Agriculture Committee on Feb. 14th, 2013

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

Thank you very much, gentlemen, for being here.

David, you talked about off-patent and the fear among farmers, and you mentioned the multinationals that control the seeds. You talked about the need for clear rules.

It seems Monsanto and other multinationals have a stranglehold on farmers when it comes to seeds. We've seen cases such as Percy Schmeiser's and other instances. We see how they are driving trade agreements to their benefit.

I'm wondering what the federal government could do to put in some clear rules. What form would they take to balance this, so that we could ensure the farmer has a better chance of counteracting the stranglehold that some of these multinationals have?

While I'm on this, there has been some concern from farmers that the current Canada-European Union trade agreement will have provisions that will implement UPOV 91 with regard to seed-saving, as opposed to the current rules.

I'm wondering if you have any concerns. Do you have comments, positive or negative? Is it a good thing, or should we be concerned about?

I think that's probably enough for the four and a half minutes that are left.

[David Rourke]

Yes, I am concerned with those things.

In terms of a mechanism to get a clear path forward with off-patent genes, a company like Monsanto would simply have to make a variety available with only that gene in it, which they would have had in their gene banks from many years ago, and make that available so it didn't have the other 200 patents that would restrict you from using it. That would be their obligation for having patent protection—just give you the gene in an unrestricted germplasm. It could be relatively simple, but they banked it up with all these other genes and then they don't make that available.

The whole reason for a farmer-owned plant-breeding company is to provide some competition. We need what they have to a large degree, but I don't think it's the only answer, and I'd hate for it to be the only answer. They can make good presentations of all the things they can do, but they don't have the only answer out there.

Whether or a not a farmer-owned seed co-op or breeding organization would dominate the market is questionable, but if we even had 5% or 10%, although I'd like to see 25% or 50%, at least there's an alternative there. Perhaps it makes the companies that price the seed based on what they can get out of the market a little bit more modest in what they think they can get out of it.

One example is anhydrous ammonia. The cost of production is $200 a tonne, but we're paying $1,000 a tonne just because farmers don't own any of those resources. It's almost criminal what's happening in the nitrogen business right now.

As these new regulations get put in place, we need those checks and balances so that we get good access to the off-patent stuff, they have freedom to operate with good patents and protection as they move forward, and we also have the ability to work in developing traits with whomever we can in the world, whether it's CIMMYT or ICARDA or universities in Kenya, wherever in the world that we can. There are good technologies in Wales that we're looking at, with a different trait altogether from what most people are looking at.

I think there are some opportunities there, but we just have to be careful not to give all the cards to the multinationals.

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

We've got a few seconds, I think.

Do either of you have any comments on UPOV 91?

[David Rourke]

I'm not an expert on UPOV 91. I read a little bit about it, and I probably should know more. It gives them a little bit more extended patent rights, in terms of length. With the costs they incur and the development times, I don't think that's unreasonable. I think once it's off patent, they need to make those traits available to other plant-breeding organizations.

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

Okay, thank you.

[The Chair, Conservative, Merv Tweed]

Thank you.

I'll go to Mr. Richards.

[Blake Richards, Conservative, Wild Rose, AB]

Thanks, Mr. Chair.

I've got questions for both of you if there's time. I'll start with you, though, Mr. Vandaele.

We often talk, whether here at committee or elsewhere, about large and small farms. Obviously there's lots of talk about the small family farm and whether it can continue to survive and whether farms are becoming larger—these kinds of issues. I think you're a good example, with your seeds business, of a family-run, family-owned seed business that's competing against some pretty large players, and from what I can hear, doing so quite successfully.

I wonder if you can maybe tell us a bit more, maybe elaborate for us a bit on that. As a small family-owned seed business competing in that international marketplace, what's been the secret to your success? How have you been competitive? What are some of the keys to your success in the market when you're up against some fairly large players?

[Cal Vandaele]

Thank you.

We continue to go to the school of hard knocks, I guess.

I don't think any small company or family business should ever fear competition. Family businesses have often some of the most innovative people you'll find. David is certainly a good example of that as well.

As long as you work hard and you're a little bit smart.... As the old saying goes, “You never go broke taking a small profit.”

We've been fortunate. We've had some good opportunities. Agriculture has been good to us. Western Canadian agriculture has been good to my family for 100 years.

Our biggest challenge, going forward, in growing our business is people. There's a serious shortage of labour, not only in southwest Manitoba but also all across western Canada. It's probably the issue that, daily, we deal with the most.

[Blake Richards, Conservative, Wild Rose, AB]

I'll speak to your last point.

Coming from Alberta, I can certainly understand that. There's a large agricultural part to my riding, but there are also parts that rely completely on tourism. Both parts of the riding, both industries, really struggle with the competition we face from the oil and gas sector, which takes the young labour. It's pretty hard to compete with what they can offer in terms of wages, for sure, so I can completely understand that.

You're absolutely right: the future in agriculture, especially for family-run businesses, is in being innovative. I really appreciate your comments there. That really speaks to where the future is for the family farm and for agriculture in general.

We talk about government regulations. Is there anything you encounter there, in terms of problems, red tape, or government regulation, that would put you at a competitive disadvantage to similar businesses in, let's say, the United States or even across other provincial boundaries within Canada?

[Cal Vandaele]

Nothing really jumps out.

Every country and every business has a certain amount of red tape to deal with. I don't know whether our business is subject to any more of that than in other countries—in fact, maybe less so than companies in Europe.

From a cost structure standpoint, probably one of the biggest disadvantages right now for an agribusiness like ours is that we are probably paying close to double for the cost of labour in our neighbourhood than what somebody running a similar operation down in the United States pays. That's our biggest increase in costs.

[Blake Richards, Conservative, Wild Rose, AB]

We're always looking for ways to reduce red tape or any regulatory irritants you might face so that you can continue to do what you do best as a farmer and as a businessman, which is to be innovative, create a profit, and grow our economy.

Mr. Rourke, if I have some time left, I'll turn to you with the same question.

In terms of excessive regulation, is there anything that you would identify—something that as a government we can remove as an irritant or something that creates a disadvantage for you over what you might see in other countries?

[David Rourke]

That might be a better question for my wife. She's our CFO and looks after a lot of that stuff so that I don't have to. She has two helpers to help her look after all the filings and stuff we have to do.

We also have a dairy, and we had to jump through a lot of hoops. We also contemplated putting in a cheese plant, and finally I decided that the risk, with having to deal with CFIA and the market and everything else, was just not worth it, so we've tabled that decision. Fortunately we found another cheese plant that was brave enough to go ahead and just got established in Winnipeg, so we send our goats' milk up there.

The one thing I wanted to comment on was your first comment that Cal talked about in terms of being.... We both run very diversified operations. We have 35 full-time people and hire almost 100 people at the peak of our workload.

My son is 25, and he has seen these last five years as quite good, other than for some hail and natural disasters. A lot of people are talking about the huge profits in grain production that we're seeing. They're causing land prices to go up. It was only six years ago that I bought land for about a third or even a quarter of today's price, because nobody wanted more land at that time.

There was a time when we couldn't get rid of wheat and barley at any kind of price. Corn prices were down around $2 a bushel. I used to feed pigs, because grain prices were so low that we had to add some value to it. I have a small on-farm ethanol plant that I've mothballed right now because grain prices are too high. However, I'm not sorry I made those investments. I can unmothball them or repurpose them in the future, because I don't think that grain will always be high.

Farmers are their own worst enemies. As soon as there's some incentive to produce more, that's what we do. Even if there's no incentive to produce more, we try to produce more. Eventually grain prices will not support the cost of production again, and everybody will be surprised.

Because our two operations are so diversified, it may not affect us as much as somebody who's just a straight grain farmer. People seem to have short memories. It was only six years ago that we weren't making any money in grains.

[Blake Richards, Conservative, Wild Rose, AB]

Thank you both. Maybe I can just close off quickly.

I just really appreciate both of you; you're obviously clearly running your farms like a business. The diversification and the innovation are very good examples of how a farm can survive and thrive. I appreciate your both being here today.

[The Chair, Conservative, Merv Tweed]

Thank you.

Ms. Raynault is next.

[Francine Raynault, NDP, Joliette, QC]

Thank you, Mr. Chair.

Mr. Rourke, earlier you talked about your plant-breeding business.

What barriers did you come up against in setting up your business?

[David Rourke]

I think you have to be a little bit naive to do that sort of thing.

The first year, I just decided we were going to do it. I could not get a variety of wheat in Canada that would serve the purpose. I couldn't consistently grow corn, so I had nothing that I could feed my pigs or put in my ethanol plant that I could grow on my farm and make money on from a grain point of view. We looked at a lot of options. We had the resources within our contract research company just to do it. The first summer we just made the crosses that now were going to be registered.

Then we decided we couldn't really produce a variety just for our own farm. What were we going to do with it? Some of you may know Owen McAuley. I approached him and kind of floated this idea across him of forming a co-op, because there were probably other people who could benefit from it, so that's what we did. We were very fortunate to get some help with Agriculture Canada. We have a line that's actually out in the market right now called 409. It's only available to our members. It didn't get registered, and that's probably another topic. There's no good reason it didn't get registered.

The Manitoba Rural Adaptation Council has come to the forefront and helped us with some joint funding that's kept us afloat. There is a deficit on the books that my wife doesn't seem to appreciate. I suggested it's long-term investment, but two of my companies hold a lot of that debt. It will be erased fairly quickly as we get a good variety on the market, but there's a seven-year time lag in getting that going. Not very many people either could do it or would want to do it; fortunately, I was in a position of having the resources to get it done.

[Francine Raynault, NDP, Joliette, QC]

Do the large multinationals enjoy competitive advantages that aren't accessible to you?

What could the government do to support businesses like yours?

[David Rourke]

Until there's acceptance of new technologies like GMOs, I don't think the multinationals will have any advantage in breeding in Canada. I'm not sure how they think they're going to make money, unless there are large check-offs that can go directly to them or they somehow bring in new traits that are worth so much more money that I, as a farmer, will have to buy them because I won't be competitive without them. I don't know if they have that kind of technology, particularly in a non-GMO fashion.

Even when they do have GMOs, I think there will still be a market for non-GMO products. I know a corn breeder in the United States. His business did very well after the GMO corns came to the States. He's not taking over the majority of the market, but he has a successful business and it does provide an alternative.

In terms of help, I listed a few things. If we get preferential treatment, it would be nice to be able to obtain an ongoing breeding program that's had those years of investment with no or low money down. We'd pay it back as we go and do things like that so that we wouldn't have a lot of the upfront costs that we'd have a hard time dealing with right now.

The other is check-offs. I know there are a number of studies being done. I think the Western Grains Research Foundation has sponsored a study. I think the Grain Growers of Canada is also involved in that same study. It's being done by Stuart Garven and Associates, with Dorothy Murrell and Carman Read looking all around the world at what models are available and what might work best. I hope I'm a little ahead of their curve, in that perhaps they'll find we have at least part of that answer already.

[Francine Raynault, NDP, Joliette, QC]

Mr. Vandaele, you talked a lot about shipping your grain. You mentioned the detours you have to make and the fact that it results in much higher production costs for you. What can we do, then, to help you? What would you like the government to do?

[Cal Vandaele]

Again, it's more of a regional problem for us, and maybe one that pertains more to our business in particular. I feel that developing the Westhope, North Dakota, and Coulter, Manitoba, border crossing, if not into a 24-hour border crossing then at least into a commercial truck traffic route, would be a big help.

[The Chair, Conservative, Merv Tweed]

Thank you.

The final round goes to Mr. Zimmer.

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

Thanks for appearing today before our committee.

I'll just comment that I'm not sure what else you do, but you're definitely a busy guy. You have an ethanol plant on your farm. You've raised hogs before. I know you're a very busy guy, and you have a busy family as well. Probably the last thing to do is run for political office with your spare time.

[The Chair, Conservative, Merv Tweed]

Just don't do it too soon.

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

If you're looking for a new MP....

[Some hon. members]

Oh, oh!