Agriculture Committee on June 2nd, 2009

[John Schmeiser]

Yes, absolutely. California is a significantly large agricultural market. In our conversation with members of Howard's association, specifically, John Deere, Case IH, New Holland, they're not going to make two different engines. Because of the financial challenges from some of the other states, they're not going to duplicate the efforts of CARB, the California Air Resources Board. They're just going to adopt those standards, and it is going to be a domino effect across North America.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

What sort of a domino effect, in terms of cost, is that going to mean on an engine, comparable to a tier 3, to a tier 4?

[John Schmeiser]

An example that we were given by John Deere is on a 400-horsepower, four-wheel-drive tractor. It could be a sizeable increase of 20% to get to the tier 4 engine over the current price.

[An hon. member]

Sixty grand.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Again, the unfortunate part is someone is making that decision and the primary producer ends up paying for it, and he has no way of dispensing those costs down the road to anyone else.

[John Schmeiser]

Absolutely.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

That is part of the concern I think too, certainly between you and Mr. Mains. I've actually had the dealers and the manufacturers in and was talking to them. I'm going to say if there's anything we can actually do, perhaps there's some further recommendation we can have from you. We recognize the need and the importance of that to our farmers, to actually have fair and accessible financing for the dealers, and also for the manufacturers, so they can provide it to the dealers so that they can be competitive.

Can I comment on a remark made by I think Mr. Mains regarding the Russian Federation? Actually, there is a small manufacturer not too far from me that manufacturers equipment. I was surprised actually at the amount of equipment, percentage-wise, that they were shipping over to the Ukraine and to the Russian areas.

I think you said they were putting out a loan incentive of a 20% reduction on interest. Just explain that a little bit for me. It's sort of a protectionist issue, I guess. If you buy Russian equipment, you would get a break on your interest rate of up to 20% of the interest that's being charged. Is that what you're saying?

[Howard Mains]

Yes, and the other thing we picked up from those people who were over there last week is that the government has made it very clear to buyers of agricultural equipment that the banks will only finance equipment that was made in Russia. It's not written down anywhere, but it's a very clear threat that has been stated.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

So what are the farmers going to do in terms of access? My understanding is that the Russian manufacturers can't manufacture enough equipment for their needs.

[Howard Mains]

I think you hit the nail on the head. The demand is huge in that country. The opportunity for Canadian manufacturers, especially like the company that's in your own riding, is tremendous. So here is an untapped potential, and yet the domestic market is not going to be able to supply it.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

It's because they love it, because of the quality and the value. When I was in Kazakhstan, that was clearly an indication we got.

Thank you, Mr. Chair.

[The Chair, Conservative, Larry Miller]

Thank you, Mr. Shipley.

Thanks, Mr. Mackay, Mr. Lennox, Mr. Mains, and Mr. Schmeiser, for coming in. We appreciate your input into our study, and I'm sure you'll want to see our report when it's all done. Thanks again for coming here.

The meeting is adjourned.