Agriculture Committee on Feb. 5th, 2008

[Bob Friesen]

Thank you.

Mr. Lauzon, I think you mentioned several things. One is transportation, and of course we supported and thank you for how quickly you brought back Bill C-8 when you came back to the House. We're also asking for a full costing review on the efficiency cap, and have already talked to the minister about that, as a complement to what's being done in Bill C-8.

On fertilizer prices, let's be clear about one thing. The prices aren't high just because fertilizer companies are running 24/7 and there's a big demand. My guess is they would be high even if there was an abundance of fertilizer, because they've seen grain and oilseed prices going up. They know that farmers are going to pay the price. So there's something there that we need to deal with as well.

There's a further complication in fertilizer prices. I think everybody knows that grains and oilseed farmers have a little more cash from 2007, but they had a deep hole and paid a lot of bills in fall 2007. So if a farmer couldn't afford to buy his fertilizer in the fall because he paid other bills, he will have to wait until the last possible moment in the spring before he buys fertilizer. He's looking at an increase of several hundred dollars a tonne, and natural gas prices have gone down. So that's another dynamic that we somehow have to deal with.

[Guy Lauzon, Conservative, Stormont—Dundas—South Glengarry, ON]

I'll get back to you with a question.

[The Chair, Conservative, James Bezan]

You have one minute left.

[Guy Lauzon, Conservative, Stormont—Dundas—South Glengarry, ON]

I'd like to follow up with Mr. Meyer.

You mentioned buying at the right time of the year for fertilizer. What kind of saving could you effect if we could make that work for you?

[Leo Meyer]

I really appreciate the question.

As Bob Friesen and Mr. Mann pointed out earlier, it's very important that we realize it's a significant issue that the majority of farmers simply cannot afford to buy fertilizer. So that's one issue.

[Guy Lauzon, Conservative, Stormont—Dundas—South Glengarry, ON]

I realize that.

[Leo Meyer]

On your specific question, the savings are significant. They can be 30%, 35%, and sometimes 40%.

[Guy Lauzon, Conservative, Stormont—Dundas—South Glengarry, ON]

That's even more than the increase in NISA.

[Leo Meyer]

Absolutely.

[The Chair, Conservative, James Bezan]

Monsieur Lemieux wants to get in on this too.

[Pierre Lemieux, First Vice-President, , Union des producteurs agricoles]

First, I think the Competition Bureau should be reinforced, that a thorough analysis should be conducted of the Competition Act and that it should be seen whether there is some way to give it more teeth, so that the Bureau can take measures to ensure there is adequate competition in the market once again.

Then information should be made available on volumes and on what is available; in other words, we should know a little more. That would enable producers to adopt purchasing strategies. If we start buying everything in the fall, suppliers will adjust. We've already done that back home in Quebec. We established purchasing strategies for grains and inputs, and our suppliers adjusted. All we can do is save on interest: we pay sooner with a little more. Suppliers have the ability to adjust quickly to purchasing strategies that we adopt. Good measures must be taken with regard to information so that people can be more aware of the situations prevailing in the market.

Measures should also be taken regarding research in order to develop new varieties that could produce good yields and be more energy-efficient than some of our current inputs. A very serious look should also be taken at the advisory service that may be offered to producers. Sound advisory service strategies should be developed so that producers can use the inputs as efficiently as possible. In some cases, savings can be made by slightly reducing quantities, without there necessarily being an enormous decline in yield.

[The Chair, Conservative, James Bezan]

Merci.

Mr. Atamanenko, it's your time.

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

Je vous remercie d'être venus. Thank you for being here.

We have this table in front of us that compares average fertilizer and fuel prices between Ontario and Michigan, Ohio, and Indiana for June 2007. If we look at potash, we see that Ontario farmers paid $384.48, whereas in the three American states during that period of time they paid $318.59. In other words, we paid 20.7% more.

In Canada we don't really have a national energy policy. We export natural gas and oil to the United States primarily, but at the same time we pay more at the gas pump for gas. Our prices for natural gas are probably not drastically lower than what people pay south of us. So as a result of the lack of an energy policy.... Our policy has to supply our energy to our neighbour to the south, and we've locked it in with NAFTA. There's all that argument.

We produce potash, and we'll take potash as an example. Our farmers are paying more for it in Canada. We're exporting it to the United States and other places in the world, and we've seen that the testimony has been that one of the reasons for the increase in prices is because of the global demand; the market is regulating the increase in prices.

We're a government committee. You're here because you're hoping that we take some kind of action. Should government be doing something to have a national policy in regard to agriculture that actually tries to, if possible--and I know it's a word that many people don't like to use--regulate the cost of input for our primary producers so that we don't get this bizarre situation where we produce something and our farmers are paid more than their competitors who pay less, who are probably getting more subsidies than we are?

So that's my question, and I'd like to hear some response from you on that. Anybody, please.

[The Chair, Conservative, James Bezan]

Who wants to tackle that one first?

[Glenn Caleval]

The idea of regulating input costs sounds appealing, but the problem is that, in my view--and now I'm not speaking necessarily for FNA, so my president may overrule me on this--from my own studies on this subject, it's just not practical. You're never going to get there through regulations.

Now, there are certain kinds of regulations that you want to do a couple of things with. Some regulations you want to just get rid of and other regulations are very specifically targeted at barriers to farmers gaining the advantages of competition.

I go back to this concept. If farmers were simply allowed to have access to the gains competition can deliver, they would have a lot of this problem solved. I'm not sure it was made clear in terms of we're talking about the fertilizer situation. For us it's nitrogen and anhydrous. But the biggest barrier for us, so that we can't go full guns and have serious competition instead of supplying 50,000, 60,000 tonnes to the market, which is not enough to make them move, is getting shippers to be willing to ship for us. They are under influence, and this is not illegal influence, but it is real and it is influence that says you guys do not give FNA these cars; you can tell them they're going to have them a month from now. Under the current legislation, the current regulations, that is legal. That kind of behaviour would not be tolerated in the United States. They have a much stricter competition regime.

So I support UAP in terms of saying we need to get more serious about what open competition means. Focus on the idea that if we believe that competition brings benefits and innovation and all of that, it should bring those benefits to farmers. The thing with the own use import program, the issue on animal health.... What can you do for hog producers right now? I'm telling you if you gave them access to exactly the same vaccines that they're using in the United States, you would save a lot of things. You would same some of them $100,000 a year. It is not small potatoes. So there are things you can do on regulations, but the concept of regulating input costs overall I think is too complicated. I think it's fraught with pitfalls and we might end up making the situation worse.

[The Chair, Conservative, James Bezan]

I am asking witnesses to keep their comments as brief as possible, because there are other witnesses who want to get in on this discussion as well.

Mr. Phillips, and then Mr. Friesen.

[Richard Phillips]

I think I'd concur. I'm not sure we can regulate. For every regulation government creates, farmers will find a way around it--that's just kind of the nature of the beast--or other business people find ways around it.

Some of the work we've done is on harmonizing and opening the borders so there's more price transparency back and forth. So if the committee, through the Competition Bureau, or Agriculture Canada, or whatever, were to be more open and post what retail prices are across the border, I think then you'll see the farmers apply the pressure where pressure needs to be applied. So I would say that's one thing the committee could look at doing.

[The Chair, Conservative, James Bezan]

Mr. Friesen, go ahead.

[Bob Friesen]

I think you mentioned an energy policy. Let's keep in mind that natural gas prices have gone down and fertilizer has spiked up, and fertilizer companies, because they know that....You see, when the price of grains and oilseeds was low, a farmer tests his soil, he calculates how much fertilizer he wants to apply, and knows that the law of diminishing returns kicks in quite soon. When the price is higher, they can add more fertilizer to get more yield, and they know that they can still get their investment return out of the fertilizer. But the demand and the price, I think, is what has spiked up the fertilizer prices.

As far as pesticides is concerned, again, we have an open border with everything else with the U.S. when it comes to grains and oilseeds. We've been pushing for an open border on pesticides.

[The Chair, Conservative, James Bezan]

You have 30 seconds left, Alex.

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

In regard to transportation, is it the feeling of people here that we have not been tough enough with our two railway companies? We keep hearing this. Should government be playing more of a role to get tough to ensure that we have that competition, especially when it comes to secondary lines and tertiary lines, to get that grain or other products flowing?

[The Chair, Conservative, James Bezan]

Mr. Phillips, do you have a short answer?

[Richard Phillips]

Yes, we could be a lot tougher yet. We'd be glad to put a submission in to you at a later date on some of the things. I think you would find a lot of the groups signing on to that sort of issue.

[The Chair, Conservative, James Bezan]

Thank you.

Your time has expired, Alex.

Alex was quoting some of the numbers and price disparities between Ontario versus Michigan, Iowa, and Indiana. I just want to add that I'm looking at the data book from Agriculture and Agri-Food Canada for 2007 and the numbers in Manitoba versus Minnesota and North Dakota: anhydrous ammonia is 38.5% higher in Manitoba; urea is 12.2% higher; phosphate is 22.1% higher in Manitoba; and potash was the only one that was close, at 3.8%. That's a comparison of fertilizer used in western Canada.

We're going to kick off the second round. We're down to five minutes.

Mr. Easter, go ahead.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

I'll basically ask a series of questions, and then let's just go to the answers.

Bob, there's been a lot of discussion on this, but you said that our natural resources are subsidizing U.S. farmers. In other words, I think what you're saying is that Canada is selling into the U.S. market at lower prices than in our own domestic market. Correct?