Evidence of meeting #12 for Agriculture and Agri-Food in the 39th Parliament, 2nd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was fertilizer.
A recording is available from Parliament.
First Vice-President, , Union des producteurs agricoles
We've tried to file complaints, but we've never filed an official complaint. We've examined the Competition Act as it is currently worded. If that act is not given more teeth, it will be very hard to file a complaint and to win. The act must absolutely be enforced.
Bloc
Ève-Mary Thaï Thi Lac Bloc Saint-Hyacinthe—Bagot, QC
So that's one of your first recommendations to the committee.
Bloc
Ève-Mary Thaï Thi Lac Bloc Saint-Hyacinthe—Bagot, QC
Indeed, it's one of the aspects that could have more teeth.
You talked about competition from our neighbours to the south, but I would like you to talk about global competition. I didn't hear you talk much this morning about the competition from other countries than our southern neighbours.
President, Canadian Federation of Agriculture
Ninety percent of the demand on fertilizer comes from developing countries. The three countries that are prominent are India, China, and Brazil. As far as doing other things on fertilizer, in response to your question, perhaps the minister should get up and address this issue and draw public attention to the fact that we are sending natural resources down to the U.S. and subsidizing U.S. farmers.
On pesticides, we need an open border instead of always hearing that yes, after the NAFTA agreement, that's great, it works for farmers; however, when it comes to pesticides, we're a sovereign country and we can't harmonize with the U.S. We should harmonize with the U.S.
On fuel, we should have a full rebate on all excise taxes.
Director, Grain Growers of Canada
Thank you.
I can only add this. What have we done by not being concerned about the concentration process?I think many of those issues we're discussing right now can simply be summarized by the dramatic concentration that has happened in the agri-business sector worldwide. And that our governments and in many ways most jurisdictions were sleeping through that process is actually to a large degree inexcusable.
President, Farmers of North America Inc.
If I may, Mr. Chairman, I have a thought with regard to what's happened with concentration. We see these industries in the fertilizer business, whether you look at Canpotex or Mosaic, are either operating almost as single-desk sellers on the other side to maintain those prices or in price leadership.
One of the reasons we started as an organization.... It was in the early nineties. The Competition Bureau came to us when Viridian or Sherritt Gordon was being acquired by Agrium.
Claims were made by the companies at that time that they would expand and competition would occur. We fought that application with no success, and today we're in the mess we're in. But having done that.... It was a catalyst to create an organization such as ours. We have 8,000 farmers working together to try to offset that degree of concentration on the other side.
If there is anything that has to do with regulation, we need to strengthen the Competition Bureau. The policies they have may be good, but they need to be acted upon. Something functional needs to come out of what we have in place, something similar to what we have in other jurisdictions we compete against, like the U.S.
Conservative
The Chair Conservative James Bezan
Thank you. Your time has expired.
Mr. Miller, you have the floor.
Conservative
Larry Miller Conservative Bruce—Grey—Owen Sound, ON
Thank you, Mr. Chairman.
Thank you to all the witnesses for coming today.
The theme today seems to be about competition in a number of areas. I think we could spend the rest of the day discussing this.
I have to go back. Mr. Storseth touched on it, but Mr. Easter brought up some of the things with CFIA, some of the problems there. We had brought forth a motion to deal with the cost recovery that happens here in Canada but not in the U.S. I'm sure Mr. Easter is too young to have forgotten that he supported that motion, and I think the committee did unanimously. So the government is doing some things. I'm not sure how many times he brought in a motion to that effect in the previous 13 years, but I'll keep looking for it.
There are a number of areas on the competition review, and it's been suggested that government should be doing some things. I agree. I think we should always be looking at ways to improve.
Could we give some examples? I'm going to use the Competition Bureau. What changes would any of you suggest we look at to tighten up the way competition goes on? In particular, fertilizer right now is hot and heavy, but it can deal with a lot more than just an agricultural product. I'll throw that out to whoever would like to tackle that one first.
Mr. Caleval.
Vice-President, Farmers of North America Inc.
If you're looking at it as general competition policy, there's a concept called “innocent collusion”. In other words, nobody is claiming these people are purposely being illegal or colluding. They're not sitting down in a boardroom somewhere. But the simple outcome of the situation, the way an industry is structured or because of the concentration, or whatever it is, the evidence we can see from the output is that there is insufficient competition.
In the United States they deal with that by breaking them up. They don't accuse them of collusion; they say there's too much concentration and they're going to be broken up. In Canada, if you embrace the idea of innocent collusion with the specific goal of increasing competition, you're going to achieve a lot.
President, Canadian Federation of Agriculture
We met with the Competition Bureau quite a few years ago. They claimed they were doing everything right and everything was perfect. It was tough to penetrate that defence.
One of the things.... This is not necessarily on fertilizer. It may apply to fertilizer. Perhaps these gentlemen could articulate that. We do know there are cases of tied selling in Canada. If you want a company to buy your product, you have to buy your inputs from it and you can't get out of it. I would like the Competition Bureau to look at that as well.
Conservative
Larry Miller Conservative Bruce—Grey—Owen Sound, ON
It sounds like better beef and the slaughter industry.
Does anybody else in here have any distinct suggestions for making changes to the competition...?
Mr. Lemieux.
First Vice-President, , Union des producteurs agricoles
The theme today is producers' net income; that's what we're trying to improve. What we find unfair now are inputs, but there are also other factors. The goal is to improve producers' net income and to save Canada's agricultural industry.
The competition information component must absolutely be developed. What information can we request from businesses to enable them to judge present trade rules? We could take a number of measures in that regard.
In a democratic society, you have to have accurate information before you make decisions. The Competition Act has a long way to go with regard to competition.
Conservative
Larry Miller Conservative Bruce—Grey—Owen Sound, ON
Okay.
Mr. Meyer, western Canada producers always seem to have taken the lead in forming cooperatives—our old wheat pool, the grain car coalition, different things across the country. In your opinion, why hasn't this happened in the fertilizer industry, where a cooperative may have got into that line to help itself? Have you any opinion?
Director, Grain Growers of Canada
Actually there are the odd places where that's existing. There are cooperatives that buy large quantities of inputs and then sell it to their members. However, within this concentration process, we recently saw that a lot of farmers went with the newly created entities.
It should be mentioned again that in some of the new on-supply, value-chain type of engagements, we see farmers buying packages. They're not just contracting the production; they also own the contract by their inputs from the same entity. This is an emerging reality: those buying certain products want to make sure that they can participate in the process as long as possible.
That excludes some of the engagements you're probably alluding to. However, I think there's a lot of merit in it. It's not for me to sit here and say what should be happening. But when I look, for instance, at some of my colleagues in my area, they're looking for entities like FNA, which are here today. Many farmers in western Canada are members of FNA. I'm not here to advertise somebody else's engagement, but overall I think it's a valid question. It is also a sad question, because it's difficult to understand how we farmers let so much go that we used to control.
Liberal
Roger Valley Liberal Kenora, ON
Thank you, Mr. Chair, and my thanks to the witnesses. I was just filling in today, but I've learned a lot already.
You see one of the problems with government, with the Parliament. Two of the last three speakers from the government side only wanted to look back. I was pretty sure all of you today in your presentations wanted to go forward. You're looking for an answer. Something drastic needs to be done if we're going to help.
One of the problems with the rising costs—and Mr. Easter mentioned it—is you find out what the market can bear. We now know how high fertilizer can go at a certain price for a product, and those companies aren't going to change it. It's like the price of gas for a passenger vehicle. They know what somebody will pay now and they're going to charge it. That's a continuing problem and it's only going to get worse.
One of you mentioned—and it was raised by Mr. Lauzon—buying fertilizer at a different time of year. Mr. Meyer, I think you made the comment, fairly so, that a lot of farmers can't afford to buy fertilizer in the fall. Are there any numbers on how many actually do? Is there a percentage, say 25%, of farmers who are able to buy it at a cheaper rate in the fall? Is there any tracking like that at all?
Director, Grain Growers of Canada
I don't think there's any tracking. Our information comes from the discussions we have as colleagues. Of course, it's often a matter of pride that one farmer can tell another he bought his inputs cheaper because he bought at the right time, which is a sign that he was lucky enough to have the necessary cashflow.
I need to underline to this committee that at that time of year it is difficult to buy next year's inputs, because you haven't even paid the current year's inputs. So how the heck do you think we're so cash rich that we can actually buy two years of inputs at the same time?
As we move forward and get better prices for a longer time, it allows us to get in a better cashflow position. But I don't think that's happening. It isn't next year yet. Before that happens, we need some sustained type of higher product and returns to farmers.
So I don't know if we need to adjust things like cash advances, which is another issue. But cashflow at that time is significant. I don't think it's much more than 10% to 15%.
Executive Director, Grain Growers of Canada
Just following upon that, one thing we've discussed but which we haven't put forward as a formal proposal was whether cash advances could be moved ahead and made earlier, so that you could take advantage, because even if the fertilizer price is going up, there are local over-supplies from here to there, and there are buying opportunities for producers, who can save significant dollars—more than the cost of borrowing and the cost of capital to do it.
You also have to have bins, of course, to store it, which is another issue.
Liberal
Roger Valley Liberal Kenora, ON
Yes. I was leading up to a direct question on that, because I don't sense a lot of sympathy with a lot of these big companies. If every farmer had the ability to buy his fertilizer in the fall, do you really think the companies would have a lower price in the fall, or would they be gouging, similarly to now?
This question is directed to you or to anyone who wants to answer it. I don't recognize a lot of sympathy for these companies. If we changed this, would they not gouge you in the fall?
Vice-President, Farmers of North America Inc.
First, on the cashflow issue, it's a transition problem being recognized. It's essentially a first-year problem, because once you've done it, you've simply shifted when you'll bank. You're going to buy those things next year anyway.
It is a serious problem in the first year, but we have managed to move.... We started off with 20% of our fertilizing-buying membership. We have now moved half of it off-season, and it's one of the key strategies we've used to lower their prices.
As for the companies, right now they do drive the prices down in those seasons, because it's the off season. I think that will continue simply because of practical realities. Most of the world is never going to shift to buying off-season, so we'll still probably be able to gain some serious benefits there.
But it's not an ongoing problem. It's a transition problem for which the government could, by moving cash advances or making a loan program for that first year, actually give help to farmers to shift to buying off-season.
President, Canadian Federation of Agriculture
Mr. Miller twigged this point. When it comes to empowering farmers to buy some of these inputs, we've submitted what we call a co-op investment plan. That gives the ability to co-ops to generate more investment capital so that farmers can empower themselves, either in the selling market or in the purchasing market. We'd love to go through that with you some time.
There's also been a lot of talk about the regulatory costs. I've used pesticides as an example several times. It costs just as much if not more to register a chemical product in Canada as it does in the U.S., but the U.S. is a much larger market, and therefore we are far short of the options, when it comes to chemical products, that U.S. farmers have.