Agriculture Committee on March 12th, 2012

[The Chair, Conservative, Larry Miller]

I call our meeting to order. I would just like to remind everyone that our meeting is televised today.

Mr. Minister, thank you for coming here today.

Mr. Da Pont and Mr. Knubley, thanks for joining us.

I'll just remind everyone that we do have votes. An e-mail just came saying they will be at 4:23, so I'm going to adjourn the meeting at 4:15. That will give us eight minutes to walk down the hall. I hope nobody disagrees with that. That should give us lots of time.

In order to get going, as chair I would like to call vote 1 under Agriculture and Agri-Food and open up the discussion by turning it over to you for your remarks.

Thank you.

[Gerry Ritz, Conservative, Minister of Agriculture and Agri-Food]

Thank you, Mr. Chairman.

Good day, everyone.

As you well know, Mr. Chair, our government's top priority is the economy, and Canada's agricultural industry plays an important role in that economy by creating jobs and driving growth. Since day one our government has committed to helping farmers earn more money from the marketplace. I am pleased to see that our government's strategy is delivering real results.

Over the past few years agriculture has truly emerged as a driver of the Canadian economy helping lead us out of this last recession. No longer is agriculture like the kid who couldn't skate, who always got put in goal. Today the agriculture industry is making the plays and supporting the entire team.

Going forward, the sector can look forward to continuing strength. The medium-term outlook over the next few years is positive, showing high prices for grains and oilseeds, modest growth for cattle and hog production, and stable growth for supply-managed commodities. Net cash income for 2011 is forecast to rise 24%, a new record. Average farm net operating income topped $65,000, up 27% over the previous five-year average. Net worth is expected to come in at $1.7 million by the end of this year, up 10 percentage points over two years for the average farm.

In 2011 our farmers earned more money from the global marketplace than ever before—over $44 billion in agriculture, food, and seafood exports. That's up over 12%—almost 13%—from 2010. Of course like farmers we are not resting on our laurels. Last month we led trade missions to China and Washington, two of our largest trading partners. A great number of agricultural industry leaders were with Prime Minister Harper and me in China.

We are working very closely with industry partners in China to get more of our product into that market of 1.3 billion consumers. We came home with almost $1 billion in new sales for our canola, tallow, and genetics, including the first access for our beef tallow to China in almost a decade. This follows on the heels of new beef access to South Korea, our last major Asian customer to reopen its doors to our great Canadian product.

With population growth and rising demand in emerging economies, our focus has moved towards a more bilateral approach to trade. We're working with all agricultural industries to align our trade priorities, target those markets they need, and make deals that will ultimately strengthen the farm gate. Over the past six years we have concluded nine free trade agreements and have many more in the hopper. Those include, of course, agreements with the European Union, Morocco, and of course India, which is a huge customer for our agricultural products.

We're also exploring new multilateral opportunities such as the Trans-Pacific Partnership, since we know that increased trade with Japan would be very beneficial to the Canadian agricultural industry. We'll continue to push forward our free trade agreements despite the opposition so we can ensure that farmers are able to compete on a level playing field rooted in fair and science-based rules. Of course we continue to foster the world's largest bilateral trade partnership with our friends in the United States. I had another very good meeting with Secretary of Agriculture Tom Vilsack just ten days or so ago. While we might not always agree on who has the best hockey team, Tom and I always have a good frank discussion on the agricultural issues that matter to our very integrated agriculture industries.

At this stage of our economic recoveries, we agree that no one can afford a thickening of our border. That's why our two countries are committed to reducing duplication and streamlining regulation through the “Beyond the Border” initiative and the Regulatory Cooperation Council. We also agree that policies must be rooted in sound science. Canada continues to work closely with our like-minded trading partners such as the U.S. to develop a globally accepted science-based approach to low-level presence of GM materials.

With respect to mandatory country-of-origin labelling, industries on both sides of the border say that COOL is hurting our integrated beef and pork industries. The administration in the U.S. needs to do what is necessary to end the restrictive nature of COOL as soon as possible for industries on both sides of the border. We know that when something is not broke, don't fix it. That's why the Harper government continues to state very clearly in every platform and Speech from the Throne that we strongly support Canada's supply-managed system.

Time and time again we continue to stand up for our industries on the world stage. After all, the dairy industry is a vital part of the Canadian economy, generating $5.3 billion in farm-gate revenue and 160,000 jobs for Canadians in 2008, all the while not taking a penny in support payments from Canadian taxpayers.

We're proud to support the supply-managed industries. We'll continue to support them as they continue to help drive our economy.

Farmers are heading into the new crop year with more new opportunities than ever before, thanks to the passage of the Marketing Freedom for Grain Farmers Act on December 15—and I'm glad Wayne got here in time for that. A big part of our government's strategy for long-term prosperity for Canadian farmers has been to bring marketing freedom to western Canadian farmers. As we work through the transition to the open market we're doing all we can to ensure certainty and clarity for western Canadian farmers.

That's why western Canadian farmers are pleased that the recent Manitoba Court of Queen's Bench threw out the frivolous injunction motion of the former directors. It gives them the clarity and certainty they need to move forward with their business plans and rightfully market their own wheat and barley.

Farmers are now forward-contracting their wheat and barley with buyers of their choice for delivery beginning the next crop year, August 1, 2012. We're already seeing buyers competing for farmers' grain and new contracts, new alliances, and new risk-management tools coming on stream.

The CWB remains a viable voluntary marketing option for farmers of all commodities in all parts of Canada. Come August 1, the CWB will be able to source and market any grains from anywhere in this great country. It will have the flexibility to adapt its business structure to meet supply and demand domestically and globally. It goes into the open market with government backing for its borrowing, which is more than what any other company has.

The CWB is exploring new partnerships in negotiating grain-handling arrangements. In fact, it recently announced its first handling agreement with Cargill, giving it access to 34 inland terminals and four port facilities. This is further proof that the CWB will be a viable and competitive marketing option for farmers.

As the global population rises, consumers are increasingly demanding more food of a higher quality, and of course food produced with a smaller environmental footprint. Innovative science-based technology is becoming more critical than ever. This new dynamic is driving our discussions around the next round of agricultural policy. I applaud the great work going on at this table and the work going on in our science clusters and value-chain round tables.

Our partnerships with industry, provinces, and academia continue to provide the results that Canadian producers and processors are looking for. The time is now for farmers to capitalize on past achievements and take advantage of world-class research, market access, and more efficient regulatory systems.

Of course, food safety remains a top concern for Canadians and this government. Working with the Canadian Food Inspection Agency we're delivering a stronger, more efficient and transparent inspection and protection regime for Canadians. Rapid changes in global trade and technology are challenging the agency to review and update its legislative and regulatory foundation and modernize its inspection regime. The CFIA is taking concrete steps to be more effective, responsive, transparent, and accountable to all Canadians. The objective of this government is to strengthen our ability to protect Canada's food supply, while not creating barriers to trade and unnecessary red tape that slows down the speed of commerce.

The government has addressed all 57 recommendations of the Weatherill report, and new food safety legislation was part of that commitment. In terms of regulation, the CFIA is engaging with Canadians to discuss its regulatory modernization strategies. This strategy will build on the government's commitment to reduce red tape and overall regulatory burden. Our objective in all of this is to reduce overlaps, bridge gaps, and make regulations more straightforward for all concerned.

Beyond legislative and regulatory renewal we're also taking a look at CFIA's service delivery. Mr. Chair, I'm sure you'll agree that Canadians are best served when the CFIA and industry are able to work together cooperatively, constructively, and proactively. That's why our government recently unveiled a new statement of rights and services for the Canadian Food Inspection Agency. This will ensure that consumers, producers, and other businesses know what services they should expect from CFIA, and what rights and responsibilities they have when dealing with CFIA.

Beginning April 1 this year there will be a new single office where Canadians can go with any questions, complaints, or disagreements about a regulatory decision or its application. We will benefit from a safe and efficient food industry, so this government is doing everything we can to ensure that the coordination and relationship between industry and CFIA supports this common goal.

The agency is also well along in its multi-year process to implement an inspection modernization plan. This plan is supported by the government's 2011 budget investment of $100 million to strengthen front-line inspection and science within the agency.

To close, everyone agrees that yesterday's solutions can't meet the challenges of tomorrow. We need new approaches for a new generation of agriculture. A revitalized CWB along with our focus on innovation and trade are all part of a comprehensive plan to strengthen our overall economy.

We want to help entrepreneurs harness innovation, add value, and create jobs right across this great country.

I look forward to working with you over the coming years to grow new opportunities for our farmers and our food processors.

Thank you for all you do, Mr. Chair. I look forward to your questions.

[The Chair, Conservative, Larry Miller]

Okay, thanks very much, Mr. Minister.

Before we move to questions, I want to remind all committee members that when it comes to public servants, they are not mandated to comment on government policy but simply on its administration and implementation.

With that, Mr. Allen, you have five minutes.

[Malcolm Allen, NDP, Welland, ON]

Thank you, Chair.

Thank you, Minister, for being here.

Looking through the main estimates, we can see a number of cuts happening in the department. At this point it looks like there could be a decrease of nearly 6% over last year's previous estimates. One of the major ones is the Canadian Grain Commission, which is facing a cut of almost 85%. There are other things in the business risk management area, but let me look at the piece around the Canadian Grain Commission.

We're hearing from farmers about issues with contracts. They are not understanding the contracts because they're opaque, not quite understanding the transition from the Wheat Board, whether it be voluntary or not. It is difficult for them. There's a whole slew of issues around those, and now we see the Grain Commission with a major cut.

Now we hear today through Viterra that they are being looked at as a potential takeover target by Glencore, which will be a foreign-based multinational.

With all this uncertainty in the market for grain farmers—and now the one major Canadian player might actually evaporate, get taken over by a multinational corporation whose headquarters, quite frankly, are not in this country—do we see that as a major issue? Where do we think that's going to take grain farmers, and where it will end up? First, could you look at that question?

Let me ask the second question, because I know, Minister, we have a limited amount of time. The second question concerns the CFIA. We also see that at present there's a budget cut anticipated of $33.5 million on top of the already $18 million that sunsets due to the listeriosis crisis. Notwithstanding your comments, Minister, we don't have a sense of how we can do things differently to protect the Canadian public from another outbreak of listeriosis that we witnessed a number of years ago. We know—we absolutely, unequivocally know—that only 2% of imported products into this country are actually inspected when they come across the border. It's not an equivalency; it's not the same as in Canada, where we do what we have to do for export. We don't do the same thing for imports. It's not the same.

Based on that, Minister, can you explain to us why we see these targeted cuts to these two areas, when indeed perhaps what we ought to see is at least a flat-line budget, if not an increase?

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Of course a lot of what you say is not true, Mr. Allen. There are no pending cuts. I mean, that's the job of the budget, should that come forward. Actually, we have that coming on March 29, as I understand.

The main estimates are just that. That's the first and foremost benchmark of what the government plans to do. If you look at last year's, rather than in isolation, then there are other programs that are added through the supplemental A, B, C, and so on, so that it actually goes beyond.

When you talk about business risk management, and your idea of cuts there, I would point out two things. The marketplace is delivering for farmers in this country as it's never done before, which is a good thing. The business risk programs are demand-driven, and at this point there is no demand. So there are actually no moneys allocated other than the main line item, such as $125 million for AgriRecovery. Should it be required, it will be there, and it will be there in a bigger way. Last year's floods were over $400 million, so the line item of $125 million, then, through the supplementaries and so on, becomes a lot bigger number.

I will not begin to speculate on what will happen in the Viterra situation. It's way too premature to do anything like that. Certainly farmers are beginning to understand the ability to market to whomever they like. Viterra is a major player, and we'll discuss those issues as they come forward, but I would not speculate on any takeover at this point.

You also point to a supposed cut at CFIA. You know the difference between a pilot project that is ending and a line item in the main estimates, I would hope. Having said that, the vast majority of that $33.5 million was the $30 million coming out of the Weatherill report. It was a three-year program specifically on listeria. That has gone exceptionally well, and we intend in every way possible to maintain that work, moving forward.

As I said, these are mains, and then you build on them with the supplementals through the rest of the year. I would hope that the NDP, if you're concerned about potential cuts, would actually support the budget this time around.

[Malcolm Allen, NDP, Welland, ON]

You are always concerned about food safety. Let me tell you—

[The Chair, Conservative, Larry Miller]

Your time is up, Mr. Allen.

Mr. Lemieux.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Thank you very much, Chair.

Minister, thank you for being here today to talk about the estimates in front of committee.

We have two sets of estimates in front of us. We have the supplementary estimates (C), and we have the main estimates. As I was reviewing the main estimates, I had a question about business risk management programming. Business risk management, or BRM programming, is very important to our farmers. Certainly on committee we have done a number of studies, and the subject comes up in a number of different studies. There are many comments about it. I think we have a fairly good understanding of business risk management programming. I'm wondering if you might be able to explain, for example, to my colleagues on the other side why, in the main estimates, on page 38, we might see a decrease in BRM spending in this next fiscal year. Often I find, Minister, that we're criticized when there's a decrease that's noted in the estimates. There's always a reason for that. I'm wondering if you could explain to the committee why there might be a reduction forecast for the next year.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Mr. Lemieux, you have the mains in front of you. You also have the supplementary (C)s from last year. That's capitalizing on what was required to finish out the year. Of course the mains are projected ahead for the 2012-13 year. When it comes to business risk, there are two things in the mains. Farmers are receiving record returns for their work and for their product, which is fantastic. We're happy to see that. There hasn't been a demand for anything yet. This time of year there is no demand for the business risk suite of programs—the crop insurance, the AgriStability, the AgriInvest, and AgriRecovery. There hasn't been a demand yet. They are demand-driven programs. Should they be required, they will be there for the farmers. There is a basic line item, and then it goes beyond that if there's demand.

There's also a second set of programming that goes along with the business risk side. That's the more proactive side—the Growing Forward suite—where we put money into a lot of different industries through science clusters, marketing funds, and so on, in order to help them return more of their income from the marketplace. There is a lot more demand for the proactive side—making sure they are able to build their own business and not be reliant on government payments. There's nothing more bankable and predictable than a good solid marketplace. That's what we were striving to make sure of—having access to that marketplace.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Minister, what you are saying is that at the beginning of a year—for example, in last year's mains—the government looks ahead to the year. They basically peg a value of what they think business risk management programs may pay out. Of course there are a lot on unknowns in the year ahead. When they reach the following year, they assess the market that just occurred—whether the prices are good, whether we anticipate them being good in the future year—and then they adjust that budgeted amount.

It's somewhat of an unfair criticism, then, to say that there's a negative amount against BRM lines in the mains, and that farmers aren't getting what they should be getting. You're saying that if it's been a good year for farmers, they don't need that type of support from the government. In fact, it's actually a good-news story, and the mains are simply reflecting the good news. Would that be a good summary?

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Sure, that's a simplified summary of it.

In my speech I talked about the debt-to-assets ratio in farms across Canada. It has never been as good as it looks now. Certainly they are carrying a lot of debt, but their assets are climbing even more, which is fantastic. It allows them to make business decisions based on a solid future and a solid bottom line we haven't seen for a number of years.

There's a growing demand for quality food around the world. Canadian farmers can supply it. They continue to do more than they are asked to do. Our quality and consistency of supply is well recognized in some of the premium markets, such as Japan. We are working on free trade agreements with the European Union. A lot if it is predicated on their ability to import a lot of our agricultural products. It's a good time to be in agriculture. It's a good time for anyone who has been on the edges looking in to take another serious look at getting back in or building their businesses.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Thank you, Minister.

[The Chair, Conservative, Larry Miller]

We will now move to Mr. Easter.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

Welcome, Minister.

I have a couple of specific questions, but first, Mr. Minister, while I have both you and the deputy here, I have a question on process. Mr. Knubley will know of what I speak because I wrote a letter to the Clerk of the Privy Council complaining about the policy that seems to exist.

A member of Parliament, regardless of the party, I believe should be able to talk to a departmental official without having somebody from the minister's staff on the phone. I have never made it a policy of calling a deputy minister or an ADM unless there's a serious issue that relates to a constituent or a farmer somewhere in Canada. However, when I call the deputy minister or somebody in your department on risk management programs—Danny Foster, for instance—I'm told we're not allowed to talk directly to that individual.

In fact with Mr. Foster at one point in time I did have a conversation with him with two officials on the phone—

[The Chair, Conservative, Larry Miller]

There's a point of order.

Mr. Storseth.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Mr. Chair, we're here to discuss the estimates, both supplementary (C)s and the mains. We have a lot of work to do.

If Mr. Easter has a personal complaint, there are TV cameras outside. He can go talk to them about that.

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Chair, this is an issue of process, of the ability of a member of Parliament to do their job. It's a serious issue.

Mr. Minister, what I'm trying to determine is if there is a policy in place whereby we are only allowed to talk to your departmental officials if it is through your office, and with people from your office on the phone.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Have you been denied in any way, shape, or form the information you've been requesting, Mr. Easter?

[Wayne Easter, Liberal, Malpeque, PE]

Yes. I've been denied from talking to an official without having your office on the phone.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

But I'm saying you've taken advantage of that ability to talk to the official regardless of who's on the phone. Have you been denied the information you're seeking?

[Wayne Easter, Liberal, Malpeque, PE]

What I have been unable to do is to talk.... I've talked to people in your office. In fact I talked to your people in the office about the issue you and I talked about in the House today.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

And there was nobody with us when we did that.

[Wayne Easter, Liberal, Malpeque, PE]

Pardon?

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

There was nobody with us when we did that.

[Wayne Easter, Liberal, Malpeque, PE]

No, no. That was a conversation between you and me.