THE STANDING SENATE COMMITTEE ON AGRICULTURE AND FORESTRY
EVIDENCE
OTTAWA, Thursday, December 14, 2017
The Standing Senate Committee on Agriculture and Forestry met this day at 8 a.m. to study the potential impact of the effects of climate change on the agriculture, agri-food and forestry sectors.
Senator Ghislain Maltais (Deputy Chair) in the chair.
[Translation]
The Deputy Chair: Good morning, everyone. The Standing Senate Committee on Agriculture and Forestry is continuing its study on the potential impact of the effects of climate change on agriculture, agri-food and forestry sectors.
My name is Ghislain Maltais, and I am the deputy chair of the committee.
[English]
Before continuing, I ask all of the senators to introduce themselves.
Senator Mercer: Terry Mercer, Nova Scotia.
Senator Gagné: Welcome. Raymonde Gagné, Manitoba.
[Translation]
Senator Pratte: André Pratte, from Quebec.
[English]
Senator Woo: Good morning. Yuen Pau Woo, British Columbia.
[Translation]
Senator Petitclerc: Chantal Petitclerc, from Quebec.
[English]
Senator Oh: Victor Oh, Ontario.
Senator Doyle: Norman Doyle, Newfoundland and Labrador.
[Translation]
Senator Dagenais: Jean-Guy Dagenais, from Quebec.
The Deputy Chair: Thank you very much. Joining us this morning, from Agricultural Manufacturers of Canada, are Leah Olson, president, and Randy Bauman, board member.
You will have a maximum of 15 minutes to make your presentation. Afterwards, senators will have questions for you. Ms. Olson, go ahead.
Leah Olson, President, Agricultural Manufacturers of Canada: Honourable senators, my name is Leah Olson, and I am President of the Agricultural Manufacturers of Canada organization. Thank you for the opportunity to be here today as you continue your study on the potential impact of the effects of climate change on the agriculture, agri-food and forestry sectors.
It is an important issue, one that our members deal with every day.
[English]
Joining me this morning is Randy Bauman, an AMC board member and president and owner of Eldale Machine & Tool, based in Elmira, Ontario.
The Agricultural Manufacturers of Canada is a national member-driven organization, founded in 1970 to promote a strong and healthy, respected agricultural equipment manufacturing industry in Canada.
With just under 300 member organizations, our members manufacture specialized farm equipment, including but not limited to grain handling and storage, seeding and harvest equipment, livestock handling equipment, hay equipment, spraying equipment, et cetera.
Machinery has been at the heart of Canadian agriculture for many years. It shaped agricultural practices and in many respects created the opportunity for rapid European settlement in the late 1800s. The agricultural equipment manufacturing industry has progressively developed as a separate entity from commercial and industrial manufacturing.
Central to this evolution was the need to develop farm equipment capable of meeting the challenges of the harsh growing conditions in Canada, some of which we feel this morning.
This drive for innovation was critical to Canadian farmers who struggled with foreign equipment designed for smaller farms and less arid conditions. These same challenges have enabled Canadian agricultural equipment manufacturers to be global leaders in the development and production of high quality, durable and innovative machinery.
Canadian-made farm equipment is among the highest quality and most sought out in the world. In 2016, Canadian farm equipment manufacturers exported more than $1.8 billion of implements to 151 countries, in spite of just over 50 per cent of agricultural equipment manufacturers being located in rural communities of fewer than 10,000.
Some of our members are located on the family farm or in communities where the number of people the manufacturer employs is larger than the community it is in.
Innovation in our industry is crucial as we seek to address global issues such as limited food, water and land sources, which directly impact the safety and security of food and food production.
The agriculture industry will need to produce more with less, and Canadian farmers are at the forefront of meeting this challenge. AMC’s members continuously develop innovative technologies and manufacture products that enable us to be leaders throughout the world.
This puts us in a good position to align with and inform the government’s innovation agenda. In fact, Innovation Minister Navdeep Bains made this exact point at our recent convention celebrating 150 years of Canadian innovation in the agriculture industry. About our theme, “Canada, a Global Powerhouse of Farmers and Shortliners: Feeding the World Today, Tomorrow and in 150 Years,” Minister Bains noted:
Ag is leading new technologies in many ways. How can we get more Canadian crops from the farmers’ field to the tables of the world? The more we ask this question, the more we can drive innovative solutions.
Data and artificial intelligence are used to map fields and report soil conditions in real time. This precision is allowing Canadian farmers to maximize production and minimize the environmental footprint. That's what we're all committed to. As the Minister of Innovation, Science and Economic Development, I know our government can count on AMC to help us meet that global appetite.
This is just one example of how the agriculture manufacturing sector is leading, addressing climate change and reducing our environmental footprint. At the heart of farming and agriculture is an inherent need to conserve and manage the environment to ensure, tomorrow, we can still produce food.
With all of the focus on greener technologies, we have a unique opportunity to help to inform the green agenda and ensure that farmers continue to be recognized as the key environmentalists that they are. Among AMC members, many are solving challenges related to fertilizer and reducing greenhouse gas emissions. This should come as no surprise to anyone.
Having grown up on a grain farm and being involved in farming today in Saskatchewan, I know that a farmer’s first job is to protect and nurture the soil because it is often his or her largest asset. Farmers tend to minimize their impact on the environment as a part of their day-to-day farm operations.
For example, one of our members, the Salford Group, makes tillage equipment that is recognized by Canadian carbon sequestration programs and American soil and water conservation districts for its ability to incorporate fertilizer and manure and manage residue, while providing low-disturbance tillage that reduces soil erosion and increases soil organic matter. The Salford Group also manufactures cover crop seeding equipment.
Jim Boak, Salford’s Sales Support Specialist, explained:
The use of cover crops can lead to improved soil organic matter, improving the soil's ability to absorb water and nutrients to support a healthy, profitable crop. Cover crops can go hand in hand with sustainable fertilizer application by helping to fix the nutrients applied, and some cover cropping practices can even reduce the need for chemical inputs by helping to fix nitrogen and suppress weeds.
In addition, the Salford Group includes their environmental footprint in their manufacturing cost and waste reduction strategies. Mr. Boak said in our biannually published magazine:
We recycle manufacturing and office waste, filter and reuse blasting medium and paint waste, paying specific attention to water quality. However, our greatest focus on reducing agriculture’s environmental impact is through developing sustainable technology and advocating best management practices to dealers and farmers and through industry associations. The 4R nutrient stewardship program is doing particularly great work aligning farmers’ efforts and industry partners. We have worked to support progressive equipment dealers and farmers with application of new sources of fertility in areas of liquid, granular and gas commercial fertilizers, as well as livestock manures, green manure, pelletized manure, humates, blood meal and biosolids.
The 4R stewardship program that Mr. Boak references is a framework to match the right fertilizer type to meet the crop needs at the right rate, at the right time and in the right place, hence the 4Rs.
I was recently at a conference about precision agriculture during which one of the panellists commented, "We all know that fields don’t yield the same, so why are we applying fertilizer the same? I assure you that these are the sorts of opportunities our members are working with Canadian farmers to address.
As we look at what farming in the future will be, there is no doubt that Canadian farmers will be at the forefront managing and being stewards for healthy soil, water and air. How we grow food today is not how we will grow it in 150, 50 or even 10 years from now. As an exporter of safe and secure food, Canada’s comparative advantage globally is its agriculture industry.
As referenced earlier, what makes the Canadian agricultural equipment manufacturing industry the producers of some of the best farm equipment in the world are the great farmers and ranchers who, despite the harsh growing conditions in Canada, provide manufacturers with feedback on the challenges they encounter in the field.
More than half of the agricultural equipment manufacturers in Canada are in rural communities where they also have strong relationships with local farmers. As a result of these relationships, Canadian-made farm equipment has a strong reputation for setting the standard to which others aspire. To illustrate, a number of our members export to more than 40 countries per year, with one located in a rural setting typically exporting to over 60 countries per year.
Our members lead the world on intellectual property of agricultural equipment. Innovation happens every day because our members are talking directly to farmers and responding to their needs by further refining and enhancing their products.
For agricultural equipment manufacturers, innovation is not just a way of being or something that happens in an isolated facility. It is in how we manufacture and manage our day-to-day operations. It is what drives us to develop some of the best agricultural equipment in the world. In this way we are leading in the reduction of carbon by exporting high quality farm equipment. Trade is a vital part of our industry.
The mandate letter of the Minister of International Trade noted that the:
. . . overarching goal will be to increase trade and attract job-creating investment to Canada, focusing on implementing the Canada-European Union Comprehensive Economic Trade Agreement (CETA), expanding trade with large fast-growing markets and deepening our trade links with traditional partners.
Not only do we want to work with the government as a partner addressing climate change, we also support ambitious trade goals, opening up new markets for Canada and Canadian farmers.
We recently met with Minister Champagne and encouraged him to pursue new opportunities in China and Asia as it opens up timely and expansive opportunities for Canadian farmers. Latin America is another market that many Canadian agricultural equipment manufacturers are focused on and pursuing.
In order for the agricultural equipment manufacturing sector to continue making its positive mark on the environment and empowering farmers, new trade markets are essential. The two go hand in hand.
We recommend that the government do more to support our efforts at international farm shows and work with us on challenges that are preventing small and medium size agricultural equipment manufacturers from reaching their full potential such as obtaining visas and getting entry into a country more easily for business purposes. Another example is supporting EDC, Export Development Canada, in regions like Latin America where securing financing terms and conditions is not always feasible.
AMC members help drive the Canadian economy, especially in rural areas. They are global leaders in innovation and are entrepreneurs who are helping feed the world. It is why opening up international markets is integral to Canada’s innovative and sustainable future.
I’m happy to answer any questions you may have. Merci.
Senator Doyle: Thank you for your presentation.
At the end of your presentation you mentioned that the government should be doing a bit more to help you reach your full potential with respect to obtaining visas, getting into Latin American countries and what have you.
Do you anticipate more difficult times ahead in the U.S., given the protectionist attitude they seem to be developing down there, in getting your equipment in? Is that a concern at all?
Ms. Olson: Indeed it is a concern when we look at protectionism. In terms of the Canada-U.S. relations, NAFTA is a huge trade agreement. We are grateful that most ag equipment is traded and not tariffed. It is recognized by most governments as being a vital part of being able to produce food.
We are concerned when we see protectionism from a Canadian perspective. As exporters, we want to see the protectionism tenets kept at bay. We’re keeping Global Affairs informed about how much our manufacturers export.
In that way we also have very good relationships with the distribution and dealership network in the United States. When we look at the United States and some of these concerns about protectionism, there’s a need for open dialogue. We appreciate the work the Senate has done in its report in May which promoted exporting more from a Canadian perspective. That’s very welcome from our position.
Senator Doyle: What about the carbon tax in Canada? Would the fact that we don’t have international standards for carbon tax across the international marketplace make your product less competitive in the U.S.? Would it make your product less competitive in shipping it into the U.S. where they don’t seem to have the same concentration on carbon taxes as have in Canada. Would that make your product less competitive?
Ms. Olson: If carbon tax in one jurisdiction and not in another were the only factors considered, absolutely. It makes Canadian-made agricultural equipment manufactured products pricier, if you will, because that has to go on. This is a jurisdiction that those of a higher pay scale and intelligence can figure out in terms of carbon taxing and what is required to get people to reduce their environmental footprint.
On our farm in particular, we are stewards of our land. Whether you’re a rancher with a lot of cattle in Quebec or you’re a grain farmer, as we are in Saskatchewan, your biggest assets are the land, the air and the water. Many in this room come from rural areas. You know what is happening, but sometimes there is an under-appreciation of the work that farmers do every day.
When I was growing up I was told that I was an environmentalist, which kind of puzzled me. I had to look after the land, and my grandfather said, “I guess I’m an environmentalist in addition to being a farmer.”
It is very important for us to have dialogue on whether it is carbon tax or behaviour writ large. If you are a farmer in a rural area, it’s important whether you are a male farmer or female farmer who looks after that asset. The government has to be very careful as to how it wants to proceed because if it doesn’t allow farmers to continue making profits, then they won’t be able to reinvest in equipment that helps them be good stewards of the land.
[Translation]
The Deputy Chair: Before we go to Senator Mercer, allow me to introduce Senator Eaton, from Toronto, who was delayed by bad weather. Welcome, Senator Eaton.
[English]
Senator Mercer: Ms. Olson, a very great presentation and a great track record for Canadians’ innovation in farm equipment and farming.
The politics are all local. What is important and what Members of Parliament and the senators look at is where the jobs are. You talk about $1.8 billion worth of implements being exported to 151 different countries. Obviously, those are manufactured here, and there are people doing that.
I don’t expect you to have the details at your fingerprints, but it would be helpful for parliamentarians to see the breadth of the impact of where the jobs actually are. As we go about our business as senators as members of the House of Commons, whether it be here or as we travel around the world, it would be extremely helpful to understand the depth of that.
We’re talking about climate change and you’re talking about innovation. There’s no one more innovative than farmers. They have to be, to survive. Is there an opportunity to marry that innovation with the opportunities that climate change presents? When I say “opportunities,” because of climate change farming in the country can probably move a little farther north than we traditionally do, not necessarily for growing of crops but probably for raising of livestock. There may be opportunities for growing products as well.
Is that happening in the association?
Ms. Olson: Yes. To your earlier question about jobs, one of the unique aspects of our industry, as many of our members have identified, is being on the family farm. One of my favourite memories, in my role as president of the Agricultural Manufacturers of Canada, was when I was lost in southwestern Ontario where there’s quite a bit of manufacturing. I kept going around. Then my GPS told me that I was right at the manufacturer's. I drove up in my rental vehicle, and I was greeted by the family dog. Fortunately, I’m a dog person so it felt a bit like home. This was at a facility where they are manufacturing harrows and exporting to the United States.
I tell you this story to illustrate a lot of good work is happening in the rural areas. Rosenort, Manitoba is about a half-hour outside of Winnipeg. In that facility, Westfield is busing people from the city to come out to work in Rosenort because they need people to be working at the facility. It’s a great example of employment opportunities in rural Canada. If we looking for innovation, those manufacturers export all around the world. We have a couple of members, one of whom is in northern Alberta, that export consistently to over 40 countries.
When we talk about climate change and innovation, it’s very much a part of our members’ way of looking at their products because they’re competing with other farm equipment manufacturers. Farm equipment manufacturers in Canada are 100 per cent shortliners. They are very specialized. Whether they focus on grain handling and storage in Ag Growth International or Meridian, or on harvesting equipment like MacDon, they compete worldwide.
There are quite a few other headers in Argentina. I’m trying to read the body language here. If I'm getting into too much technical agricultural equipment, just let me know. MacDon, based out of Winnipeg, Manitoba, and Honey Bee, based out of Frontier, Saskatchewan, compete with others. When you go to countries like Argentina, Europe or Australia, you see our Canadian agricultural equipment brands. They do very well.
Farmers know when fields do not need to have the same blanket fertilizer applied. We’re working with them to better understand how to apply the fertilizer or the seed with such precision that you can have a map of your field and know exactly what to apply at the right time.
In some of the superclusters there’s discussion about artificial intelligence. We are absolutely moving in that direction. To go from where we are to where we want to be in five years will take a little research. A very strong advocate of artificial intelligence, particularly in the Winnipeg region, was frustrated that we couldn’t put all this data in the cloud. I said that right now Versatile was the only tractor manufacture in Canada doing some really good work in this regard. You can’t have a tractor and an implement. That implement can’t tell the tractor what to do. The tractor always tells the implement what to do.
In Europe, they have an ISOBUS standard that we haven’t quite got in Canada yet, emphasis on “yet.” When we look at where we want to be, it would be ideal if we had more drone technology and autonomous facilities in fields to help farmers who then don’t have to rely on labour shortages and trying to fill them. There’s a lot of opportunity.
Senator Mercer: I would suggest that members of Parliament from Winnipeg do not know that some of their constituents are going out to rural areas for jobs as opposed to it working the other way from rural Manitoba into the city. It’s a good story to tell. It means downtown Winnipeg MPs are suddenly a little more interested in the sector.
Mr. Bauman, I was going to ask you a question about the effect of no-till on the production of corn in southwestern Ontario.
Randy Bauman, Board Member, Agricultural Manufacturers of Canada: I’m more here for moral support. I’m just kidding.
Senator Mercer: You’re here and we’ve got you.
Mr. Bauman: Thanks for allowing us to come as well. No-till is something that’s coming. Not everyone is using it yet, but it’s certainly more popular than it has been in past years.
The fewer passes over the land is much better for yields on crops. The more people adapt to no-till, it is making a big change on the land. The yields from no-till aren’t quite the same as conventional tillage. With the equipment evolving and a lot of manufacturers making no-till equipment, there have been a lot of improvements over the years. The yields are coming up. They’re not quite there they are with conventional tillage, but they’re certainly making a lot of gains.
[Translation]
The Deputy Chair: Before we go to Senator Dagenais, I would like to remind everyone that we have a very long list for questions and answers. So I ask you to be brief and specific in your questions and answers, so that all the senators can ask their questions.
Senator Dagenais: I would like to ask you two short questions about producers’ financial means. First, do they have the means to acquire more environmentally friendly equipment? Second, do they have access to financial assistance that meets today’s needs and government requirements?
Ms. Olson: Thank you for that question. I think that financial matters are always important for agriculture. We want farmers to have the money to invest in their farming practices.
[English]
We would like to see the government move to a higher capital cost allowance for farmers because we believe it’s one thing, especially with a carbon tax, that is moving forward. That doesn’t allow a Canadian farmer to maintain his or her profitability internationally. If the government increases the capital cost allowance for newer farm equipment, then for the farmer that’s saying the government recognizes their need to be able to have the financial capability to move from an older tractor or combine to a newer one.
In the United States, the government is doing some interesting work to motivate farmers and to enable them to invest in new equipment. That’s an idea we have discussed among our members. We want farmers to remain profitable, so if we look at a higher capital cost allowance that could potentially help them.
Being in government, you have to balance that with the whole fiscal picture. We’re not yet making a formal recommendation, but that’s an area we’ve been looking at to see what are some of the options for that.
[Translation]
Senator Dagenais: Without revealing trade secrets to us, can you give us an overview of future innovations and the way they will change how farmers do things?
[English]
Ms. Olson: If I’ve understood the question correctly, you are asking about what innovations are coming.
I’m excited about the question about no-till technology. That’s a pretty Canadian piece of equipment that comes out of Saskatchewan. To be honest, when I was growing up in the 1980s, I recall being at the farm and dust was blowing. You couldn’t see anything. Senator, you would understand that being from Manitoba. We had dust storms, and they were very real.
When I started as AMC’s president in 2015, I spent 80 per cent of my time on the road in southern Saskatchewan, southern Alberta and southern Ontario. At the end of 2015, I had a farmer say to me, “That was the driest spring we’ve had in over 50 years.” I was stunned because there were no dust storms. The production was very high. It was our highest grain production out of Western Canada. It was stunning.
If the farmer has the right seed, the right growing conditions, that not being the right growing conditions, and the right equipment, there’s so much that he or she can do. That’s one way in which our industry has helped.
Another new and great technology that made its debut at Ag in Motion, a farm show in Saskatchewan, is DOT. When we look at farm equipment implements, a lot of power from the tractor has to go to just pulling the tractor because it’s so heavy. One of our members has patented what is called a platform. It’s an autonomous platform. You move it with a remote control. It has the ability to identify where there are different posts and different things going on.
The opportunity for farmers is that now they don’t have to actually drive that tractor. That is an innovation. It’s 100 per cent Canadian. At Agritechnica, one of the largest farm equipment shows in the world, they got quite a bit of attention. That’s the sort of thing where our members, in working with farmers, are looking at what innovation can help so they can reduce their environmental footprint.
Senator Mercer: In my other committee work, I am on the transport and communications committee where we finishing a study on driverless vehicles and autonomous vehicles. You just talked about a driverless tractor. That’s the first time I’ve heard of this when I’ve been doing the other study.
Are there places in Canada where we can see a driverless tractor in action?
Ms. Olson: Yes, come on out. With the DOT platform it’s actually not a tractor. It is a U shape. Perhaps afterward I can show you a video of what it is. If you YouTube DOT, it’s a platform. It picks up the implements and 100 per cent of its power is dedicated to the implements.
I mentioned one tractor manufacturer in Canada, Versatile or Buhler Industries. I was just there yesterday. They’re doing some really exciting R&D. I know they would welcome you data coming to the facility. They would be happy to talk with you about some of the work they’re doing.
[Translation]
The Deputy Chair: I will ask the clerk to acquire that kind of a tractor, so you can see how it works.
[English]
Senator Eaton: Just a quick question on no-till. Does that mean more weeds? Is that why the production is sometimes lower?
Mr. Bauman: It is t necessarily more weeds, but in conventional tillage you’re turning the dirt completely and it’s rejuvenating or lying over winter.
Senator Eaton: I know that, but I was just wondering. So it’s not necessarily more weeds?
Mr. Bauman: No.
Senator Eaton: I want to ask both of you about the effects of CETA and NAFTA. NAFTA is still very much up in the air, and we’ve just embarked on CETA. Can you tell us a bit about the effects of both on your Canadian sales?
Ms. Olson: Yes. We support trade agreements for reasons that may not always be clear. Most of our equipment moves without tariff, so why would we be pro-trade? The big part is that if Canadian farmers have more markets and a diverse book of business, if you will, selling into countries like Europe and the United States, it gives them that much more opportunity to maximize their revenue. Therefore, when they have revenues, they can invest in their equipment. For the most part, that’s why we’re looking at NAFTA and CETA as very good opportunities that we want the government to continue pursuing.
CETA has also resulted, though, in a bit of what Senator Doyle referred to earlier about protectionism. Much of our equipment is moving into Europe already, but with CETA we’ve seen a requirement for a CE certification.
Senator Eaton: What is CE certification?
Ms. Olson: It’s a certification that says a manufacturer who is not from Europe has followed a certain process. It’s almost like a legal validation of your standards. If Canadian manufacturers are looking to get into Europe and sell in Europe, I’ve heard increasingly over the past year since CETA has been moving forward that they now require some CE certification.
We’ve been working with local experts to try to make sure there’s a streamlined approach to getting that CE certification.
Senator Eaton: Does it have to do with sustainability, perhaps?
Ms. Olson: Not at all, no. It’s more on the safety side and to ensure that the importer into Europe is adhering to certain standards.
Senator Eaton: Do you make specialized equipment for organic farmers?
Ms. Olson: Whether it’s organic or it’s conventional, our equipment works in both. In fact I tweeted a MacDon header that was shown for organic.
From that perspective, we work with farmers, whichever way that they choose to farm, whether it’s organic or non-organic, GMO or non-GMO. For Canadian agricultural equipment we have harsh conditions. I don’t know if people appreciate what it takes. If you’re no-tilling and pushing something through clay, clay is very difficult to plant anything into. The fact is that we can do it in Canada, but for some soil conditions in Quebec it’s something different.
From that perspective, organic or non-organic is kind of irrelevant.
Senator Eaton: That’s nice to hear.
[Translation]
Senator Gagné: Thank you for your presentation. It is very interesting. Ms. Olson, you talked about technological compatibility among various types of equipment. Some witnesses have talked to us about that challenge, and you confirmed that there are still issues in terms of technology transfer.
Other witnesses have identified a new challenge in terms of the ability to analyze data. Of course, we have the ability to collect a tremendous amount of data. However, the difficulty lies in data analysis, so that decisions can be made to help make farming practices more efficient.
Here is my question. Do manufacturers provide users with training, so that they could analyze data and implement the results of the data analysis?
Ms. Olson: That is a good question. I think that data provides an opportunity for everyone right now, the platforms --
My apologies, but I speak English better.
[English]
The platforms for the data that’s being collected are often on a John Deere tractor. Those platforms at this time are closed circuit, so accessing the data is difficult.
It is almost 100 per cent shortline manufacturers. There’s one facility that is not a shortline manufacturer in Canada, the CNH facility in Saskatoon. Our members don’t always have the ability to tap into the data in the tractor. One way farms got around it was by having a separate operating system for their technology, for their implements. Seeders, for example, aren’t always compatible, since you mentioned the compatibility.
For us in Canada, that is a huge opportunity. There are discussions happening with some of the bigger manufacturers. We’ve seen in Europe is the ISOBUS standard which really allows everybody to be on the same platform. We don’t have that in Canada.
From a farmer’s perspective, it’s difficult. If the platform you’re using for your seeder, for example, doesn’t speak properly or well to the tractor and breaks down, you need somebody to come and fix that, or you have to get your 12-year-old to come and fiddle with it to fix it.
We are very concerned about that area and are working on it.
Senator Gagné: What about the capacity of analyzing the data? Do you find that a challenge for farmers because of the amount of data that is being collected?
Ms. Olson: It’s interesting. I’ll speak a bit about our farm. We have so much data now that it’s hard, and we’re in a transition.
One of your former witnesses talked about agriculture 4.0. We're absolutely in a new stage with agriculture where we have so much data, but the valuable data will save a farmer either money or time.
For a farmer, when she looks at all of the data and understands the fertilizer applied, the seed depth and the types of seeds put down, there are definitely some ways to analyze it. The sweet spot is that we don’t yet always know how to analyze the data in a way that saves time and cost.
For an organic or a non-organic farmer there’s so much data available that we’ll be seeing some changes as we move forward. Different programmers that are definitely trying to make it easier for farmers.
At the end of the day, a farmer will still write it down. We write on the inside of our cab with a marker. We’ll write our stuff so that we know exactly what we put down, what the acres were. We can get the exact data if we analyze it using what’s in the operating system, but it’s still pretty easy to take that marker and write it on the window.
Senator Gagné: I understand you.
I have another short question. Senator Mercer mentioned the driverless vehicle or tractor. What about zero-emission equipment? Is that very far from realization, do you think?
Ms. Olson: I’m an eternal optimist. I’d say absolutely anything is possible.
When we look at carbon sequestration, I’m not sure where exactly we could find zero-emission equipment. When our members are working with a farmer, at the end of the day having soil that is fertile and productive is absolutely what we strive for. If you are a rancher and trying to make sure those water sources are kept pure, it’s always a pressure on our members. They live in the communities where they have their manufacturing facilities and some of them are farming. It’s constant pressure, I would say, and it’s what keeps us humble.
When you think you’ve got it, you will get a good hailstorm that will wipe out your crop. Then you think you can manage weather and predictability only to a certain degree, but Mother Nature is still pretty powerful and can throw us for a loop.
Senator Petitclerc: Thank you so much for your presentation. My question actually goes in the same direction as your last question, Senator Gagné.
I’m trying to get a sense of conscious and deliberate, when it comes to machinery, technology and farm equipment going green. I get a feeling, and maybe it makes sense, that the motivation would be productivity and profits, but how deliberate is the industry, when it comes to building machinery, in trying to go green?
If not, what do we need to do to ensure it goes in that direction?
Ms. Olson: I have a quote from one of our members about their drive to always have an environmentally positive footprint.
For our members, again, it’s in their blood for the most part. I’m not saying that everybody is pure. There are others who are driven by different things, but for the most part our membership is very much aware of their impact on the environment.
When we look at no-till technology and trying to keep our soil fertile and productive, our members will work with agronomists, farmers and scientists to have a holistic approach to how that equipment will actually work in the field.
Is there more that can be done? I don’t want to be too defensive, but it’s so much in our blood to ensure the farmer's asset is well looked after.
[Translation]
So I’m not sure anything else can be done, but for us, the environment is so important that it is always taken into consideration in our approach concerning new products.
[English]
Senator Oh: Thank you, witnesses, for very great information. Most of the questions have been asked, but I want to talk a bit about trade.
Your organization manufactures extremely good temperature and conditioned equipment for export. Who is your main competitor in farm equipment? How much farm equipment is coming from the U.S. compared to yours going down there?
Ms. Olson: About 80 per cent of farm equipment manufactured in Canada is exported to the United States. The United States is by far our biggest export market destination. Following that is Australia. Australia has very similar types of farming and ranching to those in Canada. Many of the competitors in the Canadian shortline industry are based in the United States.
The Germans are well known for making very good manufactured products. Their strength in the automobile industry lends itself well to supporting a strong ag equipment manufacturing industry in Germany. Again, in Japan, that would be the case.
When we look at the Canadian ag equipment manufacturers, we often are the gold standard to which others aspire. That happens as a direct result of the harsh growing conditions in Canada. As a result, farmers are forcing Canadian manufacturers to be better, to innovate, to help them with the environment and to make sure that they have products that work well in the Canadian conditions. When we look at future opportunities, I’d say there is a natural leadership that Canada can and should be taking when it comes to agriculture.
When we look at China and the dollars that are being invested in agriculture by China, we have encouraged the Canadian government to continue speaking with China, to get involved, because we have a lot of expertise in how to grow food efficiently and in a safe and secure manner. We would like to ensure that the Canadian government is representing that because we think there’s lots of opportunity in China and in Asia writ large.
Senator Oh: I visited some of the farm equipment manufacturers in China. I think they are still way behind all of you.
Ms. Olson: Yes.
Senator Oh: In your interview with Scott Garvey last month, you mentioned that the Canadian government was not doing enough to help this $1.8 billion to $2 billion business.
This is your chance. What do you want the Canadian government to do to really help you?
Ms. Olson: The government does a really good job internationally. The international trade commissioners are fantastic. The biggest impediment to farm equipment manufacturers exporting or growing their business is their dealership network.
For example, when a trade agreement is reached, I’ll get a phone call from a journalist who will say, “Tell us about the new opportunities that CETA is giving you.” And I’ll say, “They’re limited because we’re already trading without tariffs on our equipment.”
The trade agreement gives farmers an opportunity but the reason, in reality, that we’re in some of those communities and some of those markets is that we have a dealership network. It takes years to develop that network.
The biggest challenge in getting into Latin America and staying in Latin America right now is that there’s not a strong dealership network that our members can tap into. We have a couple of members that have invested. They’ve done joint ventures in Latin America. Financing is still a bit of a challenge, so that’s where the role of Export Development Canada is vital in Latin America specifically.
Since the political situation has deteriorated in Russia, if we just look at it from a financial perspective we have lost over $120 million in market share because the Canadian credit agency, EDC, is not able to be there. The Germans and the United States credit agencies are there, so those manufacturers are still selling into and eating up the market share that was formerly taken by the Canadians.
For the Canadian government, keeping the taxation level low is vital. I appreciate that Minister Morneau has been making some tax changes lately, but keeping the business tax environment low so that Canadian businesses can invest in their R& D and in innovation is really important, as is ensuring the superclusters and the drive to artificial intelligence are kept practical with what’s actually happening on the farm.
Senator Pratte: I have just a very short question. We discussed earlier carbon pricing. I am just curious to know: What is the share of the fuel cost for your members in production? Fuel must not be a very big share of production cost.
I’m just trying to gauge the impact of the future carbon-pricing system on your members.
Ms. Olson: From a manufacturing perspective, I would say it’s quite limited. If you’re talking about farmers that’s a whole different ballgame. Is that what you’re asking about?
Senator Pratte: I’m looking at both sides, so both the manufacturing of the equipment and the use of the equipment by the farmers.
Ms. Olson: I was ready for this question. I brought in something from one of our members. He will love it when I tell him that I used his data.
There have been 15 years of engineering, but right now, the emissions of Canadian-made tier 4 tractors are 25 times better than what they were with the tier 1. They’re making huge gains.
Senator Pratte: What do you call a tier 4?
Ms. Olson: A tier 4 would be what we have right now in terms of the engines. Going back to the question asked by Senator Dagenais about how we can keep farmers profitable or what are some different options, if you have an older tractor it’s like your old fridge. It may be in the basement for your Christmas baking or cold beverages of some sort. It’s sucking up a lot of hydroelectricity. If you have an incentive to replace it, as a consumer you’re likely to do that. That helps you, in the longer run, to reduce your environmental footprint.
Similarly with farmers, we’re looking at a way to promote their investing into the newest equipment that is absolutely providing a smaller environmental footprint. Some farmers have the longer term and are investing already. For some of the farmers that are holding on to older equipment, those older tractors, it is a financial problem or a challenge that they’re looking at. When the government talks about green technology and the green agenda, again increasing the capital cost allowance is but one option.
I’ve asked that we do a bit more analysis on our part to understand that because you can’t always have, and the finance officials will kill me, boutique tax rebates. If we want to increase the investments into greener technology, that would be one way.
In terms of the manufacturing side, it’s fairly limited. When the carbon taxes were announced by the Prime Minister, my first question to our membership was: “What’s the impact on you? Give me some dollars.” From a very logical perspective, we appreciate that taxes will make things costlier, but the question that we then ask is: Will that change the behaviour? Appreciating that’s what is motivating it, I think in our industry we would prefer to see other ways of reducing the environmental footprint than a whole carbon tax. Again, there’s a lot encompassed in that.
Senator Doyle: I have a short question. Is there an economically viable option to diesel fuel? Are you looking at natural gas? Is natural gas an option for these big pieces of machinery that you’re using, or is diesel fuel carved in stone and will never be replaced? Do you have an opinion on that?
Ms. Olson: I’ll make this very short. I’ll get back to you on that one because I don’t want to speak out of turn for what is going on right now.
I know there are different ways and different types of fuels and biofuels that are being used in some tractors. I’d be happy to get back to you on that one.
[Translation]
The Deputy Chair: I would like to sincerely thank this morning’s witnesses. You have had an opportunity to see how interested senators are in climate change, especially in the area of agricultural equipment manufacturing and use. Thank you so much for coming to see us. Your brief will certainly come in handy. Thank you and have safe trip back home.
I would like to ask you to join me in wishing a Merry Christmas and a very Happy New Year to all our staff: our translators, the management, our interpreters, our reporters, our analysts, Aïcha, and our smiling clerk, Mr. Pittman. Thank you for all the work you have done behind the scenes throughout the year.
On behalf of the chair, who is unfortunately not here, I wish you all a happy holiday season.
(The committee adjourned.)