Agriculture Committee on May 2nd, 2013

[Randy Hoback, Conservative, Prince Albert, SK]

When you talked about the international competition coming into Canada, is it easier for international competition or internationally produced product to go from province to province than domestically produced product?

[Susie Miller]

I haven't undertaken any analysis of that, so I couldn't respond.

[Randy Hoback, Conservative, Prince Albert, SK]

I'm curious, because that's one thing we hear quite commonly. We're starting to see the development of a micro-distillery industry, and those would be the same issues they had in the wine sector and in the beer sector. These interprovincial trade barriers are one thing that keeps coming up, especially in the area of alcohol, and then the control the liquor boards have on shelf space, and the ability of new products to get onto the shelf.

Mr. McCauley, as far as Revenue Canada goes, on the tax side of things, are you concerned who collects the taxes? Providing you get the tax, whether it came from a liquor board store or a grocery store or a corner store, would you care?

[Brian McCauley]

With the current deficit, we certainly want to make sure we collect the appropriate level of taxes. I think it's important to appreciate that the excise tax is applied at the manufacturers' level or at the point of importation into the country. We apply and receive the excise tax before that product flows to the liquor boards and so on. Then there is the further addition, as you can well imagine, of the HST and so on. But, in a way, the regime is designed to be market neutral inasmuch as it should not favour or disfavour importation over domestic, in the sense of respecting our trade and treaty obligations.

[Randy Hoback, Conservative, Prince Albert, SK]

So it should be balanced, and it doesn't matter where it comes in.

[Brian McCauley]

It shouldn't.

[Randy Hoback, Conservative, Prince Albert, SK]

So how does it go from province to province? Would a distributor go through the same barriers that a domestic producer would have to?

[Brian McCauley]

And the liquor boards. It's largely a liquor board issue, in terms of whom they deal with in bringing product to their shelves.

[Randy Hoback, Conservative, Prince Albert, SK]

Okay.

I'm just thinking here, Chair.

I was wondering if we could get you to do a written submission of the results of your round table or your sessions you had in Toronto with the different growers. Could you provide that to the committee?There's probably lots of information in there that's hard to get in a five-minute question period that we can maybe see in your submissions that would give us ideas on what the producers or the industry is saying.

Would you be willing to do a written submission?

[Susie Miller]

We do have written minutes that can be made available to the committee.

[Randy Hoback, Conservative, Prince Albert, SK]

Can we get a written submission? I'd like to see a summary. Minutes are one thing, but a submission sums up everything in a manner we can digest a little more easily, I think.

With that, Chair, I think I'm done my question.

[The Chair, Conservative, Merv Tweed]

Other than a straightforward report, I suggest it might be difficult to, because I suspect opinions prevail at those meetings, but more so just for information, to help you make good decisions.

[Susie Miller]

The report we would make available, I would suggest, is more than just the minutes. It includes background information and some recommendations for action on the industry's part.

[The Chair, Conservative, Merv Tweed]

Good. Thank you.

Ms. Raynault.

[Francine Raynault, NDP, Joliette, QC]

Thank you, Mr. Chair.

What can the government do to promote the development of the wine industry in the cold areas of Canada, particularly in Quebec and the maritime provinces?

In Quebec, for example, some producers had to stop growing tobacco and tried grapes, but it is not always easy.

[Susie Miller]

No, it's not easy.

In response, following up on Mr. McCauley's statement, it really is up to the provincial governments to determine what they are willing to do. Since the change to the Importation of Intoxicating Liquors Act on the federal side, what we have seen is that provinces are under more pressure from their industry and consumers. We've seen some action. British Columbia, for example, allows for shipments of 100% Canadian wine across provincial borders. Manitoba is not a big wine producer, but it has introduced the ability for an unlimited individual amount. Nova Scotia is looking at setting limits for what an individual could do. Right now the limit is zero, unless they put in a specific one. Some of them have personal wine limits.

What we have found is that even though the provinces have the control, they do respond well to consumer pressure once we have been able to remove the federal limitation. The industry itself is also very proactive and continues to work with both the liquor boards and the oenophile societies, the wine lovers, for example, in the various provinces and in the food service industry to encourage and facilitate this.

The change is gradual, but we have seen change even within a year.

[Francine Raynault, NDP, Joliette, QC]

Programs dealing with innovation are very much appreciated by groups of farmers. But they complain that these programs do not last long. On top of that, five-year programs in innovation work on a first come, first served basis.

Was this issue brought forward during consultations on Growing Forward 2? Is there a way to solve the problem eventually?

[Susie Miller]

During the consultations on Growing Forward 2, which directly led into decisions made on the programming, there was a great deal of interest in the industry of having a five-year horizon for some of the funding. I'll use an example in the malting barley industry. If you're going to develop a variety to suit the needs of the consumers, you can't do it in one growing season. It's the same as if you're looking at new methods for managing pests or adding nutrients. A five-year horizon is better. They actually in some cases would like ten, but a five-year horizon is better.

Essentially, in the federal programming, certainly the clusters or the five-year ones have a specific date. For other programming, funding is available through the full five-year period, and there is a mechanism where there can be continuous applications by the industry over that period of time. I would suggest it's not expected that the money for those industry-led projects would be all allocated immediately, but there would be flexibility to allow the industry, on a continuous basis, to identify their priorities.

[Francine Raynault, NDP, Joliette, QC]

Thank you.

Spirits producers—we are talking a lot about them here—complain because their products are overtaxed and are not available at all points of sale like beer and wine are.

What do you think of these comments? How could the government help this industry?

[Susie Miller]

I believe that was a big part of the purpose behind having a producer and processor summit, the one held by Minister Ritz in November. Sometimes the producers are concerned they're not getting their fair share. The processors are concerned they're put in a position of not being able to meet the requirements of the marketplace. That's why we utilize groups such as the value chain round tables to establish this dialogue between seller and buyer so that there's a win-win situation for everyone. I can't assess a particular situation, but I can say that this buyer-seller tension in the industry is not unusual. What we try to do is break down the barriers and find solutions. That actually is going to help everybody.

[The Chair, Conservative, Merv Tweed]

Mr. Richards.

[Blake Richards, Conservative, Wild Rose, AB]

Thanks Mr. Chair, and I thank the witnesses for being here today.

We've had a number of witnesses from various parts of the beverage sector here during the course of our study, and a number of things have come up. One of the things we've heard a lot about from the grape growers and wine producers, as well as some wine consumers, and which has been addressed a little bit today in some of the other questions, is the knocking down of provincial trade barriers for their products. That's been something that's been very well received, no question. That was addressed last year with a private member's bill from a Conservative member from B.C., Dan Albas. A lot of work went into that. Previously, Ron Cannan, another one of our Conservative members from B.C., had brought forward a bill. There was a lot of work that went into that. There are still some challenges with the provincial boards, but it's making a difference and has been very well received by the industry.

Ms. Miller, I'm wondering if you could tell me about some of the work that went into making that happen.

[Susie Miller]

Generally speaking, when the industry brings something to our attention that they feel is a barrier, the value added we have is to take a look at what the government's role is and determine whether or not we can make a difference. Certainly for the wine industry we looked at various instruments, including what role legislation plays, what role provincial bodies play, and what kind of mechanisms exist for discussion between those who are responsible for the impediment or who hold the key to resolving the issue. We like to work very closely with the industry, but we also like to work very closely with our provincial and federal colleagues.

You're right that the issue of interprovincial wine trade was there long before the private member's bill. We had initiated a dialogue with our provincial agriculture colleagues to see their perspective, to see what they felt their role was in the development of their wine industry. Essentially, they were the ones who would benefit—their farmers, their wineries, and their businesses.

We also worked interdepartmentally to see what we could do. We looked at some of the mechanisms: the internal trade committee; whether a minister could influence his colleagues in a formal federal-provincial process; whether we could do it our level, or the deputy's level, etc. Also I made mention earlier of the fact that we've undertaken some significant analysis to see what impact a change might have on the economics of the industry.

[Blake Richards, Conservative, Wild Rose, AB]

I'm glad to hear there is constant contact and conversation with industry and with other stakeholders. We've heard here in committee a desire from the spirits and beer industries to see some of those barriers knocked down for them too. I assume you've probably had some of those conversations and interactions with them and have probably heard those things as well.

[Susie Miller]

We certainly haven't heard them to the extent that you have and on such a consistent basis. It generally has not been raised. If I may hazard a guess, I think our interaction generally but not exclusively happens with the larger businesses, whereas your experience covers the smaller ones as well.