International Trade Committee on April 30th, 2008

[Serge Cardin, Bloc, Sherbrooke, QC]

Thank you, Mr. Chairman.

Good day and welcome, gentlemen.

I was a little late getting here and I missed Mr. Friesen's presentation. I also missed a portion of Mr. Masswohl's presentation, but I did hear Mr. Webster speak.

I would like to know if each of your sectors is currently registering a trade balance. Does Colombia export goods to Canada?

[Bob Friesen]

In agriculture, in general, our numbers show that we import about $280 million worth from Colombia. We export about $200 million worth. The imports from Colombia are primarily coffee, bananas, and cut flowers. Our exports are--I'm not sure, if you already export, how much--beef, a little pork, wheat, barley, and pulse crops such as lentils, peas, and beans.

I'm not sure if I mentioned this earlier, but I should say that the Canadian Pork Council, as well as Canada Pork International, are actually leaving for Colombia this weekend to investigate what the potential is for our pork industry to develop a bigger market there. Their middle class is expanding and their pork industry is shrinking.

[John Masswohl]

The most recent year that we had beef exports to Colombia was 2002. We haven't exported any since they closed down for BSE in 2003. We believe that Colombia is going to reopen soon. I can't give a date.

But in 2002 we exported about $1.1 million worth of product. It was about 1,200 tonnes. It was mostly liver. With their middle class growing, we see an opportunity to export more boneless cuts of beef. Colombia has an 80% tariff. It's very difficult to ship any beef with an 80% tariff, especially the higher-valued cuts.

Colombia doesn't ship any beef to Canada, because they have foot-and-mouth disease. We have a prohibition on countries that have foot- and-mouth disease, but we believe they're soon going to get that under control. Then we'll start to discuss the terms for opening up.

[Bruce Webster]

Canada currently exports no sugar to Colombia. In the 2006-07 time period, Colombia exported 43,000 tonnes to Canada, mainly because of a fluctuation in the European Union sugar crop, together with a price differential that allowed some exports at that point.

[Serge Cardin, Bloc, Sherbrooke, QC]

Getting back to the sugar beet industry, I understood you to say that there were 250,000 producers.

Are all of their operations based in Alberta or in the area?

[Bruce Webster]

The members of the Canadian Sugar Beet Producers' Association are based in Alberta. There is a sugar beet industry around Chatham, Ontario, but all of that beet is exported to Michigan Sugar, and the sugar stays in the United States as part of the U.S. sugar program.

[Serge Cardin, Bloc, Sherbrooke, QC]

You also said that this industry was highly competitive in Colombia. More than likely, this country's needs are met, given its geographic location, temperature and conditions.

Are you in a position to compete with Colombia?

[Bruce Webster]

The Colombian sugar industry is probably one of the highest-yielding in the world. The valleys in Colombia where the sugar cane is grown provide excellent agronomic conditions. But in southern Alberta, our sugar production per acre is well above the world average. So we, too, are very efficient producers.

[Serge Cardin, Bloc, Sherbrooke, QC]

Regarding the negotiations that are currently under way, were you in fact consulted by government officials? Mr. Masswohl, you mentioned earlier that you had gone to Colombia and that you had spoken to these individuals. My initial impression was that you were a negotiator. You seemed to imply that Colombia was not interested in lowering its tariffs so that they would be on par with US tariffs.

Do you already know what Colombia wants to do?

[John Masswohl]

Having learned what was in the U.S. agreement, we sat down with the officials in the Canadian government who are negotiating. They mentioned to us that in every session they've had with the Colombian negotiators, the Colombians brought their cattle industry advisers with them. So we thought it was important to go and meet these advisers. That's why we went down to Bogota. We spent two days with them. We had some very detailed conversations and we put a proposal to them.

It struck us that if the Colombians were always getting their advice from the cattle industry, it made sense for our cattle industry to speak directly to theirs, as a way of getting them to improve their offer. We're not there yet.

[Serge Cardin, Bloc, Sherbrooke, QC]

You were close to the Canadian negotiators. Did you support their efforts or were you completely excluded from the process?

[John Masswohl]

No, we're pleased with the information we're getting from them and the cooperation we're receiving from the Canadian negotiators.

[Serge Cardin, Bloc, Sherbrooke, QC]

Mr. Webster and Mr. Friesen, are you involved in talks or negotiations with Colombian officials?

[Bob Friesen]

Our role with the negotiators is simply to get briefings from them and then to provide input. When we do meet with other country delegations, we typically will phone our negotiators and say what is important for the other country to hear from us and what would help us to say if we talked to that country, or if we talked to any other delegation. So I would characterize it as a partnership. That doesn't mean we always get what we want, because they do have to negotiate, but I would characterize it as a strong partnership.

[Bruce Webster]

And then I would say we have three interfaces with the sugar trade negotiations. First of all, we're members of the World Association of Beet and Cane Growers. That's a farmers' organization. It's mainly farmers from developing countries who grow sugar cane, but it also includes some developed countries--the Australian and the European beet industries are members. We belong to the Global Alliance for Sugar Trade Reform and Liberalisation, and the Colombian sugar industry is a member of that association.

So we share the same general goals as Colombia for sugar trade. It's just that our roadblock has always been that.... We're kept informed of what's going on by the Canadian trade negotiators; it's just the result we've never liked yet. And it's not that we don't want to be free trade participants--we do--it's just that Canada has been unable to negotiate better access for us.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Webster.

We'll move now to Mr. Keddy.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Thank you, Mr. Chair.

I'd like to thank our witnesses for appearing here today. It's been an open and interesting and refreshing discussion. Obviously any free trade negotiation has some challenges in it, and it's a very interesting point of view that you've brought to the table.

I've got a couple of questions for each member, and then I know Mr. Miller has a couple of questions and I'll give him the rest of the time.

On the sugar industry--and I want to be clear--what you're after is free and open access, two-way trade, and no tariffs on anyone.

[Bruce Webster]

Yes, that's particularly at the WTO level. In bilateral negotiations we tend to be very vulnerable because nobody wants to listen at the other end about giving us access. We're members of the Global Sugar Alliance, and that is the position.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

And I very much appreciate that.

The only question I do have for you...you're saying that in Colombia there may be some resistance, and that Colombian farmers had some options, such as ethanol production and actually growing two crops a year. So they grow beets for ethanol, you're suggesting, and then they grow a grain crop on top of that to revitalize the land, because sugar beets take a lot out of the ground.

Is that possible in that climate?

[Bruce Webster]

Yes. One of the seed companies, Syngenta Seeds, made a major presentation to the world sugar industry in Brisbane last year. They have developed the ethanol sugar beet that is drought resistant, that can be grown in Sudan, Colombia, everywhere. That's our message for our negotiators. We just don't have to do what the Colombians say, because they can do other things, and we've been actively looking for other options as well.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

There is another option. Thank you.

The cattlemen's association has a bigger problem, and that's a phytosanitary regulation on beef, really. Do you think there's a real possibility of Colombia being declared free of hoof-and-mouth disease?

[John Masswohl]

They've described their efforts to us. Before we went down, we didn't really know who FEDEGAN were, if they were the guys to talk to. They clearly are the guys down there.

They are funded by a check-off. For every animal that's slaughtered they receive about U.S. $6, and about 72% of their budget goes to disease eradication, which they control. They don't rely on the government officials for issues like going into the jungle to do vaccinations. They don't really rely on the reports they get back that those vaccinations really occurred. They have their own staff. They have staff to verify that their vaccinations are being done. It is a serious effort they have.

The status they will get, probably this May, will be FMD-free with vaccination, and that's an important distinction. We look for FMD-free without vaccination. They'll work toward that, but this is an important first step.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

The lead-in for them, quite frankly, is if it's open, two-way trade and they do reach the proper status, then there is another market out there.

[John Masswohl]

Absolutely.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

I would suspect that with a growing middle class, they would still have a big job just to fill their own domestic market.