Agriculture Committee on Dec. 5th, 2013

[W. Scott Thurlow]

If you guys wanted to legislate it being 100% biofuels, I'd support it right here on the spot.

In all seriousness, this is actually one of those areas in which the Europeans are really strong thought leaders. They have an aviation biojet requirement that applies to all flights, so actually Canadian planes have to have a biojet component as they're flying into Europe. There are some serious cost differentials in this regard. The best way to drop those cost differentials to create that demand is to mandate inclusion. As we saw with the 2% biodiesel or 5% ethanol, those mandates are what's going to drive the development. I'm not calling for a biojet mandate yet. We're still working on the technology. We'd like to see capital reinvested into the NRC and into the private sector so that this innovation can happen and it can happen here in Canada.

But to be clear, the European rules as they relate to jet fuel are driving innovation and investment in Europe.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

I guess the concern I would have is that we create an issue and then we couldn't meet it. Obviously because of the capacity, especially if you start involving planes and the automotive industry, you'd need to be able to produce a massive amount of fuel. To me that would tax the food chain and all the rest of it.

We're not there yet, but I can see that coming. I think most Canadians would support what we've already done. I guess, how far out this....

[W. Scott Thurlow]

There are several steps integrated at the same time, so all of us need to walk in unison in order to build out the demand.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. Zimmer.

I'll go to Mr. Giguère, please, for five minutes.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Thank you very much.

I appreciate the witnesses. I'm very enthusiastic about your declaration. What kind of job creation will this trade agreement create for your industry?

I would expect not only a little growth but an explosion of jobs in your industry. I cherish the possibility of using sugar from Canada rather than from Brazil, and I wonder about the possibility of creating ethanol as part of the paper industry. Within your case you are requesting a policy from this government to support your development?

[Sandra Marsden]

I'm not sure I understood that.

[W. Scott Thurlow]

I'm happy to answer the question.

First and foremost, just as we can't predict commodity prices seven years from now, it's tough for me to give a bull's eye for what the number of jobs will be, but opening up the economy and opening up the market will create a lot more confidence in terms of what we need to see to encourage investment like that.

As it relates specifically to the forestry sector and producing a cellulosic-based ethanol in the forestry sector, my first and most important request would be that we need a national bioeconomy strategy. We need to get all the departments rowing in the same direction, and we need to have that strategy out there as a beacon to attract innovators to Canada. We've done this very successfully in other areas like the renewable fuel sector. Our industry is now moving beyond renewable fuels and into sustainable products and chemicals as well.

In this regard the policy “asks” are to ensure that we have a regulatory environment that fosters investment and to ensure that we have one principal area in which we can pull all of the thought leadership together. After we have that, would we like to see additional innovation capital put specifically in this sector to drive commercialization of these products? Absolutely.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

You are presently making a recommendation for this national policy?

[W. Scott Thurlow]

We've made this recommendation. This recommendation has been supported by several other trade associations, and I will continue to push for it.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

For the development of the sugar industry, you have the possibility not to use sugar from Brazil but is it the same situation for the sugar from Alberta?

[Sandra Marsden]

We see CETA as really benefiting both parts of our industry. In terms of jobs, initially we see protecting the jobs we have. As I mentioned, in the trade balance with the United States, we've lost business because of the Canada-U.S exchange rates. Some companies, like Hershey, are leaving Canada. Most recently, we heard Heinz is leaving. That takes away a lot of sugar production. We want to keep the investment here and we want to bring more.

So over time we hope that by diversifying markets—and CETA is a good example—we will actually bring some investment back to Canada. That can be in eastern Canada. That can be in Alberta. In fact, I was just in Alberta yesterday, meeting with the government and talking about coming back to talk to their investment people to build on that strategy to bring more investment in food processing.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Very rapidly, I have a question about capital for the investment. Is it a real problem for your industry, or are you requesting support from the government?

[W. Scott Thurlow]

I think it's difficult to get capital in a lot of industries. I don't think it's unique to ours. I think investment capital has shrunk considerably since the recession. There are programs that exist right now that we try to take as much advantage of as we can, in terms of creating the capital we need to get commercial build-out.

Our industry specifically is very capital intensive and very low margin. Once we get the capital in place and we can start making volumes, that's when we're going to have money. It's the valley of death of commercialization that is the big struggle for our next generation members.

[The Chair, Conservative, Bev Shipley]

Thank you very much.

Now we will go to Mr. Albrecht.

You have five minutes, please.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Thank you, Mr. Chair.

My colleague pointed out that I probably owe much of my success in life to the sugar industry, as a former dentist. I'm not sure if he's implying that I should declare a conflict of interest or not, Mr. Chair. Being no longer in that field, I'll take a shot at it.

I do want to point out that recently I had the privilege of having some conversations with European ambassadors. You mentioned, Ms. Marsden, that this agreement in principle will need the ratification of the European member states. Every European ambassador I've spoken to at this point is very bullish about this agreement. I think they see it as a very definite win-win. On that basis, while we are concerned about the length of time it may take, I think we're fairly confident that it will come into force.

I want to have you clarify for me an answer that you gave to Mr. Harris. I thought in your presentation you said we only have access to 30,000 tonnes of sugar to Europe, growing to 52,000.

[Sandra Marsden]

That was the sugar-containing products, like the iced tea and the drink mixes.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Other than that, we have totally free access.

There's no limit on how much we—

[Sandra Marsden]

For beet sugar. That's right.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

For sugar beet, but not for the products.

I'm glad I clarified that.

[Sandra Marsden]

In time, yes.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

You also mentioned 90% of the processed foods we export to the U.S. Does that mean that 90% of our exports are going to the U.S. or 90% of everything we produce is going to the U.S. ?

[Sandra Marsden]

No, no, 90% of the exports—

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Okay.

[Sandra Marsden]

—are to the U.S. rather than other markets.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

I didn't think we exported quite that much.

So in terms of getting the processed things to the European market with the high current tariffs of 100% that are there, it's quite clear that the added cost of getting them there will not be a barrier for developing markets in Europe.