Agriculture Committee on Nov. 1st, 2016

[The Chair, Liberal, Pat Finnigan]

I call the meeting to order.

Welcome to this meeting as we pursue our study of the next agricultural policy framework.

Today we welcome Mr. Ron Lemaire, president of the Canadian Produce Marketing Association.

Welcome, Mr. Lemaire.

We also have Greg Cherewyk, chief operating officer for Pulse Canada. Welcome, Mr. Cherewyk.

We will start with a 10-minute statement by each of your organizations and then we'll go to the question round.

Mr. Cherewyk, do you want to start with your opening statement?

[Greg Cherewyk, Chief Operating Officer, Pulse Canada]

Thank you and good morning, Mr. Chair.

Good morning to all committee members. Thank you for the invitation to appear before the committee today. I want to start with a brief introduction to our organization.

Pulse Canada is the national industry group that represents farmers, processors, and exporters of pulse crops in Canada. Canada is the world's largest exporter of pulses, accounting for 37% of global trade. We export pulse crops like peas, beans, lentils, and chickpeas to more than 150 countries, and we continue to grow.

Canadian farmers grew more than 4.6 million tonnes of peas in 2016, which is an increase of 44% from the previous year, and 3.2 million tonnes of lentils, which is an increase of 36% from 2015.

Many of you know that the United Nations declared 2016 the International Year of Pulses. As a result of the work of a global pulse team, to date there have been more than 2.85 billion media impressions generated in an effort to inform consumers and the food industry on the nutritional value of pulses, their contribution to important health issues such as diabetes and cardiovascular disease, and the increasingly important role that pulses can play to improve the environmental footprint associated with food.

Pulses are becoming much more than a trend with consumers, and interest continues to grow as we near the end of our international year. The food industry is already acting with new product launches and launches of reformulated foods that boast higher protein and fibre levels on the fronts of packages. The reformulation of food with nutritious ingredients that have a smaller environmental footprint will become increasingly important, and should be a cornerstone of Canadian and global approaches to improving human and planetary health.

It is important to note that the success the pulse industry is experiencing today has ties to an important partnership with Agriculture and Agri-Food Canada that dates back over 20 years. The pulse industry in Canada has been a partner in developing projects and delivering results from the onset of programs offered under agriculture policy frameworks. This industry-government partnership has been highly effective in fostering economic growth and building Canada's pulse sector into a global leader in pulse production and exports. It has also enabled the pulse sector to become a leader in cross-sectoral, multi-commodity initiatives within Canada to address such issues as transportation, market access, and sustainability, which impact the entire sector.

The next policy framework agreement, as outlined in the Calgary Statement, can build on the lessons and successes of past frameworks. Industry and government collaboration can ensure that framework policies and programs enhance private sector initiatives to create sustainable growth, innovation, and competitiveness for all stakeholders.

I'd like to begin by putting forward some views on the importance of investing in continuous improvement and transformational innovation.

The pulse industry welcomes the Calgary Statement as a framework to support sector strength and competitiveness and to foster transformational innovation. Canadians must do more than just react and adapt to change: we must create and capture the opportunities of the future.

The policies and programs of the next policy framework will need to recognize the difference between incremental growth and efficiency and transformational innovation. Elements of programs—including eligibility criteria, desired outcomes, and evaluation of success—need to recognize that by definition, innovative approaches will be different from activities focused on strengthening an existing business model.

Much of what the pulse industry identifies as priorities under markets and trade require investment into continuous improvement. The ongoing competitiveness of Canada's agrifood sector requires that a range of products destined for more than 150 countries around the world be moved in an efficient and predictable manner. Customers in every market need to know that the quantity and quality of product that has been purchased will be delivered within the delivery period specified in the contract. Reliable transportation remains a top priority.

To fully utilize market access and new trade opportunities, Canada must remain focused on continuous improvement in domestic transportation. The next policy framework must continue to support efforts that focus on improving the performance of Canada's transportation system as a key element of fostering growth in Canada's export sector.

Access to international markets is critical for continued profitability and growth. With increasing success in addressing tariff barriers through bilateral free trade agreements, non-tariff barriers are the key obstacles to capitalizing on market opportunities.

An emerging access obstacle for agriculture is the fact that neither the process nor the timing of maximum residue limit establishment is synchronized between regulators like the Codex Alimentarius at the international level, the European Food Safety Authority, and regional groups like PMRA here in Canada and the EPA in the United States. Rather than seeing a strengthening of alignment at the international level, we see more national approaches, with several key countries moving away from Codex to establish their own national systems.

Recent examples include China, South Korea, Hong Kong, Turkey, and Taiwan. Now India, Mexico, and the UAE and others are also issuing national MRLs.

Pulse Canada and its partners across the agriculture sector strongly support an expansion of efforts under the next policy framework to identify and manage this specific category of trade vulnerabilities. There is a need to quantify and build data on the growing extent of misalignment of MRLs in order to more precisely identify and manage specific risks. Reliable data will assist in management of vulnerabilities and corrective action, as well as development of common positions within grower and community groups internationally on the need for predictable, science-based international standards and trade rules.

The Canadian agriculture industry must also continue to improve its efforts to build capacity to respond to market demands for sustainable products from the food industry and other markets. Market demands for sustainable agriculture products are diverse and have varying requirements for assurance. The next policy framework should continue to support the Canadian agriculture industry as it develops a science-based, robust, flexible approach that is aligned with market requirements and leverages existing programs and tools where appropriate.

Food's role in contributing to climate change is an important consideration for everyone. However, a critical question is whether the obligation is on the consumer to change consumption behaviour to reduce the impact of diet on sustainability indicators like greenhouse gas emissions, or whether this must fall solely on the shoulders of the farm and agrifood sector. The pulse sector strongly supports a shift in thinking to emphasize a dietary approach to healthy people and a healthy planet. Market-driven approaches will provide the right incentives to keep Canadian agrifood competitive in global markets.

Value-added processing is another focus area where investment into continuous improvement will generate returns. The addition of value in Canada, including all types of processing—cleaning, splitting, bagging, or processing into consumer food products—adds jobs and market stability. The food manufacturing industry continues to be highly interested in offering products with improved nutritional quality and health benefits to meet consumer demands. Canadian grains, oilseeds, and pulses are well positioned to take advantage of these opportunities. The next policy framework can continue to support ingredient processing that improves the nutritional value and health potential of ingredients in food products.

The next policy framework can also set Canada apart on the world stage by fostering transformational innovation in food. Pulse Canada believes that Canada can differentiate its food system by strengthening the connection between food, human health, and environmental health, while simultaneously enhancing the profitability of the agriculture sector and the food industry.

Investments in transformational innovation are focused on creating opportunity through new offerings. Compared to those focused on incremental improvement, investments in transformational innovation are intended to create a novel product or service, and thus are inherently more risky for all stakeholders within the agrifood value chain. Without the benefit of knowing the full economic value of the investment in innovation in advance, measurement of success must include assessment of potential value. In these cases, measuring what you can learn can be more important than what you earn in early stages.

Investments in transformational innovation are closely linked to the next policy framework themes of risk management, environmental sustainability, climate change, and value-added agriculture and agrifood processing.

For example, a focus on sustainable food would be transformational innovation that addresses socially important issues and priorities of the next policy framework. In this context, sustainability includes human health, environmental health, and economic health. Nutritious food can deliver health outcomes. Nutritious food can also deliver environmental outcomes through reformulation and by keying on dietary footprints. Nutritious and sustainable food can deliver economic outcomes by recognizing the need for all players in the agrifood system to be profitable while also ensuring affordable food for consumers.

Putting food in front of consumers that delivers health, environmental, and economic outcomes requires forward-looking research that goes beyond existing programs. With this in mind, the next policy framework must be open to novel approaches to thinking about solutions that build the resilience and growth prospects for the medium and long terms.

In sum, the right policy framework will deliver programming that builds on success and supports continuous improvement and programming that recognizes the importance of creating future opportunities through transformational innovation.

Thank you.

[The Chair, Liberal, Pat Finnigan]

Thank you so much, Mr. Cherewyk.

We will now move on to Mr. Ron Lemaire, from the Canadian Produce Marketing Association.

Mr. Lemaire, you have 10 minutes to make your presentation.

[Ron Lemaire, President, Canadian Produce Marketing Association]

Members of the Standing Committee on Agriculture and Agri-Food, on behalf of the Canadian Produce Marketing Association, I'd like to thank you for the opportunity to speak to you today on the topic of the next agricultural policy framework.

CPMA is a 92-year-old trade association representing over 800 Canadian and international members, who are responsible for 90% of the fresh fruit and vegetable sales in Canada. Our diverse membership is made up of every segment of the produce industry supply chain, from grower-shippers to packers, distributors, food service operators, and retailers.

[The Chair, Liberal, Pat Finnigan]

Do we have a problem with translation?

Is it working?

Okay. We're good. Sorry about that, Mr. Lemaire.

[Ron Lemaire]

The Calgary Statement outlined six overarching objectives for the next framework. All are critical to the future of our industry. I will touch on how a few of these areas can support our sector.

The produce industry is a unique entity. This important economic engine is made up of rural, provincial, national, and multinational companies, all working together to increase the consumption of fruit and vegetables.

We make an important contribution to national economic output and employment. In 2013, the fresh fruit and vegetable sector supported over 147,000 jobs, created $11.4 billion in real GDP, and contributed $1.3 billion in personal income tax and $840 million in corporate taxes—yet significant potential for growth still exists. This growth will be fostered by many factors, including access to markets, effective regulatory frameworks, and the continuous commitment by both government and industry to innovation and improvements in the sector.

While science, research, and innovation form their own priority area under the Calgary Statement, these are cross-cutting issues that will help us achieve results in multiple areas. Dramatic improvements in innovation have supported our industry's ability to not only maintain and improve the traditional fresh items available to Canadians but also to dramatically expand those offerings. Additionally, improvements to technology and innovation have improved such areas as inputs to grow crops, how fields are monitored and augmented, the transportation of produce, new product development, data sharing, produce identification, and much more.

Public support for research is also important to ensuring that the benefits from the commercialization of new discoveries extend across the sector and not just to one private company. This enables national industries to benefit and grow and for those gains to reach more Canadians.

Examples of positive public-private investments are already reaping rewards for both our sector and for Canadians. After fire blight nearly decimated the Canadian pear industry, Agriculture and Agri-Food Canada researchers developed a new pear that was resistant to the disease and had a longer shelf life. This, combined with investments in storage technology, allow for this Canadian pear to be available on grocery shelves from November through to March. After 20 years of development, the Vineland Growers Co-operative launched the Cold Snap pear to consumers in November 2015. The variety is now licensed to Canadian industry and grown in Ontario and Nova Scotia, and plantings of this Canadian variety have also begun in Europe and the United States.

The produce industry faces many opportunities, but also many challenges. Labour, environmental sustainability, and consumer demands are all areas that fit under the new policy framework, and I'm going to quickly touch on a few of these now.

We are all aware that the availability of labour is an issue for our sector, and without labour all else fails. The Canadian Agricultural Human Resource Council estimates that horticulture represents 50% of the labour gap in Canadian agriculture; that means the horticultural sector is short over 29,000 workers. This highlights only the shortage at the grower level and does not include shortages through the rest of the supply chain, which would surely add thousands more. Automation and robotics are used in planting, picking, and packing of produce, all helping to reduce the demand on labour while also reducing waste and improving productivity, but automation cannot replace all labour needs.

Another challenge is environmental sustainability and the need not only to reduce the use of inputs like water and crop protection tools but also to meet emission reduction targets and adapt to our own changing climate. Technology has already allowed us to make substantial progress in these areas. Drones and other innovations are being used to monitor fields, improve irrigation, and reduce the use of pesticides and other crop protection tools, but more can be done, and investment in innovation will be essential to getting us there. As well, while support for environmental sustainability is critical at the grower level, it should not be forgotten across the rest of the supply chain.

The third area noted is the changing tastes and demands of Canadians. This is both a challenge and an opportunity for our sector. As Canada's population becomes more diverse and consumer demands become more complex, research support can help Canadians and the fruit and vegetable sector meet complex demands through the development of new varieties and the adaptation of non-traditional crops to be grown in Canada.

Along the same vein, different age groups have different expectations in terms of product offerings and convenience, not only in Canada but on a global level. Our industry has been at the leading edge in providing value-added products to consumers to meet their demands for ready-to-eat products that fit their busy schedules, from bagged salads to pre-cut apple slices to pre-made cauliflower rice. Support for innovation in this area is important, not only to ensure the continued development of new and exciting products that make eating a healthy diet easier for Canadians but also to support research to address the different food safety concerns for these products.

Additionally, I do not want to omit the growing issue of food security. Food security is a concern for both industry and government. Innovation and research in the produce supply chain supports long-term solutions in food production, distribution, and storage infrastructure for rural, remote, and northern communities, and the scope of this issue should find its way into the framework moving forward.

Support for innovation does not only mean support for research and development of new technologies in Canada, but also ensuring that Canadian agriculture is able to assess the latest technology from all over the world. For example, some of you had the opportunity to visit Peak of the Market in Winnipeg and witness their state-of-the-art equipment in their packing facility in action. It was funding under Growing Forward 2 that helped Peak make these investments. They received support to purchase equipment that included new robots with custom-designed hands capable of filling retail bins, a custom-made unloading and pallet system, metal detectors for all packed products, and an automated pallet replacement system. In addition to a projected 30% increase in productivity, the new equipment also helps ensure a higher quality of produce reaches the consumer, reducing bruising and damage to vegetables and creating a better work environment for staff. While the majority of the new equipment was made in Canada, some pieces were sourced and customized from the Netherlands, Germany, and the United States.

The funding model moving forward is vital. The foundation for Canada's fresh produce supply chain is made up of approximately 25,000 small, medium, and large-sized farms that produce vegetables, fruits, and potatoes. The produce industry is one of narrow margins with little bandwidth to absorb rising costs. It is critical to the sustainability of the industry that research and innovation enable the industry to increase its productivity and reduce costs. There is strong support within our sector to continue with the model of 75% government and 25% industry funding for research, but there are concerns that the contribution from government could decrease. There is little ability in our industry to increase the dollars devoted to these research projects at this time. A decrease in the ratio of the government contribution for research projects will only have an effect of decreasing the number of projects overall.

In closing, it is critical that the next agricultural framework allow for flexibility to meet changing needs. In the coming months, our industry expects the publication of the Safe Food for Canadians regulations. This is significant regulatory change, and support will be needed to ensure that our sector and the agrifood industry is able to meet the new requirements being delivered in the coming years.

Given the substantial investment that our federal and provincial governments will be making under this framework, it is important to ensure that the regulatory burdens are not counterproductive to our efforts. A responsive, science-based regulatory framework that allows for the timely approval of new ingredients, product, and processes is essential.

Support under the framework must also be matched by support to achieve these goals through other means. Market access concerns for fresh produce are normally non-tariff barriers related to food safety or plant health. Industry alone cannot meet the requirements of foreign governments in these areas. If AAFC and CFIA are not adequately resourced to respond to plant health and food safety requests from our international partners, other support or investment to market access will have little results.

Moving forward, we must remember the demands of tomorrow cannot always be foreseen. The Canadian produce industry works in a fast-paced market and needs to be flexible to meet changing demands. Government support should work to be reactive and flexible to enable our businesses to grow.

Again, thank you for the time. I look forward to your questions.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Lemaire.

Now we move into the question period. We will have a six-minute round.

We'll start with Mr. Anderson, for six minutes.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Thank you, gentlemen, for being with us here this morning.

Mr. Cherewyk, you had mentioned earlier that we've been partners in development under previous policy frameworks. Pulse and canola have been two of the real success stories, particularly in western Canada over the last 20 years. I'm just wondering, what has worked? When you say we've been partners, what are the things that have worked really well for Pulse Canada under the previous policy frameworks that we might be able to recommend to the minister?

[Greg Cherewyk]

One of the things that we looked at when we looked at opportunities to build on success was the transition we saw between the previous agriculture policy frameworks, Growing Forward 1 and Growing Forward 2. The key supporting programs include things like the support for our Pulse Innovation Project. It was support that was provided to the pulse industry to launch an entirely new area of focus on health, nutrition, and innovation in pulses.

Historically, we were an organization that attended food shows around the world, demonstrated that pulses were grown in Canada and that Canada was an emerging leader in pulse production and exports. Waving the flag around the world grew old pretty quickly. It was time for us to turn to establishing new market opportunities. Agriculture Canada was there to support that transition away from a sole provider of basic proteins for the developing world to an industry that could also provide products to the western developed world. A lot of the programming placed emphasis on that transition to a food ingredient supplier to the western world.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

I think my constituency, which is the area I live in, has probably benefited more from the development of pulses, particularly lentils, than any other place in Canada. John Palliser had said the area was uninhabitable. I guess we've proven that he was wrong.

You talked also about your opportunities. I'd like to ask Mr. Lemaire this, as well. You talked about creating and capturing opportunities. What do you see as your opportunities over the next five to 10 years? Where will your innovation be? I'll ask both of you that same question. Where are your opportunities? What is that innovation that you'd like to see that the APF could help with?

[Greg Cherewyk]

When I talk about transformational opportunities for innovation, I'm referring to the need for us all to start to focus on food that can deliver health outcomes and simultaneously deliver environmental outcomes.

This type of thinking is relatively new. This concept of a food system transformation that would allow for ingredients grown in Canada to be incorporated into food products that can reduce the glycemic index of a food product and be of benefit to those who are at risk of developing diabetes, or those who have diabetes, while simultaneously reducing the greenhouse gas emissions associated with that food product is an area of focus where we'd like to see research investments made.

We would also like to see collaborative efforts with respect to the department, industry, civil society, and organizations like ourselves in educating consumers on how they can walk down the grocery aisle and make selections that are not only healthy for themselves but healthy for the planet.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Can I ask you—and then we'll come to Mr. Lemaire—do you see anything specific on the farm, then? Do you see any new products the farmers will really be able to grab onto and...?

[Greg Cherewyk]

From a production—

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

I mean seeds or any kind of genetics that are coming through, or any new crops, or those kinds of things. We've gone from chickpeas to peas to lentils in this expanding development of that industry. Where do you see the future?

[Greg Cherewyk]

Continuous improvement of the current varieties that are out there in lentils, chickpeas, peas, and beans is going to be essential. I know that in Saskatchewan and Alberta they're heavily focused on developing fava bean varieties that will be adapted and well suited to all arable land in the west. A big part of their strategy is to achieve that 25% coverage across western Canada's arable lands. That is a specific area of future development. From their perspective, it's going to be fava beans.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Mr. Lemaire, would you comment?

[Ron Lemaire]

Thank you for the question, and it's a very good one.

As my colleague mentioned, the integrated food systems approach is essential. When we look at opportunity, the value added in that broad stroke is essential. It's essential to look at how we can invest in value-added opportunities and bring non-traditional partners to the table that can help in that investment.

We traditionally look, when we function at the farm level or within the supply chain, at traditional partners. How do we expand that partnership base and move beyond it? Whether that looks at health or academia, the sky's the limit relative to those partners. We just have to understand who the right partner is to drive the right innovation and the right opportunity.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Can I interrupt you for a second? I think I'm running out of time. Are organics a big part of either of your associations? We know they have their own associations, but are they a big part of your associations? Pulses are just developing. I'm interested in that as well.

I'll let you finish, but then I'm interested in that.

[Ron Lemaire]

I'll very quickly talk about new varieties. I touched on that in my presentation.

They are essential. In the changing demographic in Canada, we are seeing many new opportunities for growing bok choy and a range of new products that we traditionally would never have grown, such as sweet potatoes, yams, etc. There is demand for these products, so how do we get there? Innovation to drive those new products is essential to drive the domestic and global market.

[The Chair, Liberal, Pat Finnigan]

Thank you Mr. Lemaire. Thank you, Mr. Anderson.

Mr. Breton, you have the floor and you have six minutes.

[Pierre Breton, Liberal, Shefford, QC]

Thank you, Mr. Chair. Thanks also to the witnesses for being here with us this morning.

I would like to talk about access to foreign markets. My first question is for Mr. Lemaire.

The agriculture and agri-food sector relies on export markets. Our success in this sector depends on access to foreign markets. What do you recommend to the government to boost our competitiveness and your competitiveness on the international market?

[Ron Lemaire]

That's a very good question.

To ensure competitiveness, the biggest question is understanding what that market needs, ensuring that we're growing the right product to ship into those markets and that we are creating the right trade agreements with those markets to enable free and open trade.

We can grow some of the best products in the world. Ensuring that we have access to the right production tools is essential. For example, we're currently seeing the deregistration of certain pest management products that are used in the produce industry, products that are currently used and approved in many other jurisdictions around the world. The deregistration of those products will put Canadian growers at a significant disadvantage in growing and shipping product to foreign destinations.

The other piece around that is the inclusion and use of new products. Our system is still slow to introduce new plant protection tools into the market. Without speedy delivery of some of these tools, it's hard for our growers to be competitive.

My recommendations would be access to new tools, opportunities to research and understand what new varieties or what new products we can produce to meet emerging markets, and necessary agreements with those jurisdictions. As I mentioned, in produce, non-tariff barriers include plant health and food safety.

Those are the simplest things that we can break down if we set reciprocal agreements with many of these countries on our food safety systems. The Safe Food for Canadians Act will do that.

[Pierre Breton, Liberal, Shefford, QC]

Thank you.

I would now like to turn to innovation. You both talked a great deal about the positive features of Growing Forward 2 and what you would like to see in the next strategic framework.

My question is for Mr. Lemaire again. Excuse me, Mr. Cherewyk, I wanted to tell you that a lot of fruit is produced in my riding. The riding of Shefford, with the towns of Rougemont and Saint-Paul-d'Abbottsford, has the highest apple production in Quebec. One of the challenges is the long-term storage of apples in order to send them to market a long time after they were picked. Innovation and research and development are extremely important.

Mr. Lemaire, what would you recommend that the government include in the next strategic framework to foster innovation, which is crucial to the agriculture and agri-food sector?

[Ron Lemaire]

That's a good question.

You touched on storage. Storage is the most important aspect once the product is created, and the investment in storage by many growers is quite costly. Support to create collective storage facilities so that the small growers can pool and deliver their product to these facilities is an opportunity.

The other area of opportunity in the case of the apple industry is the new varieties. Our industry tends to stick with tradition and deliver on the varieties that we've used for the last hundred years. We've done an outstanding job in some parts of Canada within the apple sector to introduce new varieties, but it is an investment. You can't just cut a tree down and a new tree appears, as we all know.

The investment from an orchard to shift the production from one variety to another requires federal support. Without the support to invest in that shift, many do not have the scope or funds to make the significant shift that's needed to meet the changing consumer demand. How do we work to invest on that shift to enable the apple grower to look at the opportunity of a wide range of new varieties that are currently being introduced to the market? Even beyond that, what is the variety of tomorrow that the consumer is looking for?

It's understanding how much sugar content the consumer is looking for, the taste, whether it's a crunchy apple, whether it's a soft apple. All these pieces we know now and we can forecast. Working with research to determine what the best apple is for tomorrow's consumer has to be done and then implemented. The implementation requires support.

[Pierre Breton, Liberal, Shefford, QC]

How much time do I have left, Mr. Chair?