Agriculture Committee on March 6th, 2008

[The Chair, Conservative, James Bezan]

I'm going to ask you to keep your responses brief, because we're getting short on time.

[Peter MacLeod]

Okay.

There are many questions, but I'll try to get them in.

Addressing the burden of paperwork for the farmer, the process for the GROU program is very much streamlined, believe it or not. It takes a lot of the onus from the farmer and puts it on our member companies to compile the information and send that to the PMRA to actually get the products approved.

Part of the process in sitting around a table much like this with the farm groups, provincial governments, and some of the federal government revealed that costs were not the key issue for most farmers; it's availability. I think you mentioned this. The availability of new reduced-risk products and minor-use products are one of the key things.

Part of the products--

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

Mr. MacLeod, I'm sorry to interrupt, but I'm going to give you more time. The chair will be lenient with your answer time.

These farmers are asked to send—maybe I'm wrong, and tell me if I'm wrong—all their applications to some centralized office in Ottawa somewhere. It's not on the prairie, there is hardly access, and it's hardly easier on our producers. I have the application form in here somewhere, and I can show it to the committee. This is not streamlined. Maybe it's streamlined from what it was, but it's certainly not a streamlined process that's easy for the individual farmer to utilize.

I'm sorry, I just wanted to make that comment.

[The Chair, Conservative, James Bezan]

Okay.

Brian, I'm not going to let you interject again because we are out of time.

Mr. MacLeod, could you give a very quick response?

[Peter MacLeod]

Okay.

We certainly support streamlining that process for the farmer. If a farmer sees an advantage in getting a product cheaper in the U.S., as long as it's approved under the GROU process, our industry supports his having access to that. If it means streamlining the process for the farmer, we would fully support that. It's the government that puts that in place, and we would like to see that shortened as well.

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

Good.

[The Chair, Conservative, James Bezan]

Thank you. Unfortunately, we are out of time.

I'm going to move on to Mr. Atamanenko.

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

Thank you.

Thanks for being here.

I have three questions, and I'll try to be quick.

Darrin, you mentioned price increases in nitrogen and phosphate of around 40%. Obviously we live in a free society, and you can't just come in and regulate prices--or maybe we can. I don't know, but I don't think we can. Is this a result of no competition?

I understand some fertilizer came in from Russia and was sold at a cheaper price. Should we do more of that to try to bring prices down?

The second question is this. Ray, you mentioned the difference between the U.S. and Canada. Has there been any evidence of U.S. government subsidies to American companies that allow them to keep that price down? I'm just wondering if anybody has investigated that and if that's the reason. Is the reason their price is less because of the sheer volume, even though they import ours?

My third question touches on biofuels. Mr. Wideman, you mentioned that Canada should be focused on biofuels from materials that don't have a direct impact on the food chain. This is a concern I share, and I've raised it at this committee. Maybe once we look at the two questions, if we have some time, I'd like a comment from everybody. Are we on the wrong track in regard to biofuels, and should we be going in a different direction?

I'll stop there.

Darrin or Ray.

[Ray Orb]

Since my light is on, I'll try to answer.

I'd just like to touch on the biofuel question for a minute. Our organization was quite adamant right from the very beginning as far as Canada getting involved with producers in biofuel plants, and in particular in Saskatchewan it would be ethanol plants. We have some very good models for integrated facilities in Saskatchewan, one of them being Pound-Maker at Lanigan, which is not far from Saskatoon. We really promoted that farmers should become involved with this.

Canada, through Agriculture and the Department of the Environment, did its strategy, and to some degree it was successful. It was successful in promoting this. A lot of this, we believe, has been solely driven by politics in the U.S. We realize some subsidies were put in place, and we're basically not able to compete against those subsidies in this country, as you are aware. We know it's driving the fertilizer prices to some extent because of sheer demand, specifically in corn. As you are aware, corn uses a tremendous volume of nitrogen to grow a crop.

Although it seems positive, we realize there are repercussions in the livestock industry because of high feed costs for animal nutrition and all those things. The spinoff is evident there. We've always promoted integrated facilities where producers, and hopefully farmers, can build their own facilities attached to feedlots, so we see the benefit there as well for the livestock industry.

[Darrin Qualman]

Thank you.

The question, Alex, that I hear from you is about competition on the fertilizer side, and we're profoundly lacking in competition there. When you look at the graph we've included in our report, the companies as much as say they raise prices when the price of grain goes up. That's impossible in a competitive market.

I think farmers and parliamentarians need to work together to figure out how to put some competition back in the system, whether it be more pricing information from around North America and around the world, whether it be helping farmers get together and become group buyers--single-desk buyers--for that fertilizer, or whether it be imports.

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

Is there room for maybe encouraging co-ops in that area to assist farmers?

[Darrin Qualman]

Well, I think there's room for helping farmers create their own buying co-ops. The current co-ops right now are probably focused on other things, but I think more farmer groups getting together.... More than just cooperatives, though; legislated farmer buying units, in order to put.... If there are four or five fertilizer companies really controlling the North American market, 400,000 or 500,000 farmers all trying to strike a deal to buy fertilizer just isn't going to work.

[Paul Wideman]

On the biofuels issue, the investments that have been made into that industry in Canada I think accomplished what the industry wanted. It had a rise on the price of the input costs going in, which to a certain degree was fine.

One of the arguments I would make is that if the U.S. wants to support a strategy of biofuels to reduce its dependency on Mideast oil, then, really, Canada could benefit from that without putting up a single ethanol plant, in that once the U.S. has such a huge demand for ethanol and they have issues of their own capabilities to produce the crop, Canada can ship their corn to the U.S. and it can be made into ethanol there. You're already seeing some of that trend, as so many ethanol plants are popping up in the midwest United States. Iowa is moving from a net exporter of corn to a net importer of corn. So I don't think the Canadian farmer would suffer from lower corn prices if corn prices are being driven off the Chicago Board of Trade price.

What we should focus on, though, is that Canada has a tremendous amount of biomass that can be made into ethanol-based products. We should use those biomass products, for which we have an unquenchable source of supply. We are not anywhere close--in fact, I think Canada's corn production numbers are less than the State of Nebraska, so if we want to become a major player in corn-produced ethanol, I think we had better start moving our country to an area that can grow more corn. I think we need to use the materials that are here.

The other fallacy that the feed industry was presented with was that, oh, the tremendous amount of byproducts that will come out of the ethanol industry will become a cheap source of ingredients to fatten cattle, fatten hogs, grow chickens. The problem is that there is a limitation to how much of that byproduct can be fed to any particular livestock.

You can feed high levels of corn to a chicken and a hog. You can feed only low levels of DDGs, or distiller-dried grains, to those same livestock. So to prevent boredom of the science behind some of this stuff, perhaps out of the biomass—and I don't know enough of the ethanol industry—if we could create a feed source out of something that right now has no value to the agriculture industry, if out of that ethanol plant would come a byproduct that the agriculture industry could use where now it can't, I think that would be a much more meaningful process for us.

[Jill Maase]

For our part, we're in the business of providing farmers with the best tools to be as innovative as possible and get the best value. With respect to biofuels, we are developing crop varieties that have the best critical mass for biofuels. Also, we are developing crops that are high yield. So you're getting more yield per acre, and that helps as well in terms of addressing both food and fuel and the competing interests.

For the longer term, I can't really say whether ethanol from corn is going to be the long-term solution. I would leave that to others to comment on, but I would say that the technology, as I understand it right now, is not mature to take other feedstocks. That is why corn is the preferred feedstock, and soybeans and canola for biodiesel.

[The Chair, Conservative, James Bezan]

Thank you very much. Your time has expired.

Mr. Easter, you are up.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

Thanks, everyone, for coming, especially for the written presentations.

In terms of the discussion that followed the original presentations, I guess it would be fair to say that the approval process is too slow and costly compared with that of our competitors--whether it's for animal nutrition products or chemicals--and that additional cost burden is being transferred to farmers, to say nothing about the excess profits.

The second point I draw from the discussion is that the Competition Act in Canada just doesn't work to protect farmers' interests.

As well, Mr. Orb talked about the profits of companies being astronomical. I wonder, Mr. Chair, if we could direct our research staff to do some work in that area. I believe the NFU has done some in the past, but it could be brought up to date, if that's possible.

I don't want to pile any more work on J.D., but we will anyway.

[The Chair, Conservative, James Bezan]

On that point, Mr. Easter--and this is something we can discuss at the end of the meeting--do we want to have a company undertake a review or put together some of the current numbers so that we can put together a better picture of what the input prices are?

We do have the numbers that are coming out of the KAP study, also from the Thomsen Corporation, Ridgetown College, and the University of Guelph, which did the study for Ag Canada.

Maybe we need to undertake our own study to get a clearer picture of where these prices are at right now.

[Wayne Easter, Liberal, Malpeque, PE]

Yes, I would be in agreement with that.

[The Chair, Conservative, James Bezan]

Okay. I'll add some time to you.

Go ahead.

[Wayne Easter, Liberal, Malpeque, PE]

Double the time, will you?

[The Chair, Conservative, James Bezan]

We are into five-minute rounds.

[Wayne Easter, Liberal, Malpeque, PE]

Darrin, you make a recommendation to act to rebalance market power. I agree with your recommendation, in fact, but we do have a problem in that the government, with Bill C-46 before the House, is going in the opposite direction. That bill basically makes farmers who are elected to the board of directors of the Canadian Wheat Board voiceless. It makes the farmers who elected them voiceless as well. They're denying in that act the necessity to consult with the board. They're also nullifying the requirement to hold a plebiscite on the specific legislation they're trying to put forward.

I'd like your comments on that.

The bottom line is that power and control are being taken from the farm community and being transferred either to the bureaucrats in Ottawa or to the government itself and the ministers. It's being taken away from the farm community.

Perhaps you could comment on that as well.

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

I have a point of order.

[The Chair, Conservative, James Bezan]

On a point of order, Mr. Storseth.

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

It should be noted on the record that this is Mr. Easter's extremely slanted opinion on this. This is just to set the record straight, Mr. Chair.

And could we get the relevance to what the witnesses are actually here to--