Agriculture Committee on Feb. 13th, 2012

[The Chair, Conservative, Larry Miller]

I'll call our meeting to order.

First of all, I'd like to wish Mr. Storseth a happy 42nd today.

[Some hon. members]

Hear, hear!

[The Chair, Conservative, Larry Miller]

Actually, that might be a couple more than he is.

Also, as a reminder, the steering committee met last week and there is a unanimous report here that we will have to deal with at the end. We'll have to go in camera for that. I just wanted to stress that it's there.

Our meeting today is split into two one-hour segments. In the first one, we have some Department of Agriculture and Agri-Food representatives, Mr. Mayers, Mr. Tierney, and Mr. Gorrell. Thank you very much for being here, gentlemen.

I'll turn it over to you for some comments. Mr. Tierney, I guess you're first.

[Steve Tierney, Assistant Deputy Minister, Market and Industry Services, Department of Agriculture and Agri-Food]

Thanks very much, Chair.

Good afternoon. I'd like to thank the committee for inviting me to appear today to discuss current markets and trade programs and potential ways to further improve industry's ability to take advantage of both domestic and international markets.

The government is making important investments to ensure that the agriculture and agrifood sector is well positioned to take on new market opportunities at home and abroad. I look forward to talking with you about what we're doing in this area and some areas for future work.

Under our current programming, a large component of the markets and trade programs are delivered through Growing Forward. Growing Forward emphasizes the role of government as an enabler, with industry acting as an important collaborator and leader.

One of the key mechanisms for industry collaboration is the value chain round tables, which draw together producers, processors, retailers, government departments, and provinces to identify market opportunities and develop collaborative strategies. Growing Forward also supports a suite of market development programs that increase the ability of the sector to identify and exploit opportunities in markets where it is competitive on a cost or attribute basis.

These programs include the AgriMarketing program of almost $90 million, the Canada brand program of almost $20 million, the markets information program of almost $9 million, and the trade commissioner service of about $24.5 million. These programs facilitate industry success in global and domestic markets and have been very well received by industry.

Every year AgriMarketing is oversubscribed, and participants have consistently expressed their appreciation for the program.

Industry adoption of the Canada brand has grown steadily since the strategy was introduced in 2006. Membership has increased due to interest in consumer-oriented promotions and the expansion of the Canada brand to the domestic market. There are currently more than 400 members in the Canada brand program.

The domestic branding component of the Canada brand was introduced in response to industry interest in improving its ability to market directly to Canadians. Through retail promotions, the Canada brand has demonstrated that by identifying products as Canadian, participants can increase sales and improve profitability.

Additional funding was provided under AgriFlexibility, part of Canada's economic action plan, to intensify demand for Canadian products and key international markets through the Canada brand advocacy initiative. This initiative works to build knowledge of and demand for Canadian products through consumer-oriented promotion and advocacy campaigns, including advertising.

Another area where we have invested is in markets information, to provide relevant and timely information to clients in industry. Industry has noted that this information has helped positively inform decision-making.

Finally, the trade commissioner service is an important element of our market development programming. We currently have 33 trade commissioners in 13 priority markets and provide on-the-ground assistance to Canadian companies and individuals operating there.

In addition to Growing Forward programs, the government has placed a priority on market access. In 2009, Minister Ritz announced the market access secretariat, which partners with other federal departments, industry stakeholders, and provincial partners to advance Canadian interests abroad to reopen, maintain, and expand market access across multiple sectors in identified markets.

The Agriculture and Agri-Food market access report, which was released by ministers Ritz and Fast in October, highlights the accomplishments of the ministers from January 2010 through March 2011, with our support.

In particular, I would like to draw your attention to a few key successes.

Last July, Canada successfully negotiated transitional measures for canola seed exports with China, a market worth almost $2 billion.

In December, Minister Ritz announced an agreement reached with South Korea to reopen the market for certain Canadian beef and beef products, a market worth $30 million by 2015, as estimated by industry. This announcement is a step towards finally closing the book on BSE.

Another major victory for Canada was the positive ruling on the U.S. mandatory country-of-origin labelling legislation. Through dispute settlement, Canada was able to successfully defend the interests of the sector and ensure fair access to one of our most important markets.

Most recently, as part of Prime Minister Harper's visit to China, an agreement was signed that clears the way for immediate access on beef and tallow, and joint research to create a stable trading environment with China for Canadian canola seed.

In line with industry recommendations, and highlighted in the government's 2011 budget, additional funding was provided under the economic action plan's AgriFlexibility program to seize the full extent of opportunities in some key emerging priority markets like China, India, Indonesia, and Russia.

AgriFlexibility funding is being used to build on the momentum achieved thus far on market access by accelerating progress in priority emerging markets and building stronger relations with key countries to advance our interests through the strengthening of the trade commissioner service.

Also, as part of Prime Minister Harper's trade mission to China, Minister Ritz was pleased to announce that Tongwei Company Limited, a major Chinese feed company, intends to increase its purchase of Canadian canola meal by up to $240 million annually by 2015.

The government has also been active in the negotiation of a number of free trade agreements to provide important new export opportunities for the agriculture sector. Canada has most recently implemented FTAs with the European Free Trade Association, with Peru, and with Columbia. We are in the process of putting into force our FTAs with Jordan and Panama. Negotiations are also under way, notably, with South Korea, the European Union, Morocco, and India. Access gains in these markets would result in significant benefit for the sector.

The government has also formally indicated interest in joining the trans-Pacific partnership.

Bilaterally, Canada is also working on the Canada-U.S. Regulatory Cooperation Council in order to make it easier for Canadian and American firms to do cross-border business. This initiative was announced in February 2011 by Prime Minister Harper and U.S. President Obama.

The government has also made internal trade a priority and is working closely with provinces to review the regulatory environment to make it more relevant to today's market and facilitate internal trade flows. A better integrated domestic market can be a driver for a more competitive and innovative sector.

While our current programming has resulted in significant successes, there have been shifts in global and domestic markets that present new challenges for the sector. The growth and rising demand in emerging markets, coupled with slower growth in our traditional markets of the U.S., EU, and Japan, have shifted our growth opportunities towards the former. These markets require a different approach from the traditional ones. In particular, it requires greater focus on bilateral engagement. Furthermore, technical barriers are increasingly used by countries as a means to protect their domestic industry, making market access initiatives increasingly important to the continued success of the sector.

In the domestic market, Canada's high dollar and strong economic performance have made Canada a preferred export destination. This has resulted in increased import penetration, putting competitive pressure on the sector.

Finally, there are new ways of doing business. Consolidation in the retail sector, the importance of global value chains, and local food movement are increasingly dominant business models that industry and government will need to adapt to in order to compete.

Supported by the unprecedented engagement with industry that has taken place under Growing Forward, Growing Forward 2 presents an opportunity to adjust policies and programs to address new realities and build on successes. The shift in market opportunities to emerging economies suggests that more efforts could be focused on expanding access and improving penetration in these fast-growing markets. In order to maintain our competitive edge in foreign markets, Canada will also need to adopt aggressive strategies to set our sector apart from the pack.

GF2 also provides an opportunity to address the increasing competition in the domestic market. Industry has been supportive of domestic branding. Under GF2 we could explore opportunities to expand this programming with carefully delineated federal and provincial roles.

New market opportunities and a changing business environment may also require our sector to develop new skills. Under GF2 we will continue to explore a means of better assisting the sector in building the skills and knowledge they will need to adapt and compete in a highly competitive environment. We will be working closely with our provincial and territorial counterparts to look at the opportunities and challenges in the sector as we progress towards Growing Forward 2.

AAFC, along with other key departments, continues to work to create and maintain trade opportunities for Canadian agriculture producers and food processors and to support Canada's trade objectives. We also continue listening to stakeholders through forums like the value chain round tables and the market access industry advisory group and using their feedback to identify how Growing Forward 2 can help Canada compete in foreign markets.

Thank you for your time. I look forward to your questions.

[The Chair, Conservative, Larry Miller]

Thank you very much.

Next we have Mr. Gorrell from the Market Access Secretariat. You have ten minutes.

[Fred Gorrell, Director General, Market Access Secretariat, Department of Agriculture and Agri-Food]

The introductory comments from Mr. Tierney were made on behalf of the three of us.

[The Chair, Conservative, Larry Miller]

That's just fine. That's more time for questions.

Before we do that, I just want to remind members about the questioning of public servants. The House of Commons Procedure and Practice, second edition, states on page 1068:

Particular attention is paid to the questioning of public servants. The obligation of a witness to answer all questions put by the committee must be balanced against the role that public servants play in providing confidential advice to their Ministers. The role of the public servant has traditionally been viewed in relation of the implementation and administration of government policy, rather than the determination of what that policy should be. Consequently, public servants have been excused from commenting on the policy decisions made by the government.

With that, Ms. Raynault, you have five minutes.

[Francine Raynault, NDP, Joliette, QC]

Thank you, Mr. Chair.

I would like to thank the witnesses for accepting the committee's invitation. My question is for all of you.

A recent Quebec newspaper reported that more and more of Quebec's farmers feel that the government has taken them for a ride, as many tax credit applications for scientific research and experimental development investment projects have been turned down.

Could you provide some clarification about this matter? Has Ottawa turned off the taps for tax credits?

[Steve Tierney]

I'm not aware of any change in the tax credit program. I apologize. It's not an area of great knowledge for me.

[Randy Hoback, Conservative, Prince Albert, SK]

On a point of order, I would just like to remind my colleague that we're talking about market access with the Market Access Secretariat.

If she has other issues concerning research and development to raise, she should put those toward the appropriate witnesses. She could probably even put them in writing, and the committee could submit those to the department and get the answers for her.

[The Chair, Conservative, Larry Miller]

The floor is still yours, Ms. Raynault.

[Francine Raynault, NDP, Joliette, QC]

Within your department—and I am addressing my comments to all three of you—the Market Access Secretariat, or the MAS, coordinates government initiatives with industry, provinces and territories to improve Canada's position in new and existing markets.

What are the current relationships between MAS activities and the strategic programs under the Growing Forward policy framework?

[Steve Tierney]

In a sense, that's still under consultation, since the future of the Growing Forward program has not been approved by ministers, nor have recommendations been made. That being said, certainly the government has been putting a priority on market access: the Market Access Secretariat has had its role expanded since it was first created. Six months ago, further resources were put into the Market Access Secretariat.

I think it's safe to say that market access will continue to be a priority. Certainly, working closely with industry, with our provincial colleagues, and with all of the stakeholders on how best to prioritize our markets and on how best to approach market access issues in a coordinated fashion are things on my planning horizon.

[Francine Raynault, NDP, Joliette, QC]

Would there be any benefit to incorporating the MAS into the Growing Forward 2 policy framework?

[Steve Tierney]

Certainly, market access, in the most generic sense.... I apologize, but I'm a little uncomfortable answering the question, because it seems to stray into an area that is more appropriate, I think, for my minister.

[The Chair, Conservative, Larry Miller]

In any area where you're uncomfortable, Mr. Tierney, as you know, the rule is that you are not bound to answer.

[Francine Raynault, NDP, Joliette, QC]

That is fine.

[The Chair, Conservative, Larry Miller]

You still have two minutes.

[Francine Raynault, NDP, Joliette, QC]

Fine.

Entrepreneurs who wish to market products either in Canada or in the United States are not eligible for the Agri-marketing program. Do you think that one day this will be the case?

[Steve Tierney]

The secretariat has a willingness to assist any industry or association in getting market access or in dealing with market access problems. That being said, we probably have 300 or 400 market access issues at the current time. Some are larger than others. We work with industry to prioritize which ones we should put our resources towards. I think the priority setting has been quite successful. The door is open to all firms and associations.

The AgriMarketing program itself is, for the most part, directed towards industry associations. There is a small part of the program that goes to small and medium enterprises. I just wanted to make sure that I hadn't misrepresented the AgriMarketing program.

[The Chair, Conservative, Larry Miller]

Thank you.

We'll now move to Mr. Hoback, for five minutes.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

I, too, would like to wish Mr. Storseth a happy birthday. I definitely wouldn't want to leave him out, and I'm sure he'll stop by for his gift a little bit later on.

I also would like to thank the witnesses for coming by here today to talk about market access. That is very important to our government, as you've seen in your departments and from how you're working and from the minister's travels these last few years. I don't know if there's anybody who's worked harder, as a minister, on market access than the minister we have today. I think pretty well every weekend or every break week, when he has time to travel, he's out there opening up a market, whether it's for beef producers or canola producers, or he's solving an issue with a non-tariff trade barrier, usually a relevant issue.

I'm going to talk to you a little bit about process and how you operate, and whether there are things you think we should be looking at through Growing Forward that may even make the process better. I'm sure you guys are looking at that all the time.

First, how do you interact with our consulates and our trade offices in different regions of the world, and how do you utilize their services to gather intelligence to relay back to the industry?

[Steve Tierney]

As I mentioned, there are two types of interactions. First, we have 33 employees of Agriculture Canada placed in 13 different markets in the world. Those are our high-priority markets. Eleven of those people are what are termed Canada-based employees. They are Canadian. They focus primarily on the market access issues. The others are locally engaged staff. They are citizens of the country the consulate is in. They are longer-term employees, often with 20 years' experience, and they know the markets well. They work very closely with firms in terms of introducing them to contacts and telling them what the market opportunities are.

In terms of the consulates, we have a direct reporting relationship with the 13 consulates. In the other consulates, quite frequently, DFAIT has trade commissioners, either Canada-based or locally engaged staff, as their employees. We meet with them, typically, once a year. We meet with them once a year, at least, regionally. For example, in Singapore, we have an agriculture employee. She meets with the locally engaged and Canadian-based employees in the ASEAN region on a regular basis, whether they're DFAIT or AAFC employees. We keep contact, through her, with the locally engaged staff.

We're travelling, not a fair bit but about once a year. We've met quite a number of embassy staff. When we do that, we always talk with them for several hours about their priorities and so on. Then, through the AgriMarketing program, we help a number of industry associations exhibit at various food and agricultural expositions around the world. We take that opportunity to bring in from the region the locally engaged staff to again have discussions about priority setting and so on. As well, there are phone calls and e-mails and—

[Randy Hoback, Conservative, Prince Albert, SK]

I only get five minutes. I don't mean to be rude.

What do you do in situations when we've done a new free trade agreement? For example, Panama will hopefully be completed fairly soon. What would be the angle—I don't like to use the word “angle” or “attack”, and “strategy” may be a better word—now that we have an agreement with this country, to ensure that we get the right producers into Panama and the right connections made? What type of process do you use in that situation? Is there something we should be doing differently? Should we maybe be putting more focus on that? I'm just looking for your opinion on that.

[Steve Tierney]

We work on two aspects. First, with the consul general in Panama, we do our market analysis on the opportunities there. We look at the data and the import/export statistics. We also talk to the people on the ground about which country may be at risk in terms of shipping their product out but that we can go into. Second, we look at industry to see what they want to supply and whether Panama, for example, is a market where they would have to compete on price or whether they could differentiate a product as Canadian, compete on an attribute, and perhaps charge a little higher price.

It's working on both sides to see where there's a match. That's what we're currently undergoing.