Good afternoon, members of Parliament, ladies and gentlemen.
My name is Brenda Simmons, and I'm the assistant general manager at the Prince Edward Island Potato Board. Our organization represents the interests of potato farmers in our province, and we're also active in some national and international organizations that share that interest.
Our chairman, Boyd Rose, couldn't attend today, because like almost every Prince Edward Island potato farmer, he is still in the field trying to harvest his crop. At this point we have about 40% of the crop still out. We've had over 11 inches of rain in October, so we're in a serious situation. However, our directors do strongly support the questions you've identified in your letter of invitation to today's hearing.
I'll try to address several of the discussion points, and I'll start with a bit of background. Over the past 10 years we've decreased from over 500 potato farmers in Prince Edward Island to about 360 today. Our potato acreage has also declined drastically. We planted our biggest crop in 1999, at 113,000 acres of potatoes. Acreage has declined since that time, for many reasons that relate to your study of competitiveness, and in 2009 we dropped to 85,000 acres. That's a decrease of 28,000 acres, or 25%, in 10 years. We've seen about the same decrease in the percentage of farmers. It is severe and it's very real.
I will address your points on competiveness, beginning with competition levels in various agricultural sectors--retail, processing, and inputs. You know about the consolidation in retail and processing. We have basically three main retailers we sell to in the eastern part of Canada, and we deal with five processors, both large and small, for potatoes. We are fortunate that these retailers and processors seem to be viable and they pay their bills. We definitely value them as major customers of our potatoes, and we could not exist without them.
However, we do have concerns. One processor buys about half of the crop in Prince Edward Island, as they are also active in the buying and selling of fresh or table stock potatoes as well. Many P.E.I. potato farms have grown over the years, as this company has grown. It has been a valuable relationship, and it still is. However, with that level of dependence, as an industry, on one company, it's obvious that if that company experiences difficulty, our farms experience that directly and their viability is weakened.
We have situations where buyers of our potatoes are also suppliers to our farms. What I mean is that some of the buyers are also major vendors of crop inputs, fertilizer and crop protectants. It makes good business sense for a farmer to buy some of his inputs from a company that buys some, or the majority, of his potatoes. However, for that farm to be competitive, it has to buy inputs at the best possible price. We do have competition at the input supplier level, but this buying and selling back and forth can create a challenge in this regard. In some cases growers are buying higher-priced inputs as a result of this influence with their buyer, and it is not good for farm viability or competitiveness.
As you likely know, on the retail side for some chains, purchase decisions are being consolidated into a single office for most areas of the country. This year a retailer advised its potato suppliers across Canada that they will pay a certain price for potatoes. This price will be the same across the country, and it must be met regardless of the supply situation or costs in an area. If you want to sell to that retailer, you'll meet that price.
A few weeks later we heard from other potato suppliers in our province that a second major retailer was going to follow this new pricing strategy. These two companies further advised that the set price would apply to all 10-pound bags, regardless of whether they are white, red, or yellow potatoes. Normally, reds and yellows sell at a premium due to supply and production differences, but with pricing policies like this, we have difficulty achieving those required premiums.
This is a new policy. It's the first time we've had experience with it, and we'll have to see how it plays out over the marketing season. But it does give us concern at this point.
This brings us to the Competition Act. We are dealing with buyers on the retail and processing side who are national, and in some cases multinational, in scope. They have access to supply and demand information from across North America, and often globally. The producer side has not had access to the same information, and that is not a level playing field.
We know we can talk about pricing and supply within our own provincial boundaries due to the powers our organization has under the Natural Products Marketing Act, and most potato organizations across the country have similar powers within their own province. However, we understand that under the Competition Act, it is not proper for us to talk about pricing and demand with provincial potato organizations in other provinces, whether it be Ontario, Quebec, New Brunswick, or B.C. It may also be improper to talk to them about their movement and supply situation.
Our buyers have this type of information, but we don't. How can producers make informed decisions about the production and marketing of their crops without this type of information? We operate in a highly integrated North American market for potatoes, and we are also affected by the global supply situation. We need to be able to discuss this with other producer organizations and to devise a system to better track supply and demand. We've been told that fishermen have exemptions under the Competition Act. If that's correct, could a similar exemption be granted to farmers?
On the solution side, we have an organization, the United Potato Growers of Canada, that was formed in 2006 to try to bring the supply of potatoes produced in Canada more closely in line with the demand. United of Canada has provincial potato organizations as members, and together we represent over 96% of the Canadian potato acreage. We've had some success trying to build our capacity to better understand the market, but we do need help. We're modelled on our sister organization, United Potato Growers of America, which was formed the year before us to do the same thing in the U.S. I have to emphasize that we don't want to short the market or any buyer, and we don't want to see prices go to unrealistic levels. However, stable grower returns should result when producers have better information about the market and what the market requires and can produce accordingly. All segments of the industry and the economy should benefit if we can achieve this.
United of America has access to very good pricing, shipment, and supply information that is gathered and published by the USDA. We can access this data, too, in Canada, as it's published on the Internet. United of America uses this information in weekly marketing calls. Through their analysis of this data, they now know that the U.S. market can absorb approximately 1.8 million hundredweight of potatoes each week without oversupplying and causing a price drop. We have no idea what that number would be for Canada, and we're not even close to finding out. We need a system that is similar to what the USDA has. We feel very strongly that farmers will make the best possible decisions about what to produce and how to market it if they have access to accurate, timely information. We've had some success with this through United on both sides of the border, but we need more information to take us to the next level.
We know that business risk management and safety nets are not keeping farmers in business over time. Federally, we've moved away from market information in favour of other priorities, but we need to go back and build a proper, accurate, and timely system similar to what the USDA has. Some work has been done on this recently by Agriculture Canada, but it was done on a project basis by third-party suppliers. This soft money will not build and maintain the system we need. The USDA has staff and resources for their system, and we'd like to see Agriculture Canada and CFIA do the same. It isn't a project. It needs to be an ongoing line of work for our federal government. We further understand that if the government collects and publishes this type of information, it's available to all Canadians, and that is positive as well.
Another issue is market access. P.E.I. seed, table, and fresh-for-processing potatoes are exported to over 30 countries around the world each year. However, we see potential in other markets for our products, particularly the Asia Pacific region and North Africa. We're pleased to see the emphasis on negotiating more trade agreements recently, but we'd also like to see more resources for the CFIA's potato section so that they can negotiate country-specific phytosanitary potato agreements with key countries. The section is understaffed, and they seem to lack the necessary budget to get the work done. The U.S. industry gets a great deal of support from their federal government in terms of support and market access funding. This has enabled them to go after potato markets that were traditionally Canadian. We'd like to see that addressed as well.
“Buy local” initiatives are very problematic for us. The increase in these initiatives has made it more difficult for us to get shelf space, particularly in Ontario and Quebec. As a country, we should be supporting “buy Canadian”, as goods manufactured in other parts of Canada move freely and are sold in the Atlantic region. Some “buy local” initiatives, while well intended, are almost acting as trade impediments within our own country. Perhaps the Agreement on Internal Trade should look at this. We also realize that “buy local” initiatives are provincial rather than federally funded, but federal dollars are transferred to provinces, which are then able to support their farmers accordingly.
The exchange rate and transportation systems are also major issues for us. They impact all farms. We'll leave it at that for now.
As a final comment, I'd like to emphasize that we are very concerned about the decline in other types of agriculture in our province and nationally. Potatoes are grown in rotation with other crops, such as forages and cereals. With the red meat sector in crisis, our ability to produce and market the rotation crops is badly impacted.
We need a balanced agricultural economy in this country, and if we lose major sectors like hogs and beef, everything else becomes more vulnerable.
Thank you for the opportunity to address you today. I'll be happy to take questions later on.
:
Thank you, Mr. Chairman and members of the committee.
I truly appreciate the opportunity to speak to you in the hopes of helping to advance our shared goal of building and maintaining Canada's leadership position in the global agricultural marketplace.
BioEnterprise Corporation is a not-for-profit company that focuses on the commercialization of agri-technology. We are supported by 40 agricultural organizations, we have strategic partnerships with 15 groups in five provinces, and we work with the technology transfer organizations of the major agricultural universities.
At BioEnterprise, we see innovation on a daily basis. In just the past 15 months, our company has been introduced to over 300 new agri-based opportunities from across Canada, each with unique innovative products or technologies ranging in the areas of agri-health, agri-food, agri-forestry biomass, bioproducts, and clean tech. Unfortunately, the vast majority of these innovations will never make it to the marketplace. Most will languish for a period of time, then fade away because they cannot obtain the support necessary to commercialize their products.
My message to you today is that there is a new wave of agri-technology innovation occurring globally, and Canada can be part of that wave if we get our formula right. We can create new opportunities for farmers and create new high-value-added jobs. With leadership, we can create the environment in which Canada can compete on the world stage. That leadership involves developing the tools to move our innovations from the research stage through to commercialization.
This new wave of agri-technology is going to be revolutionary, just as the development of computing technology has been. That is a field with which I am very familiar. I began my career in computing technology and have founded several successful software companies, some of which are still active today. I have worked for a number of high-tech companies focusing on venture capital and investment, including Apple Computers, where I headed the Canadian arm of their venture capital group.
My experience in the computer technology revolution tells me that the same scale of revolution is happening today in agri-technology. To highlight a few examples, consider the addition of omega-3 to dairy products, which stemmed from research done at the University of Guelph.
In the automotive and aeronautics industries, agriculture-based oils are being used in bio-based composites. The dashboards of BMWs, Chryslers, and Mercedes are made partially from bioplastics containing agricultural oils. The foam in the car seats of Mustangs contains agri-products from Canada. Wine pomace, which is the part of grapes usually discarded in making wine, is now transformed by a Niagara region company into high-value food and cosmetic ingredients.
These are leading Canadian innovations. However, unfortunately, in Canada, successes like these are extremely rare because we fail to commercialize the vast majority of our innovations.
Canada spends hundreds of millions of dollars annually on agri-based research, but study after study has shown us that while Canada has been among the leaders in agricultural research and innovation, our position on the world stage continues to fall. This is partly because of our inability to commercialize new, innovative agricultural technologies.
Other countries are now focusing on commercialization. Two years ago France created a $250 million fund focused on the commercialization of new agri-based technologies. Brazil has a similar $500 million program. These are not to be confused with research programs. They are focused solely on commercialization. On the other side of the world, India and China are quickly building world positions in new, innovative agricultural and agri-food products. In the United States, Indiana, Wisconsin, Illinois, Kansas, Iowa, and Texas have each developed new funding programs focused on commercialization. Lastly there is western Europe, where they are becoming leaders in the bio-economy through funding programs and commercialization clusters.
I would like to bring your attention to a study that was completed in February 2009 for Agriculture and Agri-Food Canada. The report, which is called “The National Commercialization Assessment: Taking Commercialization National”, found a lack of support for commercialization within the agriculture and agri-food sectors. Furthermore, it linked Canada's abysmal track record in commercialization of new agriculture and agri-food products to the lack of support programs focused on commercialization of innovation.
It identified and reconfirmed the following critical issues: first, there is a lack of support within Agriculture and Agri-Food Canada for commercialization; second, there is no link between research conducted and the need to commercialize resulting innovations; third, while regional and provincial networks have been created, there is little collaboration or cooperation among them; fourth, there is no coordinated national strategy that will deliver best practices and the necessary suite of services needed within this sector; fifth, there is a lack of experienced entrepreneurs and no national mentorship or coaching programs to help them; and last, the agriculture and agri-food sectors have been almost entirely ignored by the venture capital and investment community.
This report makes a number of recommendations, but the most critical are the calls for the development of a national commercialization expansion program and for the creation of a national agri-technology commercialization funding vehicle. As an organization that eats, sleeps, and breathes innovation, BioEnterprise strongly concurs with the results and recommendations contained in this report.
I would like to elaborate on these two recommendations.
The first is for the development of a national commercialization expansion program. While there are a variety of regional and provincial service organizations across the country, they have the following problems: they operate in a regional or provincial vacuum, yet innovation and commercialization are global. Their services are incomplete, and most focus only on providing networking and introductory services. They're incapable of shepherding entrepreneurs through the commercialization process. Most organizations have no mentorship or coaching capabilities; expertise is available from coast to coast, but no organizations have the means of finding such mentors, nor do they have access to other mentorship databases that may exist. Best practices that exist in one part of the country may not be transferred to other regions. Finally, there is no formal collaboration or cooperation among these organizations.
The national commercialization expansion program would resolve all of these issues quickly and efficiently. A single entity would manage the development of a full suite of commercialization services that would be made available to entrepreneurs across Canada.
The second recommendation is for the creation of a national agri-technology commercialization funding vehicle.
By now most of us understand what is meant by the investment gap. Since 1999, the number of venture capital firms in Canada has dropped from 145 to fewer than 50. Investment incubators are gone, labour-sponsored funds are quickly disappearing, and the big Canadian banks have left the industry. The few remaining venture capital firms either have no money to invest or are focusing on later-stage investments.
Traditionally, agriculture and agri-food have never been able to attract investment capital to their sector. Today there's very little capital available for commercialization in any sector, and this is particularly problematic in agriculture and agri-food.
The creation of a national agri-technology commercialization funding vehicle has three major objectives. The first is to accelerate the commercialization and growth of agri-technology and of innovative new companies in Canada. The second is to increase receptivity in the investment community for future investments in agri-technology. The third is to attract private sector investment from both domestic and foreign sources to Canada's agri-technology sector. These objectives are of equal importance, because successful commercialization of innovation will not take place without private sector investment.
The creation of a national commercialization expansion program and a national agri-technology commercialization funding vehicle would be a catalyst to drive agri-technology commercialization and greater participation by the private sector. For governments and society, new ventures represent jobs, innovation, new products in the economy, wealth creation, a wider tax base, and a healthier sector, but the problems in management of enterprise funding, product development, and market penetration are formidable hurdles for all new ventures. Addressing these problems is vital if Canada's agricultural sector is to evolve to produce high-value innovative products. Our ability to commercialize these innovations is what will drive success for Canadian agriculture and agri-food.
In closing, Mr. Chairman, I would urge the committee to look at the recommendations of this new national commercialization report on agriculture and give them careful consideration as a model for improving competitiveness in the agriculture and agri-food sector.
Thank you for the opportunity to speak today.
:
Thank you, Mr. Chairman.
Thank you, members, for taking time to invite us over here. It has been a long journey, since late last night.
Anyway, we're here, and we're ready to talk about competition, and we're here to talk about cherries and related competition. For a bit of background, I'd like to give you a brief history of our organization.
We represent about 60% of the cherry production in British Columbia, which translates into more than 50% of Canadian cherry production. We were formed in 1998 and have experienced in our industry in the last 10 or 15 years a revival of the cherry industry, only because we've had a great partnership with Summerland's Pacific Agriculture Research Station. All the varieties that produce our top-quality cherries today, to make us competitive, were bred and developed in Summerland at the station.
We do collect a voluntary levy from our membership. We generate $30,000 to $60,000 a year in levies, which we partner up through the old MII, and hopefully soon with the DIAP program. We attract outside funding to do research projects, not necessarily to develop new varieties, but new techniques on how to handle and process our fruit and store them. We've had tremendous success with PARC. Our industry is truly a real federal-British Columbia cherry grower partnership that has produced a wildly successful story, up until recently, which is where I get to turn the page.
We have enjoyed great success. We do produce top-quality fruit, very large, firm, green-stem, flavourful cherries, which is what the markets want. We are known throughout the world as top-quality producers, again thanks to that partnership.
However, in the last few years we've seen a dramatic increase in cherry planting in eastern Europe, and particularly in the northwestern United States, which is where we really want to concentrate our comments in dealing with what we think is the unfair flooding of U.S. cherries into our Canadian markets. They're hurting us everywhere in the world. We saw cherries arrive throughout the world and, in the 2009 shipping season, on consignment from the United States, from Washington State. It's really hard to demand a top-quality price for a top-quality piece of fruit if the Americans are offering it at 50% of what we're asking, to be profitable. It's very difficult, no matter what market we're in, to face a sale at those prices.
Really and truly at the base of this thing is that we're Canadian; we represent Canadian farm families. Like most Canadian agriculture producers, we're not corporate farms. We're Canadian farm families, as I am. I'm third generation. I have the fourth generation coming up, and the fifth one was born a year and a half ago. So we're looking to keep on going in this industry.
The question is, can my family farm compete with corporate America and the methods of business they carry out? That is the crux of this discussion. Like all commodities available, cheap American cherries in the markets have had a dramatic negative effect on Canadian farmers.
I'll speak specifically to the Canadian producer trying to sell cherries to Canadians. We estimate that considerably fewer than 50% of our producers this year will show a profit; they'll be operating at a negative level this year for cherry production in our province. As an example of that, last summer in B.C. we saw Canada Safeway offering Canadian cherries. They made a big deal out of supporting Canadian farmers. They were offering retail $1.88 a pound. Doing some very quick and dirty math, that would be a loss to the producer of 5¢ a pound. It was really nice to see Canada Safeway telling us that they support Canadian food producers, but the reality is we're going broke while they're getting some advertising dollars out of it.
Why is that? It was because American cherries were available to them at severely low prices, at below our cost-of-production prices. So yes, they did buy Canadian cherries, but what's a sale without making a profit? I mean, anybody can understand that. That's only one example.
Again, before NAFTA the Canadian government made.... You know, we used to have rules and regulations that said that as long as there was Canadian stuff available, the Americans couldn't dump into our markets. It was great. We basically didn't have a guaranteed living built into that, but we certainly had market access. That was before NAFTA. Of course, that's all gone now.
We're not saying we should open up NAFTA and revisit all those old things, because we know it's probably not going to happen. Look at what happened to the cattle industry and to softwood lumber. Opening up NAFTA and these trade agreements is long, clumsy, complicated, and expensive, and we don't think it's going to happen.
What else can we do? It's really quite simple, Mr. Chairman. We think the Americans are dumping cherries here at below cost-of-production levels.
What we're saying is, why doesn't the Canadian government do its job and enforce the regulations that exist today? There are anti-dumping regulations. There are cost-to-production formulas within those regulations. We think those cost-to-production figures are woefully low. The numbers we've seen are so low that they don't even reflect the cost of production in this century. Just get out there and enforce the regulations and the laws that we already have. We think that would make it a little less easy for the Americans to dump into our markets, and that would be a good first step.
There were 8,448 tonnes of cherries sold into Ontario from the United States last year. This comes from the Northwest Cherry Growers, the marketing folks out of the Pacific Northwest. We produce less than that in Canada. According to numbers issued on August 17, Ontario produced 750,000 boxes, and they sold 850,000 boxes into Ontario. I don't want you to think that Ontario is the only bad guy. They do that all over the country. The United States, the Washington and Pacific Northwest shippers, target Canada because we're an easy mark. They can sell into Toronto and our other markets on consignment. It is against the law to do that, but it is common practice throughout the industry. They ship them over and tell the Canadian buyer to do what they can with them: “Make what you can and send us what's left over.” This is common. This is decades-old stuff. We know this because our marketers try to sell cherries into Toronto and we get an awful lot of push-back from our Canadian wholesale houses. This is against the law.
The cherry growers are asking for government action. This is not a partisan comment. This is a government committee. You're all the government to us back there in B.C., regardless of what stripe you are. We are asking why the government is letting this go on. There are people breaking the law every day. It's not going to be easy to get to the bottom of this. It's very difficult. A lot of Canadians are making a lot of money off dumped or consignment cherries out of Washington State. They're not going to cooperate with us. But it's not impossible. If I'm able to convince you to get these agencies to go out and do their work, take the taxman with you. I'd sure like to see what that looks like. Go down to the old Ontario food terminal with the taxman at your side and see how that works out. We have to do something and we have to do it sooner rather than later.
As for the Canadian market, there should be some effort made to inform Canadian consumers that buying Canadian product is an investment in their communities, their provinces, and their country. We're selling a product that's raised, produced, and processed under Canadian health and regulatory guidelines on food safety. Americans can put in whatever the heck they want. The PMRA has been woefully slow in getting us the tools to fight pests. Guess what? Our competitors have those tools. That spray residue is coming in and forcing us out of business. That's taking the Canadian way one step farther than we think we should. It's time we started playing hardball with these guys. My stories aren't made up. They're all absolutely true. This is the reality of the cherries.
One minute? Geez, I've got so much more to say.
Okay. I just want to leave by saying that you all have my brief; I hope you do.
Selling cherries at less than a profit means nothing to us as Canadian producers.
Mr. Chairman, I will just point out to you that I got 10 days' notice of this meeting. I dropped everything. I asked my board to drop everything. We prepared that brief. Do you wonder why we did that? We did it because we think you're good Canadians. We think you care about Canadian agriculture. We think you'll help us and be part of the solution, so we can preserve this Canadian farm and family way of life. That's what this deal is all about. I hope for that.
Thank you.
Time flies, eh?
:
Well, you don't have to put it on the record here.
Ms. Brenda Simmons: Can we go off the record? Because, you know—
Hon. Wayne Easter: One of the problems I guess I have relates to the second question I'm going to ask you anyway. Everybody at this committee knows that when you contract with a processor for your production, you feel somewhat obligated to that processor, because if you lose that contract you may not be producing next year. It has happened, Mr. Chair, in Prince Edward Island, producers have told me that the two major processors in P.E.I. also sell crop protectants and fertilizer. Fertilizer has been brought in from Russia by container and other countries by container much cheaper. In fact a neighbour of mine saved $60,000 on 400 acres of potatoes by bringing the fertilizer in himself.
However, the big boys, the processors, decided they weren't going to take a loss on the fertilizer they had brought in at December prices, so they very clearly told some producers, “Look, if you didn't buy your fertilizer for your grain, you'll not get a potato contract.” I know the potato board is in a difficult position to even say anything on that. Producers are fearful that if they say anything or challenge anybody, they'll lose their contract.
This is a serious issue, Mr. Chair. I see you're shaking your head and I know you understand that.
I raise that, Brenda, because what I'm saying is true, from what you've heard, correct?
:
I was saying that we will probably be producing a lengthy report on competitiveness, with many new recommendations as well, no doubt. The reason why we will have recommendations is, of course, because of the fact that these issues have not been resolved. I do understand that we cannot resolve all of this overnight, but that means that there is a great deal of work to do, both for the government and for Parliament in general, with respect to the future of agriculture.
As Mr. Lemieux just said about my comments, all of your testimony is very important. We really appreciate your travelling here to tell us about your point of view.
Ms. Simmons and Mr. Norton, you both talked about the importance of buying locally. We know that consumers want to buy locally, however we have to ensure that there are no barriers or physical impossibilities preventing this from happening. Consumers looking at products that they really want to buy want to know whether these products come from their region. However, we have realized that, at some point, the regulations issued by the government have made it impossible to ascertain whether or not these products are local.
This leads me to my question on the labelling of products in Canada. Have some of your members experienced problems since the rules changed?
We know that the previous rules were unacceptable as well, because it was the total cost of a product that determined whether or not it could be designated as a “Product of Canada” and the bar had been set very low, at 51%. This led to some anomalies, such as the case where the jar, liquid, lid and manpower were from Canada, but the pickle itself came from India and yet the product was still labeled as “Product of Canada”.
So we changed the rule, which was necessary. However, our committee examined this issue and the consensus was that we should adopt the 85% rule for Canadian products. So if sugar or certain other ingredients are added to local products, nobody will be penalized by not being allowed to put a “Product of Canada” label on the product.
As for our 98% rule, which we have in Quebec at any case, I have heard many reports about the economic problems caused: companies have to change the packaging, the labeling and consumers do not know what to think because we are not allowed to write “Product of Canada” on a product that is in fact 87% or 90% Canadian made. We never reach the 98% mark, because as soon as you add a little bit of something else, you have a problem.
I would therefore like to know whether you have experienced this type of problem in your respective sectors, and I would like to know what you think about it.
:
Thank you, Mr. Chair, and thank you to all of you for being here.
It's fascinating to see the thread tying together the story of the farms, especially the family farms, in this country, all of which do not seem to be doing well, if I can use that term.
I hear what you're saying, Ms. Simmons, when it comes to P.E.I. potatoes in Ontario.
I also know, Mr. Norton, what's happened to cherry farmers in southern Ontario, on the Niagara peninsula, where I come from. They're pulling them out there; they don't keep them. They're not even going to bother staying in the business any more. There are some very large producers who have been in the business of cherry farming for as long as I can remember, from the time I was a kid growing up in that neck of the woods. They're out of business, as well as the clingstone peach growers, who lost CanGro.
I was in a grocery store not long ago, probably a couple of weeks ago--though I don't go to it too often, but I happened to be there at that particular time--and there was a can of peaches. “Product of CanGro”, it said, the producer in St. David's that used to take those peaches. The peaches were in exactly the same container the manager had shown me as one of their pièces de resistance. “This is our new marketing tool,” he said. Yet you flip it around, and it says, “Product of China”. Every clingstone peach grower basically in the Niagara peninsula is out of business.
When you talk about the family farm and cherry producers in British Columbia, and when Ms. Simmons was talking about family farms in P.E.I. making potatoes, and we talk about buying local, the folks who I live close to, when they think of buying local, they think of buying local in season, in the sense that if tomatoes are grown in the peninsula, where they are; or fruits or vegetables are grown in the peninsula, where they are. They buy local. They're thinking basically about the market stand and that time of year. Then when they think of buying local after that fact, they're thinking about Canadian product.
In my area, at least, the folks are saying they don't want to buy P.E.I. or British Columbia produce. What they're saying is they want to buy from a local producer first, who might be up the street. In some cases, they are. It's not a very far drive in our neck of the woods, which some of you probably know.
From that perspective, why at this point, Mr. Norton, is the cherry industry in British Columbia coming to a head now? From what I've seen in the peninsula, they basically just said to heck with it. They simply pulled them out. I watched them pull out acre after acre after acre.
:
I guess, Mr. Chairman, there are probably three major reasons why. There's the economics, obviously. There's been a dramatic overplanting of cherries in the Pacific Northwest of the States and in eastern Europe. Europe has been a very lucrative market for the export part of our industry. That industry has really grown. In agriculture, when there's somebody making money, everybody else overplants it. That's a fact of life.
It was a perfect storm, because they started planting about eight to ten years ago in the Pacific Northwest, and there's been severe frost the last two winters. Basically, those trees stayed in the ground and continued to grow, and their ability to bear more fruit increased. However, they didn't bear fruit because of the winter and spring frost. So all of a sudden we had all of this extra acreage hit, with a massive crop, as opposed to crops slowly coming onto market and people getting ready for them. We saw that.
And then, of course, the high dollar has had an absolutely huge effect on us. When I started exporting cherries, all of my profit was from the 35% exchange rate I had. We broke even on the actual dollars and then my wife and I lived on the 35% premium on the exchange rate. It was wonderful to take a $50,000 cheque to the bank and come back with $70,000 or $80,000. It was just like a big party, and it definitely was. So there was that.
The other thing I think we want from the food safety and “buy local” momentum going on right now is that little bit more of a premium we think Canadians are ready to pay for Canadian-raised and produced fruit.
The combination of all of those things makes us very anxious to continue to preserve this, and in fact to expand in Canada. So those are the reasons for the timing: it's a matter of buying local, the carbon credits, and the climate change momentum. If we can sell closer to home and make money that way, we think that's the way to go from a marketing perspective.
:
Thank you for that wonderful opening. I thought I was talking too fast before, but apparently I wasn't.
Thank you for that, and Mr. Chairman, if I may, there certainly are additional things we could do. I did mention briefly that there's an opportunity for the Canadian government to do some advertising and promoting of Canadian farm products—not just cherries. I think that would be wonderful.
We also need help in developing offshore markets. There are a few opportunities left in the world: China, Japan, Brazil. We're already working with Stockwell Day. We've met with him about trying to get into China. But you know, at any opportunity, any member of government can fit Canadian food products into the beginnings of the other trade agreements that are going on—we'd certainly like you to slide cherries in there right at the top—and things like that.
Also, there's the recent movement in British Columbia toward a combined HST tax. We've been working on that forever, and we think it's a really positive thing and that the farmers are ultimately going to benefit from it.
There are also things like the environmental farm plan, under the Growing Forward framework. It's an excellent, excellent entry level program into food safety and environmental stewardship programs, which give us an opportunity to tell our Canadian consumers that we're growing with a conscience and we're aware of the impacts on the environment.
I guess that's it. Thank you very much for that, sir.
:
Okay. Thank you, Mr. Chair.
In answer to one of Mr. Richards' questions, I think one of the solutions to the family farm crisis right now, in large part, is found in the rather compelling argument made by Mr. Smardon in his presentation. I was very impressed with it.
Mr. Smardon, on that point, I have for some time been talking about turning all this wonderful research that's out there into jobs. In fact, farmers will not only feed cities, but they'll feed industry in the future if we can get our heads around this concept.
I've witnessed the production of dashboards from plastics, and in fact they make seats, I think you said, out of soybeans.
I'm going to get right to the three questions I have of you.
First, you mentioned the national commercialization assessment that was completed for Agriculture and Agri-Food Canada. What is the status of that report? Has it been received by Agriculture and Agri-Food Canada, and has there been any action or have there been any recommendations from that?
Secondly, can you expand a bit more on the point you made about the industry being ignored by venture capital and investment? Are there concerns beyond those relating to funding, and has that been particularly problematic in the agriculture and agri-food industry?
You mentioned two solutions. One that you raised is funding, but the second one, the one I want you to speak about, is this commercialization expansion program. Are there other examples that you can give us, and what exactly do you have in mind with that?
:
Mr. Chairman, I'd like to thank the member for his questions.
The national report was delivered to Agriculture Canada back in late January or early February of 2009. I'm not aware of the direct impact on policies of that report; I wouldn't be aware of it anyway. I hope it's being utilized in producing new programs and so on, but I don't know for sure. They've had it in their hands for nine months.
With respect to the problematic lack of venture capital, perception is almost everything in our world. One of the issues we have among the investment community is that, first of all, they don't understand agriculture or agri-food, so it's an education issue. The second issue, with all due respect to the farmers and producers, is that a negative aspect comes out when farmers and producers are driving their vehicles around Queen's Park. The investors pick up the Globe and Mail and see that picture on the front page and wonder why they would invest in a money-losing industry. Again, they don't understand the dynamics of the industry and where the opportunities are, but that's the perception they have. We've struggled to change that perception. The third aspect is that investors invest in what they know. If you have major money in the oil patch and you've made a lot of money, you're going to reinvest in the oil patch. In the case of the high-tech or medical community, where we have seen a boom take place, we now have plenty of entrepreneurs who became investors and are now investing back into those communities. We don't have that list of successful entrepreneurs in the agricultural industry in Canada. We have to build that and attract other investors into the industry. That's what I mean when I say it's problematic.
The third point you asked about was the commercialization expansion program.
We have a variety of organizations from coast to coast that dabble in certain aspects of commercialization, and the report lists them all. Some of them, for example, will put on breakfasts and invite entrepreneurs in. They'll try to introduce entrepreneurs to other entrepreneurs in the hope that the introductions will result in some form of commercialization. It's a very hands-off approach, and 90% of the time it doesn't result in very much.
In a couple of models--and you'll see this in Israel, France, and parts of Australia--the entrepreneur needs to be shepherded from the very beginning all the way through until his product is in the marketplace, because he may have regulatory, marketing and distribution, licensing, or legal issues to deal with, and very few entrepreneurs know it all. They need this help.
Setting up a standard, a suite of commercialization services across the country, will allow somebody who is located in Truro, Nova Scotia, or Laval, Quebec, to get the same service that you would expect in downtown Vancouver, Calgary, Saskatoon, or Toronto. That is not the case today. Today you have expertise in certain areas, but no expertise and no service in other areas. That's detrimental, because a lot of the research and commercialization that need to be done are in the non-urban areas.
We like “buy Canadian”; that works for us. As somebody said before, we have 140,000 people and 85,000 acres of potatoes. We can't eat them all, so we need markets out of our province.
We've really found, to be quite honest, that when we meet with our friends in Quebec, they've done a tremendous job in dealing with their retailers and having their support in selling Quebec potatoes. Our market share in Quebec has really dropped drastically, and they've done a very good job on quality and everything else.
When we go to Ontario, too, we're running into “Foodland Ontario”, for example. I don't pretend to be an expert on “Foodland Ontario”, but we're being told they don't want to list us in the stores because of promotions in certain periods of “Foodland Ontario”. So we're bumping into that, and it's really affecting our ability to get in the market earlier. We used to be in Toronto, definitely by late September and so on. Now we're not there until some time in November, and it's getting moved back all the time.
As I say, we like “buy Canadian”. We do buy products from the rest of Canada for other needs in agriculture and in manufactured goods--cars, all that type of stuff; we simply find that it's a bit of a trade impediment for us with a lot of retailers.
:
Isabelle was explaining that the amount that's in there, which I thought was very excessive for travelling to the videoconference, was the amount that it would have probably cost to bring her to Ottawa. Of course, it won't be that much, but the budget is made out, and if it comes in lower, all the better.
Is everybody clear on that?
(Motion agreed to)
The Chair: The motion is carried unanimously.
We'll move to our steering committee report. Before we open up discussion on it, I will point out that we've tentatively set aside, as discussed at that steering committee, to deal with the competitiveness report starting on November 19. There's one day put aside there. From discussions I've had here with Frédéric, I think it's going to be a fairly lengthy report. We may get it done in one day, but that does not always happen. It would be very important to follow up on.... I see members smiling.
I would suggest, and I consulted here with Isabelle, that if we leave the 24th open right now, if we finish on the 19th we could bring in government officials. We've had some correspondence from the Canadian Meat Council, the cattlemen, the Canadian Federation of Agriculture, and I believe a group from Quebec as well, that would like us to bring in government officials on the SRMs, which would be the second meeting. If you could keep that in mind when we're discussing the report, it would be nice to have this report wound up, sent to the House, and then move onto something else.
What I see is that we seem to be trying to do a bunch of things at one time. Sometimes it's hard to do them all right. I would prefer, if you agree with me, that we wind this thing up and get it out. Basically, that would mean the 24th at the latest, if not earlier, that the report would be available to be presented in the House.
I'll leave it at that.
André.
As a committee, we've done excellent work on competition. It covers a wide breadth. We've had a lot of different witnesses and I think we have some good recommendations to make.
There are two things we have to decide. First, where do we start winding it up? Are GMOs in the report, or is that something different? Second, I want to make sure we put aside enough time to do a good job on this report. In general, I find this committee works well together, but we don't leave enough time for committee business. It's always crammed in there and we're always running out of time.
With respect to this report, we're talking about a year's worth of testimony. We started this quite some time ago, which is good. However, we should make sure that we take sufficient time to review the report—not just the words and commas, but the content and recommendations. Farmers, groups, and associations are going to be looking at this report, and they'll want to know that we heard them, understood them, and made valid recommendations.
I'm of the opinion that we need two meetings. And if we feel we need more, then maybe we should have a third meeting. This is a big report, a year's worth of investment on behalf of this committee and all of its members.
I think we should schedule this for release before Christmas. We've devoted a lot of time to this study, we're going to do a report, and we should get it done before Christmas.
:
There seemed to be some resistance to change--just as long as we have some flexibility.
I don't know the length of it, but from all discussions it's fairly lengthy and it'll be a fairly comprehensive report. If there seems to be a big concern that the chair needs to be here, that's fine, as long as we have some flexibility at the end.
So we have November 19, the 24th, and then on November 26 it would seem we have another, similar discussion that we'll follow up on after November 17 on the program review.
And should there be something, Mr. Chair, in terms of finishing the conclusions, or I don't know what--all I'm asking is that there be flexibility on this thing. I think you talked about having ministry people come in, and they're fairly flexible in terms of being able to move ahead and work on it on November 26, just to get it done.
I'm hoping it doesn't. The food safety one, a pretty comprehensive report, went really well, except for the end. But in saying that, that's okay, we went through it well. I'm hoping this will too. It's just that if the concern is that the chair be here, as Mr. Eyking has said, that's fair--as long as we can have some flexibility around November 26, just in case. So I'm hoping this might be an option.