Agriculture Committee on Nov. 7th, 2013

[The Chair, Conservative, Bev Shipley]

Thank you.

We'll now move on to Mr. Easter.

You have five minutes, please.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

We have to be careful not to exaggerate the benefits and underestimate the negatives of this deal. Let's try to stick to the facts. I know that's difficult for the parliamentary secretary to do.

My first question is to you, Ms. Kunin. While the government members like to claim otherwise—that they've been great traders and we've been doing so well on trade—the facts dictate otherwise. In the last 46 months, 34 of them have placed us in a merchandise trade deficit. Sometimes even with a deficit, our economy still grows and there are supply chain benefits that happen. I understand that.

We're going into these trade agreements. What do we have to do to ensure that we get ourselves in a trade surplus position rather than a trade deficit?

I'll make one other point. It's interesting that wherever Canada has signed trade deals, on a surplus-deficit basis we're not doing as well as we once did. We're doing something wrong as a country. I'm not talking against the trade agreement, but how do we get into a trade surplus position instead of a deficit?

[Dr. Roslyn Kunin]

Well, increasing markets of course will increase our exports and will help us. The other factor is the factor that I've mentioned before: being encouraged by the circumstances of the free trade agreement to become more productive, because it is productivity and offering good value for money that will help us improve our position, improve our exports, and become more competitive with imports.

So for productivity, having access to the market and encouraging more business investment will also provide the capital, the incentives, and the knowledge to help improve the productivity.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you. We'll take that.

In the grain industry and in particular in the beef industry.... I do hope the market opens up for Canadian beef, but let's look at the facts. The fact of the matter is that in terms of the quota we already have for beef in Europe, Canada has never filled it. We have never filled that market. Now we're going to expand that quota. So what's going to happen to ensure that we do fill that market? I think part of the problem is that we don't have a beef slaughter industry here that will ensure the product going to Europe is non-hormone-fed beef.

What I'm saying here is that I want to see this market open for beef, sure, but Canadian beef producers and the industry have not met the openings that are already available to us, so how are we going to do that?

[Franck Groeneweg]

I'm speaking on behalf of the Grain Growers of Canada, so I'm not a cattleman. I believe they will be testifying to this committee at some point.

I actually believe in “build it and it will come”; whenever there's a demand for something, an industry starts. We've seen it in our crushed canola plants. We increased our production of canola, and the investment came to build these crushing plants. I don't see why it wouldn't happen in the beef or the pork sector.

[Wayne Easter, Liberal, Malpeque, PE]

I hope you're right, but the reason I asked that question is that if you listen to the members from the government side, you'd think all we have to do is wave a wand and we're in the market. The reality is—and I lay that fact out—that we've never met the openings we already have in the beef industry in Europe. We've never filled that capacity.

I think a really important area that you mentioned in your remarks is how we get the Europeans to address the low tolerance issues. That's a serious one for us. I wonder where that's at. With the technology that's available today, we do produce great products in this country, but the Europeans can stop us when there's no low tolerance. When it's zero tolerance, there are certain products we can't get in. Where do you see us going in terms of gaining a low tolerance level with the European Union?

[The Chair, Conservative, Bev Shipley]

A quick answer, please.

[Janet Krayden]

Before Franck answers that question, Mr. Easter, I just have to jump in to report an exciting development. I was out in Calgary for a CETA announcement last week at a new beef processing plant called Harmony Beef. They will in fact be targeting the European market with some hormone-free beef.

This is in the process of opening. The deal was closed just a couple of weeks ago, and that announcement was made in Calgary a week ago. It's an exciting new development for the European market.

[The Chair, Conservative, Bev Shipley]

Thank you, Ms. Krayden.

We're out of time. I'm going to go to Mr. Norlock, please.

Mr. Norlock, you have five minutes.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Thank you very much, Mr. Chair.

Through you to the witnesses, thank you for being here today, whether it be virtually or physically.

I want to go back. I'm a great supporter of supply management. However, I understand that whenever your industry feels the slightest threat, you have to push back to ensure you keep the same ground. But we were talking solely on meat, and here's my story.

In the county of Northumberland, which is half of my riding, agriculture contributes about $150 million to the gross domestic product of the county. I think those numbers are low. I think they're much higher.

I was at the Northumberland cattle producers' AGM, and I noticed at that meeting that there were quite a few dairy farmers there. I went to a person I know who's a dairy farmer and asked what they were doing there, at the cattle producers' meeting, and he said, “We produce meat.” In particular, I would like to hone down on that, because cows dry up and they have to be sold for meat, but we also have, I believe, a very high-end product called veal. I wonder if any of the witnesses here can confirm that about 100% of the veal calves that are raised actually come from dairy farms. Would that be correct, or do you think it's correct?

[Franck Groeneweg]

Once again, I cannot answer for the dairy sector. I'm talking for grain producers, the Grain Growers of Canada.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Thank you very much.

That number comes from the Canadian federally inspected veal establishments. But for mature cows, I am told that out of an average carcass yield of 650 pounds or 300 kilograms, when you don't take the amount of red meat used for hamburger and all those other things, when we're talking about the high-end cuts, roughly around 100 pounds of that—tenderloins, strip loins, etc.—are sold to restaurants and food services.

In the county of Northumberland, as a federal government, we have just contributed about $200,000 toward an agricultural incubator that will deal with improving the packing and the food processing of all agricultural products, including meat. As you come from Europe, sir, would you not say that some of our top-end, high-quality beef, some of which comes from the dairy producers, would be a welcome addition to any table in Europe?

[Franck Groeneweg]

I wouldn't doubt it.

We also have to consider that all my dairy farmer neighbours are grain producers as well, so I guess there is a silver lining to this.

[The Chair, Conservative, Bev Shipley]

I don't know if Dr. Kunin has a comment, but I'd like to focus it back around.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

My next question was for her.

[The Chair, Conservative, Bev Shipley]

Oh, thank you.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

You will recall, Dr. Kunin, during some previous free trade debates people felt threatened by the Canadian wine industry that was just starting, and you will recall that the average young person in the upper Ottawa Valley, who may or may not have been of drinking age, drank wine such as Baby Duck.

Today, I would have to say that the wine industry close to my riding in Prince Edward County has some of the best wines in the world. Would you not say that they're good because of competition and because we challenged our grape growers, our vintners? They met the challenge. And would you not say that vintners are part of agriculture and we can do the same in other agricultural sectors?

[Dr. Roslyn Kunin]

I have to tell you, sir, that just before free trade with the United States and open wine markets came in, I was speaking to British Columbia wine producers, where we have our share of Baby Duck, and I said the British Columbia wine industry is not in trouble because of free trade but because they make bad wine. Once we had free trade, they started making good wine. I see us starting to make more excellent cheeses, meat products, and other agricultural products as a result of free trade with Europe.

[The Chair, Conservative, Bev Shipley]

You have ten seconds.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Thank you very much, Mr. Chair, for that 10 seconds.

[The Chair, Conservative, Bev Shipley]

I'd like to thank you, Mr. Norlock.

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

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

Thank you, Chair. Thanks to all of you for coming.

Ms. Kunin, I have a question for you to start with. You talked about New Zealand and the fact that they have basically rejected all government control or subsidies and they've opened themselves up to the free market. We know that New Zealand is just waiting to get in the door and ship their cheese and dairy products to Canada, and we know we've been able to resist that because of supply management.

According to the National Post, the weighted average retail price of milk in Canada is $1.45 per litre, and it's $1.65 per litre in New Zealand. So it doesn't appear that getting rid of their supply-managed system has made things better for the consumer. We know it has been a really hard hit on farmers. In your opinion, should we be retaining supply management and making no more concessions, or should we be getting rid of it as we continue in our negotiations with TPP, of which New Zealand is a part?

[Dr. Roslyn Kunin]

My view, as an economist, is that if we're concerned with the well-being of all Canadians, all Canadians who eat, drink milk, and so on, we should have more open markets and we shouldn't have supply management. From where I live, I see lines of people regularly going across the U.S. border, to buy cheaper dairy products and so on. I think that Canadian farmers would adjust if we had freer trade and less supply management. I think the government said they would help with adjustments both to this and I imagine anything further, though they're not talking about removing supply management yet.

But as an economist, I prefer freer markets to supply management. It helps certain producers at great cost to the majority of consumers.

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

So you don't mind the fact that American subsidized farmers are selling their milk at a relatively cheap price by the border, whereas in other parts of the United States the price is a lot more, and that brings our consumers to the United States. Is that kind of free trade, with one side being subsidized, okay with you?

[Dr. Roslyn Kunin]

I am in favour of free markets. I oppose any kind of subsidization. But I think the way to get to a better situation is through less subsidization, less supply management, rather than more.