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37th PARLIAMENT, 2nd SESSION

Standing Committee on Agriculture and Agri-Food

EVIDENCE

CONTENTS

Thursday, December 5, 2002

0905

The Chair (Mr. Charles Hubbard (Miramichi, Lib.))

Mr. Howard Hilstrom (Selkirk—Interlake, Canadian Alliance)

The Chair

Mr. Yvan Loubier (Saint-Hyacinthe—Bagot, BQ)

0910

The Chair

Mr. Howard Hilstrom

Mr. Rick Borotsik (Brandon—Souris, PC)

The Chair

Mr. Rick Borotsik

The Chair

Mr. Bill Stewart (Co-Chair, Environment and Animal Care Committee, Canadian Cattlemen's Association)

The Chair

Mr. Don McCabe (Chairman, Environment Committee, Grain Growers of Canada)

The Chair

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.)

The Chair

Mrs. Rose-Marie Ur

The Chair

Mr. Bill Stewart

The Chair

Mr. Bill Stewart

0915

0920

0925

The Chair

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

0930

The Chair

Mr. Don McCabe

0935

0940

The Chair

Mr. Don McCabe

0945

The Chair

Mr. James Bruce (Canadian Policy Representative, Soil and Water Conservation Society)

0950

The Chair

Mr. Howard Hilstrom

Mr. David Anderson (Cypress Hills—Grasslands, Canadian Alliance)

0955

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.)

The Chair

Mr. Larry McCormick

Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.)

Mr. Larry McCormick

Mr. Rick Borotsik

The Chair

Mr. Larry McCormick

The Chair

Mr. David Anderson

Mr. Rick Borotsik

Mr. Larry McCormick

Mr. David Anderson

Mr. Larry McCormick

The Chair

Mr. David Anderson

Mr. Bill Stewart

Ms. Peggy Strankman (Manager, Environmental Affairs, Canadian Cattlemen's Association)

Mr. David Anderson

1000

Mr. Don McCabe

Mr. David Anderson

Mr. Bill Stewart

The Chair

Mr. Murray Calder

Mr. Don McCabe

1005

Mr. Murray Calder

Mr. Bill Stewart

Mr. James Bruce

Mr. Bill Stewart

The Chair

Mr. Don McCabe

1010

The Chair

Mr. Dick Proctor (Palliser, NDP)

Mr. James Bruce

Mr. Dick Proctor

Mr. James Bruce

Mr. Dick Proctor

Mr. James Bruce

Mr. Dick Proctor

Mr. James Bruce

1015

Mr. Dick Proctor

The Chair

Mrs. Rose-Marie Ur

Mr. Don McCabe

Mrs. Rose-Marie Ur

Ms. Peggy Strankman

Mrs. Rose-Marie Ur

Ms. Peggy Strankman

Mrs. Rose-Marie Ur

Mr. Don McCabe

Mrs. Rose-Marie Ur

1020

Mr. James Bruce

Mrs. Rose-Marie Ur

Mr. James Bruce

Mrs. Rose-Marie Ur

Mr. James Bruce

Mrs. Rose-Marie Ur

Mr. Dennis Jack

Mr. Murray Calder

Mrs. Rose-Marie Ur

Mr. Dennis Jack

The Chair

Mr. Rick Borotsik

Mr. Don McCabe

Mr. Rick Borotsik

Ms. Peggy Strankman

Mr. Rick Borotsik

Mr. Dennis Jack

Mr. Rick Borotsik

1025

Mr. Don McCabe

Mr. Rick Borotsik

Mr. Don McCabe

Mr. Rick Borotsik

Mr. Don McCabe

Mr. Rick Borotsik

Mr. James Bruce

Mr. Rick Borotsik

Mr. James Bruce

Mr. Rick Borotsik

Mr. James Bruce

1030

The Chair

Mr. Dennis Jack

The Chair

Mr. Dennis Jack

The Chair

Mr. James Bruce

The Chair

1035

Mr. Howard Hilstrom

Mr. Bill Stewart

Mr. Howard Hilstrom

Mr. Dennis Jack

Mr. Howard Hilstrom

Mr. Dennis Jack

Mr. Howard Hilstrom

Mr. James Bruce

Mr. Howard Hilstrom

1040

Mr. Dennis Jack

Mr. Howard Hilstrom

The Chair

Mr. Howard Hilstrom

Mr. Bill Stewart

The Chair

Mr. James Bruce

The Chair

Mr. Don McCabe

The Chair

Mr. Don Kenny (Member, Executive Committee, Board of Directors, Grain Growers of Canada)

1045

The Chair

Mr. David Anderson

Mr. Don McCabe

The Chair

Mr. Murray Calder

The Chair

Mr. Howard Hilstrom

Mr. Don Kenny

Mr. Howard Hilstrom

Mr. Don Kenny

Mr. Howard Hilstrom

Mr. Don Kenny

Mr. Larry McCormick

Mr. Howard Hilstrom

The Chair

Mr. David Anderson

Mr. Don McCabe

1050

Mr. David Anderson

The Chair

Mr. Larry McCormick

Mr. David Anderson

Mr. Don McCabe

Mr. David Anderson

The Chair

Mr. Larry McCormick

Mr. Don McCabe

The Chair

Mr. James Bruce

1055

Mr. Larry McCormick

The Chair

Mr. David Anderson

The Chair

Mr. Howard Hilstrom

The Chair

Mr. Larry McCormick

The Chair

CANADA

Standing Committee on Agriculture and Agri-Food

NUMBER 008

2nd SESSION

37th PARLIAMENT

EVIDENCE

Thursday, December 5, 2002

[Recorded by Electronic Apparatus]

¿ (0905)

[English]

The Chair (Mr. Charles Hubbard (Miramichi, Lib.)): Good morning, everyone. My apologies for being a little bit late. I would like to call the meeting to order, subject to Standing Order 108(2). Today we're looking further at the study of the impact of the Kyoto Protocol on the agricultural sector.

Before we do that, for committee members, if we could just take a minute, I was asked last week about the future role of the committee and very briefly identified three areas that might be of interest. With that, of course, there is the liaison committee, which looks at programs, costs, and so forth.

When we come back in January, we will have only about two months before the start of the next fiscal year, so I hope you'll agree, at least in principle, to a request for a study in three areas, which I'll be presenting to the liaison committee. The first is a topic we've brought forward here on a number of occasions, in dealing with the Kyoto Protocol and climate change. Drought was an issue in the original discussions we had this fall, so we're asking for a budget to bring witnesses before the committee to look at the situation of drought.

The second topic, which comes back occasionally to our committee, is that we'd like to apply for further study on GMOs. It's an issue we dealt with this past year, and we need a budget for witnesses.

On the third area, we've had a number of interventions here on the veterinarian colleges. If we don't see some results within the ministry in the very near future, a small component of our committee should probably visit those four universities and hear from them first-hand. In other words, we want to make sure an important point for our committee is the future success of the universities and the veterinarian colleges and their accreditation as world and North American leaders in those areas.

So with your forbearance, I'd like to have a motion so I can go to liaison committee today to present a request for our financial needs, in looking at those three issues.

Howard.

Mr. Howard Hilstrom (Selkirk—Interlake, Canadian Alliance): On the last one about accreditation of the veterinary colleges, I'm well aware of the issue. Why are we studying it?

The Chair: It's not to study it, necessarily, but to find out the situation first-hand, unless something of definite achievement happens in the next few weeks. I understand we're looking at a December deadline, and we are in December now.

[Translation]

Mr. Yvan Loubier (Saint-Hyacinthe—Bagot, BQ): Mr. Chairman, I want to recall a few facts concerning the state of veterinarian colleges in Canada. I know you are aware of the issue but you are talking about the accreditation of the four veterinarian colleges. Actually, the one that is most affected today since it has completely lost its accreditation is the Saint-Hyacinthe college. The other one affected was Guelph two weeks ago, but it has regained its accreditation after an investment from the Federal Government. I want to remind you of next Monday’s deadline.

The Dean of the veterinarian medicine Faculty of Saint-Hyacinthe must present Monday December 9th a report to the American Association to let it know whether it has received a commitment from the Federal Government that will enable it to modernize its infrastructure. If he is not able to secure such a commitment from the federal Government, the veterinarian college of Saint-Hyacinthe will be monitored by the American association. Next August, representative from the association will visit the installations of the college. If they find out that no investments were made to modernize the infrastructure then the school will lose its accreditation completely.

Two things can happen that make this situation urgent. The message sent as early as next week to potential students for next year is as follows: The University might lose its accreditation and if the students want to be recognized as veterinarians at the end of their studies they will have to take an exam in the remaining accredited schools – the University of Guelph, the University of Prince Edward Island and the University of Saskatoon. It will not give the students much to study at Saint-Hyacinthe because they will not have an accreditation at the end. Yet this accreditation is necessary even to work for the Federal Government.

Secondly, and this is my last point Mr. Chairman, I want to make you fully aware that if the school loses its accreditation next August it will take two year before these modernization investments can be made.

¿ (0910)

[English]

The Chair: Thank you, Mr. Loubier.

I don't want debate on this. If we can't have concurrence right off, because we have witnesses here, we'll have to postpone this until a later meeting. Is there no concurrence on any of these?

Mr. Howard Hilstrom: There's no concurrence on this veterinary thing. We've made a recommendation to the minister. The provincial governments of the colleges concerned have made presentations to the minister. It's on the minister's desk. It's on the provincial ministers' desks. If they can't handle it, our giving them a recommendation will do absolutely nothing. The facts are clear. We already put a report in.

Mr. Rick Borotsik (Brandon—Souris, PC): On a point of order, Mr. Chairman, you said you didn't want debate. I would prefer to hear the witnesses. If we can carry this on at some other time, we should be doing that.

The Chair: The significance of this, Rick, is that if we don't put in for some financial support for meetings in the next period of time, we'll just have no money to do anything.

Mr. Rick Borotsik: Okay. I think you've had concurrence on the other two issues. The one you haven't had was on the veterinarian colleges. I would be prepared to stay after to debate it, but I'd like to hear the witnesses.

The Chair: Can we concur on the first two?

Some hon. members: Agreed.

The Chair: Thank you very much.

We would like to welcome to our committee the Canadian Cattlemen's Association and the Grain Growers of Canada. We're looking at the Kyoto Protocol.

Mr. Stewart, are you willing to lead off this morning? Is there only one presenter?

Mr. Bill Stewart (Co-Chair, Environment and Animal Care Committee, Canadian Cattlemen's Association): Yes, I'm With the Canadian Cattlemen's Association.

The Chair: We'll have a short presentation.

Don, are you presenting on behalf of the Grain Growers of Canada?

Mr. Don McCabe (Chairman, Environment Committee, Grain Growers of Canada): Yes.

The Chair: So we'll hear both presentations. Is that what the committee agrees with? Then we'll have a period of questions.

Rose-Marie.

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.): Are we not listening to all the presenters, including the Ontario Corn Producers' Association and the Soil and Water Conservation Society?

The Chair: Yes. Do you want to do them all together, or just two?

Mrs. Rose-Marie Ur: You usually do it that way.

The Chair: Then we'll do all of them. Mr. Bruce will be your third presenter.

So you'll have 10 minutes each, and then we'll have our rounds of questioning.

Mr. Stewart, will you introduce your colleague? We'll hear from you first.

Mr. Bill Stewart: It's my pleasure to introduce Peggy Strankman. I actually introduced her this morning to someone in the room as my new girlfriend, but that didn't go over so well. She does all the environmental work for the Canadian Cattlemen's Association. I'm sure a lot of you know her; she gets around.

Now I'm in trouble.

The Chair: We'll have to be careful on this. This is on the record, and the blues may be read.

Mr. Bill Stewart: Okay. I'll start my presentation.

Thank you for the opportunity to present the thoughts of the Canadian Cattlemen's Association regarding the political impact on the Canadian cattle industry of the ratification of the Kyoto Protocol.

First, I would like to give you an idea of the size and value of our industry. It accounted for 24% of Canadian farm income in 2001 with $7.8 billion in farm cash receipts. Export values reached a new record of $3.9 billion in 2001, up 29% from $3 billion in 2000. Sixty percent of our production was exported, making Canada the third largest exporter of beef and beef cattle in the world. We are 1% behind our second largest exporter, the United States. Fifty-one percent of our production was exported to the United States.

Cattle producers are in the business of utilizing the carbon cycle. The cattle eat the grass and forage that use the carbon dioxide in the air in the process of photosynthesis. The cattle turn a low-quality plant into a nutrient-dense, high-quality protein.

Agriculture, like other businesses, looks for ways to increase output and decrease input costs to maximize our ability to make a living. Producers are beginning to recognize that a greenhouse gas value can be attached to our management practices and that value is another of way to measure efficiency. Agriculture management practices can increase or decrease the organic carbon stored in the soil. This change in soil organic carbon results from an emission of carbon dioxide to the atmosphere for the removal, or sink, of carbon dioxide from the atmosphere.

The Canadian Cattlemen's Association has monitored this issue for several years. First it was global warming, as it was described then, and now it is climate change. The CCA has been an active participant in the discussions up to this point in time. The CCA is concerned about the high level of uncertainty regarding the impact of ratifying the Kyoto agreement.

Business dislikes uncertainty. Financial institutions dislike uncertainty. I would like to touch on some of the uncertainties.

Is climate changing? Of course it is. Climate is dynamic and is always changing, moving in warming and cooling cycles. Cattle producers deal daily with the changing weather. As a group, they are very skeptical about the whole issue of climate change. That attitude must be taken into account in any Kyoto ratification plan.

Canada's beef industry generated $7.65 billion in farm cash receipts in 2001, representing 24% of total farm cash receipts. Total world export sales reached a new record in 2001 of $3.9 billion. We are an industry that contributes a lot to the high standard of living of Canadians.

The CCA is concerned that ratifying Kyoto will have a negative effect on our competitiveness. We are already at a cost disadvantage against many of our competitors. Our major trading partners, such as the U.S., are not ratifying. Our potential competitors, such as Brazil and Australia, do not have to.

If our energy costs increase as much as 5%, the cost would come out of the average gross margin of perhaps 15% to 20%. There would be some substitute possible amongst energy sources, but it would happen over a longer term. Any relative increase in energy costs versus our principal competitors would hurt our industry.

¿ (0915)

The CCA supported the Canadian government's efforts to have carbon sinks recognized in the Kyoto accord. We are, however, concerned that the government may be putting too much emphasis on the sale of carbon credits as a method of offsetting other Kyoto costs to the industry. Some say that carbon in Canada may be worth as little as $10 per tonne. The majority of the good management practices that sequester carbon do so at a rate of less than one tonne per acre. Since it can be expected that all input costs will increase, such as fuel, natural gas, electricity, fertilizers, and feed supplements, it is questionable that there will be a net benefit to agriculture from carbon sinks.

The issue of carbon ownership must be considered. The CCA believes that carbon sinks are owned by the landowner. It is the landowner who will take on the responsibility for the management practices that will sequester the carbon.

There is an opportunity for agriculture to decrease emissions by modifying our management practices. That ability should be recognized and rewarded.

There should be a definite life to the removal of credits. This means looking at renting or releasing carbon credits related to soil sinks for some specific time period, not sold, as you would an emission reduction.

CCA believes that prior to ratification the government should work with the agriculture industry to develop the accounting rules and guidelines that would allow producers to be informed participants in a domestic carbon trading system. If indeed ratification goes ahead, the CCA will strongly encourage the government to put adequate resources in place to develop such an accounting system. A major part of that must be an extension program to inform producers on how they may participate in the system.

CCA recognizes that at this time government is not proposing to cap agriculture emissions, as is proposed for major emitting industries. However, we believe that we will take a hit as our input costs rise as a result of other industries being force to comply with Kyoto.

It appears that the government is not prepared to consider credit for early action within the agriculture sector. However, it seems that it is prepared to consider it for other industries that may be disadvantaged by the climate change action plan for Canada.

As in all other policies and programs affecting agriculture, perverse incentives must be avoided. If the government is prepared to include in the Canadian calculations the 10 megatonnes of carbon that has been stored, some consideration should be given to rewarding the producers who have used their own capital and initiative to store that carbon

The climate change action plan for Canada suggests that eight megatonnes of carbon are expected under the promotion of sinks through Action Plan 2000 and the Greencover Canada component. If the government pays a producer to seed forages, will the producer be able to claim those offsets, or will the offsets be credited to the government?

If indeed the government does decide to ratify Kyoto, the lack of in-depth understanding of the greenhouse gas implications of the total agriculture system will penalize the producers. Research money will have to be injected into our system to provide a solid scientific basis from which to advise producers. There needs to be enhanced support for research in the uncertainties and additional opportunities related to whole farm accounting, including fuel and energy use and methane and nitrous oxide emissions, and to firm up the prototype measuring and verification system developed by Canada's world-renowned agricultural soil scientists.

The oil and gas industry is a very important source of farm income on the Prairies. A yet-to-be-considered cost of Kyoto ratification may be increased rationalization within the agriculture community. Faced with increased input costs, many producers may simply decide to leave the industry.

The CCA has always expressed the willingness of cattle producers to look for ways to improve the efficiency of the industry and to conserve energy. The cattle business is a small-margin industry. Its survival has always depended on the ability to do more with less.

There is a high level of uncertainty surrounding the impact of the proposed implementation of the Kyoto Protocol on Canadian agriculture. However, what does seem clear is the ability of the Kyoto Protocol to compromise the competitiveness of the beef industry.

¿ (0920)

In conclusion, I would like to summarize our main points.

The science behind utilizing carbon storage as an effective method of...greenhouse gas emissions is sound. Since it can be expected that all input costs such as fuel, natural gas, electricity, fertilizers, and nutrient supplements to agriculture will increase, it is questionable that there will be a net benefit to agriculture from carbon sinks. Therefore, there should not be undue reliance put on the sale of carbon credit as a method of offsetting other Kyoto costs to the industry.

Carbon sinks are owned by the landowner. Carbon credits related to soil sinks should be rented or leased for some specific time period, not sold as you would an emission reduction.

The decision not to cap agriculture emissions in a regulatory regime is appropriate. Agriculture input costs will rise as a result of other industries being forced to comply with Kyoto ratification.

Credit for early action must be included in the climate change plan for Canada. Failure to do so will result in the development of a perverse incentive situation.

Agriculture should be sheltered from the impact of increased energy costs that will have a negative impact on our competitive position.

Support for research and evaluation of uncertainties and opportunities related to whole farm accounting, including fuel and energy use, methane, and nitrous oxide emissions, should be increased.

A measuring and verification system to support the carbon storage and reduce the emissions from management practices of agriculture producers should be developed that would allow producers to be informed participants in a domestic carbon trading system.

The social costs to the rural community should be considered.

I would like to thank you for this opportunity to speak on this issue.

¿ (0925)

The Chair: Thank you, Mr. Stewart.

My apologies to members and witnesses this morning. I had about five sheets of paper all in front of me at the same time. Rose-Marie did try to correct me. But if we followed the sequence of the....

Dennis, perhaps it would be okay to go to you next. It would be no problem? Good.

I'm sorry about what I did this morning, but I just had too much on my table all at once. I'm forgiven, am I?

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

Mr. Chair and ladies and gentlemen of the committee, it's my privilege and honour to be here representing the Ontario Corn Producers' Association. If you'll permit me, I would like to stray from the script you have in front of you. I'd like to personalize the message somewhat, if I could. I'll try to be brief and to the point.

I've been an active farmer and a participant in agriculture for the last 35 years, ever since I graduated from school. Over those years the world has changed considerably, as I assume it will in the future. As I am a business person, it has been my goal to survive and to profit, and to do that I've had to change the way our business operates.

I'd like to tell you at the outset that farmers are the original environmentalists. We live in the country, we breathe the air, and we drink the water. It's our goal to leave it as good as or better than it was when we started.

I'd like to tell you that our farming operation twenty-some years ago went to a form of reduced tillage. At the time, it was considered novel and risky, not the approved technique. However, reduced tillage now seems to be the norm in our society, so thence comes my concern about this entire issue. In all the discussions I hear about reducing emissions, I never hear anything about agriculture getting credit for early action. There seems to be a plan someplace, someplace in the bureaucracy, where things seem to get changed around and agriculture gets blamed for the problem but doesn't get credit for the solution.

I believe I heard my colleague Mr. McCabe talking about agriculture, saying that it causes 10% of the problem but that we can solve the problem and provide about 20% of the solution. I'd like to propose to you that this is what we can do.

I represent the Ontario corn producers, and our favourite crop is obviously corn. In Ontario we grow about 2.5 million acres of corn, and we remove the equivalent of carbon dioxide released by the burning of 9 billion litres of gasoline. We are able to convert carbon dioxide into carbon in the plant, a useful form, and it creates all that oxygen so we can breathe. Two and a half acres of corn removes 22 tonnes of carbon dioxide, but it only takes 1.3 tonnes of carbon dioxide for all our inputs. Therefore, we have a 17:1 positive impact on the entire system. We can capture carbon dioxide and use it in the manufacture of bio-products, and corn is the poster child for the bio-based economy.

In the region in Ontario I'm from, there is an ethanol plant, one of two plants in Ontario. The other plant is a much smaller one. Producers in our region deliver corn to that plant and it's made into ethanol. It's the last plant built in Canada and the only one built in Ontario in the last 10 years. I would point out that in the U.S. there are 67 ethanol plants with 11 under construction, and they've been opening one a month there. Perhaps we might take some lessons from what's going on very near to us; I don't think they're always wrong.

Voices: Oh, oh!

Mr. Dennis Jack: We need, as a result of these discussions, additional investment in bio-product research. We need additional investment in basic agricultural research to overcome our nitrous oxide problems. I believe that corn and agriculture can improve the environment, can serve this country in the long term, and do an excellent job. Please give us credit for what we do.

Thank you very much for this opportunity.

¿ (0930)

The Chair: Thank you, Dennis.

Don, perhaps we can hear from the Grain Growers next. Mr. McCabe.

Mr. Don McCabe: Thank you, Mr. Chair, and we thank the committee for the opportunity to present today on what is a very important issue for agriculture at this time.

I would like to echo the comments of Mr. Jack this morning with respect to the fact that the first environmentalists and the only environmentalists who are true to the cause still in this country are the farmers of this country. We have 68 million hectares of land out there that are worked by farmers. You are looking at the long-term future of this country when you're looking at farming, and whatever direction it's going in is probably an indicator of where your entire GDP and whatever else may be headed.

I'd like to start off this morning by introducing everyone to the Grain Growers of Canada. Within the brief you'll find that the member organizations represent every region of the country from British Columbia through to the Maritimes. It is very well known that you in this committee recognize the value of agriculture, but for the record, the value of Canada's agrifood exports reached $26.5 billion in 2001, making Canada the world's third largest agrifood exporter behind the United States and the European Union. Within that context, the Grain Growers of Canada represent 80,000 grain and oilseed farmers who play a vital part in this industry. The farmers' production at the farm gate before any processing occurs is worth $10 billion per year.

We would like to now present our views on the Kyoto accord to the committee. In general terms, who can argue against Kyoto? The goals are quite laudable. Yes, there should be a reduction of emissions. Everybody should be trying to do things better for the environment. Canadian farmers again will be part of this process.

We see along the way an opportunity for the economy to come back to an increased use of bio-products. This not only means ethanol and biodiesel fuels but fibres such as flax and wheat straw, where there are increased opportunities for use in fibreboard, and polylactic acid coming from corn starch.

The carbon credit issue could have economic benefits for farm families, while Canada has an opportunity to deal with its international commitments. However, it is of the utmost importance that we be at the table to help establish these directions.

I'd like to move on to the meat of the presentation this morning and go through a SWOT analysis, examining the strengths, weaknesses, opportunities, and threats we see as the Grain Growers of Canada with respect to this entire protocol.

First of all, the strengths. Agriculture is mentioned as 10% of the problem in the current balance of emissions that has been put out by the Government of Canada. Agriculture is very unique in its emissions in the fact that we are predominantly nitrous oxide producers, followed by methane and a very small percentage of carbon dioxide. However, I would hasten to add that this does not fully represent agriculture sector emissions, because some of our transportation costs or whatever will be picked up by other sectors that have been identified within the climate change plan to date. These are the emissions that are strictly farm-based.

However, with correct policy influence wherever this issue may lead, agriculture can be 20% of the solution. I would draw your attention to the attachments at the end of the document, tables 1 and 2. As I move through these, you may wish to just keep an eye on the appendix here.

We have broken it down for Canada in the year 2008, which is the start of the first commitment period if the Kyoto Protocol is ratified by Parliament. We feel that through carbon sequestration farmers could bring to the table 24 megatonnes of carbon dioxide equivalents per year. Livestock reductions: that does not mean that we're going to knock the herd off; it means that we're going to take care of feeding efficiencies and do a better job at what we're doing there at this time, and that can bring 5 to 7 megatonnes. Increased fertilizer efficiency: yes, that's definitely a goal. With precision ag and the opportunities that lie there, we could have 5 to 6 megatonnes. This brings 34 to 37 megatonnes of carbon dioxide equivalents per year to the table.

¿ (0935)

This is 17% to 19% of the total reductions required. If we break it down, in table 2, into the next commitment period that would come after the first of 2008 to 2012, you can see the exact breakdown of the opportunities that grain growers see there.

I have to stress that these are very rough research estimates at this point in time. I'll come back later to the discussion on the needs that we require in those areas.

Agriculture can supply both emission reduction credits and soil sink credits. This is summarized within the data of table 3. We can see the government, within its climate change draft plan, has already identified ten megatonnes of carbon dioxide sequestered under “business as usual”. They also have a thing called “business as usual” for sinks.

As my colleague Mr. Jack pointed out, nothing is business as usual in the farming community anymore. It's really very difficult to switch to a no-till management system.

I'm not impressed with the term “business as usual” at this point in time. I do want to emphasize this is an opportunity for agriculture to compete or help in the area of sinks. Emission reduction credits come naturally with that, because with no-till, you're using less fuel out there. Less fuel is the form of the emission reduction that occurs.

There are weaknesses that are prevalent because of what could be done here with the ratification of the Kyoto Protocol. You're very well aware of the drought situations that have occurred. Of more importance to the agricultural sector, and the long-term viability of it, is the economic situation we find ourselves in due to foreign competition and a lack of will of our own governments to deal with the WTO talks.

There is a lack of research in basic agriculture due to the cutbacks that have occurred. Canada, in the early 1990s, was a leader in soil science activities and soil science opportunities. Now we're suddenly inventing a national land-water information system under an APF because we didn't have enough foresight to hang on to what was a world leading capability before. We are now scrambling to find the experts to fill the voids.

Opportunities, though, do exist within this. There are opportunities that cannot be ignored. Carbon sequestration will give us greater organic matter levels in our soils, with better nutrient management methodology, especially in the area of nitrogen, which will end up in a decrease of nitrous oxide losses. I have to stress that it's 310 times the power of a carbon dioxide molecule. It's very important to find opportunities where we will end up with better-quality Canadian lands as a result.

There are value-added opportunities for rural development leading to world-class leadership in bio-products. Again, as Mr. Jack alluded to in his discussion with you this morning, the ethanol industry is alive and well in the U.S. and burgeoning. We have choices to make in this country as to whether we want to be an importer of value-added goods out of agricultural products or whether we want to take leadership with the opportunities that exist within our borders.

I had the opportunity to travel down to Blair, Nebraska, to see a plant open. At Blair, Nebraska, there's a Cargill location that is a major grinder of corn. At this plant, they've now opened the first world-class-scale polylactic acid plant for corn. At the opening ceremonies that were held in Omaha, Nebraska, the senator of Nebraska who represented that region was presented with a duvet by the CEO of the Cargill-Dow plant.

I wish to note these words, on the record, for the opportunities that exist for the future. Not to quote him exactly, but it went along the lines of something to this effect: “Senator, nine months ago, over the great state of Nebraska floated a carbon dioxide molecule. It was captured on the world's behalf and put into a corn plant. We converted it into polylactic acid and today, Senator, we give you a duvet made of the same polylactic acid, capturing that carbon dioxide and improving the world's opportunities for years yet to come.”

Canada cannot afford to sit back and wait for someone else to take the opportunities that exist for us.

We will now move on to troubles and concerns.

¿ (0940)

Ownership of carbon: Our cattlemen friends here have expressed to you exceptionally well this morning the issues that need to be addressed. Last time I checked, I'm paying the property taxes. They don't always get done on time but they're still being paid. Therefore, the ownership of carbon is mine. I am the landowner. That does not mean the farmer, I have to stress; it means the landowner, because farmers may be renting or share-cropping. It will be the landowners' responsibility to make sure they know what is occurring on their own land.

Second, the credit for early action: I refer back to table 3 again, where we have 30 megatonnes of carbon dioxide equivalent in business-as-usual sinks toward the Kyoto target. I've already raised my concerns over this, as not business as usual. This has taken innovation--and usually a bit of snickering at the coffee shop--for you to overcome what you had to do to get the job done and to show leadership to make the bottom line still work.

I'd also like to point out that in the most recent Federal-Provincial-Territorial Framework Agreement on Agricultural and Agri-Food Policy for the Twenty-First Century, under annex 1, clause 2.5 reads:

Average annual rate of carbon accumulation in soils. The equivalent baseline rate in 2000 was approximately zero kg C/ha (i.e. equilibrium conditions);

In other words, the rate of intake was equal to the rate of respiration out.

I have some grave concerns with this statement. The aforementioned statement would therefore appear to negate soils as carbon sinks if we can define at any point in time that it's zero when we're not actually measuring. Secondly, it's leading toward the re-establishment of a baseline for Canadian farmers from 1990, which the Kyoto Protocol has established, to the year 2000. If we go to the September 2002 data that's been published by Environment Canada, we will note that in 1990 there was 7.3 megatonnes of carbon dioxide emitted--this is given to you in table 5--and by the year 2000 we're down to a negative 0.2 situation.

If I were to assume a constant baseline of 7.3 from 1990 forward and then find the differences that lie in between, that means there's approximately 37.2 megatonnes of carbon dioxide of possible emission reductions that are being lost to Canadian producers.

I would add to that the 10 megatonnes that somebody pointed out to this committee on Tuesday the federal government thinks it owns through a green cover program. We have 30 megatonnes more that are now deemed on business-as-usual sinks. The last time I checked, that added up to about 77.2 megatonnes of carbon dioxide. At $10 per tonne, somebody owes Canadian producers $772 million, and I'm waiting for the cheque. It's Christmas.

The Chair: Don, could I make a comment? You're over time almost 13 minutes. Could you conclude, briefly? Hopefully, the cheque is in the mail. I don't know.

Mr. Don McCabe: I will endeavour to clear this up as quickly as possible, Chair, and I apologize for the length of this discussion. However, as you can tell, these are very important matters to Canadian producers.

With that in mind, I would point out that under no circumstances should the Kyoto Protocol be wrapped into an agricultural policy framework agreement when this is a separate entity and should be dealt with as such. There is not enough money within the agricultural policy framework to address what's needed there right now, but we're already seeing measures coming together here, and if we don't take hold of our own future with the need of research in bio-products and address the safety net void that's out there as a separate entity, we're not going to be able to handle the Kyoto Protocol.

At this time I would summarize by saying that the goals of the Kyoto Protocol are extremely laudable. However, due to the lack of strong economic modelling or inference of anything to give producers a sense of commitment or strong feeling toward the opportunities that exist, we cannot support ratification from the Grain Growers of Canada.

Thank you.

¿ (0945)

The Chair: Thanks, Don. We can go further with you as we have questions.

From the Soil and Water Conservation Society, we have Dr. Bruce, Canadian policy representative.

Dr. Bruce.

Mr. James Bruce (Canadian Policy Representative, Soil and Water Conservation Society): Thank you, Mr. Chairman.

The Soil and Water Conservation Society is a North American professional society organization and has about 9,000 members with chapters in most provinces of Canada. In the very short time available, I'd like to try to cover briefly two issues. One is the potential impact of climate change and the actual impacts of climate change on Canadian agriculture, and two, the potential for the agricultural sector to contribute to meeting climate change targets.

The good news is that warming, which is intense over Canada, especially in the winter--more than one degree Celsius per decade over much of the country--and in spring, but not so much in fall, as you may have noticed outside, will result in longer growing seasons with more warmth, as we have been seeing in the past thirty years. But the bad news is that increased evaporation but not much change in annual precipitation, rain and snow, means less stream flow and less soil moisture on average across the country.

I have a map here in which the trends in river flow across the country are plotted. The red dots are places where the flow has declined across Canada, and the blue dots are where it has increased. The blue dots are all in the north. The agricultural region of the country all has red dots; that is, stream flow has been declining in the last thirty years and the projections are that it's going to continue to decline. That also applies, of course, to soil moisture.

Secondly, there are two other pieces of bad news. Short-duration, heavy rainfalls are on the increase, especially in Ontario and Quebec and in the United States. This will cause more soil erosion and washing of pollutants from farms and streets into water systems. In the United States, the Natural Resources Conservation Service of the Department of Agriculture is finding that its design criteria for erosion control, which were based on rain intensities up to the 1960s, are now hopelessly inadequate to cope with the much higher-intensity rainfalls more frequently found in the 1990s.

Third, it has now been conclusively shown that more intense winter storms have been occurring since the 1960s, and this is projected to continue.

So what would the Kyoto target achievement mean to the rate of change of the climate, which we have been experiencing and which will move into the future? The effect, if countries all met their greenhouse gas emission targets, would be to postpone the worst effects of climate change by about a decade, giving us a little more time to adapt, but Kyoto is clearly only a first step on a path towards stabilizing global emissions and climate.

Canada's emission reductions alone, as many people have said, will have no effect, or very little effect, on the farming community in Canada. But if most industrialized countries of the world, except maybe the United States, act together, then there will be a positive effect, and ratification by Canada is critical to getting other players on board, other countries. The U.S.A. is often thought of as doing nothing, but many states have programs or laws promoting renewable energy, including ethanol as a fuel and energy efficiency measures.

What role can the agricultural community play? First of all--and we've heard from Dennis and Don about this--there is the replacement of fossil fuels with bio-fuels. Ethanol from non-edible parts of corn and wheat is perhaps the most important bio-fuel being considered in Canada's proposed action plan, which calls for 10% ethanol blending in up to 35% of gasoline. If this is done by regulation or by substantial incentives, then the plants that will be needed to produce that ethanol will certainly be built, and you've heard already about the number of plants already in the United States. The United States has a 23-cent-a-litre tax break for ethanol. In Canada it's 10 cents. Europeans have a regulation pending that 6% of all fuels must be from bio-sources by 2010.

¿ (0950)

Another aspect is soil sequestration of carbon, and we've heard about that too. In the draft Canada plan some 36 megatonnes of carbon sinks are expected from soils and agriculture, and from afforestation and forest management. It's about 15% of our Kyoto target. The techniques for achieving this are already being practised by a number of progressive farmers. I agree entirely with my colleagues that there should be ownership of credit by the landowners and credit for early action for those farmers who have acted.

This can become much more widespread. The Soil and Water Conservation Society did some work earlier on that suggested that 10% to 15% of North American Kyoto targets could be met by agricultural soil sinks and set-aside lands.

The Canada plan indicates that farmers can be compensated by companies that need to buy credit. This is beginning to happen in North America. There have been purchase of credits from farmers in the mid-west of the United States. Prices are low, just a few dollars per tonne, but this will increase probably up toward $10 a tonne if there are caps or targets put in place for various industry groups. Farmers will not get rich on this, but it could help.

The global picture is even more positive. If all the countries of the world were to restore degraded land and get more of the carbon out of the atmosphere and back into the soil where it belongs, we would see a big increase in fertility and food security in developing countries around the world.

Non-CO₂ greenhouse gases come rather significantly from agriculture, methane, and nitrous oxide. These are not specifically targeted by the Canadian draft plan; however, adoption of environmental farm plans and nutrient management plans have been shown to save money for farmers and cattlemen and to reduce emissions from nitrogenous fertilizers and other sources.

Finally--and we've heard some of this today--some farmers I have talked to are worried about the extra cost of fuel and fertilizers to farms. There are estimates of the increased costs in the Canada plan that are based on economic modelling efforts. You may argue with them, that they're a little high or a little low, but what they say is that the increased cost estimates for conventional and heavy crude oil are less than one-tenth of 1% of the cost of production; and for oil sands, about three-tenths of 1% of the cost of production. It seems to me that if somebody turns around and charges farmers more and blames it on Kyoto, they are simply ripping you off.

In short, the agricultural community has much to gain, I believe, from ratification of the Kyoto Protocol followed by rapid action to implement a national plan of energy efficiency, renewable energy use, and increasing carbon sinks.

Thank you.

The Chair: Thank you very much.

Howard, will we start...?

Mr. Howard Hilstrom: I'd like to defer to my main critic on Kyoto here.

Mr. David Anderson (Cypress Hills—Grasslands, Canadian Alliance): I'd like to thank you for coming today. They were very interesting presentations, for the most part.

The other day we had a deputy minister for the Department of Agriculture here who told us they have not done any substantive cost-benefit analysis of Kyoto's effect on agriculture. I guess when I left here I was wondering why that was. First of all, I was thinking it was neglect. They had just neglected their duty. I actually realized--

¿ (0955)

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): I have a point of order, Mr. Chair. I'm not sure whether you accept this as a point of order, but certainly an excellent member of our standing committee is doing the questioning now. I just want to point out, Mr. Chair, that the person who said they had done no research was speaking on behalf of his department, which I realize it is, and not on behalf of Agriculture and Agri-Food Canada, which had done considerably costing.

Thank you, Mr. Chair.

The Chair: I'm not sure I'm clear on your point. His department?

Mr. Larry McCormick: Can I clarify, Mr. Chair? His part of the Agriculture and Agri-Food Canada.

Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.): His division.

Mr. Larry McCormick: Yes, his division. Thank you for the right word. I just thought I would clarify that so it would be fair for all.

Mr. Rick Borotsik: Perhaps we could get them to give us the cost-benefit analysis that--

The Chair: That would be a great idea.

Mr. Larry McCormick: That's a great idea. Thank you, Mr. Chair.

The Chair: It won't be taken from your time, David.

Mr. David Anderson: This just substantiates my point. The head of the research bureau says they haven't done the work. Mr. McCormick comes back and says work has been done somewhere, but they won't release it to the public. We can't get access to it, so I'm--

Mr. Rick Borotsik: —[Editor's note: inaudible] —on the main estimates on gun control too.

Mr. Larry McCormick: I won't go there either.

Mr. David Anderson: We've spent $1 billion on Kyoto--

Mr. Larry McCormick: We didn't start it. Come on. I don't care whether it gets out of the room or not, but we didn't start it, my friend.

A voice: Remember Bill C-17?

Mr. Larry McCormick: Bill C-17--we don't remember that.

The Chair: David, can we start again?

Mr. David Anderson: Okay, we're talking about hot air today, apparently.

We've spent $1 billion on Kyoto already. Hopefully, it won't be 500 times that.

I have a question for Mr. Stewart, and some of the others can respond to this as well. We've heard that agriculture is 10% of the problem. They're giving it credit for 10 megatonnes so far, but they're saying 60% of the further problem is with the animals. When we asked the research department of Ag and Agri-Food the other day what their solution to that situation was, they suggested that ruminant management would be their primary focus.

I'm just wondering if you have any idea how this is going to affect the livestock producers. What can we do to accommodate the fact that they seem to be blaming livestock producers for a big part of the problem?

Mr. Bill Stewart: I'll answer part of that, and with your permission, Peggy can answer the other part.

I know a lot of work is being done in the livestock sector, as you say, with the feed conversions and different types of feed. There have been good results in the decrease in greenhouse gases.

Am I right, Peggy? I don't want to say anything that's wrong, but this is what I've been told. Peggy has more technical information on this, so I will let her answer.

Ms. Peggy Strankman (Manager, Environmental Affairs, Canadian Cattlemen's Association): Thanks, Bill.

Just as a natural course of action in the cattle business, we've been working on diets for our cattle for a long time. Now we're learning to put greenhouse gas values on that. In the last ten years, our producers have become much more efficient in feeding their cattle. In dairy and hogs, they are also moving in that direction. There's a question about how far we can go with that and what we do when we reach the ceiling.

We're doing some research now on the efficiencies of grazing management. There's a lot we don't know about our grazing management practices and the greenhouse gas implications. There are a lot of holes in the research there.

Mr. David Anderson: Mr. McCabe said we had better be careful not to tie Kyoto and the APF together, and I think we're going to see that attempted link in those kinds of things.

You ran out of time, but I'm just wondering if there was anything more you wanted to say on your concerns about that, because I think I have many of the same concerns.

À (1000)

Mr. Don McCabe: Thank you for the opportunity and the question.

Along those lines, the green cover program has already been identified as a portion of the environment pillar of the agricultural policy framework. Because the government sent some seed out that was planted, they're going to get the credits back, if I'm interpreting the transcripts correctly from Tuesday. I have to admit they are unedited and not complete at this time; however, that does raise concern.

Within that context also, the agricultural policy framework is a wonderful motherhood document, but at this time we don't see enough opportunity to get it directly back to the farmers who are actually going to be doing these things.

Where will the monitoring and verification come from? That's not within the environment pillar at this time. We would very much like to see the opportunity to further consult with the government. The Kyoto Protocol has very laudable goals, but let's make sure we do it right and in consultation with all the stakeholders, to make sure we're giving the best benefit to all society, because we're going to be looking for money from them.

Mr. David Anderson: Mr. Jack and Mr. McCabe, I guess I just have another question. We heard it the other day and again this morning from the environment department that the cost of fuel isn't going to go up at all. We've got a study from the United States suggesting that input costs could go up as high as 30% at the farm gate.

The government also said we have to change human behaviour, that people have to drive less and use less fuel. I'd suggest there's only one way to this, which is to raise the cost of fuel to where you make it uncomfortable for people to use more of it.

Do you anticipate we can change the entire energy sector? They have to put in new technology or they're going to have to buy emissions credits. Are they going to be able to do this without raising the cost of fuel and fertilizer and chemicals?

Mr. Bill Stewart: I can't respond to your entire question, but I'll tackle the first or easy part about changing the nature of the population of this country and their habits. Sure, we know how the carrot and stick routine works in agriculture. I have seen the stick apply to farms more often than the carrot, I might suggest.

If you're going to change the habits of Canadian citizens and how they move about this country, it would be interesting. I look around this room. I represent the agriculture sector and do not live in an urban area. Mass transit is not available to me; there is no bus or train or subway going by. I live some significant distance from any place I can do business with. So I have to have a means of getting there. I can drive a smaller vehicle or I can walk, but I have to get there to do the business.

Sure, the increased costs will affect what vehicles we use. But I understand that the largest and most popular selling vehicles in the metro areas right now are sports utility vehicles. I understand it does snow some places, and they do need additional traction to get through.

The Chair: Mr. Calder.

Mr. Murray Calder: Thank you very much, Mr. Chair.

We met on Tuesday with the departmental officials, as David had said. One guy said they hadn't really done any study. But I do know there's study going on in there.

So I have two questions. Question number one would be what type of an assessment system on carbon credits would you like to see in place? Question number two is, given the fact that about 20% of the population and 80% of the real estate are green, which is where carbon credits are definitely going to come from, what type of a system could be put in place where I could get the cheque directly to the farmer—where it should be?

Mr. Don McCabe: I would like to address that, if I could, Mr. Chair.

Earlier this year, I have to admit Ag Canada did show some leadership in holding a domestic emissions trading working group. Some of us at this table were invited to participate in it. At that time, we made it explicitly clear within the working group what we expected with regards to a carbon credit trading system. Again I defer back to the points raised by the Canadian Cattlemen here today, the issues of the two types of credits available to us and direct emission reductions, and also the rent and lease of credits that can be sequestered.

With regards to the design of that program, and to ensure it gets back to the landowner, in particular, we're going to have to be able to amalgamate landowners. Whether this has to occur through crop insurance, or files, or something like that, these are design parameters, which we're more than happy to consult with the government on, to ensure the 1% of the people out there who are actually doing the work are going to be recognized for their opportunities.

Second of all, with regards to the analysis to date, and all the rest of it, I want to point out that the analysis modelling group, which took the results of the 16 issue tables identified once upon a time...The group's assumptions are part of the problem we are seeing here now. “Assumptions” comes from the word “assume”, which can usually end up making a friend of a donkey, and of you and me. The issue is, number one, that the oil industry was able to say, “No, we can't pass our costs on”. And number two, the only thing they took from agriculture is that 10 megatonnes of sinks were available. That's all they knew about agriculture. This is part of the problem of where we lie today, and the analysis that has occurred.

The last time I checked, Sir John Carling was getting too far removed from the Central Experimental Farm to remember what farmers look like.

À (1005)

Mr. Murray Calder: Are there any other comments on that?

There was one other thing that was thrown out on Tuesday, too. It was a price tag on a per-acre basis of around $10 an acre. I wonder if you had any comments on that. First off, I was a little bit curious as to how we establish that price tag on a per-acre basis. Do you think that is a reasonable figure? High? Low? What? Any comments?

Mr. Bill Stewart: It seems to me $10 an acre in our total production... It doesn't take much when you're farming these days to use up $10 an acre. Ten dollars an acre is very trivial. If the cost of producing this carbon... For me, as an average farmer, I wouldn't go out of my way too much to gain $10 an acre, let me tell you. And the average producer won't. It's hardly even worth talking about.

Mr. James Bruce: We have to recognize that many farmers have found it economical and a good idea to practice no-till or conservation tillage and to do all of the things that do sequester a lot more carbon just on pure farm economics grounds. So any little additional funding they might get, as carbon sinks, would be just on top of that already constructive approach to farming that many of the progressive farmers have taken.

Mr. Bill Stewart: I just want to clarify what I said. Maybe I didn't come across right.

For the farmers who are actually no-tilling now, which includes a lot of producers on the Prairies, if the $10 is there, of course, they'll take it. But for a producer, especially a producer getting older all the time, in order to change his whole operation to go to a no-till system to gain $10 an acre--this is what I was trying to get at--he won't do it, because the investment in this type of equipment just wouldn't pay. It's phenomenal. But if he's already in it, that's great.

The Chair: Don, again. There's about a minute left.

Mr. Don McCabe: I would just like to add that I think the $10 an acre is coming from an overestimation of the rate of sequestration that would occur in soils. It's based on a one-tonne-per-acre sequestration rate, which is probably at least 100% too high. It's probably around 0.5.

But, again, this brings us back to two very strong issues: one, we don't have the research to back this up at this time; and two, for the folks who have already started down this path, once you've sequestered carbon into your sink you cannot fill that void again. Therefore, there has to be credit for early action for the producers who have already shown innovation in this area.

À (1010)

The Chair: Thanks, Don. I'm going to move on.

As to that $10 figure, I think I challenged that a little bit the last day and no on has corrected what I said, Murray.

Dick.

Mr. Dick Proctor (Palliser, NDP): Thanks.

Let's just stay on this topic. I'll go to Mr. Bruce, if I may, because in his presentation he talked about soil sequestration of carbon and indicated that it is beginning to happen in North America, but the prices are low. You indicated, Mr. Bruce, in the $5 to $10 range.

Can you just elaborate on what is happening in North America? Where it's happening? Are farmers coming together with large parcels of land to do this?

Mr. James Bruce: As several other speakers have indicated, the way in which it has worked so far is there has been a group of farmers, maybe 90 or 100, with all of their land and the potential for sequestering carbon, who have banded together in one way or another and then sold that carbon sequestration or rented it to companies. TransAlta, actually, the Alberta company, has bought carbon sinks from U.S. Midwest farmers in that way.

Now, the price that will be attached and how much the farmers might get will depend on the market for carbon. That is a bit hard to predict. The government estimates that it most likely would be around $10 a tonne of carbon, and I'm not sure how much that translates into per acre. But a group of farmers have to get together to make it worthwhile for an industry to purchase or rent that block of carbon sink.

Mr. Dick Proctor: Are you aware of any examples here in Canada where this has happened?

Mr. James Bruce: I don't know of any places in Canada where farm communities have sold or rented their carbon sinks. I think it's provided for in the plan for responding to the Kyoto Protocol.

Mr. Dick Proctor: You also indicated a significant tax break difference between Canada and the United States in terms of ethanol.

Mr. James Bruce: Yes.

Mr. Dick Proctor: Do you think it's something we should look at here, in terms of parallelling what the United States is doing?

Mr. James Bruce: It's a bit like the question asked about how to cut down on emissions from driving. There are two ways of going about it. You can regulate the efficiency of the cars or, in this case, you can regulate the amount of ethanol that has to go into each litre of fuel. Some American states have done that. The other way is to go for a subsidy or some economic incentive. The Americans have a much bigger economic incentive, more than double what it now is in Canada, to add ethanol to the fuel.

I think if the government is at all serious about moving in this direction, and I think they probably are, they do have to provide either incentives or regulations to get the ethanol plants built.

Mr. Dick Proctor: Right.

Moving on to another area, you talked about soil carbon depletion. Can you elaborate a little bit on that? Are there estimates? Do we know how big a loss we've had in this area?

Mr. James Bruce: Globally, we have some figures. I don't think we have any good figures for Canada. There has been, of course, a great historic loss of carbon from soils from when we started plowing up the land all over the world.

The Intergovernmental Panel on Climate Change estimates that if we tried to recapture only half of it in the soils of the world, we could take 500 megatonnes of carbon per year out of the air and put it in the soil where it belongs, increasing the fertility and the productivity of the soils worldwide.

À (1015)

Mr. Dick Proctor: Thank you.

The Chair: Thanks, Dick.

Rose-Marie.

Mrs. Rose-Marie Ur: Thank you for your presentations this morning.

I certainly am supportive of the fact that the landowners need to get credit for early action, vision, and leadership. It doesn't seem to be recognized at this point. After we have a few of these meetings at the agriculture committee, I hope someone has the intestinal fortitude to read the minutes to see what agriculture has done regarding greenhouse gas emissions. We are the leaders, and you are the leaders, in this. They should be marching to our tune.

We had presentations on Tuesday from representatives from the Department of the Environment and the Department of Agriculture and Agri-Food. They had stated that the first commitment year for agriculture was 2008. They indicated or mentioned that perhaps for the industrial heavy-emission people the date might be set at 1990. I question why one sector would be at one level and the other sector at another level.

Have you heard, in your travels, why that may or may not be? Has there been any indication in your meetings? Have you heard the same date tossed around?

Mr. Don McCabe: I believe it's the current market system that the government is proposing that agriculture has been excluded from, at this point in time. The large emitters are going to be predominantly looked upon by the government for reductions and fulfilling the Kyoto Protocol. Therefore, they're swinging their own stick right now.

I would refer back, again, to the federal-provincial-territorial framework agreement, where somebody has already decided what the baseline is from agriculture. Thereby, they are wiping out the opportunities for credit for early action in establishing a new baseline for Canadian agriculture, negating what Environment Canada has already brought forth and, what further research will show, what agriculture has already done on behalf of society.

Mrs. Rose-Marie Ur: Also, the lady who presented from Environment brought up the methane question. What research, what work has the Canadian Cattlemen's Association done on that?

Ms. Peggy Strankman: The methane question has been around for quite a while. The media has had quite a good time with it. Just for the record, the methane comes out of the front end of the cow.

Some hon. members: Oh, oh!

Mrs. Rose-Marie Ur: They'll really get some good resource material here today.

Ms. Peggy Strankman: The methane is a by-product of the digestive system of the cattle and, of course, they take a low-quality forage and turn it into a high-quality protein through that digestive process.

We know there are things we can do and have been doing to make a difference as to how much methane comes out. For example, we can add canola oil into the diet to change the digestive process slightly. We can feed higher-quality proteins. But as I indicated before, there's probably an upper end to what we can do to maximize the efficiency of feeding cattle.

We have some interesting work that's starting to come out on actually identifying genetic feeding efficiencies within the various beef breeds. That would offer us another opportunity to increase our efficiencies again. Fortunately, we're find those feeding efficiencies in all of the breeds, not only one or two of the breeds, so that we won't be fighting amongst ourselves about it.

Mrs. Rose-Marie Ur: Thank you.

Did you want to respond, Don?

Mr. Don McCabe: I wanted to add that within the area of methane there's a very large area that agriculture will have to take a serious look at, and one of the things is wetlands restoration. The last time I checked, when you get soils extremely wet, bacteria will eventually move over to using carbon, so organic matter is their energy source and in the process methane comes off. With that being 21 times worse than carbon dioxide, I'm not too sure about how many more wetlands we need in this country if we're going to get global warming and allow Hudson's and James Bay to suddenly start emitting methane.

Mrs. Rose-Marie Ur: Very interesting.

Mr. Bruce, in your presentation, replacing fossil fuels with bio-fuels, ethanol from non-edible parts of corn and wheat, obviously you're a strong proponent of cellulose rather than corn. Is that right?

À (1020)

Mr. James Bruce: No. I think corn and wheat are clearly the sources that are most likely to be used, certainly over the Kyoto period. But--

Mrs. Rose-Marie Ur: Well, you said non-edible parts of corn, so I presume that removes the corn.

Mr. James Bruce: Yes. Not the ear, anyway. And cellulose from a whole lot of growing things will eventually, I think, be a source for ethanol in fuel.

Mrs. Rose-Marie Ur: That's the worry, though--eventual. We have ethanol from corn now. Cellulose is down the road, though.

Mr. James Bruce: Yes.

Mrs. Rose-Marie Ur: Perhaps Mr. Jack would like to add to that.

Mr. Dennis Jack: I don't know where I'm going here, but I'll take off anyway.

Mr. Murray Calder: Tell us when you get there.

Mrs. Rose-Marie Ur: There's always a concern when we bring up ethanol from corn that there aren't sufficient acres out there to produce--

Mr. Dennis Jack: There's 34% positive energy from the manufacture of ethanol. So for ethanol from corn, there is a positive energy response to that. There is old data that shows that it's not efficient, etc., but the truth is it's a proven technology that works. The technologies keep improving and improving.

If you'll pardon me again for quoting what's going on in the United States--it's not too far from your riding, just across the river in Michigan--they've recently opened a new ethanol plant that farmers, by the way, own a portion of. The technology is proven, and from what I understand, it's working very well. These plants are opening willy-nilly. I don't know whether you have to mandate the tax... The system in Canada is that we set targets and provide goals but don't mandate that things have to be done. Mr. McCabe can, I believe, comment more accurately on the excise tax reductions.

The one point I would make about the corn plant, particularly in livestock, is that you can chop it off at the ground and cut it up in little bitty pieces and feed it entirely to the animal. I've done that my entire life so, you know, the entire corn plant can be fed to them.

The Chair: Thank you, Rose-Marie.

Rick.

Mr. Rick Borotsik: Thank you, Mr. Chairman.

I appreciate the positive presentations that have been made, but your positive presentations are based on a number of assumptions. Every one of you said those assumptions have to include early action credits, and the other assumption is that the ownership of the carbon sink belongs to the producer. I have not received any positive feedback from government or from the department that indicates that either one of those issues is going to be resolved in favour of agriculture. I'm sorry, I've lost my optimism on this, I really have, over the last little while.

Has there been any consultation between any one of your national organizations and the agriculture department where they've told you that those two assumptions are in fact going to be borne out in favour of agriculture? Has any one of you met with any departmental officials who have told you that? Don't everybody speak at one time now.

Voices: Oh, oh!

Mr. Don McCabe: The quick answer is no.

Mr. Rick Borotsik: Have there been consultations with the Cattlemen's Association?

Ms. Peggy Strankman: We've raised that issue, but we have not had a positive answer.

Mr. Rick Borotsik: How about the Ontario Corn Producers?

Mr. Dennis Jack: No.

Mr. Rick Borotsik: Well, we're sitting here and saying, isn't this all wonderful, warm, and fuzzy? As to whether these things happen and whether this is all that's going to happen to agriculture, I'm not quite as positive. I have to say that I'm from Missouri on this one, and I think it's important that each one of your organizations makes a very valiant effort to make sure that the people you deal with on a regular basis know that this is the position we have to take.

By the way, that's one reason I think no cost-benefit analysis has come from the department, none at all. How can you have a cost-benefit analysis when you don't know the variables you're supposed to plug into it? And if they don't know what the variables are...

By the way, let me go one step further. Right now one of the stumbling blocks with this whole Kyoto accord is that the provinces want to have ownership of the carbon sinks but the federal government wants to retain it. The producers, the owners of the land, seem to be third on that totem pole. Do you have any concerns, any of the organizations, that even if the feds give up some control, the provinces will grab onto that positive carbon credit as opposed to passing it back to where we believe it should be, with the producers?

Don.

À (1025)

Mr. Don McCabe: I believe that you're entirely correct in your statements there with regard to the climate change draft action plan, where the provinces are arguing over this. My only response to that is that there has been consultation, and I have referred to one in Calgary back on April 1. Some folks within Ag Canada have been very proactive in trying to help us in this issue, but it's not making its way through the entire system. I would hope that the federal government would show leadership on behalf of the ag producers in showing the provinces and resolving this issue once and for all. For the provinces, yes, this is a resource issue, but again, the last time I checked I was the one paying the property tax.

Mr. Rick Borotsik: We were also told that transportation and industry have a large part to play in the reduction of CO₂ emissions. We know that. Agriculture obviously depends on transportation an awful lot to run its business, and it depends on industry, particularly oil and gas, fertilizer, and chemical. We were also told that the petrochemical companies have said that they can't pass those costs on to the producers, so they shouldn't be asked to reduce their CO₂ emissions.

Now, agriculture has always been given short shrift. It seems that agriculture is always being asked to take the lion's share of the problem, as you have indicated, yet now I have a really serious concern that industry's got their voice there in the ear of the environment people and now they're going to say, we can't pass it on; therefore, it has to be passed on somewhere else.

If those costs are going to increase.... We were just told they're going to go up one-tenth of 1%. I don't believe that. I believe that if the oil companies say they can't do it and that therefore the costs have to go someplace else, it's going to come to us. If that's the case, if transportation and industry have to increase their costs, is that going to impact on agriculture negatively?

Don.

Mr. Don McCabe: You've hit the nail on the head. It will definitely nail agriculture between the eyes, and as I mentioned earlier, the assumptions have been brought in and the analysis modelling group...to be brief, they also suck. Therefore, how can you make sure that the modelling that has now been brought out here, which shows electricity rising the highest...? We're at the end of the line, and we can't pick up the farm and move it to the generator. We see ag chemicals going up, and we are price takers in the market.

Mr. Rick Borotsik: So are the petrochemical companies. They just told us that.

Mr. Don McCabe: No, hang on. The last time I checked, the world is out of oil at $10 a barrel but there's all you want at $40.

Mr. Rick Borotsik: Mr. Bruce, you said there was an economic modelling method that was done, and you gave the number of one-tenth of 1% in the cost of production for oil and gas. Who did that economic modelling? Was it the oil and gas industry?

Mr. James Bruce: No, no. This is the climate change draft plan from the government, and I am simply using the estimates, which I know were produced by a modelling group involving Natural Resources Canada and Environment Canada, and some external modelling.

Mr. Rick Borotsik: Was Groupaction involved in this at all? I'm sure it was.

Mr. James Bruce: I don't think so.

At any rate, those figures I quoted are simply in the draft Canada plan, which also estimates that electricity prices might go up as much as 2%.

Mr. Rick Borotsik: Do you accept that as gospel? Do you accept those assumptions, and do you accept that model?

Mr. James Bruce: Well, I know that there has been a great deal of argument back and forth about the assumptions that went into that modelling. I think that probably it's been done over a period of about four years, and these estimates are probably about as good as you can get.

If you want to believe the industry, you should go back to some of the earlier environmental issues, such as taking phosphorus out of detergents. I was involved in that. The detergent companies said, that's going to cost us an arm and a leg; we can't possibly produce detergents that will work without it. Of course, once the regulations were put in place, they did it. I think that's a standard response of industry, and I'm not sure I would trust their figures any more than I would trust the government figures.

À (1030)

The Chair: Thanks, Rick.

If I could, maybe I'll just ask a couple of small questions.

With corn and the production of grains and the conversion of some of that to ethanol, will that affect the price at the farm gate for those commodities? In other words, do you get more for your corn because of the demand for ethanol, and if it were expanded, would it improve the market so farmers would have greater opportunities to sell their product?

Second, about something tied in with this, it's my understanding right now that your plants here in Ontario are bringing corn from other places to meet their needs. If this is happening, what is the cause?

Mr. Dennis Jack: If I could, I'll respond to that. I appreciate those questions, and the answer to your first question is yes. The answer to the second question...how long do I have to answer you?

The Chair: One minute.

Mr. Dennis Jack: Okay. There is a positive cash benefit to the producers. It increases our local bases because of lower transportation costs, so for anyone immediately adjacent or very close to the plant it helps the price of corn anywhere from 10¢ up to, sometimes, 20¢ a bushel or more. With yields of 150 bushels an acre, that can make a significant profit addition for our enterprises, so it's positive.

We have a long-term industrial market immediately adjacent to where it's grown. We don't have to ship it to the other side of the world and be the lowest-cost provider to deliver it there. We have the market, and that's the strategy of our organization, to have a long-term industrial market right where we live. We can have the jobs, the economic activity, the wealth creation, and the employment in our country, or--and here's where we get into problems--we are faced with the situation you've heard about, where corn is imported from the United States to your plant. About two-thirds of the corn that goes into the local ethanol plant in my region is produced in Ontario.

There is sufficient corn produced in our region to supply that ethanol plant and additional ethanol plants. Not all the producers are willing to sell at that price at that time, so there is a lack of competition in the buying and resourcing of that corn because of the way the industry is set up. The long-term benefit to the producers is the jobs in Ontario.

I have two questions we ask producers or some of the folks in the province about corn and ethanol: do you want corn processed into ethanol in this country for the jobs, the economic activity, the wealth creation, and the long-term industrial market, or do you want ethanol manufactured in the U.S. and exported to Canada, where it will receive the same excise tax treatment? We want the jobs and the plants in Canada.

The Chair: I would suggest that under the present circumstances the American farm subsidies are certainly hurting in terms of the advantage that some of them have in terms of production, which is affecting the present trade in that commodity.

Dr. Bruce, I have a brief question in regard to this methane business. In certain areas of Canada we have cities of cattle, they're bigger than probably 20 cities on our list. Could we assume, or do you have any studies to indicate, that when this great population is putting off all that gas in a particular area it has any effect on the climate in the area adjacent to those populated areas of livestock?

Mr. James Bruce: Not adjacent to the areas. Methane is of course a greenhouse gas. It's about one-third as important in total around the world as is carbon dioxide, but most of it comes from natural sources. A small amount comes from cattle, from landfill sites, and from gas flaring in the oil fields. As far as I can see from reading the government's plan, there is no attempt to target the cattle, but they are attempting to target the landfill sites and cities that produce methane. And Toronto has shown that methane can be used as an energy source if they tap it from the garbage dumps.

The Chair: Thank you.

Howard.

À (1035)

Mr. Howard Hilstrom: Thank you, Mr. Chairman.

God has been in charge of this climate and weather since four and a half billion years ago, and I'm not one for turning it over to the Prime Minister right now and letting him be in charge. That's a pretty scary business. Anyway, my point is that the farm groups are getting stampeded into going along with this component of the APF and going along with Kyoto, and I think you really have to think about this.

I happen to cattle ranch myself and I know the value of land and what can be produced on it. Ten dollars an acre--am I going to give up control of my land for $10 an acre? The control I'm giving up is that I would have to sign a lease, or an agreement, to give that land up for 10 to 20 years. What happens if by breaking that land up again that I sowed down to alfalfa I could make more by putting it into corn or something, but I can't because I've given up control by way of a lease agreement or rental agreement?

That's what is going to happen with carbon sink buying. If there is anybody who doesn't think this will happen, just come up to my area in the Interlake, where a lot of farmers in our area signed agreements for nothing with Ducks Unlimited and we have lost hay production significantly. So I'll ask you, Dennis, and maybe Bill, do you think farmers should be a little more cautious in this regard, about giving up control of their land, or do you think we should just agree to do it, or be forced to do it, by the government?

Mr. Bill Stewart: I'll say I agree with you 100%. Before a farmer signs a lease that may look good, he has to give long, hard thought to what he's doing, because once you sign a lease you'll probably have a caveat on the land and a restriction movement; you can't do anything.

I sit on the Agriculture Policy Framework Environment Advisory Committee, and we had a speaker talking about the greencover program under the agriculture policy framework. They're talking about a 21-year lease with a caveat. I said it may have worked 10 years ago but it isn't going to work today, because you can't expect a producer to sign a lease for a few dollars and have a caveat filed on his land; it just ties his hands and he can't move.

Mr. Howard Hilstrom: That's exactly right.

Dennis, did you have any comment on that or not?

Mr. Dennis Jack: I don't know whether I'm qualified to really answer the question other than that I do operate a farm business and I'm not prepared to do anything that affects the long-term profitability of our business. We rotate crops, and do all, hopefully, the appropriate environmental steps along the way.

But one of the crops we produce does require significant tillage, and that crop is sugar beets. There aren't too many of them grown in Ontario. I think there are some in Alberta. You'd be interested in where our beets go. We produce them in Canada and ship them to the U.S., and, Mr. Chair, I'd like to point out that this is the only time I have seen where the U.S. Farm Bill works to our advantage, because I get their money.

Mr. Howard Hilstrom: Thank you, but don't bring up sugar beets with a Manitoban, because our whole industry was stolen out to Alberta and Ontario. So we'll fight about that another day.

Mr. Dennis Jack: I understand that.

Mr. Howard Hilstrom: I'm going to ask you a question, Bruce, and then you can answer a question that you think needs answering.

When you have a carbon sink, you figure that x amount of these molecules get deposited into the ground and you do no-till on that, and then, as Dennis says, you have to put sugar beets in, rotate those crops around so.... Here I got paid $10 an acre, and I was stupid enough to agree to it so I agreed to it. So then I break that land up. Do I have to pay that $10 back, then, once I release those carbon molecules?

Mr. James Bruce: The way our society has been advising farmers who have asked us about this, about how to deal with it, is to not sell their carbon sinks but to rent them on the annual basis so that they can then, if the crop conditions or price of crops change, make the change that was most economically suitable to them.

The other thing is that by grouping a large group of farmers together in a package to sell to some company that needs to buy some credits, while some of the individual farmers may drop out, there's enough there to guarantee in total the response that the purchaser has.

I suspect it's all up to the farmer. If he wants to enter into such agreements, he can. If he doesn't want to, he doesn't have to.

Mr. Howard Hilstrom: Every one of you, or quite a few of you, have made the point that we should be able to rent this, or lease it, or whatever and to have a carbon sink for C0₂ gases. If I got paid to sink it, hide it away, would I not have to pay when I released it? Dennis, can you answer that?

À (1040)

Mr. Dennis Jack: I honestly can't respond to that. I don't know the answer so--

Mr. Howard Hilstrom: Or would we put into the agreement that I'm going to get paid to sink it but I'm not going to have to pay when I release it? I suppose that would be the way you'd sign the contract, then.

That is a bit of a rhetorical question in a sense and it brings me back to the point that we're being stampeded like a herd of crazy Limousin cattle. If there's anybody who has Limousins here, you'll know that some of them are kind of crazy. We're being stampeded into this Kyoto agreement before the country knows what it's getting into.

It really concerns me in regard to all consumers, and not just the agriculture industry but everybody. We're getting stampeded into this, and from your presentations around here, with everything from not being sufficiently consulted by the government and the government not being able to provide sufficient information, we're buying a pig in a poke here. because nobody knows yet.

Does anybody see anything the matter with not ratifying this until one year from now, when some of these issues have been worked out? I'd ask each of the farm groups to answer that.

The Chair: Howard, you're getting way over time here.

Mr. Howard Hilstrom: Yes, but these are mighty good questions, Mr. Chair. So quickly, would there be anything the matter with waiting one year for this?

Mr. Bill Stewart: I will be the first to respond. No, I don't see anything wrong with putting this off one year. This has been happening for decades.

The Chair: Mr. Bruce.

Mr. James Bruce: I would point out that the longer you leave it, the harder it is to achieve the target and the more economically disruptive it is. That's the only thing I'd say.

The Chair: For the record, this $10 figure, I understand, was the model they were working on. There was really no commitment or significance of $10 other than that.

And Howard, I don't want to disappoint you, but when you put it all down to the $10 credit per tonne, per sink, the mathematics of it works out to about $1.66 an acre. So don't spend that money before....

Am I wrong? Don.

Mr. Don McCabe: You're correct, Mr. Chair. I'd also caution that the actual market price for carbon dioxide, as it's being proposed right now, is somewhere around $3 a tonne. But if you do some modelling exercises with Cantor Fitzgerald and that kind of thing, and you get enough excited speculators in the room playing on computers...we did have it up to $400 a tonne in the year 2007.

That's back to modelling and that's back to the friends of donkeys again, because of the assumptions--

The Chair: So land values may really increase.

Don Kenny, did you have something on that, too?

Mr. Don Kenny (Member, Executive Committee, Board of Directors, Grain Growers of Canada): I want to comment on the ratification part. I think we will have to go slowly on this. If we go ahead and ratify, we have to keep in mind that our biggest trading partner, the United States, is walking really slowly on this issue.

À (1045)

The Chair: Are there other questions this morning, or other comments?

David.

Mr. David Anderson: Don, you wanted to respond to Howard's question before. Do you want an opportunity to do that?

Mr. Don McCabe: I think that Howard's question comes back to the fact that we have to be very actively engaged. The $10 per tonne is strictly a model number, as I mentioned a few moments ago. We need to have an open market. I want to make sure I afford every opportunity to the agricultural economy in regards to trading, whether or not I use this stuff personally. But we have to be involved in making sure that the rules are set correctly, that renting and leasing is an opportunity. This isn't going to work for all farmers. It's not going to work for the entire economy, but the agricultural sector has to be involved with the design. Never turn down a market opportunity, otherwise you start closing yourself off to things that could come forth in the future.

The Chair: Murray.

Mr. Murray Calder: I'll throw this question out to you because I'm going to be watching this very closely, as the chair of national rural caucus.

We have to make sure that we get credit for what we're doing. If agriculture is constantly improving each year because we're doing out best to lower our overhead costs of production as our margins are narrow....

If this thing starts at a certain date--I think we heard 2008--and we have been improving it up to 2008, and then we start getting recognition for what we're doing after that date, I believe, Don, you mentioned the fact that we're eventually going to get to the point where you can't improve it any more.

So, from right now, 2002, or if we go right back to 1990, that would make a lot more sense to me as to how the industry has improved. And we should get credit for the carbon credits that we have in fact established within our industry, and I'm going to be working towards that.

The Chair: Thanks, Murray.

Howard, you're back on again.

Mr. Howard Hilstrom: Yes. Don, that was a really good comment on that free and open market. How are our western wheat producers ever going to participate in a free and open market with the Wheat Board?

Mr. Don Kenny: We'll get board credits.

Mr. Howard Hilstrom: In Alberta last week they passed that private member's bill saying they were going to take Alberta out of the Wheat Board.

I think that has something to do with the Kyoto idea, the fact that farmers need to be free to participate in this free market selling of credits.

I also noted that one of the directors of the Wheat Board was on the radio in Winnipeg the other day saying that western farmers are getting an extra $1 to $2 by selling into the flour mills of Ontario over and above what Ontario farmers are getting for the similar quality of wheat. Have you heard that?

Mr. Don Kenny: Living in Ontario, I haven't picked that up. As far as the Grain Growers' policy on the Canadian Wheat Board is concerned, we want the same all across Canada as we have in Ontario. And we have some market choice in Ontario.

The Grain Growers of Canada are not Wheat Board bashing.

Mr. Howard Hilstrom: No, no--and I'd never bash the Wheat Board myself.

Mr. Don Kenny: We just want an open and free market right across Canada.

Mr. Larry McCormick: A point of clarification--

Mr. Howard Hilstrom: Thank you, Mr. Chair.

The Chair: David, do you have another short question?

Mr. David Anderson: I want to come back to the question Murray had addressed earlier and that is the bureaucracy that's going to be in place here. I guess the more I've heard, the happier I've been with the position that our party has taken, particularly on having to deal with this later in the rural areas. But I really think this is going to end up being one of the biggest centralized planning projects that we've ever seen in this country.

I guess I'd like to hear your comments on how we are going to monitor this, how we are going to measure this. You talked about people taking land back out of production. How are we going to police it? Who's going to have the liabilities that are involved with this situation? What have you had in terms of discussions with the departments about this? Have they done anything about it? It's going to be huge. You have to manage the entire ecosystem to be able to try to determine what we're going to get out of this and what we're going to pay into it.

Mr. Don McCabe: I'd like to respond to that with regard to the aspect of the rules and regulations that come back again to the April 1 consultation that was held, where Ag pointed out what was needed. With regard to bureaucracy, Ottawa doesn't have to do this, and neither does Edmonton, Toronto, or any other capital of a province. Agriculture has enough of its own infrastructure in place already to do the roll-up of credits and do the marketplace if it's necessary. The U.S. may not be moving toward Kyoto, but it has also opened a commodity exchange for carbon dioxide already. I deal with the Chicago Board of Trade for corn, wheat, and soys off my farm, and therefore I see no problem in dealing with another marketplace. We do not need to create a bureaucracy here.

With regard to monitoring and verification, a Prairie Soil Carbon Balance Project has run in the west and has benchmark sites illustrating how to do monitoring and verification. However, we do not have those opportunities yet east of Kenora through to the Maritimes, where nitrous oxide could become a very much bigger issue and problem. It comes back to the lack of research and the lack of foresight. We have lost a lot of our land inventory opportunities and soil classification at a time when we need it the most.

The opportunities are there to revisit this stuff, but we do not need overbearing bureaucracy to do this when we have the infrastructure already in place. We do need the money for research. We do need the government's hand in establishing some independent monitoring and issues like that. But the rest of the infrastructure for the marketplace agriculture already has in place and can take care of on its own, if consulted.

À (1050)

Mr. David Anderson: Can I just follow through on that?

The Chair: Just briefly.

Larry?

Mr. Larry McCormick: Just very briefly.

Mr. David Anderson: You're suggesting, I think, that we put those credits onto the open market. The main interference then would be that no prior credit for them is apparently going to be allowed. Secondly, we have two levels of government that feel they have first crack at those credits before the farmers are allowed to bring them onto the marketplace.

Mr. Don McCabe: That's right. When they come out and start doing chores at my place, they can have whatever they want.

Mr. David Anderson: They'll likely take it before that.

The Chair: Larry, just a little--

Mr. Larry McCormick: Thank you, Mr. Chair, and I want to thank the witnesses for being here.

By signing Kyoto now, we have a lot of years to work together to be where we should be, and I'm glad that we have excellent members on all sides of this committee. I'm glad that we have a very strong rural caucus in our government party and I'm sure the others are too.

Perception is a word I've learned since I've been here, for only nine-plus years. I just want to ask each of you this, as I may have missed it. I believe each of you, one way or another, has been involved with the agricultural policy framework, and if you haven't been, you will be. There is lots more opportunity. It is a fact that all provincial ministers acknowledge that we will have twice as much money available for risk management as we did some years in the past. That has to be a bit of a positive--I didn't say it was enough.

My question is this. Given the fact that we have tens of millions of dollars under the facet of the agriculture policy framework and the environment toward food safety, do you not think this will help toward some of the work that we need to do together? I'm just giving you a chance to give a comment on that as we wrap up.

Thank you, Mr. Chair.

Mr. Don McCabe: I would point out to the honourable member that $5.2 billion is a really nice figure. The problem is, I'm competing in a NAFTA-oriented North American market. There's $180 billion below the 49th parallel, $18 billion alone of that in discretionary spending. I have to take 5.2 and multiply it by 3 simply to get to their discretionary level. This is what I'm competing against.

How does food safety come even close to dealing with the Kyoto Protocol? How many more times do I have to come here and put greenhouse gases in the air to get the points across? The APF in consultation should not come out in nice, colourful brochures that already have the ink dried on them, if you call it consultation. And $1.1 billion demand-driven is a total lack of wisdom on anybody's part as far as being able to deal with risk management goes.

The Chair: Does any other witness wish to comment? And I thank you for your input.

Some hon. members: Oh, oh!

Mr. Larry McCormick: I've heard it all before, and I think we can achieve some things by working together. If we stand and find fault with everything, I'm not sure it's to anyone's benefit, that's all.

The Chair: All right. Dr. Bruce.

Mr. James Bruce: I think the government fails to recognize the two products that the farmers produce. One is the food they sell, and they get paid for that in the market. The other is the stewardship of the land they hold. They hold it in trust, really, for all of us. Good stewardship should be compensated for by the community at large. That's a view that our society has pushed very hard. It has resulted in the conservation title of the U.S. Farm Bill, and I hope it results in more attention to the stewardship role of farmers in Canada.

À (1055)

Mr. Larry McCormick: Thank you, Mr. Chair, and thank you, Dr. Bruce.

I'd like to point out that some in government, whether they be members or bureaucrats, might not recognize those two points, but let me assure you that we are part of the government and we certainly do recognize that. Perhaps we could do a better job of communicating that, but I think around this table we are trying to achieve the same thing by working together.

Thank you, Mr. Chair.

The Chair: David, a very brief point.

Mr. David Anderson: Yes. I guess our party's position is that we would like to have Canadians set the standards and spend their money in Canada reaching these standards. I'm wondering if there's anyone here who's going to be happy when we start sending between $2 billion and $5 billion to countries such as Russia to buy emissions trading credits to meet Kyoto's standards.

The Chair: With that, probably we'll--

Mr. Howard Hilstrom: That's a rhetorical question.

The Chair: That's another assumption.

We certainly appreciate your coming here this morning to present your many different points of view. I think in terms of agriculture we're looking at the energy you need to do your work, but also we have to look at the very positive assets that agriculture and rural society have in terms of Kyoto. We think in terms of some of your products that can be converted and we think also, of course, of the fact that in terms of that rural landscape, this is the place where the sinks are.

As Canadians, of course, and probably as people around the world, we have to recognize that in the last 100 years the consumption of crude oil has increased on a barrel basis from something like half a million barrels a day back in 1900 to about 100 million barrels a day at the present time. As citizens of the universe, I think we have to wonder how long fossil fuels can continue and whether there is a need to look at other avenues for energy.

With that, we will conclude our meeting this morning. We want to thank you for coming. Hopefully, Howard and David, and for those who are for and against the Kyoto Protocol, the vote is Monday. Perhaps we might ask our witnesses how they would vote, but we don't have a second opportunity to vote. The vote is on Monday, and I think you can conclude from the meeting this morning how the different parties may vote.

Mr. Larry McCormick: We should let all Canadians vote.

The Chair: Hopefully, it will be in the best interests of us as a Canadian nation and as citizens of the world.

With that, we'll conclude. Thank you for coming.

This meeting is adjourned.