Thank you, honourable Chairman.
I look forward to the opportunity to address this group on matters of utmost importance to most farmers across Canada. As we've seen, particularly in the last year, the competitive position of Canadian farmers relative to other farmers around the globe with whom they compete when they're selling their products has diminished considerably.
Before I get into some of the details of these issues, I want you to know that I have two documents here that I'd like to file with the clerk. I hope you'll take the time to read them. They're more extensive than the little bit of time I have to spend with you today.
Further to that, I want to talk a bit about the fertilizer situation, in which I know all of you have a keen interest in what's been happening, and why we see the lack of competitiveness occurring there. But I want to spend most of my time talking about generic registration in the crop protection area, which is another huge expense to grain farmers across Canada and something we know a little bit about and have been active in the market on for some time.
Some of you may not know a lot about our organization, but just to give you a bit of a highlight, we negotiate for farmers across Canada. We're a national organization that takes memberships, and with that membership we work on behalf of farmers to level the playing field in the marketplace. Generally, the farm marketplace is characterized by many large corporations who sell their goods and services and buy farmers' good and services. Of course, we have tens of thousands of farmers and only a handful of these corporations. Of course, a little bit of economic theory tells you that this marketplace is unbalanced. What we try to do is to balance the marketplace.
It is interesting that where government has had a role, including some of the agencies, it has helped contribute to that imbalance in the marketplace. When I start talking about crop protection and generic registration, you'll have what I think will be a historic opportunity to have some input in influencing where we go in that whole competitive area.
Needless to say, we embody the word “competitiveness”. That's our job. It's our mission to make the market more competitive and to make Canadian farmers more competitive relative to their neighbours to the south and other places around the world.
The three agencies the government has—PMRA, Farm Credit Canada, and of course the Competition Bureau—are there and do have an influence on contributing to making this market a fairer market. Part of the reason we exist today is that we don't feel they've really done their job as best they could have done.
To get into the fertilizer piece now, I recall that 20 years ago when Veridian was wanting to merge with Cominco and would have had about 60% of the market, the Competition Bureau felt there would be new players coming into the marketplace and that all would be fine. It was 20 years ago that I was asked that question by the Competition Bureau, and I told them that it was not the way the marketplace worked and that, indeed, we would have pricing to what the market would bear. And most of you will know that's what happens today: it's the NOLA, plus freight, plus a risk premium. And as you get closer to seeding, when of course you can't utilize the logistics to get it to market, quite often you'll see even higher prices.
When we are export based and have excess capacity in western Canada, why is it that our costs are so much higher than those of a U.S. farmer or other farmers around the world? We're the farthest placed from tidewater, so they have a natural competitive advantage to price to what the market will bear. We should have some of the lowest-cost fertilizers. But we put out tenders, and they don't respond to the tenders. We in fact have to bring in product from Russia and the Middle East, when we have product we can get access to here. We can bring it across by boat, by rail, by truck, and still be cost-competitive and create the market that growers need in order to compete.
So 20 years ago we were asked the question. Veridian, of course, did merge with Cominco and became Agrium. Just recently we've seen a request—and we've been interviewed on this one as well—by Agrium and CF Industries. We say, “It's too late, boys. The cat's out of the door. It doesn't matter now.” The market still is priced to what the market will bear, and it's based on NOLA plus freight. And there's not a whole lot we can do about that, unless you want the government to get involved in building and producing fertilizer on behalf of farmers.
But there are considerable margins in fertilizer. We're seeing the cost of production relative to the market price being almost double what it should be if you were to have a true competitive industry and be pricing closer to the cost of production.
There's not, in my mind, a whole lot you can do on fertilizer. We're doing what we can. We've brought four boatloads of product into Montreal. We've brought product into Churchill. We've probably saved $100 to $150 a tonne, in a lot of instances, on nitrogen fertilizers. That's the best we can do. I'm not sure what the answers are, but at this point in time, really, the horse is out of the barn.
On generic products, however, we do have an opportunity to make a difference in terms of crop protection. That, of course, is the next big expense that farmers have in their operations today. We're in a unique situation. We have regulations being drafted that will determine how the generic registration process goes on in Canada. I know the PMRA is looking for and would like to see something coming from this committee, because they're being lobbied pretty hard by other interests in the sector--not the farmer, although we're trying to do some of that.
Basically, when a product comes off patent, a competitor should be allowed to come into the marketplace immediately to try to create that competition. In August last year, a draft document that came out from the PMRA indicated that once a product came off market and the generic had gone through the health and environment science issues with the PMRA, they could go into the market immediately. That, by the way, is what happens in the U.S. The generic can make an offer to pay and he's on the market the next day. The offer to pay with regard to data compensation still is compensable, because during the lifetime of a registration, there's data that may be required, and of course those that bring that data to bear should be compensated for it.
Here, though, the PMRA is suggesting that maybe there should be 120 days to allow the innovator to negotiate with the generic and then, if that doesn't work out, another 120 days to go through binding arbitration. By the way, it's time-limited arbitration, which is a good policy that could come into regulation.
The problem is that crop protection products are seasonal, and 120 days can mean a full season. Look at graminicides; if you know Horizon or Puma, those products are coming off patent. The bulk of the chemistries out there today are coming off patent in short order, by the way, or they are off patent now. And 120 days can mean a full year, which literally is tens of millions of dollars.
There is an opportunity for this committee to put some pressure on the PMRA to talk about how and why generics should be able to come into the marketplace right away. There have been suggestions that there may be some intermediate ground. We're suggesting some of those, but we need some help. We need your help right away. They're hoping to bring this into regulation fairly shortly. I'd really press upon you to become familiar with the issues and see what can be done; talk to your friends in Health Canada and at the PMRA.
In closing, Mr. Chairman, I'd like to mention a study that was done by the Ridgetown Campus at the University of Guelph. It has just recently come out. It's part of the documents that I'm going to be presenting to the clerk. It compares Ontario with the U.S., and you will see massive differences in the cost of basic inputs—fertilizer, chemicals, seed, fuel. Why is that? It shouldn't be. Take a look at it, and hopefully it will inspire you to see what needs to be done in that area.
The whole area of the Competition Bureau is where I want to finish. What really bothers me is that when we take a look at what really propels the economy of Canada, it's the small and medium-sized businesses. They're the heartbeat. They're the engine that makes this economy grow.
The Competition Bureau in its rulings, for as long as I can remember, has favoured the large company over the small business. There are logical reasons for doing that. We want to see our big businesses here be able to compete with other big businesses around the world. Unfortunately, when they do that, and they create it in such a way that they have such a large control of the marketplace that they can price to what the market will bear, it affects the competitiveness of the small and medium businesses, including farmers, and it makes us less competitive around the world. This needs to be put in check.
Our Competition Bureau needs to have the same kind of teeth the U.S. has. Let's get on with making this economy competitive and making us much better in the world. We have some of the best farmers in the world, and they need the tools, and you can help them get there.
Thank you, Mr. Chairman.