Agriculture Committee on Feb. 5th, 2008

[The Chair, Conservative, James Bezan]

Thank you. Time has expired.

Mrs. Skelton.

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you very much for being here today.

I listened with great interest. Thank you, Mr. Meyer, for saying what has needed to be said for a long time: that farming has become very big business, and that in the concentration we've lost a lot of our smaller farmers, the kind of farmer who could buy two truckloads of fertilizer in the spring and put it into his drill and put it on the ground.

I want to ask two questions.

I want to ask Mr. Meyer about the storage issue. It's a huge issue with buying the fertilizer in the fall. One thing that always stopped my husband when he looked at when to buy the fertilizer was the storage—the proper storage, the environmental concerns we have now, a lot of new regulations around the environment on agriculture. So it's a big problem and it's interesting. I want to ask Farmers of North America how you overcome that.

I also want to ask each of your groups whether you're asking the government for cash advances or a loan program so that farmers can switch over into pre-year buying or fall buying, or to get out of the cycle. I know a lot of the farmers are involved with the grain companies now, and everything goes through one company. It's something I don't like to see happening, but it's reality; it's the way we've become.

[The Chair, Conservative, James Bezan]

Who wants to tackle that?

Mr. Meyer and then Mr. Friesen.

[Leo Meyer]

Thank you very much for your questions.

I drive by your farm quite often with my truck, actually, even though I'm from Alberta, since we go and pick up fertilizer in Saskatchewan. Anyway, it's nice to meet you.

The storage issue is a very important question, I think, and I'm glad you're raising it. Storage is an issue, you're right, but there also is a safety issue, which again you pointed out. As we move forward, there are other issues--for instance, is this properly stored, and are we cleaning out the bins properly?

You'll remember that issue where some pets got sick because there was melamine in there. Melamine is a component of fertilizer. The fact is that we have to be conscious of that. This might not be for everybody, but if in fact you have bins—I don't know how technical you want me to be here--you need coated bins. You need specific bins, you can't just use a grain bin. You can't think of this as just a simple thing of getting fertilizer to the farm and dumping it into a bin. That isn't how it works. You have special bins, coated bins. Possibly those who use more should even have a shed to store it in, and load it with a BobCat front-end loader back into a truck at seeding time.

So it is an issue, and I'm glad you raised that. The rest of the comments I'll leave to others.

With respect to advances on some things, organizations should go back and consult with their members on this specific topic. We could maybe come up with some recommendations.

As a farmer, all I can tell you is that the current changes made to the cash advances and how they help farmers are very significant. I thank everybody on the committee who had a hand in making those significant changes. They have been adjusted to the new needs in this business, and I thank you for that.

[The Chair, Conservative, James Bezan]

Mr. Friesen, then Mr. Mann.

[Bob Friesen]

I certainly think it bears taking a good look at to see if we can adjust the spring cash advance to provide farmers with money. There is one other challenge, though, and this has come about in the livestock sector now, in the hog industry. One thing we've been pushing for is a cash advance and then allowing farmers a longer period of time to pay off that cash advance rather than it having to come off other program payment that a producer is eligible for.

The problem we're seeing now is that the farmer's operating line of credit is maxed out, and the bank, or whoever holds the operating line of credit, typically has all the inventory as security and doesn't want to let go of any of that security to allow security for cash advances.

So that's another challenge we would have to face, and perhaps that would apply in the grain industry as well.

[The Chair, Conservative, James Bezan]

Mr. Mann.

[James Mann]

I would just comment on buying early and worrying about storage and environmental issues.

In our program, at least, you can acquire the product without having to worry about storage, because you're buying it, and by the time it moves through the system--our fall purchases will actually arrive in late February or March--there are not nearly the issues. The bins have been lowered with the moving of some of the grain, so the grain storage will move into fertilizer storage.

On the issue of ammonium nitrate, we brought that in earlier, through Churchill, for fall application, for the most part, over the top. It is more environmentally sound. Ammonium nitrate doesn't volatilize and doesn't denitrify, as compared with urea, which is the only product available in Canada for that purpose. So there is an environmental benefit to using that product and having it brought in during that time. That is a major issue.

I agree with Bob on the cash advances. If we could shift that down and find some way of getting cash advances, particularly low-cost cash advances...because one of the input costs that we haven't mentioned here is interest. With the amount of debt we're carrying--we've dug ourselves into a hole here--just a small change in interest rates has a huge impact on our cost of production. It is one of our significant input costs.

Again, I'm not sure what government can do in that area, but I do know it shows up on the P and L as being a significant issue.

[The Chair, Conservative, James Bezan]

Thank you.

Mr. Boshcoff.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

Thank you very much, Mr. Chairman.

You've examined the macro issues, but if you take this down to the farmer level, to the farmer trying to develop new products or get things onto the market through various ways, the cost of inspection and I guess the diligence of inspection on the smaller operator has become a question for some of the people in my riding. For example, the CFIA threatened a baker that he couldn't label his product dinner “rolls”, he had to call them dinner “buns”.

How does someone out there really know how to deal with the complexity of things that they could be ticketed for? It comes down to someone wanting to even develop local products. We have this big push to buy domestic, to help all these people do things at farmers markets and country markets, and yet there's the cost of lab testing, the labelling in official languages, which is quite normal for our country, identifying percentages, those kinds of things; some do, some don't.

Out there, if we actually enforced the law, would we still be able to deliver the local content that we're aspiring to?

Richard, go ahead.

[The Chair, Conservative, James Bezan]

Mr. Phillips.

[Richard Phillips]

Actually, that flagged an issue. Thank you for the question. It actually follows up with Mrs. Skelton's question as well.

We recently met with the Canadian Association of Agri-Retailers. They were talking about some of the new regulations and provisions for security that are coming in around fertilizer sites, and the costs. Border Services, I think, is in there because of possibilities of terrorist acts, quite frankly.

You say, “What can the government do?” Whatever costs are absorbed in that sector will be passed directly on to farmers, and yet when you look at the port position, the Canadian government put substantial dollars into upgrading ports for these very same issues. But when it comes to the agriculture sector and they have to do the same security measures of fencing, lights, and all the other stuff that goes with that, all those costs then get passed on to the farmers. So there is one issue you could look at, if you guys wanted to put your teeth into something.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

Can anybody speak to nutritional fact tables and registering labelling?

[Bob Friesen]

We haven't looked at nutritional aspects of it, but as you know, we are working on a grown-in-Canada label to identify Canadian products, to clearly brand Canada in Canada as well, on top of what we're doing around the world.

I also want to agree with Richard on the security issue. We in fact wrote the minister a letter asking that he support the request from the agriculture retailers. They're quite willing to put up some money—I believe somewhere around $17 million—but they're asking for a further sum, around $50 million, from government, because they recognize that, much the same as a lot of things farmers do, it's also a public good. So they're saying, “It is a public good to provide the security. We'll pay for some of it, but we need some assistance from governments, because we know the entire amount will eventually accrue back to the farm gate.”

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

Thank you.

[The Chair, Conservative, James Bezan]

Before we clear the room here, I have two questions that I want to get answers on.

We're talking about the cost of products today and the disparity we have in the marketplace. I know that FNA talked about prices of not only fertilizers and herbicides, but it also mentioned the animal health products.

I'm a cattle producer, and this is an issue of concern to me. In talking with my local agri-retailers, I find they're at the same disadvantage that they have to take the product as it's being offered in Canada from the manufacturer, and they don't have the opportunity to go and access the product in the U.S. and bring it in at a competitive price. Whether it's ivermectin, whether it's vaccination products, whether we're talking about glysophates, they're at the same disadvantage and feel threatened because they're losing market share, and they don't have the same flexibility. I know that exists.

Now, you were talking about being able to go out and pre-buy your fertilizer and put it into storage. I know that producers in my area, this fall, weren't able to do that. They couldn't price-forward. The agri-retailers were not in a position to give them a pricing on their fertilizer product, couldn't get a commitment from their manufacturers. Up until just recently, there was no opportunity to go in there and make those purchases, if they had the ability to do so. So I just wanted to see if that was common across Canada, or whether it was isolated to Interlake, Manitoba, and see what some of the remedies might be on that.

The second part is that you have alluded to the fact that FNA brought in anhydrous nitrogen, ammonious nitrogen, through Churchill. What are the plans for this year in bringing in product to help your membership?

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Mr. Chair, if I could just add something to your most insightful comments, Mr. Friesen commented on something that I think is a very serious issue: tied selling. Can we ask him to give us some documentation? As well, if Mr. Caleval can provide us with the four examples of the chemicals they've applied for, they don't have to be here, but—

[The Chair, Conservative, James Bezan]

I believe that's to be circulated with the report when it's all prepared, but you guys can comment.

[Glenn Caleval]

I'll take the first two.

In terms of the retailers' access, here are two comments.

First of all, we'd be happy if you could come up with the regulation to let them have that access. We know from experience that they won't exercise the right. People have to understand. I'm not saying they're bad people; they're just doing their job, which is to try to maximize profit, and that's a necessary function in our society. They don't want to have the price go down. It's not in their interest to drive the price down, so even if you give them that right, they're not going to do it. But we encourage you to give them that right. If everybody had the right to go in there, that would be great.

Access to off-season supplies is a problem. The retailers really are suffering. The manufacturers could give them that access, and they just don't. The reason I know that's a real problem is that we've had a number of retailers call us and would love to work with us to get access to some of our supply. That, again, needs a strengthening of the Competition Act. You already have similar provisions in different areas, where companies are compelled not to have tied selling, not to have exclusivity. Those kinds of things could work here.

Mr. Mann.

[James Mann]

I'd like to look to the future on two counts. On fertilizer, of course, we're going to look at every logistical possibility because we are dealing with a freight grain with fertilizer. Churchill was an excellent option--reducing rail freight, making use of a port that was close to market--and it worked excellently. We are going to continue to try to utilize that facility as well as other facilities to bring product in.

We are bringing product up the Mississippi, as we speak, for spring use as well, because again there's a significant differential in price. We will use every port we can, and we continue to look at our fertilizer program. We have some that for competitive reasons I can't talk about here today, but there are some significant things in other areas that we are looking at doing to create that additional competition as well as more choice for farmers, so we can create that competition.

When we look to the future, and it has been mentioned a few times around the table here today--and I have to really commend this group for taking a look at input prices, because historically what has happened.... I certainly hope that what has happened with grain prices is here to stay, that it is truly a shift that is here to stay, but I do know that the biggest cure for high prices is high prices. We are seeing massive global production--an increase in fertilizer use, an increase in seeds. We could enter into a situation again of surpluses. What we've seen in the past, as input prices go up to what the market will bear, is they don't go down lock-step. So we end up with farmers having to take on debt, expand their farm operations to utilize the lower margins to still maintain business. We were close to losing a large group of farmers. The action is happening around the kitchen tables, in farm operations, and on what their kids and their families are going to do. I don't think Canada fully realizes the impact it would have had on our family farms and Canadian agriculture if we hadn't seen this large increase in price.

So what we're doing in looking to the future I think is extremely important.

[The Chair, Conservative, James Bezan]

Time has expired and there is another committee that needs to use this room.

I do appreciate everyone coming in today to present. We will continue on with this study. We will be taking a short break from it, though. We do have to deal with Bill C-33. We will kick that off on Thursday. The minister is appearing on Thursday. As well, we will be receiving a WTO briefing on Thursday for committee members. I'm hopeful we can get through Bill C-33 relatively quickly, in three or four meetings, and then we can continue on with our study on high input costs.

Mr. Easter.

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Chair, is the motion there for the next meeting?

[The Chair, Conservative, James Bezan]

Yes. That's on the agenda.

With that, the meeting is adjourned.