Thank you, Mr. Chairman.
And good afternoon to all the committee members.
Many of you will be familiar with Pulse Canada. We are a national industry association that represents pulse growers in Ontario, Saskatchewan, Alberta, and Manitoba, as well as the Canadian Special Crops Association, the association that represents processors, exporters, and service providers for the pea, lentil, bean, and chickpea industry. We also work informally with a wide range of Canadian agricultural groups and our counterparts in the United States, Australia, and other pulse producing and importing nations.
Our job at Pulse Canada, as the national association, is to look for ways to make our industry more profitable. To be profitable, we have to build demand. To build demand, we have to offer value. And to capture value, we have to control costs. So I probably could summarize everything I want to say and suggest a focus for government and government-private sector initiatives with four words, that we need to focus on improving value and improving efficiency.
Our job is to make continual progress towards improving the value of Canadian agricultural products and the efficiency with which we can bring them to market. To create value, we have to innovate, and innovation in agriculture is driven by investments from both the public and private sectors. We could have a lengthy discussion about the investments that are needed to drive value. This is an important topic, and one where we have to ask ourselves whether we can clearly show whether we are being innovative.
Investments in science and innovation, in areas that add value, such as focusing on health, nutrition, and environmental sustainability, are already making a difference in Canadian agriculture, and these investments, the kind that add value to Canadian agricultural products, have to continue.
But today I want to focus my comments on your interest in public policy issues that will help improve efficiency and, in the process, build a more competitive agricultural sector.
Canada, as you know, is the world's largest producer and exporter of peas and lentils, and is a major player in global bean markets. As any team in first place knows, we can't afford to be complacent.
Interest in food security, on a global basis, and rising food prices have resulted in governments in Asia and the Middle East making strategic investments, and these investments are designed to increase food production in Eastern Europe and Africa. I believe these investments are going to present some real challenges for the Canadian export economy in the relatively short to intermediate future.
And if any of us need to be reminded about how quickly the world changes, we can just look at a couple of examples, China and Russia being two of my favourite examples. We don’t have to go back very many years and look at what China was doing in terms of being an exporter of some agricultural products, and now, with soybeans, is importing 50 million to 60 million tonnes. Russia, which for many years was a major market for Canadian wheat, is now a competitor of ours on international markets.
So recognizing how quickly markets change and the lead time that we all need in order to make our own changes emphasizes the importance of creating a dynamic and innovative agricultural sector. My view is that the industry needs investments in innovation more than it needs investments in stabilization. Just to emphasize that point, with current investments in agriculture by government, I think something over 90% of them are to safety net and stabilization programs.
Competition around price defines a commodity market. As a commodity exporter, we have to look for ways to lower costs to improve our efficiency. This is a challenge, but it is also the reality of exporting commodities in an open market. Investments in innovation have to focus on making the industry more cost-efficient to compete in the commodity markets, and we have to actively look for ways of differentiating ourselves in the markets so that low prices are not the only offering of Canadian agriculture.
A competitive export sector is built around market access, and I want to speak briefly to the key market access needs. These include addressing challenges and opportunities related to tariff barriers, non-tariff barriers, and transportation.
First, on the topic of tariff barriers, bluntly stated, Canadian agriculture can't compete against a tariff barrier. And with multilateral trade discussion on life-support for more than two years, Pulse Canada has been an active supporter, and a long-time supporter, of bilateral trade deals. For an export economy, eliminating tariff barriers is an essential element of public policy that needs to continue to have strong support. Perhaps I can use one example just to illustrate the importance of this.
It was about six years ago that the U.S. concluded agreements on a bilateral trade basis with Morocco. At the beginning of 2012, the U.S. will enjoy a 30% tariff advantage over Canadian peas, and a 2.8% advantage over lentils. Thankfully, we have at least started discussions with Morocco, because even at these levels of 2.8%, we are going to have a difficult time being competitive in the Moroccan market. The harsh reality is that Canadian peas may end up in Morocco, but they won't be known as Canadian peas because they will have had to come in from another country to avoid the disadvantage we will have from a tariff perspective.
Tariff parity and access to import quotas to match those of our competitors have to remain at the top of the list of priorities in public policy. Investments in negotiating trade deals are good investments for agriculture.
Equally as disruptive to trade are the non-tariff barriers. These include zero tolerance policies, plant quarantine restrictions, differences in maximum residue limits for pesticides, and restrictions on mycotoxins and heavy metals. The issue with non-tariff barriers is that different governments in different parts of the world take different approaches to establishing them. This creates enormous problems for trade.
Globally, harmonized approaches are very important. And with this in mind, there's an overwhelming need to press forward with OECD and global joint reviews for pesticide registrations, and for Canada to play a leadership role at Codex Alimentarius, the global food safety regulatory agency established by the World Health Organization and the FAO.
At a recent meeting of the global heads of pesticide regulatory agencies, Pulse Canada talked about a one-world-approach to registration of pesticides. The reason we did this is that there is a problem with both old chemistry and new crop protection chemistry, in that the maximum residue limits for these products are different in different countries around the world. While Canada's PMRA has shown leadership in initiating processes for global sharing of pesticide registration reviews, we have a very strong concern that PMRA does not have the resources to continue participating and providing the leadership that will be needed.
Of additional concern is the fact that Codex does not have tolerances for many Canadian products. Just as an example, 13 of 17 pesticides used on lentils do not have a Codex standard in place.
Canada is well positioned to provide the leadership needed at these international forums, but leadership is going to need an investment to ensure that our regulatory agencies continue to push for change at the international level.
Plant quarantine issues are also of great importance. While recognizing the need to take action to restrict invasive species from being introduced, there are a lot of examples where approaches to dealing with quarantine concerns are applied inconsistently and without consideration of how the rules are going to impact trade. The access of Canadian canary seed to the Mexican market is a very good example of where a process has broken down and where the approaches that are in place in Mexico are not based on science.
From a public policy perspective, our suggestion is that Canada has to play a strong leadership role in working to eliminate the problems that create non-tariff barriers to trade. A continued focus on the one-world-approach to global pesticide policy; being a champion of the need for science and risk-based approaches to the sources of non-tariff trade barriers such as GMOs, soil or weed seeds; and bringing Codex into the 21st century and ensuring that it provides up-to-date information are areas that are going to take increased investment by government. But these will also help to ensure some competitiveness.
Finally, the element I want to talk about is transportation and its importance in an export economy. I will just tell you a story about an experience that we recently had in Colombia, where we signed a free trade agreement that eliminated some tariff barriers. But we were reminded by a Colombian importer that even with a 15% tariff advantage, Canada was going to be challenged, because we were not seen as a reliable supplier of product. That importer faced a 50-day delay in getting a vessel into Vancouver.
The outcome that we have to strive to achieve in transportation is meeting commitments to customers and moving product in a cost-efficient way and, frankly, we aren't there yet. Vessel demurrage this past winter in Vancouver was reported as being five times higher than average, and three times higher than in the previous year. A Port Metro Vancouver official reported that he had never seen it so bad in Vancouver, a view that was shared by that Colombian importer.
When one of the solutions proposed is to install more anchors off the port of Vancouver, it suggests that we aren't focusing on addressing the problems that impact our global reputation and our costs.
We have to improve the efficiency of the handling and logistics systems. We can start by moving quickly to implement all of the components of the announcement made by the government on March 18.
Putting in place a system to measure performance will tell us whether we are making real progress. We can't be satisfied with record vessel demurrage and container ships that regularly overbook by 40% to ensure that they sail full when leaving Canada. These costs come out of farmers' pockets and clearly undermine our competitive position.
Pulse Canada has been a strong supporter of legislation to give shippers the rights to service-level agreements and to define the types of service that need to be negotiated so that there is more predictability in our logistics system.
In summary, we recognize that government expenditures have to be aligned with revenues. It would be irresponsible on my part to suggest that we just need to spend more money. We are suggesting that as government looks to Growing Forward 2 and to the policy framework that is needed to support these private-public sector initiatives, there needs to be an alignment between what industry needs and what roles the government is going to play.
What is particularly important at a time when the government is looking at a strategic and operating review is to consider that even more investment in some areas is warranted in the need-to-have areas. As well, government should focus more on innovation that moves agriculture out of being in the global commodity business.
Mr. Chairman, my time is up. I'll wrap up my comments with that.
