Agriculture Committee on March 28th, 2012

[Frank Valeriote, Liberal, Guelph, ON]

Thanks to all of you for appearing today.

David, I'm going to start with you. Our party quite agrees with your proposition of a compelling food plan: a food strategy from gate to plate. We have been proposing it for years. It hasn't been forthcoming.

The Canadian Federation of Agriculture tried to come up with one. There are all sorts of different groups.... I see it as the responsibility of the federal government to bring all of the stakeholders together and prepare such a plan, as they did in England, in Scotland, and, as you know, in New Zealand, but we have yet to have one here.

I first want you to comment on the need for that, and who should be the group for or the leader of this initiative. That's number one.

Number two, you made an interesting comment. You said that once the plan is prepared, we needn't necessarily have regulations or rules attached to it, and that it has to be a vision. I disagree with you somewhat, largely because there's nothing that compels the vision to come to fruition, if you know what I'm saying.

For instance, there has been a lot of talk about the unnecessary amount of salt in our diet and the need to reduce salt in a lot of the processed products out there. The government had an opportunity to do that and didn't. I spoke to some in government and they said, “Well, we want people to have their choices.” It's an ideological thing: let them have their choices, right?

On the other hand, with respect to the railways, that would fall in your chart under trade and industry, I suppose, under increasing exports and improving competitiveness. For two years, farmers have been coming here saying they are getting ripped off by the railways. Nothing is happening. If you don't complement the plan with regulations and rules, nothing happens. I'd like you to comment on that latter part of my comment as well.

[David McInnes]

Thank you very much for the questions.

I'll start with the latter. We acknowledge that targets can be difficult things to set and to enforce. We're all supposed to be eating five to ten fruits and vegetables a day. Sometimes that doesn't happen, so targets can be inspirational as opposed to mandated.

On the other hand, targets can be highly effective. The Canola Council of Canada, for its sector, set a target of increasing canola production by 65% by 2015. They'll hit it. What they've done with that target is they've galvanized their supply chain—crushers, processors, growers, and others—in order to create a catalyst for productivity and profitability.

Should government be setting targets? That's perhaps part of your question. I think that's a discussion we need to have. I think we need leadership on the government side to try to reveal where it would like to go.... On the other hand, this is not to absolve the supply chains of responsibility. The supply chains need to galvanize amongst themselves to decide what they're going to do together. So there's a shared leadership here.

Also, frankly, researchers have a role. They need to integrate into the supply chains even more than they have. This is not a top-down approach that is necessarily from government. It is a collective approach as to how everyone can figure out how we can best serve the consumer, how we can improve their health, and how we can create jobs and profitability in the areas you're responsible for. I think that's the way we should do it.

I think you started with a question about food strategies, if I may take that on.

I'm originally from Nova Scotia. A rising tide lifts all boats, and the more that people are talking about strategies, plans, and our future—and we actually talk about a destination, not necessarily a vision—I think that's good, because I think the calibre of the discussion is actually starting to change.

The Conference Board had an event not too long ago that was called a food summit. What was fascinating was the constant reference to the need to nurture food systems. We're starting to talk about food systems rather than just supplier value chains. I think the language is starting to change, which is reflecting an understanding of the complexity of what's out there.

I think ultimately it's probably important that we all try to get together and come up with some common principles. We can't micromanage every single supply chain. That would be impossible. But common principles with metrics and objectives to drive behaviour? That's what we're shooting for.

[Frank Valeriote, Liberal, Guelph, ON]

Do I have time for a quick question for Mr. Seguin?

[The Chair, Conservative, Larry Miller]

Very quick.

[Frank Valeriote, Liberal, Guelph, ON]

Bob, how is the weather in Guelph?

[Voices]

Oh, oh!

[Frank Valeriote, Liberal, Guelph, ON]

No, that's not my question.

My question is about your comment that competition has been dominated by several large players. In some instances, we see that with respect to the input supplies like potash. On the other end, we see some of the processors in the meat industry.

I'm wondering if you believe this should be regulated in some form. If not, what is being said about it by those who believe it should be regulated?

[Robert Seguin]

My viewpoint, and the viewpoint of the centre, is that we don't think that such competition should be regulated beyond the existing Competition Bureau capacity. We see that the marketplace can work so that some competitors are doing well and will continue to do well. If they share with their partners, they'll be successful. If they don't, they'll find that their partners are leaving them or they can't sustain their success or their dominant position.

For over 50 years the provinces have looked at regulated marketing in many ways to try to balance their perceptions and the reality that it's a non-equal marketplace. The challenge is that this shifts over time, and the large competitors themselves sometimes fade away, such as Dominion stores. A number of food service chains over the years have faded away. A number of major players on the processing side have faded away. Others step in. How does one build new relationships to have these become successful? That's one of the challenges.

Mr. Valeriote, I don't think a one-food strategy is going to solve it. It's far too complex and far too long. Getting a discussion going is good. But as for trying to make sure that the enterprise, the micro-level, can really work, we think that's where more success can be achieved. More people can use that to make competition more effective.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Storseth.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Thank you, Mr. Chair.

Mr. Valeriote is not wrong about one aspect. It is about ideological differences. I believe in freedom of expression; they don't. I believe farmers are capable of making their own choices; they don't. They would like the government to make all their choices for them. Their arguments are that marijuana should be legalized, but French fries should be criminalized. I'm not necessarily understanding where they're going these days.

Mr. McInnes, you talked about reducing health care costs by information dissemination. We talked about diets and diabetes. I thought this was all interesting. What you're talking about is a lot of advertising and making sure the public understands the different types of diets so they can make their own choices, correct?

[David McInnes]

May I elaborate on that? The link between health and agrifood is highly complex. There's no question. In part, it's about how we produce our food. Sodium and trans fat might be in foods or other things. In part, it's about how eat, which is clearly diet. It's in part about how we inform ourselves or our children and families about our diet. That brings in labelling, education, promotion, advertising, and other things.

Another part of this is how we innovate. Perhaps this is the greatest opportunity for the agrifood sector, because there are other departments in government and agencies and associations that spend a lot of their effort on education and promotion. They do fairly good work. In our view, the question is how to create a catalyst for activity, how to leverage that health file. It's about prevention, and I think there are a lot of good examples around the country.

The Canadian International Grains Institute, CIGI, has been working to create barley as a more nutritious ingredient, very similar to the pulse story. They've engaged plant breeders, an R and D facility in Leduc, Alberta, processors who want to be part of this potential research, and producers. All this creates an opportunity if barley is used in various processed or other foods. Barley, of course, is a good source of fibre. They are bringing these diverse players together and trying to accelerate their work. Then we have greater access to foods in Canada.

There's another benefit. We can increase our export of healthy foods and become known as a producer of high-quality, safe, and healthy foods. That's the bonus. So the health-food link is complex, but our niche here, where the Venn diagram overlaps, lies in how we can create an innovation platform to deliver healthier foods and growth opportunities across the supply chains.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

That goes well into your conversation on increased trade of Canadian products.

Part of my question to you then would be this. Is part of that ability to increase trade in that niche market the fact that the content we are selling them has to be Canadian content? The old rules used to be 50%, and as long as it was more than 50% of the packaging, you could have “Product of Canada” on it.

Is part of your plan to make sure it would have to be Canadian content to help that advertising?

[David McInnes]

We didn't specify what is or isn't or should be Canadian content. That's a complex piece, and I understand that from some of your previous testimony and from what we've heard.

From our standpoint, our focus is to understand the attributes of demand within foreign markets, or frankly, in the domestic market. Do consumers in Japan want a more protein-rich pasta or noodle? If they do, how do we align our research capacity and our processors and exporters to deliver it? That's the question, and it's this question that spans the different players, as we say it, across the food system. Therein lies the opportunity.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Absolutely.

I'm going to run out of time soon.

Mr. Burt, you talked about the transportation system as part of the overall issue. With the land mass being the size we have in the country we have, rail transportation in particular is very important when you're talking about agricultural products.

What are some of the effective ways we can enhance our rail transportation? Have you looked at ways we can make the process better, whether it's through level of service or different technologies or different types of rail cars?

[Michael Burt]

I'm not sure I can comment too broadly on that. There is no doubt that when you're talking about the agricultural commodity products, certainly rail is a significant component of the delivered price of the product. I would say, first of all, to ensure there is a competitive environment on rail so that farmers are getting the best break they can for the products they're shipping by rail.

Part of it may be some of the things we're already addressing, such as the Pacific Gateway and ensuring there is adequate capacity there to meet the need. It's obviously just not agricultural products we're moving by rail; we have to ensure there is capacity there for all of the commodities and all of the products we're shipping by rail.

Part of it, too, may be whether there are creative ways of using multi-mode transport so we can take advantage of competition across different modes. Obviously when you talk about vast distances, there are limitations on what you can do by truck and these sorts of things. Those may be potential areas as well.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

But you would say the Pacific Gateway is an important aspect of this as well.

[Michael Burt]

I think so. Given the growth in demand in Asian markets, I think there are huge opportunities for us to export to those markets. Among the 25 largest products that we export to China, most of them are commodities of one sort or another. Some of them are forest products, some of them are mineral products, but that includes agricultural products, things like canola oil.

Ensuring we can fully take advantage of that opportunity through capacity is certainly one critical component of the transportation infrastructure.

[The Chair, Conservative, Larry Miller]

Thank you very much.

Mr. Rousseau, five minutes.

[Jean Rousseau, NDP, Compton—Stanstead, QC]

Thanks, Mr. Chair.

My God, Brian stole all my questions, even though we don't agree sometimes.

But I'd like to go on.

Mr. Burt, I would like to keep my remarks in the same vein.

Since interest rates are currently low, shouldn't investments be made in the weaker links of the chain, such as the processing sector?

As Mr. Storseth just said, energy costs are through the roof for a number of links in the chain, especially for producers and distributors. Would investments make the chain more effective and help all stakeholders increase their profits?

[Michael Burt]

Certainly, you're right. The combination of a strong dollar and low interest rates is making it much cheaper for all businesses and industries to take advantage. We have seen significant increases in spending on machinery and equipment across the board, across industries, and food is no exception to that.

The question really is, if you're interested specifically in agrifood, how do we stimulate that? Personally, I'm not big on picking winners. I think broad-based programs such as the ability for accelerated writeoff of capital investments, these sorts of programs, are effective ways of encouraging businesses, including agrifood businesses, to take advantage of the current environment and try to find ways to improve their productivity.

To be honest, for things like food processing, given the strong dollar, which has eroded their competitive position in some markets, for example, this is one of the ways—through increased investment, through improving their productivity, and increasing the value of the products through product differentiation and these sorts of things—whereby businesses can potentially address the challenge they're facing through the strong Canadian dollar.

[Jean Rousseau, NDP, Compton—Stanstead, QC]

Mr. McInnes, in terms of the Canadian food strategy, this means that the chain must be turned upside down. It goes from consumer demand to producer supply.

Do consumers and the government want the same thing? Consumers want quality and healthy products. The demand for organic products has increased. Is the organic industry's production sufficient? Although that sector is still marginal, it is growing steadily. Does production meet consumer demand in terms of organics?

I will have another question after this.

[David McInnes]

Merci. Thank you for the question.

What is happening is that governments across the country are trying to facilitate how supply chains can work. I'll comment on the federal government for a moment. What we are seeing, federally and provincially, are funds going into the University of Laval for the nutraceutical centre there—among some other facilities across the country—to understand, for example, how clinical trials can be held on various food compounds to understand how they can work. The interest in that is because they want to be able to help the food sector develop new products that are good for you, but they need the public research infrastructure to help do so. We can probably identify across the country where there are some interesting ideas that are occurring.

The question we would ask is, are we optimizing this investment? I think the supply chains need to ask that same question: how can we optimize how they work in order to pull that research out of those good facilities? That's where we think the dialogue needs to change everywhere.

[Jean Rousseau, NDP, Compton—Stanstead, QC]

In your analysis, you talked about tourism and about promoting food brands. We, the NDP, feel this could be a good way to support regional economy and help many family companies survive.

Could you tell us more about that?

[David McInnes]

Thank you.

I use the tourism example to demonstrate the point that food touches so many different government departments, provincially, federally, and municipally, frankly. The interest in how we support local food is an increasing trend, and we're seeing across the country a real desire, for example, from the universities, from the University of Victoria, to McGill, to Dalhousie University, in sourcing locally. What's fascinating about this is they're getting together with nutritionists, local processors, local producers, municipal councillors, the universities, and food service providers, among many others, to try to figure out how we satisfy that consumer they're interested in: students. It's driving a lot of activity. Is it scalable on an international scale? No. But there is another set of requirements that we need to do to support exporters and even grow market share there.

Just speaking about local food, there's a lot of activity where the different players can come together to create new business opportunities for producers, farmers, and others.

[The Chair, Conservative, Larry Miller]

Thank you very much.

Mr. Lemieux.