Agriculture Committee on March 12th, 2015

[Rory McAlpine]

Thank you.

Actually, the information is that it was 143 plants over the past eight years. That figure is coming from the Canadian Agri-Food Policy Institute.

I believe there are several factors, and there has been some recent good work to study the issues and the competitiveness problem. As I said in my remarks, a major problem has been that a number of the plants that have closed are old, small plants, many of them owned by offshore interests—larger multinationals who, at the point at which the Canadian dollar went to par, and considering other operating cost differentials in Canada, realized they could no longer maintain competitive plants in Canada and so have added that capacity back to a U.S.-based plant and are now shipping more and more finished food products into the Canadian market from the U.S. side of the border.

In our view, this reflects a lack of investment. The problem of sub-scale, old plants in Canada is exactly what Maple Leaf has tried to tackle with our major capital investment.

[Francine Raynault, NDP, Joliette, QC]

Thank you.

At a previous meeting, representatives of Agriculture and Agri-Food Canada told us that there was no total estimate of losses caused by interprovincial trade barriers in the agricultural and agri-food sectors.

Have you ever estimated the losses caused by interprovincial barriers or by the problems you have in getting your products to other provinces?

My question is also for Mr. Bjornson.

[The Chair, Conservative, Bev Shipley]

I think it was to Mr. McAlpine that the question was first directed.

[Rory McAlpine]

I will make a comment and then turn to Tyler.

As I mentioned, in our perspective, it's not so much that there are actual barriers preventing the movement of goods or services or capital, but that regulatory fragmentation is definitely creating a burden of compliance costs and uncertainty. I can't say that we've added it all up. You would have to look at each initiative.

I'll give you one example. We have recently put in our arguments expressing concerns about Ontario instituting its own registered pension plan, which is again a provincial initiative to mandate what is effectively another payroll tax on us as an employer in Ontario, even though there is no equivalent in other provinces and it will completely upset the balance in our collective agreements, under which we compensate and provide pensions for all our employees across Canada. We have done the exact calculations of what that is going to cost, both in terms of administration and in direct payroll deductions.

This is an example in which one province, acting unilaterally, imposes a cost that has a consequence for the business that undermines our competitiveness.

[Francine Raynault, NDP, Joliette, QC]

Mr. Bjornson, do you want to answer the question?

[Tyler Bjornson]

Similarly to Mr. McAlpine, I would say that we don't have figures on a global scale for what all these barriers would amount to. I would suggest that the figure would be very large.

That said, on an initiative-by-initiative basis I think you could drive out figures that would show, for example, recent action by Ontario on neonicotinoids, whereby the industry would have had to put in hundreds of thousands and likely millions of dollars in order to participate in a secondary regulatory action by the province when those products have already been approved at the federal level. Also, then you're going through a whole other regulatory process. That's just the cost to the industry.

On top of that, then, I would suggest that the governments would have duplicative costs that they would have had to have borne in order to go through their regulatory process, despite the fact that the federal government, the relevant regulatory agency in this case, has already deemed the product to be safe.

I think there's a lot of duplication and cost just in the process. On top of that, then, you would have costs associated with companies having to create whole new market scenarios for Canada because you have one jurisdiction in the country that treats their product in one way here and then another jurisdiction over there that treats it a slightly different way. You're starting to have a fragmented marketplace, and and there are costs associated with that.

We don't have a global figure per se, but I think in studying this further the committee could drive out costs on an initiative-by-initiative basis.

[The Chair, Conservative, Bev Shipley]

Thank you very much.

We'll now go to Mr. Payne, please, for five minutes.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you, Chair.

Thank you to the witnesses for coming today.

My first questions will go to the Canada Grains Council.

Mr. Bjornson, this goes back a little ways, and maybe it's before your time, but in the Western Producer in 1994, the Canada Grains Council, at its annual meeting, mentioned among other things that “high on the agenda” would be “[i]nternal trade reform” and “overcoming interprovincial trade barriers”. I don't know if you've seen any changes. Have they gotten worse or better? Do you have any comments on that?

[Tyler Bjornson]

I think this is one of the reasons why we decided to write to the premiers and the Prime Minister. We were seeing a trend of provincial regulation, duplicative regulation, starting to increase. It's been an outstanding issue for a very long time. We really feel that now is the time for the provinces and the federal government to get serious about removing these barriers.

It strikes me as strange how we can have what I think are very in-depth, progressive, and helpful agreements between countries, between our trading partners bilaterally, yet within our own country we're experiencing very large interprovincial barriers and we don't have similar strong initiatives with leadership from some of the provinces to come forward and say that we have to address some of the issues in our own country too.

[LaVar Payne, Conservative, Medicine Hat, AB]

Yes, and I think that's right, because that comes from 1994, so that is a few years ago.

I know that a previous executive director in your organization gave an interview and was asked how the changes to the Wheat Board would have an impact on you. He said:

...we are facing unparalleled transition now, especially on the grains side of things as we transition away from the Canadian Wheat Board. With that comes a lot of flux. There's been a huge amount of international focus in...[the past years]. We need to make sure we have our domestic house in order....

Do you have any further comment on understanding exactly what he meant by that?

[Tyler Bjornson]

I think there's been a series of regulations and legislation that have been reviewed and overhauled since the removal of the monopoly on the CWB. I think that over the past two years governments have done a good job, an admirable job, of creating a private sector marketplace where the industry can flourish, from farmer all the way through to the end processor.

The challenge we have is in the federal and provincial jurisdictions not having clarity on who actually should be regulating in some of these areas. From our perspective, the federal government has the clear mandate to regulate food, feed, and environmental safety matters through the PMRA, Health Canada's food directorate, the CFIA, and the Canadian Grain Commission.

We find it extraordinarily unhelpful for perception and sometimes politically driven regulations to be put into place by the provinces. You remove the opportunity to do that by having an agreement between provinces and the federal government to not do that. The aim of our appearance here today is to really drive home the fact that if you have an agreement in place between the provinces and the federal government to abide by these federal regulatory approvals on the safety of these products, then you remove the possibility that future generations of governments will see fit to drive home regulation that's perception based.

[LaVar Payne, Conservative, Medicine Hat, AB]

You also talked about investment risks. With interprovincial barriers, how does that damage the Canadian economy or the economy of those provinces? In your view, where would those investment dollars go? What kind of opportunities and losses of jobs would we be looking at?

[Tyler Bjornson]

It's significant that.... I'll use the example of canola, where we really have a world-renowned crop that's Canadian-based. The global hubs for research, innovation, and new developments in a crop like canola are all based in Canada. We have to fight for those research, innovation, and investment dollars, and having a clean regulatory slate that's predictable, where there isn't duplication and there isn't the possibility of having politically driven regulation, is a clear signal to the international community that we are open for business. If we have all of these things inserted in our market, we start to raise questions in the minds of the people placing the investment about whether they should really put it in Canada or maybe go elsewhere, where they have clearer regulation and know what they are going to get into.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. Payne.

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

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you.

Thank you to the witnesses.

Mr. Bjornson, you talk about high barriers and rising barriers over time. Can you say which of these barriers have risen over time, and the importance of this?

[Tyler Bjornson]

The ones that we are targeting today and that were the topic of the letter we sent to the Council of the Federation revolve around products that have to go through a food, feed, or environmental safety approval. The barriers we have seen on the provincial and local government side include things like pesticide bans on the urban side. Recently, the Government of Manitoba put into place a ban on the use of urban pesticides, and the potential for that to snowball into regulation in other areas is rather large, I think. That's one example. There is also the ban on seed treatments in Ontario, which is a recent action.

We are very concerned, given the ability of the public at large to get false, non-science based information from the media, the social media, or any source or means whatsoever, about governments reacting to perceptions instead of sound science and risk management, which is the foundation of your regulatory system. That's where we see the risks, that is, in people responding to perception as opposed to clear, science-based, risk-based systems.

[John McCallum, Liberal, Markham—Unionville, ON]

I am certainly not defending these actions, but are they a trade barrier? Are they a barrier to interprovincial trade, or are they just a negative for your industry?

[Tyler Bjornson]

If you look at it in this way, if you have a company that's producing a seed treatment product in one of the provinces and another province decides to ban it, you can no longer provide that seed-treatment product in that province, so then you are creating an interprovincial barrier. It's a barrier both to the actual trade of goods and to investment. It's both.

I see where you are going with this, but it is a barrier to actual trade.

[John McCallum, Liberal, Markham—Unionville, ON]

Maybe this is just a question of semantics, and it's not necessarily that I disagree with you on the issue, but I see a trade barrier as a barrier to trade. If you're talking about trade between countries, each country will have a different tax system and different rules of various kinds, and if those are different, it's not a barrier. For example, when Mr. McAlpine talks about the Ontario pension system, well, that's different. It's bad for competitiveness, but I'm not sure it's a barrier to trade. It's a negative for competitiveness, if you are employing people in Ontario.

Perhaps I could ask Mr. McAlpine. Have you witnessed an increase in trade barriers, as opposed to actions by government that you don't necessarily like but aren't directly related to trade?

[Rory McAlpine]

I think you're hitting on the key point. The problem is that we always frame the issue in the context of trade barriers, as if there's some sort of tariff or real measure actually at an interprovincial border stopping the movement of goods or people or capital, whereas I think we're both trying to convey that that's very simplistic. If we approach the policy challenge of this in simply those terms, I think we're missing the much bigger point.

In fact, it's really no different from international trade in that, yes, you have tariffs at the border, but we know that in global trade, often the much more insidious and damaging impact to the actual flow of goods, people, or capital are the internal measures. In agriculture, often those are subsidies. That's why we have a WTO agreement that brings discipline to the exercise of domestic support to agriculture. There are internal standards, internal technical issues. You may have no barrier at the border, but you have all kinds of measures that fundamentally prevent you from investing or selling products.

I agree that it's not really a trade barrier. Most of these things are obvious examples in supply management, where you have actual regulation of a commodity, meaning, for example, if I'm a chicken processor in Ontario, my ability to source live chicken out of Manitoba to use in my plant is subject to a whole bunch of rules that prevent the movement of those live birds. There are, however, relatively few examples of that.

[John McCallum, Liberal, Markham—Unionville, ON]

My last question, if I have time, is not about a trade barrier, but what about restrictions on temporary foreign workers? I would have thought that would be one of the more major negative policy actions affecting your company.

[Rory McAlpine]

That's a very good point. In that case, when we get an approval for a foreign worker at a given—

[The Chair, Conservative, Bev Shipley]

We're going to need to have just an executive summary of that answer, please. We're over time.

[Rory McAlpine]

When labour is approved under the program for a given plant at a given location, and then you're unable to do that, that labour cannot be moved to another location. That's very true.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. McCallum.

We'll now go to Mr. Keddy for five minutes, please.