Agriculture Committee on March 6th, 2008

[The Chair, Conservative, James Bezan]

I will bring the meeting to order. We have quorum.

We're going to continue with our study on the high input costs facing Canadian farmers.

We have before us today for this meeting, Darrin Qualman, from the National Farmers Union; from the Saskatchewan Association of Rural Municipalities, Ray Orb; from the Animal Nutrition Association of Canada, Paul Wideman; and from CropLife Canada, Jill Maase and Peter MacLeod.

I welcome all of you to the table.

I ask that everybody keep their opening comments under 10 minutes, and then we'll open up the table for a discussion from our members.

Mr. Qualman, could you lead us off?

[Darrin Qualman, Director of Research, National Farmers Union]

Thank you, Mr. Chair.

I think you've all received the French and English versions of a four-pager we prepared. I'm not going to read it, but I'm going to refer to some of the graphs in it, so you might want to have it handy.

The National Farmers Union is extremely concerned about high input costs. We've watched them skyrocket. What we're hoping to bring to the attention of the committee members today is that as grain prices go up, we're expecting that input costs will go up very dramatically, such that we are very worried that it will be the fertilizer, chemical, seed, and fuel companies that will really capture most of the windfall from high grain prices.

We've created a four-page brief for the committee members. In that brief we've used graphs and data prepared not by us but by Agriculture and Agri-Food Canada and by the input suppliers themselves. Your copy of that four-pager shows on the front page a graph that Agriculture and Agri-Food Canada produced a couple of years ago. It shows what total expenses have done on Canadian family farms.

If you look at that graph on the front page, you will see that the big middle wedge--our expenses, our input costs--expands over time until it consumes virtually 100% of Canadian farm revenues and pushes net farm income on the bottom down to zero. What we've seen over the last couple of decades is that increasingly the input supply corporations are capturing a larger and larger share, until today they're capturing virtually all of the revenue. That's why farmers' net incomes are zero or negative.

If you turn the page of the four-pager we distributed, you'll see on page 2 a second graph produced by Agriculture and Agri-Food Canada. What's interesting when you read Agriculture and Agri-Food Canada material is that it's clear they know a lot about this problem. They sometimes don't state it as clearly as farmers would like, but they clearly have the data.

In our handout, the second graph from Agriculture and Agri-Food Canada shows the same data, but this time with realized net farm income and with depreciation taken into account. What I want to point out from that graph is that around 1985 net farm income in Canada fell to about zero and has stayed there ever since. It's been negative and it's been positive, but if you add it up, realized net farm income from the markets in Canada between 1985 and today adds to approximately zero.

If you add up farmers' production over that period of time, it adds up to $689 billion, or two-thirds of a trillion dollars. What I'd like committee members to consider as they think about input costs is this: if, over the last couple of decades, farmers produced two-thirds of a trillion dollars in product and kept none of it, who got the two-thirds of a trillion dollars?

That two-thirds of a trillion dollars went to John Deere, Cargill, Agrium, Mosaic, Exxon, and the other input companies that supply farm inputs in Canada. Really that's what the big picture is on this one. The big picture isn't just whether Canadians are paying a little more or a little less than Americans, or whether fertilizer has gone up a little faster than chemicals, or vice versa. The big picture is that the very powerful transnational input companies have positioned themselves to capture 100% of the wealth produced on Canadian farms.

It's not just a farm issue. The other thing we note is that taxpayers in Canada have been called to come forward to generously contribute through farm support programs to try to keep family farmers on the land. As input suppliers have taken that two-thirds of a trillion dollars off our farms, the taxpayers have generously come forward to fill the gap. Over the last 20 years, taxpayers have put in almost $68 billion in farm support payments to try to keep farmers on the land. That's about $9,000 per taxpaying family.

From some views, these farm support programs look as much like transfers to input companies as they do transfers to family farmers. So when you look at the billions in farm support payments that are necessary to paper over the extraction of wealth by the input companies, this is really an issue that's of importance to all Canadians. Everyone who pays taxes should be interested in the fact that farm income is so low, largely as a result of input costs.

The next two graphs I'll refer to, on page 3, were not created by Agriculture and Agri-Food Canada; they were created by fertilizer companies. They're extremely provocative graphs, because what they say and show is that nitrogen prices follow grain prices, and fertilizer prices are linked to grain prices.

The top graph was created by Agrium Inc., one of the biggest North American companies, and the bottom one was created by Yara, one of the biggest European fertilizer companies. They're in complete agreement that their pricing is determined by grain pricing. When grain prices go up, they raise the price of fertilizer.

Well, what would we expect, then? Grain prices are up dramatically. What would we expect fertilizer prices to do? According to Alberta Agriculture, nitrogen prices are up 39% and phosphate prices are up 42% in one year, comparing December 2007 with December 2006. So we see fertilizer prices up approximately 40%, and that's completely predictable, because according to the fertilizer companies, they raise their prices when grain prices go up.

I'll just say one final thing, because I realize I have just 10 minutes. These fertilizer price increases are in response to higher grain prices; they're not in response to higher costs of making fertilizer.

There's a recent quote in our brief from Agrium Inc., and what they say is:

The combination of record nitrogen prices and only a slight increase in costs due to higher gas prices resulted in record total nitrogen margins of $151 per tonne.

These companies are reaping record margins. The back page of our brief shows they're reaping record profits. Fertilizer company profits right now are five to six times higher than they were over the last decade.

In conclusion, the NFU hopes that the committee members and other parliamentarians can take a large-picture view of this, that they can look at the history of input suppliers and how they've positioned themselves to make themselves the primary beneficiaries of the wealth we create on the land, and now they're making themselves the primary beneficiaries of these grain price increases. We hope they can look into this and that they can speak courageously and clearly about this, and that they can then work with farmers to rebalance the power between farmers and input makers, because it is market power that really determines how the profits are allocated in the system. Because of the imbalance in power, there's an imbalance in profits.

If you had to sum up the farm crisis in one sentence, it would be this: farmers are making too little because others are taking too much.

[The Chair, Conservative, James Bezan]

Thank you.

Mr. Orb, could you bring your comments, please?

[Ray Orb, Member of the Board, Saskatchewan Association of Rural Municipalities]

Thank you, Mr. Chairman.

I'm honoured to be appearing in front of the standing committee. SARM President Marit sends his regrets due to other commitments.

The Saskatchewan Association of Rural Municipalities is an umbrella association for all of Saskatchewan's 296 rural municipalities. All the agricultural land in Saskatchewan lies within these boundaries.

Some particular issues that SARM would like to highlight in this presentation regarding high input costs include: the difference in fertilizer prices between the United States and Canada; the value of programs such as the own-use import program; and the value we see in trying to harmonize the Canadian regulations that govern these products with countries like the United States to achieve a more level playing field for our producers in the North American context.

My name is Ray Orb. I am a director with SARM and the reeve of the Rural Municipality of Cupar, which is about 80 miles northeast of Regina. My wife and I operate a grain farm and a cow-calf operation, and have done so for 29 years.

During all the years my wife and I have been farming, we have never seen such buoyant grain prices. Many of the commodities, such as flax, canola, rye, and field peas, have recently set records in old crop prices. Because of low-crop carryover and low stocks-to-use ratios, many analysts are forecasting higher prices for new crops as well.

As the standing committee knows, there is a crisis in the livestock industry. Although the hog industry is in a different situation, we think the cattle industry will survive because many of our operators are more diversified in the grain industry and have become used to livestock profitability being more cyclical in nature.

Over the years, many of my colleagues have publicly stated that if farmers are required to sell their commodities at world prices, they must have the right to purchase their inputs at world prices as well.

The rapid increase in fertilizer prices has not gone unnoticed by SARM either. The Agriculture and Agri-Food Canada bi-weekly bulletin from March 2007 estimates that the average price paid for fertilizer in Canada increased by 3.9% due to increased demand and decreased supply. They also indicated that increased fuel and energy prices would add to the cost of fertilizer. This 3.9% increase in fertilizer prices equals about $99 million. They estimate that every one cent per kilogram increase in price adds about $61 million to Canadian farmers' annual fertilizer bill.

As an example, the price for nitrogen fertilizer in my area since December 2007 has increased from $595 a tonne to $605 a tonne--an increase of 2%. However, phosphate fertilizer, which is one of our basic building blocks in growing a good crop, has increased even more rapidly, from $615 a tonne in December to $839 a tonne as of March. This is an increase of 36% in the same time period.

Keystone Agricultural Producers from Manitoba conducted a study from April 15 to May 15, 2007, and compared fertilizer prices at various locations in both Manitoba and North Dakota. The results indicated that average fertilizer prices were 33% higher in Manitoba versus those in North Dakota.

As a specific example, the price of anhydrous ammonia was 63% higher, and liquid phosphate prices were 41% higher in Manitoba than in North Dakota. Their study also discovered that a large amount of the fertilizer being sold in the U.S. is coming from a Canadian source. That begs the question as to why fertilizer companies can use Canadian natural resources to produce fertilizer and sell it at a lower cost to American farmers than to Canadian farmers.

David Rolfe, then Keystone's president, was quoted as saying:

This is essentially providing a subsidy to American farmers at Canadian farmers' expense, and governments have full responsibility to investigate and correct this situation on behalf of our producers.

SARM agrees with this statement and encourages the federal government to investigate this serious discrepancy on behalf of Canadian farmers.

Farm pesticide prices are also on the rise, and a large price differential exists between similar chemicals sold in Canada versus the United States.

SARM believes the federal government was providing a price management tool for producers that would allow them to import lower-priced U.S. chemicals through the own-use import program. In 2005 the OUI program allowed producers to obtain 3,146 permits to import 5.75 million litres of ClearOut 41 Plus, which is a generic glyphosate.

In July 2007 the OUI program was replaced with a grower request own-use program. At that time it was our understanding that the GROU program was going to simplify both the permit process and a process for establishing program eligibility, and that a larger number of products would be made available for import. This sounded great on the surface; however, we still raised concerns through letters and meetings with Minister Ritz and the Pesticide Management Regulatory Agency that under the new program products needed to be identical, not equivalent in formulation, to qualify. We feared this would exclude many products.

Since the introduction of GROU, we have heard concerns from our members that the program isn't working as it was intended. The list of products eligible for import under the program has dwindled from eight products to now only five. Also, the GROU program requires that all empty containers from imported products be recycled, and manufacturers have established large recycling fees for these containers. In some cases, this has made the end cost of imported products more expensive than their Canadian equivalents, resulting in no benefit to producers from importing.

Because the program has been proven ineffective in its first season of operation, SARM requests that the federal government and the PMRA extend the OUI program until the GROU program can be proven effective.

In a time where the total net income for Canadian farmers has declined substantially over the past 30 years and input costs continue to escalate, programs allowing producers to access lower-priced U.S. chemicals are very much welcome, because Canadian agricultural commodities must compete in a global market and farmers need competitively priced inputs to compete. That is why the savings that have resulted from the OUI program have been so significant for a number of producers.

Saskatchewan farmers and farmers across Canada are at risk of losing millions of dollars if the OUI program is not maintained. We have made a formal request to Minister of Agriculture and Agri-Food Ritz and the Pesticide Management Regulatory Agency that the OUI program be maintained and that farmers be made aware that this program is available to them.

To ensure that our producers maintain a competitive advantage in the world market, we believe that regulations governing farm inputs such as pesticides, fertilizers, and fuel should be harmonized within North America wherever possible. This would allow competitively priced inputs to flow more readily across the borders within North America, and this would in turn ensure that our producers had access to the most competitive prices for their inputs and would lower input costs.

In conclusion, SARM recognizes that the evidence of higher prices for both fertilizer and farm chemicals indicates two anomalies that require further investigation.

First, KAP's study was conducted in 2007, when our Canadian dollar was at 80¢, and they noted a 33% average discrepancy in the price of fertilizer between Manitoba and North Dakota. Now that our dollar has improved, you would think these price discrepancies would have remedied themselves. We are not seeing evidence of that.

Second, since the majority of the fertilizer, especially nitrogen, is produced right in Canada, most of it in Saskatchewan, you would think that Canadian producers would recognize a lower price, but instead, in some cases U.S. producers are paying less.

As stated in the KAP study, PriceWaterhouseCoopers noted some reluctance on the part of dealers to discuss possible factors that may be contributing to price disparities, and SARM has met with the same opposition when attempting to study such disparities. Therefore, SARM would request the following of this committee.

First, SARM would ask the committee to encourage the federal government to study the reasons why these disparities exist between input prices in the United States and Canada to determine whether or not customers, namely farmers, are being placed at a competitive disadvantage because of unfair price-fixing or other factors.

Two, SARM would ask this committee to encourage the federal government to reinstate the OUI program until the GROU program can be proven an effective replacement.

Thank you.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Orb.

Mr. Wideman.

[Paul Wideman, Executive Director, Animal Nutrition Association of Canada]

Thank you, Mr. Chairman.

I sit on the board of directors of the Animal Nutrition Association of Canada, ANAC for short. I am the president of W-S Feed & Supplies Ltd. , a 40-year-old commercial feed company based in Conestogo in the Waterloo region of Ontario. ANAC is the national trade association of the Canadian feed industry. It represents companies that manufacture commercial livestock and poultry feed, as well as the suppliers of feed-related goods and services.

ANAC appreciates this opportunity to speak to the committee about the critical issue of rising input costs and their impact on farmers and other agricultural stakeholders whose livelihood is linked to that of farmers. The feed industry is certainly one of those stakeholders.

Agricultural producers are our suppliers and our customers as well. It is important to bear in mind that Canadian livestock and poultry producers represent our entire customer base. When they face serious challenges in their business, we face serious challenges in ours.

The major commodities used to make feed are corn and soy. Higher prices for these inputs have also driven up the cost of other protein and energy-driven ingredients used in feed.

Statistics Canada recently reported that between September 2006 and 2007, barley prices in western Canada rose 60%, while corn prices in Ontario increased over 50%. Since September, prices have continued to escalate. Corn cost $170 a tonne in Ontario on Labour Day weekend; it now costs $200. Soybean meal complex has risen from $313 a tonne in September to a current cost of $430.

Feed manufacturers are also paying considerably more for micro-ingredients, the vitamins and trace minerals that add nutritional value to feed. Many of these products are made using fossil fuel production and have surged in cost because of rising global oil prices.

We are an industry paying more for inputs, but we are also a provider of inputs. Our feed is a major input for producers. In fact, it is the largest single cost of animal production. For example, 75% of the cost of raising a hog is the cost of feeding a hog.

Our industry operates with extremely tight margins, and our commodity inputs make up at least 85% of the total cost of making our product. We have to pass on our higher costs to our customers. We have tried to delay passing on some of our costs. For example, when fuel surcharges started showing up, many feed companies didn't pass on the extra cost to farmers right away, hoping it was a short-term trend. But these surcharges have become so prevalent in the transportation industry that we now have to pass these costs on quite quickly.

Some might ask why the feed industry is hurting if it can pass on higher costs. This comes back to the point that the health of our business is inextricably linked to the health of our customers' operations. Rising input costs are causing some farmers to go out of business, and our customer base is shrinking.

In southern Ontario a number of multi-site feed operations have had to close down mills, and the situation is even more serious in western Canada. ANAC estimates that at least 5% of facilities have either shut down or are in the process of closing their doors. We don't believe we have seen the worst of this, because some companies are holding off on closing facilities in the hope that the situation will turn around in a few months. We see little sign of that happening.

As you are well aware, the exchange rate is also having a detrimental impact on livestock producers. The last time we had expensive feed in Canada, in mid-1990, producers could cope better with higher input costs because the lower dollar meant good prices for meat exports.

The exchange rate has affected us as well. A lot of Canadian feed mills located close to the border used to sell a significant amount of feed to the northern U.S. But the sales have essentially stopped now, because of the dollar being at par. This is another factor in the closure of feed mills.

As we all recognize, the solutions to rising input costs are complex. I would like to address a couple of areas where ANAC believes improvements can be made.

There are a number of new technologies and products available around the world that can lower the cost of feed. However, regulations in Canada discourage the use of many novel, alternate ingredients, because the process of getting new products approved is complex and time-consuming.

ANAC recommends amending the regulations governing feed ingredients to ensure that the market can more easily get access to new types of lower-cost ingredients.

Overall, the regulatory regime for the manufacture of feed is out of date. This regime does not allow the feed industry to respond quickly to crises, such as the current high ingredient costs. There are a number of low-cost ingredients that could, in theory, be imported from the U.S., but they are either not approved or would get held up at the border.

Feed is also more expensive in Canada because we have additional food safety requirements included for BSE. The feed industry now understands the importance of these safeguards, and ANAC worked closely with the federal government to establish mechanisms for implementing the BSE safety measures. But complying with these regulations costs more money. At the same time, our producers are competing with imported meat products produced under less stringent rules. There isn't a level playing field.

ANAC would like to see reforms to reduce the cost of compliance while assuring the same high safety standards, and we recommend that the government provide producers with funding to offset the incremental costs associated with the enhanced BSE regulations.

Before closing, I would like to comment on Canada's biofuels strategy. The feed industry believes strongly that relying on corn as the foundation of our strategy was shortsighted. We should focus on biofuels from materials that don't have a direct impact on the food chain, such as wood waste or the byproducts of methane production. The U.S. is moving in that direction in its latest energy bill, exploring fuels from other biomass sources to alleviate the pressure that has been put on the corn industry.

Thank you very much for your attention. I look forward to answering your questions.

[The Chair, Conservative, James Bezan]

Thank you.

Jill.

[Jill Maase, Vice-President, Plant Biotechnology, Government and Public Affairs, CropLife Canada]

Thanks.

Mr. Chair and members of the committee, I'm Jill Maase, vice-president of plant biotechnology, government and public affairs, for CropLife Canada. With me is my colleague, Peter MacLeod, vice-president of crop protection chemistry.

We certainly appreciate the opportunity to appear before the standing committee today as you deliberate on the impact of input costs on farmers nationwide.

CropLife Canada is the association representing the developers, manufacturers, and distributors of plant science technology, pesticides and plant biotechnology. Our members aim to be at the leading edge of agricultural innovation by providing valuable inputs to our farmer customers, who in turn, through agriculture, are providing solutions to society's needs and challenges. Food, feed, fuel, industrial products, environmental solutions, and even pharmaceutical products can all be produced from plants, and inputs are needed to grow these innovations and commodities. The committee is very familiar with the benefits that biofuels are bringing to Canada. Our members deliver the grains and oilseeds that are feedstock for today's ethanol and biodiesel production.

Here are some other examples of where plant science technology is taking agriculture today: high-yield, high-starch corn for biofuels; insect-resistant corn; herbicide-resistant soybeans and canola, and no-till agriculture, enabling more efficient weed management and reduced fuel use overall; reduced risk pesticides, ideally suited for integrated pest management; and there are others.

Our products are delivering real value to farmers, the environment, and consumers. For this current study, the standing committee has heard a great deal already from witnesses, such as the PMRA and grower organizations, about the own-use import program and the new grower-requested own-use program taking its place.

CropLife Canada, and my colleague Peter MacLeod, were active in this and participated in the own-use import task force, and we would like to offer some comments on what led up to the task force and how it came up with its final consensus recommendations.

Let's look at the history of the issue. The own-use import program was first conceived as a price discipline mechanism at a time when record low farm income was the norm and farmers were understandably seeking the lowest input cost possible. Many pricing studies were conducted, and some products were cheaper in Canada and some were cheaper in the U.S.

From the start of OUI in 1993 to 2004, only one product was approved for importation through OUI. In 2004 the PMRA allowed intermediaries or agents to act on behalf of farmers on the basis of the chemical equivalency of the product with one registered in Canada. In 2005 permits for over 5.7 million litres of unregistered pesticide were issued and the pesticide imported, and the farmer own-use importation program was now on a commercial scale.

With the program's growth, concerns were raised by a number of stakeholders, including farm groups, our own manufacturers, dealers, environmental NGOs, provincial governments, and grain merchants.

The OUI task force was convened by Health Canada in November 2005 to address these concerns, including: the potential for trade disruption through the use of unregistered pesticides on commodity crops being exported; safety, including being offside with environmental farm plans and other safety measures; farmers having to bear all the liability for the performance of the imported product; an investment chill and the potential to increase the technology gap, something we hear a lot about from farmers; and intermediaries not bearing any Canadian registration costs or responsibility.

The end result was that a permit-based system through OUI overtakes the registration-based system. Our members wondered, which way was it going to be? Why jump through the registration hoops when others get around them?

The OUI task force quickly realized that the issues facing farmers moved well beyond price discipline mechanisms, and those issues included access to the latest technology at the same time as U.S. competitors and the role of regulatory harmonization in achieving this goal; how to fill the technology gap with a greater number of minor-use products; environmental stewardship and the management of containers; intellectual property protection and how it supports new technology development; and improved access to generic products.

CropLife Canada supported the task force consensus because it took the larger perspective of long-term needs of both farmers and the industry. As the standing committee knows, all members of the OUI task force signed on, including the Canadian Federation of Agriculture, other farm groups including Pulse Canada, the Farmers of North America, as well as our industry and government representatives.

This makes it a very powerful document of consensus, delivering recommendations on the following: to initiate a pilot GROU program, where growers identified 12 potential candidate products, and this was done in 2007; access to OUI was continued during the pilot program; stewardship programs, including container management, would be worked out through discussions with our CropLife Canada members, Agriculture Canada, and provincial government representatives; the PMRA would move forward with an improved generic product registration system; and price monitoring would continue by Agriculture Canada.

So where are we today with this?

Now we have the only product approved from the OUI program. It's now registered as a generic product in Canada and is also a candidate for the GROU program for this year. We have some seven products already approved for GROU, as well as another half a dozen under consideration for this year. We have improvements to the generic product registration system now in force. We have CropLife Canada members embracing North American registrations for many new pesticide registrations, and we have a minor-use pesticide program that is bringing in more minor-use products. We have our industry's commitment to provide the necessary data, which is both detailed and expensive to compile, for the Pest Management Regulatory Agency to assess GROU applications and our commitment to collect those containers from farmers. Our industry even supported the extension of the current OUI program until GROU was up and running.

This is, by any measure, tremendous success, in providing growers access to the products they need, expanding the potential for importation of products, and maintaining the health, safety, and environmental protections that Canadians expect. But part and parcel of this success is the implementation of GROU and the winding down of OUI. By having the two programs exist in tandem, there's little incentive for our members to participate in providing the information needed to approve GROU candidate products, to financially support a container stewardship program, and to continue to develop new products for North American registration under joint reviews or with a NAFTA label.

In closing, CropLife Canada members are committed to delivering the best technology to Canadian farmers, and we strongly urge the committee to support the implementation of the GROU program for this coming season and evaluate its success based on the outcome following this season. With the season behind us, farmers and parliamentarians alike will have a better sense of the value of GROU.

Thank you.

[The Chair, Conservative, James Bezan]

Thank you, Madam Maase.

With that, we're going to go with seven-minute rounds.

Mr. St. Amand.

[Wayne Easter, Liberal, Malpeque, PE]

On a point of order before we start, Mr. Chair, there's another sheet that we've been given. Where did that come from and why do we have it?

I do note that program payments are down substantially from 2006.

[The Chair, Conservative, James Bezan]

Yes. That was part of the NFU's submission.

[Wayne Easter, Liberal, Malpeque, PE]

Okay, thanks.

[The Chair, Conservative, James Bezan]

Mr. St. Amand, for seven minutes, please.

[Lloyd St. Amand, Liberal, Brant, ON]

Thank you very much, Mr. Chair, and thanks to all of you for your presentations to us this morning.

It has long troubled any informed person that while the farmers' share of the cost of food is steadily on the decline, the share of others is increasing all the while. It's not cyclical. As the graph from Mr. Qualman very palpably notes, total expenses being absorbed or being confronted by the farmer are on the increase and there's no ebb and flow. They're just steadily on the increase, as far as I understand the graph.

Simply put, the problem has been identified: the farmer is receiving too little. I suspect farmers are, in many instances, teetering on bankruptcy or insolvency. Of course, the issue is always what you do about it. I appreciate that there have been some recommendations put forward, but if I can ask you, and this is perhaps an unfair question, if any one of you were to be appointed Minister of Agriculture next week--it's not likely to happen, mind you--what, apart from commissioning studies, are the tangible steps you would take to immediately ease the pressure on farmers? Is that at all fair to ask you to...?

[The Chair, Conservative, James Bezan]

Mr. Qualman, go ahead.

[Darrin Qualman]

Thank you very much for the question. We've heard about own-use importation. Ways of creating competition in the market are a good thing.

There are a number of other things we can do. One, we can get some good data. In the late 1990s, Statistics Canada ceased publishing input cost data in Canada. We had a long go-round with them. If the committee could do something tomorrow, could they please get Statistics Canada to resume that data set that they terminated in the late 1990s? You heard a lot about prices. Everyone's got different prices from different places, and that's because Stats Canada--due to cost-cutting and pressure from the industry--just quit telling us what fertilizer cost and what chemicals cost. So restart that.

Two, we need to look at moving agriculture to less input dependence in this country. Input costs are high and they're going up, but if you're input dependent, that makes you more and more vulnerable. The biggest margins and the most profitable farmers in Canada are often organic producers. Not everyone can go organic and we don't want to push everyone in that direction. But balancing the push to high-input agriculture with a push to alternative input-optimized and organic would be a good thing.

The final thing I'd say is stop the mergers. The reason we got to this point is--

[Lloyd St. Amand, Liberal, Brant, ON]

Stop the mergers of what?

[Darrin Qualman]

Mergers of input supply companies, mergers of.... We used to have half a dozen machinery companies. Now we've got two and a half. Cattle producers are suffering because we're down to two and a half packers.

[Lloyd St. Amand, Liberal, Brant, ON]

Anybody else?

[Jill Maase]

I'd have to say that we really feel that the growers' own-use import program, the new program, is going to provide very good value and more products to farmers.

I'd also like to repeat what I said earlier about our commitment to a faster generic approval of products in Canada. That is now in place, and we've been advocating for that since 1993. Most of the committee members are well familiar with how long it takes to get change with the PMRA, but we're pleased that that's now in place. That will certainly make a big difference.

[Lloyd St. Amand, Liberal, Brant, ON]

I'll defer to my colleague, Mr. Boshcoff, for my remaining time.

[The Chair, Conservative, James Bezan]

You have about two and a half minutes.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

Thank you very much. We've heard previously at these hearings on input costs from groups such as the Canadian Association of Agri-Retailers, and all of you have mentioned fertilizer costs in one way or another. Their concern, of course, is with site security costs forcing their member retailers out of business because of the fencing and security things that have changed.

What will that do to communities if you lose that focal business operation? What does that do to input costs, and is it a likely scenario, and a reasonable one to expect, that if they can't afford to put the security in, they'll pack up?

[The Chair, Conservative, James Bezan]

Mr. Orb, do you want to tackle it?

[Ray Orb]

Yes, I could address that.

I guess it goes back to the company's cost of production. Some of the information we've been finding is in fact—and I know Mr. Qualman touched on it—mergers of some of these huge companies. Some of these companies have actually bought out their suppliers. They're truly vertically integrated. The third-quarter profits for some of these companies last year were just astronomical.

Fertilizer prices have gone up a lot more. The price of natural gas, which is a base for nitrogen fertilizer, really is quite stable, and it showed in Ag Canada's records, which have tracked anhydrous ammonia in the United States for years.

So what we're saying is we don't mind that these companies are making a profit, because we realize it creates jobs and it creates taxes, but at the same time we're asking it to be reasonable.

Last year, we saw the federal finance minister step in and say to the automakers in Canada, “Let's start lowering the price of your vehicles, because you're way out of line with the prices in the United States.” We were surprised that he said that. Maybe we should be asking the finance minister to say, “Look at the ag retailers in Canada, buying your products from Canadian producers and shipping them down to United States customers at a higher price. There's something wrong with the system.” We're asking the committee to look at that.