Agriculture Committee on Nov. 15th, 2016

[The Chair, Liberal, Pat Finnigan]

I'm going to have to stop you here, Mr. Shipley. That's all the time we have for this question.

Mr. Breton, you have six minutes.

[Pierre Breton, Liberal, Shefford, QC]

Thank you very much, Mr. Chair.

Thank you to the witnesses for being here today.

I would like to mention that the head office of the Canadian Council of Food Processors is in my riding, in Granby. I know you represent very important industries from our region, including Industries Lassonde inc., in Rougemont, Agropur, and Aliments Ultima, located in Granby. These three companies alone sustain more than 2,000 jobs in our region. There are some 300,000 jobs in agri-food processing in Canada. It is an important industry nationally, and in my riding also. Your testimony is extremely important.

You spoke at length about research and development and about funding for innovation and equipment. The agri-food processing sector depends on international markets. Its growth depends on exports. Access to new international markets is needed.

What would you recommend to the government to boost your competitiveness and thereby allow you to gain greater access to international markets?

I would like to hear from Ms. Cloutier first, and then from Mr. Couture and Ms. Ventin, if they wish to answer.

[Sylvie Cloutier]

First of all, I would recommend improving access to information.

We currently have opportunities with the European Union. These will of course crystallize once the agreement is finalized. The Institut du Québec has in fact published a study confirming that the agri-food sector probably has the most to gain from access to European markets.

That said, in order to access European markets, first we need strategic information about those markets. We also need access to global distributors, and finally we have to innovate. The Institut du Québec also noted in its report that we will have to innovate and offer a lot of new products that appeal to those markets.

Would you like to add something, Mr. Couture?

[François Couture, Senior Advisor, Innovation, Canadian Council of Food Processors]

Even if there are large companies in Quebec and in Canada, most of the CEOs we have worked with on the ground tell us every day that it is a David and Goliath situation. We are relatively small players internationally. Innovation is certainly part of the key strategies we have to use to provide the products of tomorrow.

The market situation is changing very quickly and there are major export challenges. Our companies must be able to keep up with the rapid innovation in the markets.

The digital world is on our doorstep. We are seeing new platforms emerging, at Amazon, for example. This creates consumer supply systems that are completely different from what we have had up until now. We have to position ourselves to respond to the markets of tomorrow.

Our SMEs and large companies must develop new innovation ecosystems in order to respond to these changes, which are happening very quickly and will not wait for us.

[Pierre Breton, Liberal, Shefford, QC]

Ms. Ventin, would you like to add something?

[Carla Ventin]

The only thing I would add here is that we know that we need to export in order to grow. That is absolutely key.

Currently the market access secretariat in the department is limited in funding. It's also limited in scope and resources and being able to get market access for value-added products. They're pretty good at getting access for wheat and canola, but once you have a product which is mixed, it's a baked good or something that is meat filled, or a pie, that's more difficult.

It's not only lack of resources there, but we also need help in getting access. It's more difficult, much more complicated, getting a value-added product into another country.

[Pierre Breton, Liberal, Shefford, QC]

I'm glad we talked about the labour shortage. Mr. Shipley spoke about it. That was one of the points I wanted to raise. Thank you for your reply.

Environmental sustainability and climate change represent a new theme among our priorities. What are your members' expectations as to this new priority which was included in the Calgary agreement?

[Carla Ventin]

Our member companies are definitely committed to protecting and conserving their resources. You have to think about the member companies that we have, and a lot of companies already take great strides in order to meet consumer needs. They know that consumers are interested in more environmentally sustainable practices, and this is part of their brand.

What I can tell you is that we did a few member company surveys on environmental sustainability. In 2011, for example, with the members that took part in this survey, we found that the majority of our members have policies and practices in place to reduce waste and emissions throughout their product's lifestyle.

We also did a survey a few years later, in 2015. What we found in 2015 was that 94% of respondents already have greenhouse gas reduction target plans in place.

[The Chair, Liberal, Pat Finnigan]

Thank you, Ms. Ventin. We're going to have to stop you there.

Ms. Brosseau, you have six minutes.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Thank you, Mr. Chair.

I would like to thank the witnesses for taking part in our consultation on the next agricultural policy framework.

I am very pleased that you spoke about the labour shortage. For a number of years, the agriculture sector has truly been held hostage. We all know that more food will have to be produced in order to feed the growing population. So there is much work to be done in this regard.

Mr. Couture, you mentioned the digital shift. In June, I accompanied the Minister of Agriculture and Agri-Food on a trip to China. I was very surprised to see how the Alibaba group works. There is nothing similar here, in Canada.

Can you tell us how things have changed? What advice would you give us to make the most of this opportunity?

[François Couture]

We are currently following the work of Niraj Dawar, at the University of Western Ontario, in London. He is making a lot of headway to help us understand what will happen.

Digital platforms are foreign-owned: by Americans, Asians, and Chinese. The platforms are not accessed by companies based in Canada. Strategically then, accessing these emerging markets through digital channels will be an important issue for all companies in Canada, both small or large.

As Canadians, we will also have to find our way since we have an incredible storehouse of resources, talent and know-how. We have to find a way to position ourselves on these new markets and these new platforms, which are not necessarily operated by Canadians. Although there are Amazon subsidiaries in Canada, the major access decisions will likely be made elsewhere.

It will be extremely important to position ourselves in downstream market activities, as much as in upstream market activities. Everything that brings us closer to the market downstream will become increasingly important to the industry, especially for SMEs. There are a great many SMEs, they do not have the resources, and at present they are not receiving help to review their strategies in light of what lies ahead.

We have already reached that point. As we speak, it is possible to simply press a button and milk or basic products will be delivered to us through robotic or artificial intelligence supply systems. That is where we are headed.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

That is truly impressive.

I will now turn to Ms. Ventin.

Carla, do you have anything you would like to add?

[Carla Ventin]

I would just say that Alibaba is extremely important. There is a huge demand for Canadian food, especially in Asia. Canadian food is well trusted, ranked by the Conference Board of Canada in 2014 as a top place for safety. China can't get enough Canadian food, so we need to take advantage of that.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Absolutely.

We have seen great interest in buying Canadian products and confidence in Canadian producers and Canadian food products.

I know the federal government must consult industry in order to improve the next strategic framework, which is a five-year agreement. I know the current framework poses a number of challenges and that we have to make improvements.

Your organizations have stressed the importance of investing in the food processing sector. Compared to other countries, we can see that Canada is lagging behind.

Can you tell us more about the importance of good programs and good investments to make sure we put our eggs in the right basket in order to support the agri-food industry?

[Sylvie Cloutier]

As mentioned earlier, in order to break into new markets, we have to be competitive. The only way of doing that is by helping our industry be competitive, remain a leader in food safety, be innovative and identify new market needs.

We have to remember that we are the most important conduit between Canadian agriculture and consumers. Quebec and Ontario buys over 70% of agricultural production, processes it, sells half of it in Canada, and exports the rest. We can easily increase production. All we need is access to markets. Once again, in order to access new markets, we have to be productive and be able to sell products at competitive prices.

That means we have to invest in upgrading equipment, in strategic information, and in capital to enable companies to have infrastructure and construction projects and to build value chains between agriculture and food processing. Many projects could be put forward quite easily, but the government must decide to support this sector.

[The Chair, Liberal, Pat Finnigan]

Thank you, Ms. Cloutier and Ms. Brosseau.

We'll now hear from Ms. Lockhart for six minutes.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

Thank you to our witnesses. This is great information for us to have today.

I wanted to clarify something, Ms. Ventin. You spoke about R and D and investment and potential for international markets. You talked about two things: one, about the huge demand for Canadian food because it's trusted and safe, and international markets are confident; but two, about increasing regulations and how that's onerous.

Can you reconcile those two things? Are they related? I'm assuming that as we prepare to export more and more, there are regulations required for that. Is that what you're speaking of, or are there other regulations?

[Carla Ventin]

No, these are in addition. For example, you're absolutely right that our industry, as has been repeated, does require more investment and support in R and D and capital, etc. Just think about what the government did for the automotive sector—highly automated, efficient, and productive. That was because there was a strategic focus on that sector. So I think that's interesting.

No, the regulations I'm talking about.... There are existing regulations that are an ongoing irritant, for example. It's nothing to do with food safety or exports or anything. For example, there are things called “standards of identity”, outdated recipes. If you want to slightly modify your product with ingredients that consumers want, you can't do that without going through a whole regulatory process. That's not good for innovation.

In addition to that, there's a whole new set of regulations right now on the whole product life cycle of our industry. It has nothing to do with the fact that we need investment in capital and R and D. That is everything from how we make our products, what goes into them, whether it's sodium or trans fat and so on. It's how we package our products. It's the back-of-the-pack labelling and the front-of-the-pack labelling, which are huge changes, and it's how we market our product.

Those things are separate, but it's an unprecedented huge change.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

Is that driven by consumer...? What is driving that shift?

[Carla Ventin]

That's a good question. That was the decision by Health Canada to focus on these areas. I think there are some changes that are driven by the consumer and that our member companies and the industry are doing anyway. There are some things that just needed to be updated, and other things are the direction the government has chosen to take.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

Okay.

Mr. Shipley started to ask you about what proportion you felt was more reasonable for investment. Could you talk about that a little bit more? We ran out of time, and I thought it was a very good question.

[Sylvie Cloutier]

In terms of funding?

[Alaina Lockhart, Liberal, Fundy Royal, NB]

Yes.

[Sylvie Cloutier]

What we've been saying is that we should get as much funding in percentage as our representation to the GDP. On innovation, for example, there's a huge fund. If we represent 5% of GDP, we should get at least 5% of any investment going toward food processing or the manufacturing sector in general.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

Do we have any comparisons with other countries? As we compete in the global market, we want to remain competitive. What are other countries investing there, and at what rate?