Good afternoon, ladies and gentlemen, members of the committee. Thank you for inviting us to address you today.
My name is Bill Wilton and I'm the president of the Prairie Oat Growers Association. I farm about 1,400 acres of cereals and oilseeds at Ile des Chênes, which is just eight kilometres south of Winnipeg. Also here today is POGA's executive director, Jack Dawes, who lives in Saltcoats, Saskatchewan.
The Prairie Oat Growers Association was formed in 1998 by a group of farmers from Alberta, Saskatchewan, and Manitoba who saw the need for an organization to develop and support partnerships in the agricultural industry that would enhance the profitability of oats for the grower and increase oat value to the consumer. Since that time, the Prairie Oat Growers Association has successfully established oat producer organizations in Saskatchewan and Manitoba. Through these organizations, some 14,000 oat producers commit their own check-off dollars to research, market development, and other activities. Going forward, we see our mission being complete with having Alberta in the fold and on stream by the end of 2009.
Canadian oat growers are at a severe competitive disadvantage in comparison with European Union oat growers, mainly from Finland and Sweden. In the past, the EU has granted subsidies of up to $66.74 U.S. per tonne of Scandinavian oats shipped into the North American market. These subsidized oats compete directly with Canadian supplies, mainly in the southern and southeastern United States. In addition, the EU has in place punitive tariffs on the import of oats and oat products from non-EU countries such as Canada. These tariffs range from 89 euros per metric tonne on raw oats to 182 euros per metric tonne on flaked oat products.
At the same time, declining oat production in the EU, combined with increased consumption of oat products worldwide, indicates that there will be an opportunity for the export of Canadian oats and oat products to the EU. Your committee can help Canadian oat producers be more competitive by working to eliminate the EU tariffs on oats and oat products and by opposing EU subsidies on oat exports.
Historically, Agriculture and Agri-Food Canada has helped to provide competitive advantages to oat growers. Oat research programs and support to the Cereal Research Centre at the University of Manitoba, the Crop Development Centre at the University of Saskatchewan, the AAFC facilities in Lacombe, Alberta, the Eastern Cereals and Oilseed Research Centre in Ottawa, and other AAFC facilities have provided Canadian oat producers with the best oat varieties and agronomics in the world. In fact, oats are the only Canadian cereal crop that has doubled its exports in the last 10 years. Domestic oat milling has increased by 50% over 10 years.
Oats have a tremendous story to tell. Recently we have become concerned about Ag Canada's ongoing commitment to oat research. Apparent lack of progress in building a replacement for the condemned Cereal Research Centre facility in Winnipeg is just one of those concerns. By way of illustration, we believe serious rust issues unique to the eastern prairies can best be addressed by research conducted in the affected areas where rust is recurrent.
From a human resources point of view, the impending retirement of a significant number of experienced senior oat researchers is a concern, since no process has been established to replace these researchers when they retire. The potential loss of their experience and knowledge is, frankly, alarming.
In the new Growing Forward model, Ag Canada seems determined to further engage industry in research funding. The Prairie Oat Breeding Consortium already in place and operated from the Cereal Research Centre in Winnipeg is a perfect example of successful cooperation between industry, producers, and government in funding oat research. The Prairie Oat Breeding Consortium is supported by American and Canadian oat millers, seed companies, oat producers, and Ag Canada. This consortium has been responsible for the development of the leading oat varieties in the eastern prairies. Further industry support to the Crop Development Centre in Saskatoon has helped in the development of the dominant oat varieties in the western prairies.
New initiatives and engaging industry participants are worthwhile ventures. However, AAFC must act to fulfill the department's traditional obligation to provide the basic necessities to foster and encourage research. Many studies have illustrated the outstanding returns on funds invested in agricultural research. Long-term commitments are necessary to encourage agricultural research.
It is apparent that A-base funding budgets at Agriculture Canada are shrinking in real dollar terms. Without committed long-term A-base funds to provide the facilities and human resources, research will stagnate for many crops that do not have the volume to attract industry investment. We submit that your committee can ensure that Canadian oat producers remain competitive by insisting that Agriculture Canada provide the long-term funding to support the facilities and human resources necessary for a vibrant research environment.
The continuing consolidation among suppliers of fertilizer, chemicals, fuel, equipment, handling, transportation, and financial services to the agriculture sector is an ongoing concern. This consolidation leads to a perception that there is no competition among suppliers, which in turn leads to higher costs for producers. For example, farmers are told that nitrogen fertilizer prices no longer reflect natural gas costs but are reflective of the manufacturers' ability to charge for their product. In addition, some chemicals are priced absurdly high in Canada compared to the U.S. price for the same chemical.
Elevation costs at high-efficiency elevators increase significantly on an annual basis.
Freight rates are another matter. Freight rates on oats from western Canada to U.S. destinations have increased seven times in the last 16 months, for a total increase of 34%. Farmers, who are the only participants in the supply chain who have no ability to recover increased costs, are expected to absorb these cost increases.
Your committee can help to ensure that Canadian agriculture remains competitive by insisting that the agencies responsible for enforcing competition enforce regulations in an equitable manner.
Mr. Chairman, I'll end my presentation there and welcome questions from any members of the committee.