Agriculture Committee on May 5th, 2009

[Laurent Pellerin]

There's no doubt about that. Farmers getting together to market their product under their choices is I think the best thing to do altogether, and the proof is there. The Canadian Wheat Board is one of our members, so we know very well what is happening in the grain sector in western Canada.

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

Indeed it is one of your members.

Would you agree with the generally stated analysis that 25% of market share is needed as the general threshold to exert influence over the market—or at least the Canadian Wheat Board's analysis that 20% is necessary? Would you agree with that?

[Laurent Pellerin]

I cannot give an exact figure on it, but there's no doubt that when farmers get together and keep their product in their hands and negotiate a price on the marketing of their product, they have a lot better chance for a better return from the market; there's no doubt about that.

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

But the question was, do you agree with the Wheat Board's assessment of 20%?

[Laurent Pellerin]

I don't have that quote.

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

Well, that is the Wheat Board's assessment. Unfortunately, in the wheat trades, they only have 14.5%. Actually, the Informa research document that came out last year shows that the only countries we influence market power in are countries such as Colombia, Ghana, Guatemala, and Venezuela. It doesn't seem as though we're getting a lot of premium.

As for barley, it's even less; of the top 20 barley global marketing countries in the world to which we export, we have no actual influence over those markets through the Canadian Wheat Board, because they're exercising less than 11% marketing influence.

Would you disagree with these numbers, or would you stick with the idea that a cooperative is the way to go?

[Laurent Pellerin]

There is no doubt that I'm a very great supporter of collective marketing. When farmers get together to market their product, there is no better choice. The big companies will never take care of the farmers; be sure of that. They never write in their business vision that they are there to build a better return for farmers. The farmers' organizations that cut through the collective marketing offer the best way to improve the return for farmers. There is no doubt about that.

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

I just have two more questions for you, sir.

One is this. The U.S. elevator bids have been higher than the final payments from the Wheat Board in five of the last six years. The average difference in price has been approximately $15.97 per tonne. That is a lot of money that our western Canadian farmers aren't getting.

I think we would both agree that quality, consistency, food safety, customer service, and reliability are things that we get a premium for. Is that correct?

[Laurent Pellerin]

Yes.

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

But that is not something that is reliant on a single-desk system.

The last thing I'll ask, and then I'll give you the floor, sir, is this. Seeing the price disparity we're getting, seeing all of these things, would you still argue that a cooperative is the best way to go? Would you recommend as the CFA position that there should be a mandatory marketing system for all of Canadian wheat, rather than just for western Canadian farmers'? Would you take that as the position of the Canadian Federation of Agriculture?

[Laurent Pellerin]

I don't have a problem looking at that on wheat.

I put in place in my past life a mandatory marketing system for hogs in Quebec, and during the same period, Manitoba farmers, through their government, decided to take off their collective marketing system. Farmers developed other options to market their pork. We export four to five million piglets to the U.S. We export live finished hogs to the U.S. We don't have an industry to kill and process our hogs. It is the same thing with beef. We are in a worse situation now, six years after BSE, than we were at that time, exporting more livestock to the U.S. and not having the processing industry in Canada. We have to look overall and analyze whether to make those decisions, and the collective—

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

But the question, sir, was not whether you would look at it, but whether you would take it as a policy of the CFA.

[Laurent Pellerin]

I have no problem with analyzing that.

[The Chair, Conservative, Larry Miller]

We'll go to Mr. Bellavance for five minutes.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

I would like to talk about what is happening at the moment. Mr. Pellerin and Mr. Richard, you are both in the hog industry. You are hog and beef producers. You have a great deal of interest in this field through Olymel. In light of what is going on today, I am feeling rather concerned. Influenza A (H1N1), which was first called swine flu, definitely did not help. Some countries are starting to close the market to Alberta pork at the border. It seems like we are going to go through the same nightmare that happened during the mad cow crisis. At some point, will the entire hog industry in Canada be penalized because one herd in Alberta will have to be killed?

I want to be very clear: I do not want to suggest a lack of solidarity with the hog and beef producers of Alberta. We must support them and assist them to get through this crisis. However, the way the mad cow crisis was managed was catastrophic for the industry as a whole. You said so yourself, Mr. Pellerin. Today, the situation is worse than it was before the beginning of that crisis.

Do you share my concern? I do not want to be a bearer of bad news. However, I think the government should learn from what happened before, and make sure we do not end up penalizing an entire industry because some countries do not understand the science behind influenza A (H1N1), and think that by closing the market to our pork, people will not eat any pork and will not get the flu. It is as simple as that. At the same time, this approach can have some very serious consequences.

[Laurent Pellerin]

I would like to make a brief comment, and then I will let Denis add something about Canadian agricultural programs and the Agriculture Policy Framework.

Growing Forward is only the second Agriculture Policy Framework. If we had as much experience as the United States in devising these major agricultural policies, as Europe does with the CAP, we would probably be able to include strategic marketing in these Agriculture Policy Frameworks, so as to counter crises such as the ones we are experiencing in the hog and beef sectors. It is time we looked into this. It is probably a little too late for Grow the Future, but we should sit down and think about what we are going to do. What strategy will we put in place to counter this crisis in the hog industry and to increase the production, processing, slaughter and value-added of Canadian beef and pork products? It is time we developed these strategic plans and included them in a Canadian agricultural policy. Otherwise I am concerned about the future of both the pork and beef sectors in Canada.

We are going through a crisis at the moment, and there has been no response to it. The markets have been shaken, countries are closing their borders, and prices are dropping. There is no concerted response from the stakeholders. We have to sit down and devise these strategic plans for both the beef and hog sectors.

[Denis Richard]

That is very much in keeping with what we were saying this morning. The hog market throughout the world is one of the most liberalized ones. That is also true of the grains markets. We are facing a crisis that is based on impressions. This disease cannot be transmitted in pork meat. The company I represent here this morning has dealings with 60 countries. Even though the borders have not been closed, the demand for pork is dropping because consumers are afraid. There is a danger—and I hope it does not happen—that we will experience quite a significant crisis in pork production. Canada exports 50% of its pork production. So we are the most vulnerable country in the world.

As I was saying earlier, trade liberalization has changed things. The programs devised 10 years ago cannot apply to fluctuations of this type. If consumers throughout the world reduce their consumption by 5% to 10%, this will be catastrophic for Canada. I do not know how the hog producers will manage. We will have to close plants, and the surplus hogs will not be slaughtered. We export too much.

Our country is very sensitive to pork consumption. Let's compare it to other products such as milk or chicken, which are supply-managed. These systems have proven their worth, and everything happens within the country. That means we control the entire situation. Consumers pay the real cost. The system is organized, and we are not dependent on markets or on political decisions.

It must be said that some countries close their borders for purely political reasons. They are rushing to reduce their inventory before the others. When a country closes its border, it reduces its inventory. It is completely strategic.

The message we want to convey this morning is precisely this: Agriculture has changed. There will be more and more fluctuations and there will be other pretexts such as those we are seeing in the case of pork at the moment.

[The Chair, Conservative, Larry Miller]

Thank you. Your time has expired.

Mr. Richards, for five minutes.

[Blake Richards, Conservative, Wild Rose, AB]

Thank you.

I want to direct my comments and questions to you, Mr. Pellerin.

In response to an earlier question, you mentioned the big move internationally towards direct marketing from farms and you indicated your support for that. I would certainly agree with that. I certainly would support that as well for the future of our farms. Farmers are some of the most innovative and industrious people in our country, and I think it is their skills and business sense that will allow our farmers to survive well into the future. Being able to give them the opportunity to market directly is a very important part of that.

Yet in response to a question from my colleague, Mr. Storseth, you indicated that you have strong support for the Canadian Wheat Board monopoly. I really struggle to understand how those two positions square off with each other. On the one hand, you're saying that direct marketing for farmers is a very important issue, and yet you're saying that you have strong support for the Canadian Wheat Board monopoly, which essentially is saying that grain farmers in western Canada are not capable of making those kinds of decisions for themselves, decisions about how best to market their products, and that they need some other monopoly to control that for them.

I can tell you that many farmers in my riding, in Wild Rose in Alberta, would be incredibly offended by that statement. They want that right and they demand that right. Certainly, the Wheat Board monopoly is something they strongly resent. It's something that is hindering their ability to get the best price for their products, hindering their ability to market their products on their own, and hindering their ability to set up value-added opportunities for themselves, particularly farmer-owned value-added opportunities.

The Wheat Board monopoly is in the way of my farmers being able to successfully market their products. It's in the way of them being able to ensure the survival of their farms. It's in their way in regard to being the most successful they can be. They want that opportunity. They want that right.

As well, certainly, they're also upset that they've seen millions of dollars of their money, farmers' money, lost as a result of poor management practices by the Canadian Wheat Board in the recent past.

I really am here to stand up for my farmers, for my producers in western Canada and in my riding, and I'd really like you to answer how you square your support for direct marketing from farms with your support for the Canadian Wheat Board monopoly. I know you're here to represent farmers' interests, yet you're essentially saying that producers of wheat and barley in the western provinces aren't capable of making their own marketing decisions. I think there are a lot of farmers in western Canada who would be very upset to hear you say that.

I'd like to hear your response to that, because I think the farmers in the west would demand to know why you would be making those kinds of statements, as you're claiming to be speaking on their behalf, when they are very clear about wanting the opportunity to market their own products.

[Laurent Pellerin]

I will never oppose the new trend of direct marketing, the tools that farmers have the right to put in place, the collective marketing tools, and I hope this direct marketing will evolve from very little volume now, with less than 1% in some products and 4% or 5% in others. I will be very happy if it doubles to 10% in the next five or 10 years or it goes to 20% of the market.

I will be more than happy with that, there's no doubt in my mind, but the large-volume commodities that we are producing in this country will have to get to the market and will have to bring back money to the farmers. The best way to get better money from the marketplace is to make sure the farmers make the decisions.

I'm watching this. I'm new as CFA chair, but I'm not new in agriculture. I've been there for 40 years. I've travelled in western Canada many, many times, participating in farmers' meetings. I've been invited to speak to farmers to explain how we work in our part of the country and how farmers can get together and be stronger. I've been there for years.

I have a very high respect for farmers and I'm very confident in the decisions that farmers are taking. I look to the last election of the board for the Canadian Wheat Board. I look to the people they have elected there, and I see that the majority of the people who were elected there are supporters of the collective marketing system.

You've probably remarked that I never used the word “monopoly”, because I don't think the Canadian Wheat Board is a monopoly system--

[Blake Richards, Conservative, Wild Rose, AB]

Pardon me--

[Laurent Pellerin]

The Canadian Wheat Board is a collective marketing tool for the ends of the farmers. The farmers have the right to do that in this country and they also have the right to decide that there's an end to that.

[The Chair, Conservative, Larry Miller]

Okay. Thank you, Mr. Pellerin.

[Laurent Pellerin]

Put the decision in the hands of the farmers--best choice.

[The Chair, Conservative, Larry Miller]

Thank you, Mr. Pellerin.

Because of the time here and the fact that we have a motion, I have to go to the liaison committee, which deals with the motion we talked about earlier, at the start. If it's okay, I'm going to take a question from Mr. Valeriote and then one from the opposition to make it equal.

Mr. Bellavance, I may have to ask you to take the chair.

Mr. Valeriote.