Good afternoon, Mr. Chairman and members of the committee.
Thank you for inviting the Canadian Canola Growers Association to speak to you as you study the Agriculture and Agri-food Canada Growing Forward 2 program and the issues that affect the competitiveness of Canadian farmers, a topic that is critically important to Canadian canola growers.
Along with my brother we farm 9,000 acres of oilseeds and grain crops near Marwayne, Alberta, which is about 30 minutes northwest of Lloydminster, right on the border of Saskatchewan and Alberta.
For any business, the ability to compete is fundamental to its long-term sustainability. This is true for canola growers and part of why canola has been able to expand into a $16 billion economic driver of the Canadian economy. In the agriculture sector, and specifically in the canola industry, remaining competitive in both the domestic and international markets is key to our survival. For the canola industry, being competitive means being able to constantly adapt and innovate in an ever-changing, increasingly competitive global market.
While canola is a good example of agricultural success, to remain competitive and to ensure the success story continues, canola farmers require a policy environment that encourages innovation, defends science-based regulations, and supports good business management practices. Equally important are government policies that facilitate the canola industry gaining and maintaining access to international markets, allowing us to compete on a level playing field with our competitors.
I would like to address some specific areas in which government policy directly affects canola growers’ ability to compete and remain profitable.
The first area is science-based regulations. Canola was born out of science and innovation, and for the canola sector science and innovation remain a top priority in ensuring the long-term success and competitiveness of the sector. The cornerstone of Canadian crop innovation is a predictable and science-based regulatory system that encourages investment in research and development. That system has served the canola industry well in the past, and that system will be required for it to remain competitive in the future. Although canola is a major contributor to the Canadian agricultural industry, on a global scale it is small compared to competing crops such as palm, soybean, and corn, which attract substantially more research dollars from the private sector. Maintaining an investment- and research-friendly environment is critical to attracting investment in the canola sector. Without that, the canola industry will simply not be able to continue on its innovative path, which supports healthy farms, a healthy economy, and healthy consumers around the world. To put that in perspective, canola has 17 million or 18 million acres, and corn has 90 million acres.
Maintaining science-based regulations not only has significant implications for the canola industry’s ability to attract investment in research and development, but it is also critical to our success in international markets.
Another area is market access. The Canadian canola industry is highly trade-dependent, with over 80% of seed and canola products exported on an annual basis. Therefore, the success of the industry is contingent on its ability to export its product around the world. Our ability to compete in international markets is affected by non-science-based regulations in some importing nations. One way to encourage these countries to adopt science-based regulations is for Canada to maintain and defend a strict policy of science-based regulations, setting an example for other countries to follow. Low-level presence policy is a major issue being discussed with the EU and EU industry counterparts. To strengthen our hand in these negotiations and ensure that our access to international markets is not disrupted by unintentional low-level presence of GM events, Canada should adopt its own LLP policy and then work with other countries to encourage them to adopt similar policies. Without accomplishing this, unintended and unexpected disruptions in market access will occur and directly impact the profitability and competitiveness of canola farmers.
The federal government is consulting with industry on developing low-level presence policy, and looking ahead will be critical to securing our market access in international markets. One of the big reasons for this is that the ability to measure such low levels is possible today in the billions. So one-billionth could be detected, and that could be one seed or a couple of seeds in a train load, which can prevent the whole product from moving to market.
On trade, beyond low-level presence, there are other trade restrictions that directly affect canola farmers’ ability to remain competitive with our counterparts in other exporting nations. In a number of markets, canola continues to face discriminatory tariffs. For example, in China and Taiwan, canola seed has a higher tariff than that of soybeans. In Korea, Pakistan, and India, canola oil has higher tariffs than soybean oil. In a highly competitive marketplace, this translates into either fewer sales or lower prices for canola, due to an unfair tariff disadvantage.
It is critical that the rules of international trade do not put our canola at an unfair competitive disadvantage. Minister Ritz, Minister Fast, and the federal government have pursued a trade strategy that includes free trade agreement negotiations with Europe and India, and more engagement with Asian countries such as China, Japan, and South Korea, who now have a trade deal with the U.S., leaving Canadian farmers at a disadvantage to our American counterparts.
Canadian Canola Growers encourages the government to continue moving forward on an assertive trade strategy with those other countries. Uninhibited market access to new and existing markets is vital to expanding the canola trade around the world.
On research, the canola industry has set an aggressive goal of 15 million tonnes of sustained demand and production by 2015. The industry is on track to reach this goal, with 13 million tonnes of production in 2011 alone. However, in order for this goal to be reached and sustained, government policies that stimulate investment and encourage innovation will be required. Perpetual innovation and investment in the canola industry has led to new seed varieties with improved health and agronomic characteristics, facilitating improvements in stewardship and market development.
While research needs to be industry-driven, support from the government is essential. Most of the agronomic research in Canada is conducted by Agriculture and Agri-Food Canada research stations. This research is critical to the competitiveness of the canola sector. Crop production research has helped to improve yields, lower input costs, manage new and emerging diseases and insects, and improve sustainability.
For example, clubroot is a serious soil-borne disease that emerged in canola only a few years ago. The federal government’s contributions have been very valuable in the effort to combat this disease. Specifically, the clubroot risk mitigation initiative was launched with the assistance of the federal government.
Continued research into the nutritional benefits of canola, such as reducing the risk of cardiovascular disease and improving the ability to manage diabetes, is also important in improving the market demand, as is research done to improve the nutritional profile of canola. The results of this research will help increase consumer consumption of canola and improve the health and wellness of all Canadians, which has the ultimate impact of reducing health costs for Canadians.
The federal government’s continued and expanded support of research directed at both the agronomic and the end-use properties of canola will play a significant role in keeping canola growers competitive. In addition, programs like the recently announced agricultural innovation program will help facilitate innovation in the entire agricultural sector.
On rail service, with the majority of canola grown in Canada being shipped to export market by rail, canola growers rely heavily on the service of Canadian railways to market their grain. Industry competitiveness in the global marketplace is dependent on the railways providing timely and efficient service to Canadian agriculture. A more effective rail system in Canada would make canola growers, along with all grain farmers, more competitive.
The Canadian Canola Growers has strongly advocated for an improvement to the rail service in Canada through participation in the government’s rail service review. The recent appointment of a facilitator and the establishment of a working group are important steps in moving forward, and we are encouraged by these steps. However, this is only the beginning of a process that is required to address the significant issues that farmers face with rail service. Only by moving forward on all of the aspects of the review will there be any significant improvement to the efficiency of the rail service in Canada.