Agriculture Committee on Feb. 8th, 2012

[Malcolm Allen, NDP, Welland, ON]

Thank you, Chair.

Thank you to all, and good afternoon.

Debbie, we haven't seen each other in a while. It's good to see you. We don't get too many folks from Niagara coming up here. It's a pleasure to have you here.

I want to go back to your presentation. We didn't quite get through it. There were a couple of pieces near the end that I'm really keen on. One is about clarifying labelling. One of the things we find difficult I think in the wine industry is making sure that at the end of the day folks actually know what they're getting.

In the interest of time, Mr. Chair, I'll wrap in the other one.

Your last slide, actually, is on the value-added per litre of wine. You talk about 100% imported products being 67¢. They go all the way to $11.50 if they're VQA, as we know it, which is 100% Canadian in the bottle—grown, vinted, and indeed bottled and marketed in this country—which is a magnitude that other producers would just love to get, I'm sure, versus their competitors. But that's a different issue.

I'd really appreciate it if you could comment.

[Debbie Zimmerman]

Thank you.

I'll be as brief as I can be. I apologize for not getting through the presentation.

First of all, CFIA, as everyone knows, has been consulting since 2009, when Prime Minister Harper made a pronouncement, actually in our Niagara region, that Canadians should be able to have clear and concise labelling. What's on the bottle should be in the bottle.

We need this to be concluded. We're hoping that these discussions are going to end soon, because they impact so much of what we do. An international-Canadian blend should have at least 25% Canadian in the bottle. Every other wine region in the world has at least that. So if you're going to use the term “Canadian”, it should be Canadian in the bottle. It shouldn't be about a process; it should actually be Canadian product. We're hoping that this is going to be concluded soon.

The other component is, yes, growing local.... I think anybody who has any agricultural history in their own particular riding or in the country knows the benefits of a local product. Obviously, the spin-off benefit for us has an economic impact of over $11 when it's made in our area. That comes from the value-add right through to the end product, which is wine.

As everyone knows, the wine regions across this country attract more than just wine. They have restaurants. They have experiences for the entire sector, and that's tourism as well. So investing in that is hugely important in Growing Forward. That's why we support ensuring that the marketing program be reinstated and that it focuses not only on exporting but on the domestic market as well.

[Malcolm Allen, NDP, Welland, ON]

From your perspective, is there anything we can do in Growing Forward 2? Setting aside the 25%, how can we enable the growers across this country? We're seeing vineyards actually crop up in places we never thought we'd see them. They're in Nova Scotia. They're in non-traditional places.

Is there a way for us to help increase that VQA market in the sense of making sure that folks are aware? Is there something you think we can do?

[Debbie Zimmerman]

I think it's going back to that AgriFlexibility and the innovation. We have to innovate in order to stay ahead of the curve. Having a grape growing region in southwestern Ontario was unheard of before, but it is there now. Still, you need innovation to help it to grow and to transform, given that growing grapes in a cool climate is difficult at best.

We are looking at a new apple variety that has health benefits and less gas—those kinds of benefits come with creating new brands and varieties. We need to stay ahead of China, and in our case we need to stay ahead of Chile, Argentina, California, and, more important, New Zealand and Australia.

So it's innovation—that's why we want AgriFlexibility to continue in Growing Forward 2, with the access to the dollars.

[Malcolm Allen, NDP, Welland, ON]

Mr. Bacon, it's good to see you, as always.

You talked about transport issues. It's primarily rail. We may not face them quite the same in other areas. Do you see a way that we can have some teeth in what you eventually want to do, namely, to see a change in the service that we receive vis-à-vis agricultural product and potash?

[Gordon Bacon]

Yes, there are elements that are a part of good business arrangement service level agreements. I think the role that Parliament can play is enhanced public sector reporting. One of the committees we have under the crop logistics working group is responsible for coming up with recommendations. Ultimately this will show whether all the things that we've done have made a significant difference. We will be reporting back through Parliament to say whether we have gone far enough. I think with the suite of initiatives in place, we will make progress.

We've already made some real progress. The railways are performing quite differently now than they were two years ago, but we have to make sure that the entire chain is performing well, and enhanced public sector reporting is how you get the report card.

[The Chair, Conservative, Larry Miller]

Mr. Lemieux, if you spoke, that would give us about 19 minutes to get to the House.

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

Let me ask my colleagues.

[The Chair, Conservative, Larry Miller]

You don't want to? Okay.

We will be back afterwards. I apologize for this, but there's nothing we can do about it. Have a coffee, and as soon as the vote is over everybody will rush back here.

The meeting is recessed.

[The Chair, Conservative, Larry Miller]

Okay, we have a quorum.

Pierre, please go ahead whenever you're ready.

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

Thank you for waiting so patiently. It is a bit frustrating when we have you come in from afar and then we get interrupted like that. But here we are.

I'll start my questions with the grape growing presentation. I was looking at your pages 4 and 5, and I just wanted to understand something: the tonnage of grapes grown has gone from 62,000 tonnes to 64,000 tonnes. That's a relatively minor increase, but the litres of Canadian wine sales have increased—more than doubled—from 46 million litres to 103 million litres. Even though the quantity in litres of Canadian wine sales has more than doubled, the market share has gone down to 32%.

Could you explain that? And don't feel restricted to talking about percentages. I would also be interested in knowing, for example, whether some of these litres are being exported. How is the export market for Ontario vineyards? Has that grown over time, which is why we're seeing a higher percentage of sales? Perhaps that's export driven. I'm not sure.

[Debbie Zimmerman]

Some export sales are actually ice wine. Ice wine is probably the only sufficient export market. Obviously the whole ice wine market is important to us, but the difference is we have two types of wine. One is called Canadian 100%, and the other is international and Canadian blend. That's where you'll see that differentiation in the numbers, because you're blending in a portion with a portion of imported as well.

We also have juice grapes. Juice grapes used to be the significant portion in 1987, but when free trade came in, a lot of our juice grapes were pulled out and the vinifera and hybrid grapes were planted to take their place.

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

Right. So when they're bringing in the blend, what is that exactly? What form is that?

[Debbie Zimmerman]

International and Canadian blend? I wish I had a picture. A big tanker comes up the Welland Canal. You take a fire hose, you stick it in the tanker, and then you pump the wine into another tanker. Then they take it to a bottling plant and they put in 75% imported and add 25% Canadian.

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

Okay, and the farm gate value has gone up?

[Debbie Zimmerman]

Significantly, because of the type of grape. Labrusca or juice grapes are about $300 to the tonne compared to wine grapes, which now can go anywhere from $1,200 to $2,400 a tonne.

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

I know you face challenges domestically. For example, as you know, there's a Conservative member who has put forward a bill to help overcome some of the interprovincial boundaries—

[Debbie Zimmerman]

Trade barriers.

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

Absolutely. I'd like to know a little bit more about your exports. What do you do to increase exports, and where is the Ontario wine industry exporting to?

[Debbie Zimmerman]

Most of our exports are in ice wine, so a lot of that goes into Europe, but again, it has a lot to do with what is allowed in European trade agreements as well as in China. We export a lot of ice wine to China. You're probably going to be faced with some questions about potential trade challenges to ice wine, and how ice wine grapes are actually produced, because obviously there are some international standards for ice wine that we need to meet.

So that's mostly where our products go.

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

What about other wines? Is there a marketing effort to sell Canadian wines to other countries? I think you're recognizing here that other countries have access to our domestic markets. What about our wine access to foreign markets, and what is the wine industry doing to push that point?

[Debbie Zimmerman]

I'm sure you're familiar with the Canadian Vintners Association, who presented here. They do a lot of work, but I would say one of the most important elements for us, given the cost of export, is that we don't even own our own market at home.

As a Canadian industry, first and foremost, our growth opportunities are right in our own backyard, and we're being limited by policies, international—

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

Right, but they're not necessarily mutually exclusive, right? You're able to export even though you might not have a high enough share of domestic consumption.

[Debbie Zimmerman]

Obviously there are opportunities to export, but in relative terms, in terms of the ability to be successful and profitable, the opportunities are at home first.

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

Yes, but I think that's where the interprovincial trade barriers are not helping, because basically wine is landlocked into the province in which it's produced. The only other avenue from selling in your own province is exporting it, right? I mean exporting outside of Canada—not outside the province, but outside of Canada.