Agriculture Committee on Nov. 22nd, 2011

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

This is chicken, now. In fairness to you, it's not turkey I'm talking about.

[Mark Davies]

Okay, well, then, no comment.

I share some of the same issues. In fact we've had an issue in the past year because of some of the challenges we've had in our market over the last 24 months. Our market tends to follow alongside the economy because of a lot of the higher-value cuts, through further processing of deli products, as I referenced in my presentation. We've had some issues with managing that. I think we've done a good job of it. We've had supplementals that can be applied for and brought into the country in case they can't be found within the domestic market.

Regarding chicken, I don't want to go out on a limb and comment on that. Within the same system, I know they have some programs that allow access, I believe, to grow--re-export and things of that nature. Sometimes it depends on the type and the cut.

In our market we might have some turkeys, as we say, in the freezer. They might not have been in the right form for some of the retailers at that particular time. If you just look at the stock numbers and try to plug in to match up with what you are looking for, it doesn't always work out.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

Another question for Todd.

I'm from the B.C. Peace River region, and canola has been a big story in our riding. Especially, there's been a migration away from wheat for various reasons. We grow 95% of B.C.'s canola in my riding, so it's very significant, a very good story.

I wanted to know specifically how the Growing Forward program funding has improved competitiveness in your industry and if you can explain how it's done that.

[Todd Hames]

I'll comment on the science cluster, the Canola Council with the science cluster. I'm a full believer in partnerships with the value chain. I think that's one of the big gains there. I mean, the multiplication of the research dollars from the government and producer levies and crushing industry levies and seeing grower levies combined has really multiplied that out into market development.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

Where do you see us going with canola, being as it's such a big thing in my riding? Where do you see us helping you basically increase your profitability well into the future? How can we help with that, or what are some areas that you see we can help in, without just writing you a cheque but helping you do it yourself?

[Todd Hames]

A guaranteed canola price would be good.

Seriously, this may sound a little strange, but one of the things that I think the canola industry is facing is competitiveness in some of the other grains we're growing. In my area it's very similar to your area, in Dawson Creek, in the sense that it's canola and wheat.

I see one of our advantages to help farmers is actually to make wheat better, to have a rotational crop that's competitive, that can make more profitability for farmers. Maybe that's a strange way to answer.

It's research in a nutshell.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

I guess I go back to canola again. You mentioned a little bit about making other crops more competitive. That's one thing that can make it better. Do you have any other ones that can make it better, canola-specific?

[Todd Hames]

Obviously most people know the world is growing and we need to increase food production. There are lots of things that will help scientists. It's going to take science to increase the food production enough to feed the world. When we hit nine billion people I think it's twice as much food production as we're producing today in the world. That's not going to happen without science.

Some of the things that are coming, like higher efficiency use of nitrogen fertilizers and also water use efficiency.... I think in the future we're going to be talking about nutrients and water to grow food. Those are the limiting factors that possibly could affect food production in the world.

[The Chair, Conservative, Larry Miller]

Thank you very much.

We now move to Ms. Raynault for five minutes.

[Francine Raynault, NDP, Joliette, QC]

Thank you, Mr. Chairman.

I thank you for your attendance here today. My question is for Mr. Hames.

Do all canola producers need access to global markets to survive?

[Todd Hames]

We're highly dependent, obviously, on the export market with exporting a large amount of oil and seed. We are dependent on that export. With 80% of it being an export of some sort of product, yes, we are dependent on some kind of export.

[Francine Raynault, NDP, Joliette, QC]

I would like to know why in China and in Taiwan, there is a higher tariff for canola seed than for soy.

[Todd Hames]

That's a good question. I believe bilateral trade agreements with other countries have negotiated that in there somehow. It's being proactive. It's talking to other countries, and I think that's what we need to do. We need to talk to them. We need to explain the product and ask them that question. Sometimes they don't even have an answer. It's protectionism.

[Francine Raynault, NDP, Joliette, QC]

Very well, thank you.

Mr. Maynard, you mentioned that one of your goals was to help producers reduce their production costs. In this context, you seem to favour wind turbines. Do you think more producers will adopt the practice? We know wind turbines are not popular with everyone.

[Ron Maynard]

I think in my circumstances, in Prince Edward Island our electrical rates are such that the cost was from 12¢ to 14¢ a kilowatt. It costs me somewhere around 8¢ to 9¢ a kilowatt that I get producing the power from my windmill. It's that rate because there is a government assistance program funded by both the federal and the provincial governments to assist in the capital purchase of that windmill. That makes that cost-effective.

If I were in another province, in the province of Quebec, for example, where they have a much lower electrical rate, then.... It's economics in many cases. It's the technology that's around, it's functions, but once again it comes back to the economics in the province where the individual producer is.

[Francine Raynault, NDP, Joliette, QC]

Ms. McMahon, you mentioned in your presentation that access to funding seemed to be a problem for organic producers.

Should the government do more in this area?

[Beth McMahon]

I think a lot of it has to come down between the federal and provincial agreements. Obviously farmers are accessing funds within their own province, and what we've found is that there's a discrepancy among the provinces in how they've interpreted Growing Forward 2. Even in terms of organic production, I know that Prince Edward Island and New Brunswick have both subsidized and supported organic farmers for their costs, for training, and even for shared infrastructure costs—storage and processing facilities. Yet in Nova Scotia we were told that the Growing Forward agreement did not include organic. So there was a different interpretation of what some of the terminology meant in this current agreement.

So I think it would be very useful to our sector if it were articulated at the federal level, and then the provinces could implement what was best and prioritize it. I think every province wants to prioritize renewal and investment in new entrants, so if it were made easier and clearer that would be very helpful.

[The Chair, Conservative, Larry Miller]

Thank you very much.

We'll now move to Mr. Lobb for five minutes.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Thank you, Mr. Chair.

I'd like to make a point. I think Mr. Maynard made a good point when he spoke about the new entrants program, and he said that government should stay out of it. I think that was a wise comment, because if I take my home province of Ontario, I think they've done a fine job managing it themselves, and quite likely the provincial government or the federal government would have helped enough to screw it up. So I think that's good that we've stayed out of it.

The first question is for Mr. Davies. There was an article in the Globe and Mail yesterday, and I've had meetings with renderers as well on the price of fat that would go into feed processed at a mill. It was $300 a tonne a few years ago, and it was up to $900 a tonne, and in fact in August it was as high as $1,200 a tonne for the fats that provide the energy in the feed. In your sector, what is the risk associated with this increase in price? Obviously this falls into your cost of production, but in the long term these prices will start to have an impact. What is out there in innovation to help counteract this?

[Mark Davies]

You've hit the nail on the head as far as an input cost in most livestock, and in particular in poultry.

One thing I will point out is that looking toward the future we don't see any real relief in sight. We see this as an increasing input. And without getting into a long, drawn-out debate, we all know ethanol and how it plays because of the initiative in the States. Corn is the other major additive in the feedstuffs, and I think--correct me if I'm wrong--this is the first year in the States that over half has gone into the ethanol industry instead of the food industry. This is of course troubling on our side, because it is subsidized.

Having said that, it has already had its impact. I referenced that we had a troubling couple of years. We're doing pretty well now. I think we've managed it well because of our system, but it has increased the end price where the consumer is going to pick up that product.

It's hard passing that on to the retailer. In our industry specifically, we see it featured a lot of times at a loss for the retailer. That's the loss leader we've all heard about. As far as the feedstuffs, the feed companies are constantly working on reformulations. I know in the last year I have experienced it, and I'm from Nova Scotia, which doesn't have a huge farming community relative to Ontario or out west, but they have seen the gains in the quality of feed that we have fed. We base it on a conversion factor, and it has improved by about 5% or 6%.

So research and technology are constantly being implemented on a yearly basis. The feed business is a very competitive industry.

[Ben Lobb, Conservative, Huron—Bruce, ON]

It's my understanding that right now the allocation for quota in Ontario for turkeys is about 80%. I'm not sure of the exact number. The question I have, though, has to do with market segmentation on page nine. I understand there's a huge demand on the organic turkey front. Because the percentages are set across the board, even though organic turkey farmers could supply more than they do, because the quota is allocated across the board, they are getting a reduction as well.

Even though it's a bit of a stretch to call it innovation, it could be innovative thinking. Do you think that's something you would look at down the road so it would help the entire turkey industry to put more turkey on people's plates?

[Mark Davies]

At TFC, a turkey is a turkey, to be quite upfront about it. Not to speak for any other jurisdiction, but Ontario has a comprehensive plan in place to deal with the market segment termed organic. That's a frustration even among different processors looking for “more of their share”. That's one of the guidelines, if you will, of supply management. The good with the bad--we've heard people describe it that way. I think it's being addressed within Ontario. They're aware of it. Sometimes what people want and what they need are two different things. Sometimes it's maybe not looking at the bigger picture, maybe just looking at their individual situations. We've all done that in the past.

We try to look at it as the big picture. It's a national market. We break it into regions when we try to determine the proper number to set nationally and we then administer that to the provinces. Within that province they have that mandate and that jurisdiction.

So I don't want to go out too far on a limb, just the generalities I know about what has gone on. In my own province, we set up a program. We're trying to deal with the same issues.

[The Chair, Conservative, Larry Miller]

Ben, you're pretty well out of time.

We'll now move to Mr. Rousseau for five minutes.

[Jean Rousseau, NDP, Compton—Stanstead, QC]

Thank you, Mr. Chairman.

My first question is for Ms. McMahon.

Given that organic agriculture requires more intensive labour and management, the cost of organic products is generally higher than that of conventional products. What program would you implement to give the Canadian organic agriculture sector a competitive advantage?

[Beth McMahon]

One of the things that we can continue to do is invest in the organic science cluster. That's been going very well. That's managed through the Organic Agriculture Centre of Canada, in which the federal contribution was over $6 million, and industry's has been $2.2 million. If we can build that base of research and science—because organic is based on science and research—as well as nutrient management and efficiency, and lowering input cost, we will start to see those price differences decline.

We're already seeing that in certain segments, and long-term studies show that the profitability of organic farms is higher.