Evidence of meeting #8 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 covid-19.
A recording is available from Parliament.
2:55 p.m.
Executive Director, Canadian Agri-Food Trade Alliance
Our grain producers—soybean and corn producers, in particular—are already seeing a significant impact in terms of market distortions.
3 p.m.
Liberal
The Chair Liberal Pat Finnigan
Thank you, Ms. Citeau and Mr. Perron.
Mr. MacGregor, you have the floor for six minutes.
3 p.m.
NDP
Alistair MacGregor NDP Cowichan—Malahat—Langford, BC
Yes, thank you, Chair. Thank you to all of the witnesses for appearing today. It's really great to see all of you again on this platform.
The theme of my questions will be resiliency: how we build resiliency into the system. I think all of our witnesses have elaborated upon and described the weaknesses in our system, and I'm really interested, not only in how we deal with those in the short term, but really also in what kinds of things we have to put in place for the longer term so that we'll be better able to withstand shocks in the future.
I'll start with Food and Beverage Canada. I'd really like to thank you, first of all, for mentioning our workers. I think it's really important to illustrate the job they're doing on behalf of Canadians and the dangers they're exposing themselves to, and also their families when they go home. I think they really are the unsung heroes of what we're going through right now.
I also appreciate your comment that sometimes policy-makers don't have the expertise. However, when you look at the state of the industry in Canada and what this pandemic has thrust upon you, I really want to know, looking ahead to future shocks, what the answer is.
What kinds of things do we need to build into our system? Have our food processing centres become too centralized? Do we need to spread them out a bit more so that if one plant shuts down, others can take its place?
I'm just curious to hear any kind of innovative ideas that your association could suggest to this committee about how we can withstand shocks in the future.
3 p.m.
Chief Executive Officer, Food and Beverage Canada
Yes, thanks very much, and I will just echo exactly what you said. There's no doubt that the last eight weeks.... I talk to food companies every day and the commitment that the workers have made, not just to their companies but to Canadians, is really moving.
As for what we need to do going forward, I think the first thing that struck me when the pandemic started was the fact that we had absolutely no plan for the food system. It's clear that measures had to be taken to address the pandemic, and I don't question those. One of those measures was essentially turning off the economy, if you will, but we didn't have a plan for what we were going to do with critical infrastructure. So we have to do that and this can't just be a lip-service activity. We actually have to sit down and start to map out what the food system looks like, from farms—including inputs to farms—all the way to retail and food service, so that we really start to identify where the weak links are.
Absolutely, there are about 10 different sectors in food manufacturing, with the obvious ones being meat, bakery and dairy. The level of concentration in each is very different. Where they're located across the country is also very different, and I think we do need to take a look so we've got a good understanding of what the sectors look like. You know, we're private companies. There's not a lot we can do in terms of collaborating and cooperating, but I think we can prepare, and if we understand better what we look like and how we're organized, I think that will help us.
Another thing we absolutely have to do—it was a problem before—is innovate. As an industry, we're the largest manufacturing sector in the country, but we lag behind most other manufacturing sectors when it comes to innovation and automation, those sorts of things.
What role they could play going forward is hard to know, but we're going to have to take a look at that. One thing we're going to have to start doing, that we probably wouldn't have thought about before the pandemic, is to really think about how we lay out our food plants.
It's not as though in six months' time we can go back to how things were. We are going to be looking at social distancing for a long time. We didn't build our food plants to accommodate social distancing; we built them to accommodate food safety. Now we're going to have to go in, because this is going to change how we look at things....
That's going to mean a lot of capital investment on the part of companies. That also may require support. You know, it's hard. If you think about Agriculture and Agri-Food Canada, I think they have about 4,000 very loyal employees. Maybe about 50 of them focus on food and beverage manufacturing. In ISED, it's maybe four people. Again, they're incredibly smart and incredibly dedicated, but we need to amp that up.
If we're really serious about the food system, from both a food security standpoint and from the standpoint of the economic contribution and our export opportunity, we now have to start putting our money where our mouth is, and I don't think we always did that before.
3 p.m.
NDP
Alistair MacGregor NDP Cowichan—Malahat—Langford, BC
Great. Thank you very much for that.
Ms. Robinson, I'd like to turn to you and the Canadian Federation of Agriculture. It's good to see you again.
Continuing on the theme of establishing resiliency, I know that some sectors have massive surpluses of produce or product because markets, as you said, have dried up. The government announced a plan of I think $50 million to purchase surplus food and redistribute it to food-insecure communities. We don't have many details on that yet. Mr. Forbes, the deputy minister, said it's still a plan that's in process.
I'd like to hear your thoughts on that and whether this might be able to serve as a model to help farms weather future shocks. We produce an abundance of food in this country. Unfortunately, the fact is that we still have so many Canadians who struggle to get adequate food in front of them each and every day.
3:05 p.m.
President, Canadian Federation of Agriculture
With regard to that $50 million, when we at CFA get more details, we'll be working with our commodity groups to make sure they're well positioned to take advantage of that and to get food to the more vulnerable people in our population.
In regard to that resiliency of agriculture and food as we move through this, I would like to highlight that we see two fairly significant opportunities to make impactful change. The first would be a long-term labour shortage strategy. I know you're familiar with the work that the Canadian Agricultural Human Resource Council has done. I think we need to definitely put more focus there and more funding there. They're doing wonderful things. Seeing them build more solutions for all agriculture is really meaningful.
The second thing—
3:05 p.m.
Liberal
The Chair Liberal Pat Finnigan
Thank you, Ms. Robinson. I will have to cut it off there. We're already behind a little bit.
That's it for this panel. I really want to thank everyone: from the Canadian Agri-Food Trade Alliance, Claire Citeau; from Food and Beverage Canada, Kathleen Sullivan and James Donaldson; and from the federation, Ms. Mary Robinson and Scott Ross.
Thank you to all.
We will suspend until the start of our second panel.
3:10 p.m.
Liberal
The Chair Liberal Pat Finnigan
Welcome back. We'll continue with the second panel.
We're now joined by Ms. Sylvie Cloutier, chief executive officer of the Conseil de la transformation alimentaire du Québec, and Mr. Dimitri Fraeys, vice-president of the same organization.
Also, from the Retail Council of Canada, we have Jason McLinton, vice-president of grocery division and regulatory affairs, and from the Canadian Cattlemen's Association, we have Bob Lowe, president, and Tyler Fulton, director.
I hope everybody was able to hear me on this one.
We'll start with a 10-minute opening statement by the Conseil de la transformation alimentaire du Québec.
Ms. Cloutier, you have the floor.
3:15 p.m.
Sylvie Cloutier Chief Executive Officer, Conseil de la transformation alimentaire du Québec
Thank you for having us here today.
The Conseil de la transformation alimentaire du Québec, or CTAQ, is the main alliance of food and beverage processing companies. Its mission is to help entrepreneurs reach their full potential to ensure the sustainability of the food industry in Quebec.
The sector purchases over 70% of all agricultural products and almost 100% of fishery products in Quebec. The sector also enhances the products' value and processes and packages the products to provide quality food that the public can easily find at grocery stores year-round. The sector is the critical component of the chain from primary agriculture to retail.
Since the start of the COVID-19 pandemic, food and beverage processors have been facing major immediate challenges as they manage the health of their workers and address the need to maintain Canada's food supply in a constantly and rapidly changing environment.
As the first active phase of the pandemic continues, many food companies have stopped or cut back on their operations as a result of cash flow issues, their inability to manage health considerations or increased worker absenteeism. These challenges will have a significant impact over the medium and long term.
Given this changing situation, it's still a little early to truly understand the risk of company closures and the full impact of the crisis. However, some companies are already reporting certain things.
First, revenues are decreasing as a result of the significant drop in food service sales. Restaurants Canada estimates that 53% of restaurants have temporarily closed because of COVID-19 and that one in ten restaurants will permanently close. The pandemic has significantly affected food and beverage processors, and especially the food services sector. A number of food processors are experiencing the same drop in revenues as a result of school and hotel closures and the shutdown of air and rail transportation.
In addition, the increased costs associated with COVID-19 are directly related to several factors: increased absenteeism; labour shortages; salary bonuses paid to retain employees; increased use of personal protective equipment; schedule changes, including staggered shifts and lower line speeds to ensure greater physical distancing; increased spacing among workers, which reduces production capacity and drives up unit costs; temporary non-structural changes within plants to protect workers where physical distancing isn't possible; the purchase of health screening tools; increased benefits, such as child care subsidies; and the use of consulting services.
In the animal protein sector, the potential need and cost of animal slaughter should also be a concern, along with plant closures and slowdowns, which lead to a decline in processing capacity.
The industry is grateful for the emergency support programs announced by the various levels of government to help companies cope with the COVID-19 pandemic. These programs will benefit a number of food and beverage companies. However, some companies aren't eligible.
The food sector has maintained a continuous supply throughout the crisis. However, many companies are reaching the end of their resilience. The most recent federal announcement promising $252 million in assistance falls far short of the needs identified by the entire network. The Canadian Federation of Agriculture is asking for about $2.6 billion in emergency funding. We've estimated that the costs and losses for food processors across Canada since the start of this crisis, from March to today, amount to $820 million. Just for the health equipment needed to protect employees, costs are expected to reach $70 million by the end of 2020. The current programs don't properly address the exceptional circumstances at this time.
Our goal for the short term and the coming months is to ensure that as many food manufacturers as possible are eligible for financial support programs related to COVID-19. If food companies close, there's no guarantee that they'll reopen when the health and economic crises stabilize. By supporting companies in the immediate future, we have a better chance of keeping them running and ensuring a strong food system after the pandemic.
The additional safety measures, the complete or partial closure of major components such as slaughterhouses, the collapse of the hotel, restaurant and institutional market—which accounted for 35% of sales—and market disruptions entail significant, if not insurmountable, costs for thousands of food processing companies.
Overnight, a significant portion of these markets disappeared, which created an imbalance in the supply chains. This uncertainty puts pressure on the integrity of the food supply for the public, which depends on the ability of each component to play its role effectively.
The workforce situation presents a paradox. In Canada, the unemployment rate is 13%, while in Quebec, the rate now stands at 17%. Seven and a half million Canadians have registered for the Canada Emergency Response Benefit, but companies are facing a labour shortage. This serious shortage will require a readjustment of existing programs to maintain the minimum number of workers needed to keep companies operating. The Government of Canada must implement programs to encourage people to return to work.
The current crisis calls for exceptional measures. To fulfill our mission as food processors, we must have access to more generous, better adapted and, above all, flexible assistance programs to take into account the changing reality of our coexistence with COVID-19. In addition to experiencing and responding to the impact of the current crisis, we must ensure that supplies are sufficient and that we remain competitive in the markets. The assistance announced to date can't meet all the needs.
Flexible financial assistance programs for farmers and food processors must be implemented to limit long-term and supply chain effects and to ensure food security for the public. The temporary foreign worker program must be more flexible. The program must facilitate the transfer of workers from one company to another, as needed, or from agricultural production to processing.
The Government of Canada must act now to support the entire agrifood sector. The sector is also a job creator and a major and essential economic player for the vitality of the regions. We must remain consistent when it comes to such an essential and vital issue for our society and for the resilience of a significant part of our economy and territories.
We're proposing the following concrete solutions to support farmers and food processors: a specific fund to meet the needs of processors in terms of the loss of margins and the disappearance of certain markets; specific assistance for small businesses whose main market is the hotel, restaurant and institutional sector; assistance for stock support and freezing; assistance for the processing sector to cover the additional costs associated with protective equipment and the adaptation of production lines; a program to encourage employees to return to work; and, lastly, an economic recovery plan for the manufacturing sector, starting this summer.
Thank you.
3:25 p.m.
Liberal
The Chair Liberal Pat Finnigan
Thank you, Madame Cloutier.
Now we go to the Retail Council of Canada, who, between you, have up to 10 minutes.
3:25 p.m.
Jason McLinton Vice-President, Grocery Division and Regulatory Affairs, Retail Council of Canada
Thank you, Mr. Chair and other members of the committee, for the opportunity to provide a retail perspective on Canada's response to the COVID-19 pandemic.
For those of you who are unfamiliar with the Retail Council of Canada, we represent small, medium and large retail businesses, with a presence in every community across the country. Our members' sales represent over 70% of the retail industry by volume. As the voice of retail since 1962, we proudly represent more than 45,000 storefronts in all formats, including department, specialty, discount, independent retailers, online merchants, and most importantly in this context, grocery retailers.
Retail employs over two million Canadians, making ours the largest private-sector employer in the country. Retail is by no means unique in being severely challenged by COVID-19. We know that this committee is looking at the severe combination of challenges facing Canadian food processors, producers, importers, freight and transportation operators. Even though grocery retailers have continued operations in this environment, they face a multitude of operational challenges. These include human resource and in-store security issues, sourcing of personal protective equipment, rapid adaptation of workplaces to emerging rules from health authorities, major increases in their cost structure, challenges with freight and shipping, and lastly, and importantly in this context, challenges with supply chains.
I would like to focus my attention on this last point.
The COVID-19 outbreak sent unprecedented shock waves through Canada's food supply system. We've seen the demand for food drop considerably in restaurants, hotels and institutions such as schools. On the other hand, we've seen a significant increase in demand at the retail level, since Canadians are now staying and eating at home.
The Retail Council of Canada has worked closely with groups of Canadian producers, processors and importers throughout the crisis to adapt to changing consumer behaviours and demands. We acknowledge and applaud the work accomplished by the Government of Canada to date. However, more work must be done to ensure that Canada can address the new challenges that our food supply is facing and will face as a result of the COVID-19 pandemic in the medium and long term.
The $252 million emergency assistance program for farmers and food processors announced last Tuesday is a step in the right direction. However, as we seek to understand the longer-term effects of the epidemic on the entire supply chain, the Government of Canada must continue to work and to support all components of the food chain. These include the producers, food processors, importers, carriers and retailers.
Furthermore, it is critical that the Government of Canada put in place proactive measures to allow for greater sourcing flexibility as the situation with COVID-19 continues to evolve at a rapid pace. We understand that the Canadian Food Inspection Agency is working on easing restrictions on a temporary basis for retailers operating in Canada to allow them to sell meat in a province other than the one it is certified in, and for meat and other foods produced and labelled for other markets such as the United States and other countries to be sold in Canada.
We are highly supportive of these measures and urge the Government of Canada to adopt them immediately on a proactive and temporary basis rather than trying to address potential supply chain disruptions after they have already occurred. Adopting these measures on a proactive basis would help secure Canada's food supply now and throughout the COVID-19 crisis and would minimize costs throughout the supply chain and, ultimately, minimize disruptions and impacts on food affordability to consumers in these challenging times.
Finally, I'd like to personally thank Canadian farmers, food processors, retailers and retail employees who continue to keep Canadians fed and well throughout the COVID-19 outbreak.
Thank you, Mr. Chair, and members of the committee.
I would be happy to take your questions.
3:30 p.m.
Liberal
The Chair Liberal Pat Finnigan
Thank you very much, Mr. McLinton.
Now we'll move to our rounds of questions and to Mr. Soroka.
I think we're going to have to do five-minute rounds, folks, because we're going to run out of time. I'm going to cut them to five minutes for everyone so I can get the first round in.
Go ahead, Mr. Soroka.
3:30 p.m.
Conservative
Gerald Soroka Conservative Yellowhead, AB
Ms. Cloutier, you said that the CERB program isn't working so well in encouraging workers to get back to work.
What are you seeing? Would they rather stay on the CERB instead of going back to work soon, or what is the issue?
She is still muted.
3:30 p.m.
A voice
Ms. Cloutier, can you unmute?
3:30 p.m.
Chief Executive Officer, Conseil de la transformation alimentaire du Québec
Right now, the program is creating serious competition for food processors. They barely make the equivalent of what the federal government is providing. The Quebec government decided to give people a bonus as an incentive to stay on the job, paying workers an extra $100 a week.
As things stand, the problem is that employees who are being asked to work overtime are saying no because they don't want to lose the $100 bonus the Quebec government is paying them. We're in a really tough situation, one way or the other.
3:30 p.m.
Conservative
Gerald Soroka Conservative Yellowhead, AB
I'm going to have to interrupt you, because you're going to go on for quite a long time.
I'm just saying that if there were a sliding scale, it would assist in ending this issue, instead of just going to the $1,000 and then getting nothing. Would that help?
3:30 p.m.
Chief Executive Officer, Conseil de la transformation alimentaire du Québec
Yes, I think so.
3:30 p.m.
Conservative
Gerald Soroka Conservative Yellowhead, AB
Mr. McLinton, you're saying that so many people are now buying food online when it comes to restaurants and that, but how much is actually being purchased online and being delivered to their homes? Is any of that being done?
3:30 p.m.
Vice-President, Grocery Division and Regulatory Affairs, Retail Council of Canada
Yes, certainly, all of our members are making that an offering. Some of the challenges they're seeing have more to do with delivery and that sort of thing. Every member I've spoken with is offering online and remote ordering, and there's a particular emphasis on making that available to vulnerable populations.
3:30 p.m.
Conservative
Gerald Soroka Conservative Yellowhead, AB
Do you see this as a new industry starting to form, where we'll start seeing more people wanting to purchase more food directly in Canada?
3:30 p.m.
Vice-President, Grocery Division and Regulatory Affairs, Retail Council of Canada
We don't know the full implications of COVID-19 yet. One thing that is fairly certain is that the world is never going to go back to the way it was before. Certainly, I would anticipate that some of these things might become more common even as we start to emerge from the outbreak.
3:35 p.m.
Conservative
Gerald Soroka Conservative Yellowhead, AB
Then if more people are purchasing more online, how much will the retail side and things like storefronts be impacted by this? Basically, how many closures will there be?
3:35 p.m.
Vice-President, Grocery Division and Regulatory Affairs, Retail Council of Canada
Our members are very, very active in the online space, so it will be interesting to see how things evolve. Because they are so active in this space, the ones who are going to do well are those who are going to continue to be very competitive in this online space.