Evidence of meeting #52 for Agriculture and Agri-Food in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was agriculture.

On the agenda

MPs speaking

Also speaking

Larry Weber  Risk Management, Weber Commodities
Ken McBride  President, Agricultural Producers Association of Saskatchewan
Brad Wildeman  President, Pound-Maker
Ian McCreary  Director, District 6, Canadian Wheat Board
Lynette Keyowski  Executive Director, Agricultural Producers Association of Saskatchewan

2:15 p.m.

Director, District 6, Canadian Wheat Board

Ian McCreary

I mentioned the key one I think has been with regard to the rail sector. We're a key leverage for farmers in terms of ensuring access to the rail system and also in terms of determining the rates.

We also play a major part in affecting the competitive balance in the grain industry because we're the first point of entry for the carriers. Independent producer terminals exist in western Canada where they don't exist in the United States. The reason for this is that we negotiate a framework on the rail side and then, in turn, deal with farmers on how they want to deal with the system.

So there are a number of key commercial pieces that we provide on that front. I would say that as the sector becomes more concentrated--the marketplace that Larry spoke of--in order for it to give you a price discovery that's reasonably balanced, it has to have a reasonable access to both providers and demanders of any service or good. As we look at the concentration that's happening on our side, we've seen their costs go down on the fertilizer side, and because prices have escalated, fertilizer prices will be almost double springtime values versus what some of the other players have seen.

So there's a very significant market power imbalance on the farm input side that we at this point are less directly involved in.

2:15 p.m.

Conservative

The Chair Conservative James Bezan

Thank you, Mr. Atamanenko.

Mr. Steckle, five minutes.

2:15 p.m.

Liberal

Paul Steckle Liberal Huron—Bruce, ON

Lessons taught should be lessons learned. You applied that principle when you spoke about having the policy. Once we determine what the policy is, we should set our policy here in terms of direction, of what we want to do, and put that in place after the fact.

Because you're here on the beef side, I can't help but go back to what happened in 2003. We learned some lessons there—hopefully—particularly in terms of what the committee did in looking at the beef packer industry. The beef packer industry took the beef issue to extreme extremes. There was profitability at levels never seen before, at the expense of consumers and at the expense of primary producers.

We need to learn the lesson that when we design programs, we don't design them so that the money is to be recalled at a later time or in fact ends up in the pockets of people other than those for whom it was intended. That's what happened with the beef industry. I hope we have learned some lessons there, but I'm not sure we have, because the beef industry itself is displaying to me the kind of habit they have had for a long time.

We built capacity in that three- or four-year period, in order for the industry to take care in the slaughter of their beef in this country. While we had capacity built to almost 100%, we are now supplying that market at about a 70% level or even less, and I think that's a disgrace. I say that to the beef people and I say that to that industry because I think they have betrayed even the best intentions of a government—and it doesn't matter what government. I believe the government did what they felt was best and worked with the industry the best they could.

I think we have some lessons to learn. There is a move—and I know we're not here to talk about the Wheat Board, but I'm using it as an example—to get rid of an agency that has served this country well and has been improved upon over the years. We have given options in the province of Ontario. Those who chose to sell in an open market last summer or late last summer would have sold wheat at about $103 a tonne. Those who sold it to the Wheat Board, where the pool price would apply, are going to get about $180. So there are merits.

I think we need to learn—and this applies to the thing we talked about before—but I'm not sure we have learned lessons. Some of us have been around this table quite a number of times, and we're hearing the same thing. We have too many governments competing in their own little niches, and we have too many farm organizations competing. At the end of the day, we all want to come out waving the white flag, but it doesn't happen very often.

It's time we started moving away from those competitive issues that we develop for ourselves, like interprovincial trade barriers or where some provinces can afford while others can't afford.... We have to get down to a point I've made time and again, but I need to stress it because it may be the last time I go across this country with the ability to say these kinds of things. It's time we put this whole issue of food security purely and simply into the control of one government.

If we believe food security is important to this nation, then we will develop policy to support that. We will deal with those kinds of encumbrances that are put in our way because of other governments, whether it's the Americans or others. We will find ways of dealing with them. But first of all we have to believe in something. If we don't believe in something, we'll just keep on doing the band-aid, ad hoc programming.

How do you feel about that kind of thing? Am I in an area where you don't want to go or don't feel comfortable with, or am I completely lost, forget it, put it away, close the book, and drive on, doing what we've done poorly? Dr. Phil would say, “If it doesn't work, change it”.

2:20 p.m.

Conservative

The Chair Conservative James Bezan

I would ask everyone to keep their comments brief, because the time is just about up.

2:20 p.m.

President, Agricultural Producers Association of Saskatchewan

Ken McBride

Thank you.

Larry said it very well. It's attitude. What we need is a willingness in this country to recognize the importance of agriculture and what it can do for this economy. We need to treat it as something that is important and as something that we value, and we need to value those people who are involved in it. It doesn't matter what level they're at.

My concern is obviously primary production; however, I think it is incumbent upon leaders to lead. We need to have an attitude, fostered through this whole industry, that says, “We're going to win, and we're going to win on behalf of agriculture in Canada, and it is going to move ahead and it's going to be valued in our society and in our economy”.

2:20 p.m.

Conservative

The Chair Conservative James Bezan

Does anybody else have a comment?

2:20 p.m.

President, Pound-Maker

Brad Wildeman

I think you're right. We had a strategy, and we dealt with it at the time, but let's remember that we still have 100% of capacity. Why are we killing at a 70% level? It's because we have some very significant things going on.

We have a very extreme labour shortage in the hottest market in Canada, where the majority of our packers are. There simply aren't enough people to go around, unless we're prepared to lower our prices considerably to some level. I don't know what level it would have to be at for them to pay the kinds of wages to be able to track that kind of labour. We're in a short-term problem.

Secondly, we have yet to open up some of those high-valued export markets that allow us to be competitive. Remember, we're into some markets, but the U.S. is into many more markets. We're 60% dependent on trade, and they're about 20% dependent on trade. We still have some recovery to do there, but I think those things are there.

Thirdly, we've asked our industry to take on some additional costs. The U.S., through NAFTA, is our competitor. What's particularly coming up and staring us in the face now is this whole feed ban enhancement probability.

On the food security issue, my answer to you would simply be this. Again, food security in Canada is not likely going to resonate very far, considering that we're the fifth largest exporter in the world. We tell some of the protectionist countries we trade with that the best source of food security they have for Korea and Japan, for example, is to have their borders open to as many countries as possible that can supply them with product.

I think our question is this. How do we raise the value of the other markets that we're dependent on to keep agriculture viable? I don't think it's the Canadian domestic market.

2:20 p.m.

Conservative

The Chair Conservative James Bezan

Thank you.

Mr. Trost.

April 18th, 2007 / 2:20 p.m.

Conservative

Bradley Trost Conservative Saskatoon—Humboldt, SK

None of you dealt directly with ethanol in your presentations, but it is something that's a major issue. A lot of the demand and drive is to have producer input.

I'm going to express a little bit of frustration here. Different groups come and look for producer funding. But when I see the groups, I guess in some ways they reflect the overall farm community. The older, well-established farmers are the ones who come. What about the 15-year-old kid who's riding the school bus? Three years from now, he'll be out. He'll work in the oil patch for two years and will then try to start farming. He'll have a few cows, etc.

This is my frustration with all sorts of programs, and ethanol is the example I'm asking about. Do you have any suggestions for programming to get producer involvement for any value-added program that's not basically one time for the first guys at the front?

Ethanol is the biggest example. If the 500 biggest and most successful farmers are the only ones who get aid for ethanol projects across this province, it's not really good for long-term viability. It's not fair to the 15-year-old kid who's going to farm.

I'm a farm kid. I said this to an earlier panel, and I say it frequently. I was so successful at farming that I retired after two years. Everyone knows what it's like. All the young people in this province basically retired after a year or two. One of my 12 cousins is farming.

Do you have any suggestions for value-added programs, etc., that are not only good for the one-time guys at the front but are continuous for agriculture in the future, not only for present farmers but for future farmers? I am really open to ideas. I haven't really heard a lot over the last couple of years.

2:25 p.m.

Conservative

The Chair Conservative James Bezan

Who wants to go first?

Brad.

2:25 p.m.

President, Pound-Maker

Brad Wildeman

I invite you to come to our place sometime to have a little visit, because here is a company that has 200 shareholders and 50 employees, and 70% of those employees were born and raised within 20 miles of our place. Over 70% of them are involved in a farm, either helping their parents or farming on the side, or trying to start a farm of their own.

So to biofuel and what drove that a little bit, in our case, we were fortunate when we built. We've been in the ethanol business since 1990, so we've been around a couple of days. One of the things we have to determine is, are we building ethanol because we want to have an alternative grain fuel, or are we building ethanol because we want to regenerate rural economies, or, thirdly, give farmers an opportunity to move up the value chain? If those are the answers, if the answers are those last two, then I think we need to restructure the way we're doing biofuel now. where we're saying every company qualifies, because when it comes economy of scale, you cannot.... Ethanol production is very sensitive to economies of scale, but you can do other things like we're doing that we think are pretty competitive. But they're done on a smaller scale and they're done because they're targeted to rural communities and farm ownership.

That's the way it started in the U.S., where the government and state governments guaranteed loans for producers to be able to invest in these things and put a cap on the kinds of tax exemptions that companies could get in those states where they were built, to make sure these multinationals didn't build these huge ones and take over the market instantly.

The reality is that one day last year, a few months ago, there were announcements of three plants in the U.S. Those three plants would supply Canadians, all of Canada, with the renewable fuel we need.

So I think we need to have a strategy that's targeted. If the strategy is increasing value for farmers, allowing participation, and doing rural development, then we need to change the program from the way it is now. Unfortunately, that isn't the way the programs are structured today.

2:25 p.m.

Conservative

Bradley Trost Conservative Saskatoon—Humboldt, SK

Are there any comments by other witnesses?

2:25 p.m.

Risk Management, Weber Commodities

Larry Weber

Access to capital should be your main concern to drive producer investment and producer participation. Giving Husky Oil $80 million to go and develop ethanol is not a great move for rural Saskatchewan. Drive that back to the farmer participation level and then we'll start to see rural revitalization, not a plant in Lloydminster.

2:25 p.m.

Conservative

The Chair Conservative James Bezan

Ken.

2:25 p.m.

President, Agricultural Producers Association of Saskatchewan

Ken McBride

I believe that. We also need to look at this, because if we don't start doing some of these things to ensure viability in rural Saskatchewan, that kid won't be bumping up and down the road in a bus, because it simply won't be there for him. So what we need to do is to ensure now that we start to build value so that they know that it may not be ownership in that plant right away but that what they produce has an end use that is valuable, that is close, and that there's also maybe a job in the meantime for him or someone else to take part in that community.

It's a total strategy built around ensuring that there's longevity for rural Saskatchewan, and you're not going to do that with one or two huge mega plants. You need to ensure that those plants are situated throughout a number of places, thereby stimulating and helping that rural economy. You will bring people back.

2:25 p.m.

Conservative

Bradley Trost Conservative Saskatoon—Humboldt, SK

Does anybody want to expand their comments beyond that?

2:25 p.m.

Conservative

The Chair Conservative James Bezan

You're out of time, Brad.

Ian, did you want to get in on this?

2:25 p.m.

Director, District 6, Canadian Wheat Board

Ian McCreary

The only thing I was going to add is that I think there's a bit of a chicken-and-egg piece, in the sense that Brad mentioned rural labour. Increasingly, the reason that highly talented young people choose not to live in rural Saskatchewan is that the public sector infrastructure, education and health, has deteriorated enough that it isn't as attractive a place to live, frankly, as a lot of other settings, and that's going to be an issue for economic development in a lot of areas.

A friend of mine once said, “Listen, I had three kids with master's degrees who all wanted to farm, and our farm was making money. But you know what? They all looked at it and said, there's no access for the things I want for my kids within a few miles of this place; we're gone.”

The economy tends to move to where it's a decent place to live, because there are a lot of mobile jobs in this world.

2:30 p.m.

Conservative

The Chair Conservative James Bezan

Thank you.

Mr. Hubbard.

2:30 p.m.

Liberal

Charles Hubbard Liberal Miramichi, NB

Thank you.

Apparently Mr. McCreary is bringing up a point that is a problem all across rural Canada, not only in the agricultural sector but back home in the forestry sector. It seems everybody wants a city job, and 37 hours a week is a lot better than 75, for most people.

I have just a couple of quick points. With capitalization, I read in the paper where somebody it seems has a rather poor quarter section for sale out in Saskatchewan. They talk about it not being very good for farming. They want $60,000 for it. If we look at the average farm, where you think you're going to at least make enough to keep your family fed for the next year, it seems that you need 2,500 or 4,000 acres. So with the capitalization that's needed to maintain that, I guess the basic question is, why is land so expensive?

You're the economist, Larry. How about telling us why land is so expensive?

2:30 p.m.

Risk Management, Weber Commodities

Larry Weber

I'm far from being an economist, but I don't view $60,000 as being expensive for land. We have the cheapest land value here in this province of anywhere in the world. If you go to Alberta, you can't touch land for $1,200 or $1,300 an acre. If you go next door to Manitoba, it's $1,200 to $1,600 an acre.

2:30 p.m.

Liberal

Charles Hubbard Liberal Miramichi, NB

So this poor farmer who's going to start off at 25 years of age needs at least $2 million worth of land—

2:30 p.m.

Risk Management, Weber Commodities

Larry Weber

You can't start farming today unless you have your parents' help. That's a fact. It will not occur.

2:30 p.m.

Liberal

Charles Hubbard Liberal Miramichi, NB

Does everybody agree that unless your father or mother leaves you a farm, you can't farm in Saskatchewan?

2:30 p.m.

Risk Management, Weber Commodities

Larry Weber

For goodness' sake, let's keep our kids in the rural area by giving them a chance to stay on their family farms.