Proceedings of the Standing Senate Committee on
Agriculture and Forestry

Issue 9 - Evidence, February 24, 2003 - Afternoon


REGINA, Monday, February 24, 2003

The Standing Senate Committee on Agriculture and Forestry met this day at 1:09 p.m. to examine and report on the impact of climate change on Canada's agriculture, forests and rural communities and the potential adaptation options focusing on primary production, practices, technologies, ecosystems and other related areas.

Senator Donald H. Oliver (Chairman) in the Chair.

[English]

The Chairman: I would like to begin our afternoon session and extend a warm welcome to three professors from the University of Saskatchewan: Andre Hucq, Cecil Nagy and Roger Cohen.

Mr. Roger D. H. Cohen, Professor, University of Saskatchewan: I would like to thank you for the opportunity to speak to the Senate select committee.

We do not have a lot of time but I want to just mention a little bit about the Centre for Studies in Agriculture, Law and the Environment, CSALE. As you see on the first slide, until recently I was the executive director and science director for that organization. It is a multi-disciplinary group within the University of Saskatchewan that is interested in the natural, economic and legal implications of agriculture on the environment, and vice versa. We draw from the College of Agriculture, the College of Law, the College of Arts and Sciences, geographers, et cetera, and also the College of Engineering, specifically bioresource engineering, which has a lot to do with agriculture, of course.

The major function of CSALE has been in the role of training graduate students. Most of our work has concentrated in some aspects of greenhouse gas emissions, carbon sequestration and climate change in agriculture. This ranges from the natural scientific impacts of that to the economic impacts, the social impacts, the he legal side of things and the social implications of what might happen.

I will speak mainly about the example I have been most involved with, which is the evaluation of the effects of climate change on forage and livestock production, and the assessment of mitigation and adaptation strategies on the Canadian Prairies using the GrassGro decision support tool.

This project adapts historic climate data that has been recorded by Environment Canada and we use that to predict what will happen, what the climate will be up to the year 2080.

We use three climate change models: the Canadian CGCM1 model, the Hadley 3 model from the United Kingdom, and the CSIRO model from Australia. These are all general circulation models and we feel that we cover as many possibilities as we can by using models from the distinctly different areas.

Senator Wiebe: I am terrible at acronyms, could you just explain what they are?

Mr. Cohen: The CGCM1 model is a Canadian model on climate change; the Hadley 3 model is a British model of climate change; and CSIRO is an Australian model predicting climate change. They are all based on general flow patterns throughout the world.

Senator Wiebe: What does the ``C'' stand for and the ``S'' and ``I'' stand for?

Mr. Cohen: Commonwealth Scientific and Industrial Research Organization, which is the Australian equivalent of the NRC.

To do this we are studying three sites: Swift Current, Saskatoon and Melfort. They are on a transect from southwest to northeast across the three major soil zones in the province and on the Prairies. They are brown, dark brown and black soil zones. We are using the GrassGro model because, quite simply, GrassGro is the only prediction model that can be used to make these predictions.

GrassGro is a dynamic, interactive, user-friendly simulation model that operates on a daily time step to assess how weather, soils and the management practices combine to affect pastoral production, profitability and risk.

How does GrassGro do this? How does it work to do this? It uses weather data to predict: above and below ground growth of each plant species in a pasture; the daily quality characteristics of the pasture; the daily intake of pasture nutrients by cattle and sheep; and the daily growth, milk production and reproduction of all classes of cattle and sheep.

People ask how accurate is GrassGro? Quite simply, in a word, it is very accurate. I will give you an example of how accurate it is. We have used GrassGro to predict the results of a major grazing experiment that was carried out at Brandon, Manitoba.

In that experiment steers grazed a mixed alfalfa, meadow bromegrass and Russian wild ryegrass pasture, which is a fairly typically seeded pasture for the Prairies, and they grazed it for four years. There were two stocking rates: 1.1 and 2.2 steers per hectare. There were two grazing systems: continuous, where cattle were put on in the spring and left on the pasture until they were taken off in the fall; and a 10-paddock rotation system where an area was divided into 10 paddocks and the steers rotated at regular intervals around the 10 paddocks. During the course of the four years there were three to four rotations.

We entered the climate data for Brandon and all the management factors that were reported in this experiment into the GrassGro model and made predictions of the live weight of the steers as well as other things such as pasture production, pasture botanical composition, nutritional values for the pastures, and so on.

What I am showing you at the moment is the live weight. On the ``X'' axis along the bottom is the predicted average daily gain of the steers; the ``Y'' axis going up the left-hand side is the observed average daily gain. What you can see from the line on the graph, line ``Y'' equals ``X,'' when the observed average daily gain is the same as what we predicted those points will fall right on that line as you can see.

The Chairman: How would you measure the daily gain for each individual animal?

Mr. Cohen: The average daily gain is measured by weighing the animal before and after, and they were weighed every two weeks. This was for the experiment, what they did in the experiment was present a combined average daily gain of these animals for the total grazing period.

What you see there is the four treatments up on the top left-hand corner. The CL'' is continuous low stocking rate, ``CH'' is continuous high, and ``RL'' is rotation low, and ``RH'' rotation high. All those points come from the four different years.

The Chairman: Were any of those pastures irrigated or did you leave everything to nature?

Mr. Cohen: No, this was dry land pasture. We have lots of other examples of how well we can predict; we call this ``validation.'' We think that the model is predicting very well.

That brings me next to what GrassGro can be used for. One of the uses that we have for it for right now is preparing for climate change. We are looking at adaptation strategies on the Prairies in terms of ranching and farming with cattle, what sort of strategies are likely to be the ones that will make that form of production viable.

We are also looking at mitigation effects, and I will give an example of that a little later. It can be used for determining strategies that will reduce greenhouse gas emissions from agriculture. As you all know, cattle produce methane that is a very powerful greenhouse gas. So we can use it to determine strategies that will reduce the production of methane because GrassGro also predicts methane production from cattle, as part of their energy system.

We are using it in conjunction with a soil model called a Century model to look at carbon sequestration, that is removal from the atmosphere of carbon by a plant and putting it back into the soil and what will happen to that as the climate gradually changes.

I am speaking here from an assumption that the climate is changing and will continue to change for a number of years. Regardless of what we do now, it will continue to change.

Finally, another brief example, it can be used for testing new varieties that might be useful in the future or right now, in terms of production and usefulness in that type of situation.

This is an example of how GrassGro can be used as a management tool. The top block of lines, three years of the data, shows the weight of the cattle coming off the pasture, as they were measured in the experiment. In none of those years were the cattle ready for slaughter. When they took the cattle off the pasture they put them in a feedlot and fed them in the feedlot and finished them for slaughter there.

We ran GrassGro to see what would have happened had they fed some barley to those cattle while they were at pasture. In a feedlot on the Prairies they get forage and barley. So we used GrassGro to determine what might have happened to those cattle if they were fed barley while they were at pasture. That is the bottom three lines of the table. As you can see they came off considerably heavier and we predicted they would. We are predicting the body condition score as well.

The other thing that is apparent is when you look at what happened with cattle that were not fed barley there was quite a variation between the years and between the various treatments. It ranged from 450 kilograms coming off the pasture to 563 kilograms coming off the pasture. When the cattle are fed barley you can see that that variation is considerably reduced and the range was 582 to 620, which is a much narrower range. Of course, that has an effect on risk, as well.

We then looked at what were the environmental implications of doing as they did in the experiment, feeding the cattle on pasture, having them graze on pasture and then putting them in a feedlot, as opposed to if we had fed them barley at pasture. This table shows the total methane produced by each of those steers.

I draw your attention to the two red figures there: the red figure on the top, 54.4, represents the methane that we predicted was produced by these cattle while they were at pasture and while they were in the feedlot. This is the total methane production through that period.

The red figures at the bottom 38.7 show the methane produced by those cattle at pasture when they were being fed barley. You can see it is considerably less. If you modify that to 100 head of steers that somebody might have on a farm that is a considerable reduction in methane. A lot of that reduction is because they were finished more quickly than when they were on pasture, when they were coming off the pasture finished and did not need to go into a feedlot.

Our recommendation is that people consider very seriously in the future finishing cattle on pasture, rather than just backgrounding them on pasture to be finished later in a feedlot.

This is the second example I want to use to illustrate how GrassGro can be used. I had a master's student working on a comparison between two common bromgrasses, smooth bromegrass and meadow bromegrass and a hybrid that has been developed by agriculture Canada. This is work we have done in conjunction with agriculture Canada.

Over a three-year period the master's student compared these three grasses in a grazing experiment with steers. It was a similar comparison to the Brandon experiment. The two years that she spent on this experiment were rather unusual. The first year was a very dry year; the second year was very dry to start with and very wet in late August; and then last year, of course, it was dry all the way through.

When we look at results in the short-term like that you are very dependant on the climate. If you have three years of drought in your three-year experiment you are not really getting much of a test of how good the grass is, other than whether it may be more drought resistant than other grasses.

What we did was we developed parameters for those three grasses and we ran it through GrassGro for 21 years, from 1980 to 2000, using Environment Canada weather data. In that period we had some very wet years, and some very dry years, some normal years.

The results have shown to us quite clearly, using GrassGro, that hybrid bromegrass shows quite a lot of promise. The weight of cattle coming off the hybrid grass in our predictions was greater than coming off the smooth bromegrass and the meadow bromegrass.

The second column there, ``BCS,'' is the body condition score of those cattle. The body condition score is measured on a scale of one-to-five. To make Canada 1AAA, that is the very lean animal, would require a body condition score of four. The results indicate that in the 21 years the cattle would have made that body condition score from the hybrid bromegrass, whereas with the other two bromegrasses they would not have achieved that body condition and would have required some finishing in a feedlot.

GrassGro can also be used for extension. For example, since 1998, 8,300 farmers in Saskatchewan have received $5 million to convert 350,000 acres of cropland to perennial grass cover for cattle grazing.

In this process I am frequently asked questions such as: What grass should I use in my area? Should I be using fertilizer in my area? If so, how much? How many steers should I be putting on my pasture? Questions vary from one area to another. It is possible to use GrassGro to provide advice to farmers.

As shown in this graph GrassGro has predicted the production of the steers and also the gross margin. That is the marginal economic return, and I emphasize it is gross margin not profit. On the ``X'' axis along the bottom is what we call the ``risk.'' Risk is really the variability of the gross margin, which is the standard deviation of the gross margin, the more variable the greater the risk. On the ``Y'' axis on the left-hand side is the gross margin in dollar returns per hectare. The points represent different stocking rates.

If you look at the point marked 0.20 you can see that that is a losing situation, there is not enough cattle grazing for the farmer to be making any money, but the risk is very low. If you look up to the other end you will see a stocking rate of 3.40. Here the farmer will be losing just as much money and the risk is extremely high because of the high stocking rate. If you look at the point of the apex where the stocking rate is 1.8 steers per hectare, that provides the maximum gross margin return but the risk is quite high. The risk, or standard deviation of that gross margin is 109, the farmer would be making somewhere around $90 a hectare and the risk would be greater than the value.

What I would suggest to the farmer if he is what we call ``risk-averse'' is that he should probably scale back to about one steer per hectare, where he makes a little less money on average over a long-term period, but his risk is considerably reduced, from $109 to $43 per hectare.

That risk is to a large extent not real in that a farmer would probably not stock at the high stocking level. In fact, if it is a drought year he may not even buy cattle at all and he removes the high-end of the risk simply by doing that. In GrassGro we can do that but we have to run it year-by-year, rather than consecutively.

I believe that every agricultural adviser should have the ability to provide this information without resorting to guesswork. What I am suggesting is that with a tool such as GrassGro it is about time we started to take a lot of the guesswork out of farming, and particularly out of ranching and pastoral farming.

The problem with research is that a research project can only be done once in one area, often it is never repeated in another area and a totally different result would happen if it were repeated. It can only be done over a short period of time and two or three years, as I indicated earlier, is not enough to get a concrete result.

GrassGro can be used in education. I have been using it for the last six years to demonstrate the principles of good grazing management to my senior students in animal science at the university. The students have been required to complete a major project each year that is worth 30 per cent of their final marks.

It can also be used in government and corporate planning. It has been used by PFRA here in Regina to make some management decisions on a number of their community pastures. I do not know whether they are using it in this current year, but I know they are working with it to predict what sort of payments they need to make in years of drought, et cetera. I have given the committee clerk a copy of my report.

I believe the GrassGro model will be of use to lending institutions. If a farmer wants to borrow money to improve his pasture GrassGro will be able to indicate whether this will be a worthwhile project and based on GrassGro findings the lending institution will be able to make an accurate decision on whether to lend the funds or not.

I have been collaborating with the scientists at CSIRO, the Commonwealth Scientific and Industrial Research Organization, in Canberra, Australia for 12 years now to develop GrassGro. It has been available now for general use in Australia for two years.

I have received requests from people in Canada for the GrassGro model. I received a request last week from the Nova Scotia Agriculture College about the possibility of getting a copy of it. Senator Hays inquired about it quite a few years ago.

If it is available in Australia why is it not available in Canada? The fact is that GrassGro runs on climate data and the climate data must be downloaded from Environment Canada into the GrassGro weather compiler, which is a software program called Metacess. Climate data are in the public domain in Australia and many other countries, but not in Canada.

I have spent approximately $12,000 obtaining data from Environment Canada stations. Saskatchewan alone has 83 weather stations operated by Environment Canada. If I were to make GrassGro available in Saskatchewan I would have to collect and forward to Environment Canada $2,102.47 in royalties for each copy of GrassGro that I sent out to various users. GrassGro has been developed as a decision support tool for the public good to enhance economic growth through research, education, extension and corporate planning. Its distribution and use is being denied because of a crippling royalties policy.

My question to this committee is: Can an exemption from the royalty payment be granted to this program so that it can be released in Canada for the public good?

The Chairman: I said earlier we would hold off questions until all three witnesses have presented. However, were all of the cattle used in your GrassGro experiments of the same breed, same age and same type, were there any variances at all?

Mr. Cohen: When we have been validating the work, yes. The cattle in the Brandon experiment were Charolais cross, and we entered in Charolais cross; they were Hereford cross in the other experiment and we entered in Hereford cross.

Mr. Andre Hucq, Professor, University of Saskatchewan: We all know that the agricultural situation in Saskatchewan is particularly difficult. Farmers are being squeezed between increasing input prices and falling output prices and no one knows what to do about it. There is little support for the concept of the ``family farm,'' which has kept agriculture in Saskatchewan in a reasonable financial state over the years.

Many elevators have been closed and thousands of miles of railway lines have been abandoned. This is obviously a decision that will have large consequences on the future environment. To many outside the agricultural sector farming is considered a business rather than a way of life. For many reasons, many of the small towns and villages in rural Saskatchewan are facing their demise.

The question is: How can we change that? The key word is ``change.'' Many people face a future with great uncertainty and apprehension. That makes change difficult. You can speak farmers, academics or government people and the answer they give you is they have no idea what to do to bring about the change that is necessary.

Farmers realize that farming practices have a tremendous effect on the environment, some of which are mentioned on page 3 of my written submission. They dump millions of tonnes of fertilizer, chemicals and, as Professor Cohen has mentioned, a tremendous amount of methane is produced from these animals. Tillage has a great effect on the sustainability of the land.

Invariably you will get the answer that we do not really know how to bring about successful change that will both solve the environmental problems and also bring the economic returns that are required.

In this climate of great uncertainty it is very difficult for farmers to think clearly about doing the right thing for the environment. We have previously discussed the Agriculture Policy Framework that concentrates on food quality, food safety and the environment. At this time farmers just do not have the resources, inclination or the energy to undertake this type of change; in a sense the Agriculture Policy Framework is not coming at a very good time.

I am very keen and supportive of the Agricultural Policy Framework. However, I do research and do not have to work in the field where these changes have to be implemented. Given the present commercial and economic environment it just simply is not the right time for these changes.

Not only do we have the Agriculture Policy Framework we have the Kyoto Protocol coming at the same time. It seems to me that the federal government has not come up with a clear policy concerning the implementation of the Kyoto Protocol. Most farmers have heard of carbon credits and they think they probably can make some money out of them, but this subject is extremely nebulous and it is going to become a big problem that Saskatchewan farmers will have to face. The whole thing is so unclear that it is going to be a huge problem to bring about all the necessary changes.

My main topic is agroforestry, and while discussing this subject one must discuss change. There are deeply entrenched institutional arrangements that have been around for many years, arrangements that are part of the make- up of the Prairies. The Canadian Grain Commission; the Canadian Wheat Board; the seed variety approval system; the emphasis on quality versus quantity; the elevator and transportation systems; all these need to be looked at and incorporated in an overall systems plan, a sort of life-cycle analysis. This will not be easy because very few people know how to bring about effective change.

The Canadian Wheat Board gave me financial support when I did my Ph.D.

The Chairman: Are you declaring a conflict before you proceed?

Mr. Hucq: My wife works for the Canadian Wheat Board so I have to be very careful about what I say.

The Canadian Wheat Board sells raw grain. One of the things that we want to promote is the ethanol industry. As you know, Saskatchewan has plans for at least three ethanol production systems. The problem is that the Canadian Wheat Board is buying that grain and the people who work at the Canadian Wheat Board like to have statistics on how much grain they sell in Canada and overseas. You have the ethanol industry competing for that same grain. Getting the Canadian Wheat Board to support ethanol development is not going to be easy. It will include changing the mindset of the marketing and management personnel of the board. That is a fact of life.

The Chairman: What change would equalize the opportunity for the farmers?

Mr. Hucq: We could be here for a few days discussing needed changes to the Canadian Wheat Board. That institution is a tremendous marketing organization. I am not saying we have to dismantle the Canadian Wheat Board or any of the ways that it operates.

The Chairman: I mean for the purpose of grain for ethanol.

Mr. Hucq: What you need to do is look at the system of the Canadian Grain Commission and the Wheat Board, the elevator system, and all of the institutions that are involved in the marketing of grain. Take a look at them and see how they can be incorporated within the larger policy of making ethanol part of the climate change policy.

You cannot have an efficient ethanol production system without looking at the whole. You cannot look at just one institution, declare it sacred and decide not to look at it. All of the institutions need to be looked at, including the sacred ones.

I am really concerned with the whole issue of ethanol. There are a lot of competing technologies and no one has really calculated the true energy costs, the true energy input-output balance on both the carbon and the methane.

The deputy minister will be here later and you can be sure he will talk to you about ethanol, and he will talk to you about cattle. You will have a huge problem because, as Mr. Cohen mentioned, cattle in feedlots produce a huge amount of methane. Trying to reduce methane and CO2 emissions under climate change, and at the same time introducing ethanol is going to require a lot of study. No one has calculated the true energy values of ethanol. I am not privy to what is happening in government, but what is happening in the ethanol industry is related to what is happening in the cattle industry, because ethanol produces input feed to the ethanol.

We need to take a look at those institutions in order to have a good understanding of what the effects are of producing ethanol. We cannot reach the Kyoto targets if we carry on the way we are now. We have this big plan but we cannot reach the targets.

What I am talking about is change but the one change I am really interested in is in agroforestry. What we need to do here in Saskatchewan is something that is environmentally friendly. If you take a look around this room, everything is made of wood. There many engineered products that we have not even dreamt of that can be designed out of wood. Throughout the world, except in Canada, afforestation and agroforestry have evolved as a sustainable resource and intensive land management option for farmers and industry. Afforestation and agroforestry are very different and must also be separated from forestry and agriculture.

Agroforestry combines agriculture and forestry through a set of guidelines formulated to create a more integrated, diverse and sustainable land-use system. Silvopasture, riparian forest buffers, shelter belts, and alley cropping are aspects of agroforestry. I have described each of them briefly in my submission.

Afforestation is the conscious planting of trees for commercial or industrial purposes on agricultural land that has not previously had trees, or where the trees have been removed for agricultural purposes. Afforestation is the plantation. In Washington State I have seen miles and miles of rows of trees. They are grown and then used in the plantation.

By establishing fast-growing trees on land that has not supported forests for many decades Canada has an opportunity to enhance carbon sequestration while increasing the supply of wood fibre and biomass as an energy, chemical and material resource. Through the strategic use of trees in certain agricultural systems it is possible to enhance carbon stocks and economic value.

I believe the committee should be playing a strong part is in education. You will not get a single farmer growing trees in this province, they have been taught for 100 years to clear the trees away. Cutting down trees comes naturally, except maybe in shelter belts. We need a to train the people who will be training the farmers. We need a strong foundation if Canada decides that afforestation and agroforestry are strategic goals of this country. We have the land, and because of carbon credits there is an economic return from growing trees. Carbon credits have the potential to deliver large amounts of money to the farmers.

We need to develop expertise and foster research. We need to initiate and facilitate collaboration with industry. We need to educate highly qualified personnel who can transfer their knowledge to the farmers.

If the committee would like to have more information on agroforestry and afforestation I will gladly provide you with it.

The Chairman: In New Zealand a number of sheep farmers lost their subsidies. It did not take a lot of education for them to realize that they had to do something else because they would no longer be given money to raise sheep. They found a species of Californian pine that matures in 25 years that they went into tree farming. That happened without a long period of education; so it can be done.

The next presenter is Cecil Nagy, Research Associate with the Centre for Studies in Agriculture, Law and the Environment.

Mr. Cecil Nagy, Professor, University of Saskatchewan: Honourable senators, my interest in climate change is the farm level adaptation options that are open to farmers. There has been very little climate change research done in the Prairies to try to investigate the adaptation options open to farmers. From a summary of the studies that have been done in the United States I think some of the adaptation management strategies are management strategies which will be used.

First, climate change has to be recognized by farmers as being different from the normal variability in climate.

Second, adaptation options are available, such as new technologies, new crop types and other enterprises, which could range from livestock to grain farming, depending on the region.

Third, farm programs do not limit adaptation options.

Farmers need good, credible information as to whether or not the change in climate they are seeing is a normal variability or a long-term trend.

In terms of adaptation options, I think farmers will adapt to climate as they have over the last 100 years of climate change.

In order to adjust to climate change farmers will consider changing their seeding dates and crop types. They will consider the variability of their crops in consideration of a longer or shorter growing season to take advantage of whatever climate change is taking place. If a farmers' crop is no longer viable for his region, will the farm programs allow them to switch crops without losing the benefits of their farming programs? Seeding dates, length of maturity of cultivars, portfolio of crops and tillage practices are cropping practices that can be adjusted or adopted to mitigate the impact of climate change. Conservation tillage is one of the big adaptation options open to farmers. Farm-level adaptation and the cost of adaptation that includes new technology can be fairly expensive. It is not certain that farmers will have the financial resources to be able to proceed with adaptation options, especially if there have been a number of years of low crops. Poor productivity over a number of years with low prices will lessen their ability to adapt to any kind of climate change. If adaptation to climate change is further delayed it could compound and lead to further problems later on.

In terms of crop insurance, farmers will look at the crop portfolio and the risk and return of growing that portfolio and decide whether making such changes as adding or deleting crops will improve their risk and return.

With climate change you will see the variability in yield of all crops grown within a region will change and that change will not be the same for all crops. Some crops might even improve in terms of climate change and yield, and variability in yield.

The farmers crop insurance is based on his financial viability and on the frequency of crop failures or crop disasters. Once in every 10 years there will be a major crop failure or disaster, however the intervening years provide enough time to recover. However, if the frequency of crop failures increases, let us say to one in six years, there may not be enough years of good crop in between the crop disasters for farmers to recover. Back-to-back or two or three years of crop failures will leave crop insurance in the red reduce their ability to fund farmers in terms of meeting crop disasters.

Whether new crops can be identified as being suitable for a region and how fast they can be added into being covered under crop insurance is one of the issues that I think should be considered.

Are current government programs designed to meet climate change? I have not seen evidence that government programs will be able to meet climate change problems.

Climate change will alter levels of production and the crops produced. Farmers converting from livestock to grain or grain to livestock, depending on the area, will certainly change the amounts and types of energy used on farms.

It is important that good, credible information about climate change is available to farmers so that they can assess their mitigation options. There are and there will be options available for them. If farmers are given good information they should be able to make a correct assessment as to what choices to make.

The current farm safety net programs should be investigated as to whether or not there are any impediments to the adoption of mitigation options.

I believe we need more information on bio-economic models to investigate crop types. We need to understand what kind of profitable enterprises are available to help plant researchers and genetics people who are developing new crop types to look at possible adaptation options to try to get an eye to the future.

The Chairman: As a researcher who has been studying all the federal programs designed to help farmers in bad crop years do you have any specific recommendations on the changes that NISA ought to make in order to accommodate climate change?

Mr. Nagy: No, I have not done any specific research on the programs.

The Chairman: Are there any specific recommendations you can leave with the committee?

Mr. Nagy: Not at this time, no, I do not have any research to back up any recommendations.

Senator Wiebe: I have a tough question for all three of you. We have heard a lot today about the need for change and the need for adaptation. It seems to me that the farmers are going to have to make major adjustments and put a lot of capital into these changes. Professor Cohen, your program, and direct seeding, will require a major investment in equipment.

All of you have mentioned that all the agricultural institutions have to be examined. Should we consider looking at farming as a business first, and as a way of life, second? Is it only when we look at it as a business that we can adjust to changes and adaptations that have to be made?

Mr. Cohen: It should be looked at in both ways. If it is not a successful business the way of life will cease to exist and people will not continue with it.

There was a gentleman from Glaslyn on CBC this morning that said that after a lifetime of farming he is putting his farm up for sale.

A major problem around the world is getting students to study agriculture. I think that will have major implications 20, 30, 50 years down the road. The number of students coming into the College of Agriculture has declined in the last five years. The trend is the same all across the country. Oxford University and the University of Edinburgh have closed their agriculture programs. Many universities are amalgamating with agricultural colleges. That has happened at the University of Alberta. We will see the effect of these problems some time down the road.

If we do not make that change in agriculture then I think the way of life will cease to exist.

Senator Wiebe: I would like to add that the farmer decided to cut his losses and retire with a considerable amount of dignity. What about the farmer that is not in a position to retire with any dignity? Should we as policy makers start looking at developing programs that will allow for that transition within agriculture and transition out of agriculture?

Mr. Cohen: I prefer the first way. If we provide programs to get people out of agriculture, then what will happen to agriculture? That is the question.

Senator Wiebe: I am talking about the individual that farms two quarters of land and cannot afford to buy the equipment or the machinery. Should governments continue to send money to that individual rather than find a way to retrain that individual?

Canada, Europe and the U.S. are losing their farmers. The rate of loss indicates it is not as a result of the level of subsidy we are providing, because each country or each group of countries has different levels of subsidization. We have to make farming attractive to our young people and we also have to make it so that they can make a good living from it. How do we take care of the people who are on that borderline?

Mr. Cohen: I am not a sociologist or an economist but it seems to me that you are right. We have a large number of marginal farmers that are just not big enough to survive in this day and age and we should be providing some means by which these people can get out of farming honourably. However, if we do that we have to also provide incentives for other people to not necessarily come into that farm but take over that farm.

Senator Wiebe: To fill that gap.

Mr. Cohen: The trend will be to have fewer farmers with larger areas to farm.

Mr. Hucq: This is a very critical question and to some extent the answer lies in the history of Saskatchewan.

I am a Belgian citizen and most farmers in Belgium can see the crane in the harbour, whether it is Antwerp or somewhere else. When you think of growing grain on the Prairies, thousands of kilometres away from the terminal, a tremendous amount of energy is spent not only in growing the grain but also in the transportation of it to the terminal in Vancouver and elsewhere. The trains that haul that grain to the harbour come back empty so there is no back haul. It is 3,000 kilometres of travel and you are competing with someone else who has the harbour just down the road.

Every country in the world can grow grain: India and China are exporting grain, and soon the Russians will be exporting cheap grain. In Canada we have the notion of quality of grain. A lot of the flour makers take the quality to blend it with the cheap grain from Argentina or wherever. The day may come when they do not need this expensive grain. There are taxes to be paid, and there is foreign exchange so often they choose the cheaper grain. Canada often lends them money to buy the grain and somewhere down the road it is given away.

Unless we look at the economics of it and say this does not make economic sense, I just do not see that you will be able to support the way of life. That will become a very critical question. You are so far away from the market that selling raw grain is just not enough.

Somebody had mentioned that we can grow canary seed, and canola. Well if you are in canary seed, it would not need much expansion of the canary seed market before the price of canary seed is down to a few pennies. So that is not an option. A lot of farmers are saying they already have diversified into this, that and the other. You have to be careful because you can grow a lot of that stuff and the price will be bottom out.

I think you have to look at the whole system and think how to most efficiently redesign it. Maybe that is what you need to do on the Prairies; assume there are no people living there and think how it can be redesigned so that everybody can have a share of the wealth. There is tremendous wealth but we need to know how everyone can gain.

The Chairman: Change to agroforestry?

Mr. Hucq: I am not saying we have to have agroforestry on every inch of land. There is room for quality grain in the world, there is no doubt about it, and a good quantity of it. However, we need not be obsessed with grain because obsession makes change very difficult.

I do not think I have answered your question.

Senator Wiebe: I think you did. Thank you very much for being so frank, I appreciate that very much.

Senator Tkachuk: GrassGro and Environment Canada charging royalties for downloading weather information. Does Environment Canada charge you a royalty every time you sell a GrassGro package to someone? Do you write the cheque to Environment Canada or the Receiver General? I am trying to find out whether it goes directly into the department or not.

Mr. Cohen: I have never written a cheque because it has never been sent out except to PFRA and Saskatchewan Crop Insurance, and they both have a licence to access Environment Canada weather data. I think they pay something like $8,000 a year to access Environment Canada data. As they already have a licence there are no royalties involved.

If I was to send it out to Senator Hays, for example, he would presumably have to pay me the amount of the royalties and then I would have to send that cheque to Environment Canada.

Senator Tkachuk: He would take the money out of his government research budget that would go back to wherever it came from.

Mr. Cohen: Yes. One of the arguments I make is the taxpayer is paying for the collection of it and those taxpayers who want to use it have to pay twice.

Senator Tkachuk: I am surprised, considering the whole issue of climate change and the Kyoto Protocol that we are actually charging royalties. I suppose it is a great business idea but I am not sure whom to believe any more. I wonder if they are using the royalties to promote their own business, and selling it as their own weather collection product.

I promise you that there will be a number of us who will look into this and see what we can do to change it. I am making that promise.

Governments are all over agriculture and most particularly in Europe. Because of European farm subsidies the price of grain products has been driven down in this country. That has hurt our agricultural community. Why are we talking about a rural way of life if there is not any money being made in that area?

I believe you can make money on a piece of land if you let people decide how to make money on that piece of land and then force them to make money on that piece of land. My view is we spend a lot of money on research to provide information so that individuals can make those decisions. Then, governments can proceed with the business of infrastructure to make sure that there is heat in their homes, water in their taps, a school down the street, and a doctor in town.

I always get confused when we talk about this because we always come back to the same problems. I have been on the agriculture committee for a few years and I have heard these problems for 25 years, and they have not changed.

How do we talk about the Wheat Board? We have been talking about this forever. You cannot start a pasta plant here; how stupid is that?

Mr. Cohen: This is the $64-million question. I agree that subsidies are not the way to go. Of course, you can get into an argument about the definition of a subsidy?

Senator Tkachuk: That is true.

Mr. Cohen: Virtually any incentive provided to people is, to some extent, a subsidy.

The Chairman: A subsidy is what the Americans and the Europeans pay their farmers.

Mr. Cohen: Yes, of course. We will pay you ``X'' dollars per bushel or ``X'' cents per bushel of wheat that you produce; we will give you that as a direct subsidy.

There are other ways of doing it and I think the Permanent Cover Program was a good way of doing it. Unfortunately, although $5 million sounds like a lot of money, when it is spread around many farmers it does not go a long way. In this case the incentive was to encourage people to take marginal cropland out of cropping. That is, cropland that is eroding, starting to lose organic matter, and may be becoming saline, is taken out and put into permanent cover.

The subsidy covered, essentially, the cost of the seed and perhaps a little bit of the cost of putting it in. I used the word ``subsidy.''

From there, having got that help, the farmer must rely on his ability to make that work. To me, that sort of program is an effective program.

Senator Tkachuk: It is in a way like research, you start small, if it was a disaster no one would have carried it on, everyone would have forgotten about it.

Mr. Cohen: Yes. I heard somebody on CBC just this morning saying that the government has announced tax relief on land that is not broken. He was saying this is a marvellous program because he has some unbroken land that was not providing any return for him and now he can get some return as a tax relief on the rest of the land that he has. Therefore, he is not encouraged to break that land to try to make extra money to make ends meet.

That has been part of the problem. We have been in a spiral of believing the only way to make money is to break more land. You break the land and it works for two or three years and then it goes downhill and starts to deteriorate, it is saline, it erodes, and so on. We have been in that spiral and it is time to get out of it.

Senator Gustafson: You have indicated that there has to be change and I could not agree with that more. The problem is if we sow the ground and we raise cattle and the Americans refuse to buy it what will happen to the price of cattle? If the Americans refuse to take our oil what will happen to the price of oil? If they refuse to buy our lumber what happens to the price of lumber?

I am referring to the Canadian Wheat Board. The Wheat Pool is broke. What is that telling us? That is telling us that there has to be some changes made. Maybe we have to market our grain through ADM; they bought 48 per cent of United Grain Growers. We fail to respond to reality.

I do not have enough time to get into this but you raised the subject, and I think there will have to be some changes or we will die on the vine.

This committee has been down to the U.S. three times. The Americans, of course, want the Wheat Board and the marketing boards gone, and at the global level this is as a direct result of the wall coming down in Germany.

The American want us to make changes so that they can export milk and butter and cheese into Canada and then they will change their rules on wheat and grain. If that does not happen where will we market our grain?

Less then three months ago we were told we would get $8 a bushel; today we are told the price of grain is dropping. Why? The price is dropping because the Americans are blocking us, if for no other reason than a political stance.

I believe that this issue is something that should be researched. I am not suggesting I have all the answers but one cannot ignore the reality of what is happening in front of us. You gentlemen are university professors, you are supposed to tell us how to do these things, and I think you have tried here today.

Mr. Hucq: I came to Canada in 1980 and to the University of Saskatchewan in 1988. When you are an outsider looking in at this problem you always wonder how did developed. Canada is selling raw grain when people from Saskatoon can by Provita and Ryvita that is made in Denmark. What is happening here? It is the same question with the pasta. We have experienced those various problems.

I think the Agriculture Policy Framework and biotechnology have done a lot to make Canadian products of a very high quality. Certainly we picture a Japanese consumer dining on steak in Tokyo and from the labelling and markings on it, we see that it is ``Made in Canada,'' we know it has quality. If you go to the United States back bacon is Canadian bacon, it is never ``bacon,'' it is Canadian bacon.

I know it is not easy to develop those kinds of markets, and I am not saying we can do this overnight or we can do it cheaply. It is an expensive, tremendous marketing tool. The Parries have tremendous resources, a highly skilled labour force and many farmers. The opportunity is here.

Billions of consumers around the world are aware of the high quality of Canadian goods. They know that our products are environmentally sound and have not been injected with something that you have never heard of. We must try to develop those markets. It might take 20 years or more to do so, but it took us 100 years to get to where we are now. I think that is the only way. Continuing on the same route as has been done in the past will not work, there is too much competition out there.

The Chairman: I have a question that goes to the root of our study. A number of researchers and presenters have said to us that farmers might receive credits for carbon sequestration and for carbon sinks, et cetera. How do you measure the value of carbon that has been sequestered by a farmer? What are the methods that should be used to determine the value of this carbon that is being held down and controlled and not exposed to the atmosphere? What are the scientific methods by which we can measure the carbons?

Mr. Cohen: That is one of the things that we are particularly interested in. The way we will do that it is to use the GrassGro model.

From the GrassGro model we can develop the above-ground carbon cycling, in other words, we know how much grass is growing and to grow that amount of grass we can calculate how much carbon dioxide has been taken out of the atmosphere. We know how much the cows are eating; we know how much is going into the atmosphere in terms of methane. We can predict how much they are returning to the soil in fecal carbon.

We use the Century model to look at what is happening below the surface of the soil in terms of removal of the carbon into the roots, the storage through the roots, and the removal of the carbon into the soil from the fecal material.

I think those sorts of calculations are the only way that we will be able to get some idea of what the carbon credits are.

The Chairman: It sounds like an almost impossible model to frame. How can you possible determine that?

Mr. Cohen: You have to generalize so much on that. We met with a group of farmers in Saskatchewan and one of the things that came out of that meeting was a concern that those farmers had with respect to carbon credits. Their concern was that the risk would be turned over to the farmer. The farmer will trade in carbon credits and they take all the risk. The risk moves from the people who are emitting the carbon, the oil, gas and coal industries, to the farmer who buys and sells these credits. The farmers were concerned about that.

The Chairman: I do not believe that the farmer would have all the risk if he has a positive on the scale. I do not see why he would end up with the risk because he may be in a positive position.

Mr. Hucq: I think the problem is if the farmer gets paid a certain sum of money for sequestering carbon, that farmer has to keep the land under that particular condition ad infinitum, really. The question is, what happens to the money he has been paid if three or four years from now the land reverts to conventional till? This issue is the farmer gets paid but what happens if he takes the money and then it is reversed?

The Chairman: It would be like other things that run with the land. You sell the deed to the land and it runs with the land, just like any other encumbrance such as a mortgage. That is the legal answer.

Mr. Nagy: I think the risk comes because you are selling the carbon credit today and in 30 years the circumstances of how you sequestered that carbon may have changed and you may have to break up the land for some reason.

The Chairman: Or climate change, some factor having nothing to do with the farmer.

Mr. Nagy: That is correct. You may not have sequestered that much carbon in that time period. So you would have to return into the market and repurchase that carbon at a later date if you did not produce as much as you got paid for at the beginning. At some point down the road you will have to return to the carbon market.

We do not know what the real price of carbon will be 20 years down the road. It is the change in the real price of carbon between now and 20 years from now that will make the difference; that is the risk for farmers in terms of selling the carbon.

The Chairman: There is an awful lot we do not know about the purchase and sale of carbon credits and there is an awful lot that we do not know about a proper model for evaluating sequestered carbon.

If any of you know of any documents or any research done in this area, I would be grateful if you would let us know. This is something that has come up over and over again and it is something that this committee needs to address head-on.

My final question is really a comment to Professor Hucq. I heard your presentation; and must say your paper is superb. You give a brief biography of yourself, and then you looked at the pressing problems of wheat farmers in Saskatchewan. As Senator Gustafson has said, our input costs are high and the price per bushel is way down and how can we possibly make a living? You analyze those and you say if we have animals you are producing a lot of methane. Finally you said no one has the answers. You have come up with a possible answer and that is what is so good about your presentation.

Have you done any other papers or do you know of other researchers who have reached similar conclusions so that we can get a copy of those papers and read and study them along with your paper? Yours was a superb approach to the concept of adaptation for the entire Province of Saskatchewan and I appreciate your efforts in that. What else is written on this area?

Mr. Hucq: I cannot give you an answer right now but I can certainly look it up and send whatever information I can find to you.

The Chairman: I found it very useful. On behalf of our committee here today I want to say to all three of you thank you very, very much. It has been most instructive and I appreciate your efforts and your time.

Senator Tkachuk: They are from the University of Saskatchewan; what did you expect?

Senator Jack Wiebe (Deputy Chairman) in the Chair.

The Deputy Chairman: Honourable senators, our next witness is from the Western Canadian Wheat Growers Association.

Mr. Mark Allan, Business Manager, Western Canadian Wheat Growers Association: Thank you for the opportunity to come and present on behalf of close to 5,000 wheat growers from Western Canada. I am pinch-hitting today for a farmer director who is tied up with the cold weather and some problems at home.

My role with the wheat growers has been to help them turn around their fortunes as an organization; to help them rebuild the organization; to work on environmental issues; and many other issues of importance to Western Canadian grain farmers.

I applaud the Senate committee for its work and for coming to one of our towns to speak to us.

I intend to speak about our views on the impacts of climate change on agriculture. Ours is primarily the farmers' perspective. There are others with a better grasp of the technical issues, and it sounds like you were just listening to some of those folks and it sounded encouraging. Our comments reflect concerns we have heard from our farmer members.

Several recent events have raised the profile of climate change in the agriculture sector. Canada has ratified the Kyoto Protocol with the result that we will have international obligations to meet in terms of reducing greenhouse gas emissions. As well, the federal government has developed a long-term plan for the sector, the Agriculture Policy Framework, which counts environmental sustainability as one of its pillars. Both of these conditions will cause major impacts on the way farmers manage their businesses in the future.

There are two main issues for farmers to consider that we want to share with you today; these are the real things that farmers can do to adapt to climate change and the topic of carbon sequestration as it relates to the Kyoto Protocol. In fairness, we probably have as many questions as we have answers.

On the point of adaptation to climate change most studies point to a climate on the Prairies that will be warmer than what we have experienced in the past. While we have had both drought and flooding on the Prairies in recent years, the more likely scenario will be increasing drought or, at least, drier conditions.

Some studies show net benefits to farmers from warmer weather. Nevertheless, there will be serious consequences for farmers who will have to change their cropping patterns and for governments in helping farmers by adding the regulatory environment and programs that will help them manage their production and revenue risks.

The key for farmers will be ensuring that they are not constrained by regulations and program designs that inhibit their ability to adapt to a changing environment.

International trade agreements strive to be production neutral, for the most part. We must continue to work through the World Trade Organization to make sure that government programs do not favour some crops over others, which would inhibit adaptation in cropping patters.

Marketing regulations continue to affect cropping decisions in Western Canada. Some were discussed just prior to this presentation. For a number of reasons many farmers choose not to grow crops that must be marketed under the Canadian Wheat Board monopoly. Since wheat is a crop that grows extremely well under warm, dry conditions the presence of the government monopoly represents regulatory restrictions for farmers because it limits adaptation.

The lack of marketing flexibility and the inability to access niche markets to develop value-added opportunities in Western Canada are all points linked to this issue.

The Agriculture Policy Framework includes a business risk management pillar that draws government safety nets under one umbrella. Wheat growers have expressed concern that the proposed system could place a heavy financial burden on farmers with less actual risk protection. If we are facing a future with warmer temperatures and more droughts there will be consequences for the safety net system and for farmers' ability to afford the programs.

We urge this committee to consider these impacts on farmers as we look forward.

A second major consideration for grain growers in Western Canada is the whole issue of carbon sequestration. There is much speculation in the industry and in the agricultural community regarding carbon in agricultural soils and the possibility of farmers marketing the carbon credits. It is our understanding that opportunities for farmers will be limited. Farmers across the Prairies have widely adopted minimum-tillage practices already and there appears to be little more they can do to sequester more carbon on traditional cropland.

On marginal land and on the northern fringes of the arable land base there are possibilities of reforestation with permanent tree cover. As well, there may be some opportunities in the southern parts of the Prairies to return land now used for annual crops to rangeland and more permanent cover, especially if warmer and drier conditions in those areas restrict cropping choices.

Where there are opportunities for farmers to trade carbon credits, perhaps a leasing arrangement rather than a sale of carbon credits could be considered. Such an arrangement would give farmers more flexibility in their operations as they would not have to retain a permanent cover indefinitely or, build in the carbon credit as part of the price of the land. At the end of the lease period they could do something else with the land, although they would then need to buy the credits from somewhere else. A lease could also be negotiated to retain the carbon credits. There are many details to be worked out before a functional carbon credit-trading scheme is developed. While there are some companies, particularly in the U.S., that are beginning to buy credits, they are speculating at this time and, essentially, buying insurance against a time in the future when their ability to emit greenhouse gases could be restricted.

Questions also remain regarding the contribution by the agriculture industry to Canada's greenhouse gas production. Farming tends to be fuel intensive, which could work against the case for agricultural lands as a net carbon sink. Since minimum tillage has already been widely adopted the carbon that has already been sequestered as a result of such practices might not be able to be used to offset greenhouse gas emissions from the industry. This situation could leave the agriculture industry, and farmers, in the intolerable position of having to drastically alter their management practices to help meet Canada's Kyoto targets for greenhouse gas emissions.

Perhaps farmers should get credit for being proactive in the area of minimum tillage and carbon sequestration since these management practices have been adopted in a significant way over the last decade.

We understand that Agriculture Canada has developed a greenhouse gas mitigation program for Canadian agriculture, to address greenhouse gas emissions under Canada's Action Plan 2000 on Climate Change, which is part of the government's commitment over the next five years to address climate change.

We know little about the program but hope that the government will work closely with the farming community to ensure that the agriculture sector does not bear an undue burden for reducing carbon emissions.

Climate change continues to involve an incredible amount of uncertainty for farmers, the public and for governments. Farmers have had little useful information about how climate change will affect farming practices and about the impacts of the Kyoto Accord on the industry.

The Canadian government does have a responsibility to ensure that farmers will be free of regulatory restrictions that would hamper their ability to adapt their farming practices as the climate warms.

We hope and expect that the federal government recognizes the significant contributions to the Canadian economy made by the industry and will ensure that our safety net systems are flexible enough to adapt to the production risks associated with climate change.

Clear answers on issues surrounding carbon sequestration and carbon credits in the agriculture industry are overdue.

I would like to thank you again for the opportunity to address the committee on the critical issue of climate change in the agriculture sector.

Senator Donald H. Oliver (Chairman) in the Chair.

The Chairman: Thank you very much for your presentation. Do you have any specific recommendations? I know you were in the room when we were asking the three professors about how you measure the sequestration of carbon, and you said:

Clear answers on issues surrounding carbon sequestration and carbon credits in the agriculture industry are overdue.

In view of what the three professors said about the lack of scientific information on measuring it and the possible jeopardy position that farmers will be in if they do, in fact, take cash for one of their credits; what changes do you recommend that this committee look at?

Mr. Allan: I wish I had the direct answer to that question. I can tell you that we are just in the process of coming to our year-end where there is a change in leadership at the wheat growers' organization. We will have a structure that will put a strong environmental committee together. The concept that we are working on will include alliances with universities, other farm organizations involved in the growing of other crops, and other technical experts. It is clearly an area where there is a lack of the technical information we need to answer your question.

The best I can say is that we are planning to put together the best and brightest minds as part of a working group on the environment.

The Chairman: You indicated in your remarks that sequestration has been happening for some 10 years, which is a long time for carbon credits; however, you are only now putting together a group to sit down and start studying this?

Mr. Allan: Absolutely. You are exactly right and it is a surprise to me as well. All I can work with is the future, not the past.

Senator Gustafson: Can the Kyoto Protocol work for farmers without the Americans being involved? The Americans have said it would cost them $20 billion if they go into the program. How effective will we be if they are not in?

The automobile companies of Eastern Canada are exempt but neither our farmers nor our oil fields will be exempt. That triggers a certain amount of animosity in Western Canada, especially Saskatchewan where we have enough problems now without that additional program. We still remember the energy crisis and programs that came in years ago. I would like your comments on that.

Mr. Allan: The wheat growers have always stood for a fair and level competitive playing field. From a standpoint of if the playing field is not level, are we concerned? Absolutely. Are we concerned that the United States is not in on this? Are we concerned that the automotive industry is excluded? Yes. The farm population represents, I believe, about three per cent of the population of Canada; we have a small voice in a big world. Our concern is if the Kyoto Protocol is implemented that it is fair to the farming industry and that it offers a fair and level playing field for us to compete on.

Senator Gustafson: In fairness to the automobile industry, if their playing field is not level, they will have serious problems because some of those commodities could be manufactured right across the line and they would lose them. Their situation is really no different from ours in Saskatchewan.

Mr. Allan: This whole area requires more resources. Ours is a volunteer farm organization and the wheat business has become a less prominent industry in Western Canada.

One of the things that our organization is struggling with is how can we be small and do a good job on big, important issues like the environment? The best that we can do, as we move forward, is continue to pass the information back to our farmer members about what they can do, how they can respond to the changes out there, and build alliances with other organizations that have the technical expertise and the financial and human resources to provide answers to this question and go to bat with us and for us. That is where we are today.

Senator Wiebe: In your conclusions you made a statement that:

Climate change continues to involve an incredible amount of uncertainty. Farmers have had little useful information about how climate change will affect farming practices and about the impacts of the Kyoto Accord on the industry.

I guess the best way for me to answer that is to say that this is the main reason why this committee was formed. We may not be any wiser than you are in that regard and we felt that it was about time that we, as an agriculture committee, tackle this question and hopefully provide the government and the Senate and the industry with some answers to those questions.

One of the big concerns that we have, whether you want to debate Kyoto or whether you do not, is that even if the Kyoto Protocol is carried out by every country, including the U.S., we have had enough experts and scientists that have appeared before us, that have told us that all that we will do is slow down the rapid change. The climate changes we should be concerned about are the extremes. Where in the past on my farm I have a nice three-day rain, I will still get the same amount of rain but it will come in an hour and a half. It is those kinds of adjustments that we must make as an industry. What we have to do as a committee is to find some of those answers.

I know that because of the financial problems agriculture now finds itself in your organization has been very much involved and very much concerned with ensuring that we will have a farm there tomorrow. Have you really had a chance to take a look at some of the adaptation practices that wheat growers may have to make? For example, in the future, will you be looking at different varieties of grain that will be able to grow in warmer temperatures?

Mr. Allan: The comment that there is more that can be done was for you to pass back to the government on our behalf. We certainly appreciate the fact that you raise the importance of this issue and are giving us the opportunity to focus on it.

We are also forming another working committee involving alliances with others on the regulatory side of the grain business, the grain commission practices and recommending committees on varieties. We have a number of innovative ideas for system reform that would be forward thinking and speak more to the farmers' needs to adapt and possibly also to our customers' needs.

We do have a situation that everybody is familiar with; there is a middleman in the wheat marketing system. Our producer-growers do not necessarily have the advantage of knowing and understanding the customer in an intimate and close way. Although many of our members are pretty good at understanding that, we think that as we make changes in marketing there should also be major reforms made to the regulatory process, crop development, and the opportunity to grow more and different drought resistant crops. Therefore, regulatory reform is part of the solution, as we see it.

Senator Wiebe: I am a strong believer that adaptation will depend a lot on the individual producers and how they have an opportunity to have some early involvement in how things develop. Once you are in a position to have some of those ideas down in black and white we would certainly appreciate it if you could forward it to our committee clerk and he will be able to make them available to all of us.

Mr. Allan: We will do that. I have a document on my desk that would answer that specific question.

Senator Hubley: Thank you very much, Mr. Allan. I apologize that I missed part of your presentation. What I heard has certainly followed the theme of a lot of the information that has come to our committee. As an Easterner, I am delighted to be in Saskatchewan today. You certainly have cornered the sunshine market; it is just beautiful to fly in over the fields.

I just might mention that there seems to be a good ground cover of snow this year; is this a little more than expected or is it pretty well what you usually have?

Mr. Allan: We had a little less than normal up until now. But it looks good today.

Senator Hubley: I would like to follow up on your alternate management practices that farmers will have to look at. I think we know from the information that our committee has received that we are, indeed, in a climate change. Senator Wiebe sometimes speaks of the government's responsibility in addressing the farmers' programs of adaptation. He talks about a one per cent food tax. Is that what you call it?

Senator Wiebe: A dedicated food levy.

Senator Hubley: A dedicated food levy. I am just wondering if that is something that your group has looked at?

Senator Tkachuk: It is like a user fee?

Senator Hubley: Well, if you eat you pay. A user fee is right.

Mr. Allan: Not to my knowledge. Although I did mention to the others when I came in that I am pinch-hitting for one of our other farmer representatives who has been involved in this organization for a longer time.

We are in favour of proactive, progressive, sustainable agriculture that provides high-quality food in an economic environment that is competitive and that has a level playing field. So we are in favour of anything that would put more money in our members' pockets.

Senator Hubley: I think that will have to be one of our recommendations. We have looked at several models, both in Northern Ireland and in the EU. While we might term them as subsidies they look at them as best farming practices or, certainly, a method for maintaining their farming communities.

I think one of our biggest concerns is what will happen to the rural communities in the west if we do not have the adaptation process in place before this starts to impact dramatically upon us.

Mr. Allan: That sounds encouraging. What I have noticed from working with our organization is that there is amazing resourcefulness, innovation, and an amazing amount of information that is available to farmers that they now use. The internet, the access to information on markets and marketing systems, other kinds of agronomic practices, and the opportunity to get it out to our members instantaneously is something we can do in a small shop. It is quite different than a farm organization of 15 years ago.

I have a lot of faith in the future of the grain business in Western Canada. I think that it is fair to say that this organization would like to see the regulatory and marketing environments based on a commercial forward thinking system. I think you will find that Prairie grain farmers are amazingly resourceful. If they are forward thinking I have every reason to expect the organization will still be here in 100 years' time supporting a successful industry in Western Canada.

Senator Gustafson: With the safety nets that are in place can the farmers stand another drought?

Mr. Allan: I do not have the answer to your question. Although the concern I have heard about the current proposed changes to NISA revolve around the farmers that have invested in NISA that are about to retire and have substantial funds in those accounts. The changes to the regulations seem to be of most concern to those folks.

Senator Gustafson: The senior farmers have built up thousands of dollars in the program and are in good shape, we know that. What about the young farmers and the future of the industry? The farmers in my age group, we must admit are pretty well off because they have had a history of good crops. It is the young farmers that we have to be concerned with. It seems to me that the programs that we have are not really addressing that up front.

First of all NISA. Young farmers may not be able to afford to match; the farmer who is well off financially can match, so he gets paid more. My view is that I think there has to be some very significant changes to our safety nets.

Mr. Allan: We also have a position paper on the current NISA situation. I would be happy to provide it to your committee, Senator Gustafson.

On the board of the wheat growers I think over 50 per cent of the board, five to six people, are young farmers, people in their 30s or early 40s that are doing very well in their farm operations. However, they have been very resourceful and innovative. I am not sure of their backgrounds, how they came into their farms in the first place, to be truthful.

Senator Gustafson: Maybe dad has a pretty good pocketbook.

Mr. Allan: Yes. So I cannot really comment on the state of the industry from that perspective.

The Chairman: Mr. Allan, on behalf of the committee, thank you very much for coming in today and sharing with us some views of your organization. It is deeply appreciated.

Honourable senators I am very pleased to welcome as our next presenter the Honourable Eric Cline. Before you begin, would you introduce those with you so that we have it on our formal record?

The Honourable Eric Cline, Q.C., Minister of Industry and Resources, Government of Saskatchewan: With me today are Mr. James Marshall, Assistant Deputy Minister of Saskatchewan Energy and Resources, Mr. Gordon Nystuen, Deputy Minister of Saskatchewan Agriculture, Food and Rural Revitalization and Mr. Bob Ruggles, Assistant Deputy Minister of Saskatchewan Environment. We have three departments represented here and one minister speaking on behalf of the three.

The paper we have submitted is somewhat lengthy and contains a lot of detail. I propose we make a short presentation and leave time open for questions and discussion.

The Chairman: That is wonderful. Thank you very, very much. Please proceed.

Mr. Cline: Thank you for the opportunity to discuss the effects of climate change on agriculture, forests and rural communities and to present Saskatchewan's perspective on these issues. We support taking action on climate change but we advocate a balanced approach that recognizes the need to address climate change issues while ensuring that our economy remains competitive.

Climate change would impact our province significantly, especially our important agricultural and forestry sectors. We recognize that even with Kyoto the concentrations of greenhouse gases in the atmosphere will continue to increase. This means that climate change likely will continue for the next several decades. We must be prepared to manage the effects of climate change on our province.

We are particularly concerned about the increased risks of drought and extreme climatic events. Major droughts are disastrous to Saskatchewan's agricultural and forestry sectors, to rural water availability and to the overall provincial economy.

Agriculture is severely impacted by a lack of water for crops, livestock and irrigation. Economic hardship to farmers, damage to soil and livestock herd reduction or relocation are common events during a drought. We experienced all of those in the last two years.

Drought also affects the growth rate and productivity of our forests. Contrary to beliefs in some quarters, forests actually cover half of our province. The forest industry faces increased fire hazards and poor conditions for the establishment and growth of young trees.

Municipal and farm water supplies, and hydroelectric production may also be affected by climate change. Climate change may bring more frequent, severe and prolonged droughts. We also expect that it will bring an increased incidence of extreme climatic events.

The Vanguard flood presentsa recent example that may be related to climate change. During the night of July 3 and 4, 2000 the Village of Vanguard in Southwestern Saskatchewan experienced torrential rain that caused extensive damage to infrastructure and property. This was the largest rainfall event ever recorded on the Canadian Prairies. Over an eight-hour period up to 350 millimetres — 14 inches — of rain fell in and around the village of about 250 residents.

The flood caused a number of serious problems for residents. Roads were washed out, fields flooded and cropland severely damaged. The community water supply was contaminated and most houses in the village were flooded, as were farm wells, dugouts and sewage systems. There were immediate problems with water availability for farm residents and for livestock.

This event showed the need for federal and provincial agencies to develop standardized procedures and a coordinated quick-response capability to deal with such disasters. It also demonstrates the importance of accurate and timely weather forecasting. Environment Canada's proposal to close its Saskatoon weather office is, we believe, a step in the wrong direction.

Saskatchewan is vulnerable to the effects of climate change. However, the province is also vulnerable to the federal government's climate change policy because of our emission-intensive economy. We have the highest emission per unit of GDP of any province, with a level more than twice the Canadian average.

From 1990 to 2000, emissions in Saskatchewan grew more than 30 per cent. Most increases resulted from development of a heavy oil upgrader, a fertilizer plant, a pulp mill, uranium mines, a thermal power plant and a doubling of oil production.

We have been trying to build our economy in such a way that our new industrial operations are low emitters of greenhouse gases compared with their competitors elsewhere. However, we recognize that our efficient companies may be penalized, while less efficient industries in countries outside the Kyoto Protocol are not.

Many of Saskatchewan's intensive industries such as potash mines, oil and gas production facilities, and uranium mines, are located in rural and northern areas. They sustain rural and northern communities by providing employment and spin-off economic opportunities.

Saskatchewan is concerned that our province may be asked to bear an unfair burden in reducing greenhouse gas emissions. We are also concerned that our citizens, communities and industries may not be treated fairly.

Saskatchewan wishes to see climate change strategies that ensure sustainable forest harvesting practices, forest renewal and minimal losses due to deforestation. The province is also interested over the long term in seeking amendments to the Kyoto Protocol that recognize the proportion of carbon that remains sequestered even after harvest.

Under Kyoto's current rules, when a tree is cut down to produce forest products the entire amount of carbon stored in that tree is counted as an emission. This is true even if the carbon is not released but is stored in a wood product such as lumber.

Saskatchewan also wishes to reduce emissions of carbon dioxide from forest fires. We are concerned that climate change will increase the number and severity of forest fires, and the length of fire seasons. Saskatchewan must plan ahead to ensure that its forest fire-fighting capacity is maintained.

In the agriculture sector prairie farmers can reduce greenhouse gas emissions by adopting a variety of beneficial management practices such as reducing tillage by directly seeding crops into standing stubble; applying fertilizer in a one-pass direct-seeding operation; planting pulses and other legumes in crop rotations; proper storage and application of manure; improved livestock grazing management systems; chopping straw and spreading it back on the field or baling it for feed; establishing grasses or trees on areas of marginal cropland; and, energy use efficiencies.

Our soil conservation efforts in Saskatchewan have been an outstanding success. In the 1980s, the agricultural community began to recognize that it needed to change the way that soils were being managed. Summerfallow and excessive tillage were seriously degrading agricultural soils. Soil organic matter was declining and wind erosion and soil salinity were growing problems.

The Senate report entitled ``Soils at Risk'' helped to raise awareness of the need for broad-based action. Several factors helped in developing improved soil management practices. The federal and provincial governments cooperated on a number of joint initiatives such as the Green Plan, and the National Soil and Water Conservation Program. Innovative farmers developed low-disturbance seeding equipment. Several producer associations were formed to promote soil conservation.

We have seen revolutionary changes in soil management practices. Saskatchewan has become a world leader in the option of zero-till direct-seeding systems. In 2001, farmers used reduced-tillage practices on 68 per cent of Saskatchewan's total seeded area. Saskatchewan's agricultural soils were a source of greenhouse gas emissions in the 1990s; now they are a major carbon sink. Saskatchewan manufacturers now export reduced-tillage and straw/chaff management equipment around the world. This chart illustrates the dramatic difference in the way we deal with soil, moving away from excessive tillage to zero till or minimal till. Summerfallow acreage in Saskatchewan has decreased from 14 million acres in 1991 to 7.8 million acres in 2001. This has resulted in greater labour and fuel use efficiencies, millions more acres of crops, reduced erosion, and increased soil organic matter.

Since 1990, Saskatchewan's soil degradation problem has been turned into an opportunity. With over 40 per cent of Canada's cultivated farmland, Saskatchewan farmers are creating a huge soil carbon sink.

Saskatchewan believes it is in the interests of all Canadians to maximize agricultural and forestry carbon sinks. Agricultural soil sinks will assist Canada to meet its Kyoto obligations. Much of this sink capacity is expected to come from lands in Saskatchewan.

Saskatchewan feels strongly that the current federal government policy regarding ``business-as-usual'' soil sinks is unfair to farmers. In the federal plan new soil sinks are eligible to be sold by farmers; however, farmers that have existing or business-as-usual soil sinks cannot sell them.

Saskatchewan holds the bulk of Canada's business-as-usual soil sinks; Saskatchewan farmers are being penalized for the early adoption of soil conservation practices. This federal policy will fail to maximize the potential for creation of agricultural and forestry sinks and many jeopardize those sinks that already exist. Saskatchewan is committed to working with the federal government to improve this aspect of the federal Climate Change Plan.

Thank you for the opportunity to present our perspective on the effects of climate change on agriculture, forests and rural communities. We invite you to refer to our formal submission to your committee for further details on the issues raised.

Now I would be pleased, along with the officials, to answer any questions you may have.

The Chairman: Minister, thank you very much for the excellence of that presentation. It covered in great detail a number of the issues we have heard from other experts in Ottawa and from others here today.

Senator Tkachuk: Thank you, minister, for coming here. I know that as a Saskatoon MLA you will do a wonderful job as the minister and I wish you the very best.

A while ago, the federal government left the impression that they were planning to close the weather office in Saskatchewan. They removed a lot of the meteorological and weather forecasting capacity, in fact, all of it, if I remember correctly, leaving only consultants, a bare-bones staff in the province. They moved it to Edmonton.

Many people from the university and others have said this is not something that should be done in this province. It takes away the capacity of farmers and other people involved in agriculture to deal with climate change.

Have you received any indication from the federal government as to their exact intentions? Is there any possibility that they may return to Saskatchewan some of the meteorologists that were sent to Edmonton?

Mr. Cline: No, senator, we have received no details of the plans of the federal government. We believe it would be a step in the wrong direction to further reduce the capacity we have to predict weather in Saskatoon and the rest of the province. We have lost 22 Environment Canada employees since 1997 and the most recent proposal would affect, I believe, the six remaining staff. Our view is that accurate and timely weather forecasting is very important to Saskatchewan, in particular.

We have 47 per cent of the country's arable land. Weather information is critical to agricultural producers and to the forest industry in the north. The farmers watch weather forecasts very carefully during the growing season and make production decisions accordingly.

It is our belief that to have the most accurate information it is necessary to have Environment Canada employees present in Saskatchewan, rather than relying on computer-generated forecasts, for example, from another part of the country.

During extreme weather events such as blizzards, fires, and tornadoes, which are not unknown on the Prairies, people require up-to-the-minute information. Now that the climate change issue has been brought to the fore, it seems somewhat ironic that we would reduce our ability to predict some of these events. Therefore, we feel that we should be increasing our capacity to predict weather.

Senator Tkachuk: I might mention that senators on both sides are very concerned about this issue, especially senators from Saskatchewan, including Senator Wiebe, Senator Sparrow, myself, and Senator Gustafson, who has raised this on numerous occasions, and others. If we can be of assistance in maintaining that weather station we would definitely do so on your behalf.

One of the reasons I have a lot of trouble with Kyoto is that because as energy producers, Saskatchewan and Alberta produce more than their fair share of carbon emissions. They supply the fuel for urbanites in Toronto and Halifax to power their four-wheel utility vehicles. Therefore, the repercussions of that production should be spread all across the country since we are all users of that energy.

Has the federal government initiated any formal discussions with the provinces, at a senior departmental level or ministerial level, as to how they intend to implement Kyoto and, specifically, what the consequences will be financially to Saskatchewan?

Mr. Cline: No, they have not. That is a great source of frustration for us. We have been saying that something should be done about the problem of climate change. It is in the national interest to do something about climate change; therefore, the country as a whole should do it

As outlined in our submission, we are doing many things to fight the effects of climate change. We feel that the federal government ought to come up with an approach that is fair to all regions of the country and all industries. No one region or industry should bear more of the costs of complying with the Kyoto Protocol than others. Indeed last fall, the Prime Minister, I believe, stated in Calgary that he would ensure that the protocol was implemented in a manner that was fair to all regions and industries.

However, we have not been provided with any information regarding the details of implementation. For example, will the requirements be applied to industrial sectors or to particular businesses within sectors? If there is not compliance with the requirements or targets for emission reduction, will that be enforced through a series of fines, penalties, a lack of tax credits? We do not know. There has been a response to the automobile manufacturing industry, however, we do not have any specifics as to how our industries would be affected.

The lack of detail and the lack of a plan have caused a lot of uncertainty and anxiety on the part of governments and citizens and those involved in industry. We are having a great deal of difficulty knowing how the Kyoto policy will be implemented. We invite the federal government to dialogue with us and other provinces about that, as we are very much in the dark.

Senator Tkachuk: There is a lot of talk about clean energy. We produce uranium in this province. Has the government's position changed or is there any hope that it may change regarding the production of nuclear power in this province?

Mr. Cline: We look at the question in terms of our power needs. Obviously, you want there to be a need for the power you produce. We believe that our own power-generation needs are adequately met until about the year 2008. According to the 1994 report of the Energy Conservation and Development Authority, that there are many options for Saskatchewan to supply its power needs. Nuclear energy is not necessarily the most cost-effective one, nor is it the only one.

We are looking at a variety of options, including conservation, which is producing power in a different way. We have several energy conservation initiatives. We have become, I think, the nation's third largest wind power producer. We are considering ethanol.

If you produce power, you must have a market for that power. We have not reached the conclusion that nuclear power is the most cost-effective way to supply the needs of Saskatchewan people.

Senator Tkachuk: Knowing the difficulties your party has with nuclear power, that was a very good answer.

Senator Wiebe: Thank you, Mr. Minister, for taking the time to appear before our committee, and thanks to your officials, too.

The committee is examining this area, as we feel not much has been done to address it to date. We have been discussing the mitigation process and how we deal with climate change. I am sure that you and other provinces together with industry and the federal government will be negotiating Kyoto in the next year or so, as to how to implement it or how far to go in terms of that.

I am encouraged, as you are, by the Prime Minister's remarks that he will try to be as fair to all regions and sectors of the economy as he possibly can.

We have to address what we have been told by some of the scientists and researchers from right across Canada, especially from C-CIARN, with which the government is very much involved in terms of grants and support. They tell us that whether we adopt Kyoto or whether we do not, the damage has already been done, our climate is changing. We will be subject to extremes. Although we may receive the same amount of water — for example, in the past I may have received a gentle, three-day rain on my farm, I will now receive the same amount of rain in an hour and a half.

Our committee is concerned about how we adapt, how do we prepare the agriculture and food sector to adapt to those kinds of changes.

If we address the current levels of Kyoto all that will do is slow down the climate change, it will not have any great impact on it. While everyone is very much concerned about climate change, they seem to focus more on the debate that took place on Kyoto: ``If I put ethanol in my tank or if I put some extra insulation in my house, and this sort of thing, that will solve the problem.'' How do we as policy-makers get the message across to the general public that the damage has already been done and that we will have to come up with ways in which we can adapt to these kinds of changes?

Some of the ways we may have to adapt, for example, is in our cities that have a waterway running through it. A disaster could come along and we will have floods. Do we look at ways to prevent that? Will we have to spend a lot more dollars on research to find ways to adapt to it?

That was a rather long question but I think this is an area the committee is very concerned with.

Mr. Cline: I would say that in terms of dealing with the problem there are two aspects to it: dealing with the problem and how to adapt to what has already happened.

In regard to dealing with the problem, I do not think we can ever underestimate the capacity of society to change the way that we do things — for example, the amount of energy we consume in transportation or in our own homes. I know that most of us could actually get by with much less energy than we now consume. We hope society will adapt itself in the future.

It seems to us that it calls for a lot of resources to be put into research and into seeking innovation. Our farmers are extremely innovative, as demonstrated, I think, by our presentation today about zero till and summerfallow. If it is the case that there has been climate change that is irreversible, we know that our producers have a great capacity to innovate, however we also know that they will be dependent on governments to put the appropriate resources into research.

We have seen a lot of innovation and we believe they should get some credit for it, as I indicated. However, perhaps we will have to see a lot more. That probably is true of the forestry sector, as well.

We are setting up a forestry centre in Prince Albert with the participation of the federal and provincial governments and the private sector. We will examine the best methods of sustainable forestry practice. Some of the effort will be directed at attempting to reduce greenhouse gas emissions, as well. We believe you can have a successful forestry industry — and in fact, in the last four or five years there have been 8,000 more people employed in forestry — while at the same time sustaining the forest and even revitalizing it to have an overall beneficial effect on the environment.

We think that research to find ways that we should innovate will be key to adapting to whatever changes are irreversible, if any. We also believe that we have the capacity – at a societal and individual level – to change the way that we do things. There are probably taxation and other tools that governments can use to encourage people to change their behaviour.

Senator Gustafson: I want to thank you for your comments on ``Farmers at Risk.'' This committee thought it was an excellent report that dealt with a lot of the problems that we have in agriculture, more particularly even, in Saskatchewan.

One of the suggestions we have is that the government should look at the regional problems in agriculture. We looked at the fact that there is 47 per cent, as you say, of the arable land in Saskatchewan. When it comes to matching programs, I have heard so many times in Ottawa with very little direct response, Saskatchewan is at a disadvantage because we do not have the tax base to compete with Ontario or Alberta. These programs come out and they expect the provincial government to match.

This goes back as far as Bill McKnight, I argued with Bill at the time and said this is not fair, this cannot work. What happens is many times the farmers that need it the least get the most, and those that need it most do not get it. If the safety nets are to work properly across Canada there has to be a change in this one very serious point — that is the matching.

Globally, we are now in a situation where everybody is talking about subsidies. I am convinced that Americans will never give up their subsidies; they may change the name, they may change the approach. I am convinced that the Europeans will not. What they are doing is under environment, under rural development, under even the Third World, and agriculture, they are making it a one-point approach. They do not expect their farmers or their agricultural producers to pay for it all, because they cannot. So all of society has to pay.

Saskatchewan, in my opinion, will be in trouble until Canadians and the Government of Canada understand that we are in a unique situation here with 47 per cent of the arable land to deal with.

That is more of a statement than it is a question, however, I think it invites the question: How do we get this changed so that we can play our part in Canada the way we should?

Mr. Cline: That is a very good question, senator. I might say that you have stated our position very well. That is the very position that we take with the federal government.

On the first part of it, matching the federal funding to agriculture, the 60/40 split, we make the point that it should be based upon need rather than each province having to put up the 40 per cent. It is not, in our view, fair that a province with 3.4 per cent of the population and for the last few years the bulk of the problem in agriculture, should have to pay for a lot of that problem themselves. As one of my former colleagues used to say, it is like asking people who are bleeding to death to give themselves a blood transfusion.

I think that our Minister of Agriculture and the federal minister have made some progress in respect of the Fredericton formula. I believe we are the point where more of the disaster relief can be allocated to one province — I think up to 34 per cent whereas it used to be 22 per cent. However, your point is correct that we sometimes have a bigger share of the problem than the support we are able to get.

Having said that, we would be quite happy if we did not need any support at all. If we had good moisture and good prices and no grasshoppers or blight, and if we did not need the farm support and somebody else got 100 per cent of it that would be fine. However, if we have a disaster as we have for the last two years then we believe that a lot of the effort should be concentrated here. We certainly agree on that point.

We also agree on the subsidies. What the federal government has, essentially, done is to say that because world trade agreements say that we will not subsidize any more, Canada will follow that; but Europe and the United States have not. As a result, we have a distorted market and we are throwing our producers onto a world market that is highly distorted against them. Everybody knows that.

The federal government knows that, too, but they have decided that nevertheless they want the agricultural community to diversify away from areas where there are subsidies. Of course, the problem with that is that we have had our farmers diversifying into pulse crops only to find that as we begin to succeed the Americans will start to pay subsidies to the pulse crop producers, as well. It is a very difficult situation.

Having said all that, on the subject of the innovative nature of Saskatchewan producers, with slimmer and slimmer margins and a distorted market, many of them compete very well because of the quality of their product. That is a real credit to them. We certainly share your concerns about those issues.

Senator Gustafson: Historically, one of the things that gave us a great many problems — although not everybody would agree — was when the Crow was taken away. When the Crow was abolished it cost our farmers $1 a bushel to move grain. That whole approach put an extra load on Saskatchewan. There is no question it was a benefit to Alberta because they are closer to the market. Manitoba also benefited to some extent because they are not that far from Thunder Bay. It was, however, a costly mistake for those of us caught in the centre.

That is history; it will not change. I was quite upset the other day when Paul Tellier got the credit for making CNR such a profitable company when it was the farmers of Saskatchewan that made it a profitable company.

However, we do have a lot of problems on our roads. The trucking industry is here whether it is good or whether it is not. On the other hand, that is a great, burden to the province because we have so many roads that have to be dealt with. How do you intend to deal with that situation of our roads and transportation of grain and other commodities? It is a big challenge.

Mr. Cline: It is a big challenge; it is also a very complicated area. We are trying to deal with it in several ways. We have been somewhat supportive of the development of the short-line railways, with which you are familiar. We have omni tracks going up to the Port of Churchill, I think their carriage has doubled in the last number of years. We are working with some producers in terms of direct loading onto trains to cut down their costs. There is some work that can be done there.

We are into the third year of a major plan to fix the roads. Part of that has involved trying to spend money more strategically. We work through area transportation committees in different regions of the province with the regional municipalities, RMs the producers and the provincial government to try to figure out where the traffic really goes and also to try to regulate where it should really go. We aim to build the roads in the right places and to minimize the damage by directing the traffic onto the appropriate roads.

There is also some work being done with the private sector to attempt to improve the thin membrane surface roads. Also partnering with the RMs to take some of the traffic off the thin membrane surface roads onto the grid roads.

It is a highly multi-faceted approach. I spent a lot of time as finance minister talking to rural and municipal politicians about the highways budget. We put a lot of attention into not only trying to fix the roads but also to directing the traffic in a way that it is not tearing up the roads as soon as we fix them. You will know exactly what I am talking about.

I think we are making some headway. You will hear people around the province starting to say, ``The roads were a real mess a few years ago.'' We have been able to improve some of them, but we really have to work strategically with the RMs and the producers. Also, I think we have to ask ourselves the questions — to which I do not know the answer: Can we direct more traffic onto the rails and off the roads? Can we work with producers to try to facilitate some of the grain going directly there? Those are some of the things we are doing and, certainly, it is something we pay a lot of attention to.

I do not know if the deputy minister wishes to add anything to that.

Mr. Gordon Nystuen, Deputy Minister, Saskatchewan Agriculture, Food and Rural Revitalization, Government of Saskatchewan: I would add that with the decrease in price of our commodities — you mentioned it is about $1 a bushel — we have seen a major shift towards an emphasis on the livestock industry. Our hog numbers have doubled in the last four years. Our cow-calf herd is growing year-over-year. In fact, even with last year's drought as severe as it was, our inventory numbers for January were up slightly.

All of those items lead to more utilization of grains within Saskatchewan rather than being exported. That is one of the other items that is also factored into the strategy of figuring out how to manage when so much of the rail infrastructure has left and the costs are so high.

Senator Gustafson: I would say that your approach on fewer roads and better roads is ideal. I was a councillor for six years before I got into politics. I always felt that we had too many roads, we were trying to maintain too many roads and we should have been much more selective on the roads that we maintained so that we could keep better roads in those areas.

Senator Hubley: I have a question in relation to your slide on biological carbon sinks. I think a reasonable approach for our provinces will be that we are not all equal in our ability to respond. I was interested in your ``business-as-usual'' as it relates to soil sinks. I am trying to stay out of the east, but we have made great progress, I believe, in our stewardship of the land right across the country. I think farmers are, perhaps, most sensitive to that. We have created many very healthy farming practices under the heading of soil conservation and protecting our water supply.

I am just wondering what recommendations would the Province of Saskatchewan like to make to the federal government regarding their plan that might improve it for your area?

Mr. Cline: Our concern is that we think many of our producers have already made the choices that they should have made with respect to tillage practices, and therefore have created the carbon sinks. The role they have played should be recognized and that they should be compensated for what they are doing on an ongoing basis, as opposed to simply compensating people that, in effect, come on stream later on.

Our main message in respect of agriculture is that there should be fair treatment of producers. It is unreasonable to compensate only the producers who have not yet made changes but will make them to take advantage of some compensation from the federal government and not recognize the producers who have already done what they should have done. It should almost be the other way around: compensate those who have already taken steps to produce carbon sinks.

We do not think the proposal, as we understand, it is fair. I will ask the Deputy Minister of Agriculture and Mr. Ruggles from environment whether there is anything else they want to say about that.

Mr. Nystuen: The baseline year for Kyoto was 1990. Much of the progress in carbon sequestration in agriculture has occurred since that time. We had some very significant decreases in the price of wheat, which caused some changes in farming practices. Sequestration has been happening for the last 12 years. Suddenly we have a policy that says that sequestration has value. However, it has value from now into the future.

Who captures the value from now back to the base period? The federal government might capture it; that is one of the strategies that they put forward. That does not seem to be fair. That is the argument we have been making about sequestration: ``My farm might be complete and so I get nothing in the future.''

Mr. Bob Ruggles, Assistant Deputy Minister, Programs Division, Saskatchewan Environment, Government of Saskatchewan: I would offer an example in forestry. We have had a project involving my department and Saskatchewan Power Corporation around carbon credits. We have two means of providing credits: One is through reforestation of areas that were never properly regenerated and the other is by setting aside large tracts of forest that will not be harvested in the future. Through a fairly rigorous and scientifically validated process we have now reached the conclusion that there is a net benefit, a net gain in carbon credits which we have arranged to provide to SaskPower as part of their program.

We are very uncertain whether that will be recognized by the federal government and we would be most concerned if the federal government chose to claim those credits that have already been paid for by SaskPower. We see a lot of potential for that in the future with the power industry and the oil and gas sector. At the moment, there is much uncertainty and, potentially, no incentive.

The Chairman: When you were giving your evidence you said ``with over 40 per cent of Canada's cultivated farmland, Saskatchewan farmers are creating a huge soil carbon sink — that will have a significant role in helping Canada meet its Kyoto commitments.'' The Senate Committee on Energy is studying Kyoto. This committee is not here to study Kyoto; we are more concerned with looking at issues of adaptation in forestry, agriculture, and rural communities.

Notwithstanding that, we would like to hear your view on calculating the value of these huge soil carbon sinks. What is the best way we should be calculating their value? Should it be paid in cash? What other advice do you have for us, as a parliamentary committee, on valuations?

Mr. Cline: Senator, my understanding is that the value we estimate is $15 per tonne, per acre. One of the officials can provide more detail as to how we think producers should be compensated for that.

We believe that what we are doing, to the extent that it may reduce greenhouse gas emissions, may ameliorate the effects of climate change in the future.

The Chairman: Quite so.

Mr. Cline: I would ask one of the officials to give a little more detail about how we would see that compensation coming about.

The Chairman: There are some real issues in your answers about potential liabilities for farmers down the road. That is one of the problems witnesses have raised with us. I would love to have the benefit of your view on it.

Mr. Nystuen: Saskatchewan has about 46 million acres of cultivated land. We have done a couple of different calculations and our estimates show between half a tonne per acre to one tonne per acre of sequestration on an annual basis. It would be somewhere between 23 million tonnes and 46 million tonnes a year if the entire cultivated land base was functioning in an appropriate model for carbon sinks.

The Chairman: Can you tell me how you calculate that? What is the basis of that calculation, what goes into it?

Mr. Nystuen: I will not give you the exact methodology, I can tell you what the parameters would be. We would be looking at the number of tonnes of dry matter/straw, plus the function of the root matter — there is dry matter and root matter in any crop. When you use a process of minimum till or zero till what happens is that you minimize the degradation and the time period over which that trash is —

The Chairman: Disturbed?

Mr. Nystuen: Also consumed by soil microbes and then released again. You are working with a formula that says this is the annual dry matter that will occur, we will put it all back into the soil. However, we know that there is a natural rate of decomposition and release back into the environment. That is a function of a number of items: dry weather, slower decomposition; wetter weather, microbes grow more quickly and so there will be a faster rate of decomposition and release. We have used some averages to put that into a parameter.

Across the province, there are different rates of dry matter production. In the south, it is much lower; as you move into the northern grain belts, it is a much higher level of dry matter production. That is where we have the variability within that structure.

The Chairman: Do you have different models for different regions of the province?

Mr. Nystuen: We would, yes. We have about 40 years of crop insurance data that verifies many of the production characteristics. There are correlations between grain, dry matter yield and the straw that comes out. Again, there is variability within that.

The Chairman: Are these models proprietary or is it something that can be released to the committee so that we can analyze them and study them?

Mr. Nystuen: I expect that our policy branch would be prepared to share those with you. If they are proprietary, again, I think for government purposes we would still choose to share them.

The Chairman: Do you mind having them sent to our clerk so that we can have the benefit of those? It would be very useful to us in our understanding of the valuation of these sinks.

Mr. Nystuen: I would also address the subject of compensation. The model that I have described is what would occur on an annual basis. We have had some discussions with our farm interest groups in Saskatchewan who have said they are concerned about the buying and selling of carbon sinks. What is actually being sold? Are you selling a perpetual interest in that sink and that methodology through time? Or are you selling an abbreviated time period? If you have a perpetual sink, it may restrict the usage of that property forever. Essentially, what you may have done is sold beneficial interest in your property without realizing that you have sold it.

The farmers have said that they think a policy that would lease them for a defined period of time and would have them behave in a certain fashion with regards to sequestration might be a more appropriate policy.

There is an awful lot of merit in the suggestions that those farm groups have put forward because for farmers to unknowingly enter into a contract that sets out how they will manage their land into the future, is something that could potentially have grave consequences. We know not what the future will hold. There may be new market realities that suggest they need to move away from livestock because they cannot make any money doing that. However, if one is blocked because of some pre-existing contract one has with a carbon sink one may be precluded from doing that.

These policies need to be very carefully developed and managed because of those risks.

The Chairman: What about a third-party intervention? What if some aspect of climate change altered the amount of sequestration? Certainly, that would change the value and would not be caused at all by any act or action of the farmer – for example, a change in the use of the land. How would you value that in your formula?

Mr. Nystuen: I think those become very difficult to even forecast. Let us say that the urgency with regard to sequestration moves from red alert to triple-red alert. Does the value of the carbon credit now triple, quadruple? It certainly has the potential to. What is the term of the contract? Is it about an annual pricing model? Those would be mechanisms that one would use to protect oneself from that kind of uncertainty. It is a very complicated field and one in which we are, at best, speculating on what might be.

The Chairman: Given all of the problems you have just carefully delineated about the proposed method of valuating them, your only suggestion for alleviating it is to perhaps look at leases. Has your department or your government come up with any other method for valuing them, other than leases, to overcome some of these problems?

Mr. Nystuen: We should be cautious of saying certain mechanisms and vehicles would work the best. I do not think we have spent sufficient time to give specific examples of that. We know a little bit about are the variables that come into play and, I guess we worry, as governments are sometimes wont to do, about the interests of the citizens in jumping into this much too quickly.

The Chairman: I appreciate that.

Senator Wiebe: Supplementary to that, are we asking for an awful lot of problems by talking about selling carbon sinks? What is your reaction to the statement that by selling carbon sinks we are letting governments and companies and countries off the hook from meeting what they are now agreeing to, which are the guidelines set by agreeing to Kyoto?

Would a better program design be to acknowledge that we as a federal government or a provincial government or a combination of both believe that all society has made a contribution to the carbon releases through CO2, whether it be by buses or cars or industry? Therefore, collectively, as a society, we have a responsibility to lower those and provide incentives to farmers to develop practices like direct seeding and zero till, rather than getting involved in what I think will be one big mess when we start talking about selling carbon sinks and attaching that to the title and so forth.

Mr. Cline: We have not determined that there is one way that producers should be compensated. If it was determined that there was an alternative to selling the carbon sinks as a way for society to participate in the costs to the producer of engaging in appropriate practices, then we would agree to examine that alternative as we attempt to see what kind of compensation or support the producers should receive.

Senator Wiebe: I hope that you and your officials are actively pursuing that alternative.

Mr. Cline: My view is that when something is suggested that we should consider it. We do not necessarily have all the answers and we would be pleased to put your suggestion and others into the mix and consider them. We will also try to engage with the federal government in a very constructive and proactive way to seek to ensure that the producers are fairly treated.

Senator Wiebe: If you take that route and you need some assistance from a senator from Saskatchewan, I am more than willing to help.

Mr. Cline: That is a very welcome suggestion. I am sure that all of the senators from Saskatchewan here would be willing to help us. We would appreciate a continuing dialogue with respect to that.

The Chairman: Minister, my second question relates to forests. You have a big section in your paper, at page 8 in particular, dealing with forestry issues. I asked a previous witness today to help us with the concept of adaptation for some of the problems that will come from drought. One of the problems that will come from dry weather is more forest fires. No witnesses have yet told us what types of scientific things are being done to prevent forest fires and the release of more carbon dioxide as a direct result thereof, and with more gas emissions into the atmosphere.

You have suggested that maybe we could reduce emissions from forest fires and that to reduce the number and severity of forest fires we should reduce the length of the fire season. Could you tell me how you would do that and what the proposal is in this province?

Mr. Cline: I do not know that we expressed a belief that we could reduce the length of the forest fire season as opposed to suggesting that climate change might increase the length of the forest fire season. We are concerned about climate change from the point of view that if it results in greater warming or less moisture we might have a longer forest fire season.

We certainly do not have all the answers in terms of forestry. The answer in Saskatchewan may not be the same as the answer in British Columbia, for example. I am no forestry expert, but I believe that in British Columbia forests that last for hundreds of years, whereas in Saskatchewan we have forests where the trees tend to last for 60 or 70 years. It is a different type of forest; you need different practices. If we simply left the forest alone and did not have any harvesting or reforestation, eventually the forest would become diseased and die. That is on the assumption that we do not let forest fires occur naturally because of the danger to property and lives.

To reduce the number and severity of forest fires and their effect on the atmosphere, we need to try to engage in forestry practices that aim to preserve a growing, sustainable forest that is also a healthy forest.

One of the issues in Saskatchewan right now is the situation in Prince Albert National Park. Many of the residents or cabin owners in that park have brought to the attention of the federal government the fact that without forest management practices and certain measures to combat insects, the forest is becoming quite old and there is a great danger of disease. We are concerned, as a province, that in that particular instance if we have more dry seasons, that forest could burn very quickly and would simply be gone.

We have been talking to the federal authorities about that. We are trying to work with the federal government and the private sector, through the Forestry Centre, to try to use our forest more than we have in the past, and doing it in a sustainable way that will ensure that we have a healthy, young forest, instead of a diseased and older forest.

I do not know if somebody from Environment or Industry and Resources would want to add to that as well.

The Chairman: We have been warned that there will, in fact, be more forest fires and more of our timberland will burn. Let us say you have a 20,000-acre block of forest that is 40 to 50 years old, has never been cut and has never had a fire. What is the province doing to ensure that if there were a forest fire, every bit of it would not be burned to the ground? What precautions are being taken now?

Mr. Jim Marshall: In an ideal world we would have much more intensive management of the forest. A healthy stand of trees – 20,000 acres or whatever – would be, ideally, much more closely managed in terms of being thinning and that kind of silvicultural activity to keep it healthy to get the maximum benefit before it is harvested.

Another approach our forest fire management program takes is the use of sophisticated early warning systems so that when there is a danger of a fire we can react quickly. We have changed our fire model here in the last few years to one of initial attack. We have put a lot of effort and resources into early detection and initial attack to control fires. Our data show that by reacting quickly to it, and contain it to fewer than 10 hectares or five hectares, we have a very good chance of that fire not escaping and causing large damage.

Those two approaches, more intensive forestry practices and a much more aggressive fire prevention program will take us where you were leading.

The Chairman: Thank you very much for that answer.

Senator Tkachuk: Kyoto is all about climate change. In other words, that is somebody's solution to the problems that we are having and a certain amount of resources and cash will be spent to implement this.

Canadians should realize that Saskatchewan, Alberta and others do not support the federal government's Kyoto Protocol implementation plan for the same reason that the Americans decided not to sign on. Per GDP, North America is the cleanest place in the world. Per dollar of wealth, we produce less pollution than any place in the world.

Yet, somehow Saskatchewan, as you said earlier has already implemented so many measures that had nothing to do with Kyoto. It had to do with good management practices, conservation, and environmental concerns.

British Columbia is in the same situation with their forest industry. Their pulp and paper companies are the cleanest in the world; no one even comes close. Yet, they are concerned that they will have to make further reductions while everyone else is at a different level — they are not as clean.

How did the federal government sign an accord obligating us to a quarter of the total for the whole world? Was it a lack of consultation at the beginning of the process? Did people not realize all these things that were happening? We are now talking about all the problems that you will have as a government; they will be serious problems. The government of B.C. has very serious problems in their pulp and paper industry, only because they have done such a good job over the last decade.

How did this happen?

Mr. Cline: It happened over the objections of most provinces. They raised the same questions related to their uncertainty as to how it would be implemented or what the effects of ratification would be.

I cannot speak for the federal government. Our point is that there is a need for serious dialogue among the federal government, the provinces and various industries in regard to how the agreement will be implemented. We have been calling on the federal government to meet with us to discuss those very questions.

To date, we have been successful in arranging for any kind of serious dialogue with the federal government. I believe the industries most affected are in the same boat. Ratification of the Kyoto Protocol is not the same as implementation and we have yet to know how it will be implemented. In the meantime, we do not believe that the uncertainty surrounding the issue is helpful to our region or the industries of our region.

The Chairman: We know that $2 billion was set aside to help with implementation. However, we do not know how that will be spent.

Senator Gustafson: I would like to discuss the question of carbon production in agriculture. I farm myself and I talk to farmers all the time. There are a lot of farmers who are talking about returning to summerfallow because of the cost- price squeeze that they are in. It is amazing. I drove from Vulcan, Albert to my home at Macoun, just outside Weyburn, I was surprised to see all of the summerfallow ground that there is.

I just raise that as a caution, because it is definitely out there. I am hearing of young farmers who have been in continuous cropping expressing concern about grasshoppers, drought and other problems and they believe that to survive, they must return to summerfallow to reduce the high input costs.

I also have a question about rural development. It is a big challenge for Saskatchewan. There are no quick answers. One of the areas is the difficulty of keeping our skating rinks open in our rural communities because some of the small towns cannot afford to pay the light bill on these rinks. Perhaps we ought to consolidate those kinds of things. Yet, that will not happen overnight. I would like to hear your comment on rural development.

Mr. Cline: In respect of your question dealing with summerfallow, that goes back to Senator Wiebe's suggestion that we have to determine whether society as a whole should be assisting the producer – Whether it is in terms of the producer being paid directly or indirectly for the practices that we want the producer to pursue, including summerfallow. There may be some way that society can do that.

Your question on rural development is difficult. Over the last number of years, we have devoted efforts to increase livestock production, for example, or increasing feedlots. We have a number of livestock producers moving from Alberta to Saskatchewan, bringing their herds over here where the land is cheaper.

Looking at the difference between net farm income in Alberta and Saskatchewan over the past 20 years, it is fair to say that Alberta has had a much higher level of livestock production. That is one of the things we need to do. We are looking at several issues in beef, several issues in hogs. We are looking at ethanol, trying to promote more feedlots through some of the by-products that occur as a result of ethanol production.

Of course, there are innovative people around the province as well. There are farm implement manufacturers in the central area of the province around Humboldt and Annaheim. There is a lot of forestry on the forest fringe. I think you are right; some consolidation will occur. Some of the communities are quite healthy; some are less healthy. The fact is that in a lot of these small communities where the farms are larger now and families are smaller we just do not have enough people.

I can assure you that one of the objectives of the Government of Saskatchewan is to try to diversify what we are doing in rural Saskatchewan in the hope of rural revitalization.

One of the other aspects of livestock production as distinct from grain production, is that grain production tends to see the value-add occur where it is actually consumed. Livestock tends to see more value-add nearer to the producer and shipping out the finished product.

We are hopeful that if we can grow the livestock, we also will grow the meat packing business, et cetera.

Senator Gustafson: In regard to your point of investment from Alberta to Saskatchewan, I have said for some time that the over-inflation of Alberta will work out to the benefit of Saskatchewan in time. I think that we are seeing that.

The Chairman: Minister, on behalf of the committee I want to thank you, very much for your most excellent presentation. It will help us as we sit around the table and think about the recommendations we want to make to the government. You have raised and answered many of the points that I know the committee will want to address later. Thank you for giving of your time to come here to help us out.

Mr. Cline: Thank you for coming to Regina and for hearing us. We appreciate your work very much.

The Chairman: The next witness is from the Agricultural Producers Association of Saskatchewan Inc.

Ms. Cecilia Olver, Vice-President, Agricultural Producers Association of Saskatchewan: I would like to introduce the President of APAS, Terry Hildebrandt, who farms near Langenburg, Saskatchewan, John Clair, President of Saskatchewan Soil Conservation and farms near Radisson, Saskatchewan.

We intend to talk about Kyoto and the agriculture industry. As Canada has ratified the Kyoto Protocol our entire country is faced with the challenge of becoming more energy efficient and reducing our greenhouse gas emissions.

Canada has released its Climate Change Plan. Kyoto's intention is to reduce greenhouse gas levels in the atmosphere. There are two methods to do this. The first is to reduce emission levels and the second is to remove and store or sequester, CO2 as carbon in forests and soil sinks. We must give the Canadian government full credit for the efforts they have made in getting international recognition for agricultural sinks.

Saskatchewan's agriculture industry is well positioned to meet this challenge as many of the best management practices used farms to mitigate environmental risks also promote greenhouse gas reduction and sequestering of carbon in soil. Producers can also undertake farm production practices that can reduce our greenhouse gas emissions. The agriculture and agri-foods climate change table identified 11 mitigating strategies for removing or reducing greenhouse gases. They are: improved soil nutrition management; increased conservation tillage; decreased summerfallow; increased use of forage in crop rotations; increased permanent cover areas; optimal grazing and grassland management; manure management; livestock and feeding management; agroforestry activities; use of agricultural fibre for commercial products; and production of ethanol and biodiesel fuels. These practices are beneficial to the environment and can reduce greenhouse gas emissions.

While the Agriculture Producers Association of Saskatchewan is confident our industry can make a positive contribution to the Kyoto challenge, we also strongly believe that the benefit of this contribution must accrue back to the farm gate.

If you look at the Climate Change Plan for Canada, you will find there are some shortcomings. For example, the plan has proposed that there be two pools of offsets. The first pool is called a ``business-as-usual'' offset; it would be owned by the government and used to lower national emission targets. The second pool, called a ``tradable'' offset, would be owned by producers that create carbon credits after the year 2008.

In other words, producers who have adopted best management practices prior to 2008 will have their carbon credits used by the government, while late adopters, after 2008, will be able to trade them freely.

This two-pool policy creates three issues. First, producers who are early adopters of conservation practices are not recognized for their contribution in creating agricultural sinks. Second, it discourages the adoption of practices prior to 2008. Third, it may also encourage some producers to release the carbon sinks and then re-establish them after 2008 when they would return value to the producer.

It is our position that these business-as-usual and tradable offsets should be the same. Creating two pools based on time is not in the best interests of either the producers or the government in reaching our Kyoto targets.

We have serious concerns with the current government proposal in which carbon sinks created by the individual management practices of producers are being used to reduce Canada's overall targets, without recognition and benefits to the producers who accomplish this for Canada.

We have four serious concerns in regard to the federal proposal. First, that it will decrease the ability of producers to profit from sinks under a DET system, producers will not be compensated for what they have done and may be reluctant to continue to improve. Producers who have already adopted conservation-tillage practices or seeded down forages, may not be able to participate in the DET system since it will be difficult for them to improve their practices beyond the initial transition to no-till. In this case, the potential revenue stream for producers under a carbon- constrained environment is no longer available.

Second, the proposal will act as a perverse incentive for producers to return to conventional tillage if producers are not rewarded for early actions. Under this proposal, producers may be motivated to undo some of the beneficial management practices that they have adopted. In their own best interests, they may elect to till their soil, push their trees, and drain their sloughs so they can benefit from the trading of credits after 2008. Furthermore, this perverse incentive may motivate producers to be late adopters of beneficial management practices because of perceived rewards after 2008.

Third, the federal proposal does not recognize the investment producers undertook when changing practices. The government's plan to use carbon credits to reduce our country's commitment does consider the investment of resources and undertaking of risk by individual producers when they switched from intensive or conventional tillage to conservation tillage. The sink table options report explains that conservation practices often require a high level of management and input costs, with the hope of greater returns. Some of the barriers to the change to conservation tillage are the initial capital purchases of alternative machinery and implements.

Finally, the proposal does not give producers the opportunity to be financially rewarded for previous good actions. The 10 million metric tonnes of carbon sinks that the Government of Canada is predicting will exist in 2008 under the business-as-usual scenario could translate to between $100 million and $500 million in the carbon market. These credits and their potential value are a result of the action of individual producers on their farms. These financial benefits to the producers will be lost if the government moves forward with the current plan. Producers have endured the costs and deserve to be rewarded.

Before the government moves forward with this plan to use the business-as-usual agricultural sinks towards Canada's national reduction gap, we suggest that serious thought and consideration must be given to the impact of such a decision. What measures would the government use to encourage producers to maintain their carbon sequestration? Would the government wish to assume the associated risk if producers elect to release the stored carbon? Producers should be financially rewarded for what they have done in the past and have financial incentives to continue doing things right for the future.

In conclusion, Saskatchewan farmers are leaders in sustainable agriculture practices. They have a history of being proactive in developing and adopting techniques to benefit the Canadian environment. The Agricultural Producers Association of Saskatchewan believes that great importance should be placed on the measures of environmental management to ensure maintenance of land resources, which provide food for the people of Canada and a large part of the world's population. As many of the stewardship initiatives producers take on their farms also benefit the Canadian public at large, we believe that with aggressive government policies, that agricultural policies can move from 10 per cent of the government's solution to the Kyoto Protocol to 25 per cent.

It would be healthy for the Canadian environment, as well as the Canadian economy, for the government to encourage producers to adopt best management practices as soon as possible.

We would appreciate a chance to discuss how we can collectively capitalize on good management practices adopted by Canadian producers. The Saskatchewan Soil Conservation Association has expertise in soil sequestration and I would refer you to them for any technical questions that you may have.

Senator Gustafson: In respect of your third point, that the proposal does not recognize the investment producers undertook when changing practices. What is your focus there?

Ms. Olver: We are saying that if we use the business-as-usual offset pool, that it will not recognize practices that we have already taken.

Senator Gustafson: Then you are saying is that somebody who is in continuous cropping and has already put his farm in an environmental program will not be rewarded. If he had 100 acres that was out and 1,000 acres in, and if he put the 100 acres into continuous cropping, he would be rewarded. Is that correct?

Ms. Olver: Any measures taken after the year 2008 would benefit the producer; anything undertaken previous to that would not. It would be used as an offset for the government.

Senator Gustafson: In other words, the farmer who has had poor practices would get rewarded and the farmer who has had good practices would not get rewarded. I think you are right on that.

Senator Wiebe: I do not know if you were here when Minister Cline appeared before our committee. One of my concerns was directly related to carbon sinks. While I still have a farm, I no longer actively farm it, my son-in-law does. He made the decision to start direct seeding. From both a husbandry practice but from a business management practice it was to his advantage financially to direct seed rather than continue on the way they had.

The individual who has done that has already received benefits because he is gaining from that particular practice. If a farmer had not gained, he certainly would not have gone into that process.

I do not believe in the federal government's position that we should be selling carbon credits. First of all, it lets the companies off the hook. Second, it lets another country off the hook from their responsibility in cutting gas emissions. Third, it lets the government off the hook, because the government will be providing incentives to industry to cut back on their emissions. Why can they not provide incentives, then, to farmers who are adopting the kinds of practices that will absorb those emissions? I would rather see us taking that direction.

Once you start buying and selling credits, how long do you have to keep your land in grass, for example? Or how long do you have to keep on continually to direct seed? What liability will the farmer have if he decides it is more advantageous for him to break that land and release those carbons back into the atmosphere. If we take this route we are asking for a tremendous amount of complications and frustrations that will not only apply today, but 10, 20, 30 years down the road.

What is your reaction to that, is it something that has merit or should we continue on the way we are?

Mr. John Clair, President, Saskatchewan Soil Conservation Association: You have asked a huge question. From my perspective, as a farmer, the liability issue is huge. If I have changed to a type of farming that suddenly creates a liability to the title that I hold, it is long-term tied to that title. Selling of credits is a huge liability. I would much to do a lot more work around leasing and I would like to look at leasing back something I have already accomplished. In other words, I would look at my last five years and say for the next five I can lease back my practice of sequestering carbon into the soil.

In respect of incentives, I am not terribly concerned about how I get paid. We do not need to get tied up over whether it is through incentive to do something or whether it is by something like a lease credit.

The idea here is that we have made the move, as farmers. The latest figure I have for Saskatchewan is that roughly half of this province is zero till, or low-disturbance seeding. I would suggest we have made a huge move already and a little more incentive would move more acres.

As to selling credits, I suggest it would be much to our advantage to spin our economy here, whether it is buying credits from farmers, leasing credits or giving them money for incentives.

Your first question dealt with the early adapters. If all of us are not treated equally, the accounting problem would be very significant. If you think that gun control has an accounting problem, look out here, this one will be even worse.

On my farm, all our land is zero till. My children are just starting. The land they are getting is mostly not zero till. By 2008, we will probably have their land into zero till. Who will be keeping track of what quarter is what and what little section is zero till and what is not?

I do not think that you should create a liability because people adapted early. The idea to reduce greenhouse gas was good. The sooner and the faster we can move farmers in the right direction the better off we will all be.

Kyoto stands out as a significant thing to aim for, but the real thing here is reducing greenhouse gas. Kyoto is just a symbol, if you like. We have to look beyond that at what we can do. Farmers can help; I would suggest we can help in a huge way.

Senator Wiebe: There is no doubt about that. That is exactly my position, and that we should be compensated for it.

In terms of keeping track, if you are buying and selling credits you have just as much of a problem. You still have to keep track of whom you sold that to, for what term, what were the arrangements. If you lease, whom do you lease to? Is it a lease from the federal government? Is it a lease from the company?

I think Canada's position in selling credits was basically more because of our huge forest mass. We would be selling credits to other countries, we would not be buying them.

If our government intends to pay Imperial Oil so much money to reduce their greenhouse gas emissions, could they not just as well pay a farmer for implementing zero till or these kinds of practices that absorb them?

In terms of keeping track, you are someone like my son-in-law who has already been zero tilling. If he continues, he will now be reimbursed for that practice. If his neighbour has not been zero tilling, and decides not to zero till, he will not be compensated until he starts to zero till. Therefore, immediately, the individual who has adopted that practice is gaining both ways — from a farm management perspective and also because he is first off the mark because he has already developed that practice.

I do not have the answer, but I feel that a farmer could get himself into some real hot water by turning around and selling or leasing credits, because it depends on what the sale contract is, or depends on what the lease contract is.

If a compensation package is brought in by the federal government it should be one that deals with the long term, not just immediately, or this year, for example, you get paid a credit. That does not necessarily mean that you will next year. If we intend to implement that program, you implement it for the total length of the Kyoto accord.

This is something that this committee has not discussed, it just happens to be my idea. How convincing I can be to the rest of the gentlemen and ladies on the committee? Only time will tell, when we write our report.

I would like us to look at these areas because we farmers are the ones that will benefit or suffer from whatever programs the federal and provincial governments adopt.

The Chairman: Would you like to respond?

Mr. Terry Hildebrandt, President, Agricultural Producers Association of Saskatchewan: We have a lot of work to do on this yet, and Ms. Olver and Mr. Clair are on top of this. When we talk of a lease, we are looking at a maintenance lease or storage lease – basically a pretty cut-and-dried thing.

I want to emphasize the potential that Saskatchewan brings not, as Mr. Clair says, to the Kyoto Accord as much, but to reducing greenhouse gases. That is what it is all about.

Senator Gustafson, Senator Wiebe and Senator Oliver may recall two years ago when Ms. Olver and I presented our START proposal. We talked about environmental rents or benefits to producers for services done for society as a whole.

That went one step further, in fact, we talked about taking 10 million low-arable acres out of the province and putting it into grass and so on. Now when you come along with Kyoto and do the research, it tells us that that land could store about 0.7 of a tonne now; into a green cover you are looking at two to three. That is the kind of potential. Those 10 million acres, if we also put that bond to it, if you remember, that stimulated valued-added feedlots and ethanol and cleaner fuels.

That is the kind of potential that Saskatchewan alone, and Western Canada, can bring to this table. Representing producers, we are saying that the half of us in Saskatchewan who have done a lot of effort for this to date should be compensated. We should not be penalized until 2008. The rest of us can prolong it if the incentive is there.

We have the whole issue of agroforestry. We can add on some of these acres with sequestration far better than grains and grasses. This is the kind of potential we can bring. All we ask is that we are rewarded if we clean the air, if we filter the water for all society. We can play a big role in meeting this accord, these commitments that the country has gone into.

We are prepared to do it. There is work to do on the details of leasing, buying, selling; we are working on it and we will come with our proposal.

Ms. Olver: Any progressive government policy that gives some incentive for producers to do the best management practices that are necessary to sequester carbon would be very beneficial. Whether we talk about it in one way or the other does not really matter as long as the incentive is to the producers.

Senator Hubley: We have heard that there are opportunities. I was pleased with Mr. Hildebrandt's comments that you have looked at this and you are seeing that you can make not only a very valuable contribution to Canadian society as a whole, but it will benefit farmers.

Having said that, when I was listening to your presentation I was worried about the ``perverse incentive.'' I found it hard to think that Canadian farmers, unless they are really pushed hard, taking a perverse incentive. I am just wondering if you would like to comment on that for me? We look to our farmers as being innovative and it would not be something that I would think would be part of farming practices.

Mr. Clair: I will talk about my own farm. It would be extremely difficult to go into the bush and find the cultivator and put tires on it and pull it out and start cultivating. However, if there were to be a line in the sand and an overall benefit for doing it, sometimes you do things that you have to swallow really hard for.

I totally agree with you. The last thing I would want to do is return to cultivating because I have seen what zero till can do over a good number of years. I think we have gained in a lot of ways.

On the other hand, my farm is in the drought area. We have been pushed to the line. The programs are not working currently — that is another issue. At this point, I can see myself and my kids saying, ``Okay, if there will be a benefit from 2008 on, then we want to be in that program.''

Mr. Hildebrandt: I think Mr. Clair is correct. As Senator Wiebe has alluded to, his son-in-law has seen the benefits of this practice now. It will be hard to change that. However, you could an awful lot of remaining native bush and sloughs drained that probably would not be if the benefit was there to the producer for the water that the sloughs are filtering and the air the trees are filtering. You could see an awful lot of that just cleared and put down to grass to get into the cycle.

I also want to comment on some of the plans of the United States Department of Agriculture, USDA, in the new Farm Bill. There is a change of up to 80 per cent in what they are doing, from a commodity base to a green credit program. I apologize that I do not have the document with me.

They call it ``niche markets'' for farmers and they can use these things to, if nothing else, certainly offset some of the regulatory things such as dykes around feedlots that producers will also be looking at. They certainly see this and, of course, as you know, federal funds can flow endlessly into the environment. They are taking away from their so-called programs of commodity subsidies and paying the producer for his or her benefits to society in green credits.

It is quite a swing and it is somewhat discomforting for us knowing of the $110 million green cover that the federal government announced here, getting those details. If you get into that program at all and take any of their money for seed or rent for the 10 years, then they are expecting the carbon credit off of that. They told us that point blank. We asked why that is, and they replied that they are not sure if they give the credit to the producer, it will be seen as lowering Canada's goal.

If you give it to an industry for lowering their emissions then it is lowering Canada's. It was kind of a silly approach but we were told at meetings in Quebec City that if you participate in this $110 million green cover, which is part of the new APF money, that the federal government will expect any sink value off that land.

That is happening while the U.S. seems to be switching to more of a green target and credit program.

Again, we have the potential; we will do our part, just reward us. In Saskatchewan, we have a big potential to help, with the land base alone.

The Chairman: Mr. Clair, you just said your farm was in the drought area. I was wondering if you have irrigation, or what you have done to adapt? Adaptation is the main thing we are studying. You have an active farm in the drought area. You know that things will be dry. Are you planting different seeds? Have you done any specific things to adapt to the climate change?

Mr. Clair: One of the things I have done is move to zero-till. One of my neighbours put it in pretty good words: ``You have to have moisture first to save it.'' That was our problem this year. We did not have moisture to save. We could not simply draw it out of the air; it just was not there.

We look at crops. Last year we knew it was dry so we did not plant canola, which is hard to germinate and it is a high-input crop cost-wise, small seeds that you seed shallowly. That option was not there for this year.

We test soil so that we know what to put down for nutrients and what is lacking. We use a balanced fertilizer approach; we have enough experience on our land.

The Chairman: Do you inject?

Mr. Clair: All our fertilizer is put down in the ground. That is one of the things that we have learned over time. We also put it next to the seed, as opposed to just a general fertilizing. As a rule, we straight cut so that we are catching all the snow that we possibly can.

In general, there is nothing done that we cannot justify. If a tractor goes out of the yard there has to be a reason; it cannot just be because dad used to do it. We use a small tractor for spraying. We spray as little as possible, so we are using spot sprayers; we have one of those as well as a large field sprayer.

Small things like that will keep your inputs extremely low in the end. We are doing those kinds of practices. The problem is that we have been pushed. Two years of drought hit pretty hard. That is nobody's fault; that is nature.

The Chairman: That is a good answer.

Senator Wiebe: One of the main reasons for our committee being here is to look at how we adapt to climate change. I know that the agriculture industry is spending the majority of its time trying to figure out how in the world they will survive because of low prices, et cetera. Not much thought has gone into the adaptation part of climate change.

Witnesses that have appeared before us, the researchers and scientists from C-CIARN and many others, have told us that even if the U.S. and every other country in the world go along with Kyoto and we meet the objectives that it has set, the damage has already been done. It will take a tremendous amount of time to recover from what we have done up to date.

Part of the climate change will be extremes. For example, on my farm, we used to get a three-day rain; we now get the same amount of rain in an hour and a half, and you will have extensive heat before that. These are some of the areas that we are looking at: how agriculture and our country adapts to that kind of change.

I am not asking for an answer from you. However, I hope that your organization will take some time to really take a hard look at how we will adapt when that eventually does happen.

To date, we have been able to adapt because that change has been rather gradual, but it has increased rapidly over the last 10 years. They are projecting that that rapid increase could actually escalate in the next number of years. That could be the problem we are facing.

I think part of the reason our committee is doing this is that we are hoping to come up with some ideas on how to react now rather than later on down the road.

Ms. Olver: We will have to do is spend more time on research on heat- and drought-tolerant type crops.

You have mentioned irrigation as a possibility. That is not possible in all parts of Saskatchewan. There is just not the right quality and quantity of water throughout the province to do that.

Shelter belts are another way of adapting. Zero till, of course, does increase our organic matter, which retains our moisture when it does fall in irrigative amounts. Also, you can maybe put alfalfa into your rotations, and try different rotations.

Research is a big part of it. There are also concerns in regard to losing some of our weather stations. That seems to be to our detriment. Without accurate weather forecasts, we may not know that the three-inch rain is coming right after we finish spraying, et cetera. I do not see a big advantage in moving all our weather stations into one spot and not giving us accurate weather forecasting. That is one thing that I would like to see us look at.

Senator Wiebe: In respect of weather stations, technology does weird and wonderful things. However, I am still a strong believer in being able to touch and feel and see what is coming down the road. That is why it is so vital that, rather than cutting back on our stations, because of the extremes that will be happening, I would be much more content with more human beings out there rather than machines. You can rest assured of that.

We have, at least, successfully persuaded the Minister of the Environment to hold off on his recent decision out of Saskatoon. We are hoping that we will be able to put a stop to it and reverse it and start to increase the bodies that are there, not the technology. We have to rely on a lot of technology but I am still a strong believer in human beings.

The Chairman: It is very much like the argument for manned lighthouses for the people on the coastlines of Canada. I do not know if you have read about that, but it is very similar.

Senator Gustafson: As you are in the drought area, you have had two years of drought, how has the crop insurance program worked for you — or has it?

Mr. Clair: I will deal specifically with my 10-year average for wheat, because it is half of my insured acres. At 80 per cent coverage, it gives me something like $121 to work with before I pay my crop insurance premium. My inputs would run probably very close to $70 an acre. You have to remember that we are into two years of drought, therefore, we really did not have a full shot of fertilizer.

The Chairman: Did you just say that your inputs were $70 an acre?

Mr. Clair: Around $70. I do not have the sheets here, but I could supply them. We have machinery, and then we have a living. There was nothing for rebuilding the farm and there was nothing for living. Absolutely nothing this year, even though one of the things we did not do was harvest. One combine never left the shed, the other one just circled around. My wife and I harvested 107 bushels before dockage; that was our total crop. On the same amount of land, my children harvested about 2,000 bushels.

It was as close to a total wipeout for our farm as we have ever come. I do not want to get better at handling drought; this is as far down the line as we can go.

In regard to the programs that are available to cover problems such as this, CFIP is a failure. When we went to it after crop insurance, we did not qualify. I know your question was just around crop insurance. If I had refused crop insurance and not paid the premium, I would have qualified for CFIP; free, no premium, no good management practice or anything.

I got slapped on the wrist for looking after my own interests. Something is slipping through the channel here. I know CFIP is to be cancelled.

We went to our NISA just before Christmas. I have not got the cash yet. I qualify for too much, they told me. They have to have another look at me. They cannot believe that they have to cut me that cheque.

The reality is that things do not happen the way it is suggested they should. Allegedly, you could trigger NISA and have it within a couple of weeks. It was just a matter of moving it into a bank, sir. Well, when I phoned 10 days ago they told me that they think I will be approved but it has to go through another channel. The cheque is still not in the bank; I checked yesterday.

Sorry to be long-winded but you hit a nerve.

Senator Gustafson: You are right on. It is unfortunate that Senator Sparrow is not here, because he did a lot of work on soil at risk. We have had a lot of talk here about continuous cropping and direct seeding and so on. He gets a lot of the credit. I would like to give a lot of credit to him today for the work he did on soil at risk. I do not know if there is anybody who has done as much as he has on that one issue, for bringing continuous seeding to the province.

Mr. Clair: There is no question at all. I have followed his work for years. He was rightfully recognized in the Hall of Fame for Agriculture here in this province. He is the only one, quite frankly, who has been recognized for soil conservation methods. Yes, he led. When you drive the country and see white snow as opposed to black snow, a lot of credit goes to him. A lot of others helped, but he started it.

Senator Wiebe: I concur with everything that Senator Gustafson has said with regard to the land at risk report. The chairman, of course, deserves everything he gets, however, I would like to pay tribute to the members of the committee who sat with Senator Sparrow and worked on that report, as well. Too often, we have a tendency to zero in just on the chairman and not on the hard work of each and every member. There are 12 on that committee; they all made a tremendous contribution to that report as well.

I could not let that pass.

Mr. Clair: There have been a number of people that should be recognized. Researchers should be recognized, the people that were involved in inventing farm equipment and pushing that forward should be recognized too. They all had a huge role. So did a lot of farmers who stuck their necks out when they first started this. I do not consider myself in that league at all.

The last word should not be mine, if I may allow someone else to speak.

Mr. Hildebrandt: If I could have the last word on a different note, because it was brought up. I have a question. How aware of the new safety net programs is this committee?

Senator Wiebe: Probably no wiser than you are. That is not a positive statement.

The Chairman: Did you have a statement that you wanted to make for the record?

Mr. Hildebrandt: The Agricultural Producers Association of Saskatchewan, along with the rest of the industry across Canada, is asking for existing programs for another year until we can get this one right. I was more curious as to what the committee's thoughts on this program are.

Senator Wiebe: You can be assured that we will be watching it closely.

The Chairman: On behalf of the committee I would like to thank the three of you for coming and presenting a most interesting report. You can tell by the questions that we do not want it to end and you have stimulated us. Your responses are such that we do not wish to end the dialogue with you. So thank you very much.

The committee adjourned.