International Trade Committee on April 9th, 2019

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Mr. Chair, how much time do I have?

[The Chair, Liberal, Mark Eyking]

You have a half a minute.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

I also want to talk a bit about the processing, because in Ontario we do have some processing facilities as you no doubt are aware.

Do you sell your seed to those processors? I gather that's how it works.

[Brad Hanmer]

That's correct. Some we sell directly to the elevator system, which is then exported directly to as raw see to places such as China.

Alternatively, I think over 50%—and maybe Rick White can help me with this—is actually domestically crushed in crushing facilities. That is domestic; that is here. The North American market is our largest market for canola oil.

Then, of course, the meal, the byproduct after the oil, is traditionally used for animal feed. That's a high-value, highly concentrated protein source for animal feed.

Therefore, there are two components to how we price that. Some of the seed goes directly to the export market, and some to the crusher. Some of that crush is done domestically and consumed here, and some of it is exported around the world.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Thank you. I appreciate that.

[The Chair, Liberal, Mark Eyking]

We have time for one more slot, and the Conservatives have it. We're going to split the time between Mr. Barlow and Mr. Maguire.

Go ahead, gentlemen.

[John Barlow, Conservative, Foothills, AB]

I have just two quick questions.

First, Mr. Newman, I want to double-check your numbers here. You said you had budgeted for a certain price of $11 a bushel, and now it's closer to $9. You were saying your per-acre profit was budgeted to be about $115 per acre, and now you're down to $14 an acre—and that's if everything works perfectly, with no drought, and so on.

What impact is it having on your operation?

[Leroy Newman]

Yes, you're right. I could have priced and invested it in the futures, up to $11 and then down to where you can see in spot markets right now, in that $9.50 mark, anywhere in between there.

I'm sorry. What was your question?

[John Barlow, Conservative, Foothills, AB]

To go from a profit margin that you were hoping would be around $115 and that is now down to $14 is pretty narrow.

[Leroy Newman]

Yes, it is really narrow. Also with what we're talking about, the bloodbath we're going to take, this is our livelihood. If I take that 5% that I might not grow and put it towards barley, and then everybody does that barley, barley can't handle a 5% increase in production, because it will crater its value too.

We're scared right now, and listening to this committee today, I'm more scared. You guys are going to get a paycheque next year; you all know that. However, we're sitting here going, “Holy crap, this is going to knock our income right out.”

We're ready for a loss. I can plan for that as risk. I know I probably won't make a profit this year. Now we're trying to hold down as little loss as we can. That's what I'm worried about.

[John Barlow, Conservative, Foothills, AB]

We had Mr. McClean earlier talking about what having to expand his storage would cost him. I did the quick math and it would be $450,000, just if he wasn't able to move his canola crop, which I'm assuming would erase any of that $14 an acre that you might get just with what you see now.

[Leroy Newman]

It's gone.

When that happened last year with our peas, I carried the peas over, just hoping. It did work to hold on, but I could only store so much. I had a drought last year, so I could carry more over.

[John Barlow, Conservative, Foothills, AB]

I have one last question before I pass the floor to my colleague.

Mr. Hanmer, you were saying you have a crop input retail company. I've had calls from some of my implement dealerships. Cervus in High River is one. They have had their producers cancel equipment sales. These are millions of dollars in sales they've lost.

What is the ripple effect? I know we're talking about producers here, but in your business, you're talking to other retailers across western Canada. What is the impact, outside of just the producers?

I have only about a minute.

[Brad Hanmer]

The impact, outside of the producers, for a crop input company such as mine is that the farmers are going to produce a crop and they're going to buy inputs, but the question is getting the right product for the right acre in time. That's the number one impact, a logistics concern.

Number two, there is still a lot of uncertainty. When you're given all the information that this committee has, there's no shining star. That's where farmers are making some very difficult decisions that are more a defensive play versus an offensive play. That's coming right back down to the purchases they're making. The needs, the wants and the musts are all being re-evaluated.

I think a lot of strategic plans are being thrown out the window right now on the basis of risk. There isn't a crop out there right now that really excites any of us.

[John Barlow, Conservative, Foothills, AB]

Thank you.

I'm going to pass the floor to Mr. Maguire.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Thank you to my colleague; and thank you to the chairman for this, as well.

Mr. Chair, in light of the time, I just want to table some requests for information. There is information we could still use as committee members here.

To my knowledge, there are no more international trade committee meetings scheduled on this issue, so I wonder whether we could get things such as the information on the 2016 MOU on canola that was signed by the Chinese government.

As well, there are a few things in regard to the farmers. I would request the tabling of the government's plan to move on the existing canola currently sitting in the farmers' bins. We've had some responses to that.

I wonder whether I could just have the okay of the chairman to table these requests.

[The Chair, Liberal, Mark Eyking]

Just leave it with us. I don't know if it has to be in two languages, but just leave it with us.

You have time if you want to ask the witnesses a quick question.

[Larry Maguire, Conservative, Brandon—Souris, MB]

I'll do that. I'll just table these, and then I'll hand them in.

Thank you to our witnesses for being here today.

You brought a broad scope. In your opinion, do you think the government was prepared to quickly respond to the whole issue of the Chinese government suspending these suspensions from the grain companies on their export permits?

That's just to anyone.

[Leroy Newman]

I'm not really an expert on foreign trade, but when this went down, we were all kind of watching to see what was going on. We were selling grain when this arrest happened. We were freaking out. We were worried because we had this India incident two years prior, right? We were hedging ourselves, but no, you can't.... We just did our best guess. The politics stuff is so hard.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Well, given the fact that it's been three weeks since we called for the first meeting here, I'm just saying that there is.... You've certainly emphasized the importance of dealing with this—

[Leroy Newman]

I'm saying, sitting in these meetings, that I'm looking at a year and a half now before this is fixed—if it gets fixed.

[Brad Hanmer]

Most of us saw.... Most of us in the farming community learned of this at the beginning of December, and I would say that most of us took significant action in selling our crops in that late part of January to early February.

[The Chair, Liberal, Mark Eyking]

Thank you. That wraps up your time, Mr. Maguire.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Thanks, Mr. Chair.

[The Chair, Liberal, Mark Eyking]

That wraps up our questions, but if the witnesses could just sit tight, we have just a little bit of business that we have to do here.

Mr. Carrie's not here, but he has a motion. I think one of his colleagues is going to read it for the record.

Madam Vecchio, go ahead.