AGRI Committee Meeting

STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, May 31, 2001

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[English]

The Chair (Mr. Charles Hubbard (Miramichi, Lib.)): Good morning, everyone.

Pursuant to Standing Order 108(2), we're continuing our study of the future role of the federal government in Canada's agricultural sector dealing with grain and oilseed.

With us this morning we have participants from the Ontario Soybean Growers, the Grain Growers of Canada, and the Ontario Corn Producers' Association. We'd like to welcome each of them to our committee hearings. We have two hours set aside for the meeting this morning.

Mr. McCreery, your name is first on the list. How many individuals do we have who want to present? Do we have three, or are there more than three?

Mr. Liam McCreery (Chairman, Ontario Soybean Growers): Three.

The Chair: Perhaps we could keep that to probably between five and ten minutes for each one. Would that be fair? After that, we'll be engaging in a series of questions and answers.

Mr. McCreery, the floor is yours.

Mr. Liam McCreery: Thank you, Mr. Chairman.

The Ontario Soybean Growers will have two presenters today. I'll start, Bill Allison will do the hard stuff, and then I'll do the conclusion.

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The Ontario Soybean Growers were established in 1949 and represent over 20,000 soybean growers in the province of Ontario. Ontario Soybean Growers is a marketing board that operates under the authority of the Ontario Farm Products Marketing Act.

The OSG operations are financed by a producer levy on each tonne of soybeans marketed in Ontario. A board of 15 soybean growers who are elected annually direct the Ontario Soybean Growers operations. Activities include export and domestic market development, providing financial support to public and agronomic research programs, administration of the advance payment program for soybeans, and the publication of a bimonthly newsletter. The Ontario Soybean Growers also negotiate an annual marketing agreement with Ontario soybean buyers.

The Ontario Soybean Growers do not buy or sell soybeans. Private companies conduct all commercial transactions. Soybean growers sell their crop directly to dealers, who in turn sell their crop to domestic processors or into the export market.

The vision of the Ontario Soybean Growers is to have an innovative and profitable soybean industry. The mission of the Ontario Soybean Growers is to develop and promote a sound industry business environment that will allow Ontario soybean producers the opportunity for viable and profitable ongoing returns.

Soybeans are the largest acreage cash crop in Ontario and they are also a major crop in the province of Quebec. Due to the development of soybean varieties adapted to Ontario's climate through research supported by the OSG and good market opportunities, soybean production in Ontario doubled during the 1990s. In 2000 Canadian farmers harvested over 2.7 million tonnes of soybeans from 2.6 million acres, with an expected cash value of $700 million.

Two world-class soybean processing plants located at Windsor and Hamilton process approximately 1.65 million tonnes of soybeans annually. The main products are soybean oil, which is used to produce food products such as margarine, shortening, and cooking oil, and soybean meal, which is used as a protein supplement for livestock feeds. There are also hundreds of other edible, industrial, and pharmaceutical uses for soybean products.

New products are on the horizon. In the spring of 2001 a new pilot plant will start producing bio-diesel, a diesel made from soybean oil.

Canada's soybean industry has been targeting niche export markets for value-added food quality soybeans in Asian countries. During the past five years, exports of Canadian soybeans to Asian countries have increased by 360%, from 122,000 tonnes in 1995 to 440,000 tonnes in 1999. Soybeans sold in this market earn a premium price over commodity markets due to the high quality and suitability for making traditional soy foods such as tofu, soy milk, miso, natto, and tempeh.

Mr. Bill Allison (First Vice-Chair, Ontario Soybean Growers): As Liam said, I'm going to get right to the point on the question of the role of the federal government in agriculture. We've identified two broad roles.

The first role is to foster competitive advantages for Canada's agriculture sector. This means government's role is to act as a catalyst and a challenger. It is to encourage or even push the agriculture sector to raise its aspirations and move to higher levels of competitive performance.

Government cannot create a competitive agriculture sector. Only industry participants can do that. Government policies that will succeed are those that create an environment in which the Canadian agricultural producers and agribusiness can gain a competitive advantage.

The second role is to defend Canadians against foreign aggression. We mean by this that the government also has a role to play defending its citizens against foreign aggression.

Grain and oilseed producers in this country are currently waging a market battle against highly subsidized grain and oilseed crops and products within our own borders and in international markets. These programs, by design, artificially drive down commodity prices. Individual producers are not equipped to fight this battle without support from Canadian governments that is equivalent to the support received by our competitors. An analysis of this issue from the May 3, 2001, issue of the Western Producer is attached for your information and background.

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Further to the point, some specific policy actions should include, number one, investment in research to give Canadians a technological advantage. Agricultural research has played a vital role in the development of the soybean industry in Canada. Thanks to the development of specialty-food-grade soybeans by AAFC researchers, Ontario producers have the opportunity to market soybeans that capture a premium in Asian markets.

In addition, the development of short-season varieties by AAFC has led to the dramatic expansion of the soybean industry in Ontario and Quebec over the last 20 years. Specific research on agronomics is important. Diseases, weeds, and insects continue to negatively impact soybean yields in quality. Ongoing research is required to develop resistant varieties and environmentally sound agronomic practices.

Biotechnology research and regulation is also important. Biotechnology will revolutionize agriculture in the 21st century and it will lead to new opportunities for both farmers and industry. Biotechnology will benefit the soybean industry in two ways—first, as a tool to assist traditional soybean breeding by accelerating the development of new and improved soybean varieties; and second, by leading to the development of soybeans with qualities that could not be obtained with traditional plant breeding.

The ultimate success of biotechnology in Canada will depend on the collaboration of government producers and the private sector. Importantly, Canada's regulatory system will continue to play a key role in ensuring the safety of biotechnology products. However, it is essential that the regulatory system remains science-based. Regulatory decisions must continue to be based on sound science, and market forces should determine the commercial success or failure of biotechnology products.

Two, we should ensure competitive access to new technologies in the traditional areas. Canadian growers need access to the same array of effective pest control products as those available to farmers in the U.S. Health Canada, through the Pest Management Regulatory Agency, must take proactive steps to close the growing technology gap between Canadian growers and other NAFTA partners.

In accomplishing this, risks associated with pesticide use can be reduced through greater access to newer, safer, more target-specific pest control products, a benefit for consumers, Canadian farmers, and the environment.

Additionally, we want to see increased interdepartmental collaboration for the new bio-based economy. There are significant opportunities for producers in the development of non-food uses for crops. Untapped opportunities exist for new products such as bio-diesel fuel made from soybean oil, biodegradable lubricants, and soy protein-based plastics and adhesives. Future opportunities will likely include nutraceuticals and other products that will be made possible through biotechnology.

The Ontario Soybean Growers is particularly interested in the commercialization of bio-diesel in Canada. Government policy in areas such as environmental regulation, taxation, research, and technical standards will play a critical role in the commercial success of bio-diesel and other new uses for crops. Better collaboration between federal government departments and their provincial counterparts will be required to help ensure that these products reach consumers in a timely manner.

As well, there is support for our industry market development initiatives. Canada's soybean industry is concentrating its export market development efforts on developing niche markets for food-quality soybeans in Asia. As Liam said, we've had a 360% increase in exports to this area of the world in the last five years.

These markets demand premium-quality soybeans, and consumers are willing to pay premium prices for that quality. Government must develop policies and continue to encourage them. That will encourage the agriculture sector to diversify into new crops and take advantage of these value-added market opportunities for our existing crops.

Mr. Liam McCreery: We also have to promote trade liberalization. Government international trade policy should pursue open market access through WTO negotiations and regional trade agreements. Trade policy should seek to open markets.

Canada's oilseed industry urges the federal government to pursue a zero-for-zero approach in the WTO agricultural negotiations. Under a zero-for-zero approach there would be no tariffs on trade in oilseed or oilseed products.

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Now, those mentioned, we have to ensure fair free trade conditions. Government has a duty to ensure that Canadian agriculture is not subjected to unfair competition in either domestic or export markets. Unfair trading conditions exist mainly due to the policies of other countries, including high tariffs, non-tariff barriers, export subsidies, and high domestic subsidies.

Canadian grain and oilseed producers are facing unfair competition within our domestic market and in export markets from highly subsidized grain and oilseed crops produced in the United States and the European Union. Goals for the WTO agricultural negotiations should include accelerated reductions in domestic subsidies, with a target of ensuring that large disparities in subsidy levels between WTO members are eliminated.

Canadian grain and oilseed producers face two risk factors beyond their control—low prices for their products and poor weather conditions that reduce the yield and quality of crops. Crop insurance provides farmers with a reasonably good tool for managing weather risk, but the programs in place to help grain and oilseed producers cope with low prices caused by unfair foreign competition are inadequate. Crop prices do fluctuate with supply and demand under normal free trade conditions; however, normal free trade market conditions do not currently exist for grain and oilseed producers.

Since 1996 the U.S. marketing loan program has provided massive subsidies for grain and oilseed in an effort to force competition out of production. On top of those payments, the U.S. government has added $24 billion U.S. in emergency payments. These efforts have succeeded in artificially pushing down prices but have not resulted in reduced production. U.S. producers continue to increase their production because they are shielded from low commodity prices by support programs. Over 90% of U.S. farm subsidies are targeted at the grain and oilseed sector.

Canada has reduced its domestic support for grain and oilseed to a level well below its WTO commitments. Meanwhile, the U.S. and EU are providing support at the maximum WTO commitment limit. Canadian farmers not only face low market prices, we also stand in line with U.S. producers to deliver our soybeans to domestic processors knowing that our American competition in the line ahead of us has received approximately $65 an acre more in support from his or her government. There is free trade in soybeans and corn between the United States and Canada, but not fair trade.

The goal of achieving meaningful reductions in domestic subsidies in the U.S. and the EU through WTO will take several years to accomplish. Until that inequity is corrected, the Government of Canada must increase its support to the grain and oilseed sector and provide a safety net program that is adequate.

Canada's grain and oilseed production sector faces a major dilemma. We are optimistic about the future, but at the present time, because of highly subsidized competition, many producers face extreme economic hardship. Strong market demand exists for our product. Our industry is developing new value-added markets to increase the value of our production. However, market signals are not being allowed to work. U.S. and EU agricultural policies are distorting market signals. Prices for grain and oilseed do not reflect the current relationship between supply and demand. Until this problem is corrected through negotiations at the WTO, Canadian grain and oilseed producers need additional support from their governments.

Thank you for the opportunity to present our views on the future of government in the agriculture and agrifood sector.

The Chair: Thank you, Mr. McCreery.

Brian, are you going to present for the Grain Growers of Canada?

Mr. Brian Kriz (President, Grain Growers of Canada): Yes. Good morning. My name is Brian Kriz, and I'm the newly elected president of a new organization called the Grain Growers of Canada.

The Grain Growers of Canada comes about as a direct effort by Canadian grain and oilseed farmers to put in place an organization that can help set firm long-term policy for our industry. I think one of the problems we've had as an agricultural industry is that we have good farmers and we don't have good lobbyists, as such, and we don't have good policy-making because of that.

The Grain Growers was a vision that came out of a frustration in dealing with government and in affecting policy. In our organization we have members from across Canada. From B.C. through to the wheat and barley industry in western Canada... we're represented by the Canadian Canola Growers. We have two groups with us today, the Ontario Corn Producers' Association and the Ontario Soybean Growers, who are part of our Grain Growers of Canada, as well as the Wheat Producers' Marketing Board out of Ontario. We include Quebec agriculture producers, and for the Maritimes the Atlantic Grains Council. So we are a national organization that's set up to make presentations and to do policy work on behalf of grain and oilseed.

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So that's what makes us a little unique. We're trying not to fragment the message. We're trying to put a uniform message together, trying to take these opportunities at hearings to have our voice heard. So we appreciate being able to speak in front of the standing committee today. We hope to have some effect. I think what's happened a lot of times in the past is that the fragmented voice has been written off. We speak for the 80,000 grain and oilseed producers directly. We hope our message maybe gets through.

The Grain Growers' vision, which is part of our foundation, is that the grain industry of Canada be market-oriented and competitive. Of course, we believe we should maximize value-added investment and develop opportunities. We support innovation through research and development. We believe in environmentally sustainable agriculture. We want to be part of the Canadian agricultural industry that cultivates consumer confidence worldwide and is able to capitalize on and sell that.

One of the things I think you people are all aware of is the real plight and state of Canada's grain and oilseed industry. We heard from Liam and Bill on some of the cumulative effects we've seen since 1996, when the new WTO agreement was put in place. One of the ironies of the WTO agreement was that this trade agreement was to liberalize trade and to open markets for Canada's grains and oilseeds. We went into those negotiations thinking that we would head towards increasing prices from the market, not from the taxpayer. That was the goal of the traders in Canada.

If you actually look at what's happened in the last few years, it's pretty obvious that the goal versus results aren't the same. Canada has seen since that time a decreasing level of support from the taxpayer to the grain and oilseed sector, and part of the plan is to cut off that support. We expected other members of the WTO to do the same. The reality is that it hasn't happened this way. The U.S. has a strong agricultural support from their treasury and they've increased spending to amazingly high levels compared with the Canadian plight.

One of the effects of this is that the targeting in the U.S. program has really targeted grain and oilseed in the U.S. If you look at how we trade other commodities between U.S. and Canada, we do have fair trade in the meat industry. We have levels of support that are fairly low there. We have fair trade to some degree in the dairy and the supply-managed industry; support levels are high in both countries. What we don't have is fair trade in the grain industry. Support levels are way higher in the U.S.

That effect is what you're hearing about—that's why the sad stories, why the desperation across the prairies into Ontario and right into the Maritimes with corn and soybean. The primary producers of grain and oilseed are really cross-subsidizing the livestock sector in Canada. One of the growth industries is in livestock. You would want to go livestock with cheap grain, and we're seeing it.

One of the things that's talked about, and that has been pushed by provincial and federal governments, is of course the need to diversify, to take advantage of new technologies. Canada's been good at that. We have good research being done. We have new varieties. We have things that are specific to areas. Farmers are readily able to adapt technology. They will buy technology and they'll put it into place. That hasn't been the problem in Canada. We've seen a change in the mix of how agriculture looks at machinery and crops.

So that hasn't been our problem. Our problem has been that we haven't had the ability to pull what we need out of the market, to adapt the new technology that increases yield... and then not be able to get the real value back out of the market. That doesn't work, and that's really what we've been faced with. We can have bigger trucks and more granaries, but we have to have the market give us a fair signal.

We go back again to the distortion in the world price because of the American subsidies. They're prepared to do it. We don't see a quick and easy answer. In the long term we expect the WTO negotiations and the position of Canada will get us to that level. We expect that maybe this crazy game of subsidization in the U.S. will fade to some degree if the economy turns down, and we expect maybe weather can help us, but in the short term, that isn't really saving the farms in western Canada that are grain-dependent.

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Another thing about the value-added industry and the processing industry is that you need capital to be a part of a value chain. You need some free cash to be able to start a processing plant, and you need markets that are domestic to some degree, and export markets.

We understand the need for value adding, but we don't have the capital as individuals to go there. You need net profit. You need some dollars available, and those are some of the things that probably are lacking in policy in Canada, the incentives to actually get into value-added and to get into processing.

If we look at the targeting of the U.S. in their subsidy program, corn and soybeans have shown the most effect. The U.S. acres into soybeans have been phenomenal, considering the market price, and that impacts soybeans in Canada, and it impacts canola.

What do we ask the Canadian government to do in terms of policy domestically? We know we have this fight with international subsidies; we know that distorts price. So what are some of the things we can do at home?

The Grain Growers of Canada understand that we have problems in our own costing, in our transportation system. I'm sure people in this committee are well aware of what we have in the infighting and what that costs Canadian exports.

We went through a process somewhat like this standing committee, only it was over a period of time, with Estey, and we thought that was a good way to do policy. In the west particularly, we had struggled with the debate over the Crow, and when we got a chance to talk to Estey and to make commercial changes in our transportation industry, we were pretty excited, because we had never been asked as farmers.

The grain industry had spoken for grain, the Wheat Board had spoken for I'm not sure who, and the Canadian farmer wasn't part of that transportation equation. We thought with Estey and the Kroeger process we were going to get there, and what happened there? We had some kind of a compromise, and we have fighting today. We've asked, as the Grain Growers of Canada, that we to go back to the Estey report and look at what he said and follow those instructions. This isn't working the way we're at now, and it's a bit bizarre to think there's money on the table and we can't get at that competitive market for transportation.

As well, we've asked for changes in the Canadian Wheat Board Act. We've asked for the right to market individually our wheat and our barley. It doesn't make a lot of sense sometimes to think about segregating two crops, wheat and barley, compared with all the other marketing opportunities you have as an individual. We've asked to look at some innovation to bridge what we see as that gap between entrepreneurialism and value adding and being able to process your own grain and what we actually have today with the Canadian Wheat Board system.

We've asked today that this committee consider maybe a pilot project that would offer an exemption to those who want to market their grain outside of that Wheat Board. We've asked to investigate having some kind of committee to look at a pilot project that might start us down that road. That's something we're looking for the standing committee to think about, because this system is too cut and dried and doesn't offer that entrepreneurial chance to individual farmers, in western Canada in particular.

Finally, maybe the federal government should consider some of its cost-recovery policies. I'm a believer in user pay, but some of the regulations we have in Canada we can't pass on to the market. To put regulations in front of us to use a grading system, or to use the Canadian Food Inspection Agency, and to have to cost-recover that when I can't get that back directly from the market... The market hasn't asked for those regulations. Those are some of the things we complain about.

Some of the small things, to some degree, are the fuel tax and those kinds of things, that are direct cash costs that perhaps could be offered to farmers. There are things we could look at in the short term.

In conclusion, what is the federal role we see in grain and oilseed?

Number one is that we ask for that proverbial level playing field. Farmers have responsibility for agronomics, for risk management, for looking forward, and for long-term planning. They take that responsibility seriously. The things they can't be responsible for are the international trade actions. We consider that a responsibility of the federal government through negotiation, the federal government through cash—and you've heard the pleas from Canadian farmers for cash in the short term.

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One of the things we've proposed is that the Minister of Agriculture and Agri-Food strike a special-measures committee, as provided under section 12 of the Farm Income Protection Act. That section leaves open room to look at just such an occasion as this. So we ask for that, to analyse the exceptional circumstances facing the grain and oilseed sector and to table a recommended approach to rectify this situation.

Of course, one of the things we ask for, again, is the freeing up of trade through the WTO negotiations and, to repeat what Bill or Liam mentioned this morning, to eliminate all export subsidies in grain and oilseed; the barriers to trade in grain and oilseed; and trade and production-distorting domestic support. Those are the three things in trade.

The second thing we ask that this government committee look into is introducing flexibility in grain marketing and competitive transportation systems, as I mentioned before. We really ask that we do a pilot-basis test of entrepreneurial marketing of wheat and barley in western Canada, and we'd ask that this committee, and the federal government in particular, really look at taking this leadership role. Don't leave that debate out on the prairie; it's divisive and it hasn't accomplished what we need. We ask the federal government for leadership there, and the same thing in grain handling and transportation.

We understand that the dollars that are available for diversification and market development are important, and in the long term we ask for continued support from this federal government for market development money and diversification and research.

One of the things that we know the federal agriculture department is interested in is being able to sell a “made in Canada” label. That's something I think we recognize as an industry and as farmers. As individuals, sometimes we get lost in our own day-to-day problems, but we really have something to sell in Canada that is made in Canada.

We know when we entertain people from Japan, from Asia, or from anywhere in the world, they like what they see here in the countryside. They like the things we take for granted—the clean air and our lack of population. So we have something to market in Canada.

We understand that through federal government cooperation and through farm initiatives we can probably take more out of the market than just this commodity sea, throwing export products out in bulk and hoping to live off that. We have something better to offer, and with the help of federal initiative and our own initiative, we hope we can get there.

In closing, we submit that the federal government's role should be to help achieve the goals and the vision that the Canadian Grain Growers mentioned before, that we have an industry that is market-oriented and competitive, maximizing value-added, supporting innovation, environmentally sustainable, and cultivating consumer confidence.

Respectfully, that's our submission for today.

The Chair: Thank you, Brian.

Dennis, are you doing the presentation for your group?

Mr. Dennis Jack (President, Ontario Corn Producers' Association): Thank you.

Good morning, ladies and gentlemen, Mr. Chairman, members of the committee. We welcome the opportunity and thank you for the invitation to attend and make this presentation.

I apologize initially if some of the comments I make will be repetitive from those of the other witnesses, but we all live in the same world and suffer the same difficulties in the end.

Again, at the outset, I'd like to say thank you very much for the opportunity to make this presentation, and mention that the Ontario Corn Producers' Association is a staunch supporter of the Grain Growers of Canada.

As a result of major expansion in Ontario corn acreage during the 1970s and 1980s, the amount of corn grown significantly exceeded domestic needs. In the early 1990s the Ontario Corn Producers' Association implemented several policies in an attempt to correct this problem.

I am not going to read all the points we have, just outline some of them. We have a plan, we have steps outlined to follow this plan, and at the end you'll see what we hope the government can help with.

Those policies attempted to correct the problem of supply and price. Our first step was an increase in domestic usage of corn, with an emphasis on new domestic markets and exports of high-value corn products versus exports of bulk feed-grade corn.

The domestic usage of corn has increased 76% since 1990. In fact, corn now ranks second only to barley in total tonnes of Canadian domestic grain usage. Unlike barley, however, most of the growth in domestic corn usage has been for the direct production of food and industrial products, as opposed to livestock feed.

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There's a strong continued near-term growth, as expected, in industrial corn usage, with expanded production of corn sweeteners and industrial starch products, the construction of a world-scale fuel ethanol plant at Chatham, Ontario, with other plants expected soon for Cornwall, Ontario, and Montreal, Quebec, and the construction of North America's first JVL citric acid plant at Port Colborne.

As a result, even though corn production continues to grow in Ontario, because of higher yields and not more seeded acres, we are significantly less dependent on exports of unprocessed corn now than we were 15 years ago. The export growth has been in the sales of products made from corn, of which there are thousands—and you can look at the list at the end. Approximately one-quarter of the food products you'll find in a grocery store contain some portion of corn. Industrial and direct food processing now represents 37% of annual Ontario corn production, up by a half in the last five years and about double the 19% industrial and food usage in the U.S. We expect the Ontario percentage to grow rapidly in the decade ahead.

Our second point is a strong emphasis on research, with shared funding from Ontario Corn Producers, governments, and the private sector. Research has been concentrated as a means of reducing costs of production and increasing the efficiency of inputs, improving quality for specific market needs, and new product development. Programs such as the Canadian Adaptation and Rural Development Fund and the matching investment initiative of Agriculture and Agri-Food Canada have been invaluable as a source of matching funds for OCPA-funded research, though the value of the MII program has diminished with time, as the terms for eligibility and available funds have become increasingly restrictive. Also important is the small portion of safety net funds devoted to research and developmental projects. The research branch of Agriculture and Agri-Food Canada has been a strong research partner, as has been the University of Guelph, including Ridgetown.

The source of frustration has been the continuing refusal by the finance department to allow collective research tax credits to farm organizations for check-off funds collected from individual farmers to fund further research. This puts farmers at a disadvantage vis-à-vis larger corporations and in access to key government programs designed to encourage research and competitiveness.

A priority for research has been new product development, with this research being closely linked to market development initiatives. In addition to expanded production and the use of fuel ethanol and other renewable fuels, Ontario Corn Producers is actively engaged in research and developmental projects designed to make other organic compounds and bioplastics from corn. Negotiations are under way with potential industry partners and investors. New Mexican food-type products, which represent one of the fastest-growing food markets in North America, are another research and developmental priority. New food and industrial products represent our primary market growth opportunities for the 21st century. We intend that Ontario corn producers and their industry partners be at the forefront of this growth opportunity, both continentally and globally.

Our third point concerns a strong commitment to new technology, including biotechnology. Biotechnology represents opportunities for corn producers to reduce pesticide usage, while improving pest control and product quality. Ontario Corn Producers, Agriculture and Agri-Food Canada, the Ministry of Agriculture, Food and Rural Affairs, the University of Guelph, and several private companies have major cooperative research and development projects under way, at both the eastern cereal and oil research centre at AAFC and the University of Guelph, designed to eliminate grain corn contamination by fusarium mould microtoxins using biotechnology. These microtoxins are a traditional quality problem with corn and other cereal grains, and they can be highly toxic to humans and animals at minute levels. Traditional plant breeding techniques have not produced the level of resistance needed. The biotech approach offers greater promise.

Biotechnology also represents a means of producing new products from corn, such as organic compounds and plastics now made from petroleum, and we are just on the verge of that happening in the very near future—hopefully in a riding where a lady here to my left would love to see it happen.

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A key strength in these efforts has been the quality and integrity of the Canadian regulatory process, jointly administered by Health Canada and the Canadian Food Inspection Agency for novel traits in crops and foods. The superiority of the Canadian approach, where intensive testing for health and environmental safety is needed for all new crops and foods that differ significantly from traditional forms for genetic or other reasons, has been applauded internationally by organizations such as the National Academy of Sciences and the American Medical Association. While opportunities exist to improve the Canadian regulatory system, we are deeply concerned about current efforts by grain exporters, international chemical biotech companies, and most recently the House of Commons Bill C-287, to dilute Canadian standards to lower standards used elsewhere. The Government of Canada must resist all efforts designed to weaken the Canadian system and make health and environmental decisions subordinate to international commercial interests.

A solid commitment to the environment is our fourth point. Environmental integrity is important to farm families as well as to all other Canadians. Environmental improvements can often occur in cooperation with other endeavours designed to reduce costs and improve market opportunities and profits. The Ontario Corn Producers' Association and other like-minded Ontario farm groups have been partners in efforts to reduce farm pesticide usage, which is down 40% in Ontario since 1983, while maintaining crop yields and quality: use fertilizer nitrogen more efficiently; reduce or eliminate soil tillage, thus reducing fossil fuel usage and increasing soil sequestration of atmospheric carbon dioxide; and increase the use of fuel ethanol and other renewable fuels. Formalized environmental farm planning has been a feature of Ontario farming for nearly 10 years. Many research projects funded by the Ontario Corn Producers' Association are also directed at environmental improvement.

Now, here's where we get to the point: what do we expect from government? The Government of Canada has been a partner in most of the efforts identified above, and we hope this will continue. We need a partnered support for research, market development, and environmental improvement. We need a regulatory system that is prompt, efficient, with decisions based on solid science, and that allows prompt access to newer technology. But most of all we expect government to provide an environment in which Ontario corn farmers can compete on a level playing field with their counterparts in other countries.

In addition to regulatory processes, this also means publicly funded safety net support. Without that support, all of our efforts to diversify, add value to our crops, exploit new market opportunities, improve quality, and otherwise benefit from new research may go for naught. Hard work and commitment alone cannot make up for the $63-an-acre disadvantage we have with U.S. farmers.

The initial anticipation that the Uruguay Round would lead to marked reductions in world agriculture subsidies has been replaced by a realization that farm subsidy levels are now even larger than before in most other major developed countries. Canada is one of the lonely few that made and retained substantial cuts. Unfortunately for corn farmers, global subsidies are concentrated in the grain and oilseed sector. As you heard my colleague say before, 95% of U.S. support is targeted to grain and oilseed.

The Government of Canada and provincial governments recognized this deficiency in part when they announced additional emergency funds for grain and oilseed farmers in February. The “in part” refers to the unfortunate fact that $500 million provided in new federal money represents only about half the annual amount needed to restore equity. But the funds will be of major benefit this spring, summer, or fall, whenever they are finally received. It's crucial, however, that this quantity of funds be augmented and continued for future years, at least until an effective international agreement does exist to reduce agricultural subsidies globally.

According to informed U.S. sources, there is no reason to expect U.S. support benefits for American farmers to diminish in the near term, and I personally can attest to that. As many of you know, I have a brother who farms in the U.S. and I am aware of the level of support. It is significant. My brother says he really doesn't know how we survive. But that's a personal aside.

• 0950

We're not pleased to have to deliver this message, but we see no other options. With an increasingly continental and global agriculture and food marketplace and the elimination of almost all border restrictions under NAFTA, Canadian grain farmers must compete directly with U.S. growers, both at home and internationally. We can only do so if supported at similar levels as U.S. farmers by our government.

We support the federal position that agriculture support should be shared with provincial governments. We are efficient grain farmers in Canada but not so efficient that we can compete against the U.S. government all by ourselves. The unilateral disarmament approach, which has been employed by Ottawa—the large cuts in grain and oilseed income support in Canada without proportional cuts in the U.S./EU—is a strategy for disaster in the future. Without a level playing field with U.S. growers, a decade of initiatives by the Ontario corn industry cannot succeed.

I thank you for this opportunity. I would like to ask Mr. Daynard if there is anything I have slipped over. I passed over much of this very quickly.

Mr. Terry Daynard (Policy Adviser, Ontario Corn Producers' Association): I think there is one point that as corn producers we would like to emphasize. All of the things that seem to be actively promoted, nationally and certainly federally, that grain and oilseed producers ought to do—diversifying, new values, life-science economy, and so on—we've been doing for ten years.

Back in the early eighties, 20% of our corn was exported. By and large, we are net importers/exporters on balance, even though our corn production has gone way up. We export a lot more corn products. We export corn products now, not corn, and we've made major gains in diversification. We are way ahead of the United States in the proportion of our corn going into new products. There are a lot more things on the drawing board, some that we can talk about and some we can't.

The frustration is that it doesn't address the problem with the huge disadvantage you have. That's the dilemma we present to you, that a life-science economy and diversification by themselves don't cut it. There has to be some help and direct head-to-head competition across an open border. Unlike what Brian described for wheat and barley, there is absolutely no restriction moving corn across the border. What you need is a truck. It moves back and forth; it crosses the bridges going in opposite directions at the same time. To move corn between here and the United States, which incidentally we support, is like moving corn between Ontario and Quebec. It's pretty frustrating to see all those American trucks coming in, knowing those guys are getting, say, for a typical farmer, probably in the neighbourhood of $50,000 to $100,000 a year more in government support than our guys are getting. It's proving more and more impossible all the time.

The Chair: Thank you.

Howard, are you ready to lead off? You've heard some things you wanted to hear this morning.

Mr. Howard Hilstrom (Selkirk—Interlake, Canadian Alliance): Mr. Chairman, I'm always ready to enthusiastically participate in the agriculture committee activities.

The Chair: I thought you'd be very enthusiastic.

Mr. Howard Hilstrom: The work we do here really is important in getting the message across to the federal government—the ministers, actually.

I'll start off by saying welcome. To the Canadian Grain Growers, I tell you, it's really great to have that organization in place that is concentrating on the commodities that are hardest hit by the current income problem. I don't disagree with virtually anything that any one of you has said. It's the policies we've been advocating for the federal government.

You are here today to educate all of us, myself included, but especially the people who have direct access through the Liberal caucus to Minister Goodale and Minister Vanclief.

The only thing I would disagree with a little bit, Mr. Kriz—do you mind if we use first names here? It's a lot easier. The only thing I would disagree with, Brian, is the idea of a trial marketing outside the Canadian Wheat Board. Why wouldn't we want to go straight to a producer voting with his truck as to where he wants to market his grain? Wouldn't that actually be the better solution? We don't have to try to see if free enterprise works; we know it does.

Mr. Brian Kriz: We're just looking for some leadership from the federal government. That would be our solution in the short term—that we do a pilot project, because if they need proof we're pretty sure it would come.

Just in passing, we did have a brief, and I'm not sure if everyone got a copy of that.

I failed to mention that we have Kevin Muxlow with us. We hired him to run the office out of Ottawa as our executive director. Kevin comes with a policy background, with an education in political science. He actually has a passion for this kind of thing and we're pretty happy he's with us. Kevin will be available in Ottawa for anyone who wants to talk to the Grain Growers directly.

• 0955

Mr. Howard Hilstrom: Thank you very much.

Since 1997 the Reform before—the Canadian Alliance now—has been leading a fight in Parliament, and a fight I'm quite proud of, to try to narrow the subsidy gap with the United States. As you're well aware, the last thing we did, of course, was the vote that Stockwell Day put forward in order to get Parliament to at least put out another $400 million. The minister has essentially said there's no more money coming, or subsidy support. We'll have to wait and see what happens there.

In the Canadian Alliance now we're trying to concentrate on getting rid of that 4¢ federal excise tax on diesel fuel and doing other things that are important to get more money into farmers' pockets. The biggest issue right now that can be done to help farmers is the Canadian Wheat Board has to be made voluntary. The Canadian Wheat Board has to be taken out of grain transportation.

Brian, you touched on both of these issues and that's why we're concentrating on bringing into the public light the true story about the Canadian Wheat Board. The Manitoba Co-operator is not putting out the true story about it. I have the press releases right here from their last paper. I'm not attacking our friends here. Alex Binkley is in the audience here today. It's just that producers and Canadians generally are not getting an accurate story on what the Canadian Wheat Board is doing.

If any one of you stood up here today and argued that you would want corn or soybean under the Canadian Wheat Board, or any other commodity, I would be very surprised. You all have the opportunity to say that you want soybean under the Canadian Wheat Board, if you do. I'm sure I don't believe you do, but I'll let you answer that.

So that's what we're trying to do here.

On the grain transportation, have any of you heard that there's been any kind of breakthrough between the Canadian Wheat Board and the Western Grain Elevator Association?

Mr. Kevin Muxlow (Executive Director, Grain Growers of Canada): Howard, we haven't heard that there has been a breakthrough. We've heard that there's been progress. What that progress includes is anybody's guess. My understanding is that there are still fairly contentious issues over definitions of shipper, over car allocation. We haven't heard anything yet, but at the same time, producers, by and large, are being kept in the dark on the progress.

Mr. Howard Hilstrom: Exactly. I was in the committee where the Liberals brought in voters to sit and vote on that transportation bill last spring, because some of their members were going to vote for our amendments that would have removed some of the Canadian Wheat Board's authority over grain transportation. That's why your presentation today is so clear and it's so important that this message get out. The Canadian Wheat Board is standing in the way of grain transportation reform in this country—and you've mentioned Estey-Kroeger.

Liam, I'll ask you this question. Would you like to see the Canadian Wheat Board marketing soybean in Ontario, and would you like to see it involved in helping to arrange the transportation of soybean inside Canada?

Mr. Liam McCreery: To be honest with you, Howard, I don't understand the issues you're referring to. The Ontario Soybean Growers are comfortable with our current marketing system and we're happy to keep it the way it is, but I won't get into the conversation concerning western transportation and the Canadian Wheat Board.

Mr. Terry Daynard: I want to make a comment from the Ontario grain perspective. We're as committed as anyplace in the country to the Grain Growers of Canada. We're just delighted, and wish we'd created it 20 years earlier. We have to find common policy across the country. If the message comes out that we're opposed to the Canadian Wheat Board, certainly from our standpoint that's not the case. To some degree, from an Ontario perspective, we believe it's up to western Canadian grain farmers to sort out how they market their grain out there. It's not for Ontario.

But we do strongly support the idea that producers should have a choice. It's a clear element within the Grain Growers of Canada's position that we've supported right across the country.

• 1000

I'm a wheat grower myself, and I do have some choices. We have a pooling system in Ontario I'm pretty proud of, but there are some options—

Mr. Howard Hilstrom: Why, then, Terry, can't the western Canadian farmer have some bloody choice? Can you tell me that?

Mr. Terry Daynard: Well, I guess we would say from an Ontario standpoint that we support the concept of having choice for the western Canadian farmer, too—

Mr. Howard Hilstrom: Thanks very much.

Mr. Terry Daynard: —but we're not anti-Canadian Wheat Board.

Mr. Howard Hilstrom: No, and neither am I. The Canadian Wheat Board should be a voluntary cooperative. That's the message we've put across to the Liberals here time after time, and that is what western Canadian farmers want. Some want a pure monopoly, but why in the Lord would we have somebody with $1 million in assets being told that the only place you can market your wheat and barley is through the Canadian Wheat Board? That just flies in the face of reason.

I'm just going to conclude. I'm probably close to the end of my time.

The Chair: Yes, 40 seconds.

Mr. Howard Hilstrom: In 40 seconds, then, Larry, this is so important that I can't emphasize this enough to you. Just listen to this:

The case of Manitoba farmer Andy McMechan, who dared to sell some of his own barley to the U.S. for a profit, is now legendary in farm circles. For his “crime”, McMechan was handcuffed, shackled and tossed into jail with two accused murderers and an accused armed robber. He was held in jail 155 days, strip-searched more than 50 times, paraded around in chains and leg irons, and suffered other indignities.

What kind of a bloody government do we have that does this to farmers? I might be starting to sound like Jake Hoeppner here, but I'll tell you, folks, this is exactly—exactly—what's happening to western Canadian farmers, and the parliamentary secretary had better take this seriously.

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): Mr. Chair, I have a point of order, since my name was used.

That's a new book out. I'd have the same... That incident was shameful, and I would not... It's ridiculous, what happened, is what I'd say to my friend.

The Chair: Marcel.

[Translation]

Mr. Marcel Gagnon (Champlain, BQ): Thank you, Mr. Chairman.

I would like to thank our visitors this morning who bring to us, in bulk but very thoughtfully, the issues within facing their industry. I am happy to be here to hear what you have to say about the farming industry in general. You spoke a little bit about Quebec but mainly about Ontario and the West.

Unfortunately, the briefs you are presenting this morning would have deserved a little more time for reflection before meeting you so as to improve our questioning. We feel that there are studies in there which deserve some thought. I hope that the department, more than the committee, will use them to make an in- depth examination of the issues you are raising this morning.

You talk about competition. You have difficulties namely because you are facing U.S. competition. The U.S. and some other countries are accused of subsidizing agriculture more than it is here. In the whole context of free-trade which is developing, how do you see the possibility for each of our industries to better subsidize transportation for example—we have been talking about transportation in other areas—while respecting the rules of free-trade agreements?

• 1005

At a certain time, we also see a contradiction. We accuse the U.S. of subsidizing too much or much more than here, and we say that it should not be that way, but we ask Canada to do the same thing.

I would like to hear you on those issues and on the development of each of our industries. In the case of corn, among others, we are talking about sustainable development and we are touching on the environment. We also seem to agree on the production of transgenic food, which is transgenic corn and on the stewardship of the environment. I have a little difficulty to make the connection here.

I think I have asked questions for each of you, and I am waiting for the answers.

[English]

Mr. Liam McCreery: Thank you for the questions.

You see, there is a kind of strange message we're bringing forward. We're saying we need to promote a reduction in subsidies in other countries, yet we're promoting more support for our producers.

We should emphasize very clearly that we have a lot of room, within our WTO commitments, to increase support for our agricultural producers. We see this as a medium-term solution, as governments work together to ratchet down support in their countries. We are believers in free trade and open markets, but as long as our competition is being unfairly subsidized—like Brazilian jets, say—we will need support from our federal government in order to compete fairly.

As far as environmental initiatives we are taking, specifically in Ontario, first of all, we've been very proactive in forming a group called AGCare. I think it was formed ten years ago. It's a group that looks at issues concerning the environment. We've been proactive in developing environmental farm plans for our farmers, where we can look at our operations, see how we can do things even better, and help show society that we are truly good stewards of our land.

That's the introduction to the answer. I should turn it over to other colleagues.

Mr. Terry Daynard: I just want to add a couple of things. From our analysis, the Americans are not doing anything that's illegal under the world trade agreement. We negotiated a cap on the amount of subsidies. They're at the cap, or close to it. They came down and came back up. It's frustrating, but to say they're doing something illegal under the world trade agreement is false.

We brought our subsidies down; we've come up a little bit. If you compare them with the amount of support the federal government was providing to agriculture back in the late eighties and early nineties, though, they're substantially below that—somewhere in the neighbourhood of 50%. We have a lot of room.

We are just totally frustrated about having to look that way. As corn producers, we spent ten years looking for other solutions, such as diversification. We don't have to export our corn to Iran and compete with the lowest-priced grain in the world. We want to export. Paper is one of our biggest corn products. All this paper has corn coating on it. We're into sugars and food quality. Fuel ethanol is now being exported, to some degree, out of Canada. When you get your plant built in Montreal, that'll be good news for us, because Ontario and Quebec agriculture is a continuum—there's just a river in between. We work very closely with our counterparts down there. But you can't do it that way. You just have this frustration. The Americans are setting the rules, and we don't see any choice.

In all fairness, you have to watch for the fiscal needs down the road. Last year, as the numbers say, Canada had a surplus somewhere in excess of $15 billion. We had farmers on the road protesting substantially for want of $400 million, and we're being told by Ottawa that our numbers are too low—the amount needed to maintain equity with the U.S.—but we think they're quite modest. We're expecting the provinces to pick up 40% of the cost, too, which we think is fair. Most of them have begrudgingly done that. Some provinces are way beyond that in terms of support they're giving there.

• 1010

From the environment standpoint, there are all kinds of things we could point to—things we're doing and they're doing in Quebec. We talk to each other every day, so by and large they're in concert with western Canada. There are some major opportunities. We think we can reduce nitrogen usage—use it more efficiently. Using modern satellite technology, we can save money. We can save on environmental costs. We can save on greenhouse gas emissions. We can build up carbon in the soil. There are lots of opportunities there.

Mr. Kevin Muxlow: I see very little contradiction here in advocating a level playing field for Canadian farmers. I mean, where that level playing field is in the future, ideally we'd like to see it where you're getting rid of trade- and production-distorting domestic support. In the meantime, you need to do something to raise it, to get to the level playing field, because we're not in the same game now, let alone on the same playing field.

On environmental sustainability, you've heard of some of the leadership roles that Ontario and Quebec groups have taken with regard to sustainable development in the west. Just as an example, the canola growers out there are starting processes of benchmarking their farms for environmental indicators, so they can measure how they're contributing to sustainable development over time. These things are being done already. There's reduced tillage going on out there and reduced pesticide usage, partly for cost reduction measures, partly for environmental spillover benefits, through adopting those technologies.

So we're getting there. But the point is, you have to get back to the fundamentals of the marketplace, and that's where this level playing field becomes so critical. We talk in our brief about where the support levels are now, and how they need to be fixed.

The Chair: Thank you, Marcel. I gave you two more—

[Translation]

Mr. Marcel Gagnon: I would like to have 30 seconds to say that perhaps they have not understood the beginning of my statement.

I was saying that I find your briefs extremely interesting and that I was hoping that this will go further than the discussion we are having this morning, that this will be examined more in-depth not only by our committee but also by the department. Thank you.

[English]

The Chair: Thank you, Marcel. I have to move to Paul.

Mr. Paul Steckle (Huron—Bruce, Lib.): I want to welcome you here this morning. I would say to Kevin and the people from the Grain Growers of Canada, I think this is an evolution that has occurred, as a result of some of the difficulties we've been in over the last couple of years. It's too bad it hadn't occurred—as I think Dennis mentioned a few moments ago—20 years ago.

I think you also need to give your heads a shake and ask why you've come from where you have to this job. Shouldn't you be home milking cows?

Mr. Kevin Muxlow: Definitely the dairy farm is just fine without me right now.

Mr. Paul Steckle: There are some other things we could talk about this morning. I hardly know where to begin.

Has any work been done by your groups on where the dollars go in the U.S.? How much of the money flowing to the farming community goes to the large corporate farmers, versus the smaller farmers with 1,000 acres or less? Our understanding is that a huge amount of money really flows into the large corporate entities.

Mr. Kevin Muxlow: Support levels in the U.S. are hitched to two things—acreage and production. So the more you have of each, naturally, the more you get. I don't know if that's a major issue, because in Europe they tried to modulate and target money to certain structural types of farms. They tried to do that in the United States as well, but they found it doesn't get past that concern. It makes farmers decide whether to incorporate their farms or not. Rather than tying a family farm together and managing it through one family, a brother may own one farm, another brother may own another farm, and the sister may own another farm, so the structure of the farm responds to the policy in place.

Attempts to target programs end up changing what the farm looks like. They don't actually get at the concern you raise, that 20% of the farmers get 80% of the money. They still get it; it's just that the farm changes and looks different.

Mr. Paul Steckle: Would you agree that the American view today is that they're trying to beat down the Brazilians, and it's not the Canadians they're targeting? And how far can they go in doing that?

• 1015

Mr. Kevin Muxlow: Perhaps I'll let the soybean guys talk to the issue of Brazil and soybeans.

I guess if I look at the trend in U.S. farm policy, it's always been the case of “Hey, we're just going into third markets, we're not targeting you guys”, but the point is, we're collateral damage. It's almost like there's a war out there, if you will. When the odd subsidy flies over your head, even if it's the house next to you that gets blown up you still get hurt. And that's what's happening here. It's the same impact. Canadian farmers are collateral damage.

As we said in our brief, Canadian farmers can't have the responsibility and don't have the tools available to them to withstand collateral damage. That's where we feel the role of the federal government is, to keep that collateral damage to a minimum. That's what I'd say.

But how do you argue with them if that's what they say, that they're going into third markets? It hurts.

The Chair: Mr. McCreery.

Mr. Liam McCreery: Thank you, Mr. Chairman.

I'd like to answer your first question very quickly. We look at it on a per acre basis. Our argument, if you will, has been that our competition across the border in the Michigan Thumb gets about $65 an acre. Whether that farmer farms 1,000 acres or 500 acres, so what? We're looking at the per acre, per unit cost.

So that's our target. We do have analytical data, which we can get to anyone who wants it, of where the differences are.

Are the Americans going after the Brazilians? In my personal opinion, they've designed a very poor program and are now caught in it. They didn't envision the prices going as low as they have and the AMTA payments kicking in the way they have.

The policy-makers in the States aren't looking out, they're looking in. They know that $28 billion is a lot of money and that they will continue to get votes if they continue to provide it to their constituents.

Mr. Paul Steckle: This is a question I'm going to put to all of you. It sort of comes from the presentation from Dennis this morning.

Something that was noticeably absent in your issue on the environment was the whole issue... and I realize that I should be addressing this to the livestock producers. We're constantly bombarded as politicians, whether we be federal, provincial, or municipal, on the issue of clean water, with the blame, of course, being placed on the livestock producers.

Why is there not a greater effort made by the farm community? I would add that around both sides of the table approximately half of us are actually farmers, so the questions we're posing are real questions for us as well. Why isn't greater effort made to find ways to utilize animal waste, or manure—or what we sometimes call it? We clearly understand that there is a real use for that product. It's a by-product that has high value, and we're not spending very much effort on it. In fact, they're coming to me and asking why we can't find a way for them to handle this. Shouldn't this come from the farm community?

Mr. Kevin Muxlow: As you say, this is off topic, being more of a livestock issue, but as you mentioned, Paul, I come from a dairy background, and we do have a feedlot. We deal with a lot of manure out there. We're in the east end of the Fraser Valley. It's where I was born and raised. I just moved away from there a few years ago now. We have a lot of waste, a lot of manure. What we do is separate liquid from dry matter in the manure, reuse the water to clean and flush out our barns, and at the same time compost the dry matter into steer manure, which we sell into Vancouver.

So there are opportunities out there. The marketplace was already doing it. The farm didn't do that in response to any program or policy in place. Someone said that people like steer manure to keep their lawns green. We said, “Hey, we've got lots of it. Let's put it in a truck and haul it to them.” It was that simple. The market works that way.

Mr. Paul Steckle: I'd like to place a lot of emphasis on that.

Mr. Kevin Muxlow: I just gave a plug to Dad, on the record.

Mr. Terry Daynard: I would like to say that the fact that we didn't mention it doesn't mean we're not totally committed. We work closely, certainly within Ontario, with these folks trying to find solutions. But you're meeting with the grain and oilseed groups here, so would we emphasize that, and I assume you'll be meeting with the livestock group.

We're watching this. One of the things we get accused of is the problem of pesticides. Our problem there is the difference between fact and perception. Surveys have shown that we have relatively minor problems on that, yet the media mentions all the time that our groundwater is full of pesticides.

The Sierra Club of Canada did a major study about two years ago looking at about 71 communities in Ontario to see what they could find. They were searching for pesticides, that's clear. Out of 71 they found a trace of one pesticide in one site.

• 1020

The problems of E. coli and so on can't be diminished, but even here there's a problem. This supposed mega-farm at Walkerton that caused all the problems had, I gather, about 70 cows or something like that. It was a veterinarian who raised a few cows on the side and had a track record that was second to none in terms of environmental responsibility.

So we have real problems and we have perception problems, too.

The Chair: Thanks, Paul. I have to move on.

Dick.

Mr. Dick Proctor (Palliser, NDP): Thank you very much, Mr. Chair.

Welcome, everybody. I think the underlying theme that comes through, at least for me, in all three of your presentations is the need for a level playing field in this country. Yet we had Minister Goodale, the minister responsible for the Canadian Wheat Board, a week or so ago putting a cold shower, as far as I could tell, on any suggestion that we were going to get to a level playing field any time soon. I would suggest his comments echoed Minister Vanclief's, that our pockets aren't as deep as those of Washington's or Brussels'.

Mr. Daynard has given us a little bit of his feelings about that, and he may wish to say more, but just as a general question to all, how do the members, the farmers who are members of your organizations, respond to that kind of message from the ministers?

Mr. Kevin Muxlow: What we're hearing is that at this stage they're not willing to say this is the case. They still think we need to have some more support out there. They're not just saying, “Okay, that's the statement”. Then we see these Bombardier examples occur, and the very targeted approach to airplanes, which is somewhat frustrating. I made a comment in the media that when Bombardier had problems, they weren't instructed to build speciality airplanes, but when farmers were confronted with the same thing, we were told to grow speciality crops and then move into diversification.

Farmers are moving into diversification. You've heard some amazing examples. The list of products that corn goes into is impressive. It's impressive what soybean is doing. And barley, which is just for beer and cattle feed—they're starting to fractionate the stuff for beta glucans, trying to move it into functional foods. So they're moving into these other things.

The problem is, those are ten-year projects to move them anywhere, so in the short term you still need some support levels. What we're hearing is that we need some action in terms of a policy approach between the federal-provincial governments and farmers. That's why in our brief we call on this provision in the Farm Income Protection Act, section 12, to be invoked, saying we have an exceptional circumstance facing the grain and oilseed sector. It's not facing dairy; I can ask Dad. It's not facing cattle; I can ask Dad about that, too, because he's in that business. Those are doing fine, thank you. Grain and oilseed are hurting. This is targeted at just them at this stage of the game.

That's what this section is all about. Get the provinces together, get the feds together, get the producers in there and say “Look, here's where we're at, folks. WTO ain't gonna happen until 2006, so let's build something now and get it done.” It's enshrined in the legislation. Let's use it.

Mr. Dick Proctor: Probably everybody around this table would agree with that sentiment and those comments. It's the government that's saying we're not going there.

Mr. Kevin Muxlow: If I may be so bold, I don't think anyone, on any side of the House, is saying the problem's solved and we're not going to do anything. I'm just not getting that sense. Everyone has different ideas on how to solve this issue. That's why we say let's bring all the people around one table and look at everything cumulatively—support levels, taxation levels, cost recovery. Let's get it all together around one table and ask how we can make this work—not transportation, but these issues. Western Canadian grain and oilseed, grain and oilseed by and large in this country, are going to be in the export market for a long time to come, regardless of diversification. We have a lot of product being produced that we need to move.

I guess we think an ideal option for a committee such as this would be to take the proposal we put in our paper for the provision in the Farm Income Protection Act and try to move it forward. If you can recommend it in the short term as something that should be done, we can do this over the summer and get this cleaned up.

Mr. Dick Proctor: I think Mr. McCreery also wants to comment.

Mr. Liam McCreery: Thanks, Dick.

I see the approach to the issues we have right now as being multi-pronged. Of course, we have to continue to pursue new markets and diversification and new uses for our products, and we will continue to work with the government to look at new uses, new markets, and premium markets. I think we have to continue to pursue freer trade in the world through the WTO. In the interim we still have to pursue further support from our governments, both provincial and federal.

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So to answer your question directly, we will continue to ask the federal government for more support for our grain and oilseed producers.

Mr. Dennis Jack: I'd like to respond as well, if I may, Mr. Chair.

You ask an interesting question. We aren't talking solely about the production of grain and oilseed, about corn, soybean, wheat, barley, whatever the commodity is. We're talking about the production of feedstock not only for the livestock industry, which is being discussed here, but for all the industrial uses.

I passed over very briefly the job creation, the wealth creation, the economic activity that go on in this country, the export dollars that come in because of the products that are created with raw material commodities that we're representing. So many jobs are created and so much wealth comes into this country because of that processing. It's not a few farmers somewhere out in the sticks who are prospering from this, it's all the rest of the people, the transportation industry, and on and on.

There seems to be this attitude that we can isolate agriculture and a few individuals somewhere out in the country really don't count. The fact is, so many people in this country depend on that activity that it has to be supported for the future, or you're going to have to import the raw material and then re-export the product. I don't think that will happen in the long term. I don't think it's viable to do it that way.

The Chair: Thanks, Dick.

Murray.

Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.): Thanks very much, Mr. Chair.

Dennis, you have just hit the nail right on the head, as far as I'm concerned. With the grain and oilseed sector in particular, the farmers are price takers. Their position for being able to be a price setter is not a good one. We're talking a lot about value-added and everything else like that, and yet the one who's producing the primary product for value-added is not at the table to set the price.

We are looking at the United States with their new proposed farm bill for 2002, which is going to put $265 billion over ten years into their farm economy. In 1999, through the FAIR act, they put in $15.2 billion. That's going to increase to $26 billion if this thing is passed. This is what we're faced with right now. They're pumping probably well over $100 billion into one sector of agriculture, grain and oilseed, in the U.S., and it has a funnel effect. It is lowering one of the major overhead costs for the dairy, the beef, the pork, chicken, sheep, brewing, flour, pasta—all that. We're faced with the quandary that we want to support the farmers, but if we do the same thing here, we're actually supporting the U.S. industries at the same time, because they're one of our biggest markets.

If you guys have a solution to this, I'd love to hear it.

Mr. Dennis Jack: I have not a response, Murray, but a question. If we don't do it that way, what is the other option? We don't like the other option. We are basically exporters. Supply management has a system that works very well for them. We don't think that will work for us. We don't see any commitment to that. So the only opportunity we have is to do it this way. There are producers who suggest we should have countervailing duties and shut off the world. But that isn't the world we live in these days.

I'm sorry it's not an answer to your question. We all live with that same quandary, but we just don't see that there's an opportunity to do it any other way than by what we have proposed.

• 1030

The Chair: Brian.

Mr. Brian Kriz: I just had a couple of comments about what might be out there in the grain and oilseed industry for farms if you leave it the same. If you let it go, if you don't have more involvement in the grain and oilseed sector, you're going to see bigger farms, you're going to see fewer farmers. You're going to see more change in rural Saskatchewan, rural Manitoba, rural Alberta. You're going to see disruption, because that will have to happen. You can't lose equity year after year and keep everyone happy. Those communities are already suffering and they're already having those problems.

When you think about those kinds of issues, you also see the need for capital. If we're going to have new environmental regulation—and we see it right now in pesticides—you might need to have more containment on the farms, buildings that have buffer areas, more concrete where your fuel is stored, and those kind of things. We see those regulations coming, if you look around the world, if you look into Europe. It's the same thing with the way we handle manure and where that can sit in storage. Those costs are going to be forced upon farm operations because of regulation. We see that coming. We don't see the capital there to do it.

The less profit you have on any particular farm, the more problems you're going to have environmentally, because you need capital to be a good steward. Farmers will look after private property, that's proven, but not if they don't have the capital. Given things that happen out there with depression and with farm income problems, you're not going to have the stewardship, you're not going to have the healthy outlook to the future if you don't think there's a future.

So those are issues we are facing, and you have heard a lot about them. By doing nothing, you're going to have a different industry, and it's going to be big farms.

Mr. Murray Calder: In fact, Brian, I think that is going to start by 2010, because if you take a look right now, the national average for a farmer is 58 years. By 2010 that generation is starting to look at leaving the farm. If there isn't a generation behind that to replace them, it is just going to accelerate that much more. I'm convinced that there's always going to be food grown on the land. My concern is, who's growing it? If it is a multinational that's growing it, is it Canadian-owned? That's the next thing.

The Chair: Thanks, Murray.

I'll go now to Rick.

Mr. Rick Borotsik (Brandon—Souris, PC): Thank you, Mr. Chairman.

You touched on the biotechnology and the improvements with respect to the types of products with corn and with soybean, and I think that's the future, but we're not going to go there. We could take all day on it, and I have three other questions I want to ask you.

One of them is tied into Murray's question. We had academics sitting in your chair a couple of days ago—it's quite a divergence from those academics to this group, but we won't go there either. I don't subscribe to this, but they did put it on the table, and I want to hear your positions on it. They talked about transition programs for agriculture, they talked about exit strategies, and they talked about early retirements. That falls into what Murray said about the average age of farmers.

Have you thought about that in your organizations? Is there any policy you see perhaps heading in that direction? If you haven't thought about it, are you going to think about it?

Mr. Kevin Muxlow: All I want to say is, that's an option to be considered. It's a shift in public policy. That's why you folks are here, to make that shift. I would not want to build an exit strategy on false pretences. If you're undertaking an exit strategy that says “Our industry can't compete and we're kind of giving up, so we'll take this exit strategy approach”, that's a problem, I think. I would rather see you say “We're going to implement changes that may provide more value-added opportunities in the prairies for growers”.

Mr. Rick Borotsik: What they said, just to set some background, was not what you just said. What they meant was that the younger farmer could come in behind those who were exiting, and there would be a public policy program to assist the younger ones coming in behind. As Murray said, the land is going to be farmed, but who's going to farm it? That's where they were heading. I guess the question is, have you looked at it at all?

Mr. Liam McCreery: Very directly, no, our organization hasn't looked at transition strategies. But as a personal comment, I think we should be looking at keeping a progressive, strong industry viable, not saying, let's get the next generation into a poor industry.

Mr. Rick Borotsik: Good point.

Terry, I have to keep going fast on this, because I don't get as much time as some others.

Mr. Terry Daynard: We'd prefer to spend our energies trying to figure out how to renovate this building to meet the 21st century economy, rather than who's going to shut the light switch off.

Mr. Rick Borotsik: Okay.

I have another question, and help me with this one. I believe the corn producers' brief said:

The fact that some provinces have chosen to provide support at levels above the 60:40 federal:provincial ratio reflects a failure by Ottawa to provide leadership on this issue,

—and here's where I have a problem—

rather than an agreement that the international trade-and-subsidy-induced income problems are the primary responsibility of provinces.

Is that where you're heading, that the provinces are responsible?

• 1035

I have two questions here, for all of you. The 60:40 split is something that's evolved and has maybe been taken out of the air. The United States and the Europeans do not have a provincial contribution to their subsidy programs.

First of all, do you feel the federal government is right in its assumption that the provinces should be part of this? Second, is the 60:40 split the right one, and why did the corn producers suggest that perhaps it's the primary responsibility of the provinces?

Mr. Terry Daynard: The point we're picking up is that provinces are moving to take the lead on this. The most notable one is Quebec.

Mr. Rick Borotsik: Absolutely.

Mr. Terry Daynard: Look around Canada and see where are the most contented grain and oilseed farmers. Look at where the youngest grain and oilseed farmers are—Quebec.

Mr. Rick Borotsik: Alberta's not doing a bad job, either.

Mr. Terry Daynard: I'm coming to Alberta. Quebec has taken the lead, and in essence what comes from Ottawa tends to be supportive of the Quebec programs. Alberta's going the same way. Ontario's thinking about going the same way.

Mr. Rick Borotsik: Is the 60:40 split the right answer? Don't forget, we're talking about policy into the future.

Mr. Terry Daynard: Yes, 60:40 would be the right answer if the total amount of money is high enough, but the provinces are saying is there's not enough federal money in there. There's a serious problem, so we have to address it, but it has major problems, not only—

Mr. Rick Borotsik: Terry, I don't want to cut you off, but I want to hear Brian's position and Liam's, if you don't mind.

Mr. Terry Daynard: But I think the real key issue would be, is this a national agricultural approach, or are we ten different individual agricultural policies? That's the problem.

Mr. Rick Borotsik: Good point, and that's the policy we should be setting.

Brian.

Mr. Brian Kriz: Would you ask your question again?

Mr. Rick Borotsik: It's about the 60:40 split. First of all, as I said, the Americans and Europeans don't have the responsibility at the state level or provincial level that we have. The federal government has said 40% of the problem is the provinces'. Do you agree with that? Is 60:40 the right number? Should there be more of a federal contribution?

Mr. Brian Kriz: The 60:40 works in a “have” province like Alberta. It doesn't work very well in Saskatchewan. That's just the reality.

Mr. Rick Borotsik: Is the policy that we should be looking at the continuation of a 60:40 split the right policy?

Mr. Brian Kriz: Figure out whose responsibility it is for policy.

Mr. Rick Borotsik: Thank you. I'm heading there.

Kevin.

Mr. Kevin Muxlow: Let's make a decision on what the policy is and we'll figure out how to fund it. Get people around the table. It's that simple.

Mr. Rick Borotsik: Are you happy with what's there now?

Mr. Kevin Muxlow: As Brian said, in the have provinces it works fine. In Saskatchewan they're not too happy. We got a letter from the Saskatchewan minister who said—

Mr. Rick Borotsik: Or Manitoba.

Mr. Kevin Muxlow: Or Manitoba, yes. But where the split is, let's get down to the point of saying, yes, this is the policy. This is what it's going to cost. We'll figure it out.

Mr. Rick Borotsik: Liam, I have one more question for you. It has nothing to do—

The Chair: Mr. Borotsik, you've had five-and-a-half minutes.

Rose-Marie.

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.): I, too, welcome all the presenters, and I'm very fortunate that in my riding of Lambton—Kent—Middlesex I have very astute leaders, some of whom are at the table this morning. I always appreciate their kind input. Sometimes they're a little more vocal than others, but I'm glad they're here this morning albeit.

I've expressed to Kevin before that I certainly appreciate your presence in Ottawa. I think it's a valuable asset, and it'll only continue to grow, I'm sure.

One of the presenters, Liam of the Ontario Soybean Growers, stated that the goals for the WTO negotiators should include accelerated reductions in domestic subsidies with the U.S. and the EU, of course. To each presenter, can you tell us what approach you want the negotiators here in Canada to follow in the next negotiations? What are we supposed to tell them? How do you get rid of your subsidies? What direction would you give our negotiators?

Mr. Liam McCreery: To aggressively pursue reductions, and they have to negotiate those with other countries.

Mrs. Rose-Marie Ur: Okay, but examples—that's a statement. What is the direction? What would be something... you go and take this to the table?

Mr. Liam McCreery: Start with zero. Do you mean what strategy do you want us...

Mrs. Rose-Marie Ur: Exactly.

Mr. Liam McCreery: I think we should be promoting freer trade. The negotiators will have to come up with the best deal they can, but definitely we'd say moving toward zero. The ultimate goal is to have zero dollars in distorting subsidies.

Mrs. Rose-Marie Ur: But you have to provide a mechanism for them to go in there.

Do you understand what I'm saying, Kevin?

Mr. Kevin Muxlow: There's a couple of things. Are you thinking of negotiating strategy? I would hope that the Canadian government would go to the table with the maximum leverage to get the most access, the most reduction in subsidies globally, for Canadian grain and oilseed.

Mrs. Rose-Marie Ur: But the direction has to come from people like you.

• 1040

Mr. Kevin Muxlow: Absolutely. We've been giving it fairly clearly. The three objectives of the Grain Growers of Canada are that you eliminate subsidies, eliminate export subsidies, and eliminate access barriers. It's that simple.

So we would like to see the Canadian government bring maximum leverage to the table in terms of achieving those objectives. How? It's just my personal opinion, but the Cairns Group is proposing downpayment-type approaches where you'd lump sum a payment, get rid of the export subsidies by 50%, then the next 50% you do over five years at 10% a year. That would be great.

Mrs. Rose-Marie Ur: That's what I'm looking for.

Dennis.

Mr. Dennis Jack: You'll have to pardon me, but on a more folksy, homespun, down-home approach to this, we're talking about a drainage project in the swamp. We really believe that drainage is the way to go. But we have this little problem with alligators right now, so we can't lose sight of them.

In the long term, reduce the export subsidies, the trade distorting mechanisms that are there. But in the short term... How can I put this? In the long term I'm sure we can survive, but we have to survive in the short term.

While we have this goal of reducing all the subsidies, bear in mind that the producers still have to pay their bills and keep that economic empire rolling for the country.

Mrs. Rose-Marie Ur: I had an interesting proposal given to me a couple of weeks ago by some farmers regarding safety nets, regarding market revenue, where market revenue pays, I think, 80% for grain growers. Regarding safety net programs, they said, you have the market revenue there as part of the safety net envelope, so why wouldn't the government then take, whether it be 70% or 80%, or whether it be the 20% or 30% that's not covered, and make that the disaster program so there would be 100% payment?

Do you see the logistics in that, or the workability?

Mr. Dennis Jack: As a grain grower perhaps I can respond. We're thankful that there is a disaster program, but it's truly an accurate name for the program for grain and oilseed producers. Our price has been on a decline long enough that the disaster program is far more effective for those in the livestock industry than it is for those of us in the grain industry.

My personal perception is that the disaster program isn't suited to the grain industry.

Mrs. Rose-Marie Ur: But with that case scenario, it would be.

Mr. Dennis Jack: It would take a fair bit to improve the program.

As I said, we thank everyone for the support of the disaster program, but it is truly accurately named.

The Chair: Thank you, Rose-Marie.

I'm going to go now to David. I'm trying to get everybody in. You have about five minutes, but I want to get everybody in before 11 o'clock.

David.

Mr. David Anderson (Cypress Hills—Grasslands, Canadian Alliance): I wanted to come back a bit to the issue of internal subsidies. Rick had brought that up and we talked about it a bit.

Quebec has chosen to put money provincially into their program through ASRA. They're putting billions of dollars into that. I'm wondering, and I direct this to Mr. Daynard, who seemed to have some awareness of numbers, do you have any idea what it would cost nationally to put a cost of production program into grain and oilseed?

Mr. Terry Daynard: We spent a lot time looking at the Quebec program. As I say, we're separated from Quebec by about half a mile across the river. Some of our members are francophone as well. We do have excellent communication between us and the Fédération des producteurs de cultures commerciales du Québec and we compare notes.

It hasn't gone unnoticed that the place where the grain farmers in Canada seem to be the most satisfied with the programs is Quebec, and its cost of production. I would say, in defence of Quebec, there's a myth that they're supported at the full cost of production. In practice they're not. They pay a third of the cost of it.

If you look into the formula, how it's calculated, there are some things in there that are well below the cost of production.

Mr. David Anderson: But what would it cost nationally?

Mr. Terry Daynard: In terms of the cost of doing that, I can't give you the number. I'll tell you that we're in the process right at the moment of sorting out what that would cost for Ontario and where that might come from, doing that approach. I would say the rest of Canada would be fools not to take a look at that.

Ten years ago I wasn't there. I was supportive of something linked to long-term market prices. But now we have 15 years of long-term market prices affected by the 1985 farm bill and everything evolved. Those aren't market prices. Those are U.S. government-set prices.

• 1045

Mr. David Anderson: My understanding of this, though, is that the cost would be absolutely prohibitive, particularly in western Canada. With that comes a corresponding loss of control over the operation. When I've mentioned this to people from my area of the world, they want nothing to do with it. They've watched the loss of control that American farmers have across the border from us due to their farm programs. These people won't change from crops that earn $80 an acre to crops that earn $500 an acre because they'll lose their subsidy. I have lots of people who, of course, would love the money but are refusing to consider the option of giving up control of their farms.

I guess I'd like to ask some of the other people at the table what they think of that.

Mr. Terry Daynard: I'll just make one point. That doesn't happen in Quebec. There's nothing in the Quebec program that determines what somebody grows.

Mr. David Anderson: I've talked to people who have argued that point with me, but anyway, I want to hear from some of the other people.

Mr. Liam McCreery: I'd just like to clarify something, Mr. Chairman.

Rose-Marie, there is no market revenue in place right now for the 2001 crop. As Terry mentioned, we are looking at developing the son of market revenue, which I'm sure will have some sort of cost of production element, or a large cost of production element.

The Chair: Please respond quickly because you're talking time from Mr. Anderson.

Mr. Liam McCreery: Okay.

Bill.

Mr. Bill Allison: I'll just answer your question directly. We've had the same concerns—and Terry alluded to them—that it really isn't that distorting. Anything that we want to design in Ontario is not going to be structured so that you grow the crop the program says. You want market forces to do that, and you want your own decisions to do that. It's all in the matter of program design. I take your point, but we would not attempt to have anything, and we wouldn't support anything, that would have those fears within it.

Mr. David Anderson: There's market distortion built in just because the Americans are subsidizing so heavily. If you put a program in place that's going to cover cost of production, it's affected by the amount that they're selling their product into our country for as well.

Brian, did you have a comment on that?

Mr. Brian Kriz: My comment is just that I don't believe designed systems have long-term success. You show me any economy in the world that's designed in some part of it, where you set things by public process without the market. I don't see a long-term solution in that. That's really not what we're aiming for over the long term.

Mr. Dennis Jack: I'd like to respond. I can't give you a direct answer to your question, but I'd like to suggest that those of us who are here represent bona fide producers who run a business. As business people we make the best decisions we can to generate a profit for our business. Most of us, I would assume, run fairly diversified enterprises. If the appropriate market signal is there, we will grow the appropriate crop. I chose earlier on not to get into supply management. As life goes on, I sometimes have second thoughts about that.

On a personal level, we grow corn, soybean, wheat, alfalfa, sugar beets, cucumbers, peppers, peas, and white beans. We have a livestock operation. Most of the people that are here are representing an organization, but we are not just corn or soybean, or whatever. We run a diversified enterprise, and the goal of that enterprise is to generate wealth and make a profit.

Mr. David Anderson: The American subsidy program right now interferes with people's choices in doing that. Actually, I'll turn my time over, if I have any more time, to give some of these other people a chance to speak here.

The Chair: Okay, thanks.

Mark.

Mr. Mark Eyking (Sydney—Victoria, Lib.): I guess my question is coming a bit from where Howard was going. If the Wheat Board was left more voluntary, how would the dynamics change out west over four or five years? Would you see people along the border shifting that way? How would it change? Would the Wheat Board not be able to exist in itself because they would be losing a lot of potential money? How would you guys see it?

Maybe Brian can answer.

Mr. Brian Kriz: Well, the examples are there. They're there in the export of Timothy hay by producer co-op groups. They're there in the export of canola. There are really strong market examples of commodities moving without a monopoly, with the signals being clear, and the cost being passed directly to farmers for what service they want. There are so many mysteries because of monopoly. I don't think the intentions are bad with any employee at the Wheat Board. I just think the nature of the monopoly prevents some things from happening. The control they have over the entire industry, the handling industry, the storage, and the rail—those are the things that would change.

• 1050

I'm a little bit of a believer in the laissez-faire agricultural economy. We can't have that with that monopoly. Things don't just happen as they would. So to say what would happen, I'm not certain. I just know it would be different from what it is today, and today isn't that good.

Mr. Mark Eyking: My next question is, if the Canadian public or a government in power says, “Look, there's only going to be so much money that we're going to give to the grain growers”, whether it should be or shouldn't be... if they say $1 billion or $2 billion... Knowing what we know, when our negotiators go to the WTO, a lot of times they don't have a lot of negotiating power. They're the same as Australia. They're going in. They're hoping that somebody's going to do something. But let's assume things kind of go the way they're going. In Ontario especially, with soybeans and whatnot, do you see an exit from those crops? Can they survive? Or would you just see their equity dropping on the farms, and they wouldn't be buying planters and stuff like that?

Maybe Liam can answer.

Mr. Liam McCreery: Thanks for the question.

I believe we have a very viable and progressive industry. We are branching out. We are diversifying. And I think what you do, when you start to financially suffer, is you back away from making your farm top-notch. You start to lose your competitive edge. So I see a slow slide into taking a very good, competitive industry—I think the best in the world—and having it slide to something that's not as good.

In the long term, in ten years, will we be growing beans in Ontario even without subsidies or government support? Yes. Will we be the same dynamic, progressive industry that's the world leader? No. And we see ourselves not just supporting our own personal sectors, but supporting the other sectors, such as livestock and industrial use.

Bill.

Mr. Bill Allison: Perhaps I just add to that, Mark.

We're not just looking at being status quo competitive. We look at the untapped potential in the bio-based economy in the future. And if we want to be in that game, we want to be progressive, and as competitive an industry worldwide... and right now we are.

As Liam says, we might be backsliding if we don't have the competitive support from our government. But we want to look ahead and, if we do have that support, become even more competitive and grasp the opportunities of the bio-based life science economy that is coming. That's where we want to be in 10 years. This is our choice right now. We either go ahead and look forward towards that, or, as you say—I don't like to contemplate what Liam says—we just exist as we are. We'll still grow beans, but we won't be at the cutting edge, where we were.

Mr. Liam McCreery: And we really believe this has implications for all of Canadian society. We can see the soybean industry, the wheat industry, and the corn industry being able to provide services for industries that come into Canada for smaller amounts of product. We believe we can fill that service and fill that need, and we have to remain competitive and progressive to move to that life sciences goal.

Mr. Mark Eyking: That brings us to the next question. We had the two professors, I guess, from two universities, and they were saying that people are not going into a lot of these courses for on-track farm training or whatnot. And if you have this sliding of capital not being invested, you're also going to have people not getting into the industry, young people not learning, or whatnot. And I guess that brings it to the fact that if that goes down, it's going to be pretty hard to kind of bring it back up. Both will decline, I guess.

I'll leave it at that.

The Chair: I was asking our researchers a minute ago, in terms of grain in Ontario, comparing it with grain production in the west... Does anyone have the figures on that in terms of tonnage?

Yes, Terry.

Mr. Terry Daynard: I think about 80% of the tonnage of Canadian grain is in western Canada, and I think about 16% is in Ontario and about 4% in the rest of the country put together. That's roughly the number. You can get complicated and put different dollar values because it tends to be slightly different commodities and so on, but that's roughly the breakdown. We're somewhere between one-fifth and one-sixth in Ontario.

On the other hand, we have exactly the same problem and same thing as the others. It's a continental market you're looking at. It's not a Canadian market particularly.

The Chair: Marcel, a short question.

[Translation]

Mr. Marcel Gagnon: Thank you, Mr. Chairman. Thank you also to the Ontario Corn Producers' Association for looking in the direction of Quebec. It is true that we are visionaries in several areas. I would like them to tell the Minister of Justice how they do it; she could do the same thing for the Young Offenders Act. But it is not where I want to go.

• 1055

In your presentation, you are talking about Bill C-287 concerning the labeling of the GMOs. This bill is presently before Parliament and it reflects somewhat the position of my party. I would like to know what you think individually about the labeling required for genetically modified products.

[English]

Mr. Terry Daynard: I'd say the percentage of genetically modified corn and soybeans in Ontario and Quebec is identical. So it's the same situation in both provinces, and it's an individual thing. Some people are growing it; some aren't. They're not doing it because they like big chemical companies or anything. They're doing it because it makes sense on their farm and because of the advantages they have.

I think we've done a pretty good job of segregation in terms of the farm industry, the grain industry, and the Canadian regulatory industry. We've made sure that nothing that's going to Europe in direct grain or, more importantly, in food products, contains anything that's not been approved for sale into Europe.

We put a protocol in place about two or three years ago, and as far as we know there's not been a violation. Our customers are saying that their customers in Europe are happy on this. We didn't have a StarLink problem here. We actually made a point in our brief that nobody's picked up. We believe—this is a compliment to Ottawa—that you have the best regulatory system in the world in terms of handling genetically modified ingredients.

We have some major concerns. We have another group around Ottawa right at the moment here expressing concerns about efforts to dismantle it, going down to the lower levels that you have in other countries. We think that the Canadian regulatory system has given us some benefits as well. At the same time, we're committed to this technology. Between us and the industry, we have close to about $750,000 a year going into research, including money coming from the grain growers in Quebec to make fusarium-resistant corn because we know it's a serious toxicological problem.

They have a gene here in Ottawa now in Agriculture Canada that looks like it will give us resistance. We want that in our corn, and it's going to be genetically modified corn that's a superior product. We believe, when the hysteria ultimately clears on this, that we'll have a better food product to go to the world market. We'll be the only country in the world that'll be able to guarantee our corn and corn products are toxin-free.

The Chair: Please make your point very quickly, then.

Mr. Larry McCormick: Okay. Thank you, Mr. Chair. I have just a short comment to our witnesses.

Thanks for being here. I listened to you even though I sat at the back of the room, for a reason, for a bit of time. I will be going with Minister Vanclief in June to the ministers' conference. All the agriculture ministers from each province are scheduled to be there. I sat with them at Quebec City, and I've been sitting with them every opportunity I get.

The immediate is the concern. You've said so many good things about where you want to get your livelihood in the future. I do think there's some will there, but we do have to work together on it. It's very important that you're here, and I'm glad you're here.

Thank you, gentlemen, and Mr. Chair.

Mr. Howard Hilstrom: Charlie Mayer, the old agriculture minister, advocated a continental barley market. Do you think we should have a North American continental market, with agriculture products between these three countries, in all agriculture products?

The Chair: Would that be a yes or no? Our translation is disappearing in about 10 seconds.

A voice: We've already got one.

The Chair: Okay. Thank you for coming.

A voice: In Ontario you do, but we don't have time—

The Chair: We're sorry about the time constraints, but it's difficult for six people to give their answers within the five minutes that some members are allocated.

Again, thanks for coming. Hopefully we can glean some information from you that might assist us in making a future report and future decisions.

With that, we'll adjourn our meeting.