Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 30 - Evidence - Meeting of June 2, 2015
OTTAWA, Tuesday, June 2, 2015
The Standing Senate Committee on Agriculture and Forestry met this day at 5:30 p.m. to study international market access priorities for the Canadian agricultural and agri-food sector.
Senator Percy Mockler (Chair) in the chair.
[English]
The Chair: Honourable senators, I welcome you to this meeting of the Standing Senate Committee on Agriculture and Forestry.
[Translation]
I will now ask the senators to introduce themselves. I am Senator Mockler from New Brunswick, and I am the chair of the committee.
[English]
Senator Merchant: Good afternoon; I'm Pana Merchant and I'm from Saskatchewan.
Senator Tardif: Good afternoon; Claudette Tardif from Alberta.
Senator Enverga: Tobias Enverga from Ontario.
Senator Unger: Betty Unger from Alberta.
[Translation]
Senator Dagenais: Jean-Guy Dagenais from Quebec.
[English]
Senator Ogilvie: Kelvin Ogilvie, Nova Scotia.
The Chair: Honourable senators, as a witness from the National Farmers Union, we have Mr. Terry Boehm. Mr. Boehm, do you hear us?
Terry Boehm, Chair, Seed and Trade Committee, National Farmers Union: Yes I do. Thank you very much.
The Chair: Thank you for accepting our invitation to share with the committee your comments, opinions and recommendations with the order of reference that we have from the Senate of Canada. The committee is continuing its study on international market access priorities for the Canadian agricultural and agri-food sector.
As we know, Canada's agriculture and agri-food sector is an important part of the country's economy. For statistics, in 2013, the sector accounted for one in eight jobs in Canada, employing over 2.2 million people and close to 6.7 per cent of Canada's gross domestic product.
[Translation]
Internationally, the Canadian agriculture and agri-food sector was responsible for 3.5 per cent of global exports of agri-food products in 2013.
[English]
In 2013, Canada was the fifth largest exporter of agri-food products globally. Canada engaged in several free trade agreements. To date, 12 free trade agreements are in force. The Comprehensive Economic and Trade Agreement with Canada and the EU is completed and 11 FTA negotiations are ongoing.
That said, Mr. Boehm, we will ask you to make your presentation. Following that, senators will be asking you some questions.
Mr. Boehm: Thank you and hello, honourable senators. I appreciate the Senate's leeway in giving me the opportunity to speak. I was scheduled last week but I ran into difficulties on the farm with seeding. Therefore, I am quite pleased to have another opportunity to speak.
As many of you know, the National Farmers Union is Canada's largest direct membership voluntary farm organization. Farmer members have to participate directly by paying a membership fee in the organization and decide to be members of the organization. We believe that small- and medium-sized family farms should be the fundamental food producers in Canada and we advocate for policies that would benefit economically, socially and environmentally food production in this country and that would also benefit that type of farm operation.
One of the key pieces in Canadian policy for a long time has been international trade agreements. Indeed, we're a country with large productive capacity and large surpluses, in general. As a consequence, we play a role much beyond our population weight internationally in the export markets.
As a grain producer in Saskatchewan, export markets have been important, as well as domestic markets of course, throughout my farming career. However, the nature of the international trade agreements, the consequences, the power shifts and the impacts on farmers are something that we would question.
I would like to point out that the history of Canada has been one where a large portion of the agricultural area was formerly controlled by the Hudson Bay Company under a grant from the British and that the creation of the country came about through the British North America Act enacted in 1867. Canada has fought and Canadians have fought for autonomy from various colonizing agents over time.
Later on the Statute of Westminster in the early 1930s granted us control over our natural resources, of which we have vast amounts. Then, finally, in the 1980s, we repatriated our Constitution.
Again, these activities have been about power — who holds power, who holds control, and an attempt to balance power. In the BNA Act, two chambers were created. We have a bicameral Parliament, with the House of Commons and the Senate. This was consciously done in order, as in other bicameral systems, to balance power to offer the opportunity for a second look at legislation and at directions.
Now we are now losing control of our autonomy and our democracy, we believe, through these international trade agreements that are essentially constitutions for international corporate players. The investor state dispute settlement mechanisms go to arbitrators outside the country. An assortment of intellectual property mechanisms, intellectual property templates, of which some we have adopted, all of these mechanisms remove autonomy from the Canadian population and ultimately to farmers as a consequence.
The question is this: We have expanded trade drastically in this country. Agri-food exports have gone up in value significantly, but for farmers what have the consequences been? We have seen consolidation take place. Farm sizes have increased drastically, including my own. We've seen debt levels rise significantly and farm populations drop off significantly, so that now agricultural producers make up less than 1 per cent of the population of Canada.
At the same time, there is the a consequence of these agreements and an abandonment of the mechanisms that were recognized a century ago in the United States in particular and in parallel legislation in Canada, the Sherman anti- trust, anti-combines legislation in the U.S., which sought to break up entities that were deemed to be harmful to the general economy in the U.S., including the breakup of Standard Oil, Carnegie Steel and an assortment of other actions. It was recognized at that time that it was important to maintain competition within an economy and not to allow too much control or power to be accumulated.
What we are seeing in these trade agreements is that power is accumulating in nearly every sector, and it is accumulating to maybe two or three players that internationally control the trade in grains, seeds, agricultural chemicals, fertilizer, fuels, et cetera. This sort of power has allowed them to externalize costs onto farmers. That showed up in the debt sheets. We see approximately 200,000 farmers in Canada shouldering $80 billion of debt.
Tantamount for those of us in the National Farmers Union, for many other farmers and for Canadians in general is that market access and the expansion of trade, under the terms of these agreements, should be looked at through a lens of what are the direct benefits to the Canadian economy, and ultimately to farmers. We see the issues of deficits in the Canadian economy. For a nation that has such a huge surplus of production capacity, whether agriculture, natural resources and otherwise, this is puzzling. We also see farmers expanding in size, adopting the latest technologies and large economies of scale shouldering more and more debt.
Again, on the one land you see a concentration and the externalization of costs — whether it is grain companies, railways, et cetera — on to farmers, showing up directly in farmers' debt balances. We wonder what the long-term benefits of these mechanisms are.
For example, in the latest rendition of trade agreements, the CETA, the Comprehensive Economic and Trade Agreement, chapter 21, Article IV, clause 6 states:
. . . a Party, including its procuring entities, shall not seek, take account of, impose or enforce any offset.''
"Offset'' is defined as:
. . . any condition or undertaking that encourages local development or improves a Party's balance-of-payments accounts, such as the use of domestic content . . .
Further clauses go to impact local food systems, including the restriction on the mash sector, municipalities, academia, schools and hospitals that are subject to certain thresholds of $110,000 at the federal level and $335,000 at the municipal and provincial levels. With any procurement over those values, you could not give more favourable treatment to your domestic supplier than a party outside of the country.
There are to be no restrictions on the movement of capital, which could subject us to drastic currency fluctuations and would also impact, at times, our ability to trade or to export, however it might be.
The National Farmers Union is part of an international organization called La Via Campesina that has developed a concept called "food sovereignty'' that recognizes that trade will always be part of the agricultural situation, but that we don't want to impact other nation states. We feel that they should be able to determine what is culturally, environmentally and economically important for them, just as we should for our own purposes.
We have seen in these trade agreements, with the investor state protection clauses, that our democracies are threatened. We can have autonomy, but that comes at a price. If we put in regulations once these things are in force that impact future profits, we can certainly do that but we pay, and we pay outside of our domestic courts.
We see intellectual property mechanisms for alleged infringement where our courts enforce for these international corporations as a consequence of these trade agreements. For alleged infringement of an intellectual property, whether it is plants breeders' rights, copyrights, trademarks, et cetera, the precautionary seizure of the alleged infringers' moveable and immoveable property, the freezing of bank accounts and other assets, and the communication of financial data shall take place. Of course, this creates a culture of fear amongst the agricultural community and others. In addition, any third party alleged to have assisted in the alleged infringement would be subjected to these precautionary seizure provisions.
Ultimately, we would ask why these negotiations, Trans-Pacific Partnership, CETA, et cetera, are negotiated in secret? If they are beneficial to the Canadian economy and to Canadian citizens, why would it be negotiated with the degree of secrecy that is in place and then be presented to us as a fait accompli at the end of the day.
In the end, we shouldn't be terrorized by missing a trade deadline. What is to hide except that something may be unacceptable and that Canadians as a whole have resources, food stuffs, et cetera that the world wants? Tariff levels are low on all of these items. These international agreements, supposedly free trade agreements giving market access, are highly suspect and actually very harmful in the long run to farmers, to Canadians and to our autonomy.
I will give you an example for the Europeans. Many farmers assume we will increase our access to the European marketplace with our GM crops, for those who choose to produce those crops. In reality, only a side letter was communicated between the ministry of the environment in the EU to our Agriculture Minister saying that these things would be discussed. There is no definition in the CETA accord in that regard. Most nations in the European context have exemptions in their annexes for a whole number of items in this.
What farmers need, and what they are being denied in these international arrangements and market access, may benefit certain sectors of the agri-food system. But as more powerful players are put in between farmers and their ultimate markets without direct access, farmers find themselves in a position of receiving less and less for what they produce. We have studied, over time, the adoption of innovation and increased production where it has taken place. Farmers have not particularly benefited. Indeed, almost 100 per cent and sometimes more of the improved production has been captured by the suppliers of the technology.
With that, I will close my remarks and I would welcome questions, comments and anything else that the Senate chooses to say.
The Chair: Thank you, Mr. Boehm, for sending us your presentation. We will start first with a senator from your own province, Senator Merchant.
Senator Merchant: Welcome. The senators are very happy to hear that Saskatoon is this thriving. You are from Saskatoon; I am from Regina. I will say nice things about Saskatoon anyway. We only have two cities in Saskatchewan, so there is a bit of competition between the two.
You did not make any mention about the situation with infrastructure, particularly in moving these products. What is the situation exactly? How do you see it from your point of view?
Mr. Boehm: I appreciate that question. Of course, for a long time, we have had problems with rail infrastructure and constrained port capacity.
One of the problems we have as farmers, particularly in Western Canada, is that we are about the farthest away from tidewater that any agricultural region is, with only rail service as a possibility. Of course, we are finding what I mentioned, this externalization of costs that has been taking place, where farmers are forced to haul to fewer and fewer elevators longer distances and put up more on-farm storage. We see that the port facilities and the lack of coordination in the system, which we formerly had, has led to a situation where (a) the control of the port facilities has become more concentrated and (b) the railways have been capturing excessive rents for a long time, as the lack of a costing review and an adjustment in the revenues that they receive is taking place. We have not seen drastic improvements in that rail infrastructure even though they are getting excess returns significantly, over $100 million annually — according to a study some time ago — beyond what is considered normal, generous returns on long-term variable costs. A 20 per cent contribution rate is the North American railway standard and they are far exceeding that.
Ports are an issue, as are elevators, roads, et cetera. The infrastructure is being taxed to the limit. Potentially, changes in our grading system, new grain classes and other legislation in the Canadian Grain Commission, could see American grain start to flow through our taxed infrastructure which is having difficulty serving us at present. Infrastructure is an important part of this puzzle. Given the financial constraints that farmers are receiving, including variable wheat and barley prices at the moment — they're extremely low — it has to be accessible at a reasonable price.
Senator Merchant: Since you mentioned prices, I will raise a topic that is maybe a little bit of a soft spot for you. With the changes since the Canadian Wheat Board, you talked about how the benefits are trickling down to farmers with the low prices right now. From your point of view, how have you witnessed the evolution of the new practices now that it has been changed?
Mr. Boehm: The first year the board was gone, wheat prices were relatively buoyant. Immediately after that, we ran into transport difficulties and a collapse of grain prices, even though the port prices were almost double throughout the crop year of what we were receiving inland. We were having difficulty even moving the product and, even after we paid the normal handling fees and freight rates, grain companies captured that differential at the port, which was almost identical to what farmers received. The coordinating ability of the CWB disappeared and we ran into problems.
Then, we saw grain companies make as much as farmers on that crop — pure profit, not for their services. They made their normal tariffs there on that crop. Again, this is what I alluded to in that farmers need the ability to directly access markets with a minimum of middlemen and international players that would undifferentiate the Canadian brand, the Canadian product, from anything else.
Senator Merchant: I think I will let my colleagues continue. Thank you so much.
[Translation]
Senator Dagenais: Good afternoon, Mr. Boehm. It is a pleasure to hear from you. I am going to make you smile. I go to the United States regularly, and last time, I was grocery shopping with my wife at a Winn-Dixie. We were in the meat section, and while she was checking out the specials, I was looking at the labelling on chicken thighs and cuts of beef. My wife was surprised to see how interested I was in labelling, but that has only been since I have been a member of the agriculture committee.
In May, the World Trade Organization rejected the United States' appeal concerning the amended version of its labelling policy to indicate the country of origin. A WTO appeal body confirmed that the U.S. labelling policy did not abide by international trade rules. So Canada was given permission to take reprisal measures against the United States. I don't know whether you are aware of that. If so, what do think about the decision?
[English]
Mr. Boehm: I don't have a headphone for translation, and I don't want to misinterpret the question.
Senator Dagenais: I understand. That is okay for me.
Mr. Boehm: Would you mind repeating the question in English so that I get it right? I'm very sorry; I do not want to make a mistake. I'll ask the people here.
The Chair: Mr. Boehm, you should have a regular feed so that you can hear the translation. Do you hear the translation?
Mr. Boehm: No, I do not.
The Chair: One minute, please. We will try to solve that technical problem.
Can you hear me? Do you have the translation, Mr. Boehm?
Mr. Boehm: No.
The Chair: You don't hear any translation?
Mr. Boehm: No.
The Chair: The chair will recognize Senator Dagenais. Senator Dagenais, would you ask your question in English? Or I could help you with the question in English.
Senator Dagenais: When you buy your groceries in the United States, you have a special sticker on a piece of beef or a piece of chicken, and that is the rule for international commerce.
The United States had a problem. On May 18, 2015, the World Trade Organization rejected the United States' appeal regarding the amended version of its country-of-origin labeling policy. The WTO appellate body confirmed that the United States' COOL policy international trade rules decision authorized Canada to take retaliatory measures.
What does your organization think of this decision? Do you understand my English with a very special accent?
Mr. Boehm: It was very good.
Senator Dagenais: Thank you so much.
Mr. Boehm: Much better than my French.
I think that the country-of-origin labeling requirements in the U.S. probably will be an ongoing problem. The U.S. is a powerful player and used to getting its own way, regardless of the WTO rulings.
While we have no objections to taking on COOL, it may be time that Canadians start to think of it as an advantage in branding Canadian meat products. If there's country-of-origin labelling, perhaps we could take advantage of that and market our products with the Canadian brand and attempt to turn it into an advantage rather than a disadvantage.
Senator Tardif: Good afternoon. Thank you for being here.
Mr. Boehm, you have expressed serious concerns in your presentation about the free trade agreements that Canada has signed and that Canada is pursuing presently. Knowing the importance of exports to our economy, what are the National Farmers Union's proposals to improve international market access for Canada's agri-food products?
Mr. Boehm: On the one hand, I think that everyone assumes that increased access is important and that trade is important. We would agree. On the other hand, again, the question was: Who are the beneficiaries of these particular mechanisms? For a long time, we've called for agriculture to be negotiated outside of these comprehensive agreements, and for agriculture and food to be treated differently than other sectors of the economy because we're subject to so many variables that are out of our control — weather, pricing, et cetera. This is problematic in sort of an agreement that has chapters on agriculture, et cetera, in that there are the underlying principles that I mentioned, namely, no offsets, the impact on local food production, no favouring of a domestic supplier, et cetera.
Regarding your question about access to international markets, I think what we should be looking at domestically, for example, is that we have tremendous concentration in the meat-packing industry with two companies with90 per cent of beef and two companies with 70 per cent of pork. We do know that premium markets exist in the world, for example in Europe where they are looking for hormone-free beef, and that we have difficulty fulfilling even the quota levels that are available to us right now. We should be looking at our domestic packing industry and thinking about how we would supply those premium markets with special runs or maybe opening up to smaller abattoirs, in particular, to encourage farmers. They don't get particular direct benefit because they just don't have access to those premium markets through our current meat-packing system, except maybe on a limited scale.
These kinds of opportunities are not being translated through these trade agreements, which are sort of a one-size- fits-all and a kind of standardization internationally, because of the degree of concentration that we've allowed to be dominated by companies that are based outside of our country in meat-packing, as one example.
One of the recommendations in our brief was that things be looked at through the lens of the beneficial impact on farmers, community, soil, the environment, et cetera, and that we look and cherry-pick, because transportation is expensive. We would look at accessing those sorts of niche markets that could be profitable.
Senator Tardif: You've mentioned in your brief, Mr. Boehm, that trade deals feature harmonization of regulations and standards so that global agri-business corporations can operate seamlessly in several countries, while nations are deprived of regulatory tools to differentiate their products in the marketplace or to create economic space within their countries to pursue other values that are important to their citizens and residents.
What do you mean exactly and could you give us some examples?
Mr. Boehm: Sure. For example, standardization has benefits in some regards, but excess of standardization leads to an inability to differentiate a Canadian brand; that is, American wheat from Canadian wheat or from Australian wheat or beef, or whatever it might be. When you have standardized systems and undifferentiated products, traders in those products can easily move across borders and they're selling commodities. It doesn't matter whether it's Canadian beef or Canadian wheat or wheat of such-and-such a specification. They can play one country off another.
Other mechanisms — for example international seed protocols facilitating a variety of registration systems to allow international varieties to come into this country rather seamlessly in different food crops — can be problematic in that ability for us to differentiate ourselves from other trading nations.
Senator Enverga: Thank you for the presentation. I want to go back to the earlier question with respect to your view being against more trade agreements and you want to more or less separate the agreement from agricultural trade. Would you rather keep the status quo at this point and not do trade agreements at all?
Mr. Boehm: I don't think that the status quo has been particularly beneficial, given the evolution of what's happened in the countryside. Again, we all know farm debt levels are going up and farmers are disappearing, particularly younger farmers. We know there's a demographic issue.
What we would like to see conceptually is a shift away from pure volume, dollar value-added exports to a shift towards sort of an actual benefit relationship that translates both to the country of Canada and to farmers directly. That isn't taking place with the status quo and it certainly won't take place with the new trade agreements because they're about externalizing cost onto the least powerful and that happens to be farmers. We can see a continued round. We can increase production; we've done it. We've done it threefold in the last decade, or maybe a bit longer in the last 20 years. At the same time, the negative impacts continue. This is why we're calling for a different look through a different lens as to what the consequences of these mechanisms are.
Traditionally, so-called free trade agreements have meant to be tariff agreements so that tariff barriers and other mechanisms don't restrict the flow of products into countries. But these are not about that. These are about mechanisms that make countries less autonomous and farmers more dependent on a few increasingly powerful players in many different sectors. Right now, we see Monsanto's bid to take over the huge Swiss firm Syngenta.
Again, there's nothing in these agreements that would limit those sorts of things from taking place. That sort of power allows for excess rents to be extracted from farmers. The canola example is a perfect example where farmers are paying over $600 a bushel for canola seed, when that same bushel that's perfectly viable as seed, when they go to sell, it is worth $10, 60 times less.
Senator Enverga: When you say you want mechanisms, you want to keep supply management? I understand that during the negotiation for TPP, they talked about supply management. Is that what you're saying, that we should remain with supply management; we cannot do away with it?
Mr. Boehm: I think supply management in many parts of the world and here in Canada has been recognized as generally a success story. Supply management for dairy, poultry and eggs has allowed farmers to generate a reasonable income without support from the state. Most other developed countries in the world have been supporting agriculture through various mechanisms — whether it's income adjustment schemes, et cetera, direct subsidies and whatnot — because actually the markets that are generated by these kinds of agreements don't return sufficient amounts to farmers. It's an issue of power and control.
Supply management changes that equation. It comes with the requirement that you don't allow outside products into the country. There are exceptions — tariff rate quotas, et cetera — on certain items. Nevertheless, farmers generate a reasonable income. There's no cost to the public purse. Processors get a stable, reliable product for the domestic market.
I think it would be a huge mistake to dismantle the supply management system developed in Canada for some tenuous benefit of Trans-Pacific Partnership in expanding trade or market access elsewhere. I think this would be a huge mistake in domestic policy.
Senator Moore: I'm sorry I've been late coming here, but I got hung up on a long-distance phone call at home.
Mr. Boehm, thank you for being here. The U.S. Department of Agriculture recently developed a voluntary certification for the labelling of genetically modified crops. What impact do you think that new certification process will have, and what will be the consumers' thoughts or reception or perception of that process?
Mr. Boehm: Of course, as with many things — trade agreements, et cetera — the devil is in the details, and I haven't had the opportunity to carefully read this protocol.
Generally, voluntary protocols can be subverted to a certain extent. We see, I think, a real interest on the part of food consumers to see improved labelling, particularly around GM products. I think in the future, products with nanotechnology should become a concern as well.
GM has been around for some time and there's been great resistance in labelling protocols. I think the resistance partly is a fear that there will be a reduction in demand for those products by the purveyors of those products. Nevertheless, I, as an eater, and I think most people like to know, based rightly or wrongly on their biases, what's in their food. So, regarding the impact, I'm uncertain and unfamiliar with the details of that protocol I must admit.
Senator Moore: I appreciate your answer. In the closing of your brief today, the first recommendation is that trade and agriculture be treated separately and excluded from comprehensive trade agreements such as NAFTA, the Canada—uropean and the Trans-Pacific Partnership.
Has your organization been consulted with regard to those — NAFTA, CETA and TPP — and if so, when and what was the manner of the consultation?
Mr. Boehm: We have participated in a few calls in CETA that were put out by DFAIT, where they gave us updates of the state of negotiations. We have not been directly consulted in terms of our opinion, but we have participated occasionally in these update calls. The Trans-Pacific Partnership has been much less in that regard. In general, this is one of the problems we have with these agreements; for the most part they're negotiated secretly and presented to the Canadian and European populations after the fact.
We have had the benefit of receiving leaked documents throughout the CETA process. At one point I asked Steve Verheul if the leaked documents that we had were indeed what they were working with at that point. He is Canada's chief trade negotiator in CETA, as you would know. He confirmed that indeed they were. So we raised alarm bells, including speaking tours and things about that. But in terms of direct consultation, our organization has not been directly solicited in these negotiations.
Senator Moore: You said you participated in two calls by DFAIT. What's a call and what's involved?
Mr. Boehm: These were conference calls where Mr. Verheul would give updates of the state of negotiations in the CETA process. We participated in probably more than two, maybe four of those calls.
Senator Moore: Were they consultative or advisory from his end?
Mr. Boehm: Largely advisory.
Senator Merchant: Thank you, Mr. Boehm. I had an inquiry from someone, and you mentioned it yourself, about being interested in what you are ingesting. When you're eating something, you'd like to know something about it. He said, because I come from Saskatchewan, there is something you may be able to tell me about. It's called glyphosate, I think, and it's something we use a lot in Saskatchewan. It's a desiccant, I think, that we use. Those things are not really on labels anywhere. We know if something is organic or not organic. Since you mentioned that, what's that about?
Mr. Boehm: Glyphosate is the base product of what's called a non-selective herbicide. It kills anything green. It's used widely in agriculture. Increasingly, herbicide-tolerant crops have been genetically modified to tolerate that. Rather than being non-selective in a herbicide-tolerant crop resistant to glyphosate, you can spray it on your crop and the crop survives; everything else dies, at least initially. Resistances have started to show up in some parts of the world, and here as well.
Glyphosate is probably the largest consumed herbicide in the world. It comes under different trade names, including Monsanto's Roundup, which of course the Roundup Ready GM crops have been adopted extensively.
Certain crops — canola, soybeans, corn and cotton — are the big ones in the world.
There are others. There's glufosinate, which is known as LibertyLink, which is another breed of genetically modified crops largely produced by Bayer, and this is another non-selective herbicide.
Glyphosate is used extensively, not just in the early stages of crop production. It's used as a burn-off prior to seeding so that farmers can seed their fields without tilling them and knifing the seeds so the weeds are killed in advance. It's also used as a desiccant pre-harvest, where crops are forced into an early death and an early dry-down.
The promise of reduced herbicide use with GM crops hasn't exactly borne out as promised because, for a number of reasons, glyphosate has become the single most popular herbicide used, particularly in Western Canada but also in many parts of the world. It has become one of the big things that has also become very cheap, and it's directly connected to the crop production and genetically modified seeds that are tolerant to it.
Residues are increasingly going up on food, and my understanding is the tolerance levels are being increased because of the widespread practice of using it, particularly just immediately pre-harvest for forcing the dry-down in the earlier harvest of crops.
Personally, I'm not enthusiastic about that. On my farm, I refuse to do it.
The National Farmers Union includes many types of farmers, some that are doing this practice, but they all recognize that we need increased studies on the long-term human health consequences of the ingestion and, of course, the environmental consequences of such a singular widespread shift to one particular form of herbicide in agricultural production.
Senator Merchant: Does it present any difficulty for those who are handling it, the farmers, not those ingesting it?
Mr. Boehm: There are some new reports. I also have not taken the time at the moment to look at it. I've been totally focused on seeding coming out.
While in the tractor, I did hear on CBC radio an interview on a report that's come out of the UN that there is likely a carcinogenic link to glyphosate. They say "likely.'' There's been no definitive establishment of this study and I have not read it.
With all of these herbicides and creations, extended-release fertilizers, et cetera, judicious use can be beneficial in certain circumstances and excessive use can be problematic. At the moment, I think perhaps we've reached an excess level and that we should be undertaking independent studies and establishing made-in-Canada regulations. However, things like CETA and the investor-state protection clauses make that very difficult, if not impossible, without extreme costs to the public purse. Basically, what we get locked into is a standstill once these things come into force.
Let's just pick the example of the prohibition or the reduction of pre-harvest applications of glyphosate for forced dry-down and perennial wheat control. We can do that, but with these mechanisms, the investor-state protection clauses, we would likely be subjected to international arbitrators outside of our Canadian court system imposing fines on us for the lost future profits of the utilization of that product. This is why we find these trade agreements so problematic.
Senator Enverga: One of your recommendations was the excess revenues be returned to farmers. Do you have any figures about this? What percentage of excess revenues are you thinking of here?
Mr. Boehm: Mr. John Edsforth, a well-known analyst in rail costing, has produced a number of reports over time analyzing the excess contribution levels, as it's termed, or excess profits and returns to the railways that have been taking place as a consequence of their ability to externalize costs on to farmers. The numbers would be in the neighbourhood of $100 million to $150 million excess revenues annually over the industry standard, the 20 per cent contribution level that's sort of a North American rail industry standard for profits. They define it as contribution over long-term variable costs.
Currently under the revenue cap, when the railways exceed their allotted cost for a given volume of grain, under the freight rate regime, that excess is given to the Western Grains Research Foundation to undertake varietal development research, agronomic research. We think that given that revenue cap mechanism — nothing has been addressed in regard to this $100 million or $150 million excess — that should be directly returned to farmers through reduced freight rates.
Under the former Western Grain Transportation Act, where we had a costing review every four years and the efficiency gains were shared between railways and farmers, where the improvements in railway productivity and cost savings and the investments that farmers made having to haul to fewer elevators, greater distances and more on-farm storage. Every four years freight rates would get rolled back and the efficiency gains would be shared 50-50.
For almost 20 years now — actually longer, 1992 was when the last formal costing review that took place — the railways have captured all of those revenues and kept it to themselves and externalized more and more costs on to farmers.
The Chair: As we conclude, Mr. Boehm, I would have two questions for you, and if you could be succinct in answering. I'll make a statement and then I'll ask you the two questions.
When Canada and the EU concluded CETA, which will arguably immediately make 93.6 per cent of EU agricultural lines and 92 per cent of Canadian agricultural tariff lines duty-free — that is according to our agreement — now the NFU has raised a number of concerns regarding the implementation of CETA. I am asking you to share with the committee your three most important concerns with that agreement.
Second, in your view, what should be done to ensure that CETA is implemented in the best way possible? There, again, give me three reasons or factors.
Can you please share with us your three most important concerns about CETA?
Mr. Boehm: Sure. The first is around intellectual property rights and the provisional and precautionary enforcement of intellectual property rights for alleged infringement, particularly with regard to plant breeders' rights patents and the extension of the patents.
The second one is the procurement provisions disallowing offsets, no requirement for domestic content and anything that encourages local development or improves the parties' balance of payments.
The third one, of course, would be this issue of procurement with regard to not being able to favour a domestic supplier. Particularly with local food systems, both on the European and Canadian sides, the threshold levels are far too low and particularly problematic. In our brief, we called for the elimination of the investor-state dispute-settlement mechanisms.
The Chair: Thank you. To implement CETA, what would be the factors that would ensure that it would be implemented the best way possible for Canadians? As we know, a little over 50 per cent of our agricultural products are exported.
Mr. Boehm: First of all, we need not worry about whether we export products or not, whether these agreements are passed or not. We exported before and we will export during and after the agreements. I think there is a real demand for our products.
I think that these agreements are so fundamentally flawed, particularly the impact on our democracy and our ability to autonomously, as a nation state, act in our citizens' public interest, that we really should open it up and present to Canadians in the widest possible way what actually is in this agreement and undertake consultation as to whether they find it acceptable in any shape or form.
If some of those provisions that I mentioned were removed, it would make it more palatable. But, given that I have read all of the drafts of these agreements from front to back for several years now, and the annexes and related agreements, I would not be particularly inclined to implement it at all.
The Chair: Thank you very much, Mr. Boehm, for sharing your opinions with us.
Honourable senators, at this time, I will now adjourn the meeting.
(The committee adjourned.)