Agriculture Committee on Nov. 20th, 2012

[Rick Istead]

I can't give real life examples currently because I think it's still early days yet. From what I understand, Alliance Grain's plans are still to go ahead. They've just been delayed due to other business reasons. I expect that we will see, as the marketplace sorts itself out in terms of what the customers actually want, some further interest in developing value-added processing facilities across western Canada, but there's nothing current.

[Brian Otto]

I think you'll find—

[Frank Valeriote, Liberal, Guelph, ON]

Can I ask one quick question?

Sorry, go ahead, Mr. Otto.

[Brian Otto]

I think on the barley industry side you can look at Rahr Malting and the expansion they've done at their plant as an indication of the positive atmosphere in the malt industry. They are completing three huge expansions of barley storage there so that they can keep more barley on-site for processing. That's definitely occurred since moving to a more commercial marketing atmosphere.

[Frank Valeriote, Liberal, Guelph, ON]

Thank you.

[The Chair, Conservative, Merv Tweed]

Mr. Hoback, go ahead.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Mr. Chair.

Welcome, gentlemen. It's great to see you guys. I've always enjoyed working with you, Brian. Rick, it's nice to meet you.

Both you guys have been farming for quite a few years. I'm hearing some great prices off the combine where you're paid in full over $9 a bushel for wheat. How many times has that happened in your careers before?

[Rick Istead]

First of all, just to clarify, I'm not a farmer. I grew up on a small farm in eastern Ontario, moved west in 1980, have been involved in the agricultural corporate side of things for 34 years, and took early retirement, but all during my career I worked with some great farmers. I think Brian is the best one to answer that question.

[Brian Otto]

Randy, I can tell you right now that the atmosphere out in the farming community is so positive and so energetic. It's just something that I've waited my whole life to see. Being able to haul your grain into the elevator or wherever you're delivering it, and see exactly what you're going to get paid for it goes a long way to helping farmers manage their cashflow and make good business decisions on their farm. You can talk to farmers, and I'll tell you a little story that I heard this fall.

This was a farm family that supported the Canadian Wheat Board. They had signed a contract with the Canadian Wheat Board for new crop for durum. They had locked in a price, and this summer there was a hail storm, so they phoned the Wheat Board and said they didn't know if they were going to be able to deliver it.

[Randy Hoback, Conservative, Prince Albert, SK]

I'm sorry, I only have five minutes. I would like to listen to the story, but there are a few other things that I want to get to before.

[Brian Otto]

Anyway, the gist of the story is, they got out of the contract, but they delivered what they grew to the elevator which offered him a premium over the daily broadcast price because it was so good. They sold it to the elevator and never did deliver it to the Canadian Wheat Board. I'm waiting to talk to this farmer and ask him how this new commercial system is working for him.

[Randy Hoback, Conservative, Prince Albert, SK]

It's money in his pockets. I know. I come from a riding in Saskatchewan.

[Brian Otto]

It's money in his pocket, and that's what farmers are seeing.

[Randy Hoback, Conservative, Prince Albert, SK]

Yes, that's what I'm hearing too. I'm in the riding of Prince Albert, which is as far away from the American border outside of northern Alberta. We're talking to farmers now who've delivered all their wheat off the combine and have held back their canola for marketing reasons, which is a total reversal from other years when they had to dump canola at a high basis. It's interesting how the market takes care of itself, and the benefactor in this case is definitely the farmer, no question about that.

One of the concerns I have looking forward—and this is looking to the sector—is what other structural changes are needed to make the system more efficient so we can start delivering grain to the port on time and meet those commitments, so that we're delivering the product in a fashion that the market wants. I'm talking more about wheat in this case, Mr. Otto, but even in barley, looking at the grading system and what we're doing there, what do you think we need to be doing now as we move forward?

I'll start with you, Rick.

[Rick Istead]

I think the marketplace will dictate, determine or specify what we need to grow. As you know we currently grow nine different classes of wheat in western Canada. I think in many ways that provides us with a lot of strength because we have a lot of different opportunities for those nine different classes. Do we need all the grades and all the protein spreads? Do we need the confusion in the marketplace whereby different grain handlers have different points of reference for what they're quoting in terms of pricing? I don't think so. I think we're going to see some rationalization and tightening up. The customers in the end will dictate what they want. I foresee a lot more contractual arrangements being made in the future as well.

[Randy Hoback, Conservative, Prince Albert, SK]

Brian.

[Brian Otto]

Randy, when it comes to getting grain into position at the ports, I think we're witnessing that already. Grain companies today are accepting delivery of grain only when it's shipped out to their ports and has a place to be exported at that point. I know we're not seeing a lot of grain in storage. If you go with the statistics right now, as I said earlier, we've shipped more grain to this point in the year than we have in the last 10 yeas. If you look at what's in storage you'll find that grain isn't there. What we're witnessing right now is that grain companies are able to manage their facilities a lot more efficiently and bring in the grain and ship it to their customers without having to keep it in storage. That's just the way a good commercial system works. Elevator companies don't make money storing grain, they make money moving grain.

[The Chair, Conservative, Merv Tweed]

Thank you.

Mr. Atamanenko.

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

Thank you to both of you for being here.

Any time one changes a system, time will tell. So far apparently, according to both of you, it appears things are working well. I'm glad for farmers and hope that continues. Hopefully it will also work well when the markets aren't in such good shape.

Both of your organizations have recently been formed as a result of the loss of the single desk of the Canadian Wheat Board. Is that correct?

[Rick Istead]

The Alberta Wheat Commission started four years ago with a resolution that was tabled at an AGM asking the board to investigate producer interest in creating an all-wheat commission. At the time there were two producer commissions in the province, one representing winter wheat and the other representing soft wheat. Those two combined accounted for less than 5% of the total acreage and producers, so the question was asked: Why not all wheat? That's where it started. It had nothing to do with the change in the Canadian Wheat Board, it was a separate initiative that coincidentally happened on the same date.

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

Okay, thank you.

I'm going to talk about GMOs, which is probably not a surprise to anybody here. In the past, in the nineties when the attempt was made to introduce GMO wheat, there was quite a push back by producers, and I guess the Canadian Wheat Board and other organizations played a role in this. It's possible in the future that this push will come again from the major biotech organizations.

Do you feel there is enough strength to withstand that? For example, if our markets won't allow that, do you feel there should be a real look at the markets that farmers currently enjoy in countries that do not allow GM wheat? Do you think there will be unity among farmers from different organizations to say if they're going to do that, they've got to make sure they've got markets, or do you think there will be an introduction of this kind of wheat and then we'll have to take it from there? What's your take on that?

[Rick Istead]

I believe GM wheat will come eventually. I'm not sure when exactly that will be; some predict within the next 10 years. We know there are developments currently under way.

It will be done in a coordinated fashion in concert with a lot of the companies in the major wheat-producing areas in the world. For sure, it needs to continue to be science based. In terms of technology, as we develop it, we'll need to do a much better job of communicating and educating the value of the technology and why it's necessary, and not be afraid of addressing our critics. I think the science will tell us today that GM crops are certainly no different from crops that have been naturally bred. GMO is a tool, and if we're being challenged to feed that ever-increasing hungry world of ours, we're going to need that and other tools to put in the hands of producers and others to help us with that challenge.

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

If the wheat industry is successful and GMO crops have not been shown to increase yield, why would we need to even think about introducing GM wheat when we have good markets now in countries that enjoy the quality of our product, such as Japan, which does not tolerate genetically modified organisms?

[Rick Istead]

We're not, to my knowledge, building any more area to produce crops. For wheat, for example, as I mentioned in my brief, it's expected by the year 2050 we're more or less going to have to move from about 660 million tonnes to 880 million tonnes to feed the nine billion people on earth. We're going to have to provide a lot of tools, and I think GMOs are one of those tools to help us reach that.

To respond to your question about yield response, there was some recent research at a very early stage, GMO work in Australia, that indicated a 30% increase in yield from the standard variety.

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

That's interesting—