Mr. Speaker, I welcome the opportunity this evening to speak to this motion. It is important that the players in the grain transportation system explain, identify, and work with the government to improve our grain transportation system.
As I think everyone is aware, Parliament just returned from our winter break. One of the first items of business we undertook was establishing committees, including the agriculture committee. I am very pleased that I am now a member of that committee.
The member who brought forth this motion can be assured that it is a priority for committee members from our side to make sure we get to the bottom of this transportation backlog. We will be asking hard questions to principals in charge, in order to get some real answers to determine real solutions to a real logistics problem.
That having been said, and as my colleague from Prince Albert has mentioned, I am a grain farmer, although my wife does most of the work. I would like to explain a little about what it is like on the farm and give a bit of a farmer's side of the story.
We start off by seeding our grain in the spring. We are making decisions based on the situations we see in front of us. We are watching our crops grow. This year farmers knew that it was going to be a record crop. Decisions were then made about extra bins, grain storage bags, how much to store in the ground, and the amount to sell straight off the combine, either directly or with some fall contracts or other contracts that we would have throughout the year.
After they have secured safe winter storage for the grain they have, farmers look to the next off-farm opportunities to deliver. That means we do not want to be delivering in -40°, as we were often told to do under the previous system. Certainly, the other time we would be called to haul grain would be when the spring road bans were on or when we were trying to put our crops in.
Farmers recognize that, for cash flow, the other opportunities they have are agri-invest and also crop advance opportunities. We have heard comments about cash advances, but this is something that farmers have as a tool and the government has as a tool if farmers find that this particular situation that we have continues. The point is that we knew the yields, we analyzed the risks, and we took action.
The next part of the supply chain, during fall delivery, was a change of attitude on grain elevators, especially in Alberta. They made calls to organize daily delivery times, which was a lot different from normal practices, but it worked well as truckers hardly had to wait in line. In the past, they could be sitting for an hour when companies just gave a generic call to haul.
Obviously when the elevators are plugged, though, everything stops. As I said earlier, farmers make decisions on their part of the distribution system in conjunction with the grain industry.
Let us talk about the next part of the system. As those trains roll through the Prairies, did no one notice the bumper crops that existed? Where was the planning on the part of the rail companies? What coordination was there between the grain company sales, the rail company car spots, and the efficient ship-loading at the ports? These are questions that will be asked of those involved in the grain logistics system.
We will solve this problem. However, for now what I would like to do is speak about where Canada's grain industry is going. Canada's world-class grain industry is a strong driver of the economy and jobs. In 2012 Canada had its best export year on record for the agriculture and food industry. There was a new record, $47.7 billion. For 2013, we are likely going to approach $50 billion.
All of the top exporting sectors come from the Canadian grain industry: wheat, canola seed, canola oil, soybeans, and pulses. That is total exports of over $20 billion, driving jobs and growth across Canada.
Grain and oilseed farms account for the highest share of total Canadian farm asset values, representing over 44% of total Canadian farm assets, and account for about 60% of all farm cash receipts. To maintain this incredible momentum, the government has embarked on an ambitious plan to modernize Canada's grain sector, and the timing could not be better. We are coming off of a record harvest, global demand is growing, and the FAO estimates that the world will need a billion tonnes more of cereals over the next four decades.
To help meet this new demand, we have a new open market for wheat and barley in western Canada. The record harvest clearly demonstrates that the end of the old single desk two years ago has reinvigorated Canada's grain industry. In the second year of marketing freedom, farmers planted two million more acres of wheat, and I would be happy to talk about how important marketing freedom has been for our farm. Decisions are ours, and as I mentioned earlier, a dropped ball by CN and CP would hit just as hard or worse under the single-desk buyer. We would just be hearing excuses from them instead.
A Canadian Federation of Independent Business survey found that the vast majority of its ag members, over 80%, are positive about the impact of marketing freedom on their operations. This is why young farmers are coming back to the farm. They are making marketing decisions from the combine, and this is going to continue. Yes, bumper crops are now the new normal. A fellow farmer said:
We had a record crop last year with a significant increase in yields. A buoyant farm economy, better genetics, increased usage of new and better fungicides, overall better agronomics, and better utilization of micro-nutrients in fertilizer application were all contributing factors....
The person who said that was Gary Stanford, president of the Grain Growers of Canada.
That said, we understand farmers' frustration with a system not moving grain fast enough to keep up with the demand. The government has taken steps to improve the performance of the entire rail supply chain to help farmers get their crops to market. These include, if necessary, taking action to protect Canada's economy and grain farmers by introducing legislation to get CN Rail back on track if that issue does materialize, which we have heard some good news about tonight; investing $1.5 million in a Pulse Canada-led multi-sector collaboration project of the pulse, oilseeds, and grain industries to improve supply chain efficiency and reliability; passing the Fair Rail Freight Service Act, which will create a process to establish service agreements; investing $25 million to support grain shipments through the Port of Churchill, which, of course, had record shipments this year; implementing marketing freedom for western Canadian wheat and barley growers, allowing decisions to be made by individuals, who now have a vested interest in all parts of their own operations.
The government is also working to help solve the challenges of the supply chain by bringing industry groups together through fora such as the commodity supply chain table, a crop logistics working group, and value chain round tables to facilitate comprehensive industry-led solutions that are suitable for all players. These are the people who have their finger on the pulse of the commodity supply chain.
We have further acted to respond to earlier recommendations of the crop logistics working group by pursuing enhancements to the grain monitoring program to improve the frequency of reporting, and committing to providing an ongoing forum for representatives across the industry to discuss improvement throughout the entire supply chain. This crop logistics working group was created to drive new efficiencies in the system, and we are already moving forward with some early recommendations. The working group provided a useful forum for industry to exchange views, build consensus on priority areas, and identify future opportunities to improve supply chain performance. Its work will complement the government-funded study of the grain supply chain, which will also identify ways to improve the efficiency and reliability of the system.
To bring more predictability and to clarify the system last year, the government passed the Fair Rail Freight Service Act. The act creates a process to establish service agreements and ultimately encourage commercial solutions between shippers and railways. Transport Canada has committed to establishing a commodity supply chain table where supply chain partners can discuss issues, including the grain sectors.
I would like to talk for a moment about the Canada-Europe free trade agreement, the comprehensive economic and trade agreement. The government will continue to work toward a modernized grain sector that has the tools to solve issues commercially and is well positioned to continue to drive the Canadian economy. The discussion this evening speaks to that as well.
A prime example is the historic trade agreement in principle between Canada and so many other countries, but specifically the European Union. Once this trade agreement is fully implemented our farmers and food processors will have virtually tariff-free access to half a billion consumers. This is a remarkable achievement when we consider that currently only 18% of EU agricultural tariffs are duty-free.
Our agriculture industry here in Canada will be the only one of all the G8 countries to have preferential access to the EU. As Grain Growers of Canada said recently, this trade agreement is opening up a new frontier for Canada's grain industry.
Our top three agri-food exports to the EU are soybeans, durum wheat, and non-durum wheat. Europe has a grain deficit when it comes to feedstocks, both for livestock and for the biofuels industry. So we really have the opportunity there to start shipping products to them.
The Canadian Agri-Food Trade Alliance is estimating there will be new grains and oilseed opportunities in Europe of $100 million a year. On wheat, tariffs of up to $122 a tonne will be gone once this deal is fully implemented. At a wheat yield of one tonne an acre, that is $122 an acre. On barley, tariffs of up to $120 a tonne will be gone once the deal is fully implemented. On processed pulses and grains, tariffs will disappear as well, and they start at over 7%. It is the same story as well with canola oil, whose tariffs now exceed 9%. Canola growers alone are looking at $90 million a year in new sales to Europe, including the biodiesel market. Our pulse producers are estimating a new market of up to a million tonnes in Europe for them to use as healthy ingredients in a whole range of processed foods. Of course, our pork and beef producers will also win with an estimated billion dollars a year in new sales, which is good news for our grain sector as well.
Let us talk about some of the great initiatives in agriculture that will help guide them. In terms of non-tariff barriers to trade, the agreement will establish mechanisms allowing Canada and the EU to address issues of importance to our agricultural exporters, such as technical and regulatory co-operation, promotion of efficient science-based approval processes, and co-operation on low-level presence of genetically modified crops.
The agreement also includes new mechanisms for preventing and resolving trade challenges related to plant health and food safety issues. The Minister of Agriculture and Agri-Food remains committed to developing a policy to manage low-level presence in grain, food, and beef, and we continue to work with our trading partners and domestic stakeholders to develop an approach that is predictable, flexible, transparent, and proactive.
Canada also launched a global LLP initiative via a group of 15 countries committed to developing international solutions to LLP, with the goal of minimizing trade disruptions. Likewise we remain committed to implementing UPOV '91, with a view to stimulating investments, innovation, and growth in the agricultural sector.
We are focused on international standards on maximum residue levels for pesticides, which can also act as a non-tariff trade barrier for Canadian exports.
The reform of the Canadian Wheat Board and European trade agreement, as significant as they are, have essentially launched us into an active agenda for modernized grain policy, expanding markets and moving the markers on innovation.
We are pushing ahead with our aggressive trade agenda in key markets like China, and through the trans-Pacific partnership, negotiations with Morocco, and the talks with some 50 other countries that are under way with key customers around the world.
The Minister of Agriculture and Agri-Food is also committed to continuing our modernization agenda around the Canadian Grain Commission, building on our first round of reforms.
We will also continue to focus on improving the supply chain through a number of initiatives, including encouraging Transport Canada to convene the promised supply chain round table to squeeze inefficiencies out of the supply chain.
Our strong innovation continues. Under Growing Forward 2, we are investing over $70 million in grains, oilseed, and special crop research clusters and projects. That includes the wheat cluster, backed by shared government-industry funding of over $25 million. All of the clusters continue to do a tremendous job of bringing everyone to the table to set common directions and achieve common goals.
There is also the $97 million Canadian Wheat Alliance . The alliance is a five-year partnership with the University of Saskatchewan and the National Research Council to develop elite new wheat varieties. The goal is to kick-start wheat yields by an estimated 10 bushels an acre, increasing producer revenues by close to $5 billion over the next two decades.
As we have learned from the clusters, collaboration is key to moving the yardsticks forward on innovation. Ensuring that farmers continue to have the latest tools at their disposal will take greater emphasis on public-private collaboration and value chain partnerships, such as what we are discussing tonight.
Meeting the new global demand for grains will take investment from government and industry. At the same time, Agriculture and Agri-Food Canada remains committed to core research while partnering with industry to get new tools out the door. A good example is the recent discovery by scientists of three genes resistant to Ug99, a potentially devastating wheat stem rust. The discoveries coming out of this research will protect farmers' livelihoods and food security in Canada and around the world. We have already invested $13 million in the fight against this disease, plus an additional $1.6 million under Growing Forward 2.
The new variety registration system is also tied in closely with our innovation capacity. We are committed to working with industry to develop a system that facilitates increased innovation and productivity, reduces the time it takes to get varieties into the marketplace, and delivers on the performance demands of our farmers and the quality and consistency demanded by our customers.
Looking ahead, the Canadian grain industry will certainly continue to play a vital role in creating jobs and economic growth. Of course, there are challenges. That is to be expected for an industry that is in an expansion mode. We are addressing these challenges by working closely with industry and calling on all players, including the railways, to step up their game.
The time is right for the Canadian grain industry to capture new opportunities in burgeoning markets that are looking for healthy, nutritious foods more than ever. The government will have to continue to work with the Canadian grain industry to drive transformative change and lay down the conditions required to unlock the sector's full economic potential.