Agriculture Committee on May 7th, 2024

[Peter Vinall]

Yes, absolutely.

Soils are degrading across the world in terms of organic content. There's a big push for circular, regenerative and sustainable agriculture.

At the same time, that organic material that's coming out of the soil—like food waste and other products like that—ends up in a landfill, where we lock it into a plastic-lined, inefficient bioreactor that lets 50% of that methane escape into the atmosphere.

What we can do is take municipal solid waste, that organic material, separate it and put it into a form as a fertilizer. We have gained CFIA certification—the first of its kind, we believe, in Canada—to take waste product—garbage—separate the organics and put them in a form that is clean, has high nutrient value and can be used as a fertilizer.

We've pioneered that pathway in Nova Scotia. We're in active trials now—I'm sorry; that was more than 40 seconds—and we're hoping to scale that part of our business as well.

[The Chair, Liberal, Kody Blois]

Thank you very much.

Mr. Perron, the floor is yours for two and a half minutes.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you very much, Mr. Chair.

Mr. Gervais, I'm glad to have you with us today. I'm pleased to see you again. It's a happy coincidence that you're here today at the same time as Mr. Forest, with whom I earlier discussed the interest rates, charges and costs that have to be absorbed and for which financial support is requested from the government. However, that's also partly FCC's mission.

Last week, a producer pointed out to one of my colleagues that he was facing charges of 18% on outstanding amounts. Don't you think that's high? I was honestly surprised to see it.

I ask you quite candidly: Would you please explain this policy to me and the way you've adjusted your assistance based on business viability?

[Jean-Philippe Gervais]

I'm not aware of that particular situation, but I can tell you what usually happens. In a situation where a loan or a payment is in arrears, we immediately go to work on it. As I said, the ideal approach is to work proactively. You have to be able to restructure a payment schedule, extend amortization and come up with other solutions by comparing types of goods or available loans that would allow for a slightly different payment schedule. For example, you can opt for a partial interest-free loan. In that case, however, interest may still accrue even if it isn't required to be paid at that time.

There are various situations. That's usually what happens for a loan to be restored to performing-loan status. In the case you mentioned, it may simply be a matter of the definition that is assigned to the word “charges”. The main thing is to find a way to restructure a payment schedule.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you very much for your answer. You reassure me somewhat. I wanted to draw your attention to this situation because I thought the percentage was high, considering your mission.

Mr. Forest, I have about 30 seconds left to ask you if there is any element that we haven't mentioned and that might be important to point out to the committee.

By the way, if the witnesses wish to clarify any points for the committee, I would ask them to provide us their recommendations in writing following their testimony.

[Pascal Forest]

I would conclude by noting an element that was mentioned several times today: Programs must execute quickly. It's important for all agricultural businesses that assistance programs be as responsive as the agricultural sector. We have to be efficient every day when we're in production. We have to be on top of production constantly, 24 hours a day, seven days a week. Production never really stops. It's an ongoing job. I think it's important to have programs that assist producers promptly and permanently. I think it's unacceptable to have to wait six months to a year for a response.

[The Chair, Liberal, Kody Blois]

Take us home, Mr. MacGregor, for two and a half minutes.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Thank you, Mr. Chair.

I'd like to turn my final question to Mr. Gervais from Farm Credit Canada.

You had an exchange earlier with Mr. Drouin. I missed a little bit of it, so accept my apologies if I'm covering some of the same ground.

Repeatedly before this committee and in particular in this study, we have heard a lot about the impact that climate change is having on farm operations. Farm Credit Canada is central to farms' financial success, and you mentioned that you have 3,576 clients who work with Farm Credit Canada who are in the horticulture industry.

What I want to know is your perspective looking forward into the next decade or the next couple of decades, knowing what we now know about these extreme weather events. For example, in British Columbia, we saw in one year a massive heat dome followed by an atmospheric river. We know that western Canada is facing extended drought forecasts for this summer because snow packs and water reservoirs are at a fraction of what they should be. What does that do to Farm Credit Canada's risk analysis going into the future?

If farmers are going to be continuously pummelled by this, which may result in late payments, struggles with loans and so on, what does that do to your overall risk analysis in the next decade and even further on?

[Jean-Philippe Gervais]

Taking a long-term perspective, we feel that we need to position and support our customers in the industry transition to a low-carbon economy, because otherwise we're going to be exposed to way too much risk stemming from climate change.

We're starting right now in terms of putting in incentives for adopting production practices that are going to lower the carbon footprint in different operations. We offer software solutions that we think can also improve the carbon footprint on farms, and we can also put together a sustainable finance framework that will allow operations to introduce new production practices to introduce new technology. It is really a long-term challenge that we have in front of us.

We must not forget that there's a food affordability challenge as well that we have in front of us in terms of feeding the growing Canadian population and the world, frankly, because the world needs more Canadian agriculture.

I do think that by acting with all of that together now, we can deal with or manage the risks that we are going to face going forward. What we're doing in terms of risk analysis, without getting into the details too much, is to assess the financial risks over a long period of time. We call it stress testing. We're stress testing FCC's resiliency to be able to serve the industry as well as testing the resiliency of the industry going forward.

[The Chair, Liberal, Kody Blois]

Thank you very much, Mr. MacGregor.

Thank you, Mr. Gervais.

On behalf of all the members of this committee, I want to thank the witnesses for their testimony and the work they do in the agriculture and agri-food sector in general.

We're going to suspend, colleagues, to bring in the second panel. We'll be back in just a few minutes.

The meeting is suspended.

[The Chair, Liberal, Kody Blois]

Colleagues, we're going to get started.

We're a few minutes late. There was a little bit of trouble transitioning, but we're ready to rock and roll. If you have conversations, take them outside, please.

Colleagues, we're continuing our panel, and today we have, as part of the second panel, Frank Stronach. He is the founder of Magna International and founder and chairman of Stronach International, but I think he's going to talk farming and the good work he's doing in that space as well.

From the Canadian Agri-Food Policy Institute, we have Dr. Al Mussell, who is no stranger to this committee. It's great to see you back, Dr. Mussell

Lastly, we have Geneviève Grossenbacher, who is director of policy at Farmers for Climate Solutions.

Welcome to the committee this afternoon.

We have five minutes for each opening statement.

I'm going to start with Mr. Stronach. We go over to you for up to five minutes, please.

[Frank Stronach, Founder of Magna International, Founder and Chairman of Stronach International, As an Individual]

As most of you might know, I am the founder of Magna International, which I started in a garage and built up into a company of over 170,000 employees.

Then, 12 years ago, I decided I would get out of the big car business and go into agriculture. The more I got into agriculture, the more I saw this huge chemical jungle. We know that approximately 95% of the we food eat comes from industrial farms. On industrial farms, you see no more eagles flying, for the simple reason that there are no more rabbits and no more pheasants. We kill everything. The pesticides, fungicides and herbicides get into the air, and we breathe the air; they get into the water, and we drink the water; they get into the soil, and we eat the food grown in the soil.

Family farms were always the backbone of Canada. A country that can feed itself will never have a problem, but family farms are practically on welfare. The children of family farmers say, “Mom, Dad, I don't want to be in farming. I don't want to be on welfare.”

There are so many indications and statistics that practically all kids have allergies. There has been an enormous increase in the number of type 2 diabetics cases, and autism is on the rise. Most well-to-do families feed their kids organic foods, but I believe in a Canada where every kid has an equal chance to grow up healthy. That is not the case anymore under these circumstances.

My recommendations are, one, that no Canadian kid should go to school hungry, which means breakfast has to be served; two, no Canadian kid should leave school hungry; and three, the law should state that the food served in schools has to be organic.

When people say we cannot afford to feed organic food to our children, I do believe that is a very poor statement to make because the medical cost savings would outweigh the cost of producing organic foods.

I believe Canada should take a closer look at how family farms can survive. They could survive and do well if Canada had a special program to support family farmers who grow organic foods. I hope the Minister of Agriculture takes a serious look at my recommendations. The subject is very dear to my heart. It is important that all Canadian kids have a chance to grow up healthy and happy.

I will make myself available to go into more detail on how to grow healthy foods for Canadians.

Thank you.

[The Chair, Liberal, Kody Blois]

Thank you very much, Mr. Stronach.

We'll now turn to Dr. Al Mussell for up to five minutes, please.

[Dr. Al Mussell, Senior Research Fellow, Canadian Agri-Food Policy Institute]

Mr. Chair and honourable members, I'm pleased to appear before you today and to provide my insights as a researcher at the Canadian Agri-Food Policy Institute.

Horticulture is an essential element of Canadian agriculture and secure access to nutritious food. It's an important source for food manufacturing and the basis of Canadian export-oriented industries, and it's an area where Canada has an importing interest, both off-season and throughout the year.

Horticultural products—edible and floriculture, or nurseries—have ranged around 12% of total farm cash receipts, recently valued at just under $11.5 billion, but represent a far smaller share of agricultural land. Exports of fruit and vegetables were recently valued at about $125 million. Flowers and ornamental exports were valued at almost $225 million.

Processing horticultural crops is economically significant regionally within several provinces. Work by CAPI doctoral fellow Kushank Bajaj at the University of British Columbia has found that Canada is dependent on imports for about 80% of its fruits and 60% of its vegetables, and the dependence on imports exceeds this in some provinces and territories.

Canada's northern climate has limited the output and extent of horticulture. However, some of the key factors are changing. The data compiled since 1948, and even earlier, show that much of the country is warming and receiving more precipitation. The greatest warming and increase in precipitation are in the winter and in northern Canada. Nonetheless, these changes are allowing for increased crop yields, the movement of new crops into areas where the climate was previously unsuitable and the movement of agriculture into regions with climates that were previously unsuitable for farming.

It presents a prospect for growth in horticultural crops in Canada. New developments in controlled environment agriculture and/or vertical farming provide some call for optimism for Canada's ability to supply fruits and vegetables locally, including in northern regions of the country, according to another newly published report by CAPI doctoral fellows.

However, this entails multiple challenges. Just as warmer and wetter promote plant growth, they also promote crop diseases and pests. Some of these were foreign to Canada in the past, but are beginning to be seen in Canada due to changes in climate, and they require an effective means for control. Canada will require research to support controls, enable or generate access to new crop varieties because of climate change, and the ability to expedite registrations to make these products available to growers.

The meaning of “warmer and wetter” in terms of local windows of time with favourable weather for fieldwork needs to be better understood. It will need to be met with plans for a workforce, including temporary workers called upon to work a longer season.

Crop insurance, heavily relied upon by horticultural industries to underpin investments, faces multiple challenges. It requires an adequate level of acreage and frequency of independent management in order to establish insurance programming, which can be a challenge in provinces where horticultural crops are minor. Similarly, crops that are newly introduced to a province lag in terms of availability of insurance, as the data required for due diligence must be acquired and analyzed.

The multilateral, rules-based trade environment, which has facilitated export-oriented horticultural industries and allowed Canada to confidently meet much of its needs for fruits and vegetables through imports, is eroding. Canada has played an active role in attempts to revitalize the WTO and rules-based trade, and this should continue. However, a prudent strategy would reduce some dependence upon imports through exploration of expanded horticultural production in Canada and the challenges this entails.

Thank you again for the invitation. It's my pleasure to respond to questions.

[The Chair, Liberal, Kody Blois]

Thank you very much, Dr. Mussell.

We'll now turn to Ms. Grossenbacher. It's over to you.

[Geneviève Grossenbacher, Director of Policy, Farmers for Climate Solutions]

Mr. Chair and members of the committee, thank you so much for having me today.

I'm here representing Farmers for Climate Solutions, or FCS, as director of policy but also as a farmer myself. I grow vegetables on the outskirts of Gatineau, just on the other side of the river. My husband and I were the proud winners of Canada's Outstanding Young Farmers Award in 2021 in Quebec.

FCS is a farmer-led and rancher-led national coalition with 29 member organizations across the country. We represent over 20,000 farmers and ranchers. all working to scale up climate solutions in agriculture. We advance policy proposals grounded in on-farm experience to better support producers in the face of climate change. We also encourage the adoption of low-emission and high-resilient practices via FaRM, our farm resilience mentorship program.

For FCS, it is clear that the horticultural sector faces unique challenges due to its high-value, diverse and perishable crops and the fact that BRM programs were really not designed for horticulture. Because of that, we really feel that we need to act on two fronts urgently: We need to improve BRM programs to reduce risk for governments and farmers and provide timely support to farmers, as you've just heard, and we need to incentivize the adoption of climate-resilient practices. We also need to double down on resourcing existing and new programs that build on-farm climate resilience to prevent crop losses.

We really must act now. The urgency cannot be overstated. The climate is changing faster than policy measures and BRM programs can adapt. Our sector is especially vulnerable.

I want to share with you a story from a farmer I met recently that exemplifies the need for action. Richard is a mixed vegetable farmer cultivating 600 acres of land in Annapolis Valley in Nova Scotia—in the riding of Mr. Chair. Last year, due to relentless rains, he lost 40% of his crops, amounting to $320,000 in damages. This level of loss was unprecedented in his 45-year career. Thankfully, Richard is amongst one of the few lucky farmers who subscribed to AgriStability, but the $80,000 he will get for that program, when he gets it, falls very short of covering his actual financial loss. Richard now faces the really distressing challenge of having to dip into his retirement savings to have money to plant this year.

This situation shows how urgent it is that we find ways to better support farmers. In a good year, horticultural farmers don't make enough money to cover bad years. Farmers like Richard should not have to underwrite the cost of crop losses due to extreme weather events.

High inflation and interest rates are putting the industry's already thin margin at risk. Our sector is vulnerable, and the cost of inaction is high. As Richard put it, businesses are used to taking risks, but our sector is currently on very thin ice. We are very much at risk of losing farms. This would be terrible for our economy. It would drive up food prices and food insecurity.

Existing BRM programs fail to meet the unique needs of horticulture farmers, for several key reasons. Number one, there is very low uptake. Horticulture farmers find that programs are not tailored to their unique needs or their crop diversity. For instance, in Nova Scotia only 14% of total acreage was covered by crop insurance in 2021.

Two, premiums are often too high. For instance, for Richard the crop insurance premiums are quite prohibitive. They would cost him $40,000, nearly 4% of his gross sales, which would eat a large part of his profit margin.

Three, there's a high loss threshold, meaning that compensation is triggered at a very high level of losses, leaving farmers vulnerable to most losses that they experience.

Four, the coverage is inadequate and unclear. With horticulture covering over 200 different crop varieties, farmers are uncertain about which crops are covered and what minimum land area is required for compensation to kick in. This disproportionately affects diversified farms. Actually, farmers who diversify to mitigate their own risk feel penalized by existing programs. Further, as you heard, farmers face long delays in getting compensated. This has a big impact on their ability to recover from their losses.

In a nutshell, horticultural producers are already at high risk due to climate change. To boot, they don't have a real safety net in place. This must change.

As extreme weather events become more frequent, BRM programs are becoming increasingly costly. For instance, in 2023 crop insurance payouts in Canada reached $3.88 billion, up from $1.7 billion in 2020. To tackle this issue, FCS formed a farmer-led expert task force to identify specific ways to improve BRM programs. In their 2022 report, which I would happily circulate to the committee, the task force makes a number of recommendations.

Number one is that we make improvements to key programs like AgriInsurance, AgriInvest and AgriStability to reduce risk for governments and producers by incentivizing the adoption of climate-resilient practices.

Number two, we also need to make sure that BRM programs—again, you've heard this—are affordable, accessible, tailored to the needs of farmers and horticulture farmers, and ensure timely compensation when disaster strikes.

Number three, reforming BRM programs will not be enough. Therefore, number four, we also need to double down and invest in existing and new programs that build on-farm climate resilience to prevent crop losses. Programs like the popular and oversubscribed on-farm climate action fund, the OFCAF program, are crucial examples of programs that need further investment and resourcing.

We really cannot wait to act until 2028, when current programs expire. Action is needed now.

On that note, thank you, Mr. Chair.

[The Chair, Liberal, Kody Blois]

Thank you very much.

You mentioned Richard. I know that he's a regular participant who will watch committee proceedings. He is certainly one of the best in the country in terms of his knowledge on risk management programs and he did a lot of work. Assuming it's the same Richard—Kings—Hants is a small place—he's done a lot of work on Canadian horticulture.

If you're watching today, Richard, we appreciate your work.

With that, I'm going to turn it over to Ms. Rood for up to six minutes.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Mr. Chair.

Thank you to the witnesses for being here today.

Mr. Stronach, in your opening remarks, you referred to as “industrial farms” versus organic farms and the traditional farms. I have to say, Mr. Stronach, that you're a businessman. You're a very well-known successful businessman, but I, as a farmer, take offence to that terminology, as I'm sure a lot of farmers who are watching this right now take offence to your calling us “industrial” farmers. We're business people as well, Mr. Stronach, and we're trying to make a living at farming.

We heard from witnesses in the previous panel about how difficult it can be to make a living. I just want to set the record straight that family farms work very hard in this country, and many of us are incorporated, for various reasons, to make a good business model. We work very hard to produce the best food for Canadians, using the least amount of chemicals and using the least amount of inputs as possible. I just want to correct the record on that.

Sir, you're known for having a strong commitment to the environment and to conservation and sustainability. We've seen that this government has proposed regulations banning plastic food packaging. We've heard that a Deloitte report says that food waste and spoilage will increase drastically—actually, by 50%—and will increase greenhouse gas emissions by 50% from food wasted. I'm just wondering if you can comment on whether this is a good business decision coming from the government.

[Frank Stronach]

First of all, I'd like to say that the last thing I want to do is criticize farmers, because I think that to provide food is the most noble profession people can have.

When I refer to “industrial” farms, I refer to farms that are quite a few hundred acres, or a thousand or a few thousand acres, where you do single crops or where there isn't a lot of variety. Nature can take care of itself if you leave it reasonably alone, but the fact is that when you have large farms where you have maybe 500 acres of corn or soy or whatever, there are a lot of chemicals used—fungicides, pesticides, etc. The plain fact is that on those farms, you don't see any more eagles flying. Why? It's because we poison everything. That's the problem.

Again, practically every kid has allergies. A great percentage of kids have. There's the rise in type 2 diabetes and autism. I mean, we've got to wake up. We use too many chemicals to produce foods, so we've got to wake up.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Well, Mr. Stronach, I can tell you from my experience that in all of the farms I've travelled to across this country, I saw eagles fly over the farms in British Columbia when I was out there a couple of weeks ago. I see lots of wildlife and I disagree with that statement.

My family used to farm over 1,000 acres of potatoes. Many farms are big, and they're family farms. They're owned by families, and the truth of the matter is that they have to have large farms in order to succeed in this industry in Canada. It's very hard to compete as a small farm any more.

Mr. Stronach, around the world we've seen that experiments have been happening, and I'm going to turn to Dr. Mussell for a moment. We've seen what's happened in Sri Lanka with organic farming when you take away all of the pesticides and then see the inability to actually produce food.

Dr. Mussell, I'm wondering if you would comment on that and what we've seen in Sri Lanka. Should we legislate organic food for kids in school?

[Dr. Al Mussell]

Thanks for the question.

I don't think we have the luxury of legislating organic foods. There are a number of concerns there, but the biggest one.... You started your question off with Sri Lanka. What occurred in Sri Lanka was that essentially the agricultural system fell apart when they stopped using fertilizer and at least certain pesticides.

We have to make prudent use of fertilizer and pesticides. This is to be taken as a serious matter, but we can't simply do without. I would direct you to some of the research done at the University of Manitoba, in which they found that globally, 40% of the adequate diet based on protein can be directly mapped back through to the Haber-Bosch process that produces artificial nitrogen.

There's a certain group of people who can afford organic food. These are personal choices, and I don't advise people on personal choices. However, I believe that the idea that this is a widespread solution is incorrect, in my understanding of it.

[Frank Stronach]

I'd like to make a few comments on that.

I would like to see a Canada where every kid has the same chance to grow up healthy.

When you look back 50, 60, 70 or 80 years ago, people hardly had any allergies. We started to use so many chemicals that...all the kids are practically sick. Yes, you still see eagles flying in the mountains. There's no farming, so of course you see eagles fly.

On the industrial farms where you farm single crops in large quantities, there are no more rabbits there.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Mr. Stronach, I would love to invite you to come to my farm or to any farm in my riding of Lambton—Kent—Middlesex, where you can see the plethora of wildlife that lives in the area among all of the agriculture that takes place there.

[The Chair, Liberal, Kody Blois]

Thank you, Ms. Rood. We're at time.

Thank you, Mr. Stronach. I think one thing we can all agree on is the importance of food in school and early education. It's good to see some of the measures that were introduced recently.

Ms. Taylor Roy, I'm going to turn it over to you for up to six minutes.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

Thank you very much, Mr. Chair, and thank you to all the witnesses for being here.

We've heard from numerous witnesses today of the importance of sustainable food and local food security for Canada. Mr. Stronach, I know that you've put a lot of time and effort into GUHAH, the foundation you started to ensure that children have access to healthy food. I'm proud that our government has introduced a national school food policy.

Could you explain a little bit? When you're talking about industrial farms, what is it about those farms that you feel is problematic for childhood health? Why do you think organics would be better for children?