Agriculture Committee on April 18th, 2016

[Claire Citeau]

As mentioned before, for all of the sectors, including soybeans and canola exports, that's very much the case. In Japan they are looking to ship a lot more value-added products, including canola oil, but a lot of the other products that we present, whether they be pulses, malt, barley, and sugar as well.... Sugar is a major component for the sugar processing sector as well. There is additional sugar provided in the restrictive U.S. market for sugar, but sugar is also an input that goes into the food processing. These are all looking to get exported out of Canada as well.

[The Chair, Liberal, Pat Finnigan]

Thank you, Ms. Citeau.

Thank you, Mr. Warkentin.

The floor now goes to Mr. Breton, for six minutes.

[Pierre Breton, Liberal, Shefford, QC]

Thank you, Mr. Chair.

Thank you all for joining us today and giving us your testimony. The committee sincerely appreciates it.

Clearly, a market of 800 million people is extremely attractive for producers and processors. Those 12 countries are major ones. However, I am particularly interested in our 35 million consumers here in Canada. In fact, I want to put myself in the shoes of the consumers who have to shop for groceries every week.

Can you tell us what the benefits of joining the TPP are for them; if we join, of course?

[Claire Citeau]

I would like to answer the question quickly and then let the other witnesses speak to their sectors more specifically.

You mentioned 35 million consumers, but many of those 35 million people are also farmers. In Canada, in the sector we represent, 90% of farmers directly depend on foreign markets. For those consumers—who are farmers too—competitive access to foreign markets, such as the TPP implies, is very important.

In terms of access to markets, our members are generally open to competition. There was a lot of talk earlier about the balance of trade. I wanted to mention the number 77% to you. This is the percentage increase in our exports in the last 10 years. This increase in exports has contributed directly to an increase of about 50% in farm income in Canada. Trade really is a stimulus in terms of increasing income.

[Pierre Breton, Liberal, Shefford, QC]

I would like to ask you a question before the other witnesses reply.

I understand that you see advantages for producers, that is to say, an increase in production and sales. Do you think, even if this is not perhaps your area of expertise, that it will bring prices down for the consumers? What will be the effect for the consumers, the ones buying the products? Will prices stay the same or will they increase? That is our concern, we work for people who are in that situation every day.

I would also like the other witnesses to talk about those issues.

[Jim Everson]

Where there are tariffs on Canadian products that are also reduced through the TPP agreement, then you're reducing a tariff on a product coming in from another TPP country into Canada. This could translate into a competitive price from the consumer's point of view or for a supply chain where an ingredient in a product is coming into the Canadian market without attracting a tariff. This would add to its cost and therefore add to the cost the manufacturer has to pass onto the Canadian consumer. I think there are some opportunities there for consumers.

The other aspect is the supply chain effect of it. Within the TPP countries, you have national treatment or rules of origin. If you have a product coming in from Malaysia to the United States that attracts a tariff now and then a finished product comes into the Canadian market from that U.S. supplier, the tariff cost is incorporated in that.

Under TPP, you even those rules out, so the tariff applies equally to all of the participants in the agreement. An ingredient from Malaysia can be used in a U.S. manufacturing process and result in a product coming into Canada that a consumer purchases at a reduced cost, because the American tariff is taken off the product coming in from Malaysia. It has a dynamic affect on supply chain competitiveness.

[Pierre Breton, Liberal, Shefford, QC]

Quickly, Mr. Darling, we know that the price of beef has gone up considerably in recent years. We are told that prices could go down for certain imported products. What effect does the TPP have on the price of beef?

[Dan Darling]

One of the reasons beef prices have drastically gone up is the short supply of beef. The biggest reason there's a short supply of beef is that there's been no profitability in the industry for our producers. As I said before, there's been a huge retraction of the cattle herd.

With TPP, CETA, and these other deals we value, there could be as much as $150 increase per carcass for our producers, which will mean that the profitability will be there for our producers, so the volume of cattle will go up. It stands to reason that with the quantity going up, prices will probably come down to a little bit more reasonable levels here in the stores.

The other thing you also must remember, with more cattle being processed, with more offshoots because of that, there will be jobs for these people that are wanting to buy the product as well.

[The Chair, Liberal, Pat Finnigan]

I am sorry, Mr. Breton, but you only had one minute and 25 seconds. You have used all the time you had available.

Mr. Gourde, the floor is yours for five minutes.

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

Thank you, Mr. Chair.

My thanks to the witnesses for joining us today.

I feel that everyone is happy to be able to access those markets. That said, Canadian producers are very concerned about animal welfare. They are developing new production techniques and they have environmental standards that differ from one province to the next.

Our standards, which are higher in Canada than in other TPP countries, may provide us with an advantage in bringing products to market, but they can also be an obstacle in terms of the price of the products. When you compare our standards to those in other countries, do you have an idea of how we are going to position ourselves as producers in the markets you represent?

[Claire Citeau]

Today, Canada is the world's fifth-largest exporter of agriculture and agri-food products. In other words, we are positioning ourselves rather well. We are in full support of the TPP as a means for us to remain competitive at world level.

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

The new production trends that keep the welfare of the animals in mind, such as for pork, beef and veal, imply standards that increase production costs for Canadian producers. It is a worldwide trend.

Do the countries with which we will be competing in the TPP follow the same trends or do they have a more traditional approach to this? That could well be a competitive advantage for them and a disadvantage for us.

[Claire Citeau]

I will let the witnesses who work specifically in that sector answer that question. But I would say, however, that the TPP puts everyone on an equal footing in terms of standards.

[Dan Darling]

Canada sets high standards for animal care. I'm probably not the best person to talk about what other countries can do, but that's why we have the CFIA.

The CFIA and our other government agencies are well-equipped to ensure that the animal and products coming back and forth are on the same playing field. Certainly, as Canadian producers, we want to do everything that we can to raise our cattle, hogs, etc., in a high value and humane way.

For us, we don't believe that is something that enters into it. That's the best way I can answer that question.

[John Masswohl, Director, Government and International Relations, Canadian Cattlemen's Association]

Just to add to that, we have a couple of international initiatives that we're involved in as well.

We belong to something called the International Beef Alliance with the United States, Mexico, Australia, New Zealand, and now some South American countries as well. One of our key main areas of work is in sustainable beef production, and that also includes animal care. We're wanting to learn from each other and know what other countries are doing. They can learn from what we're doing and ensure that we're all doing the right thing.

We're also involved in something called the global roundtable for sustainable beef and we have our own Canadian version of that. Again, it's one of these initiatives to ensure that we are producing, the type of beef produced in the way that consumers expect it to be and are still willing to actually pay for it. We have a number of initiatives that are all aimed at ensuring that beef production is what consumers expect, but is also sustainable for the producer to be competitive in producing it.

[Jim Everson]

I was going to say something very similar.

Canada is part of the international plant protection convention and is a signatory to Codex. Those standards allow us to protect ourselves from pests from coming into Canada and to protect the quality of our food production system for export or domestic consumption.

The TPP endorses the WTO SPS agreement, allowing us to work with other nations on those standards.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Gourde.

Ms. Brosseau, the floor is yours and you have three minutes.

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

Thank you, Mr. Chair.

Mr. McCabe, I know you're shaking your head. I want to let you answer and give you a chance. I also asked you another question in the first round, but I'll let you lead the floor to address the committee.

[Don McCabe]

Thank you for the opportunity.

Your earlier question was about the compensation package offered to supply management. I will immediately defer your question. The reason I'm going to do that is that I sit here representing the Ontario Federation of Agriculture and not supply management directly. I think they would best answer on the exact level of compensation they would see as adequate to meet their needs and where the pressure is coming. It's not something I can address directly.

The answers to the last sets of questions here have been great on a theoretical basis, but there's also reality. Here I'm going to mention something that I'm pretty certain isn't in the TPP.

I started this morning at a meeting of some of our members at Woodstock, Ontario. There's an individual there who works in the world of pheasants. When the Canadian Food Inspection Agency came out to that operation, essentially the CFIA went back home rewriting the book. This is how stupid the situation is right now.

This individual can take pheasants across the border into the U.S. alive, have them processed in the U.S., and brought back into Canada, but cannot have them processed in Ontario and moved out of the province because there is not the appropriate federally inspected plant to do it. She can take the same pheasants to Pearson airport and fly them to B.C. alive, but can't process them.

By the same token, we are woefully inadequate in ensuring that all our farmers have access to the same tools at the same time, a thing called regulatory co-operative. The RCC was initiated, but we're still waiting to see gains on that for farmers.

Within Canada you have a risk cup, a risk cup that is there to protect Canadian consumers from where they go. We're about the only country that I know of that allows other countries to fill the cup first before Canadian producers get to fill it. In other words, if I need access to a tool to protect my soybean crop, I only [Inaudible--Editor] soybeans into the export markets from Ontario. I can't necessarily use it, because Japan said so or whatever else because they already know what's gone in in another way.

We have pretty well been boy scouts on a number of these issues, and the CFIA is woefully inadequate in certain aspects of how it's operating right now. There needs to be some clearing house here to make sure that we have the appropriate tools and support to move ahead.

Theoretically, I agree with my colleagues. In reality, I'm hearing back from producers, “Why can't I do this?” The reason is that there's no federal abattoir, for example, in the Maritimes.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. McCabe.

Three minutes go by quickly.

We'll start a new round of six minutes.

Mr. Shipley.

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

I have two quick ones. I want to first touch on non-tariff barriers. Claire, you talked a little bit in your earlier comment that, as part of the negotiations, a process may be put place to help deal with non-tariff barriers.

I'm wondering if you might talk to us a little bit about that and how effective that is, because those have always been the linchpins that really screw up a good deal. A non-tariff barrier kicks in, and we get a shipment coming back because there's something wrong with it based on a non-tariff barrier, which is a usually political issue.

Secondly, the other one is the establishment of a low-level presence—and this question is more for the grain folks. The establishment of a low-level presence is incredibly important. I mean, stepping out in front by yourself is always a little dangerous if nobody else follows you. If there's a standard set within the TPP with major organizations and countries as part of that, do you see that as a lead role for an international standard? Those are sort of two questions.

If will start, Claire, with you.

[Claire Citeau]

On the SPS and TPP provisions, as was mentioned before, the TPP builds upon the WTO SPS and TBT measures. There are, I believe, close to 20, maybe 25 different committees that are to be established that touch on the trade of agriculture and agrifood products. For those committees, we have yet to see how they will operate, but in principle they are to be formed by all the 12 signatories today and more as more TPP countries join the TPP agreement. Those are to be mechanisms to be put in place to find resolutions to problems and issues as they arise.

[Jim Everson]

On low-level presence, the TPP doesn't set a standard. What it does is set up a working group of the countries to talk about low-level presence in a circumstance where something may come up. I can explain. Low-level presence is a kind of a complicated thing, a regulatory thing, but it doesn't set a standard. As for what Canada has done, though, we would agree with you, Mr. Shipley, that you can't get out there too quickly on a regulatory issue like this. What Canada has done is develop a model policy that is not a policy that would be implemented immediately in Canada; it's a policy that we can showcase around the world.

Canada has taken a leadership role on a complicated international regulatory issue in regard to sitting down and looking at how we could structure our regulation and how other countries could structure a regulation to help the international grain trade with this perplexing problem. Put the policy out there, and then marshal international negotiations and discussions about it in order to raise awareness of the issue, and in order to show that it's possible to have a regulation like this without changing a lot of laws and regulations, a regulation to be implemented that would help the grain industry. That's where Canada has gone. We really congratulate the leadership of Agriculture Canada and the CFIA in coming to that policy.

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

Do we have time? I think Chris has a question.

[Chris Warkentin, Conservative, Grande Prairie—Mackenzie, AB]

Yes, thank you.

You've answered a number of questions. Obviously, the lists of countries that present a significant opportunity for the Canadian market are extensive in the TPP.

Malaysia is one of the more interesting ones, I think, for Canadian exporters, as it's a place where we've seen a significant amount of growth in the last number of years. Obviously, as people's wealth increases, there's an opportunity that will continue to grow. Countries in that area are growing into economic powerhouses.

Have any of you studied the potential of the Malaysian market, our entrance into that area, and what opportunities are presented in having to deal with Malaysia?

Claire, did you want to start?