Agriculture Committee on May 15th, 2020

[The Chair, Liberal, Pat Finnigan]

I call this meeting to order.

Welcome to meeting number 10 of the House of Commons Standing Committee on Agriculture and Agri-Food.

I'd like to outline a few rules to follow. Most of our MPs are now familiar with them, but I will go through some of them for our witnesses.

Interpretation in this video conference will work very much like it does in a regular committee meeting. You have the choice at the bottom of your screen of floor, English or French. When you intervene, please make sure that the language channel is set to the language you intend to speak, not the floor channel. This is very important. It will reduce the number of times we need to stop because the interpretation is inaudible for our participants. It will maximize the time we spend exchanging with each other.

Witnesses, could I get a nod from you that you understand how to change the channel if you want to change your language. Mr. VanderHout, Mr. Keenan, Mr. Lemaire and Mr. Gilroy, are you good with that? Okay.

Also, before speaking, please wait until I recognize you by name. When you are ready to speak, you can click on the microphone icon to activate your mike.

Make sure your microphone is off when you are not speaking.

We're ready to begin now.

I'd like to welcome our witnesses to today's hearing.

Today, for our first hour, we have, from the Canadian Horticultural Council, Mr. Brian Gilroy, president, and Mr. Jan VanderHout, vice-president. Welcome to both of you. From the Canadian Produce Marketing Association, we have Mr. Ron Lemaire, president. Welcome, Ron. From the United Potato Growers of Canada, we have Mr. Ray Keenan, chairman, and Mr. Kevin MacIsaac, general manager.

I know we're working to reduce statements from 10 minutes to seven minutes, but because we did not have time to do that before the meeting, we will have a 10-minute opening statement from each organization.

Let's start with the Canadian Horticultural Council, with up to 10 minutes between Brian Gilroy and Jan VanderHout. Go ahead.

[Brian Gilroy, President, Canadian Horticultural Council]

Thank you, Mr. Chair, for the opportunity to be here.

Thank you to the committee members for working under these extraordinary circumstances on behalf of Canadians.

My name is Brian Gilroy. I am the president of the Canadian Horticultural Council. I am also an apple grower from Meaford, Ontario.

The Canadian Horticultural Council is an Ottawa-based voluntary, not-for-profit, national association that represents fruit and vegetable growers across Canada. They are involved in the production of over 120 different crops on over 14,237 farms with farm cash receipts of $5.7 billion in 2018.

As you can appreciate, with 120 different types of crops, our industry is very diverse; so too are the challenges we are facing in light of the COVID-19 pandemic. Certain subsectors in the fresh fruit and vegetable industry, such as potatoes and greenhouse vegetables, are facing very acute and immediate challenges while others are making decisions on the future of their business. What is common among all commodities is that the impacts felt this year as a result of COVID-19 will have a lasting impact on their operations

I want to start off by saying that CHC recognizes that the safety of Canadians and the integrity of our health care system remain the government’s number one priority. We're fully supportive of that. We appreciate the great efforts that the government has made to keep us all safe, as well as the measures to keep our country and economy afloat during this crisis.

However, we are here today to point out that, like most countries, Canada faces serious challenges on an issue that is essential to a strong health care system and a healthy population. It's our national food security. We think this is an opportunity for the Government of Canada to continue to demonstrate how critically important our food security and supply is to Canada and to underline that governments have farmers' backs, to paraphrase the Prime Minister.

Early in the pandemic, access to temporary foreign workers was the single most significant threat to our sector. We are grateful to the federal government for its actions exempting international farm workers from travel restrictions and for providing some financial support to employers of foreign workers to help cover the extraordinary costs of the two-week isolation protocol; however, a number of obstacles have made the flow of critical workers untenable. Many farms will receive merely a portion of the workers they generally rely on.

Again, we do recognize the work that ESDC and IRCC, along with Agriculture and Agri-Food Canada, have put in to getting workers into Canada. We appreciate that, but the government has been using statistics in their briefings that do not reflect the situation on the ground. For example, the government has pointed out that in the month of April, Canada received 10,066 workers compared to 13,000 in April 2019; however, that 10,066 includes workers who were supposed to arrive in March but were delayed when the travel restrictions were put in place.

Based on the numbers we have found internally, the data that we have compiled show that, so far, Ontario, which also coordinates arrivals for the Atlantic provinces, has received 78% of the requested workers; Quebec has received just 50%, and B.C. has received 54%.

May and June are busy months for our growers. That's when they would typically be expecting a lot of their workers to arrive. We are very concerned with the small numbers of workers we are seeing who are fully processed to arrive. Without the guarantee of a reliable workforce, many growers are making decisions as to whether it’s practical, let alone possible, to tend crops, prune trees, harvest greenhouse vegetables, etc.

Compounding these difficult decisions is the knowledge that they do not have a sufficient safety net behind them. Growing fruit and vegetables has significant input and overhead costs. It is not for the faint of heart. Many growers just can’t take on those extra costs without a guarantee that the risk will not push them into bankruptcy.

COVID-19 has also had a significant impact on potato growers in Canada. The closure of food services triggered the collapse in the demand for frozen processed potato products, resulting in a huge on-farm surplus of processing potatoes from the 2019 crop that will no longer be utilized. In addition, the 2020 processing-potato contract volumes have been reduced by 15% to 25%, and unsold seed potato inventories remain on farms as a result of the significant reduction in 2020 plantings. Over 700 million pounds of surplus processing and seed potatoes remain in storage on Canadian potato farms, valued at around $110 million.

The United Potato Growers of Canada will be speaking a little later. They've asked the Minister of Agriculture for immediate action to compensate for losses from the surplus perishable potatoes that cannot be sold due to COVID-19.

Growers are not immune to risk and uncertainty. Year after year, they take on risks associated with Mother Nature, pests, infestations and market volatility to make sure that Canadians have an abundance of healthy fruits and vegetables. With the record cold temperatures over the past fortnight, Mother Nature has been especially—I wrote “difficult”—cruel so far this season. In these extraordinary times more than ever, growers need concrete assurances that the government will have their backs.

The government has announced several measures, such as the emergency wage subsidy and the emergency business account. Unfortunately, many family farms will not meet the eligibility criteria. The $5 billion going to Farm Credit Canada is not beneficial, as taking on additional debt will not help our growers recover our backstop losses.

We understand that business risk management programs are there with the intention of protecting farmers from disastrous losses, but cuts to program funding and changes to the eligibility criteria have rendered the programs, namely AgriStability, ineffective for most farmers. The changes made in 2013 to the reference margin limits and the limitations of what expenses can be deemed eligible make it very difficult for even very devastating scenarios to trigger a payment.

CHC—together with AGgrowth Coalition members which represent various sectors across the agriculture industry—has outlined its recommendations to the Minister of Agriculture and the Minister of Finance for immediate changes to these business risk management programs. These are needed to help see farmers through this crisis so that they know that Canada supports those who grow Canada's food.

We have requested that the AgriStability trigger be increased to 90%, beginning for the 2020 program year or, more generally, the program year that covers the 2020 crop year for edible horticultural farms, and that the program cover 85% of losses below this trigger. To cover any immediate extraordinary costs for growers, we have also requested an immediate injection of a minimum of 5% of a producer's 2018 allowable net sales into their AgriInvest account, and waiving the requirement for the grower to match the contribution. This would help give confidence to growers in the short term.

We have recommended that these emergency coverage measures be coupled with the review of the reference margin limit. It's outdated. If a farm is forced to reduce farmed acreage and/or reduce output per acre as a result of delayed or insufficient labour or value chain supply disruptions, CHC has stated that particular consideration should be given to waiving structural change provisions for edible horticultural farms.

The Canadian Horticultural Council is prepared to work with Agriculture and Agri-Food Canada to refine any of these recommendations and minimize the risk of any unintended consequences or moral hazard. What is important to note is that we are not asking the government for a blank cheque. Making improvements to a program like AgriStability will allow for a mechanism for farmers to recoup at least some of what has been lost.

Again, I'd like to thank you for the opportunity to speak to all of you today. I look forward to any questions you may have.

I will now turn it over to my colleague Jan VanderHout.

[The Chair, Liberal, Pat Finnigan]

Sorry. We're up to 10 minutes, so we have to move on to our next witness. On this one, you might have a chance to come back later through the questions.

For the Canadian Produce Marketing Association, we have Mr. Ron Lemaire.

Mr. Lemaire, you have up to 10 minutes.

[Ron Lemaire, President, Canadian Produce Marketing Association]

Thank you, Mr. Chair and honourable members of the committee. On behalf of the Canadian fresh fruit and vegetable sector, I welcome the opportunity to share our comments regarding the financial repercussions that the COVID-19 pandemic poses for the fresh produce industry and its supply chain.

The CPMA represents the entire fresh fruit and vegetable industry, from farm gate to dinner plate. Our comments are reflective of a wide array of members who work daily to provide Canadians with the fresh and healthy fruit and vegetable options they demand and who have continued to do so during these extremely challenging and stressful times.

To begin, the CPMA would like to recognize and express our industry’s appreciation for the high level of engagement and collaboration the federal government has shown in working with industry during these challenging times. In particular, I would like to thank the government for their flexibility and collaboration with industry in granting exemptions to international travel restrictions for temporary foreign workers and in providing some financial support to employers of foreign workers to help recover costs for the two-week isolation protocol.

We look forward to an ongoing working relationship to find solutions to mitigate the impact of the outbreak on Canadian families and to ensure they will be able to continue to put our safe, healthy and nutritious fruit and vegetable products on their tables throughout this crisis and afterwards.

With Canadians staying home and buying patterns shifting during the pandemic, we have seen retail sales up 8% for vegetables and 5% for fruit, but at the same time, consumers are spending less time browsing grocery stores for unique items, and sales for shorter shelf-life products and specialty items are lower.

While the CPMA members within our national retail category have navigated COVID effectively to meet consumer demand for produce items, there are many other companies within the supply chain that are not so fortunate. Food service represents 30% of our value chain, and the catastrophic impact to this sector and those who supply it will be felt for years to come.

While meal delivery and curbside pickup have lifted food service produce sales from zero to 20% and sometimes 30% of traditional volume, it will be a long recovery, as physical distancing and consumer fear will play a role in how restaurants reopen. For many, the physical space available, which cannot be changed to accommodate new social distancing requirements while also allowing sufficient customer capacity, will be a major factor in the economic decision on whether to reopen.

Those operators who still owe distributors for product ordered when they closed their doors will not be serviced when they try to reopen until they pay these bills. Many of our members are also being dramatically impacted due to the rising costs of inputs, access to labour and operational changes. For a sector that works with a very small margin and limited available capital, we are at a point where more effective programs to access operating capital without going into unmanageable debt are paramount. I will touch on this more later in my comments.

In a post-COVID world, business continuity will be challenging as we transition. It is crucial that the government ensure the supply chain is supported from farm gate to dinner plate. Government programs created or adjusted to support the produce industry must provide the necessary flexibility, adaptability and longevity to minimize losses to the industry. The impact to businesses in our sector is happening not only today but will continue for the next 12 to 24 months. The complexity and seasonality of our industry mean that both large- and small-scale operators must have access to programs and tools developed by government for both the short term and the long term.

The CPMA recognizes and commends the speed at which the Government of Canada operated to create macro level programs to support industry at the outset of the pandemic in Canada. Many of the programs created have provided support to segments of our supply chain. Yesterday's announcements are a good example, but moving forward it will be important to provide a more focused approach to reduce the unintended consequences and impacts to some businesses, which include increased debt, challenges in accessing domestic labour, and more.

In addition to foreign workers, the produce supply chain relies on a steady supply of domestic labour. The CERB has created unintended consequences in the short term for many packers, distributors, wholesalers and small retailers, which are facing greater challenges to hire at a time when Canadians are relying on them to provide the food they need. The Canada emergency response benefit must be adjusted to support unemployed Canadians without creating a disincentive for Canadians to work, as the $1,000 allowable monthly income amount is not enough encouragement during these unique times.

Additionally, the Canada emergency student benefit has the potential to impact seasonal and summer employment opportunities within our sector. I would encourage greater flexibility for students to collect the benefit and work for essential service providers like agriculture and agri-food.

On a positive note, programs like the Canada emergency wage subsidy have been key for those of our members who qualify. They were able to maintain staffing during the initial food service market shift, but now we must review this tool and potentially extend it beyond September for targeted essential services like the produce supply chain. This will help alleviate the economic stress companies are forecasting under the new normal.

Early in the pandemic, access to temporary foreign workers was the single greatest threat to our production, food security and integrity of the food supply chain in Canada. While some of the industry's key labour concerns have been addressed to a point, logistical and financial challenges remain. CPMA would like to echo the concerns of our partners at the Canadian Horticultural Council about the significantly reduced number of workers who have been able to come to Canada, particularly looking ahead to harvest.

CPMA also supports the recommendations made by the Canadian Horticultural Council in relation to the government's business risk management programs, including additional support for farmers through AgriStability and AgriInvest. We all know there will be winners and losers during this pandemic. As members of the committee are fully aware, the Canadian produce industry has been requesting for many years that a financial protection tool for produce sellers be implemented.

Unfortunately, over the next two years, the COVID business environment has driven and will drive businesses into bankruptcy, and our sector has no effective protection. Canadian produce sellers now more than ever are at risk in the event of a bankruptcy. Without a limited statutory deemed trust, we will potentially see more companies dragged into economic hardship. At a time when food security is second only to health care in terms of priorities for all Canadians, it is crucial that the government provide all possible safeguards for the Canadian food supply chain, including a deemed trust mechanism for produce sellers and farmers.

From growers to packers, shippers, processors, wholesalers and retailers, our industry has incurred unprecedented costs to develop COVID-related business plans and new procedures to ensure business continuity and to prepare for the eventual return to work. Many CPMA members are addressing, and will need to address, employee concerns by implementing physical and social distancing measures and ensure access to PPE.

Why is this important? In B.C., one greenhouse packing operation had 30% of their workforce not show up to work one day following the announcement of a suspected COVID case. The need for PPE is recognized as necessary to ensure business continuity and staff morale while working to keep absenteeism low.

In a survey completed last week, 87% of our members reported they are actively purchasing PPE and other health screening tools. However, challenges pertaining to the access of these essential supplies have been noted by many CPMA members. A shortage of supplies and long lead times to order products like hand sanitizer, gloves and N95 masks have only added to the complexity.

I must note that the added costs of purchasing this equipment cannot sustainably be absorbed by the industry. While the announcement by the minister yesterday was encouraging, CPMA recommends that the government implement a PPE tax credit to support industry in securing the equipment needed to keep workers and the public safe.

Additionally, the inconsistency of a harmonized delivery of isolation protocols and measures at a local level is also causing frustration across the industry. The need to have common risk-based models is vital to provide and enable competitiveness and public safety.

Finally, we must also recognize trade and regulatory flexibility. This pandemic has clearly demonstrated the need to bolster our food security to ensure the ongoing viability of our food system and strong domestic global strategy. The supply chain linked to transportation, border access, ports of entry and exit must all be maintained. The regulations such as hourly service for truck drivers should be harmonized wherever possible, specifically with the U.S.

The produce supply chain is a globally integrated model that relies on both domestic and international networks. Recognizing the government's efforts to provide some flexibility in the enforcement of non-food safety labelling requirements to ensure that the smooth flow of essential products continues is needed more than ever.

Further flexibility to allow nutrition facts from other countries, especially the U.S., and to allow English-only mandatory labelling information in provinces other than Quebec would help to ensure that grocery stores can continue to provide food.

I apologize for being long.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Lemaire.

We will now move to the United Potato Growers of Canada, Mr. Keenan and Mr. MacIsaac.

Your organization has up to 10 minutes to make your statements. Go ahead, please.

[Kevin MacIsaac, General Manager, United Potato Growers of Canada]

Thank you very much.

Good afternoon, honourable members of the Standing Committee on Agriculture. I am speaking today with Mr. Ray Keenan from United Potato Growers of Canada.

Our organization has been in existence since 2006 and was created to help growers improve profitability by sharing data based on the economic principles of supply and demand. We are funded by a per-acre levy from growers across the country, from Prince Edward Island to British Columbia. We would like to thank you for inviting our organization to share our thoughts on how this pandemic has affected the Canadian potato industry.

First of all, we must look to see how the potato industry was doing before this pandemic began in the second week of March. Simply put, it was doing very well. We did have some harvest issues last fall, particularly in the provinces of Alberta and Manitoba, but overall our supply was fairly well matched with demand. If anything, it was a bit short, creating a need to import potatoes from our neighbours in the United States.

Our fresh sector saw strong demand and resulting good prices. Our processing sector, based largely on pre-season determined contracts, was in an enviable position, responding to increased demand for the insatiable taste for french fries. Export markets were growing and domestically, plant expansions in the province of Alberta by Cavendish Farms, in Manitoba by the J.R. Simplot Company, in Quebec by Saint-Arneault, and in New Brunswick by McCain Foods all required additional supplies of potatoes for 2020. The seed potato sector was increasing as well largely to service the needs of the expanding processing sector.

However, on Monday, March 16, after our country began to self-isolate, we saw immediate changes in our potato markets, beginning first of all with table potatoes. Demand for fresh potatoes increased substantially and packers were challenged to keep shelves stocked, as consumers, now staying home, stocked up on staple nutritional foods like potatoes. It was commonplace to see produce managers in grocery stores moving empty pallets as they waited for new skids to come into the store. Demand for table potatoes is still strong and has become more stable in recent weeks as consumers have learned to cook again and enjoy the experience. Potato chip producers also saw increased sales, as consumers selected their favourite comfort food for the pandemic.

It did take more time for the processing sector to react, but eventually, with the sit-down portions of restaurants closed and only the drive-throughs open, the large volume of processed potatoes that enter the food service side of the industry was affected. French fry companies quickly realized that their freezers were becoming full from the factories that are designed to run 24 hours a day, seven days a week. Fryers began by taking downtime and shift layoffs to mitigate the effects but had to eventually close plants at various times.

The excruciating pain for growers then began as french fry companies began calling and advising that they would not be buying all of the potatoes that they had earlier contracted from them. Growers were advised to sell those potatoes to another market. In the following weeks, the situation became even worse with fry companies advising growers that they would be cutting volume for next year's crop. Cuts are dependent on what market each one of these factories supplies but range anywhere from 10% to 35%. The COVID-19 pandemic has had similar effects on french fry sales in the United States and in European countries like Belgium and the Netherlands.

Seed potato growers in Canada became the final victim of this COVID-19 pandemic as they began to receive calls from growers cancelling their seed orders due to 2020 crop volume cuts from the processors. It is difficult for any segment of the supply chain to react to market adversity, but it's definitely hardest for seed growers as they are at the bottom of the supply chain. In addition, many of these growers had started multiplying varieties three years ago that are only now reaching the commercial stage.

Our organization has the difficult task of trying to determine what supply of potatoes is needed to feed our country and export to others in the coming year. We can run several models, but we need to know two important input factors that are right now unknown: When do we start and how long will it take us to get back to pre-COVID-19 consumption levels? It will perhaps not return to what we know as historical consumption.

In the meantime, our growers need assistance. Planting time is now here for the 2020 crops, so there is a real sense of urgency.

The United Potato Growers of Canada supported the Canadian Potato Council in a letter of April 23 to the Honourable Marie-Claude Bibeau requesting assistance to deal with the effects of COVID-19 and preserve food security in Canada.

On May 5, the Government of Canada announced an industry support program, of which an initial $50-million fund would be used to purchase unsold inventories, such as potatoes, poultry and other agricultural products. There are no details yet as to how this program will work. However, our organization thanks Prime Minister Justin Trudeau and Agriculture Minister Bibeau for acknowledging in that announcement that our sector needs help. At this time, it is clear that it falls short of our urgent needs, unfortunately.

Specific to our industry, the Canadian Potato Council has contacted each province in Canada and identified the surplus potatoes on Canadian farms to be valued collectively at $105 million. The components of this big pile of potatoes include processing potatoes valued at $92 million and seed potatoes valued at $13 million. Converted to pounds, this pile is about 760 million pounds. This is a massive quantity of potatoes to move in a short time.

These surplus potatoes have a shelf life, so action must be taken now.

UPGC has looked specifically into the option of running more of these potatoes into the fresh market, but unfortunately, that market is now approaching saturation levels, in addition to our difficulty in locating sheds with additional run times.

Dehydration would also be an option, but our three plants in Canada are currently running at full capacity and their markets have been hit by food service restrictions as well. Cattle feeders are another possibility, but basically they only return trucking costs to the potato growers.

Food banks are an attractive option to avoid food waste, but logistically require extensive time to organize transportation, delivery and receiving. We simply do not have the infrastructure to handle the volume that must move. Many of our growers do support food banks now and are familiar with some of these difficulties.

The final option for these surplus potatoes would be composting or burial, both of which need to meet environmental and plant health guidelines.

All of these scenarios point to a series of options that growers cannot handle at their own risk and expense. Outside help is needed to begin removing this product now, with completion over the next three months to avoid environmental and plant health risks to the 2020 crop. We need help now, not in three months' time.

Your input and assistance as the Standing Committee on Agriculture and Agri-Food is critical to the future food security of Canada. Given all of the negative situations created by the COVID-19 pandemic, one positive has been a greater appreciation of the food produced in Canada and an increasing desire of consumers to support the producers who put it on their tables.

Thank you for the invitation and the opportunity to address you today.

[The Chair, Liberal, Pat Finnigan]

Thank you.

Would you like to speak, Mr. Keenan?

[Ray Keenan, Chairman, United Potato Growers of Canada]

Yes.

[The Chair, Liberal, Pat Finnigan]

You have almost three minutes left. Go ahead.

[Ray Keenan]

Mr. Chairman, thank you for the opportunity to speak with you here today.

I am the chairman of the United Potato Growers of Canada. Our farm operates a growing and fresh pack operation delivering potatoes on a daily basis to chain stores and, in the past, to food service, when it existed.

I echo the comments that have been made today. Although we are grateful for the dollars that the Prime Minister has allocated to the potato and poultry industries, unfortunately the potato industry has less than half of what it needs to facilitate moving to market the flood of potatoes that we now have available.

As the government searches for methods of doing things, there was an announcement to put these potatoes through food banks or in cattle feed, but I'm not certain that the logistics on that have been worked out very well. Certainly, as Kevin mentioned, potatoes have a shelf life and have to be.... If we bring processing potatoes into our packaging plant, about 50% to 70% of the yield will be packaged. In other words, there's a huge shrink to them, so we have a lot of potatoes that don't have a home in a fresh pack that make it into processing, because they have more uses at the processing level.

Having said that, with the problems they have had in western Canada with the feedlots or the meat packing plants, there's a backup of cattle on the farms, so I think we need to be careful about making assumptions that these potatoes can go to cattle. Some of them can, but some must be disposed of.

The more important thing is that the money gets distributed fairly among the provinces. I would like to make a recommendation that the fastest and most effective way to do this is through the provincial governments, in turn through the potato boards in the various provinces. We should take their advice on how to use the money, because each province has a different situation. Certainly, one size does not fit all clear across the country, especially today in the heavy processing sectors in, for example, New Brunswick, Manitoba and Alberta. They have been especially hit hard with processing extra potatoes.

[The Chair, Liberal, Pat Finnigan]

Mr. Keenan, unfortunately, that's all the time we have. Thank you very much.

Now we'll go to our round of questions.

We'll start with Ms. Rood for up to six minutes.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Mr. Chair

Thank you to the witnesses for their presentations today.

Perhaps this is for the Canadian Produce Marketing Association, and the Horticultural Council may want to jump in as well.

Our seasonal agricultural workers and temporary foreign workers play an integral part in the produce industry especially. I know that you were pleased to see the exemption for our TFWs and our seasonal workers after our party really did help push the government for this exemption.

In growing fruits and vegetables, we have a significant input and overhead cost going in. It's obviously a critical time of year. In my riding in particular, we have a lot of our farmers out planting their vegetable crops. As you alluded to, we've had some downright brutal weather. This past week our fruit tree growers have been trying to avoid frost right now with where they are in their production. There are also some farmers who are ready to go out and harvest their crop; for example here in Ontario it's asparagus.

I know where we are in receiving workers, but how is this going to affect, for instance, our asparagus farmers and those who have early crops? We're still missing a lot of workers. There are issues with paperwork for some of our workers coming from some places. How is that going to affect our food supply down the road as we look into the fall with volume that we may or may not see as farmers may cut back on their acreage this year?

[Ron Lemaire]

I will defer some of this to CHC, as they are definitely in a strong position to talk to boots on the ground, but I'll make a quick comment. Everything you said hits it right on the head relative to your question.

We're not really seeing issues now—and I feel horrible for the asparagus industry, which I understand will see 50% of their crop not come out of the ground and, in some cases, there will be even more of an impact—but when you look down the road, it's important to ensure that we have the workers for midsummer, the end of summer and for the fall harvest. That's going to be fundamental, so it's not just an immediate issue; it is the long game also, which was alluded to by the other speakers.

I'll hand it over to the Horticultural Council to continue.

[Jan VanderHout, Vice-President, Canadian Horticultural Council]

One of the things that I think is being overlooked is the exposure we have as producers to a large exodus of workers if there's an outbreak on our farms.

Imagine asparagus growers, because that's the imminent one right now, who go through all of this process to get their workers. They go through the isolation period. They go to work and then, two weeks later, there's an outbreak on their farm. What will the impact of that be? We need to ensure that growers have confidence that they're going to be supported by the federal government when this is all over.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

We still don't know what all of the impacts are going to be when all of this is over, like post-harvest. As a farmer myself, I know that I wouldn't want to be taking on more debt during this, because we don't know what's going to happen. How can the government support farmers post-harvest at this point?

[Ron Lemaire]

I'm going to start with that.

I mentioned the tax credit model as one potential tool, and there are a few other pieces of current input costs. We're looking down the barrel of a regulatory change under the safe food for Canadians regulations, where lot codes of consumer packed goods will require new packaging for many growers. The packaging costs alone under this current environment will add additional economic burden as we move forward. What we would ask is that the government postpone the implementation or delay that implementation of the lot code requirements on consumer packed goods for produce items to give the growers an opportunity to adjust to the current market, maintain current inventories of packaging, and continue to roll out and meet consumer demand.

I mentioned the tax credit, and the other piece of that also starts looking at creative models that enable wage subsidies. We've heard that the provinces look at how we enable essential services, and food seems to be missed out. On a call earlier today, there was a note that Quebec, B.C. and P.E.I. may be the only provinces.... How can the federal government support and enable the provinces in a federal model that can have some additional wage top-up for farmers and produce supply chain operators to take some of the burden away from the costs and stress they're under for production?

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you very much.

Mr. Chair, how much time is left?

[The Chair, Liberal, Pat Finnigan]

You have one and a half minutes, Ms. Rood.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Okay. I'll be quick.

Turning to the potato growers, I understand that you're sitting on a lot of inventory. Growing up on a potato farm myself, I'm very familiar with how this industry works. I'm still involved a little bit. We have a lot of input costs. It costs a lot per acre. In the U.S. we've seen some of the processing potato farmers having to disk under their crops.

You mentioned, I believe, around $90 million worth of processing inventory. The government has come out with $50 million, which obviously is a drop in the bucket and won't even touch nearly half of what's left over for the processing sector. Do you see them cutting back a lot of acres this year, then, just because of the decrease in demand on the commercial versus retail side of things?

[Ray Keenan]

Yes, the retail business today is very insecure. The number that we don't even pay a lot of attention to is the food service potatoes that are not going anywhere right now and are simply being saturated into the fresh market. That's causing great concern. The reduction in the processing contracts is significant. That will have a huge effect on the bottom line of our growers.

It is huge concern going forward, Lianne, yes.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Keenan and Ms. Rood.

Mr. Drouin, you now have the floor for seven minutes.

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

Thank you, Mr. Chair.

Mr. Lemaire, it's great to see you at our committee. It's not our first meeting. We've had the opportunity to have this discussion. Thanks for the call; as Ms. Rood talked about, we're all in this together. It was a global effort to try to resolve the TFW issue.

You and I have certainly had our fair share of calls—already about a month and a half ago, on this particular issue—but now I want you to talk to me about the challenges of your industry. We announced $77.5 million to help the sector adapt to COVID-related issues. I visited some plants, and some are automated. Are you speaking to some of your members about that? Are they looking at potentially automation to fight COVID? Plants are not designed now to respect physical distancing, for instance, so that has an impact on production.

[Ron Lemaire]

We are appreciative of the $77 million for the process industry. Our supply chain does fit within that portfolio.

In terms of the gaps that we will see, yes, industry can automate some areas but not everything. The costs that have been incurred relative to plexiglass barriers, a drop in production or an impact on production because of physical distancing, personal protective equipment that's hard to come by but is essential and is being purchased by the sector to protect employees—all of these pieces do qualify, we understand, under the blanket of funds. The challenge is that it won't be enough. We're one sector amongst many processors. Take pork as an example; that industry could eat it all up in one fell swoop. I know that's not the intent. I know they are looking at small, medium-sized and large businesses.

Will we be able to automate? Yes, but look at the greenhouse industry as an example. It's only for elements within a greenhouse, which Jan can talk to, that the automated approach can apply. Everything else is hands-on.

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

I think you mentioned that $77 million probably won't be enough. I think the minister has been clear that it's the first step. The Prime Minister has been clear, announcing on live television to Canada that it's just the first step.

In those discussions, are provinces jumping on board? Are you having good discussions? We talked about essential services and providing subsidies to essential workers. I know that we've announced $3 billion. I think you got cut off earlier; was P.E.I. mentioned as one of the provinces where agricultural workers are essential workers?

[Ron Lemaire]

That's right. That's what I've heard. I have to confirm that, but I was on a call today where it was identified by Agriculture Canada. As well, in Quebec and B.C., there are beginning approaches to identifying the agri-food sector. I have to gather further details.

How do we get the provinces on board? Well, we are in discussion with the big provinces, and there is a slow pickup and a recognition that, yes, we need to be included in that wage subsidy or wage top-up, but—I hate to say it—it is a slow boat, and our guys can't wait any longer.

As for how the federal government can support in the federal-provincial-territorial calls, it's essential to encourage the provinces to recognize that this sector is what makes the country operate. Without us, no one is going to eat and we are going to see a COVID environment that will be much more challenging.