Agriculture Committee on March 28th, 2012

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

Thank you, Mr. Chair.

I'm very pleased that this committee is studying the value chain. I think there are two main groups: the farmers at the one end, who are producing the raw materials that feed into the chain, and the consumers at the far end. On what lies in between, although there is commonality, there are also differences, depending on what the consumer is purchasing and where. Just to give an example, the consumer is purchasing processed food in a grocery store or is going to a restaurant.

The chains can have different variations, but I think there are some commonalities. There's the fact that food moves from the producer to a processor, to a distributor, to a wholesaler, to retailers, to the consumers. I think that chain is fairly well understood, but I would like to understand better the different aspects associated with each step.

I'm interested in seeing how we can maximize revenue for the farmer who is producing the produce that enters into the chain, and how we can ensure good value for money for the consumer at the far end, because pricing is added at every point that the product is handled, processed, moved along, stored, and distributed. I think we want to minimize waste as well. Any time there's waste there's a cost hit to somebody. That's where I see our study being very interesting and important.

The report was a joint affair between the George Morris Centre, Mr. Seguin, and CAFPI, and it characterizes the determinants of successful value chains. In your first recommendation—you mentioned five different recommendations—you say that value chains really require the free-will participation of businesses that are involved in the value chain. In other words, it can't really be legislated. To get proper participation there has to be a voluntary aspect by the businesses themselves that are involved in the chain.

The second thing is that the value chains change. Science and innovation are going on. Consumer demands are changing. The chain must be very innovative, and companies must be very adaptable in order to survive, thrive, and prosper in this environment.

I'm wondering if you can comment on those two recommendations, and particularly on the government's role. I'm not convinced it's heavy legislation or regulation, but I think we do have value to add.

Mr. Seguin and Mr. McInnes, what do you see the role of government being, given these first two recommendations in your report?

[David McInnes]

I wonder if I can defer to Bob to start, given that the paper was authored by the George Morris Centre.

[Robert Seguin]

Thank you, David.

Thank you for the question, Mr. Lemieux.

Our view is that it's an enterprise prospect, with willing sellers and willing buyers, not coerced or compelled by legislation or regulation but trying to find mutual benefit. There is mutual benefit, but sometimes it's not very easy to find. Sometimes even the regulatory system doesn't encourage it.

Past attitudes and battles in the marketplace have not encouraged people to come together. But if they can they will find they can drive value to the consumer, possibly reduce their costs and waste, find better ways of dealing with it, and be adaptable over time.

This isn't something that's replicated just through regulation or one management study. You have to keep working at it. It varies by commodity. The commodity outlook or the demand outlook for a dairy producer in Quebec and Ontario is very different from that of a potato producer in P.E.I. or New Brunswick. It's different again for a beef producer in Alberta or Saskatchewan. How do you find the right processing balance?

You also deal with a lot of history here. Past differences and views, past legislation, and past attitudes have not always encouraged people to come together. So there has to be a willing capacity. Governments can encourage that, enable that, help management capacities, and help the understanding of what's really happening in the marketplace. But people shouldn't be compelled or coerced into making this happen.

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

Mr. McInnes, would you like to add anything to that?

[David McInnes]

Yes, thank you.

Thank you, Bob.

I think it should be organic; that is, it should naturally evolve where there are business opportunities to be had. Government absolutely plays a key role. They are regulators, they are funders, and they are trade promoters, so in their own right they can have an impact on the marketplace as a whole or on a specific value chain or supply chain.

Where we see an example of that—and I believe this is through the Ontario government—is that they are helping producers, retailers, chefs, and restaurants find each other in the marketplace. They've set up a website called Ontariofresh.ca. Through that they are trying to create new links, essentially new supply chains between growers, producers, and the markets in the populated areas around the green belt. So government can help in that regard, but government sometimes doesn't need to be part of this transaction.

We're familiar with, and have invited to one of our symposia, an entrepreneurial couple who have sourced product from 29 farmers and producers—beef producers and horticultural producers—in the Ontario region to feed healthy meals to thousands of school kids every day in the GTA, the greater Toronto area. They've actually shortened the supply chain, because they have developed a relationship together. They've developed trust. They see value, and now they're moving into the processed foods area, because they're trying to use the full carcass, for example, or they're trying to have a year-round supply of products, so they're getting into sauces and other things. I'm not sure if government was part of their story, but they've found a common desire to create a quality product that improves the quality of meals delivered to thousands of kids every day. We should celebrate that.

The question to them would be, what stands in their way of succeeding? I'm sure they would have a list. But I think we should embrace the fact that there's diversity out there and there are going to be large and small chains.

[The Chair, Conservative, Larry Miller]

Thank you very much.

Mr. Allen, you have five minutes.

[Malcolm Allen, NDP, Welland, ON]

Thank you, Chair.

Thank you, folks, for coming.

It's interesting that you talked about feeding school kids. The Scottish national food plan actually talks about feeding kids until grade 6, regardless of income, just simply as a food strategy, period.

Also, I noted that there is a hospital in the GTA—and you wouldn't wish to be in a hospital, but if you've been a patient, you remember how bad the food can be—that is now actually preparing what one would call home-cooked meals. Even though they're actually more expensive to generate at the beginning, what you find is that you don't dump 70% in the garbage at the end, which is what happens with most patient food, because folks really don't like it, and that's understandable. For those of us who have been in a hospital lately, it isn't much fun. It isn't very good, actually. So it's interesting that you talked about that chain and about how institutions may play parts in chains to some degree. It would be interesting to see how that works itself through, because it's only one hospital at the moment in Toronto. We'll see what happens.

David, you talked about something—and Robert did as well—in your report, and that was the Vineland Research and Innovation Centre, which I know infinitely well because I live down there. I hate to admit that I used to take peaches from them when I was kid, but I did. They were pretty good peaches. I don't think they grow those ones that we took any more. I think those were the ones they didn't like.

In any case, are we seeing any models like that across the country? It's somewhat innovative, having gone from a place that almost died, actually—about eight years ago it was almost closed—to what it is today. I wonder if either one of you wanted to comment on that.

Then the second piece was to talk a little bit about what you call sustainability farm plans. Could you both touch on that? And I'll let you use up the rest of your time talking about those two pieces.

Whoever wants to start, please feel free to.

[David McInnes]

Bob, do you want to?

[Robert Seguin]

No.

[David McInnes]

I don't want to put you on the spot.

Mr. Chairman, maybe you better preside on who....

[The Chair, Conservative, Larry Miller]

Mr. McInnes, you have the floor.

[David McInnes]

Okay, then, Bob, you can think of a good answer.

Quickly, back to the hospital point, this is a really interesting area. It speaks to the idea that we tried to present here, which is whether we should be thinking about the health sector and the agrifood sector, and are there mutual opportunities, such as in the procurement of Canadian food, wherever it may be grown, to help serve hospital meals?

I know in the GTA—I hope the statistic is right. There are 115 million long-term care hospital meals served every year in the province. One has to wonder whether that's an opportunity, and I don't have the answer. What is the percentage of food that's drawn from Ontario or Canada? It's a question that we have to ask. Are we missing opportunities in our own backyard?

With respect to Vineland, I'm most familiar with them. I think there are efforts being undertaken across the country to try to bring people together. I mentioned CIGI. There's the Richardson Centre for Functional Foods in Winnipeg that's trying to reach out and engage the private sector, the supply chains, to create opportunities. There's FOODTECH Canada, if I have that right. They have R and D facilities across the country to bring in growers and entrepreneurs to co-develop foods, and test them, including market and consumer research. There's a whole lot of activity.

The question I would come back to is, are they business-led? Do they have a line of sight on the consumer, and are they leveraging the resources of the public and private research facilities in order to get product to market? And then is the regulatory structure in line with when a product comes out the door?

You need these pieces coming together at once I think in order to create that optimum environment for innovation.

[Malcolm Allen, NDP, Welland, ON]

I don't know who wants to touch on the sustainability farm plans and how you see that working itself through, because there's lots of talk about sustainable agriculture. If I could have somebody touch on that...it is part of the report you folks put together called Canada's Agri-Food Destination.

[The Chair, Conservative, Larry Miller]

Mr. Seguin was trying to say something.

[Robert Seguin]

If I can, Mr. Chairman, that's a good question.

I'll say three things. I would like to know at what time any government, any minister of agriculture, ever said local food was not important, because it always has been. What has always been the challenge for many institutions as they looked at the food side is the cost factor. To the point raised by the question, a lot of the product ended up being thrown out, wasted.

It took a change in attitude. What do we really want when we feed institutions, whether schools, hospitals, or long-term care facilities? How do we want to use it, and are we getting the best value? That then turns around and changes what we are trying to feed consumers in these places.

I'll note that the College of Management and Economics here at the University of Guelph has completed, or is just completing, a study on local hospitals and what's driving their institutional behaviour with food. It isn't the lack of a government mandate or even a lack of innovation at the producer/processor level; it's how the institutions historically looked at how they handled food and how to minimize the cost burden. That's how they thought of it. Now they have a change of attitude, which should start changing things.

Finally, I think it's a case of how we help people think differently about where the real value is in the marketplace, versus trying to say that we definitely know where it is. There's far too much complexity in the food system to think that a mandate or a regulatory rule will satisfy both the people consuming the food and the people producing and processing the food. We have to have much more flexibility.

On the sustainable farm plan, our biggest challenge from the centre is that it's a great concept, but both governments and industry have stopped that, so how does this really affect the environment? Can we really measure these impacts to see what really works and what doesn't work? That's a real challenge, in our view, to take this one step further.

[The Chair, Conservative, Larry Miller]

Thank you very much.

Mr. Woodworth, for five minutes, and welcome to the committee.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Thank you very much.

Thank you to the witnesses for attending here today.

I have a whole host of thoughts. I'm going to try to get through as much as I can in five minutes, and of course the first observation I'll make is that it's very clear what a complex issue this is, so it's a shame that we have to do it in five-minute segments. It's very difficult.

I'll also begin by thanking you, Mr. McInnes, for ending your response to Mr. Valeriote's question by pointing out that we cannot micromanage things.

I will pick up on a theme that Mr. Valeriote started when he said that he observes a bit of ideology about a Conservative's desire to give people the freedom to follow their own destiny. On this side of the room we often observe an ideological desire on the part of the Liberals to micromanage by government, so I think that correctly discerned the issue.

I have been listening carefully, and I haven't heard much said today about the question of the interaction of federal and provincial jurisdictions. Of course, I am new to this committee, so it could be that I have finally stumbled on a committee where the question of federal-provincial jurisdiction doesn't come into play. Maybe everything is running smoothly and there are no obstacles.

When we're talking about food chains, we do have complex activities, and they cut across all provinces. I wondered, since we're doing a kind of overview here, if I could start with Mr. McInnes and ask if it's the case that all federal-provincial issues have been ironed out in relation to food supply chains, or are there some that remain, and what do you think the federal government might do to move those issues or challenges along?

[David McInnes]

Thank you for the question.

Federal-provincial issues are very much front and centre for the agrifood sector. There are many activities being undertaken right now federally, provincially, and territorially to try to streamline issues and harmonize regulations, including in the slaughtering of beef and federally and provincially licensed facilities, for example. There's an effort under way there to try to do so.

There are issues. There are processes that are under way. I guess the question is for the individual sectors: are they in an optimal spot? I'd have to ask them specifically, but federal-provincial barriers and problems do exist.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Is there any sort of premier activity going on right now to address that in a comprehensive way, or is it simply sector by sector, as you suggested?

[David McInnes]

Well, of course, there is the Growing Forward 2 process, which is designed to have a consolidated approach across the country in order to plan, manage and prioritize, and then fund, federally and provincially. That's a robust process that's under way, and it's been under way for some time—previous plans, that is.

The marketplace is always dynamic. There are always new pressures or issues that come up. I guess the question is, notwithstanding such frameworks or agreements, are we nimble enough compared to our competitors to ensure that issues that stand in the way are being dealt with? There's a possible systemic issue that we have to just keep bringing back, and do we have that right process? Government officials are very open to consultation to understand issues on the minds of producers or the sector as a whole, and that's to be congratulated.

I guess the question really is, how can we best move forward, like any other regulatory issue?

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

I hope that is a question the committee will study.

Do I have a minute for another question, Mr. Chair?

[The Chair, Conservative, Larry Miller]

You do.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

I'd like to direct this one to Mr. Burt, if I may, because I am familiar with the fact that Conestoga College, which isn't quite in my riding but just next door to me, has initiated some new programs in conjunction with the food processing industry to train skilled workers.

I wonder if you have any bird's-eye information for the committee, Mr. Burt, on behalf of the Conference Board of Canada, about the questions of labour availability in the food chain. Are there weaknesses? Are there spots that the Government of Canada ought to be addressing, or what suggestions might you provide to the committee to take forward to the government about ensuring that we have a sufficiently skilled labour force in the food supply chain?

[Michael Burt]

I guess I would say there are portions that are highly skilled, but large chunks of it are at lower-skilled levels. It isn't necessarily always a lack of skills. It may be just an outright limited number of people willing to do the work. A good example is the meat-packing industry. Often that industry has trouble recruiting people because it's not necessarily a desirable activity for a lot of people. That's an industry that's been very effective at using international immigration as a source of new workers for the industry.

If you look at the processing segment, for example, manufacturing in general is very male-oriented, with a very limited use of immigrants. There are very many characteristics that are common across most of the manufacturing sector. This is not so true in food. They've been much more effective at incorporating groups that are not traditionally in manufacturing into the food sector.

Probably where you do run into things like labour constraints.... I know Alberta had a pilot program during the peak of the oil boom. In 2007-08, for example, we saw restaurant sales actually falling a little bit, which made no sense at all. One of the reasons for that is just that you couldn't find enough people to work in restaurants. The restaurant industry was actually working with food processors, because restaurants are labour intensive. How can we push some of the product development or the product preparation back to food manufacturers? How can we work with food manufacturers so that we can automate things more, do more of the actual food preparation at the manufacturer level? That way there's a limited amount of preparation work that has to be done at restaurants.

There are areas of labour shortages at different times and in different industries. It depends on what you're talking about, but I'd say, in general, the industry has been effective thus far at looking at traditional sources for its labour supply.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Thank you.