Agriculture Committee on April 6th, 2017

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

They're full-time staff?

[Debbie Barr]

They're full-time CFIA staff. They may not be doing full-time animal humane transport inspections, but they're full-time CFIA staff, yes.

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

Perfect.

Thank you.

[The Chair, Liberal, Pat Finnigan]

Thank you so much.

That concludes the first portion of our meeting.

Ms. Barr, thank you for coming in and answering our questions. That was very informative.

We'll break for a couple of minutes just to change the panel. We will come back with the Agriculture and Agri-Food Canada and CFIA officials regarding lentils.

[The Chair, Liberal, Pat Finnigan]

We shall continue our meeting.

Today, pursuant to Standing Order 108(2), we have a briefing on lentils exportation to India.

I want to welcome our panel. We have Mr. Kris Panday, director general of the market access secretariat at the market and industry services branch of Agriculture and Agri-Food Canada. Welcome, Mr. Panday. From the CFIA, we have Mr. William Anderson, executive director of the plant health and biosecurity directorate.

Each of you has 10 minutes. Mr. Anderson, if you want to give us a 10-minute opening statement, you can go ahead, sir.

[William Anderson, Executive Director, Plant Health and Biosecurity Directorate, Canadian Food Inspection Agency]

Good morning and thank you, Mr. Chairman.

As you mentioned, my name is Dr. William Anderson. I am the executive director for the plant health and biosecurity directorate at the Canadian Food Inspection Agency. It is my directorate that is responsible for working with India and establishing appropriate standards and procedures to protect plant health. I appreciate the opportunity to be here this morning and participate in this discussion on lentils exports to India.

I'd like to start by providing a brief overview of pulses, and then of the work being carried out by the CFIA with respect to supporting exports of pulses to India.

Lentils are part of the pulse family of crops, which also includes peas, chickpeas, and dry beans. Pulses play an integral role in global food security, nutrition, human health, and environmental sustainability around the world. Pulse production has increased significantly in Canada since the 1980s. In 2015, Canada produced roughly 6.5 million tonnes of pulses and exported more than five million tonnes. Their export is important, Mr. Chairman, because Canadians consume only a small amount of pulses regularly. As a result, Canada exports a large proportion of the pulses we produce.

India is an important market for the Canadian pulse exports. In 2016, Canadian pulse exports to India were worth over $1.1 billion. This accounts for 96% of the total value of our agricultural exports to India, making it Canada's largest market for pulses. Canada is India's largest supplier of peas and lentils; more than 40% of India's imported peas and lentils come from Canada.

I would now like to provide some context related to the current interim solution, as well as the long-term solution being sought, related to the issue of methyl bromide fumigation of pulse exports to India. Canada's legislation, under the Plant Protection Act and the plant protection regulations, requires that exporters obtain phytosanitary documentation as necessary to verify that exported shipments meet the requirements of the importing country. The CFIA, as the administrator of these regulations, strives to ensure that the exports meet the importing country's requirements, and issues a phytosanitary certificate to the shipments after necessary inspection and analysis.

Exported pulses can potentially carry nematodes, insects, and weeds. Since 2004, India's regulations have required that pulse imports be fumigated with methyl bromide in the exporting country to make certain that they are free from plant pests that are of concern to India. It's important to note, Mr. Chairman, that methyl bromide fumigation is not effective at low temperatures, like those we have in Canada during the late fall, winter, and early spring. There is another consideration. In addition to the fumigant's not being effective in cool climate conditions, methyl bromide is an ozone-depleting substance. Additionally, Mr. Chairman, Canada already has a rigorous inspection process in place, so only pulse shipments that are free from the pests of concern to India are certified by the CFIA and exported to India.

In 2004, Canada negotiated that India waive the mandatory fumigation-at-origin requirement for Canadian pulses, considering that fumigation is not effective for most of the year in Canada. India agreed, and it has granted Canada a series of six-month exemptions, known as derogations, from its regulations. The derogations allow pulses to be fumigated with methyl bromide after arrival in India. The United States and France have similar exemptions. Mr. Chairman, Canada and India worked collaboratively for more than a decade to ensure that Canadian pulse exports are uninterrupted, and that India's plant protection needs are met.

In late 2016, Canada was advised by India that India was considering stopping the issuing of exemptions from its regulatory requirement of fumigation at origin. We indicated to them that we still cannot fumigate in Canada for much of the year due to our weather. As an alternative to fumigation, Canada proposed to Indian officials that a systems approach, used currently in Canada—which includes production and storage practices, grain elevator inspection, and sample inspection certification—along with the Canadian winter, provides for effective risk mitigation for stored products and insect pests of concern to India. India signalled that they were willing to review our proposal. On December 28, 2016, the CFIA submitted the technical package and proposal to officials in India, prepared in collaboration with the pulse industry and the Canadian Grain Commission.

The proposal outlines an approach that demonstrates how Canada's pulse production, handling, and inspection systems ensure that grain exports are certified to meet India's plant health import requirements. The proposal also explains why mandatory fumigation of Canadian pulses with methyl bromide, or any other potential fumigant, is not required in order to prevent the introduction of regulated pests to India. If the proposal is accepted, it will exempt Canadian pulse shipments from mandatory fumigation.

On January 25, 2017, officials in India signalled an initial positive response to Canada's proposal and requested additional information. On February 9, 2017, the CFIA submitted that additional information on Canada's systems approach. Last month, in March, the Honourable Lawrence MacAulay, Minister of Agriculture and Agri-Food, completed a mission to India where pulse exports were discussed. CFIA president Paul Glover accompanied the minister and met with officials in India to work on a solution to the pulse issue.

Following that and other meetings, India has granted Canada a new three-month exemption from its fumigation requirement. The new exemption applies to pulses exported from Canada between April 1 and June 30, 2017.

That is good progress, but work continues. The CFIA is committed to establishing a long-term solution to India's fumigation requirement. We will continue to follow up with Indian officials on a regular basis to seek acceptance of Canada's certification system.

In order to accept Canada's systems approach, India will need to change its quarantine order. This will take some time and require notification to the World Trade Organization.

We have offered to host Indian officials to showcase Canada's grain handling and certification practices to build their confidence and expedite approvals. The work to reach a long-term solution to keep Canadian pulses flowing to India continues.

That completes my opening remarks. Thank you.

[The Chair, Liberal, Pat Finnigan]

Thank you very much, Mr. Anderson.

Now we'll go to Mr. Kris Panday, from Agriculture and Agri-Food Canada, for up to 10 minutes.

[Kris Panday, Director General, Market Access Secretariat, Market and Industry Services Branch, Agriculture and Agri-Food Canada]

Good morning and thank you, Mr. Chair.

I appreciate the opportunity to be here this morning to speak with you and to provide some context around Canada's pulse exports to India. Following Dr. Anderson's remarks, I'd like to briefly set the stage and provide an overview of the importance of the Indian market and the Canada-India relationship to the agriculture and agrifood sector.

India has been identified by the Government of Canada as a priority market. It is one of the world's fastest growing economies and by some estimates is projected to become the world's third largest economy by 2025. Some of the market drivers that have positioned India as a key global player include it's young and growing population, its rising gross domestic product and growing rural population, the importance of its emerging and relatively less populated cities and towns, and its growing middle-class consumer market.

In 2016, India was Canada's sixth largest market destination for agrifood and seafood exports, valued at nearly $1.2 billion. These accounted for 30% of Canada's total goods exports to India in 2016. Our top agricultural exports to India include pulses, canola oil, hemp oil cake, and food preparations. Pulses, as indicated by Dr. Anderson, are by far the most significant commodity, at 96% of the agrifood total.

India offers great opportunities for additional Canadian agriculture and agrifood exporters. As Dr. Anderson mentioned, from March 6 through 11 of this year, Minister MacAulay led his first trade mission to India, where he was accompanied by a delegation of Canadian officials, including CFIA president Paul Glover, MP and committee member Bev Shipley, as well as a range of industry participants.

During this mission, Minister MacAulay promoted Canadian agricultural products in the cities of New Delhi and Mumbai and held meetings with government counterparts, various agriculture and agrifood businesses, as well as importers and exporters.

These close ties with India are of a longstanding nature. In 2009, Canada and India signed a memorandum of understanding on agricultural co-operation. Collaboration under this MOU is ongoing and includes priority areas of bilateral interest such as dryland farming, pulses and oilseeds.

Since the signing of the MOU, Canada and India have set up a plant health technical working group and are in the process of setting up an animal health sub-working group, which is aimed at promoting trade and regulatory exchanges by facilitating science-based discussions related to sanitary and phytosanitary issues.

In November 2010, Canada and India launched trade negotiations towards a comprehensive economic partnership agreement. An ambitious and comprehensive free trade agreement between Canada and India would enhance our growing bilateral trade relationship for key sectors, including agriculture and agrifood.

Before discussing Canada's pulse trade, I'd like to mention some of the broader context related to global pulse production and demand. India is the world's largest producer of pulses. At the same time, it is also the world's largest importer of pulses. Due to a range of factors, including reliance on seasonal rain and competing higher value commodities available to farmers aside from pulses, Indian pulse production is highly variable year to year. This has created a situation wherein India cannot meet its domestic demand on an annual basis, meaning that it relies on foreign imports to supplement its domestic production.

Canada, meaning Canadian farmers, has seized the opportunity to serve this market demand and has witnessed significant growth in production and exports. As I mentioned earlier, in fact, when it comes to trade in agriculture and food, Canadian pulses significantly define our commercial relationship with India. I mentioned the dollar values, that 96% of our agrifood exports to India were attributed to lentils, dry peas, and chickpeas. This represented 27.6% of our global pulse exports to the world by value in 2016. The Canadian pulse sector relies heavily on continued access to India for pulses.

The challenge in serving the Indian market rests with securing a long-term and predictable trading environment in which regulatory decisions are science-based and are commensurate with actual risk factors. India is a World Trade Organization member and it is our expectation that it will adhere to its WTO obligations.

Mr. Chair, as you've heard from Dr. Anderson, Canada has received since 2004 a series of six-month exemptions or derogations from India's fumigation requirements for pulses. This has allowed the Canadian pulse exports to continue to enter this market across this entire period. On March 30, Canada received an additional exemption, which will be effective for three months, from April 1 through June 30. Exports leaving Canada on or before June 30 will enter India without the need to be fumigated in Canada prior to export.

Although Canada appreciates the fumigation exemptions granted by India to date, we recognize the uncertainty and unpredictability that the current situation creates for the Canadian pulse trade. Therefore the Food Inspection Agency, in consultation with other government departments, provinces, and the pulse industry, has been working diligently toward a long-term solution with India instead of mandatory fumigation.

The current three-month derogation was obtained thanks to the execution of an integrated Government of Canada engagement strategy with Indian officials. Work will need to continue toward obtaining a long-term solution prior to the end of this derogation period. As Dr. Anderson mentioned, this long-term solution would entail India making a change to its plant quarantine order and would require notification to the WTO and a domestic consultation period.

In order to ensure continued engagement with Indian officials, Agriculture and Agri-Food Canada has developed an ongoing advocacy strategy to be deployed during this period. This strategy has been developed in consultation with the Food Inspection Agency, the Canadian high commission in India, and Global Affairs Canada. These ongoing efforts illustrate how we are able to work together to address challenges and achieve significant results for market access issues of priority for the Canadian agriculture sector.

Let me close my remarks this morning by saying that the export of Canadian pulses to India is a key aspect of Canada's bilateral trading relationship with India, and the government is committed to continuing to work with India in close consultation with Canadian pulse stakeholders toward a permanent and commercially viable outcome for pulse exports to India that does not disrupt trade.

Mr. Chairman, I wish to thank you, again, for your invitation and kind attention. My colleague and I would now be pleased to answer any questions you or colleagues might have for us.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Panday and Mr. Anderson.

Now we'll start our round of questioning with Mr. Anderson, for six minutes.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Thank you, Mr. Chair.

I want to thank the committee members for having this hearing. This isn't an important issue in a number of areas across the country, but it certainly is in western Canada, so I want to acknowledge the committee's taking important time for this.

I was struck by the fact that if the $1.2 billion in agrifood and seafood exports are 30% of our total goods exports to India, we certainly have room to grow in this market, so it's exciting to see there is some opportunity there.

I have a number of questions, so I'm going to ask for some fairly short answers.

I'm just wondering. We have some guarantee now until June 30, 2017. People are going into the field right now but are wondering about the next year. What can you tell us about what's being done to guarantee shipments from July of 2017 into 2018? Do we have to rely on the derogation process again, or do you expect that this new systems approach you're talking about would be coming into effect in the next crop year?

[Kris Panday]

Thank you, Mr. Anderson.

It is our expectation, on the basis of discussions with our Indian counterparts, that they see the benefit of long-term and assured access for Canadian pulses to their market, and we are working very closely with Indian officials to use this three-month period to good effect and are certainly hopeful that, by the end of this period, we will have a long-term solution that should preserve access to the Indian market.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

You've talked about the need to change their plant quarantine orders. It's often difficult to get changes in regulations, and when they come it's sometimes hard to control them; there are unintended consequences. But is there a willingness by the Indians to do this? Are they at the point where they're saying that this seems like a good idea, a good option, or are you still at that point where you're trying to convince them that this would be a time to begin to change their process?

[Kris Panday]

I think the Indians have identified this as being in their interest, so there are domestic factors that are driving them. I think we've played a role in highlighting their importance, but I think they've identified domestically, on the basis of their own economic and food security factors, that they need to make these changes.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

This leads to the question that I wanted to ask. Can we rely on this as a solution? I ask because with India—and China is another example—we have these on again, off again phytosanitary issues that are often related to production, politics, or whatever in their countries. If we set up a dedicated systems approach, what is the guarantee that it will somehow be more effective and more permanent than what we've seen in the past? I know there's a difference between a permanent approach and a six-month one, but these games get played. What in that new approach will keep that from happening?

[Kris Panday]

I'll provide a brief response and then pass to my colleague.

It's very difficult for us to comment on the sustainability of initiatives by foreign governments. It is our understanding that the Indians are committed to assuring a long-term resolution to this issue for their own reasons. This is not a favour to us; there are domestic drivers that point them in this direction.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Will they extend this change, then, to other countries as well? You were talking about France, the U.S., and other exporters. Will this be applied to other countries, or are you looking for an exemption for Canada in terms of this quarantine order?

[William Anderson]

We are looking for an exemption for Canada, and we have unique systems ourselves that wouldn't align exactly with other countries'—and our weather and winter are part of our mitigation going forward.

With respect to how the Indian officials are responding to the proposal we put forward, I think the science that we've put forward and the evidence to support it, that we mitigate the risks related to the pests that they have concerns about, is resonating with them. The feedback we've received at this point is fairly positive. We are awaiting an official response, but I could say we are hopeful, based on the science we presented, that it has good traction from our counterparts.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

You seem to be giving the impression that this will be sooner rather than later, which is an excellent thing.

I also want to talk a little bit about the fact that we've had to fumigate offshore. There's been talk about establishing a fumigation centre, if you want to call it that, in India. There is a reluctance by Canadian companies to put money into that because of investment agreements and the fact that Indians require local ownership of these plants. Do you have any comment on that? You're part of the market access secretariat. Do those investment agreements and that inability to actually invest and then own your investment have any role to play in this discussion?

[Kris Panday]

I think that private investment decisions by the Canadian pulse industry are really not my purview. I certainly would suggest that, in the event that—

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Can I rephrase that? Is there something that the government can do, then, to improve the investment environment for Canadian companies in India on this issue?

[Kris Panday]

As I mentioned, there are ongoing discussions for the a comprehensive economic partnership agreement. One aspect of that would presumably involve investment treaty elements, which might provide the kinds of certainty that the private sector parties are looking for.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Are we working on that as well, or is that outside your purview?

[Kris Panday]

That would really be in the direct purview of Global Affairs. We contribute to those efforts.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Okay. I wouldn't suspect they would be that interested in agricultural investments, so I'm just wondering how much of a role you play in encouraging them to take a look at these things.

[Kris Panday]

I think they can read the statistics as effectively as we can. They see the volume of trade and the opportunities, and we communicate regularly with Global Affairs. We also work in an integrated fashion on the ground in the context of the high commission and the consulate in Delhi and Mumbai, respectively.