Agriculture Committee on March 24th, 2009

[Wayne Easter, Liberal, Malpeque, PE]

To take a minute of Mr. Valeriote's time, Mr. Chair, I think the record should be cleared up in terms of the misinformation that Brian is trying to draw out. I'll go back four years. The contingency fund in 2008 had a $28.9 million deficit. There was a $9.2 million surplus in 2007, a $44.3 million surplus in 2006, and a $48.6 million surplus in 2005.

Mr. Chair, the fact of the matter is this. In terms of receipts and revenue, the revenue for the Canadian Wheat Board was $8.4 billion last year, which was up from $4.9 billion the year before. They recognized they'd beaten all international competitors in terms of prices returned to the farmer. Mr. Chair, they did it at a cost of 9¢ per bushel. I'd say that's pretty good.

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

Are you going to let them comment on that, Wayne?

[Wayne Easter, Liberal, Malpeque, PE]

No.

[Frank Valeriote, Liberal, Guelph, ON]

I would like to ask a question, Mr. Chair, about public research, and I'd like to ask this of Mr. Phillips, Mr. Robertson, and indeed, if there's time, Mr. Otto.

I come from a community, Guelph, where the University of Guelph has a great deal invested in public research and transferring that research, that R and D, into jobs. My vision is that farmers will not only feed communities, but they'll also feed industry with the raw materials that are needed. I'm just wondering, when you talk about public research, what features you see as fundamental in any research policy the government would come up with. I have a sense already that it needs more money invested. But apart from money, what other features do you think should form part of that policy?

[Doug Robertson]

For one thing, one of the problems we have right now is that these programs have a tendency to go on for three years on funding, whereas most of these research projects...for instance, to develop a variety, we're looking at ten to twelve years. It needs to be on an ongoing basis. You can't be doing this stuff in three-year or four-year shots. You've got long-term research projects. You can't keep good research staff around if they think they're going to spend all this time getting the project started or into the main vein and then all of a sudden funding is cut and they have to go somewhere else. We've lost a lot of good researchers because of that type of thing. That's one thing. We need stable, long-term funding.

The other problem we've had, which I've mentioned, is that agronomics research has been the one thing.... It's easy to look at funding at the varietal end of things. Private companies like to fund the varietal end of things because that's an easy win for a company. If I were an investor in a company, that's what I'd want to fund too. Get money from sales of seed. But the part that doesn't get covered is agronomics. Here we play into talking about doing things better for the environment and whatever. Because of the way we're seeding now, with lower-impact seeding, we could cut back a lot on some of the inputs that are being done, if it were properly targeted to where it has to go. This is becoming a buzzword in the fertilizer industry, mostly because they want us to feel friendly towards them after last year--the right product at the right time and the right place. With GPS and variable seeding technology and variable rate technology, you're able to do that, to be able to say, okay, this hill needs a little bit more fertilizer, so we'll put it on there. But the agronomics research for that has not been done and is not being done. That's where it's being shortchanged. So agronomics would be the second.

[Frank Valeriote, Liberal, Guelph, ON]

Does anybody want to add to that briefly? I do have another question and I don't want to lose all my time.

[Richard Phillips]

Just very briefly, I know one concern within the Ag Canada researchers is that there's been a move to push them to say you should only be researching things that can be commercially viable. Maybe there needs to be a split, where you're working on bioproducts or the value-added end of things, but you also go back to what Doug said: there has to be enough focus on the core agronomics, whether it's the Quebec wheat farmers, who have a fusarium issue, or the Atlantic farmers or the Prairie farmers. Core agronomic research must be done as well.

[Frank Valeriote, Liberal, Guelph, ON]

Can I have one short question?

[The Chair, Conservative, Larry Miller]

Your time has expired, Mr. Valeriote.

Ms. Bonsant or Mr. Bellavance.

My mistake. It's Mr. Richards.

[Blake Richards, Conservative, Wild Rose, AB]

Thank you, Mr. Chairman, and thank you to all the witnesses here today. It's always good to hear from farm groups, but even more importantly to have a chance to hear from producers who are dealing with the policies we are talking about here. I particularly want to welcome Mr. Robertson as a farmer in the Carstairs area, which is in my riding.

Mr. Davis, I appreciate your being here today as well. You have joined the growing chorus of people we have had before us who have talked about the importance of exports and appreciation for our government's direction in that area to try to see markets open up. I'd love to give you a chance to comment on that, but I'd like to spend some time on the Wheat Board. I appreciate your comments and your recognizing that government is moving in the right direction on exports.

I want to spend most of my time on the Wheat Board. I hear from grain farmers in my riding all the time about their inability to make their own marketing choices. Farmers are some of the most industrious and innovative people in this country, but they are being hampered severely by the inability to market their own products because of the monopoly of the Canadian Wheat Board. They are demanding the ability to choose whether to market their products through the Wheat Board or to market for themselves in the world market. Our government certainly recognizes the need for this, and the only thing standing in the way is the opposition parties across the way. I know this would make a huge difference for our farmers and I know how important it is.

Last year we saw the Wheat Board, with over $7 billion in sales, which was a result of a combination of record high global grain prices and a high production of wheat durum and barley by our prairie farmers. However, millions of dollars of farmers' money--and I'm going to emphasize farmers' money--were lost as a result of the poor risk-management practices of the Canadian Wheat Board.

The Wheat Board has been quoted as saying it understands the importance of direct accountability to all producers and it's committing to sharing the results of a review process.

I'd like to pick up on the question from Mr. Storseth, because I know Mr. Robertson wanted a chance to answer that question and I would like to give you that opportunity. Do you think there needs to be an investigation of the Wheat Board's losses?

[Doug Robertson]

Mr. Ritz indicated that the Auditor General indicated to him she couldn't do anything for two years. That's certainly not acceptable. If there is no way she can do it, I'm sure he could find an independent group to look at it. It's also been indicated that the Wheat Board was willing to have someone look at this report they had done for them by Gibson. Examining a report that was done by their former employee I don't think is a great expenditure of our time. We really need to have a look at the....

I have no problem with the pooling side of things. This is where it's critical. For those who want to pool, I have never disagreed with people's ability to pool. If I were a farmer pooling, I'd be really upset if I knew that money that was supposed to go into my pool was being rerouted into a free market program I didn't want to participate in. We'd been told for years that those two were going to be kept separate and that's what the contingency fund was for. We found out that's not what's happening. We need to have this clarified.

What's going on with the contingency fund and what's going on with those trading accounts? No matter what the board wants to spend this year, they lost a lot of money trading grain. Anyone else would have been fired over this. We need to get to the bottom of this.

Yes, we're calling for an independent review done especially on that trading deficit. We don't need to look at the pooling accounts, the office work, or anything like that. We need to look at that trading deficit and the contingency fund.

[The Chair, Conservative, Larry Miller]

Thank you.

Your time has expired, Mr. Richards.

We now move to Ms. Bonsant.

[France Bonsant, Bloc, Compton—Stanstead, QC]

Thank you very much, Mr. Chairman.

Unless I am mistaken, the Canadian Wheat Board and supply management are similar things.

I would like to know if the clients of the Canadian Wheat Board are all large farms or if they tend to be small farms. I do not know the situation out West, but I know that in my riding almost every week a farm goes out of business. Supply management helps farmers by providing them some level of income.

Does the Canadian Wheat Board have a similar role helping small farmers to meet their needs? Without that income, small farmers will go out of business. This is why I ask. Is that also how it works in your area?

[Brian Otto]

I appreciate the question.

The first thing I'd like to make a comment on is your comparison of the supply management and the Canadian Wheat Board being the same. There's a distinct difference between the Canadian Wheat Board and the SM-5. With the SM-5 you control production and you set your prices. The Canadian Wheat Board does not control production and it doesn't set prices. It's a price taker in the world marketplace, entirely different from the supply management that you're referring to. So to compare the two as being the same—they're not at all. That's like comparing a cat and a dog and calling them the same.

[France Bonsant, Bloc, Compton—Stanstead, QC]

Right. This is why I was asking the question. I was told by the government that we do not have too much farming in Canada, only too many farmers. This is what scares me. In other words, big farming will swallow up the small farms.

Once a producer gets a monopoly, will this impact on world prices? We know that once there is no longer competition between producers, only a monopoly, the person with the monopoly sets the price and decides when to sell and to whom.

Do you see any danger in this type of situation where the big fish eat the small fish, or do you embrace this vision?

[Brian Otto]

Let's be clear: even though the Canadian Wheat Board is a central desk marketing agency with monopoly powers, it's only within Canada. They do not have a monopoly on the price of wheat in the world. The price of wheat in the world is set by a competitive bidding process in Minneapolis, Kansas City, and Chicago. So whatever prices they quote will be based on a world competitive market. If we're looking at the Canadian Wheat Board to protect the smaller farmer, they don't have the ability to do that because they are price takers, not price setters.

[France Bonsant, Bloc, Compton—Stanstead, QC]

Thank you very much.

I would like to direct a question to Mr. Marsden regarding sugar.

Where does sugar cane come from? Do we grow it in Canada or do we import it?

[Sandra Marsden]

We import raw cane sugar and process it in Canada because we can't produce cane. We also produce sugar beets.

[France Bonsant, Bloc, Compton—Stanstead, QC]

My colleague requested that in order to get labelled as a product of Canada and be bottled as a product of Canada at least 85% of the product should come from Canada. Excuse me if I do not express myself clearly. What happened was that we had olive jars labelled as “Product of Canada“. But we do not grow olives in Canada either.

When we asked for this 85% content rule, the government increased it to 98%. Do you believe that 2% of the sugar comes from sugar cane grown here? This means that no sugar at all is being made, grown and produced in Canada. So having a 98% requirement of Canadian content seems to be excessive.

[Sandra Marsden]

Our industry has been here, as I mentioned, since before Confederation. We can't produce sugar cane in Canada, so we have no choice but to import raw sugar.

Under the government's new policy our sugar is not produced in Canada, except for beet sugar produced in Taber. It's unfortunate for many food processors who use sugar that we have long considered Canadian who can no longer label many products “Product of Canada” that contain even small amounts of sugar. It's a problem.

[The Chair, Conservative, Larry Miller]

Thank you.

Your time has expired.

Mr. Lemieux is next, for five minutes.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Thank you, Mr. Chair.

I find it interesting that the Bloc supports the Wheat Board so strenuously, because not a single Quebec farmer is forced to sell grain to the Wheat Board, and I don't think the Bloc would ever impose a Wheat Board solution on Quebec farmers. There would be a revolt in your province.

I'd like to pursue the idea of sugar with Ms. Marsden. Especially in terms of the sugar beets grown here in Canada, how large is the domestic market and how large is your export market?

[Sandra Marsden]

Do you mean the market for sugar beets?

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Yes. I mean the sugar that comes from sugar beets.

[Sandra Marsden]

In fact, the only product that we can export to the United States, except in times of natural disaster, is beet sugar. That's under the U.S. rules of origin.