Agriculture Committee on Nov. 28th, 2013

[Matthew Holmes]

Thanks.

As I mentioned earlier, the Europeans are the greatest consumers of organic products in the world per capita, particularly as you go north. The Swiss and those up into the Scandinavian regions are just incredible, and there's a lot of potential in that market for us. I think we can meet it. We in the organics sector are used to the issue of having a major supply bottleneck. We have tremendous growth in demand every year and our market is expanding rapidly. We need more supply. We need more farmers, absolutely.

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

Right. That's why I asked you, because your market, even domestically, is increasing so dramatically.

[The Chair, Conservative, Bev Shipley]

A really short question and answer, please.

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

Is your membership prepared for this new market? Do you foresee that as a problem, or do you see it as something your membership can address?

[Matthew Holmes]

It is a problem. It's a good problem to have, and we're seeking new farmers.

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

Good answer.

[The Chair, Conservative, Bev Shipley]

Thank you, Mr. Zimmer.

We'll now go to Madame Raynault, for five minutes, please.

[Francine Raynault, NDP, Joliette, QC]

Thank you, Mr. Chair.

I have some questions for Mr. Holmes and I will also have some for the gentlemen on the videoconference.

You feel that you will be able to meet the entire demand for organic products from the countries of Europe, where they are great consumers of organics. Will your sales go up because Europeans are not really fond of GMOs? At least, that is what we are told. Is this a real opportunity for you to increase your exports?

[Matthew Holmes]

Definitely, the European consumer is very familiar with organic products. They've had a regulation in place for over 20 years, and as we all know, they are also highly sensitive to the presence of GM material in those products.

It's a double-edged sword coming from Canada. We're seen as having great natural spaces, being a country that they love to visit, typically, coming from Europe, but they also realize that we're a major producer of GMO as well.

We do have organic products that go to Europe and are rejected for pesticide residue that's drifted or perhaps sometimes for a genetic drift as well. There is a lot of testing and there's a lot of expense involved, and there's not a tremendous amount of security as well for the Canadian operators. We have farmers who test it here at home and everything is fine, but when it gets to Europe it's rejected, and they don't have much recourse.

It is a concern. It's also a great potential. If we look at the hormone-free beef going to Europe as well, that's something that organic is already positioned to play into. It's something we can deliver on and already have the skills to deliver on, so in many ways we are well positioned to meet that market and meet that demand for GM-free product going into Europe, but there are some pitfalls, as always.

[Francine Raynault, NDP, Joliette, QC]

Thank you.

With grains, which aspect of CETA do you consider as the greatest cause for concern? Do you have concerns with this agreement in principle? My question goes to the four of you.

[Jean-Marc Ruest]

The biggest advantage of the agreement is—

I'm sorry, but I'm having trouble speaking over top of the translation.

The biggest advantage we see—

[The Chair, Conservative, Bev Shipley]

You can speak in English and we'll translate it here.

[Jean-Marc Ruest]

The main advantage we see is the possibility of accessing the markets for lower to medium qualities of wheat and barley that currently are subject to very high tariffs, which make Canadian production uncompetitive in that region. That is the main advantage, the main market that we can access favourably.

I think one of the areas of concern—I wouldn't say that it's of concern, but rather that we would ask that attention be placed on it—is with respect to the commitment on cooperation around biotechnology. The previous question and answer revolved around genetically modified products that originate from Canada and how we maintain our ability to export non-genetically modified products when we have a handling system that does handle genetically modified goods. With regard to acceptable tolerance levels and synchronized approval processes for these new technologies, we believe there are workable solutions, but we'll have to let the governments negotiate and work out those details.

[The Chair, Conservative, Bev Shipley]

You can have a very short question, because you lost a little bit of time.

Go ahead, please.

[Francine Raynault, NDP, Joliette, QC]

Thank you.

If your grains are not accepted in Europe, will that result in a major economic loss for farmers?

[Richard Wansbutter]

I don't see any economic hiccups. As we stated at the outset, we do see increased market access. Mr. Ruest already touched on increased access for wheat and durum. The tariffs will fall over the next seven years and then fall to zero, so we'll have significant access on that side.

When we talk about the biotechnology, as Jean-Marc said, we have to have synchronous approvals. A number of our canola varieties are already approved in Europe. The economic hiccups are in and around the approval process and ensuring that it is done in a timely fashion and in a synchronous manner.

[The Chair, Conservative, Bev Shipley]

Thank you, Mr. Wansbutter.

We will move to Mr. Hoback for five minutes, please.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Mr. Chair.

Thank you, witnesses, for being here this afternoon.

It's good to see the Western Grain Elevator Association guys. I know we talked about the infrastructure going east and moving product out through Churchill or Thunder Bay, and of course out through the St. Lawrence. Do you think that having more markets spread out around the world instead of all going through Vancouver or going through Asia will help alleviate some of the pressures you've been facing this fall with moving grain?

[The Chair, Conservative, Bev Shipley]

Could you identify yourself, please?

[Carsten Bredin, Assistant Vice-President, Grain Merchandizing Richardson International Limited and Member, Western Grain Elevator Association]

It's Carsten Bredin with Richardson International.

I think it's very safe to say that we have a strong demand off the west coast out of Canada, and we're maximizing the amount of grain that we flow out of that corridor today. The eastern market through the St. Lawrence and through Thunder Bay definitely has some additional capacity. We're broadening the countries we ship to and increasing our market access, not only through the eastern ports but also for some of the lower quality wheats. The Asian market is for more of a high-quality wheat. Under the old rules, we cannot access the European market today with some of the lower quality wheat. This agreement will allow the tariff for the lower quality wheats to drop over the years.

It's not going to be instantaneous. The quota was increased from 38,000 to 100,000, which is a small increase. The benefit of the 90 euro duty being lowered over seven years really won't come into play until after those seven years, because the market spreads between the countries aren't that large. There's no doubt once we get there it will definitely improve the flow of grain going east and the opportunities to get into Europe.

[Randy Hoback, Conservative, Prince Albert, SK]

There is one concern, which I know Mr. Eyking talked about, and I think we have to be realistic about it. We were moving a lot more grain this year and a lot more grain last year than we've moved in the previous years for sure. There were record crops this year in the Prairies. I believe farmers' income is up around 30% compared to pre-Wheat Board days.

I'm just kind of curious. If we pull the CWB and the old team of the CWB out of the equation in transportation, how does that impact what you've moved this fall, let's say right off the combine? How many tonnes of grain have you moved out to the west coast and exported because you didn't have that hindrance in your way?

[Wade Sobkowich]

I'll start, and then I'll ask my colleagues to jump in.

Hi, Mr. Hoback. It's Wade Sobkowich here again, with the WGEA.

When the Wheat Board monopoly was in place, they were involved in grain logistics and they planned logistics for wheat and barley. The grain companies planned logistics for other crops, like oilseeds, flax, pulse crops, etc. It was almost as though we had two layers of logistics, one on top of another, and we tried to fit them together and they didn't always fit. That created some inefficiencies in the system.

Now that we have an open market, we have each grain enterprise managing their own logistics and pulling grain—grains, oilseeds, pulses, wheat, and barley, all of it—through their pipeline and managing their entire pipeline. That has created efficiencies in the system. The problems we're seeing out there right now, I believe we would see amplified if we were dealing with two layers of logistics systems rather than just a single logistics system for a grain handler and an exporter. In terms of volumes, I don't have those numbers off the top of my head.

[Richard Wansbutter]

Mr. Hoback, it's Richard Wansbutter.

I'd like to add to that and give some specifics when we're talking about logistics management. There is no doubt in my mind that it has improved and is better. One very specific area is that on the wheat and barley side of the equation, we as companies are now booking our own vessel freight. We're controlling those logistics, not only out of the country but also as those vessels arrive into Vancouver, or the east coast, or Prince Rupert. We're able to then marry up the movement out of the country with what's coming into the ports, and we're seeing better utilization out of our terminals. I don't think there's any doubt about that.

As to the actual volumes, I don't have them—they're per tonne volumes—but we're up at all ports this year, as far as unloads.

[Randy Hoback, Conservative, Prince Albert, SK]

Where's the bottleneck, or is it just because of the size of the crop, that there's just no way you can move it all at once, and it's going to take some time? We're getting a lot of complaints off the Prairies about service, but....

Go ahead.

[Richard Wansbutter]

Mr. Hoback, you just hit on it. Unfortunately I think we'd all like to move the crop in a very short timeframe, but there are huge demands on the system in the October, November, December timeframe, and we simply cannot move all of that demand.

Would we like to move more? There is no doubt about that, to access higher price markets currently, but physically, we just can't do it. Can we do more? Always.