Agriculture Committee on Feb. 1st, 2012

[The Chair, Conservative, Larry Miller]

We're going to call our meeting to order. We have a quorum and we'll have more joining us.

I'd like to thank our witnesses for being here today. We appreciate that.

I hope all of our members and staff and everyone had a great Christmas, and it's good to get back to work.

We're going to continue our study on Growing Forward 2, and of course we're just beginning the theme right now on marketing and trade. The next component of that, based on earlier direction, is on meeting consumer demand.

I just have a comment. We have votes at some point today. I don't know whether the bells will go off before the meeting time is up; I suspect so. In that event, the committee—probably at our next meeting—should just take a few minutes to discuss where we want to go after this, because the weeks will go by in a hurry, and if we book our witnesses at least two weeks in advance, it does save us money overall because usually flights can be cheaper. That is just something to keep in mind.

With no further ado, we'll move to our witnesses. First of all, we have the Agri-Food Export Group Quebec-Canada.

Mr. Coutu, do you want to lead off for 10 minutes or less, please?

[André Coutu, Chief Executive Officer, Agri-Food Export Group Quebec - Canada]

First, allow me to introduce myself. My name is André Coutu. I am the chief executive officer of the Agri-Food Export Group Quebec-Canada.

I would like to thank the members of the Standing Committee on Agriculture and Agri-Food, especially Mr. Malcolm Allen, the member for Welland. I had the pleasure of meeting him for the first time today, and the same goes for all of you. I would like to thank you for giving us the opportunity to express our opinion on the strategic framework of Agriculture and Agri-Food Canada, Growing Forward, which will perhaps be renewed in 2013.

The Export Group is a non-profit organization that has been around for 22 years. Its main mission is to promote Quebec products on international markets. It is by far the largest association of agri-food exporters in Canada, with over 400 members, including 350 manufacturers from all regions of Quebec. The organization is located on the south shore of Montreal and has 13 permanent employees. Its board of directors has 11 export manufacturers and three representatives of service companies. We are an organization on the ground made up of entrepreneurs, manufacturers and also exporters.

With our European partners, the Groupe Comexposium, we are the founding owners of the international food fair, better known as SIAL. There is SIAL Paris, SIAL Shanghai, SIAL Abu Dhabi, SIAL Brazil and, since 2001, SIAL Canada, which now takes place annually and alternates between Toronto and Montreal. This fair brings together 700 participants from 30 countries and, each year, receives over 13,000 visitors from the industry from some 50 countries. This Canadian fair is our best showcase in the world. It promotes processed products and all provinces are represented there.

In addition to its numerous training activities, in any given year, the Export Group travels with dozens of manufacturers to over 25 agri-food fairs around the world, thanks to the generic component of the agri-marketing program. These activities alone justify the renewal of the budget envelopes that are set aside for the agri-marketing program. In fact, the contributions to Quebec for 2010-2011 was some $1.3 million and the return on that was over $200 million in spin-offs.

These international fairs that allow the Export Group to support Canada's brand must remain in the department's program. They are an excellent springboard for promoting the safety of our food which, we all know, is made in a way that respects the environment. Budgets must also be provided to maintain Canadian pavilions at large international events, in the same way that it is crucial to financially support the activities of our consulates and embassies to bring missions of buyers to Canada. In this same vein, the Export Group also regularly organizes a number of B2B—business-to-business—activities with American and international buyers. This formula will be developed further in the coming years.

Quebec's agri-food exports total some $10 billion a year, with $5 billion of that going outside Canada. In fact, our international exports have almost doubled in the past 10 years. In fact, our exports are up to $5 billion per year. Do you see? We're not talking here about the sales figures for Bombardier, Bell Helicopter or CGI, but agri-food, products made in Quebec, frozen food, jam, couscous, beverages, and processed meats and fish. Five billion dollars, and that's not small change. Yet we spend a lot of time, in Quebec and in Ottawa, wondering about the relevance of maintaining this exporter assistance program. I don't dare think what the impact of such a decision would have on our gross domestic product.

Every Minister of Agriculture for over 10 years, including The Honourable Gerry Ritz, has recognized the Export Group as being the agri-food export component of Quebec and essentially for Canada. In the past 20 years, for processed foods, we have become a valuable ally in developing the Canada brand around the world. For several years, the Export Group is pleased to have been able to count on its federal partner to pursue its mission, namely, to promote agri-food on foreign markets. Our mission is both simple and complicated at the same time. Our efforts to support the industry are supported by the program's generic component and it works very well. There are over 25 international events per year.

Needless to say, we are very pleased with the support granted to Quebec food exporters by the Canadian government, and especially by the minister, the Hon. Gerry Ritz, and his partners, particularly Deputy Minister John Knubley.

Having said that, we must not rest on our laurels. There is always room for improvement, especially with regard to the SME component of the agri-marketing program.

Exporters must be supported on an ongoing basis over a three-year horizon, which we feel is the minimum amount of time required to position a product on a new market. So it is vital to ensure the sustainability of government assistance during that entire period because we cannot abandon it halfway through.

Every year, things are uncertain for manufacturers. The file is analyzed by public servants who, despite their good intentions, do not always have all the elements to support their argument and make an informed decision because they are not in the regions, whereas we have competent clerks in every big city in Canada.

In the case of the SME component of the program, decisions were made in the business files based on unknown and inaccessible criteria that, from the outset, makes it impossible to intervene because we don't know how the funds were granted or what it was based on. We don't even know who analyzes the files. It's vague. So it's practical: no information is transmitted, no questions are allowed, and there is no risk of accountability. It's verging on being an act of God.

The risk with this is that there are some good files that are not accepted. Responsible recommendations on these business files made by our teams or by people in our embassies are not even taken into consideration or they are not considered based on inaccessible and rather subjective criteria.

So we would ask that, from now on, the business files be analyzed again by local offices of Agriculture Canada. A business in Montreal that submits its file would therefore be analyzed by people in Montreal, because they know the local Quebec agri-food industry. If the file is from Calgary, then it should be analyzed by people in Calgary. It seems to me that this makes good sense.

Now, it worked that way for a number of years. The committee made up of local public servants and industry representatives was a winning formula for all the partners in the sector, and the word "partnership" took on its full meaning. This also meant that months didn't go by before an answer was given.

As mentioned earlier, in recent fiscal years, many of our members have had to wait between three and eight months to get an answer from Ottawa. That is why the decision-making centres must be brought back to the provinces. In short, the regional offices of Agriculture Canada need to be made responsible for the management of the envelopes under Growing Forward 2.

We would also suggest, honourable members, that you seriously consider the creation of a permanent agri-food export fund—not a program, a fund: a fund that would be adapted to the real needs of processors across Canada from east to west; a fund based on the promotion of Canadian products that are value-added; a fund managed by the industry and by Agriculture Canada. In short, it would be the same envelope, but it would not be subject to an annual renewal that would be uncertain, rather an envelope that would be protected for five years.

This approach would enable us to have a free rein, to work with a five-year horizon without worrying each year about the program being abolished for various reasons by the Treasury Board or because of a policy change.

In short, the government should try to work with an associative formula with the industry and should entrust the execution of its business development strategy to entrepreneurs who are the best promoters of Canadian products abroad because they are the ones who make them and sell them.

Thank you for considering our recommendations.

[The Chair, Conservative, Larry Miller]

Thank you very much.

We'll now move to Mr. Pomerleau, from Canada Pork International.

[Jacques Pomerleau, President, Canada Pork International]

Thank you for inviting us to this forum today.

I think many of you know who we are at CPI. We are the export market development agency of the Canadian pork industry. We were established in 1991, about the same time as Groupe Export, and it is a joint initiative of the Canadian Pork Council and the Canadian Meat Council. Our organization deals primarily with market access issues, the promotion of Canadian pork abroad, providing market intelligence, as well as working on other significant export-related issues.

Although Canada has been exporting pork for over 100 years, Canadian pork exports have grown considerably in the last 20 years. From 250,000 tonnes worth $600 million shipped to 54 countries in 1991, they grew to 1.1 million tonnes worth $2.8 billion shipped to 108 countries in 2010. Export statistics for 2011 are yet to be published, but based on the figures for the first 11 months, we can already state that it will be a record export year for our industry. For the first time, our exports will exceed $3 billion and should almost reach 1.2 million tonnes.

With close to 20% of the world's total pork trade, Canada is the third-largest pork exporter behind the United States and the European Union. We should retain that position in the foreseeable future. Our major markets are the U.S., Japan, Russia, China-Hong Kong, and South Korea—and that's one reason why we are so adamant about getting the FTA discussions resumed with South Korea.

Close to 60% of Canadian pork production is exported, which makes our industry very dependent on exports. It is worth noting that Canadian pork exports to the U.S. now represent less than 30% of the country’s total exports. When CPI was first established, this market represented more than 75% of the total exports. This is proof that our strategy to diversify away from the U.S. and be less dependent on one market was successful. However, one must keep in mind that past success is no guarantee of future results. Current forecasts indicate that in 2012 the world pork supply will be tight, which could provide some relief to an industry that has suffered in the last few years, especially at the farm level.

At the same time, the per capita pork consumption in Canada is declining, and imports have increased to the point that 25% of pork consumed in Canada is now imported. This is not a situation that can be taken lightly, and the Canadian pork industry intends to address it in the months to come.

Canada’s pork industry operates in a challenging, highly competitive environment. Canadian hog producers and Canadian pork packers and processors must compete in a global marketplace while facing challenges from the rapid strengthening and appreciation of the Canadian dollar, the cyclical nature of prices, and increasing costs of production such as feed grain, fuel, and regulatory costs. All of these factors have created the need to improve Canadian competitiveness in the global marketplace.

Because of these challenges, the Government of Canada provided CPI with $17 million in multi-year funding under the International Pork Marketing Fund in June 2009. Currently the IPMF enables CPI to undertake its four strategic priorities of market access, market development, market intelligence, and product promotion. Based on Mr. Coutu's comments, that's exactly the kind of funding he would be looking at—similar to what we have. But we have to say that it's the only time since it has been established that CPI has received financial assistance outside the regular programs, like the agrimarketing program and its predecessors, CAFI and AIMS. Since this special fund was designed to assist the industry in very challenging times, we have to assume that after March 31, 2013, when the IPMF runs out, future financial assistance from the federal government will come from the agrimarketing program or its successor, and then we will be asking for the same thing as Mr. Coutu has—a renewal of multi-year funding.

As stipulated in our IPMF contract, a third-party performance evaluation was just completed to assess the relevance and effectiveness of the IPMF funding. The full report will be submitted to the Minister of Agriculture and Agri-Food, the Hon. Gerry Ritz, soon. Since all our regular members were to be contacted, we seized the opportunity to request the evaluators to also ask about the relevance of CPI.

Our members made it very clear that without federal funding CPI would have to scale back export market development activities, which would significantly affect the industry and the CPI membership. In turn, without the CPI program support, members would reduce their export marketing activities, bringing these activities in-house.

Continued export marketing by specific companies without the CPI marketing that differentiates Canada and the Canadian pork brand would present additional challenges to individual companies. Interviewees noted that growth in exports from current levels would be challenging, that it would be difficult to meet and develop sales to new clients, and that sales would likely be lost to non-Canadian competition that would benefit from the supports that foreign governments continue to provide to these competitors. Foreign competitors would be increasingly present in these markets and, especially in the absence of a strong Canadian presence, would be expected to attempt to increase their sales to clients currently buying from the Canadian industry.

Based on the qualitative comments during interviews with members who are active on a day-to-day basis in all of Canada's pork export markets outside of the U.S., interviewees estimated that support from the CPI activities funded by the federal government contributed to an estimated 5% to 30% of export sales for specific members.

With Canada's total export sales of about $3 billion annually, based on these interviews, it would be most conservative to estimate that the program is helping the industry to make at least 10% of these export sales or to prevent this level of sales from being lost to competitors. This translates to at least $300 million of additional export sales each year. If a higher estimated amount were used, each additional 1% would represent an additional $30 million. We can only conclude that federal funding represents good value for money. We believe it is also the case for the other export-focused associations that participate in agrimarketing.

Although, as indicated earlier, our industry has been quite successful on the export markets, it will still require assistance to reach its overall objective of becoming the preferred supplier of high-quality pork. To achieve this, the industry will need to be capable of supplying a well-differentiated product and effectively position and merchandise it in the domestic and export marketplace. It is recognized that the quality advantage that Canadian pork once enjoyed over its competitors has narrowed and our traditional differentiation points no longer suffice. A science-based differentiation is now required to improve the competitiveness of Canadian pork.

Pork is the most versatile meat, but we have yet to exploit its full potential. More research and development is required to do so. Developing new products and successfully differentiating Canadian pork will not fully benefit the industry if it is not supported by effective merchandising. Better marketing tools need to be developed.

We still believe that Canada remains one of the best places, if not the best place, in the world to produce high-end quality pork. At this moment our industry not only needs some assistance in positioning and merchandising its product, but more coordinated and better focused research and development should be of great benefit as well.

Maintaining access to existing export markets and seeking access to new markets has been and still remains the top priority of our association. Over the years, we have established a strong working relationship with the Canadian government. This partnership has been successful so far, as demonstrated by the number of countries Canada has been able to export to. However, exporting to a country does not mean that one has full access to that market. In fact, there are several markets where we have a limited access and where we continue to seek full access with varying results.

Given the current economic and financial crisis, we are starting to see an increased tendency in some markets to use technical barriers as a means of limiting or prohibiting imports. In too many cases, import requirements are either not based on science or unjustifiably too restrictive, not taking into account actual trade and distribution conditions. Market access must remain a pillar of Growing Forward 2, as it is the key to export growth for a large number of Canadian agrifood sectors. The federal government must ensure that adequate resources are allocated to market access, as it should be remembered that only the federal government has the mandate to negotiate with its foreign counterparts, be it technical market access issues or bilateral and multilateral trade agreements.

Here is a short word on transportation. Although there is no longer a container shortage, as we experienced a couple of years ago, transportation is still an issue that the Canadian meat industry is concerned with. When dealing with the Canadian rail companies in particular, a large number of our members are finding it difficult to adapt to their demands and requirements. They are left with the impression that perishable products are considered a nuisance, and they are questioning the commitment of the railways to offer a quality service. It is hoped that this issue will be addressed in the framework of Growing Forward 2, as it also impacts several other sectors in Canada.

Briefly, in conclusion, we understand that the economy remains the government’s number one priority. We agree with the government that engagement and increased trade are important drivers of Canada’s long-term prosperity and growth. Growing Forward 2 could be a good framework in which to do it if it were adequately resourced. Our experience demonstrates that there could be a good return for all stakeholders, including the government. It should be looked at as an investment rather than as just another government expense.

Thank you very much.

[The Chair, Conservative, Larry Miller]

Thank you very much.

We now move to the Canadian Agri-Marketing Association and Ms. Nagelschmitz.

Go ahead for 10 minutes, please.

[Stefanie Nagelschmitz, Member, Canadian Agri-Marketing Association]

Thank you very much.

Good afternoon, honourable MPs and observers. My name is Stefanie Nagelschmitz and I am here representing the Canadian Agri-Marketing Association, also known as CAMA.

In my everyday life, I am the communications coordinator for Canada's Outdoor Farm Show, held annually in Woodstock, Ontario, and we're actually the nation's largest business to business trade show for farmers and agribusinesses. But today, as I mentioned, I'm here representing the Canadian Agri-Marketing Association.

To give you some context, the Canadian Agri-Marketing Association is the national professional organization for agricultural marketing and communications professionals from coast to coast. We have over 350 members in five provincial chapters, with the majority being from Ontario. Our members work in media, advertising agencies, and farm organizations, and as marketing staff within agribusinesses of all sizes, from John Deere to Husky Farm Equipment.

Our members include public relations specialists, editors, general managers, advertising directors, marketing coordinators, account managers, presidents, and event managers like me. Essentially, we represent the technology, services, and products to help farmers run their businesses and tackle new markets, which we hope Growing Forward 2 will also assist with.

When our members look at Canadian agriculture today, we see an industry we are proud of, excited about, and passionate to advance to the world stage. Our membership has no shortage of diversity, as I mentioned, in geography, in scale, or in sector. We are also at a distinct advantage in often looking at Canadian agriculture and agrifood from a big-picture perspective. From that perspective, we view the industry as one of strength, with a business sense and a readiness to take on opportunities to which we hope Growing Forward 2 will give us access, whether locally or on the world stage. Canadian agriculture and agrifood are, for the most part, in a very positive place, in a place of strength. In the Globe and Mail newspaper on July 19 last year, reporter Tavia Grant announced that:

Canada's manufacturing industry typically conjures images of machinery, steel, cars and technology.

These sectors are vital not just because their health is critical to the country's economy, but because they have come to define what Canada is, and what it brings to the world.

But the country's largest manufacturing sector is no longer one that produces auto parts or high-tech gadgets like BlackBerrys. It's food. The sector is the country's largest manufacturing industry by sales, the most recent statistics show. Sales set a record last year topping $80-billion.

That does not include agricultural machinery, which, as we are all aware, has rather high price tags.

Nationwide, Canadian farmers are producing billions of dollars' worth of high-quality, safe, and delicious food. That's in addition to the agricultural products that go towards textiles or commercial manufacturing for car parts made from soybeans, for example. There is a lot of buzz in the industry, and our members see it first-hand with our clients or at larger industry conferences and farm shows.

CAMA members have also seen Canadian agriculture and agrifood become more businesslike in recent years. The farmers our members deal with are continuing to manage their farms as businesses. We are being asked for the new technologies to make day-to-day chores more efficient, for services to help smooth the obstacles of succession planning, or for help in equipping farmers with skills training through programs like the advanced agriculture leadership program run by the Rural Ontario Institute. From our perspective, farmers are keen to seek and conquer new markets, run efficient operations, and be active members of the Canadian agricultural community and even more so the Canadian business community.

These farmers, along with the Canadian agribusinesses that work with them, are taking business to the world as well as across the country. Some CAMA members represent Canadian companies reaching out for international markets, as my colleagues have already mentioned this afternoon. Others work as the Canadian lead for multinational companies like Monsanto or John Deere, as I mentioned. They are interested in local markets, Canadian markets, and international ones.

Our members who sell their products internationally often comment that one of the top selling assets they have over competitors is the maple leaf itself. The Canadian brand is one that is linked with quality. The Canadian brand that “quality is in our nature” could not be more fitting, in our opinion. It's a brand that our members are proud to represent at home and abroad. As a professional organization representing many private agribusinesses, not surprisingly we see Canadian agriculture and agrifood as a vibrant and competitive industry. The Canadian brand is a strong one, and we see no reason to withhold that world-class potential.

Agritechnica, the world's largest agricultural machinery trade show, is held biannually in Hanover, Germany. It is just one example of how Canadian agriculture is full of vibrancy and potential. Agritechnica has over 2,700 exhibitors. Many hundreds of farmers from around the world come to this seven-day event to see the latest technologies and products available for their farms. In 2011 Canada attended with four Canada pavilions, and a total of 49 Canadian businesses attended as part of the larger delegation or on their own. The excitement was palpable and the excellence undeniable. There were also many Canadian farmers attending, from Kamloops to Barrie to Quebec.

It is clear that Canadians are world players, whether as farmers producing quality food products or agribusinesses selling agricultural machinery to farmers in other parts of the globe. Empowering our farmers with technology, skills, and services to succeed is paramount. It would be a shame not to take advantage of our amazing potential.

I think, at the end of the day, the Canadian Agri-Marketing Association and its members want Growing Forward 2 to facilitate the ability of our farmers and our agricultural agribusinesses to thrive. As we look into the future, we want this momentum to continue.

As I mentioned in my introduction, the Canadian Agri-Marketing Association represents the services, products, and tools farmers use to produce quality, safe, innovative, and delicious agriculture and agrifood products. It's the world-class potential we are known for and proud to produce, whether for customers within our borders or abroad. CAMA is a group of suppliers who are ready to provide the innovative tools farmers need and want, whether it is for the farmers, or perhaps for the processors and retailers, so that they can use it to do what they do best.

As Growing Forward 2 develops, at the end of the day our members want farmers to be empowered to be innovative and entrepreneurial. As new markets, domestic or international, open, our members are ready to help the Canadian agricultural industry with whatever they need. We want Growing Forward 2 to encourage innovation and the continued production of quality products.

On behalf of myself and the hundreds of Canadian agrimarketing professionals across the country, thank you for the invitation to speak with you this afternoon. Like you, we are passionate about the Canadian agriculture and agrifood industry and its continued success. We have strength, quality, and world-class potential. Let's take full advantage of our skills.

Thank you.

[The Chair, Conservative, Larry Miller]

Thanks very much, Stefanie.

We'll move now to the Western Canadian Wheat Growers Association.

Mr. Mike Bast, you have ten minutes.

[Mike Bast, Director, Western Canadian Wheat Growers Association]

Thank you for this opportunity to appear before you to talk about issues relating to the marketing and trade of Canadian agricultural products.

Throughout our 42-year history, the wheat growers have been strong proponents of open markets and free trade. We are convinced the high standard of living that most Canadians enjoy is directly linked to an open trading environment and policies that encourage investment and innovation.

In our presentation today we want to focus on two main areas. First we want to talk about the measures that are needed to fully capitalize on the opportunities that have been created with the implementation of an open market for wheat and barley. The second part of our presentation will deal with trade and market access issues.

The wheat growers are very pleased with the creation of an open market for wheat and barley in western Canada. Farmers in the trade have already taken advantage of the new opportunities that have been created. We estimate over 2,000 forward contracts have been signed by farmers for delivery of their wheat and barley in the new crop year. For the first time in almost seven decades prairie farmers now have the opportunity to sell their wheat and barley directly to processors. We have already seen the announcement of a new $50 million pasta plant in western Canada and further expansion of malt barley storage capacity. We expect to see further announcements of new investing in the coming months.

Today and tomorrow, a wheat summit is being held in Saskatoon that is exploring the new opportunities in wheat research that are now possible under an open market. Several seed companies have already made plans to expand their capabilities to bring new wheat and barley varieties to the western Canadian marketplace.

The wheat growers are also pleased to report that forward prices in Canada are arbitraging well with those that are available in the open market in the U.S. As we predicted, the high open market prices we saw in the U.S. have moved north. There is every reason to believe that Canadian companies will be fully competitive and that there will not be widespread truck movement of wheat and barley to U.S. elevators.

There are, however, some issues that need to be addressed. First, we need changes to the Canada Grain Act that allow Canadian Grain Commission inspection at port position to be optional. As you may know, western Canadian grain shipments that are delivered directly to Canadian flour mills and malting plants do not require CGC weighing and inspection. As well, shipments that are made directly to buyers in the United States do not require CGC weighing and inspection. However, CGC inspection is mandatory on shipments to overseas buyers through Canadian ports. This places our Canadian port facilities at a competitive disadvantage.

While some overseas buyers may continue to rely on Canadian Grain Commission grading and inspection, we are convinced many buyers would be content to rely on the reputation and undertakings of Canadian grain exporters. If that reputation is good enough for Canadian and U.S. buyers, we maintain that this reputation will also be satisfactory for many overseas buyers. Making inward and outward weighing and inspection optional will put all Canadian exporters on an equal footing and reduce the costs that are ultimately borne by farmers.

Secondly, we need the federal government to move forward with its plans to amend the Canada Transportation Act to include measures that will improve railway service standards. The ability of Canadian exporters to meet sales commitments in a timely and cost-effective manner depends on good rail service. We were pleased to see the announcement last spring that the federal government intends to introduce legislation to improve railway service, including the requirement for railways to provide shippers with service level agreements that would contain penalty provisions for non-performance. We encourage the government to move forward this spring with the necessary legislation.

The wheat growers also consider it important to move quickly to transform the Canadian Wheat Board into an entity that is truly owned and controlled by farmers. In this regard, we recommend that shares in the new CWB be issued to farmers based on their grain deliveries to the CWB over the past six years. We suggest one share in the new CWB be issued for every 10 tonnes delivered. Receiving a share certificate will give farmers true ownership and will give each of us an incentive to make sure our shares increase in value. The wheat growers propose that shareholders of the new CWB elect a 10- to 12-member board of directors consisting of elected farmers and three non-farmers who have expertise in trading, finance, and any other skills that would strengthen the board.

It should be up to the shareholders to decide who should be allowed to buy and sell shares; however, we recommend no restrictions be placed on share ownership. This would give retiring farmers the opportunity to maximize their share value. Allowing non-farmers to purchase shares will create better liquidity and boost share value. Ultimately, however, we believe it should be up to farmers to decide how much or how little they wish to retain ownership control over the CWB.

The goal, of course, is to create a company that provides a good competitive alternative for farmers, especially for those who see value in pooling their grain. The federal government has agreed to guarantee the initial payments and borrowings of this new entity for up to five years, so this new entity has every opportunity to be transformed into a valuable, competitive option for farmers.

Before concluding our presentation, we wish to take a moment to stress the importance of pursuing bilateral trade deals, especially since multilateral negotiations at the WTO appear to be making little progress.

For prairie durum wheat producers, successfully concluding a free trade agreement with Morocco is very important. Currently durum exports from the United States enter Morocco under a preferential tariff; Canadian durum exports to Morocco are subject to a much higher tariff. Concluding a trade agreement that addresses this disparity will ensure that Canadian farmers and exporters are on an equal footing with U.S. durum producers.

We also urge the government to successfully conclude trade negotiations with Europe. Again, a free trade agreement has the potential to significantly lower tariffs, not just for grain, but also for our red meat sector.

In our view, striking trade agreements that reduce trade barriers for our pork and beef industry bring substantial benefits to the prairie grain sector. About 30% of western Canadian wheat and barley production is now fed to livestock. Any trade initiative that promotes the Canadian livestock industry translates into higher prices and greater market opportunities for the grain sector.

For this reason we also strongly encourage the federal government to pursue a trade agreement under the trans-Pacific partnership. In our view, it is vitally important for Canada to be come a full member of this partnership so that our grain and livestock sector can fully capitalize on the fast growing Asian markets. Farmers in western Canada are well positioned to serve these markets, which are becoming increasingly important given the financial and economical challenges that now face Europe and the United States.

In summary, prospects for the western Canadian grain industry are looking bright. The creation of an open market for wheat and barley is creating a strong investment climate and giving farmers the opportunity to lock in attractive prices for a portion of their expected production.

To realize our full potential, the wheat growers recommend that the government move quickly to make improvements to the Canada Grain Act and the Canada Transportation Act.

We also recommend that the government take steps this fall to transform the CWB into an entity that is truly owned and controlled by farmers.

We also urge the government to vigorously pursue our interest in bilateral trade negotiations.

Again, thank you for this opportunity to provide our comments. We look forward to your questions.

[The Chair, Conservative, Larry Miller]

Thanks to all of you for keeping on time.

The first five minutes are for Ms. Raynault.

[Francine Raynault, NDP, Joliette, QC]

Thank you, Mr. Chair. What an honour it is to ask the first question!

My question is for Mr. Coutu.

Good afternoon. In your presentation, you referred to good business files that have been turned down or that might have been poorly assessed. Could you give any examples? How could we remedy that situation?

[André Coutu]

The question is a relevant one. There are two parts to the agri-marketing program. The generic component is going very well, and there are no problems in that respect. The situation is different for the SME component. People submit files and they are sent to Ottawa. It's very difficult to find out what happens from that moment on. It's a black hole. We don't know who makes the decisions or how things work.

I'll give you a bit of an absurd example. There is a honey producer in Quebec that has a distributor in Japan. The name of the business is Buy Us. The business sent its file to Ottawa. The public servant who read the file interpreted the name as "Buy US", or in other words "Buy American". So he automatically dismissed the file rather than phone the people on our team and ask the appropriate questions.

There are more situations, particularly this one, which happened recently. There was another Quebec company that does business with Mexico, and there were recommendations from the consulate because the product and the marketing were excellent. The file was sent to Ottawa, but it was rejected with no consultation with our embassy in Mexico. Obviously, this has negative consequences. The response times are extremely long, between three and eight months. It makes no sense. At the end of three or eight months, the businesses have already gone elsewhere. They've moved on to something else.

Our position is this: let's do the work in Montreal, with people who know the market, and apply the same principle in Toronto, Calgary and elsewhere, so that we can get answers quicker. Some files have been rejected in some cases, but I don't want to specify which ones because they involve companies that are very well known in Quebec, especially big Quebec companies. Those files were refused for unknown reasons. We're talking here about large companies that spend hundreds of thousands of dollars a year to have access to markets. The file was sent to Ottawa, and they get lost. I spoke earlier about an act of God, like when someone is hit by lightning. We don't know what happened or why. We only learn about it five, six, seven or eight months later.

That aspect of the program is tiresome. It interferes with the work. The people from these businesses don't have time to wait three, six or eight months: they must make their decisions immediately. When we tell them that their file has been rejected for one reason or another, when they're told the arguments for this, there should at least get an explanation, but it's another story when we bring up the fact that the business received money the previous year and so the business needs to let someone else have a turn.

That is why I said in my presentation that it must be consistent. An international market does not develop in six months or a year. It takes two or three years of investments, of human and financial resources.

The file must be analyzed with insight and we must understand that, in this area, continuity is vital. We can't tell businesses after six months that they didn't do their job or that, in the ivory tower of Ottawa, we think that they haven't been successful. We really need to give businesses the time to do their work. That's why I said earlier that it takes at least three years. We can't refuse to give financial support at the end of one year or two with ridiculous pretexts.

Does that answer your question? My response was perhaps a bit long.

[Francine Raynault, NDP, Joliette, QC]

No, it's important to understand and, to do that, you needed to take the time to explain. You answered my question very well. Thank you.

My next question is for Mr. Pomerleau.

For some time now, there has been a great deal of enthusiasm for local products, regardless of the product. What do you think the government could do to equip the farming sector to improve its capacity to market local products?

[Jacques Pomerleau]

That's a fairly broad question. In our case, we are specialized in the international market but, as I said in my presentation, we'll have to look at the situation in the domestic market very closely. Given our international experience, the industry is entrusting us with the mandate of promoting Canada. Our strategy will be based on the differentiation of the product. Our competitors are the Americans. So we must see how we can distinguish our products from theirs. We already have several examples of local products, particularly with regard to Quebec pork, whether its Lucyporc and its Nagano pork, which is very popular in Japan, duBreton and its antibiotic-free pork, or Maple Leaf and its natural products.

We are going to try to provide our businesses with a platform that will allow us to define the characteristics of Canadian pork. Then the businesses themselves will be able to distinguish themselves locally and internationally.

[Francine Raynault, NDP, Joliette, QC]

All right.

Do I have any time left, Mr. Chair?

[The Chair, Conservative, Larry Miller]

You're out of time--well over, actually.

Mr. Hoback, five minutes.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Mr. Chair.

I'd like to welcome everybody back. It looks like everybody had a good time back in their ridings working with their constituents. It's great to see you refreshed and smiling. Even Mr. Valeriote is smiling, so that's always a good sign. And Mr. Chair, it looks like you had a good break. It's a good sign for the agriculture committee when everybody is laughing.

I'd also like to thank the witnesses for being our first set of witnesses as we come back.

One of the first things I want to get off the table is the importance of trade. It's a quick, simple question. How important is trade to each of your individual organizations, and how important has it been that the minister has been out opening up markets for your organizations or your markets?

I'll start with Mr. Coutu and go right across.

[André Coutu]

Our group is a business association. Agri-Food Export Group Quebec-Canada represents 350 manufacturers. The association's rationale is trade.

Our primary mandate is to do business. So we need to maintain access to the markets at all costs. Access to shelves is the most difficult thing when it comes to processed products, which sort of comes back to your question.

In Canada, it's a little difficult because four food retailers control 80% of the retail market. Just like the organization represented by my friend Mr. Pomerleau, our group is present on the international markets. Obviously we do a lot of business in the Canadian market.

[Randy Hoback, Conservative, Prince Albert, SK]

I have only five minutes, so I want to stay on the trade side of it, okay?

[André Coutu]

To answer your question, I would say that trade and government support are absolutely vital for Quebec businesses.

[Randy Hoback, Conservative, Prince Albert, SK]

Mr. Pomerleau.

[Jacques Pomerleau]

In pork, as I mentioned, 60% of our total production is exported, so it's vital to maintain a vibrant industry in Canada.

[Stefanie Nagelschmitz]

I would repeat the same sentiment. Trade is very important for the members of the Canadian Agri-Marketing Association, whether they are Canadian companies trying to market their products to farmers in other countries, or whether they're representing foreign companies who are hoping to reach Canadian farmers. Open and efficient ways of doing that trade are very important to our membership.

[Mike Bast]

The importance of trade to us is in access to markets and making it a level playing field for competing against other countries. There are more diverse buyers, and it brings us to a more competitive environment to allow us much more opportunities. When one side might fail, we may have an opportunity to go somewhere else.

[Randy Hoback, Conservative, Prince Albert, SK]

That's one thing we have to give the minister credit for. In this last year or two the beef sector is definitely starting to see the rewards of trade—the markets he's opened up—and we've seen the rise in beef prices. Hopefully, we'll see the rise in pork prices coming sometime in the near future too because of that.

The grain industry is really excited. In fact, I was talking to a young farmer during the Christmas break. He's already forward marketed three-quarters of a million dollars of wheat for this next year. He's been able to do that and keep canola back, so he can do a proper job of marketing his canola and managing his cashflow. So we're already starting to see the benefits of a free and open market and young farmers taking advantage of that.

When we look at trans-Pacific partnership, how important is that in your industries?

I'll start with pork and then go to the grain sector.

[Jacques Pomerleau]

In our case, Australia and New Zealand are already good markets for us, interestingly enough. People don't think of those as being big markets for meat, but we do. Vietnam has a significant potential. But the key here is Japan. If Japan joins TPP and we don't, we will be in deep poo-poo.