Agriculture Committee on June 11th, 2009

[The Chair, Conservative, Larry Miller]

I call this meeting to order.

I'd like to thank our witnesses for being here today and taking part in our study on competitiveness in agriculture. We're going to start off. I'm not even going to try to announce the organization here, I would mess up.

Mr. Shipley.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

On a point of order, Mr. Chairman--this is one of those good points of order--this is to deal with the subcommittee on listeria and food safety. This was the report that was done, all 74 pages and probably 13 recommendations that came in it. We went through it. We finished up a little after midnight last night. We started at four o'clock, and so it was a long night. We do have a dissenting report to admit, Mr. Chairman. I believe the clerk has that in both official languages.

I just want to have a comment, if I could. I wish the whole committee were actually here. It has been a long and intense process, but I have to tell you that last night--and I think the chairman and those who were here will agree--we went through those whole 74 pages, clause by clause, word by word, and we had great cooperation of all members on all sides to produce a balanced report that will be coming to this full committee, I believe, next Tuesday, which we'll go through. I'm hoping that it will come as endorsed by the subcommittee, that we can go through it quickly. We spent a lot of time on it.

I just wanted to pass that on to everyone. You know how committees get sometimes, but actually, when we got down to it, we all wanted to make it a good and balanced report. I think that was a critical part. I just want to pass on those kudos to all the members who were on it from all parties--and to the chairman, who actually walked us through that and kept us on track. Thank you very much for doing that.

[The Chair, Conservative, Larry Miller]

Thanks.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Can I comment on his point of order?

[The Chair, Conservative, Larry Miller]

Certainly.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Well, I'd also like to thank my colleagues for getting a report done and doing a good job on it, but I question, if Mr. Shipley says it's balanced and it went through really well, why there is a dissenting report.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

There was one area at the end of it, one recommendation that came forward. As you know, we're having an investigation. We've just done the subcommittee and the investigation of listeria and food safety. The one recommendation was to have.... I guess I can't get into it, sorry. We're in public, open. That would be closed.

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

The report hasn't been tabled, Chair, so we can't give any details. I suggest we discuss it as a committee at perhaps our next meeting.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

So we will do that, then, but it was a one-item issue.

[The Chair, Conservative, Larry Miller]

I'd probably remind Mr. Eyking, too, and I'm sure he knows this, that it's very, very seldom when a report comes out of a committee that there isn't a dissenting report from one side or the other. I think that's duly noted.

To Mr. Shipley's comments about last night, yes, it was an eight-hour meeting, but at the same time I think there were 73 or 75 pages of text, plus, I think, originally 10 recommendations, and there were two or three added. For the most part, there was a lot of balance and consensus on that, and I appreciate the members' work.

With no further ado, we will move to our witnesses. I'll turn the floor over to Ms. Gravel, for 10 minutes or less, please. Thank you.

[France Gravel, President, Filière biologique du Québec]

Thank you.

La Filière biologique du Québec would like to sincerely thank the Standing Committee on Agriculture and Agri-Food for agreeing to meet with us so that we could express our serious concerns about the proposed Organic Products Regulations (2009) and its negative impact on the competitiveness of the Canadian organic industry.

La Filière biologique du Québec is an organization that began its activities in 1994 and that represents 12,000 organic operators in Quebec. Filière is also a member of the Organic Federation of Canada.

Filière believes that the proposed regulations should be amended as soon as possible, since, not only do the regulations not meet the Canadian organic sector's objectives, we also believe that they completely stand in the way of its development. Here are the main arguments on which the request for a committee review is based.

The Canadian organic sector wanted to have organic products regulations to ensure a credible monitoring system for companies that use the organic designation for their products. Accreditation is the police for the organic products control system. However, the current proposal delegates the monitoring of organic products to accreditation bodies outside the country. Such a delegation of public authority to foreign organizations is improper and will have a negative impact on the Canadian industry's competitiveness.

Under the Quebec provincial law that controls the intra-provincial trade of organic products, the Conseil des appellations réservées et des termes valorisants—the CARTV—is responsible for accreditation and monitoring. The Quebec industry highly values CARTV's accreditation system and continually refers to it when assuring consumers of the credibility of Quebec organic products.

Filière hopes that the Canadian industry will acquire similar means to increase its competitive edge on domestic markets, like the United States and the European Union have done in their own markets.

The organic sector wanted the regulations to effectively control the export of organic products. Unlike the 2006 version of the regulations, the current proposed regulations no longer require products that are exported from Canada to be certified to Canadian standards.

Canadian companies lose the added value associated with uniform quality certification for all Canadian products. Furthermore, Canadian processors will have supply problems, since they will not have access to products that are certified only to the standards of the countries to which these Canadian products will be exported.

Here are the reasons to exclude export products from federal regulations. To accurately assess the scope of the negative impact resulting from the lack of regulations on the Canadian industry's development, it is important to understand why certain operators would choose not to request certification to Canadian standards, even if this deprives them of access to interprovincial trade. The main reasons to exclude export products from regulations and Canadian organic standards are as follows: costs associated with purchasing standards; costs associated with additional certification; costs associated with becoming familiar with standards; free trade and competitiveness on export markets (to this end, it should be noted that several points in the Canadian standards are similar to the European standards, both of which are stricter than the U.S. standards); and, the impossibility of obtaining imported ingredients that comply with Canadian standards.

For these reasons, certain operators have clearly indicated that they will not adopt the Canadian standards for the certification of their products. Moreover, since the provincial regulations to control intra-provincial trade will not be in force on June 30, 2009, these operators will also be able to market their products on the intra-provincial markets.

The combination of the lack of regulations for export products and intra-provincial trade could prove to be disastrous for Canadian companies, whose development and survival depend on the supply of organic products certified to Canadian standards that are traded on the intra-provincial market.

Important players in the grain and oilseed sector vigorously opposed compulsory certification to Canadian standards. After the implementation of the regulations on June 30, 2009, these crops will not be accessible for livestock production, processing and retail sale in Canada.

The maple production sector has been waiting for nearly 10 years for the implementation of federal regulations that would eliminate disparities in the organic certification of products exported to the EU. The sector will thus have to deal with the negative impact of these disparities which, if the regulations are unchanged, will become a permanent reality in the sector and may even become more widespread.

In the market gardening and livestock sectors, if a Canadian producer believes that it is in its best interest to split up production according to various standards to serve the U.S. market, for example, it will have to plan in advance the proportion that will be intended for Canadian and U.S. markets. The surpluses certified to Canadian standards, which will also be mostly certified to less strict U.S. standards, could be sold on the U.S. market, but not the contrary; hence the loss of access to surpluses certified to U.S. standards for Canadian processors, distributors and retailers.

The Canadian organic industry, which intends to serve the Canadian market by certifying its products to Canadian standards, is also concerned about the high risk of fraud associated with the sale of a portion of the surpluses certified to U.S. standards on the Canadian market. This will result in unfair competition for companies that mainly serve domestic markets.

The organic sector wanted the regulations to allow for the proper monitoring of imported organic products. The current proposed regulations entrust the monitoring of imported products to the jurisdictions of other countries.

[The Chair, Conservative, Larry Miller]

The translators are having trouble keeping up. I'd appreciate it if you could slow down a bit.

[France Gravel]

All right. Should I start that over?

[The Chair, Conservative, Larry Miller]

No, you can continue. We should be okay.

[France Gravel]

The current proposed regulations entrust the monitoring of imported products to the jurisdictions of other countries with which Canada has signed equivalency agreements.

To accept a product imported to Canada, the other proposed alternative is certification to Canadian standards. There is no clause allowing for the unilateral recognition of an organic production standard and a monitoring system as equivalent to Canadian requirements, without the signature of an equivalency agreement. By comparison, even the EU and the United States, two jurisdictions that have much more influence in imposing their own organic standards, have this type of flexibility in their regulations.

Such flexibility would allow Canada to have more leeway to facilitate the supply of imported products and ingredients that would comply with Canadian requirements. Moreover, Canada would certainly need this flexibility, since recent CFIA reports indicate that little progress has been made in negotiating the equivalency agreement with the European Union.

Furthermore, this flexibility would also put Canada in a better position during equivalency agreement negotiations with countries that have less strict standards. In fact, it would be much easier to withdraw from negotiations that yield unsatisfactory results, if there were other alternatives to control organic product imports.

Canada imports between 80% and 85% of organic products sold in Canada, and the lack of flexibility in accepting imported products will have a negative impact on the competitiveness of Canadian companies .

The lack of export product regulations and the lack of flexibility in accepting imported products falls in line with the lobby that is promoting the North American integration of the organic industry based on the adoption of U.S. standards.

Insofar as the organic product market is much more developed and stable in the European Union in comparison with the U.S. market, and while most representatives who established and developed this industry have serious reservations about certain U.S. organic standard provisions, it is essential to consolidate the basic principles on which the future of this industry depends.

To this end, Filière therefore requests that organic products exported from Canada be certified to Canadian standards by a certification body accredited by CFIA; that section 29(2) of the draft regulations be replaced by a section that will allow the import of an organic product only if this product is certified to standards equivalent to the Canadian standard by a certification body recognized by CFIA.

Regarding a proposed accreditation system, Filière also requests that the accreditation system proposed for Canada be brought into line with that in effect in other industrialized countries that regulate organic products; to have CFIA designate as an accreditation body any Canadian accreditation authority constituted specifically by virtue of a Canadian government regulation at the federal or provincial level.

During the consultation period on the Organic Products Regulations (2009), Filière also made certain comments on the logo design and the Canadian standards update, two other weak points in the Canada Organic Regime that will undermine the Canadian organic industry's competitiveness. Filière invites you to review this document. Thank you for your attention to this matter.

[The Chair, Conservative, Larry Miller]

Thank you very much.

We'll now move to Mr. Dwight Foster from the Ontario Soybean Growers, for 10 minutes or less, please.

[Dwight Foster, Director, Ontario Soybean Growers]

Thank you very much.

I'm pleased to be able to address this audience, ladies and gentlemen. I'm Dwight Foster. I live half an hour south of the Hill and farm 4,500 acres of grains and oilseeds. I have a beef feedlot, and I'm sad to say it's the largest feedlot now east of Toronto. That industry is quickly going down the drain.

I'm here to speak to you today about grains and oilseeds and the desire to achieve the goal of having an AgriFlex program federally. There have been many wins. We're very encouraged by the demise of the CAIS program. We don't feel that it properly addressed the concerns of agriculture. With the new program going forward, we're very happy about the possibilities. It's not perfect, but it's a step in the right direction.

I'd like to talk about the requirement for regional funding and, more specifically, provincial funding. Quite often issues arise in either the east or the west that need to be addressed and could maybe be responded to more quickly at a provincial or regional level. Sometimes issues fall through the cracks with the federal program, and I'll use the example of BSE.

We've never had a case of BSE in Ontario, and I'm not sure if there has even been one in Manitoba. But we know it has happened in Alberta and B.C., and I think Saskatchewan. There's no doubt it has affected our bottom line in Ontario and Quebec. It has been a huge issue since 2003 and still hasn't been resolved. That industry is about ready to collapse in this province, and in Quebec it's not far from that same scenario either. So the example is there that regional programs would be much better.

Take the example of Europe. In Switzerland, a little wee country that would fit within Lake Superior, if they have an issue with an outbreak their border is closed and the neighbouring countries aren't even affected. How far is Alberta from Quebec or Ontario? There's a huge area between Manitoba and Ontario that could quickly be closed down.

There's the example of the emerald ash in the forestry industry. In Ontario you can't even transfer firewood outside your county. They're doing a good job of shutting that down.

When you think about agriculture, putting everybody in the exact same window or program from the Pacific to the Atlantic is really dysfunctional.

I'm here today to tell you that I'm encouraged by some of the things I've seen going forward, but there's still a lot of room for improvement. I'd like to see the flexibility of partnering with the Ontario government and the RMP that is now entering its third year. I can't tell you the exact dollars that have been paid out. I know there were significant dollars in year one. Year two paid barely anything--I didn't get anything. We're entering year three with very strong commodity prices, and it's not likely we'll be paid anything. So the program costs almost nothing for the province. Some support from the federal government would ensure that the program would remain in place going forward, considering the fact that we're entering year three. With the wheat crop that will be planted in August or September in Ontario, those farmers don't know today whether they'll have stabilization or a program going forward.

So I'm encouraged, and I would like to see some flexibility in the federal programming so that issues can be addressed provincially.

Thank you very much.

[The Chair, Conservative, Larry Miller]

Thank you very much for staying well under the time. I appreciate it.

We will now move to the National Farmers Union. We have Ms. Colleen Ross and Mr. Glenn Tait with us.

You have ten minutes or less.

[Colleen Ross, Women's President, National Farmers Union]

Thank you, Mr. Chair. It's a pleasure to be here today. I want to thank you very much for the opportunity.

I'd like also to acknowledge my colleagues at the table. It was wonderful to hear France talk about the organic industry, because I have chosen to be an organic farmer. I am certified organic under the Organic Crop Producers and Processors. Being certified has been a strategic decision for us as farmers; it makes us in fact more competitive and more profitable.

I have similar concerns to those expressed by France about the change in the certification standards and how they will be lowered. The standards I must adhere to as an organic farmer are extremely high, much higher than those now adhered to by farmers in other countries. We are importing from those countries, so it is a real concern.

That being said, I'd like to also draw your attention to a brief that we have prepared for you. It has been translated, so you have it, and we will be referring to it throughout the morning.

I want to talk a little bit about what has been going on in agriculture. I've been farming for over 27 years. My father is a Cape Breton Islander. His family were farming and fishing folk in Cape Breton Island and had a beautiful farm there on the Bras d'Or Lakes. My father still has 400 acres on the Bras d'Or Lakes. But we see what competition did to the cod industry and what that did to my father's family.

Later on, after graduating from the University of Guelph, I farmed in Australia. My husband is an Australian, and we were grain and cattle farmers there. We were very competitive in Australia. When another country had a natural disaster, we got the competitive edge, because there was a world shortage in grain. The only time we ever got a higher price in the 15 years that I farmed in Australia was when another country had a natural disaster; then there was a shortage on the international grain market, and we could see grain prices go up. The friends I've left behind in Australia are also struggling in this global market of competitive agriculture.

Now I farm one hour south of Ottawa, just a little bit further south than Dwight Foster. I am a soybean grower. We also have cattle and we grow horticultural crops.

What we have been witnessing in agriculture for the past three decades, and more so over the past decade, is cartels and takeovers that are emerging in world agriculture. According to the Competition Bureau, and I am sure you are all familiar with this: “...when a dominant company exploits its market power in a way that hurts competition in the marketplace the Competition Act may come into play”. I just wonder, will the Competition Act come into play at any time to examine what these mergers mean for food producers in this country?

Under the Competition Act, mergers of all sizes and in all sectors of the economy are subject to review by the Commissioner of Competition to determine whether they will likely result in a substantial lessening or prevention of competition. With only a handful of dominant players in the agricultural marketplace—i.e., in slaughter facilities; fertilizer, seed, and chemical suppliers; equipment dealers; and grain buyers—farmers are not able to be competitive or in fact profitable. Hence comes the need for the AgriFlex program.

Helping farmers put—as Mr. Ritz has recently said—more “black ink on the bottom line” cannot be done until we examine and address the pitfalls that have been created by allowing corporate gouging to continue unabated from season to season. Encouraging competition between farmers and citizens destroys communities.

I look at the topic for today. As a farmer, the idea of being competitive is something that's not part of my psyche or my ideology as a citizen of the world.

With farmers making up less than 2% of the population in Canada today, surely we do not need to compete for food dollars; we just need to be able to hold on to more of them. There is enough for everyone. It needs to be spread more evenly among those of us who actually grow the food. I know that's a hard job, but it's something we need to start thinking about more strategically.

The fascination and preoccupation with innovation in agriculture may create opportunities to farm more easily as we hold down off-farm jobs. But where is it guaranteed that this innovation in agriculture will put more black ink on the bottom line for anyone other than retailers, input suppliers, and commodity traders?

Society wants farmers to grow what society wants to eat, and that's why I've been a successful farmer: I grow what people want to eat. Society needs farmers to grow safe, healthy, tasty food that is closer to home.

I'd like to refer to a report that I'm sure many of you are familiar with. It was sponsored by the United Nations FAO. It calls for a radical shift away from industrial competitive agriculture towards more sustainable place-based agriculture. The report goes on to state: “...the old paradigm of industrial, energy-intensive and toxic agriculture is a concept of the past”.

The impact of competition has cost farmers. Farmers are more efficient than ever before. We have to be, with over 85% of farmers in Canada forced to hold off-farm jobs while running large and usually management-intensive, high-capital-input operations. I know there are many members of Parliament who call themselves farmers but who have pretty nice off-farm jobs. This is the reality, regardless of increased market access due to trade deals, which we continue to pursue.

Meanwhile, rural communities have lost valuable support infrastructure that would allow us to process foods closer to home. This loss of infrastructure is something that's a real concern and something we really need to look at. Last summer, Ontario lost its last canning plant in the Niagara escarpment, and it was okay to watch it shut down. I have friends who are farming in the Niagara escarpment, and there's no longer anywhere for them to get their peaches and nectarines processed. Meanwhile, we're bringing them in from California or South Africa or China. Local processing would really help for value-added purposes and to extend our market, therefore making us more competitive—enabled, in the sense that we are able to grow more “Grown and processed in Canada” food, giving consumers more “Grown and processed in Canada” food choices.

Unnecessary regulations have been applied to small-scale food processing facilities, rendering us unable to compete with corporate giants; pushing small-scale abattoirs, for example, into bankruptcy as they scramble to keep up with the regulatory treadmill. Our reluctance to label foods appropriately, so that consumers can make informed choices to purchase food truly grown in Canada, has stymied farmers' abilities to capture the increasing market demand for food grown, not simply processed and repackaged, here.

Our government needs to stop adding to the competitive deficit and block all non-essential mergers and takeovers by corporations that serve the interests of the shareholders and not the public, corporations that Agriculture Canada and the CFIA appear to be protecting.

I'd like to note what has happened very recently, in the past two weeks: the recent actions by Canada's representatives at a meeting of the governing body of the International Treaty on Plant and Genetic Resources. The Canadian delegates held up a resolution under negotiation to reaffirm farmers' rights to save, use, exchange, and sell their own seeds. Canada's action on the international stage, which blocked consensus allowing farmers' rights to seeds, is an example of how far we have come as a society from understanding the basic tenets of civilized societies. The use and sharing of seeds is not simply a right, but a fundamental requirement, and yet we continue to commodify and manipulate seeds and foods so that we can accelerate the innovation needed to bring more products to market in less time. As a farmer, I ask why are we doing this; what products; for whom; to what purpose?

If Agriculture Canada is indeed concerned with the future trends in consumer demands, I suggest that we need to get more in touch with what's going on at the present. Consumers are asking farmers such as me to grow food that is safe, ethical, environmentally responsible, and that just plain tastes good. Many farmers are doing just that. In doing so, we are actually rebuilding a local sustainable food system that has been destroyed through an overzealous focus on competition and competitiveness. We need to continue to ask who is paying and who will profit.

As I said, I've been farming for 27 years, and we are showing substantial increased growth of sales on our farm, and not only sales growth, but we're actually keeping more of the money on the farm. Regardless of how competitive we are, we need to start growing food in this country that Canadians want to eat and that our trading partners are interested in purchasing from us.

I want to thank you for this opportunity.

[The Chair, Conservative, Larry Miller]

Thank you very much, all of you, for honouring the time.

There is one comment that I'll come back to later. Ms. Ross, you just mentioned an ongoing problem about the actual profit or the price of food products that farmers produce. You're going to have processors who need to make money as well. At the same time, I think there's a general feeling out there that we need a little more. It goes back to the fact that the percentage of our disposable income that is spent on food has been continually dropping, I think about 8% or 9%, if I have the figures right, in recent years.

There seems to be a mindset here that we have to have cheap food. I'd like some comments towards that. I think consumers have to realize that they're going to have to pay more if they want good Canadian food.

Anyway, I'll turn it over to Mr. Valeriote for seven minutes.

[Frank Valeriote, Liberal, Guelph, ON]

Thank you, Mr. Chair.

I'd like to thank each of you for taking time out of your busy schedules to come up to speak to us today.

Mr. Tait and Ms. Ross, I'd like to direct my first comment and question to you. First of all, I did have an opportunity to read the submission you made. It's, frankly, an incredibly compelling argument you make, the facts you recite.

I want to talk to you first about food sovereignty. When I sit back and think about where we're going, I think about, ultimately, our agricultural system progressing maybe 50 or 60 years from now when there are very few farmers, when large corporations are going to be owning the production facilities. Frankly, there are no assurances that those companies will be Canadian owned. I am concerned, frankly, that Canadians will lose their ability to grow their own food, process their own food, and sell their own food to us as Canadians.

In your submission you made reference to a piece of legislation in the United States, the Livestock Marketing Fairness Act. It was your acknowledgment that President Obama acknowledges the disparity that exists and the lack of competition that arises. Could you talk to us more about that issue and give us some insight on what we might do to address that particular problem?

[Glenn Tait, Board Member, National Farmers Union]

Yes, thank you. I suppose I can take that.

I'm a mixed farmer in Saskatchewan. I'm actually the coordinator for the NFU for the province of Saskatchewan. We raise grain and cattle, and I'm a bit familiar with the crisis report on livestock that the National Farmers Union put out a little while ago. This is talking about banning captive supply, which is packer-owned animals in a feedlot, which they use to crank down the bid price of cattle whenever they want to do it. The most obvious example is Brooks, Alberta. You take an aerial shot of the packing plant at Brooks, and you see this modern factory, a very efficient operation. If you back up just across the highway, there's a huge cattle feedlot.

When the packing plant is out on the auction floor, which I think they also own, they're bidding on cattle. If the price goes up too high and they don't want to bid anymore, they don't have to; they can go back to their own feedlots and use their own cattle to supply the packing plant. The packing plant never shuts down. When they're out of the picture, when they're not bidding anymore, of course, the bid price in cattle falls. When it falls down to a low enough level, they're back into the auction barn, they're refilling their own supply, their own feedlot and the packing house.

If we can ban captive supply, which is what the Americans tried to do with their bill, we negate that ratcheting-down effect that the packers have over cattle producers.

[Frank Valeriote, Liberal, Guelph, ON]

All right. Now, I have another question of you, and it's about innovation. I come from Guelph. You went to the University of Guelph. A couple of months ago I was talking to research students there. Their concern was that companies like Monsanto provide them certain incentives, grants to continue their education, continue their research, but at the same time have them sign contracts that provide that only Monsanto, obviously, has use of any innovation, any ideas that they come up with or they create.

I'm wondering if you could comment or if you have any concerns about the need to have more public funding at universities directed to the kind of research that everyone has access to, so that Monsanto and other companies like it don't have a monopoly. Do you have any thoughts on that?

[Colleen Ross]

I'm a Guelph grad also. I studied animal science, and that was my forte. I took a bit of crop science while I was there, and it is a real concern. I graduated in the early 1980s. I'm pretty old. That wasn't the case when I was there. For students, there was more public funding, and we researched and studied basically whatever was pressing on the day as far as consumer demand was concerned, or where we thought consumer demand was going to be, or whatever animal health issues we thought were going to be at the cutting edge.

It is a concern. I still do some work with the university, working with projects as a consultant and sitting on a couple of committees, and it has really split the faculty. The need for publicly funded research not tied to industry is hugely important. The University of Guelph has been nicknamed the “University of Monsanto”, and there are greenhouses on the campus exclusively the property of these chemical companies.

You referred to food sovereignty, and one of the tenets or central hubs of food sovereignty is that citizens and farmers are central to determining agriculture and food policy nationally and globally. We don't have that today; we have companies, such as Monsanto and Cargill and ADM and Syngenta and Dow, who are the drivers of agriculture, not only in Canada but also globally. I've travelled to African countries, I've been to India, and I've spent a lot of time in Australia and European countries, and these guys are bullies. They're not only influencing our educational institutions, but unfortunately they also have a huge amount of influence on our governments. I'd like to see citizens starting to be able to determine what our food and agricultural policy and system actually looks like, and start meeting their needs.

[Frank Valeriote, Liberal, Guelph, ON]

So unless we invest more public funds, we will decrease our ability to compete and we will impair our food sovereignty?