Thank you.
Once again, thanks for the opportunity to do a presentation in front of the agriculture standing committee.
First of all, I'm a director with the Ontario Soybean Growers and also chair of the Canadian Soybean Council.
I can tell you a little bit about the Soybean Council. We have a formal relationship with the Manitoba Pulse Growers, Ontario Soybean Growers, and the Fédération des producteurs de cultures commerciales du Québec. Basically we represent about 25,000 growers with approximately three million acres--most of those acres, about 2.2 million, are in Ontario--that represent approximately $1 billion in farm gate receipts.
At the end of the day, the soybean industry in Canada is a net importer of soybeans and meal. Basically a third of our beans are exported for food-grade-type situations. The resulting commodity required for feed has to come out of the U.S. for soybean, whole beans and meal.
The Canadian Soybean Council was established to better represent soybean producers at the national level. We have some major ties with the Canadian International Grains Institute, the Canadian Soybean Exporters Association, Soy 20/20, Soyfoods Canada, and the Guelph Food Technology Centre.
Most of our focus includes market development. We initially started off in the area of exports. We're also involved with research and innovation through Agriculture Canada partnerships, involved with stakeholder, communication, and environmental issues. We also participate within the national oilseeds round table, especially in the areas of innovation and trade and regulations. We've also been doing a lot of work with APF II consultations on all those pillars.
Basically our vision of the Soybean Council is to stimulate industry growth by efforts in utilization. Traditionally we've been in the export business or export markets, IP systems, with soy foods and ingredients. In the last number of years we've been in a lot of bio-economy initiatives.
As I said earlier, our whole focus is innovation. We feel that's the major way to try to have returns that are better for producers. At the same time, we also recognize that to have those returns, we have to have a backstop in place of safety nets as well. I'll talk a little bit about those and why we feel they're needed within our industry.
Certainly they provide stability from highly variable commodity markets. Globally farmers have access to these types of tools. Especially given Canada's close proximity to the U.S. and their types of programs, we certainly need to get ourselves a similar set of tools as well to provide support for our producers in times of need. Some provinces already have regional programs that work, such as ASRA in Quebec and the spring price endorsement in Alberta.
Now, as to where we've been and where we're at, prior to 2003 each province negotiated different programs with the federal government. Those programs could be targeted to the different provinces. Ontario had the market revenue insurance program and Quebec of course had the ASRA program. After the 2003 federal policy, the APF was changed for two national programs--namely, CAIS whole farm and also the production insurance, crop insurance sector.
I'll mention some of the current issues we have with the safety nets, particularly with CAIS. Albeit the federal government announcement about the top end of a NISA-style program or component was certainly welcome, there are still some issues with CAIS that we feel need to be dealt with--for instance, the timeliness of payments, basically based on income tax. And it's difficult to target the specific need. There is always the offsetting of losses and other segments of the operation that can affect sometimes the main core of the business. There's also the long-term declining reference margins. The prediction of a payment, if any, is very tough to try to come up with.
So what programs worked?
As an example, prior to 2003 something in Ontario that had worked very well was the market revenue program with the production insurance. It was flexible in delivery and targeted to need. It certainly accounts for differences in crops and markets. We look at that program to address the issue of markets tending to work north and south, between the U.S. and Canada. We also recognize that there are differences in production systems in eastern and western Canada, where those type of programs, commodity specific and companion-type programs, helped out.
There were timely payments, not based on tax, and targeted to specific sectors. We always feel that those safety nets are a bridge for producers as the market develops further. We also feel that programs need to be adjusted to be more flexible, bankable, and predictable.
In the area of trade and safety nets, we do some work on that, and some of our positions are that we see that as critical for the long-term stability of the soybean industry. The Soybean Council supports free, fair, and open international trade, but at the same time we're not in favour of unilaterally reducing Canada's business risk management programs prior to other nations that do that.
Getting back to our core type of initiatives that we do, we see that our market development issues always need to be backed up with solid business risk management strategies for us to be proactive and keep moving our industry forward. We always see that we need to ensure the long-term sustainability of the industry and have those backstops in place. Market development works to build a strong, viable industry, and safety nets provide the stabilization in the marketplace until the potential of market development can be realized.
Our member organizations that I mentioned before have been very active in market development opportunities, such as new export market development, the biodiesel, soy foods, and bio-plastics and other things in the bio-economy. Certainly the ability of safety nets to support those initiatives is required within our industry.
There are some other critical points that we'd like to address with market development. We see that soybeans are a key feedstock in the bio-economy. Domestic production is required to ensure the long-term stability of the bio-economy, the bio-industry. We recognize the movement forward in renewable fuels and the opportunities they present, but at the end of the day that's one component. We don't see that this is the only silver bullet to fix things and move forward in innovation. There are lots of other things that are required as well.
We also advocate feedstock neutrality, especially in the biofuels industry. We think that it should be the marketplace that decides how and what type of commodity is utilized in those biofuels.
We also believe that any product branded as Canadian should be made from domestically produced feedstock. To go along again with the whole messaging, we certainly recognize that we need targeted solutions that complement all pillars within the APF: market development, science, innovation, and the business risk management.
We're also quite involved with research, science, and innovation. We bring forward these comments. Canada must focus on opportunity to present benefits for Canadian agriculture and related industries. We noticed that the public and private sector research and development in Canada are lagging behind our competitors, despite the studies that suggest the cost-benefit ratio of R and D is in the range of 20 to 1. More dollars are being spent in other places for that research and development and innovation, and we feel that it needs to be addressed here in Canada as well.
We also believe that all these initiatives must have a regional focus to meet the needs of producers. Just on the agronomics side, pest infestations tend to be regional, not national, and move north to south instead of east-west. We also see that research policy needs to capitalize on Canada's advantage in respect to its location in key U.S. markets and the value-added industry.
So in closing, we feel that as a soybean industry, innovation has been our key to success over the years. We look forward to a lot of other opportunities that are taking place to work with government and work with private industry, and that will be the thing that really drives our industry forward. However, we always emphasize the fact that with the dollars that all of us are investing in these opportunities, we always have to maintain some type of business risk management program to support those initiatives.
Thank you so much.