Agriculture Committee on Feb. 28th, 2013

[The Chair, Conservative, Merv Tweed]

Good morning, and welcome everyone to the Standing Committee on Agriculture and Agri-Food, meeting number 69.

The orders of the day, pursuant to Standing Order 81(5), are the supplementary estimates (C) 2012-2013, votes 1c, 5c, 20c, and 25c under Agriculture and Agri-food, referred to the committee on Monday, February 25, 2013. Also, pursuant to Standing Order 81(4), we have the main estimates 2013-2014, votes 1, 5, 10, 15, 20, 25, and 30 under Agriculture and Agri-food, referred to the committee on Monday, February 25.

We have with us today the Minister, Mr. Ritz.

I welcome you. I know that you have some people with you and I'll ask you to introduce them and make your presentation, and we'll move right to questions.

[Gerry Ritz, Conservative, Minister of Agriculture and Agri-Food and Minister for the Canadian Wheat Board]

Thank you, Mr. Chair. I appreciate the diligence of this committee. You're actually doing two jobs at once. I can see the headline now in the media, “SCAAF double dips.” We'll have a good story to tell coming out of this, I'm sure.

I have with me today my deputy minister, Suzanne Vinet; Mary Komarynsky, executive vice-president with the Canadian Food Inspection Agency; Pierre Corriveau, assistant deputy minister, corporate management branch at Agriculture and Agri-Food Canada; and Greg Meredith, assistant deputy minister, strategic policy branch at Agriculture Canada. On the other side, I have Peter Everson, vice-president, corporate management, Canadian Food Inspection Agency; and Paul Mayers, associate vice-president, policy and programs, CFIA.

It's always a pleasure to be at this table. I thank you for your kind invitation to be here with you today. This committee continues to do important work for the sector, including your current work on grains and oil seeds as part of larger study on the food supply chain here in Canada.

The 2013-2014 main estimates you have before you are the starting point for a transformative shift as a result of the new Growing Forward 2 agriculture policy framework that starts in just over a month from today. This new framework will invest more than $3 billion over the coming five years—that's $600 million a year in both federal and cost-shared initiatives. This is an increase of 50% in funding for cost-shared strategic initiative compared to the predecessor, Growing Forward 1.

The future prospects for the sector have created an opportunity to focus on proactive investments to generate growth and productivity across the sector from coast to coast to coast.

I would note that funding for these Growing Forward 2 cost-shared initiatives is expected to be presented to Parliament in supplementary estimates and is therefore not reflected in these main estimates. I will repeat: these estimates do not reflect the future moneys that will be invested in food safety under Growing Forward 2. To suggest that the figures you have before you represent any sort of decrease in food safety—and I know that's been done—would be playing loose with the facts, something that Canadians do not deserve. These figures will be bolstered in the supplementary estimates once federal, provincial, and territorial GF2 spending agreements are finalized in the coming days. As well, the estimates reflect the lowered draw on our demand-driven BRM programming, due to strong commodity prices.

We've had a busy agenda year since we last met. We passed amendments to the Canada Grain Act to drive the continuous modernization of Canada's $16 billion grain industry. We introduced Bill C-52 to strengthen our rail system by giving shippers the right to a service agreement with the railways that serve them. We have backstopped that process by renewing the mandate of the crops logistics working group to improve the performance of the supply chain for all crops across Canada.

We're also now more than halfway through the first crop year under marketing freedom. Already, marketing freedom is re-energizing the western grain industry. We're seeing good movement of wheat, durum, and barley, with higher volumes through the system and higher exports year-to-date. Farmers were able to take advantage of high prices selling off the combine while using risk management tools like pooling through the new reinvigorated CWB. It's called choice, it's called freedom, and it's working. Marketing freedom is only one part of our efforts to drive a prosperous market-oriented agricultural industry that will continue to help drive the Canadian economy.

Over the past year we have made some real and tangible progress, including expanding our access to the Japanese market for our high-quality beef products, a move that will double the annual value of this market, some $150 million; cutting red tape by eliminating duplication and extra cost; negotiating and putting in place a new federal-provincial-territorial framework with no gaps in federal programming; achieving a positive decision from the WTO on country of origin labelling; and forging ahead on new international opportunities for our Canadian producers and processors. Looking ahead, the outlook is bright, with a strong farm economy, growing global demand, and world-class producers here in Canada. They are, of course, one of our most valuable resources.

Yesterday, Agriculture Canada released the annual farm income forecast, along with the outlook for the medium term. I know, Mr. Chair, that we have enough copies to hand them out to everyone in both official languages and I'm happy to do that.

This news is positive for a number of key indicators of the health of the farm sector overall. Once again, the sector will report record high income levels for 2012 and can count on a continued positive outlook for 2013. For 2012 net cash income for the entire sector is expected to rise 14%. The average net operating income for Canadian farms is expected to rise 50% above the past five-year average. This is good news, Mr. Chair.

The average net worth is expected to grow by 8% to $1.8 million per farm. Over the next decade, strong global demand, particularly from major emerging economies, will underpin continued strong pricing and growth for our agricultural sector. Canadian grain and oilseed prices are expected to remain at higher than historical levels over the medium term, with modest growth for cattle and hog producers.

There is good news on the export side as well, Mr. Chair. The numbers are just in and show that fiscal 2012 was Canada's best export year on record for the agriculture and agrifood sector. The industry posted a 7.4% increase, to $47.7 billion, a new record, which is not bad with the global recession still on.

The bottom line is that it's a great time to be involved in Canadian agriculture. Our government will continue to work with industry to maintain this positive momentum so that farmers can stay ahead of emerging competitors and take full advantage of growing opportunities both here and abroad.

As a government, we must foster the right conditions that farmers require to succeed, and we'll do that by continuing to drive market development with a strong trade agenda that includes new bilateral and regional free trade agreements. We'll modernize the legislative tools that the sector requires to remain competitive by reforming the regulatory framework to strengthen the agricultural sector's capacity to take advantage of market-based opportunities here in Canada and abroad, and by focusing on transformative, proactive investments, especially innovation under the Growing Forward 2 framework, as I said, starting in just over a month.

During my more than five years as agriculture minister I've been across the country meeting face to face with producers, and the message I'm hearing loud and clear is we need to move beyond the status quo, and the time is now. We need to look ahead, not backward, toward positive, proactive initiatives that will move the industry forward.

It's this kind of proactive vision that lies behind Growing Forward 2, the new five-year framework for agriculture that came out of our FPT ministers meeting in Whitehorse in early September of last fall. Growing Forward 2 sets the right conditions for success. At its core is a 50% increase in cost-shared strategic investments in innovation, competitiveness, and market development. That's a $3-billion increase over the next five years, or $600 million a year in targeted, strategic investments to move the industry forward.

Growing Forward 2 marks a major shift in our focus toward realizing the high economic and productive potential for the Canadian agriculture and agrifood sector. GF2 kicks in on April 1, as I said, and three federal-only programs are AgriInnovation, AgriMarketing, and AgriCompetitiveness. As I said, those are federal-only programs.

AgriInnovation is now taking applications. It will focus on investments that will help the industry get new products and technologies off the boardroom tables and out into the marketplace. It will continue to support the science cluster model, which has done a great job of driving industry-led research across a number of sectors.

The new AgriMarketing program will help producers and processors gain and maintain access to markets, both at home and abroad. We'll do that by breaking down trade barriers, responding to consumer demands for food safety and traceability, showcasing on the world our top quality agricultural products here in Canada, and by showing our lighter environmental footprint.

Canadian agriculture has a tremendous story to tell, as I said, from that lighter environmental footprint to many new value-added products.

AgriMarketing will leverage that advantage and help the industry turn sales leads into closed deals. We'll also be strengthening the Market Access Secretariat. Mr. Chair, as you know and as the committee knows, they're basically our SWAT team. They're helping to take down trade barriers to technical, science-based solutions, and they've done an excellent job for us.

Trade is critical to the farming sector in Canada. A full 60% of pork, 70% of wheat, and 85% of canola and canola products are shipped beyond our borders every year. Trade brings jobs and growth to our economy. That's why our government continues to pursue the most aggressive trade agenda in Canadian history. During our time in office so far we've concluded negotiations for six free trade agreements with nine countries. We're pushing hard in other agreements, like CETA, where we continue to work toward a positive outcome. Negotiations are ongoing with more focused and frequent meetings to resolve outstanding and sensitive issues, including agricultural market access. Likewise, Canada's membership on the TPP will improve Canadian farmers and processors' access to critical emerging Asian markets.

Finally, the AgriCompetitiveness program will strengthen industry's capacity to adapt and be profitable in domestic and global markets. Through directed investments, we will work with the sector to adapt to rapidly changing and emerging global and domestic opportunities and issues they face, respond to market trends, enhance business and entrepreneurial capacity, and, of course, attract the next generation of farmers.

Of course, none of this is to say there aren't risks and challenges to farming. There always will be. Governments will continue to offer an extensive suite of business risk management programs to help farmers cope with severe market volatility and of course weather-related disasters.

Likewise, we continue to take concrete steps to ensure our food safety systems are effective, responsive, transparent, and accountable to the Canadians they serve. To that end, last fall the government passed new food safety legislation with the Safe Food for Canadians Act. The act provides the Canadian Food Inspection Agency with new and enhanced authorities to deliver effective food inspection services. It also strengthens the agency's enforcement and compliance capabilities. This new legislation is the foundation for a modernized inspection service. These estimates reflect a new investment of $11 million to modernize Canada's food safety inspection system.

So my message to this table today is that with our continued hard work, Canadian agriculture will continue to prosper and grow. Global demand, as you know, is growing for food, food that will come from highly progressive and productive farms across Canada. We are creating the conditions to unlock the potential of agriculture as a continuing economic driver by modernizing our grain industry through marketing freedom, Canadian Grain Commission reforms and, of course, rail service reforms; driving regulatory reform to spur innovation; and making proactive investments in innovation and market development under Growing Forward 2.

It's an exciting time to be involved in agriculture. Young people are once again looking seriously at a career in agriculture, either on or off the farm gate. There's much to do. Our government is committed, like you, to growing Canada's agriculture and food industry and helping it reach its full potential as an economic powerhouse in this great country.

Thank you, Mr. Chair, and as always, I look forward to the committee's questions.

[The Chair, Conservative, Merv Tweed]

Thank you, Minister.

Mr. Allen.

[Malcolm Allen, NDP, Welland, ON]

Thank you, Chair.

And thank you, Minister, for being with us. It's always a pleasure to see you, of course.

Let me start with the comments you made yesterday in response to a question, when you talked about the issue that these are only estimates. You suggested I should know that, which of course I do. Supplementary estimates during the year would continue to potentially feed additional funds to particular programs and, of course, specifically I'm talking about the food safety and biosecurity risk management program, which, according to these estimates, shows a 32% reduction.

Your response to me in question period yesterday was, don't worry about that, we have additional estimates coming and we'll add money to that.

Let me put that in the context of your colleague at the cabinet table, the President of the Treasury Board. If I could use a colloquial term, I believe he's the guy with the chequebook. He actually said that these estimates would be a harbinger of things to come.

Now I looked up the word “harbinger” because it's a pretty big word. So I looked it up and it's a sense of this is what will probably be coming down the road; you should be prepared for this. So this isn't about preparing for more, Minister. Your colleague at the cabinet table, the gentleman with the chequebook, is saying, “Be prepared for less, not more”.

So in light of your response to me yesterday in question period, when you told me to be prepared for more, your colleague is actually telling you to be prepared for less. So I guess I would ask you, Minister, are you right and Minister Clement wrong, or is Minister Clement right and he just hasn't told you yet that you're not going to get more?

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Nicely phrased.

[Malcolm Allen, NDP, Welland, ON]

I would hate to say you're wrong, Minister. I never ever say that, but he may not have told you that yet.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Nicely framed, Mr. Allen.

As usual, you missed the obvious. In this case, we're both right.

Mr. Clement is following through, as is Agriculture and Agri-Food Canada, as well as CFIA, in looking for efficiencies. We're doing that. We're not ashamed to say that we have found some good numbers and that we're moving forward in that vein. But when it comes to the biosecurity piece that you led off with, there will certainly be more investments to come in that particular relationship. What's missing in that point right now, as is in many of the columns that you look at on the main estimates, is the ongoing negotiations with the provinces. In the case of biosecurity, I can't forecast which provinces are going to sign on and to what extent, but I know from past experience and knowing my provincial and territorial colleagues that biosecurity is a cornerstone of a lot of what we're moving forward on.

So I look forward to finishing those bilaterals, as I said, in the coming days, and being able to put that number for you, probably in supplementary estimates (A).

[Malcolm Allen, NDP, Welland, ON]

As you know, of course I look forward to those additional moneys back in that additional program, since it's of critical importance based on what we lived through last fall, the largest meat recall in Canadian history. There's a more recent example in the last few weeks, where we've seen a number of cases of E. coli in ground beef. Of course, that leads me to my next question around the issue of traceability, a program that has been suggested by both levels of government, provincial and federal, as well as the industry, as one that we need to actually go forward on.

Now there were some commitments made that we would get things done by 2011. We're now headed into 2013. It would seem that we're not nearly as far along as we should be in this particular program. I raise that point not in a context of our actually being affected by the outbreak in the EU, where we have seen meatballs with horsemeat in them. Let me be unequivocal: that is not here.

To be fair, Minister, it's not here in this country at all. I simply reference that in the sense that it's not an unhealthy thing, necessarily; you're just getting the wrong product. We need traceability when we do things in this country internally for our own market and externally for those with whom we're trading. As you pointed out—and I agree with you by the way—we export a great amount of product externally. Traceability becomes an intrinsic piece of this. It seems to me we've dropped the ball a certain degree. We started well. It seems as if we've taken our eye off that goal line.

Perhaps you can help me understand and point me in a direction where we can see some funding to get back on track with that sense of traceability. We're now seeing in a global sense, as you articulated, that the food supply system is getting more global every week. That being the case, it seems to me this ought to be near the top of our agenda when it comes to the issue of product. It's not necessarily only just safety; it is about consumers knowing that when they buy a product, they know what it is.

Traceability actually does two things in my view. It's a safety aspect, absolutely, unequivocally. The other piece is, I know what I get when I look at the label and it says this is what it is, unlike our colleagues in Europe who we're trying to actually have a trade deal with. They're buying meatballs and finding out they're not what they thought they were. When IKEA is selling you horsemeat meatballs, it's a bit difficult, it seems now. That's their issue. Let them sort it out, but let's not get there.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

The one thing I agree with what you're saying there, Mr. Allen, is that this is of critical importance. Then I'm puzzled by the fact that your party constantly votes against funding for these types of issues. I know that you rail against an omnibus budget bill, and it's your right to do that, but when we get into the supplemental estimates, they're very specific. I'd be hopeful that you'd be able to support those when we bring that forward on the biosecurity piece because traceability is, of course, a very large part of that.

We take traceability very seriously, as do our provincial counterparts and the industry as a whole. We're well on our way. For a number of years, we were starting to slide. We were getting behind the Americans and the Australians when it comes to traceability. I'm happy to tell you that's no longer the case.

We have the vast majority of our product now traced. We did analyze and assess during the XL recall that there was a gap between the wholesale and the retail side. There's great bar-coded traceability on the retail side. There's great biosecurity from the farm gate right up through to when it goes into that slaughter capacity. There's a bit of a hole there that we need to put a lot more emphasis on. We'll be doing that. We'll be addressing that as we move forward. I'm looking forward to the report on the XL situation.

I agree with you that it is of critical importance. That's why we've pushed very hard and spent a significant amount of money to do that. There's a new property being developed in Guelph, Barcode of Life. The federal government has invested some $84 million in that procedure. That lets you then assess exactly what's in this and that. It's very hard to distinguish certain fish from each other. It's very hard, as you rightly point out, when it's hamburger on the shelf, to figure out what is in there.

With that particular procedure, they can identify every part and piece, almost right down to the molecule. There are some exciting things happening in Canada simply because we've embraced traceability. We've drawn in that type of investment, as I've said, such as Barcode of Life in Guelph.

I'm sure Mr. Valeriote is well informed on that issue.

[The Chair, Conservative, Merv Tweed]

Thank you.

Mr. Richards, go ahead.

[Blake Richards, Conservative, Wild Rose, AB]

Thanks, Mr. Chair.

Minister, thank you so much for being here.

I noticed that the main estimates for Agriculture Canada indicate that the three new Growing Forward 2 strategic initiative programs are ready to go. I know that you mentioned the three of them. These are the federal-only ones that you mentioned in your opening remarks: the AgriInnovation program, the AgriMarketing program, and the AgriCompetitiveness program. I know that you did talk about them a little bit in your opening remarks, but I noticed they've been allocated almost $100 million. That's great news. Many of us hear all the time how important investments in science, innovation, and market access are to the future of agriculture and the future of the agrifood industry. It's very great news.

I know that you did mention and give us a little bit of information about those three programs in your opening remarks, but I wonder if you just tell us in a bit more detail about these new Growing Forward 2 programs. Tell us a little bit about how they'll benefit farmers.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Sure. The one thing I remember railing against all the time when I sat on that side of the table was that the government of the day always had an idea that one size fits all. And of course we know that's not true, with the diversity and the size and scope of agriculture in Canada. So we have continually and consistently worked with our partners in the provinces and territories—it's a shared jurisdiction—to make sure they had the ability to address regional differences, regional requirements, and we've done that even more so in Growing Forward 2.

There are two significant thrusts in Growing Forward, under the umbrella. There's the flexibility component where the province will deliver certain programming in baskets, we say, and we allocate certain amounts of money to those baskets. And then of course, there's the business risk side, which again is still a full suite of programs, when things do go off the rails.

On the flexibility side, in Growing Forward 1 we had worked with 75% allocated funding into specific programming and 25% free balance for the provinces or territories to administer to their needs, and we paid our 60% of that. This time around, we've gone to 50% free balance so that they can assess what they need and how they will apply their moneys to benefit what's in their region.

I think that's very good. I think that's the right direction to be going. In most cases now, the province of record will administer the program itself. The federal government only administers now in Manitoba and the Atlantic provinces and, of course, a little bit up into the territories. But the other provinces have taken up the challenge to administer these programs, get that dollar closer to the need. I think that's much more effective.

There is a significant amount of re-investment in the new Growing Forward suite of programs, as I've said, some $3 billion of moneys over the next five years, $600 million a year to address the growing need for science and research, innovation, marketing, all the solid pillars that build the future of agriculture.

[Blake Richards, Conservative, Wild Rose, AB]

Thanks, Minister.

Let me ask you now about something else that I think is really good news. Just recently our government reached an agreement with Japan to expand market access for Canadian beef from animals under 30 months of age, and that's of course an improvement over the previous requirement, which was under 21 months of age. Obviously that's going to be great news for our beef producers, Minister, and I know that's largely due to the work you do, you and Minister Fast, our trade minister, in just continually and constantly working hard on behalf of producers to gain that market access for our world-class agricultural products. So I want to thank you for that.

I know that this expanded access to the lucrative Japanese beef market is largely due to the fruits of those efforts, so thank you for that.

Can you just maybe elaborate a bit more on the impact this will have and just how good this news is for our Canadian cattle producers? In other words, what does this mean in terms of dollars, and what will it do for our beef producers?

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Sure. I thank you for giving me the credit, and Minister Fast who has done an excellent job on this as well, but I would give a lot of the credit to our market access secretariat. This is the swat team on the ground, with people like Dr. Gary Little, a CFIA veterinarian who's based in Tokyo now and looks after the Japanese and Korean markets for us. He's done a tremendous job of making the scientific case to move away from 21-month to 30-month bone-in. So it's a significant advancement for our industry. Our industry pegs it as doubling the market value in Japan to some $150 million annually. That's a tremendous achievement by the swat team, by Gary Little, and of course by some of the people right here at this table who constantly pressure other governments to open their access to us and take advantage of that top-quality Canadian product we have.

So it's a great thing when those types of things happen. We've slowly and surely been rebuilding the livestock industry since BSE, putting value back into the carcass, opening up markets for a lot of the second- and third- and fourth-tier products that we don't use here at all. We have access now to the $300 million rendering market in China, which had gone missing. Those were things that were going into dumpsters here in Canada. That's adding a significant amount of value back into the beef industry.

[The Chair, Conservative, Merv Tweed]

Thank you.

I'm hearing a lot of feedback on the translation. I don't know if anybody else is experiencing that.

Mr. Valeriote.

[Frank Valeriote, Liberal, Guelph, ON]

Thank you, Mr. Chair.

Thank you, Minister Ritz, for appearing before us today, and I also want to thank you for acknowledging the value of the Barcode of Life in Guelph. We've worked hard at bringing it to the attention of the government, including a visit by this committee to it. We're grateful for the funding and, frankly, I hope the tone of my questions that follow won't deter your continued support for the barcode.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Be cautious.

[Frank Valeriote, Liberal, Guelph, ON]

Okay.

Minister, you arrived here asking for billions of dollars without tabling your department's report on plans and priorities, which of course is a comprehensive document that would give us a full picture of what's going on. I want to know if you'll commit to returning here once that's tabled and before this committee votes on full supply.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

I'll try to make myself available, Mr. Valeriote. It would depend on the time and the case. I don't want to hold up movement forward on the main estimates, and certainly I would not expect this committee to do that.

I'll check with the officials here as to where the P and P is at.

[A voice]

March 15.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

There we go. It's to be tabled on March 15.

[Frank Valeriote, Liberal, Guelph, ON]

Okay, so there's no reason why you couldn't come before us, time and your schedule permitting.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

If I can make it happen, I'm always happy to be here, Frank.

[Frank Valeriote, Liberal, Guelph, ON]

Thank you, Gerry.

It is frustrating, however, that you claim, in your presentation to us today, that it's irresponsible to call a $30-million reduction in food safety a cut. Yet it is clear that you've not only lowballed the resources needed for CFIA but have also not outlined what programs are in place to accommodate for food safety—not until, as you said, we see the supplementary (A)s.

Now, you mentioned the new food safety act, but an act alone doesn't assure food safety. Shouldn't taxpayers know what programs are in place and be aware of the resources available to them?

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Oh, absolutely, and we're not shy about doing that. What you are speaking to again is what Mr. Allen brought up, the biosecurity piece. I cannot put down on paper the numbers until I know exactly what each province is going to do. Then I can give you that value.

I fully expect it to be in that same area, if not higher. We all recognize the value of biosecurity, the traceability system and everything that goes along with producing safe food. As has been talked about, there are two roles for that. One is to have the traceability when you're searching out a situation, and the other is to assure our domestic consumers as well as international consumers that we're serious about our food safety. We'll continue to do that.

If you look at the underlying volume or value at CFIA, the number is actually up this year. So to point to one specific issue that involves other levels of government to sign on and say we're short isn't really factual. It may look like it to someone who's short-sighted, but if you take advantage of the fact that within the next days and so on we'll have those signatures on paper, that will give us the exact number that will be there.