Agriculture Committee on Nov. 3rd, 2016

[The Chair, Liberal, Pat Finnigan]

Hello everyone.

Welcome, everyone, as we move along with our study of the APF. I call the meeting to order.

With us today we have the Dairy Farmers of Canada, with Madam Caroline Emond, who is not a stranger to this committee.

Welcome, Ms. Emond.

We also have with us Émie Désilets, assistant director of dairy production research.

Hello, Ms. Désilets.

From the Turkey Farmers of Canada, we have Mark Davies, chair, and Phil Boyd, executive director.

Welcome, Mr. Davies and Mr. Boyd.

As usual, we have up to 10 minutes from each organization.

Mr. Davies, you have the floor.

[Mark Davies, Chair, Turkey Farmers of Canada]

Thank you very much, Mr. Chairman.

I'll quickly introduce myself. My name, as stated, is Mark Davies and I'm the chair of Turkey Farmers of Canada. I have a farm in the Annapolis Valley in Nova Scotia where I raise turkeys, and I've done so for 25 years. I'm also a second-generation farmer. The farm itself has been around since the first year of supply management for the agency. We bought our farm then.

Once again, thanks for inviting us to present our comments on the next APF.

I'll give you a bit of background on our industry. TFC represents 535 farmers across our great country, in eight member provinces from Nova Scotia to British Columbia, who generated farm cash receipts of almost $400 million in 2015. Over the last five years, farm output has grown by 12%, driven by a growth in production for value-added activity of 19% over that same period.

Across the chain, the turkey sector generates 14,000 jobs and adds economic activity in the amount of $3.3 billion per year, providing Canadians with 95% of their demand for turkey meat and related products. The sector imports $37 million in turkey meat, and exports are valued at $32.4 million per year, based on the 2015 statistics. Canada is also home to a globe-leading turkey genetics sector, specifically supported within the domestic quota system for many years.

Turkey farmers operate, as you well know, within a supply management structure and view supply management as a significant component of Canadian agriculture, including from the standpoint of a business risk management program in and of itself. That's how we view supply management. This has been recognized by parliamentarians and governments and was reinforced in the July 2016 Calgary ministerial statement, and we believe that it will continue to be a strong plank in the next policy platform.

The Canadian Federation of Agriculture, of which we are a board member, presented to the committee last week. The CFA has put significant work into contributing to the development of the next policy framework. As you develop and finalize recommendations, we encourage the committee to give the CFA a heavy weighting on their presentations and their objectives.

Our experience at TFC has been largely focused in two areas: research cluster funding through the Canadian Poultry Research Council, and the development, implementation, and review of our on-farm programs specifically dealing with on-farm food safety and flock care. In both cases, our sector has seen benefits from the current and previous framework. This experience shapes our comments for the next policy framework in light of the current and emerging influences on the Canadian agricultural and agrifood sector.

Moving along to the objective for today, which is the next policy framework, the Calgary statement sets out the key areas of focus for the next policy framework, but we will focus our comments on the following three elements today: first, research and innovation; second, the link between agriculture/agrifood and the public; and third, growth in the domestic value-added activities that it supports.

First is research and innovation. We support the cluster funding process that has been in place for the last two policy frameworks. The approach has created opportunity for our sector specifically linked to our TFC research strategy. We see the language of the Calgary statement as a positive indication of where ministers would like to go, at least directionally.

In particular, there are two key pieces to which we would like to draw your attention. First, the strengthening of science, research, and innovation capacity is needed, and the need to address it is not without urgency. The second piece is the supporting of research activities that require sustained commitment. Both of these objectives need attention and further development as Growing Forward 2 ends and the next framework comes into play.

The cluster funding model has been helpful to us and our partners in the Canadian Poultry Research Council, and this five-year model is helpful to our sector and to the researchers. We wonder if there is a way to create a longer-term span on the funding side. This would allow for a more flexible approach to ongoing research and addressing the needs as they emerge.

Finally, on the question of capacity, as you know, there are no federal research facilities for poultry at this point in time. It's very concerning to our industry as a whole. It is very important that the poultry sectors do not get overlooked as federal funding targeted to existing facilities increases now and into the new framework. We believe that it's worth a very considered discussion when it comes to the funding of research for poultry.

The second element is public trust. We all know that this has been in the public eye, especially in the last three to five years, where it has really come to the forefront for a lot of people in understanding how things work in the agricultural world.

As we're all aware, the agriculture and agrifood sector is facing a challenge as well as an opportunity, as the public and consumers rightfully want to know more about production of the food they consume and the consequences of food production and processing on our national resources and our environment. As noted by others, there can be a trust gap—and it is sometimes significant—between the science-based innovation that we use and the consumer acceptability of that innovation. We believe it can be bridged by an understanding of this innovation. Creating that understanding will maintain and deepen the public trust in Canadian agricultural production and food processing.

We've also engaged in the public trust network that was initiated about one year ago. This is an important priority for us. We would support an integrated approach between governments and industry in terms of reinforcing confidence and building trust, as per the Calgary statement, but this has to include consistency of standards applications on product coming into the Canadian market. That's not a new position for anybody in agriculture. Continuing support of programs that work towards, amongst other things, addressing consumer confidence and support for initiatives that bring improvements to practices is certainly warranted.

The last point is value-added growth. The further processing or value-added segment of the market, as I noted in my opening comments, has been the driver of growth in our sector. The value-added activity is strong, and farmers are meeting the needs of the sector through a flexible and market-driven approach to setting our turkey supply. We have also developed and implemented programs that focus on food safety and flock care. Both are important to customers and consumers. These should include an emphasis on value-adding in the next policy framework and they are of high importance to our farmers, especially if the Trans-Pacific Partnership is implemented. Our sector will face high import access and we expect that access will be used to import meat processed to a secondary level—I am referring to boneless meat, which is really the economic driver, and what is mostly imported into Canada—that will be used to a finished level. This represents an area in which a well-informed and integrated approach along the domestic supply chain, with the support of governments, is critical to maintaining and increasing domestic output.

In conclusion, I would like to thank you all today for the opportunity to appear. We've been able to hit only the very high points on three major areas of focus, three areas that overlap with our business plan, which, coincidentally, we just completed in Calgary in May. We see a real dovetailing here of initiatives. It's really no surprise, given the ongoing changes within Canadian agriculture and agrifood. We all have the same focuses now. We're ready to engage collaboratively with you on the committee, with the government, and with officials as required. Thank you for your time.

[The Chair, Liberal, Pat Finnigan]

Thank you so much, Mr. Davies.

I now give the floor to Ms. Caroline Emond of the Dairy Farmers of Canada.

[Caroline Emond, Executive Director, Dairy Farmers of Canada]

Thank you very much, Mr. Chair.

First of all, I thank you, on behalf of the Dairy Farmers of Canada, for this invitation to participate in this very important study on the next agricultural policy framework. I will start my presentation in French.

With me this morning is my colleague Émie Désilets, assistant director, dairy production research, for the Dairy Farmers of Canada. She is very familiar with the current framework so she will be able to answer your questions.

The Canadian dairy sector makes a huge contribution to the Canadian economy. According to the latest study conducted by EcoRessources ending in 2015, Canada’s dairy sector contributes approximately $20 billion to the GDP, and $4 billion in tax revenues, every year, while sustaining 221,000 full-time equivalent jobs across the country. From 2013 to 2015, this represents a 5% increase in contributions to the GDP, a 5% increase in tax revenues, and a 3% increase in jobs. In addition, dairy is either the top or second agricultural sector in 7 out of 10 provinces. Furthermore, unlike other jurisdictions where farmer’s incomes are heavily subsidized, Canadian dairy farmers receive no direct subsidies and derive their income from the marketplace.

The development of the new strategic framework is crucial to our sector. It will of course be difficult to cover the topic in detail in 10 minutes. We will nonetheless be available to contribute throughout the development process.

A number of programs affecting our industry contribute directly to achieving the objectives of the strategic framework, whether market growth or sustainable development. It is clearly important to maintain and indeed increase investments in partnerships with the dairy sector.

I will now say a few words about the AgriInnovation program.

Following a consultation with dairy sector stakeholders, the Dairy Farmers of Canada, or DFC, this summer adopted a national dairy research strategy for the next five years. DFC and its members are currently working to coordinate investments in dairy research and leverage partnerships at all levels to maximize farmers' investments in research, and generate targeted outcomes to advance the sector.

DFC strongly believe that the next strategic framework should maintain the overall government-industry ratio of investment at 75/25 for non-profit organization applicants. If the ratio changes, industry might not be able to compensate for reduced government contributions, which would decrease research capacity and efforts.

In order to maximize the effectiveness of the research continuum, there should be no interruption between GF2 and the next strategic framework. Access to all government and university researchers under GF2 is appreciated. This access has been a key component in maximizing the success of collaborative and multi-disciplinary projects. DFC consider that all types of research and projects that are deemed important to the industry should continue to be eligible and funded under the next program.

Furthermore, it is critically important for DFC to continue to be able to fund randomized clinical trials for human nutrition and health research under the cluster program. Such trials provide the strongest levels of scientific evidence in order to inform clinical and public health guidelines. As these trials are generally longer, very expensive to conduct, and normally difficult to fund under our other funding programs, the cluster program presents a unique and very important opportunity for us in this regard.

Finally, DFC requests that the next APF keep investing to ensure the rapid and efficient dissemination of research results, new knowledge, and new technologies. Moreover, the next strategic framework should be more flexible in terms of the budget and work plan in order to address issues that emerge during the research period.

The role and responsibilities of cluster recipients in the management of the intellectual property developed under the program should be reviewed and better defined.

I would like to provide a few concrete examples of the cluster under GF2.

Canadian dairy genetics are among the best in the world. Since 1988, the total value of Canadian dairy genetic exports, including dairy cattle, embryos and semen, rose from $68 million to $140 million in 2015.

With regard to sustainable development, carbon equivalent emissions from dairy farms were reduced by over 25% between 1981 and 2006 as a result of efficiency gains made on farms. This trend has continued to show a steady decline in GHG emissions from dairy farms of approximately 1% per year.

Research outcomes have resulted in science-based standards for the animal care assessment stream of DFC’s proAction program.

Milk products, regardless of their fat content, do not increase cardiovascular risk. In fact, a growing body of evidence indicates that milk products are associated with a reduced risk of cardiovascular disease. These are some concrete examples of the investments made in the research cluster.

I would like to say a few words about the AgriMarketing program. I mentioned the proAction initiative, comprises six modules: animal care, food safety, traceability, biosecurity, and the environment. It is an on-farm sustainability program launched by DFC to foster more innovation and improvement within the dairy industry, as well as to build and maintain public trust. The Canadian dairy industry is unparalleled in the quality and safety standards that are rigorously set and adhered to by all our farmers.

Some components of the proAction initiative are administered under the assurance systems stream of the AgriMarketing program of GF2. DFC will be reapplying for funding for the continued development and implementation of proAction under the next APF.

This kind of program requires some flexibility in order to adapt to market conditions. In addition, DFC strongly recommends that AAFC reduce the approval delay period for projects falling under the AgriMarketing program, and offer bridge funding between GF2 and the next APF.

With the dismantling of TraceCanada, DFC suggests that AAFC ensure continuous eligible funding for livestock traceability projects, including implementation and operational costs.

Environmental farm plans are also very important to us and we would like to contribute to discussions on their evolution and on the national approach currently being developed.

Finally, since June 2015, DFC has been asking the federal government for an investment equal to 50% of the cost of implementing proAction on Canadian dairy farms. The total cost is estimated at over $200 million in cash outlays and producer time over the next ten years. We believe this would be a constructive way for the Canadian government to invest in a sustainable and innovative dairy industry that could be administered under the next APF.

I will conclude in English.

While DFC's focus in this submission has been on the element of the new APF that directly impacts the dairy industry, as a member of the Canadian Federation of Agriculture, we would like to state our support for each of the CFA's recommendations.

In closing, it's important to say that the government's long-term commitment towards supporting the agricultural sector must go beyond the five-year framework for the AFP. The government must recognize agriculture and the role of dairy as a strategic growth sector.

While DFC considers supply management to be one of the best business risk management tools, the next APF can play a critical role in supporting the investment of the Canadian dairy farmers and making it into a sustainable future for our sector.

There is a need for increased funding for the entire program. However, it is important to know that any increase in funding for a particular stream should not come at the expense of any other program administered under the next APF.

It is critical for the government to recognize the knowledge and expertise of the agricultural sector. If you put the right tools in our hands, we will continue to innovate and lead our industry to a sustainable and prosperous goal.

I know that you all have on your mind a big question about CETA. I just want to let you know that I do not have any information or reaction I can share with you. I will be pleased to take your questions on research, and even on the new logo, if you want to, that we launched this week. I look forward to the discussion.

[The Chair, Liberal, Pat Finnigan]

Thank you, Ms. Emond.

We will now move on to the question period.

Mr. Gourde, you have six minutes.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

Thank you, Mr. Chair.

Thank you to the witnesses for being here this morning.

My first question is for you, Ms. Emond.

On the weekend, the European free trade agreement was signed. No doubt you have a tremendous amount of work to do as a result.

During the negotiations, the Conservative government had established a compensation program for Canada's dairy farmers. In the House this week, the Parliamentary Secretary to the Minister of Agriculture and Agri-Food said that it would be a transitional program. So there will be some compensation during the transition.

I don't know if you would agree, but from my point of view, that is not the same thing. Some journalists specializing in agriculture are suggesting that there is an agreement on a transition program. On Monday, the government set out a transition program and journalists are already aware of it. Were you aware of it? Have you participated in developing this program? Do you have any comments to make on it?

We are members of the House of Commons and the government has not yet told us anything about the development of a transition program. We had heard instead about a compensation program. We are frustrated. For your part, you should have played an active role in this process. We should have been informed before journalists commented on it in specialized journals.

[Caroline Emond]

Thank you for your question.

My answer is no. The journalists do indeed have more information that we do right now.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

To your mind, are a compensation program and a transition program the same thing or is there a difference between them?

[Caroline Emond]

We have made representations to the government. It has all the information we could have provided on the impact and the way it could approach certain situations. I would have to know what the announcement says before forming any judgment. I am not able to form a judgment right now. I have no information that would enable me to assess what is planned one way or the other.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

Should Canadian dairy farmers be nervous about a potential precedent regarding the difference between a compensation program and a transition program? In my opinion, legally speaking, they are not the same thing.

[Caroline Emond]

I have to admit that I share your curiosity. I am also eager to understand the difference between these two terms. As mentioned, there is a process in place. Journalists had an information session with Global Affairs Canada, but we did not attend. So I cannot say more than I know, which right now is nothing.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

We have always fought for the principle of compensation. According to this principle, if a market is lost, compensation is provided. A transition program can help people deal with changes in the market or provide some support for marketing efforts. Perhaps the transition program includes recognition of lost markets?

[Caroline Emond]

I can only hope. All we can tell you is that we made representations to the government to discuss the losses resulting from the implementation of CETA. We did our job.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

Can you remind us of the extent of the losses expected from the import of tonnes of cheese?

[Caroline Emond]

They are in the order of about $100 million for producers and about the same for processors. Based on our calculations, the annual losses could range from $200 million to $300 million in perpetuity, since these losses are recurrent.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

Do you think cheese producers, which are often small dairy farmers with niche products, will be the first to feel the effects of this agreement?

[Caroline Emond]

As I already said, we have made efforts to support small and medium-sized cheese processors. We also worked with them to form a coalition in order to give them access to import quotas. That is one of the measures proposed to mitigate the impact on small cheese producers. We still do not know to whom the quotas will be awarded.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

Should these import quotas be awarded first to those who already produce cheese? These cheese makers invest a great deal of money to produce cheese while complying with Canadian standards.

Some people want these quotas, but they are just distributors. I think it is easier for someone to put cheese in a freezer, to buy small trucks, and to make deliveries around town rather than investing $10 million, $15 million or $20 million in production.

Consider Fromagerie Bergeron, for example, which is in my riding. It already produces and exports cheese and it would also like to import it. Companies like this invest and create jobs in the riding. This company employs more than 200 people. If it had import quotas, that would give it leverage to export its own cheese. If it is possible to buy cheese from Europe, it should also be possible, through European brokers, to export cheese that is produced here.

Would that give these processors some leverage? Would it enable them to export and import cheese? We also have access to the European market, but it will be very difficult to penetrate that market.

[Caroline Emond]

We took part in all the consultations on the administration of tariff quotas, and our position was that tariff quotas should indeed be awarded to small and medium-sized cheese producers.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

Let us set aside the Costcos of the world that would like the lion's share of the market. In all regions of Canada, we might allow these cheese makers who purchase milk from Canadian producers to make investments. They are prepared not only to purchase milk at Canadian prices, but also to try their luck on the export market.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Gourde.

Now Ms. Lockhart, for six minutes.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

Ms. Emond, I appreciate your testimony today, and I appreciate your responsible commentary on CETA. As you said, we don't have all the information now, but I can assure you that we're very committed to ensuring that the dairy industry succeeds.

Under the context of today's hearings, we're focused on the agriculture policy framework. I want to talk to you about what innovation looks like for the dairy industry, specifically for producers and for the processors. Could you talk to us a bit about how APF could assist in that way, so that we can be successful going forward?

[Caroline Emond]

Innovation is key, and I've told you a few times when I've come to this committee that the producers has been investing a lot in the last few years to innovate, to improve the economy, and to improve farm practices. When I've mentioned proAction, it's exactly that. It's a program to innovate and make sure that we follow the best practices. The Going Forward 2 money has been used to support the efforts of the farmers, because we do invest ourselves. It maximizes our investment. It makes sure that we can grow our industry, that we can develop the technology, and that we can make sure that we maximize that.

I think one important element of the presentation was related to knowledge transfer. It's one thing to do research, but the next thing is to make sure it's been used and it's been disseminated to the producer. That's the second phase of our national strategy. I've mentioned in the presentation that we have worked to ensure coordination among the provinces, and that we focused on priorities so we can all work together and maximize our dollars.

The second aspect of it that we'll complete for 2018 is a knowledge transfer strategy, as well. This is key. It has to be part of access to the farmers.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

You mentioned collaboration amongst provinces and that sort of thing. From a regional perspective, as we move across Canada, are there things that are going to strengthen the industry in certain regions, and do you have any specifics on those as far as the investments by processors, producers, and government?

[Caroline Emond]

That's why we need all of those tools for co-operation. That's why the leadership is important at the federal level. I know the provinces have been contributing, because everybody has a role to play, but we need to make sure we all work in the same direction. That's where priorities are so important because over the years there's a lot of goodwill, but it happens that some universities or some groups will be working on the same thing across the country, and that's why we value the national strategy.

Even now we have a national dairy council where we share with stakeholders to make sure that we maximize all the research that we do. Coordination is key. There are a lot of good things that can be done in the provinces, but the provinces can learn from each other, as well. We need to make sure that we spend every dollar we have wisely and maximize it.