Agriculture Committee on March 6th, 2008

[The Chair, Conservative, James Bezan]

Mr. Qualman, very briefly. We're almost out of time.

[Darrin Qualman]

If fertilizer companies are coming down here trying to explain high fertilizer prices by the cost of fencing and security, they're just engaging in misdirection.

When you read the presentations they're making to bankers in the United States and to shareholders meetings around the world, they talk about unprecedented large margins, record margins, record profits. There's never been more money in fertilizer. So to somehow blame the high price on the need to build fences is just misdirection.

[The Chair, Conservative, James Bezan]

Thank you.

Monsieur Bellavance.

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

Thank you, Mr. Chairman.

Thank you for your presentations. It seems that we are discussing input costs quite often in the Agriculture Committee. Unfortunately, we are never talking about a decrease of input costs but always of their going up. This is an issue that we are studying regularly. Your opinions can help us find solutions that we will then submit to the Minister. Maybe there is no magic bullet, but we still discuss and even get information that will allow us to receive some good advice.

You are probably aware of the study sponsored by Keystone Agricultural Producers, KAP, that was recently done by PricewaterhouseCoopers. I am asking myself some questions concerning statistics on fertilizer price increase. That study compares fertilizer prices in Manitoba and Saskatchewan with those in North Dakota. We are living alongside our American neighbours and products can freely cross the border thanks to NAFTA.

What I find intriguing in that study is that the differential was only 1% in 2004. This is a quasi parity. However, in 2006, American prices were 10% lower. In 2007, there is a 33% difference and for anhydrous ammonia, our price was 63% higher. We are no longer on a level playing field with the Americans. Given the rise of the Canadian dollar, our purchasing power should increase and we should be able to buy our products at a lower cost.

How is it that instead of diminishing, the price gap is increasing? As I am not an economist, I find it difficult to understand this. I would like to get your comments on this.

[The Chair, Conservative, James Bezan]

Who wants to tackle that?

Mr. Orb.

[Ray Orb]

I'll try to answer it.

I have the study here, and we did read the study. The study doesn't really indicate why that has happened.

I guess you have to realize, if you're buying it from the same producer and it is a Canadian producer and they are shipping it down there, they have to add some costs for freight. So you can only assume either of two things: they're using a different price mechanism for producers or end users in the United States than they are in Canada or the retailers are charging more in Canada than they do in the U.S.

To be honest, we have the same problem. We're looking into this. It's quite hard to find prices, sometimes, from American retailers because of the fact that we are Canadians and they may be a little bit leery of giving this information out. Ag Canada seems to have more luck at getting information than we do, so maybe this is a step that Ag Canada could help us with.

[The Chair, Conservative, James Bezan]

Go ahead, Mr. Qualman.

[Darrin Qualman]

I can second that. We shouldn't have to commission farm organizations to get this kind of data. If Stats Canada and the government collected and published this kind of data, it would really help us as farmers to bargain with those Canadian companies.

[The Chair, Conservative, James Bezan]

Actually, for the information of the witnesses, in September 2007 Ag Canada did their farm income, financial conditions, and government assistance data book. In section B they have a bunch of information on the comparison of fertilizer and fuel prices between Manitoba versus Minnesota and North Dakota, as well as between Ontario and Michigan, Iowa, and Indiana. The data are out there, and some of the data have been shared with the committee already. I understand it is available to all farmers, so I suppose you'd better get your hands on a copy.

Go ahead, Mr. Bellavance.

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

Of course, I also wish to hear from CropLife Canada.

[Jill Maase]

Sure, I'd be happy to respond. We don't deal in fertilizers. Our mandate and our members are in the areas of pesticides, plant biotechnology, and seed.

I believe you're having the Canadian Fertilizer Institute next week?

[The Chair, Conservative, James Bezan]

Yes, it's next week.

[Jill Maase]

It may be more appropriate to ask them that question.

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

You are in the same situation as concerns pesticides. You could tell us your opinion about it and the fact that we are supposed to have a better purchasing power with our stronger dollar. There are negative and positive impacts, but it is not helping us to compete with our American neighbours. Are you not in the same situation in your sector?

[Jill Maase]

We certainly do.

There are a couple of points I'd like to make. I think the committee is aware that the costs of registering pesticides in Canada are very high. There are additional costs to registering pesticides in Canada and Canadian-specific studies that our members have to commission and provide for the Pest Management Regulatory Agency before getting Canadian approval, so our cost of entry into the market is higher in Canada, and it is a smaller market.

What we've tried to do about that is a couple of things. Our members have been working very hard to look at getting a NAFTA-wide approval and having a NAFTA label so that products are available in Canada and the U.S. simultaneously. That helps to rebalance availability for farmers on both sides of the border.

As I mentioned earlier, we've also worked hard to get a faster and improved generic approval system here in Canada, which will help as well to improve price competition. We've supported a minor-use program, and while this isn't price specific, we've certainly helped to support a minor-use program through Agriculture Canada to bring in low-volume products that are not terribly economical to register in Canada. Through that program there is an opportunity to build the data set that is required to get the programs registered.

Those are some of the things we've tried to do to bring a competitive array of products to Canada.

[The Chair, Conservative, James Bezan]

Thank you very much.

Mr. Storseth, the floor is yours.

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

Thank you very much, Mr. Chair.

So many questions, so little time.

I want to thank all the witnesses for coming forward. There were some excellent presentations and some good balance and back-and-forth.

I'll start out with the obvious comment that the dollar is up, the cost of what we export is up, but once again the cost of things we import doesn't seem to decrease, as the Keystone Agricultural Producers' report proved.

First of all, Mr. Orb, I very much appreciated your presentation. I actually did put a motion before the committee. Are you aware of the motion I put before the committee?

[Ray Orb]

No.

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

I'll quickly read it for you, because I'd like your opinion on it:

In the light of testimony from the Pest Management Regulatory Agency as well as industry and farm organizations, that the Standing Committee in Agriculture and Agri-Food recommend that the Own-Use Import Program continue in its existing form indefinitely so as to ensure that farmers have the opportunity to access these products in a price-competitive manner in order to continue to enhance competitiveness in the agri sector.

Are you in favour of that motion?

[Ray Orb]

Yes, definitely.

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

Could you quickly, in 30 seconds or less, explain to the committee the reasons you would be in favour of that?

[Ray Orb]

Yes, I'll take a try at that.

I think that program is working well on its own, and our producers were really benefiting from that. At the same time, we're saying we want to have a balance between our companies out of the United States and Canada. We don't want to deter companies from coming here and investing money into research and developing new products, but at the same time we want access to those, and we want more competition.

A good example is the price of glyphosate. Going back probably 15 years, it was $20 a litre and it was unaffordable for most producers. Well, when some of the registrations dropped and there was more competition, it just drove the price down to the point where now it's one of the lowest-priced inputs.

We're in favour of it, yes.

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

Thank you very much.

In the order of expediency--because I do want to give CropLife Canada an opportunity to respond to this--unfortunately, I'll skip two of our witnesses and go to you, Ms. Maase.

I want to make a couple of comments first. The producers we have in western Canada--and I haven't had an opportunity to travel the country as extensively as some of my colleagues have--are some of the most efficient and some of the best producers, with the best crops and the best products in the world. It's my opinion that the government far too often stands in their way from competing on a level playing field with other countries and other producers around the world.

One such example, in my personal opinion--and I brought this before the committee last time PMRA was here, and I know you were here--is this new GROU program. Look at the paperwork burden that is on our producers to be able to bring some of this in.

Quite frankly, to the layperson, it's extremely onerous on our producers to be able to bring any of these things in through permits. We've once again created a monopoly with the container disposal. I want to be fair and give you the opportunity, because you and I haven't had the opportunity to speak on this yet. Once again, we've given one organization the ability to control all pricing on that, and our producers have to use that. Once again, in my opinion, that is going in the wrong direction for our government and for our producers.

I would like you to quickly speak on the paperwork burden, because PMRA didn't speak on that before.

I'd also just like to give you some quick facts and figures, and then I'll give you the floor. In Alberta alone there were 1,515,879 litres of ClearOut 41 Plus used in 2007. Many of the producers in my area who I've talked to and many of the industry professionals say there's an approximate savings of about $4 a litre. That's about $6 million to Alberta farmers alone in savings.

I have the numbers: from Manitoba, 652,000 litres; from Ontario, 607,000 litres; and from Saskatchewan, 4,524,337 litres for 2,196 permits, for a savings of over $18 million to Saskatchewan farmers.

I would submit that the reason you don't see the price disparity this year that you saw last year is simply because of this program.

I have a problem with the fact that ClearOut 41 Plus, which was under the own-use import program, is listed as being under review in the GROU program. That makes no logical sense to me.

The other comment I would make is on the seven herbicides and chemicals that you have approved and the six that you have under review. I take note in your presentation that you talk about studies showing cheaper inputs, wanting intellectual property protection. I hardly think that's a high priority of some of our producers. Improve access to generic products. Well, we've really yet to see that. I believe from previous testimony we're hoping to really see some of that this year. Access to the latest products is something that really struck me. The seven products that we have approved are all older products, and this isn't giving our producers access to newer technology and newer products so that we can get out on the market and have the same level playing field once again.

Now, don't get me wrong. Most of the guys I talked to are happy with these seven products. They want to see these other six products on here--and, as you know, there are many more. It just seems there is a real barrier in allowing our producers to be on the same level playing field, at the same competitive level.

I haven't even got into anhydrous ammonia and any of these other things we saw coming out of the Keystone Agricultural Producers' report.

Perhaps you could just respond to some of that, Ms. Maase, and I'll give you some time.

[Jill Maase]

I'm going to ask my colleague Peter MacLeod to respond to the first part of your question, and then I'll tackle the container discussion, if that's all right.

[Peter MacLeod, Vice-President, Crop Protection Chemistry, CropLife Canada]

Thanks very much.