Agriculture Committee on March 9th, 2016

[Lloyd Longfield, Liberal, Guelph, ON]

I see we're splitting it three ways now.

It was earlier mentioned that you're a co-operative at Agropur. I know that Gay Lea is a co-operative. There are lots of co-operatives. Maybe one of the other arguments, in a positive way, is the co-operative financial model, where the money actually does get back to the farms and does get back to the producers. How strongly has that argument been made in the past, and is that an argument you'd be using going forward?

[Dominique Benoit]

Thank you for the question.

Obviously, as a co-operative, our excédents—“profits” is not a co-operative term—go back to the farmers. Agropur has paid back to our dairy farm owners in the range of $500 million over the last five years in patronage dividends. That money, obviously, is being used by them to reinvest in their own farms and reinvest in their communities. That's the beauty of our model: the money remains in the industry. The profits are in the industry.

[Caroline Emond]

I would mention that actually not all dairy farmers in Canada are members of co-ops. Co-ops are not replacements to support all farmers. I just want to make sure that's clear.

[The Chair, Liberal, Pat Finnigan]

Thank you.

Mr. Shipley, you have six minutes.

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

Thank you very much.

I want to thank the witnesses for coming.

Mr. Gould, you made an interesting statement, which was actually pretty concerning, about the problem resulting with CITT, the Canadian International Trade Tribunal. You said the test they used was whether you would put it on a piece of toast. Is that actually part of what they used as a tribunal to determine what was a blend or not?

Like, are you serious about that? Are they serious about it?

[Peter Gould]

It was a very narrow interpretation. Their question was on whether or not these butteroil-sugar blends are a substitute—

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

Is that still a term that is used? Is that still a quote? Is that still a determining factor?

[Peter Gould]

Well, nothing has changed. They made their ruling. It's not the—

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

I would just raise that as an issue. I think regardless of what industry we're looking at that a tribunal we turn to and that organizations turn to uses that pretty much uneducated analysis....

[Peter Gould]

Perhaps I could use that as a way to maybe raise another point. Alain talked about the importance of producers across the country and the industry being on the same page. It's a challenge. But challenges arise as a result of things that happen at the border. How do we respond and how do we deal with them? We don't always agree on that, but many of them are the result of either the CITT or the Canada Border Services Agency.

We also have to be a little bit careful about the CITT, because we're hoping they might rule in favour one time, but there is a history there.

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

We know in 2007-08 there were requests, and significant changes were made at that time to help accommodate the industry. Things keep moving along, and obviously those changes now have been supplemented by border crossings of a product that is having a pretty significant negative impact on the industry.

I'll start with the skim milk dryers. I understand the technology issue. I also know that in the past you had made an application under the agriculture innovation fund in terms of the Elora station for the dairy industry to move forward. I think the next innovation fund application—if that's where you're heading—would be supported by this committee. Not only would it be dryer capacity, but the technology, then, that is used in other countries would come forward for use in those plants. Would that be a fair statement?

[Peter Gould]

You didn't have 100% of my attention, and I apologize for that, but based on what I did hear, Mr. Shipley, I think it is a fair statement, yes.

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

Okay.

Madame Emond, is there a consistency across the country in terms of the pricing of products so that the dairy farmers across Canada would be able to be more competitive in terms of producing a class of milk that would be used? No?

I know there have been discussions, for example, with DFO in terms of a class of milk that would be used to help....

[Caroline Emond]

[Inaudible—Editor]

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

Maybe Mr. Bourbeau.

[Alain Bourbeau]

If you don't mind. I'll answer in French. It will be easier for me.

First, the price of milk is practically the same across Canada, regardless of the milk class used. That's the first factor. There are institutions in Canada through which provinces collaborate to ensure those levels are maintained. The second factor is that there is a payment class in Canada, which we refer to in our jargon as class 5. In that class, the price of milk is the same as the U.S. price to bring a competitive element.

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

I think we all agree that there needs to be effective border control that falls under CBSA. Minister MacAulay had talked with you, and I think that's an encouraging statement that was made. I'm just wondering if they've given any sort of a timeline in terms of when they would start to implement the concern with CBSA, but also the stopping of the imports.

[Caroline Emond]

I'll take that one.

Actually we wish we had a deadline, but we don't. I understand that you might haveMinister MacAulay coming to meet with you soon, so you can ask him the question. I will be listening. I will be in the room to get the answer. We're hoping it's soon. That would be my answer, because as you've seen, the time is pressing.

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

In terms of the amount of imports that are coming in, what are the amounts that are needed here to meet the market demand?

Mr. Benoit.

[Dominique Benoit]

We don't need...and do you know why? It's because we have a lot of skim milk in Canada from which we could produce ingredients. If the government would make a decision to control the utilization of those ingredients.... Let me be very clear. We're in the final process of negotiations of a national strategy. We will produce those ingredients domestically, at a competitive price, and we will use them. There's no need for that since we have so much skim milk.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Benoit. Thank you, Mr. Shipley. The time is up so we'll have to move to the next questioner.

Mr. Drouin, go ahead for six minutes.

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

I am asking a lot of questions, but you will understand that the dairy industry is extremely important in my area. The St-Albert Cheese Co-operative uses 100% Canadian milk. I have been talking and continue to talk to many dairy farmers.

I want to come back to my question about the ingredients strategy. I want to make sure that I understand what that means. Mr. Benoit alluded to it. This strategy will help producers buy those products at a competitive price. Is that correct?

Peter Gould, you made some reference to it, but it has to be followed by the updates of processors, the dryers. Is that correct?

[Peter Gould]

Let me make a couple of points. One has been talked about already. There are some necessary conditions. Nothing will happen unless you have the conditions right.

One is a level playing field. There is no question about that. You need a competitive price for skim solids, what we call ingredients, which is what I wanted to touch on when Bev raised the question.

With the way we price skim solids in this country, there is a huge incentive to find another source. We have to get on a competitive footing. That's all part of the ingredient strategy.

In terms of ingredient technology I'm not talking about cheese, because we have very advanced cheese technology. For yogourt, it's state of the art. But in terms of ingredients, it's not. That's where the investment has to be made, as I say, to bring Canada into the 21st century.

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

I know it's mostly been an issue since 2012, because they have skyrocketed.

How do Canadian dairy producers see those issues coming and how do they prepare for them? I know that you will probably officially adopt the ingredients strategy across the country over the next few months. However, how do you make sure that we don't end up in those situations? Perhaps you talked about that five years ago, but I am not aware. I would like to plead my ignorance on the matter. I have been a member of Parliament only since October 19. If you have been talking about this for five years, I forgive you.

[Caroline Emond]

First, to answer the question, the federal government is responsible for border measures and the implementation of cheese standards. The situation we find ourselves in currently is caused by government inaction and not by us. Let's be clear on that. As for the measures that should be taken, the problems are known and the solutions have been discussed several times. Government responsibilities are necessary, and we talked about that. We are in charge of two pillars. The third pillar, border control, is the government's responsibility. As an industry, we basically make sure to provide our processors with the best possible environment.

I also have to remind you that producers have invested in their facilities over the past 50 years. So they have invested in new equipment, robots, the construction of barns, and so on. Millions of dollars are invested in our farms across Canada. So we have done our share of the work. Processors have invested in Canada. Agropur is a good example of that. There are others that have chosen not to invest in their processing capacities in Canada. We are currently trying to help them and encourage them to do that. We are doing it in partnership with the processors. We hope that the government will also be a partner because we want to make sure to have the best possible environment, so as to benefit from the experience we have in Canada. Our dairy producers are manufacturing milk of very high quality, and our processors have a great deal of expertise. All we want is to make sure to have the most prosperous industry possible and to work with all the partners to achieve that.

Yes, the ingredients strategy is something that has been on the table for a while—for a few years before we even started talking about it. I can tell you that we are now the closest we've been in terms of reconciliation and willingness to work together. So that's an extremely positive development. We need help from the government, and we need the government to fulfill its role.