Investor ​G3 Global Grain Group taking over former Canadian Wheat Board

A newly established agribusiness partnership based in Winnipeg has been selected as the majority investor for the former Canadian Wheat Board. 

CWB's search process concluded early, with a $250-million investment from G3 Global Grain Group.

Gerry Ritz, the federal agriculture minister, and representatives from G3 will discuss the deal with reporters at 10:30 a.m. ET. CBCnews.ca will carry the event live.

A press release from G3 says it has acquired a majority interest, of 50.1 per cent, in CWB, with the minority ownership interest to be held in trust for the benefit of farmers.

The transaction is expected to close in July 2015, it says.

G3 was formed through a partnership between:

• Bunge Canada, a subsidiary of Bunge Limited.
• SALIC Canada Limited, a wholly owned subsidiary of Riyadh-based Saudi Agricultural and Livestock Investment Company.

The legislation that ended the CWB's monopoly over marketing Prairie wheat and barley gave the revamped wheat board — purged of farmer-elected directors and now run by a board of Harper government appointees — until 2016 to come up with a privatization plan and until 2017 to implement it. Otherwise, it would be dissolved.

CWB spoke openly of wanting to beat that deadline in order to end uncertainty about its future as quickly as possible.

Parties involved in the talks are bound by confidentiality agreements, so it's unclear exactly which multinational grain companies were in the running or how much they'd offered.

Agriculture and Agri-Food Canada tendered a third-party study of the value of CWB's assets but has refused to release that report. It has also refused to release any financial details of CWB's operating results since the market opened up in 2012, citing competitiveness concerns.

A Canadian farmer-investor bid for the CWB by the Farmers of North America group was based on a valuation of the CWB's assets at between $250 and $300 million. That bid was rejected last fall.

CWB now operates seven grain elevators in Western Canada and port terminals in Thunder Bay, Ont. and Trois Rivieres, Que. Four more grain facilities are under construction in Manitoba and Saskatchewan. 

Bunge Canada's terminal in Quebec City and its four elevators in Quebec are part of this deal, according to the press release.

Todd Bastean, the CEO of Bunge North America, said in the release this investment "complements our existing Canadian footprint" and acquiring what remains of the marketing expertise that once sold all of Western Canada's wheat abroad strengthens the company's export capabilities.

"SALIC is committed to infrastructure investment in countries such as Canada, which are exporters of surplus supplies of high quality grain. The launch of G3 will enable us to invest in infrastructure across Canada, providing more market choices for Canadian producers," said Abdullah Al-Rubaian, SALIC's chairman, who also said Canada was poised to capture a larger share of the international market demand.

"G3 brings substantial financial strength and extensive operational experience... and we are pleased that the farmers will be able to continue to participate in the commercialized CWB," said Ian White, CEO of CWB in the G3 press release.

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Narendra Modi visit: Why India matters to Canada

Canada welcomes Indian Prime Minister Narendra Modi for a three-day visit. CBCNews.ca will have live coverage throughout the day, including events in Ottawa and a major Modi speech before a large crowd in Toronto at 7:30 p.m. 

For two countries that Prime Minister Stephen Harper calls "natural partners" in a new global economy, Canada and India might appear to share a rather meek business relationship.

Not even one per cent of Canadian exports currently ship to India, with goods exports around $3.1 billion in 2014 — less than one-sixth what Canada exports to China.

Promising to open India to global commerce, Indian Prime Minister Narendra Modi's historic three-day Canadian tour this week seeks to change that.

His trip ends a 42-year dry spell since a head of state from the world's largest democracy visited to talk bilateral relations.

As Harper pushes for a free-trade pact with Modi, Canadian economists and business leaders representing South Asian professionals lay out their case for why India is a social, political, cultural and economic force that matters.

1. A hot opportunity

"Let's not forget there's a race to get to India's door," says Jaswinder Kaur, director of the Canada-India Centre of Excellence in Ottawa.

"We're competing against Japan, the French, the Australians, and this is an opportunity for Canada to demonstrate how we can contribute and make a true partnership."

India's Prime Minister Narendra Modi was elected partially on the promise that he would open India up to global commerce. (Toru Hanai/Reuters)

Canada's Global Markets Action Plan identified India as a priority market, with a burgeoning economy and roughly 11 million people under 30 entering the workforce each year.

India has for years remained the largest market for Canada's pulses (grain legumes such as lentils and peas), and Canada also supplies lumber and potash.

"But are Canadian companies ready to do business?" Kaur says. "That's where the real work is going to begin."

The International Monetary Fund projects that by 2016, India's GDP growth will outpace that of China's becoming the fastest-growing major economy in the world.

In the meantime, two-way bilateral trade has grown to $6 billion, up 47 per cent since 2010, when trade was around $4.09 billion.

2. Energy demands

Much has been made, Kaur notes, of Modi "shopping for uranium" as part of this Canadian tour.

India needs the radioactive element to feed its nuclear reactors, and Canada has a vast supply.

'Mr. Modi will be looking for a signed contract for Canada to be a supplier of uranium, as India desperately needs energy as it expands.'- Elliot Tepper, Carleton University South Asian studies professor

If Ottawa allows, Saskatchewan-based Cameco Corp. could resume uranium exports to India following a ban 40 years ago, when India was accused of testing a nuclear weapon in 1974, and then again in 1998, using Candu technology supplied by Canada.

"Since then, our relations have slowly climbed back up to the point where we have a nuclear agreement," said Elliot Tepper, a South Asian studies professor at Carleton University.

"Mr. Modi will be looking for a signed contract for Canada to be a supplier of uranium, as India desperately needs energy as it expands, and wants to rely more on nuclear power."

Meanwhile, Canadian natural gas and oil will continue to be useful resources to India.

3. Young population

The under-35 demographic represents more than 65 per cent of India's population, and many of them are migrating from rural areas to cities searching for education and employment, both of which Canada can help supply.

Open for business. India's Prime Minister Narendra Modi addresses the world's largest industrial technology fair, the Hannover Messe, in Hanover, Germany, earlier this month. He has been on something of a world tour, trying to drum up industrial investment in job-hungry India. (Reuters)

Modi's "Make in India" initiative is encouraging international firms to set up manufacturing plants in India to spur job creation at home and become a low-cost alternative to China.

Flipping the saying that China will grow old before it grows rich, Gary Comerford, president of the Canadian Indian Business Council, believes "India will grow wealthy before it grows old."

Over the last decade, he says, a large number of Indians have "pulled themselves out of poverty" and into a rising middle class.

"And that means they're consuming," Comerford says of the next generation of big spenders. "They're getting a fridge, a TV, a cellphone.

"If you take that sheer population of 1.2 billion and convert it into a consuming group, as well as being an economic powerhouse, it will be a political powerhouse as well."

4. Cross-cultural understanding

India remains a democracy with a "remarkably pluralistic society," which Canada can appreciate as a state that welcomes diversity as a foundation of the country, says Tepper.

Two business-friendly PMs, India's Narendra Modi and Canada's Stephen Harper chat at the G20 summit in Australia in November. (The Canadian Press)

"That makes our two countries both natural allies and rather special in terms of the states of the world," he says, adding that the two countries have worked together quietly for years on such things as counter-terrorism and sharing concerns about violent extremists.

University of Toronto professor Kanta Murali, who analyzes Indian politics at the Centre for South Asian Studies, points to a 1.2 million-strong Indian diaspora in Canada as "central to the excitement surrounding Modi's visit."

A shared history under British colonial rule, a broadly English-speaking population and a democratic system add to a sense of kinship, adds Comerford.

5. A knowledge economy

According to Dherma Jain, president of the Indo-Canada Chamber of Commerce, more than 15,000 Indian students have decided to pursue foreign studies at universities and colleges in Canada.

Modi's visit is expected to seal some educational co-operation agreements such as twinning programs, Tepper said.

"Canada will be providing expertise that India invites as it wants to upscale its own capacity, from technology to agriculture, and attracting people to come to Canada instead of going elsewhere," he said.

India is interested in harnessing green tech as well, notes Karunakar Papala, chairman of the Indo-Canada Ottawa Business Chamber, which represents some 600 business owners in the capital.

Modi's plan for India to develop 100 high-tech "smart cities" that are more energy and resource efficient, could benefit from Canadian know-how. (The Indian prime minister made a similar pitch when he visited Germany recently.)

"Solar technologies, green technologies, Canada has got a lot to offer there," Papala said.

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Average Canadian house price climbs 9% to $439,144 in March from year earlier

The average price of a Canadian home sold in March increased by nine per cent compared with the same month a year earlier, rising to almost $440,000.

The average house price was $439,144, and actual home sales activity rose 9.5 per cent above March 2014 levels.

While the spring home buying season is off to a hot start, the two big markets of Toronto and Vancouver continue to skew the numbers higher, the Canadian Real Estate Association said Wednesday.

If sales in those two markets are stripped out, the average price for Canadian resale homes drops to $332,711, with an annual increase of just 2.4 per cent.

"Price gains in these two markets are being fuelled by a shortage of single family homes for sale in the face of strong demand," the realtor group's chief economist Gregory Klump said.

House prices were up 7.1 per cent in Greater Vancouver and 7.8 per cent in Greater Toronto, as low mortgage rates lured buyers into the market.

There was a shortage of new listings, especially for detached homes. Meanwhile, the number of sales of all residential properties rose 50 per cent in Vancouver and 10 per cent in Toronto, indicating further pressure on prices.

The number of sales in Calgary was down 30 per cent since last March, but prices continued to climb — although at a lower rate than in the past. CREA estimated Calgary home prices are up 4.3 per cent from last year.

Only two cities marked a decline compared to March 2014, with prices falling 4.6 per cent in Regina and 0.4 per cent in Moncton.

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Adios, Canadian-made Corolla: it's going to Mexico

Toyota will spend $1 billion to invest in an assembly plant in Guanajuato, Mexico, and move production of its popular Corolla sedan there from another plant in Cambridge, Ont.

The Mexican factory will have the capacity to crank out 200,000 cars a year, bringing an end to the production of the Corolla in Canada. It is one of the best-selling cars in the country and had been built here since the plant opened in the 1980s.

Toyota has made more than three million Corollas in Ontario since opening its first plant, but from now on, they will all be built either in the Mexican plant, or an existing one in Mississippi.

Toyota says Wednesday's news doesn't mean the end for the Cambridge plant, however. It will "switch from producing Corollas to mid-sized, higher-value vehicles," although a release Wednesday doesn't specify which ones.

"We are thrilled to invest further in North America so we can better meet the needs of our customers for decades to come," said Jim Lentz, chief executive officer of Toyota's North American unit.

A worker at Toyota's Mississippi plant. After Wednesday's move, the plant will be one of the two places where the company builds its popular Corolla sedan. (The Associated Press)

"Transforming our Canadian vehicle assembly plants is an equally important part of our strategic plan to position the North America region for sustainable long-term growth."

Toyota recently invested $100 million into the Cambridge-area facilities, which the company says should add about 400 new jobs and introduce hybrid production and increase capacity at the plants.

The Woodstock plant will continue to manufacture the RAV4, a vehicle competing in a rapidly growing segment. The Cambridge South Plant will continue to build the Lexus RX 350 and 450h, the newest models of which were recently unveiled.

The first Corollas from the 2020 model year will start rolling off the line in Mexico some time in 2019.

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Bank of Canada stands pat at 0.75% rate, saying growth has stalled

The economic pain inflicted by plunging oil prices is hurting the country more than expected right now, but that pain should start to ease in the next few months, the Bank of Canada said in its latest forecast.

Unlike what the bank did in January with a surprise cut, the bank opted Wednesday not to change its overnight lending rate, leaving it at 0.75 per cent.

The Canadian dollar gained almost a full cent to 80.60 cents US on the news, as currency traders seemingly focused on the lure of stability as opposed to a rate cut which would have made the loonie less attractive as an investment.

Canada's economic ills are acute right now. Poloz, famously predicted GDP growth in the first quarter of 2015 would be "atrocious." Now the numbers are in and show the economy effectively stalled, with zero economic growth in the first three months of 2015. The bank had previously estimated growth of 1.5 per cent for the same period.

"The Canadian economy is estimated to have stalled in the first quarter of 2015," is how the bank bluntly put it in its statement.

Bank of Canada Governor Stephen Poloz announced a bank rate cut in January, after the bank's gloomy forecast for the start of 2015. Wednesday's monetary policy report said growth was at zero for the first quarter, but is expected to pick up later this year. (Adrian Wyld/Canadian Press)

The central bank says the economic strife caused by oil prices is proving to be more "front-loaded" than predicted, but not larger. It anticipates non-energy exports will start to improve and investments will increase around mid-2015. By the end of 2016, the bank estimates the economy will have reached full capacity.

Some say that optimistic view borders on implausible, however. The bank's reasoning expressed "confidence that the January cut was enough and that the economy … will rebound strongly in the second quarter and never look back thereafter," said David Madani, an economist with Capital Economics in Toronto.

"We think this is pure fantasy and expect the oil price shock to hit the economy hard this year."

The bank has also shifted its prediction for overall economic growth in 2015 to 1.9 per cent.

That's roughly in line with the average of the private-sector economists Finance Minister Joe Oliver with last week. They predicted two per cent growth for 2015, which is the number Oliver says he plans to use when making his planning assumptions for the budget he intends to table next week.

 Further rate cuts are off the table- Scotiabank on Wednesday's interest rate news

Add it all up, and Wednesday's bank statement is one of the gloomier ones in recent memory.

With the bank seemingly leaning toward another cut at some point, Madani figures that will only fuel more borrowing as mortgage and other lending rates get dragged even lower. He thinks the bank could cut the rate two more times by the end of the year, to a microscopic 0.25 per cent — the level it dropped to during the depths of the credit crisis in 2009 and 2010.

By its very mandate, the bank has to walk a fine line between stimulating the overall economy with lower interest rates, without encouraging reckless debt. But "as we have said before," Madani said, "this is a gamble the Bank of Canada has gone on record saying it's willing to take."

Others think the bank may have found its sweet spot on rates, and be in no hurry to move them. 

"Pulling all of this together, it is our view that the economic forecasts in today's MPR … point to a central bank that is comfortable with its current monetary policy stance," TD Bank economist Randall Bartlett said. "Given our expectation that the economic impact of lower oil prices is mostly behind us, we expect that the Bank of Canada will keep interest rates on hold until the end of 2016."

Scotiabank agreed, saying in a note that "The main message from the Bank of Canada — for now — is that further rate cuts are off the table."

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Ottawa's latest wireless spectrum auction kicks off today

The federal government's auction of 2500 Mhz wireless spectrum started at 10 o'clock eastern time on Tuesday, and some of Canada's wireless companies could be poised to buy the building blocks to expand and improve their networks.

Wireless spectrum is the network over which wireless devices like cellphones and tablets send and receive data. Wireless companies need more and more spectrum to keep up with the growing demand for data transmission, so the government auctions off new stretches of airwaves at periodic intervals under certain rules.

The auction is for spectrum in the 2500 Mhz band. Two of Canada's biggest wireless companies, Rogers and Bell, aren't expected to be very active in this round of spectrum sales because the government imposes caps on the amount of spectrum that any one company can own in any given market — and both companies are already at or near that limit in some of Canada's biggest cities.

That's good news for Telus, one wireless analyst says, because the company is now poised to hoover up valuable spectrum at a discounted rate, if Bell and Rogers aren't bidding on many of the biggest blocks. "As Telus has no 2500 MHz spectrum at this time, we assume that it will win in all major markets," Canaccord analyst David Ghose says.

Another company that could be poised to improve its network is Toronto-based Wind Mobile, a company that Ghose expects will pick up 2500 Mhz spectrum in the big cities where it already operates, such as its densely populated home base in Ontario.

As well, Ghose says he will be looking to see whether or not Quebec-based Videotron picks up spectrum outside of Quebec and Eastern Ontario, as that would be another sign that the company could be planning to offer cell service across the country.

The 2500 Mhz band of spectrum has the potential to improve cell transmission in urban places that currently get spotty coverage, such as elevators and parking garages. But it's also viable to rural companies for transmitting internet connections where wired services aren't practical. It's also deemed to be a valuable brand because it's used internationally, in the U.S., Europe and China. Phones like the iPhone 6 and the Motorola Nexus 6 can operate on the 2500 Mhz band, Ghose notes.

The auction won't end until a complicated, multi-level bidding process ends, which could take days. But the federal government says it will reveal the results of the auction within five business days of the end of bidding.

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Kim Dotcom Megaupload case falters over sharing Canadian data

More than three years have passed since Canadian police seized 32 Megaupload-related servers on behalf of U.S. authorities seeking to prosecute company founder Kim Dotcom in one of the world's largest copyright infringement cases.

Still, no one — except perhaps officials with the file-sharing company itself — knows what's on the servers. 

At issue now is how much of this seized Canadian data can be shared with the U.S. Department of Justice, which is very eager to press its case against Dotcom, who is currently fighting extradition from New Zealand, where he's a permanent resident. 

In a Toronto court on Monday, Crown attorney Moiz Rahman, acting on behalf of the U.S., recommended bringing in a U.S. "clean team" — an American term for a group of forensic examiners independent of the case — to sift through the 25 terabytes of data on the servers to pick out relevant files and separate them from personal information. 

But Megaupload's lawyer argued that the Ontario court can only ask the U.S. police officials on the so-called clean team to "double pinky promise" that they won't share information not relevant to the case, since there's no way to enforce the court's decision south of the border.

"Once they return to the United States, that's nothing more than a promise," said Scott Hutchison.

U.S. regulators shut down Megaupload, founded by the notorious Kim Dotcom, in January 2012. At the time, it was one of the world's largest file-sharing sites. (Dotcom, a German-Finnish entrepreneur who was born Kim Schmitz, changed his name in 2005.)

Dotcom and others face charges related to copyright infringement, racketeering and money laundering. Prosecutors argue the company essentially rewarded users for uploading popular content such as stolen movies and TV shows.

The three-year-old case has been mired in complications and delays, including here in Canada.

On Jan. 18, 2012, an Ontario judge granted a search warrant to seize 32 servers in Canada — equivalent to the amount of data stored on 100 laptops, according to Megaupload lawyers.

A year later, a different Ontario judge rejected a request to send mirror copies of what was on those servers to the U.S, saying such a request might be overly broad.

Instead, the justice ordered both parties to find a way to filter out and share only the relevant data.

The "vast majority" of the data, argues Megaupload lawyer Hutchison, is likely everyday files uploaded by innocent users of the file-sharing service, which allowed users to upload and share large files such as photos, videos and documents.

"We don't know what we're turning this clean team loose on," said Hutchison at Monday's motion hearing.

Even if the court assumed half of Megaupload's daily users — estimated to be 50 million at the time of the site's shutdown — were innocent, that's a lot of irrelevant files in the hands of U.S. officials, he said.

Instead, Hutchison proposed that an independent Canadian examiner be hired to review the content.

Crown attorney Rahman argued that having a U.S. clean team do the sorting posed no greater risk than the practice of allowing U.S. police to come into the country to witness evidence

He says the clean team would review the materials without delving too deeply. It would then present an index of what's contained on the servers to the court, which would decide what gets turned over to the U.S.

Rahman noted that the treaty guiding U.S.-Canada information exchange allows for the Ontario court to place restrictions on how the evidence is used. 

"That's a little bit of cold comfort to me," said Justice Michael Quigley.

Beyond that, Rahman said this data pales in comparison to other information shared easily with the U.S., such as wiretaps.

"What's being proposed here looks very, very minor in terms of what we're exposing foreign officials to," said Rahman.

Ultimately, however, the issue comes down to cost. Rahman said the price tag to hire an independent Canadian examiner would be "prohibitive."

The judge ordered both parties to do a cost comparison between the U.S. clean team versus. hiring Canadian experts before a decision will be made.

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CanJet Airlines to lay off most of its staff, as European routes dropped

​CanJet Airlines will lay off 47 pilots and 68 permanent and seasonal flight attendants by May, after cancelling its European routes, CBC News has learned.

The cuts total more than 70 per cent of the charter airline's flying staff. CanJet currently employs about 62 pilots and 100 flight attendants.

The airline has ceased its Europe operations, because the venture "is simply not profitable," company president Stephen Rowe said in an email to CBC News

"It is disappointing we have to realign our employee group today to a much smaller group," he said.

CanJet, a subsidiary of Halifax-based IMP Group, launched its own vacation package deals last year. It also provides charter flights on behalf of Transat Holidays, but that partnership will soon come to an end, resulting in more lost business.

Rowe said the company is exploring its options and that "everything is on the table," including possibly adding scheduled flights in Canada and internationally.

Constant layoffs

CanJet has been plagued over the past few years by shrinking business and layoffs.

This past winter, it cancelled 40 per cent of its planned flights and laid off 21 pilots. Rowe said the company had to make the cuts because it overestimated sales for its first winter season offering vacation packages.

The union representing the airline's pilots is suggesting CanJet Vacations could also be doomed.

In a memo to members obtained by CBC News, Air Line Pilots Association representatives with CanJet wrote:

"We have been advised that the fate of CanJet Vacations is not entirely clear, however, from our perspective it is. It appears that the desire to continue past this summer has unfortunately been lost after only nine months of selling."

But Rowe maintained that CanJet Vacations could live on, "as we had as we had great support during our first year of operation." But he also admitted that "pricing in this business segment is a challenge."

Feelings of deception

The union memo also criticized how CanJet is managing the cuts.

"It is unfortunate that we have been put in this situation," the memo said, adding that the union representatives share members' "feelings of being deceived and disrespected.

"It is unfortunate that we sit here now with layoff notices given after our own president issued a memo in the past telling us not to worry, not to go anywhere," said the memo, issued by Capt. Jon Mason, Capt. Mike Power, and Capt. Bruce Dandurand.

Rowe sent a letter to employees on April 7, obtained by CBC News.

CanJet's president told staff the airline will continue to focus on "profitable flying" and additional opportunities.

He also said CanJet's Europe flights "fell short of our financial requirements" and that the airline was decreasing the number of aircraft it would be staffing with crews.

The letter didn't mention layoffs, however. Instead, Rowe talked about realigning employee resources and said, "This year will be a transformational year for the organization."

The union memo also criticized CanJet's timing of the layoff announcement, saying some pilots will have to work with the additional stress of knowing they will soon be losing their jobs.

It said this will result in fatigue and illness.

"It is obvious that decisions are being made based on dollar signs rather than good judgment."

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Almond backlash tied to California drought

Health advocates have been extolling the benefits of almonds for years. And, increasingly, products like almond milk and almond butter are taking up space on kitchen shelves.

But there is a movement in California discouraging almond consumption, thanks to that state's massive, years-long drought. It's affecting almost everyone in the state and has compelled state governor Jerry Brown to announce unprecedented water conservation measures last month.

Critics, though, say officials aren't targeting the right people: farmers.

Farmers account for a biggest share of water use in California, and almonds are a major crop in the state.

A movement in California discouraging almond consumption is on the rise, due to high water use on almond farms. (Mike Mozart/Flickr)

According to the Almond Hullers and Processors Association, group that represents the industry, each single nut requires about a gallon of water to grow.

Adam Keats, director of the California Water Law Project at the non-profit Center for Biological Diversity, is among those who say that's too much.

"On a personal level, I have reduced and nearly eliminated my consumption of California almonds," he said. "Everyone consuming California almonds should recognize that right now, at the stage of the drought that we're in, they're consuming a disproportionate amount of a state resource — that is, California water."

But the Almond Hullers and Processors Association suggests Keats and other environmentalists are overreacting. It says the amount of water consumed by almond growers per acre has declined over the past two decades, is comparable to other California crops, and is lower per ounce than for some other sources of protein, including peas, lentils and beef. It says agriculture, as a whole, is water-intensive but is critical to the state economy.

In any case, if you're eating almonds, they're probably from California. That state is responsible for producing the vast majority, or more than 80 per cent, of the global supply.

The nuts are sold not only here in Canada, but in countries like India and China. Last year, the Almond Board of California estimated the state would produce 1.85 billion pounds of almonds.

At a gallon of water per nut, that's a lot of water.

When it comes down to it, almonds are lucrative, and Keats worries the nut industry has successfully lobbied to be exempt from water conservation measures.

"All the expansion of the almond, pistachio and other nut tree cropland in California is in places that have historically and geographically extremely low amounts of rain," he explained.

"So they require extreme amounts of imported water to create these tree farms for these water-intensive crops."

The solutions, Keats said, are simple, but tough.

He said almonds should no longer be grown in desert regions of the state, but they should be restricted to a handful of valleys that get enough rain for almond trees to flourish without irrigation. That would mean entire orchards would have to be dug up.

"I think that there will be a time when California almonds and pistachios will be socially unacceptable in a lot of circles.  A lot of people will shun those crops. I hope that happens," Keats said.

"And I hope that other parts of the world that have a natural ability to grow those crops will step up and provide an alternative."

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Hackers get lots of help from careless victims, studies show

When a cyber security breach hits the news, those most closely involved often have incentive to play up the sophistication of the attack.

If hackers are portrayed as well-funded geniuses, victims look less vulnerable, security firms can flog their products and services, and government officials can push for tougher regulation or seek more money for cyber defenses.

But two deeply researched reports being released this week underscore the less-heralded truth: the vast majority of hacking attacks are successful because employees click on links in tainted emails, companies fail to apply available patches to known software flaws, or technicians do not configure systems properly.

These conclusions will be in the minds of executives attending the world's largest technology security conference next week in San Francisco, a conference named after lead sponsor RSA, the security division of EMC Corp.

In the best-known annual study of data breaches, a report from Verizon Communications Inc to be released on Wednesday found that more than two-thirds of the 290 electronic espionage cases it learned about in 2014 involved phishing, the security industry's term for trick emails.

Because so many people click on tainted links or attachments, sending phishing emails to just 10 employees will get hackers inside corporate gates 90 percent of the time, Verizon found.

"There's an overarching pattern," said Verizon scientist Bob Rudis. Attackers use phishing to install malware and steal credentials from employees, then they use those credentials to roam through networks and access programs and files, he said.

Old, unpatched vulnerabilities exploited

Verizon's report includes its own business investigations and data from 70 other contributors, including law enforcement. It found that while major new vulnerabilities such as Heartbleed are being used by hackers within hours of their announcement, more attacks last year exploited patchable vulnerabilities dating from 2007, 2010, 2011, 2012 and 2013.

Another annual cyber report, to be released on Tuesday by Symantec Corp, found that state-sponsored spies also used phishing techniques because they work and because the less-sophisticated approach drew less scrutiny from defenders.

Once inside a system, however, the spies turned fancy, writing customized software to evade detection by whatever security programs the target has installed, Symantec said.

"Once I'm in, I can do what I need to," said Robert Shaker, an incident response manager at Symantec. The report drew on data from 57 million sensors in 157 countries and territories.

Troubling trends in ransomware

Another troubling trend Symantec found involves the use of "ransomware," in which hackers encrypt a computer's files and promise to release them only if the user pays a ransom. (Some 80 per cent of the time, they do not decrypt the files even then.)

The new twist comes from hackers who encrypt files, including those inside critical infrastructure facilities, but do not ask for anything. The mystery is why: Shaker said it is not clear whether the attackers are securing the information for resale to other spies or potential saboteurs, or whether they plan on making their own demands in the future.

At next week's RSA Conference, protecting critical infrastructure systems under increasing attack will be a major theme. Another theme will be the need for more sharing of "intelligence" about emerging threats - between the public and private sectors, within the security industry, and within certain industries.

While many of the biggest breaches of the past two years involved retailers, the healthcare industry has figured heavily in recent months. Former FBI futurist Marc Goodman said that both spies and organized criminals are likely at work, the former seeking leverage to use in recruiting informants and the latter looking to cash in on medical and insurance fraud.

Verizon's researchers said that to be most effective, information-sharing would have to be essentially in real time, from machine to machine, and cross multiple sectors, a daunting proposition.

Another section of the Verizon report could help security executives make the case for bigger budgets. The researchers produced the first analysis of the actual costs of breaches derived from insurance claims, instead of survey data.

Verizon said the best indicator of the cost of an incident is the number of records compromised, and that the cost rises logarithmically, flattening as the size of the breach rises.

According to the new Verizon model, the loss of 100,000 records should cost roughly $475,000 on average, while 100 million lost records should cost about $8.85 million.

Though the harder data will be welcome to number-crunchers, spending more money cannot guarantee complete protection against attacks.

The RSA Conference floor will feature vendors touting next-generation security products and anomaly-spotting big-data analytics. But few will actually promise that they can stop someone from clicking on a tainted email and letting a hacker in.

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It's not just your imagination — flying really is getting worse every year

Think flying is getting worse? A pair of university researchers who track the airline business say it's a fact.

More flights are late, more bags are getting lost, and customers are lodging more complaints about U.S. airlines, government data shows. Dean Headley, a marketing professor at Wichita State and one of the co-authors of the annual report being released Monday, said passengers already know that air travel is getting worse. "We just got the numbers to prove it."

Among the findings in the report:

• Fewer delays — The percentage of flights that arrived on time fell to 76.2 per cent last year from 78.4 per cent in 2013. Best: Hawaiian Airlines. Worst: Envoy Air, which operates most American Eagle flights.
• More lost bags — The rate of lost, stolen or delayed bags rose 13 per cent in 2014. Best: Virgin America. Worst: Envoy. Airlines lose one bag for every 275 or so passengers, but at Envoy, the rate is one lost bag for every 110 passengers, according to government figures.
• More oversold flights — The rate of passengers getting bumped from flights rose 3 per cent. Best: Virgin America. Worst: a tie, between SkyWest and its ExpressJet subsidiary.
• More complaints overall — Consumer complaints to the government jumped 22 per cent in 2014. Best: Alaska Airlines. Worst: Frontier.

Regional carriers, which operate flights under names like American Eagle, United Express and Delta Connection, tend to earn the worst marks. They fly smaller planes, so when airlines are forced to cut flights due to bad weather, they ground the regionals first to inconvenience fewer passengers.

But the picture was bleak at the four biggest U.S. airlines too. On-time performance fell and complaint rates rose at American, United, Delta and Southwest.

Headley said airlines performed better in the years after 2001, when travel demand fell and planes were less crowded. Airlines were also losing money. They returned to profitability when mergers reduced competition and the remaining airlines limited flights to keep fares up. The average plane is now more than 80 per cent full at most airlines, and many flights are oversold.

"They have put the same number of people in fewer airplanes," Headley said in an interview. "Anytime the system ramps up, it goes haywire."

Airlines are ordering new planes and making other investments that they promise will lead to better service. Many of the biggest improvements are targeted at the airlines' most valued customers — those in first-class and business-class sections.

The annual report is now in its 25th year. Headley and Embry-Riddle Aeronautical University professor Brent Bowen use information that the airlines submit to the U.S. Department of Transportation.

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Alamos Gold, AuRico Gold to merge in $1.5B US deal

Two Canadian mid-sized gold companies say they have a $1.5-billion US friendly deal to merge, creating a business with operating mines in Ontario and Mexico and a minority stake in a spinoff company working on a project in British Columbia.

Alamos Gold and AuRico Gold are to merge in a $1.5 billion US deal. (Canadian Press)

Shareholders of Alamos Gold Inc. and AuRico Gold Inc. would each own half of a new company that owns the Young-Davidson mine in Ontario and two operating mines in Mexico, Alamos' Mulatos and AuRico's El Chanate.

They would also get shares in a spinoff company called AuRico Metals, which will have about $20 million US in cash and a number of mining assets including the Kemess project in northern British Columbia.

The new Alamos Gold would keep about five per cent of the spinoff's shares, and provide about $20 million US in cash up front. The code-named SpinCo will also get the Kemess copper-gold project in northern British Columbia and a stream of revenue generated from operating mine within the enlarged Alamaos Gold company.

Intermediate producers

"We believe the New Alamos will be one of the most attractive (investment) vehicles among the intermediate gold producers," said Alamos CEO John McCluskey, who would be chief executive of the combined company..

"The combined management team has a wealth of open-pit and underground experience, which will be instrumental in bringing on the future growth."

McCluskey said shareholders will also benefit from having a stake in the AuRico Metals spinoff, which will receive financing for its activities from an upfront transfer of $20 million cash and an ongoing stream of revenue Alamos' operating mines.

AuRico chief executive Scott Perry, who will be executive chairman at AuRico Metals and on the main company's board of directors, said it made sense to separate the Kemess project from the merged company because it's a copper-gold project.

Kemess spun off

"When you look at all the operating assets and development projects within MergeCo (New Alamos), they're all pure-gold assets. We looked at Kemess and thought it's not a perfect fit," Perry said.

"We didn't want to create any noise from that perspective."

The transaction will require approval of two-thirds of shareholder votes from each Toronto-based company.

Alamos would receive $28.4 million US and AuRico would receive $37.5 million US in certain circumstances if the deal isn't completed.

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Pitt Meadows Meats expected to plead guilty in E. coli case

Pitt Meadows Meats is expected to plead guilty on Monday to at least one count of selling E. coli-tainted meat in 2010, CBC News has learned. 

Pitt Meadows Meats is expected to plead guilty on Monday to selling E coli tainted meat in 2010. (Curt Petrovich/CBC)

One of British Columbia's largest meat processing plants, which now calls itself Meadow Valley Meats, was charged with 11 counts under the Food and Drugs Act for selling meat unfit for human consumption after a former employee contacted the Canadian Food Inspection Agency.

The coverup came to light when Daniel Land, who oversaw the plant's quality assurance, later contacted CBC News, saying officials at Pitt Meadows Meats told him to keep quiet about the positive test result obtained on Sept. 9. 2010.

Land said a manager failed to report lab results that showed a sample of its product was contaminated with the deadly E. coli O157 strain.

Regulations require federally licensed plants to report such findings.

"They told me that this would be looked after — they would pull it off the shelf," Land said from his home in Edmonton. "Shame on them. There was tainted meat in the marketplace and they did nothing."

Plant shut down, food recall

Land was fired and decided to report the incident to the CFIA, a month after the test came back positive for E. coli.

Federal inspectors shut down the plant for a month and issued a recall, warning consumers that Pitt Meadows beef and lamb products may be contaminated with E. coli and should not be consumed. 

Daniel Land says the Pitt Meadows plant manager ignored a positive test for E. coli. (CBC)

All the products were halal, meaning the animals were slaughtered in accordance with Islamic tradition, and distributed in the Metro Vancouver area.

The company was charged with 11 counts of selling tainted meat to 10 different markets and restaurants, according to the indictment. It has apologized to customers and businesses harmed by the recall for not alerting federal officials sooner.

Following the E. coli tests, plant officials said they internally recalled the products and destroyed 61 cases.

Pitt Meadows Meats repeatedly described Land as a disgruntled employee who may have tainted the beef himself. 

"That's a lie. We had a positive E. coli O157," Land said.

"The meat was out there in the industry. When CFIA got involved and pulled it off shelves the meat was already in stores and people had already consumed it."

There were no reports of illness and later tests were negative for E. coli.

'Justice has been done'

Land said he is relieved the case is finally coming to an end, though he was more than willing to testify if there was a trial.

"It's taken a long time, five years it's taken. I just hope they realize how serious this situation was and I'm glad justice has been done."

The directors of the numbered company doing business as Pitt Meadows Meats, Ken and Jeff Kooyman, also own Chilliwack Cattle Sales, a dairy plant that was targeted in a hidden camera investigation by Mercy for Animals Canada, a non-profit group.

Video shot by a former employee showed employees beating and kicking cows. Some processors cancelled their milk orders. At the time the Kooymans said the behaviour was inappropriate and followed up by firing the employees they said were responsible.

Through a spokesperson, the Kooymans declined CBC's request for an interview. Their company is expected to issue a statement after Monday's court appearance.

The case will be heard at B.C. Supreme court in New Westminster.

Read the indictment. 

Indictment Pitt Meadows (PDF)
Indictment Pitt Meadows (Text)

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Why Stephen Poloz can't fix a weak economy: Don Pittis

Everyone knows the bit of folk wisdom "If it ain't broke, don't fix it."

But as the economies of China, Japan, Europe and North America coast in neutral, that may be part of the problem.

The latest employment numbers from Canada and the U.S. showed job growth is OK, but not great. Last week, the OECD – the rich-country think tank – released new statistics that, as the Wall Street Journal reported, "suggest the global economy once again faces a patchy, and therefore relatively weak, recovery." 

As global economies limp from crisis to crisis – never breaking but never really recovering, either – does something serious have to go wrong before the world can return to growth?

This is a question that must keep Bank of Canada Governor Stephen Poloz awake nights. And yet keeping destructive forces at bay will be one of Poloz's jobs when he presents his Monetary Policy Report later this week.

Economy stalled

In his newly published book, Stalled, business commentator Michael Hlinka examines why the Canadian economy seems stuck in low gear.

His prescriptions, including a low minimum wage, less welfare, smaller government and low taxes, seem to come right out of a conservative playbook.

And yet after nearly a decade of Conservative government rule, most of it with a strong parliamentary majority, there are few signs that the Canadian economy is about to burst into life.

Hlinka says that in a democracy, governments can't force change down people's throats. The electorate has to be convinced. And he says that's a good thing. But it means that change may need an outside stimulus.

The ancient Acropolis is seen through a smashed window in Athens last month. Is it possible to nurse the Canadian economy back to health, or do we need to wait until it is broken, a la Greece? (The Associated Press)

"I think there's going to have to be some kind of [economic] shock, and I'm not quite sure what that shock is," said Hlinka in an interview.

That sounds a bit like the "crisis theory" recently outlined by Canadian political economist Daniel Drache as it applied to the as-yet unresolved economic imbroglio in Greece. 

But as Drache warned, the danger of counting on such a strategy is that one crisis can lead to another and no one knows where it will end. And that is why central bankers from Poloz to U.S. Federal Reserve Chair Janet Yellen to Europe's Mario Draghi are so anxious to thread their way between the potential abyss of deflation on one side and the unknown jungle of inflation on the other.

The courage to act

This is why the title of former Fed chairman Ben Bernanke's new memoir, The Courage to Act, is earning raspberries from many quarters. Instead of doing something radical that would set the U.S. and world economy on a new track, imply the comments on Twitter, Bernanke bailed out the banks and perpetuated the status quo.

The fact of the matter is, perpetuating the status quo was his job. Whether you think the world economy needs some serious discipline (similar to Hlinka's advice for Canada) or that recovery demands some other radical rethink (as the Occupy protestors did in 2011), you are unlikely to get it from central bankers or incumbent politicians.

Their role is to keep the machine running – with wire and bits of string if necessary – as long as possible, in the hope that the global economy will once again find its footing in the traditional way. In a democracy, the only ones qualified to demand radical change are voters.

And even they can get it wrong, as The Atlantic Monthly reported last week. Last year, Kansas re-elected tax-cutting Governor Ted Brownback, who offered "a real live experiment" to get the state's economy back on track. But whether through a failed strategy or poor execution, the tax cuts did more harm than good and the experiment failed.

Pressures build

There are enormous pressures coming to bear on developed economies. Populations are aging, with fewer workers to support the retired and pay for their health care. Economic growth may be moving to the poorer countries of the developing world as they cry out for a fairer share. 

But fear of creating a worse crisis prevents governments from intervening. That is, until the machine actually breaks. Only then will our elected representatives and the officials they appoint be permitted to try more radical experiments to fix it.

Hlinka is not optimistic.  

"I think what's more likely, however, than the shock," says Hlinka, "is just a kind of downward drift over the next five or 10 years."  

Or as the poet T.S. Eliot said in his poem The Hollow Men, this is the way change happens: "Not with a bang, but a whimper."

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Chinese exports plunge prompt fears of slowing growth

China's trade contracted in March by an unexpectedly wide margin, adding to expectations that Beijing will launch new stimulus to shore up weakening growth in the world's second-largest economy.

Exports fell 15 per cent compared with a year earlier to $144.6 billion following a 20.5 per cent contraction the previous month, customs data showed Monday. Imports declined 12.7 per cent to $141.5 billion.

The decline fueled fears that economic growth in the first three months of this year, due to be reported this week, fell further after declining to 7.3 percent in the final quarter of 2015.

The weakness "represents not only monthly volatility but also further weakness in foreign trade, adding uncertainties to economic recovery," Citigroup economist Minggao Shen said in a report.

The economy has cooled steadily as communist leaders try to steer China to more sustainable growth based on domestic consumption and reduce reliance on trade and investment. Last year's full-year growth of 7.4 per cent was the lowest in two decades.

The decline has deepened since mid-2014, feeding concern that growth might be falling too sharply and raising the risk of politically dangerous job losses.

To spur growth, Beijing has cut interest rates twice since November. China's top economic official, Premier Li Keqiang, said in March that Beijing might intervene to stimulate growth if employment weakens too much.

Also in March, the central bank governor, Zhou Xiaochuan, said economic growth had fallen "too sharply." He said inflation has fallen so low that the country should be alert to the possibility of deflation, or a damaging overall decline in prices.

Total imports and exports in the first three months of the year fell 6.3 per cent from a year earlier, making it unlikely China can meet the Communist Party's official target of 6 per cent growth for the year.

That "dismal performance" increases the chances Beijing might roll out more help for Chinese exporters following the announcement of export rebates in March, economist Brian Jackson of IHS Global Insight said in a report.

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California drought to squeeze produce prices, but so will other factors

Drought may have gripped California's agricultural heartland for a fourth consecutive year, but it's not the only factor putting pressure on imported produce prices at the supermarket.

More than 93 per cent of the state is currently experiencing "severe" to "exceptional" drought, according to the U.S. Drought Monitor, and the governor recently implemented new rationing measures for cities and towns to cut water use by 25 per cent.

When California officials tested the depth of the snow pack in the Sierra Nevada mountains on April 1, they found dry grass where 1.5 metres of snow should have been. (Rich Pedroncelli/Associated Press)

Farmers have so far been exempt from those restrictions — even though they use 80 per cent of the state's developed water supply. Still, many have had their usual federal allocations of water reduced to zero for the second year in a row and have had to draw more heavily on groundwater sources or purchase water from contractors and other farmers — for as much as 10 times the usual rates. Others are switching to more efficient irrigation methods and less water-intensive crops or letting some land go fallow. 

John Bishop, a produce buyer for distributor Fresh Start Foods in Milton, Ont. says his Californian tomato suppliers are planning for a smaller crop this June.

"They have told me that they are reducing their acreage by 20 per cent because they don't have enough water to be able to continue to grow the way they've grown in the past," he said.

Canadian food from California

About 76 per cent of Canada's fresh strawberry imports come from California. (Gus Ruelas/Reuters)

California is the primary source of many of Canada's imported fruits and vegetables, including:

• 84 per cent of broccoli and cauliflower.
• 76 per cent of fresh strawberries.
• 68 per cent of lettuce.
• 69 per cent of carrots, turnips and other root vegetables.
• 89 per cent of almonds.

Prices of some of those products have increased in the past year, but it's hard to draw a clear line between those increases and the drought, say Bishop and others.

Between February 2014 and February 2015 prices rose 3.5 per cent for fresh fruits and 8.4 per cent for fresh vegetables — compared with overall inflation of 2.1 per cent.

Lettuce prices have jumped about 40 per cent in that period. Part of that is likely due to the shift Californian farmers have made from so-called row crops, such as lettuce, carrots and tomatoes, to higher-value perennial crops like nuts and wine grapes. But it's hard to separate the effects of the drought from other factors that affect retail prices, such as:

• Fuel prices, which have been falling and made transport cheaper.
• The low Canadian dollar, which has made U.S. produce more expensive.
• Other weather events, such as frost.
• Labour disruptions, such as the farm workers strike in Mexico, where some produce comes from in winter, and wage pressures.

"Periods of drought often get exaggerated in terms of their impacts on retail food prices," said Richard Barichello, professor of food and resource economics at the University of British Columbia. "The larger likely effect is to shift land away from producing hay and livestock feed and more into valuable crops."

California's almond production, for example, increased to record levels last year, despite the drought.

No substitute for fruit and veg

The University of Guelph's Food Institute estimates the price of fruits and nuts will go up between one and three per cent in 2015 while vegetable prices will increases by three to five per cent.

Sylvain Charlebois, lead author of the forecast, says if California produce gets too expensive, Canadian grocers will have to find a cheaper alternative because unlike meat, which can be substituted with other food that provides protein like eggs or fish, fruits and vegetables "have no substitutes." 

And although locally grown produce is finding a foothold in some grocery chains, it could never make up the volume of lost Californian imports.

Search for new suppliers is on



Sobeys CEO Marc Poulin and other grocers have started searching for new suppliers that could potentially replace California produce if the drought starts to have a more severe impact on prices or supply. (Nathan Denette/Canadian Press)

Charlebois said Canadian produce importers — and especially those who bring in organic products — have been feeling the effects of the drought for the last 18 months, but Bishop said it'll be the next eight months that will be critical as California enters the dry season and the agricultural production cycle moves north from Yuma, Ariz., where some of our vegetables come from in winter, to California's Central Valley and Salinas regions.  

It's the Central Valley that has been hardest hit by the drought.

Bishop says that although he doesn't consider his California produce supply under serious threat just yet, he has started scouting other potential suppliers — looking as far afield as Argentina, Australia and South Africa.

But few contenders can match California's fertile micro-climate, extensive agricultural infrastructure and proximity, especially when it comes to crops like lettuce, broccoli and cauliflower, Bishop said.

Lemons, for example, "can be on a boat for a week or 10 days and they're fine." But lettuce, he says, "has to be harvested, cooled and used within seven days."

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Revenue Canada targets Steelworkers charity for political activities

A union-backed charity that wants Canadian mining companies held accountable for overseas misdeeds is among the latest to be targeted by the Canada Revenue Agency for political activities.

The Steelworkers Humanity Fund Inc. is still awaiting a verdict from the agency, nine months after an auditor showed up at the Toronto office and hauled away several binders of sensitive material.

The fund, with about $1.3 million in annual revenues, has supported Canadian food banks and provided disaster relief abroad since its founding in 1985.

But the charity's support of the Canadian Network on Corporate Accountability or CNCA, to which it gave about $37,000 in 2013, appears to have piqued the agency's interest.

"We've been part of this CNCA, and no doubt that's part of the rationale" for the audit, Steelworkers president Ken Neumann said in an interview from Toronto.

"It's quite clear that it's targeted to folks that speak up sometimes against the government's policies."

The Canada Revenue Agency launched a series of 60 political-activity audits in 2012, after the Harper government publicly tagged some environmental charities as radicals and money-launderers and possibly linked to terrorists. The federal budget that year earmarked $8 million for the special audits, later increased to more than $13 million through to 2017.

Audit net widens

The first wave of such audits hit environmental charities, but the net has since been widened to capture human-rights organizations, anti-poverty groups, international-aid and religious groups. Other labour-supported charities have been targeted previously, including CoDev and the Canadian Centre for Policy Alternatives.

Many charities undergoing political-activity audits have been outspoken against Harper government policies, and the audits have tied them in knots, draining resources. At least one group has lost its coveted charitable status, while others report self-censoring their public statements for fear of aggravating the auditors.

'They would see us as a thorn in their side.'— Steelworkers president Ken Neumann

The Canada Revenue Agency, however, says its choice of which charities to audit is made at arm's length from government, with no input from any cabinet minister, including Revenue Minister Kerry-Lynne Findlay. The agency declined comment on the Steelworkers audit.

The United Steelworkers' Canadian arm has frequently butted heads with the Conservative government over issues such as perceived lack of support for the manufacturing sector and what it sees as anti-labour policies.

The Steelworkers' charity draws largely on a one-cent-an-hour donation from union members, worth between $20 and $40 annually from workers, who can also opt out.

The fund gives about two per cent of its annual revenues to the non-charitable Canadian Network on Corporate Accountability, an umbrella group that includes faith groups, environmental NGOs and others, and is avowedly political, working to hold mining companies accountable in Canada for overseas misbehaviour.

Revenue Minister Kerry-Lynne Findlay has repeatedly rejected any suggestion that she directs which charities the Canada Revenue Agency will audit for their political activities. (Adrian Wyld/Canadian Press)

Under the tax agency rules, charities can devote up to 10 per cent of their resources to political activities, and the Steelworkers' charity fund reports no political activities other than its small role in the CNCA, worth two per cent of all expenses.

The audit is looking specifically at the fund's formal agreements with the Canadian Network on Corporate Accountability, as well as any "non-partisan actions concerning the retention, opposition or change to any law, policy or decisions of any level of government in any country."

Clashes with government

The network clashed with the Harper government as recently as last month, when it said a newly appointed ombudsman for corporate social responsibility was toothless, and that Canada needs tougher laws to deal with rogue mining companies.

"They would see us as a thorn in their side," said Neumann. Prime Minister Stephen Harper has "got his scope clearly on us. … These [audits] aren't random."

Last month, the charity Dying With Dignity had its charitable status annulled after a Canada Revenue Agency audit. And the charity Environmental Defence says it is appealing an adverse ruling from the agency after an audit.

The agency says that, as of March 31, it has completed 21 political-activity audits, with 28 still underway. Another 11 audits are to be started before the project ends in 2017. Officials will not identify any of the target charities because of the confidentiality provisions of the Income Tax Act.

So far, five charities have received notices of the agency's intention to revoke their charitable registration, while six have received education letters, and eight have been asked to sign compliance agreements for more grievous problems. There has also been one voluntary revocation, and one annulment, Dying With Dignity.

Follow @DeanBeeby on Twitter

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Ontario to sign cap-and-trade agreement with Quebec to reduce carbon emissions

Companies can cap their greenhouse gas emissions or buy credits from others

By Margo McDiarmid, environment reporter, CBC News Posted: Apr 10, 2015 6:05 PM ET Last Updated: Apr 11, 2015 6:21 PM ET

Provincial climate change action 2:00

Provincial climate change action 2:00

Ontario Premier Kathleen Wynne will sign an agreement on Monday to join Quebec in a cap-and-trade system to reduce greenhouse gas emissions, CBC News has learned.

Wynne will make the announcement in Toronto on Monday morning and then head to Quebec City to sign a memorandum of agreement with Quebec Premier Philippe Couillard around noon.

The announcement comes after Ontario has held public consultations on how to reduce its carbon emissions. Sources say Monday's announcement is timed to set the stage for the provincial and territorial leaders summit on climate change being held the next day in Quebec City.

The cap-and-trade system allows companies to either cap their greenhouse gas emissions or buy credits from companies that have reduced emissions.

Quebec implemented its cap-and-trade system in January 2015. As of February, the province has auctioned off $190 million worth of credits to reduce emissions.

Quebec operates its cap-and-trade system with California. Monday's announcement means that Ontario, Quebec and California could set up a joint system to allow companies to trade their emissions between all three jurisdictions, if Ontario signs a separate agreement with California. 

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Parents funding kids' houses & Big Brother watching you drive : BUSINESS WEEK WRAP

Without a doubt, the most popular story we brought you this week was this one, based on a report from mortgage insurer Genworth on Monday, that shows as many as one in three first time homebuyers in Canada are getting help from their parents to come up with a down payment.

Parents helping their kids to buy a home may not be a new concept, but Genworth's numbers made a splash because it's one of the most comprehensive attempts to quantify just how prevalent it is. With average house prices well over $400,000 now, it's no wonder buyers are hitting up "the bank of mom and dad" with regularity.

The typical first-time buyer paid about $293,000 for a first property, Genworth says, and put down 12 per cent, or $34,000, up front. 

That's nice if you have the cash, but everyone else trying to get into the market is affected, author Derrick Penner told us this week. "By giving them more money to play with in the market, um, you're, um, helping bid up property prices perhaps too much,"  he said.

Big Brother is watching you drive

Another story that made waves this week was this one, from the CBC's consumer affairs reporter Aaron Saltzman, about a new app from Desjardins Insurance called Ajusto that the company claims can lower your insurance rate by as much as 15 per cent because you consent to giving the app the ability to monitor your driving.

Once installed, the smartphone app monitors how much you speed, how much you're braking, how hard you go into corners and even how often you were distracted by your phone.

The company says it's a great way to lower insurance rates for good drivers. But privacy watchdogs are raising some concerns over other similar apps, some of which have been known to collect and transmit more info than the users thought. Although there's no evidence that's the case with Desjardins' app, professor and privacy expert Lori Andrews says it's a slippery slope to start down.

"We've found problems in all sorts of apps… healthcare apps, or fitness apps, where you enter data, that information is being sold," she said.

Oil woes spreading

We've seen for a while now that low oil prices are hurting the economy in energy-dependent parts of the country like Alberta. But the Bank of Canada on Wednesday said it's starting to seeing the pain of cheap oil spreading to other sectors.

Declining oil prices are starting to impact other aspects of Canada's economy, the central bank suggested this week. (Sue Ogrocki/Associated Press)

In its quarterly survey, the central bank polled 100 big companies across the country chosen as a representative sample of the whole economy. While there were some corners of optimism, overall the mood was rather bleak.

Hiring intentions were down to their lowest point since the recession of 2009. And even industries that typically do well when energy prices come down — like manufacturers — aren't doing as well as some people had hoped.

That could be bad news down the line for the economy as a whole, the bank says. And even business leaders in other industries are starting to worry about the spectre of cheap oil

"The oilsands, and the investment in the energy sector in general, has been an important driver of growth and manufacturing over the last number of years," Mike Holden of the Canadian Manufacturers and Exporters told Amanda Lang this week.

Nintendo's ad grab

It happened to the music industry, it happened to movies and TV, and now it looks like even the video game industry is getting set to wage wars on its own fans, in an attempt to get a cut of money it says are being collected illegally.

In a growing trend worth billions of dollars, gamers are making big bucks by posting clips of themselves playing video games online.

The movies are so popular that a major gaming company wants a piece of the action.

Nintendo wants some of the ad revenue gamers earn from posting videos on YouTube, and is pursuing legal action against some of the more popular ones, in some case seeking up to 100 per cent of the ad revenue they generate from making videos of themselves playing video games. 

Nintendo claims it's a copyright issue. But the gamers may not have to share, one lawyer told us this week. "I think the game players' position would be that they shouldn't be sharing this ad revenue at all, because they should be exempted from any claim of copyright infringement by fair dealing laws, because these videos could be interpreted in particular ways like criticism."

Other stuff

Those were just some of our biggest stories this week. Don't forget to check out our website often for more, and be sure and follow us on Twitter here. In the meantime, here's some more of our best work from the past week that you may have missed.

Monday

Tuesday

Wednesday

Thursday

Friday

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Paying for YouTube: The next experiment in the TV revolution

Would you pay to watch YouTube videos, uninterrupted by advertising?

That's a question a lot of business analysts — and users — are now pondering, as reports emerge that Google's video-streaming site is in the process of launching an as-yet-unnamed monthly subscription service.  

"Probably not, I don't know if I could justify it," says Michael Senchuk, a music blogger in Edmonton. "But if it was a couple bucks a month, maybe."

So far YouTube has declined to confirm specifics, but early reports suggest the cost of the premium service may be $10 a month.  

Whatever the price, the effort will be yet another test of what it takes to get consumers to fork out hard-earned cash for the type of creative content that the internet once offered for free.  

'It's very hard to to go from free to a subscription mode.'- Ramona Pringle

"Netflix has proved people are willing to pay," says Duncan Stewart, a media analyst and trend forecaster with Deloitte Canada. "I'm not suggesting YouTube's success is a foregone conclusion, but I understand why they're trying it."

YouTube is already a global giant, with more than one billion users and $4 billion a year in revenue.

New streaming services

It's not the only content company trying to win over subscribers via the internet. The revolution in how people consume content is ongoing:

Budget-conscious Canadians will need to add up their entertainment costs, especially now that Canada's telecom regulator has ordered that a new pick-and-pay system for cable TV customers be put in place by 2016. 

Ordering from an a la carte menu of services, including Netflix and YouTube plus specialty channels, could end up costing more than the prix fixe of a cable subscription.

Once upon a time the internet was free

Not so long ago, users believed everything on the internet should be free. 

Music, books, video games, television and movies are all industries that have seen their business models blown apart — either by pirates or via legitimate digital companies. And while Netflix, Apple and Amazon have been successful in convincing consumers to pay for online products, others have struggled.  

Canada's largest circulation newspaper, the Toronto Star, attempted to recover revenue lost through falling sales in 2013 by installing a paywall on its website, charging readers who opted for online news.

But a little more than a year later, the paper announced the wall will be coming down. Its digital focus will shift instead to a tablet edition.  

Netflix, which streams the political drama House of Cards, starring Kevin Spacey, left, and Michael Kelly, has been successful in getting people to pay. (Netflix/ Associated Press)

"It's very hard to go from free to a subscription model," says Ramona Pringle, creative director of Ryerson University's Transmedia Zone.

"With Netflix, paying has always been the deal. With YouTube, the users are content creators as much as they're content consumers. They're part of the value proposition. That could cause some pushback against paying."

Pringle notes that the bar has been set high by other subscription models. "Netflix's House of Cards has a huge budget, and Amazon's Transparent won at the Golden Globes."  (Transparent won best comedy and best actor, while House of Cards is both an Emmy and Golden Globes winner.)

More than cat videos

"The stuff that's going to be part of a YouTube paid service will not be kitten videos," predicts Deloitte's Stewart. He expects the service to up its game and to target specific customers.

"There are two types of users," he says.

"Big TV-watchers who want to pay as little as possible to get as much as possible, and real connoisseurs who are willing to pay more for special programming.

"I like to say that subscription television will be craft TV, in the same way we have craft beer. Just like with beer, it tends to be for those who want strong flavours. And those people may consume less, but they'll pay about the same."

Stewart recently analyzed what the world's television watchers pay on an hourly basis for different types of services.

His math was simple — take the billions of hours watched globally and stack that up against the revenues of traditional networks and subscription services.

Consumers pay less when they watch ads

His numbers show that traditional TV with advertising generates just four cents an hour, while Netflix is five times more lucrative at 20 cents an hour.

"Television with advertising tends to be cheaper on a per hour basis than television by subscription," says Stewart.

And he points out that the former president of Bell Media made a similar distinction between types of users in December, when the company launched Crave TV, its Netflix-like add-on for subscribers.  

Kevin Crull noted that 90 per cent of Canadians subscribe to TV services, and suggested cord-cutters aren't true television aficionados.  

"The 10 per cent that aren't TV subscribers, in a general sense, they're not TV lovers," Crull said.

The director of communications for Netflix has little to say about YouTube's effort.  

"If you provide content that people want to watch in a timely fashion and at a reasonable price, they will pay for it," Jonathan Friedland told CBC News.

Consumers will decide what works and what doesn't. As the American writer and internet thinker Clay Shirky observed six years ago, "that is what real revolutions are like. The old stuff gets broken faster than the new stuff is put in its place."

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California drought to squeeze produce prices, but so will other factors

Drought may have gripped California's agricultural heartland for a fourth consecutive year, but it's not the only factor putting pressure on imported produce prices at the supermarket.

More than 93 per cent of the state is currently experiencing "severe" to "exceptional" drought, according to the U.S. Drought Monitor, and the governor recently implemented new rationing measures for cities and towns to cut water use by 25 per cent.

When California officials tested the depth of the snow pack in the Sierra Nevada mountains on April 1, they found dry grass where 1.5 metres of snow should have been. (Rich Pedroncelli/Associated Press)

Farmers have so far been exempt from those restrictions — even though they use 80 per cent of the state's developed water supply. Still, many have had their usual federal allocations of water reduced to zero for the second year in a row and have had to draw more heavily on groundwater sources or purchase water from contractors and other farmers — for as much as 10 times the usual rates. Others are switching to more efficient irrigation methods and less water-intensive crops or letting some land go fallow. 

John Bishop, a produce buyer for distributor Fresh Start Foods in Milton, Ont. says his Californian tomato suppliers are planning for a smaller crop this June.

"They have told me that they are reducing their acreage by 20 per cent because they don't have enough water to be able to continue to grow the way they've grown in the past," he said.

Canadian food from California

About 76 per cent of Canada's fresh strawberry imports come from California. (Gus Ruelas/Reuters)

California is the primary source of many of Canada's imported fruits and vegetables, including:

• 84 per cent of broccoli and cauliflower.
• 76 per cent of fresh strawberries.
• 68 per cent of lettuce.
• 69 per cent of carrots, turnips and other root vegetables.
• 89 per cent of almonds.

Prices of some of those products have increased in the past year, but it's hard to draw a clear line between those increases and the drought, say Bishop and others.

Between February 2014 and February 2015 prices rose 3.5 per cent for fresh fruits and 8.4 per cent for fresh vegetables — compared with overall inflation of 2.1 per cent.

Lettuce prices have jumped about 40 per cent in that period. Part of that is likely due to the shift Californian farmers have made from so-called row crops, such as lettuce, carrots and tomatoes, to higher-value perennial crops like nuts and wine grapes. But it's hard to separate the effects of the drought from other factors that affect retail prices, such as:

• Fuel prices, which have been falling and made transport cheaper.
• The low Canadian dollar, which has made U.S. produce more expensive.
• Other weather events, such as frost.
• Labour disruptions, such as the farm workers strike in Mexico, where some produce comes from in winter, and wage pressures.

"Periods of drought often get exaggerated in terms of their impacts on retail food prices," said Richard Barichello, professor of food and resource economics at the University of British Columbia. "The larger likely effect is to shift land away from producing hay and livestock feed and more into valuable crops."

California's almond production, for example, increased to record levels last year, despite the drought.

No substitute for fruit and veg

The University of Guelph's Food Institute estimates the price of fruits and nuts will go up between one and three per cent in 2015 while vegetable prices will increases by three to five per cent.

Sylvain Charlebois, lead author of the forecast, says if California produce gets too expensive, Canadian grocers will have to find a cheaper alternative because unlike meat, which can be substituted with other food that provides protein like eggs or fish, fruits and vegetables "have no substitutes." 

And although locally grown produce is finding a foothold in some grocery chains, it could never make up the volume of lost Californian imports.

Search for new suppliers is on



Sobeys CEO Marc Poulin and other grocers have started searching for new suppliers that could potentially replace California produce if the drought starts to have a more severe impact on prices or supply. (Nathan Denette/Canadian Press)

Charlebois said Canadian produce importers — and especially those who bring in organic products — have been feeling the effects of the drought for the last 18 months, but Bishop said it'll be the next eight months that will be critical as California enters the dry season and the agricultural production cycle moves north from Yuma, Ariz., where some of our vegetables come from in winter, to California's Central Valley and Salinas regions.  

It's the Central Valley that has been hardest hit by the drought.

Bishop says that although he doesn't consider his California produce supply under serious threat just yet, he has started scouting other potential suppliers — looking as far afield as Argentina, Australia and South Africa.

But few contenders can match California's fertile micro-climate, extensive agricultural infrastructure and proximity, especially when it comes to crops like lettuce, broccoli and cauliflower, Bishop said.

Lemons, for example, "can be on a boat for a week or 10 days and they're fine." But lettuce, he says, "has to be harvested, cooled and used within seven days."

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Parents funding kids' houses & Big Brother watching you drive : BUSINESS WEEK WRAP

Without a doubt, the most popular story we brought you this week was this one, based on a report from mortgage insurer Genworth on Monday, that shows as many as one in three first time homebuyers in Canada are getting help from their parents to come up with a down payment.

Parents helping their kids to buy a home may not be a new concept, but Genworth's numbers made a splash because it's one of the most comprehensive attempts to quantify just how prevalent it is. With average house prices well over $400,000 now, it's no wonder buyers are hitting up "the bank of mom and dad" with regularity.

The typical first-time buyer paid about $293,000 for a first property, Genworth says, and put down 12 per cent, or $34,000, up front. 

That's nice if you have the cash, but everyone else trying to get into the market is affected, author Derrick Penner told us this week. "By giving them more money to play with in the market, um, you're, um, helping bid up property prices perhaps too much,"  he said.

Big Brother is watching you drive

Another story that made waves this week was this one, from the CBC's consumer affairs reporter Aaron Saltzman, about a new app from Desjardins Insurance called Ajusto that the company claims can lower your insurance rate by as much as 15 per cent because you consent to giving the app the ability to monitor your driving.

Once installed, the smartphone app monitors how much you speed, how much you're braking, how hard you go into corners and even how often you were distracted by your phone.

The company says it's a great way to lower insurance rates for good drivers. But privacy watchdogs are raising some concerns over other similar apps, some of which have been known to collect and transmit more info than the users thought. Although there's no evidence that's the case with Desjardins' app, professor and privacy expert Lori Andrews says it's a slippery slope to start down.

"We've found problems in all sorts of apps… healthcare apps, or fitness apps, where you enter data, that information is being sold," she said.

Oil woes spreading

We've seen for a while now that low oil prices are hurting the economy in energy-dependent parts of the country like Alberta. But the Bank of Canada on Wednesday said it's starting to seeing the pain of cheap oil spreading to other sectors.

Declining oil prices are starting to impact other aspects of Canada's economy, the central bank suggested this week. (Sue Ogrocki/Associated Press)

In its quarterly survey, the central bank polled 100 big companies across the country chosen as a representative sample of the whole economy. While there were some corners of optimism, overall the mood was rather bleak.

Hiring intentions were down to their lowest point since the recession of 2009. And even industries that typically do well when energy prices come down — like manufacturers — aren't doing as well as some people had hoped.

That could be bad news down the line for the economy as a whole, the bank says. And even business leaders in other industries are starting to worry about the spectre of cheap oil

"The oilsands, and the investment in the energy sector in general, has been an important driver of growth and manufacturing over the last number of years," Mike Holden of the Canadian Manufacturers and Exporters told Amanda Lang this week.

Nintendo's ad grab

It happened to the music industry, it happened to movies and TV, and now it looks like even the video game industry is getting set to wage wars on its own fans, in an attempt to get a cut of money it says are being collected illegally.

In a growing trend worth billions of dollars, gamers are making big bucks by posting clips of themselves playing video games online.

The movies are so popular that a major gaming company wants a piece of the action.

Nintendo wants some of the ad revenue gamers earn from posting videos on YouTube, and is pursuing legal action against some of the more popular ones, in some case seeking up to 100 per cent of the ad revenue they generate from making videos of themselves playing video games. 

Nintendo claims it's a copyright issue. But the gamers may not have to share, one lawyer told us this week. "I think the game players' position would be that they shouldn't be sharing this ad revenue at all, because they should be exempted from any claim of copyright infringement by fair dealing laws, because these videos could be interpreted in particular ways like criticism."

Other stuff

Those were just some of our biggest stories this week. Don't forget to check out our website often for more, and be sure and follow us on Twitter here. In the meantime, here's some more of our best work from the past week that you may have missed.

Monday

Tuesday

Wednesday

Thursday

Friday

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Should you pay if you get an illegal download notice?

Canada's crackdown on illegal downloading is in full swing, with more and more Canadians reporting that they're receiving notices from their internet service providers. The notices say they could be on the hook legally for downloading copyrighted files.

The warnings are part of a new provision under Canada's Copyright Modernization Act, called the "notice and notice" program, which came into effect on January 1st.

Under the provision, copyright holders — such as movie studios — send a notice to ISPs to inform them about alleged infringements. The ISP, in turn, is required by law to forward that notice onto the customer. But the ISP isn't allowed to reveal the identity of the person to the copyright holder without a court order.

Calgary's Darren Mycroft says he received four illegal downloading notices from his internet service provider, Shaw. He says he got four of the notices in his email inbox this week, all on the same day.

"It was a shock to me. I was really confused, because I don't download files illegally. I wasn't worried or scared because I know that I hadn't done anything wrong, I haven't downloaded anything illegally since Napster shut down so it wasn't me," says Mycroft.

Screenshot of CEG TEK's website, a copyright enforcement company. Darren Mycroft says the illegal downloading notice he received from his ISP directed him to this page in order to pay settlements for files he says he did not download. (Darren Mycroft)

Mycroft says the notices he received encouraged him to go to a website to pay at least $450.00 in settlements, to avoid further legal action. But he says he has no plans to pay.

"It is almost a form of extortion in my opinion. Once you follow the link to their site, they're asking for your personal information so the privacy that's being protected by your ISP is no longer there because as soon as you go to that site they can look and actually find out who you are," says Mycroft. 

According to Industry Canada, Canadians can be liable for up to $5,000 for downloading a film or other copyrighted material for personal use under the "notice and notice" provision.

Meghan Sali, campaigns coordinator with internet advocacy organization Open Media, says Canada's copyright laws and the notices Canadians receive are doing exactly what they should: deterring people from downloading illegally.

But still, she advises Canadians not to pay settlement fees when they receive a notice from their ISP. She says the notices may not reflect the legal reality of what an illegal downloader could be required to pay. She says people are asked to pay settlement fees, when there's no proof of a law being broken.

"There need to be some clear and simple rules put into the Industry Canada's guidelines about what type of information can be included in the notice. If there aren't any rules around what can go into these notices, Canadians are unsure about whether or not this is actually a real threat to them and that is where ultimately the confusion comes in," says Sali.

Sali says other cases can involve so-called "copyright trolls", companies hired by copyright holders to go after illegal downloaders. She says "copyright trolls" bank on fears of further legal action even when there is no proof of guilt. 

"Copyright trolls actually don't want you to go to court. They know it's difficult to win and what they'd like you to do is settle outside of court and that's really where this bullying behaviour comes in," says Sali.

Mycroft says the files he is being accused of downloading are pornographic movies. He says he's looked back at the dates in question, and he suspects it may have been a friend he had over to his place that day, but he isn't sure.

Sali says Open Media has heard from many Canadians who've been pursued for files with explicit titles. 

"Usually what they [copyright trolls] do is pick titles that are explicit and pornographic because they know they're more likely to get money out of them [subscribers]. They know that these people would be embarrassed if this came to light. Essentially what this amounts to is a shakedown," says Sali.

It's not clear if that happened in Mycroft's case.

Homepage for the website seventorrents.org, featuring a banner ad for shipping company DHL. Movie and music piracy thrives online in part because website operators receive advertising dollars from major companies. (AP Photo) (The Associated Press)

Sali says Canadians shouldn't take the consequences of illegal downloading lightly. She says if you are downloading illegally, you could end up getting sued. 

"The reason the government spent so much time crafting this system is to educate Canadians about copyright infringement. And that's what the notices do and they're remarkably effective at this," says Sali.

But Sali says she wants to see guidelines in place so that Canadians can be sure they're receiving accurate information when they receive illegal download notices.

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