Agriculture Committee on May 5th, 2009

[Frank Valeriote, Liberal, Guelph, ON]

Thank you, gentlemen, for spending your time with us. I know it's valuable to you, and we appreciate that you've taken time out of your busy day to be here.

Jacques, I have a situation in Guelph that I'm hoping you might help me with. It concerns a butcher who lives just outside Guelph. He comes into our market Saturday mornings. He's flooded with people who come to purchase his wonderful product. And he's going to have to close down. The reason he has to close down is the amount of paperwork that he has to now fill out with respect to listeriosis and health safety.

What is an inconvenience to somebody like Maple Leaf, hiring some extra people to deal with the issue, is an overwhelming, insurmountable process for him in cost and with respect to human resources. Of course, when he leaves, maybe the whole market will close, because he's the anchor tenant in this market.

I want you to comment, if you could, on the degree of regulation we're currently engaged in and whether or not you see it as fair; whether or not you see the smaller operations being subject to a different obligation for food safety, for at least reporting and paperwork; and whether there should be a high standard that everyone has to meet or separate standards for the larger and the smaller industries. Could you comment on that?

[Jacques Légaré]

Thank you for your question.

Indeed, the legislation has meant a very heavy burden in terms of paperwork for all manufacturers and processors. They have to cut through a lot of red tape from different departments that are not necessarily keeping the communication channels open between themselves, which leads to a kind of duplication that manufacturers and processors have to deal with.

There needs to be more focused dialogue with Health Canada and Agriculture and Agri-Food Canada to truly reduce the administrative burden while maintaining at the same time the appropriate checks and balances. While the paperwork and regulations need to be simplified, consumers also need to be protected at the same time. We have approached a number of Health Canada officials about this issue and they have told us that they will look into it. However, we have not seen anything come of this.

The same is true for inspectors, who are sometimes in-house, sometimes arm's length, and sometimes they work for the province and at other times for the federal government. There needs to be a far more open dialogue between departments, like in the case of Food Valley, and for non-meat products.

The Food Valley example is a good one. The government struck a committee on which various department were represented with a view to developing a policy that cuts across all departments and to making it far easier for manufacturers and producers to gain an understanding of the processes, the objective being to fast track development. Food Valley has enabled a country that is much smaller than ours to become the fifth biggest food exporter in the world. So clearly, it would be worthwhile to take a look at this model, besides which their administrative practices are far less complex than the ones we have here in Canada.

[Frank Valeriote, Liberal, Guelph, ON]

I notice that you did not allude to different standards for various people. It should just be a streamlined standard for everyone to meet.

[Jacques Légaré]

You are totally right.

[Frank Valeriote, Liberal, Guelph, ON]

I find it ironic and almost sadly humourous that you suggest—rightly—that products made in Canada are recognized to be Canadian outside of Canada, while they're not within Canada. I suspect that has to do, as you say, with the formula or the definition we use. What kind of definition might you recommend? Or should we even bother putting “Product of Canada” on at all and just identify where the different components of the product come from?

[Jacques Légaré]

Let me take a step back, back to when the government commissioned a nation-wide study and consulted various stakeholders to ensure that this policy, or by-law, was really feasible and would help to better inform consumers.

The minister brought in legislation before the advisory report was released. On reading the report, we note that it suggests the percentage should be set at 85% Canadian content, not 98%, thereby allowing for various spices, sugar and salt that make up some of the ingredients in processed products.

Research involving various stakeholders and costing about $100,000 was not factored in. Legislation was brought in before the report was released and the direction taken really goes against the government's stated intent, which was to better inform consumers. However, in the legislation, there is a loophole for export products. They can be identified as products of Canada by disregarding the 98% rule.

I just do not get it. It really is unbelievable nonsense. In defining a product of Quebec, we can put on a label saying “Product of Quebec”, but we cannot put “Product of Canada” on the same product, and a product made in Canada can be identified as a “Product of Canada” outside Canada, but not within Canada's borders. It is illogical and we just do not understand it.

[Frank Valeriote, Liberal, Guelph, ON]

On page 8 of your report you say, “The concentration of distribution encourages food processors to engage in abusive business practices”.

Can you be more specific and tell me what kinds of abusive business practices, for example?

[Jacques Légaré]

For example, the slotting fees of $500,000 for a product, a SKU, throughout Canada, without a sale warranty, do not correspond to what happens in the American markets, where you have access to different distributors.

Market access costs in Canada are excessive. The rules are very strict. For example, 40 rather than 10 day terms of payment to suppliers and the ability to change contracts without prior notice are examples of things that don't happen outside Canada. But because of a situation where things are so controlled by the government—at least in Quebec—this has meant... It doesn't make sense. The only place in the world where there is such a concentrated market is in Australia where there are only two distributors. The same situation exists there. There were also situations just as troubling in France, Germany, and England, but laws were passed to at least prevent this kind of worrisome occurrence.

[The Chair, Conservative, Larry Miller]

Thank you, Mr. Valeriote.

Mr. Légaré, I was going to ask this at the end, but you were just talking about it. When you mention referencing, you're talking about basically buying shelf space. Is that what you're referring to?

[Jacques Légaré]

It enables you to place your product with the distributor, to take up space in his warehouse, to access his sales network, and to get space on store shelves. The per product cost—not in the case of a single distributor but for all the distributors—, if a manufacturer wants to sell a 200 ml jar of strawberry jam throughout the entire chain, will be $540,000 or $520,000 to gain access to the system. And the producer at that point still hasn't sold a single crate, he's merely paid to access the system.

[The Chair, Conservative, Larry Miller]

I just wanted to be clear--and if the committee would just get on this--when you mentioned this in your opening remarks, you mentioned that government needed to address this in some way.

This issue has been identified at this committee before. Could you just enlarge upon, right now, what you meant or what you think government can or should do to address that kind of retail abuse, as you called it?

[Jacques Légaré]

The simplest answer is to take the example of the Raffarin legislation in France which governs margins distributors can earn on products in relation to the costs of getting the product on the market. This legislation provides parameters of sorts because regardless of what legislation you have, at some point in time, someone is going to get around it, but at least it gives you parameters through which to access a market in a more logical manner than now exists.

[The Chair, Conservative, Larry Miller]

Thank you very much.

Thank you for allowing me to follow up on that. I think that was an important issue.

Mr. Bellavance, you have seven minutes.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

That is your privilege, Mr. Chair. When I am chairing a meeting, I do the same thing.

I would like to welcome our witnesses and thank them for their presentations.

Mr. Pellerin, this is the first time you have appeared before the committee since your election as President of the Canadian Federation of Agriculture. I would like to take this opportunity to congratulate you once again, this time in public. I am sure this is not the last time we will be seeing you. We certainly saw your predecessor regularly at this committee.

Each of you talked about the problems but also the challenges facing the agri-food industry and farmers generally. Since I have been on this committee, we regularly come back to the issue of competitiveness. I can tell you—and my intention is not to hurt your feelings—that we often hear the same things. That means that not all the problems have been solved. This may not always be attributable to bad faith, but it is clear that there are some areas in which we are not making any progress.

As members of Parliament, our role is to collect the information you provide to us. I always tell producers that they are the specialists in their field, while, for our part, we can get things moving through legislation, motions or regulations. Our job is to make things easier for our producers and our agri-food industry, to help them out, to support them, and to ensure they can export their products successfully. The government's role is to support farmers. Mr. Pellerin referred to the very high subsidies paid by the U.S. government; he also referred to the European Union. We can never reach that level, but the procedures we have developed will enable us to be competitive on both the domestic and foreign markets.

As a member of Parliament, I am particularly upset when the government makes things difficult for us. At times like that, I really wonder how good the government is listening. All the political parties say that they listen to you, that they want to hold consultations and to do what you advise. However, when legislation or regulations come into force, the government actually sets up some obstacles.

Each of you mentioned some blatant examples of this. The "Product of Canada" issue is one. Both Mr. Légaré and Mr. Pellerin spoke about it. The SRMs, or specified risk materials, is another example. We could also mention again the AgriFlexibility Program, which was announced with great fanfare before the budget was tabled. The government was suppose to finally have listened to producers' demands and make programs in the provinces flexible and adaptable to local conditions. It was all smoke and mirrors. Things turned out very differently.

We are in a good position to talk about the "Product of Canada" issue. You are right, Mr. Légaré, it was this very committee that studied this matter. We made our study as comprehensive as possible with the resources we had available. We heard from many witnesses. Never, absolutely never, did we hear in the course of our study that the standard to target was 98%. Even government members did not tell us that. For whatever reason, that is the conclusion the government reached.

Are you able today to tell us how much your members lost as a result of this decision? Whether we like it or not, consumers can no longer see the difference. You can no longer use the words "Product of Canada". That was an added-value for consumers, but it is now over.

Changing all the labels cost money, but in addition, not being able to add the words "Product of Canada" is a loss, because consumers will now choose any product at all. In the past, they could identify which products were Canadian, and decide to support them.

Have you already checked with your members to find out what their losses have been as a result of this, or are you in the process of doing so?

[Jacques Légaré]

No, we have not calculated the losses, because they are considerable. First, you are right when you say that changing labels cost hundreds of millions of dollars. Distributors want to comply with the legislation, even though it provides that they can use up the labels they have on hand. Generally, small manufacturers purchase labels for two or three years in order to reduce their costs. When legislation is passed and people are given three to four months to comply with it, first of all, it is almost impossible to use up the supplies, and second, distributors require that manufacturers comply with the deadline set at the beginning of the year for changing the labels. So people had to do that.

This is an industry that wants to develop new markets, and then the economic crisis came along at the same time, so there is a shortage of money. Mr. Richard mentioned that with the exception of produce, the cost of products in stores has dropped rather than increasing. Since manufacturers can no longer refer to the quality of the product with the label "Product of Canada", they are inclined to see whether they can get their inputs from foreign suppliers. At the moment, they have to say that the products are manufactured in Canada, and can no longer say that they are "Products of Canada". They are in the same situation as importers who buy certain products in bulk for packaging in Canada. These too will be labelled "Made in Canada". So not only are we losing the money we got because the quality of the product was recognized, we are also losing money with the system, and on our agricultural products.

Three years ago, we processed 85% of the agricultural products produced in Quebec. Last year, the figure was 70%. There has been a significant drop, and this is going to continue. If we look at the results we want, results we've never had in the past, we are going to have to do some things we have never done before. That is why we are coming up with new business models, and the government is inviting us to leave Canada to do that. This makes no sense! But to answer your question, we have not calculated how much this has cost us.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

I can tell you that we are consulting many people in the agri-food sector in Quebec who are telling us that economically, this makes absolutely no sense whatsoever.

[Jacques Légaré]

Absolutely.

[The Chair, Conservative, Larry Miller]

Thanks very much. You are right on the button.

Go ahead, Mr. Allen, for seven minutes.

[Malcolm Allen, NDP, Welland, ON]

Thank you, Mr. Chair.

Thanks to all of you for being here.

Mr. Townsend, perhaps we can engage you about bees since it's your first time here, and bees actually fascinate me anyway. As someone who lives in the Niagara Peninsula, I see bees as fundamental to the value-added crop we grow, the tender fruit industry.

Perhaps you could talk to us about what you see as the need for research and development. You are absolutely right about the kill rates. You know it because you're in the business and in your position.

We know in the peninsula that it actually goes beyond the 30% kill rate. In some cases it actually has destroyed entire colonies and hives and has put some folks in the position of almost being out of business when it comes to honey. We're a little bit further south than you. We seem to be getting the influx of whatever seems to be manifesting itself in our hive colonies, and of course that is a great danger for tender fruit crops, in the sense that we won't get them pollinated. We'll have a very difficult situation.

From the research and development perspective, are things lacking? Are there things we need to be doing? Are the things we are doing now insufficient? How do you see that developing as far as your particular industry is concerned, and what do we need to help with that?

[Lee Townsend]

Thank you for your question.

The biggest thing we're lacking is extension support, provincially and federally. In Alberta this year we finally got approval to create a bee health program, and that's a joint project with the Alberta Beekeepers, its producers or members; the Alberta government; ACIDF; and the seed companies in southern Alberta. There's going to be a $250 charge per beekeeper, and the provincial agriculturalist, who is our chief inspector in Alberta and any support staff he hires, will go out and check the hives for mite and nosema levels--an intestinal disease of bees--and also train the beekeepers in what to do and how to treat it. But that's only the start.

We have a lack of research right now on miticides to control the mites. The miticides we have used over the past years either do not work anymore or...we only got emergency registration for the one that did work last year. We have two soft miticides, formic acid and oxalic acid, that are very temperature- and time-sensitive. So there's a window right now where we have no control if levels are higher.

A lot of beekeepers are unaware of how to test and monitor these problems, because they're new. They've not been around for 30 or 40 years. They're relatively new in the last 10 years, and the miticides we had controlled them. With nosema, the intestinal disease, we have a new nosema out called nosema ceranae. The medication we use to treat the other nosema did work, it's working on this one, but we don't know to the extent it's working. So research is being done in Beaverlodge to see how it's working and what impact it has on the bees over the winter.

But the problem isn't just a lack of money.

We had two inspectors in Alberta. One of them retired, and that position was never filled. In Beaverlodge, I believe there are two full-time federal researchers and a couple of part-time, but they have to take money from everywhere to try to keep them on. The Alberta Beekeepers Commission is funded to keep these people on when that money should have gone strictly to research. So there's a huge lack of federal and provincial research money for our industry.

We've suffered huge losses in our industry, and recovery money would be great for the producers, but I think that money would be better off going to the extension and research.

[Malcolm Allen, NDP, Welland, ON]

I would agree with you, but it seems to me your industry is suffering an identity crisis because people think beekeepers are involved in honey alone and don't understand the nature of the business bees do, which is pollinating the vast majority of crops we need to harvest that we wouldn't otherwise be able to. So I think that perhaps is a public awareness program that needs to happen so we can identify things.

But I appreciate your input on what it takes to get your research and development done, because if the bee colonies collapse across this country, we're going to be in one heck of a state. I thank you for that.

Getting back to Mr. Légaré and Mr. Pellerin, we talked earlier, and I believe on this side as well, Mr. Richard, about the sense of food safety, food security, which brings me to try to weave a tapestry, if you will, around when we talk about buying local and finding places on the shelf. The area I live in, the Niagara Peninsula, is clearly an agricultural area, not only for the tender fruit and wine-growing industries, but just over a year and a half ago we witnessed the closure of a company called CanGro, which was the last tender fruit processing and canning plant east of the Rocky Mountains. This meant clingstone peach growers had no market; they had nowhere to put it and no one to take it. Suggestions were made that they try taking it to the United States. The reality in the Niagara region is that they pulled them out. So there are very few clingstone orchards left for peaches because that canner is gone.

If you could speak to this whole sense of the food security and the food sovereignty issues around the need, and there is a need out there to get placement of food, because there is a demand from folks who are saying they want to buy local.... They do buy local as much as they can, but they have a hard time identifying what is local when they don't buy at a market. They can go to the market or to the farm gate, they know what that is, but when they go to the supermarket or a larger store, they don't always know where it's from because of the way the product is placed.

Why is it when the demand is clearly there to buy local...? And a couple of things are self-evident: first, we're helping the producer who lives in our neighbourhood, or perhaps very close to it in some cases; and second, traceability is extremely easy. It's a lot harder to trace spinach and lettuce that's just travelled 8,000 kilometres to get to the table or to the store than it is to trace that lettuce that perhaps was picked this summer and travelled fewer than 50 kilometres to get to the store. Why is it that we seem to have such huge difficulties with that sort of supply?

I'll allow either or both sides to comment, whoever wants to take it up first.

[Jacques Légaré]

You talked about the availability of Canadian products regionally. We are seeing products on store shelves that come from California or other places. Without going so far as to pass new legislation, the government could easily encourage distributors not to put Canadian products in competition with foreign products which have to be transported, thereby causing pollution.

In England, labels on products have to show how far they have come. I'm sure Canada will eventually pass legislation of this type in the interest of the environment. Then consumers will be able to tell easily how far products have travelled and will be able to promote more local products.

At the moment, we have Foodland Ontario, which is a very well-known brand. Aliments du Québec is also a well-known brand, but we cannot yet place it on products, because we would have to have separate inventories, because the products cross the border. We have seen that canned asparagus from Canada has virtually disappeared. It now comes from Peru, for similar reasons. The same is true of gherkins, which are imported from India. That is unfortunate, because with Canadian products, we had better quality and food safety.

Generally speaking, most of the products that are recalled are imported. When we lose control of our food supply, we lose control of our heritage. That is why the government must develop an integrated policy covering people who do canning and all other types of food processing. Unless and until we have such a policy, we will have difficulties, because the approach will be too sectoral, and distributors will be allowed to do whatever they choose.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Lemieux.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Thank you.

I would like to thank our witnesses for being here today. The committee had a good discussion of the "Made in Canada" label.

I would like to make a few comments and then ask a few questions on the “Made in Canada” labelling. The first thing I'd like to point out is that it's a good initiative that was implemented by our government. It was in response to strong concerns expressed by, in particular, our Canadian producers across the country. I can tell you that for the producers in my riding, this was one of their top priorities. I met with them frequently, and this was at the top of their list. The second group of people who were particularly concerned about this was made up of consumers.

When they buy a product, they want to be sure, when they see the "Made in Canada" label, that

virtually all of that is Canadian. They didn't like the fact that they didn't know whether this was Canadian or was not Canadian. They don't believe we grow pineapples in Canada, and so on.

I want to also point out that when the Prime Minister announced this initiative, the Liberals, at the time, through Wayne Easter, actually, mentioned that it had been on their radar when they were in government. They were unable to move forward with it. They weren't able to make a decision. They have a track record of not making decisions. Perhaps they were paralyzed. I'm just saying that it was on their radar and they couldn't or wouldn't make a decision.

The other thing I want to point out, because I have Mr. Easter here, is that he really said some good things when this was released. I'll just give you the quote. He said, “the new regulations would provide consumers with honest information on the contents they purchase and the changes could also increase the consumption of Canadians products”. That's a verbatim quote, right from Mr. Easter. I wanted to point it out, because we don't often get compliments from Mr. Easter, and I really wanted to get that on the record. I think, when Mr. Easter has his turn, he's going to say, “yes, but...”, or, “what I really meant to say was”, but that would affect his credibility. Because you know, when Mr. Easter speaks, I listen. Surely Canadians can have confidence in what Mr. Easter says when he says it, all the time, not just some of the time.

As I say, the “Product of Canada” labelling was a good initiative, brought about primarily by our producers and by our consumers.

One of the other points I want to point out is that no matter where the line is drawn, there will be products that are just below the line. It will invariably happen, and the producers of those products will not be happy. If you even set it at 50%, there will be someone there at 48% saying, “Listen, I'm so close. Why can't it be 48%? Why did you set it at 50%?” So I think we have to recognize that no matter where the line is drawn, there will be some people who are struggling with the challenges it presents.

The second thing is that there are different players involved in moving food from the producer to the consumer. For example, the processors are one of those key players. I understand the challenges the processors are facing, certainly from your discussion this morning but also from other meetings and discussions I've had.

I also see that we must respond to our producers and consumers. There is a level of business decision-making that has to be made at the processor level in terms of what is being sourced out. What is being bought outside Canada? Can that be changed? There is sugar, for example, that is grown in Canada. Can that be done? Is it worth it to put on the “Made in Canada” label, and so on? These are considerations.

I just want to say that there are many groups involved in food production. Tremendous pressure was coming from producers and from consumers. This “Made in Canada” or “Product of Canada” labelling addresses many people, but those two key groups in particular.

Let me just move on to my question. The first question I want to ask is to Mr. Townsend. What are your thoughts on the “Product of Canada” labelling?

[Lee Townsend]

I think it's very important. Our industry has been lucky that ours has gone through relatively easily. Now it's a matter of getting it enforced.

We understand that consumer demands and things along those lines require having imported honey coming in. I have no problems with that. Neither does the industry. We just want it labelled properly. This imported honey that's been coming in, because of the mislabelling that's been going on in the past, has affected our price horribly. In the last five years, we've seen it go anywhere from $2.50 a pound for our honey all the way down to 75¢ a pound. Back before countries like China and India started producing the way they did, our market was always stable. Our price fluctuated a little bit, but not two to three times what it does now.