Agriculture Committee on Feb. 5th, 2013

[Stewart Wells]

Yes, thank you.

I was a supporter of the Canadian Wheat Board marketing system, single-desk selling, before the change was made last year. In fact, I did run and was elected by farmers in southern Alberta and southwestern Saskatchewan in the 2010 Canadian Wheat Board elections. I actually sat on the board of directors of the Wheat Board; my platform was clear, and I was elected as a single-desk supporter. It's interesting to note that in that same election in 2010, the single-desk supporters came within 31 votes of a sweep in that election. I think it was really the district that you partly represent that was the only holdout there, and again that was a matter of 31 votes.

I should also say that just over 20 years ago we started conversion to organic production on our farm. The Canadian Wheat Board was marketing our organic production over the last several years. Our experience has been a drastic reduction in the price that we're able to sell our organic grain for. Markets change from day to day, so it's hard to make a blanket statement that all of our gains in our organic sales were made for us by the Canadian Wheat Board. But on the surface, if you look at the snapshot of the evidence, the Canadian Wheat Board returned much more money to us for our organic grain sales. When I'm looking at the—

[The Chair, Conservative, Merv Tweed]

I'm sorry, Mr. Wells, I have to interrupt you there for time purposes.

Mr. Valeriote.

[Frank Valeriote, Liberal, Guelph, ON]

Thank you, Mr. Chair.

Thank you gentlemen, for appearing before us, either by video conferencing or personally.

You talked about the price of land, Kenneth, and I'm curious. I'd like to know more about the impact of RRSP funds on the price of land. You mentioned low interest rates and high returns right now and the volatility in the world keeping our land prices high. I'd like to know more about that.

Interestingly, I've been through an order paper question trying to determine the extent to which our farmland is owned by foreign interests, and it's almost impossible to tell, largely because it's provincially regulated, and even the provinces don't know. It could be corporately owned or not, or individually owned. Could you talk about the price of land—I'd like to know more about the RRSP funds buying it up—and whether you have any concerns about foreign ownership of our farmland?

[Prof. Kenneth A. Rosaasen]

In terms of farmland prices, some of them have been escalating very rapidly. You can hear of prices in some regions exceeding $2,500 per acre, which is up sharply. I heard of one, which I didn't personally go out and validate, where an offer was given of $3,000 an acre for good land near Balcarres, north of Regina, but I heard the seller declined. In terms of how much they currently own—the foreign investors—as you say, it's really hard to know. There have been some questions put to the group that used to be called the Farm Ownership Board. There was legislation in Saskatchewan that used to limit how much could be there. But it's really hard to trace the flows of money.

The other thing is this Agcapita, which I talked about. I haven't had much time to investigate it, but they have had a couple of funds; they've been buying land, and they've closed them as they've purchased enough land. I think you all know the implications. If someone can buy it out of an RRSP and I have to buy it out of money that I've paid taxes on...I'm a non-competitor. It's going to change the profile as more of them get set up.

I have children, and of course I asked, should we put some of our money into an RRSP and use that to buy some land? We couldn't figure out a way to do it, because of the requirements of being large and being traded on exchanges and other things, which seems to be the rule.

I raise it because I have a concern. I hear concerns from neighbours about how land is managed or treated. I think there's a long history about outside land ownership, and in terms of whether you're talking Ireland and potato famines or other things, they're not always great stories. I think it's something that this committee should be addressing, and that's the reason I raised it. It's the talk out there in the country.

[Frank Valeriote, Liberal, Guelph, ON]

Okay, thank you.

Stewart, I want to ask you as well about the ultimate variability of the price of grains up and down. I know it has been a reasonably good year, and everyone will take credit for it, I'm sure.

How are prices increasing land values, and what does that mean to you? What happens if suddenly the price of grain should drop?

[Stewart Wells]

It's a mixed blessing when commodity prices go up. On the surface, everybody wants commodity prices to be higher than they are, but what they're really saying is that they want that margin to increase; they want their own take-home margin at the farm gate to increase.

One of the negative things that happens when commodity prices go up is that the whole enterprise gets riskier, because all the input suppliers and handlers and all the other people the farmers have to deal with in this value chain all extract extra money as soon as commodity prices go up. I suppose an analogy can be made to a poker game: if you keep upping the ante every year or upping the ante in every round of cards, the enterprise gets riskier.

When that's combined with what Ken was just talking about—in a sense, you could call it unfair competition or competition coming in for farm land from offshore or other sources of money—it really starts to make the enterprise look unsustainable. We settled this country in the west on the basis of individual farmers and farm families that were doing their best to produce good quality food; you end up right away in this situation of absentee landlords and farming not being a right for Canadian citizens but rather a privilege.

[The Chair, Conservative, Merv Tweed]

I have to stop you there for time, I'm sorry.

Mr. Hoback.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair, and thank you, witnesses, for being here today.

I know Stewart, Ian, and Kenneth; we've talked many times in the past, and while we'll agree to disagree on probably just about everything that's been said here today, there are some things I'd like to pry into with Mr. Rosaasen, looking forward, because this is a study about the production and supply chain, how we look forward, and how we're going to meet our needs going forward in, let's say, 2020, 2030, 2040.

Ms. Brosseau brought up a good topic, and that is that we do have growing consumption, we do have a world that's getting bigger and bigger. In your work, Mr. Rosaasen, what do you think we need to do to ensure that we can produce enough food to feed all these people that are coming?

[Prof. Kenneth A. Rosaasen]

One is public research to make sure you improve your yields and your varieties and those kinds of things. The other thing is that you need to keep a healthy farm sector to make sure it can withstand some of vagaries that do occur with the weather and world markets.

[Randy Hoback, Conservative, Prince Albert, SK]

Let's just explore that, then, on the public research side.

[Prof. Kenneth A. Rosaasen]

Sorry, could you speak a little louder, because I have one hearing aid.

[Randy Hoback, Conservative, Prince Albert, SK]

Can you not hear me? I'm the same way; I'm having a hard time hearing you.

[Prof. Kenneth A. Rosaasen]

Okay, I'll speak louder.

[The Chair, Conservative, Merv Tweed]

Both of you have earpieces if you need them.

[Randy Hoback, Conservative, Prince Albert, SK]

Chair, I hope you're not counting my time here.

[The Chair, Conservative, Merv Tweed]

I'm not counting your time.

[Randy Hoback, Conservative, Prince Albert, SK]

I appreciate that.

I think public research is important. I don't think anybody around this table would disagree with public research, but I think you also have to recognize the importance of private research and research that's been directed based on economics.

You made some comments in your testimony about the price of canola seed. It's been a little misleading, because when I look at the yields that we're getting from the new varieties, the GMO varieties, even though the seed costs more, the net return per acre is substantially more. That's what the farmer puts in his back pocket, and that's the equation he does when he looks at the cost of all his inputs before he puts them in the ground.

As we move forward we have limited resources. We have a limited amount of land, a limited amount of water. Would you not agree with me that it's very important that we look at all aspects of the production cycle to ensure we're maximizing to fulfill the global requirements?

[Prof. Kenneth A. Rosaasen]

Right. We want to be productive. We want to be innovative. We want to adapt. We may want to do it across all components of the supply chain, including plant breeding. But I think it's wrong to neglect that there are and have been major gains in plant breeding from the public sector and they are shared significantly differently. We make choices about how we should share those benefits. Many of those choices are legislative choices.

[Randy Hoback, Conservative, Prince Albert, SK]

legislative choices are one option for sure, but legislative choices can create unintended consequences. I look at the testimony of Dr. Brian Fowler. When we had legislative processes in place when it came to winter wheat breeding, for example, his great varieties were all being grown everywhere else but Canada. There were reasons why, and that was because of the types of regulations and legislation we had in place. When you talk to him now, with the changes that are in place and the future changes that will come forward...a lot of this new technology that we've been ignoring for reasons other than market conditions will now be allowed to hit the market. It's going to give farmers more choice. That choice is going to drive even more research. Would you not agree?

[Prof. Kenneth A. Rosaasen]

I agree that having a greater selection of varieties is important. If you go back and look, you'll find that I was one of the people who was arguing that things like HY320 as a new variety should be introduced to give farmers more choice.

[Randy Hoback, Conservative, Prince Albert, SK]

I remember that.

[Prof. Kenneth A. Rosaasen]

So I haven't been opposed to technological change or those types of developments.

Brian Fowler is a colleague of mine, and we have discussed how specific milling requirements and other things may have limited the gains for some things. Sometimes it's important to adjust regulations. All regulations aren't perfect.

[Randy Hoback, Conservative, Prince Albert, SK]

That's right. They have to adjust as times change—exactly—just as any other organization has to adjust as times change. Is that correct?

[Prof. Kenneth A. Rosaasen]

Yes.

[Randy Hoback, Conservative, Prince Albert, SK]

Both Mr. Wells and Mr. Robson are very strong single desk supporters. I understand that. That's something that's inbred in them and it's something they strongly believe. I respect that, and I really respect their passion. But I disagree with it because the market conditions right now are showing something totally different from what they're saying.

I'll use the example, the testimony we had earlier, of talking to...sorry, it escapes me. Basically the movement of grain this fall has been 40% higher, and more efficient, since the removal of single desk. When you look at the price of grain off the combine...I have testimony from numerous farmers who have never had such high prices paid in cash, off the combine, in their pocket, in the bank account, all within two or three days. That was never there before.

So you have to look at that and ask where was the supposed market power. The reality is the board was not big enough or efficient enough to extract market power. It could threaten, but it could never extract. The reality is that the market now is reacting to a variety of things. It's sending signals based on where and when the grain should be delivered; the market is driving that, which is what the market does. This is no different from canola.

I know Mr. Robson says he finds it confusing, but you know what? I don't find options confusing. Options are what the farmer needs to make the best decisions for managing his operation. My operation would be different from Brian's operation and different from Blake's. That's something the single desk could never do.

One thing I do find interesting is that the single desk now, the new CWB, is handling canola. I understand that's moving very well. Colleagues at the CWB said the first example of moving canola through the Canadian Wheat Board, which was supposedly not possible to do, went very well.