Thank you, Mr. Chairman.
I'm Brian Otto, president of the Western Barley Growers Association, and with me is another director, Mr. Rick Strankman.
My presentation is going to be a little closer to the farm. We represent western barley producers in western Canada, so I'm going to try to hone my presentation around western Canadian farmers and their production.
My presentation is going to be based on two main areas. One area is production agriculture and the growing, marketing, and transportation issues we face. The other very important issue that we consider to be a backstop to western Canadian agriculture is the value of publicly funded research.
I'd like to start with the production side of agriculture, and I'd like to start with a personal experience I had when I travelled to Australia to visit some of my friends in the farming industry last November. I had the opportunity to do a little bit of combining. I combined some Australian hard white wheat. I also had the opportunity to get in the truck with my friend's son and deliver that grain straight to port, an hour away. We didn't have to face any restrictions of railway or elevators to deliver in to. It was delivered right straight to port.
What I learned from this experience was that the difference between their agriculture and ours, and what we face in western Canada, is that we are at a distinct freight disadvantage when we come to competing with Australia in a marketplace. It was a concern to me. What also compounded the situation, in my mind, was that Australia is selling into the same Southeast Asian markets that we are. Besides the landlocked freight rate of about $30 to $40 a tonne to get my barley from my farm to Vancouver for export, I also face an ocean freight rate that is much more than what they would face in Australia.
It brought home the point to me that we're going to have to do something in western Canada if we want to stay competitive with the products we're growing on the farm, and we're going to have to focus more on domestic processing of what we're growing in western Canada. We can't continue to focus on exporting raw product.
Unfortunately, the Canadian Wheat Board focuses on exporting raw product. There's very little focus on developing a domestic processing industry in western Canada, and that disturbs me.
I was at a meeting with Minister Ritz a little over a year ago, in January 2008, at which we were talking about market choice for barley producers in western Canada, which is something the Western Barley Growers Association has been striving for, for a number of years. At that particular meeting, Canada Malting made a public statement that they were looking to expand their malt capacity in the world, but they were not willing to look at western Canada to do it, because they were not willing to try to access their barley product through a single-desk marketing system such as the Canadian Wheat Board.
Three years ago, there was a malt plant being considered for western Canada. The people who built the malt plant decided to build it in Great Falls, Montana, because they were well aware of the difficulties in accessing barley product through the Canadian Wheat Board marketing system.
Last week Agriweek said that Canada is a net importer of American-milled flour. That disturbs me. Why are we importing American flour into western Canada when we are the number one producers of hard red spring wheat? It just doesn't make any sense. In this article it says that the main losers of milling capacity are in western Canada. Why is this happening? I think one of the contributing factors to this is our marketing structure. We can't continue to have a single-desk seller when we're trying to develop a value-added processing industry in Canada.
The last three examples clearly point out that we need to establish a positive investment climate in western Canada that will attract investment in value-added processing. There has to be something wrong with what we're doing, and we still think it's our marketing setup.
The Canadian Wheat Board likes to think they are emulating an open market system, a market choice system, with what they offer through fixed price contracts, basis contracts, cash-plus contracts, and other programs. The problem is that in any other country, when you're offering a basis contract, a fixed price contract, or what they refer to as a cash-plus contract--a direct contract between maltsters and barley growers--you need to have more than one player bidding for that contract. Right now all we have is the Canadian Wheat Board. They're a single player. You need a number of players in order to establish a clear price discovery system. Therefore I don't believe their particular approach to what they call market choice is working. There are no clear market signals to farmers that allow them to make good business decisions around their farming operations. We need to have clear market signals, and these are being masked today under the present system.
We firmly believe in the importance of research, and Doug Robertson talked a lot about that. I want to refer to a study done about three years ago by Richard Gray, an economist from the University of Saskatchewan. He talks about the return on research investment in wheat and barley. For every dollar invested in wheat research there's a $4 net return, and for every dollar invested in barley research there's a $12 net return. This clearly points to the value of public funded research to not only the agriculture community but the economy of Canada.
I'd like to give you an example of an experience I had on my farm in the beginning days of safflower. There was a little research programming going on at the Lethbridge Research Centre run by Dr. Hans-Henning Mündel. It was a safflower breeding program. He developed a variety called Saffire that was adapted to the very southern growing regions of western Canada. A group of farmers got involved and started with breeder plots, trying to see if we could grow it. We moved to field-scale trials and finally to what we called commercial production. Through all of this we needed the help of Henning, who was doing the breeding, and Dr. Bob Blackshaw, with chemical controls for weed control.
At the end of the day, a group of us formed a business and our own marketing company. We have markets in Japan and the U.S., and we've established a customer base across Canada. It's one small example of the value of public funded research and where it goes, but there are numerous other examples.
I have only one minute and lots more to say, so I'll leave it.
I want to stress the importance of A-base funding for public research. We have to continue to fund our research. We can't continue to withdraw money and reallocate it to other areas. Producers have stepped up to the plate. We have check-offs in place to support research, but we need the government to show their support for it. We have to address the inflationary aspects that have taken place in research and how that has taken away from their ability to do it.
Thank you very much, Mr. Chairman.