Mr. Speaker, I want to highlight just how important the agriculture sector is to Canada. There is some $47.8 billion in exports coming out of the agriculture sector. It is 8% of our GDP and one in eight jobs is created in the agriculture field.
Canada has a world-class grain industry. It is a strong driver of the economy and jobs on its own, with over $21 billion in exports. Close to half of our total agriculture and food exports—pulses, wheats, canola, barley, flax, corn, soybeans, and many more grains—grow our economy and jobs. That is why our government is working hard with the industry to modernize Canada's grain industry. We have delivered on our commitment to bring marketing freedom to western wheat and barley growers, and over the first 18 months of open markets we have seen record foreign incomes with strong balance sheets, two million new acres of wheat, wheat cash receipts up by a third, and wheat exports up by close to 20%.
Another key part of our grain modernization agenda is to reform the Canadian Grain Commission. Building on our first round of reforms, we are looking at streamlining the variety registration system, updating plant breeders' rights legislation, and promoting a practical approach and a low-level presence of genetically modified content in our grain shipments.
We are continuing our strong focus on innovation and investing in over $73 billion in research clusters and projects on grains, oilseeds, and specialty crops and, of course, we continue to lock in new markets for our grain producers through trade missions and free trade agreements. We continue to work hard to get the new Canada-European Union trade agreement out the gate. That will open up the world's largest market to our grain producers, eliminating tariffs on wheat, pulses, flowers and canola oil, tariffs that could be up to $120 to $130 a tonne on wheat and oats, for example.
Industry is estimating there will be new grains and oilseeds opportunities in Europe of $100 million a year coming out of this historic agreement. Therefore, the future is bright. This year we are coming off of a record grain crop. Canada is up by close to 20 million metric tonnes from last year. At the same time, the global demand for grains is projected to grow by a billion tonnes over the next four decades.
Of course, we all know the large crop is presenting considerable challenges. Farmers across the west are facing major difficulties in getting their bumper crops to market, from the farm gate to the ocean port. They are depending on an efficient, effective, reliable rail service to move these crops off the farm to customers in Canada and around the world.
It is important that we take a step back and look at this crop year to put in chronological perspective what has been going on in the grain belt in Saskatchewan. Last May was a late seeding and planting season. Farmers were very concerned that they were not even going to get their crops in. In fact, I received phone calls from farmers who were concerned that they would not get their crops in the ground and did not know how they were going to handle their cash flows throughout the summer if they did not.
It turned into great growing conditions, a great summer. Of course, Saskatchewan always has good summers, and I would encourage everyone here to come visit this summer. There are great lakes, and there is great golfing, and everything else. There was also a great growing season in Saskatchewan. In the fall, farmers were looking at their bins, looking at their combines and smiling. They were harvesting. Some of the guys were taking the wheat right off the combine. In fact, I know one farmer who delivered 50 semi-loads of wheat off the combine, something he could never do under the Canadian Wheat Board system.
I think farmers started to realize just how big this crop was and started to understand that it was amazing. We are starting to see crop yields, for example, in canola of 65 bushels an acre. It used to be, when I was farming—and I know the member for Red Deer would agree—that if farmers said they got a 40-bushel crop, it was pretty good. If they said they got a 50-bushel crop, people would look at them a little cross-eyed and say they were feeding people a line. If they said they were getting 65 bushels, people thought they were crazy.
This last year, more farmers told me they got 65-bushel to 70-bushel canola crops. The reason is the genetics they are getting thanks in part to the funding this government has given to plant breeders and through the different growing associations to help them select the proper traits and get the proper seeds and genetics in the ground so they can get these high-yielding crops.
Farmers had this great crop. In October and November, the rail system seemed to be functioning fairly normally and looked like it was moving. In December, it all fell apart. In January, it got even worse. We know it is cold in December and January, but we are used to working in the cold. There are a lot of guys who work in the oil patch in -30° or -40° weather all the time. Cold definitely could be a factor for sure if safety is an issue, but the reality is that we are used to shipping and doing stuff in the cold.
What was happening was that the system was starting to show the strain coming upon it. The system could not handle the increasing growth in western Canada. It could not handle the grain, it could not handle the potash, it could not handle the coal, and then it started to ship oil. Oil capacity also increased over this time, which our speaker from the NDP, the agriculture critic, highlighted quite correctly.
It is ironic that the NDP are complaining about oil, when if we wanted to help capacity on the rail, we could put the oil in a pipeline where it belongs. The NDP should support the Keystone and gateway pipelines, which would free that capacity up so we could ship more grain and more products from the Prairies to the west coast.
This is conundrum that we are dealing with. This is the kind of scenario that I was dealing with when talking to farmers in October and November. A couple of things were happening in October. Farmers who were contracting throughout the summer were hedging on locking in the prices. They would go to deliver that contract, and the grain company would say, “Well, wait a minute. The rail did not show up. There are no cars. We did not get our cars this week, so we cannot take delivery of grain. We are going to have push your contract until next month because we cannot take delivery of that product”.
The farmer is sitting there. He has told his banker about the contract. The banker knows about it. The farmer has his cash all figured out. He is going to pay his bills based on the terms of the contracts being honoured. However, when the rail does not show up, what does he do?
When I farmed, I can remember this scenario happening many times. The rail would phone ahead and say they were going to have cars showing up on Friday and that the grain company would have to load them over the weekend so they could be picked up on Monday. In fact, I had a scenario on my own farm where we loaded about six Super Bs on a Saturday and shipped them 200 miles to an elevator. I had them there on Monday morning at eight o'clock, only to find there was no capacity because the train did not show up. Then what do you do?
I know our members talked about the Canadian Wheat Board and how it would be the saving grace for this scenario. The reality is that it would make it worse. Let us look at what is going on in the rail freight system at this point, and I will use the example of oats. Oats does not belong to the Canadian Wheat Board. Right now, oats going to the United States is well behind where it needs to be. The mills in the United States are screaming for Canadian oats, and farmers have some of the best oats in the world. What is going on? The rail is not delivering our oats. It is amazing.
It is oats. It is non-board crops. It is coal. It is a variety of things that are affected by the lack of rail service we are seeing from CN and CP. That is affecting the economy of Saskatchewan, Alberta, and Manitoba. We need that rail to perform.
Let us look ahead and look at what is happening on the Prairies and at the growth that is happening in Saskatchewan and Alberta. I will use the example of the genetics and corn. It used to be that 10 or 15 years ago, if someone said they were going to grow corn in Saskatchewan, people would raise their eyebrows. I know the member for Red Deer would agree with me. They would say “Oh, you are nuts. You are not going to grow corn in Saskatchewan”.
However, the new genetics are lowering the heat units in corn. We are going to start growing corn in Saskatoon. That is very amazing. Corn is a nice crop to grow. It is high value. It is a good profit crop for farmers.
One of the problems with corn, though, is that it has four times the volume. Let us think about it. Where we are shipping one tonne of wheat right now, we are going to be shipping four tonnes of corn. How do we handle that?
I will give the minister credit. As this was happening and we started to recognize the problem of the rail not doing its job, what did the minister do? The first thing that the minister did was to bring all the players together, sit them down in a room, and ask what they were going to do to fix this. He put them together and asked what the problems were and how to fix them.
He sent them out to create solutions. They should find the solutions. It is the responsibility of CN and CP. The minister did his job. He put them in the room with grain growers and grain companies and asked them how we make this work. He said they had to get the farmers' grain shipped to market. That is the first thing that he did.
The second thing he did is that he went to the producer associations. He funded them, to the tune of $1.5 million from us and $1.5 million from them, to look at the future of transportation and what we needed to make sure we do not lose markets as we get new trade agreements, such as TPP and CETA, and agreements with Korea and other countries that may be coming down the road.
They are going to look at this in the future. They are not looking at it today. I do not want people to think that $3 million is supposed to solve this month's problem and next month's problem. It is meant to make sure we do not have the problem reappearing next year and the year after, and 5 years and 10 years down the road. It is to make sure a system is put in place that can handle the growth we are going to see in the grain sector. That growth is coming very rapidly.
Again, let us give the government credit; it is looking forward. It is saying there is a problem and bringing the players together to figure out how they can think through the situation to make sure the problem does not repeat itself going forward, and to make sure we have the proper capacity to handle the growth in the commodity sector in Saskatchewan.
It is a very wise and bold move, something that none of the opposition members, when they were in government, ever did. It is nothing that the NDP ever talked about. The NDP would want to take a fist, a hammer, and a sledge, saying, “We will go pound on the pipe and get some grain to the port”. That is not going to work.
The government has to work with the players. It has to have a reasonable approach about how to move more grain to port. The politics have to be put aside in order to focus on the problem.
It is interesting. As we look forward, I am very excited. I come from a province that is growing. I come from a province that was a have-not province. It came under all sorts of nationalization in the 1970s, with potash. It chased away business investment. It was a province where our kids would have to leave in order to get a job. Now my province is totally the opposite. I am in a province where the potash sector is growing like crazy. The province is taking all our kids back from Alberta, from B.C., and Ontario, because we need them. We will take many more. We will take immigrants from the Philippines, because we need people. Our biggest hindrance to growth in Saskatchewan is people.
With all this growth and all that is happening, if we do not see growth in our rail sector and our transportation and logistics, it is for not. With all these trade deals that we are doing to allow our farmers to access higher value markets, if we cannot get to market in a timely and accurate fashion, they are no good. We need to have this vision in our transportation system. That is one thing that, again, I give the minister credit for. We needed to see some visibility in what they can actually do.
I spoke before about the grain companies taking contracts for October and November. To be fair to them, they have no clue about what each other is doing. I might take a hundred tonnes, and the member for Red Deer takes a hundred tonnes, and then the member for Calgary is going to take a hundred tonnes, but the rail system may only be able to handle 150 tonnes. However, all of us expect to ship all that grain in one month. Therefore, what we need to do is put some visibility and some monitoring in place so we can see what is going on in the rail system. We need to know when we are making out that contract that it is a reasonable timeframe to deliver in or that the capacity is full and it has to be moved into the next month.
Those are the types of things that the minister has been working on, and I give him credit. He introduced some monitoring announcements today in Saskatchewan, again, giving us visibility so we can understand what the problem is and address the bottlenecks to move forward with something that works for everyone in the shipping sector.
It is interesting when members talk about the changes in Canadian Wheat Board. I know exactly what the Canadian Wheat Board would have done in this scenario with a record crop. The member for Malpeque also knows what it would have done. If a farmer had theoretically contracted a hundred tonnes of crop to the Wheat Board, it would have taken four tonnes and shipped it. It would have said, “The rest of the grain is yours, Mr. Farmer. You can carry it until next year or the year after. I know it is nice, hard, great durum, and it looks really beautiful, and I know that in Italy it is worth $9 a bushel. But you can sell it in feedlot alley in Lethbridge because we don't want to sell it for you”. That is what the Wheat Board did.
There is another thing that is interesting with the Wheat Board being gone. In talking to farmers, a lot of them are very tech savvy. If one were to go on Twitter with a lot of farmers, they are using it to market their grain. For example, if they see a price across the line in North Dakota or Montana, they are taking advantage of that. They are putting it on Twitter and comparing that with each other. They are looking for logistics and alternatives, which they could never have done with the Canadian Wheat Board. They would not have had those options of looking for other alternatives for markets.
There is another thing that we need to look at as we go forward and we increase our production capacity in the Prairies with higher yields. We need to create an environment so we are processing more of that product. We need to make that product into other things rather than shipping the raw goods. We need to have a strategy on how we are going to move forward on that. The reality is, if we want good competition for rail, put it in a cow, or a pig, or bread, or put it into something that is manufactured. That is great competition for rail. Domestic processing makes a lot of sense, and we need to figure out a strategy and move forward on that. I know the minister is talking about that right now.
As we look back at this year, one thing that has to be stated very clearly is that CN and CP have dropped the ball. We can blame the weather. We can look at other issues around CN and CP, but there is no question about it. They have not read the market right in Saskatchewan about what is going on in western Canada. As the NDP agriculture critic stated, if they are dropping locomotives and cars, they obviously do not have proper vision on what they are going to require for moving our product to port in the upcoming years. That is why the service level review that is coming up in 2015 is going to be so important. That review will look at what is happening right here and now, and that will be a factor in the outcome of that review in 2015. We need to make sure in that review that the railways are held even more accountable for what they have done this last year because it has cost farmers a lot of money.
The impact has been very severe. I will give a few examples. I was talking to a guy by the name of Chad Doerksen. The base price on his oats is too high. He ordered 90 producer cars to ship his oats into the U.S. The producer cars are sitting in the CN's yard in Saskatoon and he only has 13 of them so far. Another example is a farmer from Melfort who was supposed to load 70 producer cars. The producer cars were actually on the next spur and he could not load them because he was not on the right spur.
Those are the types of idiocies we are seeing from CN and CP that need to be corrected, and it is up to the railways to correct that. They have to understand what the waiting is costing that farmer. Time is money. While they think that extending the shipping season over two years might be great for shareholders, it does not work at the farm gate. We have to make sure that stops and does not move forward.
In summary, there are a lot of things we could talk about in regard to changes in the agricultural sector, but there are more people wanting to be farmers today than there has been at any time in history. There are some challenges. There are some growing pains. However, in the same breath, this is a vibrant industry that sees a lot of opportunity.
Talking to hog producers this year, with CETA coming into effect in the next year or so, one of the producers said that finally in the hog sector there is a light at the end of the tunnel. It is so important that they get market access for our hogs. Farmers are excited about it. They see some future in it.
If we look at where the beef sector was four years ago and where it is today, and we look at the price of cows and calves and meat, the minister has been very aggressive in opening up markets around the world. It is very interesting that the markets he is opening are very different, but it works very well for Canadian beef producers. Some parts of the world like tongues, hooves, and different parts of the animals, where another part of the world wants steaks and ribs and short ribs. For example, Japan has basically taken all the short ribs we can produce because they like our beef.
We have lots of opportunities, and I give the minister credit because he has been very aggressive in recognizing the importance of trade to the agriculture sector. We are a trading nation. We grow more than we can ever consume in Canada. We need to make sure we can get that product to port, so we need effective rail from CN and CP.
In closing, I want to commend the minister for all the work he has done. He has had many long days working with farmers, with the industry, and with the railways to ensure we get some answers and some movement on that. I know we will see some success as we move forward, but just like anything else, it will take some time.
The sector is strong. Farmers are vibrant. We will move on and get through this. We also know that what we look back on was something that was far worse.