Agriculture Committee on Oct. 22nd, 2009

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Chair, I have a point of clarification that Ms. Burr could answer. On my question earlier on the return on capital, I talked to Mr. Hoback and Mr. Storseth. They're of the same opinion as I am. In fact, a vice-president of CN Rail, before the transport committee, indicated that they were assured of a 20% railway cost.

Ms. Burr, under the revenue cap, are the railways assured of a guaranteed return on capital? How does that work? Mr. Ruest and I are both of a different opinion on this. Are the railways assured of a return on capital under the revenue cap?

[Kristine Burr]

Mr. Chair, I wasn't present at the earlier discussion, but we'll try to answer that question. I'm going to ask Mr. Doran to comment on the question.

[John Doran, Policy Advisor, Transport Canada, Canadian Transportation Agency]

Mr. Easter, the revenue cap, as you know, is a revenue-based system; it's not a cost-based system. The revenues, as you know, were developed out of the 1992 costing review. Then they were ratcheted back by 18%, and that became enthroned in the legislation as the basis for the revenue cap.

To that each year is added an inflation factor, which covers fuel, capital material. That goes into the formula to produce a revenue cap. So does the revenue cap guarantee a level of profitability? Yes. Is it set by the government? No, because it varies with the length of haul and with the tonnage that is moved. It's worked off the formula that's in the legislation.

[Wayne Easter, Liberal, Malpeque, PE]

The original formula had a guaranteed return on capital of 20%.

[John Doran]

That was an agreed rate.

[Wayne Easter, Liberal, Malpeque, PE]

That two-sixths converts into this, so in this formula there is still somehow a guaranteed return on capital plus inflation. Is that correct? On these sidings, that's capital. They're getting a return on them whether they use them or not. That is the fact of the matter.

[The Chair, Conservative, Larry Miller]

We'll let the gentleman finish up.

Is there anything more to add to that?

I thank our witnesses for being here today. As you can all tell, this is a very contentious issue, not just with our producers in western Canada but certainly with committee members all around the table.

Today there were a number of requests for information, from Mr. Hoback and Mr. Storseth, and there might have been someone else. It was Mr. Easter. I hope we can get that sent to the clerk.

Thanks again to all of you for being here. We are going to move to committee business now.

Mr. Lemieux.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Thank you very much, Chair.

Regarding committee business, Mr. Atamanenko asked the committee to consider allowing him to swap his two motions. We have a number of motions in front of the committee. His first motion deals with the AgriFlexibility program. The other one deals with supply management. He asked the committee if we could allow him to swap the two, to move with the supply management motion first, because it's timely, in that WTO discussions are ongoing.

He has to seek unanimous consent. I am putting it in front of the committee now. We would like to support what Mr. Atamanenko was asking for in the last meeting, that he be allowed to swap those two motions so we can discuss supply management.

[The Chair, Conservative, Larry Miller]

Do I have unanimous consent to do that?

[Some hon. members]

Agreed.

[The Chair, Conservative, Larry Miller]

Do you want to speak to that, André?

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

I think Alex should speak first on the motion.

[The Chair, Conservative, Larry Miller]

Is there something to add, like if we have unanimous consent?

Is this a point of order on that, André?

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

No, it is not on the same subject, but as we have just agreed to change Mr. Atamanenko's motion, I wanted to ask for unanimous consent for my motion to be discussed before or immediately after Alex's.

If we finish at 5:30 p.m. without having discussed my motion, we will have a problem. My motion is about inviting a witness for Tuesday's meeting, and Tuesday is our next committee meeting. It is all very well to say that we can discuss my motion on Tuesday, but if we do that, we will not be able to invite the gentleman to appear by video conference on Tuesday. That will not work.

It is a question of timing. That is my problem.

[The Chair, Conservative, Larry Miller]

I believe, Mr. Bellavance, you will get that chance, but we have this one. We will move it, and presumably you can make the request at that point.

Mr. Atamanenko, do you want to present your motion?

Yes.

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

Do I have unanimous consent to discuss my motion immediately after Alex's?

[The Chair, Conservative, Larry Miller]

Mr. Bellavance, we have one piece of business on there. Let's deal with it. We have unanimous consent. We should finish dealing with one piece of business, and you can bring it up--

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

Very well, but remember my question when we have finished the discussion.

[The Chair, Conservative, Larry Miller]

You can bring it up then, and we'll deal with it.

Mr. Atamanenko.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

I'll be very quick.

I'd like to thank Pierre for proposing this and talking to me about amending it. However, I'd like to go with my initial motion, and I'll explain why.

The motion reads:

That the Committee recommend the government immediately instruct Canada's negotiator to indicate through the proper channels at the World Trade Organization that the text which undermines or weakens Canada's State Trading Enterprises and Supply Management systems must be removed from the DOHA agreement and that this be reported to the House.

I'll read a very brief paragraph I received from the chief liaison officer of government relations, Ron Davidson, with the Canadian Wheat Board. It touches on state trading enterprises, and I'll show you how it's applicable to supply management:

...the paragraphs that follow elaborate in some detail on why it is critical that the Government of Canada proactively take the initiative and leadership to present and advocate in the WTO its publicly avowed position that decisions pertaining to how Canadian farm products are marketed be taken in Canada, not by other countries.

I know we have the support of the minister on this because he said this.

Time is of the essence, and unless such action is taken on a timely basis at the most senior levels, the right of Canadian farmers to choose how their products are marketed could effectively be conceded, by default, to the unilateral initiative of the former New Zealand chair of the agriculture negotiating group who prepared a draft text that targets solely the Canadian Wheat Board while at the same time exempting the kiwi agriculture exporting state trading enterprise of his own country.

I would like to add that this gentleman is from New Zealand, and they have made it public that they want us to wither down our supply management. It's very important. It has something to do with the way you take it out of brackets so it's just not on the table.

Then we can move on and look at all those other issues that Pierre mentioned--the export subsidies and all of that. It's crucial and timely. It cannot hurt our negotiations if we take that out. That's why I want to leave the motion as it is.

[The Chair, Conservative, Larry Miller]

Thank you.

We don't have an amendment on the table that I'm aware of.

Mr. Lemieux.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Thank you, Chair.

I think Mr. Atamanenko was just referring to a discussion he and I had the other day regarding an amendment.

First of all, supply management is of paramount importance to Canadians, and I think to people on this committee. Supply management has created jobs, prosperity for Canadians for the past 40 years, and it continues to create prosperity in our rural communities and in our urban centres. Certainly in my riding of Glengarry—Prescott—Russell there is a lot of supply management.

It's not only helping the tens of thousands of Canadian farmers and their farm families, but also suppliers, processors, the food service industry, transporters, basically everybody up and down the value chain, from the farm gate to the consumer plate—and as I say, in my riding, I can certainly give examples of supply management.

There are the five supply managed industries, but I want to just underscore the dairy industry. It's a powerful economic driver. It has delivered $5 billion in farm gate receipts, 60,000 jobs for Canadians, and $13 billion in sales to consumers. The sector delivers a consistent supply of safe, high-quality products to consumers. It delivers good value to consumers and a decent return on investment for farmers. When our government supports the dairy sector, we support supply management; and the other way around, when we support supply management, we're supporting our dairy sector.

This message is not lost on our producers, and I want to be clear here that our Conservative government has been very strong in its support for supply management. We have consistently supported supply management, right from day one, and we are delivering what I consider to be real, meaningful results.

For example, I think Mr. Atamanenko and my colleagues will remember that we took action on article XXVIII of the General Agreement on Tariffs and Trade to limit imports of the low-duty milk protein concentrates through the establishment of a new tariff rate quota. This was of great benefit to dairy farmers.

At the World Trade Organization, we continue to promote producer and exporter interests and to strongly defend interests important to supply managed industries.

In addition, our government is committed to the operationalization of the WTO's special agricultural safeguard for supply managed goods. So we're speaking up internationally in support of supply management.

The WTO's special agricultural safeguard permits WTO members to provide enhanced ability for sensitive industries by imposing temporary surtaxes in response to sudden over quota imports surges or significant reductions in over quota import prices. So these special safeguards are a tool that several trading partners, including the European Union, the United States, and Japan, have used on a regular basis, and the supply managed industries have been looking for the government to ensure that Canada is well positioned to exercise this WTO right.

We are also standing up for supply management, including the interests of the dairy industry, at the WTO agricultural negotiations, and Canada has been very clear about its position in Geneva.

This government supports supply management, and we are taking a firm position at the negotiating table on interests important to our supply managed industries.

I have letters from the Minister of Agriculture, the Honourable Gerry Ritz, to His Excellency Crawford Falconer, the New Zealand ambassador to the WTO and the chair of the WTO agricultural negotiations, and I am going to table these letters with the clerk immediately following my presentation. But I would like to read what our minister and our government have said in these letters.

To quote briefly, he said:

As you know, Canada has a system of supply management for certain products (dairy, poultry, eggs). That system has worked very well for those producers, and both those producers and the Government of Canada are resolutely committed to maintaining it.

The approach to sensitive products in your draft text is not one that is acceptable to Canada....

The minister goes on to say:

...with regard to the issue of treatment, you are aware of our long-standing opposition to tariff cuts or tariff quote expansion for sensitive products. I want to reiterate the Government of Canada's commitment to that position. We remain strongly opposed to the approach to treatment [in your outline].

And in another letter to the ambassador, Minister Ritz writes:

Canada has a very strong position with respect to the negotiations on sensitive products. This position is grounded in the very strong support of the Government of Canada for our supply management system. Canada maintains its firm opposition to any tariff cuts or tariff quota expansion for sensitive products. This represents a fundamental element of Canada's negotiating position.

As you can see, the minister has spoken very strongly in support of it, and he's spoken very strongly in a formal way in two written letters supporting supply management.

Our government is also working toward taking down trade barriers at the border. The Canadian dairy industry got a big win when rule 2 came into effect and re-opened the U.S. market to older cattle and breeding stock. That is good news for dairy farmers.

That good news is built on a lot of good hard work done by producer groups and governments, and that good work is reaching well beyond our closest neighbours. Mexico, for example, has resumed imports of Canadian replacement dairy heifers and beef-breeding stock. This trade had been cut off since 2003.

[Wayne Easter, Liberal, Malpeque, PE]

How long will this go on? We know it's a political speech for publication.

[The Chair, Conservative, Larry Miller]

Mr. Lemieux has the floor, Mr. Easter, and he is speaking to the motion.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Thank you, Chair.

Mexico has also agreed to include older animals for export, and they have since lifted the temporary restrictions on breeding stock imports from Alberta. We continue to work on outstanding issues to restore full access for beef and to take advantage of market opportunities for other products. We are also firmly defending Canadian cattle producers regarding the U.S. country-of-origin labelling rule, or COOL. In early December we initiated official consultations with the United States at the WTO's dispute settlement body, further showing our determination in defending Canadian producers, and we have recently announced that Canada is taking the next step in our COOL challenge by launching a WTO panel.

The Prime Minister, Chair, and this government have made it very clear to the Americans that if no settlement could be reached, we would take this issue to the WTO. This trade challenge speaks loudly that this government is serious about protecting our producers and protecting their interests, and that is why we pulled out all the stops to fight the COOL in the United States. COOL threatened our industry, particularly our cattle and hog producers and our meat processors. It threatened to throw red tape and needless costs into a highly integrated system, which last year facilitated almost $4 billion worth of sales to the United States in livestock, beef, and pork.

Canada's hard work over the past year resulted in a positive outcome for Canadian producers, and producers are with us, Chair. Let me quote from Brad Wildeman of the Canadian Cattlemen's Association, “The negative impact” of the COOL legislation “will only increase”, and we appreciate the government “requesting the Dispute Settlement Panel at the WTO.” Jurgen Preugschas, of the Canadian Pork Council said, “Our government understands the impact COOL is having on our producers and that they will continue to work with the livestock sector to defend our WTO trade rights.”

It is not just our producers. It is also our provincial and territorial partners. Bob Bjornerud, Saskatchewan's agriculture minister, says this: “These blatantly protectionist measures are placing an unwarranted burden on Canadian livestock producers”, and ”we are pleased the federal government has made the WTO request to address this”.

Indeed, Chair, we will continue to stand up for our producers whenever and wherever their access to markets is in jeopardy.

Turning to the domestic front, there are lots of examples of this government's support for the dairy sector and for supply management, beginning with our action to clarify and harmonize compositional standards for cheese. These regulations ensure that the expectations of Canadian consumers are met with high-quality products. The Federal Court recently sided with us and ruled that our protection of supply management through cheese compositional standards is constitutional and the right thing to do.

The bottom line is this government is supporting our dairy sector through actions internationally and domestically, and it is supporting supply management. We are supporting them in what they do best, and that is providing safe, wholesome, nutritious products for all of us to enjoy.

However, don't take my word for it. Perhaps the best advocates of what we have done for supply management come from the dairy, chicken, turkey, and egg producers themselves. Jacques Laforge, president of the Dairy Farmers of Canada, said, “The Canadian government, over the past two years, has repeatedly indicated its strong commitment to support” trade agreements on agriculture that would maintain supply management.

Gyslain Loyer, chair of the Canadian Broiler Hatching Egg Marketing Agency, says, “We are encouraged to see that the government is unwavering in its determination to deliver on its position for dairy, poultry and egg farmers...”.

Laurent Souligny, chair of the Egg Farmers of Canada, who lives in my riding, Chair, said, “The Government has committed not to compromise the sound foundations of the Canadian agricultural economy, including supply management...”.

Chair, I just want to highlight for Canadians, for our farmers, for our producers, for the people here at committee, it is obvious our government supports supply management.

What I find unfortunate about the wording of Mr. Atamanenko's motion is that it does not capture our full support for supply management. The motion simply asks us to change text at the WTO and no more than that, and everyone here knows this is not the way to proceed. We need to be proactive in our support for supply management, and if the committee so desires, we should send a strong message to the negotiator and not just focus on this little piece of text. He should be getting some strong guidance from this committee. We simply can't just show up and ask for text to be changed, and if that doesn't happen say we'll move on. It's not only that the members opposite treat the issue of supply management lightly; it's that they need to acknowledge our support for export industries like beef and pork, industries I spoke about earlier, and the positive steps we are taking through the WTO process.

So, Chair, what I'm proposing here is an amendment that I discussed with some opposition members yesterday, and certainly Mr. Atamanenko, to amend the latter's motion. I'm going to put forward an amendment here, Chair, that I think better enunciates the message this committee wants to send to our negotiator regarding our support for supply management, but also for our other producers. We want to support all producers regardless of the commodities they happen to deal in.