statistics Canada seems to present: the bigger the farm, the more payments you need?

[Erik Butters]

If that's the truth, I'm very sorry to hear that.

The Beef Information Centre arm of the Canadian Cattlemen's Association has done consumer research. Consumers are starting to say they've done enough direct subsidization, putting this money in. I think we need to find ways that young farmers and middle-aged farmers and old farmers can all make money in the marketplace.

And it appears to me that there is a marketplace. It will be very interesting to hear what Doug has to say about it, but it appears that there's an opportunity to make some money. Of course, in agriculture we have done what we always do: we respond to that challenge. I'm given to understand that you can't buy a John Deere combine for delivery before next November. We've seen the price of urea driven through the roof. We're starting to drive up the factors of production in chasing the opportunity to make more money in the grain sector. But they're doing that in view of making some money, surely not in the view of losing money.

I think there are opportunities, and we should be able to address them in every way that is open to us. I'm absolutely convinced that better research in yield and varieties of feed grains is one of those ways.

[The Chair, Conservative, James Bezan]

Doug McBain, a short response.

[Douglas McBain]

I have a couple of things. You mentioned the frustration with the complexity and delivery of the program. Unfortunately, that comes with the program. If you want a simple program you make a flat acreage payment or per head payment or whatever. That's the simplest delivery program. But it's also the easiest to be capitalized. It loses its benefit but continues to be an expense for the government. That's why we've never recognized that as a recourse. You have to find the balance between fairness, equality, and complexity, and that's what we're all struggling with.

As far as the research, Eric is absolutely right. Most barley research is on malt, essentially provided by the malting and brewing companies. Government and public spending has almost completely disappeared as far as feed barley research, and it is continuing to drop. We're hearing more reports that they're trying to get out of it completely. This is a concern for us, as barley growers.

Your question goes to efficiency and productivity. Do we get more by producing more, or are we better off with what we have and doing a better job of it? That's an ongoing question. As long as it translates into efficiency, the more productive you are then the more per acre you can produce and the better off the whole sector, the whole value chain, should be. We're the fundamental building block of the rest of the value chain. The more efficient and productive we are the more it creates opportunities for everybody else, whether it's the biofuel, the cattle-feeding fractionation, or whatever.

But it's the drop in public research money and fundamental support for that type of policy that is our concern. We see it dropping and continuing to drop.