Agriculture Committee on Feb. 25th, 2008

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

Thank you very much, Mr. Chair.

I'd like to direct my first question to Mr. Thoroughgood.

My memory is not as good as it used to be, but I think you mentioned something to the effect that if it's implemented responsibly, Ducks Unlimited believes an increase in biofuels will be a good thing. You also said that it will be “greener, smarter, and better”, and I wonder if you can expand on that.

[Paul Thoroughgood]

My comments were specifically to which types of feedstock were utilized in the biofuel industry. So an expanded biofuel industry that continued habitat types such as spring wheat wouldn't be good from a habitat perspective. But a biofuel industry that promoted crops that provided improved habitat value, like winter wheat or perennial grasses where annually cropped land currently exists, would be greener, better, and smarter than what's currently on the landscape.

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

So you're saying that if it were implemented responsibly it would be a good thing.

Mr. Thomson, I was very interested in some of the comments you made. I think you said it is the most positive thing that has happened in agriculture in 30 years. I'd like to hear a little more about that. It's good news for the farmer, obviously.

[Ian Thomson]

Yes. Let me share by way of an anecdote.

In January 2006 I was a speaker at a forum in Saskatoon. It was Canola Days--the primary gathering of canola growers. It would not be an understatement to say that the mood was despondent. The average age of canola growers was 59 years, and they were looking to sell out of the business. At a $5,000-an-acre loss per year, it was hardly an incentive for canola growers to get excited about the industry. The panel's full focus for that year was on canola.

Fast forward to today, and we are looking at four contracts for next year in the range of $13 a bushel--and at the time it was about $5.75. If you phoned the Canola Council of Canada and asked them if biodiesel was a good thing, I think they would speak for farmers as a whole in saying...I think any grains across the board coming up. They know it's a commodity and it will come and go, so I think there's that enthusiasm.

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

One of our previous witnesses mentioned that it's a saving grace, not only for farmers but for rural Canada. If we can get this industry up and running vibrantly, I think there will be a lot of spinoffs.

You also mentioned that we should pass this bill as quickly as possible without delay, because private investors need to see some action on this very quickly. Are private investors there willing to buy into this?

[Ian Thomson]

There are two parts to a successful industry in a country. One is to create the assurance of demand. If we were not a new industry in the presence of another conventional industry that was reluctant to adopt this, it would be reasonable to let the market take care of that. But the market simply does not allow room, the way it's structured right now, to put in a new fuel unless somebody is saying you really need to do this. That would be the federal government, by way of a mandate.

The second part is the financial piece. This committee isn't looking at that piece, but that part allows us to not only use biodiesel or ethanol, but to use the biofuel we produce in Canada. The production incentives are also a critical part of it.

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

You mentioned that you would like to see biodiesel moved up from 2012 to 2010.

[Ian Thomson]

Yes.

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

Could you give a quick explanation of why?

[Ian Thomson]

You have to go into the horse trading that was done two summers ago on getting biodiesel included as a specific renewable fuel. The concern at the time was that because ethanol was better developed and there were two petrochemical companies actively producing and selling bioethanol, biodiesel really needed a place for the benefits I've talked about today. For Canadian growers, it was very much the agricultural sector that showed up and said, you can't just make this wide open, ethanol will have the whole thing. That was the presumption. So the federal government said, okay, we'll have a 2% set-aside for biodiesel, but because there are technical uncertainties surrounding this fuel, we will give it two more years at the latest, and it could be as early as 2010.

Well, we have, for the most part, satisfied the technical requirements necessary to satisfy ourselves that we will not be putting biofuel into the distillate pool, in this case, that will compromise operability, leave trucks by the side of the road, and that kind of thing. I'm on the steering committee of a large-scale pilot right now that has very successfully run in Alberta this winter. If you know anything about what it's been like in Alberta this winter, it's an extremely good case for demonstrating that we can use a low-level blend of biodiesel, up to 5%, which is commonly supported in many countries. In fact, a number of people in more temperate places will go to 20% without any difficulty.

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

Thank you very much.

[The Chair, Conservative, James Bezan]

Thank you very much.

Mr. Gaudet, you have five minutes.

[Roger Gaudet, Bloc, Montcalm, QC]

Thank you, Mr. Chairman.

In your reports, you say that the ethanol plant in Varennes could be producing more. Do you support ethanol production by small businesses?

[Benoit Legault]

The agricultural community would love to see that happen, but experience and information over the last few years on ethanol and biodiesel show that profitability is a matter of scale. This is particularly true for ethanol, but even in the case of biodiesel, we have realized that you have to have a very big business in order for this to be profitable.

There had been research projects in Quebec to determine whether it would be feasible to do this on a small scale or perhaps even on the farm, but there are all sorts of factors that have to be taken into account. I am not just talking about profitability, but also about the quality of the product. All of this means that it may not be possible to do it on a small scale.

Our association, along with producers from the Pro-Ethanol group and the Ethanol GreenField company, has grown over the years. The project started in 1992. We started talking about ethanol in Quebec in 1992, and the project started up in 2007. We are talking about a two-to-three-year period to implement the project. It is clear that this was beginning to develop. We would very much like to be able to turn to small businesses that are managed by agricultural producers. Furthermore, in future developments, we would like to see greater involvement of producers in terms of value added for their grain, therefore financial involvement in the development of biodiesel. That is what we are seeking. We have not yet found the ideal solution.

[Roger Gaudet, Bloc, Montcalm, QC]

I would like Mr. Chornet to tell me what he thinks of the small businesses that could supply the industry. We want to protect the environment, but what about transportation? If you are leaving from Abitibi, for example, to supply the ethanol plant in Varennes, you are using a lot of fuel.

[Dr. Esteban Chornet]

There is also, sir, an underlying problem in the fuel industry, not only in biofuels. The fuel industry is regulated. You cannot sell just anything to people at he pump. That requires a certain control over how the mix was made. This discourages small producers because they do not have the technical know-how, the equipment or the necessary investments to be able to produce a final product. The idea of having regional production is fantastic. Everyone supports it. However, regional production still must be on a scale that will reassure the general public as to the compatibility of the product with the needs of their cars, the regulations, etc.

[Roger Gaudet, Bloc, Montcalm, QC]

I more or less agree.

I was born on a farm. At that time, that is in 1957, there were 127 dairy producers in my hometown. Today, there are only two left. I imagine that in 1957, my milk was as good as today's. At that time, you could drink the milk directly from the farm, whereas that is no longer possible today. Today you don't even have the right to sell it. I have a problem with that.

In 1992, I was mayor and reeve. Ethanol production had started up on the North Shore, in the riding of Berthier. Following that, it was transferred to Varennes. I am well aware of these developments.

Do you support small businesses producing ethanol? It worries me that we are only talking about big businesses. We may find ourselves with multinationals.

[Dr. Esteban Chornet]

Make no mistake, in the fuel business, GreenField Ethanol is a small producer. It is no Shell or Texaco. I believe that the biofuels sector, whether it be biodiesel, ethanol or new fuels of the future, will be fantastic in terms of the creation of wealth, and that we are discussing a level that the big multinationals cannot get into for the moment.

The idea that a producer who owns 100 acres of feedstock would be able to manufacture his own fuel seems overly romantic to me.

[Roger Gaudet, Bloc, Montcalm, QC]

One hundred acres...

[The Chair, Conservative, James Bezan]

Your time has expired.

[Roger Gaudet, Bloc, Montcalm, QC]

...is perhaps not enough. I was thinking rather of 2,000 acres.

[The Chair, Conservative, James Bezan]

Mr. Gaudet.

[Roger Gaudet, Bloc, Montcalm, QC]

I am not talking about farms as they were 20 years ago.

Thank you.

[The Chair, Conservative, James Bezan]

Merci beaucoup.

Mr. Storseth, you have the last five minutes, and that will give us a couple of minutes between groups to clean up the table.

Five minutes or less, Mr. Storseth.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Thank you very much, Mr. Chair.

I want to thank everybody for coming today. This is a very interesting debate we've been having at this committee. I believe this is a great piece of legislation that's going to bring a lot of benefits, not only to our farm families and our small farm families but also to our environment.

I'd like to talk a little bit about the fact that this is a new industry in Canada. Any time you have a new industry you start out with a base, but inevitably it always gets better. Your technology always advances to far more than what it was when you first started. Oftentimes the advances that you end up with at the end of the day are things that you couldn't even conceive of at the beginning.

So I understand if you don't have all the answers to my question, but a perfect example of this is the oil sands. What we started with in northern Alberta, where I'm from, almost looks archaic compared with what we have today, the advances that we have.

I would like to start out, Mr. Thomson, by asking about some of the research and development that you see coming out of this and some of the advantages that you see coming out of these initiatives.