Agriculture Committee on Oct. 7th, 2014

[The Chair, Conservative, Bev Shipley]

I call the meeting to order. I welcome everyone back to the agriculture committee.

We're going to start into our discussions on the agricultural growth act, Bill C-18, and as most of you know, it is a bill that we are going to amend, an act to amend certain acts relating to agriculture and agrifood.

We are a little late getting started. We have Minister Ritz with us today for the first hour. Then we'll follow through with the witnesses later, in terms of the Canadian Food Inspection Agency and also the Department of Agriculture and Agri-Food, along with the Department of Justice, in the second hour.

I welcome Minister Ritz to our committee. I also welcome with the minister, Mr. Rosser Lloyd, director general of the business risk management programs directorate, programs branch. I welcome back William Anderson, executive director of the plant health and biosecurity directorate.

Minister, we would ask that you open with your statement and then we'll go into rounds of questions from the committee members.

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

Mr. Chair, I'm pleased to be here today, and I'm equally pleased that Bill C-18, the proposed agricultural growth act, has come before this committee for study. I appreciate the opportunity to speak to this bill, because I firmly believe in all that it is striving to achieve.

This proposed legislation will move our government's strong and proactive agricultural agenda forward, and I'm sure the witnesses will underscore that. It's consistent with the government's priorities of growing the economy and creating jobs for Canadians. We must continue to be proactive about securing the future for Canadian agriculture.

Right now our agrifood sector is the leading manufacturing employer in the country, and our exports have helped put Canada on the map as a major trading nation. Bill C-18 will help Canada continue to be a front-runner. With the agricultural growth act, we are modernizing Canadian legislation on a foundation of science and technology, innovation, and of course, international standards.

Since the introduction of Bill C-18, my officials and I have had an opportunity to talk with many Canadians about the provisions contained in this bill. I've heard a lot of support for the bill from across all the sectors, whether they are farmers, livestock producers, or plant industry stakeholders. I've also heard some good suggestions about providing more clarity, making the bill's language more useful, and as you alluded to, Mr. Chair, we will be passing some amendments to that end. I'd like to highlight key areas where the government will be proposing those amendments to make a stronger piece of legislation even better.

One area where there has been a lot of discussion is related to the changes to the Plant Breeders' Rights Act and their relationship to the International Union for the Protection of New Varieties of Plants 91, or UPOV 91, as it's known, and especially a farmer's privilege. UPOV 91 provides the current international standard for plant breeders' rights.

Canada's legislation at present, under UPOV 78, does not include the current UPOV 91 standard of farmer's privilege, but conforms to the outdated convention of 1978. After 22 years of discussion, Bill C-18 will amend the Plant Breeders' Rights Act and bring Canada's legislation up to that date. The farmer's right to save seed for future planting is protected and includes storage and/or cleaning of the seed. This is why it is important to update to UPOV 91 standards. A farmer does not need to seek permission from the rights holder to store farm-saved seed for replanting in future years. Let me repeat that: a farmer does not need to seek permission. Recognizing this fact, our government has heard from stakeholders that the language could be improved to make it absolutely clear that storage of seed by the farmer is included in farmer's privilege. Our government will be bringing forward an amendment in that vein.

Mr. Chair, more than 70 countries, including Canada, rely on UPOV to fulfill their obligation to protect plant varieties under the World Trade Organization. The updates we are proposing in Bill C-18 are already encouraging investment in plant breeding in Canada and will give farmers access to more varieties of seed developed in this country or abroad. They would also better align our regulatory regime with those of many of our key trading partners, such as Australia, the European Union, Japan, South Korea, and of course the United States.

As I said earlier, a wide range of industry sectors have expressed support for the plant breeders' rights provisions in Bill C-18. In fact, every relevant farm group in the country has come out in support of Bill C-18. This includes the Canadian Federation of Agriculture, as well as Partners in Innovation, a broad coalition of farm organizations that represent the majority of farmers in Canada. Partners in Innovation expressed its support of Bill C-18 passing second reading and being referred to this committee for study.

Ron Bonnett, president of the Canadian Federation of Agriculture, said:

The legislation strikes a good balance between giving plant breeders the ability to receive a return on their investment and research efforts while preserving the ability of farmers to save, store and condition seed for their own use.... We are pleased that the bill is now at the point in the process where we can engage in public discussion at committee.

Mr. Chair, with the amendment we will be bringing forward, I trust we will find further support from Canadian farmers.

This brings me to another issue being addressed by Bill C-18. This bill includes important language concerning the administration of the Agriculture and Agri-Food Administrative Monetary Penalties Act, or AAAMPA. When it comes to inspection, the Canadian Food Inspection Agency works closely with Canada Border Services Agency to verify the safety of agricultural products at our border. An officer with the CBSA who determines there is a problem at the border can issue a notice of violation under the Agriculture and Agri-Food Administrative Monetary Penalties Act. Anyone who receives a notice of violation can request a review of the facts by a ministerial review or a review by the Canada Agricultural Review Tribunal. Currently, only the minister of agriculture of the day or officials of the Canadian Food Inspection Agency under this delegated authority can review these files.

Unfortunately right now the minister responsible for the Canada Border Services Agency, our front line, cannot review the facts concerning a notice of violation.

To increase efficiencies, it makes much more sense for the minister who is responsible for CBSA to have the authority to do a ministerial review on the notices of violation issued by his officers. Bill C-18 contains the language to address this issue, to provide ministerial review authority to the Minister of Public Safety and Emergency Preparedness.

Mr. Chair, a delegation to the minister, whose officials are making the decisions, will be much more efficient and will result in greater clarity in the review process.

We've also heard more from farmers and stakeholders across Canada about how we can improve the advance payments program. With this bill we have the opportunity to deliver real results for farmers. The advance payments program is a critical risk management tool to help bridge farmers through high cash flow periods, like planting and harvesting. Loans of up to $400,000 are secured against that production, with the first $100,000 being interest-free.

The agricultural growth act proposes a very smart measure to cut out a lot of the red tape from the application process for this advance payments program. These changes make a good program even better by reducing the administrative burden and cutting costs for participating producers. Once these changes are in place, producers will be able to obtain advances on all of their eligible commodities from a single administrator.

These changes will also open the door to multi-year agreements, saving time and reducing paperwork for farmers and the administrators of the programs. In other words, producers will be treated more like repeat customers. Farmers will have greater flexibility for repayments. In some cases they would not need to sell product to meet repayment requirements, such as when they decide to hold off on selling their product until market conditions are more favourable.

As well, we're expanding the security that can be used to obtain these advances, allowing producers more opportunity to take advantage of this important timely programming.

In addition, the agricultural growth act also proposes changes to the Farm Debt Mediation Act to streamline interaction between the advance payments program and the farm debt mediation service.

Mr. Chair, our goal here is to deliver better financial tools for Canada's food producers.

I urge the committee to give this bill careful consideration based on input you receive from the witnesses you will hear. For example, sector consultations and further analysis by the department have suggested possible improvements to the application of the administrator's percentage, and clarification around the limitation period for recovering defaulted advances.

Mr. Chair, Bill C-18 addresses many important areas, from seed to feed, to fertilizer, to animal health, to plant protection, to plant breeding, and to farm finance. Some of the acts we are amending date back to the 1950s. A lot has changed since then. Farmers must have a system that reflects today's realities and requirements.

Mr. Chair, I trust you can see why it's so important that we move forward now on the proposed agricultural growth act to help Canada's producers and our agricultural sector, and help them sooner rather than later. I believe strongly that this proposed legislation has its weather vane pointed in the right direction. The amendments we propose in this bill follow extensive consultations with producers and industry across Canada and we will continue to consult.

I also trust this committee will give the agricultural growth act the careful and due consideration it so rightly deserves and will move it forward in a timely manner to bring our existing legislations into the 21st century.

I look to your questions and comments.

[The Chair, Conservative, Bev Shipley]

Thank you, Minister.

Before we go on, I know this bill has attracted a lot of interest and I welcome those of our guests who have joined us today to hear the beginning of the proceedings.

Also, I want to say to our committee members that one of the advantages that we've had all summer has been visiting and talking to stakeholders, to be putting our thoughts forward. I want to remind you that we are going to be on some tight scheduling, so we do have five-minute rounds. I will be holding each of you as close to that five minutes as I can.

I want to welcome everyone, and the return of Alex Atamanenko.

Thank you, Alex, for sitting in on the committee today.

In the first round, Madame Brosseau, for five minutes, please.

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

First off, I would like to thank the minister for agreeing to stay for the full hour. We really appreciate your presentation and also the fact that you're here to respond to our questions.

This is an important bill for agriculture. It does touch on nine pieces of legislation. Certainly this government has a trend of having these omnibus bills. There are a lot of aspects of this bill that the official opposition agree with, and after consultation with industry too, we see the value in certain points of this legislation. But there's still a lot of concern.

You mentioned, Minister, in your statement that you're going to be amending this legislation when it comes to being able to store seed. Is that correct?

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

Well, it's not an amendment as such, Ms. Brosseau. It's more of a clarification so that farmers understand. In most cases lawyers aren't farmers and they don't get the agricultural jargon, so we just want to make absolutely clear that under UPOV 91, as opposed to the legislation we're under now, UPOV 78, there is now the right for a farmer to save seed. It can be stored. It can be cleaned. There is a lot of misinformation or mythical information out there that somehow that would not happen under UPOV 91. That's absolutely not true.

The amendment we're seeking is just to put it in words that are more farmer friendly and actually underscore and clarify the right of a farmer to save his seed.

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

Would the government be open to amendments?

We work really hard in committee and we have great witnesses, and sometimes I feel that we do propose some great things based on witness testimony, but they don't get through. I'm just hoping that when we do propose amendments, they will be considered by the government.

What will Bill C-18 do to the price farmers pay for seed? Could you elaborate on that?

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

First off, on amendments, of course, the committee will underscore the value of each amendment as it comes forward and make the decision on that. It won't be me.

Having said that, we put forward these comprehensive.... I don't call them omnibus; I call them comprehensive because they are all interrelated and actually build a stronger agricultural system.

When it comes down to the price farmers will pay, it's always amazing to me that the newest and best varieties of seed are the ones that sell out first every year. Farmers out there are very knowledgeable in what they require.

The best news, I guess, is that a lot of the new varieties take less input cost. They are bred to take less fertilizer, fewer pesticides, and fewer chemicals, which is in and of itself a cost-saving measure for the farmer. Certainly the IP costs may go up on that seed, but then you're going to save in the long run by not having to put on the volumes of fertilizer, chemicals, and pesticides that may have been required for the old variety. So farmers will make that decision.

The changes we're providing here under UPOV 91 take into consideration only new varieties going forward. There is no retroactivity, so farmers still have access to all of the varieties that are out there as of today and can scope their business plan around that.

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

I want to take this opportunity to ask two quick questions.

First, some stakeholders have said that the bill was more focused on protecting the rights of large companies and corporations—mainly multinationals like Syngenta—instead of protecting farmers. I would like to hear your comments on that.

Second, there are no provisions in this bill to protect producers from being sued for accidental patent infringement—for instance, the wind blowing seeds on to neighbouring fields. Can you tell us what measures should be included in the bill to protect farmers who may be negatively affected?

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

I would disagree with your characterization that only multinationals and transnationals will take advantage of this. We have changed the game plan in Canada so that wheat and barley commissions across western Canada and throughout Ontario, Quebec, and the Maritimes now have the ability, with a check-off, to direct their own investments in research. I think that's a good thing to have.

We've also made significant investments in the organic sector so that they can start to develop their own varieties as well.

When it comes to this whole idea that there are wind-blown seeds and seeds spread by birds, this goes back to the Percy Schmeiser case. It was pretty hard for Mr. Schmeiser—and that's why he lost—to justify that 1,200 acres of canola were wind-blown or spread by birds. It just doesn't happen in that manner. Certainly there may be a rogue plant that shows up from time to time, but that is not a patent infringement, and no one has ever taken a farmer to court for a scattering of seeds throughout a 160-acre or a 300-acre field.

[The Chair, Conservative, Bev Shipley]

Thank you, Minister.

I'll now go to Mr. Lemieux for five minutes, please.

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

Thank you, Minister, for being here. I'm happy that this bill is finally in front of this committee.

I was listening to Madame Brosseau, but I don't feel that this is an omnibus bill at all. It has a few focused, well-aimed initiatives or thrusts. That it touches on a number of acts doesn't make it an omnibus bill just because, as I said, it focuses on four or five key areas.

I want to talk about one of those areas, which is plant breeders' rights. Plant breeders' rights is a very important aspect of the bill. When the agriculture committee travelled during the last Parliament, we did a study on research and development within the seed sector. The information we received was that developing a certain trait within a plant can take 10 to 12 years. That would not be uncommon. I believe the investment would be in the very high tens of millions of dollars, perhaps even over $100 million, depending on the nature of the trait, etc.

The bill talks about moving from UPOV 78 to UPOV 91. I wonder if you could highlight some of the advantages of moving from UPOV 78 to UPOV 91. Perhaps you could also elaborate on what the economic advantages would be to the farmers on the ground.

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

First and foremost, and I covered it in my opening statement and in answer to some of the questions from Ms. Brosseau, it's the ability for a farmer to save seed, which is not in UPOV 78, and it's now underscored in UPOV 91. There's that ability. You either pay the IP up front, as farmers are used to doing now with new varieties of canola, soy, corn, whatever it is. They now will have the ability to pay that IP at the end, as they sell the product. There would be a contract they would enter into with the plant breeder who says, “I'm going to save some seed, so I'm going to pay this royalty as I sell what I produce, as opposed to paying it up front.” That's in the contractual systems that will be developed case by case.

The biggest thing, I think, is that we'll have availability of new varieties. Since the change from the single desk of the Canadian Wheat Board, we've seen a lot more demand in our millers and bakers around the world, away from the hard red, which was all we would ever sell under the Wheat Board, to some different utility varieties that actually produce better, have more return per acre for Canadian farmers, and are still very millable.

One of the largest buyers in Great Britain was asking for changes and was starting to look at other places to buy, until the Wheat Board was changed. Now they're back. They're actually contracting acres in western Canada and doing a great job on these new varieties that we're now able to produce. We couldn't do that before. There's a huge change in that regard.

You're absolutely right. It takes years and tens of millions, if not hundreds of millions, of dollars to bring forward a new variety. There's a tremendous amount of work being done in that regard. We've actually seen significant investments in wheat and barley research in Canada that we've never seen before.

I was happy to attend the opening of a new Bayer CropScience experimental farm just out of Saskatoon. They'll be spending several hundred million dollars in order to put grain in the ground to see how it reacts, and working on new varietal research right there in Saskatoon. That's a tremendous opportunity for Canadian farmers to take advantage of these new varieties as well as to export these new varieties around the world.

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

In your travels as minister you have the opportunity to consult extensively with different parts of the agricultural sector. You mentioned Bayer CropScience. I want to ask about your interactions with actual plant breeders. Could you share with the committee some of what you've heard in terms of plant breeders not investing in Canada right now because we are under UPOV 78, or plant breeders restricting their investments in Canada, in other words, they're only doing limited investments in Canada, because of UPOV 78, as opposed to UPOV 91?

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

I've had numerous meetings with different organizations over the years as I worked on this committee when I was first elected and so on, and the message has always been very similar. There are only so many dollars invested around the world, Australia, Argentina, Brazil, the U.S., Europe, big growers of grain varieties. There are new varieties being developed for Africa so that they can start to get to some sort of food security and sustainability as well. There's growing demand for that.

I've had meetings in Germany during what they call International Green Week, in January. A number of ministers from Africa were simply demanding that the European Union stop withholding these new varieties of seed from them, because they know they need it. There's a growing demand across Europe, as well, in some of the lesser agricultural-based states, such as Portugal. They say they need access to the new varieties because they will grow on their lighter, rockier ground. There are those investments being made.

The Canadian representatives of all of those companies have always said we're out there competing against our own comrades, our own compatriots in the U.S., for investment, in Australia for investment, and so on. Still having the old jurisdiction under UPOV 78 was the first box they couldn't check, and that usually redirected those investments somewhere else immediately. This will change that. We are already seeing the benefits.

[The Chair, Conservative, Bev Shipley]

Thank you, Minister, and Mr. Lemieux.

Now we'll go to Mr. Eyking. You have five minutes, please.

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

Thank you, Minister, for coming.

I only have one round of five minutes, so what I'm going to do, Minister, if you don't mind, is I'm going to ask you three questions and then let you do your best to answer the three.

It's my understanding that last week Tom Vilsack, secretary of agriculture, called you up and stated that produce exporters, farmers who are selling in the United States are not going to have the protection they used to have for selling there. It has also been noted that a lot of these produce sellers down there, farmers.... Now we have to put a bond in place.

You mentioned in the House that it's under the Minister of Industry's portfolio. I have recently talked to Minister Moore about that, but this is a big, big hit for produce suppliers and growers across this country. Since the secretary of agriculture called you, I want to know what you told him and what you are going to do for the produce industry to help correct this big issue.

Recently, Mr. Trudeau and I were at the International Plowing Match and we met with all the agriculture leaders from Ontario. One of the biggest concerns they had was the business risk management, some of the tools that are in place. They stated that there's less from the federal part than there was before, so when things are going bad down on the farm, they say there's going to be less coming from the tools that you are presenting to them.

My last question is about the bill we have in front of us. I think you're right, Minister. It is an important bill. It's a bill that's needed for our industry, the food industry and agriculture especially. There has been a lot of work by your department on this, but as with a bill this big with so many components, there are always little glitches in it that need tweaking. There are two that come to my mind. One is dealing with the word “privilege”. That terminology, that it's a privilege to grow these seeds, is a real problem and it has already been talked about.

The second one is the limit on crop insurance, the cap at $400,000. Many of the commodity groups are out there saying that with the size of farms now and the amount of crops that they grow, the limit needs to be up to around $800,000.

I'm hoping that you're going to be willing.... If this committee comes forward with some of those changes, those tweaks, it would be really nice if we were unanimous and all parties agreed on this bill, because I think all parties agree that something needs to be changed.

I'm hoping you're open to that.

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

Let me start with the last question first because that's the shortest answer.

Yes, it's a very important bill and around the farm privilege, the legalities were not clear to farmers. We're going to underscore that with an amendment, as I've said.

Our discussions.... Since this didn't get to committee in the spring, we actually had the summer to talk with people. We've come forward with that and I think the parliamentary secretary will be introducing that amendment here.

On the raising...you're talking about the access to the $400,000 with the first $100,000 free. You said crop insurance, but it's not.

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

It's a loan, I think. Sorry. It's not crop insurance.

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

We've analysed that, the Grain Growers of Canada and other groups have talked about that all along. The problem is it would only be reflective of about 6% of farmers who would actually take advantage of a higher number than $400,000. Right now, we're capturing the vast majority of farms.

My concern, and I know it's your concern as well, is we want to see family ownership of these farms remain. We're not wanting to overstimulate size and scope, and since 94% to 95% of farmers take advantage of the program now in the scope that it's in, there hasn't been an appetite to move it further. We're hoping that the administrative changes and so on that are in here will actually ease some of that. Farms of that size and scope actually have other venues, lines of credit, and so on like that. That's the first question.

On the plowing match, BRM, there's always talk that this happened and that happened. At the same time it wasn't a zero-sum game. Yes, agri-stability was taken from 85% to 70% at the same time that crop insurance was enhanced. We were always told that agri-stability was not bankable, not predictable, and took too long to get the money, so we've moved a lot of the coverage into crop insurance. As you know, you do those assessments right away in June and July, and the money is forthcoming fairly quickly.

The trade-off was to enhance crop insurance so that unseeded acres, flooded acres—using that as an example from Manitoba and Saskatchewan this year—are now captured under crop insurance. You don't have to wait for agri-stability payments a year later, or agri-recovery which may or may not happen, depending on the province triggering it. It's not a zero-sum game.

The biggest argument in Ontario is that we as a federal government will not fund RMP. We have always been very clear on that. It is countervailable in the extreme, so we will never fund RMP.

On Tom Vilsack, yes, we have discussions every month or so. I harangue him pretty hard on country-of-origin labelling. He has decided in his wisdom—he told me this last May in Mexico when we met—that they were going to make some changes to PACA, covering only American exports, not anybody importing into the U.S. It's their program; it's at their discretion.

The good news is there hasn't been a lot of take-up on the PACA underwriting Canadian producers. It's about a $2 billion a year industry, the horticultural industry exporting into the U.S.

Over the past three years or five years, I can't remember, there has been only a $7-million draw on that which, when you look at it, a $7-billion package with $7-million drawn on it, it's a very minuscule percentage.

We have made some changes to our Bankruptcy and Insolvency Act. There's a report coming down from Industry Canada sometime in November, I understand, which may start to address some of these things. I'm not privy to that report yet and neither are you, I understand. We'll see when that happens.

We have put in place a single dispute mechanism which does bring them up higher in that protocol when it comes to a bankruptcy and insolvency situation.

We've made some changes. There are more in the offing. Right now, it's very unfortunate, as we work under the Regulatory Cooperation Council that bring more things together as an integrated North American industry under NAFTA—

[The Chair, Conservative, Bev Shipley]

Minister, we're going to have to keep it short.

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

Sure.

—that the U.S. keep throwing these things out there. It's very protectionist. I've told Tom that, and I will continue to.

[The Chair, Conservative, Bev Shipley]

Mr. Eyking, because you only get one round, you got extended time.

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

I wanted to give him his money's worth.

[The Chair, Conservative, Bev Shipley]

I'll now go to Mr. Dreeshen, for five minutes, please.

[Earl Dreeshen, Conservative, Red Deer, AB]

Minister, it's great to have you here to talk about a bill that is extremely important for agriculture and for Canada.

I think we know that the significant part of this bill is designed to help Canadian farmers benefit from the latest scientific research from all around the world. You mentioned that earlier in your presentation. In addition to improving and strengthening intellectual property rights for plant breeders and moving towards the UPOV 91, it also proposes provisions that directly address the subject of our illustrious chair's private member's motion M-460.

I'm wondering if you could tell us how Bill C-18 addresses the concerns of M-460 and how confirming the ability of the CFIA to look at the scientific data and improvements from around the world will mean more innovative products coming here to Canada.