Agriculture Committee on March 24th, 2009

[Richard Phillips, Executive Director, Grain Growers of Canada]

Thank you for the question.

First of all, I was out making some maple syrup on the weekend. It's very fine Ontario maple syrup, so it's not just in Quebec.

We produce a lot of products even for the domestic market. We've seen a huge growth, especially around the urban centres, with people wanting the hundred mile circles and so on. There's a lot more local production for local consumption. There is a market for it, and I think a number of farmers and farmers' markets are doing very well. There's a lot of growth in that. But we have been blessed with a very rich land and a large ability to produce. That's why, with a smaller population, there'll always be the export side as well. I think there is room for both.

As producers, one of the challenges we have, especially in western Canada, is that we continue to ship large volumes of low-value commodities out. We're looking for ways to add more value. For example, if grain were at $300 a tonne and you were paying $50 a tonne to ship it, we'd rather see some value added, because the freight would have become such a high percentage of the cost, which puts us at a competitive disadvantage with other countries closer to water. What we would like to do is add more value to it, so that you're shipping products that are worth $1,000 or $2,000 a tonne; the freight then becomes a smaller percentage.

There are many areas we think we can move on that will put more money back into the grassroots. There are more jobs locally, there is more production, the service industries around those things work. We think there's a lot of potential, if we can move in that direction more than just being shippers of low-value products continually. We think this is one important step to help out producers.

[The Chair, Conservative, Larry Miller]

Thank you, Mr. Phillips.

Mr. Atamanenko.

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

Thank you for taking the time to be here.

In the same vein, I'm doing hearings across the country dealing with food sovereignty and food security. I'm listening to folks. A lot of people are saying that some of our trade obligations are making it hard for us to maintain our food sovereignty, and that it's hard for a lot of farmers to make a living.

A couple of years ago, this committee made a number of recommendations on food security. One of them was that we should encourage our government to have a local procurement policy when buying for federal government institutions. This was a unanimous recommendation. The push-back we got from the minister at that time was that we have to be very careful because of trade obligations. I want to reiterate that trade seems to be the main thing we're focusing on. Yet we've seen in the cattle industry over the last 20 years that, although trade has tripled, the cattle producers are going out of business and getting less than half of what they got 20 years ago. We just signed an agreement. We're in the process of signing agreements with some European countries that is effectively going to kill our shipbuilding industry, because we decided not to protect it.

This is the problem we're all wrestling with. How do we come to grips with it?

I believe, Mr. Robertson, you mentioned at the WTO that nothing should be excluded—or maybe it was you, Mr. Davis. Does that mean we just sign on at all costs? Does that mean that we forget about supply management for the sectors where farmers are actually making money? I understand that each dairy farmer stands to lose $70,000 if we sign on. As to the Wheat Board, if we sign on, we'll no longer have loan guarantees.

We're talking about an ideal world where we have free trade, where we sign these agreements. Since the financial crisis, various countries have put 47 protectionist measures in place. Should we not have a back-up plan? Should we not be going into this very cautiously? We're trying to get these ideal agreements, but we're seeing what's happening. Shouldn't we be doing something to protect our farmers and to guarantee a sovereign food supply? I think that's a question for all sectors of the agricultural industry. I don't know what that answer is. I'm sure we're all thinking about it.

We have protectionism; we have harmonization. A lot of folks mentioned in my tour that any produce coming into Canada should meet the same pesticide standards that we have, period. If we import apples or oranges from somewhere, they should meet the same high standards that we have for content.

Let's see if we can get some answers.

[Darcy Davis]

You raised a lot of the issues that are coming forward in trade. In questions that have been asked previously, there's this idea that trade and what's good for farmers are mutually exclusive, that trade can't be good for farmers. I don't think that's true. We've had previous trade deals where we didn't go far enough to get the kind of controls on other countries that we needed. With NAFTA, we got extremely good tariff-free access to the American market, which grew our cattle and pork industries. But we didn't get controls on some of the domestic supports they had, and this created problems when our currency rose.

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

We lost our vegetable industry in southern Ontario and B.C. because we used to have in-season tariffs and now we don't. What's your reaction to that?

[Darcy Davis]

It comes back to competitiveness. You have to have the ability to compete with those other products. You have to have the ability to sell to Canadian consumers a product that's as good as, or superior to, the imported product. Our wine industry has been a huge success story. They were extremely worried about any trade deals that were coming up, but by being competitive they've managed to rise above it. Every industry faces those challenges. If you tried doing it with tariffs and supports, you'd find that the products would come over the tariffs anyway, and then you'd end up in an even worse situation. Consumers would be paying far more than they should, and all of Canada would have to pay. Ultimately, the world is such that commerce is going on and we have to find our way in it. The best way is to view ourselves through a competitive lens, to see what we can do to come up with the best products we can sell into domestic and foreign markets.

[The Chair, Conservative, Larry Miller]

Go ahead, Mr. Otto.

[Brian Otto]

I can understand where you're coming from, but I have a real difficulty with creating false barriers to support agriculture, because eventually what happens with government support of any farming operation is that this money becomes capitalized into the operation and at some point they become less efficient and don't adapt as well to the changing world climate in agriculture.

I hesitate, as a farmer, to ask the government to protect me from my competition. I believe I can compete as long as I have regulations that allow me to do that. I embrace that. I don't want the government to protect me from the world marketplace; I will do that myself.

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

What if those people you are competing against have regulations and subsidies that make it difficult for you to compete in that market? What do we do then?

[Brian Otto]

I've been doing that for my whole farming career. I compete against the American farmer. In my operation it has forced me, or made me, adapt my operation to grow other crops and to become more efficient in my production in order to be able to compete. I have no problem in saying that in the marketplace today I think I can compete better than the American farmer, and survive, because I have the tools. I've been working with them my whole farming career, and I've had to do it.

[The Chair, Conservative, Larry Miller]

Thank you very much, Mr. Otto.

Your time is up, Mr. Atamanenko.

Mr. Storseth is next, for seven minutes.

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

Thank you very much, Mr. Chair. I'd like to thank all the witnesses for taking the time to come forward today to talk to us about the very important issue of competitiveness in our agriculture industry.

I want to start out with a comment to Mr. Robertson. You talked about some very important matters in relation to regulatory environments. I think you're dead on when you talk about the OUI program and helping to make the GROU program a better program than it is by making it faster, more efficient, and more competitive. There is no doubt that there's been a price disparity in the past, but OUI did help our farmers level out that price disparity in certain segments.

I do take a little umbrage to your point on bilaterals. I think it's very important in today's market to go after bilateral trade as aggressively as the minister is. You talk about the United States. I think that becomes part of our problem sometimes, in that we focus on the United States. In terms of the South Korean market, as far as I understand it, the biggest country to take up the void that was left is Australia, which has a population of 21 million, compared to our 32 million. There's no doubt we can compete with these guys if we can get in there and make good bilateral agreements. I agree with you there.

The other issue I would like to talk about today is the shippers' bill of rights. Mr. Easter talks about cost review versus level of service review, but what he happens to leave out is that our government did something in the last Parliament that our producers and our shippers had been requesting for an awfully long time. As many of you know, I worked with you on a 24-page report that I submitted to the minister on the shippers' bill of rights. It set out what we needed there and how we had to fight for the right thing. In that bill of rights came this level of service review, which came directly from our producers and our shippers. It said the first thing we have to do is to get this level of service review.

I thank you for your encouraging comments on that. Let's make sure we get this done and get it done properly, and then move on to the next step, but let's do it one step at a time.

What I primarily want to talk to you about today is competitiveness within our industries. I'm from western Canada, and my producers don't have the ability to compete in an open, competitive industry because the opposition parties have kept their hands on the backs of our farmers for the last three years in not allowing us to move forward with progress on the Canadian Wheat Board.

The Canadian Wheat Board often talks about how it provides pricing advantages right from the ground up for our farmers, yet we have a $60 million freight overcharge, $30 million of which comes from Wheat Board crops. I don't see the board going out there, fighting for our farmers, and getting the best price advantage when it comes to these things.

I'd like to ask Mr. Strankman, who I know comes from an area close to me, if he feels the Wheat Board does a good job in getting price advantage throughout the value chain for our farmers.

[Rick Strankman, Director, Western Barley Growers Association]

Would you like that answered in a single word, Brian?

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

No, I'd like you to extrapolate a little bit.

[Rick Strankman]

No, the Wheat Board is not working for us.

As for Mr. Atamanenko's comments regarding regulations and government action, I believe that government action and regulations are always reactive; they're never proactive.

To be proactive on this, for guys like Mr. Otto and me, we innovate on our farms. I grow grain that goes to an ethanol plant. I deal directly with the ethanol producer. I'm able to learn through wireless Internet, satellite transmissions, etc., that Baltic sea freight is $7 a tonne. I can't even haul grain to my nearby local producer or to a railroad port that would accept the grain for export at $7 a tonne. Those are some of the competitive things that we are aware of. We're hamstrung.

Mr. Storseth, you made a comment about the Wheat Board having their hands on the backs of producers. No, they don't have their hands on our backs. To me, it would involve pushing us forward, but they're not. They have their hands in our back pockets.

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

I couldn't agree more.

Perhaps I could ask Mr. Otto or Mr. Robertson to comment on this. As we all know, the Canadian Wheat Board took massive losses this year on their contingency funds. Do you believe the Canadian Wheat Board should transfer money from the pool accounts to make up for the huge losses in the contingency fund? Should the interest from the pool accounts go into the contingency fund?

[Brian Otto]

The contingency fund is a contentious issue for all western Canadian producers. No, they shouldn't be transferring money back and forth between pool accounts and the contingency fund. It was our understanding that when the contingency fund was set up eight years ago, there would be two separate entities under the Canadian Wheat Board. When looking at the financial statements over the last few years, they've been moving net interest earnings back and forth between pool accounts and the contingency fund.

We still haven't figured out why they transferred money this year from the pool accounts into the contingency fund. The contingency fund is allowed to run a deficit, and there's no limit on the deficit it can run. They had a $89.5 million deficit. Why did they transfer money from the pool accounts that should have gone to producers? It's the producers' money. It should have been paid back to them.

If you take a look at the contingency fund of three years ago, the contingency fund had $60 million. It was at the limit of what could be put in. Within three years it was in a deficit position and $150 million had been lost through the producer payment options program. We need answers on that one.

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

I guess that leads to this question. Do you believe there should be an investigation into these losses and transfers and how it's occurred?

[Brian Otto]

The Western Barley Growers Association has written a letter to the minister asking him to push for an audit of the Canadian Wheat Board. We do not mean an audit of their operations; we mean an audit of their investment desk and sales desk. We have to look at what they're doing, because the last audit didn't even come close to the day-to-day sales of grain of the Wheat Board.

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

Mr. Robertson, would you like to comment on this?

[The Chair, Conservative, Larry Miller]

Your time has expired, Mr. Storseth.

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

It's the same question, Mr. Chair. Mr. Robertson only wanted a chance to comment on it.

[The Chair, Conservative, Larry Miller]

Well, maybe he'll get a chance to do so, Mr. Storseth.

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

That's unfair.

[The Chair, Conservative, Larry Miller]

Mr. Valeriote.