Agriculture Committee on April 17th, 2007

[Roger Gaudet, Bloc, Montcalm, QC]

I told you about the 127 dairy producers who were in my municipality in 1957. Note that today, 100 percent of the land is cultivated. There is not a single plot of land left. It is another kind of agriculture.

I would like to ask a question to Mr. Vandervalk. You said that you had no need for the government, but I understand that you were quite happy to receive a billion dollars from the department, and then another 600 million for risk management, not to mention the money available from the APF and loan programs. I believe that in fact, you do need the government. That is the government's role. I do not want to criticize you, but you do give out the impression that you do not need help from anyone.

It is all very well to say that we want to export and open up the market, but do not forget that if we do open the market, others will want to come into our country. That is why I believe that we must find the right balance. At the level of the Canadian government policy, we must be careful. If we open up the doors wide open, some will go out, but others will want to come in. I would like to hear your opinion on this matter.

[The Chair, Conservative, James Bezan]

Thank you.

Merci, monsieur Gaudet.Your time has expired.

So just a short response, please, Mr. Vandervalk.

[Stephen Vandervalk]

I'm sorry if that's how it came across. What I meant to say is that farmers want less reliance on government; we would like to make our income from the marketplace.

It's very tough, because we have trading competitors in the European Union and the U.S., where they are subsidized. They can sell at lower prices. So we can't compete fairly, and that's where the government help comes in. If we were on a level playing field and we could get our income from the marketplace, we'd rely less on the government, and that would be our goal.

[The Chair, Conservative, James Bezan]

Thank you.

Mr. Miller.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Thank you, Mr. Chairman.

Thanks to all the presenters. There were some very good comments from all of you.

One in particular, Brenda, is something you touched on. I think all of us in agriculture and in government sometimes.... You pointed out the vast need for more diversity and a willingness to change in agriculture. You know that old saying: “My dad and my grandpa grew wheat and raised cattle, so that's what I have to do.” It's been pointed out here that there are other markets out there, and that we should be open, as farmers, to some of them.

You made a couple of comments, Leroy, that are probably a little controversial, but I found them interesting. Caps are one subject you touched on. I myself have been leaning toward them a little bit in some ways, and I'll tell you why. I'll use the first and only example that comes to mind, out of CAIS. A year or a year and a half ago, the Saskatchewan grain pool, which is not in my view a farmer, ended up with money out of CAIS. And there are other examples out there.

My question to you would be, should companies like that really have access to government programs? That's only one example. I'm not trying to pick on the Saskatchewan Wheat Pool.

Another one you mentioned is own-use imports. I presume the history is that government was approached by producers, and I think it started more in the west, and I understand that, as a way to help save the producer money. But you pointed out the fact that what I'll call local farm agri-dealers, or what have you, lose out there. And I understand that. This does take money out of the locals.

The question is, is there a happy medium there that government should be following? I'd like to hear a little more on that.

This is a question for all of you. You mentioned the one day a week in the office that's pretty nearly mandatory today. As a farmer, when there's seed to go in the ground, or cattle to round up, or a crop to come out, that's the last place we want to be. But we have to be today.

How does a government put in stopgaps and measures—an audit system—to make sure the programs aren't being abused, without some kind of paperwork? I'd love nothing better than to have it simplified, and I'm sure there is a way, but I'd like to hear some general comments from everybody on just how we could do that.

[The Chair, Conservative, James Bezan]

Mr. Fjordbotten.

[LeRoy Fjordbotten]

I will take on the last one first. I'll just make a comment and I know the others will have something to say about that.

We need to have rules and regulations around any program. We're dealing with public money, and you just can't throw public money around without making sure that it's followed, or else the government gets in trouble in a hurry. So we don't want to do that. However, the forms get to be so prohibitive.

I'll give you an example. When I was the minister they'd come in and I'd ask them for a copy of all the application forms. They came in with stacks of them. I asked them what each application was for, and if I didn't like the answer, I threw it in the garbage. I finally ended up with a stack that you could deal with. I said, why can't you put this on one sheet rather than five sheets? It got to be that you never knew if you got the right form. I think it could be simplified.

To answer your question on large companies, I don't know the answer to that one; that's a difficult one. In a democracy, as Mark Twain said, it's like a raft; it never sinks, but your feet are always wet. I think our feet are always going to be wet on that one.

The comment I'd like to make on the caps issue is one I wasn't able to finish because I ran over my timeframe when I made the comment. But we have all kinds of caps on things. Cultivated acres are handled differently depending on how many or how few farmers farm those acres. The degree of land ownership or whether you lease shouldn't be a consideration. Governments have all encouraged farmers to get bigger and bigger. They get economies of scale, and then once you get bigger then they put a cap on you, so you're being unfairly treated. Caps give a disproportionate amount of money to small producers and penalize large ones.

I'm going to make one comment about this that I'd like you to think about. I don't mind being a bit controversial and so I'll put it this way then. Caps have actually hurt western farmers more than eastern farmers. The reason they've hurt western farmers more is that there are bigger farms out here. When you put a cap on things it actually affects us more than the ones in the east, and that's truly unfair. When you look at the system of caps, everything always has to be done fairly, and I don't believe that's fair.

On the GROU program, there is a presentation and I think you all should read it. It's presented to you by the grain growers of North America. I don't disagree with anything it says in there.

However, the one part that you alluded to was the small chemical dealers. If we're to make an even playing field, then allow the local chemical dealer to have the same import rights as the producer. They have to prove things to do that, but that would put that chemical in our local communities right across this country. We get barrels of chemical coming out of the States. It comes through somebody else and our local dealer never sees it. I don't think that's fair. I think that dollar is being made by somebody out there, and why shouldn't it be made in our local communities?

I have a fellow who advised me on this before I came to make sure I was right. He said that by enabling those local dealers in rural Canada to supply these products at comparable prices to the U.S. counterparts and by allowing them to make an import application the same as a farmer does would level the playing field.

I hope that answers your question.

[The Vice-Chair, Liberal, Paul Steckle]

Your time has expired, Mr. Fjordbotten, and we'll have to wait for another round or another day.

We must move on to Mr. Atamanenko for five minutes.

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

Thank you, everybody, for being here.

One of the issues that came up a lot yesterday, but not so much today, is the issue of our food security and being able to sustain ourselves, being able to buy locally, making sure our institutions purchase local food, and so on. I think people are concerned about that.

The other thing I think we're in agreement on is that the commodities we export are quality. We're known for our wheat and durum and for our malting barley, for example. Taking it from the point of view of the primary producer at the grassroots level, we then look at the need for research and whether it's the private or public sector.

We touched on biotechnology. We have this quality. We know we have to look after our food security. We have commodities that are respected and sought after around the world. There's actually the whole area of biotechnology and the fact that we want to develop new strains, new brands, new varieties.

What actual benefit do you as a farmer at the grassroots level see from this? What role, if there is a benefit, should the government be playing? I guess the underlying question is this. Is it maybe the biotech companies that might benefit more from assistance and research than the actual farmer?

That's a general question, but I'd like your comments.

Maybe, Lynn, you could start with that.

[Lynn Jacobson]

Yes, it's a topic that is very relevant within the agriculture community itself. We've all heard about the 100-mile eating habit, or whatever they call it--trying to source all your products within 100 miles.

When I look at that and I look at some of the things closer to our larger cities in western Canada, say Calgary or Edmonton, there is an area surrounding those cities that could supply that local vegetable market during the summer, and that should probably be encouraged through farmers' markets. But the problem is that not only does our climate limit us as to what we can actually supply and the time we can supply the food that people want in the fresh vegetable end of the market, but our consumers in Canada have been educated to go to the grocery store and buy enough groceries for one week--that type of thing. So a farmers' market has to operate more on a day-to-day basis, as in the European model, where people go each day and buy fresh stuff, which to a certain extent I don't think really applies in this country. We can't do that.

As for the food quality and the research and the biotech, that is where we look at it. I think all of us in the agriculture industry recognize that there are some opportunities within biotech research and some of the products that are coming, especially when we consider the diversity of pharmaceuticals and some of those things.

There's a controversial issue about taking the fish gene and putting it into a plant and things like that. That has to be decided by society as a whole. We can't decide that as agriculture producers. I don't think the biotech companies should have the right to decide that. When you look at the Percy Schmeiser case, basically, to a certain degree, it wasn't that he used the product and he saved the seed that blew on his land. What it really comes down to is who owns the gene in that plant, and that's what's going to be a problem.

When we got a court ruling in Canada.... I had this in my brief and took it out, because we can't patent a living organism anymore; the court has ruled that. They can't own a mouse--they tried to own a mouse--but they can own every gene that makes up that mouse. So we have to distinguish what's actually going to happen in this area, and it's a bit of a controversial thing.

Biotech offers us an opportunity in certain things, but I don't think we need to leave it wide open to everybody. I think there have to be some rules and guidelines. You can't have a free-for-all out there. And society itself, through the government, has to set some restrictions on what the parameters are going to be and what is going to be the benefit of it.

As producers, we want a say in what actually comes out and what we grow on our fields, the opportunities, and how it's going to affect us.

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

Would anybody else care to comment on that?

[The Chair, Conservative, James Bezan]

Brenda, and then Stephen.

[Brenda Schoepp]

I guess one of the terms that struck me was commodity selling. I think there is merit in the discussion of having enabling policy on the federal level to access high-population markets that are beyond the North American standard and get more into a demand pull rather a supply push. What we do is produce a lot of commodities here and then we go out there and say, “We've produced this. Why don't you buy it?”, instead of establishing that demand pull.

On the biotech, as my learned friend to the left has said, one of the things that we lack.... Where's the advantage to the farmer, I believe, Alex, was one of your questions. We have to help the farmer understand the benefit of commercializing the product beyond the commodity, as an example, or giving him some tools or some access to that technology transfer, because until we do, we just don't have an appreciation of the benefit to me as the producer.

[The Chair, Conservative, James Bezan]

Stephen.

[Stephen Vandervalk]

The benefit to the farmer, really quickly, with research.... We have good examples. We have winter wheat varieties sitting on the shelf in Lethbridge that will produce over 100 bushels an acre. They are not allowed, through KVD, because once out of three years it looks like a hard red spring wheat kernel. So it's scrapped. The winter wheat researchers have just thrown their hands up and essentially quit.

Regarding the ethanol industry, we cannot really sustain an ethanol industry, because we can't grow the bushels for it economically. We're growing a 70- or 80-bushel winter wheat crop when we need to be growing 100 to 120 bushels. If we talk about 40 bushels an acre at $4 a bushel, using today's prices, that's $160 an acre. You know, when the government spends billions of dollars, maybe you could give us back $8 or $10 an acre. That's where we talk about getting our returns from the marketplace.

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

Thank you.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Atamanenko.

Next we have Mr. Easter.

[Wayne Easter, Liberal, Malpeque, PE]

Thanks, Mr. Chair.

Stephen mentioned the CN strike. That should be dealt with by tonight, Stephen. I know it should pass all stages tonight, and both the Liberals and the Conservatives are supporting that legislation, so it'll carry.

Thanks to all presenters.

Brenda, it's really good to hear your thoughts on the future potential opportunities that are out there. I think the key, though, is that we've seen lots of opportunities in the past, so how do we ensure that those opportunities and financial returns get back to at least rural Canada, and preferably to the primary producer or the farm family, rather than just letting us be the provider of cheap labour or cheap raw materials so somebody else can profit from it? My worry in the ethanol and biodiesel industry is that the way we're structuring that industry right now in Canada, we're going to create another profit centre for the oil companies rather than a profit centre for the rural communities, and that's a huge problem.

But our purpose here is to deal with safety nets. One key point was raised this morning. It's only a simple one, but it's a controversial one, and I didn't think it was. We actually changed the deposit requirement for CAIS to be a deposit instead of a fee. The Alberta Barley Commission was here this morning, and it wants to go back to the fee and away from the deposit.

So when we get a new program, do any of you have any proposals for how the farmers' share of it should be paid?

There's one other thing I want to mention off the top as well, and it really relates to what several of you have said. I think Leroy said we need to get our money out of the marketplace and get the returns. Stephen said much the same thing. Well, you know, I'm saying give your head a shake. These are the figures: in the last 21 years, realized net farm income in Canada was $51.51 billion; payments from federal and provincial governments were $58.4 billion; net income from the market in the last 21 years was negative $7 billion. So let's think about that.

The other thing is that I've heard a lot about the U.S., and I'm one who says that Canada should match the U.S. dollar for dollar in terms of programming into the agriculture sector. George Brinkman had this to say, and I want you to think about it, because I think we've really got to think about this. George Brinkman is a retired economist out of Guelph. He talks about the debt load in Canada, and our debt load is extreme, way higher than the U.S. primary producers'. He says that “the higher per capita farm debt in Ontario and in Canada has muddied the whole farm subsidy picture. As a percentage of income”--and that's the important point--Canadian government subsidies represent 116% of farm incomes, but U.S. government subsidies represent only 37% of their farm income.”

Now, if those figures are accurate, we've really got a bigger problem than I thought we had. I just wanted your comment on that as well.

But key to the specifics, how do we handle the farmers' share of any safety net program? Should it be a fee? Should it be a deposit? Should it be 30%?

I'd like to hear any thoughts.

[The Chair, Conservative, James Bezan]

Who wants to go first? Stephen.

[Stephen Vandervalk]

I'll speak personally about my farm.

You want to talk about a deposit or a fee. I sent a deposit in for CAIS. That has cost our farm thousands. Our accounting bill in the last three years is approaching over $10,000, and I've not seen one cent from the program. That's how this program is working. It penalizes the proactive farmer who is trying to offset his risks with irrigation, different crops, trying to grow some specialty or even something value-added, and trying to keep his income stable. That really penalizes that farmer. If he just goes for the gusto and he makes lots of money, and the next year he loses lots of money, CAIS will really help you.

So it's something that's all over the board. If you talk to one farmer, they'll say it's the greatest thing, because they've seen big cheques. For the next farmer, it has cost a fortune.

So that's why, if we go to a NISA-style--and I'm not saying NISA--account, so there's not the paperwork, there's not the cost, the sales, the inventory, beginning, ending, and all the complication.... They take net eligible sales and you get a percentage of that, and the farmer can do with that as he chooses.

[The Chair, Conservative, James Bezan]

Mr. Jacobson.

[Lynn Jacobson]

That's a very good question.

We view it like this. We've looked at the top-tier CAIS type of thing, with the top 30% right now in terms of how it's paid out and the rules under which it is actually paid out. If you had a NISA-style program on top of the CAIS program, it would be better than just going to a straight NISA-type program.

NISA itself was limiting. It did not do what the CAIS program was supposed to do when we had just the straight NISA, because NISA would run out of money on you right away. If you have a couple of bad years, you're gone, because you don't have any more NISA. If you had a top tier of the CAIS program that would pay out, and had maybe some set rules around pay-out....

One of the things the government said was that there was too much money in the old NISA program. That was only a certain percentage of the population, and it was the older farmers who had that extra money. It was not the young farmers who had the money in the NISA program; it was the older established farmers, who were 60, 70, or 80 years old at the time. They had the $100,000 deposit. The guy who was 30 or 40 years old didn't have any NISA account left. We need to establish that.

NISA on the top end of a CAIS program would allow some more flexibility for farmers to actually bring it out in timely payments. That's what we need. We don't need your accountant to say we should get $10,000 out of this program this year and then we wait a year to get it. That doesn't work.

[Wayne Easter, Liberal, Malpeque, PE]

It needs to be timely.

[Lynn Jacobson]

There has to be a time limit. We need a NISA-style program in which we can draw that money right away.

[LeRoy Fjordbotten]

The only comment I would make is that governments are always notorious, at every level, for coming out with a stabilization program when the industry is in the tank. The industry gets stabilized at the lowest possible level at which it can be stabilized, and this never works, of course. If you're going to do something like that, I don't think the fee is an issue. If you have the right program, you'll figure out a way to do the fee.

I don't like stabilization programs. I was involved in designing some of them, and you always design stuff when it's in the tank. That's wrong.