Agriculture Committee on Feb. 19th, 2015

[C.J. Helie]

On the specific mention on direct shipping, what we were referring to there is that 18 months ago the Government of B.C. allowed spirits manufacturers licensed and located in B.C. to ship directly to over 600 private liquor stores and to over 1,000 licensed bars and restaurants and to exempt all those sales from any markup whatsoever. A spirits manufacturer located across the border in Alberta or a couple of borders away in Ontario or Quebec is not allowed to ship directly to any private retailer in B.C. and certainly gets no break on the markup or commodity tax.

[The Chair, Conservative, Bev Shipley]

I'll move to a guest who's joined us today.

Ms. Brown, I'll ask you for five minutes, please.

[Lois Brown, Conservative, Newmarket—Aurora, ON]

Thank you very much.

Yes indeed, I am just a visitor here today. I'm delighted to be here, and I come from centuries of ancestors who were farmers. I have a soft spot in my heart for farmers.

Jan, it's nice to see you, by the way. I wonder if I could get some comment on a couple of things you talked about.

First of all, I love to hear when you talk about new markets. I always say to Ed Fast, he should talk about “new markets—Aurora” and use that term, but new markets are always a passion of mine. LaVar talked a little about the bill that went through on the wine. First of all, I wonder if there is anything in that piece of legislation that could inform a piece of legislation that would assist with the difficulties you're facing.

Second, because we have to have the provincial buy-in on this, are there provinces to whom you have spoken that are more receptive to this than others? Is there a place where we can start building some agreement? If so, what does that look like? What do the negotiations look like for you right now?

[Jan Westcott]

I'm a little hesitant to pick out any one province.

At a philosophical level everyone says they get it and everyone says they agree, but when it comes down to the practical issues of how you start to implement that, or for example, start to take away subsidies to local businesses, or make sure that everybody is paying the same amount of tax, or has the same amount of the customer, that's where it tends to break down.

Again, part of this is helping provinces appreciate that they are winners when they can produce and can help establish companies that can compete everywhere in Canada and everywhere in the world, not just in their own province because they have some kind of a subsidy or some kind of a benefit. It gets expressed in a number of different ways. Even in provinces where we have significant distilling operations and where we source a tremendous amount of our grain....

The spirits industry is the largest purchaser of rye grain in Canada. We are the fourth-largest purchaser of corn in Ontario. We're substantial purchasers of grain in Quebec and in Manitoba. Even in those provinces they look at some small producers and companies now called craft distillers and want to do things that give advantages to those businesses in the marketplace. We're in this whole notion of picking winners and losers, which is not the kind of business that we think government should be into, federal, provincial, or anybody.

[Lois Brown, Conservative, Newmarket—Aurora, ON]

It's not good economics.

[Jan Westcott]

It's not good economics and it distorts the market. At the end of it, what it really does is it discourages people from making investments in this country. That's really what it does; it drives investment out of this country. If you don't have investment going on in Canada, our entire economic activity shrinks and that's bad for everybody.

[Lois Brown, Conservative, Newmarket—Aurora, ON]

Obviously, we want to get to yes on this issue. That has to be the premise from which we start. Do we start with the agricultural ministers, do we start with the finance ministers of, say, those four or five provinces that you've spoken about: Manitoba, Alberta, Ontario, Quebec? Is that where we start with this to try to get some agreement amongst those people first?

[Jan Westcott]

I think agriculture would be good. At the risk of singling somebody out and having them a bit upset, I'm going to use an example. We make whisky in Ontario and we try to sell it all over the country. They harvest lobsters in a number of maritime markets. Those lobsters come to Toronto. Nobody in Ontario decides that if they're lobsters from down in Atlantic Canada they can only be sold in certain stores or that they have to pay a special tax or this or that. This linkage about what each part of the country is producing....

I don't mean to offend Nova Scotia and I do eat lobster and I really enjoy it, but there needs to be a better understanding that if Nova Scotia's going to have that opportunity, which they should, to come and sell their lobsters freely in other provinces, then when our products go into Nova Scotia—again, I'm not trying to be unfair to Nova Scotia—they should have an equal opportunity to compete fairly and effectively in the marketplace. You can go to every region of the country, whether it's maple syrup from Quebec, whether it's certain kinds of products from British Columbia, or Saskatchewan, or whatever it is, and that understanding of how we all benefit when we treat our goods equally is I think a big thing that's missing right now.

[The Chair, Conservative, Bev Shipley]

Thank you very much. Thank you, Ms. Brown.

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

[Malcolm Allen, NDP, Welland, ON]

Thank you, Chair. Thanks, folks.

Mr. Rice, we haven't talked to you in a while, so maybe we'll come back and simply ask you to articulate for us.... We all know pork moves fairly freely. For your industry, whether that be feed or any of the parts of it, are there any pieces of your industry and that infrastructure that you have problems with, basically, interprovincially? Not north-south, basically east-west, because that's really what we're looking at here, because I know this stuff goes north-south as well.

Is there anything you see that's a bit of an impediment for your particular industry, looking at the holistic piece, not just the actual animal or the pork itself but the holistic piece?

[Martin Rice]

I don't think there's anything that our membership collectively has been seeing as an impediment. There is from time to time an interest in being able to see product move between provinces that is from the smaller provincially inspected plants. It's not something that has been raised as a national issue, but when the question does come up we look at it as something that.... If it provides new marketing opportunities, it has some attractiveness to it. But the industry's concern is that it not dilute or compromise in any way our national standards so that we, first, assure our own Canadian consumers of the quality of our products, and second, we keep our export markets fully confident that we operate under one set of standards, whether it's interprovincial trade or international trade.

Right now what we don't have is any kind of a formalized system, unlike in the United States where you do have a system of interstate movement, but it's all under a nationally formalized mandated system that each state has to respond to. There have been attempts in the past to try to arrive at something like that, but again, it's a matter of individual provinces needing to see that it's in their interest to move to that system.

That's the only thing that comes to my mind. I was going to suggest, if the committee wants, that we could just refer them to the U.S. system, which seems to be working reasonably well.

[Malcolm Allen, NDP, Welland, ON]

Thank you. I appreciate that.

Mr. Westcott, maybe I misheard, but you talked earlier about resources as well that perhaps have to move interprovincially for your distillers. Is it true there are some issues with certain resources moving from one area to another to get to your distiller? Is that an impediment as well? Is that true, or did I just hear something else and drew it into that?

[Jan Westcott]

No, I don't think so. We don't have any issues shipping products across the country. Our products enjoy access. It's what happens to the products when they land in a particular jurisdiction, the treatment they are afforded, and the competitive set they face once they get there.

[Malcolm Allen, NDP, Welland, ON]

I didn't mean so much the sense of the actual finished product. If you are buying the resource, if you buy rye or if you need glass, for instance, any of those products, do you have any problems getting that stuff, or do you stay self-contained close to the distiller inside a particular province so you don't have an issue of making sure that stuff can move back and forth? The resource base of a final product—

[Jan Westcott]

No, we do not have any issues moving grain, say, from different places, and we do buy western Canadian grain for use in eastern Canada, particularly rye. There are no issues I am aware of that we face on that front.

[Malcolm Allen, NDP, Welland, ON]

What you are telling us is that when your finished product lands wherever that happens to be, depending on where you make it, whether it be from Alberta—and by the way, I've never seen a bottle of that. We'll perhaps have to ask Mr. Payne to bring a bottle of that Alberta...whatever you called it. I don't want to get the name absolutely wrong, but perhaps Mr. Payne should bring us some samples of that new product.

[An hon. member]

That's a good idea.

[Malcolm Allen, NDP, Welland, ON]

We won't tell anyone he did it. It would be illegal to transport, I think is what you said, Mr. Westcott.

Just to get a yes or no from Mr. Westcott, it's the finished product we are talking about. Is that correct?

[Jan Westcott]

Yes, that's correct.

[Malcolm Allen, NDP, Welland, ON]

Thank you.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. Allen.

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

[Larry Maguire, Conservative, Brandon—Souris, MB]

Thank you.

I'll just say that Mr. Allen isn't prohibited from going to Alberta either to have an opportunity there. He could enjoy some good pork with it.

I just want to add to comments from Jan—your comments about the trade agreements in 1988 and the free trade agreement in 1995, NAFTA, and those areas. When you open up markets that generally does three things, in my mind. You can develop a better quality product, as you pointed out for the wine industry. Here in Canada it puts more people to work and it provides an economic stimulus for companies as well as workers in those areas.

We did away with interprovincial feed grain trade in western Canada at least and in all of Canada, I think, about 40 years ago, but we still have restrictions on the movement of some of the other products we're looking at. It seems we need more processing with some of the things that have changed in Canada. You people are doing a good job in both of your industries, because you're exporting so much of an extremely high-quality product around the world.

I am wondering. What do you think needs to be done—to come to an area that we haven't really talked too much about today—in the environmental management of our industries? Why can't we break down the barriers and get the provinces to the table to talk about them? I know that in Manitoba particularly, because I'm from there, we have restrictions on the ability to produce pork because some of the rules that have been put in place there aren't in place in some other areas of Canada. We do want to make sure we manage our natural resources to the best of our abilities and protect them. That's a plus and that's a must, but there are some things I'd like you to speak to with regard to whether each of your industries can see some rules that we could probably come together on, on a national basis.

[Martin Rice]

Maybe I'll start—is it okay for me to start?

[The Chair, Conservative, Bev Shipley]

Yes, go ahead, Mr. Rice.

[Martin Rice]

We do have national standards, which Ms. Scovil could go over, for our on-farm quality assurance, and so on, and in animal care, which are areas that were in the past considered provincial domains. That's not under the Constitution or anything, but.... On the environmental side, we did make an effort several years back to have a single national environmental farm plan. As well, we had a national standard, a formal standard.

These formal standards turned out to be a bit onerous for a lot of farms to operate by on top of provincial environmental standards, which for some provinces have been—in the case of Manitoba, certainly—quite restrictive. We would look at that as something that would be I think attractive for the industry to look at again at some point if there were a provincial appetite for it. I mean, if we're going to have a national standard and additional provincial requirements.... In this case, I think British Columbia was a bit of an innovator in having a farm plan that was not as restrictive, I guess, as some of the regulations that we've seen arise in some provinces. Again, I guess I'd make Manitoba as a case.

I think the industry finds that far easier to adapt to, because they have a role in pointing out the different conditions that exist in different parts of the country, whether they are differences in climate or in soil structure or things of that nature. This needs to be responsive to provincial differences, but I think we could have something like a more national compliance system that would relieve producers of having two different sets of standards that they have to live by.