Agriculture Committee on May 28th, 2014

[The Chair, Conservative, Bev Shipley]

I would like to call today's meeting to order.

Folks, we have with us the Minister of Agriculture and Agri-Food, the Honourable Gerry Ritz, along with department heads. We'll start this with Greg Meredith, Andrea Lyon, and Pierre Corriveau.

I want to thank each of you for coming out.

As you know, this is the discussion around the estimates. What I would like to do is just ask you, Minister, because I think we are in a pretty tight schedule in terms of timing, whether you have an opening statement or if in lieu of time you would prefer to go into questions. I don't know what the committee wishes to do.

Minister, are you open to either one?

[Gerry Ritz, Conservative, Minister of Agriculture and Agri-Food]

I'm fine with forgoing an opening statement and moving right to questions. I understand that we're under some time constraints.

[The Chair, Conservative, Bev Shipley]

Committee members, do you have a choice?

[Mark Eyking, Liberal, Sydney—Victoria, NS]

I'm open to going right to questions.

[The Chair, Conservative, Bev Shipley]

We will start with the NDP agriculture critic.

Madam Brosseau, please, you have five minutes.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Thank you, Chair.

I'd like to thank the minister and his team for their presence today at committee.

As you know, we've done a lot of work in dealing with the grain transportation crisis. I was wondering if you could update us on what is going on with Bill C-30 and the government's amended bill, and where money will be allocated. Because with the amendment that was accepted here at committee, we would just like to know where the money will come from when it comes to compensation for farmers.

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

That's a very pertinent question, and I'm happy to do that.

As you may know, the Senate passed Bill C-30 last night. As I understand it, royal assent will be put to that bill tomorrow at some point. When it comes to the regulatory package that goes along with that, as you know, the legislation is an umbrella that creates the ability to put regulations in place. We went that route because regulations are more flexible. They can be more timely and you can adapt and change them to what's needed on an ongoing basis, as opposed to coming back to the House all the time on legislative changes.

When it comes to any type of compensation for farmers, I guess rather than compensate farmers after the fact, which is what was done prior to this, this piece of legislation and the regulatory package that will be attached to it will actually see to it that farmers are not hurt to begin with. What this does is make sure that the railways deliver the product from where it's asked to be delivered from, and in a timely way, to whichever port facility the shipper wants it to go to. There's no more opportunity for storage of grains costs or demurrage costs along that chain going back to the farm gate. They are now stopped in the service level agreements between the shipper of record, whoever that may be, and the railway of record. That's the difference, in that it doesn't require compensation to farmers because they are now covered proactively under those service level agreements.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

So there is no retroactive money or anything to help people that were—

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

Well, there's the possibility of that through our business risk suite of programs. Agri-stability will certainly pick up if there is someone who is caught in a situation where their average fluctuates. That will trigger a payment under agri-stability.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

I would like to move on to the hog industry. Under grants, there is money going to the initiative to control the diseases in the hog industry. It's $2 million. Can you give us an update on this program? Could you tell us if this program would be adapted to help farmers dealing with the PED virus?

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

There's a potential to adapt to anything along the PED virus. Most of the funding that was required and the success that was generated in Canada's situation under PED is a little different from the U.S. because we do have a coast-to-coast biosecurity and traceability system, which of course the U.S. does not have. We have been very fortunate in that our outbreak has stopped. There was not a new catch—touch wood—in the month of May, so we're feeling quite good about our biosecurity system and our traceability system here in the country.

For the pork animal diseases and so on like that, it's in fact administered by the Pork Council and the derivative of that as opposed to being directed by us. There will be another cluster announcement for the pork sector coming shortly. It was to happen, but now with the votes and everything like that, it won't happen tomorrow as was scheduled.

That said, they will administer where they see that money will be needed. When it comes to PED, I think there may be some applications under the Growing Forward 2 envelope. Province by province, they have talked about a new type of truck wash at the border, something with more pressure, more heat, chemical, and so on, that's not there now. The federal government will not own the bricks and mortar and will not run the truck washes, but we certainly have no problem putting in our 60¢ dollars towards the capacity to have that hotter chemical bath-and-dry that trucks will require.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

I'd like to move on to agri-recovery and the AG report. Agri-recovery was specifically designed to help provide quick, targeted assistance to producers who experience a disaster. The recent Auditor General's report found that one third of cases take more than a year to resolve. Is there a plan to address this problem?

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

Well, there always is. I mean, we want them expedited as quickly as we can.

The Auditor General was under the false impression that this was a federal-only program. That's not true. It's actually triggered by the province of record. We don't get involved in triggering what is a disaster and what is not. The province of record does that. It takes some time to work that system through. They go out and do their assessment, and if they decide to move forward, they send us copies of that work. We then run our oversight on that as well. Once that happens, it's fairly quick in getting that money out.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Madam Brosseau.

Now we'll go to Mr. Lemieux for five minutes, please.

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

Thanks very much, Chair.

Thank you, Minister, for being here.

Let me start with a question about the main estimates. I notice that there are really two things going on. There's a reduction in spending and then there's a focus of funding on other things. I'll get to that in just a moment.

I would like to ask a question about table 1. I'm noticing in the 2014-15 main estimates that you report an operating budget of $545 million. In last year's main estimates, it was $595 million in operational expenses. That's a savings of about $50 million to the taxpayer.

I'm wondering if you could just elaborate for the committee on why that was important.

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

A number of things happen under the new Growing Forward suite of programming. Some of it is that certain provinces now are administering, so it's not a federal government cost to administer anymore. The federal government at this point administers programming in Manitoba and the Atlantic region. All the other provinces do it on their own. There are some administrative savings there because we're not duplicating.

There are also some savings in our travel and hospitality costs, some 60% over other years. We're actually doing more travel but it's costing us less. We're finding efficiencies there. Our entourage has shrunk. We schlep our own bags. We look after our own hotels. We do a lot of things like that, as most Canadians would expect us to.

We identified a lot of savings like that in back offices and so on. No program was affected in a negative way. I know there are always stories out there that we've somehow slashed food safety and so on. None of that's true. The programs are still very robust. There are actually more inspectors on the front line than there ever were. I'm going a little beyond your question, but that's just to some of the other things that have come up.

There were people who were hired to put in place Growing Forward 2. They have now been terminated. They were on short-term contracts to make that work happen under Mr. Meredith's shop. So there are some savings there as well.

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

Okay, what I see is that basically you tightened up spending to save taxpayers money. But what I also see in the estimates is a real focus on science and innovation: $520 million listed for science and innovation, $72 million for industry capacity, and $211 million for market access initiatives. That's almost three-quarters of a billion dollars that will try to make our farm gate more competitive.

I would like to talk about science and innovation. I know that under your leadership, the department has moved to a model that integrates industry with university researchers, with government researchers, particularly through the science cluster process. Certainly the feedback that we received here on committee, when we were studying Growing Forward 2, was that this was extremely well received by industry. I think they liked the matching funds idea as well.

But I'd like to get it from your perspective, Minister. You've been out on the ground as well. I'd like to know what feedback you're getting from stakeholders, be they farmers or their representative organizations, on, first of all, our investments in science and innovation, and secondly, with the science cluster format that we've put in place.

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

The main positive response out of the science cluster format is that it's results-based. We sit down with industry, academia, our provincial partners in agriculture, and then industry that will deliver the goods, as it were, when it's new varieties, new chemicals, new fertilizers, and things like that. We work with all of them to come up with the result that the farm industry has said they require. In that regard, they're getting what they're asking for in a much more timely way.

I know there's some concern that somehow Ag Canada has lost its long-term vision. Nothing could be further from the truth. We just do it in five-year bite-sized chunks now. With Andrea Lyon and the other ADMs and so on, we sit around and talk about programs 10, 15, and 20 years out. The discussions are already under way for GF3 and those types of things.

So certainly the long-term vision is out there. Doing it in five-year chunks means you actually get a result, because you have a timeline that says within this Growing Forward 2, in that five-year window, we'll have these results. It's giving us much more proactivity in that regard.

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

Obviously you've focused resources into science and innovation, both monetary and through this science cluster format. Can you perhaps explain to the committee how you see this benefiting agriculture, and most importantly benefiting farmers who are working on their farms?

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

What farmers have been shifting away from...and we saw this after the change to the single desk of the Wheat Board and some of those prescriptive regulatory regimes that were in place, and the gaps and overlaps with the provinces as we worked with our federal-provincial-territorial partnerships. Farmers of today are asking for two things. They are asking for innovation and for help with efficiencies in applying that innovation, and then marketing. They can grow it. They can do it. They can provide it. Now we have to have markets for it to go to and good transportation lines in order to get it there in a timely way.

That's what the focus of GF2 has been shifted to—the innovation side, science and research. More money than ever before is going into those envelopes as well as into enhanced marketing capacities. We now have agricultural people, CFIA scientists, doctors, and veterinarians embedded in our embassies around the world in the hot markets and the growing markets so that on a day-to-day basis we have the information we need to connect producers in Canada, processors in Canada, with that market.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. Lemieux.

Mr. Eyking, you have five minutes, please.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Thank you, Minister, for coming today. I have four questions, so I think I'll just give you the four questions. Perhaps you can jot them down and then do your best to answer them in my five minutes.

My first question deals with CFIA's inspections. I'm hearing, especially in the Maritimes, about CFIA inspection services on seed grain. I have Charles Murphy, who I speak to, a farmer from P.E.I. He states that on the grain fields that he grew last year, the CFIA inspected them for him at a cost of $478. The new cost to inspect these fields is going to be $6,393. That's over 13 times the original cost. He figures he's not going to be able to grow seed grain.

First, are you aware of this? Are you aware of the downloading of these costs and how it will put these farmers in jeopardy?

My second question follows up on today in the House about the chicken farmers. You're well aware of all the spent fowl that's coming in, about the more spent fowl that's really produced in the United States coming in. You kind of stated in the House that you were taking action. Can you tell me what action you're taking to keep this from happening?

My third question follows up on the pork virus that hit us this winter. There were some news releases stating that feed supplements that were coming in from the United States had pork products in them that could have caused some of the contamination. What are your comments on that? Is the CFIA checking these supplements coming in, that there are no pig products in them?

My last question is dealing with the European trade deal. As you're well aware, our milk production is going to be cut—pretty well the size of Manitoba's production, or Nova Scotia's; it's quite a big cut. We're in favour of the trade deal, but when this happened, the Prime Minister stated that there was going to be a package to help the dairy farmers of Canada. Can you tell us where the package is and what will be in that package?

I'll leave you with that, Minister, and you can do your best.

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

I know there are some changes in the inspection of seed grain and the way that's done, actually moving to a private sector model that is available 24-7 as opposed to CFIA. If CFIA does it, they're going on a cost-recovery basis. I've not seen any kinds of numbers that show 15 times more, as you're recording. I'd be happy to talk to your farmer—through you, if you desire, Mark—to make sure he's not being sold a bill of goods. There are some changes, but nothing that I've seen shows it at that level. I'll certainly check that out for you.

On spent fowl, we're working with Canadian Border Services with regard to the line item that pertains to spent fowl. There is one that says it's fine to bring it in. What we're finding, though, is that spent fowl is coming in, as you rightly point out, in a volume that says it's a lot more than just chicken nuggets, soups, and so on, where it was originally destined to go. It's starting to show up as full-fillet cuts on store shelves, which is not acceptable and not part of what's happening. The package is being put together. We're working with the Chicken Farmers of Canada on how we get on top of that and start to get it back to the flow of where it's supposed to be going.

It's very similar to the pizza kits issue, the cheese compositional standards, as I outlined today in question period, the other issues that we've dealt with and have resolved on behalf of the SM groups. We'll do the same thing on spent fowl. We're in the midst of that assessment right now, working with the Chicken Farmers of Canada and so on.

On PED, when it first was discovered in Canada, CFIA undertook.... I mean, it's under provincial jurisdiction. It's not a reportable disease, so it doesn't go to the federal level. But we assigned CFIA to help their provincial colleagues as much as they could. They undertook work with the provinces to oversee how our biosecurity system was working. They then also started to look for causes, how it was transmitted. The U.S. had done some work on feed inputs and had not come up with any kind of conclusive results to say it was part of it or it wasn't part of it. There was really no rationale in that regard.

CFIA undertook a number of studies and did testing over the ensuing weeks and months, working with a product coming out of the U.S.—blood plasma, a protein enhancement. It is pork blood dehydrated down that is used as a pig starter, for piglets. They thought, since it's affecting the piglets themselves, maybe that was part of the problem. We know it's transferred through the feces. We know that grown hogs will suffer a couple of days with flu-like symptoms, but it doesn't dehydrate them to the point where it kills them, as it does the young pigs.

They did all this testing in the lab in Winnipeg. They found positive PED in the blood plasma, but it did not translate into the finished feed product. No one feeds raw blood plasma to the pigs. There's a process where it goes through another heat treatment and different things. I can get you that scientific rundown. In the final feed result, they never did find a positive. Part of the work that's done in creating the product out of the blood plasma said...you know, it was negated.

We've shared those test results with the U.S. Now that the European Union, led by France, has put a ban on any product...mostly genetics and so on, on Canadian pork, we've shared that science with them as well.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Minister. Maybe the other question will come up later.

We'll now go to Mr. Dreeshen for five minutes.

[Earl Dreeshen, Conservative, Red Deer, AB]

Thank you very much, Mr. Chair.

Thank you, Minister, for being here, and department officials.

One of the things I want to talk about has to do with transition costs with regard to the Canadian Wheat Board. Looking at table 2, we see that the Canadian Wheat Board transition costs program is at $30 million. Of course, what we had done, or what had taken place, was front-end loading as far as the costs were concerned and then reducing the expenditures. Since then, of course, we've also seen that the Canadian Wheat Board has been purchasing physical assets, such as grain terminals and so on, throughout.

I'm just wondering if you can comment on some of the things you've seen and whether or not this is what was anticipated. As a farmer myself, thinking back to when my dad started farming, he had grain that was free and then was marketed into a program where he no longer owned it. Finally we were able to turn that around.

Perhaps you could talk a little bit about what you saw and where things are going, and then add something about these transitional costs.