Agriculture Committee on March 6th, 2008

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

Of course.

[Paul Wideman]

Between 1993 and 1996 we had similar high grain prices, but we had a 65¢ dollar. That allowed our predominantly export-driven meat industry to weather that storm and pay the higher price.

I'm going to use a little analogy. My father used to say that high feed prices used to make farmers the most amount of money. In other words, the trend was that you were paid more for meat when you had to pay more for your input costs. In the past that was true. It is not true today, and that's part of the perfect storm you're talking about.

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

Does somebody else want to comment on the Canadian dollar?

[Ray Orb]

The dollar has hurt a lot of us who export meat to the United States, there's no doubt about that. I guess CFIA was mentioned, but our organization has a problem with some of the regulations they're putting on our producers right now. We believe there's about a $50-per-animal cost to Canadian producers that American counterparts don't have. Part of that is because of SRM disposal--the parts of the animal they have to take out.

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

You'll be interested to note that the minister is well aware of that. It's under consideration.

[Ray Orb]

Yes, and I know they have put money into building facilities in Saskatchewan. The province has also kicked some money into that. So this is a regulatory issue that needs to be talked about. We're well aware that the committee has undertaken that.

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

Thank you very much.

Mr. Wideman, you mentioned that technology is part of the solution, and getting approvals more quickly. Explain how technology can help us.

[Paul Wideman]

Examples of some of these products are enzymes and probiotics. The addition of very minute amounts of those ingredients into a typical feed ration will allow the animal to obtain more nutritive value. If you take a higher-fibre, lower-digestible ingredient, an animal would have a lot more waste excreted and suddenly the animal gets more energy and more value out of it. You can save money by using lower-cost ingredients to raise an animal.

[The Chair, Conservative, James Bezan]

You're out of time, Mr. Lauzon.

Mr. Steckle.

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

Thank you.

This morning you, Ray, from SARM, asked us to continue with OUI. Jill, I've heard you say, and I think your recommendation states, that we should move quickly to the GROU program for this year. Given that it was not as effective as we had expected it to be, why would you continue to ask us to move towards GROU?

I'd appreciate a brief answer, because I have a number of other questions.

[Peter MacLeod]

The GROU program of 2008 is really the start. It was brought into place late last fall. There were delays on the PMRA side in getting it in place, so 2008 will be the first true test.

As we indicated earlier, there are seven products. The current product under the own-use import program should be available as well. In our minds it makes no sense to continue the OUI program when all the products are available for farmers that were available before, plus the additional seven.

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

The direction that Ray wants to take us, would that have any negative impact? Maybe it would for your organization, I don't know. I don't see anything negative in allowing us to go through a full year and then make our evaluation at the end of 2008.

[Peter MacLeod]

The other part of this is the August 2007 new generic process in Canada. It is in place to speed up the process. Protection of products has dropped from 12 years to 10 years in Canada with the new process. It's a streamlined program. We think that this, in parallel with GROU, would reduce the need for OUI.

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

Darrin, you laid out fairly explicitly this morning what has happened, and we know it has happened. Farmers are price-takers. But if we were to apply the same criteria to the organizations providing us with their input products as we apply to labour when it takes, say, cost of living into account in arriving at its settlements, can you imagine where our prices would be today?

I know we could talk all day on this, but we simply have no mechanism in Canada to keep multinationals from becoming even more centralized in their operations. We know that the Competition Bureau doesn't work. It's a useless organization. I'll be quoted on that, and that's okay, because it doesn't work.

We need to find a device that will work. We need to look seriously at how much more of this we can tolerate. It has to come to an end, because prices don't come down.

As price-takers we have produced the value in the farm, but we don't keep it on the farm. It moves on. Perhaps you want to comment on that.

[Darrin Qualman]

Thank you, Mr. Steckle.

We agree about the Competition Bureau. As an organization, we went in front of the Competition Bureau to talk about one of the latest mergers that came on the radar, the Cargill takeover of Better Beef. We predicted disastrous outcomes for farmers, and sure enough, that's exactly what we're seeing.

We have two and a half packers left and we have fat-cattle prices that, literally, when adjusted for inflation, are the same as prices in 1936. They are exactly half of what they were for the 50-year period between 1940 and 1990. On the input side, over the last two decades we have record-setting profits. At the same time, we have the biggest farm income losses.

I just want to point out one thing to bring this completely up-to-date. Mr. Easter mentioned the sheet on some Canadian farm income figures. Agriculture and Agri-Food Canada last month projected that farmers' net incomes from the markets in 2008, this year, will be negative despite spectacular increases in relative grain prices. They are projecting $3.7 billion, almost $4 billion, in support payments and only $2.5 billion in realized net farm income. That's a negative $1.5 billion in net income for the market despite these high prices.

It's largely a factor of higher input costs. These companies are taking it away and the Competition Bureau isn't doing anything for us.

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

I have one question to you, Paul. You're in the feed manufacturing business. You mentioned probiotics, enzymes, trace elements, and products and minerals that go into your feed products. We have very strict rules in terms of cleanup after batching, and we know there's a cost to that. You might want to explain to this committee--I've been in a number of your feed companies--what that is costing the industry, and ultimately the farmers, just that element of control. It's one of those elements again that governments come down on and say, you must do this. On farm that doesn't happen, but in your case it does.

[Paul Wideman]

First, I want to state that we're a big supporter of creating the safest feed for livestock in the world. You don't have to look far to compare our regulatory regime to other countries to see that if we're doing what we are told we are supposed to be doing, we do have the safest regulatory regime in the world for feed production. But that does come with a cost. Certainly there are a lot of issues facing the feed industry. If the only option in the flush procedures that you're talking about, Paul, is that this livestock feed needs to go to the landfill site because you can't feed it to livestock as it doesn't meet the regulatory requirement, I can guarantee you I don't think that's the level of cost that the feed industry wants to bear, and certainly not our producers either.

[The Chair, Conservative, James Bezan]

Thank you. Your time has expired.

Mr. Fitzpatrick.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

I want to zero in on the cross-border issues pertaining to Saskatchewan, North Dakota, and so on. But I want to make a couple of preliminary comments on some of the evidence I've heard here. Somebody mentioned that Saskferco was 51% owned by Mosaic. I want to focus on the other 49%, which to my understanding has been owned by the provincial government. Lorne Calvert and Roy Romanow were premiers for 17 years and they had a 49% interest in Saskferco, so if there were excessive profits in that industry and they were selling fertilizer at a much lower price to the United States than they were in Canada, maybe we should be calling Lorne Calvert and Roy Romanow here to explain how the biggest benefactor in this whole arrangement was the provincial government in Saskatchewan.

While I'm on that point too, the only refiner in Saskatchewan isn't Exxon or Shell or so on, it's Federated Co-operatives. It has an exclusive monopoly on the refinery business in the province of Saskatchewan. It's owned exclusively by Canadians; a large proportion of them are Saskatchewan residents. So if there are excessive profits in that area, they've been accruing back to individual Canadians through a cooperative ownership arrangement.

I do want to look at the cross-border issues. I wish there were some people from the fertilizer industry today, but there aren't. I think Mr. Orb might be the best person to respond to these.

On the differences in prices on the same products between Canada and the United States, the first question I have is this. Do Canadian farmers and producers have the ability to cross the border into the United States and buy fertilizer and machinery and other items? Are there any impediments to doing that?

[Ray Orb]

No, as far as I know there are not.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Are people doing that?

[Ray Orb]

Yes, to some extent. The farmers who farm closer to the border are bringing it up.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Right. I know that's happened in automobiles where there's a disparity in price. It seems to me that eventually the market's going to have to sort out these problems if that's available to buyers.

Are there any differences in taxation that might explain the difference? Are there hidden taxes or higher corporate taxes or state taxes or provincial taxes that might explain some of the differentiation in price? Do you know?

[Ray Orb]

We haven't really looked into that, other than in Saskatchewan where we have lobbied our former provincial government long and hard to look at those hidden taxes, and to be honest, they stonewalled us and said, no, there weren't really any hidden taxes.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

We're not sure on that.