Agriculture Committee on May 12th, 2014

[Doug Wray, Chair, Board of Directors, Canadian Forage and Grassland Association]

It's Doug Wray from Calgary. I'm going to make the presentation.

We very much appreciate the opportunity to speak to you about the innovation in the forage and grassland industry.

My name is Doug Wray. By way of introduction, my wife Linda and I operate a family ranch at Irricana, Alberta. We manage over 300 cows, background and grass the calves, and raise our own replacements. I'm speaking today as the chair of the board of directors of the Canadian Forage and Grassland Association. Joining me from Edmonton is Ron Pidskalny, our executive director.

We are a national non-profit association representing Canadians who produce hay and forage products, as well as stakeholders who depend on forage and grasslands to support their industries.

Forages are Canada's largest cultivated crop at almost 13 million hectares, representing 39% of the land devoted to cultivated crop production. Forages also occupy an additional 15 million hectares of native or natural pastures and range land. The livestock sector is the largest user of forages in Canada. Eighty per cent of Canada's beef production and 60% of a dairy cow diet depend on forages.

These 28 million hectares of forages generate almost $5.1 billion in economic activity annually. Of this total, the forage, hay, and seed export industries represent $288 million, with forage and hay exports currently experiencing about a 50% growth rate internationally. This is due to water quality and supply issues, population growth, and protein and fibre shortages in many regions of the world. Our forages are in demand.

Our export members have been instrumental in opening China to Canadian alfalfa exports, and this spring, Minister Ritz signed a trade deal with China to accept timothy exports.

This $5.1 billion of economic activity does not include $13 billion of indirect value contributed in ecosystem services to Canadians with regard to climate change mitigation; erosion control; pollination services; recreation; wildlife habitat preservation; and the regulation, protection, and improvement of water resources. We think this is a very important piece of the forage dynamic.

Society in general is unaware of forages' unique attributes relative to other crops. Forages are perennial species that regrow every spring, fix atmospheric nitrogen biologically, and enhance soil fertility. However, producer-funded check-off programs for research and other activities that exist for crops such as canola, and livestock such as beef, do not exist for forages, so we have no direct check-off to do our work with.

The Canadian Forage and Grassland Association interprets competitiveness as the ability to sustain an advantage over competitor nations. This advantage will develop through innovation derived from a consistent, long-term strategic plan that integrates activities across the value chain. A strong research program is the essential foundation that will allow the innovation required to drive competitiveness.

The reality is that Canada has experienced a substantial decline in investment and expertise in forage research. Between 1985 and 1998, research expenditures and scientific capacity declined by 55%. Since then, research capacity has continued to decline, funding has been inadequate and sporadic in nature, goals have been short-term, and there has been no long-term commitment to building or maintaining existing infrastructure.

Research investment to address priorities such as forage yield stagnation is required to reverse the removal of forages from cropping rotations in favour of annual crops like canola, corn, and soybeans. Dramatically reduced forage research funding has created a situation in which forage yields have not kept pace with those of annual crops, thus putting the livestock sector at risk. Producers are losing the financial incentive to grow forages and forage seed on productive land as a part of a perennial cropping system.

Evidence of a reduction in forage competitiveness includes the following: The national beef herd continues to decline despite recent record high prices in cattle markets. Land reclamation and restoration efforts and biodiversity initiatives are becoming a challenge as the availability of cultivated and native forage seed and inoculants decline, so the availability of the seed to actually do the reclamation work is an issue. Canada is losing its capacity to test new forage varieties nationally in 2014.

One solution is to integrate the goals in resources of both the public and private sectors. Our association's vision includes the renewal of the public sector's commitment to forage and grassland research, and a division of the research activities between the public and private sectors.

Public sector research would focus on the longer term goals where there is a need to solve complex technological issues, develop platform technologies, or overcome technological bottlenecks, particularly where private ownership of intellectual property is not in the public interest. Increasing intellectual capacity and expertise through scientific training, mentoring, and teaching would be a responsibility of the public sector, and also, areas where the private sector has vacated the market due to lack of commercial viability. We have some examples of that. Providing ecosystem services for the public good would be the final point for the public sector.

The Canadian Forage and Grassland Association has developed a framework for fair compensation for ecosystem services through the Commission for Environmental Cooperation, which is a tri-national organization created in conjunction with the North American Free Trade Agreement. Our pilot project catalyzes North American grassland conservation and sustainable use through beneficial management practices that demonstrate positive linkages between cattle production and native grassland conservation. The two work hand in hand for the benefit of both.

In closing, I will mention our three main recommendations.

Number one, improve foraging grassland research capacity by enhancing federal government support of long-term, innovative basic and applied research programming. Through innovative research, the issue of yield stagnation and declining competitiveness can be addressed, which will drive sustainable advances for foraging grasslands stakeholders.

Number two, assist in addressing the lack of availability of cultivated and native forage seed and inoculants through innovative research practices, and develop new and innovative capacity to test forage varieties nationally.

Number three, identify a means of capturing or compensating producers for the value of ecosystem services provided by forages and grasslands owing to their range of unique attributes, and the value to the Canadian economy and society.

That's our presentation. Thank you.

[The Chair, Conservative, Bev Shipley]

Thank you very much.

With that, we'll now go to rounds of questioning. We'll start off with Madam Brosseau, please, for five minutes.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

I'd like to thank our witnesses for their presentations. I've learned a lot.

I'm sorry, but I forgot the name of the last witness, who talked about forages. You commented that the private sector has vacated some areas due to market and commercial viability. Could you comment and give some examples of that, please?

[Doug Wray]

I certainly can.

The reality of the forage industries is they are perennial producers. If a plant breeder develops a forage variety that works very well, one of the attributes I want is long-term survivability and productivity. I have some in my pastures that are now 15 years old and haven't needed any reseeding; they're as productive as they were 15 years ago. If he's successful in providing the plant product that I need, I don't go back to buy more seed very often. That makes it a catch-22 situation, in that it doesn't provide an economic basis for continuing on when we're successful in developing the varieties that provide the kind of growth and productivity we need.

In the annual cropping scenario—and we just heard from the Canola Council—the producer goes back for more seed every year, and the market is very robust and economic in that regard. On the perennial side, it's a different game, because if you successfully provide a good variety and it lasts a long time and is productive over the long term, which is what I need as a rancher to be profitable, then you can see where the two don't fit economically in terms of that plant breeder continuing to produce more varieties.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Bill C-18 will be coming up once again in the House, and it will be at committee. I hear a lot of concerns about that bill, so I'm looking forward to having that come in. I don't know when it will be. I was just wondering if you can comment on how the government can continue to foster or better foster innovation.

[Doug Wray]

Well, we think that because of the environmental piece that provides benefits to all Canadians, there's a case to be made for public dollars to be spent on forage variety development, because when they end up on the landscape, they provide for healthier soils and more biodiversity. They support the wildlife element and the recreation element. All those things are side benefits to my successful ranching operation.

We think the public purse, the government, being involved in developing and working on innovative new varieties will allow us to remain competitive. Certainly the perennial plants have not seen the yield increases that the annual cropping world has seen, just because of the dynamics of the biology. Also, it's much tougher to generate those huge increases in yields.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

I have some questions for Ms. Miller.

Your industry has been very successful, mostly because of innovation. I was wondering if you could comment on how important it is to ensure Canada does invest in public research, because we know success is based on innovation. Also, is the government doing enough with the programs as they are right now?

[Patti Miller]

Public research has been critical to our success, but I would look at it more in terms of not only the public research but also the public industry partnership. That's what has really driven canola's growth over the last few years.

It is important that the government continue to invest in its own research capacity, but also to work hand in hand with industry as you're establishing the priorities, and as you're looking at where to allocate what are very scarce resources.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

In your industry, how much is public and how much is private?

[Patti Miller]

Trying to come up with a figure on what's been invested in canola research publicly or privately is a huge challenge. You have life science companies that invest millions and millions of dollars in individual variety development. I certainly know what goes through our organization in terms of project funds. At the last Growing Forward science cluster, the Canola Council saw the value chain receive $15 million in federal funding, and one of our member organizations, SaskCanola, a producer organization, received another $5 million. That's $20 million over five years of program funds alone. I think even within the federal government they do have challenges in trying to determine how much is spent on each commodity, but the department is doing work on that.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Madam Brosseau.

I'll go to Mr. Hoback, for five minutes, please.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, witnesses, for being here this afternoon.

The canola industry has been an interesting industry to watch. I grew canola, and my dad started growing canola when it was still called rapeseed, I believe, so it's definitely matured from there. It used to be that if we got 18 bushels of Polish canola an acre, we were very happy. If we got 20, it was great. If you got 40, you were actually lying.

I look at the sector and how it has come along, not only the yield but also the economics of it. What has been the thing you could most refer to that explains why this sector is attracting foreign investment and why this sector is growing? What would that be? What has it been?

[Patti Miller]

It's hard to pick one single thing, Mr. Hoback. I think it's the combination of investing in a way that ensures farmers can grow the crop profitably, and the market really understands the value of that canola. It's the entire profit cycle. Consumers aren't going to be willing to pay for the crop if they don't truly understand its health benefits or its meal attributes. When they're willing to pay for the crop, it makes it more profitable for farmers to grow, and the more the industry will invest in it. That's how you get that sustained profitability cycle.

You talked about the yields. One of the things that really caused canola to take off was the development of herbicide tolerant technology in the 1990s. That's when you really saw the jump in yields. As an agriculture industry, we talked about that in the context of how good it was for the farmer. I think we also need to tell that story in terms of how good it is for the consumer. The use of herbicide tolerants means we are producing more food on the same amount of land. It means we're using less fossil fuels to produce a larger crop. It means we're using fewer crop protection products to produce more of a crop. There's a phenomenal sustainability story there that I think is going to help—

[Randy Hoback, Conservative, Prince Albert, SK]

It's actually a very amazing story. When you look at zero tillage and how it came into play, the advent of Round-Up Ready canola, at the time, and how that fit into the rotations to allow weed control in that one year where they normally go summerfallow. Taking a lot of summerfallow acres out of the system, which is subject to erosion and all sorts of bad habits with summerfallow, actually created the ability to add a third or fourth crop, depending on where you are farming.

I find it really interesting, though. You've talked about this whole industry approach. That's one thing I've seen at the round tables. You have all the players in your industry, and you've been doing this for a while, basically identifying the markets, identifying the need, and telling the producers or the plant breeders, for lack of a better word, what they need to grow. How is that complementary to what you're doing? Isn't that very key to what you've done in the past, and is that key for what you'll be doing in the future?

[Patti Miller]

Absolutely.

When you have the entire value chain sitting around the table and making decisions in common and focusing, again, as I referred to before, very scarce resources, it's helping guide not only public resources and public investment, but also industry investment itself. That makes a huge difference to how quickly we can move forward.

As I said, we're 5% of the global oilseed trade now. On the world scale, we're small, so we need to be really focused. We need to have very specific goals and work on them together, and so it has been critical to our success.

[Randy Hoback, Conservative, Prince Albert, SK]

Again going back to yield, in 2013 the average was 40 bushels an acre, which is, again, unheard of. In the days when my dad and I farmed, 40 bushels an acre was a good crop. Now we're hearing stories of 60 and 65 bushels an acre. I heard one neighbour say 70, but I think he has a bigger bushel than most people have. But you're talking 52 bushels in 2025. Who's going to take that? Where is it going to go?

[Patti Miller]

There is significant demand out there. When you look around the world, the challenges there are with cardiovascular disease, with diabetes, and with obesity, are not just a North American issue. Markets in Mexico, China, and Asia are really looking for a healthy oil, and canola fits that bill. There's a strong demand for it.

There's also a strong demand for canola meal. We've done studies that show the inclusion of canola meal in a dairy ration can increase milk production by a litre a cow a day. For markets that need to increase dairy production, like in China, it's a phenomenal product.

When we developed our new strategy, we actually looked at what the world needed before we looked at what we could produce, and we see that the demand is there.

[Randy Hoback, Conservative, Prince Albert, SK]

It's fair to say that demand is overseas, though. It's something we're going to have to get to market.

Do you have any suggestions on how we can improve on that?

[Patti Miller]

Do we have any suggestions on the transportation system, is that what you're asking?

[Randy Hoback, Conservative, Prince Albert, SK]

Yes.

[Patti Miller]

Historically the Canola Council hasn't been very involved in the transportation discussion. Our members have been through the Western Grain Elevator Association or the Canadian Canola Growers Association. Certainly with the launch of this strategy and what is a fairly significant goal, our board of directors is becoming more and more engaged in this. While I certainly don't have expertise on all of the regulatory web underneath the transportation legislation, we do know that we need to look at that infrastructure in a way that doesn't just deal with an 18 million tonne crop. This past year is not an anomaly. We need to look to deliver something even larger and more efficient. So—

[The Chair, Conservative, Bev Shipley]

Thank you, Madam.

Thank you very much, Mr. Hoback. I didn't mean to cut you off, but we're well over our time.

We will now go to Mr. Eyking, please, for five minutes.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Thank you, guests, for coming today.

I'm going to start my question with the canola group.

Yes, it's a wonderful crop we have and when you look at the potential and how it's grown over the last century, it's amazing. My question is around the bees, because it's a crop that needs to be pollinated, right? Do you use neonics on the canola?

[Patti Miller]

Yes.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

It's been stated in some circles that neonics have an effect on bees. With so many millions of acres and pollination being so critical for you, what's the researcher doing to make sure your bees are healthy and also that farmers can have the tools they can use to grow their crop? What challenges are you facing on that side?