Thank you very much, Mr. Chair and honourable members. It is a pleasure for me to be here.
I'm here for Farmers of North America. I used to be a farmer myself in Wawanesa, Manitoba, which I always considered to be the insurance capital of Canada. I was a turkey and a hog producer in Wawanesa.
Farmers of North America is a national farmers business alliance. It's made up of farmer members. We have about 10,000 members across Canada, and our members vary in size anywhere from 500 acres up. We have a member who has 60,000 acres which, just to put some perspective on it, is about twice the size of Vancouver. In total, our members are responsible for about 20 million acres. Our farmers business alliance is what we consider to be a private sector solution provider. We don't buy or sell anything; we simply create a crosswalk between our farmer members and our input supply partners. It was started in 1998 by a grain farmer from Swift Current, Saskatchewan, and it started out as a group of farmers getting group discounts. It moved from there very quickly to major fertilizer and crop protection programs. We've now reached the third phase—while we've still maintained the first two—where we create opportunities for farmers to invest in the value chain. A good example of that is ProjectN, our $2-billion, farmer-owned fertilizer manufacturing project. It is going along really well and we're very excited about it.
Our interest in the act is very specific. Our number one mission at Farmers of North America is to maximize farmer profitability. Our interest in the act is very specific to ensuring that it creates a framework within which we can have regulation that helps farmer profitability and farmer cost competitiveness. We have an extremely important—and in this case we're talking about crop protection products—crop industry, grains and oilseed industry, in Canada. It's worth anywhere between $30 billion and $35 billion. The crop protection input costs for farmers in aggregate in Canada is somewhere around $2.5 billion; that's the third largest input cost that farmers have, behind fuel and fertilizer.
We can't emphasize enough the importance of driving everything we can towards improving farmer cost competitiveness because they have to compete against, and within, very integrated industries with U.S. farmers. I can't help but think sometimes that whenever we negotiate a trade agreement with another country—and they're really important for our agricultural exports—we should always scrutinize to see how we can harmonize our regulation as well, so that our regulation doesn't make us less than competitive with players in industries in other countries. To that end, I want to congratulate and applaud this government for its initiatives in removing all the regulatory impediments to cost competitiveness that we possibly can. That's extremely helpful because we do have redundant regulation that impedes cost competitiveness, and this government has been zealous in doing that. I would like to implore you, however, to remind the departments and agencies, once in a while, that they share the same zeal that the government has in making sure that we are cost competitive.
Our interest in the act, as I said earlier, is that it creates a framework within which we can have effective regulation. It doesn't matter what your interests are in the act; the act itself is really only as good as the regulation within it. To that end, our interests are very specific. We want lower-cost generic crop protection products for farmers because they help cost competitiveness. That is what our interests are all about. This is not a health and safety issue. We are looking for lower cost alternatives to products that are already on the shelf. Also, this is not about undermining the exclusive period that basic or original registrants currently have. This is not about undermining that exclusive period nor is it about undermining their ability to recoup some of their costs with data compensation, and I should say fair data compensation for data that is relevant and legitimate.
Once the health and safety issues have been addressed and the exclusive period is done, it's about getting a lower-cost generic product in the market as quickly as possible for farmers so that they can avail themselves of the opportunity to be more competitive.
The current regulation within the act has resulted, unfortunately, in basic registrants delaying the process and in some cases preventing generic companies from registering lower-cost generics.
As I said earlier, a very important component of reducing farmers' costs is to make sure that we get lower-cost crop protection products in the market as quickly as possible. Currently, Canada is one of the most difficult countries in the world to register a generic product. As a result, some generic companies have pulled out their applications and in some cases have revisited their business plan for Canada.
Only about 15% of our crop protection products in Canada are generic. That compares to approximately 50% in the U.S. You may recall that I said earlier we have a very integrated grains and oilseeds industry with the U.S., and so that definitely puts us behind the eight ball.
Let me give you some price comparisons. I know these products are probably meaningless to you. They are to me too because I'm currently not a grain producer, but I'll specify the products anyway. These products are all registered on both sides of the border by the same company. It's the same product registered on both sides of the border by the same company. Banvel II is three times more expensive in Canada than in the U.S. Refine Extra is double the price in Canada than in the U.S. Folicur is six times more costly in Canada than in the U.S. Tilt is triple the price, and Select is more than triple the price. This is all because of the fact that we don't have a regulation within the act that facilitates the expedient registration of lower-cost generic products. Farmers are looking for more options when it comes to lower-cost generics. Don't let anybody tell you any differently. Farmers are always looking to reduce their input costs whenever they can.
I'll give you an example. Farmers of North America, together with their input supplier, a few years ago finally, after many delays, managed to register a generic for Horizon. We called it Aurora.
We negotiated a price with our input supply partner at half the price of the prevailing market price for Horizon. As a result, other related products fell in price as well. We calculated that, over a 30-day period, we took $60 million out of the market. In other words, $60 million more stayed in farmers' pockets because we were able to register that generic product.
If you look at the $2.5 billion crop protection industry in Canada, if you start doing the math on 10% reduction in costs or 20% reduction—20% reduction on $2.5 billion is $500 million—I can assure you that would result in much less reliance on the part of farmers on government programs. It is all about cost competitiveness.
Moving on to the act, you're very familiar with the mandate of the act. It says:
(b) seek to minimize health and environmental risks posed by pest control products and encourage the development and implementation of innovative, sustainable pest management strategies by facilitating access to pest control products....
And it goes on.
Innovation and sustainability apply to the generic products that farmers have access to as well. It's about cost-effectiveness. It's about creating regulation within a framework, the act framework, so that we can be cost-competitive, that we can be innovative, and especially within Growing Forward 2, in helping farmers be more competitive.
In reviewing the act, we need to ask the following questions. Does the framework of the act allow the minister to minimize health and environmental risks? That's absolutely important. Without compromising health and safety, does the act encourage implementation of innovative sustainable pest management strategies; in other words, cost-effective and sustainable products for farmers who are trying to improve their cost-competitiveness? In other words, does the framework allow for regulation that does the foregoing and encourages innovation and cost-competitiveness? In our case, beyond health safety and environmental concerns, it's all about giving farmers more access to lower-cost generics.
Is the framework effective? We believe it can do all of the above, except—and we're not suggesting that we reopen the act—there are a couple of challenges that we need to address and I'll quickly go over those.
One is section 66.(3) in the act, which calls for using the Canadian Commercial Arbitration Act when it comes to disputes in establishing compensable data when generics are registered. The Canadian Commercial Arbitration Act is binding and so in our case, if a generic applicant negotiates compensable data with an original registrant, they can't come to an agreement, they decide to take it to arbitration and the arbiter rules in favour of the innovator's number, the generic might say that in that case they can't afford to register the product and so they will not be moving ahead. Because the arbitration is binding, the generic would be required to pay it regardless of ability to afford to go ahead, pay the compensable data, and register the product. That needs to be fixed.
We've been told that there may be a fix without reopening the act and we're certainly looking forward to the PMRA addressing that. We implore this committee and the minister to continue to keep an eye on that to make sure that we can remove this impediment.
The other problem we have, and this again is about the fact that the act is only as good as the regulation within it, is that the regulation within the legislative framework has not achieved the PMRA policy for the protection of proprietary interest in pesticides. That policy objective is to provide favourable conditions for generic pesticide producers to enter the pesticide market and to increase the selection of products available to the user.
In conclusion, Mr. Chair, is the act effective? We believe it can be effective with effective regulation within it. The good news is that the PMRA is finally engaged in trying to come up with some solutions for the regulatory challenges we have within the framework. I would simply implore the minister and this committee to keep an eye on it to make sure that we don't lose momentum because it is imperative for farmers to have more access to lower-cost generics within the act and within the regulatory framework inside that act.
Mr. Chair, I will leave a document behind with the clerk that identifies the specific issue I talked about with regard to the Canadian Commercial Arbitration Act as well as some of the other recommendations we have regarding regulations within the act.
Thank you very much.