International Trade Committee on Feb. 3rd, 2014

[Jasbir Sandhu, NDP, Surrey North, BC]

I'm well aware of that.

You talked about geographical indications. Would you have liked geographical indications for your sector?

[Sven Freybe]

I wish that the European names would not be protected in the Canadian marketplace.

[Jasbir Sandhu, NDP, Surrey North, BC]

I believe Canada has actually given 179 GIs to Europe but we haven't gotten any back from Europe.

[Sven Freybe]

It's not fair.

[Jasbir Sandhu, NDP, Surrey North, BC]

Is that a good thing or a bad thing?

[Sven Freybe]

In principle I find that a bad thing, from the perspective that if there are products that are great from here, if we're giving up GIs, I believe we should be gaining GIs in exchange.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Cannan, the floor is yours for four minutes.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you, Mr. Chair.

Thanks again to our witnesses. To summarize a couple of comments coming from the Okanagan and Kelowna—Lake Country, we have an artisan goat cheese producer there and that goes well with our wine industry. I know we have a hard-working representative, the director of international trade for the province, Janet Quiring, and we were just talking during the break about how the province is expanding some of its liquor laws.

Have you done any cross-promotion with the wine and alcohol industry to look at expanding your market, not only here but across the country?

[Debra Amrein-Boyes]

Actually, we create two cheeses for Mission Hill winery in the Okanagan. We don't sell them ourselves. They are their cheeses we create for them to go with their wine. So we do have a relationship with a winery.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

That's fantastic, and Mission Hill just bought CedarCreek last Friday—

[Debra Amrein-Boyes]

That's great.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

—so you may have another opportunity, another potential customer.

I was looking at your web page. It is really exciting to see the farm gate sales and to see how you are trying to produce that agri-tourism perspective, which I know is a strong philosophy of Premier Clark. Our communities across the province are looking at trying to encourage local.

What other initiatives, from a federal perspective, do you think we can take to help small farming communities such as yours to go to the next level? You're at the level where you are family-operated, but then as with any small business, like a grocery store, you have to decide how many more staff you want to add and take that next jump. Do you need training? Do you need resources? What are some of the aspects of infrastructure the government could help with to help your business grow?

[Debra Amrein-Boyes]

I think anyone who's had any association with farming or agriculture knows how much work goes into it, so maybe it could be something in the labour initiative for programs to hire student labour in the summer. I created in-house an internship program to teach people to make cheese. It's a three-month internship program. We pay. They get paid minimum wage to learn to make cheese, because I don't believe in just using slave labour. That came from in-house. We did that. At the end of the three months, interns should be able to create their own cheese and hopefully then go out and increase the footprint of artisan cheese-making in Canada.

So there would be that—something to support labour—and as well maybe some support on the technical side would be good. Also, if there could be an easing of the ability to ship across the country, through agreements in certain sectors, so we could cross borders without a lot of red tape, that would be good.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

We talked a little bit about interprovincial trade barriers earlier.

[Debra Amrein-Boyes]

Yes.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you very much. I appreciate your fire-in-the-belly entrepreneurial spirit. That's great.

Mr. Freybe, I'm third generation. My father worked at the Gainers meat-packing plant for 45 years. I've seen a lot of the processing in the food industry, and I appreciate your family's contribution to the industry and specifically to innovation. I notice that you're the first North American company to declare its products gluten- and lactose-free.

Do you have a research and development department that looked at what the niches were in the marketplace and then developed that?

[Sven Freybe]

Actually, what's great about that is that we stumbled on the fact that our products are both gluten- and lactose-free because consumers came to us and told us that ours was the only product their children could eat. We figured out what lactose intolerance and celiac disease were and so forth. The reality was that the product we were making was essentially clean because we were trying to make it the best product it could be, and that pushed us in that direction. We didn't strategically set out to be gluten-free, but because we had a mandate about the quality of our product, we didn't try to cut corners, which in our industry is generally where lactose and gluten are utilized. We do have a large innovation department that is always tweaking new recipes.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Fantastic. All the best to you in the future.

Thank you.

[The Chair, Conservative, Rob Merrifield]

Thank you very much, and thank you for your compelling testimony in answering the questions. You're an inspiration to all Canadians for what you do. Keep it up.

With that, we will suspend as we set up the next panel.

[The Chair, Conservative, Rob Merrifield]

If our witnesses are ready and our committee members are ready, we'll start a little early and finish a little early, if that's okay.

We have our last panellists of the day. From the British Columbia Dairy Association, we have Stan Van Keulen.

Thank you for being here as a board member.

From LifeSciences of British Columbia, we have Paul Drohan and Gordon McCauley.

Thank you very much for being here.

We will start with you, Mr. Van Keulen. The floor is yours.

[Stan Van Keulen, Board Member, British Columbia Dairy Association]

Thank you.

It's been an interesting day here. I've been listening to a lot of the witnesses and presentations. I thought it was very intriguing.

Just to let you know who I am, I am a milk producer here, from the Fraser Valley. I've been involved in dairy politics or dairy industry leadership for probably the last 30 years. Most of my colleagues would probably be in this room right now and supporting me, but they're at a Dairy Farmers of Canada convention. We have a lobby date tomorrow, when we go out and see all the MPs. Since there are so many MPs here, the A-team was left behind—

[Voices]

Oh, oh!

[Stan Van Keulen]

—and I'm here doing it. The other reason is that I hate cold. As you get older, you find that cold weather plays havoc with you.

I'm here to speak on behalf of our industry, so I just want to give you a bit of a perspective on what the dairy industry means in British Columbia. You've heard about Debra with her artisan business, but the mainstream industry, just in gross receipts to the primary producers, is an industry of about $560 million to $570 million in British Columbia. From there, obviously, it gets multiplied. One of the biggest factors about a primary producer, especially a local producer, is that he spends here, locally, every cent he makes and more.

In this province, I represent close to 502 producers—it changes daily—and about 353 of those producers are in the Lower Mainland. Like I said, I've been involved in this business for probably 30 years on the politics side and as a producer all my life.

I'm one of the fifth-largest producers in British Columbia. Just on our farm—if you want to google it, it's Donia Farms Limited—we have three boys at home who are all college grads. They all want to stay at home and farm. My father started the operation, we've taken it to another level, and I'm pretty sure they're going to take it to another level too. The future is bright if we can keep our industry intact.

On that note, I'll go forward with the presentation. I want to thank you for allowing me to speak here on the implementation of CETA.

This agreement with the EU is going to give additional tariff-free access of close to 16,000 tonnes of high-quality cheeses and another 1,700 tonnes of so-called industrial cheese. When combined with the access the EU enjoys now, there will be nearly 32,000 tonnes of European cheese coming into Canada every year. That is a doubling of the current EU access into the Canadian cheese market. It is vitally important for the Canadian government to understand that the European dairy industry is government-subsidized by close to 40%.

While sitting here today, I've heard some of the comments about supply management. Supply management doesn't cost the Canadian government any money. We get our prices from the marketplace. We do not receive any direct cash benefit from the government. I think that is a key point.

I'm going to jump around a little bit here, because for some of the things that were prepared for me, I'm a little bit uncomfortable saying them here.

From a broader perspective, CETA will push the total tonnage of cheese imported to Canada to more than 38,000 tonnes and increase the import market share from 5% to 9%. The significance is even greater when we consider that there is the potential to fill an additional 15% to 30% of the fine cheese market. This would mean that the EU would have the majority share of the premium market, with exclusive access to about 60% of the total fine cheese market in Canada.

Once CETA is implemented, the new access will be equivalent to 2.2% of Canada's milk production, a $150 million loss in farm income each year, 4% of the Canadian cheese market, and at least $300 million worth of cheese annually. It will reduce our milk production. It will cost Canadian dairy farmers, cheese-makers, industries supplying dairy farmers, and processors millions of dollars in lost revenue as a result of this foreign access to our market and projected market growth of our industry that has developed through farmer investments.

One of the key things I want to expand on here is that there is a check-off for advertising to enhance the growth of our industry in the supply management system we have. It may be through advertisements, incentives for new innovative products, lower prices, or a whole range of products to develop the market.

When this agreement with free and unfettered access—I shouldn't say free and unfettered access—but if they are within their quota, they don't pay any of that particular cost. The market we are creating, that we have established through the check-offs, through the advertising programs, through enhancements, through all these things I've talked about, these things they don't have to....

The beef industry in this country has won a check-off now for any importation that comes in. They will pay into the advertising program. I would think that this agreement as it sits right now... these people are taking a market that we've established. There's only 1% growth in our industry right now on an annual basis.

The implementation of CETA matters to us. If I read the agreement and what was told to me earlier through my colleagues, the program was to be implemented over a seven-year period. We would appreciate it if you would implement this agreement over a 10-year period. We understand it's going to happen, but at the same time we recognize that to minimize the impact, 10 years is something we should be looking at.

The other thing is that the supply management system we work under is faced with a tremendous amount of criticism. It was blamed for the lack of trade by a number of other industries sometimes. I want to give a little bit of a stat. It's a government stat, and it's put out by the Canadian Dairy Information Centre. It's the balance of trade. When we talk about trade, we talk about an economic developer. We want to create jobs. We want to have that spin of our dollars going back and forth. But under the supply management system we have today, we are in a trade deficit. As of 2012, the imports were $677 million; the exports were $439 million. Since 2003 and every year, there has been a trade deficit. Trade is a matter of balance. There are winners and there are losers between sectors. I understand that. But in the dairy sector, we've been in a trade balance for the last 10 years. It's your own stat that is telling us this.

In order for supply management to work correctly, we have to have predictability of imports. When this is taking place....I brought a glass of milk. I probably won't drink it because it has been sitting there and getting warm. I only like cold milk.

But you just see milk here. With today's processes, that milk is fractionated when it comes into the milk-processing plant. It is broken down into a number of components. Some of those components—and that's why the imports are coming in—will be broken into whey protein, casein, and a whole range of things.

The cheese that you have today is first broken down into fractionated products and then added back in. The dilemma we have is that our trade rules or barriers or those tariff lines have never captured that new technology of breaking down the milk products. So we have a whole range of countries right now that look at our captured market, that look at our supply-managed markets, look at the prices that we have here, and they say, “We want in, and this is how we're going to come in.”

Sorry, shall I slow it down?

[The Chair, Conservative, Rob Merrifield]

Your time is exhausted. I'll let you do a closing statement, if you want.

[Stan Van Keulen]

The closing statement is that I do appreciate the fact that we're here. But I think, as I pointed out earlier, that we'd like to have a 10-year program.

I'll answer any questions on supply management or anything during the question period. Thanks for the opportunity.