Agriculture Committee on Feb. 5th, 2008

[Bob Friesen]

Yes.

[Wayne Easter, Liberal, Malpeque, PE]

That isn't the way it works when we sell beef, hogs, or malting barley, as we'd have had a trade challenge against us in a minute.

I know everybody is saying this is due to supply and demand and competition. I have just one word for that—bullshit. The fact of the matter is that demand is higher in the United States, with their push for ethanol. The real problem, I think, comes down to the way these companies operate, my assumption being be that it has nothing to do with competition, but basically with what the market will bear.

I really firmly believe that we have a competition act that doesn't work. The U.S. has a competition act that works. So I want to know your position on the Competition Act. We've made recommendations on that before, but governments, no matter what political stripe, continue not to deal with the Competition Act in Canada. That's question number one.

Number two, does anybody have any studies on energy pricing at the farm gate in the U.S. versus Canada? The chair mentioned some of them: diesel, diesel-gas, or natural gas.

Can you imagine in the United States, the U.S. government allowing any company to sell a natural resource, be it diesel-gas or natural gas produced in the United States, more cheaply to their competitors than to themselves? Why is that? Does anybody have any answers on that? And why can't our government do the same thing? All we're doing is subsidizing their industrial plants.

Number three, should the government be using monetary policy to force the dollar down? We did it before, if you remember the day after the stock market came down substantially. Stock market holders in New York were affected, and the Bank of Canada moved in, as well as the U.S. banking system, and brought the dollar down, and the market corrected itself. Should we be doing that or should we not? I don't know.

I find it amazing that nobody has mentioned the imbalance between costs in Canada versus the United States. We have cost recovery under the CFIA, but the United States does not. Theirs is subsidized by the government. Should we be dealing with those points? Those are government regulatory costs in Canada that the United States producers do not have. Should we be demanding from those guys over there, and their minister, that they deal with those costs?

The last point I'll mention is related to you, Glenn. You came out with some pretty startling numbers. Can you table those with us? How would you suggest that we facilitate the original intent of GROU, which was to provide greater access to competitively priced chemicals?

So those are five questions.

[The Chair, Conservative, James Bezan]

Five questions, and you have a minute and a half to answer them.

[Bob Friesen]

I'll answer four of them. I would like to talk about OUI and GROU a little later, though.

I actually did mention regulatory costs, Mr. Easter. Just for the record, I did talk about regulatory costs. In fact, the hog industry will tell you that farmers in Canada pay for an awful lot of regulation that U.S. hog farmers don't. Perhaps that's one of the reasons hog farmers had a record year in the U.S. in 2006. As I mentioned earlier, we're competing against cross-subsidization down there as well.

As far as monetary policy is concerned—and I think Mr. Lavoie referred to this—we calculated when the dollar started going up that for every cent the Canadian dollar strengthens compared with the U.S. dollar, we lose $230 million in export value to the U.S. Weighing that against the benefit of a stronger dollar for the purchases that we have, my guess is that we're still out an awful lot of money from our exports.

The disparity in fuel costs between Canada and the U.S., as per the KAP study, was 12% in 2004, 19% in 2005, and 14% in 2006.

[Wayne Easter, Liberal, Malpeque, PE]

On that point, how does government deal with that fuel disparity? The United States government would not allow that to happen. Why can't we? What have we done wrong?

[Bob Friesen]

We asked before for an excise tax rebate across the board.

On your first question, on nitrogen, you're right. I've said that too, and emphasized it. I believe it doesn't matter if there's a lot of fertilizer lying around, because fertilizer companies know that if I get $5 or $6 or $8 per bushel more for whatever grain I produce, I can afford to apply more fertilizer and to buy more. They don't take into consideration how many bills I have to pay from the past, and the hole we have come out of.

On corn production, the fertilizer people are telling us that corn takes nitrogen on a two-to-one ratio more than say wheat does—and you all know how much corn increased in the U.S. compared with wheat and soybeans, which decreased.

[The Chair, Conservative, James Bezan]

Time has expired, unfortunately, and we aren't going to get to Mr. Caleval's response.

Mr. Storseth, you have the floor.

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

Thank you very much, Mr. Chair.

I just want to thank everybody for coming today. It's important that we all recognize that we are here in a non-partisan effort to look at and get some very real suggestions on how we are going to reduce input costs here.

As to Mr. Easter's partisan comments, it's nice that he's found his voice now that he's on that side of the table.

I also believe that we are over-regulating--

[Wayne Easter, Liberal, Malpeque, PE]

You better read the report there, Brian. We challenged the government.

[The Chair, Conservative, James Bezan]

Order.

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

We're over-regulating our industry and we're not putting our farmers on an equal playing field with those in the United States or in other countries we compete with.

This is a key component to things we need to deal with. Mr. Easter is right. We need to deal with some of these CFIA costs. We have addressed that. It was actually my colleague, Mr. Miller, who brought that motion before the committee.

Mr. Atamanenko, I disagree with putting more regulations into it, and I think it's important that somebody correct the record. The Government of Canada, through Bill C-8, has taken tremendous steps that our shipping industry as well as our producers asked for.

Group FOA is very substantive in holding the railways to account, as well as the level-of-service review, which I believe is already being started.

These are only some of the initial steps we need to take. They are some very substantive steps.

I read the Keystone report on fertilizer, and that is something I have some questions for you on. I'm not an interventionist, but the market is supposed to correct things. When the dollar goes up, our input costs should go down and our exports become more expensive. Well, we've seen our exports become more expensive across the board, but on our import costs, that same dollar is not buying any more than it used to. As a matter of fact, the Keystone report shows that it's buying less.

I'd like some very frank recommendations from you, gentlemen, on how we can address that--anhydrous and fertilizer being just two. We need to be proactive on this, or else we're going to get ourselves in a situation where the industry is coming to us saying they need more money and they need it now, just like we're facing with the pork and cattle situation.

I think we should start with Mr. Meyer.

[The Chair, Conservative, James Bezan]

Mr. Meyer.

[Leo Meyer]

Thank you very much for that.

Just briefly, it's a very sincere discussion we're having here. I'd specifically like to comment on the dollar.

Our currency, and how quickly it rose to a level that we haven't seen before, has surprised a lot of people in the trade. What one can't overlook in this discussion is in fact that a lot of the business we're doing today was done some time ago. Part of a consideration of a price is currency, and when contracting partners make an arrangement they take those different factors for a price consideration into account. I wouldn't be surprised to see that arrangements of some of that fertilizer pricing have been done maybe even a year or a year and a half ago.

As we move forward and the dollar stays strong, I think some of the points you made are becoming more evident and will begin to work. I just allude to the fact that I think it was your Minister of Finance, Mr. Flaherty, who had to call in the people in other areas of our economy and point out to them that the prices weren't coming down.

What you're seeing here is the tail end of the trade and an industry that needs to adjust to the different situation out there in respect of currency, because most of those inputs are actually priced in U.S. dollars.

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

You bring up a valid point. When you talked about automobiles, for example, it was the outcry of the Canadian public who started going to the United States to get that product that I would contend has created the changes you see now with the selling of cars in Canada, which are, as a matter of fact, up in the month of January. But as Mr. Caleval points out, that's not allowed. We prohibit that here in Canada. So would you not agree that we need to expand that ability and push them as much as we can to get that fair trading system back and forth, just as we did with automobiles?

[Leo Meyer]

Yes, no question about it. Allow some time.

Most of those entities realize this, and I think also the buyers and the consumers out there--in this case, the farmers--need to be made aware of it. They have to speak out about that issue more vehemently than they've done in the past.

It's taken some time to allow for that to happen, but I think it's going to happen. So I may be a little bit more confident that way, that actually our stronger dollar, over time, will make a much more significant impact on this.

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

Thank you.

[The Chair, Conservative, James Bezan]

Your time has expired, Mr. Storseth.

For a very short intervention, Mr. Lemieux.

[Pierre Lemieux]

The strength of our dollar, which is now worth as much as the U.S. dollar, has consequences. The regulatory aspect has to be considered. The best example is the cattle industry's current situation. Our regulation on hazardous materials is much stricter than that of the United States, which has significant economic consequences for our producers.

There are consequences for production, but there are also consequences that can come back to haunt us if our regulation, at least regarding exports, isn't adjusted or isn't equal to the U.S. regulation.

[The Chair, Conservative, James Bezan]

Thank you very much.

Ms. Thaï Thi Lac, go ahead, please.

[Ève-Mary Thaï Thi Lac, Bloc, Saint-Hyacinthe—Bagot, QC]

Good morning. Thank you for being here today. I'm sure that all the recommendations and evidence that we've heard this morning will be of great use to the committee.

I'm very sensitive to what the people in the agricultural sector are experiencing, since I myself represent an agricultural riding. I lived on a hog farm for more than seven years. So I'm very concerned by what farmers are experiencing.

They say that the sector is in a crisis in a number of respects. We've indeed talked about supply competition. You indicated that the Competition Act should be reinforced.

My first question is for all the speakers. Has one of the organizations filed a complaint with the Competition Bureau?

[The Chair, Conservative, James Bezan]

Who wants to pick it up?

[Glenn Caleval]

We have a complaint currently being looked at by the bureau. It's been under investigation for three weeks. It has to do with a refusal-to-supply situation. In order to try to find a way to work with the existing chemical marketers, FNA purchased an actual chemical dealer. As soon as the chemical manufacturers found out we owned it, basically on the same day, we received letters from them all saying that we should go away and they're never going to provide us any product. So we do have an action before the board.

[The Chair, Conservative, James Bezan]

Mr. Friesen.

[Bob Friesen]

One of our members, Keystone Agricultural Producers, also requested that the Competition Bureau do an analysis on the study that KAP had done. The bureau wrote back and claimed that there wasn't enough information for it to go ahead.

[The Chair, Conservative, James Bezan]

Mr. Lemieux.