Agriculture Committee on Oct. 30th, 2014

[The Chair, Conservative, Bev Shipley]

I want to call the meeting to order if I could, please.

As you know, we are studying Bill C-18, and today we had some procedures and voting in the House that has delayed us. I am asking for the indulgence of the committee, and also a nod from our witnesses—some concurrence from our witnesses—to be able to extend our time.

I've had a chat with Mr. Graham here. What I would like to do is to be able to add 20 minutes to each of the panels.

Do I have the concurrence and agreement of the committee to extend our time? That would take this panel to 12:20, and the next one would take us until 1:20.

Does anyone on the committee have an issue with extending it for some time?

Mark.

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

I could go to 1:10, but I have a conference call around 1:20 back in my office. I can stretch a bit.

[The Chair, Conservative, Bev Shipley]

Okay. What we're going to do then, if that's the case, is to add about 10 minutes now. What I'm going to do is to introduce our presenters. I thank you for hanging in with us.

With us in the first hour we have, from the Canadian Fertilizer Institute, Clyde Graham. We have by video conference from Halifax, Nova Scotia, the Canadian Animal Health Coalition, and Mr. Ed Empringham. Also by video conference from Edmonton, Alberta we have the Canadian Cattlemen's Association. In the same room, I believe, is also the Feeder Associations of Alberta Limited.

I'm going to start with the video just in case we have video interference. I'm going to go to Halifax and the Canadian Animal Health Coalition. I'm going to ask you to keep your times very tight so we can get through your presentations and also then have the opportunity to ask a round of questions.

With that I will then go to Halifax, Nova Scotia and the Canadian Animal Health Coalition, Mr. Edward Empringham, senior project manager.

Mr. Empringham, please, for six minutes. If you can keep it a little shorter, it would be appreciated.

[R. Edward Empringham, Senior Project Manager, Canadian Animal Health Coalition]

Thank you. Bev, that's pretty formal for an old dairy farmer to a veterinarian. It goes back a long time.

Good morning. My name is Ed Empringham. I'm a veterinarian and the senior project manager for the Canadian Animal Health Coalition. I'm pleased to be here with a full view of the harbour out the window of Purdy's Wharf.

The coalition was pleased to facilitate a teleconference on C-18 with its members and an extended invitation to other non-member organizations in the animal agriculture sector. The teleconference was held on January 9th and included 58 participants demonstrating interest in this legislation. The discussion was led by representatives of the CFIA who discussed the Health of Animals Act, the Feeds Act, and the Agriculture and Agri-Food Administrative Monetary Penalties Act, which, of the seven bills that were included in C-18, were the ones within the mandate of the coalition.

We really want to commend the CFIA staff for the work they did to make this initiative work, and it ended up being a very positive event.

In addition to specific comments on the three acts, the presenters commented on the principles of modernization and inclusion by reference that are included in all acts in C-18.

The purpose of the coalition teleconference was to provide an opportunity for the animal agriculture organizations to become aware and informed of C-18, and to encourage high-quality consultative input by the organizations involved. The coalition did not provide comments of its own. The coalition as an organization of organizations has a mandate to facilitate discussion and action on matters that affect multiple stakeholders in animal agriculture.

However, as a matter of principle, the coalition supports the modernization of legislation to harmonize approaches and recognize modern business practices, the concept of inclusion by reference into regulation, the ability to reference foreign reviews and analysis, and the need to ensure that legislation ensures the protection of animal health and welfare, food safety, meets the requirements of trade, enables innovation, and doesn't impede commerce. That's a pretty tall order.

In its work the coalition takes a collaborative approach that includes industry and other non-governmental organizations with provincial and federal partners with a focus on enhancing Canada's animal health and welfare system. It's hoped that the changes to be implemented through C-18 will help in this regard. In particular a reference of foreign reviews and analysis may be helpful with the availability of pharmaceuticals for minor species thereby contributing to animal health and welfare as well as food safety through a decreased need for extra-label drug use.

Thank you for your opportunity to appear as a witness, and that closes my opening comments.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. Empringham. It was good to see you again, even though it is at a distance. Thank you for your presentation.

Now we'll go to video conference with the Canadian Cattlemen's Association. I'm not sure who the presenter is going to be, Mr. Ryder Lee or Dave Solverson, who is the president.

Also following right in behind is the Feeder Associations of Alberta. Whoever is going to speak at that, either the chair or the administrator, Joy Leonard or Reg Schmidt, please just start in and identify yourselves. It would be very much appreciated.

The Canadian Cattlemen's Association, please, for six minutes or less.

[Dave Solverson, President, Canadian Cattlemen's Association]

Ladies and Gentleman, hello from Edmonton. As mentioned, I am Dave Solverson, president of the Canadian Cattlemen's Association. With me is Ryder Lee. Many of you will know him; he's one of our people in Ottawa. I would like to say thanks to Ryder for digging deep into this agricultural growth act for me.

I am a cow-calf producer from Camrose, Alberta and also a backgrounder and a feeder. We have an operation that is a bit different. We take our calves right through to the finish. It has given me a good understanding of the challenges at each step of production. Along with my partners, I'm also involved in some grain farming production, and have been exposed to the ups and downs of that side of farming.

Bill C-18 covers a wide array of acts. Some of the changes are of obvious interest to livestock producers—the updates to the advance payments program, for instance—and some are not likely as obvious. I will comment on both.

The changes to the Plant Breeders' Rights Act are positive. Canadian cattle producers depend on innovation and improvements in feed grain and forages. We believe that the update to UPOV 91 will encourage investment in seed development in Canada. The protections this act confers are not just for companies, but also for institutions like universities and governments that develop new varieties of seeds. Two of our major competitors, the United States and Australia, have adopted UPOV 91, and we hope to keep pace with them.

There are overarching changes to several acts that merit comment. The first is the ability to incorporate by reference. The second is the allowance for the use of documents that are not Canadian. The third is the allowance for the minister to consider information that is available from a review or evaluation, conducted by the government of a foreign state.

We have often found the regulatory change process to be time-consuming, or to be duplicative of rigorous approval processes in other jurisdictions. We see these changes as positive for innovation and for regulatory processes in general. There are requirements set out for transparency and accessibility. The test will be when these things are done. Enabling them in this legislation is a good first step, and we will be involved when the authorities granted by these changes are first tested.

Skipping down to the Agriculture and Agri-Food Administrative Monetary Penalties Act, we do have some concern with how this is implemented, more so than with the authority granted in the proposed bill. The proposal is to set new penalty amounts for minor violations at $5,000, serious violations at $15,000, and very serious violations at $25,000. One reading could be that any violation could get at least a $5,000 fine. It's not clear that there will be a continuum within minor, serious, and very serious violations.

The current CFIA modernization consultation discusses compliance and risk-based enforcement that would lead us to believe that a minor offence of little risk to human or animal health would not yield a $5,000 penalty. This comes down to implementation. It is not something for which we have an amendment to suggest to the committee, but we did want to register this concern.

With respect to the cash advance, you'll be hearing from Alberta feeder associations and others about this program. CCA supports the legislative changes in C-18. Granting the authority to add breeding stock is a positive change, and changing some of the dates will make the legislation match up better with beef production than it did in the past.

We also support giving administrators more ability to handle the different kinds of business set-ups that exist in farming today.

We will continue to work with AAFC on this file. They've done a good job of consulting on the APP part of the C-18. As regulations are drafted to be put into force, and the authority is granted in the act, we will participate.

One of the things we will keep investigating is the ability to add the western livestock price insurance program to the list of programs that producers can use as security for the advance payments program. We'd like to see price insurance become a national program.

Thank you for inviting us to appear. I appreciate the opportunity, and regret that I'm not in Ottawa to talk with you all in person.

To close, the changes in this bill are positive, and should improve government operations in the policy area it covers. They follow other improvements we're seeing in market access, which we have loudly supported.

From here, we're going to Red Deer to join a labour forum. Labour shortages on farms, and especially at the processing plants, are hampering our ability to take full advantage of positive changes we've seen to date and expect in the near future.

We're going to need more Canadian workers to meet the new needs of markets such as China and the European Union. If we cannot get more willing and able workers on farms and in plants from Canada and abroad, we'll continue to lose out on opportunities the marketplace has presented and on improvements that legislation like Bill C-18 enables. This is already happening today.

Thank you again.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. Solverson.

Now we'll go to the Feeder Associations of Alberta and whoever is going to present there, please.

[Reg Schmidt, Special Projects Contractor, Feeder Associations of Alberta Limited]

My name is Reg Schmidt. I do special projects for the Feeder Associations of Alberta. With me is the chairman, George L'Heureux, and our advance payments administrator, Joy Leonard.

Dear honourable members and guests, it's an honour and a privilege to provide you with a brief today and some background on Bill C-18, and mostly in regard to the advance payments program. If we look at the Agriculture Marketing Programs Act and, more pointedly, at the advance payments program, which received a major overhaul in 2007, those sweeping changes in 2007 completely updated the latter program, including adding new commodities and new processes.

When the Feeder Associations of Alberta was first notified last fall of the new set of amendments, we were not anticipating this exceptional amount of change that is being proposed. We were thinking more of a lipstick and makeup approach. Instead what we got are a very well thought out set of amendments that bring another round of comprehensive updates to an otherwise excellent program.

Firstly, we want to comment on the advance payments program and how it pertains to the cattle industry in Alberta. In Alberta, in the last number of years, the Feeder Associations of Alberta has provided approximately $25 million annually in advances to cattle producers. This has supported an industry that was beleaguered by the after-effects of BSE and a depressed marketplace. In the current situation with the record high cattle prices, the program continues to flourish and remains strong as producers depend on it to add value and market their cattle. The Feeder Associations of Alberta expects continued growth of the program and these amendments will support that growth.

Secondly, we have made notes of the amendment sections that pertain to the program here in Alberta and the advances, and we're going to make comments from that perspective.

Number one was easing the administrative burden. The changes to the holdback provisions and the five-year advance guarantee agreement will make a big difference and be a big help in reducing work for the administrators. This is going to lower costs and the workload for administration. In addition, reducing the annual application process for producers to a simple form will be beneficial again for both administrators and producers.

Second is methods of repayment. We have always believed that producers should be able to repay an advance from any eligible commodity, especially if the producer is in mixed grain and cattle. Market conditions may be strong for cattle, but poor for grain. A producer could use cattle sales to reduce his grain advance and/or vice versa. This is simply logical and good business when you look at it from a producer's point of view.

In these cases, we believe this provision should be allowed in situations where a commodity cannot be sold to prevent a default. We want to be able to allow a cash repayment as long as the producer still has the commodity. He will sell it eventually. We don't understand why you would charge him a penalty interest at that point.

Third is advances on breeding animals. Many producers raise stock for sale and wish to use the advance payment to allow for marketing time. This provision simply matches the reality of seed stock producers.

Fourth is attribution rules for multi-family farms and farming entities. These new provisions remain complex and cumbersome. The regulations of the advance payments program clearly indicate to support one farming entity and not multiple advances for any farming group. The fact remains that a farming business and structures thereof can be complex and attribution rules therefore are also complex. We continue to speculate on whether there is an easier way to manage the relatedness of producers.

Fifth is new eligible commodities. We fully support further expansion of advance payment into other commodities. Clearly, criteria regarding marketability of a commodity, that being a livestock or product, must be established before any new advance needs be considered.

Sixth is multi-commodity administrators. We have always supported the ability of an APP administrator to deliver an advance to producers they already serve. It would make sense for producers to apply for an advance for cattle and any other commodities from the same administrator, not to mention the efficiencies in administration and to allow for some competitiveness in service and fees. In any case, a producer should be able to choose.

As for securing an advance, the advance payments program requires security for an advance, usually on the commodity for which the advance is provided. Agriculture and Agri-Food Canada uses the term “business risk management” programs. In grains there is a choice between crop production insurance, being AgriInsurance, or AgriStability. In livestock the only allowable security is AgriStability at this time. This has directly limited the uptake of advances in Alberta because many beef producers have chosen not to participate in AgriStability. Cattle producers have seen the value of AgriStability diminish greatly as their margins have fallen from 2004 through 2010 and many have since opted out.

In the last three years the use of more modern bankable programs like livestock price insurance in the west has substantially increased as producers see value in that program. The draft amendments also discuss allowing taking security on cash deposits, GICs, or an irrevocable letter of credit from the producer’s financial institution as security. These options reflect the original intent of the amendments. If producers choose to use other business risk management tools that provide bankable risk management and can be assigned to an APP administrator, that should make them eligible for an advance. If the producer offers priority over any cash security, this should provide a reasonable degree of security and we should be able to provide the advance.

To summarize, the Feeder Associations of Alberta is an umbrella organization that supports our 50 feeder co-ops in Alberta. We provide more than $300 million in financing of feeder cattle to 2,500 producers annually. In addition, as mentioned earlier, we have been the administrator for advance payments since 2007. Our board of directors strive to provide a high level of service to our membership and APP producers alike. It is very important that the FAA see these amendments carried forward so that the advance payment can be provided to many more producers

Thank you for allowing us to provide this brief today.

[The Chair, Conservative, Bev Shipley]

Thank you very much for your intervention. It's appreciated with your time constraints.

Now I'll go to Mr. Graham, please, with the Canadian Fertilizer Institute, for six minutes, please.

[Clyde Graham, Acting President, Canadian Fertilizer Institute]

Thank you for the introduction, Mr. Chairman.

Good morning, members of the committee.

My name is Clyde Graham, and I'm the acting president of the Canadian Fertilizer Institute. CFI represents the manufacturers of nitrogen, phosphate, potash, and sulphur fertilizers, as well as the major wholesale and retail distributors of fertilizers in Canada.

In 2006, CFI established the Canadian Fertilizers Products Forum at the request of the federal government. It's a stakeholder-led initiative to improve the regulatory system for fertilizers and supplements.

Canadian farmers spend as much as $4 billion a year on fertilizers, more than for any other crop input. It's estimated that without fertilizer, crop production in Canada would decrease by half.

The federal regulatory system has served the industry well for 50 years. It has ensured a science-based and consistent regulatory environment for fertilizers and supplements, which emphasizes the principles of safety and efficacy for all products.

The fertilizer regulatory system in Canada is undergoing rapid, continuous, and unprecedented change. Even with Bill C-18 before the House, existing regulations are still being modernized and streamlined. This is an attempt to deal with product registration backlog, which has recently increased.

In 2013, the Government of Canada ended all federal regulation of fertilizer quality and efficacy, while focusing entirely on product safety. This has led to market uncertainty, unexpected regulatory bottlenecks, and as yet no measurable increase in access to new, innovative fertilizer products. Recent advancements in innovative fertilizer and supplement technologies have resulted in products that do not share the same established track record of safety, consistency, and benefit as traditional products. It is important, therefore, to monitor both the safety and efficacy of these new offerings, to better meet the assurance needs of industry, farmers, and other stakeholders.

We won't comment on most of the provisions of Bill C-18. We're going to focus entirely on the changes to the Fertilizers Act.

Bill C-18, which amends the Fertilizers Act, is the latest significant change in the federal regulatory environment. CFI believes that there is an opportunity to set fertilizer regulation in Canada on a cost-effective and sustainable path. Bill C-18 has a number of enabling provisions that have the potential to improve outcomes, but this will only occur if the government makes the right decisions in developing the regulations that will flow from the legislation. The fertilizer and supplement industry, and our farmer customers need to continue to be at the table. That being said, the fertilizer and supplement industry supports new provisions in the bill that enable tools such as incorporation by reference, licensing, export certificates, and acceptance of equivalent foreign scientific data.

Regarding incorporation by reference, currently a detailed list of fertilizer types that are exempt from product registration—not from regulation, but from registration requirements because they have proven value and safety—is embedded in the fertilizers regulations, in schedule II. This product list can only be updated by cabinet order, which can take up to two years or longer. Incorporation by reference would move the list out of the regulation, where it could be routinely amended by a simpler process, which still incorporates public consultation. CFI has supported this concept for years.

BillC-18 allows for the licensing of fertilizer and supplement establishments, which is common in the United States. The bill also enables the licensing of persons to conduct an activity involving fertilizer and supplements. The Canadian Fertilizer Products Forum has signalled that this is an area that needs to be explored, but only with industry consultation. Licensing could assist the transition to a more preventative and systems-based approach that could include hazard analysis and preventative control plans, as well as incorporate international standards. Licensing could reduce the regulatory burden on importers and manufacturers, but could be costly and unnecessary for agri retailers who sell fertilizers to farmers. Licensing could facilitate more efficient private sector science evaluation and audit systems; however, any move to licensing will require careful study of cost-effectiveness and benefits of adoption.

Regarding export certificates, Canada is a major global fertilizer exporter. Bill C-18 would formalize the process of issuing certificates to facilities for the export of fertilizers and supplements. This would be a positive step as long as the CFIA is given the resources to meet these needs.

Regarding information from foreign states, Bill C-18 allows for the CFIA to accept foreign scientific data or evaluations for product registrations. This is in line with current practice, but should be allowed if the foreign information is equivalent to Canadian requirements.

What is fertilizer?

By making a decision to stop regulating fertilizer quality, the federal government has left the fertilizer industry and Canadian farmers without any meaningful definitions or standards for the quality of fertilizers and supplements in their regulatory system.

We don't want to rewrite history, but we believe it is important to address this gap in the fertilizer regulations that will be associated with Bill C-18, to minimize the appearance of ineffective products on the market.

The last thing I would like to say is that we just want to pay a lot of respect to the people at the CFIA. We've been working very closely with them, managing a very aggressive regulatory modernization program. They've been terrific to work with, and we always want to make sure that the leadership of the CFIA and the Government of Canada understands that.

Those are my remarks.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. Graham.

As we go into one round of questions, those coming to us by video conference should make sure to identify themselves; they can't see what's happening around the table.

I'm going to go first of all to Mr. Allen, please, for the first five minutes.

[Malcolm Allen, NDP, Welland, ON]

Thank you, Mr. Chair.

Mr. Solverson, you talked about regulatory changes and, as I believe Mr. Graham indicated at the end, this sense of “harmonization”, if I can use that term, albeit loosely. Do you see any restrictions on that in the sense of whom we accept or whom we do not accept, or is that an open piece? They've already done some science and it looks pretty good, so would we just accept the product? Or is it more limited in scope, from your perspective and from your organization's perspective?

[Dave Solverson]

Thank you, Mr. Allen.

I think the scenario around this is improving. We used to be at a very clear disadvantage: companies would have products available to our competitors in the United States and other parts of the world, but we were unable to access those same products because they weren't yet approved in Canada. That's where we've been pushing hard for recognition of the work that's been done in other jurisdictions to make us more competitive.

Ryder, would you concur?

[Ryder Lee, Manager, Federal Provincial Relations, Canadian Cattlemen's Association]

CCA's policy is based on sound evaluation of science and risk.

To your question—is it just accepting of anything?—no. We leave it to the Government of Canada and the regulators here to assess the robustness of that other country's science. If it's there, then let's not make us repeat it here in Canada but instead take it at its value and move forward quickly rather than repeating.

[Malcolm Allen, NDP, Welland, ON]

That's fair enough.

Mr. Graham, along the same line of questioning, you talked about accepting products that have already gone through a regulatory process. I just want to make sure I heard you correctly. Are you suggesting that if the CFIA were to lay down a framework such that if you checked off all of these pieces, and they've been done in country X, the industries would then simply be accepting and say that's the baseline they'll deal with. That would then be where we would look at those products, rather than constantly bringing a new product and saying it doesn't quite fit the framework but it's done by reputable labs, so isn't it okay?

Clearly what happens is this. If you were to say let's open it up to overlapping jurisdictions, which I don't disagree with, by the way, to a certain degree.... There are certainly accepted places where the science they do is equal to ours or the same as ours, maybe even more than ours, or maybe more “comprehensive”, in a way, if I can use that term. Would that be the framework that most industries would have to agree to? There would be give and take with the CFIA, I think, the government, and the industry groups, versus just simply saying this product is really safe, so we should add that to the list. How do you see that framework being developed?

[Clyde Graham]

I think the way it currently works to an extent is generally that the science in foreign jurisdictions is brought to bear in Canada, and then some judgments are made about how applicable that is to the Canadian circumstances.

Obviously we must have a discussion. I think the government has excellent people in toxicology, which is the area that would probably have the most application to this, but you get into issues like lab standards.

There is a process under way right now at ISO, the international standards organization, to develop some common international standards in lab analysis and accreditation, and things like that. That could certainly help to facilitate that process as well.

The concept is simple. The execution is probably a little more difficult.

[The Chair, Conservative, Bev Shipley]

Be very short, as you've only got 30 seconds, including for the answer.

[Malcolm Allen, NDP, Welland, ON]

My question is for Mr. Schmidt. You talked about the advance payments programs and laid out a number of places where you think there were some good things done and some things that still need to be looked at. Can you give me the top of your list as to which is number one for you? You listed quite a few. What would be your number one, that you would say that's where we need that change to be made in Bill C-18 on advance payments?

[Reg Schmidt]

You've pinned me down, didn't you? I think if we were to draw a priority, it would probably be in the methods of repayments, allowing producers to repay from another commodity. In my mind that would probably be our number one priority, followed quickly by the complexity of attribution for farm families and multi-family farms. There it is.

[Malcolm Allen, NDP, Welland, ON]

I appreciate that. Thank you very much.

I'm sorry for putting you on the spot, but in bargaining you've got to pick your best one. Right?

[The Chair, Conservative, Bev Shipley]

Thank you for the short answers.

I'm now going to go to Mr. Lemieux. Five minutes, please....

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

Thank you.

I'd like to thank the witnesses for being here and providing their input on this very important bill.

I think I'll start by making some references. Dave of the Canadian Cattlemen's Association had raised a few questions about the administrative monetary penalties. I believe there are two different types of administrative monetary penalties, one for businesses and one perhaps that could be levied against individuals. It's the ones for businesses that have been increased, not the ones that could be levied against, for example, an individual farmer.

My understanding as well is that the administrative monetary penalties, although their application is discretionary, the amount is not. Whether or not it would be applied or not is discretionary based on the incident and the investigation, but it's not discretionary in terms of how much of that amount would be applied. The amount is the amount. The amount would be applied.

I would like to ask a question, though, about the feed side of things. Again, I'll ask this of the Canadian Cattlemen's Association and to the feeder associations. I'm wondering if the provisions within Bill C-18 to allow the certification of feed producers are of benefit to both of your industries. I'm wondering if each of you could comment on that and perhaps in which way they would be beneficial.

[Dave Solverson]

I'll start. Definitely the innovations that we need to become competitive again in western Canada with the feed grains we use.... In barley, for instance, there has been very little progress in yield and other attributes of the crop compared to corn, canola, and soybeans, all of which have had a lot of private research gone into them. They have literally doubled their yields in the last 20 years, whereas our feed grains have flat-lined.

It is partly because the model that we depend on, entirely public research, hasn't enticed any investment from the private sector. We're seeing this as an option that could lead to more investment in research so that we could catch up and become competitive and get more acres in high-producing feed grains.

[Reg Schmidt]

Just to echo what Dave has said, I think innovation has been completely lacking in the feed grains side of it. Like Dave has said, we've not seen new and fresh investment in the whole feed grains complex for a good number of years. That's a competitive disadvantage at the present time.

For crops in general, the level of biotechnology that has been added and genetic modification to increase the yields, which generally lower costs.... We've just not seen that. So, yes, there's a big benefit to be had there.

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

Okay. If I could also perhaps ask a question about the advance payments program, I was just reading and listening to your comments regarding the Feeder Associations of Alberta. You mentioned multi-commodity administrators and how that would be beneficial. In other words, a farmer need only go to one administrator now to receive an advance on multiple commodities, rather than to multiple service providers.

I'm wondering if both you and the cattlemen's association could provide the committee with some information regarding what percentage of your membership would in fact be multi-commodity when they go to seek advance payments.