Thank you, Mr. Chair.
Good afternoon, everyone.
I'd like to take this opportunity to thank the committee for inviting me to provide a general overview of the agriculture and agrifood supply chain, and the work the department undertakes to enhance revenues and reduce costs all along the chain.
The agriculture and agrifood system includes the farm input and supplier industries; producers; food and beverage processors; exporters; food distributors; and retail, wholesale, and food service industries. In 2009, it provided one in eight jobs in Canada, employed two million people, and represented 8.2% of GDP. Over 40% of Canadian agricultural products are processed in Canada and supply approximately 77% of all processed food and beverage products available in the country.
The food processing sector is Canada's largest manufacturing sector, with 2011 shipments worth $92.8 billion. It employs 270,000 Canadians and accounts for 17% of total manufacturing shipments. The key to supply chain success is to enhance the revenue all along the chain with the participation of suppliers, producers, processors, distributors, exporters, and retailers.
The department works with the supply chain primarily through value chain round table processes, often called VCRTs. These were originally put in place to establish international market development strategy for the various sectors, but have taken on the broader mandate of creating overall chain competitiveness.
Since 2008 the number of VCRTs has grown from six to 11. There are now VCRTs for beef, pork, sheep, horticulture, grains, pulses, special crops, seeds, organics, seafood, and food processing. We have prepared information on each of the VCRTs, their members, and co-chairs, which is included in the information package that has been submitted to the clerk.
Included in this package is the overview of the agriculture and agrifood system in 2011, including an economic review. The 2012 version will be released on the department's website on Monday, March 19, 2012. We'll provide the address for that to the clerk.
The development and integration of value chains is part of a fundamental strategy for improving the agribusiness environment through better customer-driven information sharing and analysis; alignment of goals, objectives, and systems; and investment in innovation, which is so important to production and efficiency. Such an agribusiness environment builds trust in business-to-business relationships and helps to overcome competitive barriers and make adjustments according to market dynamics.
As a bit of a background to this, the value chain round tables were launched in 2003 as part of a shared vision between government and industry to enhance Canadian market success by bringing together key industry leaders with the federal and provincial governments.
All VCRTs are organized along commodity lines with two exceptions: organics, which covers all organic crops and livestock; and food processing, which includes all food processors from small to large. Including the critical players of each sector ensures that each round table is capable of responding to the various issues and crises that may arise.
For instance, in 2003 the Canadian and U.S. cattle industries were hit with the first of several BSE cases that shut down international borders. With the help of the beef round table, the beef industry's reputation was restored, and Canada became one of the first nations to which China reopened its borders following that crisis.
In terms of their work and how they work, one of the requirements of a successful round table is the engagement of all the key players, as no one segment of the chain is suited to respond to all demands. That takes a collaborative effort.
For example, the pork round table includes the pig genetics industry, feed companies, producers, processors, exporters, and Canadian retailers. The round tables use an industry-government co-chair model, and the industry co-chair leaders usually own and run their own businesses.
The government co-chairs are senior departmental staff at the director general level. I'm sure the round table co-chairs would be willing to provide you with a view of the value, limitations, and successes so far of these round tables.
Actual round table meetings are held approximately twice per year; however, there are active working groups that are mandated to achieve progress and priorities in between meetings. The round tables have maintained a high level of departmental commitment: Minister Ritz has attended various round tables, and in November 2011, Minister Paradis presided over the food processing round table.
Deputy Minister Knubley meets annually with the round table co-chairs and invites his fellow deputies from departments and agencies that have an impact on the agriculture and food industry.
Health Canada, the Canadian Food Inspection Agency, Transport Canada, Human Resources Development Canada, and other departments are just some of the participants who have attended past meetings. Mr. Knubley also regularly attends select VCRT meetings, as does Associate Deputy Minister Carrière, who is now the government co-chair of the food processing round table.
In terms of its activities, I'll give you just a few examples. The horticulture VCRT is developing a system where producers can post availability of fresh produce online to permit retailers to access more Canadian-produced fresh produce in their stores. The pork VCRT is leading on the implementation of traceability, good animal-care practices, on-farm food safety, and biosecurity measures to position Canadian pork as meeting both foreign and domestic consumer requirements. The seafood VCRT is looking at why exports from other countries of the same species are often able to obtain higher value for their product, and to develop an action plan to enhance the value of Canadian product through modification of harvest, preserving, processing, and marketing.
AAFC, through the AgriMarketing program, and pork and beef legacy funds, provides funds to assist the industry, such as the pork and seafood VCRTs, to put their plans into action to develop markets and expand sales. At the initiation of the beef round table, the industry has added value to the use of the traceability system that was built to manage animal health emergencies. Beef processors are now reporting carcass information back to feedlots and cow-calf producers, so that cattle producers can have an improved view into how their live animals translate into meat. The government has invested in this system, called the beef information exchange system, or BIXS.
The horticulture round table is developing a water strategy to secure access to water, adoption of best practices, and confirmation of sustainable use of water throughout the supply chain. This will cover field and greenhouse production, washing and packaging, processing, and the retail industry.
Pulse producers, through the VCRT, are working with processors to ensure that the product they provide can easily be utilized as an ingredient in processed food products.
The organic round table developed an innovation strategy that was then leveraged to attract business funding into a joint partnership with AAFC through the research cluster program.
The grains round table is currently working on the development of a draft low-level presence policy, which could be used to advocate to other countries as a possible import mechanism.
Lastly, the food processing industry round table was formed in 2008 to examine the challenges affecting the growth of this sector. Although food processors are members of each of the sector-based round tables, there are opportunities and challenges that are common to all food processors, no matter what product they produce. The food processors VCRT is looking at how to deal with a stronger Canadian dollar, rising energy and raw material prices, as well as strategies to foster innovation and productivity. To complement this work, AAFC introduced the AgriProcessing initiative, designed to provide food processors with a source of funds to adopt innovation.
Many AAFC programs provide benefits through the full chain. For example, the Canadian Agricultural Loans Act, CALA, supports the food chain by guaranteeing repayable loans to farmers for the establishment, improvement, and development of farms, but is also open to agricultural cooperatives for the processing, marketing, or distribution of the products of farming.
The department and minister have found that the VCRTs are valuable for purposes that cross the tables themselves. As a result, all of the VCRTs were consulted during the Growing Forward 2 process. We've utilized the VCRTs to develop, implement, and modify the research clusters under the brand initiatives, and we've collaborated with the VCRTs to establish the Agri-Subcommittee on Food Safety, which includes members from the Canadian Food Inspection Agency, Health Canada, the Public Health Agency of Canada, plus a member from each of the VCRTs. More recently, the crop logistics working group was struck to examine a crop logistics system to identify approaches to improve logistics.
In terms of further work, the industry has confirmed that they wish to continue the process of round tables to work on industry-identified competitiveness issues, with one area of priority in the future being regulatory modernization. CFIA has engaged with the beef and horticultural round tables on this issue, and this exercise will be extended to all of the other round tables in the near future.
Biofuels and bioproducts also offer new market opportunities for the agriculture sector, and will require the development of new supply chains with sometimes unfamiliar end-users, in the energy and manufacturing sectors, for example.
Thank you for your time today. I look forward to your questions.