Evidence of meeting #13 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 producers.
A recording is available from Parliament.
Conservative
The Chair Conservative James Bezan
I call this meeting to order.
We're kicking off our study on Bill C-33. It's been thrown to us to review this, and of course, as with any legislation, the sponsoring minister comes in and tells us about all the good things that are in the bill.
So with that, Minister Ritz, I'm glad to see you at the committee. Whenever you show up we get a bigger venue. We actually get to hear our own echoes.
I'll leave it to you to provide opening comments.
Gerry Ritz ConservativeMinister of Agriculture and Agri-Food
You know you've been here too long when you can hear echoes.
Greetings, everyone. It's great to be back here. It's always a comfort to come before committee. We all spent a good many hours chatting about issues together over the years, and it's my pleasure to be back here.
As you know, our government recently introduced the renewable fuels bill and its proposed amendments to the Canadian Environmental Protection Act , or CEPA, as it's more widely known. These amendments will provide the additional authorities that the government requires to make efficient national regulations requiring renewable content in Canadian fuel.
In December 2006 the government began to move Canada towards smarter consumption by announcing our intention to require a 5% average renewable content in gasoline by 2010. We also signaled our intent at that time to develop a similar requirement of 2% renewable content in diesel fuel and heating oil by 2012. Meeting these requirements will make a real difference for our environment. Hitting these targets will be the equivalent to taking almost one million cars off our roads.
Over the past seven years Natural Resources Canada has developed and maintained a model named GHGenius. GHGenius estimates life cycle energy use and the GHG emissions from both conventional and alternative fuels. This model is the only one of its kind in Canada and only one of several such models throughout the world. Using this model, we estimate that under typical Canadian conditions corn-based ethanol can reduce life cycle energy use and GHG emissions by around 40% compared to crude-oil based gasolines. Beyond these environmental benefits, this requirement will help stimulate the growth of the renewable fuels industry in this country. That means economic benefits for producers and rural communities across Canada.
Close to three billion litres of renewable fuels will be needed annually to meet the requirements of these regulations. Supplying that demand will be a big job for the biofuel industry. Canadian biofuel producers are already producing more than one billion litres per year and we're well on our way to meeting our production targets. This kind of expansion will represent a tremendous economic opportunity for Canada's 61,000 grains and oilseeds producers. In fact, all of this presents an exciting new market for Canadian producers. Biofuels production is helping farmers grow their businesses while creating new jobs, especially in rural Canada.
Our government is taking strong action on biofuels in very concrete ways. We've announced funding for the ecoAgriculture biofuels capital initiative to encourage producer investment in biofuels and their production facilities. We have recently announced the first two contribution agreements under this program--a new biodiesel plant in Alberta, and an ethanol plant in Saskatchewan at Unity. We expect to sign multi-million dollar agreements with several other plants, with farmer participation in the very new future, as interest in this funding has been very high.
We have invested in the biofuels opportunities for producers initiative, or BOPI. This initiative supports more than 120 biofuels-related projects across Canada with farmer representation. These new plants are great news for our producers. They provide a new market source for their wheat, corn, and canola and potentially other crops. Having plants in our rural communities will lower transportation costs that too often cut the knees out of farmers' profits.
At the same time we're looking ahead to the next generation of biofuels development, such as wheat straw, corn stover, wood residue, and switchgrass. In July Prime Minister Harper announced ecoENERGY for Biofuels, an incentive program for producers of renewable alternatives to gasoline and diesel fuel. In total, we're investing $2.2 billion over nine years in that biofuels development. Recently we officially launched Canada's largest cold-weather demonstration of renewable diesel. The Alberta renewable diesel demonstration involves over 60 trucks of various sizes operating throughout Alberta where the climate, as you know, poses some of the most extreme challenges to renewable diesel use. The demonstration will provide hands-on cold-weather experience for fuel blenders, distributors, long-haul trucking fleets, and of course, the drivers who have to keep them running.
The Canadian and Alberta governments are investing $2.6 million in that particular project. Road testing began in late 2007 and will continue until October 2008.
Mr. Chair, Bill C-33 is essential to move forward on implementing our commitment to renewable fuels. While Bill C-33 itself does not impose any renewable fuel requirements, the amendments we are putting forward in it will ensure this government has the necessary tools to develop an effective and workable national regulation requiring the use of these renewable fuels. The authorities we are seeking include: authority to regulate at point of fuel blending; authority to track exports; and exemption for small-volume producers or importers. By doing so we can maximize the benefits that Canadians enjoy from the use of renewable fuels in this country.
Our government understands Canadians' concerns about climate change. We know that using renewable fuels means less greenhouse gas emission. When it comes to biofuels, the facts are clear. A strong biofuel sector will contribute to a stronger foundation for farmers, lead to better usage of agricultural products from beginning to end, and protect our environment for future generations.
This investment in biofuels is a triple win: it's good for producers, it's good for the environment, and it's good for the economy.
Thank you, Mr. Chair.
Conservative
The Chair Conservative James Bezan
Thank you, Mr. Minister. We appreciate the comments.
I should mention that joining the minister at the table is Andrew Marsland, who is no stranger to the committee. He is the assistant deputy minister of the strategic policy branch of Agriculture and Agri-Food Canada. Also from the Department of the Environment, we have Gord Owen, who is the director general of energy and transportation.
With that, we're going to open it up for questions. We're going to keep it to five-minute rounds, since we have only an hour with the minister.
Mr. Easter shall kick us off.
Liberal
Wayne Easter Liberal Malpeque, PE
Thank you, Mr. Chair.
Welcome, Mr. Minister; and welcome, folks.
I guess the first question we need to have answered is, what department is going to be responsible for the implementation of this policy and the regulatory regime?
Conservative
Gerry Ritz Conservative Battlefords—Lloydminster, SK
It's a shared jurisdiction, Mr. Easter, much the same as PMRA is with the Departments of Agriculture and Health, and so forth. It will be a shared jurisdiction between Environment Canada and Agriculture Canada.
Liberal
Wayne Easter Liberal Malpeque, PE
Okay.
The reason I raise that question is that my colleague has made it clear in the House that we support this approach, that we support this bill. My concern is that we're here today on a bill that doesn't require a lot of discussion, and I question whether it should even be here. The minister's speech, to me, seemed more like an advertisement of some good things you are doing. But what I'm really concerned about is that we're sitting here, basically fiddling while Rome burns in the hog and beef sector.
My second question is very simple as well. We had the Canada Pork Council here, and you were asked this question in the House last week, Minister. They basically said that the program announced was a cruel joke to many of their producers. The fact of the matter is that we're losing hog producers every single day.
When Mr. Marsland was here the other day, and others, and also to the parliamentary secretary, I said that what the government needs to do in the hog and beef sector requires legislative change. Whether it's in CAIS or wherever it may be, we're willing. This place can get legislation through in 24 hours, if they really want to do it, and we're willing to do that. If the reason you're not doing anything for hogs and beef is a problem of legislation, then bring it forward, let's have a look at it, and we'll get it done.
My question to you, Mr. Minister, is not on this bill. We basically support this approach, and we supported it in the last election campaign as well. But when can we expect to see a meaningful package that's going to work for hog and beef producers, and when will you come before this committee with that?
That's what we'd welcome seeing before this committee. I don't want to see more farmers going out of business, and we need to ensure there's liquidity there for those farmers. So when can we see a package along those lines that's going to be meaningful? Is the problem one of political will on the part of the Prime Minister's Office or the finance department, or does it require legislative change? What's the holdup? We need to get it done.
Conservative
The Chair Conservative James Bezan
The question is actually out of order. It doesn't relate to anything in his testimony or on the agenda that we have before us.
It's up to you whether you want to answer it, but Mr. Easter's question is not in line with what we're discussing today.
Conservative
Gerry Ritz Conservative Battlefords—Lloydminster, SK
I would answer it in a little different way and try to have it pertain to this bill.
I welcome the opposition's input saying that this bill is a done deal. Well then, let's get a report back to the House later today and ask for unanimous consent to pass this at all stages. I think we'd be happy to do that, Mr. Chair. If you can get the paper work to us by question period or routine proceedings, I'd be happy to stand and say we have unanimous consent to see this bill passed at all stages and get it into the backlog in the Senate. If they get the justice bill out of the way, we can start to move some of this other product through.
So I welcome that intervention and I'd be happy to carry it forward. I take it as a strong endorsement from Mr. Easter.
On his other question, as it pertains to this bill I'm not going to get into the livestock sector. That's a discussion for another day, and those discussions are ongoing. But I will say that one of the major problems attacking our livestock industry today, whether you're talking about cattle or hogs, is the price of feed. If this program had been implemented ten years ago when we heard it talked about and when it was kicked around in these very halls, we would have distillers' grain and other byproducts from the ethanol and diesel industry to give livestock producers access to a cheaper feedstock.
We're playing catch-up here because there was a lot of talk—a lot of sound and fury, but no substance—for the last ten years about doing this type of program. We're behind the rest of the world in doing it, so we're playing catch-up. That's why this bill is before us today. It's part of the process that is required.
But I take Mr. Easter's intervention to heart. I'd be happy to stand today and ask for unanimous consent to move this bill at all stages, Mr. Chair.
Conservative
Bloc
Ève-Mary Thaï Thi Lac Bloc Saint-Hyacinthe—Bagot, QC
Good morning, Mr. Minister. I'm very pleased that you are before the committee this morning to testify.
We know that the stakes in agriculture are very high within the WTO, and this applies to Quebec as well as to Canada. Today there is a crisis in many agricultural sectors. In any type of negotiation, there is always some give and take.
So what will Canada give and what will Canada take? What kind of deal are you ready to make with other countries?
Conservative
Gerry Ritz Conservative Battlefords—Lloydminster, SK
Again, Mr. Chair, I'm not sure how this pertains to this particular bill. I guess I got the wrong memo. I thought we were talking about renewable fuels here today.
I'm more than happy to entertain those discussions at some future date.
Conservative
The Chair Conservative James Bezan
Bill C-33 is the relevant topic before us. We are talking about WTO in the next hour, but it's not part of this hour.
Monsieur.
Bloc
Gérard Asselin Bloc Manicouagan, QC
Mr. Chairman, my question will follow up on the minister's opening remarks and on the issue raised by my colleague from the Liberal Party, who asked who would manage, administer and apply Bill C-33 if it is passed. The minister replied that it would be both the Department of Agriculture and Agri-Food and the Department of the Environment.
As is often the case, a bill per se does not do any damage, but its enforcement, and the way it is managed and applied, does do damage. Often the right hand does not know what the left hand is doing. And this might happen in cases where legislation is enforced by two departments. The right hand won't know what the left one is doing.
Mr. Chairman, you might say I'm being simplistic, but it's like two drivers who are sitting behind the wheel of one car. In that situation, one driver might want to turn left, and the other to the right.
Mr. Minister, can you reassure us this morning? Bill C-33 seems logical, but can you tell us how the two departments, agriculture and agrifood, and the environment, will share its application? How will they do it?
Conservative
Gerry Ritz Conservative Battlefords—Lloydminster, SK
To your point about two drivers, my wife always tells me I drive better when she's in the car, so sometimes two drivers are better than one.
Bill C-33 is part of a broader strategy. This dovetails with our whole....
Wayne is agreeing. He needs three drivers just to keep him on the straight and narrow and keep him from veering to the left.
The good news in Bill C-33, with Agriculture Canada involved, is that producers are involved. They will benefit from the biofuels industry in this country. As I said, it's part of a broader strategy. The overall effectiveness of the bill I think is better served by having both Environment Canada and producers involved, so that we make sure producers on the ground share in the profitability that ethanol and biodiesel will have for us.
I'll turn the floor over to Mr. Owen to speak to the administration of the bill.
Gord Owen Director General, Energy and Transportation, Department of the Environment
Sure.
Environment Canada will be the one writing the regulations that will follow from this bill, because it's the regulations that will have the specific requirement for the 5%, let's say. So it would be Environment Canada and our enforcement officers, our system, that would actually manage the regulations.
But as the minister has said, the regulations are only one part of the overall approach to biofuels that the government has put forward.
Bloc
Gérard Asselin Bloc Manicouagan, QC
Mr. Chairman, allow me to ask an additional question.
How will offences under the act be prosecuted? Will there be fines? How will they be imposed? What kind of penalties can we expect? Will the Department of Agriculture and Agri-Food or the Department of the Environment be responsible for enforcing sanctions?
Director General, Energy and Transportation, Department of the Environment
Because the regulations themselves have not yet been written, not all the provisions are clear. However, the act itself, CEPA itself, does have provisions for penalties. We do have enforcement officers. We have many other fuels regulations that we enforce within Canada. This would become another one of our fuels regulations. We have a number, for example, on sulphur in gasoline, lead in gasoline, sulphur in diesel. So this would be another one of our fuels regulations and enforced and held to the same provisions that presently exist within the act.
You must remember that what you have before you is a small change to a very big act. The penalty provisions are contained within the act. I don't recall them just off the top of my head, but they provide for fines of up to $1 million, and there are other provisions as well.
Conservative
Larry Miller Conservative Bruce—Grey—Owen Sound, ON
Thank you, Mr. Chairman.
Mr. Minister and guests, thank you very much for being here today.
Just to quote Mr. Easter here, or to use his words...and it goes back to a comment that you made about the inaction on this file in the last ten years. You know, while he and his government sat idle for years, basically agriculture and rural Canada burned, burned around us.
So I'd like you to talk a little bit more, Mr. Minister, about where might we have been if we'd have moved on this file ten years ago. And maybe you could talk a little bit about where we might have been ahead, as far as acreage or dollars in agriculture--
Liberal
Lloyd St. Amand Liberal Brant, ON
On a point of order, Mr. Chair, with respect, the question from my colleague, whom I respect, is baseless. It's entering into the realm of fantasy.
He's asking the minister--as I try to understand the question--where we might have been if this and that had happened, if these ducks had fallen into order. The question is baseless. He's asking for an answer to a hypothetical question that is unfocused and disjointed, and I don't think the minister should be asked to answer.
Conservative
The Chair Conservative James Bezan
Mr. Miller, I would ask that you have a very specific question regarding this bill and how it's going to affect the future rather than the past.
Conservative
Larry Miller Conservative Bruce—Grey—Owen Sound, ON
Okay, well, it's even been said to me by a number of producers in my riding that we may not have had to go through the drastic low prices we've had in grains and oilseeds if we'd gotten moving on this.
I still think, Mr. Chairman, that the minister can add something on what he feels what we may be able to do in agriculture as far as what it's going to mean in dollars to agriculture, acreage, that kind of thing. I think he can speak a little bit to that.
Conservative
Gerry Ritz Conservative Battlefords—Lloydminster, SK
On the thrust of the question, I guess if we had done something years ago.... But there's no way you can go back and correct any of this; we have what we have. I think there would be less concern in the industry and for investors about imports flooding into our market if we actually had concrete in-the-ground tanks and so on that we could actually push back. There's some concern that with the thrust of the American ethanol, especially corn-based, we wouldn't have maybe seen the glitches in cheaper import corn for some time. There would have been a bigger demand for it so that we would have seen those prices go up. But, as I said, we have what we have. Imports flooding in is a major concern
There is also concern among investors out there that it may be too late to buy market share. Investors are fickle creatures. To get them on board and put their dollars on the line they have to be assured there is a future--a three-year, five-year, ten-year, or twenty-year window of opportunity. They see that as shrinking, in that we're late off the mark.
Brazil is producing ethanol for export like you wouldn't believe. There's a huge market in Europe. In my discussions with the European Union they're looking to import biodiesel, and far more than we can produce. The reason they're looking to us to do it is because we will have the cold-weather capacity they also want, the canola standard. The American biodiesel with the soya standard just is not built to do the cold-weather starting or even have the same lubricity that canola does.
There are market opportunities that may be slipping away from us, as we didn't get off the mark three to five years ago. I think we've lost ground on the development of new varieties, especially on the ethanol side, such as the high-starch wheats. Right now the best we have is CPS. I grew that under contract to Cargill and the Wheat Board in the early 1970s. We're back to those kinds of varieties. There are varieties that were developed at the University of Saskatchewan and are being grown in North Dakota and Montana because of a little thing called KVD in western Canada. We're not allowed to grow those varieties because they interfere with the look of hard red. Those types of things are holding us back in developing the new varieties.
There are winter wheats now with a high starch content that will yield 70 to 80 bushels on dry land. This whole argument that we can't support both the food line and an energy line are ridiculous because of the technology and innovation out there that we have to make use of. To that end too, I think there are new technologies and new ways of doing it, such as they talk about a cold press for biodiesel, as opposed to heat, and it is a lot cheaper to produce, but those technologies are probably three to five years behind because there wasn't the demand for the technology at that point.
To your initial thrust, those are the interventions I would make on that point. I think it's a tremendous opportunity for producers to turn the page, to not be so reliant on export markets or even domestic use. It's another line, another way to develop products for farmers that will create cashflow for them. Certainly products used in energy today are much more expensive than products used in food. It gives them an opportunity to do that.
There's a tremendous amount of derivative coming out of the ethanol line as well. Some of the sidebars of course are the distiller's grain, and, as I mentioned, lower feed stocks for agricultural usage. There are even pharmaceutical uses coming out of some of the offsets of the ethanol industry itself. It gets to the point where ethanol is almost a sidebar icing on the cake, because the other products are worth more money and there's a lot of developmental work going on in that.