Agriculture Committee on June 11th, 2009

[Randy Hoback, Conservative, Prince Albert, SK]

Again, that's not correct. I know there are lines, value-added chains, that you can decide to be involved with if you want. Cargill has a product. If you want to be involved in growing their canola, they have a value-added chain where you buy their inputs and they give you a premium to do that. But I just grew a Monsanto variety that I bought through Pioneer, and I actually bought my Roundup--

[Glenn Tait]

Do you still farm?

[Randy Hoback, Conservative, Prince Albert, SK]

Yes, I do.

[Glenn Tait]

I saw your auction sale bill not long after we met--

[Randy Hoback, Conservative, Prince Albert, SK]

Yes, a few years ago. I bought an air drill and a tractor back last year and my brother moved back to the farm this year, so we're still farming. We never did quit farming.

[Glenn Tait]

I saw your sale bill. I thought you did.

[Randy Hoback, Conservative, Prince Albert, SK]

No, that's not correct.

So I guess what I'm saying is that I have experience. I'm buying my chemical from one retailer, Greenspring Ag in Debden, which is a really good retailer. I'm buying my seed from another retailer. Again, that's a choice I make personally, and you can make that choice. The farmer can also make the choice if he says, “You know what, I want to grow a high erucic acid canola”, and he wants to get in that chain. He's going to get a premium of an extra buck a bushel, but there are some conditions they want to see in order for him to get that. Again, the choice is there.

So for you to say that Monsanto is gouging or other big companies are gouging.... I hope he brings proof, because if he can't give something that we can go after.... I'm sure that in this committee--I know Mr. Easter would back me on this and I'll back him on it to the wall--if you can give us some proof to go after him, we'll go after him. But nobody has been able to present proof outside of hearsay.

[Glenn Tait]

The simplest basic proof, which I don't have to explain to anybody, is a 0.4% return to farmers and record profits for these ag input companies--not just record production and record sales, but record profits. They are making money. We're not. We are basically employees of the government, supplying food for people.

[Randy Hoback, Conservative, Prince Albert, SK]

[Inaudible--Editor]

[The Chair, Conservative, Larry Miller]

I think it's a fair request by Mr. Hoback, Mr. Tait. It's one thing to make.... We all know, whether it's the banking industry or whatever, that there's always a much higher profit level and what have you. I don't think anybody is disputing that. But proof or allegations of what you're making.... I think it's only fair. I'd love to see them as a farmer too.

[Glenn Tait]

Fair enough. Let the National Farmers Union have access to Monsanto's books and we'll--

[The Chair, Conservative, Larry Miller]

I'm not getting into that.

I have just one question that I would like you to answer. You don't have to necessarily answer it today. You could get back to us. We talked about it. I'm not sure who brought it up. It may have been Mr. Foster or Ms. Ross. It's about packing plants owning cattle and what have you.

We all know that's not illegal, but what I think you said, Mr. Tait, was about how they can pull the cattle in, whether it's deliberately controlling the price or not. There's something that I've been tossing around. Again, as I said, while it's not illegal for packers to own cattle, I'd like to see some ideas and some suggestions--and I've talked to farm groups in my own riding--for coming up with a litmus test that would qualify you as a farmer. My idea in doing this is to basically make it so that you would have to pass this litmus test, if I could call it that, in order to access government programs.

Do you have any ideas or comments? I spoke to representatives from your organization in my own riding. We can come back to that at one point.

We'll now turn it over to Mr. Easter for five minutes.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

On the gouging, there's no question that when the $550 million BSE payment went out, the meat packers gouged it all. They basically stole $500 million of that money. We've said that at this committee. We had a report on it, and that's gouging if there ever was gouging.

I don't want to get into the Wheat Board, other than to say that in terms of the facts about processing plants, if we compare the midwestern United States with western Canada, there are more processing plants under the Wheat Board than there are under the open market. Those are the facts.

In terms of captive supply, we have the bill that the U.S. is putting forward. It seems, Dwight, that you may be in favour of that approach. I'm sure the Canadian Cattlemen's Association will be opposed, and I don't know why. Can you provide us with some more information on that? I think that breaking the link between the slaughter plants and the producers is an avenue we should pursue. We've tried to do that in the potato industry in the past and we weren't successful.

I guarantee that in the potato industry this year, when fertilizer prices are so high and the same companies that buy potatoes provide the fertilizer, some of the producers have told me that those companies are basically saying to them, “If you don't buy our fertilizer, then we'll not buy your product.” It's tied selling, and that's serious, but nobody is willing to come forward on the record and say it, because they won't have their market.

On that issue, can you provide us with anything more that we could use? You can think about that.

The recommendations here, Ms. Gravel, are excellent, and I think we should try to accommodate you on those recommendations, but I have two questions.

You request “that organic products exported from Canada be certified to Canadian standards by a certification body...”. Can you give us a name for that body? We need to be more specific.

Then you request “that article 29(2) of the draft regulations be replaced by an article that will allow the import of an organic product only if this product is certified...”. Can you give us an idea on the article?

Organic is the fastest-growing sector of the agriculture industry. We should be moving on that now. I'm absolutely amazed by Ms. Belzile's statement that you're not even getting any answers from the centre. Who did you send this letter to, and to what agency? Maybe we can write a letter and ask why this issue is not being dealt with.

The questions, then, are on captive supply and organic. Go ahead.

[France Gravel]

I am just going to answer your first question.

We don't name any particular certification organization. There can be several certification bodies, but we ask that they be accredited by the CFIA.

I'll now give the floor to Julie, so that she can give you some explanations on section 29.

[Julie Belzile]

Article 29(2) is on the equivalency agreement. Article 29(1) is what we are negotiating with the U.S. right now. Article 29(1) in the regulations says that if we have an equivalency agreement then we can export to the U.S. according to the agreement. Article 29(2) says that if we have an equivalency agreement with the U.S. but we don't have one with, say, Costa Rica, and the United States agrees to oversee all imports from anywhere in the world, then we would be allowed to import products from everywhere in the world. Basically, the United States is becoming the authority that will control our imports.

When the negotiations started, the rumour was that the U.S. would agree to this, which would mean we would not have many problems importing products. Our concern would have been more on what kind of agreement you can have with the United States. We know their standards are lower. There's a great fear in the organic community that we would sign anything in front of us, because that would be the only way we could import products.

The new rumour is that the United States won't agree to oversee imports from everywhere in the world into Canada. We'll know next week what kind of equivalency agreement we're going to get . Instead of delegating our import mechanisms, we are asking that article 29(2) be changed to say that Canada will unilaterally evaluate standards and use an accreditation system. This way, if we feel that they're equivalent, we can accept products on that basis. We would need it for the EU, which has a much better system than the United States. If the latest rumours are true, we will not be able to import organic products from the EU after June 30.

[Wayne Easter, Liberal, Malpeque, PE]

Who did you write the letter to?

[Julie Belzile]

We wrote letters to the minister. We started with the Canada organic office. We went up to the CFIA president. We wrote letters to the vice-president of policy and programs, and then we wrote letters to Minister Ritz. We wrote several letters, which Mr. Blackburn got carbon-copied. This took a tremendous amount of resources from this little organization, and we got no results.

[The Chair, Conservative, Larry Miller]

Mr. Bezan.

[James Bezan, Conservative, Selkirk—Interlake, MB]

Thank you, Mr. Chair.

I want to thank all the witnesses for appearing today and making their presentation.

I think it is very timely that we are discussing where we are headed as a country and what the future holds for us. One thing that's constant in agriculture is that it's always changing. We've experienced over the last number of years, probably, really the last 25 years, that the pendulum has been swinging into these mergers and acquisitions and the consolidation in the processing industry, which has had a dramatic impact on us. It's something that's happening not just in Canada; it's also happening around the world.

Looking at our long-term profitability from the standpoint of being farmers and looking at how we fit into what's happening on a global scale, we still have to be competitive. In western Canada we are major exporters of food grains, of livestock, and we have to have open markets to access those opportunities for increased revenues and increased profitability.

I'm a cattle producer and my father is an organic farmer on his crop side. The livestock side isn't, but the crop side is, and it works quite well with the forage rotation that we operate. By choice, I decided to enter public life, not for the off-farm income, that's for sure, because being up here in Ottawa is not conducive to running a good farm operation. It was about coming here to help influence public policy and legislation for the betterment of agriculture.

The one thing, I think, that has been touched on is the whole idea of captive supply in the cattle industry. I'm a cow-calf operator. I'm concerned about what's happening there. I also realize the fact that the packers are also buyers of my calves, so I'm following quite closely what is happening in the States with the discussion that Congress is going through. I think we need to make a differentiation between what the packers own versus what they contract, though. I think we still want to have the opportunity of cattle producers to have those risk management tools that are available commercially, whether it's through contracts or otherwise, and I'm sure the same is true for other commodities. But it's nice to have that contract and to know what you're going to get at the end of the growing season rather than rolling the dice and seeing what happens.

I want to get some ideas from the witnesses.

How do we do this so that we still have the risk management capabilities that are available commercially to us and improve the competitive position that we want to have as farmers, the increased profitability? I know one of the comments that the NFU made is to block mergers. The XL Beef Inc. one is a good example. If we were to block that merger, Tyson would have just walked away from Brooks. Then we're down to one player, really, and we're losing major capacity in the industry. So the question becomes, what do we do in those situations? Where do we find new players and people to come in to pick up the slack that's going to occur in the marketplace?

I just throw that open. Perhaps, Mr. Foster, you want to kick off first, and then the NFU and our friends from the organic industry. I'd be interested to hear what happened.

[Dwight Foster]

The issue is that livestock production is moving all over the place. It used to be in the seventies that Ontario was the major livestock feedlot industry in Canada. Then it shifted more to the west and the big facilities that are out there are handling a lot of cattle out of Alberta. What's happening is that in Quebec, government stabilization...they have it wrong. What's happening is that they're stabilizing livestock producers in that province, and then those same cattle are coming into Ontario's market, and it's fine that they come to the slaughter facility here. What I have an issue with is the fact that the farmers in Quebec are being stabilized and then those cattle are coming into Ontario's market, which is going to pot, and it's the same with Alberta cattle. They're coming into this market in Ontario, where we're no longer producing enough cattle for our own demand.

If you want to stabilize your cattle in your province, that's fine if you stabilize to your own demand. When your stabilization causes grief for other provinces, then I have a huge issue with that. So we need to draw the line somewhere. Is government support going to start skewing the whole industry or is government support going to help the industry? It's fine if you can stabilize to your own production requirements. If you want to encourage livestock production in your province, I think that's a great thing, if that's what you have to do in order to have production in your province. But they come into eastern Ontario and they buy calves because they can afford to pay more for them, and I can't compete with that. So what do I end up doing? I feed cattle for a guy from Quebec. That's how bad it is.

[The Chair, Conservative, Larry Miller]

Mr. Bezan, your time has expired.

[James Bezan, Conservative, Selkirk—Interlake, MB]

We were just getting rolling, Mr. Chair.

[The Chair, Conservative, Larry Miller]

I know you were, but everyone must have a chance.

Mr. Bellavance, go ahead for five minutes.

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

Thank you.

Ms. Gravel and Ms. Belzile, let us continue in the same vein. You spoke of exports and imports, but there is another phenomenon, or another problem directly linked to this new regulation that also concerns the interprovincial market. Tell me if my understanding is correct. A producer of organic food in Quebec who wants to export to other provinces and who wants to sell his products there must follow Canadian standards to get the organic certification, and these standards are fairly strict, fairly precise, etc.

Earlier, we discussed a product coming from India or from Korea that is not necessarily subject to the same rules. Am I wrong in saying that this creates unfair competition? The product could be certified in the foreign country, it will not have to follow the same standards as ours, because we have accepted that. Am I wrong in saying this?

[Julie Belzile]

That is not quite accurate. In fact, product import regulations include mechanisms for acceptance. Products must be in compliance with Canadian standards or standards that are deemed equivalent to them. However, a big problem remains. As I explained earlier, we do not have the option of unilaterally accepting a product because we are a small country. The regulation only allows us to discuss or to accept other standards through equivalency agreements. If a country does not have any regulations, no equivalency agreement can be reached. Some Latin American countries have no regulations. Therefore, we cannot discuss things with their governments. Consequently, we need a mechanism to be able to do this. They apply certain standards, they have a certain system. Is it to our satisfaction? If it is, we can accept the product.

Due to this lack of flexibility, the U.S.A. is the only country speaking to us at this time. The Canadian organic industry is unanimous with regard to this: the American standards create problems for certain products. Since we have to negotiate with the Americans, we are in a weak position. They offer whatever they want to offer to us, and if we refuse, we cannot import anything. If we accept, there is a problem caused by the disparity between what our local producers are subjected to and what we have to accept. In fact, the regulations do not provide the mechanisms and tools that we need to import products on an equal basis with what is expected from Canadian producers.