Agriculture Committee on Nov. 7th, 2013

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

I've been here at this table since 2006, and pork producers and cattle producers have been coming to us saying they need help. They're not getting the subsidies they were promised.

We're probably going to be faced now with dairy farmers coming and saying the government promised them this money, but they're not sure what it is, and asking when they are going to get it and what's going to happen. On the other hand, now we don't even need to subsidize them because they regulate their own market.

Is there a possibility that might arise, do you think?

[Wally Smith]

Just about anything is possible. I'm quite confident. I believe the government is going to be good on its word in terms of.... Again, I would expect that you, as a member in the House, would hold the government accountable, making sure it delivers on the commitment to mitigating the injury the dairy sector is facing.

We can speculate all we want, but we are proud Canadian dairy farmers who derive our income from the marketplace without any government subsidy, period. We want to keep it that way.

[The Chair, Conservative, Bev Shipley]

Thank you, Mr. Atamanenko and Mr. Smith.

We're out of time.

We're going to now move to the second sector. We'll take a couple of minutes. We've got to fire up the screens. We have a video conference, and we'll be back in two minutes.

[The Chair, Conservative, Bev Shipley]

Could I have your attention, please? Would the next group of witnesses come forward, please, and the rest of the people find a seat?

Ms. Kunin, can you hear us?

[Dr. Roslyn Kunin, As an Individual]

Yes, indeed. Can you hear me?

[The Chair, Conservative, Bev Shipley]

It's as if you were right next door, even though you're in B.C. Welcome.

[Dr. Roslyn Kunin]

Good. Thank you for inviting me.

[The Chair, Conservative, Bev Shipley]

Committee, we're about to start on the second round of witnesses. We have witnesses with us from the Grain Growers of Canada. Franck Groeneweg is the director and Janet Krayden is one of its analysts.

Also we have the pleasure of a video conference from Vancouver, British Columbia. We have, as an individual, Roslyn Kunin.

Welcome, all of you.

I'm not sure who is going to.... Will it be Franck or Janet?

[Franck Groeneweg, Director, Grain Growers of Canada]

It will be me.

[The Chair, Conservative, Bev Shipley]

Mr. Groeneweg, would you start, please? You have 10 minutes.

[Franck Groeneweg]

Thank you, Mr. Chair. Good afternoon. Thank you for inviting Grain Growers to discuss the Canada-Europe trade agreement.

Thank you for inviting Grain Growers of Canada to discuss the Canada-EU comprehensive economic and trade agreement.

My name is Franck Groeneweg. I'm a Grain Growers of Canada director and the chair of our trade and marketing committee.

I farm 7,500 acres in Edgeley, Saskatchewan, which is about a half hour northeast of Regina, where I grow canola, wheat, flax, peas, faba beans, and hemp. On our farm, we farm sustainably. We're responsible stewards wanting to leave the land and environment in better shape for the next generation, which is my four children.

The Canada-Europe trade deal is the biggest and the most important trade agreement in Canada's history.

The Grain Growers represent over 50,000 successful grain farmers from British Columbia to Atlantic Canada. We have supported the comprehensive economic and trade agreement negotiations—CETA—from the beginning.

We believe that new markets for our crops are absolutely essential to Canadian grain farmers, because we export 85% of our canola, 70% of our wheat, and 65% of our malt barley. In 2011 Canada's top five agrifood exports to Europe were soybeans, canola oil, canola, durum wheat, and non-durum wheat. The Canada-Europe trade deal is opening up a new frontier for Canadian grain farmers, as this trade deal will give us greater access to a market of 500 million consumers with a GDP of over $17 trillion.

We've just harvested the largest canola crop on record. This shows the importance of export markets to canola farmers and rural communities. Canadian canola oil is a preferred feedstock for Europe's biodiesel industry, and this deal will allow for even greater shipments. In the canola sector, we expect canola oil exports to Europe to increase by $90 million annually.

Europe is also our largest importer of Canadian soybeans, with more than a million tonnes shipped annually.

For wheat, on day one, the quota for low- and medium-quality common wheat will increase from 38,000 tonnes to 100,000 tones. This alone will be worth about $20 million. Down the road, we understand that the deal also calls for the complete elimination of European tariffs on Canadian wheat and wheat product exports within a seven-year timeframe. Currently, a tariff is in place on exports of low-protein wheat to Europe. Eliminating this tariff and the risk of a tariff on high-protein wheat will give our exporters much greater confidence in establishing long-term supply relationships with our European customers.

I have just a few statistics. For wheat, depending on quality and class, current tariffs can be up to $190 per tonne. That's about over 50% of its total value. For oats, current tariffs are $114 per tonne. For barley and rye, they are up to $120 per tonne. These tariffs can be huge, and they're about to disappear. Down the road, CETA will lock in permanent duty-free access.

This trade deal is coinciding with new marketing changes for wheat and barley in western Canada. It is easy to see that huge gains are on the horizon.

We're the Grain Growers, but any gain for livestock is good news for Canadian grain farmers. The livestock market is a very important market for Canadian grain farmers. The feed industry alone consumes about 80% of our total harvested barley and 15% of our total wheat crop production. Under CETA, beef exports to the EU are projected to increase by $600 million in this trade deal, and pork exports are projected to increase by $400 million. We anticipate that the deal will drive significant growth in domestic feed grain sales as exports of beef and pork expand under the new trade deal.

With this Canada-Europe trade deal, along with more efficient marketing changes that are currently happening in the grain industry, we feel that this is the opening up of a tsunami of opportunities for Canadian grain farmers.

Increasing market access for farmers is extremely important, so we're also glad to see that CETA includes a commitment to improve consultation and cooperation around biotechnology. Grain Growers is eager to see the Canada-EU trade deal opening a new dialogue with the European Union through an active working group focusing on biotechnology issues to address non-tariff trade barriers in grain, including measures to ensure the low-level presence of genetically modified grains so that it does not serve as a trade barrier.

Grain Growers also sees CETA paving the way for much greater investment in the development of new seed varieties for Canadian farmers. As part of these trade negotiations, we understand the European Union has raised concerns about Canada's outdated legislation with respect to plant breeders' rights. Currently, we're using old legislation from the 1978 convention governing international trade in seeds. Canada is one of only two developed countries in the world that has not brought their legislation into compliance with the 1991 seed convention, commonly known as UPOV 91. As part of the CETA agreement, we encourage the Canadian government to commit to the modernization of our legislation so that Canadian farmers can benefit from increased investment in innovation, research, and development of new seed varieties in Canada.

I am an immigrant from France, where my brothers still farm, so I can confirm that Europeans' taste for good food is similar to Canadians'. They have an appreciation for high-quality Canadian agricultural products. It is a market where we have a lot of room to grow, and it has cash to pay for that high quality.

It is not just the raw products that are reliant on trade. Our value-added products create jobs here in Canada and need new markets as well.

Canada's agrifood industry accounts for over 8% of our GDP. Europe is a good fit for our industry because it releases more than 36% of the world's new processed food products, more than any other region. Europe is interested in innovative and leading-edge food products, which Canadian farmers and industry will provide. As a farmer from western Canada, I am excited about the new value-added opportunities we're seeing down the road.

Currently, Canadian exports to Europe are only one-tenth of what Canada sells to the United States, but as farmers we learn through experience. While the U.S. is one of our best trading partners, we need to diversify where possible. The Grain Growers of Canada fully supports the agreement in principle with the European Union.

The Grain Growers of Canada is therefore very pleased with this agreement, which will enable growers to become more competitive in coming years.

We seek to ensure that this agreement is concluded as quickly as possible so that Canadian grain farmers can start reaping the benefits of improved market access for grain and grain products, growth in our domestic livestock sector, and access to new, improved seed varieties.

Thank you for your consideration of our views.

Thank you for your attention.

[The Chair, Conservative, Bev Shipley]

Thank you, Mr. Groeneweg.

Ms. Krayden, do you have any further comments?

[Janet Krayden, Analyst, Grain Growers of Canada]

I don't have any comments, thank you. I'm here to help answer questions.

[The Chair, Conservative, Bev Shipley]

Thank you.

We'll now go to Roslyn Kunin. You have ten minutes. Please go ahead.

[Dr. Roslyn Kunin]

Thank you, Mr. Chair.

I'm very happy to talk to you, and I'm very happy that you have invited an economist to address your committee, because I will be presenting the broad views on the impact of the agreement on the whole Canadian economy.

I don't have detailed knowledge of some of the industries that some of your other presenters have, but I would like to speak strongly in favour of the agreement and its positive impact on at least five components of the Canadian economy.

The first component is Canadians as consumers. I believe the position of this government is to improve the standard of living for consumers and to make things better for ordinary Canadians, whether it is by lowering the tax burden or by other means.

This agreement, with freer trade between Canada and Europe, is going to make things better for consumers by offering access to a wider variety of goods and services, and offering them at better prices, because the increased competition will increase productivity. So people will have more goods, more services, better prices, and it will improve the basic standard of living for Canadians as consumers. I think that is probably the most important thing. That's why we have a government running the economy, to help our standard of living.

The second group that will be helped, and this has been mentioned by others as well, is exporters. Trade is a very important part of the Canadian economy—the agricultural sector, the resource sector, and virtually every other sector as well. Fewer barriers to trade and reduced tariffs are going to greatly help our exporters to continue to export, continue to improve our balance of payments, and continue to prosper as businesses.

I am on the board of a forest company, among other companies. We've already noticed—although this committee isn't primarily concerned with forestry—that the 10% and 15% reductions on some of the wood products we export are already helping us build the specialized and high-value-added markets that we were hoping to build in Europe. That is going to make it an awful lot easier.

What any economy needs, what any business needs—and sometimes people planning businesses forget about this—is customers. What the European free trade agreement gives us is customers. It gives us access to a market roughly equal in size, wealth, and number of people to the United States.

Much of our trade has been concentrated on the American market, and Canada has benefited greatly from free trade with the United States and Mexico. We are going to get at least an equal boost by having access to the European market.

Having customers, people who are interested in our manufactured food products, our basic grains, and the other goods we produce in Canada, is going to make it that much easier to have opportunities for businesses to grow and thrive in Canada.

There is another side to that coin, of course. A free trade agreement means that Europe will have more access to Canada. How will that help us?

It will help us by dealing with one of the persistent challenges that the Canadian economy has had to deal with for lo these many decades, and that is productivity. We don't get as much bang for our buck, we don't get as much output out of the amount of input—the labour, the capital, and so on—that we put into our economy. We're not as productive. This means our workers can't get paid as well, and our standard of living is affected.

What the free trade agreement and Europe's access to Canadian markets is going to do is increase our productivity. When producers, whether of cheeses or other products, realize that Europe is going to have more access to the Canadian market, they will sharpen their pencils. I believe Canadians are smart, capable, and intelligent. When they realize that, hey, other people are sending cheaper products, less expensive products, good-quality products, products that customers might want into Canada and they are going to have to compete with them, I believe that Canadian business people will find ways to be more productive. They will sharpen their pencils. They will develop a great many Canadian geographically designated cheeses—it doesn't just have to be Oka anymore—and they will compete effectively to maintain their share of Canadian markets, as well as expanding into European markets.

This isn't just a pipe dream. It has happened, probably about 20 years ago now, in New Zealand, when New Zealand faced a financial crisis and had to remove all the tariffs and protections its heavily protected industries, including agriculture, enjoyed. Everyone had said that if it didn't have this protection on its home market, all the businesses and the economy would fail and the country would die. The country didn't die. The country became much more productive; a wider variety of goods and service of better quality were made available; prices for many goods and services in the country fell; the improved quality and pricing expanded export markets; and New Zealand has gone on to prosper. That is the kind of increased prosperity I see in Canada as we become more productive in response to being a more open market to Europe, as well as to the United States.

So productivity, a big factor in our economy and our standard of living, will be given a very strong push in the right direction by having more European goods and services come into Canada, encouraging Canadian producers to work harder to get a better product and better value for Canadians, as well as to meet export demand.

Another thing: as a global economy, Canada needs to be competitive. I apologize for the cliché—you've heard it a million times—but we have to have globally competitive producers in agriculture and in all our other sectors, and we are going to get one huge competitive advantage that we don't even have to share with Europe as a result of this agreement. As this agreement is implemented, Canada becomes the only major economy in the world that will have free trade access both to the United States and to Europe. That will help Canadian businesses. They will have that many more customers, markets, and so on available to them. It will also help to attract outside investment and other global businesses that are seeking a place to do business.

Canada is a very good place to do business. We have rule of law, stability, and many other advantages. We will have the additional advantage of free access to two of the biggest, richest industrialized economies in the world, and I believe we'll be the only major economy to do that.

So we will be a good place to do business: we will be a more productive economy, with more competitive businesses providing goods and services at better value; we will have more customers for our producers and more market for our exporters; and, as I said, most important of all, we will have more goods and services offering better value and a higher standard of living for all Canadians.

I think this is one of the greatest things that has happened to the Canadian economy, and I think many, many people are eagerly looking forward to its implementation.

Thank you. Je vous remercie.

[The Chair, Conservative, Bev Shipley]

Thank you, Ms. Kunin.

I appreciate all the witnesses keeping their times in order.

Now we'll go to our first round.

You have five minutes, Ms. Raynault.

[Francine Raynault, NDP, Joliette, QC]

Thank you, Mr. Chair.

Mr. Groeneweg, as we know, GMOs are not really tolerated very much in Europe. Basically, people do not want GMOs.

In your view, could that make it harder to sell our grains in Europe? In addition, are you currently in talks to determine an acceptable percentage?

[Franck Groeneweg]

I do not have specific data. However, I have some stories about my family in France. Consumers are definitely intrigued by GMOs and wonder about them. I think there is a lot of misinformation about GMOs in Europe. As we can see here, we are in good health. After several thousand meals consisting of GMO products, we are alive and well.

The misinformation on the issue is quite incredible. I think this agreement will open up dialogue that will benefit Europe as well. In fact, there is an opportunity both to advance technology and to feed our planet.

[Francine Raynault, NDP, Joliette, QC]

I was talking about grain. If our beef and pork products go to Europe and the cattle and hogs were fed with grain containing GMOs, will they be rejected?

[Franck Groeneweg]

You must understand that a lot of our soybeans are already exported to Europe as GMO products and they are used to feed the animals. So cattle and hogs are already being fed with GMOs. If animals in Europe are fed with GMOs, I don't think there will be a problem with our pork and beef on the European market.

[Francine Raynault, NDP, Joliette, QC]

We hear all sorts of things here about what Europeans think about GMOs. We are always wondering about that. The fact that there are traces of GMOs in the grain or in the meat must not hurt our trade.

Ms. Kunin, this summer, I visited some outstanding fine cheese producers in the region of La Pocatière. There were also producers from everywhere. They are definitely producing fine cheeses. Their production may not be large-scale and they have rather limited resources.

Do you think that European cheeses coming into our market will affect those producers because they will be cheaper?

People have wanted fine cheese for years in Quebec and I think our producers have been very successful in that sense. If European cheese comes into our market and is less expensive—agriculture in Europe is subsidized—will it affect some fine cheese producers or other types of producers?

[The Chair, Conservative, Bev Shipley]

Is it Ms. Kunin you're posing the question to?

[Francine Raynault, NDP, Joliette, QC]

My question is for Ms. Kunin.

[The Chair, Conservative, Bev Shipley]

I don't think she caught it.

Ms. Kunin.

[Dr. Roslyn Kunin]

Oh, sorry, was that question for me?