Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 2 - Evidence - Meeting of October 18, 2011
OTTAWA, Tuesday, October 18, 2011
The Standing Senate Committee on Agriculture and Forestry met this day at 6:06 p.m. to examine and report on research and innovation efforts in the agricultural sector.
Senator Percy Mockler (Chair) in the chair.
[Translation]
The Chair: Honourable senators, I see that we have a quorum and I therefore call this meeting to order.
[English]
I welcome you to this meeting of the Standing Senate Committee on Agriculture and Forestry.
[Translation]
The Standing Senate Committee on Agriculture and Forestry has an order of reference to examine the development of new domestic and international markets, the strengthening of sustainable development in agriculture and also improvements to food diversity and safety.
[English]
The committee will submit a report to the Senate no later than December 31, 2012.
Honourable senators, I would ask that we introduce ourselves. I am Percy Mockler and I am the chair of the committee.
[Translation]
Senator Robichaud: Fernand Robichaud from New Brunswick.
[English]
Senator Mahovlich: Senator Mahovlich from Ontario.
Senator Fairbairn: Joyce Fairbairn from Alberta.
Senator Ogilvie: Kelvin Ogilvie from Nova Scotia.
[Translation]
Senator Rivard: Michel Rivard Quebec City.
[English]
The Chair: On behalf of the committee, we thank you for accepting our invitation. We know that you are leaders in your industry.
We welcome today David Wiens, Vice-President, Dairy Farmers of Canada and Chair of the Dairy Farmers of Manitoba.
[Translation]
We have with us today, from New Brunswick, Jacques Laforge, who was president of the Dairy Farmers of Canada for a period exceeding the mandates of several of his predecessors. Mr. Laforge has been a leader in New Brunswick and in Canada, if you look at his record at the international level. We welcome you and thank you for agreeing to be here.
[English]
David Wiens, Vice-President, Dairy Farmers of Canada: Thank you for this opportunity to appear before this committee. We value this opportunity to share some of the things we are involved in within our industry.
I have been with the Dairy Farmers of Canada since 2002. I started off as chair of the promotion committee, so I cut my teeth on that experience. More recently, as was mentioned, I was selected as one of the vice-presidents representing Western Canada at the board. I am also currently chair of Dairy Farmers of Manitoba. I farm together with my brother and our families. Our farm is located about an hour's drive south of Winnipeg, which is only about half an hour's drive from where Senator Plett would be. Dairy is a fairly significant part of agriculture in that area.
In my remarks I will cover, basically, the three areas that have been highlighted: developing new markets domestically and internationally, enhancing agricultural sustainability and improving food diversity and security.
Dairy Farmers of Canada represents all dairy producers in Canada. There are almost 13,000 of us. We lobby on behalf of Dairy Farmers of Canada, as well as develop policy and promotion. We are run by producers for producers.
The vision of the dairy industry guides our focus and that guides our activities, such as policy and program development, and dialogue and relationships within our industry with the other stakeholders. Of course, there are many stakeholders, including processors, retailers, government, and, of course, consumers.
Our vision here is a dairy industry comprised of profitable, independent farm businesses operating within a dynamic system of supply management, producing and promoting safe and high-quality Canadian dairy products for Canadian consumers.
We are very proud of the contribution that the dairy sector makes to Canada's GDP. In our handouts you will see that dairy has added $15.2 billion to the GDP of Canada. In total, we sustain roughly 215,000 jobs. It is quite a significant contribution to Canada. This can be compared to some of the other industries.
I would like to speak a little about our sustainable development strategy. At Dairy Farmers of Canada, we have adopted a sustainable development strategy. I will briefly highlight areas that you have in the documents. The general objectives of our sustainable development strategy are, first, to reduce greenhouse gas emissions from dairy farms in Canada; second, to promote the efficient and sustainable management of natural resources on Canadian dairy farms; and third, to improve the socio-economic performance of Canadian dairy farms.
I brought some brochures instead of getting into a lot of detail for now. They spell out these three areas of the sustainable development strategy. I can attempt to answer any questions that there may be on that.
The other area within sustainability is sector sustainability. For that you need young farmers.
We have often heard the criticism that it is very difficult to get into the Canadian dairy sector. We also know that dairy industries in other countries have often experienced great difficulties because of market volatility, and it has been difficult for dairy producers to stay in the industry. That is very much in contrast to what we see in Canada. We can provide a stable environment for dairy producers to operate the farms because of our supply management system. There are some real benefits that fall out of that.
Statistics will bear out that dairy farmers are generally younger than the average Canadian farmer. A 2006 census on agriculture indicated that an average dairy farmer's age is 47 years, and for the general farm sector, the average farmer age is 52 years. We see there is a significant difference in that. All of that feeds in towards that sustainability.
We have a sector that makes it possible to have efficient and profitable operations. It gives us the ability to reinvest in our operations and keep up with efficiencies, whereas a that sector is struggling hand to mouth is unable to make those investments.
Some of the areas we invested in are things like food safety, the environment and the new entrants program. In this past year we have had 25 new producers start up across the country. These new producers did not have a background in the dairy industry. This does not count all those generations that are coming on and taking over their parents' farms. This is people from the outside saying, ``We think there is real opportunity there, but can you give us a helping hand to get into the industry?'' This program does that. It has brought new producers into the dairy industry right across the country. It has proven to be very effective.
Another area is on-farm food safety. A major concern for Canadians is that their food source is safe. There are systems in place to be able to provide that quality of food, and food that has been produced in a safe environment. We have developed the Canadian Quality Milk program, which is known to producers as the CQM program. It outlines ways in which producers can best maintain safety of milk and meat on the farm.
This program is certified by the Canadian Food Inspection Agency, CFIA, so it meets their requirements. We provided the reference manuals and workbooks. We developed an easy-to-use system so that producers can carry out this program on the farm effectively without some of the undue paperwork that often comes with programs like this. It has proven to be a very effective program for us.
The other thing is a comment on on-farm efficiency. Dairy genetics are one of the most sought after genetics in the world. Again and again there are requests and interest coming from other countries who want to buy the Canadian genetics. Over many years, the genetics have been developed to improve the efficiencies that we have on Canadian farms. Of course, those are also demanded across the world.
Here are some interesting facts: According to the USDA statistics, since the introduction of supply management until 2008, yield increases in Canada over that time period were at 138 per cent. The U.S. was at 110 per cent during that time frame. In the U.K., another benchmark country, it was at 81 per cent. Interestingly enough, in New Zealand it was much lower, at about 35 per cent.
We can see the strides that have been made within the Canadian dairy industry in terms of increasing the productivity of the cows. That has come as a result of genetics, feeding the cows, cow comfort and many things that go with that.
At the same time, the farm size and efficiency have continued to increase under supply management. It is interesting that in Canada, the decline of the number of dairy farms has followed a similar trend to what we have seen in the U.S. We have seen the number of farms reduced dramatically over the years and that has created larger units and more efficient operations.
We can see through some of these statistics that Canadian dairy producers are comparable to producers in the rest of the world in terms of increased efficiencies.
In terms of dairy research, we have a long-standing commitment. We believe that producers, processors and governments all have a responsibility to come together to develop some common efforts, which also helps to ensure the future viability of the dairy industry.
Most recently, the focus has been on the Dairy Research Cluster, which was started in 2010 as part of the Canadian Agri-Science Clusters Initiative for Agriculture and Agri-Food Canada within Canada's Growing Forward policy framework. Under this initiative, the federal government has financed to the tune of 75 per cent in this research venture, and Dairy Farmers of Canada came in with 25 per cent. Our 25 per cent contribution was $3 million, so that has proven to be beneficial to the industry in terms of the kind of research we are able to do.
In the dairy cluster, the main objective is based on identifying the health benefits associated with milk and dairy products. It is a response in terms of Canadians. What is important to Canadians is the food they eat. At one time, maybe there was less focus on that, but certainly Canadian consumers have become much more aware of what they eat. They want to know that it is nutritious, the different amounts and the kind of nutrition they get from that.
Those things are responding to what we know is a need in the marketplace. This research is a benefit to the dairy industry, but it is also a benefit to Canadians in general through better health outcomes, and economic benefits actually are spread beyond just our industry.
This dairy cluster includes 46 different research projects and involves hundreds of experts at universities right across Canada. It is not unique to one area. It has a presence throughout this country. This program will terminate on March 31, 2013. We are now starting to work on the next round, the next phase of dairy research. This November, a group of dairy farmers and others engaged in dairy research will develop a list of priorities to help set the direction for the next set of projects.
At the end of the day, the continued investment in research is critical for all sectors within Canada. The biggest market for Canadian dairy farmers and processors is Canada, but it goes beyond just dairy. In fact, in general agriculture the primary market is right here within Canada.
The Canadian agriculture and agri-food market is a strong market. Through some of our programs we are encouraging the value added that we have right here within Canada.
It is said that 63 per cent of the value of agriculture and agri-food production is sold in Canada. That gives an indication of how important our domestic market is. In the Growing Forward 2 consultation paper, AAFC has said that three quarters of Canadian processed food and beverages is destined for the domestic market. That is again an indication of how important our market is.
The dairy market in Canada is a mature market, but there are still areas for growth and development. To this end, Dairy Farmers of Canada, DFC, and our members initiated a comprehensive review of all these different elements influencing the market growth for Canadian farm milk. That study is now under way.
For our policy conference coming up in February 2012, we expect a report to come out at that time to indicate any potential market opportunities that we have within Canada. We look forward to that, some of the initial reports coming out that obviously there is opportunity there. We have to find ways to tap into that.
We have always placed a high priority on investment in generic promotion of milk and dairy products and, of course, the processors are doing their brand advertising at the same time.
Through advertising partnerships and educational programs, DFC promotes Canadian milk products and encourages healthy eating habits, which is a benefit for all Canadians.
I believe you have received this magazine. You may not have it, but it is an indication of how we will also promote our product, together with other commodities. Here you have an example of where we worked together with the Canadian beef producers. You see the Canadian beef emblem there as well, and of course we all know that cheese and meat go well together. We do find those opportunities and work with the other commodities. This was an example of that.
The other thing that we have developed is a blue cow logo, and many of you may have seen this. Certainly, consumers are becoming increasingly aware of this blue cow logo because it signifies to them that that particular product is a Canadian dairy product. It is 100 per cent Canadian dairy product and they can expect the great taste and flavour that comes with our products. It is a sign of quality.
Since we started with this blue cow logo, over 300 dairy processors have signed on to using this for their programs for over 5,100 products in Canada, and more than 2,700 products proudly display that symbol, with another 2,400 being lined up to take on this symbol. They have begun to recognize that. It is interesting to see how the retailers have come to demand that too. They certainly track what is important to Canadians. Those are their direct customers. They have turned back to the processor and said we would like to have this logo because we want to be identified as having a Canadian dairy product on the shelf.
That has proven to be a very effective way of getting consumers to know that we have these dairy products and that they are made in Canada.
Finally, in improving food diversity and security, recently the cost of goods in Canada, both generally and in comparison with other countries, has been a topic of discussion. I am sure many of you may have heard some of the goings on in the media recently.
It should be noted that Canadians spend 10 per cent of their disposable income on the grocery basket, and of that 10 per cent 1.5 per cent is dairy. It is also interesting to note that the Canadian disposable income spent on dairy products has decreased by 11 per cent since 1990. It has declined considerably, and some of that has come through the efficiencies that we have achieved over the years, through some of the things we have talked about.
Finally, we are also proud to be able to reinvest and contribute to our local Canadian communities and economies. Of course, all 13,000 farms are in rural Canada, near a small town somewhere, and all that income is basically reinvested close to home, which is in those rural communities. We see vibrancy in the rural communities where you have this strong farming presence. In particular, we have seen the kind of impact that dairy has had on the communities in which we reside.
In closing, there are a few suggestions for the committee to consider as part of your study on research and innovation. We focused on sustainability and research, and these can be found on the last page of our report.
With that, I would like to thank you, Mr. Chair, for your time.
The Chair: Thank you, Mr. Wiens, for sharing the information. Now we will ask Mr. Laforge to give his presentation.
[Translation]
Mr. Laforge, the floor is yours.
Jacques Laforge, as an individual: Thank you, Mr. Chair. I was very pleased to be invited to speak before your committee. I already know many among you.
I come before you today as a farmer with nearly 30 years of experience in general agriculture. My 30-year-old son and I represent the third and fourth generations manning the family farm. He is with us at the farm, with his wife. Our farm has developed over the years. And we already have three grandchildren who scamper around the farm, representing the next generation, the fifth generation. I think that somewhat describes the Canadian family farm today.
Given this experience, I would like to, first of all, speak of agriculture in general; I will then discuss our own farm, relating what we have done to overcome our challenges over the years, in terms of market innovation and development. I will try to cover all these aspects within five to seven minutes.
Ours is a mixed farm, 50 per cent dairy and the other half devoted to grain production. We are also involved in marketing activities to sell our products.
We grow around 500 acres of grain from a total of approximately 1,000 acres of land. All of our grain crops are harvested. We harvest grain, hay and as much fibre as possible in order to bring them to market. There have been years that our hay fields generated more revenue per acre than grain. In the 1990s, grain was selling at a very low price. The exchange rate strongly encouraged us to sell our fibre, hay and fodder to the U.S.
Regarding market development, often a market is a bit like fog or smoke. We have it today, but it is not always stable; it is volatile. When the Canadian dollar reached parity with the U.S. dollar, we had no other choice but to stop a large part of these activities. This is a fairly typical example of a Canadian farm. On the dairy side of things, it has been genetics with mad cow, and the difference in the dollar has also affected us greatly. It is the same story with hog producers.
The message I want to convey here is that Canadian agriculture has always benefited from a low Canadian dollar, and that is how we maintained our competitiveness.
Over the last few years, we have not had that and farmers are eating their profits just to stay in business. It is not that they are not good business people, they have to adapt. When the Canadian dollar jumps 20 to 25 cents nearly overnight, we have to adapt very quickly.
The message I am looking to convey today is that in order to strengthen agriculture and the morale of farmers, and encourage progressive businesses, we need a massive investment to compensate for this loss, which was the result of bad timing. It is a direct loss of competitiveness that we have always suffered, and we developed our businesses in this manner.
The committee must address this issue in order to assist many farmers in the export and domestic markets. It is difficult to develop a market when you cannot breathe. We do our best to survive financially, but this is not always possible. We eat our profit margins or we have to borrow large sums of money to survive for several years in order to rebalance things.
Since I am here representing my farm today, I will speak to you about it. We decided to make investments in the farm that were a bit outside the scope of general agriculture. We had planned for this project a long time ago. We built a digester. It is a large stomach that takes cow manure and produces biogas. We added waste from outside the farm to the cow manure. This waste came from specialized food production plants like the McCain Foods Limited plant 5 kilometres from our farm, which turns potatoes into fries. We concluded an agreement to receive all their waste. We mix it in with our dairy cow manure and we make biogas out of it. We then use the biogas to operate a cogeneration plant that will produce electricity for about 200 homes, a small village. We will be producing approximately $250,000 worth of electricity per year. Everything that goes through the digester is converted into liquid and once digested, it is the best organic fertilizer you can find for plants. We have an agreement with a dozen or so farmers in the area for this fertilizer. We are self-sufficient in terms of our chemical fertilizers on the farm. We have electricity revenues, and the cogeneration plant also provides us with heat. We have a 1000-HP engine that fuels a generator, producing between 300 and 600 kilowatt-hours. We are trying to maximize this heat. We heat all the houses and the hot water tanks. The digester also needs to maintain a certain temperature.
I provide this as an example, because my dream, when I bought the farm from my father, was to have a self- sufficient operation for all its major acquisition costs.
[English]
On the farm, we wanted to be self-sufficient, not having to buy these items, because the highest-cost items today are energy, fertilizer and chemicals. Today we have a farm because of this operation that has a multitude of potential around it, and it is part of the farming operation. We also have other industries looking at us, to make agreements with us on the extra heat that we have and all this.
For farming of the future, when we look at the late 2000s or 2010, we do not see exchange rate changes very much. It will stay at par. What we need is not necessarily more production but smarter efficiencies and doing it smarter. By smarter, because we are in a cold climate, I mean we need to do things differently and more efficiently than someone who is in a warm climate. We need to actually look at agriculture in Canada as almost being self-sustainable and self- sufficient in all these input costs. I think that is quite achievable. If you look at everything that is facing us, if you look at farming, and it does not have to be a digester, a farmer today has enough land to grow his different crops to produce energy. You have canola today, biodiesel and biogas. You have a mixture of things. In order to have that, you need innovation, and you need massive investment, which the farmer cannot afford right now because of the exchange rates. They are squeezed financially.
We need to look at farming in Canada from the perspective that a farmer will be self-sustainable economically on his farm and will have a profitable unit. If he is producing something where one year the market is fairly soft, he has an opportunity to do something else with it rather than just marketing it on the local market. In order to do that, government has to have a lot of programs lined up for massive investment in those areas. For me, a massive investment is a certain amount. For a smaller operation or a bigger one, it could be a different amount. We need to focus, and I would say a committee like yours would need to design programs that take each individual farm and determine the three most innovative things you can do on your farm to achieve these objectives, to be free and producing your own input costs. These are high-cost items. You would be surprised. If you get the farmer concentrating on at least three or two, that would help him. On day one, give him a boost in reducing his costs or increasing his return. I think that is where the future of farming programs should be. Sometimes we try to do something more in one area or in another, but I think a per-farm basis is almost the way to go.
These are just suggestions. When I look at innovative ways, I will give you an example, and this might sound too simple, but the best innovation that takes place is when you are actually at one point, and usually most of the population has gone to three segments in order to achieve efficiency. I will use the example of a cell phone in Canada. We had telephone lines and all kinds of systems to communicate because we were a developed country, doing fairly well. We went to cellular phones and all the gadgets today, and it takes a while and it is costly. It is not cheap in Canada. In 1999-2000, I actually went to India, and at that time I would call them starting to be an emerging country. I could not afford a cell phone, but everyone in India walking on the street had a cell phone in their hands, including kids. How could they afford that? They did not have to go through all the history of telephones. They went from nothing to a cellular phone. Agriculture has to go through a process like that in Canada. You have to jump, and that is why you need massive investment. You have to jump a bigger hoop and go through a higher efficiency gain and try to do away with that interim layer. I think agriculture in Canada will be and can be a very competitive and efficient operation in the future, but we have to be putting the investment out there and making sure it is done correctly.
With that, I will stop.
The Chair: Thank you, Mr. Laforge.
Senator Robichaud: Mr. Wiens, do you see an urge for the dairy farmers you represent to go and find ways towards self-suffficiency as Mr. Laforge just described here?
Mr. Wiens: I am not sure how I would interpret your comment on self-sufficiency. I would say that we are currently self-sufficient, and certainly we will continue to look for efficiencies to move the farms forward. We currently are independent farms. Have I misunderstood your question?
Senator Robichaud: Mr. Laforge was saying there are three things that have an impact on whatever revenues or profits you might have. Energy is one of them, and he found a way to deal with that. In his case, there was fertilizer, and I suppose some of the dairy farmers also have fields for hay and feed and things like that. Is there a drive for your members to go in that direction and not rely only on genetics? With genetics, we would come to a point where it has been maximized. Am I wrong?
Mr. Wiens: It is a good question. Part of maximizing is to have consistency. The genetics of one line may produce different results, but part of the challenge is to make that as consistent as possible.
Mr. Laforge made a good point there in that how you improve efficiencies on farms will vary from one part of the country to another. For example, in my situation in Manitoba, the hydro rates would be considerably less than they would be in New Brunswick. For us to do the same business plan, unless we get some major subsidy from the utility in order to generate additional electricity and put it back in the grid, just would not work. However, there is something else that we could use in a greater way than he can.
Part of it is that there are differences from province to province, and not only in terms of climate. Energy costs for us will vary so much from one part to another, and I think hydro is probably one of those biggest variables. Fuel costs are a little more consistent. There are variations within the country, but it seems on the hydro side they are trying to do different things. Just in terms of looking for other opportunities, for example, in dealing with manure, it is a valuable fertilizer, even as raw manure. In some cases where producers find themselves further away from the land or they do not have enough land right around the farm and distance becomes a factor, they separate the liquids from the manure. It helps us deal with other things. Besides making the transportation more efficient, you can keep the liquid closer to home and the dried solids can go further. In terms of the phosphorus nutrient, there is less in the liquid. When you tend to put more manure closer to the farm, you want to use liquid so you do not overload the phosphorus. Those are the things that producers are pursuing.
[Translation]
Senator Rivard: Mr. Wiens, I thank you for the statistics you have presented to us. I had no idea that so many jobs were being generated by your industry. This compares with the aeronautics industry or Desjardins and others. Congratulations!
Before the House of Commons, a bill has been tabled to abolish the Canadian Wheat Board. In the west, it is very controversial; about half are for it and the other half are against it. If there was not a supply management system, to what degree would such a situation be disastrous for you?
[English]
Mr. Wiens: Certainly the supply management is extremely important to us. Over the years, supply management has proven to create a very stable environment in terms of our dairy production. I know that often there is a link made between the Canadian Wheat Board and supply management, although those are quite different. Within that, there are more differences than similarities. They very much do different things.
I should comment that in terms of supply management and the effectiveness, first of all, there is massive producer support for it. That is pretty clear. It is an industry that exists from coast to coast in this country. When you reflect back a couple of years on the recession in 2008 when dairies throughout the world found themselves in huge trouble, there were demonstrations in Europe where producers were dumping milk in protest because of the low prices, but in Canada we withstood that storm. In fact, the market did not shrink during that time. The prices did not falter. Canada had a relatively good economy through that, too. Certainly it is an indication of how we can weather those kinds of storms with our supply management system.
[Translation]
Senator Rivard: Mr. Laforge, you spoke of government programs to be implemented. Would you have one or two examples? I do not mean a direct subsidy that would be connected to production. What kind of programs would you like to see the government put in place?
Mr. Laforge: The programs should steer farmers towards innovation, in the sense of improvements. You can innovate on a farm with very simple things. I am speaking of programs strictly connected to innovation.
Past programs were based on farmer subsidies so they could produce more. If there was a problem, we would simply produce more. That is the nature of farmers. If I was feeling the pinch financially, rather than have 200 acres, the following year I would have 250. And I would do this as long as necessary.
When our dollar is equal to the U.S. currency and our monetary situation at the international level is high, it is best for us if we focus on cost reductions through innovation. We should not stimulate more production before lowering our production costs in order to improve our situation. Farms come in various sizes, and innovation is very important right now, along with investments, in order to complete this step.
If you look at debt levels on Canadian farms versus U.S. farms, it is alarming. The reason is that we are in a period of adjustment. During an adjustment period, innovation is important and costs must be minimized.
There is an English expression that goes: ``Don't get bigger, get better.'' By applying this principle, we will only grow in the future. If we are more efficient, we can look at expanding our business.
But it is essential that we focus on innovation today and reduce our costs. I am not saying that there are no exceptions making it possible to develop a high-value niche market that will generate adequate revenues, but in general agriculture, it is more important to focus on innovation by reducing our costs.
Senator Rivard: Regardless of the program that could be implemented by the federal government, would the project costs be shared 50-50? In your mind, do you believe that all programs for research, innovation and development should be strictly a federal responsibility, or do you think that your industry can contribute half, two thirds, one third?
For example, in municipalities, when infrastructure work is done, the costs are shared between the three levels of government: provincial, municipal and federal. In research and development programs, do you think that a 50-50 split is reasonable?
Mr. Laforge: I want to be careful to not confuse federal and provincial policies. No two provinces have the same financial situation. Agriculture is very different from one end of the country to the other. Some provinces place more emphasis on agriculture than others. A mix is required, but I am not in a position to tell you what the percentages should be. Such a task is the responsibility of the federal and provincial governments. However, innovation is key.
Senator Rivard: Even though we cannot establish any percentages, you do not deny the fact that, regardless of the program, the industry must do its part to establish a certain percentage?
Mr. Laforge: Yes, I would agree with that.
[English]
Senator Mercer: Thank you, gentlemen, for your presentations. Senator Rivard stole my first question on supply management, but I want to go back to it a bit. I do understand the difference between the Canadian Wheat Board and supply management, but I also see a trend that I am concerned with. When I spoke with the egg producers a couple of weeks ago and some chicken farmers, they, too, are concerned about supply management and the direction that the Wheat Board legislation sort of points at.
In your presentation, Mr. Wiens, under the heading of dairy genetics you talked about the efficiency of the Canadian sector and increasing yields of 138 per cent. You referred to New Zealand only increasing 35 per cent. I was recently in New Zealand and visited a dairy farm — and I cannot recall the exact figures because I do not have my notes from that visit with me — but it seems to me that they also have a difficulty in increasing the yield too much because of the size of the animal that they use and the way they feed the animal on very hilly grounds. The animal cannot be too big to be moving up and down those hills. Also, the type of product they are producing for export is not the same as what we are producing. You are producing mainly for the liquid milk and cheese market, where they are doing a lot of powder. How much milk powder are we producing?
Mr. Wiens: We actually have a surplus of milk powder, which is the protein, non-solids. In Canada, in order for us to meet the butterfat market, we will have a surplus of protein. Much of that is turned into skim milk powder. One of the areas we are looking at is to do further value added on that. Instead of just letting it end off as skim milk powder, we need to turn it into protein concentrate, something that our processors can use in their cheese production, in particular. Of course, we are also looking for some opportunities within the pharmaceutical markets and so on. That is a piece we are not doing in a very big way in Canada. However, it is something that we certainly want to pursue now.
Senator Mercer: I was impressed with your discussion about the Dairy Research Cluster.
Now I go to Mr. Laforge to talk about wanting to leap forward and to basically skip the technology somewhere along the way to give us the jump start. Have the research capabilities of Agriculture Canada, along with your dairy research cluster, been able to synchronize so that you are both working on complementary projects, and so that the left hand knows what the right hand is doing?
Mr. Wiens: That is a good observation there, and that is where there is the coordination within this cluster. It brings this together so that this amount of money, the $3 million and the $9 million from the federal government, ultimately, is made as efficient as possible. Instead of redoing the same projects, let us look at things where we are working together on this so that we can reduce or extend that $12 million into as much research as possible, like the actual hard research rather than to be duplicating ourselves here. Yes, there is an effort there.
Senator Mercer: Mr. Laforge, in Atlantic Canada, as Mr. Wiens commented, we have the disadvantage of extremely high power rates. You talked about your own electrical generation in your operation. Can you tell us how much power you generate and what percentage of your own needs that fills? If you are in a situation where you have excess power at any one time, does it get fed into the grid?
Mr. Laforge: In the maritime region, New Brunswick, first of all, has the lowest electrical rates. For feasibility, it was probably tougher to do that project in New Brunswick versus Nova Scotia or P.E.I. From a production standpoint we produce 2.5 million kilowatts a year. With the objective we have now it probably will be a bit more.
If I look at the programs that were in place, we received a pretty good grant to do this investment. It was a $3- million investment. We received over $1.2 million, $1.3 million in grants through the environment, which was a federal program that has to do with the Climate Action Fund, which is what they call it in New Brunswick. It has to do with the amount of carbon credit savings that you will get out of the project. The grant is based on the carbon credit, not the cost of the project.
It was a well-designed program, but it has run out. I believe they are working on other phases of that, and it was federal money administered by the provincial government, in my case the environment.
Senator Mercer: We talked about food safety, and you talked about the Canadian Quality Milk program. That, too, is very impressive, but is the federal government providing enough and adequate inspection to help you deliver that Canadian Quality Milk program?
Mr. Wiens: We did get some support along the way. When the program first came into effect, one of the things that many producers installed was, for example, a piece of equipment we call the time temperature recorder. This equipment keeps a constant record of the temperature of the milk, the temperature of the bulk tank when it has been washed and the temperature of the water used to clean the milking system. A grant was provided for producers to purchase this equipment. I think it was somewhere around $2,500, this piece of equipment, and we received a grant of about $750.
In terms of the process of becoming validated and then registered on this program, there is some added time for the producer to develop standard operating procedures and so on, getting a listing of the various treatments used on the farm and those kinds of things. That took a while for a producer. He had to step out of his schedule to develop this protocol.
Through the Canadian Dairy Commission there was also a grant available for those who were successfully validated and became registered. There was some support there.
Senator Duffy: Welcome to our guests. I want to follow up on something that Senator Mercer alluded to, but I would like a little more clarity. I remember in another life being told about mountains of butter and lakes of milk that were unable to be sold. Can you give me some idea of the balance between supply and demand? How much dairy product is going into storage and how much is in storage at the current time?
Mr. Wiens: I will try to give as complete an answer as I can, and we can follow up with more information.
To explain how the balance of supply and demand works, the Canadian Dairy Commission constantly measures the amount of production in all of Canada. The processors buy whatever product they need for their sales. When there is butter or product that they do not need, it goes into storage and it keeps their branding on it. It can be withdrawn at any time.
When the processors are not buying to reserve that for themselves, the Canadian Dairy Commission will buy that excess product. They measure the product. For example, there could be around 5,000 tonnes of butter in storage. As the butter stocks grow, an adjustment will be made to our market share quota. There is a formula to determine that. If the stocks are growing, that is an indication that the market is not requiring what is being produced. They send a signal to all the provinces, and we in turn reduce the amount of quota in the system because it is not required at that time. As the Canadian requirements are growing and that level of stocks falls too low, then there is a signal for more quota on the system. In terms of butter fat, there are roughly 4,000 to 7,000 tonnes in the Canadian Dairy Commission warehouses.
Senator Duffy: Is the powder a similar arrangement?
Mr. Wiens: Yes.
Senator Duffy: How responsive are the provincial dairy commissions in responding to the edict from Ottawa? We have known in the past that some provinces have ignored it.
Mr. Wiens: Within dairy, there is a consequence for a province not to follow it. Each province has a percentage of the market share quota. It is a fixed number. We are allowed to operate within a range. We can be half a per cent over and we can drop down to 1.5 per cent. If we grow beyond that range — if we are over, for example — then penalties would apply; and it would become expensive for a province to ignore that signal. If we produce below that range then that market opportunity is lost for that province.
Senator Duffy: How much less expensive would dairy products be if we did not have 5,000 or 7,000 tonnes of butter sitting in the storage or if we had better correlation between the supply and the demand, instead of allowing people to stock up and have taxpayers and consumers pay for it?
Mr. Wiens: When the CDC buys butter or excess skim milk powder, that cost is billed out directly to dairy producers.
Senator Duffy: That is built into your cost of production. In the end, the consumer pays.
Mr. Wiens: The cost of production is our cost on the farm. There are a number of factors: capital investment in terms of facilities, fuel, interest costs and all these things.
Senator Duffy: Labour, management and return on investment. I understand that.
Mr. Laforge, your experience is impressive and shows the kind of forward and nimble thinking that built the country.
How much room is there for more Mr. Laforge in your area? How many people can be producing electricity and digesting the bio-waste? Is it too much to think that the market is big enough to support more than one or two in a region?
Mr. Laforge: To have the same projects that we have on our farm, let us assume in New Brunswick, you could probably have in the vicinity of 15 to 20 digesters across the province. You have to match waste and land base.
My point is that it is not just the digester. You can produce crops to produce bio-diesel and ethanol. For me, one of the most promising crops is sugar beets. People will laugh at this. Twenty years ago, people were just concentrating on the sugar from sugar beets. Sugar beets is probably one of the most promising crops per tonnage, per acre and is the kind of by-products that can be fed into a digester. You can sell the sugar. We need to think wider. It is not just about a digester but about getting an alternative to the farmers to produce their own energy costs or create revenue out of energy costs they would not have otherwise. It might be a rotation with their cash crop that creates that.
Senator Duffy: Could we encourage that innovation if a financing agency like the Farm Credit Corporation had a provision to allow them to fund innovation?
Mr. Laforge: If you had special investments for special innovations like that per farm, that would be ideal. Farm Credit is already financing some of these activities, but they are viewed as just additional activities. At the start they are high risk. They are new. You need to think about that as high risk and a good solid ground to start with from that perspective.
Senator Mahovlich: You mentioned India. I was wondering if the demand for milk in India is going up as their population is increasing. Do you look at India as a market place? Every time you are driving down the highway there is a cow. Does everyone have a cow?
Mr. Laforge: Most of their milk production is produced by milk buffaloes and not necessarily cows. They are low production. India has one of the most sustainable dairy productions in the world because they do it in dairy villages with production of two to three cows per unit.
Senator Mahovlich: So they are self-reliant.
Mr. Laforge: They are self-reliant.
Senator Mahovlich: With that many people?
Mr. Laforge: For an emerging country, India is a good example. There are improvements for milk quality and how they deal with surplus milk. If you go into a dairy village you do not know if it is a buyer or seller entering the village. One is going out with a few litres of milk in their hand and the other one is coming in to sell a few litres of surplus milk. It does not apply to us, but it is a very intriguing model.
Senator Mahovlich: Every farm is self-reliant?
Mr. Laforge: Their water buffalo is basically fed on cash-crop residue, like wheat straw. It is not at all the same system as you would have in a developing country, but it is an interesting system.
Senator Mahovlich: You mentioned that dairy farmers in the United States and in the EU are subsidized. Are there subsidies for our farms here in Canada?
Mr. Wiens: In Canada, we do not receive subsidies on the farm.
Senator Mahovlich: Now that the dollar is so high, do you need it?
Mr. Wiens: There is still no subsidy for Canadian dairy farmers.
That raises a good point. Often, milk prices are compared from one country to another. The thing that is always ignored is the amount of subsidy that goes to dairy producers. Surely that must become part of the price, but very often it is not measured.
Senator Mahovlich: How do you compete with that?
Mr. Wiens: That becomes impossible because then we are competing against the treasuries of other countries.
Senator Mahovlich: That is right.
Are the cows of today giving more milk than, say, a cow 50 years ago?
Mr. Wiens: Yes, they are producing considerably more milk. It has actually accelerated fairly quickly over the last 25 years. If you look at it over 15 years, it is even more extreme than that.
At one time, it was rare to have a cow that would produce 6,000 kilograms of milk. Now, it is nothing to have a cow that is at 10,000 or 11,000 kilograms of milk.
Mr. Laforge: I look at the quota base that we have now on our own dairy farm and then I look at it for when we started in 1980, in terms of production per cow. Today we are milking 100 cows per day. If I had the same production base per cow that I had in 1980, I would have to milk 300.
The production per cow and the Canadian genetic improvement has been tremendous, incomparable. Canadian dairy cow genetics — Holstein genetics — is taught around the world. If I go back to the question of whether we have maximized the improvement, I do not think we will get the same per genetic improvement. However, now there is more selection. For example, you are able to select semen to get only females. You may not have as much growth, but in genetic fields of type improvement, for a more solid cow, for example, you will still have improvements. We are pretty unique.
Senator Mahovlich: Do we sell a lot of cows to, say, Argentina and Brazil? Are there auctions throughout the country for exporting cows?
Mr. Laforge: There are buyers and sellers. Up until 2003, before mad cow disease, there were all kinds of markets. From 2003 to about 2010, about seven or eight years, we could not export. That was very hard on dairy farmers. It was an adjustment. Now those markets are opening back up, and there are markets for embryos, semen and live animals.
Senator Plett: Let me start off by apologizing for being a little late. I was at another committee meeting dealing with what my good friend Senator Rivard was talking about earlier. I need, at least for the record, to make this comment that the intent regarding the Canadian Wheat Board is not to abolish it, but rather to create a dual marketing system. I know that the Canadian Wheat Board will do well under that. That is a topic for another day that we might have the opportunity to discuss right at this committee.
Welcome, gentlemen. Mr. Wiens, you and I know each other and have done so for a while. You suggested that we do not get any subsidy. I do not want to debate this, but I think some people would consider supply management a form of subsidy. Your prices are guaranteed and, as such, it might be a subsidy.
My first question is how do our prices at Safeway compare to prices south of the border.
Mr. Wiens: That is a good question. I know that for many years the prices in Canada were lower. Currently, I would say they are slightly higher, although there is a huge range. It depends upon whether you are comparing a superstore here to a similar store there. If you want to compare the corner store here to a superstore there, it will skew numbers.
It is interesting that in New Zealand, for example, they have the climate and a growing season 12 months of the year. If we were to try to farm the way they do with our climate, we would not survive. We need to get the production per cow because no one here can afford to build a barn for 1,000 cows when we can do it for 300 with higher production.
If you buy a glass of milk in Canada, at a restaurant, you will pay somewhere around $2. Of that, 21 cents goes to the dairy producer.
In New Zealand there is very similar pricing. The retail price is similar to what it is in Canada, so to blame the farm gate price of milk in Canada on a retail price we have here would not hold up. We have seen that in many other countries. The retail prices vary very little from what we have here in Canada, and yet the farm gate prices are a completely different thing.
Senator Plett: You say 21 cents of that goes to the farmer. Where does the other $1.79 go? How is that split up? The restaurateur would, say, only make 15 cents on that glass of milk as well. We know that there is gas and a lot of taxes, but where does the other $1.79 go?
Mr. Wiens: Part will go to the processor for what they do with the milk. Then, of course, there is the cost of the transportation from the processor to wherever the milk is retailed. Ultimately, the retailer will set the price of milk in the store. That price is not regulated. Getting back to the restaurant example, a glass of milk is $2 in the restaurant. We receive 21 cents. The consumer pays a 15 per cent tip on that glass of milk, which is more than the producer ever receives. It is almost twice what we receive at the farm gate. It is a third more. It is interesting that the producer's share is less than the tip.
Senator Plett: You are better off to be a waiter than a farmer.
Mr. Wiens: You wonder.
Mr. Laforge: To be fair to Mr. Wiens, when I was the chairman at the Dairy Farmers of Canada I travelled quite a bit internationally. One of my first exercises, upon getting to a new country, was going to the retail store to compare dairy products and what the farmer gets. If you forget exchange rates, most of the time, in Canada, the farmer would get 60 per cent of the retail share.
It is pretty steady, with no subsidy from government. In most other countries, farmers would get anywhere from 20 per cent to 40 per cent of the retail share. When they get less and less, down to 20 per cent, the government pays out more money to keep the farmer in business.
We are able to compare apples with apples, I guess. We do not over produce.
Senator Duffy: Why do we have big surpluses?
Mr. Laforge: There is no surplus in Canada. We balance production on butter fat. We always meet our butter fat requirement. We never exceed more than a quarter of a per cent a year. Everyone tries to figure out how dairy farmers are doing that. In order to produce that butter fat, you have surplus solids. Skim milk powder, unless we start making low-fat cheese and things, will always equalize. It is a precise system.
Senator Plett: If you answered this question in your opening remarks, I was not here, but tell me that and I can check the records. The written report that I am reading here says that critics argue that the quota system creates a situation of less innovation and lower efficiency. I personally live in an area, as you know, where there are some of the largest farmers in certainly Western Canada, and maybe Canada. I have looked at their systems, and I would argue that there is a lot of innovation there and a lot of efficiency. I would like you to answer the critics here regarding whether you would agree with this statement. If not, would you say that supply management maybe enhances efficiency and innovation?
Mr. Wiens: One of the things that we make available to processors is milk that becomes available to them if they can create a product that is new to the marketplace. They may have done a market study and seen that there is something that is not available in the Canadian marketplace, so we make milk available for those processors above and beyond what they would normally get. There is an area of innovation. It has been a long-standing program. It has been a very successful program as well. During that time that they are creating this product, there are also some price concessions given so that they have the opportunity to invest in that product and get it in the marketplace. There is an area of innovation.
In terms of on-farm, we can make longer-term investments on the farm because we have the stability. For example, on my farm, we have installed a robotic milking system. It is automated to the extreme. It does not take us out of the barn, but now we can spend more time managing the cows rather than doing a lot of the tedious work. It was interesting. A tour of American dairy producers came up to look at it, and they toured a number of different farms. He looked at our setup and was amazed. He said he could never do this kind of innovative investment at home because there is too much volatility. He could not even begin to finance this if, from one year to the next, the milk prices range by 30 per cent.
Senator Robichaud: Where was that observer from?
Mr. Wiens: He was from the southern U.S.
Mr. Laforge: As an example, on our farm, from a security blanket point of view, we always keep the supply management commodity at 50 per cent of the overall income. That is the only way we could justify to the banker making an investment in the digester. If instead of a dairy operation I had a hog operation, I could not build a digester. With supply management, Mr. Wiens is bang on. It offers a certain stability. If you are in that commodity and are able to blend it with your farm operation, it is an insurance policy.
As far as I am concerned, if I am in the potato production area, if I look at the consistent revenue, planning, budgeting and so on, you are able to forecast 10 years. If you are in the U.S. farm operation, five years is the maximum, and it is more like two and a half years. Sometimes you do not do very intelligent investment based on a survival rate of two and a half years. That is the beauty of this system. If I look at long term, probably a lot of farmers would like to have that system in other countries.
Senator Plett: I have one more question, but, Mr. chair, I do want to comment on what Mr. Wiens said about the robotic system. When we travel to Western Canada, I want to ensure that we look at one of them. It is truly amazing. I have seen them, and it is a wonderful system.
I know that you will have some difficulty answering my last question, but I will ask it anyway for the record. I would hazard to say that if I drove by some farms and checked to see what their quota was, and I am assuming quota is somewhat based on a cow and one cow is whatever amount of litres of quota, and if a person with his quota should be milking 700 cows, if I were to count some of the cows, I might find the odd farm that was over a little bit. How closely is it regulated that a farmer does not farm more than the quota he is granted?
Mr. Wiens: That is a good question. In every province, there are quota management rules for producers. If a producer goes over the quota that is on the farm, for example, in our province, there would be a pre-fill policy, so he would not get paid for the milk that was overproduced, and on top of that it would also take a bite out of his existing quota for the next three months. For the producer, there is no incentive. There is no reason why a producer would overproduce. I am referring to Manitoba, but every province has quota policies and regulations in place. Of course, part of supply management is about discipline. You lose the discipline and you run into trouble.
To broaden this a little, a comment was made earlier about the amount of product in storage and it was so wasteful. It is interesting that in countries like the U.S. and the EU, the surpluses are often bought up by government, and there is no incentive for producers to cut back on production. Here, whether it is at farm level, provincial level or national level, there is discipline that has to be exercised all the way through the system, and that is when it works.
Senator Fairbairn: Earlier on, when we were starting, you made some comments that called me up smiling. I am from Lethbridge, Alberta, and I am down in the southern part of the mountains and all of that, so it is very much on the land. We have heard previously that it is important to be able to find a way for the young people to understand that this is not just something coming out every day. This is a very important and elegant way of learning, with families and with the country. I was wondering if you could give us a little bit more about where you have been particularly looking, the people who are interested in that, and the ones who have said to you they would like to do it. It is important to have young people in these areas. I wondered if you could give us a little bit more on that.
Mr. Laforge: For young people getting into farming, I think Mr. Wiens has addressed it all. Most young people who get into farming have been involved and interested at a young age, and they start working on the farm. They develop from there and then they decide they want to do it and buy an enterprise of their own. There are programs at DFC for that.
I think the perception of farming, and why I am very concerned about the exchange rate, is that it creates a negative impact on future generations to get into farming if we do not resolve that perception.
When I was young, if my dad had always said, ``well, darn this, darn that'', and ``this is not a way to make and living'' and so on, you always progress and try to balance the books and make the investment needed. I think right now it is very important that that takes place, for the perception of farming and young farmers wanting to get in.
I want to tell you a story. I have a grandson who is 12 years old. Because we built this digester we do not have to use wood for the wood stove anymore to heat the houses. This is what a typical young fellow — not just because he is my grandson — thinks of farming. I went into the maintenance garage three weeks ago and there was a gas engine sitting on the floor, as well as a hydraulic cylinder. He is 12 years old and he knows how to weld. I walked into the maintenance garage yesterday, and that hydraulic cylinder and engine have become a wood splitter. He put it together and he was painting it. I asked why he was doing that. He said because we do not have to use wood to heat anymore he was going to sell it.
That is where the creativity of farmers starts. If you have young people in farming or working on farms, the creativity starts. When things get so hard and desperate, everybody goes to the bare minimum, and what I call the power of positive thinking goes away. This is for any society, rural people, urban people; we need to make sure that that takes place.
More and more food will be produced closer to home. The further food is produced from your home, the higher the risk of issues happening. That is in any country. You want food produced that is as close to you as possible. Young people are the key to these things.
Senator Mahovlich: Did you ever buy him a pair of skates?
Mr. Laforge: He would be dangerous.
Senator Fairbairn: It is hard where the cattle is and where the mountains are and all that kind of thing. I was very pleased when I heard you say that, because I come from Lethbridge, and it is all around. You often see more now with the young people out and really finding that there is a different way of not hiding back but to getting forward. I just wish all the very best to both of you to keep on going.
Also, the more you keep on going, the more we have to keep going and get things done in Parliament.
[Translation]
Senator Robichaud: How much does he want for his lawn mower?
Mr. Laforge: You would have to ask him. I did teach him how to haggle.
Senator Robichaud: When you talked about supply management, you gave us a good overview of what this represents to producers. But we have people who are constantly trying to undermine the credibility and viability of supply management. All kinds of questions have been asked and some have suggested that surpluses have been bought; some have gone as far as to say that surpluses have been bought by the government, but I clearly heard you say that this has never been the case. It has also been said that there are no subsidies and milk is cheaper, which goes against what you have told us.
How do you demonstrate the success of supply management in dairy products and in other products that are managed in this way?
[English]
Mr. Wiens: That is a story we will never stop telling. I think very often the critics of the system are not the consumers, but somewhere between farm gate and consumer there is someone who would like to have a larger share of that consumer dollar. I think often what happens is a producer is targeted in that case.
What they fail to say is that if they had their way and they could get this product, let us say at half the price or whatever it may be, it would still not change the retail price but it would mean some of those consumer dollars would end up someplace else. We have to see where the criticism is, the quarters from which the criticism is coming. It is coming from those who have a vested interest in grabbing a larger share of the consumer dollar.
Ultimately, we do receive support for the way we do things, first, because we get the share of the consumer dollar that we do. We do not rely on subsidies to get us through the day or through the year. It is also recognized then that this industry is self-sufficient.
That is where we find favour, because at the end of the day almost all parties get what they want. We have a system that makes it possible to sustain ourselves as dairy producers. The consumer gets a high-quality product with stable pricing. You do not have the kind of spikes you have in so many other parts of the world. It is very steady, and the supply is very steady. The processors recognize a lot of the benefits of our system.
For example, a processor here can get a steady supply of milk. If you have a cheese plant you know that milk will be there for you tomorrow. We do not have the production swings they would have in some countries. A processor knows they can carry a full complement of staff and run the plant as efficiently as possible. They know the product will be there for them today, tomorrow and every day. In other countries they have to actually curtail.
We have talked to people from Parmalat, for example, or even Saputo, who recognize the strength of the Canadian system. Somewhere along the way there is somebody who would like to receive a larger share of that consumer dollar, and that is what we keep coming back to.
The public, the consumers, want to have a high-quality product and they want it at a fair and reasonable price. I think consumers also understand that with the system we have it allows us to make the required investment in the farm to address issues like environment, sustainability and greenhouse gas emissions. All those things are important to people.
Just in terms of greenhouse gas, for example, by the fact that we increased the production per cow, we need fewer cows around to get the same job done. That also affects the total amount of greenhouse gas coming out of the dairy industry.
There are all sorts of benefits, and Canadian consumers — and I think worldwide to some extent — recognize they would like to have a food source that is close to home. All of these things have value to consumers. For some reason the critics do not go away, but I would have to say that it is largely due to the fact that there is a vested interest in them, and that is what the issue is. It is not the system itself.
[Translation]
Senator Robichaud: That is the answer that I wanted to give to Mr. Wiens and Mr. Laforge so that the people who listen to this will remember this information and not be swayed by people who do not give an accurate picture of supply management.
Mr. Laforge: For us, as farmers, the system is simple; we operate this way every day. But when I try to explain it to someone who is on the outside, it becomes quite complex. I am thinking of Senator Duffy when he was trying to figure out the dairy production surplus in Canada. Dairy production reaches 100 per cent every year without a surplus. There might be one tenth of 1 per cent more or less, and it evens out the following year.
There are people who still believe the myths regarding supply management, that it is a totally inefficient system. Education is needed. It is your job and ours to explain to people that it greatly serves the public and producers.
Senator Rivard: I hope this time my question will not be too controversial. About 25 or 30 years ago in Quebec, margarine was introduced to the market. Dairy producers saw their products selling less and less because of margarine. It got to the point that the Government of Quebec, in order to protect the dairy industry, was required to introduce regulations forcing margarine producers to sell products that were not the same colour as butter.
The two of you who are not from Quebec, did or do these regulations exist in other provinces as well?
Mr. Laforge: You are going way back. The debate over margarine and butter took many years, and each province put tools in place. Quebec, of course, was one of the most ardent defenders because it was a province, at the time, that had a significant industrial production with cheese, butter and so forth.
However, consumers today see a clear difference between butter and margarine. The colour of margarine is still somewhat talked about in Quebec, yes, but in the other provinces, they have abandoned the debate, telling themselves that, one day, consumers will clearly see that butter is a natural product from a dairy cow and that it is the best choice from a health point of view. Margarine is indeed a product that costs less to produce, but it is up to consumers to decide what they want to eat. This situation with colour, it was to make sure there was no confusion between margarine and butter.
Senator Rivard: I would like to make a comment.
I can tell you that Quebec dairy producers are really reaching consumers with their advertising campaign that often says: ``Butter, it's better!'' It is reaching a lot of people. Great job by the dairy producers; in Quebec, the advertising is extraordinary.
Butter, it's better!
[English]
The Chair: Honourable senators, before we leave, I would like to ask the two witnesses a question. The committee has heard witness from the forest industry tell us that they supply more than half of their industry's energy needs from biomass. Do you think that the dairy industry could make the same claim in five years at the rate that we are going, taking as an example what is happening in Canada now, and with your own farm, Mr. Laforge?
[Translation]
Mr. Laforge: I think that the dairy industry is a bit special, but I cannot sing its praises; it may not be on that level, but we produce fodder for our cows that constantly returns carbon to the soil. We use our manure in the best way possible. By having a digester, we are certainly improving the environment, we are eliminating the odours, we are collecting the ammonia, we are producing energy and so on.
But since it is an animal industry, we are already producing it, and by increasing production per cow, we are minimizing greenhouse gases a great deal.
In terms of energy, for example, most dairy producers, by using their own manure, are already 50 per cent self-sufficient in terms of their fertilizer use. In terms of energy and fossil fuels, we still have a lot of work to do. We are not faced with the same challenges as the forestry sector, but it is a good target to shoot for.
The Chair: Mr. Laforge, you spoke of digesters and you mentioned a number that might be reintroduced, taking your example, in New Brunswick. But as for Prince Edward Island, Nova Scotia and Newfoundland and Labrador, what number would be profitable to the industry?
Mr. Laforge: It would be a similar number. We do not have the same number of producers in each of the maritime provinces. I could see 15 to 20 digesters in each province and especially in these provinces since the cost of electricity is higher owing to certain situations. It is good potential for the Atlantic provinces.
The Chair: And for the other provinces?
Mr. Laforge: For the other provinces as well. But there are other uses for biogas: we can produce heat with it. On our farm, because of oil, the next step will be to separate our biogas, which is CO2 and methane. We want to use a device to separate the methane and CO2 and sell the CO2 to companies that use that gas, compress the methane and use it in our tractors at a ratio of two-thirds methane and one-third diesel. That is the next step and all farmers could do it. At the same time, it eliminates the smell of ammonia in the air.
The Chair: How many digesters do we have in Atlantic Canada at the moment?
Mr. Laforge: I believe I am the only one. There are some at the industrial level, but in terms of farmers, I am the only one.
The Chair: Before adjourning, I would like to remind the members that, at the next committee meeting, we will hear testimony from the industry. Please feel free to recommend other stakeholders if you would look to move this file forward at the committee level.
[English]
Senator Robichaud and I will be meeting with the speaker from the Senate of Gabon, who is coming as the guest of Senator Kinsella on November 1, and they have asked to meet with our committee with regard to our forestry report, and, no doubt, we will be sharing agriculture as well. Any member is welcome to the meeting on November 1.
On behalf of the Standing Senate Committee on Agriculture and Forestry, to the witnesses, I thank you very much for sharing your knowledge with Canadians and the Canadian industry.
I declare the meeting adjourned.
(The committee adjourned.)