Evidence of meeting #13 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 market.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Benoît Fontaine  Chair of the Board, Chicken Farmers of Canada
Jeff Nielsen  Chair of the Board, Grain Growers of Canada
Erin Gowriluk  Executive Director, Grain Growers of Canada
Dave Carey  Vice-President, Government and Industry Relations, Canadian Canola Growers Association
Michael Laliberté  Executive Director, Chicken Farmers of Canada
Jean-Michel Laurin  President and Chief Executive Officer, Canadian Poultry and Egg Processors Council
Joël Cormier  Chair of the Board, Canadian Poultry and Egg Processors Council
Rory McAlpine  Senior Vice-President, Government and Industry Relations, Maple Leaf Foods Inc.
Paulin Bouchard  President and Chief Executive Officer, Fédération des producteurs d’œufs du Québec

May 29th, 2020 / 2 p.m.

Liberal

The Chair Liberal Pat Finnigan

Good afternoon everyone.

I hope you're all doing well.

I call this meeting to order.

Welcome to meeting number 13 of the House of Commons Standing Committee on Agriculture and Agri-Food. Pursuant to the motion adopted by the House on May 26, 2020, the committee may continue to sit virtually until Monday, September 21, to consider matters related to the COVID-19 pandemic and other matters.

Certain limitations on the virtual committee meetings held until now are removed. As just mentioned, the committee is now able to consider other matters. In addition to receiving evidence, the committee may also consider motions as we normally do. As stipulated in the latest order of reference from the House, all motions shall be decided by way of a recorded vote.

Finally, the House has also authorized our committee to conduct some of our proceedings in camera, specifically for the purpose of considering draft reports or the selection of witnesses.

Now I would like to outline a few rules to follow.

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 your 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.

I'll ask all of our witnesses to let us know with a nod that they have understood this, just to make sure everything will go right. It looks like everybody understood. If there's an issue, we will help you out.

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

Please make sure your mic is on mute when you're not speaking.

We are now ready to begin.

I'd like to start by welcoming the witnesses. For the first half of the meeting, we have joining us, from the Chicken Farmers of Canada, Benoît Fontaine, chair, and Michael Laliberté, executive director.

Next, from the Grain Growers of Canada, we have Jeff Nielsen, chair of the board of directors, and Erin Gowriluk, executive director.

Lastly, from the Canadian Canola Growers Association, we have Dave Carey, vice-president of government and industry relations.

We'll begin with everyone's opening statements. Each group will have seven minutes for their presentation. The Chicken Farmers of Canada representatives can start things off. You can split your time as you see fit.

Please go ahead.

2 p.m.

Benoît Fontaine Chair of the Board, Chicken Farmers of Canada

Thank you, Mr. Chair, for inviting us.

Good afternoon everyone.

My name is Benoît Fontaine.

2 p.m.

Conservative

Gerald Soroka Conservative Yellowhead, AB

On a point of order, he does not have his interpretation set right.

2 p.m.

Chair of the Board, Chicken Farmers of Canada

Benoît Fontaine

I think it's working now.

2 p.m.

Liberal

The Chair Liberal Pat Finnigan

Yes, you can proceed.

2:05 p.m.

Chair of the Board, Chicken Farmers of Canada

Benoît Fontaine

I'm a chicken farmer from Stanbridge Station, Quebec, in the Brome—Missisquoi riding, and I'm the chair of the Chicken Farmers of Canada.

Our industry contributes $8 billion to Canada's GDP, supports more than 101,900 jobs and generates $1.9 billion in tax revenue for the government. Canada's 2,877 chicken farmers are proud to raise birds that represent Canada's number one meat protein, in the good times and the more challenging ones—as is currently the case. As is seen across the country, and even across the world, the COVID-19 crisis has left no sector untouched, especially not ours.

Chicken Farmers of Canada was pleased to see the government's announcement on May 5, 2020 in support of the agriculture and agri-food sector, but we need to highlight that these measures do not go far enough in supporting Canadian agriculture and, in particular, Canadian chicken farmers. In order to continue to ensure food security for Canadians, further support for Canadian chicken farmers and processors is needed as we navigate the unprecedented stress and pressures of the pandemic.

Currently, the Canadian chicken sector is seeing unprecedented market conditions as a result of the infamous COVID-19 virus. Food service, which usually represents approximately 40% of the market—so a huge share—has experienced a rapid decline in sales, almost overnight. In retail, there was an initial surge in sales caused by consumer stockpiling, but that demand has now stabilized, resulting in a total demand that is below usual volumes.

What does this mean for farmers? The rapid decrease in food service meant that farmers and processors were left with surplus production for a short period of time. Thankfully, the flexibility provided by supply management allowed our board of directors to quickly react and adjust production for the coming months, hoping to avoid a worst-case scenario of depopulation. On April 14, the board of directors reduced allocation for May 10 to July 4 by 12.6%, and recently adjusted the national allocation for July 5 to August 29 by 9.75%. Those decisions were made to deal with the situation in a responsible way and to make sure the chicken supply was sufficient to meet demand in Canada.

While we have been able to adjust production, that does not entirely alleviate the stresses on farmers and processors during this time. Some processing plants may have to reduce their slaughter and processing volumes of chicken owing to physical distancing requirements, employee absenteeism and complete shutdown to isolate workers and deep clean facilities for longer periods of time.

Processors are working closely with one another and with farmers to redirect birds if and when needed, as was the case in early April in Ontario and in early May in British Columbia. However, there are limits to the number of birds that can be processed by other plants if a plant significantly reduces its activity or is completely shut down. This reduced throughput and risk of plant shutdowns significantly increases the risk of farmers having to depopulate flocks.

Farmers do not take depopulation lightly. In addition to impacting the food supply of Canadians, depopulation means a loss of the flocks farmers have spent time, money and energy raising. It also means a financial loss.

In the event that processors do not have the capacity to process chickens, farmers will have to work quickly with their processors to determine next steps, and at this point in time, they do not have government assurance that the live price of the birds will be covered.

Based on the government's announcement, our understanding is that AgriRecovery will cover up to 90% of the costs of depopulation. This does not address the value of the flocks being depopulated, the administrative burden on the farmer or the lobbying of provincial governments to provide their portion of business risk management funding.

Throughout numerous conversations with government officials, we have reminded them that, under the Health of Animals Act, depopulation is supported in instances of disease. We are well aware that the act was specifically designed to cope with animal disease, but we believe what the sector is experiencing now—with processing capacity, depopulation and the overall impact on operations—follows the intent of the act and has the same consequences for farmers.

We are disappointed that the government has not looked to this well-functioning model to support the chicken sector in the event that depopulation is necessary.

While the business risk management suite of programs is designed to address fluctuations in income to support farmers in times of need, it does not work for chicken farmers in cases—

2:10 p.m.

Liberal

The Chair Liberal Pat Finnigan

Thank you, Mr. Fontaine.

Unfortunately, your time is up. That's all the time you had, but you may have a chance to provide more information during the question and answer period afterwards.

2:10 p.m.

Chair of the Board, Chicken Farmers of Canada

Benoît Fontaine

Thank you, Mr. Chair.

2:10 p.m.

Liberal

The Chair Liberal Pat Finnigan

I'll now turn the floor over to the next witness.

We'll now go to the the Grain Growers of Canada.

Whoever wants to take the seven minutes, go ahead.

2:10 p.m.

Jeff Nielsen Chair of the Board, Grain Growers of Canada

Thank you, Mr. Chair. Erin Gowriluk and I will split our time, and I'll quickly make my opening remarks.

Once again, thank you for this opportunity to speak in front of your committee today. I am Jeff Nielsen, and I farm in central Alberta near Olds. I am chair of the Grain Growers of Canada, which is a national voice for grain, oilseed and pulse producers through our 15 regional and national grower associations.

To put it simply, we are extremely disappointed in the support offered to farmers to date. The recent $252-million announcement directed limited funding to select sectors while leaving others feeling totally ignored. Let me be clear: We do not expect to be your main or sole focus right now, but we also do not want to feel like an afterthought.

We do not have to look far to see a different level of support for agriculture in the face of COVID-19. Our direct competitor to the south has offered agriculture a support package that is well into the billions, with $6 billion recently going directly to crop producers.

For the benefit of the committee, let me give you some background on the state of the grain industry. Certain grain commodities, such as corn, have been significantly and directly impacted by COVID. With a decrease in demand for fuel, ethanol plants are running at a very diminished capacity. We do not expect a return to normal anytime soon. Soybean cash receipts have fallen nearly 40% over the last two years.

I am a malt barley producer. Malt barley demand is down significantly due to to the fact that the restaurants and hospitality industry have been affected by COVID, which has naturally decreased the demand for beer. Barley cash receipts are down 21% in 2020 from the same time last year. Malt contracts are being pushed well into the fall for the current crop year, and new crop contracts have been asked to be reduced due to the fact that we currently have an oversupply of malt barley.

Feed prices are very volatile. It's a reflection of what may happen to the U.S. crops and will definitely affect their feed prices. Flaxseed cash receipts have dropped 33% in the last year. Demand for pulses has remained stable, but there is the concern with the lack of container shipping, a problem complicated by the rail blockades this past year, port quarantines and decreased cargo ship movement at this time.

A regular amount of uncertainty is typical for us farmers—we plan for this—but these are not normal times. Recent years have been disastrous for many of us, in terms of weather, rising costs and growing market access challenges. In fact, Canadian farmers were not well positioned going into this pandemic. According to StatsCan, in 2018, farm incomes fell by nearly 21% while realized net farm income fell by 45%.

While StatsCan data from this week shows a rise in income for 2019 for the first time in three years, that does not give an accurate picture of agriculture. Excluding cannabis, which seems to be a new agricultural crop, crop revenues on the national level have decreased by over 1%.

Talking about StatsCan information, this only heightens the concern about our ability to service farm debt loads, which are now at a record high of $115 billion—an increase of nearly $30 billion in the past four years. I do not want to overstate this, but in reality our industry is hurting, and while it's not easy for older guys like me to admit, we need support.

I'll turn it over to Erin.

2:15 p.m.

Erin Gowriluk Executive Director, Grain Growers of Canada

Thank you, Jeff.

Now, for the good news. We believe there are easily achievable solutions to help farmers and to protect the Canadian economy. We have very specific, very actionable requests for you today.

First, as a sector, we are asking for two critical changes to the AgriStability program. The changes are as follows: Coverage must immediately be adjusted to cover losses, starting at 85% retroactive to 2019 and for the remainder of the Canadian agricultural partnership; and the reference margin limits must be removed. These two simple changes will give farmers the confidence to keep operating.

As members of the committee know, we are not alone in seeking changes to AgriStability. The fact is that this change is the one that unites essentially all agricultural sectors.

While it is a positive signal that the application deadline for this program was extended, we do not see it inspiring more farmers to apply. Farmers simply don’t see enough value in the program to put in the time and effort required to enrol, and unfortunately, an online calculator isn't going to change their minds.

However, we commend the federal government on some of the other business risk management programs for farmers that work well, including AgriInvest and crop insurance. These are success stories and valuable tools for farmers, ones that cannot afford to have funds diverted away to bolster or address the concerns we have cited here today. These programs need to continue to be complementary in nature.

Finally, we understand that the cost of the current program is shared sixty-forty between federal and provincial governments, and that provincial governments are currently facing their own financial challenges. This is why we are seeking leadership from the federal government on this. We need our federal leaders to renegotiate the cost load.

As we look toward recovery, this is definitely not the time for government to abandon its vision for agriculture as a high potential sector for economic growth in Canada. As stated in the report of Canada’s economic strategy tables, Canada has the potential to be one of the top five competitors on the international stage, increasing agriculture, agri-food and seafood exports by 32% to $85 billion by 2025. This is a laudable goal, and it is one that the entire sector supports. However, it can only come to fruition if Canadian farms remain solvent and are able to succeed.

We are at a crossroads. We can choose to support Canadian farmers now and allow for that potential to be realized, or we can choose to abandon Canadian farmers and lose the vision for a real economic recovery and future prosperity for our farms.

2:15 p.m.

Liberal

The Chair Liberal Pat Finnigan

Thank you, Ms. Gowriluk. Sorry, we're out of time and have to move on.

From the Canadian Canola Growers Association, we have Mr. Carey, for up to seven minutes.

Go ahead, please.

2:20 p.m.

Dave Carey Vice-President, Government and Industry Relations, Canadian Canola Growers Association

Thank you, Mr. Chair, for the invitation to appear before your committee today on your study on the Canadian response to the COVID-19 pandemic. It's a pleasure to be here on behalf of Canada's 43,000 canola farmers.

CCGA represents canola farmers from Ontario to British Columbia on national and international issues, policies and programs that impact their farms' success. CCGA is also an official administrator of the federal government's advance payments program. For the last 35 years we have been providing cash advances to help farmers better market their crops and finance their operations.

Developed in Canada, canola is a staple of Canadian agriculture as well as of Canadian science and innovation. Today it is Canada's most widely seeded crop, and has the largest farm cash receipt of any agriculture commodity, earning Canadian farmers over $8.6 billion in 2019, which is a decline of $700 million in 2018. Annually, the canola sector provides $26.7 billion to the Canadian economy, and provides for 250,000 jobs.

Exports drive canola's success. More than 90% of all canola grown in Canada is exported as seed, oil or meal. There continues to be global demand for canola, but blocked market access coupled with the economic downturn from COVID-19 is putting considerable pressure on farmers. Canola prices in 2019-20 lag the previous year's, and farmers face significant market uncertainty. Continuation of this trend could significantly reduce the canola sector's contribution to Canada's economy, impacting employment and wages. Urgent efforts are needed to restore stability and position canola as a dependable economic contributor to Canada's post COVID-19 economy.

To unleash the full potential of Canada's canola farmers, the following actions are requested from the federal government: opening and diversifying markets, ensuring that farmers have access to risk management tools that are effective, and facilitating global competitiveness through access to innovation.

On the trade side, farmers are well positioned to provide safe, reliable canola supplies, both domestically and to the world, but require a rules-based, predictable framework to grow our exports. Promoting this framework will be even more important to counter protectionist policies post-COVID-19 as countries turn inward and look to shore up their domestic economies. Trade is key to the world's economic recovery, and modernization of the World Trade Organization is essential to ensure that borders and supply chains remain open.

For the canola sector to achieve its full potential, reopening the China market must remain a priority. For canola farmers, China was their largest market, representing 40% of canola exports. It has been over a year since market restrictions were imposed, and farmers continue to struggle with market uncertainty and reduced prices. In 2019, canola seed exports to China were a third of those in 2018, leading to a 26% decrease in export value. The impact of such a large trade disruption has highlighted the need to diversity our markets, and to do so, additional resources are required, particularly in the Asia-Pacific, to help understand evolving regulatory requirements and to address market access issues.

In addition, launching FTA negotiations with the Association of Southeast Asian Nations and the expansion of the CPTPP could generate new market opportunities and create a more predictable trading environment.

Canada's domestic biofuel market also presents an important opportunity to diversify the canola market, and the upcoming clean fuel standard, or CFS, provides an opportunity to realize this potential.

Canadian canola is a high-quality biodiesel feedstock currently used in Canada, the U.S. and the EU. It has the potential to not only spur economic investment but to lower greenhouse gas emissions. The CFS, which is currently under development, could triple the domestic demand for canola-based biofuels, providing much needed market stability for farmers, increasing value-added investments and making real and quantifiable contributions to GHG reductions.

To leverage this potential opportunity, the government must consider immediate improvements to the regulatory design of the CFS, including providing the necessary demand signal for biofuels by requiring all diesel fuel to contain the minimum 5% renewable content. The current standard mandates 2%. If this requirement is instated in the CFS, increasing renewable content to 5% of the diesel pool would conservatively use 1.3 million metric tons of Canadian canola and reduce GHG emissions by 3.5 million tonnes of CO2 equivalent per year.

This would represent new domestic demand for Canadian canola that is not subject to trade disruptions, and is roughly the size of the Japanese export market in value. A clear and strong demand signal is critical. The time is now to leverage this opportunity for biofuels to spur economic investment in Canada, with no cost to the government.

Canola farmers need urgent action to improve business risk management programming. Family farms are facing unprecedented challenges and uncertainty due not only to the current pandemic but also to ongoing trade restrictions. Net farm incomes fell 45% in 2018. In Manitoba and Saskatchewan, net farm incomes again saw significant declines in 2019. In addition, farm debt levels continue to increase.

Farmers rely on BRM programs to help manage the risks that are beyond their control. Immediate solutions and focused investment are required to improve programming and provide farmers with effective tools to manage increased volatility and uncertainty that, in turn, will support their ability to contribute to rural communities and economic growth.

The following BRM change is needed immediately: AgriStability coverage adjusted to cover losses starting at 85% of historical reference margins with no reference margin limits.

As we prepare for the next policy framework, CCGA looks forward to working with the government to ensure that risk management tools available to farmers are effective and reflect the risks of modern farming. CCGA requests the establishment of an industry-government technical working group that will allow farm groups to actively participate in BRM data and impact analysis.

It's worth noting that in the last three years, the U.S. government has announced $47 billion in agriculture support in addition to its regular farm bill and crop insurance programs. To realize our full economic potential, we have to remain competitive in the global market.

On innovation, a science-based regulatory process is the foundation upon which the Canadian canola industry was built. It's critical that the PMRA continue to take science-based regulatory approaches that assess risk on crop protection products, including the final decision on the proposed ban of neonicotinoid seed treatments that would cost the Canadian canola industry between $700 million and $1 billion annually.

As part of our stewardship, CCGA collected water monitoring data in collaboration with industry partners, weekly over the spring and summer of 2019, that demonstrates canola farmers are effective at preventing these products from moving into wetlands. The PMRA needs to continue making science-based decisions on crop protection products by incorporating the best available information.

Another important innovation is the advances in new plant breeding techniques, as was identified by the 2018 report from the economic strategy table, the 2018 fall economic update and the 2019 Treasury Board agri-food and aquaculture regulatory road map. These new tools have the potential to create new and better varieties for farmers, consumers and the environment alike. To ensure research and development continues in Canada and to maintain farmers' competitiveness, an enabling regulatory system is required.

In conclusion, we appreciate the opportunity to speak with this committee today. CCGA would urge this committee and all parliamentarians from both Houses to reflect not only on the current challenges that agriculture is facing but also on the support our sector needs to drive the Canadian economy post-COVID.

2:25 p.m.

Liberal

The Chair Liberal Pat Finnigan

Thank you, Mr. Carey.

Now we'll go to our question round.

We'll start with Mr. Barlow, for up to six minutes.

2:25 p.m.

Conservative

John Barlow Conservative Foothills, AB

Thank you very much, Mr. Chair.

Thanks to our witnesses for taking the time to be with us today.

The numbers that Mr. Nielsen was talking about are certainly concerning when you see the farm income down 45% in 2018 and then another drop last year. It doesn't include what we'll see next year with COVID. We've certainly heard the number of 30,000 for family farms at risk of bankruptcy, and debt levels now at $115 billion.

Mr. Nielsen, how critical is the situation? As you said, there was difficult financial footing heading into the pandemic. We have seen a real lack of definitive action, something designed specifically for agriculture. How serious is the situation facing Canadian farmers right now?

2:25 p.m.

Chair of the Board, Grain Growers of Canada

Jeff Nielsen

As Mr. Carey indicated, different crops have different effects. It's more noticeable right now with the soybean and the corn sectors. On the other commodities, in terms of canola, we've seen the hit for over a year: lack of market access to one of our key exporting countries. We've seen the effects of the U.S. farm programs affecting some of our prices.

It's hard to really quantify the total damage. I think what we're waiting for now is the other shoe to fall. If we don't have the proper programs in our back pockets that will work for us, that are designed to work properly, then when that other shoe falls we're going to be in serious trouble.

2:25 p.m.

Conservative

John Barlow Conservative Foothills, AB

I think we all would agree that agriculture is an industry we'll be relying on post-COVID to get us out of a very deep financial hole. However, we have a government right now that's asking agriculture to empty whatever savings you may have before it offers any tangible assistance.

There is AgriInvest, for example. Do you have an idea what funds are available in AgriInvest? I would assume that farmers rely on it as a long-term savings program. Do you know what numbers are available in AgriInvest and whether this is a tangible solution to a global pandemic?

2:30 p.m.

Chair of the Board, Grain Growers of Canada

Jeff Nielsen

We've been trying to get data from the federal government on the accounts of AgriInvest. We understand that somewhere in excess of $2 billion is in accounts being held right now. The thing is, a lot of people use this money. It's a matching program of up to $10,000. I and all the people I talk to on this program use it. They use it yearly in investing that money in their farm operations. Some people believe they want to use it for the next-generation transfer of their farm to the family.

We're trying to find the right information from that so we can better answer a question like that, Mr. Barlow. Currently, we have a request in to the federal government for this information. We're still waiting for that information to come.

2:30 p.m.

Conservative

John Barlow Conservative Foothills, AB

I understand that you've been pushing for the CEBA to be made more available or to have better eligibility for agriculture to take advantage of that. There has been some movement on that to ensure producers can access the emergency business account, but my understanding is that the information still is not available and some financial institutions still don't have the documentation to allow agriculture producers to access that. Is that correct, Mr. Nielsen?

2:30 p.m.

Chair of the Board, Grain Growers of Canada

Jeff Nielsen

That is my understanding, yes. Currently, the Bank of Montreal has been trying to keep.... My personal account manager, my commercial manager at my branch, sent me a note this morning on that, stating that the proper information isn't available to the Bank of Montreal yet to open any accounts. We do thank the government for the changes made to allow more farm businesses to take advantage of this, hopefully, yet currently we cannot.

2:30 p.m.

Conservative

John Barlow Conservative Foothills, AB

Mr. Carey, you were talking about the importance of global trade, and I think that as we go post-COVID it's going to be critical. We've talked about canola and soybeans to China. We've now seen China put 80% tariffs on Australian barley. Is there any concern—even on the decision with Huawei earlier this week—about what our Canadian relationship is going to be with China? There are discussions already starting on the potential ramifications of Chinese political influence on trade relationships around the world.

2:30 p.m.

Vice-President, Government and Industry Relations, Canadian Canola Growers Association

Dave Carey

Thank you for the question.

We have certainly seen China take a strong approach to trade, and doing what it feels is in its best interests of late. I know that in March there was ongoing dialogue between the Canadian government and the Chinese government. The recent court decision, I'd say, is still too new for us to really have any information that isn't available to the public.

Again, the trade concerns the Chinese government has raised are of a technical nature, a phytosanitary nature. At this point, we don't yet see a path forward to resolving that issue. Again, I think it also speaks to the importance of our opening up many potential markets so that farmers aren't reliant on any import market that could have this sort of adverse effect on our exports. This is why we're also looking at more Canadian-made solutions, such as biodiesel, which is key.

2:30 p.m.

Conservative

John Barlow Conservative Foothills, AB

Thanks.

I have time for one last quick question for Mr. Nielsen.

AgriStability is being touted as your tool out of here, but many times AgriStability payments come out two years down the road, while you may be facing bankruptcy. Was AgriStability ever designed for a pandemic?

2:30 p.m.

Chair of the Board, Grain Growers of Canada

Jeff Nielsen

To be honest with you, no.

2:30 p.m.

Liberal

The Chair Liberal Pat Finnigan

Thank you, Mr. Barlow.

Next, we have Mrs. Bessette.

Mrs. Bessette, you may go ahead. You have six minutes.