Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue No. 31 - Evidence - Meeting of June 6, 2017
OTTAWA, Tuesday, June 6, 2017
The Standing Senate Committee on Agriculture and Forestry met this day at 6:01 p.m. to continue to study the potential impact of the effects of climate change on the agriculture, agri-food and forestry sectors.
Senator Ghislain Maltais (Chair) in the chair.
[Translation]
The Chair: Honourable senators, welcome to this meeting of the Standing Senate Committee on Agriculture and Forestry.
[English]
I am Ghislain Maltais, senator from Quebec. I would like to have the senators introduce themselves, starting with the deputy chair of the committee.
Senator Mercer: Terry Mercer, Nova Scotia.
Senator Gagné: Raymonde Gagné, senator from Manitoba.
Senator Woo: Yuen Pau Woo from British Columbia.
Senator Bernard: Wanda Thomas Bernard from Nova Scotia.
[Translation]
Senator Petitclerc: Chantal Petitclerc from Quebec.
Senator Pratte: André Pratte from Quebec.
[English]
Senator Doyle: Norman Doyle, Newfoundland and Labrador.
[Translation]
Senator Dagenais: Jean-Guy Dagenais from Quebec.
[English]
Senator Ogilvie: Kelvin Ogilvie, Nova Scotia.
The Chair: Thank you very much, senators.
Today we have, from Fertilizer Canada, Garth Whyte, President and Chief Executive Officer, and Clyde Graham, Senior Vice President.
Mr. Whyte, you have a short presentation? And Mr. Graham, you will answer the questions.
Garth Whyte, President and Chief Executive Officer, Fertilizer Canada: That's the plan.
Thank you to the committee members for inviting us here today. We represent an industry whose members sell fertilizer to farmers and homeowners, and manufacture nitrogen, phosphate, potash and sulphur. Fertilizer keeps soils, one of the world's most precious natural resources, productive, accounting for roughly 50 per cent of food grown. To feed a projected world population of 9 billion by 2050, we must increase crop yields by 70 per cent.
Fertilizer is essential to intensifying crop production sustainably. It's important that we position Canada's agriculture economy to meet this important challenge.
Canada's fertilizer industry stands ready to help. Saskatchewan is the world's largest supplier of potash, accounting for 46 per cent of global trade. Alberta holds the largest concentration of nitrogen fertilizer production facilities in North America, a process that adds value to the province's natural gas. Additionally, Canada is home to the world's largest fertilizer company and the world's largest agri-retailer. These, and all our members' contributions, are vital to increasing crop production sustainably.
Before I discuss the impacts of climate change, I want to bring to the attention of committee members the three documents that we put before you. The first document is our annual report, which describes who we are, members of our board and our membership, but also that we are more than just about sustainability. We also play important roles with security and other issues, and that's in our annual report.
The second report is called Fertilizer Canada 4R Nutrient Stewardship Sustainability Report. Last week, I presented it to the international fertilizer conference with 1,300 delegates in Marrakesh, Morocco. I only bring it to your attention because we are about much more than climate change. If you look at page 4, you can see that we have linked this report and what we do to the United Nations' Sustainable Development Goals. If you look, there are about half a dozen goals that we're involved with, including no poverty, zero hunger, climate action, life below water, life on land, partnership for goals, decent work and economic growth, and responsible consumption and production. In other words, we are about agri-business, economic development, food, and about the environment, land and air, and water.
The third report that we have thrown in is talking about the research we've done with the federal government on how to make our crops more productive and environmentally sustainable. If you look at page 2, you can see the different lists of projects we do. The research network is focusing on the following major environmental issues: greenhouse gas and ammonia emissions; losses of phosphorus to surface water; nitrate leech in the ground water; and coordinating research and policy development.
I show you these documents because this is a compilation of 10 years of research we have done on increasing productivity, increasing our food production and also on environmental issues. Based on that, I'm going to talk about greenhouse gas emissions and, in the last year, the regulatory landscape has changed. As the government further develops a strategy to address climate change, we urge collaboration with leading industries such as ours.
We also ask the committee to consider two recommendations: one, promoting climate-smart agriculture practices for sustainable food production; and two, setting achievable industry emissions reduction targets.
Feeding the world with climate-smart agriculture, as defined by the United Nations, is a priority for Fertilizer Canada. Climate change makes the challenge of feeding more people on less land all the more significant as it threatens productivity and forces quicker adaptation of farming systems.
Reductions in emissions cannot come at the cost of reduced output of foods. Instead, farmers must get more out of the inputs and resources they use. At COP22, we shared how our industry can help the government achieve reductions in greenhouse gas emissions from agriculture sources using 4R Nutrient Stewardship, which is the right fertilizer source, used at the right rate, at the right time and the right place. In other words, we want fertilizer going to the crop, not to the air or to the water. If you do that, you increase production and you increase farm profitability.
4R Nutrient Stewardship is a science-based system for nutrient management, which improves agricultural productivity while reducing environmental impacts. Fertilizer Canada has made extensive efforts to continuously improve this program, working with governments, NGOs, universities and other stakeholders to develop research and metrics that promote global adoption. Research funded by the Government of Canada and matched by our sector will further validate the benefits of 4R Nutrient Stewardship practices.
Emissions reductions can be further achieved when farmers are incented. The world-leading Nitrous Oxide Emissions Reduction Protocol, or the NERP, employs the 4R principles to generate saleable offset credits. The NERP was developed in Canada and, coupled with government support and broader adoption, will make Canada a leader in climate-smart agriculture. The NERP is currently operating under Alberta's emissions reduction regime and expansion to other jurisdictions will result in real greenhouse gas emissions reductions, up to two megatons annually in Western Canada alone. That's equivalent to 126 million car emissions or 240 billion litres of gas consumed. That is a climate game changer.
Fertilizer Canada asks the committee to recommend the NERP-like offset protocols to reduce farm-based greenhouse gas emissions to be expedited to help Canada meet its emission targets. This truly is climate-smart agriculture, which is being recognized internationally.
Meanwhile, the committee must also consider that economically or scientifically unattainable greenhouse gas reduction targets will negatively impact on the competitiveness of Canada's fertilizer industry and increase the risk of carbon leakage. Nitrogen fertilizer manufacturing, in particular, is one of the most energy-intensive, trade-exposed sectors globally.
Our industry has worked with federal and provincial governments for more than a decade to benchmark our performance, which has concluded that Canadian facilities perform in the top quartile for energy efficiency and greenhouse gas emissions. There is no commercial step-change technology in development that will replace existing production systems, which are based on the Haber-Bosch process. Reduction targets exceeding achievable levels will erode our global competitiveness as an energy-intensive trade-exposed sectors, with no tangible reductions in greenhouse gas emissions.
Fertilizer Canada recommends that related government policies be science-based, achievable and sector-specific, balancing environmental goals with the realities of our industry. Fertilizer Canada stands ready to work with government. It's important to ensure we get it right.
To conclude, I want to thank senators for this opportunity to present our views. In summary, our recommendations are twofold: One, promote climate-smart agricultural practices for sustainable food production, and, two, setting achievable energy emissions reduction targets.
My colleague and I welcome the opportunity to continue this dialogue and are pleased to answer any of your questions. Thank you, Mr. Chair.
The Chair: Thank you very much, Mr. Whyte. We will begin the first round of questions.
Senator Mercer: Thank you for being here and for your presentation, gentlemen.
First of all, I would go back to page 1, because you have said something that nobody else has said before this committee — that I have noticed and the clerk noticed it as well. To feed a projected world population of 9 billion people — and we've numbers of 9.7 billion, but 9 billion-plus — by 2050, we must increase crop yields by 70 per cent. This is the first time we have heard somebody put a number to what we have to increase. That's helpful.
But you go on to talk in your presentation about science-based, achievable, sector-specific, balanced environmental goals. Is that 70 per cent you talked about a science-based, achievable, sector-specific, balanced environmental goal?
Clyde Graham, Senior Vice President, Fertilizer Canada: The reality is that projections are projections. We don't know whether the world population by 2050 will be 9 billion or 9.6 billion or 9.7 billion; it will depend on the decisions of people.
We are operating in very long time ranges for our facilities. The expansion of potash production in Saskatchewan, where our industry invested $15 billion over little over a decade to increase production, has to be there in order to help feed those people. As well, there is additional nitrogen production coming on stream in other areas. So we have a very long time horizon for planning for those kinds of population increases.
It's not only the increase in the population that's important, but as countries develop and become more prosperous, the first thing you do when you get more money in your pocket, you will be looking for a better diet. You will move from subsistence crops like rice, which is carbohydrate-intensive, to higher-protein crops and animal protein so that you can have a healthier diet. That is part of the 70 per cent increase that we have to do.
I don't know if I'm getting quite at your question, though.
Senator Mercer: You are almost there.
Mr. Whyte: I just came back from Morocco and the big preoccupation there is how — the game-changer will be Africa, as 60 per cent of the arable land is in Africa. The Gates Foundation was presenting to us. They are looking at long-term strategies and they see the 4Rs as one the key tools to increase productivity and do it in a sustainable, climate-smart way.
They are looking at the scaleability and how we can make it go across the entire continent to something that can work with smallholders. That, in particular, is very exciting and it has the potential for another green revolution.
So, on the one hand, you have that. On the other hand, you have to produce fertilizer and, when you produce nitrogen, it's a chemistry process. You take it out of the air, which means you have to emit carbon because of the chemistry. So, there is a challenge there. But if you want to increase food production, you are going to need more nitrogen, phosphate and potash. And you need water, but you have to ensure you don't damage the water and the climate at the same time. We think we can do both.
Senator Mercer: I have a question I have to ask as an Atlantic Canadian. We talked about the potash development in Saskatchewan and the importance of that. We had a very productive and profitable potash industry in New Brunswick. If we're going to fulfill that 70 per cent target that you talked about on page 1 of your presentation, are we not going to need more potash? Will we not need potash out of the mines in New Brunswick?
Mr. Whyte: We have to be careful, for competitive reasons, but I can say a couple of things. The geography of New Brunswick is different from that of Saskatchewan, but it's also in terms of the resource. Two major mines have come on to almost $7 billion worth of investment in Saskatchewan. Unfortunately, the New Brunswick mines were not as productive. I can tell you it was very painful to the CEO.
There was an outplacement firm from which I heard indirectly. They said they had never seen a company deal as compassionately with their employees. The CEO went there and talked to each employee. They ended up hugging him because he was so upset about closing the plant down. This is not something you do lightly. They invest in stuff.
There is an overcapacity of potash right now. We will need more, but, at the same time, there is overcapacity. It was an unfortunate event that had to happen, and it was upsetting event for everyone.
Senator Mercer: The potash is not going away; it's there. Come back and get it.
Mr. Whyte: They are maintaining the mine, but there is a skeleton staff on.
[Translation]
The Chair: I would like to introduce our guests to Senator Tardif from Alberta, who has just joined us.
[English]
Senator Pratte: Forgive me for not knowing those numbers, but I understand nitrous oxide is an important contributor to agricultural emissions of greenhouse gases. You point to the contribution of NERP would have to the reduction, and you say it will contribute to a reduction of 1 to 2 megatons annually in Western Canada alone. Would you put that into perspective compared to what the emissions are today?
Mr. Graham: Yes. I'm not sure I have the total emissions in Western Canada at hand. We could get those for you, but it would be a significant portion of the emissions. Nitrous oxide is one of the most important emissions in crop production.
Senator Pratte: It would be a significant contribution?
Mr. Graham: It would also be a significant contribution to the reduction of Canada's greenhouse gas inventory, because it's something the government is not anticipating at this point.
Part of the problem with agricultural or biological emissions compared to a factory where you have a smoke stack that you can measure things, fields are hard to measure. One of the major contributions is that this is a rigorous science-based approach that allows a very verifiable and internationally recognized approach where the government can actually make claims regarding how farmers have been able to reduce their total emissions.
That is very helpful to Canada in terms of the story it's telling internationally. It's particularly true in provinces like Alberta, where we are facing international reputational challenges, to be able to say we are making progress in agriculture is very helpful.
Senator Pratte: I take it that you think that this is an achievable target. In your mind what would be an unattainable goal? Your recommendation is that the government has an aim that is achievable and not unattainable. Do you think the current government is aiming at unattainable objectives as far as greenhouse gas reductions are concerned?
Mr. Whyte: When you talk about our industry, first, there is downstream and the upstream. The downstream is the 4Rs we are talking about. Our research has shown that nitrous oxide can be reduced by a minimum of 25 per cent using 4R nutrient stewardship. If you are using the NERP program, you can reduce by 25 per cent and extrapolate over the number of acres and by crop, and also increase profitability by up to $86 per acre. That's one side.
The other side, which is back to sustainability, is on the production of nitrogen. There is only so much greenhouse gas reduction that we can do, because of the science to create nitrogen. If the targets are beyond that, and if we are best in class, which studies have shown, with the Government of Canada and if they put a target beyond that, we are just displacing our manufacturer to a coal-fed plant potentially in China or something less productive. You may reduce the Canadian target, but you will increase the world target because we are much more efficient and effective at producing nitrogen.
It is one of those policy conundrums, if you look at greenhouse gas alone. We're saying look at it industry by industry, not as a blanket target. We have been doing that when we work with provincial governments. We're working right now with the Alberta and Manitoba governments, different governments with different approaches, but making sure they understand how energy intense and how trade exposed we are.
Senator Pratte: What about the current federal government's policies?
Mr. Whyte: That's kind of a benchmark. It could get to a level where it's not competitive for us. We'll have to see how they work it out with the provincial governments.
Mr. Graham: We have done extensive work with the federal government and provinces to demonstrate, through benchmarking, how efficient our plants are. We are confident we will be recognized as an energy-intensive or emission- intensive trade-exposed industry. I think that most provincial governments and the federal government have recognized that those kinds of industries that are highly efficient and cannot change their production to dramatically reduce their emissions, and yet face competition and are export or import driven, as we are — we're a very export-driven industry — that we have to be given some relief in terms of the burden that we face.
[Translation]
The Chair: I would like to introduce Senator Oh from Ontario.
Senator Dagenais, the floor is yours.
Senator Dagenais: The Government of Canada has committed to implementing a carbon tax. Some provinces have already made commitments in this regard. From a political and economic perspective, this tax is being challenged by certain stakeholders in the agriculture sector. I want to hear your comments on the matter. Is this type of measure the best way to achieve the greenhouse gas reduction goals, or have other approaches been considered?
Mr. Graham: Thank you for the question.
[English]
Over the years we have worked with many different federal governments and ministers. Provincial governments have looked at various schemes and, if you look across Canada, there are a variety of approaches to reducing greenhouse gas emissions. You have a carbon tax in British Columbia and a mixed cap-and-trade and performance standard type program in Alberta. Ontario and Quebec are very much cap-and-trade. There is a carbon tax being proposed federally.
For us, for our industry in particular, which is what we would speak to, what is important is not necessarily the design of the system but the burden it places on industry and whether that's actually going to change behaviour. At a certain point, in any system, whether the cap-and-trade is set too severely or the carbon tax is set too high on a particular industry, you really don't change the behaviour of the industry. We can't change the way we make ammonia, which is the foundation for all nitrogen. It's bound in the way our plants are, in the chemistry and in the science. That's what we focus on.
We recognize the importance of dealing with the issue, and we understand that different governments will have different approaches, but in the end, the important considerations for any carbon regime have to be: Are you actually changing people's behaviour? Are companies able to do something different? Do people become more efficient in the way they go to work, how they drive their cars and all those other activities? I think that is up to members of the Senate and the House of Commons to determine the best regimes for the Canadian public.
Mr. Whyte: On the downstream side, though, there are significant reductions in climate impact, and it is being recognized worldwide. It's a win-win-win. It helps food production, profitability and the environment, not just air but also water. Why? Because you are putting the right fertilizer in the right place at the right time, and I think that's very important. We have done a lot of research to help there and, if we can get people to do that, that alone is a significant contribution. It's the application of our product as well as the production of our product that we're concerned with.
[Translation]
Senator Dagenais: We've heard about intelligent fertilizers that would help the agriculture sector reduce greenhouse gas emissions. There's a cost associated with these seeds. I want to know what you think about this. Also, how many years will it take to see the effects of these new seeds?
[English]
Mr. Graham: There is a wide range of fertilizer products that slow down the release of nitrogen fertilizers when they are applied and prevent loss to the air or slow down those losses. It essentially makes these fertilizers more efficient. They are not quite smart, but they are very effective, and some of our research programs are looking to document the effectiveness of those fertilizers. Increasingly, farmers are turning to those products to make their production more efficient.
I think we're already seeing the benefits of past research, and more research is under way.
There are some people looking at fertilizers that react to the plant needs in a more effective way. I think we are a number of years away from those kinds of products, and I might be concerned about their potential cost, but in all these things I think we have to be looking for multiple answers and innovation is very important.
Mr. Whyte: There is an intelligent process, and so you are seeing by using satellite imaging, soil sampling, having a certified crop adviser, looking at weather patterns, rain, precision agriculture and different types of releasing. It's all around the 4R Nutrient Stewardship, and you will see more and more of that happening. The beauty of it is it is simple, but it's complex. It's simple because people can get it down to four products, but it varies by land, by weather and by crop and it has to be done almost specifically by the farmer. The nice thing is it can be applied to small holders as well. We are focusing on small holders in Africa, as well, and we think Canada has intellectual property here to meet not just our own targets but to help world targets as well.
Senator Woo: Mr. Whyte and Mr. Graham, thank you for your testimony. I want to follow up on Senator Dagenais's question and your comment that what really matters in the design of a GHG-reduction system is whether there are incentives for the producers upstream and downstream to behave in ways that reduce their emissions.
Can you just tell us a bit more about the design of the system that has created incentives for NERP to function effectively? You talked about the offset credits that were generated. What is the design of the system that incentivizes the creation of these offsets. At the end of that section in your presentation, I think you talked about how this has to be extended into other jurisdictions, or the system needs to be broader. Tell us what you mean by that.
Mr. Graham: In the Alberta system, and in other systems like cap-and-trades, if large companies, power plants, mines or other emitters can't meet targets or goals that are set by governments, they can buy offsets on the market rather than having them go out of business or be fined. Often, these offsets are by people who aren't regulated. That might be a factory that comes up with a great new process that allows it to reduce its emissions.
In the case of farming, farms are smaller entities so you bring together, under what is called an aggregator, a large number of farms into a project. Everyone in that project, all the farmers, agree to be more efficient in their fertilizer application and then we can estimate from that, based on sound science that's been well-established in Alberta, how much they are reducing their emissions. Based on that, you can calculate an offset payment that would come from industry to go to the growers as an incentive.
We would like to see that system grow, either through the federal system or, hopefully, through federal and provincial co-operation so that all farmers across Canada would have that opportunity to get that small incentive — it is not huge per acre and might only be a few dollars — but it is also a way for them to improve their on-farm processes and their use of fertilizer and enhance their profitability, as well as contributing to the environment. It is very much a win-win for the growers. It also helps industry meet its commitments to climate change targets by helping farmers and food production.
Mr. Whyte: If I can contribute, it is nice being in a room where I mention something and everyone will understand what I am talking about.
If you remember when the GST was implemented, we had a target but there was a compliance burden. We spent a lot of time dealing with GST compliance. The same thing would happen with the NERP. It is one thing to announce it, but if you make it so onerous for farmers to fill out they won't do it.
The second thing is that if it costs small business owners money to collect, like the GST did, they weren't going to do it, it was going to be a problem and we had to find ways to help them do that.
The third strategy on using the NERP and others is that if we can show farmers that they will actually increase their profitability and productivity, then they will buy in. We have to find a system that allows people to do that.
As an organization, we have set a target of reaching 20 million acres under 4Rs by 2020. That is 25 per cent of all acreage across the country. We can't do that alone. We are looking to advisers, leaders, retailers, agri-business and academia to help us push for that target.
If you remember zero tillage, it was a 30-year overnight story. People now say, "Wow,'' but that took a long time to happen. We need to accelerate this process.
What we didn't talk about is that nitrous oxide is 300 times worse than carbon emissions. This could be, as I said, a real game changer.
Senator Woo: Is the difficulty in reaching 20 million acres also in part because you need a large enough market for companies and other polluters to buy the offsets? Is the current size of the market in Alberta sufficient to accommodate the offsets that are generated in Alberta alone?
Mr. Graham: I think the biggest issue we face in Alberta is more the complexity of the offset system, which is designed more for industrial reductions rather than on-farm.
There is a major challenge. As I said before, we are having to operate off of science-based estimates or coefficients for reduction. Then, there are verification issues because in Alberta we are creating financial instruments.
I think the success will come from working together to help growers understand the opportunity. In a certain market, where there isn't sufficient opportunity for industry to buy offsets, hopefully there might be opportunities to sell to other jurisdictions. In some cases, it may also be better to have a government program that encourages it, rather than have an offset, necessarily, but we think offsets are a great starting point.
Mr. Whyte: There could be a push/pull. You could have farmers pushing the retailers and others to say, "I want this.'' There might be a way to incent the farmers through crop insurance or something so they can do a test acreage for a while and see whether that will work. It isn't a yearly thing; it is over three years that you really see the benefits.
Senator Woo: By contrast, can you talk about the way in which the more explicit carbon price in British Columbia has affected fertilizer production in that province?
Mr. Graham: We don't have much fertilizer production in British Columbia.
Senator Woo: Of course; yes.
Mr. Graham: British Columbia has some of the best farmland in the country. The problem with British Columbia is there just isn't enough of it for everyone, because we would all enjoy more B.C. wines and produce. We don't really have much experience with British Columbia, unfortunately.
Senator Gagné: I believe any sustainable development effort must reflect the input of different stakeholders. Does Fertilizer Canada get input from the food security experts, environmental scientists, the farmers and so on? Could you describe your research network and how you get the input from those stakeholders?
Mr. Graham: In general, climate change is just one of the issues that we are trying to manage. We are trying to reduce loss of phosphorous to water and nitrogen fertilizer to groundwater and to the air. We have a number of different factors. Climate change is very important.
We are trying to promote the 4R Nutrient Stewardship System across the country. Primarily, we have done that by establishing memoranda of understanding in provinces where we see the need is important. We are operating under that basis collaboratively with provincial agriculture and environment departments, major farm groups and, in many areas, with watershed groups, like the Kensington North Watersheds Association on Prince Edward Island, the Grand River Conservation Authority in Ontario — in fact, all of the conservation authorities in Ontario as a group — and Lake Friendly Manitoba in the province of Manitoba. We work with Ducks Unlimited and with all the farm groups. We have been careful and, I think, respectful of the significant changes that may occur on farms because of what we're proposing, so we've worked to be collaborative in all of this.
This is a longer-term process. I think of the great Senator Herbert Sparrow who did the Soil At Risk report that was the paving stone for zero-till in the 1980s, but that was a multi-year process. It took decades for zero-till to become the dominant agricultural system in Western Canada.
We are about 10 years into 4R Nutrient Stewardship and our target is about 20 to 25 per cent of Canadian cropland by 2020. That's the kind of change that we are looking at making.
Most farmers are doing a good job with their fertilizer application. Canadian farmers are among the most efficient in the world in terms of using fertilizer, pesticides and other inputs, like diesel fuel for their tractors and combines. We are talking about that incremental level at the top, the icing on the cake, where we can make some final and significant changes in that. That is the most difficult part.
Mr. Whyte: On the food side, a lot of the major buyers and distributors of food are also worried about food sustainability.
One example would be Walmart. Walmart initially said, "We want a reduction in fertilizer by 10 per cent,'' and they were going to focus on that. After we worked with them, they changed that to wanting their producers using 4R Nutrient Stewardship.
As Clyde said, a lot are doing it, but informally and we want to formalize it. We want to recognize it and get them to start using it more, working with a certified crop adviser, making sure they're working all through the food chain to let people know about this.
It is very exciting. This research that we keep talking about is ongoing. We are already negotiating to get further matching funding so we can keep doing this and keep these experts going. This network is a North American network. We are working with scientists and academia in the United States as well.
Senator Tardif: I came across a report by the International Panel of Experts on Sustainable Food Systems. In their 2016 report, they advocate for:
. . . a fundamentally different model of agriculture based on diversifying farms and farming landscapes, replacing chemical inputs, optimizing biodiversity and stimulating interactions between different species, as part of holistic strategies to build long-term fertility, healthy agro-ecosystems and secure livelihoods, i.e. 'diversified agroecological systems'.
According to them:
Data shows that these systems can compete with industrial agriculture in terms of total outputs, performing particularly strongly under environmental stress, and delivering production increases in the places where additional food is desperately needed.
Do you agree or disagree with these conclusions and why?
Mr. Whyte: First, I think it can be done. If you look at the history of soil — and that is what we do — those civilizations that did not return the nutrients to the soil moved on because they depleted the soil. Healthy soil leads to that conclusion. You need fertilizer. If you take it out of the ground, you need to put it back.
We have worked with the World Wildlife Fund and Ducks Unlimited to talk about maintaining the natural habitat and to have an ecosystem. But on arable land, we want our fertilizer to go to the product, which is proper crops. You can get your cake and eat it too. To the extreme they are talking about, I don't know about that, but I know to meet the challenge of having another green revolution and to feed more than 9 billion people, we will have to ensure that the limited land we have is not depleted. You need it to renew. That is part of the strategy.
We have seen in Africa, when we were over there, again working with the Gates Foundation, they don't use fertilizer and then all of a sudden you see a water resource depleting, or they use it improperly.
I just came back from the Sahara Desert, and it is dry out there; they try and get every bit of water. But healthy soil and plants lead to more water. Water goes hand in glove. A proper ecosystem is very important. We think we are part of that solution.
Senator Tardif: I know there is a lot of concern, and the report this year by the UN Human Rights Council was very critical about the use of pesticides.
Mr. Whyte: We are not pesticides.
Senator Tardif: I know, but that is part of the concern with using chemical inputs.
Mr. Graham: Sure. I grew up in Saskatchewan. Before I was born, the province was operating in a system where there was no fertilizer being used in the 1930s. A large part of the Dirty Thirties, the crop failures we had year after year were due to depleted soils. Farmers were growing crops and then exporting those crops and the nutrients were leaving the country and there was no replacement. There was some animal manure being used, but it wasn't enough.
That is what has happened in places like Africa, where you have year after year of growing crops without any ability to replace the nitrogen, phosphorous, potassium and sulphur that goes with the crops when they go from a farm to a city.
A system like agroecology could work if you had people living on the land with their animals and they ate what they grew, but that is a long-term recipe for poverty.
In Africa, the biggest economic opportunity is for people to grow their crops, export them to cities or other countries, and get enough money so they can buy a proper diet, send their kids to school and get proper health care. That is what we need to do.
The challenge in Africa and other areas where agriculture has not advanced is extreme, but the opportunity is huge.
Right now we are in the province of Ontario. The number one industry in the province of Ontario is agri-food, and that is as a result of fertilizer. Fifty per cent of the production in Ontario is due to fertilizer, and that is a huge part of the Ontario and Canadian economy. It is the same in Saskatchewan and Alberta, where a lot of the provincial economies are dependent on agriculture and agri-food.
Senator Tardif: Thank you for your explanations.
Senator Petitclerc: When it comes to fertilizer and the environmental footprint, what part is from the production of the fertilizer versus the use of fertilizers?
Mr. Graham: It is a mix. When we make nitrogen fertilizer — and other fertilizers, but nitrogen is very energy- intensive — it requires natural gas. That carbon footprint is part of all nitrogen fertilizer when it goes to the field.
When the farmer puts the nitrogen into the ground, there is always going to be some loss, because it's a biological system, that nitrogen can convert to N2O, nitrous oxide, and then you have a cost. It is a mix of the two.
Because our industry in Canada is highly efficient, our opportunity to reduce at the industrial level is limited. That is why we have decided to spend a significant amount of effort on helping farmers reduce the loss factor at the field level.
Senator Petitclerc: I was hoping for a number. Is it 50/50?
Mr. Graham: It would be larger at the production level than at the field level.
Senator Petitclerc: I am asking that because your website says — I don't have it, but I can find it again — that 95 per cent of the potash production is exported.
I know this is a business; I understand that. If you were to look at it strictly from an environmental perspective, why would we want to export so much that we don't need here if it has such a big environmental impact? Maybe I am not reading it well. If the footprint is big, why would we want to do that?
Mr. Graham: There are only two major areas in the world that have potash. Potash is a mineral. It is about a kilometre underground across the southern half of the province of Saskatchewan. The other major deposits are in Russia and Belarus. The world is very dependent on Canadian potash to grow crops.
If you look at the major nutrients — nitrogen, phosphate and potassium or potash — fertilizer is food for plants. Plants, like people, need a balanced diet. They need nitrogen, potash, phosphate and potassium or potash. Without the potash, over time your yields go down and you can't grow the food you need for your population.
We export to about 70 countries and their agriculture depends, to some extent, on that potash. We think it would be wrong to limit that.
Mr. Whyte: The environmental footprint for potash is not a lot. It is the manufacturing of nitrogen, and it is the chemistry. You are taking it out of the air. You are splitting things. It is not like you are emitting; that is the difference.
But I do want to talk about potash. They are so efficient and effective that if you go to the port in the Neptune Terminals, their time to put it in ships is a three-day turnaround versus other commodities that can be seven days. It is extremely environmentally sensitive. They have developed extra large types of train cars to export their commodity. Our industry worked hard before the targets.
That is another point. Sometimes you make a target and you have already exceeded that target before the target was made, but your target has changed. That is a frustrating thing. We have identified that our industry is best in class in the world, but we have to set a new target that will make it virtually impossible for us to try to meet that target.
We are hoping that is identified for our sector.
Senator Petitclerc: I wanted you to reassure me that we are not leaving a big footprint for exportation.
Mr. Whyte: No.
Senator Ogilvie: Out of curiosity, what percentage of our nitrogen fertilizer that we use in Canada is produced in Canada?
Mr. Graham: We are a net exporter of nitrogen fertilizer. In Western Canada, we are self-sufficient and we export about 40 per cent currently, mostly to the United States. We produce more than we need in Canada and we help American farmers grow their crops. We convert natural gas into a value-added product, which is a significant factor in the provinces in Western Canada. There is also a significant nitrogen plant in Ontario.
Mr. Whyte: In Manitoba.
Mr. Graham: Ontario, Manitoba, Alberta and Saskatchewan all have nitrogen fertilizer.
In Eastern Canada, because of freight and things like that, a large proportion of the nitrogen fertilizer is imported by water. That is the economics. It is easier to bring it in by water than to move it across.
For potash, we only use about 5 per cent of the production.
Senator Ogilvie: I am only interested in the nitrogen.
Mr. Graham: Fair enough.
Senator Ogilvie: You implied during your presentation, and in answers to other questions, that the nitrogen we are using today is still by fixation of nitrogen. In the processes used in Canada, is it a modification of the Haber process or is it some wonderful new miraculous process? Is it still the Haber process?
Mr. Graham: It is still the key elements of the Haber-Bosch process, which go back prior to the First World War. Both Haber and Bosch won Nobel Prizes for their science on that. That is how significant those discoveries were at the time. No one has come up with an economic alternative to Haber-Bosch.
Senator Ogilvie: The real question I have is back to the point you were making about how critical it is to understand the role, and we have heard this argument in other presentations. It is about how critical it is to understand the impact on human life of certain things we have to manufacture. Nitrogen fertilizer would have to be, from my perspective at least, considered one of the most essential commercial compounds that we produce.
Going back to the numbers that Senator Mercer indicated earlier, we get up to 9 billion people. We know that plants will just not grow in the air — at least not yet. There are a lot of microbiological processes that are being looked at, but they still haven't shown the potential to produce plants that we need on the kind of scale that is required to deliver that kind of food.
Could you say a bit more about the degree of success you are having in impacting the political world with that fact, in terms of the treatment of the industry under either carbon tax or cap and trade?
Mr. Whyte: You just flooded me with things to say.
We are working very closely with the Alberta government. The industry is working closely together to work with formulas to see how we can get an answer. We are working very closely with governments of all political stripes. Each one has its own formula and approach. We are trying to take the politics out of this and get down to the science, the targets and what is reasonable.
If you are interested, there is a great book called The Alchemy of Air, which talks about why they have this Haber- Bosch process. They did so because the science community said, "We have a crisis. We will not be able to feed our own population if we do not find a new process to develop nitrogen.'' Before that, they would mine guano in Chile and they were running out. The world was desperate. It is funny how policies change over time.
One of the balancing acts you have here is an agri-food policy on how do we position Canada in the world market; an environmental policy; and a feeding-the-world policy. How do we combine those three things? There is a balancing act that can be made. But to try to put it as one-size-fits-all and treat all industries the same, you can cause an imbalance in other areas. That is a major part of it.
We have been working closely with the Alberta, Manitoba and Ontario governments. We worked with the federal government, using the same science and research, and got the industry together.
Coming back to the international fertilizer conference, I was amazed to see how we are all rowing in the same direction because we are dealing with the United Nations and the International Joint Commission. We are using the same formula to work together to see how we can be part of the solution and not part of the problem.
Senator Ogilvie: Well, you are certainly part of the solution in feeding the world's population, so is the issue is what problem are we trying to solve here? Thank you very much.
Senator Bernard: I know time is getting on so I will be brief.
I have a question for clarification. You mentioned a few times that the potential for the future in terms of the projections around increasing crop yields lies in Africa. You mentioned Africa several times, but we know that there are 54 countries in Africa. We know that there are many pockets of poverty, and pockets where people are not in a position where they can sustain themselves through agriculture.
Can you bring some clarity to what you are referring to? Which countries are you talking about? Are you talking about the entire continent? What is happening with that?
Mr. Graham: We are working with the Canadian Co-operative Association to develop a program to work in Africa, South America and Southeast Asia to bring forward our systems for climate-smart agriculture to those regions. The countries we have identified with the most promising opportunities are Ghana, Senegal and Ethiopia in Africa, Colombia, and we are still trying to assess where we could do the most good in Southeast Asia. We are not really talking about doing business in those countries, but doing farmer extension, working through cooperatives to build better agricultural systems and make sure there is the expertise so that farmers can make the best use they can out of fertilizer.
The opportunity is certainly strong in those countries, and we worked with the federal government to try to identify where we can have the most beneficial impact. One hopes that if you can have an impact in parts of Africa or other continents that success breeds success and that those systems could move to other regions in Africa, as well.
Mr. Whyte: I would add that it's not just because the countries; it's where we have the infrastructure to do some good. The Canadian Co-operative Association have people there, and the International Plant Nutrition Institute, which is scientists who can teach people, is there. We want to practise what we preach. We don't want to just throw money there; we want to develop infrastructure. On the cooperative approach, we are hoping to reach 120,000 smallholders, primarily women.
Senator Bernard: It would be really helpful to know specifically which countries you are talking about in Africa and to have a bit more information on that. Also, what infrastructure is in place and how are you working with that? When you speak of Africa, it sends a different message.
Mr. Whyte: When I spoke of Africa, we are just talking about Fertilizer Canada here. I was at a conference with 1,300 businesses which are all throughout Africa. There is one in Madagascar and different places. Each has its own strategy. There are European fertilizer entities, the International Fertilizer Association and the Gates Foundation are putting in $300 million on soil nutrition. We are talking about a concerted effort over time. It is a broader issue than just at this table here.
Senator Bernard: That's why I was asking for more information. Greater detail would be helpful.
Mr. Graham: We have documents we can provide the committee for our solutions projects.
Senator Bernard: Could I ask one other question, Mr. Chair?
So here is my —
Mr. Whyte: We will meet with you after, too, if you want.
Senator Bernard: I come from a small, rural Black community in Nova Scotia — a segregated community — one of 52 Black communities in the province that were all settled on very rocky land. The history of farming and agriculture has really been lost, because they couldn't farm the land.
Is your organization looking at any kind of initiatives like that in this country? Could you help? Is there something in your world that would help people farm their "rocks''?
Mr. Graham: It is very difficult to farm rocks. If we could turn the Canadian Shield into productive farmland, just think of what Canada could do. So little of Canada is good, arable farmland. I came from the province of Saskatchewan and it is a province of immigration as well. The first people who arrived there tended to get the best farmland and then, in the later waves of immigration, people were into more and more marginal areas.
Nova Scotia has some of the best farmland in the country in the Annapolis Valley, but I know there are other parts that are very challenging. People have looked at crops like blueberries, cranberries and things like that which are best suited to marginal land.
We could certainly see what we could do in that area, but part of what we believe is that in the end we have to make the best use we can of the very best farmland that we have, because that's where the best production is and we're going to get the most utility.
It may be that in some areas that livestock is better than crops in terms of agriculture. We have to look at what we've been given and use it the best we can.
Mr. Whyte: I will add that we could help in this way: We have a network of scientists that look at specific plants and fertilizers. They've done their research. They are quite amazing and it's worldwide. They look at everything — not just rice, but plantains and different types of crops. There might be a specific crop there.
The Chair: Mr. Whyte, Mr. Graham, thank you very much for appearing this afternoon. Thank you for your presentations. Thank you, senators, for a great interest in the subject.
(The committee adjourned.)