Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 19 - Evidence - Meeting of March 7, 2007
TABER, ALBERTA, Wednesday, March 7, 2007
The Standing Senate Committee on Agriculture and Forestry met this day at 9:02 a.m. to examine and report on rural poverty in Canada.
Senator Joyce Fairbairn (Chairman) in the chair.
[English]
The Chairman: Good morning, honourable senators, witnesses and those who have been kind enough to come to the meeting this morning.
We are pleased to be in Taber. This committee has had people from Taber come to Ottawa several times to make sure we are up on the sugar beet industry and this area. Not only is Taber known for its sugar beets, but I have told my colleagues that, thanks to our abundant sunshine, we are known as the Corn Capital of Canada. Agriculture is clearly very important to Taber, and indeed important to all of Canada.
We know, and we have been hearing, that farmers have been struggling lately, leading to serious poverty problems in many parts of our rural communities' right across this country. As we heard a few weeks ago in Ottawa, more and more farmers are using rural food banks just to get by. That was not always so in our corner of Canada.
Rural farmers are also calling help lines in an effort to relieve the stress and the depression that come from struggling to cope with large debt loads and volatile commodity prices as well as a very shifty climate that goes its own way in our area.
Our first witness this morning is Laurence Nicholson, Co-chair of the Real Voice for Choice Alberta, which is a volunteer group that argues that farmers should decide the future of the Canadian Wheat Board. We will also hear from Mark Fournier, the Executive Director of Community Futures Lethbridge Region. We had a very good discussion with the Community Futures people who came to speak with us in Ottawa just last week. We had not seen them for a while, and we are very encouraged by what we heard. We will also hear from Charles Moore, the Regional Director of the Alberta Association of Agricultural Societies.
Laurence Nicholson, Co-Chair, Real Voice for Choice Alberta: It is a pleasure for me to be here this morning. I am a farmer from the Medicine Hat-Seven Persons area. I spent 30 years with Alberta Wheat Pool, where I dealt with agricultural and operational policy. I am familiar with the old statutory Crow rate and the debate surrounding it, in fact, I worked in the middle of that debate. During 22 years on the road, I worked with the board of directors and senior management of the grain industry. We certainly used the 36 Canadian International Grains Institute programs on how grain moves from the farm gate through the tidewater and into the international market.
I also spent four years with the Alberta Canola Producers Commission as a director, the Canadian Canola Growers Association as a director, and the Canola Council of Canada as a director for four years. I have a pretty good understanding of the open-market system as well.
I was part of the elevator consolidation in Western Canada. We were led to believe, during that consolidation process, that grain needed to be cleaned on the Prairies and fed on the Prairies. That is exactly what many of the systems are doing.
Why are we producers still charged a freight rate on the dockage to Vancouver? It is unfortunate that grain companies are doing that. I guess they are allowed to do it. The other issue is loss of income for farmers. Last winter, I did a lot of analyses on the costs of doing business and farming in Brazil and Argentina for companies doing business here in Western Canada. They are doing business in Argentina and Brazil at half the cost of doing business here in Canada. Those companies say that because of the high cost of doing business in Canada they have to charge more.
If you look at the subsidy levels on hard red spring wheat in the international marketplace and from the information from the World Trade Organization talks, Australia is about $9 tonne and Canada $25 tonne. Those figures are for 2005 and the Canadian wheat is mainly in the CAIS and crop insurance program. If you look at the United States, it is $140 a tonne. In Europe, it is $170 a tonne. We are getting hammered on our input side, and on the price side of our commodities in the international market, we are getting hammered again.
As farmers in Western Canada, we cannot stand that for a long period of time. We need government involvement to straighten out this system. I can go into many other areas. The Monsanto issue and the $15 tech fee they use for Roundup-ready canola. When will that research be paid? Do they have a cash cow they can dip into our pockets and get three bushels per acre with no risk for involvement?
Let us look at the railway and transportation costs. From Dunmore, Alberta, where I deliver my grain, they do not supply the car, they do not load the car, they only pull the car to Vancouver, they do not unload it, yet they get $2,700 a car out of my pocket for freight. Those costs amount to more than one-third of my total revenue. I could talk about many more issues.
The big issue today is Real Voice for Choice in the Canadian Wheat Board. Real Voice for Choice is made up of volunteer farmers from Western Canada. I am the co-chair for Alberta. We have done a lot of things in the last three months. It has taken anywhere from 70 per cent to 90 per cent of my time. I spent last week in Ottawa lobbying the government. The Conservative government would not meet with us — the minister would not, but the bureaucrats did. They did not have many answers, though. We are a non-aligned group. We are concerned western farmers. We are not formally connected with any farm organization or any political party. We insist on the right of Prairie farmers to make decisions about the Canadian Wheat Board marketing system via farmer plebiscites as per section 47.1 of the Canadian Wheat Board Act. We insist that the plebiscite pose a clear, fair question to farmers and that the voters' lists be properly constituted. There are many grey areas in the whole process. The questions are not clear and concise like in Manitoba.
The Canadian Wheat Board is a marketing organization for Prairie farmers for wheat and barley for human consumption and export. There is also the Canada Grain Commission. Many people get the two confused, including the parliamentary secretary for the Canadian Wheat Board when he attacked Greg Arason last week — and I was there — about the sale of durum wheat to Algeria. The parliamentary secretary talked about grades, yet grades fall under the Canada Grain Commission, not the Canadian Wheat Board. Obviously, Mr. Arason does not understand the system.
The grain companies handle domestic wheat and barley. Uses for feed wheat and canola are outside the board, as are flaxseed, oats and other grains for domestic use. The Canadian Wheat Board is the sole organization for the single- desk marketer, authorized to market wheat and barley from Western Canadian farmers. It markets wheat and barley used for domestic and human consumption and all the wheat and barley going into the export markets. I should not say all, though. If you are an accredited exporter — and most grain companies are — you can buy the wheat from the board and move it into the international market. The board-only direct sales are about 70 per cent; accredited exporters do the others.
The annual sales proceeds of about $3.7 billion, less the Canadian Wheat Board costs of $70 million, which is about 2 per cent, go to Prairie farmers. Prairie farmers pay for all costs of the Canadian Wheat Board, meaning the Canadian Wheat Board is efficiently owned by farmers in Western Canada. The farmers marketing together through one organization, the Canadian Wheat Board means we have marketing power, because there is one seller, and hopefully a whole pile of buyers.
To me, as a farmer, there is a big difference between a seller and a marketer. The Canadian Wheat Board does a pretty good job of marketing, and uses the Canadian International Grains Institute at Winnipeg to do that. They bring millers and bakers over to bring the flour quality to their specifications.
The last time I went through that, I zeroed in on why they are not working on other commodities. They do some work on malt barley and the beer-making end of it. They have done some work for the Canola Council of Canada on the meal to make it more palatable for the hog industry. Why have they not done work on peas, lentils, safflower and other commodities grown here in Canada? That is the question I asked when I went there. I said, ``Do you not have the expertise or the equipment to do it?'' ``Oh, yes, but we have had no requests.'' Anybody can be a seller. As farmers, we need more marketers around the world.
They can negotiate from the single-desk position and get premiums for grain in the international market, which no other grain company can do. They can negotiate with the grain industry from the same position, and they do that on the car allocation.
The Canadian Wheat Board allocates the cars. If you look at Mr. Strahl's task force recommendation on wheat board 11, and our whole bottleneck, and if you want a monopoly, the monopoly is the railways in Western Canada. If you control the movement of grain, you control the sales.
The Canadian Wheat Board has a head office building in Winnipeg and about 1,700 cars, where one manager handles both Canadian Wheat Board grain and the grain company grain on an open-market basis. I can assure you that some of these facilities have a 100-car spot, and the railways are always short-falling that because they do not have enough empties. If the grain company gets 50 cars, and it has 100 orders, and 10 of those orders are for canola, which is an open-market grain, I can tell you right now that it is the canola that gets loaded first. Why? Because that grain company is responsible for any demurrage if that canola does not get to Vancouver. If you look at and how wheat board 11 would play out, I can get into that from an operational perspective — they will continue to do that. The Canadian Wheat Board will play a backseat to that program and cause the destruction of the board.
I could go into many issues on that subject, but I do not dare.
I want to touch on the whole argument of the farmers marketing flexibility. Since 1998, the Canadian Wheat Board has changed dramatically under the direction of farmer-elected directors. If you look at the board today, we do have dual marketing, especially in barley. The Canadian Wheat Board, on the wheat end of it, offers all kinds of programs, such as fixed price contracts, basis contracts, daily price contracts, early payment options, and the pooling payment system.
As a producer, I can go on to the Minneapolis or Chicago exchange through the Canadian Wheat Board and hedge my wheat on the futures market. I can have buy-backs from the Canadian Wheat Board and sell it to whomever and get an export permit to do it. In reality, you have dual marketing.
If you go to Mr. Strahl's proposed Canadian Wheat Board II, you only have one marketing system. That is open market, not dual market. I think that is an important fact that producers lose sight of in this plebiscite.
Single-desk marketing for barley earns Prairie farmers about $60 million in extra revenue each year. That is mainly in the malt end of it. Here in Taber you will find the highest barley price anywhere in the world, because of feeder alley.
The federal government wants to take it away from farmers for single-desk marketing on barley. The large federal agenda is to dismantle the Canadian Wheat Board altogether. There is no question in my mind that is true, especially if you look at Mr. Strahl's underhanded tactics.
I was in Saskatoon at that meeting. I was not in his meeting, but I was across the street. Minister Strahl selected anti- Canadian Wheat Board producers at that first meeting. He then picked his own task force, all anti-Canadian Wheat Board, and he invited the Canadian Wheat Board to the table.
I talked to my Canadian Wheat Board director about that, and so did our group and we advised the directors not to be at the table, because that would be like putting a mouse into a lion's den; they did not attend. They fired Mr. Measner, who was only doing his job under the direction of the board of directors, and then they appointed four government-appointed directors who were anti-Canadian Wheat Board, to destroy the board of directors within as well as outside the organization. I think it is a damned shame that in the democratic process we have in Canada, the minister has used those tactics to destroy our central marketing organization.
I could talk a lot more about issues, but this issue is very near and dear to me, and I must say that we, and my group in Alberta — and we are redneck Alberta — we are known as that — we have collected $40,000 in cash from farmers to fight this.
The Chairman: Thank you very much, Mr. Nicholson. I know you feel very strongly about this issue, an issue that raises these from-the-heart attitudes from both sides of the fence. We are glad you came to give your side of the fence.
Mark Fournier, Executive Director, Community Futures Lethbridge Region: I have been involved with Community Futures Network for about eight years. I started in Medicine Hat as a business analyst, moved to Strathmore as a business analyst, and then down to Lethbridge as general manager. For eight years, I have had the privilege of working with 30 different rural communities. I am on the Community Futures Network's board, which has allowed me to talk with counterparts and various boards of directors to determine the key issues in their regions.
In Alberta there are is 27 CFDs, or community futures offices. We are located in all of rural Alberta, excluding Calgary and Edmonton.
Working with 30 communities over the past few years, I have found a few trends. I am here to talk about one thing and I have five points to back it up.
When we look at programs designed to give people handouts, they are far-reaching. I found they hit the rural communities. A village of 300 people or 400 people has access to the same programs as in Calgary, Edmonton, Toronto, and Vancouver. That is a very good thing. Unfortunately, the programs designed to give hand-ups are not as far-reaching.
I have five examples I will bring to your attention. I apologize that I did not bring handouts with me. I can type up my notes and email them to you at the conclusion of this meeting.
Career and employment services such as job search programs, career counselling programs, most importantly job training programs, and a variety of youth training programs, are not available to small communities.
The individuals we had the privilege of working with over the past few years, some of them have access to vehicles, yet many do not. Our office will go to rural communities and meet with people one-on-one, but not all programs will do that.
I have worked and met with people looking for employment that do not know how to prepare a resume. They cannot get in to Lethbridge or Medicine Hat or Calgary to use the training programs.
We have done a variety of community value surveys. We talked to people about the soft skills. We look at economic development programs, but we like to look beyond that and look at community sustainability programs, the quality of life issues.
Many of our rural residents cannot get in on a day-to-day basis, or at least a weekly basis, to get basic healthcare needs without trying to find a ride. This puts them at a severe disadvantage. This is becoming more of an issue as the baby boomers come of age, move out of the cities, and retire into rural areas. They are on fixed incomes and many individuals move to smaller villages or towns because the cost of living is substantially less; however, these areas do not provide the same programs as the larger centres.
Recreation facilities are at the top of the list in our community sustainability and community value surveys. The youth in these areas complain of the lack of access to recreation centres and the price of user fees. Unfortunately, they are a black hole of funds for municipal governments.
I hear you are going out to Picture Butte this afternoon. If you get a chance, talk to their CAO about the cost of their skating rink, their curling rink, their pool. It is very hard to pay for these services. Most municipalities will try and recoup as many costs as possible through user fees. Unfortunately, as more people move to larger centres, out of rural areas, that base is falling and the availability of these recreation centres is falling as well.
The only other soapbox I have is the lack of response for local economic disasters. I will not go on about BSE. I am sure you will hear about it this afternoon. I had the dubious honour of starting in Lethbridge the same day as BSE hit, May 21, 2003.
The Chairman: We must have met on that day.
Mr. Fournier: It was interesting. I saw the entire city grind to a halt. Our office was flooded with phone calls with people looking for loans to carry them through the gap, getting in while they could. Initially, we did not see much federal response. In time, I am pleased to say, yes, individuals came down and did some feedlot tours, but initially we were left out in the wind. Shortly after that, Toronto lost power. We saw immediate action for that. That is something we would like to prevent in the future.
We are dependent on the agricultural markets. When there is a hiccup in that agriculture market, it is felt through the entire community. We need to consider the rural areas, the farmers and the counties, as we move forward.
I do not like giving problems without giving solutions. I have a small solution.
We are dealing with federally funded or provincially funded programs for these quality of life issues. These services are offered in the larger centres, such as Medicine Hat and Lethbridge, Red Deer, but quite often not to surrounding communities. Incremental dollars would allow one or two individuals to go out per program. For example, the Youth Connections program offers job-training programs for youth in the rural communities one or two days per week. All they need for that program to succeed is small incremental dollars to cover mileage costs. I am sure that if the mandate stated that services were to be given to the rural communities, no matter the size, and the incremental mileage dollars were provided, the services would be delivered.
The Chairman: Mr. Fournier, even though it may have appeared that you were alone during the start of the BSE issue, I would like to go on record stating that in all the years I have been involved, I have never seen two ministers, one federal, one provincial, work any more vigorously and closer than Lyle Vanclief and Shirley McLellan. Indeed, they worked with their American partner. You did not see those things. Those were tough days, as we all know. I give them credit for getting on and doing everything they possibly could in what seemed to be an extremely dark and impossible event.
Thanks to the strength of the communities in southwestern Alberta, we have managed to come out of it. We always have to look back on that and remember we have to be ready to fight on.
Charles Moore, Regional Director, Board of Directors, Alberta Association of Agricultural Societies: Thank you very much for an opportunity to be here and speak with you, and particularly Frank Mahovlich, my childhood hero from the Original Six.
The Chairman: You should have been in Warner yesterday.
Mr. Moore: I am Charlie Moore, a third-generation farmer-rancher on the land locally known as the Moore Ranch near Pine Lake, Alberta, approximately 35 miles southeast of Red Deer, and established in 1893.
As a community leader from the Pine Lake-Innisfail area, I have worn many hats over the years, the most notable being my involvement with the gas co-op movement. This co-op provides natural gas service to all rural areas of the province. I am involved with the Alberta Association of Agricultural Societies, which in one way or another provides recreational, entertainment, educational, and rural leadership training to remote rural areas, as well as some urban areas. The AAAS movement has provided Albertans from all areas a vehicle in which to communicate and work together for the common good. AAAS is the umbrella organization with approximately 300 member societies scattered throughout the province. These member societies range in size from very small, remote areas to very large, urban areas, that is, the Calgary Stampede and Edmonton exhibition.
If I wore my farmer-rancher hat today, I would be talking to you about the long-term low commodity prices that have crippled the grain industry in Western Canada, as well as the BSE that put our beef industry in turmoil. I would go on to advise you that the World Trade talks, in their present form, are not the answer. We realize the European and U.S. governments are not likely to solve our problems. We need a made-in-Canada solution. The solution is obtainable, but requires bold new legislation that provides a domestic market by legislating 10 per cent to 15 per cent biofuel content on all gasoline and diesel produced and marketed in Canada. Second, we need legislation to provide a business climate where the profits from such an industry go to the producer, a floor price for grain. One without the other is futile; otherwise, the large multinationals would build the plants and produce competitively priced fuel, large profit margins, and well-paid employees on the backs of the producer. This industry could take our surplus and poorer quality grain and we could concentrate on marketing the rest as premium quality at a premium price throughout the world.
If I put on my gas co-op hat, I would tell you how in the early 1970s, we, as rural residents of Alberta, fulfilled Premier Lougheed's dream and election promise of making natural gas service available to farmers and all rural residents of the province. I could tell you how we intend to provide high-speed Internet service in the same way. We intend to use the co-op principle of one-price-for-all to stop the potential cream skimming of the large profit-driven providers. By using wireless Internet, WiMAX technology, and a digital system modelled after a program used in South Korea, things such as a visit to a doctor can be as close as your laptop, even in the most remote area of the province.
My primary mission here today is with my AAAS hat on. I am here to bring you the views of our membership on how to repopulate the West and bring prosperity back to rural Alberta.
We have been very active in supporting rural initiatives undertaken by our provincial government over the past few years and feel our organization could play a big part in its success. We have member organizations in all regions of the province ready and willing to work toward reversing the flow of people to the large urban centres. Agricultural societies could play a prominent part in providing the services necessary to bring the people back to the rural areas of the province.
We feel strongly that our governments must take some bold new initiatives in order to accomplish any significant change in this trend. Our leaders must get out and lead rather than react. A wise community leader once told me that becoming a successful leader is like building a fence. He said that you must put the corner posts where you want the fence to go, and stay ahead of the workers because if you stay too close they start advising you where to put the posts, and if you are too far ahead they lose sight of you and quit following.
The Chairman: Thank you and before my troops get going, I want you to know a little bit about them.
The deputy chair of our committee is Senator Gustafson, who comes from the province of Saskatchewan. Beside Senator Gustafson is a faintly familiar face who began his life and career around Timmins and Northern Ontario, and that is Senator Frank Mahovlich. I hardly need to tell you that Senator Tommy Banks is from Edmonton. He was good enough to come down for our hearings in the South. Senator Terry Mercer is from Nova Scotia. Senator Peterson is from Saskatchewan as well.
Senator Mercer: I would like to thank all three witnesses who presented stimulating and sometimes controversial subjects. Each presented some solutions. Identifying the problems is the easy part. We struggle with the solutions.
Mr. Nicholson, you talked about the shortage of hopper cars. Is it a shortage of hopper cars, or is it the bad management of where the hopper cars are at any one time?
Mr. Nicholson: We just went through a CN strike, which caused a tremendous a shortfall.
If you look at the grain movement, on both CN and CP, they are getting paid the compensatory rate, but by moving other commodities, such as sulphur, coal and containers, they are getting paid more. The higher freight traffic gets preference and grain is secondary. That is only my opinion.
If you look at the number of grain cars that sit on the rail sidings, and especially after they are loaded at the inland terminals, the railways' performance sucks big time.
At farmers meetings, members of the Canadian Wheat Board have told me that they could move and sell 100 per cent of the grain, but they are not sure they can get the railways to move it. Railways always continue to be in a shortfall position.
Senator Mercer: Are there enough cars?
Mr. Nicholson: There are enough cars, but not enough initiative to move them.
Senator Mercer: I am disappointed, as I represent a province that manufacturers hopper cars. I was hoping I would go home with a big order.
Senator Peterson: Mr. Nicholson, we hear that the closer farmers are to the American border, the more supportive they are of an open system. Is it possible for the CWB to continue and allow those people to opt out?
Mr. Nicholson: I do not think so. If you look at what has happened with the Canadian Wheat Board in the past years, the Canadian Wheat Board has had 11 anti-dumping challenges from the United States. It has cost producers about $4.5 million to fight them in the world tribunal. We have won every case.
We can move about 10 per cent of our production down there, the other 90 per cent has to go offshore, or through Thunder Bay or Vancouver. Most of the grain moved down there today is moved down by hopper car.
If you open that border and allow producers to move into that market, they will move in there with Manitoba, Saskatchewan and Alberta trucks. They will be lined up at those facilities. If I was an American producer, I would be mighty upset. I think the border would be closed fairly quickly if you open that border.
You can do that to a limited degree. If you feed a market, you do not destroy the market. However, if you oversupply the market, you destroy it.
If you look at how we farmers market our grain, especially in the open market in Canada and the United States, 70 per cent of the canola we produce is sold on the downward side of the market. That is not good marketing. That pushes the price lower than it needs to be.
The same takes place in the United States where they have had a continuous open market environment. You need to measure that market, feed the market, but do not oversupply it, as you will destroy the price.
Senator Peterson: The WTO does not seem to be working too well. They have not negotiated very well for Canadian agricultural producers. Should we concentrate more on bilateral agreements?
Mr. Moore: I believe the World Trade Organization talks have been going on since I was a boy. I have not seen any favourable results to date. We have to continue with them as they may bear fruit one day. We have to lessen our concentration on the WTO talks as a solution and start some other negotiations and do some hands-on work to solve our own problem in our own country.
That would be my passion of biofuels, which would produce a market so we do not worry about exporting so much and we can focus on a premium product. We always put our product on the market at the price and stage where the rest of the world dumps their surplus grain.
We could get away from that with proper marketing tools, less of a volume to market, and pushing the quality and premium, best quality wheat in the world. We are not getting a premium price. We are taking world dumping prices for it most of the time.
Let us concentrate on a made-in-Canada solution and made-in-Canada market.
Senator Banks: How can you concentrate on a domestic market when we cannot consume more than 20 per cent of what we grow?
Mr. Moore: That is what my biofuel industry will do. It will consume a tremendous amount.
Senator Banks: Will it consume the other 80 per cent?
Mr. Moore: It could very easily consume the other 80 per cent. All we need is a stroke of a pen and Parliament to make its use compulsory. The government could legislate its use as it has been legislated in the U.S. That is why there is a bulge in our barley market right now. It is nothing to do with what we have done. It is what the American government has done to legislate the content of biofuels in their fuel, which has taken the corn out of our market. Without the corn, the producers here, the feedlots and such, have to pay a higher price to get the barley.
Senator Banks: You are talking about growing different crops than we do now?
Mr. Moore: Not necessarily.
Senator Banks: You do not want to use wheat to make ethanol.
Mr. Moore: We would use just the poorer quality wheat, the poorer end of it. Ethanol and biodiesel can be made out of the very poorest of grain. It will eliminate this glut and the whole system in one fell swoop.
Senator Banks: Can they make it out of straw?
Mr. Moore: Yes, they can. That is where we need to concentrate our efforts and start using our stuff here or more of it. That would relieve this trying to face the world trade with a big pot of stuff that nobody wants.
Senator Banks: You talk about transportation. Grain does not move properly. I was the author of a bill that would have introduced a level of competition into the movement of grain and only grain along the main railway lines. Neither CN nor CP allows any locomotive or rolling stock on their main lines, including grain. When you get to the end of the spur, you transfer to them and no one else is permitted to do that. I may reintroduce that bill.
Do you think the introduction of competition on the use of the presently underused main lines for the transportation of grain by other carriers would be a good idea?
Mr. Nicholson: Certainly, it would be a good idea. You are going back to the Estey report and his fourteenth recommendation, which was taken out immediately by the federal government when it went to the House of Commons.
When I met with Justice Estey in Bow Island, and I met with him in Regina on that issue, I commended him for the work he had done. The report was cherry-picked and it did not have much meaning after the joint running rights were taken out. Yes, I believe we need joint running rights in Canada.
Senator Mahovlich: You mentioned user fees for rinks, pools. I grew up in Northern Ontario where the local Lions Club sponsored the swimming pool. The Rotary Club sponsored baseball fees. Other clubs sponsored hockey teams. Are you saying the federal government should step in?
Mr. Fournier: I am, yes, if you look at the trends. The Elks Club, the Legion, the Moose, these organizations are seeing their memberships dwindle. As older members retire or move away from the organizations, there is not the same level of new members joining. In Coaldale, for example, the local Kinsmen Club does a phenomenal job of supporting that community. However, not every community has one of these organizations.
The population of the village of Nobleford is 400 residents. They do not have many of these organizations. Everything they do, they do on their own. Their residents are already taxed with their time and their volunteer efforts. There is a gap and somebody needs to fill that gap.
Senator Mahovlich: Can you give me the percentage of farmers that want to keep the Canadian Wheat Board.
Mr. Nicholson: Manitoba had a plebiscite with two clear, concise questions. It came in at about 69.8 per cent on wheat and about 63 per cent on barley. That was the clear, concise question.
I have held 18 meetings in southern Alberta, I held one in the Red Deer country, and that is Chatney country, who was an open market, board of director supporter. I was forewarned when I went into that meeting, that the area was marketing choice, it was true.
I have to say, and I am sad to say this, from my perspective, that 97 per cent of the farmers in Western Canada, including Alberta, do not know and understand the open market system, nor do they understand the Canadian Wheat Board system.
The question I asked, right at the start of the meetings, was can anybody tell me how China, Japan, and Mexico, who buy 90 per cent of our raw canola, buy it from Canada? Nobody could answer that question. Until you can answer that question, and understand the open market, and the Canadian Wheat Board system, how can you have a realistic vote?
Senator Gustafson: I do not know if I should get into this.
The Chairman: Gently, Senator Gustafson.
Senator Gustafson: Your mind is made up, Mr. Nicholson, and you are part of the bureaucracy of the Canadian Wheat Board.
What I know about Alberta, a large percentage of the farmers here, feedlot operators, the barley growers, have come out very, very forcefully saying they want a choice.
I have delivered grain 20 miles from the border; I have delivered canola to Velva, North Dakota; ADM, Archer, Daniels Midland Company; and even to AGCO, Massey Ferguson, Heston, Gleaner, White. ADM owns 28 per cent of AGCO. They are a much bigger company than Saskatchewan Wheat Pool and they have come out in favour of choice. I do not know where you get your numbers.
Mr. Nicholson: The consultation that Mr. Strahl has conducted has been with the Western Canadian Wheat Growers Association and Western Barley Growers Association. ACAP has never been consulted. Wild Rose has never been consulted in Alberta. APAS, Agricultural Producers Association of Saskatchewan, and SARM, Saskatchewan Association of Rural Municipalities have not been consulted. Mr. Strahl and his task force have not consulted the CFA, Canadian Federation of Agriculture.
The Canadian Wheat Board has never employed me. I am a farmer. The Alberta Wheat Pool employed me for 30 years, not the Canadian Wheat Board. I have put sessions on not only on the CWB but also on the Winnipeg Commodity Exchange, the Canada Grain Commission, ocean freight, and all those things that come into play in how producers can fare in this system. It is a complex and complicated system without question.
Senator Gustafson: What percentage of Alberta farmers wants a choice? It is a high percentage. There is no question about that. It is too bad we do not have people from the Cattlemen's Association, the Barley Growers, AGCO, and so on.
Mr. Nicholson: The Canadian Wheat Board cannot sustain long-term viability on marketing choice. You will either have open market or central desk.
Senator Gustafson: What would be wrong with taking the major grain companies, forming a Canadian company, and competing with Cargill? The CWB sells a lot of grain right through Cargill. When it does that, it becomes another middleman in the game.
Mr. Nicholson: As I mentioned in my presentation, all the grain companies are accredited exporters of the Canadian Wheat Board and can sell wheat board grain in the international market. They buy it from the board. Accredited exporters sell about 30 per cent of the sales of the board. I worked for a grain company for 30 years and I know that the idea of amalgamating the grain companies into one would not work.
Senator Gustafson: Times change and if we do not get some change in agriculture, there will not be an industry in Canada.
We used to produce about 31 billion tonnes of wheat. That has dropped to about 16 tonnes. It is going down. The way it is going, the CWB will not have anything to sell.
Mr. Nicholson: That is due to the European and American subsidies, not the Canadian Wheat Board.
Senator Gustafson: Exactly. We have to deal with the subsidies. I have made the statement many times that we have bought the lie from our bureaucrats that we will get the Americans and the Europeans off subsidies. I have been down there several times, and I have been to Europe. Nothing is further from the truth. It is not going to happen. We must look at the global economy and how it is affecting Canada or we are in big trouble.
Mr. Moore: I hesitate to speak on this. Sometimes it is better to be shy and thought a fool than to remove all doubt by speaking. I cannot sit idly by and listen to one of our own, Mr. Nicholson, paint the same picture of us that most people have, of the dumb old farmer with the bib overalls and the railroad cap and the piece of grass hanging out of his mouth saying, ``Gosh, Pa, it is a hot one today, eh.''
We are very much in tune with what is going on. The modern farmer is up to speed. We have to realize that whether you are pro-choice or CWB, we have to move on with a positive approach. I do not see anything wrong with the dual system as a trial, if nothing else. If the CWB is as good as the CWB people say it is; it should not have any problem competing and being successful. Let us give it a whirl. Let us go the other way for a little ways and see if we cannot do something. We sure as hell are not doing great right now.
Senator Gustafson: We cannot continue like we are.
The Chairman: Thank you very much. This has been a good lively discussion this morning. My colleagues are always lively.
We will now hear from our second panel. We have Victor Chrapko, the President of the Alberta Organic Producers Association, David Lauwen, the President of the Alberta Sugar Beet Growers, Jerry Zeinstra, Vice-chairman of the Potato Growers of Alberta, and Mark Miyanaga, who is Director at large of the Potato Growers of Alberta.
Victor Chrapko, President, Alberta Organic Producers Association: Thank you for giving us the opportunity to present before you.
Poverty in rural Canada is not only monetary. It is also mental or spiritual or whatever way you want to address that.
In the two pages we handed out, we tried to be brief. We know, from experience our briefs are shoved on a shelf and gather dust. I am pretty long in the tooth, and my toupee is about the colour of most of yours. I have done a presentation or two in the past. I have to say we are very disappointed in these government boards or committees. They come out with good reports and they are shelved. I hope Senator Fairbairn, you and your committee can find a way to manoeuvre and get some of this into legislation.
The Chairman: I should tell those at the table, and those who are listening, one of the first things we do in the Standing Senate Committee on Agriculture and Forestry, it is a very old committee. We are not all old, but the committee makes sure right at the beginning, to bring in the ministers involved. We bring in the ministers and their officials and make it clear to them what we are doing. Frankly, we have had a very collegial and supportive response, particularly on this crusade. No one else has done it. No one else is thinking of doing it. We are doing it with encouragement from all sides, if that makes you feel any better. We would not be doing this if the interim report before last Christmas had not hit a nerve.
Mr. Chrapko: That sounds like a good start. Farmers have been farming for centuries. In Canada, as prairies were being broken for food production at the beginning of the century, the government of the day in 1905 passed the Noxious Weed Act. This was an attempt to protect the farmer from weeds and was the process to ensure that the integrity in seed supply would be maintained. It has done that. Seed supply has been monitored to ensure quality, purity and availability to everyone. Over the years this has changed. Why now is there a move to patent that form of life? On two counts it is destructive. No form of life, plant or animal, should be ``owned'' by any one individual or corporation. It eliminates the farmers' right and freedom to provide food for the animal kingdom. For these reasons, it is destructive to agriculture. Legislation is no longer there to protect the farmer.
Current prices for a farmer's commodities are at or near the level seen in the 1930s at the height of the depression. Cost of production has skyrocketed to levels that make it impossible to be in the business of growing food in competition with corporate farms. As an example, in the late 1940s and early 1950s, a combine cost about $3,000. Commodity prices for agricultural products have remained about level. The beginning price for a combine today is $400,000. Inflation, yes, but where is the balance?
Rural poverty is real in our country, which is rich in oil, industry, and resources. Northern Alberta is one of the poorest regions overall. StatsCanada has shown these comparisons to be true. With modernization of the seed regulatory framework, with cost of machinery, and with escalating land prices, is it surprising that by statistics, the suicide rate in rural Alberta is at its highest levels?
Land prices are not based on productive capacity, but influenced by the nature of the buyers. Land is bought for recreational use, oil patch land use contracts, and professional buyers such as doctors, lawyers, et cetera. Money for the purchase comes from sources other than agricultural activity. This trend may appear to be good for the retiring farmer, but it takes approximately 10-quarter sections of land to be sold to the highest bidder to buy a retirement house. It is not conducive to retiring with that much land. This land is out of reach of the young farmer willing to produce food. Is it any wonder that the average age of farmers in Alberta is 56 years of age or older? Young farming families have to rely on off-farm work and a high percentage of both operators and their spouses are employed off- farm in order to maintain a lifestyle choice and contribute to the GNP.
Farmers are good citizens of the communities they live and work in. We pay the highest price for equipment. We support local businesses in rural towns and villages. We pay taxes. We support institutions such as schools, banks, churches and medical services. We serve as volunteers in countless organizations to serve our youth. We raise our children to be responsible adults. Corporate farms do not support local communities. Those communities fail. Until society recognizes that agriculture is vital to our country, we will be unable to get out from under the cloud suppressing the family farm.
The WTO agreements and tariff and non-tariff barriers, give unfair advantage to other agricultural countries against whom we have to compete. We get minimal support from our government in policy decisions to encourage agriculture, and we do not get monetary support that other competing countries do.
Programs brought in during a crisis, such as BSE, result in returns to the big multinational corporations, not in the hands of the small farmer who bears all the costs. The pressure of government and the major packers inevitably squash farmers that attempt to develop cooperatives to sustain meat packing locally.
Our grandparents came to Canada, more specifically to Western Canada, so that their children and generations to follow could own land, contribute to the GNP, have a chance to live a rural lifestyle in which to nurture generations to come. Chemical technology, the GEO factor, synthetic additives, impending seed patents, a disproportionate ratio of income to expense, and poor acknowledgment by society are eroding this rural lifestyle.
In conclusion, we need legislation to control the prices for farm machinery, fuel, repairs, and input costs. We need legislation to set floor prices that represent the cost of production and a reasonable return for wages and investment. We need legislation to guarantee our ability to grow plants and livestock without contamination by GEOs, biotechnology, nanotechnology, et cetera. We need legislation to ensure that if undesirable contamination occurs the farmer is compensated by the entity that caused the contamination, that is, the seed company, corporation, operators, et cetera. We need legislation to facilitate that plant and animal experimentation be done at a publicly supported research facility to avoid results that are skewed to a corporation's bottom line.
The Alberta organic farmers thank you for your interest and attention. We, as farmers, would like assurances that we can still be free to choose an occupation of self-sufficiency and sustainability. We ask not to be under the agenda of corporate control and not to be forced off our land on to social assistance.
David Lauwen, President, Alberta Sugar Beet Growers: Thank you for allowing us to attend these hearings.
In Alberta, we have 250 growers producing about 37,000 acres of sugar beets. This number has declined by about 50 per cent in the last 10 years. Most developed countries have a sugar policy to protect and enhance their sugar industry. Other than modest tariffs on refined sugar in Canada, we operate solely on the open market.
We participated in a tripartite stabilization program from 1986 to 1996. We opted out early to rely solely on market returns. We decided we wanted to go just on what the world market return was going to do for us. We have not had a commodity-specific program since then. In turn, we rely solely on crop insurance and the CAIS program. The CAIS program does not help with slow eroding of production margins as experienced in many crops recently. This is by way of declining commodity prices and increased input costs.
The way CAIS is set up, it seems to discourage diversification that governments try to encourage farmers to do. This is by not allowing some costs that are vital in that diversification. NISA was a better program for diversified farms. This is based on personal experience. I do not have as much experience as most of the people here, but that has been my experience. One broad-spectrum program is not capable of addressing the needs of all the different situations, especially with the irrigation issue in this area.
If commodity prices are low for several years, CAIS is not responsive enough. For example, from 1998-02, with the Olympic average, we had an average return of $35.29 a tonne, which is $5.81 below the five-year cost production of $41.10 per tonne. Through all this, not once did we approach the government for any assistance. That is probably when our numbers fell off from 500 down to 250 farmers.
Sugar beets have been excluded from ad hoc payments in the past. We are not sure why.
The Chairman: Do not go there. Just remember we won.
Mr. Lauwen: I know that the per acre payments the government announced is the easiest and quickest way to get money out to producers, but it is not representative of the higher costs and productivity of irrigation farms.
Payments based on the gross sales do not seem to get to the people that need it the most. That is from personal experience. When I had my tough times, and my returns were low, well, my gross sales were low and my help was low. Then you have a couple of good years, and all of a sudden you get a big cheque, and you say, ``Well, I could have used this four years ago.''
We are not competing with the agricultural producers of other countries, but we are competing with the treasuries of these countries, like the EU countries and the United States. If it was a fair playing field, I am sure we could do it. With all the support they get from the government, it is pretty hard for us.
The sugar beet industry has enormous potential across the whole country, if the proper environment was established, and if we did not make these costs where we could trade deals. With a little protection, I am sure this industry would flourish.
In the long term, we encourage the reduction in subsidies and market distortions caused by government intervention of the other countries. We aim for free trade so long as it is actual free trade. Short-term needs have to be addressed to offset the market distortions caused by the actions of other governments. Some ideas include a Canadian farm bill until we get to the long-term strategies, biofuel initiatives to keep that industry building in Canada instead of passing it on to other countries, and a NISA-style piggyback on the CAIS program to help the most diversified farms.
We would like to thank the members of the Senate for the hard work and support on the thick juice issue we had the past year. We have not heard the official decision, but we appreciate your effort.
Jerry Zeinstra, Vice-Chairman, Potato Growers of Alberta: I appreciate that we had the opportunity to be here today.
The Potato Growers of Alberta have an executive director and staff members, and we have our own office. We have a board of directors that meets on a regular basis. Once a year, we have a strategic meeting to cover our goals, communications, market productions, relationships and leadership.
We have approximately 150 licensed producers with approximately 50,000 acres of potatoes. Of those 50,000 acres, approximately 36,000 acres produce potatoes for processing, 12,500 acres of seed potatoes, and 1,600 acres of table potatoes. We are a little lacking in the table market. There are many table potatoes coming into the stores from outside the country. There are problems there. I am not going to get into that. It involves retail-related problems.
The processing plants of southern Alberta ship their raw products to McCain Foods, the Lamb Weston Inc., Maple Leaf Potatoes, the Hostess Frito-Lay, and the Old Dutch Foods.
The last few years, the big upcoming thing in the agriculture industry, and we have dealt with that with the potato growers, is food safety and traceability of our products.
The United States has formed a group of people, the United Potato Growers of America, and they have asked Canadian potato growers to join. We have formed the United Potato Growers Group of Canada. We try to control and encourage the producers not to overproduce to maintain price and commodities.
We have a negotiation committee, which negotiates on behalf of all growers on contracts and pricing. We have a research committee, in which we do all kinds of projects to improve everything on the farm and the marketing end and to help to understand marketing. There is a seed growers committee. A big part of the seed is exported to the United States and a good chunk is exported to Mexico. There have been quite a few difficulties in trading with Mexico. We have gotten closer with Mexico and ironed out new rules and regulations with them.
We have a power and energy committee. In the last few years, power and energy costs have been escalating, and it has had a big impact on the farm gate and the cost of production. We have a committee that keeps in touch with crop insurance, which we all buy. It gives us protection on our income if there is a disaster. A potato committee is involved in the marketing.
Senator Gustafson: Do your prices vary from potatoes to beets to agriculture in general? How does that work?
Mr. Zeinstra: Land prices are connected, but they are not really connected to production. In southern Alberta, we have dry land, ranch land and grazing lands. Where there is irrigation, the majority of the specialty crops are grown. Yes, there is a differential in those prices on that type of land.
Senator Gustafson: What would a good acre of potatoes cost you?
Mr. Zeinstra: In southern Alberta, it is around the $3,500 per acre, what is under pivot irrigation, and then there is a variation from $2,000 to $3,500. There are exceptions when you look at the location and the production value. There are other pressures.
Senator Gustafson: How about beets?
Mr. Lauwen: We are in the same area. We are competing for the land. It is not based on production value. Better- producing land sells at the higher end of $3,500 an acre. The lower-producing land is at $2,000 an acre. Even at $2,000, the lower-producing land is not sustainable at that price. Prices are high; we compete with the potato people. We also rotate and work together with them.
Senator Gustafson: I am putting in a pitch for Saskatchewan. You can come and buy half of the province for that amount of money.
Mr. Chrapko: The price of land varies all over the map depending how close you are to the major centres. It depends on how bad a doctor or lawyer wants the land. It was very comical to me, if I can take a moment.
One of the lawyers from our community said, ``Geez, this farming does not pay.'' I said, ``Yeah, the sooner the scabs get out of farming the better it will be for us.'' He said, ``What do you mean?'' I said, ``When you do stuff that is not your main source of income, you are scabbing and taking my livelihood away.'' I said, ``You guys charge us like heck when we go to visit you, and then you try and brush that off on the land.'' I said, ``I cannot compete against that.'' I said, ``If you are crying with your profession and your ability to dig into another pot, imagine where I am.''
Senator Gustafson: I am interested in your suggestion that you are joining with American farmers to have some control in the North American market. Tell us about that.
Mark Miyanaga, Director at Large, Potato Growers of Alberta: About two years ago, the United Potato Growers of America started due to low commodity prices in the United States. Idaho and Washington are constantly overgrowing and flooding the market with cheap potatoes. A big core of farmers got together and said that they had to try something even though they had tried before and failed. They managed to get the prices up but then other farmers would plant potatoes, flood the market and bring the prices down. In the last three years, it has held together pretty good. The prices have gone up.
Alberta joined the movement because we send seed into Idaho and Washington. If we do not look like we are part of the plan, they will not buy our seed. That way was visual. It has helped in Eastern Canada. The prices in P.E.I. have gone up tremendously.
Senator Peterson: Victor, what premium do you get for organic produce? Is there a premium?
Mr. Chrapko: Senator Peterson, I sell very little produce and I do not know the exact premium. Some of the premium comes in the ability to be able to sell it over your neighbour, because the consuming public is looking for food not filled with chemicals. The big premium is you can get rid of your product or produce sooner than your neighbour who floods his produce with chemicals.
In our operation, I do not care what the other guys charge. I look at what the retail market is paying on other stuff and add 20 per cent. Sometimes that is below cost of production. The real world is you have to get rid of your product. Produce is volatile; you cannot freeze it or keep it in a granary.
Senator Mercer is from Nova Scotia; I am the first commercial apple orchard operator in Alberta.
Senator Mercer: We do not want more competition.
Senator Peterson: When you had problems with access to the U.S. market last year, were they tariff-related or quality control related?
Mr. Lauwen: It was an allowable product into the U.S. It was in their legislation that this product was allowed across the border. As soon as it started going in there, .1 per cent of their total production, they decided they did not like this anymore. They wanted to stop anything coming from Canada.
Once it went in, they turned it into sugar. That sugar was not subject to their quotas. The U.S. has a protected market. Each factory has the specific quota. If they overproduce, they have to store it. The thick juice that was coming from Taber was outside of their quota. They could sell that sugar over and above their domestically produced quota.
Senator Peterson: Under free trade, under what authority did they do it? They did not like the competition.
Mr. Lauwen: They did not like the competition. They were overproducing sugar. They had block stocks of their own that they could not sell. It was going to a sugar factory down in the U.S. They were actually on side with us.
The other factories did not appreciate that more sugar was coming in when they could not sell the sugar they had sitting in block stocks. It was a tariff line that was allowed. There was nothing being circumvented. That was an allowable product into the U.S. A few people decided they did not like it anymore. They wanted to put an end to it.
Senator Peterson: Like our softwood lumber situation.
The Chairman: We were all very pleased to jump in and write a couple of pretty feisty letters to the two ministers of border and agriculture on behalf of your organization. We hope that might have helped.
Mr. Lauwen: We appreciate the quick response from the Senate and the letters of support.
Senator Banks: The last time we met with you, they were talking about imposing more restrictions beyond the syrup. They are still talking. They have not done that yet, have they?
Mr. Lauwen: They are always threatening to close the border to anything that comes out of Canada. I am not sure of the exact year. We used to ship up to 30,000 tonnes of sugar down there. It went down to zero. Now we have a TRQ, tariff rate quota, of 9,600 tonnes allowable. We are still a third of what we were a long time ago.
Senator Banks: The 9,600 tonnes is still going to the U.S.
Mr. Lauwen: Yes, that is still going there.
Senator Banks: Things have turned around for your business. You had a record tonnage last year, a record average yield per acre, and it was still selling at better than cost, which it did not between 1996 and 2002. It is not a bleak picture, is it?
Mr. Lauwen: I would not say it is a rosy picture. It is a more stable picture than it has been in the past. We had a new contract in 2002 that put a little pressure on the company to do a better job.
Senator Banks: Rogers Sugar is a good company.
Mr. Lauwen: Yes.
Senator Banks: How is the potato business?
Mr. Zeinstra: If you go back three, four, or five years ago, there was a good margin in the potato business. The last four or five years, the cost has been escalating. Land prices have gone up, land rents have gone up. The earlier question was also on the land. I grow and trade on two-thirds of my land.
If you had to buy and own it all today, it is no different from any other farm commodity; it would not be sustainable.
Senator Banks: You could not buy new land today.
Mr. Zeinstra: No, I could not buy the required amount of land. It is not like land needed for growing grain. You have to be on a minimum three-year rotation but preferably on a four-year rotation. You have to have quite a large land base to maintain your contract.
Senator Banks: I will ask Senator Peterson's question about grain again. When you produce organic grain, do you get a premium price for it? If so, where, how, and who buys it?
Mr. Chrapko: In our case, that falls into the open market situation. I find it very interesting, because most of the buyers base their price on the Canadian Wheat Board. Anybody that criticizes the Canadian Wheat Board, thank you, but no thank you.
I say very forcefully, when I sold my wheat in Montana, it took me less than 10 minutes to get the approval from the Canadian Wheat Board to get the numbers and certificates to do it. The Canadian Wheat Board does not hamper that type of transaction even if my grain was not organic; it is that simple.
Yes, we get a premium. The last time I priced it out, which is a year ago, because I did not have any wheat in particular to sell, the lowest was $3 above the Canadian Wheat Board price. Five years or six years ago, I got $10.80 a bushel.
Senator Banks: Above the price?
Mr. Chrapko: That would have been $7 above the price. There is also the value of the dollar that comes into play when you are going across the border. I cannot say enough good things about the Canadian Wheat Board from that standpoint. It saves me the time it takes to go and look for markets and debate with the buyer.
Everybody here appreciates the commercial interest of any mill, or anybody that will buy that grain will try to get it for as low as possible. I will try and get it as high as possible. If I have the Canadian Wheat Board saying, ``Look, you guys, if you do not cough up X above the Canadian Wheat Board, keep it,'' I am going to the Canadian Wheat Board. You can do that with any grain or any wheat.
Last year, when I went to sell my oats and oats are not covered by the Canadian Wheat Board — I got a price of $1.92. I said to the lady working at the desk, ``I am prepared to go; I will come and sign the papers on Monday.'' This was Friday. She did not know how to enter the oat information into her computer. I went back Tuesday. The price had dropped to $1.88. Who takes the licking there? I did not have the Canadian Wheat Board to rely on. I sold at $1.88. It is obvious the market is sliding badly.
I delivered on $1.88 and I had more grain left. When I asked the people if I could deliver more and receive the same amount, they replied that the spot market price had fallen to $1.57. Hello. It is sure nice to have a Canadian Wheat Board.
I went again in the beginning of September. We had a lot of rain. The oats were going to the U.S. I got $2.19 a bushel. I booked in X number of bushels. I still had more left after I made that delivery. I said, ``Can I sell the rest at this price?'' ``No, the spot market today is $1.38.'' Again, hello, the Canadian Wheat Board would sure be nice.
I do not know, unless somebody around this table can tell me, has there ever been a cheque that has bounced from the Canadian Wheat Board?
Senator Banks: Has there even been a cheque bounce from Cargill or Archer Daniels Midland.
Mr. Chrapko: If I may, senator, and you are probably aware of the fellow buying peas north of Edmonton, he still owes me in excess of $40,000. Hello.
Senator Mahovlich: To my mind, the best potato is a baked potato from Idaho.
Mr. Chrapko: We have to expel you from this room.
Senator Mahovlich: Have you ever marketed an Alberta potato? Do you just send it to the processor, McCain? Is there marketing for a good roasted Alberta potato?
Mr. Zeinstra: Yes, there is.
Senator Mahovlich: Is there a retail outlet somewhere in Ontario?
Mr. Zeinstra: I am not aware of any such retail outlet. There are many potatoes grown in Ontario, too.
Senator Mahovlich: Yes, there are great potatoes grown in P.E.I. too. There is nothing like a baked Alberta potato that you wrap up and market?
Mr. Zeinstra: Not as such, no.
Senator Mahovlich: The WTO has been mentioned a number of times today. I guess the Mulroney government signed that deal.
Can we do anything on the next round of talks to help our farmers in the negotiations? Do we have to subsidize our farmers? Is that the answer to what the Europeans and the Americans are doing? Can we get a better deal for our farmers?
Mr. Chrapko: You are looking at me senator, and I enjoy the confrontation or hockey attitude with the potato people. Seriously, if I had my way, I would avoid them completely. They are a waste of my money, my taxpayer money. The people we are sending there do nothing, if I can use the word very loosely, but prostitute the farmers' position.
Not all the other countries are living up to the WTO. We are constantly reminded about the red light, the orange light, the green light on programming. Come on people; whoever is making those decisions, or whoever is taking the advice from the bureaucrats, wake up to the fact that they have these programs figured and know how they are going to jimmy us before they go to the WTO meetings.
I was talking to American friends on Friday and Saturday in Lincoln, Nebraska. Those guys are getting up to $100 an acre in subsidies. After they combine for their corn, they are paid $40 an acre, so they allow their neighbour to graze cattle on the corn stocks. We are worried about giving the Canadian farmers something?
Senator Mahovlich: We have a NAFTA agreement. You are talking about trouble with Mexico. Do they not follow the NAFTA rules?
Mr. Miyanaga: When our troubles with Mexico started it became a sanitary issue. Their changed their rules on how clean they wanted their potatoes delivered. The CFIA in Canada uses a certain standard of tests. The Mexicans use a molecular test and our spuds could not match the test. It was a way to keep our potatoes out because they had a surplus that year.
When we asked what we can do for trade back the other way, block tomatoes or do something, the Canadian government says, ``We do not do it that way.'' That was the end of that. We sat out of that market for probably two years.
Senator Mercer: I want to talk about potatoes. About 75 per cent of your crop goes to processing. We drove by the McCain plant on our way out here this morning. I see the list of the other processors. What are they processing the potatoes into in those processing plants?
Mr. Miyanaga: Most of the potatoes are processed into french fries, and then by-products of French fries: hash browns, steak fries, and cubes.
Senator Mercer: There are no other types of processing like potato chips?
Mr. Miyanaga: Old Dutch and Hostess Frito-Lay are the potato chip processors.
Senator Mercer: What percentage of the 75 per cent that goes into processing would go to Hostess and Old Dutch?
Mr. Miyanaga: It is perhaps 25 per cent.
Senator Mercer: You talked about food safety, a program you related to the problem with Mexico. Has the CFIA come down with regulations that are too strict on potatoes?
Mr. Miyanaga: I do not think the regulations are the problem. We are such a large province, and we have trouble getting access to the CFIA. We export a lot of seed potatoes and there are only two or three inspectors to cover the whole province. They are supposed to be at each farm as we are exporting. They have come up with a pre-inspection program that lets the farmer take his own samples.
Senator Mercer: How do you pre-inspect a crop that is still in the ground?
Mr. Miyanaga: They teach you how to do it. We pre-inspect our crops while in storage, too.
Mr. Chrapko: Madam Chairman, I would like to make another comment. I was hoping somebody would pick up about the patenting of seeds, which applies to potatoes. I mentioned this in my brief. Nobody is paying attention to the ghost that is approaching us.
I mentioned the Seed Act, and that act has evolved into the Patent Act. It is a very scary thing that has happened. There is no question in my mind that there is a treadmill situation being developed. I understand there are three major seed companies that own 80 per cent of the patents.
I will use wheat as an example to explain: We cannot sell deregistered wheat, even though it is perfectly good wheat. It is illegal for us to grow and sell that grain if the patent owner deregisters it. If you grow a crop and sell it and it becomes deregistered, you are in trouble.
With these companies owning all the patents, they can decertify and bring in new seeds. That forces the farmer to use their seed. We know what has happened with canola; you have to sell it back to them, and on goes the treadmill.
There is no other thing in Canada or the United States that I know of that is patented, whether it is a vehicle or anything. Once you buy it, it is yours. You pay your royalty the first time.
That begs the question of research. If every farmer was taxed $15 an acre for research, like Monsanto is charging, we would have megabucks to do public research. The results would not be skewed, because a civil servant would have no reason to skew it. That is a whole day's discussion right there. I will drop it at that.
Senator Gustafson: I have a neighbour who is an organic farmer. He leases 50,000 acres. He came back from Europe where he was selling a special kind of durum wheat for seed. He got over $12 a bushel. There must be some latitude in the Canadian Wheat Board to allow him to do that.
Mr. Chrapko: That is a fact. I stated earlier, you can sell any wheat to do that; however, if it is deregistered, you are in trouble.
Senator Gustafson: This guy is making a killing. He is a young fellow. At $12 a bushel, that is a nice price.
Hank G. Van Beers, Reeve, Division No. 5, Municipal District of Taber, as an individual: Thank you, senator, and committee members, for coming to the Municipal District of Taber. We welcome you. I apologize for not making it to Lethbridge yesterday. For the first time in six months, the CWB allowed me to haul a couple loads of wheat and you guys were second choice.
The Chairman: First things first.
Mr. Van Beers: We have specialized, economized, globalized, and stabilized. We levelled the playing field, and in the end, it did not make much difference. We approached this from a different point of view. The council of the district of Taber is concerned about renewal and future growth of rural Alberta; I am sure you are as well.
For a young farmer to start in agriculture nowadays, he needs $1 million, or more, depending on what he would like to do. Last summer Taber hired an accountant to identify some concerns young farmers would face and one of the concerns was stable financing to get off the ground.
I am at the end of my farming career. Some of the biggest challenges I faced, and a lot of us did, certainly in the early 1980s, were the finances. We asked those accountants to come up with some ideas that would ensure stable financing for young people interested in getting into agriculture. They came up with some recommendations and choices. At the end of January, we had a convention of the Agricultural Service Boards of Alberta, and this resolution passed unanimously. Most of the recommendations had to do with financing and capital gains.
It takes a lifetime to build up an inventory and pay for the equipment. When the farmer retires, it is all sold in one year and the taxes are paid. He has to live somewhere. There is not much room or opportunity for farmers to reinvest some of that money. I am sure farmers would be interested in leaving some of that money in agriculture. A person can roll over capital gains to immediate family members.
One of the suggestions was to extend that right to non-arm's length individuals if the farmer that sold out would provide some financing for the next generation, even though it was not sold to immediate family members. That was one of the recommendations.
The other recommendation is to enhance the application of capital gains reserve from 10 years to 20 years. I think it is 10 years, and if we could extend that to 20 years, that would be helpful as well.
The third recommendation is if a farmer sells his inventory and equipment that is taxed that year. If a guy has a herd of cows, and he was to take over, and if that herd could be taxed in some manner with the farmer that is retiring leaving his money, I am sure that could be accommodated to get a young guy going.
We are concerned about the lack of young people that are able to start in agriculture these days, and we believe if the government were to consider some of these changes in the Income Tax Act it would be helpful and it would really rejuvenate rural Alberta.
I am old enough to know I do not know everything. This is just kind of a remark on the side, because it was a hot topic earlier this morning. I have grown barley for 33 years. I have never needed a wheat board for my barley. At the same time, what the government might consider trying is getting the CWB out of all domestic marketing and let it just deal with the export markets. If the CWB can do a good job with the export markets, we can reconsider in a couple years.
Thank you for listening. I know you are busy and you are anxious to get going.
The Chairman: Thank you very much, Mr. Van Beers, and we are listening.
I should mention to the committee that Mr. Van Beers is a Councillor of Division No. 5 of the Municipal District of Taber. He is very much in public life and farm life. When he talks, we listen.
Senator Banks: Mr. Van Beers is the Reeve. Your worship.
Mr. Van Beers: I have never heard that before.
Senator Banks: You are entitled to it.
Mr. Van Beers: Thank you.
Senator Banks: The second recommendation does not refer specifically to agricultural land. I think you mean it too; am I right?
Mr. Van Beers: That is right.
Senator Banks: It would be agricultural land in which the capital gains would be extended from 10 years to 20 years.
Mr. Van Beers: I guess if we were to be specific, we may be perceived as being too narrowly focused on that. Certainly that was our intent. At the same time, it would be for someone else to consider. That would be a broader point of view.
Senator Banks: That omission in the second part of the resolution was intentional.
Mr. Van Beers: I guess so. We are political to get more people on side.
Senator Banks: You and I talked earlier that farming is a good way to make a small fortune provided you start with a large one. You asked the rhetorical question, if a young fellow has $1 million, which is what it takes to go into farming, why the hell would he go into farming? You could do a heck of a lot of things that are a lot easier than farming.
It goes to the way-of-life question. The worst day of my life was when I was on a committee, of which I am now the chair, and we put the final nail in the coffin of the Cape Breton coal mines, because for years and years and years, the Government of Canada — it does not matter which party it was — subsidized the Cape Breton coal mines. It got to the point that it did not make any sense anymore. There was no business case light at the end of the tunnel.
Instead of providing a subsidy to an industry that had some prospect of anything that could be called success, the Government of Canada was subsidizing, to use the term you raised, a way of life.
I do not know whether it should always be the business of the Government of Canada, of whatever stripe, to subsidize a way of life as opposed to an industry that has some prospect of recovery or success.
When the bill came down to shut down the Cape Breton coal mines, the people came to us and said, ``We have been doing this for 400 years. We have been operating those mines long before there was any such thing as Canada. When Canada needed us, in the wars, in the Industrial Revolution, in the development of things, our great grandparents and their great grandparents were there and died mining that coal and now you are going to shut us down?''
The question boiled down to subsidizing a way of life or of a business. There are parts of this province that fall in the Palliser's Triangle, which Mr. Palliser observed when he first came here. He noted that this land is not good for agriculture. There is a lot of marginal farming that goes on in this part of the world.
When we talk about agricultural subsidies and helping young people to get into farms, particularly if they are marginal farms, are we supporting a business case or are we supporting a way of life?
How much sense does it make for the Government of Canada to support a way of life? We do not say there needs to be a blacksmith in every village anymore. We do not say in some cases there needs to be a village anymore.
Which is it?
Mr. Van Beers: There is a case to be made for the business side of agriculture. The potato growers have done it. The sugar beet growers have done it and that is just in Taber. Many other individual's have done it. They cannot do it if you are going to hamstring them with all kinds of regulations and restrictions as to what they can or cannot do.
The CWB issue is a perfect item. If someone in Taber, or surrounding area, or in Saskatchewan, wants to start a durum processing plant, a pasta plant, or whatever, and whether you believe it or not, the CWB is the biggest restriction to the success of that plant. I really believe that.
Unless we are willing to make changes in those rules, we are just supporting a way of life. We must be willing to venture out and make changes to the rules.
Senator Banks, you asked the question about running rights on the railway, if I am properly licensed, I can drive any truck down the road. If I am properly licensed, I can use any airport in Canada. If I was properly licensed, I cannot run a train down the track. Come on. It is ridiculous.
When the Crow Rate was done away with, we heard all kinds of promises on how rural Alberta was going to have added value, secondary processing, and all that kind of stuff. There were going to be great benefits. All it has done is ruin rural Canada; it really has. None of those things that were supposed to happen did happen.
I am not asking to bring the Crow Rate back, but at least provide us with opportunities to do something with the products we produce and add the value and take it where we want without somebody else putting restrictions on it. In our opinion, there are different ways of doing that.
I see the biofuel industry as a tremendous opportunity for rural Canada. We can argue about which method to use. Regardless of some opinions that we should not use technology too much in raising different kinds of crops, but if we raise the right kind of crop, it would be a great benefit to our whole energy industry.
Regardless of where one is on the whole global warming issue, if you have David Suzuki — and I can get a couple other guys of a different opinion — but one thing that nobody will disagree with is that our regular energy sources are going to run out. Whether it is 50 years or 100 years or 500 years down the road, we have to come up with some alternative. If we are allowed to use technology, and innovative optimistic people carry the ball and run with it, we can do all those things. It will help our environment. If they do not restrict us too much, agriculture can be successful. It can be a business. We will pay taxes instead of taking taxes. Do not tie us down too much.
The Chairman: Is it councillor or reeve?
Mr. Van Beers: Reeve.
Senator Gustafson: I would like to know what you have been told by your lawyers or accountants regarding the generational transfer.
My understanding is you can transfer, if your children are farmers, even to the third generation. You cannot transfer the commodity that happens to be in the bin. You have to pay taxes on that.
What about cattle?
Mr. Van Beers: You pay taxes on the cattle in the year you dispose of it.
Senator Gustafson: That would be a big issue here.
Mr. Van Beers: For sure.
Senator Banks: Or the year you die.
Senator Gustafson: It depends what you have in your will.
Senator Banks: You pay taxes on your cattle the year you die regardless.
Mr. Van Beers: Unless you take them along.
Senator Banks: Ghost riders in the sky.
Senator Mercer: They said you could not take it with you.
Senator Gustafson: I suppose it depends how your will is written out. If your will is made out to your wife, and you do not both die at the same time, she could use the intergenerational transfer.
Mr. Van Beers: No doubt.
Senator Gustafson: I see large numbers of cattle around here. That would be a pretty big tax thing.
Mr. Van Beers: If it was structured in a way it would be easier for the next generation to get into that, without having to pay the taxes and getting everything else sorted out. You have to live somewhere. Other things make it difficult for the present generation to finance the next one.
Senator Gustafson: You do have a $500,000 exemption.
Mr. Van Beers: Yes, we do. Maybe if they extend that to $1 million it might solve the problem. It is a serious concern around here. You heard the prices of land. Certainly a lot of that was higher-priced stuff. Most of it is traded below that price. There is a significant amount of capital required for anyone to get into agriculture. The younger generation cannot do it under the present circumstances. That is the message we wanted to bring to you today.
Senator Peterson: As a small business, you get a $500,000 capital exemption.
Mr. Van Beers: We do.
Senator Peterson: You are saying that should be higher.
Mr. Van Beers: That is what we are saying.
Senator Mercer: The municipality has done this work; it is good work. What have you done with it since then? Has it been forwarded on?
Mr. Van Beers: We have taken it to our convention of the Agricultural Service Boards meeting in January. It was unanimously approved by that body. It gets passed on to the federal government in this case. Hopefully somewhere along the line you will see this.
Senator Mercer: How does it get passed on to the federal government? The federal government is a big organization.
Mr. Van Beers: It is passed on to the Minister of Finance, I believe.
Senator Mercer: Does somebody write a letter and say, ``This is what we passed?''
Mr. Van Beers: That may be a shortfall in our way of doing business. With the exception of this, there is very little opportunity for rural Albertans to communicate their concerns with government.
Senator Mercer: I was not being critical. I was trying to determine where it is so we know if there is an opportunity to follow it up. If we have the Minister of Finance before us, we will know he should know about this before we talk to him.
Mr. Van Beers: I have no executive position with the Agricultural Service Board, but I will certainly find out where it is. I can let Senator Fairbairn know.
The Chairman: Thank you very much, colleagues. Thank you, Mr. Van Beers. It is always good to see you. It is a very interesting issue we will follow up.
Mr. Van Beers: I would like to thank the committee members for taking the time to be here today. It was an interesting morning for me, even though I have heard a lot of the issues before. I am glad you were here to listen.
The Chairman: We have enjoyed it, colleagues. It is always good to come to Taber. Thank you to the witnesses and the rest of you who have listened. It was great to have you here. We will carry on in Taber and in Picture Butte and then we are heading for Saskatchewan.
The committee adjourned.