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, November 1, 2001

• 0912

[English]

The Chair (Mr. Charles Hubbard (Miramichi, Lib.)): Good morning, everyone.

Pursuant to Standing Order 108(2), today we'll be having a briefing session on the Canadian Wheat Board's position statement regarding the production and marketing of genetically modified wheat and barley.

I'd like to welcome our witnesses.

Before I introduce them, I would like to bring to the committee's attention a couple of matters. The clerk and I went to the liaison committee with reference to our committee travelling to three areas: Quebec and Ontario; western Canada; and the Atlantic area. We broke our overall budget into three components because the liaison committee was short of money. As a result of our request, we did get approval from the liaison committee to travel to Ontario and Quebec, with the understanding on my part that the House leaders would agree that we would start that phase of our trip while awaiting more money being provided to the committees from the House.

It has been brought to my attention that as of yet we still don't have additional moneys from the House and that the House leaders are reluctant to approve—

Mr. Rick Borotsik (Brandon—Souris, PC/DR): Mr. Chairman, I have a point of order. I wonder if we could deal with this afterwards. We only have until 11 o'clock, and maybe we—

The Chair: If I could have one minute, I would appreciate it, Mr. Borotsik.

Mr. Rick Borotsik: Our witnesses are here, and I don't know if this is the time or the place. We do have some time after this meeting.

The Chair: I want to bring this to the attention of the members because I don't want people leaving this committee meeting not knowing what's going on. If you would be patient, we would appreciate it.

From today's point of view, we don't have approval from the House to go on the trip to Ontario and Quebec.

We still don't have money to go to the other two areas.

I would ask permission from the committee that in terms of our lateness in approaching this, we may have to postpone our trips to Ontario and Quebec until later, because I don't want to go to those places and not have some advance planning. So I would like to know, Rick, if the members would appreciate what I'm asking them for permission to do. If we can't find out within the next few days that we have permission to travel and to cover adequately the idea of getting witnesses and having proper forms, we should postpone that activity until later. The committee will meet next week, but I just want to make you aware that we don't want to do it poorly.

The other quick point I want to make, Rick, is that I've been invited to be part of the Canadian delegation going to the WTO. We do have representatives from each of the parties going on that trade mission. If members of the committee have particular points they think I should advance, I would like a short presentation, maybe just a paragraph, telling me what I should watch for. There are many different things there. Agriculture is big time on the list, if it has not been put down by what happened back in September. But if you have particular concerns, would you please give me just a brief note so that I can hopefully fulfil my commitment as committee chairman.

• 0915

I do apologize, Mr. Ritter.

Make it a quick one, Howard.

Mr. Howard Hilstrom (Selkirk—Interlake, Canadian Alliance): We have the board here until 11:30, so let's not get excited. Let's take a minute on this.

The Chair: It's 10:30 for the board and then an extra hour for Ducks Unlimited, which goes to 11:30.

Mr. Howard Hilstrom: We'll move along quite quickly, then.

This thing we're studying, and I'm quoting right out of the interim report of our own committee, is “The Future Role of the Government in the Grain and Oilseeds Sector”. I think we need to meet as a committee very quickly to discuss in-depth the money that has come. I know I agreed to Ontario and Quebec moving up the ladder, but that was with the idea that all the money would be appropriated. I can't imagine us going to Ontario and Quebec as opposed to southern Alberta and western Saskatchewan. Those folks had zero crops. Ontario cut down around 20%, although maybe some were deeper than that, and Quebec eliminated an old problem, plus Quebec has ASRA, the cost of production, and all that.

I think, Mr. Chairman, we have to review in-depth what happened in that Board of Internal Economy meeting, rather than just the comments we had this morning, and I'd welcome an opportunity to do that. The Board of Internal Economy could end up saying that is all the money the committee on agriculture is going to get. I don't think it would be wise for us to make a trip to areas that are not the worst hurt or the ones that are suffering the most from the lack of a good safety net program.

The Chair: Madame Tremblay.

[Translation]

Ms. Suzanne Tremblay (Rimouski—Neigette-et-la Mitis BQ): I would like to comment on your second point. It is all very well to say that we will be given notes or information, but we must have at least some idea about the position Canada will be defending in Qatar. We do not have the slightest idea.

I would like a meeting to be held next week at which we would be at least informed about Canada's positions on agriculture. What are they? Is it worthwhile taking the time to think about them? I think it is worthwhile for us to have some idea what the positions are. At the moment, we have no idea whatsoever.

[English]

The Chair: Thank you. I will take both of those under advisement.

I did want, Rick, to get permission from the committee to delay. Our clerk has been sick the last few days and won't be back to work until Monday. I did want permission from the committee more or less to put the thing on hold until we get some better answers.

I'm sorry, Mr. Ritter and members of the Canadian Wheat Board.

We all get involved in things that are being done in haste, but you have to make sure you get it properly organized.

Ken, welcome again. You're quite a familiar person here in terms of coming before our committee. You have two people with you this morning. Perhaps you could introduce them.

The main focus today is on GM, the genetically modified situation.

Mr. Ken Ritter (Chair, Board of Directors, Canadian Wheat Board): Mr. Chairman, good morning, and thank you for the opportunity to speak with you today on the issue of biotechnology and specifically the introduction of genetically modified, well-known as GM, varieties of wheat and barley into western Canadian production.

My name is Ken Ritter, as you've indicated, and I'm chair of the CWB's 15-member board of directors and one of 10 elected farmer directors. With me is Greg Arason, the CWB's president and chief executive officer; and Patty Rosher, from our market development department, who works on the CWB's biotechnology strategy. If there are very technical questions, Patty is the expert who will be able to deal with those.

With the possible introduction of the first variety of genetically modified wheat on the horizon, now is the time for the grain industry and the federal government to have frank and open discussions about the opportunities and challenges that products of modern biotechnology present.

• 0920

We have titled our presentation today “Farmers Listening to Customers”. Perhaps more so than any of our competitors in the world grain market, western Canadian farmers do listen to their customers. They have to, because they are not sheltered from the realities of the market through protectionist government policies. Farmers know they must grow products that meet customer needs.

Greg Arason will begin with a short description of the type of customer feedback we have been receiving on the issue of GM wheat and the types of initiatives underway to address customer concerns. I will then provide a farmer's perspective on how Canada should be responding to these market challenges.

Greg.

Mr. Greg S. Arason (President and Chief Executive Officer, Canadian Wheat Board): Thank you and good morning.

In 1999 the Wheat Board publicly announced its biotechnology strategy, which was based on feedback received from customers concerned about the possible introduction of a GM wheat variety. We stated then, as we have continued to state, that the Wheat Board recognizes the potential benefits that biotechnology may provide to consumers and to wheat and barley farmers in western Canada.

The Wheat Board's objective is to ensure that the introduction of genetically modified wheat and barley varieties for production, handling, and marketing is accomplished in a manner that will satisfy customers' requirements and will result in net financial and other benefits to western Canadian farmers.

Customers and at least two-thirds of our markets have expressed a reluctance to accept genetically modified wheat shipments. That reluctance has been voiced through direct statements to our marketing managers—and directly to me as well—and the institution of government-imposed moratoriums or restrictive import and labelling policies. Other customers have simply been silent as they monitor the feedback from consumers, governments, and the international community.

Time will not permit me to review the positions of all our customers. However, I will focus on some of our top-volume markets to give you a sense of the breadth of the reactions we have received.

Domestic millers are in most years western Canadian farmers' top customers. Surveys would suggest that there is not the same level of concern over GM food products in Canada as in some other areas in the world. However, our domestic customers are also exporters, and much of their wheat flour produced here goes into what we would categorize as GM-resistant markets. We have been in close communication with the Canadian National Millers Association on this issue, and they have expressed concern about the premature introduction of GM wheat. They are in favour of a market-impact test for new products.

As well in Canada the discussion on labelling foods with GM ingredients is causing a great deal of uncertainty for the domestic wheat market. The Wheat Board supports a voluntary labelling system with a feasible tolerance level. We believe as well that a domestic labelling system should focus solely on the products of transgenic plant breeding and should not include more traditional breeding techniques, as has been suggested. This would put Canada in line with the rest of the world and would ensure that the systems developed to meet domestic labelling standards will also meet international labelling standards.

A well-defined, focused labelling scheme would allow the Canadian grain industry to provide the information and choices that consumers seek. Any other system would make it very difficult to segregate and guarantee the contents of wheat shipments to domestic processors.

We can add U.S. millers to the category of markets wary about the introduction of GM wheat. The U.S. is another large market for western Canadian farmers, and the North American Millers Association has publicly expressed its position that crops that do not have wide market approval should not be placed on the market.

Japan consistently ranks in the top five of western Canadian wheat customers and is a premium price market. The Japanese concern about the introduction of GM wheat in North America is well-known. They have publicly and privately told us and U.S. marketers that they will not buy GM wheat, plain and simple. Japan has a labelling standard in place. It requires food to be labelled if it contains more than 5% GM ingredients, which is certainly a much more feasible tolerance level than that proposed in other markets.

China is also an important customer of western Canadian wheat and has ranked among the top five customers numerous times over the past decade. China has recently instituted an import restriction on GM products that requires documentation, making it difficult for those now exporting GM products to China. We are aware of the difficulties that are currently being experienced by canola marketers in this area.

• 0925

The list of other wheat customers that have in place policy or practices restricting GM food products is too long to cover at this time; however, I can tell you that right now we are regularly asked for, and provide, letters of assurance that there are no genetically modified varieties of wheat registered for commercial production in western Canada at this time.

It's evident that under these circumstances we cannot afford to rush a GM variety, a wheat variety, onto the market until we can be assured that we will be able to continue to meet customer requirements for non-GM wheat shipments, if necessary.

There is also a great potential that technology developers will create a GM wheat variety with certain end-use qualities for which some customers will pay a premium. In that case, we will want to have in place an identity preservation program to capture that premium.

The grain industry is discussing a new approach to handling grain in response to these and other non-visual wheat segregation pressures. The next forum for these types of discussions will be the Wheat Board's industry advisory committee on genetically modified crops, which Ken will talk about momentarily.

Throughout the automated quality testing initiative, we are also funding research—and that means the Wheat Board is funding research—into new, inexpensive, quick, and accurate ways to verify the contents of wheat shipments. This is a necessary component of a non-visual segregation system like that required to market GM and non-GM products. The federal government also participates in that funding, and we would encourage the government to continue to support the initiatives underway in this area and to maintain the funding that has been committed to that project.

We believe there is a role for the federal government in helping to encourage dialogue and information sharing on new opportunities for grain segregation. This will help to prepare the industry for future opportunities and grain handling.

The last item I would like to touch upon is the need for international tolerance levels and testing and sampling protocols. There is a myriad of tolerance levels for GM products in non-GM shipments, from 0%, which is in fact impossible, to 5%, which could be feasible. Added to that is the lack of agreement on testing technologies and sampling methods. This creates a marketplace with significant uncertainty and risk.

We appreciate the federal government's efforts to include industry representation and reflect industry positions in its work on the Cartagena Protocol on Biosafety. We would like to see the federal government encourage the discussion of reasonable tolerance levels and standardized testing and sampling in all appropriate international forums, including the Cartagena Protocol and the Codex labelling discussions. It's only by establishing the necessary international rules that western Canadian farmers will be able to market products of biotechnology to their full advantage.

With those comments, I'll turn it back to Ken to discuss the farmer perspective.

Mr. Ken Ritter: Mr. Chairman, as a farmer, I can tell you that I'm interested in the advances that are possible through transgenic plant breeding. I do grow transgenic canola, and I know first-hand the potential agronomic benefits that such technology can provide by lowering my cost of production. However, as a farmer, I'm also interested in growing crops that meet marketplace demands. Agronomic advantages are of little benefit to me if there are no customers for my product or if my grain sells at a discount to that of my competitors.

I take great pride in knowing that the crops we grow in Canada are well respected around the world for their high quality, consistency, safety, and cleanliness.

I am confident that the current variety approval and registration system, by which new varieties come to market, results in safe food products that benefit both consumers and producers. However, the current level of customer resistance to products of genetic engineering has made us re-evaluate how well our current system is working in providing us with marketable products. Under the current system, it is possible for a new variety to meet existing safety, agronomic, and quality conditions, but to be rejected by customers because of the techniques used to develop it. There is no regulatory authority to prevent that variety from going on the market, even though it could result in hundreds of millions of dollars in lost revenue.

The CWB invited the major farmer and commodity organizations, as well as representatives from the grain handling industry, to discuss this very issue at a grain industry strategy meeting in September of this year. We had two objectives for this meeting. The first was to identify common grain industry concerns regarding the decision process for the introduction of genetically modified products. The second objective was to discuss and evaluate options to deal with the issue of market impact that I outlined above.

• 0930

We had 26 industry representatives at the meeting. I can tell you that there was a tremendous level of agreement among the participants. Some might say that it is unprecedented for such a diverse group, but it is indicative of the unusual circumstances in which we find ourselves.

The group was in agreement that in addition to the current slate of safety, quality, and agronomic evaluations, market impact must be considered before new crops become available for commercial production. We discussed a range of options on how this might be done. Some options were generally discarded, such as a government-imposed moratorium. In fact, one of the principles we discussed was that we do not want to delay the introductions of new products unnecessarily and we do want to encourage innovation in plant breeding. There was a general agreement that an industry-led process in which farmers are able to participate and which would include wide representation from all industry stakeholders would be preferred.

Following up on the discussion at that meeting, the CWB is forming an industry advisory committee on genetically modified crops. The mandate of the committee is, first of all, to advise the CWB on policy and actions related to the potential introduction of GM crops, and secondly, to engage in a full assessment of potential benefits, costs, and risks associated with the introduction of specific GM crops. Thirdly, the mandate is to recommend a set of conditions under which specific GM crops could be introduced in a positive manner that would satisfy the concerns of customers, farmers, and other industry stakeholders. And finally, it's to recommend steps to be taken to implement an effective segregation system for GM crops as required.

This advisory committee will have broad representation from farmers, customers, the grain handling industry, the Canadian grain commissioners, the developers of the technology, and the federal government, including Agriculture and Agri-Food Canada and the Canadian Food Inspection Agency. We believe this advisory committee could serve as a prototype for the type of industry approach to the decision-making on GM crops that was discussed at the September 24 meeting.

To date, responses to our invitations have been positive, and we anticipate that the group will start its work by the end of the year. While the farming community has not developed a common position on exactly how the market impact question should be answered, the CWB believes that an industry-driven, government-supported approach would best serve customers, farmers, and the Canadian economy.

The CWB believes that regulatory changes will be required to add weight to the industry approach we have launched. One of our specific requests to you, as members of the standing committee, is to aid industry in this discussion by directing the relevant government departments to examine thoroughly all options to consider market impact, and where they identify possible barriers, to develop creative solutions to overcome those barriers.

As a wheat farmer, I am convinced that I will realize the potential that biotechnology holds only if positive market entry is achieved with the first introduction of a genetically modified variety and by having all necessary elements such as segregation systems, testing and sampling methodology, and intolerance levels in place first. Positive market entry is what we hope to achieve through industry-government cooperation.

I'd like to thank you for the opportunity to speak to you today. In the packages we've provided you we have included the CWB's biotech position statement and strategy as well as key messages that we believe help shed some light on the issue. We'll be pleased to answer any questions you have or elaborate on any of the materials we have presented today.

Thank you, Mr. Chairman.

The Chair: Thank you for your presentation.

Howard, for eight minutes.

Mr. Howard Hilstrom: Thank you, Mr. Chairman, and welcome Greg, and Ken, and Patty. It's good to have you down here on this important topic.

• 0935

Parliament and the committees are very seized with this whole issue of GM crops and GM foods, and as I say, we just went through it with a private member's bill of Mr. Caccia. The Wheat Board's position is that if these elements are met, the segregating system, testing methodology, and the tolerance levels, then in fact the Wheat Board is in favour of biotechnology and the introduction of GM wheat in the medium term. Is that a fair analysis of your statements?

Mr. Greg Arason: I think, Mr. Hilstrom, that in terms of the medium term, if we look at the development of the technology you suggested in terms of testing and the ability to segregate, we're probably two to three years away from having that available. I think that might even be optimistic if we look at a reliable, inexpensive front-line test that could be used as the products enter the system. So when we talk about a positive introduction of GM wheats, technology, that's what we're talking about. We're talking about having, hopefully, improved customer acceptance but also being in a position to deliver what the customer wants, having the ability to identify these varieties, segregate them, and flow them through the system in a manner that does not contaminate non-GM varieties for those who choose to go that route.

Mr. Howard Hilstrom: The Wheat Board is going to be actively trying to make these things happen so that in fact GM wheat can be introduced into Canada and the United States.

Mr. Greg Arason: Absolutely, and, as I indicated, we have provided considerable funding to this AQT initiative, which is the effort to develop the technology. We do, as I said, indicate that there are matching funds that have been dedicated by the federal government. We're encouraging others to participate in it as well, but, yes, we are moving towards a positive introduction and we are in favour of.... This is not an anti-technology stance we have taken.

Mr. Howard Hilstrom: We of course are concerned, and there are others who will be bringing this up in more detail later, but there are a lot of non-government organizations that are very opposed to the promotion of GM crops and GM foods, and of course they're concerned with who is working positively in the GM field—which is for the benefit of humanity in the future; there's absolutely no doubt about that. There are many groups that are very opposed to any advancement in the biotechnology area, particularly in regard to food, but that will be coming up later.

We have another issue and this relates to trade. Do you have any idea right now what the United States is going to come down with this morning or this afternoon with regard to that 301 challenge? In the future, with GM wheats, will there be any similar type of impact around the world? What do you think? What's happening with what the U.S. issued today?

Mr. Greg Arason: We do not have any advance indication of what the preliminary ruling might be from the U.S. today. We're awaiting that, but as we came here this morning, we had no advance on what that might be.

• 0940

Mr. Ken Ritter: If I could, I'll answer your questions this way, Howard.

In the first question you asked whether, if the segregation system, the tolerance level, and the testing equipment were available, the Wheat Board would be supportive of GM wheats.

Of course we would. That is the assumption we've been going on all the time, that if those three elements were in place, the positive introduction of a GM product would be there because our customers would then know they'd be getting exactly what they ordered. If they ordered a non-GM product, that's what they'd be getting.

Mr. Howard Hilstrom: My last question is, what is the Wheat Board doing with its customers around the world in order to educate them and overcome their resistance, or even just their questions? They say they're concerned about it and don't want to touch it until they feel comfortable with it. Do you have a specific initiative to deal with the customers to prepare them for the acceptance of GM wheat?

Mr. Greg Arason: We do meet with customers on a regular basis. We utilize the Canadian International Grains Institute to bring many customers to Canada to introduce them to new varieties and the methods they can use to achieve the most benefit from using Canadian grain.

What we have been assuring customers is that we are listening to them. We are also assuring them that grain from Canada is produced in a safe environment, and that they are going to get the product they are ordering and paying for. And we are talking to the millers and the first-line...the people we deal with on a regular basis.

The problem we have in this whole area is the ability to influence the end-use customer—the person who buys the bread in the supermarket or at the local bakery. That is a much more difficult issue to deal with. Their rationale is often not based on science and technology. It's based on emotion and impression, and that's where we have a greater challenge—to work with our customers to introduce this in a positive way. When we have those varieties on the horizon it's going to be very important for us to get out and work with the customer so they can assure the end-use consumer what they are getting is a safe product and is properly identified.

Mr. Howard Hilstrom: I have a point of order.

I'd just like the presenters to know I'm going to be leaving now, and my point of order is that I'll be moving a concurrence of the second report that the committee put forward in the House. I'll be leaving to do that concurrence motion in regard to our interim report.

Thank you, Mr. Chairman.

The Chair: Thank you.

Madame Tremblay, I know you're having some difficulty with the translation. I've been listening, and it comes and goes, en français. But in any case—

[Translation]

Ms. Suzanne Tremblay: Everytime we come to this room, we have exactly the same problem. Someone will have to take responsibility for getting the interpretation system checked, because I have not understood anything that has been said since things have been this way. I have a receiver in my ear, but it is not working. All I hear is someone murmuring something.

This is quite a nuisance, and I apologize if my questions have already been asked and answered.

Mr. Ritter, you said at the beginning of your remarks that you grow modified canola, that you were very pleased and proud of this fact. I would like to know what the main benefit of this is for you. Do you make more money by working less? What are the real advantages of genetically-modified products for farmers?

[English]

Mr. Ken Ritter: Madame, it depends on which product you're growing. For example, most prairie farmers would say a Roundup Ready canola is a good crop to grow if you have weed problems on your fields. You can clean them out quite readily with a very cheap herbicide—Roundup—and you can do it a couple of times during the season. That gets rid of some very nasty weeds. You tend to have a very clean crop then, so as a farmer you can generally harvest it more quickly and easily with less green count in the seed and so forth. So from that perspective, it's agronomically the kind of crop farmers have put into their rotations.

• 0945

[Translation]

Ms. Suzanne Tremblay: We know that the Canadian government has had some experiments done in some fields, but we have not been able to find out exactly where they took place. Do you think some farmers' fields may have been contaminated without them knowing because of these experiments by the Canadian government?

[English]

Mr. Ken Ritter: Madame, with my very limited knowledge, I understand there is the possibility with canolas to cross-pollinate over a considerable distance, but with wheat cross-pollination, it's very limited; it doesn't move very far. So we have no knowledge of any contamination with the test plots in wheat.

[Translation]

Ms. Suzanne Tremblay: If a country decided to dump transgenic wheat in Canada, would you be opposed to Canada importing transgenic wheat, Mr. Arason?

[English]

Mr. Greg Arason: One of our serious concerns, given our proximity to the U.S., is if these varieties were introduced in the U.S., even though they were not licensed and approved for production in Canada, there could be either inadvertent or evasive measures that would introduce them into Canada.

The example I think many would be familiar with is the StarLink corn issue, where even though StarLink was not produced in Canada, some StarLink got into the Canadian system, and it was a concern. Measures have been put in place to deal with that.

So, yes, it is a concern that there could be contamination from outside Canada, and it is important that we have consultation with the U.S. I know they have similar concerns. I have talked to the U.S. wheat associates and others, and our comments reflect some concerns there. But we do live with a very long border along the growing area in western Canada, and we even have some farmers who farm on both sides of the border, so it is an issue.

[Translation]

Ms. Suzanne Tremblay: The position of the Canadian Wheat Board is very similar to that contained in Bill C-287. Since I am not an agricultural specialist—before I became a politician, my specialty was kindergarten, which is quite far out from agriculture—I would like someone to explain why, when the Wheat Board's position was so clearly in favour of Bill C-287, the Wheat Growers Association spent so much money lobbying us to vote against Bill C-287.

Why were some in favour of the bill and others opposed? After all, they are all wheat growers. Some wheat growers are members of the Canadian Wheat Board. Why were they on opposite sides of the issue? For the average person like myself, the question is who is right. I am not in a conflict of interest, because I am not a farmer. Who is right? The Wheat Board, a para-governmental body, or the Wheat Growers Association, which represents the people who want to make money?

[English]

Ms. Patty Rosher (Program Manager, Market Development, Sales and Market Development, Canadian Wheat Board): There are a few elements of that bill that most of the wheat industry agreed on. There were a couple of details on which there were differences in opinion—the mandatory versus voluntary aspect. The CNMA—the Canadian National Millers Association—for instance, doesn't care whether it's voluntary or mandatory. We would prefer voluntary because we think that creates a market opportunity. A mandatory system just puts a cost on everybody. A voluntary system would allow us to identify niche markets for non-GM products, and there would presumably be a premium that would pull that out of the country.

• 0950

The issue of the tolerance level was a concern for anybody in the grain industry, because we know that meeting a 1% tolerance level would be very difficult. We market varieties of malting barley, and we market varieties of wheat within larger classes. We try to hit a 95% purity level, so that's a 5% tolerance level. That seems to be something we can do in a fairly economical and foolproof way, but 1% would be very difficult.

Seed, when it goes into the ground, already has a little bit of contamination in it. It is produced, and there may be some cross-pollination. The farmer harvests it with equipment that he has used on other crops, so there's some contamination there, or comingling, if he puts it into a bin that maybe had something else in it. It goes into the commercial system, a bulk commercial system, where a lot of grain is being handled; there's grain dust that could contain GM or non-GMO elements. So we know from experience that 5% is reasonable, but 1% would be very difficult, very costly. So that's one aspect as well.

But the biggest issue on the labelling system is the wide versus narrow definition. Our customers are concerned about rDNA technology, transgenic technology. They're not concerned if it's a herbicide-tolerant wheat that became so through spontaneous mutagenesis or if it just happened in the field that way; they're concerned about that transgenic element.

The private member's bill focused on the narrow definition, which was a very positive thing. The voluntary labelling discussion that's going on right now is considering a wide definition, which would be very difficult for us to meet and very costly for farmers.

Thank you very much.

The Chair: Thank you.

Paul.

Mr. Paul Steckle (Huron—Bruce, Lib.): We're talking about GM wheat this morning. We know there are many products in the marketplace today that have been transgenically modified.

Science, of course, is intelligence property, and it's owned by someone. This property we're talking about, is it a secretive process? What are we trying to accomplish through this process? Are you people prepared or able to speak to that? What's the mutation we're hoping to accomplish by the science that's going on in this particular wheat modification?

Mr. Greg Arason: Certainly there are proprietary interests involved in this technology. Particularly when you look at the issue of herbicide resistance, and so on, there are obvious proprietary interests, and there have been recent examples of enforcement of those proprietary interests in canola, and so on. So there's that aspect.

There's the broader aspect of whether improved varieties from an end-use characteristic, improved disease resistance, and so on, could also be developed, but again I think, in the plant breeding industry, this technology has tended to be focused on by the biotech companies. Public research and breeding has declined in Canada, and I expect that most of this technology will be produced through proprietary interest. That's the way the industry has been evolving.

Mr. Paul Steckle: Obviously the companies developing this type of wheat are looking at the benefits to them, not only in terms of selling the seed but certainly in terms of this becoming a widely accepted product. Are they also looking at the industry down the road, the further processing and the benefits that might be beneficial to those people and ultimately to the consumer?

I speak as a farmer. I'm trying to get to something here, because I think there's a need for us to continue the science, but I think we need to know who's driving this. Is it the companies, the science, the universities, private companies?

• 0955

Mr. Ken Ritter: Well, sir, it appears that the companies are driving it. I will speak as a farmer back to you.

Look, the future is bright in this field. I've read a number of articles on it. There's talk of growing wheat in the Ogaden desert, in the salt flats, and whatever, providing extra protein, creating pharmaceuticals out of it. When you really look at what the future holds, I think it's very bright.

The difficulty we have with the first introduction of a transgenic wheat is that the only benefit I would see to it, as a farmer, is that you can again spray Roundup on it, to make your weed control a little bit better. The company's claiming that you'll have a more consistent kernel size and protein consistency throughout. So on just those characteristics, as a farmer, I'm thinking the negatives probably outweigh the positives.

It's not bad in canola, because in canola, first of all, the transgenic products are not carried in the oil. So that's good for the consumer. Also, in canola, you can spray out all the grassy weeds, including wheats and everything else, but if you have two of them now—a broad leaf, like canola is, and a grassy plant, like a wheat is—and they're both resistant to Roundup, it's going to cause farmers some difficulties.

Mr. Paul Steckle: What level are the Americans or the Aussies at in the development of a new strain of wheat? As close as we are? Where are they at?

Mr. Ken Ritter: My understanding is that the company involved in this initial variety is also working in the U.S., along with us.

In response back to you, Professor Bill Wilson, from North Dakota State University, stated in an article that the first country, whether it be the U.S. or Canada, that introduces GM-tolerant wheat, transgenic wheat, is going to lose two thirds of their markets.

So the bottom line is, we look at ourselves and ask the question, why is this wheat, the first introduction, being developed as a hard red spring wheat? Why isn't it a hard red winter wheat that's grown primarily in the U.S.? We see very little benefit to us, and we seem to be the only region—the northern tier of the U.S. and the western Canadian prairies—where this wheat would be introduced.

Mr. Paul Steckle: I know we've—

Ms. Patty Rosher: I just want to elaborate.

Ken was mentioning that the first GM wheat variety is a hard red spring wheat. That makes up two thirds of western Canadian wheat production. The red winter wheat, which would make up two thirds of the U.S. production, is not being modified at this time. Neither are Australian varieties nor European varieties. So we would be basically the only ones who would have a GM wheat for the first few years.

The Chair: Thanks, Paul.

I have to move on now. I can come back probably later.

Dick.

Mr. Dick Proctor (Palliser, NDP): So, Mr. Ritter, what is the answer to the question you just asked? Why is it that the hard red spring wheat is being experimented with, as opposed to the winter wheat, in your opinion?

Mr. Ken Ritter: I really don't have an answer. I believe that was the company's choice, to go that route. Unless Patty or Greg want to comment on that....

I don't have a specific answer as to why they chose hard red spring wheat as the first one.

Mr. Dick Proctor: The company we're talking about is Monsanto?

Mr. Ken Ritter: Yes.

Mr. Dick Proctor: Are there any other companies like Monsanto? I assume there are other companies that are looking at GM wheat. Can I also assume that Monsanto is the furthest along in the process?

Ms. Patty Rosher: Yes, that's true. They have a variety that could be put up for approval in 2003-04.

We have met with other biotech companies, mostly to give them feedback, as we do with any plant breeder, on what customers are looking for. The feedback we've received from some of them is that they're going to focus on end-use qualities. We know Monsanto is also looking at end-use qualities. So I think that's going to be the next generation. The first generation is a herbicide-tolerant wheat.

Mr. Dick Proctor: Right.

I think it was Mr. Ritter who indicated that the Canadian Wheat Board could be ready, in terms of segregating product, in a few years. Patty has just indicated that 2003 to 2005 is the timeframe in which Monsanto says it could first bring GM wheat out, other than in a test form.

• 1000

How does their timeframe fit with what time the Canadian Wheat Board feels it needs?

Mr. Greg Arason: Given my understanding of the AQT initiative that I talked about, we're in the initial stages of funding some research on that. My understanding of our timeframe for AQT is that it's very unlikely we would have an efficient, inexpensive, front-line test available within that timeframe.

Mr. Dick Proctor: How many more years...?

Mr. Greg Arason: I honestly can't answer that, given the stage of our research. We could probably have a DNA lab test available by that time, but it would not be inexpensive; it would not be front-line based. That's really where we need the technology. So I'm really not in a position to say, except to say that it's very unlikely we would have it by 2003-04.

Mr. Dick Proctor: I think it was you, again, Mr. Ritter, who indicated that two-thirds of your current customers said they simply didn't want it and the other third were silent.

Are there any customers who think this is a great idea?

Mr. Greg Arason: I think it was me who said that. In effect, none of our customers is asking for GM wheat. Basically, as I said, most of the reaction has been, “Not at this time.” Consumer resistance is too strong at this time. We have others who are just sitting back and watching, but nobody has come to us and said we're ready.

Mr. Dick Proctor: It seems to me the Department of Agriculture has taken a position that this is a life science question. If the science is right, then we should go ahead and bring it to market, regardless of the fallout.

It reminds me of Mr. Martin's talk about the fact that we have the fundamentals right on the economy; it's that we have a dollar at a historic low. I think we run that risk with bringing this product to market when there's obviously as much customer resistance as we have out there.

Any comment?

Mr. Greg Arason: I do support science-based...in the broad sense, because it's important that we have some objective means of determining what is an acceptable product. And that has been the basis for trade, etc. We do have countries now that are refusing to accept GM products entirely.

It is a fine line. We need to find some balance here between what is good science and what is acceptable to the customer, and that's not going to be an easy balance to find.

Mr. Ken Ritter: We're not going to comment on what the Department of Agriculture is doing in Ottawa. I'll give you an example, sir, of one of the things we think is fairly essential. It's this biosafety protocol on establishing tolerance levels. It's fundamental to this whole thing, and I would suggest that this has to be a condition precedent before we're capable of handling this kind of product.

The Chair: Thank you, Dick.

I'll go now to Murray.

Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.): As was said, we dealt with Bill C-287 on the labelling, but I think it has pushed the discussion to the fact that we still have to sit down and figure out some sort of a set-up for voluntary labelling. The consumer wants it, and I think it's the responsibility of us as producers.

My questions would be the following. Who do you think should be involved in this process of setting up voluntary labelling? Who should be around the table?

• 1005

Ms. Patty Rosher: The general representation that's at the Canadian General Standards Board committee right now is probably right, because it does cover the customer, the consumer, and the grain industry side.

We need to have perhaps a better idea of what consumers actually think about it. I would be concerned that we are relying too much on the people around that table for the consumer attitude.

I would also be concerned that we don't have enough reality from the grain industry side, and it's a bit of an educational issue. The average consumer doesn't have a good understanding of where their food comes from. To get them to this idea that you can't guarantee that a load of wheat is free of anything...there is a tolerance level for stones in our wheat shipments. The average consumer doesn't know that, so we would need to have that whole spectrum there to really get to the facts.

Mr. Murray Calder: Basically, the debate on this GMO business comes around to the fact of GMO-modified and transgenic. And GMO-modified, quite frankly, is not the problem. Customers have no problem eating nectarines, for instance, but when we get into transgenic, therein is the problem.

We already have, through the Canadian Food Inspection Agency and the Food and Drugs Act, mandatory labelling on the transgenic. If you take the issue, in the early nineties, of a new breed of soybean, of using a Brazilian nut gene to boost the protein level, that was turned down because, quite frankly, nobody would ever think about a nut gene being in it. So that right in itself, I believe, has to be one of the components within the voluntarily labelling.

The Prime Minister's Task Force on Future Opportunities in Agriculture has been touring Canada. One of the things we hear is the debate between conventional and organic. When we get into this transgenic we are dealing with the issue of cross-pollination.

I'm wondering if you have any comments on buffer zones, for instance, on how big they should be, on whether or not they should be there, and who should be responsible for them.

Mr. Ken Ritter: Mr. Calder, we have met too with the organic industry on numerous occasions around numerous topics, and certainly this is one area where they are completely dead against this. The buffer zone would have to be, again, based on science, and we're not experts in that field. However, in order to ensure that the organic industry continues to grow at the rate it has grown—and it is a very big component of the growth factor in Canadian agriculture—their concern should be heard and addressed.

Mr. Murray Calder: That's fine, Mr. Chairman.

The Chair: Thanks, Murray.

Rick.

Mr. Rick Borotsik: First of all, I congratulate the Canadian Wheat Board for putting together this rather realistic approach, I think, from your perspective on how you must handle GM products.

In saying that, there are other organizations that perhaps are a little ahead of you. You have some concerns, obviously, about the segregation and the testing. In fact, Mr. Arason, you say that the testing isn't quite there yet and probably will not be for a number of years.

I have a report by the Canadian Grain Commission that has been very involved, actually, in the detection and segregation process of GM product, and in this particular case, Roundup Ready wheat.

Let me quote from this report, where it says that:

The [Canadian Grain Commission] is in discussion to acquire specific intellectual property, protocols, know how, and genetic reference material to develop robust [Roundup Ready] wheat detection systems for use in the Canadian grain handling system.

And they say this will be ready fairly soon.

It also says that because of their relevant know-how in dealing with soybean, corn, and canola, that in fact it can be well within the less than 1%. It can go to 0.1% to 0.5% that they can detect of Roundup Ready wheat.

We now have the Canadian Grain Commission saying they will be there very soon. We have the Canadian Wheat Board saying this isn't going to happen and it's not good enough; therefore we have to do away with any of the progress in GM wheat.

Do you work with the Canadian Grain Commission? Are you not familiar with what they're doing?

Mr. Greg Arason: Mr. Borotsik, yes, we do work with the Canadian Grain Commission.

Mr. Rick Borotsik: By the way, this was a confidential report I received. I have difficulty getting access to information from the Canadian Wheat Board, but I do get it from the Canadian Grain Commission—just as a little aside.

• 1010

Mr. Greg Arason: On this issue we'd be happy to provide you with any information we have—

Mr. Rick Borotsik: The question's legitimate.

Mr. Greg Arason: Certainly, it is.

Mr. Rick Borotsik: Here we have the commission saying they're going to be able to develop the segregation and this testing system very soon, between 2003 and 2005, yet you're saying this isn't possible.

Mr. Greg Arason: The Grain Commission is part of the AQT initiative. Their people—

Mr. Rick Borotsik: You didn't mention this, by the way, in your AQT presentation.

Mr. Greg Arason: I said I believed we were well on the way to a lab-based system, where it was basically DNA analysis, as I understood it. I'm not a cereal chemist. I gave that up for economics in university. But from what I understand of the Grain Commission's technology, it is lab-based. It will be DNA-based. They have that available for StarLink corn. As I said, they can detect it. They need the genetic information from those holding the proprietary rights in order to develop the technology. I think that's in their statement.

I don't think we have the ability, on the near-term horizon, to use that technology at the elevator driveway. I don't think the farmer could have it literally at his fingertips, so he could bin properly, etc. The problem is it needs to be at the front line because it has to be segregated as it enters the system. Once it's commingled, it's commingled, and there's no way to unscramble the egg, so to speak.

Mr. Rick Borotsik: I only have five minutes, Mr. Arason. There's one more area I want to go to on this one, if I can, and that's with respect to marketing.

You mentioned in your representation that Japan and China particularly have indicated publicly and privately they'll have absolutely nothing to do with GM wheat. You said it was that simple. Do you have a written document you can provide us with from your customer in Japan, saying to the Canadian Wheat Board they want absolutely nothing to do with GM products and they will not buy them from you?

Mr. Greg Arason: As I indicated, we are regularly asked to provide letters of confirmation that there is no commercial production. That's one side of it. We do have—

Mr. Rick Borotsik: Do you have written direction from Japan or other customers that they do not want to have any GM products at all?

Mr. Greg Arason: Algeria is one of the countries that said—

Mr. Rick Borotsik: Japan is a major customer, though.

Mr. Greg Arason: Japan is, and Algeria is our biggest market for durum. A law has been passed in that country.

So we will do what we can to provide you with—

Mr. Rick Borotsik: In saying that, you're telling us there is no market for any GM wheat. You've said that quite emphatically.

Let's hypothetically say GM Roundup Ready wheat was put into the Canadian marketplace. You've said you can't market it; there is no market. If that happened, would you allow that product to be marketed outside of the Canadian Wheat Board, since you'd have no market for it at all?

The Chair: Thanks, Rick, but your time's up—

Mr. Rick Borotsik: It's a simple question. Would you allow that to be marketed outside the Canadian Wheat Board?

Mr. Greg Arason: The Canadian Wheat Board Act stipulates that any exports of wheat or sale for domestic human consumption must be marketed through the Wheat Board. So we would not provide an exemption.

Mr. Rick Borotsik: You'd have no market.

The Chair: Rick, your time is up.

Mr. Rick Borotsik: Okay, I'll talk to Greg after.

The Chair: On the Liberal side, Rose-Marie, do you have a question?

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.): I'd like to expand on Rick's question. If someone was interested in producing GM wheat and any wheat that was sold had to go through your board, if they had a customer, you'd be holding that person back.

On top of that, I don't know whether I'm totally convinced, because there are other areas where Canada is a leader and we're not accepted in the European countries. But I'm reluctant to believe that those individuals over there aren't proceeding at a quicker pace than Canadians, and we're going to be caught with the blinds down adversely to our Canadian farmers.

Mr. Greg Arason: On the issue of marketing, I think we're perhaps missing here that the risk to the large part of the market by simply having the GM wheat grown, whether there's a market for it or not, is the concern we're expressing. Once we have identified a market and we can safely segregate it and identify it, then we will serve that market.

• 1015

Mr. Ken Ritter: Can I answer your question, too, Madam?

Mrs. Rose-Marie Ur: Quickly.

Mr. Ken Ritter: Speaking as a farmer, how would this happen? First of all, if the present variety of GM wheat were introduced, there would probably be a market. It would be the feeding industry, which doesn't have to worry about it at present. So there is an open domestic market for feed wheat, and that's where it would likely flow.

The critical question, though, is how would other farmers be affected by the introduction of GM wheat into Canada? That's where the liability would be. They would be dramatically affected, just by the fact that it was here and had the potential, actual or real, of being commingled with the wheat products they grow. The liabilities would be in the hundreds of millions of dollars.

Mrs. Rose-Marie Ur: In the presentations by both Gregg and Ken, their concerns were with their customers, but I think our biggest problem here is with consumers beyond their customers. The education lies within the consumer part. Their customers are probably more on top of the issue, but consumers don't understand whether it's GM or transgenic. That's where we have to really do a better job of selling, whether it's wheat or anything else, to educate them about what is actually happening.

Mr. Greg Arason: I would agree with that very strongly. I could give you one example. At Warburton's bakeries in Britain, Canadian wheat is identity-preserved, using specific varieties for that company. They have told us very clearly that they understand the technology, but if there is GMO product in their bread, their customers won't buy it.

The gap that has to be dealt with is customer acceptance—educating that this product is safe. Because of experiences in Europe and other places, in some people's minds there is a basic mistrust of the science that has to be overcome.

Mrs. Rose-Marie Ur: We don't have to look in Europe. We can look in our own country here and see that by watching the news.

Ms. Patty Rosher: We have a package of information we provide to customers on the technology itself, how it's regulated in Canada, and the food safety assessment it goes through. We didn't want that rejection to be based on a lack of knowledge. So it's there and we're ready to have those discussions with customers. But they haven't asked us for that because they understand the technology. Our ability to get through them to the consumer on the street in Algeria is fairly limited, for many reasons, but there is information out there.

Mrs. Rose-Marie Ur: You can have all that scientific information and all the rest that people such as yourself are very versed in, but the average consumer doesn't have the time, for one thing, to go into it in depth.

People come to me who are totally against GMO products. I let them say their spiel, and at the end I say, “Well, do you buy your grapes with seeds in them?” They say, “Oh, no. No way at all”. I say, “Guess what?” They don't realize they're genetically modified. You don't have a grape without seeds unless it's been modified, right?

Ms. Patty Rosher: Yes, but that's not transgenic.

Mrs. Rose-Marie Ur: No, but that's still a bit of manipulation of the original product.

Ms. Patty Rosher: That's what we were talking about—

Mrs. Rose-Marie Ur: Those are the kinds of simple examples that need to get out. It may not be totally about the grain industry, but we need to give examples that it's already here. People don't understand it's already here. They think of this as a new phenomenon, and we'd better put our hands up because we're all going to have four ears or something. That's where we have to better inform our consumers.

Mr. Ken Ritter: I'll just answer your question very quickly.

The Chair: I'm sorry, I have to move on.

Mrs. Rose-Marie Ur: Now we'll never know.

The Chair: David.

Mr. David Anderson (Cypress Hills—Grasslands, Canadian Alliance): Rose-Marie, this marketing problem doesn't just extend to GMOs; it's in lots of other areas. I just had someone call me who wanted to try to make a barley sale. They had phoned the Wheat Board about it. They were refused any discussion over whether they could acquire that wheat or not. They phoned an Ontario supplier and he said “I'd be glad to supply it to you. Where are you from?”. When he said he was from Saskatchewan, he said, “Sorry”. There are lots of places where the initiative is stolen from people because of the marketing system we have.

• 1020

One of the things I've been really concerned about this morning is the implication—and I guess it bothers me—that somehow Monsanto is working against Canadian farmers; that they're developing a variety of wheat that can only be introduced in western Canada, and as a consequence of it western Canadian grain production is going to be destroyed. I find that unacceptable. Monsanto has in fact set forth a number of standards that I find are equal to or exceed yours.

I'd just like to read some of them:

We will make regulatory submissions to the appropriate regulatory bodies in importing spring wheat countries identified as key markets by the Canadian Wheat Board. At a minimum regulatory approvals must be achieved by the United States and Japan.

That goes further than yours. Secondly:

We will work with the grain industry to ensure that an effective and highly controlled system of production, transportation, and processing—based on reasonable tolerances and standardized testing—is in place to handle biotech wheat.

Again that's in line with what you've said. They say:

We recognize that several important Canadian wheat customers have said that they are concerned about the presence of biotech traits in wheat. Export markets are of paramount importance to all Canadian growers. We want to strongly emphasize that [we're] committed to working with the grain industry.... =1603=]

That's similar to yours.

We will work towards the development of internationally recognized quality standards for wheat seed and grain trade that provide realistic quality standards and tolerance in grain.

Here is another standard fairly equivalent to the ones you've got in your biotech statement.

You have industry agreement on conditions and industry commitment to them. I'm just wondering what in the world it was that brought you to the point, when you're supposed to be representing farmers and marketing their grain, of throwing yourself into this highly charged—politically charged—anti-GMO campaign. In a minute I'd like to talk about some of the partners you have in that campaign with you.

Mr. Ken Ritter: Well, Mr. Anderson, I'll begin by answering your question this way. On September 24 we had a meeting in Winnipeg with the industry partners I identified in my opening remarks. They include everyone from the Western Canadian Wheat Growers to the NFU and the full political spectrum of farm groups in between. We also had the Grain Commission as part of it, the Canadian Seed Growers Association—as I said, 26 leading industry players. They were all of one mind: that market impact is critical to the introduction of GM products. Otherwise, the western Canadian farmer is going to suffer as a result of it. So our position is—

Mr. David Anderson: I'd like to interrupt you there. Again I'm not sure why you're conducting this initiative. I realize the government's not leading in agriculture these days, but this is an initiative that should come from the government. The farmers have low prices right now, they have absolutely low yields, and once again they're paying the bill for something that doesn't directly have to do with marketing grain. This is the government's responsibility, not the Canadian Wheat Board's.

I have a concern you're sleeping with some pretty strange companions. Most of us agree—and this is another topic—that these upcoming WTO talks are going to be the last hope for Canadian farmers, if we don't get the subsidies reduced through them. You've aligned yourselves in the public eye with such urban-based lobby groups as the Council of Canadians and Greenpeace, which are strongly anti-GMO and anti-World Trade Organization. The Council of Canadians is in the middle of actively trying to scuttle the trade talks that are going to be in Qatar. You stand to lose some of your power through these trade talks potentially.

You're supposed to be marketing farmers' grain. I'm just wondering what gives you the right to ally yourselves with left-wing urban organizations who basically detest farmers and what they represent. I also want to ask, how does that protect farmers' interests, and why are farmers paying for this initiative when it should be the government's responsibility to do it?

Mr. Greg Arason: As the marketer I feel I would be totally irresponsible if I did not pass back market signals to the farmers of western Canada as to what our customers are telling us. And very clearly our customers have identified this.

We have the responsibility to market the grain the customer is willing to accept. For us to sit silent and not inform growers and the industry what the customers are saying I think would be irresponsible on our part, and I believe it's fully within our mandate to pass it back. We work with customers all the time asking us for different qualities and work with the industry to develop them. We can give you all kinds of examples of crops that have been developed through good customer contact and market intelligence. That's our responsibility.

• 1025

The relationship with others I will leave to Mr. Ritter to comment on. But it's important.

Mr. David Anderson: Get your DNA testing in order if you want to do something that will help farmers.

Mr. Greg Arason: That's why the Wheat Board stepped up front with a million and a half dollars before anyone else to get that project underway.

Mr. David Anderson: [Inaudible—Editor]

The Chair: I have a problem here. David, the time is up. I'm sorry, but your opening statement took up a lot of the time, David.

Marcel.

[Translation]

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

I am going to speak against the position just stated by my neighbour. I apologize for arriving late and for perhaps missing a significant part of your statement.

I did hear that we were talking about genetically modified foods and the bill, which was voted down here, and that would have required genetically modified foods to be identified and labelled in cases where there was more than 1%... You mentioned that that could be rather costly. During the conversation, it was also said that the ultimate objective of what we were doing was to protect consumers, and that they might not be ready to buy genetically modified foods.

In my view, there is no better way to prepare consumers for these foods than to give them a choice. Why should consumers not be able to choose which food they want to buy by demanding labels that show whether or not a product is genetically modified? Why did we decide not to force companies to label foods they provide for consumers? In my view, this would be the best possible education for consumers, because they would be able to choose whether or not they wanted to purchase genetically modified foods.

I will ask two or three questions at once and then leave you enough time to answer them. I attended a meeting of the Human Resources Committee where the subject was developing countries. We were told that the worst thing we could do would be to provide them with genetically modified seeds in an effort to help them. This would make them dependent on the big companies, multinationals, and there will be no way out for these countries. Some experiments along these lines have already been carried out with corn.

I felt a chill when one of you mentioned that we could develop a wheat that would grow in the desert if you added some proteins. In my opinion, this would be the worst thing we could do for these countries. I would like you to tell me why we are doing research of this type and who is requesting it. Is it the hungry people of the world who are calling for this, or is it rather the companies that want to continue to keep them hungry?

What I find scandalous about GMOs, is that we seem to be forcing people to eat them and to be dependent on certain multinational companies. I have had an opportunity to go to Africa and to see machinery rusting out along the road, close to airports. This was equipment that they would have never needed to use, such as threshing machines, in regions where no grain was grown. This was part of our generous aid to developing countries. I also saw huge tractors in places where there was no gas available for them or fields to cultivate. This too was part of our great generosity toward developing countries.

Are we doing the same thing with seeds?

[English]

The Chair: Thank you, Marcel. I think you made some good statements. It's ironic, the tractors on the side of the road. But the five minutes are up, and I'm sorry. Now let's have a couple of zingers around.

Garry, you have a short—

Mr. Garry Breitkreuz (Yorkton—Melville, Canadian Alliance): Thank you very much.

My question was essentially asked by Rose-Marie Ur, and I would like to give you 30 seconds to answer her question out of my time—the couple of minutes I have here. I want to expand just a little bit on it.

• 1030

There are a couple of groups right now on the prairies, the new generation co-ops that have been trying to get established, who really could move into this whole area if they were allowed to process and market some of these grains. They'd be able to do that and not have to wait three years for the AQTs to be put in place. We have the organic grains people, who now can access some of the markets the Wheat Board can't.

I think it's really a detriment to Canadian farmers on the prairies to restrict these groups in their ability to expand on some of these markets that you say at the present time you're not completely able to do.

I would appreciate it if you would finish answering Rose-Marie's question, and tell me why some of these groups are restricted in their ability to go ahead in these areas.

Mr. Greg Arason: First of all, we place no restrictions on organic farmers in what they can grow. We do have an organic policy that streamlines procedures so they can access markets more readily through the buyback programs we have in place and through credit assistance. So we have worked with organic producers, and we have a program in place to enhance that business.

On the value-added side—

Mr. Garry Breitkreuz: Can I just interrupt?

I have a lot of people in my riding and my province who would not agree that is so. They have been restricted. But anyway, go ahead and answer.

Mr. Greg Arason: We've had broad consultation with organic producers in general.

The Chair: Thank you.

Larry, you had a quick one.

Mr. Larry McCormick: Thank you, Mr. Chairman. I have a very brief comment.

I know we're supposed to be asking questions, not making statements, but I'm sure we all agree one of our next witnesses on GMOs and testing should be the Canadian Grain Commission.

On the testing, Mr. Chair—I apologize; I was out for health reasons—if we had the segregation test of the product, that would be one thing. I'd like to hear when that's.... But until we have a test that will test the pizza, the corn flakes, and the bread....

I'm sure the Canadian Wheat Board, which is a great Canadian establishment that has done a lot of great work in this country, would be concerned about their product and how it was used after it went to the manufacturer.

To segregate the GM wheat down the road at your end of it is one thing, but how do we control it when the manufacturer has it? I mean, when there's no test anywhere around the world, and I wonder how many...a a real, true test.

That was our problem with the bill the other day, and that will be the problem tomorrow. We want to move that way, but you can't have a law you can't enforce. You can't test something you don't have a test for.

Thank you, Mr. Chair.

The Chair: Thanks for your statement.

Dick, is it a statement?

Mr. Dick Proctor: No. I was looking for an answer, Mr. Chair.

Can you give us any insight into what you're looking at in terms of actual segregation, comingling, how the Wheat Board proposes to do that?

Mr. Greg Arason: It has to happen at the country elevator level. Various methods have been talked about, including some kind of certification program right back to the farm. In my view—and I've operated country elevators—for practical purposes, it has to be a driveway test that will allow the country elevator to bin that grain accordingly, ship it out, and preserve the identity in the elevator system right through the rail system to the terminal and ultimately onto the boat or into the mill. That's where it has to start.

The Chair: Bob, do you have a short question?

Mr. Bob Speller (Haldimand—Norfolk—Brant, Lib.): Mr. Chair, I have a question for the chair, because I'm wondering where....

I appreciate the fact that the Wheat Board came today. I'd be interested some time in finding out where you came up with the 5% level, but I can deal with that later. I'm interested, though, in where we're going with this.

I apologize, I'm not on the steering committee. But as a member, I see this as a very important issue and one I think this committee should explore further. There are a lot of different issues, and if we don't get on top of this issue, other groups such as the environment committee or a committee looking after consumer groups will take this on and recommend things that may not be in the interests of the farming community.

I would suggest, Mr. Chair, that the steering committee take a serious look at this very important issue.

The Chair: Thank you, Mr. Speller.

• 1035

With that, we'll conclude this part of our hearing this morning. We'd like to thank the witnesses. I didn't get a chance to ask questions, but I would hope the Wheat Board is not only monitoring what's happening in Canada on this but also looking at some of our competitors, in terms of other countries that are taking positions. We have some competitors that are really eating into our markets, and I think it's very important that Canadians watch what Australia, Brazil, and other countries are doing to put a product on the market that could jump over ours if we're not cognizant of what's going on in the world.

Thank you for coming, and as Mr. Speller says, we'll certainly as a committee look at this issue, and I would think the committee may want to hear more.

[Translation]

Ms. Suzanne Tremblay: I would like to comment on...

The Chair: Ms. Tremblay.

Ms. Suzanne Tremblay: My question is an extension of what Bob Speller was saying. I believe Marcel Gagnon raised the issue last week or the week before. Since the four ministers—the Minister of Health, the Minister of Agriculture, the Minister of the Environment and the Minister of International Trade—wrote a joint letter to the chair of the Health Committee to ask her to begin hearings on this issue, the hearings will be held by the Health Committee, rather then by the Agriculture Committee. They will begin in February and the committee is to present a report in June 2002.

So, it will not be the people here today who will be examining this question, but rather the people in health. The hearings are to begin February 2002. In January 2002, people are supposed to provide a list of all the witnesses they want the committee to hear. The purpose of Mr. Gagnon's comment was to try to have the witnesses heard by the Agriculture Committee rather than the Health Committee.

However, when I reread the blues, I realized that no one listened to what he said, that it was lost, and the committee moved on to another matter without discussing his suggestion. However, after what Bob Speller just said, I think it is so...

[English]

The Chair: We're getting into debate on this, and at this point I'd like to adjourn this part of our meeting and thank our witnesses. In about two minutes we'll welcome to the table our group from Ducks Unlimited Canada.

Thank you.

• 1037

• 1041

The Chair: Pursuant to Standing Order 108(2), we'll resume our meeting.

Our second group of witnesses is from Ducks Unlimited Canada. I'll just mention briefly that a short time ago Mr. Turner came to my office and wanted to discuss the position of Ducks Unlimited in terms of some of our farmlands and wetlands in Canada. I suggested that they should write to the committee, which they did, and the committee of course recently agreed that we would spend approximately an hour hearing the presentation from Ducks Unlimited.

As a former parliamentarian yourself, you're well aware of how these things work. Barry was on the Hill here back in the 1980s as a member of Parliament.

We'd like to welcome you and your group. I'm not sure exactly how you plan to present this. You are the person dealing with public relations, so welcome, and if you will, you can introduce the other two members of your group.

Barry, the floor is yours.

Mr. Barry Turner (Director of Government Relations, Ducks Unlimited Canada): Well, Chairman Hubbard, thank you very much to you and your clerk. The notice was fairly short, but we really appreciate a chance to present an initiative to this committee.

I wear two hats, Mr. Chairman. Yes, I'm a former member of Parliament, and I'm chairman of the Canadian Association of Former Parliamentarians, but I'm not here on a recruiting drive. At some point in time we will be welcoming all of you to the Association of Former Parliamentarians.

However, I'm wearing a Ducks Unlimited Canada hat this morning, and if we can perhaps genetically alter your mindset for the next little while, we'd like to talk to you about a national initiative we have been promoting across the country for the last couple of years. In particular, we've met with the five NR departments of the federal government, the Prime Minister's Office, the Privy Council Office, all of the provinces, and a number of industrial groups that are interested in what we're proposing. In general, we think you will agree with us that our initiative has broad economic, environmental, and financial implications for all Canadians, not just for the farming community.

On that note, I'm going to ask my colleague, the director of our conservation programs, Dr. Brian Gray, to give you an overview with a PowerPoint presentation of what the initiative is all about. Then we will look forward to your questions.

Dr. Gray.

Dr. Brian T. Gray (Director of Conservation Programs, Ducks Unlimited Canada): Thanks, Barry. I also echo Barry in thanking this committee for giving us the time to present what we think is a very exciting proposal.

Why have we developed this proposal? I'd like to quickly go through some of the key issues affecting the ecological integrity of agricultural landscapes. I want to preface this by saying that outside Agriculture and Agri-Food Canada, there's probably no other agency or group that has worked more with farmers across the country than Ducks Unlimited. In the last five years alone we have developed management agreements with 2,600 farmers.

We are not here to cast blame on anything. We're here to make observations of the state of the environment and talk about moving forward. We know from our experience that if farmers had the resources to do ecological things and if the cost benefits were just even, they would do it. Unfortunately, they're not. They can't. It would cost them money to take these ecological actions. I preface my presentation with that.

• 1045

The issues we're looking at are tillage of marginal or highly erodible soils, wetland drainage, overgrazing of native pasture and riparian areas—riparian areas are those areas of transition between water or an aquatic ecosystem and an upland or dry system; it's a unique ecosystem in and of itself, and it's a very important one. To continue, we're looking at removal of vegetative buffer zones along waterways and field margins and the over-application of fertilizers and pesticides.

There are five key issues I would like to briefly highlight here. The first one is marginal soil cultivation. Cultivating marginal soils is not ecologically sustainable, and in many areas, we suggest, it's not economically sustainable either. It results in increased sediment loads and nutrient loads within associated water courses. In the prairies, specifically in the saline areas, it results in increased salinization of the associated uplands.

The second key issue is the loss of wetlands. When wetlands are drained or filled, we lose flood protection and the potential for groundwater recharge. We lose the water filtration and purification functions of those wetlands, which make them the kidneys of the earth, if you will. And we lose the associated fish, wildlife, and human benefits of those wetlands.

The third key issue is the loss of riparian buffer zones. Agricultural activities that reduce or impact on riparian buffer zones along waterways affect fish and wildlife habitat, but they also affect the nutrient and sediment loading of adjacent watercourses and especially affect the rates of surface runoff, a critical element if you're looking at mitigating flooding. All these factors in turn affect water quality and quantity.

The fourth key issue is the loss of biodiversity. Without native plant communities, riparian and field margin buffer zones, and wetlands, we lose biodiversity. We are also actually creating a growth industry for designating new species at risk, which nobody wants to do.

The fifth and final key issue we would like to highlight is Canada's greenhouse gas budget. Conversion of native prairie to cultivated cropland; excessive tillage of marginal lands, including wetlands; and drainage of wetlands all lead to production of greenhouse gases, whether it be nitrous oxide, methane, or carbon dioxide.

So why are we here and why have we developed this proposal? For a couple of years we have felt that the benefits that would accrue to society through the conversion of riparian areas and marginal agricultural land to permanent vegetative cover significantly outweigh the cost to do so. I want to highlight here again that we're talking about societal costs and benefits, not on-farm costs and benefits. As I said when I started this conversation, if the benefits outweighed the costs, on-farm producers would already be doing it.

The realities of the approach we've taken and the issue we're trying to tackle here are that in the past, ecosystem services have not really been fully captured in commercial markets or adequately quantified in terms we understand in comparison to economic services and manufactured capital. Because of this, they have been given too little weight in Canadian policy decisions.

We're suggesting here, and we would like to show you, that we do have a case, that the net benefits are there and are real, and that here's an opportunity to take a leadership approach and do the right thing. We hope we present enough information to whet the appetite of this committee to get started on something like this.

Now, who should lead this? Obviously, from a renewal standpoint we'd say Agriculture and Agri-Food Canada needs to lead this. But this is not a strictly agricultural issue. In fact, as Barry mentioned, we have engaged the five NRs, the five natural resource-related ministries of the federal government. NR CAN needs to be involved in this because there are carbon sequestration aspects associated with this. Environment Canada needs to be involved because of the stewardship aspects, whether it be biodiversity or the issue of species at risk. The Department of Fisheries and Oceans needs to be engaged in this because we're talking about fish habitat, aquatic habitat. And finally, Health Canada has to be involved because we're talking about clean water, which affects all of us.

We also need to engage the provincial counterparts of the five NR departments in this. We have been doing that at the provincial level. We started off with the agriculture ministers. Then I'd suggest we also need to engage other NGOs like ourselves, such as the Canadian Federation of Agriculture, the Crop Protection Institute, etc., and we have started those discussions.

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So quite simply in this proposal we're looking at doing two things: one is to protect or restore the graded riparian zones. In a schematic here, just to visualize what it looks like, we're talking about taking a system that might look like this and turning it into something that looks like this; or perhaps a better example, taking a system that might look like this, where the producer is actually making money doing that. There are no costs to him. So there's no motivation to change to a system like this where it's providing societal benefits as well as on-farm benefits.

The other thing—and we focused just on the prairie provinces for this—is to provide economic incentives for landowners to convert marginal agricultural land to a conservation cover. Again looking at a schematic here, we're talking about a landscape that might look something like this and changing it into a landscape that looks something like this. Downstream of this, at the tail end of the schematic, you see a model city, if you will. That city represents society benefiting from what happens upstream here.

With regard to the key points of this proposal, we're talking about managing these lands to enhance the provision of environmental goods and services, period. We're not talking about subsidies or reducing commodities. Those might be something that you would be interested in, but we're talking about simply paying people to provide society with these goods and services.

Long-term securement is preferable on this. I'd like to engage the group in a discussion of that during the question and answer session.

We're talking about this land not being used for agricultural purposes. We're talking about the end points of this being clean air, clean water, wildlife habitat, fisheries habitat, and societal benefits. Those are the end points. Agricultural use might be acceptable to get one of those end points. That's fine. That would be value added. But the end point here is that we're talking about environmental goods and services.

In the proposal the analyses came from two sources: one was an in-depth case study I was involved with, which Ducks Unlimited staff led, along with Dr. Ken Belcher from the University of Saskatchewan. He's an agricultural economist by training.

We looked at three case studies, one in Ontario, one in Saskatchewan and Manitoba, and one in Prince Edward Island. We were looking at the cost benefits of doing something like this on those real case studies. We didn't develop the data. The data were already there. We selected these areas because they were fairly data rich, especially the Grand River system in Ontario.

Concurrent to that, we wanted to know how much land we were talking about, where it was, and how much by province, broken down by riparian area or marginal lands. So if you look at these two sources, essentially the in-depth case studies provided cost-benefit estimates per hectare, so at a fairly micro level. Land-based calculations provided estimates of how much land we were talking about, so we could scale up the in-depth case studies to a national level to give us a ballpark idea about what we were talking about land-wise and cost-benefit-wise.

Getting to the bottom line here, we looked at marginal land. We said, how much marginal land exists in the prairies right now that is currently being cultivated? We used the definition of Agriculture Canada. We're talking about CLI five, six, or seven lands. Everybody agrees those are marginal, whether it be the provinces or the federal government. Fair enough.

So we said, how much is out there? There are about 2.5 million hectares. We said, just for the case of this proposal, if you take half of that out, how much would it be and what would be the cost benefits? The reason we chose half is because it's easy to do the math. If you say it should be a quarter, you just divide these numbers by two. If you think it should be all of it, you multiply by two.

We looked at riparian buffer zones in every area. Again, we calculated how much riparian zone we were talking about in cultivated areas. We estimated that there were going to be roughly 2.3 million hectares. We said, let's take out half of that. How much are we talking about? That's the total there of 1.115 million hectares. For people like me, on the bottom there we have the conversion into acres.

So we look at a total here. We're talking about nearly six million acres if we took out roughly half of the riparian zones and put them into goods and services or half of the marginal lands in the prairies.

• 1055

The paper I referenced earlier that Dr. Belcher, Cynthia Edwards, and I did was done for the agricultural working group of the national round table. We were looking at ecological fiscal reform. Are there tax programs or expenditure programs that we can move around to encourage ecological reform? That's where these numbers came from. So the total benefits for the Maritimes, Quebec, and Ontario came out to $198 per hectare per year. That would be our best estimate of the benefits.

There are costs associated with this. Essentially, we took a conservative approach. We said, if we did this over an annual basis, what would the costs be? We said the best, most conservative estimate to get is let's find out what the rental rates are for each of these provinces. So these are the average agricultural rental rates per hectare per year. That's where most of the cost is coming from. Then we said, here are the total costs. What's the bottom line?

We estimated that the net benefits per hectare per year ranged from $108 in the Maritimes to $67 in Ontario. These are largely being driven by the annual rental rates. We looked at the prairie provinces specifically. The total benefits are estimated at $68, with costs at about $34, again largely being driven by that annual rental rate, and net benefits to Canadians based on the prairie approach would be $34.

So in total we're looking at a target of about 2.4 million hectares. The benefits would be about $200 million per year. The costs of this program, mostly due to an annual rental payment, would be about $103 million a year. So the net benefits are estimated to be $93 million a year.

So what are the policy implications if we did something like this? This would be a green box initiative under the WTO. We're talking about targeting environmentally sensitive land. We're not talking about promoting a forage conversion program.

We really feel that protection of the environment and long-term sustainability of agriculture are complementary objectives of the Government of Canada. All the signals we've been seeing, hearing, and reading about suggest that.

Finally, and very much related to that, we think that branding Canadian agriculture as environmentally responsible is a very good ticket, a very good success item. Looking back at the Speech from the Throne in January, it mentioned that high standards of environmental stewardship are being encouraged on the farmscape. More recently at the federal-provincial-territorial agricultural ministers meeting in Whitehorse, they developed an action plan, which we understand all ten provinces and one territory have signed off on. They want to become the world leader in food safety, innovation, and environmental protection. In fact, their press release issued after that meeting stated that they want to enhance the sector's environmental performance through accelerated adoption of sound environmental practices on the farm. This is a tangible tool for that environmentally responsible tool bag they're trying to develop. More recently, I think it was on Monday, there was a special section C in the Globe and Mail, which Agriculture and Agri-Food Canada put in, and on the front page they had similar wording.

There are lots of reasons people can think of as to why this might not work. What we're trying to engage people in is let's think about why it will work and how we can build it. If we fixate on all the blemishes, we're never going to get anywhere.

Happily, not only does Ducks Unlimited have 60 years of experience in dealing with landowners, but a similar program has been happening in the United States since 1986. It's called the Conservation Reserve Program. It has been through four farm bills. It's now in Congress for the 2002 farm bill. From 16 years of experience, they've learned what's good about the program and what's bad.

So there are lessons to be learned from them. We've met with Bob Stephenson, who's the senior administrator for that program in the United States. Bob gave us a lot of advice. We said, Bob, if you could do it all over again, what would you do? So a lot of this comes from our experience and theirs.

Quickly, this needs to be voluntary with financial incentives. That's a key issue.

We're talking about retiring lands providing environmental services. We're not talking about a technique to reduce commodity plantings. The farm bill in 1986 started off doing that. They learned their lesson, and by 1996 they weren't doing that any more. No one size fits all. What the end points are in the Maritimes might be different from what they are in the prairies or British Columbia. One size doesn't fit all. But we have to keep it simple. The more sizes you have, the more administrative costs you have.

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Maximize the environmental benefits relative to cost. They've done that in the United States. They have an environmental benefits index. It's basically the index they use to score successful applicants for CRP, and right now there are 1.5 times as many applicants as there is program money.

Incentive-based payments should be market sensitive. We need to encourage input from wildlife organizations in identifying what these end points are—and I shouldn't just say “wildlife”, but all environmental interest groups. We need to limit enrolment by region so that large areas are not taken out of production. CRP limits it to 25% of any one county.

Address environmentally significant or marginally productive agricultural lands. Maybe in some areas the end point is wildlife species, not in all areas.

Protect marginally productive land in perpetuity with one-time payments. Again, I'd like to get into this a little bit more during the discussion.

Link the program enrolment contracts with Canada's commitment to Kyoto. We think the resource industry that needs to buy carbon credits would be happy to buy credits through this program. So industry could actually fund this program.

We need to link the program, as I've already mentioned, with the new vision for agriculture and bring together the five NRs and their provincial counterparts to help build this program. We need to enhance program funding administration through NGOs. We are prepared, as an organization, to help deliver this, not only to bring money to the table but also to provide our staff time. We have almost 400 permanent staff across the country. We have offices in every province.

We're saying we need to use adaptive management. We can't be paralyzed by perfection. We have to get started on this. We're not going to hit it perfectly; we're not going to develop the silver bullet this year. We start, we do the best we can, we evaluate. If our end point is water, let's say, we're going to have our water quality parameter. It's going to go from here in year one to here in year five, and if it doesn't do as well as we thought, we have to change something about the program to meet that end point. But we can't just wait till we get it perfect before we get started or we'll never get started. And we need to ensure that the program is not production enhancing. It has to be compatible with trade agreements like NAFTA, WTO, etc. And we feel it is.

Finally, to the punch line, we have simply two recommendations. We want the five federal natural resource ministries to work together to develop a national conservation cover incentive program that addresses the environmental issues and concerns of the associated departments, which we've outlined briefly in this proposal. Secondly, we'd like to be at the table to help. We've been the architects of this to date. Every one of the five NR ministries we've met with has said, this is great, we like it, but we don't have time to spend on doing this. We have other things. We have a brush fire here, we have a brush fire there, but this is brilliant. We like it.

Somehow we have to get these people together and say, for the next period of time, this is your job. Let's do this. Let's put together a Mars team, so to speak.

Finally, we are prepared to provide significant financial resources to this program if it's something that meets our objectives and the objectives we've outlined here.

So now we have a little bit of time for questions and answers. We'd be happy to engage in that now. Thank you.

The Chair: Thanks, Dr. Gray.

I think most members are familiar with Ducks Unlimited. I know I attend some of your fundraisers. But what really caught my attention when I met with Barry was your financial resources and your annual budgets, and just how much money you have available to put into these kinds of programs.

For the committee's benefit, Barry, would it be fair to say you're one of the largest?

Mr. Barry Turner: Mr. Chairman, you're right. Ducks Unlimited Canada is a lot more than just ducks, as most of you now know. We are the largest conservation company in the country, and if you combine our resources—we'll spend about $80 million this year in Canada—with the DU Inc. in America, it's the largest conservation company in the world.

What many of you don't know, I would think, is that we generate about $20 million Canadian per year from the U.S. Congress, and that is sent to DU Canada through DU Inc. in America as the United States government federal commitment to the North American Wildfowl Management Plan, which was a plan initiated between Canada, the United States, and Mexico in 1986, which has had significant impact on wetlands, waterfowl, and wildlife throughout North America.

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We also get about $30 million Canadian a year from DU Inc. in America. As we all know, the wildlife of this continent, for the most part, is bred in Canada, but they winter in America; it's a shared resource. That's why the American government contributes significantly to the efforts of Ducks Unlimited Canada.

I have had discussions with some U.S. legislators with respect to their ongoing financial commitment to Canada. Their comfort level, in raising more money for wetlands and waterfowl and the health of our communities, will be raised significantly if the Government of Canada makes a commitment to do more of the same.

They have said that to us through DU Inc. in Washington. Part of this initiative is trying to engage the five NRs, the federal government, the provinces, and ourselves in raising the protection of the environmental goods and services on farmscapes across the country. That's essentially where we are financially, and we're prepared to commit millions of dollars to this initiative on an annual basis.

The Chair: Thank you, Barry.

We have a limited amount of time, so could we keep our questions a bit short.

David, are you going to lead off?

Mr. David Anderson: I'd like to follow up on that answer a bit and ask you who funds you. What percentage of your funding is government funding? What percentage is private? Also, what assets do you have in terms of dollars?

Dr. Brian Gray: In terms of the first part of your question on our funding, which Barry was explaining, the North American Wetlands Conservation Act, signed in 1989 by George Bush as an act of Congress, says.... They needed funding for the North American Waterfowl Management Plan. This was a mechanism, so they've taken money and they said, under the act, you can appropriate up to $45 million U.S. a year for NAWCA, the North American Wetlands Conservation Act.

Every year the House and the Senate have to appropriate funds, whether it's $45 million or not. The restrictions for those moneys are, one, it has to be matched by a non-U.S. federal dollar, and it can be matched by a state dollar, it can be matched by an NGO dollar like Ducks Unlimited Inc.; and two, 45% of that money has to go to Canada. Only 50% can stay in the U.S., 5% goes to Mexico, 45% to Canada. That's in the act.

The issue is every year, since 1991, the amount that they've appropriated has been around $15 million to $18 million in total, so we, DU Inc., only get an opportunity to match 45% of that.

Last year, we had a blip. For whatever reason, Congress decided to go to the ceiling. I think it might have been when Clinton was leaving office—I don't know the politics behind it—but it went up to $45 million. We know, from talking to Congress people, that they're not comfortable with keeping it up there because what's Canada putting into this program? They're saying, we're sending that money up there, how much is the Canadian government putting in? If we were able to show a program like this, we could go down there and say, $45 million, let's keep it at the highest appropriation level every year.

So our budget this year, the $80 million, is inflated a bit because they did that last year. So we got $20 million U.S. in this giant lump sum thing that's matched by DU Inc. We don't think it's going to stay that high.

Getting to your question, specifically, on an average year, about 55% to 60% of our moneys come from DU Inc. and the federal match. The rest we raise in Canada through our event systems. We have about 600 dinners or golf tournaments or what have you. Hopefully some of you have been to them. If not, please do attend; there's one in every community. The net dollars we raise go into our program. That's about $20 million a year. Then we have major gift development, which although we're an old company we're very new at, and we're trying to get corporate dollars or major foundation dollars. We get government money from Canada. On average, through the joint ventures, we might get anywhere from $1 million to $2 million a year in partnerships, and just recently we had about $1 million a year through the millennium fund.

Mr. David Anderson: Do you hold land—

Dr. Brian Gray: And provincial money, sorry.

Mr. David Anderson: —in your company?

Dr. Brian Gray: Yes. We own about a quarter of a million acres of land. Most of that is in Saskatchewan.

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Under NAWCA—sorry, the last thing I mentioned—what's very important is that there's money that comes from Congress that's matched to come to Canada. The other restriction is that they want it to be perpetual. They want it to be there forever, so they like land purchases. But they also like conservation easements, which means the landowner retains everything except the easement. So they're entrusting Ducks Unlimited, for example, with looking after the environmental aspect of that landowner's land.

So with something like this, again, the more permanent it is the more likely we are to get U.S. federal dollars.

Mr. David Anderson: So that is a major difference between the CRP program and what you're doing.

Dr. Brian Gray: Exactly. The CRP gets no NAWCA funding.

Mr. David Anderson: I'll let somebody else ask questions.

Mr. Howard Hilstrom: I'll use up his time if he has a minute.

The Chair: He has 30 seconds.

Mr. Howard Hilstrom: Barry and Brian, you probably know who I am. I'm Howard Hilstrom from the Vestfold area, the very riding where the Stonewall Oak Hammock project is. With all the bright image that you're putting on this, you know very well that there are massive problems with the DU project in the Vestfold area, with the flooding we have there. Ducks Unlimited is not totally responsible for it, but you're part of the problem right now and not part of the solution.

When I look over your proposal here.... I imagine we're going to be in favour of your proposal, but I have to look at it. But I don't want everybody on this committee to assume that everything DU does works out fine.

One of the biggest problems is that DU has massive amounts, millions, of dollars, and that individual little farmer who signed that agreement with you cannot force you, because he doesn't have the resources, to live up to your agreements as to water levels and that kind of thing. So you may want to respond to that, as to how the individual landowner is able to deal with an organization of such a large size like yourself.

The Chair: Thanks, Howard. I'm sorry, you've used up your 30 seconds.

Maybe later you'll want to comment on that.

Marcel.

[Translation]

Mr. Marcel Gagnon: I would like to congratulate this organization, because in Quebec, the efforts made by Ducks Unlimited to restore wetlands, among other things, have been very good.

You made two recommendations, which means that you are having trouble reaching certain objectives and getting a number of departments to work together. How can we help you reach this objective, because the environmental restoration work you do is outstanding?

[English]

Mr. Barry Turner: That's a wonderful question.

[Translation]

Thank you very much.

[English]

How can you help? Well, Mr. Chairman, it would be wonderful if this committee were to unanimously endorse this initiative with a recommendation to the Minister of Agriculture, the cabinet, or the Prime Minister, that the five NR departments sit down with us, work this out, and make it happen.

I should add that we have met with the Quebec environment minister,

[Translation]

Mr. André Boisclair. We have met with Mr. Boisclair and his officials, and they said that in general they found the project very interesting and that they wanted to work with Ducks Unlimited Canada to improve this initiative.

The situation in Quebec is very positive as well.

Mr. Marcel Gagnon: Thank you. The work you have already undertaken in Quebec is very good.

Mr. Barry Turner: Thank you.

The Chair: Thank you, Marcel.

[English]

Paul, do you have a question?

Mr. Paul Steckle: Yes. I'm a big fan of Ducks Unlimited, and in our own area we have an area that has been taken out of basic farmland use and put into a habitat management area for ducks. That's the Hullett wildlife management area.

I certainly favour the direction we're going in, in your initiative. I think it's a positive one, given the status of our agricultural community right now and where we're going there.

I'm wondering, what are the benefits? How many Americans are coming to Canada, and how does that impact our economy? Certainly I know American hunters come to Canada as a result of the populations, maybe more so in the west than perhaps in Ontario, but I think it's important to recognize. We need these arguments going forward. I think it's a great initiative, and I would support it.

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Mr. Barry Turner: Mr. Chairman, we made a presentation in May to the Senate Standing Committee on Agriculture and Forestry, chaired by Senator Gustafson, and when we finished the presentation, Senator Joyce Fairbairn was the first person to make a comment, followed by a question. She said that when she was a young girl growing up in Lethbridge many years ago, there were wetlands everywhere, wildlife everywhere, waterfowl hunters everywhere, and people from all over the world would go to Alberta to hunt waterfowl. She said that is no longer the case; there's hardly anything left.

She's right, because in the last 40 years there has been the drainage and erosion of the habitat for waterfowl in Alberta and other parts of the country. Therefore, those men and women who used to go and hunt there don't go there any more, and that is not providing economic benefits to Alberta or Canada.

In Saskatchewan, there's still lots of waterfowl hunting, but her comment was really interesting when she said there's hardly anything left. When we look at the landscapes—we didn't show you, but we could have, a picture of Churchbridge, Saskatchewan, in 1956, an aerial photograph, and one from 1997. Comparing aerial photographs 40 years later, you can see that the wetlands have disappeared significantly. So you're right, and thank you for the positive comment.

Mr. Paul Steckle: What kind of response have you had from these five ministers? Have you met with these departments singularly or jointly?

Mr. Barry Turner: As you may know, it's very difficult to bring together federal departments. There's something in this town called “silos”, and they all protect their own areas of interest and their own real estate, and for whatever reasons they have, their various agendas. That's fine. That's the way this town has been working for decades.

Mr. Murray Calder: It's like herding cats.

Mr. Barry Turner: Yes, Mr. Calder, herding cats.

Well, we're getting good at herding things and we are bringing them together, and our initiative says that's what we want help to do. If the Prime Minister's taskforce on agriculture were to suggest that Ducks Unlimited and the five NR departments sit down with leadership from Agriculture Canada, bring together whomever for four, five, or six months and develop this program, we could ask for nothing more.

The Chair: Thank you, Paul.

Rosemary.

Mrs. Rose-Marie Ur: I have a quick question.

In your first slide, the key issues impacting the agricultural landscapes, in your last statement “over-application of fertilizers and pesticides”, I don't know whether I totally agree with that statement. I do believe our farmers have recognized that they're good stewards of the land, and I think pesticide use is down by 40%, not moving the other way. I think they're certainly looking at going in the opposite direction, and I actually read this week something on that too.

I'm totally a strong supporter of Ducks Unlimited as well in my riding of Lambton—Kent—Middlesex in southwestern Ontario, and they keep close contact with our offices, with all their functions and everything else.

But my question is, how much input does a landowner have when these marginal land takeouts are proposed within an area? Who looks after that, and how much input does that landowner have in the end?

Dr. Brian Gray: It's a voluntary program, and it will be incentive-based. So if a landowner volunteers, then they've done the cost-benefits in their head and have figured out that this is something they want to do voluntarily, and they enrol.

In deciding who's eligible to enrol, it might be, like the U.S. does, an environmental benefits index. In your neck of the woods, it might be water quality specifically, and so what then do we do on the landscape to move water quality parameters from here to here? Only people who would actually have a program that could do that would be eligible to voluntarily enrol in the program. So there would be people who wouldn't be eligible because they wouldn't score high enough on whatever benefits index there would be.

Mrs. Rose-Marie Ur: What happens to the tax base, if that's true?

Dr. Brian Gray: They still pay taxes on them. The conservation easements are still taxed.

Mrs. Rose-Marie Ur: They're taxable?

Dr. Brian Gray: On your first comment, about the over-application, I needed to specify and I guess I didn't. I'm talking about over-application on marginal lands. The Crop Protection Institute, seeing this, agrees with us. Just by the nature of it being marginal, you have to get a little more than you would on quality lands. I'm not talking about the good quality land. And we agree with you that this isn't.

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The Chair: Thanks, Rose-Marie.

I'm just going around the table now.

Larry.

Mr. Larry McCormick: Thank you very much, gentlemen, for being here, and of course it's a great organization.

My background is small business, and I like to think timing is everything. And of course we think the timing for your program is now.

I remember one night we were going into the Governor General's residence, and I talked to some of my friends in the Alliance Party to learn from them about the west and the prairies. There's a great need for you there, as there is in all provinces. The friend's name was Gary, and we talked about the amount of land in Saskatchewan.

And, Dave, it's so great there.

I would like to give you the opportunity to answer Mr. Howard Hilstrom, because I'm sure your organization would want to work with this and be part of it.

I'm trying to give them an opportunity, because it's very important. I think we need to work together, and I will recommend it.

The Chair: Murray had a question.

Mr. Larry McCormick: Didn't we have enough time for that answer?

The Chair: Okay, you'd like to have an answer?

Mr. Larry McCormick: I'd give him the opportunity to answer.

Perhaps, Howard...if I may, Mr. Chair?

The Chair: Is it an important question?

Mr. Larry McCormick: Yes. Thank you, Mr. Chair.

The Chair: The parliamentary secretary looks after everybody, I guess, so Howard....

Dr. Brian Gray: Mr. Hilstrom, I am aware of who you are, and unfortunately we've never met before, and it's a pleasure to see you.

I take what you say very seriously, and I'm not going to dispute it, because I don't know the facts. I would very much like the facts from you, or from whatever your source is, so I can look into this.

One thing I take very seriously is our integrity, and we aren't perfect. When you have 400 employees, you can't be perfect. What we do on the landscape, we have to be fair, we have to be honest, because the second you stop being that, you're not going to have any stewards helping you, you're not going to have any people volunteering for the program.

So I'm not going to dispute that, because I don't have the facts, but I want the facts from you, and I will take action.

The Chair: Thank you.

Murray, I'm sorry about that.

Mr. Murray Calder: Actually, I think this program has a lot of merit. I see it right now as farmers on marginal lands, struggling. They have all the input costs on this side, and by the time they sell the product, if they're lucky, they're making a profit whereas you people are going to come in and take a look at this land. If you can strike a deal with the farmer, the farmer doesn't have to go through all this business right here, there's going to be revenue on a per acreage basis coming out. So that's definitely a positive.

I'd like any comments you want to make on that.

I am seriously looking at another thing. We went through last year the situation of Walkerton in Ontario, which is about 25 miles away from where I am. Ontario is currently putting together legislation to take to and deal with the farming industry.

I feel your buffer zones around rivers, as you showed in your presentation, fit right in with what Ontario's coming up with, which, quite frankly, is probably going to go right across the country, because water is a universal problem. I'm wondering whether or not you have had any discussions with the provincial government in Ontario, right along with how this legislation is going to work with the farmers.

Dr. Brian Gray: We were invited to testify in phase two of the Walkerton hearings, and we did. We presented a report to Justice O'Connor. The report is public information now. In that report entitled, Beyond the Pipe, we were the presenters who said, yes, you might have to worry about scrubbers, pipes, getting all this bad stuff clean, but you also need to focus on the landscape. If we develop a landscape that filters out things, that cleans water, air, you don't have to worry about this second line of defence as much.

I use New York City as an example. New York City draws most of its water from the Catskills. It comes right out of the ground, right out of the rivers and lakes, without any treatment.

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Ten years ago they were starting to get bacterial counts, they were starting to pick up nitrogen and phosphorus in the water. It was getting to the point where they had a year or two before they had to develop some sort of big cleaning system. The best engineers in New York estimated that building a water treatment infrastructure would cost $6 billion to $8 billion.

Then they looked at the landscape. Mother Nature was providing this wonderful thing. They went to the landscape and they said, well, we have to secure these riparian areas, we have to change the buffer zone width, we have to change agricultural practices, we have to change the way cottagers behave, etc. At the end of the day, they did that; it was $1 billion by going to Mother Nature. This would be the same type of program.

Unfortunately, in a lot of instances you can't do the economics until it's hindsight and you say, if we would have done that, we could have saved all this money. We're proposing proactively doing that.

Getting at your first question about the incentive base, you wanted me to talk a little more on that. I have an observation. The New York example and the example of the riparian zones...the investment here...yes, the math might be a little nebulous, because it's hard to account for these things until they happen, but I'll use the analogy. When we invest in public spending for highways, bridges, roads, hospital buildings, you have a capital investment. Whether it's a first-year payment...pay for the whole thing over a five-year period, it's necessary you invest this money. The way the economy is, the way physics are, at the end of 30 years, that thing's depreciated and you have to replace it. You have to build a new bridge; they just don't last that long. So you have to reinvest 100%.

We're talking about a one-time capital cost. If you invest now, you don't have to reinvest in capital, because Mother Nature's going to take care of it for thousands and thousands of years. Our great-great-grandchildren are going to thank us for our wisdom today, because they're not paying for it in their lifetime.

Mr. Barry Turner: Mr. Chairman, may I just answer part of the other question. We've met twice with the Minister of Agriculture in Ontario, Mr. Calder, and we intend to meet with the Minister of Natural Resources and the Minister of the Environment in Ontario as well in the very near future. So Ontario is very much aware of what we're doing.

The Chair: I'm going to go back now. David has a short question.

Mr. David Anderson: What happened to the producers upstream in the Catskills when they secured the riparian areas? What did that mean for the producers?

Dr. Brian Gray: Two things happened. One is, New York, the city, bought 100,000 acres voluntarily. They didn't have to take the whole landscape out of agriculture. They said, we have to do x%. So they had a bidding process; they bought land. In my understanding they did not expropriate land. They bought it in a regular bid system. Then they needed to secure more, and I don't have the numbers in my head of how much, but they had conservation easements where the landowner kept the land. Then they had other areas where it was just simple stewardship, where they had extension programs put in to change agricultural practices if in fact they were hurting things. Cottages were another thing. Septic systems were built simply too close to water.

So in the end the producers in the area were very happy about it.

Mr. David Anderson: I have some concerns when I hear the term “marginal land”. I'm from Saskatchewan, and some of the farm organizations there, in a plea for a CRP-type program, are saying that marginal lands, using assessment, should be taken out of production or shouldn't be eligible for programs.

I come from one of those areas where we don't have a huge amount of runoff or erosion that way. People are trying to cut back on their sprays. We've been told for decades we should be seeding land back to grass in that area and yet people have done very well there, because they've had good initiative.

So I have a concern. I know your program's voluntary, but when marginal lands are always used...but they always seem to be somebody else's land that we're applying things to. I happen to live in those areas. People are doing very well for the most part right now and partially because they live there.

So it's a warning about producers and not isolating them.

The Chair: Thanks, David.

[Translation]

Suzanne.

Ms. Suzanne Tremblay: I have a brief question about something I find strange. The costs and benefits tables that you just presented show that payments to producers are $32 in the Prairies, $129 in Ontario, $80 in Quebec and $87 in the Maritimes. How do you account for these differences? Why does everyone not get the same amount?

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[English]

Dr. Brian Gray: I'll answer that. Largely, if you're looking at this slide, the variability exists in the Maritimes, Quebec, and Ontario. We've estimated that the benefits are the same across all three of those areas—the two provinces, Quebec and Ontario, and three maritime provinces. Where the variation exists is in the cost of implementing the program.

Again, for an example, we're using an annual rent, because we're doing annual cost benefits. That's where the variability is, and it's because in the Maritimes, if you look at the rental rates there, the total costs are being driven by that. In the Maritimes it's $87 per hectare per year for rental rates. You go down to Ontario and the rental rates are higher. So the actual net benefits are lower because the annual rental rates are higher, using the average rental rate of farmland in that area.

[Translation]

Ms. Suzanne Tremblay: Is it because of the market in that particular province? Does the market determine these prices?

[English]

Dr. Brian Gray: Yes.

The Chair: Marcel?

[Translation]

Mr. Marcel Gagnon: I wanted to speak briefly about what happened at Lac Saint-Pierre. I don't know whether you know where it is located. It is close to Trois-Rivières. There was a very significant problem about the conflicting interests of agriculture, the environment, fisheries and so on. As a result of Ducks Unlimited Canada's work—I believe it was in the 1980s—a way was found to accommodate all these needs. I would invite committee members to visit the area around Lac Saint-Pierre, if they have an opportunity to come to Quebec. You will see a number of facilities that meet the needs of farmers and at the same time protect the environment. I think what was done there sets a fine example.

I wanted to pass on that message to you.

[English]

Mr. Barry Turner: Mr. Chairman, we'd like to thank you for inviting us to this Ducks Unlimited Canada rally here in Ottawa. The positive comments we've heard from everybody have been rather encouraging.

We look forward to working with you and your colleagues and the federal government to protect our farming landscapes more effectively.

The Chair: Barry, thanks to you and your congress for coming. I think we've had a very good presentation and a fairly good hearing. There were a few negative comments here, but I would leave it with that.

I would probably also suggest to committee members that if they would like to make a motion at a future meeting to deal with this issue, a motion that might be sent either to the House or, by letter, to other standing committees, it certainly would be welcome by the chair.

This meeting is adjourned.