Good morning, and thank you for the invitation to be here again. It's a pleasure.
My name is Brett Halstead. As you said, I currently serve as president of the Canadian Canola Growers Association. I farm near Nokomis, Saskatchewan, growing a variety of grains and oilseeds, and raising a beef cattle herd.
With me here today is Catherine Scovil. She's our government relations director here in Ottawa. CCGA is the national organization representing canola farmers. We have a membership of 43,000 farmers, and we represent those farmers on national and international issues, policies, and programs that affect their farms' success. We also are members of the Canola Council that is here with us today.
In my tenure as president of CCGA and my time spent on various agriculture boards, free trade has remained a central interest to grain farmers. Canada is blessed with great land and agriculture production, but we need an international customer base for our farms to be successful. This is particularly important for canola because we export 90% of what we produce in either seed, oil, or meal. That was valued at $10.2 billion last year in Canada.
It used to be that the focus of trade and trade agreements was on tariffs, but now we are finding that non-tariff trade barriers need to be front and centre. In addition to addressing tariffs, farmers are increasingly having to manage the impact of existing and new non-tariff trade barriers. These can take many forms, including non-scientific sanitary and phytosanitary requirements, delays in approvals for new crops from biotechnology or crop inputs, or additional business requirements asked of our Canadian exporters.
Each of these barriers creates uncertainty in our operations, impacting demand for our crops, the price we receive, and what crop inputs we can use. The added uncertainty of these risks impacts our entire business, from deciding what crops we will grow, where we ask questions like “Will China buy our canola seed this year?”, to determining what seed or crop inputs we purchase, “Has the U.S. approved a certain chemical for use on the products they import?”, and how we market our crops, “Will prices decline, if markets are closed?”
Increasingly farmers are asked to manage competing market requirements and adjust their operations accordingly.
The situation with China this last summer highlights that point. China signalled that its solution to the blackleg situation was to lower dockage levels. Whereas blackleg is a fungal disease found in canola fields, dockage refers to the material in the canola seed that is not the plant, including weeds or straw or other foreign matter. Canadian standards allow for 2.5% dockage. While many companies negotiate and set those levels in contracts, China was asking for 1%.
Based on the available research and science that was proposed, the Chinese rule was counter to the finding that showed that the threat of spread of blackleg through dockage was nearly non-existent. China, however, continued to push for reduced dockage levels.
Through the summer of 2016, the industry worried about the potential loss of our second-largest export market, valued at $2.7 billion, and our largest market for our raw seed. Prices fluctuated during the summer as there was uncertainty in the markets. For me and other farmers, this meant having to keep canola on the farm longer than anticipated or having to sell at a reduced price. For those forced to sell for cash flow, it also meant taking a lower price.
The industry was thankful that a solution was found and wants to recognize the work of Ministers Freeland, MacAulay, and Prime Minister Trudeau on finding that resolution. But the solution required the involvement of every level of government, and sometimes that is what's required. If Canada is truly going to capitalize on the benefits of trade, we need to have continued and ongoing commitment to resolve barriers. Relationships with trading partners must be managed, and addressing barriers must be a priority across government departments and at all levels of government.
Tariffs can be addressed through trade agreements, and increasingly there are opportunities to address non-tariff trade barriers through those agreements as well. CETA and TPP offered examples of this. CCG is supportive of CETA with the European Union and looks forward to its implementation. With CETA, the tariff on crude and refined canola oil will be eliminated immediately, creating new opportunities for canola. But to truly capitalize on CETA, tariff elimination needs to be completed with a timely and predictable EU regulatory system for biotechnology varieties and crop input products.
Under CETA, Canada and the EU agree to strengthen co-operation on biotechnology and have signed parallel letters committing the EU to an efficient and timely process for biotechnology trades. Different from past Canadian bilateral agreements, CETA expands past tariffs and looks at other factors influencing trade. If successful, it provides an example whereby non-tariff issues can be incorporated in such agreements.
The Canadian government must continue to pressure the EU to live up to this commitment, not just on paper but in real time. This is an ongoing project.
The TPP also aimed to establish better rules for trade. The agreement set new rules to address biotechnology-related barriers committing TPP members to increase co-operation, to exchange information, and to rely on a more transparent process. In addressing the challenges that may emerge, we look forward to working with the government to find ways to pursue the gains that have been negotiated under the TPP and to maintain access to the Asia-Pacific markets.
As Canada looks to a potential agreement with China, both tariff and non-tariff trade barriers must be part of this dialogue. Beyond specific agreements, solutions to manage such broader issues as maximum residue limits, also known as MRLs, or the low-level presence of biotechnology, known as LLP, are required, either through bilateral or multilateral trade agreements and/or recognition of global standard-setting bodies such as Codex. Canada is and should continue to take a lead in addressing issues such as missing or misaligned MRLs and promoting that LLP policy.
As producers, we do our part to facilitate trade. We wait to use new technologies and new crop inputs until they are recognized in our key export markets. Often this means not adapting to the newest and best technologies on our farms. These technologies may have been deemed safe and effective by our Canadian regulatory bodies, which we feel are amongst the best in the world, but we do this in order to protect our export markets.
As we do our part, we also need our Canadian government to maintain a strong and dedicated commitment to pursuing trade agreements and addressing and resolving non-tariff trade barriers across all departments and at all levels of government on an ongoing basis. We need our governments to be competitive in addressing the barriers to trade.
Our focus is on transparent and science-based trade. Through free trade agreements, ongoing work to address trade barriers, and Canada's leadership internationally, we have a platform to be competitive and to expand our exports.
Thank you for this opportunity, and I look forward to your questions.