Agriculture Committee on March 21st, 2016

[The Chair, Liberal, Pat Finnigan]

Welcome, everyone, to our agriculture committee meeting. It's a very interesting one today. We have the honour of having the Minister of Agriculture, the Honourable Lawrence MacAulay, a good maritimer who escaped the snowstorm today with me, here to explain his mandate letter and also to talk about the main estimates.

We'll proceed with the minister's presentation.

You will have your opening statement, Mr. Minister, and after that we'll go with the question period.

Thank you.

[Lawrence MacAulay, Liberal, Minister of Agriculture and Agri-Food]

Thank you, Mr. Chair.

Good afternoon everyone.

I'm honoured to be here today and I'm joined by my deputy minister, Andrea Lyon; assistant deputy minister, Pierre Corriveau; and assistant deputy minister, Greg Meredith.

I congratulate you, Mr. Chair, and all the members, for being selected to this committee. While we all come from different backgrounds, our goal is the same, to build a stronger agriculture food industry in Canada.

I am honoured to have been appointed Minister of Agriculture and Agri-Food. It has been a busy few months on the job building relationships throughout the sector and throughout the country, which is so critical. I've been talking to industry and my provincial and territorial counterparts. I have been speaking to our international partners, including the United States, China, Mexico, and the EU. I look forward to continuing discussions with my colleagues, industry, and Canadians to help improve the agriculture industry in Canada.

We are meeting at a time when Canada's agriculture and food sector is in a relatively strong position. Net cash income is expected to hit a new record in 2015 of $15 billion and remain strong for 2016. The farm balance sheet is also strong with a lower ratio of debt compared to assets. Meanwhile, our agriculture and food exports hit a new record of over $60 billion last year, and there are more exciting opportunities for growth to come.

The purpose of our meeting today is to look at the government's financial estimates, as well as to outline the key priorities in my mandate letter. The main estimates outline the department's planned spending for the coming fiscal year. The estimates are a snapshot of the department's budget at a point in time. As members know, the department's budget can change over the fiscal year depending on the changing needs and priorities. These changes are reflected in the supplementary estimates.

Agriculture and Agri-Food Canada 2016-17 main estimates total $2.26 billion. The majority of the department's funding supports programs under Growing Forward 2.

Mr. Chair, I'd like to give the committee a brief overview of how our investments are building a stronger Canadian agriculture and agrifood industry. Growing Forward 2 is a $3-billion investment over five years to drive a Canadian agriculture and food industry that is innovative, competitive, sustainable, and focused on markets. Of this amount $1 billion is earmarked for federal programs. The balance, $2 billion, is cost-shared funding with the provinces and territories on a 60:40 basis. The provinces and territories use these resources to meet the regional needs of their industries.

In addition, this year's main estimates reflect $1.3 billion available for business risk management programs. Our investments under Growing Forward 2 are helping our agriculture and food industry stay on the cutting edge of innovation, marketing, sustainability, and competitiveness.

Turning to my priorities, a central one is supporting science and innovation. Science is the core of Agriculture and Agri-Food Canada. For over 125 years research has helped build a world-class agricultural industry in Canada. I've had the privilege of visiting some of our research centres across the country. It is amazing what our scientists do—helping farmers cut expenses with crops that are resistant to certain diseases and insects, and helping ensure efficient use of inputs such as water and fertilizer, which is good for the environment and for the producer's bottom line.

Through investments in science, our government will help the sector stay on the cutting edge. Some examples of recent Growing Forward 2 investments in science include almost $8 million with Saskatchewan for livestock and forage research, and $3.6 million to help cattle producers harness the power of genetics and open up new markets. The main estimates also outline capital investments of over $30 million to boost capacity at our research centres, as well as other improvements to greenhouses and laboratories.

Innovation is critical to delivering the government's strong environmental mandate. My mandate includes the environment, helping the sector adjust to the increasing number of issues associated with climate change and addressing water and soil conservation issues.

Farmers are already making great progress. We all know Canadian farmers are incredible stewards of the land. A recent study shows that the Canadian cattle industry has reduced its environmental footprint over the past three decades while increasing production by one-third.

Growing Forward 2 is also supporting environmental actions on our farms. For instance, we recently joined with Alberta in announcing funding under Growing Forward 2 to support solar power on farms. These kinds of investments will boost Canada's reputation for environmental stewardship at home and abroad.

Along with innovation and the environment, another key priority is trade. The government supports trade because it creates good jobs for Canadians and contributes to economic growth. We want to be sure our farmers and processors reap the benefits of the growing world population.

In these estimates you will see resources going to help our farmers and food processors grow their markets through investments under agri-marketing programs. In the past few months we have worked hard to open markets for our beef farmers in South Korea, our beef and pork producers in Ukraine, our pork producers in India, our livestock genetics in Georgia, and our beef genetics through our investment of $2.6 million in the Canadian Beef Breeds Council.

Our farmers can compete with the best, but they need a level playing field to do so.

We took a big step in this direction in December when the United States repealed country-of-origin labelling for beef and pork. I am pleased that the USDA has now officially repealed the legislation. This is positive news for our pork and beef industries.

The government also strongly supports supply management. Having worked both in the dairy and potato business, I have a good appreciation of how important supply management and trade are to our farm businesses and to our economy. We will continue to advance all Canadian agricultural interests as we consider trade matters, which include the Trans-Pacific Partnership. The government has committed to hearing from Canadians on TPP before determining whether the Canada will ratify the agreement, and we have committed to a comprehensive debate on the TPP in the House of Commons.

I have already been discussing the TPP with farm organizations to get their view. Our message is clear, the Government of Canada fully supports supply management. We understand the importance of compensation to the supply-managed sector should the TPP enter into force. We will continue to engage with farmers on this important issue.

Just over half the money budgeted under the main estimates is available for our business risk management programs. Farmers look at government to help them manage risk and recover from the impact of disasters and disease. For example, in January we announced investments to help the tree fruit growers and maple syrup producers in Nova Scotia to recover from weather-related damages.

The estimates include an increase of $5 million for agri-risk initiatives. The initiatives are focused on helping to develop new and innovative risk management tools for Canadian farmers.

We are also moving forward on improvements to the advance payments program. These changes were requested by farmers and are now in force. They will make the program more user friendly and flexible while covering most commodities.

The Prime Minister has asked me to engage with farmers and provincial governments to ensure our business risk management programs are meeting their needs.

Before I close, Mr. Chair, I will give the committee a brief look ahead.

In the coming months I'll be working with the provinces and territories to position the sector for even greater success through the next agricultural framework. We've been listening to farmers, processors, and Canadians. More and more customers around the world are looking for the great products coming from Canada's farmers and food processors. The new framework will help ensure that the industry can meet and benefit from the growing demand. For the longer term, we're also committed to beginning discussions with governments and industry on the direction of food policy in Canada.

Mr. Chair, I hope that this has given you a sense of my priorities as minister. To sum up, I want to listen to, work with, and invest in our agricultural industry. Thank you for the opportunity to visit you, and I'm pleased to be here.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Minister, for outlining how this government plans to support and guide agriculture in the future, and for the overall picture of where it is today.

We'll start with the questions.

Mr. Gourde, you have six minutes.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

Thank you, Mr. Chair.

I thank the minister and the deputy ministers for being here. The committee is always pleased to have the Minister of Agriculture and Agri-Food Canada here.

We cannot afford to ignore the problem of diafiltered milk. You are aware of this issue, Minister. Americans are very imaginative and invent products so that they can get them into Canada. This was confirmed by a very large processor at the last meeting of our committee.

Diafiltered milk is not used in the United States to make cheese. It was invented so that it could cross the Canadian border. It is a scandal.

Minister, we must act and close that border. This product was invented in order to get across the border. No American eats cheese that was made with diafiltered milk, and Canadians should not be eating it either.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Thank you very much, Mr. Gourde, and I appreciate your question. Basically, I guess I can say that I inherited the issue.

Over the last couple of years, there has been an increase in diafiltered milk in this country, and we're certainly aware of the concerns regarding the use of diafiltered milk in the making of cheese. We're looking at an approach that ensures that the cheese compositional standards are clear for everyone. Under the standards, diafiltered milk was never meant to be allowed to be used as milk.

Canada recognizes the importance of effective import controls and administers its imports in accordance with the international trade obligations. Milk protein substances, including diafiltered milk, can be imported into Canada under NAFTA, as long as they contain 85% or more milk protein on a dry matter basis.

The industry has been engaged in negotiations, and there are differences of opinion on the way forward between some producers and processors, and between some dairy farmers in different provinces. We are working with the industry, and intend on having further discussions on this issue to ensure that the standards are clear.

Quite honestly, Mr. Gourde, I understand the problem. As you are aware, there are discussions taking place with the processors and the industry in different provinces. What I am trying to do, and have tried to do since becoming minister, is to make sure that all of the sectors understand the regulations and what standards are required. That is, in fact, what I have done to this date.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

Thank you, Minister.

I would like to discuss another topic, that of free trade agreements such as the Trans-Pacific Partnership Agreement or Canada-European trade agreement.

The Canadian meat industry, particularly beef and pork, is very favourable to those agreements. It is very happy that our government managed to conclude agreements last year. However, there is a cloud on the horizon. The matter concerns the consistency of regulations governing slaughterhouses. It seems that certain European countries, or other countries, could use the regulations governing abattoirs to see to it that our meats do not get exported to other countries.

Could those regulations possibly be harmonized with those of other countries? Otherwise, our exports may be blocked. A country could say that it agrees to import 60 million tonnes of beef, but it could also refuse our exports by claiming that the rules and standards governing Canadian abattoirs are different from the ones in Europe.

Could this jeopardize the ratification of the agreement?

[Lawrence MacAulay, Liberal, Cardigan, PE]

I understand and I've heard your concerns. Of course, as you're no doubt fully aware, my officials are doing their work on an ongoing basis on this plan in order to make sure that we can, as a country, accomplish what we have achieved in the trade deal, and to make sure that the regulations are well understood.

Deputy, you could add to that, but that's basically what we do when there are difficulties. There always are, no matter what commodity you're talking about. I think you're fully aware of this, too. Whether it's dairy, grains, oilseeds, or whatever, there are always difficulties with regulations.

Sometimes there's agreement on regulations, but as you're fully aware, then something else enters the deal and causes some trade problems. I think it's a problem continually with the countries that are involved in trade deals.

Yes, we want to make sure that we work to make sure they're harmonized as well as possible. My officials have been working on this.

Perhaps you can add to that, Deputy.

[Andrea Lyon, Deputy Minister, Department of Agriculture and Agri-Food]

Thank you for the question.

We have exchanged correspondence with European Union representatives concerning the technical barriers relating to meat. Among other things, we have a work plan. Although we have had success in this area, this process with the European Union is ongoing. We recently held meetings with industry representatives to discuss these matters.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Gourde. Unfortunately, your time is up.

Ms. Lockhart, you have the floor.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

Thank you, Minister MacAulay, for joining us today, and to your officials as well. We certainly appreciate the work you're doing to support the growth of the agriculture sector, especially in my riding of Fundy Royal in New Brunswick.

Aside from talking with participants in the industry, I also spend quite a bit of time talking to consumers. One of the areas they have brought up to me are concerns with the Canadian Food Inspection Agency. Those are largely due to some of the stories we've seen in the media.

I know that CFIA falls under the Minister of Health, but I'm wondering if you could update the committee on your work with the department to strengthen our inspection levels.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Thank you very much. I can assure you that before I came here I dealt with CFIA. Sometimes I had some difficulties with CFIA, being a potato producer and calling them in. Yes, we hear there are difficulties, probably with inspections, and having inspectors available, and getting the certificate if you're wishing to ship, particularly in western Canada, some products across the border.

In general, from what I understand, there are basically enough inspectors. The problem is.... I expect that this committee will probably be interviewing some farmers and farm groups. The interesting thing is whether they wish to have CFIA officials available around the clock. If they do, that costs more money. Is that the direction they wish to go in?

There are things like that we're going to have to deal with, but we have a CFIA official here, if you wish to elaborate more on that.

Basically we had meetings, mostly in eastern Canada, in the last few weeks. CFIA is generally well accepted, but in some areas, having this 24-hour availability for CFIA people is wanted. It's something that I think could be looked at by the committee.

[Paul Mayers, Vice-President, Policy and Programs, Canadian Food Inspection Agency]

Thank you, Minister. Thank you for the question.

Just briefly, the last time I had the pleasure of being at this committee there was a question with respect to the agency. We did follow up and provided the committee with a reflection of the focus that the agency has placed on front-line inspection in particular, which, you will recall from the information we've provided, has demonstrated quite a significant increase in inspection.

We recognize that in the agency, even as we have dealt, as all departments have, with cost containment, the agency has made a very firm commitment to protecting front-line inspection, and the numbers bear that out.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Thank you very much.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

Mr. MacAulay, could you expand for us a little bit? I know part of your mandate is to develop a food policy. That's something we're very interested in, so could you elaborate a little bit on where that is and what it looks like for you?

[Lawrence MacAulay, Liberal, Cardigan, PE]

I thank you very much.

Yes, it is, and it's something that will be developed down the road, not at this moment. But what we want to do is deal with the provinces and territories and stakeholders in order to put a format together to make sure that we're able to come up with a proper food policy. It won't be something that will happen very quickly. It's something that has not been done yet but will be put together by myself and other ministers across the country, and there will be other people involved. I have a daughter who's a nutritionist and there's very little I do that's right.

[Some hon. members]

Oh, oh!

[Lawrence MacAulay, Liberal, Cardigan, PE]

I think we need all views on what we want to do and then decide on the direction we want to go in. It's important, but it's down the road.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

Thank you.

[The Chair, Liberal, Pat Finnigan]

Madame Brosseau.

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

Thank you, Mr. Chair.

Minister, lady and gentlemen deputy ministers, I want to thank you for being here today.

My colleague Jacques Gourde asked you the same question as the one I wanted to ask. I heard your answer, but it was not clear. When are you going to act? The problem of diafiltered milk coming into Canada is really serious. It is costing producers approximately $1,000 a week.

You said you were negotiating with industry representatives, but I sincerely believe that you have to take a leadership role in this file. More than 100 days have gone by since the election, and you still have not settled the issue. I know it is difficult, but I think that everyone agrees that the government has to apply the rules and standards that are already in place.

Minister, when are you going to act to solve the problem of diafiltered milk in Canada?

[Lawrence MacAulay, Liberal, Cardigan, PE]

First of all, I want to thank you very much for the question.

I do understand that you're quite concerned about this issue, as I am. I milked cows before I came here, and in fact, a few years after I came here, so I understand the issue. But there's a lot involved in this issue with different provinces.

Just to make sure the record is straight, I am not negotiating with anybody. It's the industry and the manufacturers that are in discussions, but I am not negotiating with anybody. My job is to make sure that both sides understand the regulations. That's basically what I am doing at the moment. I can well understand how concerned you are, and I saw it a number of times in the House, but it's a process. I'd be more than pleased, when we get to whatever the concluding move will be in the process—

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

Do you have a time frame? This problem has existed for two years; it also existed under the previous government. Everyone agrees that the federal government should take the lead and apply the rules. In my opinion, it is not that complicated a thing to do. Do you have a more specific idea of when you will be able to act in this regard?

Whenever I go back to my riding, I meet with producers. They aren't just numbers; they are people, families. The dairy industry and supply management have suffered adverse impacts following the Trans-Pacific Partnership Agreement and the Canada-European Union Comprehensive Economic and Trade Agreement. However, there is still no word about the compensation that was to be given to the industry. I am going to conclude this question by adding that I find this very frustrating.

I have another very important question to ask.

There have been some big losses and issues regarding labour, particularly in Quebec. In that province in 2014, these losses amounted to about $52 million. I have met with several key stakeholders from the industry, and everyone agrees that the government has to do something.

Recently, your government made a change by granting an exemption to seafood processors in the Maritimes. Will other measures be implemented to help other Canadian industries, such as those that produce mushrooms, beef, and vegetables?

[Lawrence MacAulay, Liberal, Cardigan, PE]

Thank you very much.

This is an issue that I see in my province too. As you know, there was a great problem with the temporary foreign workers over the last couple of years. It's not my ministry, of course, as you know. It's under Minister Mihychuk. She has indicated they're going to conduct a review.

It's my understanding that's what we did for the fish processors. It's just something that the previous government had done the year before, and we had just arrived on the scene and this happened, which I believe was a good thing to do.

The whole program is under review. We have to make sure that we hear from sectors across the country, which I hear from, like the beef processors outside of Calgary and the processors in Quebec. It's vitally important that we hear from the sectors across the country and make sure that this program is put back in an appropriate manner.

It's very difficult if you have the product, you have the market for the product, but you can't manufacture it in your own area. I understand that fully. But I think you also understand the problem that was faced, and what we want to make sure is that this evaluation of the program is done properly and that the people who are concerned, wherever it is in the country.... It's awfully important that you contact me, if you wish, or any member of the government or any member of the House of Commons, because you have positions right here and in other places to indicate your support for these types of—

Yes, you were going to say something and I don't want to stop you.

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

I have one quick question. I only have 30 seconds.

We talk a lot about CFIA and they're in the news a lot. At another meeting we had previously I asked some questions about CFIA. I was at the committee when we had the Safe Food for Canadians Act and there will be an evaluation, but it's not until 2017.

Would you be interested in or are you open to the idea of supporting that the assessment be done sooner, because there have been so many articles and a lot of surveys and Canadians are really worried about the CFIA and how we are inspecting food here in Canada?

[Lawrence MacAulay, Liberal, Cardigan, PE]

Of course, if there is ever any problem with safe food, immediate action is taken, no matter what government is in place in this country. That's the way it always has been and that's the way it will be with us too, with this government.

As I told you, I had heard from a number of stakeholders right across the country and there was some concern in western Canada and possibly in Quebec too about CFIA. I'd let my CFIA official speak if he wants to expand on it. First of all, food has to be safe.

Go ahead.