Agriculture Committee on Feb. 12th, 2008

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Thank you very much for coming here and testifying.

I will continue with you, Mr. Quaiattini. I hope that I have pronounced your name properly.

In your statement, you made some relatively optimistic assertions. I would like to know what you're basing yourself on in order to come up with such statistics. For example, you talked about new plants that will be built and which would generate investments of more than $1.5 billion. You said that 14,000 jobs would be created in rural communities. You also said that once these plants have been built, the industry would create 10,000 direct and indirect jobs and would generate economic activity of $600 million per year.

Your figures were quite precise. Are they based on one or more studies which you have access to but which we do not? We would really like to see them. Or are these your estimates? I would like to know where these figures come from.

[Gordon Quaiattini]

Thank you very much. I'm happy to do that.

As we stated, the policy of the Canadian Renewable Fuels Association is to grow the size of the industry in Canada. As we have advocated for mandates to come into effect, our purpose has been to ensure that we meet the production level of those mandates by building plants in Canada.

In terms of biofuels production today, we are about to reach around one billion litres of biofuels production sometime in the next couple of months. In order to achieve the mandated target of three billion, obviously we have to build more plants.

When you look at the number of facilities that need to come on line, we're looking at adding between 15 and 20 biofuels facilities across Canada. The construction jobs generated from that can be anywhere from 300 to 400 per plant, and there are all of the indirect jobs in terms of the supply, equipment, and infrastructure that goes into building those facilities.

The numbers come directly from the fact that currently we don't have the number of facilities to meet the target. In order to do that, we have to build plants. That's where the economic activity is going to come. We estimate that we're going to be adding between 15 and 20 new biofuel plants in the next two to three years in order to meet that mandate domestically.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

You don't have an exhaustive study to show the accuracy of these figures? Talking about building new plants is one thing, but estimating the number of direct and indirect jobs that will be created is another. It looks optimistic to me. This is wishful thinking.

[Gordon Quaiattini]

Well, no, but they are coming directly from our industry.

Mr. Haig has built his biodiesel facility in Hamilton, and he might want to make some direct reference to that.

[Tim Haig, President and Chief Executive Officer, Biox Corporation]

We can justify these numbers with back-up studies from the USDA and things like that. If you would like to see them, we will direct these studies to the committee.

This is not myth; this is reality. It's based on existing jobs from existing plants, extrapolating out and going forward; existing studies from the USDA; and current facilities being built in the United States. We can satisfy your need for that data.

[Gordon Quaiattini]

Mr. Baker from GreenField Ethanol is with me. They have a facility that currently operates in Chatham. They built the first new biofuels facility in Varennes, Quebec. They have a state-of-the-art, 200-million-litre facility under construction in Johnstown, about 45 minutes from here.

Our members have very accurate data in terms of the number of people they're hiring and the amount of infrastructure and supplies they are sourcing. The information we have is very accurate.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

You understand what I mean by that. We would be the first to be delighted if these forecasts were accurate. I would be the first one to be pleased, but it would be good to have...

[Gordon Quaiattini]

Absolutely. So are we.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

... substantive studies enabling us to ascertain that we are going in this direction.

Mr. Friesen, the Canadian Federation of Agriculture has already said that energy was indeed attractive for agricultural producers, but that it was not the solution to the income crisis anymore than it was a cure-all to resolve all of the issues in the agricultural sector.

[Bob Friesen]

This initiative certainly has a lot of potential for any grains and oilseeds producers we have. We do know that currently the price of feed, of course, is a challenge to the livestock industry. But as I said earlier, the livestock industry is facing other challenges that are probably contributing more to the crisis than an increase in feed costs.

We need to figure out a way whereby grain producers and livestock producers can make money at the same time. We're saying that should not discourage us from pursuing this potential and this initiative. However, a few years ago, when CFA members started talking about this and about what sorts of incentives we should create, the livestock industry was very vocal in saying that if subsidies are going to be applied, or if some sort of farm gate support is going to be applied to the corn industry, for example, it shouldn't be applied only to corn that goes for ethanol because that would discriminate between livestock producers and the ethanol industry. So we have to be very careful of how we create incentives. However, with regard to whether we should stop short of pursuing this opportunity because it's creating a crisis in the livestock industry, we believe the crisis in the livestock industry needs to find other solutions beyond saying that grain producers have to lose money.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Certain producers have raised some concerns with respect to energy, which is, as I said, an interesting avenue. They are nevertheless wondering how we can guarantee that they will really stand to profit by it. When it starts to pay off, some fear that the big integrators and corporations will be the ones who will make the money. Producers want to make sure that they will really be able to profit directly from this energy opportunity and from others.

In some sectors, we have seen that this has not necessarily been profitable for them. How can we reassure them that the large corporations, the big oil companies that own the fields, will not be the only ones to make money at the end of the day? I know that this question has already been raised in the committee, but I was not there.

[The Chair, Conservative, James Bezan]

Mr. Bellavance's time has expired, Mr. Friesen, so I'd ask that you keep your response brief.

[Bob Friesen]

Thank you, Mr. Chair.

That's a very good point. We have to make sure that some of the benefits of this accrue back to the farm gate. We would also like to see incentives similar to what they have in the U.S., where there is a certain percentage of producer ownership of the manufacturing facilities. They have better incentives if they have over 50% of farmer-owned manufacturing facilities. That's why I mentioned earlier that we need to make sure we develop competitive policy and that we do it in a way that benefits accrue back to the farm gate, and that farmers also have an opportunity at the manufacturing level. Otherwise, if no benefits accrue back to the farmer, then we certainly wouldn't be as energetic with our support as we currently are.

[Kenneth Sigurdson]

I'd like to make a comment on that.

[The Chair, Conservative, James Bezan]

Please do so very briefly, Mr. Sigurdson. The time has expired.

[Kenneth Sigurdson]

The reality is that the price of a bushel of canola is $13 today, the price of a bushel of wheat is $10, and you're not going to make biofuels out of those kinds of fuels. A bushel of canola has about 10 litres, and Mr. Chorney will back me up on that, so the direct cost is a $1.30 a litre before you even start processing it. We're not going to change to some bio-economy running our vehicles. In the United States, where biofuels are big, they estimate only about 2% of the fuel is going to be biofuels, with all of that activity.

[The Chair, Conservative, James Bezan]

Thank you.

Mrs. Skelton, it's your turn.

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

Mr. Sigurdson, I've never had the pleasure of sitting at a committee table with you. May I ask where you're from?

[Kenneth Sigurdson]

My wife and I farm in the Swan River area of Manitoba.

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

That's good. That's all I wanted to know. I did take one exception to one of your statements. You called the prairies basically a desert. You quoted that.

[Kenneth Sigurdson]

No. I was quoting somebody. I was quoting Dr. Vaclav Smil, and he said that you don't set up ethanol plants in a semi-desert, which is much of the prairies.

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

I take exception to that, because we've always been called the breadbasket of the world. I think that as a producer in your area you would be sticking up for western Canada too.

That was just my comment. I wanted to make sure that Canadians know that western Canadian producers are some of the most environmentally friendly and most productive producers we have in all of Canada. We have exceptional rural Canadian farmers, and I just want to stick up for them by saying that.

We're talking about Bill C-33 today, gentlemen. The minister was before our committee last week. We have a concern in western Canada because of the way grain prices are right now, and I asked him...because we're trying to get a bunch of plants up and running and we're having trouble getting producers to invest in these plants.

I would just like to have comments, Mr. Chorney, from you. What would you tell western Canadian farmers especially? We've gone through many years out west of really low grain prices, losing a lot of smaller farmers with difficulties because we just couldn't make a living at that time. Could I have your comments on that, please?

[The Chair, Conservative, James Bezan]

You can jump in after Mr. Chorney is done, Mr. Sigurdson. I'll give you the floor.

[Brian Chorney]

I guess if you look at the history of agriculture in western Canada, we've always been encouraged to participate in value-added activities. Unfortunately, as grain farmers we have struggled for many years because of some of the pricing considerations we had. Participating in some of the value-added opportunities is tough when you're trying to pay the bills at the end of the month, so you look after your primary operation and go on, looking at other value-added opportunities that are maybe going by the wayside.

Yes, grain prices have moved upward in recent history, and we are glad to see that. We absolutely encourage the prices to move forward; it gives us an opportunity to maybe look at investing in some of these value-added activities that have long-term potential.

Unfortunately, some of the value-added opportunities that have been encouraged in the past have been very much in niche markets. The difference with the biofuels side of the equation is that this is the niche market. When you look at 2% of the overall pool of diesel fuel, it's a big number for western Canadian agriculture, and it's not going to be filled by one or two farmers or one or two plants. That's where the opportunity is different in the biofuel sector, as distinct from some of the other smaller niche market types of opportunities.

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

Do you look at this bill—