Agriculture Committee on Dec. 10th, 2013

[LaVar Payne, Conservative, Medicine Hat, AB]

All right, thank you.

[The Chair, Conservative, Bev Shipley]

Thank you, Mr. Payne.

[LaVar Payne, Conservative, Medicine Hat, AB]

That could only have been two minutes.

[The Chair, Conservative, Bev Shipley]

You actually had over five. We did extend 10 minutes because we had three different ones instead of two.

I want to thank the witnesses for coming out.

We will be wrapping up the discussion on CETA at the end of today, and there will be a report developed over the Christmas break.

Thank you again for coming out.

We'll suspend for a couple of minutes until the new witnesses come in.

[The Chair, Conservative, Bev Shipley]

I'd like to call everybody back to their chairs, please, so we can get started with our second round of witnesses.

I want to take the opportunity to welcome two groups.

The first witness is Jane Proctor from the Canadian Produce Marketing Association. Jane is vice-president of policy and issue management.

Second, we have the Canadian Horticultural Council. Keith Kuhl is the president, and Anne Fowlie is executive vice-president. Welcome.

I will turn first to Ms. Proctor. You have eight minutes, I think it is.

[Jane Proctor, Vice-president, Policy and Issue Management, Canadian Produce Marketing Association]

Honourable members of the Standing Committee on Agriculture and Agri-Food, on behalf of the Canadian Produce Marketing Association, I would like to thank you for the opportunity to speak to you today on the topic of the Canada-European Union trade agreement.

The Canadian Produce Marketing Association, CPMA, is an 88-year-old not-for-profit association representing organizations involved in the sale of over $9 billion of fresh fruit and vegetables in Canada. We represent the entire produce supply chain from farm gate to dinner plate, including growers, shippers, packers, food retailers, food service operators, and all other businesses that engage in or support the produce sector. As an example, members include the PEI Potato Board, Ontario Greenhouse Vegetable Growers, Loblaw, Metro, Sysco, Gordon Food Service, and of course many others.

Within our international and Canadian membership of approximately 800 companies, CPMA represents the interests of over 456 Canadian companies, including over 150 Canadian growers, packers, and shippers. This diversified Canadian membership provides CPMA with a unique perspective of the issues and challenges facing our industry, domestically and internationally, on import and export market issues.

CPMA commends the Government of Canada in its efforts to reach a trade agreement with the EU, which will see some sectors within agriculture benefit from increased Canadian exports and reduced tariffs in the years ahead. CPMA believes in an open market philosophy that reduces irritants to trade and allows for economic prosperity and consumer choice.

On a review of CETA, we believe the agreement will provide parts of the fresh produce industry with an opportunity to expand their market penetration in the EU. The elimination of tariffs on mushrooms, raspberries, strawberries, blueberries, peas, potatoes, and cranberries is exciting for the Canadian fresh produce industry, and this could provide opportunities for Canadian farmers. Further work is now required to ensure the right variety and supply chain efficiencies are available to ship some of these highly perishable products overseas to very competitive marketplaces.

Furthermore, our members could also see benefits from increased trade from the EU into Canada. With a population as diverse as Canada's, our members work hard to provide the diverse selection of fresh fruit and vegetables Canadians look for on their grocers' shelves. This agreement could provide new opportunities in this area.

Our members are also always on the lookout for new and cheaper sources of industry technology and innovation that can be used to improve our industry here at home. We recognize that the agricultural sectors in Canada are interdependent. For example, some growers rely on cattle for their outputs to fertilize crops, while the beef industry relies on produce growers for cattle feed such as hay as part of vegetable grower crop rotation. We therefore hope to see collateral benefits from new opportunities for our partners in other agricultural sectors.

While we are generally supportive of the agreement and efforts to expand Canadian trading opportunities, as representatives of the entire produce supply chain, we note that not all of our members will be affected in the same way, with some potentially benefiting from expanded markets in the EU and new sources to bring to Canada, and others potentially hurt by new or expanded entrants into the Canadian market. For example, Canadian greenhouse vegetable growers could be severely impacted should the agreement affect anti-dumping tariffs currently applied to Dutch bell peppers, set for expiry review in 2015 by the Canadian International Trade Tribunal.

Similarly, other commodities could be impacted by removal or reduction of tariffs, but this can only be assessed as additional detail when the agreement is made available. We therefore look forward to learning more details on the agreement over the next two years, but also would welcome clarification on the tariff section in the document, “Technical Summary of Final Negotiated Outcomes”,on page 10, which states, “92.0% of agriculture tariff lines set at 0% at entry into force”. Greater detail on what agricultural tariff lines are included in the 92% will facilitate increased clarity for industry analysis of the impact.

Food safety is imperative in the produce industry in an area where it is essential that all are held to the same standards. It is also important that these measures be truly focused on providing safe food for consumers, and not be used as a cover for protectionism. It will be crucial that governments in both Canada and the EU strive for joint recognition of industry-led food safety programs, which have demonstrated their efficacy to ensure safe food in each country. We applaud efforts to establish a new sanitary and phytosanitary measures joint management committee, and to facilitate discussions and dispute settlement. Via this effort, government must ensure that policies and regulations are science-based.

Additionally, we concur with the statement in the agreement that recognizes the important role of standards, and are encouraged by the intent for Canada and EU standard-setting bodies to cooperate more closely on joint priorities.

We urge both governments to engage, where appropriate, industry specialists who can provide valuable input to these efforts. For example, for the produce sector, the International Federation for Produce Standards is a valuable resource and includes representation from multiple EU and Canadian produce organizations. Both of our organizations are part of that.

In closing, on initial review, and based on the level of detail currently available, we believe this agreement will be positive for industry overall, but there is the potential, as noted earlier, for some commodities to be negatively impacted.

Our sector is one that depends heavily on international trade and our members are continuously working to find opportunities to expand Canadian sales abroad while ensuring an affordable and diverse selection of fresh fruit and vegetables for Canadian consumers. We will continue to monitor developments as the government works toward the final agreement and look forward to investigating the potential opportunities it will bring.

Thank you.

[The Chair, Conservative, Bev Shipley]

Thank you, Ms. Proctor.

I will now go to Mr. Kuhl, for eight minutes, please.

[Keith Kuhl, President, Canadian Horticultural Council]

Mr. Chairman and committee members, thank you for the opportunity to appear before the committee to speak to the Canada and European Union comprehensive economic and trade agreement and aspects of trade negotiation in general, which are of importance to Canada's horticultural sector.

The Canadian Horticultural Council represents producers across Canada primarily involved in the production and packaging of more than 100 fruit and vegetable crops. Members include provincial and national horticultural commodity organizations, as well as allied and service organizations, provincial governments and individual producers. The CHC represents members on key issues such as crop protection, access to a consistent supply of farm labour, food safety and traceability, fair access to markets, research and innovation, and government programs to ensure a more innovative, profitable, and sustainable horticultural industry for future generations.

The CHC and its members are committed to ensuring that strong Canadian farms will continue to be able to provide safe, secure, and healthy food for families in Canada and around the world. With a primary production value of over $5 billion and after-packaging or processing value of $10 billion, horticulture is one of Canada's largest agricultural production sectors.

At present, Canada imports very little fresh fruit from the EU, while slightly above 16% of total fresh fruit exports are destined for EU member states, the majority being frozen blueberries.

Total Canadian vegetable exports and imports in 2012 amounted to $1.05 billion in exports and $2.28 billion in imports. EU member states currently represent less than 0.3% of Canadian fresh vegetable exports and roughly 1.1% of Canadian fresh vegetable imports.

While the U.S. is our most important trading partner, we welcome opportunities for growth in other markets. We fully support the intents and directions of the CETA agreement in principle. The CHC has long been committed to undertaking all necessary efforts to exempt Canadian horticultural products from tariffs or obtain duty-free entry into the European Economic Community. The EU is certainly a market that has potential to benefit Canadian horticultural producers once the agreement is implemented.

We believe that strong effort should be directed toward achieving a market-oriented horticultural industry. Government's role is fundamentally to facilitate this process, to be a catalyst, and CETA appears to go a long way in accomplishing just that.

CETA is a comprehensive agreement that will cover virtually all sectors and aspects of Canada-EU trade, including both measures that have a direct impact on trade and are felt at the border, such as tariffs and customs procedures, and those that are felt behind the border, such as product certification and technical standards.

While recognizing the inherent potential benefits of international trade agreements such as NAFTA and now CETA, our objective continues to be automatically triggered emergency mechanisms as a protection against occasional and massive surges of foreign surpluses at distressed prices. Therefore, the CHC fully supports CETA's intended competition provisions to ensure that the benefits of the agreement are not offset by anti-competitive business conduct.

CHC believes that the federal government should ensure greater attention is paid to the monitoring of imports, with quick and effective corrective action taken against violations through legitimate trade instruments and procedures. The CHC urges the federal government to establish a comprehensive system of monitoring prices of imported goods, subsidies, and export assistance to industry in foreign countries in order that fast and appropriate action may be taken against imports in violation of trade agreements such as CETA.

Of particular concern is the EU's use of non-tariff barriers, such as sanitary and phytosanitary measures and environmental and animal welfare standards. Also, while CETA includes provisions for dispute resolution mechanisms and the establishment of committees to resolve trade irritants, it does not otherwise address the biggest non-tariff barrier that Canadian producers face in Europe, that being domestic subsidy programs that create disparity in competitiveness.

Food safety is imperative to the produce industry and an area where it is essential that all are held to the same standards. It is also important that these measures be truly focused on providing safe food for consumers and not be used as a cover for protectionism. It will be crucial that governments of both Canada and the EU strive for joint recognition of industry-led food safety programs that have demonstrated their efficacy to ensure safe food in each country.

Canadian producers have taken food safety and traceability seriously. The successful recognition of CanadaGAP, the on-farm food safety program for Canadian-grown fruit and vegetables, by the Global Food Safety Initiative, GFSI, has been a success story for industry and government and a testament to what can be achieved through government and industry collaboration.

Major Canadian buyers require proof of implementation and certification to a GFSI-recognized program as a condition of sale. We maintain that imported products must be subject to this and scrutinized to the same requirements as domestic production. This must be a consideration for all future trade negotiations and agreements.

Under CETA, both Canada and the EU will identify joint cooperative activities and establish an annual high-level dialogue on regulatory matters. A new sanitary and phytosanitary measures joint management committee will provide a venue for experts to discuss issues before they become major trade problems.

The opportunity as we look ahead is to use free trade agreements like CETA to attain regulatory harmonization around maximum residue levels and sanitary and phytosanitary agreements. To facilitate market growth opportunities that CETA will create, governments on both sides must fully utilize the agreement to address the lack of regulatory harmonization, especially as new innovations in agriculture emerge in the context of new technology around detection.

CHC is aligned in thought with other production sectors and the global crop protection industry that has serious concerns about the European Union's regulatory framework for plant protection products, particularly the European hazard-based approach to pesticide registration. In our view, this has the potential to be a significant non-trade barrier for Canadian agriculture and agrifood products.

The approach taken by the European Union moves it away from a science-based approach. The European Union will impact not only trade in pesticides, current and future, but also in food, feed, and seed products using those pesticides. We believe this approach is not consistent with the World Trade Organization sanitary and phytosanitary agreement, to which the European Union is a signatory. Growers will potentially be prevented from using a large number of safe, effective pesticides that have been assessed by Health Canada.

The CHC is committed to working with the relevant government departments and agencies to develop and maintain markets, both domestic and international, to ensure the sustainability of these markets, to support the Canada brand, and to increase the overall consumption of fresh fruits and vegetables.

We congratulate the Government of Canada on its perseverance and success in concluding the Canada and European Union comprehensive economic trade agreement.

Thank you.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. Kuhl.

I want to welcome Ms. Morin to our committee.

We'll start our round of questions with Mr. Atamanenko, please, for five minutes.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Thank you very much.

Thanks to the witnesses for being here.

Mr. Kuhl, I gather from your statement that perhaps the greatest danger, if there are any dangers in this agreement, is for our exports going into Europe rather than imports coming here. I'll come back to that.

When we sign trade agreements, we obviously hope that it will be an advantage to us; otherwise we wouldn't sign agreements. I think it's documented that your sector perhaps was one of the hardest hit under the FTA and NAFTA, whereas prior to these agreements we had in-season tariffs that protected our fruit growers and our vegetable farmers.

For example, in B.C. we used to have a thousand onion producers. We have maybe half a dozen now. I was talking to probably one of the largest broccoli producers in Ontario, and he said he makes money when there's a drought in the United States. These things have happened. Even now we often see current dumping of American apples and cherries below the cost of production. Yet our farmers, those who have survived, seem to be doing okay.

This has been a negative aspect of those trade agreements. Is there any danger of subsidized fruit and vegetables, for example, coming into our market and flooding our current market? Or is this more of a danger that we have from the United States for our producers?

[Keith Kuhl]

I think it's clearly documented that European farmers are among the most highly subsidized farmers in the world. Our assumption is that when the Government of Canada enters into a trade agreement with countries in the European Union, they're taking these subsidies into consideration and trying to ensure that a level playing field is created.

Certainly, as we moved through the NAFTA, there were a lot of efforts put in by both the Canadian and the U.S. governments to ensure that any government support programs were seen as green programs and that they were NAFTA-friendly programs. My expectation is that as we move to implementation of the agreement between Canada and Europe, we have to use the same benchmarking. We have to go through the same process to ensure that the subsidies or the support programs that Canada has are offset and are similar to programs in place in Europe, and if they aren't, then that needs to be looked at.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

We have mechanisms now if there's a perceived subsidy or products are being dumped, but often by the time things get rolling, whether there's a favourable decision or not, the farmer has already been hit, because it takes months to do that. I'm just wondering, even though it may look good on paper, if that may happen. We'll have to see what happens there.

You mentioned Dutch bell peppers. Is that an example of how this may happen? Might it be difficult for those people producing peppers?

Was that you, Ms. Proctor, who mentioned that?

[Jane Proctor]

Yes. As you may know, the CITT, Canadian International Trade Tribunal, has a ruling now and certainly there was a great deal of concern within our greenhouse industry, which obviously led to that. That is something we are aware of. Obviously, greenhouse production is huge in the Netherlands and there's greenhouse production in Spain and other countries. We will want to keep a very close eye on that to make sure this doesn't remove the ability of Canadian greenhouses to thrive also.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Do I understand correctly that perhaps if any part of our industry is going to suffer, it may be the greenhouse industry because of competition from the Netherlands? We probably won't be getting broccoli from Europe, but is there a danger for greenhouse produce?

[Jane Proctor]

I'm going to also ask CHC to answer this, because obviously we share a lot of members. The greenhouse industry is part of their membership also. Certainly that is one particular part of our sector that we've collectively identified as being at risk for negative impacts given the tariff situation.

[The Chair, Conservative, Bev Shipley]

Thank you, Mr. Atamanenko.

I'm sorry.

[Jane Proctor]

I think Anne might want to say something.

[Anne Fowlie, Executive Vice-President, Canadian Horticultural Council]

I was just going to say that there's always an ebb and flow in the trade. You quite correctly pointed out mechanisms and timeliness, and I think those are the key elements in any of the agreements. Often the language is there around dispute resolution or other things, so it's to make sure that it works, that it works equitably, and that it is timely.

[The Chair, Conservative, Bev Shipley]

Thank you very much.

We'll go now to Mr. Zimmer, for five minutes, please.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

Thank you for appearing before the committee today to talk about CETA.

I definitely heard some of your concerns, Keith, with regard to a cloaking protectionism within that agreement. Obviously, we'll be concerned about your comments and we'll take those forward.

We know, too, that there are significant differences between the ways we produce and the ways they produce. We talked to the beef producers who are going to have to provide the European market with hormone-free animals, etc. They are willing to take it on and take it to their members, and their members are going to meet the task at hand and compete.

I just wanted to know from your perspective, in a positive way I guess, whether in terms of production you think your membership is ready. I'll ask Jane that as well. We see these increases in production that we think are going to happen. I know there are still some unknowns, but what's the feeling on the ground for the CETA? Are they excited about the agreement, or where are they on that?

[Keith Kuhl]

When I talk to the average producer out there, they probably don't get as involved as we do in where government is on trade issues.

In real life, I'm a potato farmer from Manitoba. Many of us have already lived through the NAFTA, and when NAFTA came in, there was a lot of concern and a lot of fear.

The farmers in Canada have demonstrated on an ongoing basis that they're a very resilient bunch. We adapt and adopt on an ongoing basis to ensure that we maintain good profitability. I'm looking forward to opportunities in the European market. We already work with many companies in Europe.

Yesterday, I was at an announcement where Minister Ritz said we were going to finally move up on plant breeders' rights to meet UPOV '91. That's a welcome announcement on our part. We've been waiting for this.

We work with potato breeding companies from many different parts of the world in order to bring the best varieties and provide the best product to our consumers. We're looking forward to continuing the relationship, and hopefully now moving product back to our European counterparts.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

Right.

Jane.

[Jane Proctor]

Keith is on the ground. His feet are on the ground, so he certainly has the pulse of this.

Before coming here, we reached out to our membership and talked to some of them, and I think in general the feeling is very positive. They're looking forward to the potential for expanded markets.

As I said, the one caveat is that the greenhouse industry is going to be watching this very closely, and I think hoping for the best.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

In terms of quantifying the expectation, we expect things to increase. I asked whether your membership was ready for that projected increase.

What are your projected increases in production, and what kind of timeline do you expect? Do you have enough time to ramp up to that production level? Are your members ready to ramp up the production level to meet that demand? Do you see a time period? Is it going to be a couple of years? Is one year all you need to ramp up?

Do you have answers to these kinds of questions?

[Keith Kuhl]

Today's producer will first of all analyze the potential profitability of the trade, but if our producers see potential to make additional profits by expanding their operations, they will do that very quickly. Most of our producers have the capital resilience to ramp up that production. Of course, ramping up production in the fruit and vegetable sector is extremely expensive; you're talking a much higher cost than that in the grains and oilseeds sector, but our farmers will certainly react and be ready for that.