AGRI Committee Meeting

STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, May 10, 2001

• 0910

[English]

The Acting Chair (Mr. Bob Speller (Haldimand—Norfolk—Brant, Lib.)): Colleagues, perhaps we could begin.

We're continuing our look at the plans and priorities of the department. We have from the department Mr. Corey, Ms. Vinet, Mr. Dorrell, and Mr. Wettlaufer. Welcome.

Do you want to begin, Mr. Corey?

[Translation]

Mr. Mark Corey (Assistant Deputy Minister, Market and Industry Services Branch, Department of Agriculture and Agri-Food): Good morning, ladies and gentlemen. I am very pleased to be here today to speak about the plans and priorities of our Department for next year.

My name is Mark Corey and I am Assistant Deputy Minister, Market and Industry Services Branch. I am with Mr. Gordon Dorrell, Acting Assistant Deputy Minister, Research Branch.

[English]

We have Bob Wettlaufer, director general of the Prairie Farm Rehabilitation Administration. We're also joined by Suzanne Vinet, director general of the international trade policy directorate and also Canada's chief agricultural negotiator at the World Trade Organization.

We'll be providing a 15-minute overview of the department's principal efforts related to international trade, specifically market development and developing secure markets; second will be research and innovation in agricultural products; and finally the services provided by the Prairie Farm Rehabilitation Administration. Following the presentation I understand we'll have a good discussion and questions and answers with you.

Let's start on the international side with our slides.

Agriculture in Canada is an international winner. Last year we exported $23 billion in agricultural products and imported $17 billion, for a trade surplus of $6 billion. That's a lot.

In 1995 our total agricultural exports consisted of 60% commodities and 40% value-added—that is, further processed products. Industry, led by the Canadian Agri-Food Marketing Council, CAMC, developed a goal to reverse those figures by 2005—in other words, to move to more value-added exports. Today we're about 52% value-added. So we've gone from 40% to 52% value-added and climbing towards that goal of 60%.

CAMC also set a target of 4% of world trade in agricultural products, which would be about $40 billion per year, and we're slowly getting there year by year.

So what do we do to help industry keep those figures climbing and reach those international trade goals? Well, one of the things we do to support industry is market development. Let me give you an example of the kind of support we provide.

The agrifood trade program this year will match, dollar for dollar, about $12 million in proposed export expansion programs with industry associations. This program is extremely popular, and now we work with 30 industry associations. Many, like Canada Pork International, have been extremely successful in finding new export markets for Canadian pork producers. Others, like the Food Processors of Canada, have worked with their members to make Canada a leader in the export of frozen french fries.

We also spent $2.5 million for related industry projects and another $2.9 million to support the Canadian International Grains Institute and the International Grains Council as part of this effort.

We have a number of other ways we support market development—for example, through the agrifood trade service that we host. This service provides market information on opportunities abroad and supports industry participation in international trade shows and missions abroad.

Finally, we work closely with the Department of Foreign Affairs and International Trade, which provides industry support at our posts abroad. We have a network of 20 agricultural trade specialists abroad who work exclusively on agriculture promotion, and a much larger number of commerce officers who support agriculture on a part-time basis. So this is a global network that we have supporting agriculture.

[Translation]

Market development is based on previsibility and the development of market access. Markets are another of our priorities.

Canada is a middle power whose economic growth is highly dependent on exports. For a long time, our strategy has been to work with foreign governments to set up a system of international trade that would be based on common rules.

[English]

Further progress toward liberalization will come through the World Trade Organization talks on agriculture that are now ongoing. We've finished the first year and we put forward our ideas on market access, domestic support, and export competition. During the upcoming year all countries will be further elaborating on these ideas and we will be looking to the ministerial meeting in Doha this fall to see if a broader set of negotiations is on the horizon.

• 0915

More immediately, outside of these rules, we will be looking to develop better market access and reduce tariffs on a regional basis through the FTAA; on a bilateral basis through negotiations with the Central American countries of El Salvador, Guatemala, Honduras, and Nicaragua; and through further WTO accessions, for example, with China.

As tariff barriers come down, though, we have to be vigilant that they're not simply replaced by new technical barriers to trade. Many of the major impediments to trade may increasingly become sanitary and phytosanitary and standards-related measures. As a result, we will continue to focus our work with groups like Codex Alimentarius and policy-setting organizations to make sure that technical issues do not become unjustifiable barriers to trade.

The agriculture and agrifood industry works and competes in a global environment. Our agriculture industries are in fact global players, and they need information, support, and services to do well and to better manage their risks and operations. So this is the last thing I'm going to touch on.

We continue to provide information and advice. And agriculture, like many other sectors of the economy, is increasingly moving onto the Internet. The demand for information from some of our industry service databases increased dramatically last year, on average up 124%, with the horticulture sector being the biggest, increasing from 400,000 to over a million hits a year, up 166%. So farmers and agricultural producers are online. It's important to have this information online, because from the statistics we've got now, an estimated 45% to 50% of farmers are now hooked up to the Internet.

Outside of the Internet, we still provide personal service and information by phone, by mail, and in person, either through the national capital region offices or our regional offices and establishments across Canada.

I'll now ask Dr. Dorrell to talk a bit about some of the support we provide in innovation in science.

Dr. Gordon Dorrell (Acting Assistant Deputy Minister, Research Branch, Department of Agriculture and Agri-Food): Thank you, Mark.

Mr. Chairman, I'd like to build on Mark's comments and spend a few minutes speaking about science activities in the department.

Let me start by saying we conduct research along the full value chain of the agriculture sector. This means that we're involved in soil and water quality; sustainable crop and animal productions systems; the development of superior varieties, ranging from raspberries to wheat; the development of new ways to protect crops from insects, weeds, diseases, so that the value of the crop can be maintained; adding value to crops and animals by keeping the products safe and wholesome by extracting unique components and by developing new uses for traditional crops.

We do this by developing a productive relationship with other public science agencies. Our 19 major centres across Canada work in close cooperation with the public sector, sector partners at universities, provinces, federal laboratories, and in international organizations. Today science is moving so quickly that few organizations can succeed by working on their own.

Agriculture and Agri-Food Canada also works with the private sector. We try to cooperate with those companies and organizations that can make the most significant contribution to Canada. This permits us to combine our discoveries with private technology and the associated market intelligence and move new technology more rapidly to Canadians.

Our matching investment initiative has generated some $150 million of private investment since the beginning of the program some six years ago. The MII program has enhanced public and private cooperation. It's strengthened the development and commercialization of government technology and ensured a more timely transfer of this technology to the users.

Permit me to offer a few examples. A new insect bio-control agent was discovered and produced commercially that controls the spotted spider mite, which is the major pest of greenhouse production in Canada. A new method was developed to extend the shelf life of broccoli by some eight weeks, a major advance for a company in Quebec. A new extra-strong gluten durum wheat was developed recently that permitted Canada to regain its dominance in the premium durum market.

A large portion of what we do in Agriculture Canada is for public good. Examples would be the discovery and the incorporation of genes for resistance to rust in wheat to reduce production risks and costs for producers. As an aside, we have estimated that a major rust epidemic on the prairies would cost Canada about the same as the total budget for the research branch in a year.

• 0920

Timely forecasts for insects and disease outbreaks, such as grasshoppers and late blight, and the identification of new insect pests, such as the cabbage pod weevil, which those of you from western Canada will know is now threatening the canola crop...

More and more, Agriculture Canada is focusing on the interaction of agriculture, the environment, and the consumer. The department has considerable research under way to mitigate the impact of intensive livestock and crop production systems on the quality of air, water, and soil; to work on quantifying carbon sequestration in the soil as it relates to greenhouse gas; and to reduce the buildup of bacteria in meat and vegetables.

You heard the minister speak of the importance of the life science economy to the future of agriculture in Canada. Agriculture and Agri-Food Canada is expanding its research into neutraceuticals such as the anthocyanins in blueberries, which appear to reduce risks from cancer and cardiovascular diseases; functional foods such as beta gluten, which reduces blood cholesterol; and bioproducts such as an array of biofuels, fibres, specialty chemicals, and degradable packaging.

These are just a few of the research activities under way in Agriculture and Agri-Food Canada.

At this time I'd like to introduce my colleague, Bob Wettlaufer, the acting director general of PFRA.

Mr. Bob Wettlaufer (Acting Director General, Prairie Farm Rehabilitation Administration, Department of Agriculture and Agri-Food): Thank you, Gordon.

Mr. Corey has talked about trade and Dr. Dorrell has talked about research and science, and I'll speak for a few moments about innovation. I would like to deal with innovation in the context of a healthy and competitive industry that is built on a solid environmental foundation.

Innovation is the key to our continued competitiveness in all parts of the agriculture and agrifood sector, and it is accomplished by the many thousands of Canadian producers and processors who own and operate farms and agrifood businesses. Agriculture and Agri-Food Canada emphasizes access to knowledge as a tool for supporting innovation and growth. We do this through our research activities, which create knowledge, through the development and interpretation of that information, and the transfer of that information to those Canadians who make everyday decisions with it.

Our need to develop, manage, interpret, and disseminate information on land and water capability to support innovation and growth was mentioned by Mr. Vanclief when he spoke to you last week. He noted that every farm should have an environmental farm plan within five years. The Speech from the Throne commits investments in advanced information systems to enable better land use and to protect surface and groundwater supplies from the impact of industrial and agricultural operations.

This recognizes that the management of Canada's landscape has a direct influence not only on the agricultural sector, but on the health and safety of Canadians. Agricultural land use affects the water that is drunk by over 90% of Canadians. The need for excellent information to make the best decisions in agriculture has never been more acute. The combination of surface water information, groundwater information, geological information, soil type information, as well as the physical infrastructure and locational infrastructure, all put together with the innovative tools that are available now, can lead to land use decision-making at all levels, including at the farm level, to improve our land use.

Our vision is a service with data that is current, accurate, and at an appropriate scale; expertise to analyse and interpret this information and maintain the databases; applications and technology transfer that meet the needs of users and decision-makers; and infrastructure that includes hardware and software and the telecommunications necessary for Internet delivery of the information.

With this capacity, we believe we will be able to encourage responsible land management for a safe and healthy environment. We will be able to increase public confidence that land management decisions are based on the best available information, and we will be able to have meaningful farm plans.

The key to our success will be working together with other federal departments, with provinces, with municipal governments, and with the thousands of Canadians who own and manage the land resources. This is just one example of an innovative approach to good stewardship that will enhance the quality of life for all Canadians.

• 0925

Thank you.

The Chair (Mr. Charles Hubbard (Miramichi, Lib.)): Thank you for your presentation, and my apologies for being late. I was tied up in another event this morning along with some other members.

Howard, would you like to start?

Mr. Howard Hilstrom (Selkirk—Interlake, CA): Sure, I have a few questions, I guess.

I was a little bit late, too, and I just got off the phone with the councillor for the R.M. of St. Laurent, where my ranch happens to be located. The Shoal lakes area... and you won't know the lakes I'm talking about, but the flooding over the roads, including the major Highway 6, is ongoing right now.

The councillors were out last night until 1 o'clock in the morning over this issue. I have alfalfa land going underwater right now. Part of the problem in regard to this environmental issue is who's making the decisions, and who's got the sway as to... Ducks Unlimited, for instance—they're like beavers; they want everything covered with water. The farmers and ranchers want water control that has the capacity in this case to drain these lakes—not dry, but to keep them within a reasonable level.

An issue with water in Manitoba—and this is across the prairies—is that the Department of Fisheries and Oceans' director in Winnipeg won't attend watershed meetings with the municipalities. They've sent out a minor, lower-level bureaucrat to go out, but the municipalities are having a hard time working with DFO right now in order to get permits to approve these drainage projects. Is PFRA in on this water business? Do you work with DFO and the municipalities in that?

Mr. Bob Wettlaufer: We work with DFO and municipalities, but the responsibility for drainage and drainage licensing lies with the provincial governments. I certainly understand the problems that farmers have wanting to drain land to improve it and to be able to get on land earlier, the problems with spring flooding, and the wrestling match that goes on with the provincial departments of the environment in order to attempt to get licences to do that.

As you know, we've had some particularly difficult circumstances in east central Saskatchewan as well. But PFRA generally does not get involved in drainage; that's a provincial responsibility.

Mr. Howard Hilstrom: Okay, but I guess maybe it's more of a federal government issue because right now municipalities have been waiting for months and months and months for permits that are being held up by DFO. You can't answer for them. I'll be taking that up further—

Mr. Bob Wettlaufer: Not for DFO, thank you.

Mr. Howard Hilstrom: No, I know. The thing is, we have a whole bunch of departments all having an impact on us and our farms and ranches, and it's really hard to figure out just which one to deal with. One says, well, I can't say or make a decision until these other ones make a decision.

It's the same thing with these environmental plans for these farms and ranches. You believe that there's one plan, that there's one set of criteria that'll apply right across the country to everything that's classed as a farm? Is that a fair assessment? Is that what Mr. Vanclief wanted us to have, a one-size-fits-all environmental plan for agriculture?

Mr. Bob Wettlaufer: No, I don't believe that's the situation. I don't think one set of standards or one plan will fit everybody.

I think the concept is to have the best possible information available that farmers can base their decisions on. That would depend on the local situation, and any plan would have to take into account all those local situations. But the idea is to provide the best possible information for decision-makers.

Mr. Howard Hilstrom: I have one other thing. You mentioned neutraceuticals, but I'll leave that. I heard a little thing here that they have blueberry beer advertised now over in Japan selling like crazy, I guess. I'll be interested to see about that.

Right now we have a private member's bill in the House here in regard to mandatory labelling of biotech food products and that. The allegation being made by that particular member and other members from various parties, I suppose, is that biotech is killing our ability to export foodstuffs.

• 0930

Is your department... do you agree with that concept, or is the biotech industry going to massively increase our exports over time? How much resistance in your marketing do you find from other countries, or are they saying, as long as you regard it as safe and our scientists agree it is safe, then we'll import it? Can you discuss that a little bit?

Mr. Mark Corey: Yes. I think maybe I would talk to two different things on that. You did mention labelling, and then also you did mention the genetically modified strains of, for example, some of the grains and oilseeds and things like that, that are coming forward now.

I guess in terms of the overall situation, I would reflect pretty much what the minister said last Tuesday, when he did appear before the committee. He was saying that science has advanced over the past 100 years, and it's brought tremendous benefits to agriculture, and science will continue to advance. He also said that we have to use the best science we have available today to ensure that... that we can use the science so that it's as safe as possible, and he did underline that there's no such thing as zero risk. We have to limit the risks as much as possible.

That said, again, we've been working with various parts of the industry to use different types of science. The policy of the Government of Canada is in fact to have a science-based approach to these things. Again, I think we're very close to the United States in our approach to these things.

Mr. Howard Hilstrom: The comment on the resistance or non-resistance from our customers—that's what I'm asking about, too.

Mr. Mark Corey: The biggest resistance right now tends to be in the European Union. Again, we have had a number of issues with them, a number of which we've actually won at the WTO with them. So we have a different approach. We have very much a science-based approach to these things.

On the question of labelling, again we do actually have a policy on labelling right now. If there are any health effects on people, such as allergies and things like that, Health Canada requires that to be labelled. So that in fact is the policy of the Government of Canada right now.

I know the minister as well did talk about this a couple of times, but health and safety concerns must be labelled right now. There's also, as the minister mentioned, an industry-led initiative under the Canadian General Standards Board, which is developing these further standards. It's a voluntary labelling approach. It parallels the approach going on in the United States right now. So that's the approach we have taken to labelling of foods that are developed using biotechnology.

Mr. Howard Hilstrom: Am I getting close to my end time?

The Chair: You have a little bit left.

Mr. Howard Hilstrom: A little bit left? Okay.

The agriculture department now, the cattle industry, the Canadian Cattlemen's Association—they're all advocating that money for agriculture should be going into developing markets. How much money from the federal government is at the current time going into the promotion and, I guess, the marketing offshore for beef?

Mr. Mark Corey: I'm going to see if one of our officials actually has the number for beef.

Mr. Howard Hilstrom: I think they were looking for about $20 million there to have the government... I think the government did put that in, or no?

Mr. Mark Corey: We have a program called the agrifood trade program. I think we mentioned that on one of the slides. I understand it's about $1.4 million.

This is Gilles Lavoie. He's director general for the agriculture industry services directorate.

Gilles, did you want to add something?

Mr. Gilles Lavoie (Director General, Operations, Agriculture Industry Services Directorate, Department of Agriculture and Agri-Food): Mr. Chairman, it's $1.4 million that we contribute to the Canada Beef Export Federation for their export activities abroad, outside of the U.S. This is, of course, in addition to the service that is being provided by our specialists abroad.

Mr. Corey mentioned the 20 agrifood specialists we have in various posts, plus the 60 or more employees of DFAIT that do serve the industry in general.

Mr. Howard Hilstrom: My last question is, on all this research and development, is the Government of Canada, the people of Canada—whether you're partnering or not partnering with somebody, a company—ending up owing any patent rights on any of these... from neutraceuticals to grains and all that?

Dr. Gordon Dorrell: That usually depends on the type of partnership. In general terms, when we enter into an agreement with a company or an organization the crown owns the patent, and the commercial partner gets the first right to exploit that technology. For that right, they pay the crown negotiated royalties. We have an arrangement that those royalties come back into the department and are reinvested in research.

• 0935

If a company comes to us with some very critical technology, they may wind up owning the resulting material, but as a consequence they pay a higher royalty. So I would say that probably over 80% of the technology we develop in partnership is owned by the crown.

The Chair: Time is up. Thank you.

Marcel.

[Translation]

Mr. Marcel Gagnon (Champlain, BQ): Thank you, Mr. Chairman.

In the presentation, we have seen that the increase of our market in relation to the added value of our exports has made a spectacular jump since 1995, from 40 per cent to 52 per cent, and that we hope to move to 60 per cent by 2005. Of course, that is very interesting because, when we increase our exports, we create jobs here in Canada.

However, this also means a spectacular increase of our production, particularly of hogs and beef, considering the present situation in Europe. This creates an opportunity for us.

I am however concerned about the environmental problems created by our increase in production, problems that are more and more visible. They increase at the same rate as our production. Are you not afraid that the present increase of our production is too fast considering the state of research on protecting the environment?

[English]

Dr. Gordon Dorrell: I'll start, and perhaps Bob can expand on it a bit.

I think you're right in the sense that the larger-scale production of hogs and beef and whatnot has expanded dramatically in the last three or four years. The other thing is that the interface between agriculture and the urban dweller has increased. There are more people living in the urban fringes that come close to agriculture. So any potential problems are magnified.

Before I came over this morning, I looked to see what studies were going on related to this. I was surprised and pleased to see how much work we were doing on cryptosporidium, the problem they're having in the water in Prince Albert—sorry, North Battleford.

Mr. Rick Borotsik (Brandon—Souris, PC): Don't confuse municipalities and cities here—there's a lot of trouble there.

Voices: Oh, oh!

Dr. Gordon Dorrell: There is a considerable amount of work trying to figure out the impact of feedlots on the groundwater supply. We're finding so far that the impact isn't as big as we might have expected. As you know, there's a tremendous amount of work going on in Quebec in respect of managing hog manure. That work is extended across the country.

So our work on the environment has increased significantly because of this. We hope we'll be able to pass on new codes of practices to the provinces to develop.

Mr. Bob Wettlaufer: If I could just add a little bit, I think both producers and municipalities in particular are being pushed very hard to make decisions. In the case of producers and large feedlot operators, they will adopt best management practices and meet whatever environmental requirements are necessary. Often they just say “Tell us what they are and we'll meet them”. They have the capacity to meet them, but they need to know what they are. They need to know what the rules of the game are.

Similarly, rural municipalities, which are often responsible for zoning and deciding where some of these intensive livestock operations should go, often are not making decisions on the best available data. I think that is a very important role that needs to be filled. If we can put together the best available information on the basic resources, then rural municipalities can make decisions on siting that can do the least environmental damage. Both producers and regulators are being pushed very hard as this industry grows.

• 0940

[Translation]

Mr. Marcel Gagnon: I agree with you about making good decisions for siting our production units but, since I have been a producer, I know that one of the things that is often missing is the time to carry out all the required research. We do not have the time and the equipment required for research.

Is there at the present time in your Department enough research being carried out as to the disposition of animal manure? What is the state of research on composting and on processing animal manure, in order to use it rather than destroying it?

[English]

Dr. Gordon Dorrell: I'd start by saying that the problem is not unique to Canada, so one of the first things we do is try to find out what other people have done. Let me give you an example in the area of odour. You require a tremendous amount of instrumentation to measure these various subtle odours that some people can detect and others can't. The first thing we did was to go to Holland to see what they've done, and they've done a tremendous amount. So we bring you that back and start from that point.

The science of composting hasn't changed dramatically in the last few years, but what we are finding is that what you do in composting affects greenhouse gases. You can do it in one way and get CO₂ production. You can do it in another and get methane production. So in addition to solving the problem of disposing of manure, we have to balance that against the production of greenhouse gases. More and more commercial companies are looking at ways of digesting this.

As you know, for example, the Chinese for years have produced methane from manures. We haven't done that because of our climate and for other reasons, but I'm surprised at the amount of commercial interest there is in improved composting and use of the compost.

[Translation]

Mr. Marcel Gagnon: What is the situation relating to GMOs? Is it true that, two years from now, for example, some genetically modified wheat could appear on the market?

I have another question. More and more, consumers want to know what products they are buying and if they have been genetically modified. There does not seem to be any agreement as to this type of labelling. Do you think that there is any chance we will one day have this type of information?

I would also like to know what percentage of our consumer products contain GMOs? Those are my three questions.

Mr. Mark Corey: The first thing I can tell you is that the same question was asked to our minister last Thursday. The answer was that we are now working with genetically modified wheat and that we have been doing so for at least two years. This means that it is not yet approved. There is a regulatory process that we have to go through to get it approved and it has not yet been done.

[English]

As to the percentage of foods now containing GMO, I can't say. We're not really sure.

On the other question, about the future of labelling for GMOs, again, we would come back to the fact that we do have the Canadian General Standards Board representative working right now. We have funded that for the last couple of years. We've been working with them. To underline it again, if there are health, safety, or allergy concerns, those are required. There's mandatory labelling for anything that's a health concern. The issue they're dealing with is going further. If we are to talk about any component part that is genetically modified, what is the best way to label that? As our minister said a number of times, it should be in a way that's meaningful, enforceable, and makes sense. That's really what we're working towards through this Canadian General Standards Board process.

• 0945

The Chair: Thank you, Mr. Corey.

Murray.

Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.): The one plate you have here that shows website usage I find very interesting. From 1999 to the year 2000, horticulture hits on those websites increased by 166%, poultry hits increased by 160%, and red meat hits increased by 105%. That's really substantial.

I'm curious to know whether you have an idea who is looking at these websites and what they are looking for.

Mr. Mark Corey: That's actually a very good question. One of the difficulties we have with the Internet is that it's anonymous. When you have hits coming in sometimes it's very difficult to tell where they're coming from. From interaction with our staff... it tends to be producers. It tends to be people who are looking particularly for market information, for government contact information, for where they can get information on regulations. It's a whole variety. It's a lot of different kinds of information.

As we said, the statistics are actually quite high now. We are saying that between 45% and 50% of farmers are estimated right now to be on-line and on the Internet. This is one of the great levellers in terms of advantage. It's not as much of a real advantage to be living next to Agriculture and Agri-Food Canada because it's convenient, and you can go over and talk to people and get information. People on farms in fairly remote areas of Canada have the same kind of easy access now to statistics and information, and it's a huge advantage for people in rural Canada. It's one of the reasons we spent so much time developing these websites, making sure that the information is up to date and correct.

The other part about the information technologies is that they really force you to concentrate on the currency of information because people point out to you very quickly when things are out of date.

Again, our guess is that it's probably largely producers looking for information who are now on the Internet, as most Canadians are moving that way.

We're always very careful to also qualify it by saying we're not just an Internet-based department. There are still a lot of people who are not on the Internet. We still have telephones, we have regional offices, we have institutions across the country, and we provide that same kind of personal service that we always have. This is just a way that actually allows us to provide more information in a very direct way to people.

Mr. Murray Calder: Every year I host a round table at the OAC in Guelph. For two years a question has been posed to my panel and it deals with GMO and non-GMO. The issue that we're concerned about is cross-pollination. Unfortunately, we have to learn how to control the wee little bees that are taking pollen from one crop to the other. We have one crop that is not GMO and another that is, so you basically end up with a cross-pollinated crop that's not supposed to be GMO but in fact is.

One question was the issue of buffer zones between those crops. The labelling aspect of it would go into Marcel's question a little bit. If we do get into this issue of mandatory labelling, do we have standards in place that would cover that issue?

Dr. Gordon Dorrell: This is a real problem and it varies with crops, as you know. A crop like wheat is a self-pollinator and the pollen doesn't go very far. Corn goes a little bit further. Canola is very promiscuous; it blows all over the place.

It does pose a problem, especially for those people who are in the organic business. Work is being done to establish what a reasonable buffer is, because as you say, bees fly a fair distance, especially downwind. The isolation distances that perhaps were in vogue twenty or thirty years ago to keep crops separate from a physical point of view—just a colour or something like that—is totally different from a situation where you're looking at small changes in genetic make-up that people can now detect.

• 0950

Mr. Murray Calder: If we ever get into the issue of labelling, whether it's voluntary or mandatory, whether the product is GMO or non-GMO, how accurate is in fact that labelling if we have this problem of controlling something as simple as a honey bee?

Dr. Gordon Dorrell: I won't speak to the labelling issue, but I'll speak to the detection.

There's a tremendous amount of debate around the world about what level would be declared “free of”. Some countries have suggested that 5% would be considered free of, others have said zero. With our capacity to detect DNA now, we'll be able to detect in a short time at a very low level, so zero would be impossible.

And then there's the question of whether, as you process something, 1% is meaningful. It's a very small amount. That is one area I'm concerned about. As we move to very specialty crops with unique characteristics, we're going to have to factor in isolation. I think that isolation will probably mean that some of these specialty modified crops will be grown in areas of Canada where the normal crop is not grown at all.

Mr. Murray Calder: I really wonder sometimes, because we're still... and I don't think it gets out enough that any one of these GMO products would have to have gone through the test as to whether or not there's an allergen or where there's a toxin. In essence, by the science itself, the GMO is safe because it went through that. And we've turned down lots. Would you agree with that?

Dr. Gordon Dorrell: Yes.

Mr. Murray Calder: Thanks, Mr. Chairman.

The Chair: Dick Proctor.

Mr. Dick Proctor (Palliser, NDP): Charles, apparently my colleague from the Conservative Party has some time constraints, and since he's always accusing me of stealing his questions, I'm going to give him an opportunity to go first.

Mr. Rick Borotsik: If you don't mind, Mr. Chairman, I do have House duty at 10 o'clock, so I have to leave. I do thank my colleague from the New Democratic Party, who is very, very cooperative, unlike others.

Lady and gentlemen, just for the record, you are not with the FCC, the Farm Credit Corporation, correct?

Good. I just wanted to make that... it's an inside joke, I'm sorry. I apologize for that.

First of all, on trade, obviously, we're all interested in trade and you have some rather impressive figures—$23 billion in trade, we know that, in agriculture. Do you know what percentage of that goes to the United States?

Mr. Mark Corey: Yes.

Mr. Rick Borotsik: I knew you would. That's why I asked the question.

Mr. Mark Corey: About 61% of agricultural trade goes to the United States.

Mr. Rick Borotsik: And where does the majority of the other 40% go?

Mr. Mark Corey: After that, I can tell you the primary markets in order of importance. Japan is our second most important trading partner; we export about $2 billion a year. The European Union is $1.1 billion, Mexico is, say, $700 million, China is $687 million, and then we get into South Korea, Taiwan, and Brazil.

Mr. Rick Borotsik: So it's 60% to the U.S., 10% to Japan, and 5% to the EU.

You also mentioned in your document that $17.4 million is used for trade projects, and that you and your department use $12 million for developing trade. It said the $12 million is used for cost-shared projects with 30 industry associations. And $2.5 million is used in other related projects that are also cost-shared with industry. Do you know approximately how much industry would invest into the trade programs that you just talked about?

Mr. Mark Corey: They're all 50-50. For example, the first $12 million is part of the agriculture international marketing strategy, and that's cost-shared 50-50. So for every dollar the federal government puts up of that $12 million, industry puts up $12 million.

Mr. Rick Borotsik: In most of these trade programs these are trade shows you're referring to. Are there any other types of projects? Can you give me a little understanding of what the programs are?

Mr. Mark Corey: It's a fairly broad variety of things. I'll give you an example from one of them.

On planned activities, there are seminars, newsletters, branded promotions, incoming and outgoing missions, development of technical specifications, promotional materials, scientific research, conferences and meetings, trade shows, workshops, and so things like that. It's all oriented towards increasing our exports abroad.

Mr. Rick Borotsik: On the WTO and the FTAA, I've had some experience with the WTO just recently with the agricultural side and we know about FTAA with Quebec City just recently. In your opinion, do you feel that agriculture has a high enough profile and in the negotiations within those organizations that are going on right now?

• 0955

Ms. Suzanne Vinet (Director General, International Trade Policy Directorate, Market and Industry Services Branch, Department of Agriculture and Agri-Food): The agricultural negotiations at the WTO are, as you know, one of two mandated negotiation processes. I think we're making a lot of progress in the WTO negotiations. We can expect better results if we can have broader negotiations.

We went into negotiations on a strong footing with Canada's initial negotiating position. During the first year, which was the phase where countries had the opportunity to promote their negotiating position, we did so by putting forward all the elements contained in Canada's initial negotiating position.

Mr. Rick Borotsik: One of the concerns I have and the reason I asked whether you feel that agriculture has the proper profile relates to what we've recognized over the last little while with the softwood lumber debate and dispute currently before us and with the issue of the Brazilian aeronautic industry. Do you not feel that perhaps agriculture... We have $23 billion at stake here, a lot of it with the U.S.A., yes, but we obviously need to expand in trade markets within the Americas. Do you honestly believe that agriculture is now poised to take advantage of some trade agreements through the FTAA and the WTO?

I hear what you're saying, where you like where we're heading with the WTO right now, but I'm more concerned with whether we are in fact having our agriculture issues put on the front burners and whether we can avoid their being relegated to the back burners because of these other issues.

Ms. Suzanne Vinet: Clearly, we're talking to trade issues on several fronts. Some are going to take longer. The WTO and the development of rules are all part of the broad negotiations. It does take a bit longer.

In terms of... for example, we just signed another agreement with Costa Rica. It puts us at a competitive advantage against the U.S.A. and the European Union—

Mr. Rick Borotsik: How much of the softwood lumber trade goes to the U.S.A.? I hear it's about $11 billion. Is that probably the right number?

Ms. Suzanne Vinet: Probably, yes.

Mr. Rick Borotsik: So we're talking in this particular case about 60% of $23 billion, which is going to be about around the same, $13 billion or $14 billion as compared to $11 billion. Do we have as much leverage with agriculture as they do with the softwood lumber, for example? Am I getting into some areas that are not policy?

Mr. Mark Corey: No. Again, I think agriculture is actually a fairly high-profile sector in these negotiations. There are only two special sessions going on at WTO right now. One is on services and the other is on agriculture, so agriculture is actually very high profile in WTO.

In the FTAA, again, one of the sections that I think will be negotiated very hard, one where there's going to be a lot of attention paid to it, is the section on agriculture. The text on that right now is square-bracketed, which means that we still have some basic issues to resolve. There's going to be a tremendous amount of attention paid to that because countries like Canada have such strong interests in maintaining our exports and continuing—

Mr. Rick Borotsik: As does everyone around this table too, I might add.

Mr. Mark Corey: Yes.

Mr. Rick Borotsik: This is my last, a 30-second question. For the environmental farm plan, you say five years. How realistic is that? Can we have a quick answer? I mean, be honest.

Mr. Bob Wettlaufer: I think it is realistic.

Mr. Rick Borotsik: Really? I'll hold you to that. I have this marked down.

The Chair: Okay. Thanks, Rick.

Mr. Corey, you talk about the importance of agriculture with trade, but would I be correct in saying that in terms of our trade, agriculture is really only about 5% of our total exports?

Mr. Mark Corey: I don't have those numbers here, but we could certainly get them. It's important in the sense that there are a lot of sectors...

The Chair: Would you say it's close to 5%, then?

Mr. Mark Corey: Okay. I'm seeing people nodding in the back rows on that.

The Chair: I think as supporters here of the agricultural community, we have to recognize that. I think it is a concern. I think that's what Rick was driving at. When 95% of our trade is in other commodities, we're a pretty small player. Maybe I'll just reflect a bit in terms of the potato problem in P.E.I.

With that, I'll move back to the other side.

Bob, do you have some questions?

Mr. Bob Speller (Haldimand—Norfolk—Brant, Lib.): Thank you, Mr. Chairman.

It's a question of how much it actually is. It's how important it is, particularly as it is discussed in these organizations and particularly at the WTO. It is the key issue, no question. We are having negotiations on services, but everybody is talking about agriculture and how we can resolve agriculture.

• 1000

I had an opportunity last week to talk with Mike Moore and Pascal Lamy on the European position for the upcoming negotiations. There are some hurdles that need to be overcome before a broader round is going to be agreed to. He feels that unless something breaks by July, they won't get commitment from countries to have a broader round.

What happens then in agriculture, and what happens to the agricultural negotiations if there's not a broader round?

Ms. Suzanne Vinet: I guess we're still working very much toward resolving and overcoming some of the hurdles you mention, and we're hoping that we're going to end up with a broader set of negotiations because for agriculture it obviously has a significant impact. The broader the set of negotiations, the broader the number of issues that are being discussed and the more we believe we can expect a substantial outcome from the agricultural negotiations.

So far it's clear that all the countries are fully committed to proceeding with the negotiations in agriculture with or without a round, so I think that right now we're set up in a process that will allow us to move forward with our broader negotiations. Obviously, we're all fairly realistic in evaluating the fact that we have much more hope of having a more substantial outcome if we have a broader set of negotiations.

A lot of the effort between now and the DOA ministerial in November will be directed to working toward resolving some of the outstanding issues to ensure that we do broaden the subjects for negotiation in the coming year. With or without a round, we're going to go ahead with the negotiations in agriculture. So far, the process has certainly been set up in a way that allows us to do that.

Mr. Bob Speller: What's the government's position on the European plan for anything but arms?

Ms. Suzanne Vinet: Several countries have been coming forward with packages that enhance the access of—

Mr. Bob Speller: Least-developed countries.

Ms. Suzanne Vinet: —least-developed countries, yes. The package the Europeans announced early in the new year was really a package of market access measures that further liberalized access for least-developed countries.

Canada had similarly announced a package in September that also freed up access for an additional number of 500 more products originating from developing countries. We also further liberalized rules of origin, so we have a very liberal access package for least-developed countries. Similarly, New Zealand has come up with a package, and the Americans have come up with a package. It's an effort by a number of developed countries to facilitate access for least-developed countries and to address some of the concerns and issues that have been raised by them in terms of their access to more markets.

Mr. Bob Speller: How important are agricultural exports in the Free Trade Area of the Americas? We're negotiating this, but how important is it for Canadian agricultural exports that we get a free trade area? Are we being blocked in any of these countries by high tariffs, or are we—

Ms. Suzanne Vinet: Yes. The tariff levels in the FTAA region vary, depending on the country, and we're certainly dealing with some hurdles. We don't have a competitive advantage. For example, the Europeans are negotiating some access with some selected developing countries, some Latin countries.

What's really important to keep in mind in relation to the FTAA is that this would give us access to some 800 million consumers, and that allows for a significant improvement in our ability to sell Canadian agrifood products in a much broader market than we have now. That would certainly remove significant tariff barriers in various countries, such as in MERCOSUR countries, for example, where we face significant barriers against some of our key exports.

• 1005

From a market access point of view, the FTAA promises to give us very significant access and to provide us with the ability to further improve our levels of exports.

The Chair: Thanks, Bob.

Back to Dick again.

Mr. Dick Proctor: Just to pick up on Mr. Speller's question, what would be the Canadian products we primarily would be looking at to market to Central and South American and Caribbean countries?

Ms. Suzanne Vinet: For some of our main commodities for export—wheat, for example—we're facing significant barriers in some key countries, including Brazil and the MERCOSUR countries. We have only two trade agreements right now, with Costa Rica, that give us competitive access. Those are very recent, following the Canada-Chile agreement we've had since 1997.

As well, in the value-added area, as income rises significantly in Latin countries, there is certainly a significant opportunity for Canadian agrifood exporters of value-added products and consumer products. I think we could anticipate over time that we would see the same kind of trends that we've seen with Mexico and with the U.S., where a significant portion of our increase in exports has been in the consumer product area.

So it is, I think, a legitimate expectation we would have that the same thing would happen with the Latin countries over time.

Mr. Dick Proctor: Thank you.

You mentioned, in answer to Mr. Borotsik's question, that more than 60% of our agricultural trade is with the United States. They've announced in the last couple of weeks significant increases in subsidies to their producers, projected over the next number of years. What impact, if any, will that have on our ability to grow that trade, or will we see a reduction in it?

Ms. Suzanne Vinet: With the U.S. specifically?

Mr. Dick Proctor: Yes.

Ms. Suzanne Vinet: Our trade into the U.S. is significantly in the area of consumer products. We do have, obviously, a fairly important trade in wheat products, but a lot of the subsidies they're providing to the producers are really on grains, cereals, and oilseeds, where we have more limited trade directly.

The significant impact of these subsidies is really on our ability to compete in third markets against similar exports of U.S. products. That's why we're seeking such an aggressive agenda in the WTO in terms of reining in the level of subsidies that the Americans can provide to their producers and that do harm our producers in third markets.

Mr. Dick Proctor: So to combine the two answers you've given, then, looking at legitimate expectations in terms of opening up markets in the MERCOSUR countries, for example, this could be offset by the continued aggressive policy by the United States on subsidizing their farmers.

Ms. Suzanne Vinet: Beyond market access, one of the things we're looking to accomplish in the FTAA—and we have the Americans supporting that position as well—is that within an FTAA context, we would be seeking rules to prohibit the use of export subsidies within the FTAA market, because that would have a very significant impact on our exports, obviously.

So within the FTAA we're trying to deal with the most harmful support policies we're facing in these markets, and we're seeking the prohibition on using export subsidies within the FTAA.

Mr. Dick Proctor: Didn't we get some guarantees, at the time the WTO was signed, on export subsidies, that these were going to be reduced?

Ms. Suzanne Vinet: Yes. All countries that were using export subsidies, or trade-distorting support, committed to a certain amount of reduction, and all countries have lived within the commitments they undertook in the WTO. Part of the problem is that some of those levels of subsidies that were permissible, even after the cuts, are still very high and have the ability to impact the market.

So the challenge in this round is to make sure the next slate of cuts is significant enough to level the playing field. That's very much the Canadian objective in these negotiations—to make sure that the cuts are significant enough, that we don't allow this gap in the levels of support, and that we bring back down the ability of the Europeans, in this case, and the Americans to have such high levels of support for their producers.

• 1010

Mr. Dick Proctor: Isn't it also accurate to say that, yes, I accept your point that countries have reduced, but they've also moved moneys around in a way that's still trade-distorting, staying with grains and oilseeds?

Ms. Suzanne Vinet: Obviously part of the process coming out of the Uruguay Round is that we had, through the committee on agriculture, the ability to monitor how countries were implementing their commitments. We've been following very closely how the Americans and Europeans have been doing their implementation. So far it's true that they have made some significant changes in the way in which they support their producers, and they have been able to increase the kind of support that is technically considered to be green, or non-trade-distorting.

One of the challenges, again, through the implementation, is that it's clear that we don't have the fiscal capacity of the Americans and the Europeans, so in looking at the impacts and the lessons, if you will, from implementation, one of the issues that became clear, through our consultations in developing our position for the negotiations, was the fiscal ability of some countries to increase their level of support, non-trade-distorting support, to levels that may still have an impact on trade. So that's going to be one of our challenges here.

One of the proposals we've made is that we put a cap on support that would not allow them to switch $1 of trade-distorting support into $10 of non-trade-distorting, which still ultimately can have some impact on the market. That's one of the things we're looking at.

That also means that the Americans, as well as the Europeans, have put in place some changes in the way they support farmers, and have done so in a way that is less trade-distorting than it was at the end of the Uruguay Round.

So some positive progress has been made as well.

The Chair: Thank you, Dick.

Murray, another round.

Mr. Murray Calder: Just to follow up on what Bob Speller started and Dick Proctor got into, yes, we have the WTO negotiations going on right now. We're not involved in these negotiations for nothing, and obviously there's a cost involved in terms of our sending delegations over there. I'm kind of curious right now about how much we have already invested in these negotiations. Do you have any idea what it's costing us on a yearly basis as these negotiations go on?

Ms. Suzanne Vinet: Mark can handle some of the general issues on that, but in terms of the budget for the international trade policy directorate specifically, the directorate within Agriculture Canada that is responsible for trade negotiations at large, it's roughly $3 million. As to how much of that is allocated specifically to WTO, we would have to do the calculations. The overall directorate budget covers all of the trade negotiations, whether they involve the FTAA, Costa Rica, Singapore, China accession, or WTO negotiations. In addition, obviously all the consultations we undertake on an ongoing basis with the industry are covered as part of our operating funds.

So the $3 million covers all of the activities of trade policy, including defending Canadian industry rights through panels, be it NAFTA panels or WTO panels—for example, the dairy panel. So the cost of defending Canadian industry interests are also included in the $3 million I mentioned.

Mr. Murray Calder: Okay.

There's another thing on the table other than subsidies, and that's market access, which is a very important component of supply management. I'm curious, what is the level of market access that's currently on the negotiating table, and do you see this access being negotiated higher?

Ms. Suzanne Vinet: In the WTO?

Mr. Murray Calder: Yes.

• 1015

Ms. Suzanne Vinet: We're not at the point where we're doing requests and offers in the WTO negotiations. Clearly, the first phase last year was about putting forward and explaining ideas for negotiation. In our case we put forward all the ideas contained in Canada's initial negotiating position.

The second phase, which we've just undertaken, is about explaining the technical details of how we want to accomplish our objective. We're going to have the opportunity in the next year or more to explain in a more technical fashion how we would propose to make operational the ideas contained in our negotiating position.

If I refer back to the position, the government undertakes to retain the ability to operate orderly marketing systems, be it institutions such as the Canadian Wheat Board or supply management.

Obviously, the corollary to that is what do we do on the issue of tariffs. We feel Canada has put forward a very credible position in the WTO negotiations right now, which promotes the idea of a variety of techniques on how to tackle issues around tariffs and market access, and we also promote the idea that we have to reach some very real market access. The proposal we're promoting in Geneva has the broad support of the industry in terms of being realistic in providing increased access to these markets while being more sensitive to some of the domestic industries we have.

Mr. Murray Calder: Currently, within the poultry industry we're allowing 7.5% access to our market, and I believe in the dairy industry it's 5%. If you want to get down to the reality of the whole thing, within the poultry industry it's probably more like 10% that's coming in. Obviously, there'll be pressure from countries that want more access to our markets. Do you see that in fact happening?

Ms. Suzanne Vinet: One of the concerns that was clearly expressed by the Canadian industry and that is fully reflected in Canada's position is the fact that the market access levels are very uneven between countries. The position we're putting forward is that we should be levelling the access between countries. For example, in the Uruguay Round agreement the disciplines, if you will, on how to calculate access within TRQ were not rules and were interpreted somewhat liberally by some countries. So you might have cases where, for example, in Canada we do provide 5% of access for certain products, but if you look at how the EU implemented those guidelines, you'll see it ends up being 2% or 3% of their market.

One of the objectives in the negotiations for us and for the industry is to make sure that every country provides equivalent or similar access to their markets. That would bring everybody to the same level of access. The Canadian proposal says that we should be aiming to provide at least 5%, and 5% is really the upper limit that was provided in the guidelines coming out of the Uruguay Round. For example, all countries should be providing at least 5% of access relative to their consumption for similar products and should have clearer, enforceable rules on how these levels of access are established. It's a matter of making sure everybody provides exactly the same kind of access.

Mr. Murray Calder: But when you say something like that, wouldn't the response from the United States be, for instance, our domestic market is 10 times that of Canada, and if you want the same access, obviously, the percentage rate wouldn't be the same? Would they not use that argument?

Ms. Suzanne Vinet: In the current agreement everybody is doing it on the percentage consumption. Obviously, it was based on the 1986-1988 base year for the levels of consumption. What we're proposing is that we update the information on the levels of consumption so that it would be the same basis for everybody, and it would also reflect the situation in relation to the current consumption in each individual country. So it's a fair basis under which to do it.

Mr. Murray Calder: Okay. Thank you, Mr. Chairman.

The Chair: Thank you, Murray.

Howard.

• 1020

Mr. Howard Hilstrom: Thank you, Mr. Chairman.

Madame Vinet, you said that Canada doesn't have the fiscal capacity to subsidize our farmers. I really disagree with that comment. I know you're getting it from the minister and the Prime Minister. But the fact of the matter is, there is lots of money. It's the priorities of the government that are wrong. There is lots of money for farmers and food production, which is a national interest issue and a market issue. It brings a mammoth amount of wealth into this country with all these exports.

I would ask you to review that with the minister, because in fact there is enough money for farmers. I'll leave that. Quebec is able to fully support its farmers. I really disagree with that. I'd like you to take back to the minister that we do in fact have the fiscal capacity to support our farmers and our agriculture. That's a comment, not really a question.

How many hits did you get on the barley and wheat websites? I'm looking at your information here.

Mr. Mark Corey: Is this related to the Internet usage?

Mr. Howard Hilstrom: Yes.

Mr. Mark Corey: I'm going to ask Gordon Richardson from the International Markets Bureau to give us some information on that.

Mr. Gordon Richardson (Director, Americas, Europe and Middle East, International Markets Bureau, Department of Agriculture and Agri-Food): We can't break that down by actual commodity. We can break it down by some of the key reports, such as the overview of international trade, trade statistics, and some of the key reports on food market studies in other countries. But we can't break it down by wheat and oilseeds.

Mr. Howard Hilstrom: I'm approaching it from a little different angle here, and you'll get my reasons and questions in a second. I note that usage has gone up quite a bit, and these farmers are contacting these websites as one of their information sources for marketing. The reason you don't have anything for wheat and barley is that we have a bloody monopoly on that with the Canadian Wheat Board. The organic wheat farmers are not sourcing Agriculture Canada for information about marketing their product because of this monopoly. My question is, why are you as bureaucrats advising your ministers, Mr. Goodale and Mr. Vanclief, to maintain that monopoly of the Canadian Wheat Board? Why do you advise them to do that?

Mr. Mark Corey: I think the best we can do in response to that is to note that the minister was asked that very question when he appeared before you last Tuesday. He stated the government's position, which is that it does support the Canadian Wheat Board. He did go on to talk quite a bit about some of the reforms that had gone on.

I'm not sure there's an awful lot more I can add over and above that.

Mr. Howard Hilstrom: I'll just make a comment, then. I believe that organic wheat farmers and barley growers are every bit as smart as every other farmer in this country and that they can market their own products. I want you to deliver that message along with the fiscal message to your ministers and tell them that these farmers, who are modern and in some cases university educated, have a lot of information sources and are quite capable of marketing their own wheat and barley. There's a big demand for it, and we really want to see that happen.

Getting on to this trade issue, which is a large one, one of you stated quite clearly at the start that we're really big on increasing our exports and having good trade relationships around the world, because trade is good for us. When you're trying to maintain supply management and then trying to have this large increase in exports, do you not have other countries, or even some inside Canada, telling you that's a contradictory position? What do you say to them when they say that to you?

• 1025

Ms. Suzanne Vinet: I don't think there's anything contradictory in trying to increase your exports. There's no rule that says because you have supply management you can't export. That just doesn't exist. So as long as we do exports in conformity with our trade obligations, then there are absolutely no restrictions as to what we can export.

Mr. Howard Hilstrom: But the idea is that there's the access from the other countries. We can't just export. The other countries also want to export, and that's where the contradiction comes in. We can't have it all our own way and say we're just going to export, not import.

Ms. Suzanne Vinet: But even on the import side, Canada has very few products where there are some limits on access, and limits are really done in accordance with the obligations that we have under the WTO by the establishment, for example, of tariff freight quotas. And a number of countries have exactly the same limits on access.

As long as it's done according to the rules, there's really no impediment on that side.

Mr. Howard Hilstrom: Under the U.S. trade rules—they've instituted their Super 301, as they call it there, I think—they say agriculture is the main one. What agricultural commodities are they targeting Canada with under that Super 301 section of their trade act?

Ms. Suzanne Vinet: Under the Super 301 they make a statement of fact that back in October, U.S. trade representative Barshefsky initiated a 301 investigation into the activities of the Wheat Board. The Super 301 is a report that's produced annually by the Government of the United States outlining the status of trade—what their trade priorities are and which actions they have ongoing. In fact, there has been an investigation under 301 since October. They have 12 months to complete the action.

Recently it's been referred to the ITC for a survey of activities in third markets. In fact the investigation will have to be terminated by this October, and there currently... there was a call for comments, and there will likely be public hearings in June on investigations.

So we're following this, but it's certainly been an investigation that's been undertaken by the administration back in October 2000 that's just following its course. That's what the Super 301 was referring to.

Mr. Howard Hilstrom: I'll just conclude because I'm sure my time is just about up. At the PFRA now, you put $500,000 into a hog manure project there in the Triple S in my riding—a study that just happened a couple of years ago, I think now, or a year ago, and I think it's probably getting close to finished. You mentioned you're doing hog manure research in Quebec and I'm sure in other provinces. Is not all hog manure the same, and how much money are you spending on this hog manure research?

Dr. Gordon Dorrell: Okay, I'll jump in, and my colleague can follow. You have raised a very good point. Why would you want to do... Other countries have done hog manure research, so you don't necessarily need to duplicate it. You know better than I that soil conditions and moisture conditions vary across Canada, so you have to make adjustments.

Agriculture and Agri-Food Canada has pulled together their research, and our centre in London, Ontario, runs a thing called ManureNet, which brings together all the research in Canada on manure. So that's the place to start.

These people work fairly well together. We're working very closely with PFRA in terms of software to determine the fragility of soils and water and siting work, using our GIS systems.

So we're trying not to duplicate except where it's absolutely essential because of soil conditions.

Mr. Bob Wettlaufer: I think I'd only like to reinforce the fact that physical conditions do vary from place to place, and it is important to take into account the particular surface and groundwater conditions and the particular soil conditions in order to handle manure, both storage and dispersion.

Mr. Howard Hilstrom: Mr. Chairman, can they just answer the amount of money? That was the other part of my question.

How much money is being spent by Agriculture Canada on hog manure research? Just answer that question.

Mr. Bob Wettlaufer: I don't think we can answer the question, but we can get the information for you.

Dr. Gordon Dorrell: I guess I'd only add that the amount that's going in at the present time has declined because a lot of work has been done in the last five years.

The Chair: Claude.

[Translation]

Mr. Claude Duplain (Portneuf, Lib.): I would like to know your reaction to Mr. Hilstrom's statements that Canada does not put enough money into agriculture. He also recognized on the other hand that there is more support for agriculture in Quebec than in the other provinces. What is your reaction to that?

• 1030

I would also like to deal with the dairy issue that could, I believe, become a serious problem for Canada. In Quebec, there does not seem to be any problem for the dairy sector. Is that really the case?

Mr. Mark Corey: I will give you a first answer. It is always dangerous to ask a bureaucrat if he has enough money to spend. However, I believe that we generally have enough resources for what we have to do. Of course, we have to set priorities and we have to be very careful how we spend the money that is available. That is perhaps all I can say about this.

Ms. Vinet might answer your question relating to the dairy industry.

Ms. Suzanne Vinet: About the dairy industry, I suppose you are thinking of the panel on export practices. As you probably know, a complaint has been lodged by the U.S. and by New Zealand alleging that we have not set up a system that would be compatible with the conclusions of a first panel which stated that we are using higher export subsidiaries than is allowed by our commitments.

We have started the process to defend our programs. We are convinced that those programs are compatible with our obligations and with the conclusions of the first panel. The process started this month and we estimate that it will be concluded at the end of July. At that time, we will see if any changes are required or if we have won our point about the types of programs that we have.

We are working closely with the dairy producers and with the provinces in order to prepare a defence against the allegations from the U.S. and from New Zealand.

Mr. Claude Duplain: Do these allegations relate mainly to the processes used by Quebec?

Ms. Suzanne Vinet: The allegations from the U.S. and from New Zealand are generally that the systems we have set up and changes that we have made to the pricing system for our exports of dairy products are not major but are only superficial changes compared to the conclusions of the first panel. Those are the general allegations, but each of the programs would obviously be subject to review.

Mr. Claude Duplain: Thank you, Mr. Chairman.

[English]

The Chair: Thank you, Claude.

Marcel.

[Translation]

Mr. Marcel Gagnon: Thank you, Mr. Chairman. I will try to be quick because I know we have to have a short meeting later on.

In answer to a question, Ms. Vinet stated that the “so-called green” measures have an impact on the market. Could you explain that in more detail? Is it because of the cost of these measures?

You also referred to the development of our negotiating position, and this led my colleague across and myself to talk about supply management. Could you tell me if, in the upcoming negotiations relating to the FTAA, supply management as it is practised in Quebec and across Canada could become a serious issue? Is our supply management threatened?

• 1035

Ms. Suzanne Vinet: When I referred to the green measures, the issue is not that they would be “so-called green” but that there is no limit as to the amount of subsidies coming under the definition of green measures. The green category is supposed to reflect measures that would not distort trade or that would do so only very minimally.

The point made during the negotiations is that if a country does not limit seriously the amounts that it can provide to its agriculture—think of the incredible amounts that we could invest in agriculture as such—that could end up having a global impact for that country because such incredible amounts end up providing a benefit or an advantage.

We are not claiming that the American or European programs set up in the green category are not in fact green, we claim that such high amounts could still have an indirect impact on the markets. That is our analysis. That is why we would like to put a limit on those programs. Canada's idea is to propose that a total limit be applied to the level of subsidies that any country can provide in order to try and compensate for the subsidies of other countries.

Mr. Marcel Gagnon: Is it true that, as far as agriculture is concerned, and that may apply to other sectors as well, the quality of the environment could be reduced? For example, a country that would not have any environmental concerns anymore would end up being penalized by the negotiations.

Ms. Suzanne Vinet: Our present proposal is to recognize that countries are entitled to provide subsidies to their producers for their own objectives. If some priorities are more important for a country than for another, whether they be related to the environment, to more welfare, to tourism or whatever, it would not be up to the WTO to pass judgment on the validity of those objectives. Those rules should apply to the type of measures in order to make sure that the measures taken in support of a country's priorities are objective and do not distort production or the market.

This is really a very important distinction. We too have our own priorities relating to rural development, the environment and so on. So, our point is that the power or the sovereignty of the countries to establish their own priorities should be respected.

As to the rules that should be established, we are trying to make sure, through the negotiations, that the measures taken in support of those objectives do not distort trade. Those measures might have such an impact and that is what concerns Canada and why we are trying to get rules within the WTO.

Mr. Marcel Gagnon: And what about supply management?

Ms. Suzanne Vinet: As to your second question, relating to the FTAA in particular, the government's position is the same as for any other negotiations. The government is committed to remaining able to operate its supply management systems. That is clearly our position in the WTO negotiations and that is the main position that we have taken for any other negotiations. Therefore, it is also that position for the FTAA.

More specifically, about the FTAA, that is an issue that includes a more immediate component related to market access, and our proposals are the same as what we find in other agreements, for instance with Chile, with the U.S. and with Mexico. It is not any different than our present policies.

Mr. Marcel Gagnon: Thank you.

• 1040

[English]

The Chair: Thank you.

We've had a change since the program review in terms of research, and there have been criticisms that we've moved away from pure research to research as motivated by certain large companies that have a vested interest in particular products. What has actually happened in, say, the last five years in terms of research? Are we seeing enough pure research in terms of agriculture? Is there any validity to the complaints that we've heard from agricultural groups that when we lost a lot of our so-called supported research that the new research wasn't going to meet the needs of Canadian agriculture?

Dr. Gordon Dorrell: Of course, I've heard that argument too. There has been a shift to paying a bit more attention to technology that can be commercialized, because before we'd been criticized for doing a lot of good discovery research and producing excellent papers and leaving the material on the shelf. I never believed that theory, but we heard it a lot. I think what's happened in the last, I would say, 10 to 12 years is that more attention has been made to getting the science out to the people who need it and in different ways—some of it commercial, some of it public good.

I wouldn't agree that our discovery side has been reduced. We simply must maintain a strong pipeline of new ideas coming down the system. You would see most of our researchers having a percentage of their time in discovery, but we also insist that those discoveries move out to teams to convert it into technology. At the present time, I'm quite comfortable with the balance, and I think it's standing the industry in pretty good stead.

The one thing I would say is that we are getting technology out faster, and some of that is due to associations and producer groups like the Western Grains Research Foundation putting check-off money into wheat research. That has produced varieties coming out twice as fast.

The Chair: Thank you, Dr. Dorrell.

With that, I'll conclude this portion of our meeting this morning. I'd like to thank the officials for coming and offering their presentation. I think the answers were generally good, with the exception I guess that you do have one reply here to make to a member and to the committee clerk.

We'd like to thank you for coming. It certainly is appreciated. Your annual task probably has been completed.

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): Mr. Chairman, on a point of privilege, I believe if you ask, you might find we have consent to have a short business meeting, perhaps three minutes from now, if we could go in camera.

The Chair: Is there consent?

Mr. Howard Hilstrom: Well, I missed my rapid round, but I guess I'll give consent anyway.

Some hon. members: Agreed.

[Editor's Note: Proceedings continue in camera]