Agriculture Committee on Feb. 12th, 2008

[The Chair, Conservative, James Bezan]

I'm sorry, Ms. Skelton, Mr. Sigurdson wanted to respond.

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

Okay.

[The Chair, Conservative, James Bezan]

Just go quickly, because she has other questions she wants to ask.

[Kenneth Sigurdson]

Yes. She made some statements about my having made some statements. I want to clarify what I said in my presentation. Here's what I said.

Vaclav Smil, from the University of Manitoba, described the problem with the wheat ethanol, such as low wheat yields, high water requirements, and growing wheat in the prairies, much of which is a semi-desert.

That's a quotation from him. I heard his entire presentation. He was talking about the Palliser triangle.

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

Could I go further with my questioning? I only have seven minutes?

[Kenneth Sigurdson]

No, I'm trying to explain that. You made some comments about being the farmer here and being proud of these farmers. Well, I really am too, you know.

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

I didn't say I was a farmer.

[Kenneth Sigurdson]

Well, whatever you do....

Anyway, why would we produce low-valued grain to put into ethanol and import the—

[The Chair, Conservative, James Bezan]

Ms. Skelton has the floor. I'll add on 30 seconds to your time, Ms. Skelton, so that you can get in the question you want.

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

We're talking about Bill C-33. Mr. Haig, what would you like to see changed in this bill? Is there anything to be changed, or is it fine to go ahead? If we went through it today clause by clause, would it be--

[Tim Haig]

I've been through it in some detail. I think the bill is very sound. Clearly we also support going further, but we have to start with a first step, and I believe this is a fabulous first step.

I'm not a farmer. I am a developer of technology that we bought from the University of Toronto. We are the largest biodiesel producer in Canada right now. We intend to work closer with these guys on adding more value to their feedstock.

All ships rise in the tide. I believe there's a fantastic opportunity for Canada to be an impressive global producer of renewal energy, as we are of conventional energy. So I think this is fabulous. It's a great first step.

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

So would all of you gentlemen be pleased if we went through this clause-by-clause today?

[Gordon Quaiattini]

Yes. But just as a very quick comment, Ms. Skelton, the reality for us right now, of course, as I mentioned in my presentation, is that we are set to have this mandate moved forward on January 1, 2010. If you count backwards from that, Environment Canada requires, rightfully, the opportunity to consult stakeholders from across Canada with respect to the regulations that will come into effect. That's where the body of the mandate and the language around how that will be implemented is contained, but they need legislative authority first. That's why it's incumbent that we have this committee deal with the bill swiftly, have it returned to the House and go over to the Senate, and get it done quickly, because that January 1 date is coming awfully quickly. You can appreciate that the blending industry, the oil industry, requires certainty, and we want to make sure we have that certainty as we proceed.

[Bob Friesen]

We support the bill, and in fact we have a resolution on the books that calls for going further as well, but let's get this one passed quickly, and if we really see benefits, I'm sure the House would very quickly be able to pass further legislation.

[Brian Chorney]

We support the bill going forward as it is. As I stated in my presentation, we obviously would like to see it go further faster. There's been reference to a study being done in Alberta looking at usage of biodiesel in cold weather climates. Upon positive conclusion of that study, we would really like to see the 2012 date moved to 2010 for the biodiesel. We're happy to wait until the conclusion of that study, because we're very confident that it will have a positive conclusion.

[The Chair, Conservative, James Bezan]

Time has expired. Sorry, Ms. Skelton.

Mr. Atamanenko.

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

I'll see what I can get in during my seven minutes.

As a follow-up to what Carol was saying, the minister did say that he really wants to encourage co-op investment. He was a little bit worried that people aren't taking this up because of the high prices of grain right now, and I think he even said something like they may have missed the boat. If that's the problem, are we not in danger here of sliding into not really farmer-controlled industry, but with Husky Oil and the other major corporations and the multinationals...a situation in which the farmer then just becomes a supplier?

Do you want to answer that quickly, Mr. Quaiattini?

[Gordon Quaiattini]

Thank you. I would very much so.

I think you can see where the marketplace is going within Canada right now. We are seeing the variety of projects that are coming forward, so you have the larger producers like GreenField Ethanol, as one example, who have farmers as part of the projects in each of the communities in which they are building. Their project in Varennes, Quebec, has over 600 farmers as equity investors in the project--not simply suppliers of corn, but absolute equity investors in the project. That is a model, quite frankly, that they are taking to the other projects they are building.

When you look into southern Ontario, near Brantford and Aylmer, at IGPC, which is a farmer-led co-op, over 700 farmers are building the plant as we speak. They are the sole investors in the project. They are taking advantage of the federal government's ecoABC program through which $200 million is being provided by the federal government to help support that.

We have Saskatchewan projects, the Gardner Dam and EnSask Bio. Again, these are both farmer-driven projects that are currently looking for investment.

So there is that variety there.

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

Thank you. I'm going to stop you there, because I've got some other things.

Ken, I'd like to address this to you. Maybe I'll give my questions, and then hopefully we'll have enough time to get answers.

We are seeing that farmers are benefiting from this, as far as the prices and the revenue are concerned. You are coming out pretty strongly against it, so I'd like to know why.

I'd like to make some other comments before I move on, and I'll just start with this.

In Europe, the renewable fuels are scheduled to provide 5.75% of their transferred fuel by 2010, 10% by 2020. The U.S. aims at 35 billion gallons a year. These targets far exceed the agricultural capacities of the industrial north. Europe would need to plant 70% of its farmland to fuel. The entire corn and soya harvest of the U.S. would need to be processed as ethanol and biodiesel. Converting their arable land to fuel crops would wreak havoc with the north's food systems; therefore, OECD countries are looking to the global south to meet their fuel demands, and southern governments are eager to oblige.

The point is that here we have once again food versus fuel. If we start shifting all of our crops over to fuel, if our industry is advancing and developing and we don't have enough feedstock, then we're going to have to look to the south. If we look at one of the pillars of the bio...agriculture and environment and fuel.... We have noticed devastating patterns of deforestation in the Amazon and in other countries such as Indonesia, where farmers are being forced off their land and big plantations are being set up to supply feedstock to Europe and the United States for this increased demand for consumption.

So in the global sense, if this is there because of climate change, to keep it down and control it, are we actually contributing to it if we're encouraging the import of feedstock from these countries where all this deforestation is taking place? There is also the moral aspect of the effect it is having on their farmers.

So coming back here, then, if we want to ramp up our production, does that mean we're going to be pushing for more GM wheat and canola to supply the whole bio-industry? And what effect will that have on our total food supply and our standing in the world?

I'll stop there.

Ken, maybe you can start, and then we can get some other feedback.

[Kenneth Sigurdson]

Why oppose this? Various countries have different situations. The U.S. is a big producer of corn, and a lot of the organizations and associations use ethanol as a way to dispose of some of that corn. That's how it was first thought of. Canada, east of the Manitoba–Saskatchewan border, is a net importer of corn—about 50 million to 100 million bushels of corn a year. So it makes no sense that we would import corn from the U.S. and turn it into ethanol. There's going to be a feed deficiency somewhere if we do this.

There are implications for the whole western Canadian grain marketing system if we start pulling grain out of the system. Our terminals on both coasts will be less efficient if there's less grain going east and west. Overall, you're not going to make ethanol or biofuels out of expensive grain. You need cheap grain. This has been government policy for the last 20 years: cheap grain for secondary processing. We've seen that with the elimination of the Crow rate, for example. We've seen that with changes to Wheat Board marketing.

So really, the so-called value-added is actually removing grain from farmers' control. In Manitoba and Saskatchewan, Husky has a mandate for 130 million litres. The taxpayers are going to pay for it. You fill up your blended fuel. Husky has the mandate for the 130 million. If you're at Texaco and he's a co-op, you have to come to me for the supply, and I can set the price. So there are a lot of costs that are going to go on. Why would we do this? You cannot gain energy from biofuels. It's been proven.

I've heard Don O'Connor. He's an engineer from out in Delta, British Columbia. He's not a scientist. We need scientific analysis and data on this, and the major scientists in this country say it simply doesn't work. It won't work out of grain. It's doubtful it's going to work out of cellulose. Development may change that some day, but currently it doesn't work. We shouldn't be taking the straw and trash off our fields to do things like that.

So biofuels are a costly misadventure. They achieve no public policy objective. Your committee ought to be looking at whether it serves some policy objective. It's not going to drive our cars down the road. It's not going to do anything for the environment. The tailpipe emissions are no better, maybe worse. There are more aldehydes coming out. There are more pollutants coming out of the tailpipe.

[The Chair, Conservative, James Bezan]

Mr. Atamanenko, your time has expired. Everybody else wanted to get in on your other question, but we have to move on and be fair to the rest of the committee.

Mr. Steckle, you're up.

[Paul Steckle, Liberal, Huron—Bruce, ON]

Thank you.

We are anticipating that high grain prices are going to be here for a long time; at least we're hoping so. If that is the case, and our stocker cattle, our feeder cattle, our feeder hogs are more and more moving southward, where do you see us going, given that we developed these 16 or 20 new plants we're anticipating? They're developing one in my area as we speak. Where do you expect that this used feedstock is going to go? Are we going to use it and transport it south, too? I'm just wondering where you're going to go with this.

[Gordon Quaiattini]

I'm happy to take a first stab at the question.

There are a couple of things, and I could spend an inordinate amount of the committee's time refuting what my friend from the National Farmers Union is saying, because unfortunately his statistics are all over the map.

To answer your question, Mr. Steckle, let me give you some real world data. Right now, and my comments will be directed at corn and ethanol for a second, only about 10% of the corn that we grow today globally goes into consumer foodstuff. In Canada alone, when you take in all grains and oilseeds, we're roughly at about 50 million, and half of that finds its way into the export market. All we're simply saying to Canadian farmers is you're going to have an option for your crops that can be both food, because we produce more than we consume, and to service the biofuels market.

Number two, you are absolutely right. When you look at where the growth is going in the United States, the policy objective that the CRFA has been advocating is not only do we want to grow the mandates within Canada and therefore develop the production capacity to meet those mandates in Canada, but we are also looking at the opportunity of what is happening south of the border. You make an excellent point. We do not want to be in a situation.... When you look at the 36 billion gallon target that the U.S. has set for itself, they recognize that of that target they have the capacity to meet about 15 billion to 18 billion gallons with current feedstock. The rest of that is going to have to come from next generation ethanol production, or it's going to have to come from imports, and we have the capacity to meet that here in Canada.

To look at what is truly a significant public policy objective, wouldn't it be fantastic that we build not only the industry here in Canada to meet the domestic requirement of the mandates that have been set--5% and 2%, and Mr. Easter talked about going to 10% and 5%, which this industry supports--but absolutely look at south of the border and ensure that what does not happen is having the feedstock simply make its way into the United States, by quite frankly having the biofuel get exported into the United States to help meet the target they are setting? That's a win-win that I think this committee would support unanimously.

[Paul Steckle, Liberal, Huron—Bruce, ON]

As my second question, has there been research done in terms of the greenhouse gas emissions, the differential between what comes out of the gallon of ethanol produced by feedstocks derived from corn or wheat and that which comes from solubles? Is there a difference, and is there any differential in the outcome of that?

[Gordon Quaiattini]

Yes, there is.

But again, current technology, corn- and wheat-based ethanol or biodiesel coming from canola, rendered animal fat, and other feedstock all have a net positive contribution on GHG reduction. Don't take my word for it. Take that of Natural Resources Canada. They've done a significant amount of research in this area. They have created what is considered a world class model, GHGenius, that looks at the full life-cycle analysis of the production of biofuels.

Contrary to my friend from the National Farmers Union who likes to cite studies like Pimentel's--he does not do life-cycle studies, his data is about 20 years out of date, and he is talking about old infrastructure that was in its early infancy in the United States with respect to biofuels production--we're talking about current real world data on facilities that are being built in Canada today. On ethanol it's a 40% to 60% benefit, and in biodiesel it's upwards of 75% to 95%, again depending on the feedstock input.

Don't take my word for it, Mr. Steckle. Take the word of Natural Resources Canada.