Evidence of meeting #12 for Agriculture and Agri-Food in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was production.
A recording is available from Parliament.
Conservative
Richard Lehoux Conservative Beauce, QC
The coming into force of CUSMA on July 1, as opposed to August 1, will have a considerable impact.
Liberal
The Chair Liberal Pat Finnigan
You're out of time, Mr. Lehoux.
Just hang on a second here.
Mr. Drouin, you may go ahead. You have six minutes.
Liberal
Francis Drouin Liberal Glengarry—Prescott—Russell, ON
Thank you very much, Mr. Chair.
I'd like to thank all the witnesses here today. We've had an opportunity to speak with them before.
Mr. Lampron, kudos to you and your organization. Two months ago, I didn't think it was necessary to explain that a cow isn't directly tapped to obtain a quart of milk, but there you go—it had to be explained. Your organization has done some great work.
You're absolutely right when you say that supply management did what it was supposed to, even at a time of crisis.
I'd like to commend all the farmers in my region. The Dairy Farmers of Canada has been very generous, even locally, donating hand sanitizer, milk, cheese and so on. My hats off to all dairy farmers.
What do you think the challenges will be in the next few months? I know it's hard to say, since you can't predict demand. Nevertheless, for the farmers you represent, what challenges will July and August bring?
President, Dairy Farmers of Canada
No one knows what's going to happen. It's hard to predict anything.
I drew an analogy with a tap earlier. If hotels, restaurants and institutions—in other words, the HRI sector—resume operations, if consumers fall back into their old habits and if local buying remains strong, that's good for us. The demand will have to be met, however. There was a drastic break in the supply chain, and our production dropped. If demand rises, that demand will have to be met. That's why the Canadian Dairy Commission's storage capacity was so important. The government raised its line of credit to ensure it had sufficient storage capacity to meet the demand that lies ahead.
The future is very unpredictable. Today, for instance, it's quite hot. We have good facilities, but production could drop. Weather is one of the unpredictable variables we have to deal with.
Liberal
Francis Drouin Liberal Glengarry—Prescott—Russell, ON
Thank you very much.
Mr. Frigon, you said there had been negotiations with the government regarding compensation and TRQs.
Did you base your estimate of the industry's potential losses on the Canadian dollar? The value of the U.S. dollar and that of the Canadian dollar have changed since the winter. Does that make a difference, or do you anticipate the same amount in losses?
President and Chief Executive Officer, Dairy Processors Association of Canada
It could affect margins, but not substantially. Our working group estimated the losses stemming from the three agreements at $320 million per year, which includes the export caps. As we mentioned in our opening statement, CUSMA includes a clause that imposes export caps. Our estimate takes the losses from those caps into account.
Liberal
Francis Drouin Liberal Glengarry—Prescott—Russell, ON
I see.
Some of your members have companies in Canada and the U.S. Has your association taken a stand on the importance of allocating TRQs or import licences to companies with plants in the U.S.? Companies could simply transfer their production to the U.S. Should the same type of licence be issued regardless of whether a processor has facilities in both countries or only in Canada?
President and Chief Executive Officer, Dairy Processors Association of Canada
We haven't looked into that specific question.
Liberal
Francis Drouin Liberal Glengarry—Prescott—Russell, ON
You can nevertheless appreciate that it could cause concern for farmers here, can you not?
President and Chief Executive Officer, Dairy Processors Association of Canada
Yes, absolutely. I can see that it would raise questions.
Our association hasn't taken a stand on how TRQs should be distributed among dairy processors, depending on whether they are small and medium-sized businesses or large companies.
Our position is that TRQs should be allocated to dairy processors, not non-dairy stakeholders, because we are ultimately the ones who will feel the impacts of the agreements, not retailers and brokers—who are not processors.
Liberal
Francis Drouin Liberal Glengarry—Prescott—Russell, ON
There were talks regarding an investment program to help the dairy processing sector with innovation and automation of its processes in order to increase production.
Should that type of funding be granted according to the TRQs allocated? When the investment program is announced, in a few months or next year—I have no idea when—do you think the government should take the allocation of TRQs into account to ensure fairness? The cheese processing sector comes to mind, for example.
President and Chief Executive Officer, Dairy Processors Association of Canada
Yes, fairness is very important for processors.
Earlier, I was talking about losses of $320 million a year. The compensation program can be adjusted based on the tariff rate quota allocation, which is also a loss mitigation tool. This tool won't be effective for all processors. It depends on the products they offer and the markets they serve. These are two complementary tools. For those who haven't received many tariff rate quotas, the compensation program will contribute the most to improving the situation of producers.
Liberal
Francis Drouin Liberal Glengarry—Prescott—Russell, ON
Have your members started negotiations? I know that this question is difficult. However, we know that the food service industry is no longer what it used to be. Obviously, this has affected your members and their suppliers.
What will happen if the food service industry doesn't return to the way it used to be? Is your industry ready to adapt?
President and Chief Executive Officer, Dairy Processors Association of Canada
It isn't easy to do, because the drop in revenue may be much larger for suppliers in the food service market. Each case is different.
Liberal
The Chair Liberal Pat Finnigan
Thank you, Mr. Frigon and Mr. Drouin.
Mr. Perron, you have the floor for six minutes.
Bloc
Yves Perron Bloc Berthier—Maskinongé, QC
Good afternoon, everyone.
I want to thank the witnesses for joining us today.
Mr. Lampron, at this time, when I ask questions about compensation payments following free trade agreements, I'm told that this isn't the right time and that other priorities must be addressed.
Could you explain to the committee the importance of receiving this money now and how it could help you?
President, Dairy Farmers of Canada
All losses related to these trade agreements have been documented. CUSMA will come into effect a little too soon, in July. We were hoping that the agreement would come into effect in August, because the dairy year starts in August. As my colleagues said, we also have export limits. We must adapt our industry. These are significant amounts. However, a substantial portion of our market has been turned over to other products. That's why we need these amounts.
First and foremost, we're asking for direct payments to producers.
Bloc
Yves Perron Bloc Berthier—Maskinongé, QC
If I understand you correctly, you're telling me that the impact is already being felt. You need the money now and you want direct payments. The message is quite clear.
You thanked the government for its amendment to the Canadian Dairy Commission Act. That's good.
Do you think that it took a long time to make the amendment? If the amendment had been made earlier in the crisis, could you have avoided throwing away so much milk?
President, Dairy Farmers of Canada
I don't like to criticize what was done. I think that everyone was in crisis. We didn't all see this happen, and the change was made quickly, within two weeks. Let's try to talk about the future and the positive aspects.
Yves Perron Bloc Berthier—Maskinongé, QC
You're very kind.
You spoke of the importance of supply management and its system. I'm pleased, because all my colleagues seem to understand the importance of maintaining this system. I suppose that you would be in favour of potential legislation that protects supply management to ensure that the system is no longer affected, because an 18% cut in your production is enough.
President, Dairy Farmers of Canada
Certainly. In the last three agreements, the dairy industry and dairy producers made many concessions. At a certain point, we can't make any more concessions. This type of legislation would be appreciated. Thank you for your work to protect supply management.
Bloc
Yves Perron Bloc Berthier—Maskinongé, QC
Thank you, Mr. Lampron. You referred to the last three agreements. That's why I find you very kind and polite.
Mr. Frigon, I want to hear about how the entry into force of CUSMA on July 1 will affect you and your industry. Apparently, you were told that the agreement would come into effect on August 1. Can you take about 20 seconds to respond?
President and Chief Executive Officer, Dairy Processors Association of Canada
The impact will be very significant. In reality, the first year will last 30 days. There's a major difference between the first year and the second year in the agreement. In the second year, imports will triple and the export cap will be significantly reduced from 55,000 tonnes to 35,000 tonnes. We'll benefit from the first year for one month. These are substantial effects.
We were extremely disappointed to learn that the implementation would take place on July 1.