Agriculture Committee on Feb. 20th, 2020

[Kody Blois, Liberal, Kings—Hants, NS]

Thank you very much to all our witnesses for providing their information.

I'm going to be splitting my time with my colleague Francis Drouin. I'm going to ask some very pointed questions and I'm going to try to move quickly to get some answers.

In terms of consultation with the processor side, which was brought up by Mr. Barlow, can you speak to whether the consultation in this particular trade agreement was better than under TPP?

[Gilles Froment]

I can address that question.

I was certainly more involved in my role. I joined Lactalis four years ago. In my previous involvement in the dairy industry I was not involved in the process, but I would say that it was probably similar, in terms of information. Typically, the industry is kept aware of the main discussion. You don't have all the details to be able to grasp really where....

In the end, in a lot of the discussion that led to the agreement—I think it was September 30 or something like that—in the last few weeks, I was personally left pretty much in the dark as to where it was going.

[Kody Blois, Liberal, Kings—Hants, NS]

I appreciate that.

I'm reading a Financial Post article here that actually says that during the TPP the dairy processing industry didn't have a whole lot of involvement whatsoever.

I'm going to Mary and her point. You talked about your background in horticulture. You talked about the unprecedented nature of the impact. Our witnesses before you certainly talked about the challenges, the negotiation at the table, in terms of the American positioning on some of this. Can you speak to how important this deal is for horticulture, particularly products that might be relevant to your province or my province of Nova Scotia?

[Mary Robinson]

We know that one of the big successes was for our sugar beet processors and our sugar beet growers. They really gained a lot of market access, which will mean a lot to Alberta, which grows most of our sugar beets. In regard to crops and seafood from Nova Scotia and Prince Edward Island, we're excited from that perspective to have this deal in place so we can get back to doing business. It's been very unnerving to be flying blind like this.

[Kody Blois, Liberal, Kings—Hants, NS]

Thank you very much.

Finally, I'll turn to our dairy farmers. Dave, thank you very much for your testimony. It was moving. I have a lot of dairy farmers in my particular community, and any of them who are watching today, I'm sure, can share similar experiences. You talked about compensation. I guess this is more of a comment than a question, but the direct dairy payment program is coming online. Our government has committed to compensation, and we know that's important. That's more of a comment, as opposed to a question.

I want to pass it over to Francis to finish off.

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

Thank you, Mr. Blois, for keeping your promise.

Thanks to all of you for being here.

I have met you a number of times.

My first question is for the dairy processors. I know that you're asking for an investment fund. One of the concerns I have is that.... I know that some processors have operations in the U.S. and other countries. Given that CUSMA will come online, one of the things I would have to make sure of, because I am accountable to some processors back home, and especially dairy farmers, is that I wouldn't want to subsidize shifting production to the U.S. or other countries. Obviously, Canadians would be mad at us.

How do you think we could ensure that doesn't necessarily happen? For instance, supply chain integration with the U.S. and Canada could be a particular model that we could see. Are there any guarantees that you can give me here at committee that you would ensure that this is just spent in Canada and only for Canada?

[Gilles Froment]

I can definitely start. Our company works in many countries—in 50 different countries, actually—but Canada is number two or three in the group in terms of sales, so Canada's very important, a lot bigger than our operation in the U.S. I have to say that, when our fight in Canada.... I'm going to speak for our own business. When we try to convince the group to invest in Canada, we compete against all those other countries, so we have to make it sexy to invest in Canada, and the investment in Canada is definitely for jobs in Canada, for innovation, and so on. A very significant part of the money that is being made in Canada is reinvested in Canada.

[Michael Barrett]

I would quickly add that, as a farmer-owned co-operative, the second-largest co-operative, Gay Lea Foods has 1,400 farms that I represent, which are concerned about exactly the same thing that you're concerned about and that Dave has reiterated—about investment in Canada to be able to ensure the health and well-being of farms, and not only that but rural sustainability as well. That's the guarantee I can give you. I have 1,400 constituents of my own who are making sure that we live by that agreement.

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

That's what I like to hear.

My question goes to the Dairy Farmers of Canada. Clearly, there were concessions and we are not all satisfied with the results. But that's where we are. My colleague was getting ready to talk about direct payments. We have seen two models, and things are working well. I know that the first payment has been made.

You have had discussions with your members. Does the model seem to be working well for them?

I'm out of time.

[The Chair, Liberal, Pat Finnigan]

You're out of time; that's right. Thanks for reminding me. It's your loss.

[Some hon. members]

Oh, oh!

[The Chair, Liberal, Pat Finnigan]

Mr. Perron, you have six minutes.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Good evening, everyone. Thank you for coming here despite such short notice. We really appreciate it.

I wanted to talk to you about the thresholds. I feel that the issue has been thoroughly discussed. It sets a precedent that does not seem to make sense for a number of people around the table. It results in us giving up a part of our sovereignty.

Setting that aside, could you tell us what the economic impact of those thresholds will be on the agricultural businesses you represent? Perhaps you could relate it to the losses in the supply managed market, because we are talking about the same initial product. I feel that the impact is much more significant than we are being told.

[Michael Barrett]

As Gilles has outlined, and certainly many of our members.... There's been a considerable $7-billion investment. If you take the crystal ball and take a look at this, on the caps, it's imperative to be able to.... Although supply management is primarily a domestic balancing system, you need the export market to be able to balance out the puts and the takes. Where there's certainly been an uptake in the fat market within Canada, you need to be able to balance out that system.

You have the potential where, if you cannot balance that system without being able to understand the need for that investment, the investment from processors won't take place. Then it runs down to the dairy farms themselves. It will have a potentially significant impact in the short term with regard to the 55,000 and 35,000, but you have to look beyond that to say how you are going to be able to ensure that there's investment by processors in processing in Canada. Without that, we have a self-fulfilling prophecy.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Mr. Taylor, would you like to add anything?

[Dave Taylor]

I can't say it any clearer than Michael has. I would just emphasize that when there's no opportunity for growth and no innovation in the sector, we go backwards. That's not how we want our dairy industry in Canada to be.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

As I understand it, this threatens the future of dairy production quite substantially.

Given the sacrifices that you are being asked to make, do you consider it reasonable that the agreement should go into effect before August 1? I think you said earlier that it would make no sense.

Can you put numbers to the losses that it might represent?

[Gilles Froment]

About 20,000 tonnes would be lost, in products like skim milk powder or milk protein concentrates. That represents between $10 million and $15 million or more, depending on how the losses are valued.

As we said in our testimony, we believe that the government could easily say that the agreement was negotiated in good faith. The idea was to move from a volume of 70,000 to 72,000 tonnes to a volume of 55,000 tonnes and then to 35,000 tonnes. That was supposed to be done gradually. Now, if the first year has only one or two months, we drop to 35,000 tonnes. So, instead of losing one-third of the volume, we would be losing half all in one go, and that would have a major impact on our companies.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Given everything that is being asked of you, it would be only reasonable for us to do everything in our power to ensure that it happens after August 1. Thank you very much.

Ms. Robinson, you mentioned that export caps could be challenged by other countries. Can you tell us more about that?

[Mary Robinson]

An example would be if we were exporting powdered milk to a country and the U.S. found that it couldn't compete with us in that country. It would decide to place a cap on us, and then it would go in and fill the market instead. We would lose that market.

That's how I understand it to be.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you. That does not play by the rules of international trade.

I would like to talk about the companies' need to feel secure. Could one of you to explain to me the importance of a supply management system in Quebec and Canada from an economic point of view, not only for the companies that you represent, but also for those that benefit from it indirectly? I am thinking of sales of animal feed, for example.

Could you please tell us about the importance of a system like that?

[Mary Robinson]

Coming from the non-supply managed side of the industry, I can tell you that I look at the supply-managed side with envy because I see them being able to plan. I see them being able to invest in their resource to make really good decisions on how they're going to do the best thing in terms of environmental stewardship. I see them being able to plan their capital investments. There's so much stability there that not only does it bring peace of mind to the producers, but it puts them in a position to really manage our natural resources well.

On the non-supply management side, it's a race to the bottom. It's a cutthroat business. I think supply management is an amazing thing.

[The Chair, Liberal, Pat Finnigan]

I'm sorry, but we're out of time.

Thank you, Mr. Perron.

We'll move to Mr. MacGregor. You have six minutes.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Thank you, Chair.

Thank you to our witnesses for giving their testimony today and giving us some guidance on our deliberations on CUSMA. We're operating on quite a tight timeline, and I very much appreciate what our supply-managed sectors have gone through. We seem to be constantly paying the price for other jurisdictions' overproduction problems. It's obvious when you look at states like Wisconsin, which produces more milk than our entire country and is affected by massive price fluctuations, that they're looking for places to get rid of their excess production. Canada was an easy target, and I very much appreciate that.

There have been a lot of discussions about when this agreement is actually going to be ratified. I was looking at Bill C-4 and the coming into force provisions. Section 213 says, “this Act comes into force on a day to be fixed by order of the Governor in Council.” I'd like to know what your conversations with the executive branch have been like when you've raised these particular concerns.

[Gilles Froment]

Our understanding from the start has been that the agreement will come into force the first day of the third month after the last country has ratified.