Agriculture Committee on Feb. 24th, 2016

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Meredith.

Thank you, Mr. Meredith and Ms. Brosseau.

Mr. Drouin.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Thank you, Mr. Chair.

Thank you for being here. I appreciate your coming on short notice. I don't share the same grief as my colleagues on the other side about the minister not being here. If I recall correctly, in 2011 he didn't show up for five months.

My constituents and I would like to know how ready we are with free trade agreements that are going to come into force. I'm thinking about CETA, and I know there are technicality issues. Is your department working on those? I'm thinking about hog farmers and cattle farmers with regard to slaughterhouse provisions. It seems as though our other partners are dragging their feet. What's the role of your department in this?

[Paul Mayers]

Thank you very much for the question.

Using CETA as the example, we've been working very closely with our colleagues in Agriculture and Agri-Food Canada, Global Affairs Canada, and the meat industry to ensure that their needs are realized with respect to meaningful market access improvement as a result of CETA. They have identified for us what needs to be done to achieve effective market access. As a result, we have been pursuing this in regulator-to-regulator interaction with our colleagues in the European Commission and with the member states.

For example, in Canada an important food safety barrier employed in slaughter is the use of hot-water washes of carcasses to address the issue of microbial contamination. We worked very closely with the industry to ensure that a very effective dossier was available to the European Union so that they could review and approve the use of recycled hot water in slaughter production. That was the highest priority the industry identified to us. We pursued it and have been successful in gaining the approval in the European Union for the use of recycled hot water in slaughter processing.

The industry will continue to identify priorities, and we will continue to pursue them aggressively with our European colleagues in order to ensure that the industry has meaningful access, not simply paper access, to the European Union.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Thank you.

I have another question. It is again about free trade.

It's about the harmonization of regulations—or not necessarily regulations, but perhaps certification—for biological products or organic products. What's the role of the department, and are you working on a strategy to get this done?

It was one of the issues that the Mexican minister of agriculture mentioned, and I think it does make sense, especially for vegetable and fruit farmers, because it would make it easier for them to export and would reduce impediments to their ability to export their products. What's the role of your department?

[Paul Mayers]

With regard to regulatory co-operation, Canada has been successful in elaborating a comprehensive organic standard, and inherent in the elaboration of that standard is the pursuit of equivalency agreements with jurisdictions.

Again, we work with the industry to identify where their priorities are in terms of markets, and then we pursue negotiations with those markets to maximize the alignment between the Canadian standard and their organic requirements in order to give them assurance that products produced according to Canada's organic standard meet the requirements for the claim of organic in their market. We've been successful in negotiating a number of equivalency agreements with respect to organic produce. Not surprisingly, the very highest priority for the industry was organic equivalence with the United States, which was the first jurisdiction we achieved that equivalence with. We have continued to expand the number of jurisdictions with which we hold organic equivalence in order to maximize the market opportunity for Canadian farmers.

[The Chair, Liberal, Pat Finnigan]

We're now on the second round.

Mr. Longfield, you have six minutes.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you, Mr. Chair.

Thank you for coming. It's really good for us to get an early start on what I'm going to say are non-political and non-partisan discussions on how we can help the Canadian agriculture industry through your departments. As committee members, we are trying to get a sense of where can we add value to make your jobs easier and for us to have success across Canada.

Early in my campaign I was discussing with some of the people of Guelph the need to replace some of the economic fallout that we've seen from the oil industry with an industry that's stable, productive, profitable, and really pan-Canadian.

Mr. Meredith, your presentation on the Canadian agricultural industry, and Mr. Mayers, your value-added on that, are really appreciated. My question might sound political, but I'm trying to be practical about it.

There have been cuts. We had a parliamentary budget officer report that showed some cuts to CFIA, and that's an area I'm very concerned with. We have some major constituents in Guelph, some businesses that see the value of the agency not only as you presented it in your video in protecting our food security but also in helping us with our exports. Our exports have gone from a $50-billion surplus to a $13-billion trade deficit, and we want to do whatever we can to try to build ourselves back up to a positive situation.

We've done some pre-budget consultations. They were completed at midnight last night. How can we invest in your area to try to help with situations that might stop the movement of goods from Canada? I'm trying to understand this from the sense of whether it's the border services or whether it's CFIA. We've heard some stories about shipments of live animals being stuck at border crossings for days. I've heard some stories about the inspection of bull semen, for example, not being done on a timely basis. One recently released shipment was held up since August 18 because of some of the issues like stress on the inspectors and the roles that they're trying to play.

Can you give us a sense of what we can do to help, in terms of investment in CFIA? Is this an area I should be concerned with?

[Paul Mayers]

Well, as you know, it is not for public servants to comment on policy, and I'm sure you appreciate that.

What I will note is that in the agency we're very aware of areas of pressure that industry stakeholders have identified. In their view, our service is not sufficiently consistent or sufficiently timely. We have a very strong commitment in the agency, as part of an overall strategy of modernization, to improve service standards, to bring greater consistency to how we deliver our programs, and, importantly in that regard, to be clearly risk-based in deciding on priorities and where resources are deployed in response to risk. Included in our consideration of risk is economic risk. It is an important consideration, an important part in the overall role that the agency plays in terms of facilitating market access, which, of course, has a tremendous relevance to the sustainability of agriculture and the continued growth that my colleague just described.

As an agency, we're very focused on improving that service culture. We recognize that relative to our regulatory frameworks, which were elaborated more than 50 years ago, the pace of business today is different. In the video, we mention the importance of advancing a new regulatory framework built on a promise presented by the Safe Food for Canadians Act as an example. We're very focused on where we can, within the context of the resources appropriated to us, deliver excellence for Canadians.

I note in passing that while there will always be points of pressure, issues related to determining how best to respond to those points of pressure can be addressed through the movement of resources among the lines of our business. We're putting a lot of focus on how we do that promptly and effectively in order to maximize the efficiency of our delivery.

However, that said, we continue, even with that recognition of pressure, to be recognized for the effectiveness of our delivery. As some members may be aware, the Conference Board assessment of 17 OECD countries ranked Canada number one in terms of its food safety system. We're proud of that, but it's not sufficient, so we're very focused on how we can enhance it.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Mayers. Your time is up.

Sorry about that; you just finished.

Mr. Shipley, you have six minutes.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Mr. Chairman.

It's good to see you again, Mr. Mayers, as always.

On page 7, you say, “As a result, the largest 5% of farms account for almost half of farm cash receipts.” I may be wrong in the exact numbers, but it wasn't very long ago that those numbers were that 20% produced 80% of the cash receipts in terms of production.

Do you see that as a trend that will likely continue? I suggest, as you did in the sheet, that the likely reason is that the medium-sized farms and larger farms continue to become more effective because of their ability to take on innovation, whether that is genetics or physical and mechanical innovation. Do you see that as a trend, and why would you see that as a trend?

[Greg Meredith]

Thanks for the question.

It's something that's quite pertinent to our business, of course. I think I would acknowledge that there is a trend towards larger farms and I think in large respect it's not growth of opportunity. By that I mean that land prices are high, even for small farms. Farmers can exit with a very significant nest egg if they wish, but it's not cheap to consolidate and grow.

I think you're quite right in pointing out that the capacity of an individual farmer or farm family to run a big operation is vastly greater than it was not too long ago, and I'll give you a small example in the sector of dairy and supply management. The average size of a Canadian dairy farm is about 70 cows. That's a limit that most farms can handle themselves. I think it's a limit that reduces productivity within the capacity of an individual farm. One robotic milking machine can milk 70 cows a day, so there's an opportunity through technology for consolidation there. That's a significant benefit for a farmer, who would then not be on 24/7 duty but can monitor his or her milk production remotely. As well, the farmer has all kinds of wireless telemetry to monitor the health of the animal and the productivity of the animal at any given time.

On the crop side, the ability of farmers to use precision measurement of soil health, moisture, and crop advance is exploding exponentially, which gives them a significant advantage over scouting or going out and walking their acres. If you have an 800-acre farm, which I think is the average size of the Canadian crop farm these days, that's tough enough. If you have 5,000 acres, scouting your farm is a significant challenge. Technology is enabling that activity to a significant extent.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

I think you've helped me lead into my next question. In terms of that technology, on our place scouting is now done by drones in a number of different ways. The equipment that is used now is specific to the drop, to the depth, and to where fertilizer is placed, which is quite a change from what it used to be not that long ago.

I want to take you to page 21. We're looking ahead now 14 years, and look at where the market is. That 5% that produces the greatest percentage of income in our industry will get it from the Asia-Pacific region. To my colleagues, I think that chart alone spells out to us in agriculture the significance of the Trans-Pacific Partnership.

This isn't Mr. Meredith's and Mr. Mayers', but it really lays out the significance of what our industry is capable of doing. We now have less land producing more crops. Once you cover up the land with asphalt, you don't ever get it back. In my area, some of the best agricultural land now has houses and streets on it. That's of concern.

That was more of a comment, but I hadn't seen a graphic showing the significance of it.

I don't know how much time I have, Mr. Chair.

[The Chair, Liberal, Pat Finnigan]

You have 30 seconds, Mr. Shipley.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

In terms of processing, can you help us with the reasons that processing is limited in Canada? In Ontario, we know we are losing some of the processing because of the cost of operation. In Ontario we had a large horticulture greenhouse that was starting to grow, but a 200-acre plant moved out of the province next door because of the cost.

Is there something that technology is going to do to help prevent that?

[Greg Meredith]

I think the horticulture industry, especially the industry as it exists under glass, in greenhouses, is probably one of the more innovative segments of agriculture in Canada. I think there are areas where some significant cost reductions are possible. One is in energy.

The horticulture business is in a very good position to reuse heat energy for electricity and to use CO₂ to provide nutrients to plants. I think one of the biggest challenges for the horticulture industry is the utilization of energy, so alternate energy sources will be very important.

Beyond that, I hesitate to get more speculative. Clearly, horticulture has advantages over open-field cropping systems in areas you just alluded to. Micronutrient detection, moisture management, the management of nutrient introduction, and the management of pests are all in a controlled environment in horticulture. I think there is opportunity for productivity growth and for costs to be contained.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Mr. Chair.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Shipley and Mr. Meredith.

Alaina, you have six minutes.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

Thank you.

I'd like to thank you people for your presentations today. They were very informative.

I want to delve a little more into the dairy industry. We've talked about milk proteins, which I think are very important. Perhaps you could tell us about some region-specific programs that are working well for the dairy industry. I'm from eastern Canada, so I'd be very interested to hear about some of the programs on a federal level that are supportive of the industry.

[Greg Meredith]

I'm sorry I can't be very specific, but I can give you some insights into what we do.

From a federal point of view, our main on-farm contribution comes through our cost-shared programming with provinces. I would have to do more work on what individual provinces are doing.

We have a significant number of investments in our cluster work on dairy genetics, and I think Canada is a world leader as a result. Included, by the way, are significant investments from the industry and from producer finance sources as well as from government. The business is not relying just on government but has some significant skin in the game. It comes in the area of genetics and milking systems.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

To follow up on that, what about specific challenges you're seeing going forward?

[Greg Meredith]

If you talk to dairy stakeholders, they are concerned about the impact of the various trade agreements we've entered into, providing additional market access for 17,000 or 17,700 tonnes of cheese. Clearly that has cheese producers concerned. It has the people who supply milk to cheese producers concerned.

The relatively small market access that was granted under the Trans-Pacific Partnership is also of concern to the industry, although in our consultations, the issue that Madame Brosseau raised is probably more acute than the market share issues arising from greater market access and greater quota access under TPP. The government understands that and is paying attention to it.

One source of concern is the ability of our farmers to compete with imports. That said, we think there's considerable opportunity for productivity enhancements in the supply-managed sectors. Supply-managed industries can generate a considerable amount of money for research and development. Economies of scale could be taken advantage of. As I mentioned, one milking machine can handle what a normal or average farm is doing these days.

I think there are also underappreciated opportunities in the areas of artisanal cheese and niche or specialty cheese products. Yes, it's a small business right now, but European cheeses didn't start as global-dominant brands. They grew from small businesses with artisanal cheese associated with particular geographic regions. There's no reason Canada can't build on our own advantages in that respect, to build product built on quality and reputation as opposed to simply cost advantage.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

Artisanal cheese is interesting. What about interprovincial trade on artisanal cheese and other products like that? Is that posing challenges? Do we have a plan?

[Greg Meredith]

Paul?

[Paul Mayers]

Interprovincial trade is a critical consideration, and all provinces and territories, along with the federal government, are seized with the enhancement of interprovincial trade in a more predictable context.

One of the considerations in that regard is regulatory. We do have some differences in the Canadian fabric from a regulatory perspective, because of the complementary jurisdiction.

Just as important to the regulatory alignment, which I spoke of earlier in the international context, is domestic regulatory alignment. That same rich federal, provincial, and territorial engagement my colleague mentioned earlier is being engaged in the regulatory context as well to explore where we might identify and streamline regulatory barriers to have an impact. This is part of a broad discussion that respects local interests while still pursuing the national interest at the same time.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

Thank you.