Agriculture Committee on Nov. 22nd, 2011

[Ron Maynard]

Yes.

[LaVar Payne, Conservative, Medicine Hat, AB]

How would you see that fund helping out the industry? And secondly, is there any particular area you would like to see the research dollars going to in Growing Forward 2?

[Ron Maynard]

Just last week in Montreal, we had a meeting called a research conference seminar with the producers, with some processors, with other industry stakeholders, and with the researchers. Right now, we're in the dairy research cluster.

We were looking at where we are now and taking a look at the research that's in place, and looking at the future and asking, “Where do we have to be?” Last time, the dairy cluster came on a little quickly, and we didn't have time to consult fully with the full industry. So some of us who act as leaders kind of said, “Well, this is where we think we want to be.”

So it was a two-part process. One part was to justify that what we're doing now is along the right lines, and the other part was looking at where we want to be in the future. The basis of it is sustainability—environmental sustainability, animal welfare, food safety, and new product research—and that's the basis we would like to see the next research cluster encompass.

[The Chair, Conservative, Larry Miller]

You are out of time, Mr. Payne.

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

[Malcolm Allen, NDP, Welland, ON]

Thank you very much, Chair.

Thank you, everyone.

I'm going to address my question to Ms. McMahon, but I'm going to steal from you, Mr. Hames, your science-based approach to things. We hear of this here on a regular basis, but quite often—and please don't take any offence, because I think what you say is not incorrect—it's used as a euphemism for “must be good, because it's science-based”.

Science used to be based on a flat earth society at one time too, but we proved that to be wrong. In fact, I was watching my 27-year-old daughter do physics the other night, and it wasn't the physics that I did in 1972. It evolves over time.

Ms. McMahon, I would get back to you. We hear the term “science-based” quite often. Is the organic sector based on science as well, or is it based on—I don't know—smoke and mirrors?

[Beth McMahon]

No, not today; right now, with over 4,000 producers—and 40% of those are in the prairies—this is business, it's economics, and it is science. The only way we're really seeing a lot of people transition into organic is that the science is there and they're fed up with some of those fertilizer bills.

Quite honestly, that's why we're getting, as I said at that conference, so many non-organic producers in attendance.

At the same time, it's also based on consumer demand. Consumers are saying they want organic turkeys, so there has to be a shift. Whether a turkey is a turkey.... If the consumer says they want it and they're going to pay for it and there's a value to the end producer, then it's going to happen.

It's the same with canola in P.E.I. They have a market in Japan for non-GE canola, so they grow it and they make money and they export it. It is about adaptability and seizing those market opportunities.

[Malcolm Allen, NDP, Welland, ON]

The other question I have for you is around the idea that somehow, in order to feed the potential of nine billion people down the road, a certain model needs to be used, and otherwise we can't be successful.

Would you agree that this is the only model to be successful to feed what potentially might be nine billion people on this planet?

[Beth McMahon]

Absolutely not. I feel as though there is value to different scales in production models. That's why community-supported agriculture models are doing so well in Canada. Then maybe the surplus of exports can go to that international market.

At the heart of it, we still believe that locating production in areas and countries that need it most makes the most sense. Maybe it doesn't line our pockets, but if a certain country is food-insecure and if they're able to grow their own product, that is, I think, the best solution. Right now we see a lot of regions that could use our expertise.

[Malcolm Allen, NDP, Welland, ON]

Mr. Maynard, quite often what we hear from detractors of the supply-managed system, which clearly we are not, is that somehow you're non-competitive. I say that from a perspective of looking at our market per se. Your chart reminded me, albeit I wasn't in this country in 1960—I didn't actually get here until 1963—as I thought through things the other day, that I have a memory of my mother complaining bitterly about the price of milk and how it went up through the roof and down through the basement during the 1960s. There were five kids in my family, me being the eldest, and as you can imagine, we drank a lot of milk when we were younger.

Can you take a moment to simply explain to us—I already have a view of it—how you folks look to be competitive in some of the things that you do?

[Ron Maynard]

“Competitive”, as I said in my conclusion, is always difficult to define. For “competitive”, use “sustainability”. What we're into is sustainability. We're into environmental sustainability, we're into economic sustainability, and the stability that's in supply management is what we're talking about.

We have higher costs than other countries because we have, as I said in my presentation, a winter season here. We have to store feed; we have to keep animals in shelter. We're the same as the northern European countries, the Scandinavian countries especially, which have a higher cost of production.

To be competitive, we produce milk by Canadians, for Canadians, using Canadian standards as far as environment, employment, and food safety are concerned. Yes, we are going to be more expensive than some of the offshore competition who don't have those expenses.

[The Chair, Conservative, Larry Miller]

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

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair

I'd like to again thank everybody for coming out this afternoon. It's great to see you here today. As we talk about Growing Forward 2, I think where we want to go to is where we need to be.

I'm going to start off with the Canadian Canola Growers Association. We had the impact of China's basically shutting the border down to canola. To help the committee understand the impact on your industry when it was shut down for that brief time, perhaps you can give us an example on a per-tonne basis of how it worked. Even if you don't know the exact dollar figures, maybe tell us the impact.

[Todd Hames]

Thanks, Randy, for putting me on the spot.

Certainly there was a huge impact on the Canadian canola growers, partly because the market was just emerging in China. Demand was starting to really ramp up in China, and with the 15-million-tonne Canola Council goal, this was the way we were going to achieve it.

In dollar terms, China would take something around the million-tonnes-a-year mark, and they were just starting to ramp that up to probably two million tonnes. So it was a significant blow to an industry that was probably producing at the time about 11 to 12 million tonnes. It would be 10% or 20% of the canola crop in Canada—as distinct from giving a dollar-per-tonne figure—as a percentage of the export market. There was a huge market.

[Randy Hoback, Conservative, Prince Albert, SK]

I can remember that it was a big issue. I know that the Minister of Agriculture, even the Prime Minister, got involved in that one. We're still trying to make sure that it doesn't happen again. But in the same breath, there are still some restrictions in place that we've been able to work on with our colleagues in China to at least get market access. I think this underlines the importance of market access and what can happen when you lose it, especially when you lose it based on a non-tariff trade barrier—something based on politics rather than on science.

In the case of trade agreements we're working on with Europe, and with the TPP, how important is it to the canola growers to see those types of trade agreements come in place, that we have mechanisms to deal with disputes and to help market access?

[Todd Hames]

It's absolutely critical. To highlight what we just talked about—that China and the U.S. are huge markets for us, and we're export-dependent—we need to have more people to whom we're exporting so that we're not dependent on one market alone. That's the main thing: we need market access to all of these countries, so that if someone has a problem or a hiccup the industry is not shut down because we're only in one door.

The canola industry's goal is to get more trade going on with more countries so that we're not as dependent on one partner.

[Randy Hoback, Conservative, Prince Albert, SK]

One thing we've seen in the canola sector also is the increase in domestic crush in Canada, and actually a change from the crush happening offshore to its now happening on the prairies. That's the type of thing I'm hoping to see in the wheat and barley market as we move forward.

How does it change the Canadian canola growers? Now you're dealing with not just exporting the seed; now you're talking about oil. How do you go about the promotion of not just the seed now, but the oil too?

[Todd Hames]

That's a good point. I'll highlight that. It's a result of partnership, of the value chain, and a goal of 15 million tonnes by 2015 to coordinate growing more canola and crushing more canola at the same time.

Those products.... One of the market development issues is probably the bigger issue of getting rid of the canola meal. It's mainly a by-product with canola. Soybeans is our competitor. Soybeans are crushed more for the meal; canola is crushed for the oil. I don't think the oil is a big problem to get rid of; it's going to be the meal. We've worked with the dairy industry a lot in China and in the U.S. to show how the canola meal can help milk production increase.

[Randy Hoback, Conservative, Prince Albert, SK]

I'm going to move on to organics, Ms. McMahon.

One thing we've had a lot of testimony on before this committee, not at this sitting but before, when we looked at the biotech sector—and I know Mr. Valeriote was working pretty hard on this—is trying to figure out a way that organics and the biotech sector and GMO sector can survive side by side. One question that keeps reoccurring concerns low-level presence and the acceptability of a reasonable amount of low-level presence. Have you in your sector talked about this, and have you looked at where we need to be with it? Is there a compromise to be had here?

[Beth McMahon]

We have. We actually had a presentation at the Organic Value Chain Roundtable last week. As I'm sure you can imagine, the organic sector is very unsupportive of this.

One thing I want to raise, and I don't even know that the canola growers realize it, is that it's not about just a singular incident; it can be a repeat offender over and over again. That was clarified during those meetings. It's not a singular issue whereby something that is undesirable to the Canadian consumer or a Canadian grower comes in and is dealt with, and maybe the shipment is not destroyed or rejected. It's something that can just keep happening, as long as they're under those limits. If you keep adding it up over years and years, the contamination can be quite significant.

We know that one kernel within a tonne of ethanol corn can destroy that entire tonnage for baking purposes, because the enzyme breaks down. Just that 0.1% can have very detrimental effects, whether intentional or not.

[Randy Hoback, Conservative, Prince Albert, SK]

Really? I've never heard that before. I've never heard anybody say a low-level presence that small would impact on--

[Beth McMahon]

Yes, a study was done in the United States by the American Bakers Association, because they're quite concerned over ethanol-based corn, point blank. So they were reducing it, saying even if it's not intended for human consumption, that cross-contamination has significant detriments to human consumption and baking quality.

[The Chair, Conservative, Larry Miller]

Your time is up, Mr. Hoback.

The last five minutes go to Mr. Lemieux.

[Randy Hoback, Conservative, Prince Albert, SK]

I have a few more questions, but I guess I'll have to stop.

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

Thank you, Chair.

I want to focus the discussion on the farm gate. In Growing Forward we've been studying science and innovation, but now we're looking at the competitiveness of enterprises. I think of this at the farm gate, meaning that we expect our farmers to be good farmers, and they are good farmers, but we also expect them to implement business skills.

As a government, we sometimes obligate business-type training if someone requires access to a particular program, if there is difficulty within their sector or on their farm, but each of your organizations is different. You have different scenarios, different systems, and different networks.

What I'd like to know from each of you, does your association promote business development, business skill development, and business strategy development at the farm level, so the farmer is looking ahead more than just in the crop season in which he finds himself? But he might be looking at should he pay off debt, should he acquire more capital acquisitions, should he use an accountant, what tools does he have to help run his farm like a business--those types of business decisions that would affect his enterprise.

Because your organizations are quite different, because we've got supply-managed sectors and we have non-supply-managed sectors and the communication levels between the farm gate and your associations would be different, perhaps I'll start on this end with turkey farmers and then we'll go to dairy farmers and then to organic farmers and then to canola farmers.

Perhaps you could explain to me what you offer and how you encourage the take-up by farmers within your association. And is there a take-up?

[Mark Davies]

Thank you very much for the question.

The short answer would be not in any formal sense. It's not as if there's a course of business acumen to take and here's some.... It's more we could provide resources and some direction.

Inherent in supply management--and Ron has touched on this before--is this model of the farm and how it is to be operated, the cost structure. Within supply management is a very savvy group of business people. I think that's evident. It doesn't matter if it's supply-managed or not; if you're not a good producer, you're not in business. I think it's that simple.

Supply management provides a little more stability, but along with that stability, as has been referenced before, is a heavier debt load. So the risk is inherent in that.

To tell you the truth, I don't think it's something that's needed from the top down, if you will. It's something that any good businessman is going to seek himself.