Agriculture Committee on Nov. 21st, 2013

[Brian Otto]

I can't answer that. I think you would have to pose that question to the pork industry.

Certainly, the Barley Council of Canada has the feed industry at our table, but it's not something that we have discussed at this time.

[Francine Raynault, NDP, Joliette, QC]

We know that Europe doesn't want any traces of GMOs in the grain. You say that barley does not contain any GMOs, but, if I have understood correctly, you also produce other grains. What will you do to convince them that you are working to eliminate all traces of GMOs? We don't want the ship to be sent back from Europe and crops to be lost.

[Lisa Skierka]

The question was on how we can ensure Europe that there is no trace of GMO in the grains.

We deal all the time with major-league exporters whose job it is to make sure that we avoid having any low-level presence issues in the grain. That's their job. Their livelihoods and profitability are based on it. The good news about barley is that it's not GMO. There are certainly challenges with shipping, but because the exporters' livelihoods depend upon on it, they will do their best to make sure that access remains open.

[Francine Raynault, NDP, Joliette, QC]

Yes, probably, as the cost would be fairly high and result in a major financial loss if any traces of GMOs were found and the ships had to return to Canada.

Earlier, you said that the producer paid $1 per tonne and could ask for a refund afterwards. Can you please tell us more about that?

[Lisa Skierka]

In Alberta the system of check-offs is what we call “mandatory refundable”. This means that people pay when they sell their grain. The money comes in. If they want it back they fill out a simple form and we send the money back. That's under legislation in Alberta because the Alberta government believes that it's the farmers' money and they have the right to ask for it back. We would have greater struggles collecting the money for purposes that farmers have asked for and approve of. I work for farmers; they determine how the money is spent. But it would be much harder to collect if it wasn't mandatory first, and then refundable.

[Brian Otto]

One thing I'd like to clarify is that the Barley Council of Canada is not a levy-funded organization. The Barley Council of Canada is made up of producer groups plus the industry. The producer groups and the industry are the ones that, as they become members of the Barley Council of Canada, fund its operation. It's a total value-chain funded council, and it's a national council. It's the first one we've had in Canada. We've been very impressed working with the whole industry. Sometimes you have difficulties there, but we certainly haven't run into that. It's been a very collaborative group.

[The Chair, Conservative, Bev Shipley]

We're just about there, if you have a short question.

[Francine Raynault, NDP, Joliette, QC]

Okay.

Last year, Canadian brewers told us that the number of acres used to grow barley had decreased. Now that the European market seems to be opening up, how will the producers manage to increase their production in order to meet that new market's needs? What will you do to ensure that producers can do more and increase their production?

[The Chair, Conservative, Bev Shipley]

Give a quick answer, please.

[Brian Otto]

It's all a matter of dollars and cents. Hang the carrot out there, and they'll grow the barley.

That's what happened after 2008 when we were at 5.7 million acres. The malt industries realized that, if they were going to get farmers to grow barley for them, they had to offer prices attractive enough to get them to grow barley. And that's what we have today. They put the carrot out there, and producers are producing the barley they're looking for.

[The Chair, Conservative, Bev Shipley]

Thank you, Brian and Lisa, for great presentations and good answers. I appreciate it very much.

We're going to take about a two-minute break to switch witnesses. Also we have a video conference on our next round, so we'll get that hooked up.

[The Chair, Conservative, Bev Shipley]

We'll start the second round of witnesses now.

On our second round we have with us, from Grain Farmers of Ontario, Barry Senft, chief executive officer. Welcome Barry.

And by video conference from Winnipeg, Manitoba, from Pulse Canada we have Gord Kurbis, director of market access and trade policy.

[The Chair, Conservative, Bev Shipley]

According to my agenda, we'll start off with the Grain Farmers of Ontario.

Go ahead please, Barry. You have 10 minutes.

[Barry Senft, Chief Executive Officer, Grain Farmers of Ontario]

Thank you, Mr. Chairman.

On behalf of our 28,000 farmer members in Grain Farmers of Ontario, I want to thank you for this opportunity to provide our views on the Canada EU trade agreement. Over the past 10 to 12 years, the Ontario grain industry has increasingly outgrown the Ontario and Canadian markets. The domestic market remains the primary market for most of our production, but the development of international markets is an ongoing critical task. This is particularly true of Ontario soybeans. Two-thirds of our production is exported. As an association of farmers our mission is to develop an innovative and successful business environment that will allow our farmer members the opportunity for profitable growth. The path to achieve this requires the reduction of trade barriers and the expansion of markets for corn, soybeans, and wheat. For these reasons, Grain Farmers of Ontario is very supportive of the government's efforts to secure foreign markets for our products.

Given the importance of the European Union as a market for Ontario grain, we are particularly supportive of CETA. The EU is an already important market for Ontario and Canadian grain and oilseed producers. Between 2008 and 2012, Canadian soybean exports to the EU increased 113%, going from half a million metric tonnes in 2008 to 1.3 million metric tonnes in 2012. The value of these exported soybeans is around $740 million and accounts for over one-quarter of the Canadian soybean crop. Within the top 10 export markets by volume in 2012, four of the top destinations were European countries: the Netherlands, Belgium, Germany, and Italy. This year for the first time in several years, we also exported corn to the EU, a total of 175,000 tonnes were exported at a value of $46 million.

Additionally, over the last several years, Ontario wheat has been exported, although only 38,800 tonnes, because wheat exports have been constrained by the EU quota for Canadian low protein wheat at less than 13.5% protein. Upon implementation of CETA, the quota for Canadian low protein wheat will immediately rise to 100,000 tonnes from the current 38,800 tonnes. Further, the current in-quota tariff of 12 euros per tonne will disappear, and over the seven-year implementation period of the agreement the over-quota duty rate of 95 euros per tonne will be reduced in equal amounts. In the eighth year the EU market will be entirely open for our wheat, an exceptional market opportunity for our farmers and one that they look forward to selling into.

Financially, Grain Farmers of Ontario also foresees a lot of benefit within the domestic industry. A large portion of our Ontario grains is sold to companies and industries in Canada that will benefit from improved access to the EU. Upon implementation of the agreement, the tariffs on products like bakery goods, spirits, soybean oil, soymeal, and numerous other products produced from Ontario grain will either be substantially reduced or eliminated entirely.

Another important element of the value chain for Ontario grain is livestock producers. Grain Farmers of Ontario is encouraged by the fact that Canadian beef and pork producers have secured increased access to the EU as these two industries are major users of Ontario grains. In fact, livestock feed remains the primary use for corn in our province, and we look forward to increasing our supply to livestock as the demand for their products increases internationally.

Above all this, one of the most important challenges facing exports of our soybeans and corn into the EU is the slow pace of the EU approvals for genetically modified grains. As previously mentioned, our farmers operate in an innovative business environment and are high adapters of new technology. The EU however, maintains a very low tolerance level for unapproved GM grains destined for feed use and has a zero tolerance for unapproved GM grains for food use. One of the most promising points under the agreement is that Canada and the EU will establish a working group to examine biotech issues and ensure that they do not disrupt trade.

This open dialogue and collaboration on the issue of genetically modified grains is an exceptional step forward in our relationship with the EU, and we look forward to contributing to this working group.

We see immense opportunity for Ontario grain farmers with the implementation of CETA. This agreement will reduce trade barriers for Ontario corn, soybeans, and wheat, reduce tariffs for our end-users in the industry, and increase market access for Ontario livestock producers. All these components will help drive the grain industry in Ontario and across Canada toward increased competitiveness in a global market with sustainable and profitable market opportunities. For these reasons, GFO strongly supports the government's efforts in securing CETA.

Thank you.

[The Chair, Conservative, Bev Shipley]

Thank you very much for your presentation.

Now we'll go to Winnipeg.

Mr. Kurbis, I'll ask you to make your presentation. Welcome, by the way.

[Gord Kurbis, Director, Market Access and Trade Policy, Pulse Canada]

Mr. Chairman and committee members, thank you for the opportunity to speak to the committee today.

As you know, Pulse Canada is a national industry association funded by the farmers who grow peas, lentils, beans, and chickpeas across Canada, as well as by the processing and exporting companies that export pulses to more than 160 countries around the world. Pulse Canada has, for more than 15 years, been focused on market access and the need for a predictable and stable trading environment as one of the members' top priorities.

The Canadian pulse industry is very supportive of CETA and other bilateral and multilateral trade agreements at the government-to-government level, because they provide an opportunity to create a more permanent and lasting trade policy framework that levels the playing field and improves the predictability of trade.

The EU is one of Canada's top three markets for Canadian pulse and special crop exports, and is valued at approximately a quarter of a billion dollars annually. Canada exports more than 180,000 tonnes of peas and lentils to the EU each year, as well as 38% of dry bean exports, 32% of Canadian canary seed exports, and 31% of Canadian mustard seed exports.

CETA represents two key opportunities for the Canadian pulse and special crops industry: market growth in processed products, and regulatory harmonization. While Canadian whole and split pulses and special crops are well established in the EU, and already had duty-free access, exports of further processed products have been restricted by tariffs. CETA creates significant opportunities for our sector through the reduction or elimination of tariffs for pulses that have been processed in Canada and then exported as flour, fibre, starch, and protein. Tariffs for those will be removed immediately, with the exception of the pulse-starch tariff, which will be phased out over seven years.

Why that's important is that the EU leads the way in innovative product launches that focus on health and sustainability. With the rates of obesity and other diet-related illnesses such as cardiovascular disease and diabetes at historic highs, the food industry is responding to consumer and public-sector demands for healthier foods by reformulating existing brands or developing new products. With high levels of protein, fibre, and complex carbohydrates, pulses are optimal ingredients that offer important health benefits.

In fact, earlier this year, experts in diabetes and cardiovascular disease research met to discuss whether existing evidence for pulses was sufficient to warrant a health claim in these areas. The experts unanimously agreed that there is an evidence-based relationship between consumption of beans and cholesterol lowering. The studies consistently showed that a half cup of beans per day lowered both total and LDL-cholesterol, and that the magnitude of the effect was similar to or greater than that of other foods with approved health claims, like plant sterols and barley.

Moving towards the regulatory harmonization opportunities that CETA will create, governments on both sides must fully utilize the agreement to address new technology and innovations in agriculture in the context of synchronous approvals, as well as new technology for detection. As you've heard, GMOs—or genetically modified organisms—and new reduced-risk crop protection products are two cases where regulatory infrastructure lags behind advancing technology. All commodity exports will increasingly face challenges in years to come, as testing becomes cheaper and more sensitive, often capable of measuring down to single parts per billion. In cases where importing countries have zero tolerances, or near-zero tolerances in place for products that have not yet completed the approval process, misaligned timing of approvals alongside the ability to detect minute levels has the potential to be devastating for trade.

Canada has shown tremendous leadership in its development of, and international outreach around, the draft low-level presence policy, which is especially needed in the EU. Since you'll have heard about the critical importance of this policy from other agriculture groups representing GM crops, I would like to use my remaining time to focus on the need for a similar approach for crop-protection products.

These products—herbicides, fungicides, and insecticides—have been critical to improving agricultural productivity. Unfortunately, new crop-protection products and their rapid adoption have challenged market access, as importing countries can take years to establish legal tolerances, with zero or near-zero tolerances that apply in the meantime. For example, in 2011 the pulse industry had a high-profile glyphosate breach and MRL gap that we encountered on lentils to the EU. The issue was that Canadian farmers were using a crop protection product, glyphosate—or Roundup—which was fully approved for use in Canada with exports that were well within Canadian food safety standards.

However the EU had never gone to the process of establishing an MRL for glyphosate on lentils, and consequently applied a near-zero default of 0.1 parts per million, which caused rejections as well as product recalls from retail shelves. As you know, detection of pesticide residues, even when well below levels considered safe by the world's leading regulatory bodies, can create headlines that undermine consumer perceptions of the safety of Canadian agrifood products.

All of this happened solely as a result of lack of regulatory harmonization. I want to be clear to all committee members who may not be as familiar with the policy and processes around the establishment of crop protection product tolerance levels. Canada is among the toughest regulators in the world when it comes to establishing safety margins, and the product pulled from EU retail shelves was compliant with Canadian standards. Underscoring that there was no food safety issue at the heart of this is that, in the following year, the EU itself increased the 0.1 ppm tolerance that it was applying to Canadian lentils by a factor of 100 to 10.0 ppm after review by its own EU health regulators.

The opportunity, as we look ahead, is to use FTAs like CETA to attain regulatory harmonization around both LLP, or low-level presence of GM, and MRLs. We do have a policy development process in place for one, yet we're only getting started on the other. There is a role for leadership.

In closing, as an affluent, quality-conscious market, with strong consumer interest in food that provides health benefits, and with an interest in sustainability, the EU is a natural trading partner for Canadian agriculture, and we expect that CETA will provide many opportunities. However I would like to make an additional closing remark on transportation.

Canadian customers overseas have long memories, and people don't forget when their food isn't delivered on time. While trade and partnership agreements open doors to an enhanced trade relationship, being the reliable supplier year after year is what's needed to keep the relationship going.

The size of this year's crop is bringing clarity, unfortunately, to the underlying problems that can sometimes be lost in the complexity of the transportation system.

Grain production this year is estimated to have exceed 65 million tonnes. The railcar shortfall for the past 16 weeks now exceeds 20,000 cars. Quorum, the federal monitor of the system, reports that vessel waiting times at Port Metro Vancouver are as bad as they've ever seen, noting that this is the third year in a row that Vancouver has experienced these problems and it's getting worse. A system that's frankly not meeting the needs of its users means that Canada isn't meeting the needs of its customers in a consistent and reliable fashion and isn't able to fully take advantage of the enabling conditions that FTAs like CETA create.

Thank you, Mr. Chairman.

[The Chair, Conservative, Bev Shipley]

Thank you for your presentation.

And thank you all for staying within presentation time.

I'll now go to our members, and I'll start off with Madame Raynault.

You have five minutes, please.

[Francine Raynault, NDP, Joliette, QC]

Thank you, Mr. Chair.

My question is for Mr. Kurbis.

The document we received earlier states the following: “The Comprehensive Economic and Trade Agreement represents two key opportunities for the Canadian pulse and special crops industry—market growth in processed products and regulatory harmonization.”

Could you tell us more about that?

[Gord Kurbis]

I'm sorry; the question didn't come through clearly in translation. Could you repeat please?

[Francine Raynault, NDP, Joliette, QC]

Yes.

In one of the paragraphs of the document you submitted to us, the following is stated: “The Comprehensive Economic and Trade Agreement represents two key opportunities for the Canadian pulse and special crops industry—market growth in processed products and regulatory harmonization.”

Could you please tell us more about that?

[Gord Kurbis]

Our concern around regulatory harmonization is that we have products that are compliant with Canadian food safety standards, which are certainly among the toughest food safety standards in the world, but may not be compliant with EU standards. It's not because they have assessed or maybe made a different assessment from Canadian regulators, but simply because they have not gotten around to going through the process of setting a tolerance and conducting a risk assessment.

In the meantime, there are either zero tolerances or near-zero tolerances. For example, they are set at the default limit of detection of 0.01 parts per million in many cases. It is really the establishment of government-to-government forums that will give these issues, we feel, a higher probability of being wrestled to the ground by both sides.

[Francine Raynault, NDP, Joliette, QC]

The idea is to avoid pulse shipments being returned to Canadian producers and resulting in a fairly significant financial loss.

In your document, you say that pulses could be added to products such as pasta and baked goods. How will you convince Canadians that adding pulses to pasta or bread provides health benefits? What is your strategy when it comes to that?

[Gord Kurbis]

There are two components to that strategy. The first component is we feel that consumer messaging is saturated with anecdotal claims about health and nutrition and what food A versus food B will do for health, so we would rely on peer-reviewed science and health claims to communicate that message. Food companies are very good intermediaries in carrying forward to consumers the sorts of messages they can understand.

The second component though is that we need a continued absence of any unsubstantiated food safety scare that could come from any of these zero or near-zero default tolerances being triggered because of a lack of regulatory harmonization. Even though there's always risk to trade or that one kernel that could potentially be found in a bulk vessel, this agreement, in our view, can only move the needle in the right direction with respect to the potential unfortunate detection, and rejections even, of such events.

[Francine Raynault, NDP, Joliette, QC]

Mr. Senft, last week, some of my colleagues told Canadian grain producers that they were worried by the low levels of GMOs and by the fact that we have signed an agreement with the European Union without having found a solution to that problem.

Do you think that issue could be resolved before we sign the agreement or before the Europeans send our grain back?

[Barry Senft]

We have been putting that effort into signing an agreement with the European Union since the introduction of GM technology, which dates back to 1996. We haven't made a lot of headway since that time. Without an agreement, it doesn't seem that we've done very well in moving that issue forward. This agreement proposes a formal discussion about an approval process.