Agriculture Committee on Dec. 3rd, 2020

[Dimitri Fraeys, Vice-President, Conseil de la transformation alimentaire du Québec]

Thank you for the opportunity, Mr. Perron.

The key to helping processors is to provide subsidies and financial tools that lead to better cash flow. As Ms. Cloutier said earlier, processors' margins have dropped, so they need mechanisms that enable them to spread out investments over time.

In the case of fruit and vegetable production, for instance, the equipment amortization period is very short. Consider peas, beans and corn, which have a harvest of 45 to 60 days a year. Equipment costs have to be amortized over a very short period of the year, not 12 months. The sector needs financial tools that take those unique aspects of production into account. Meat processing is a type of production that spans 12 months. If, however, the government wants to improve food self-sufficiency when it comes to vegetable production, better tools and equipment are needed to speed up the process, reduce the labour required and, above all, support long-term capitalization.

I hope I answered your question properly.

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

Yes, very well.

Since we are very short on time, I encourage you to send any specific recommendations you have to the committee in writing. Our job is to provide the government with recommendations, so we could draw heavily on your extensive knowledge. That is very important.

In particular, we were looking for insight relating to the lack of capital. The technology shift was also covered.

Ms. Cloutier, in reference to the recovery plan earlier, you said the sector needed between $70 billion and $100 billion. Is that money to help the sector upgrade and innovate or did you have something else in mind?

[Sylvie Cloutier]

Innovation is an important piece since the labour shortage continues to be the biggest challenge faced by the manufacturing sector.

We also need access to skilled employees in food processing. Transportation and logistics need improving and businesses need upgrading. Robotics aside, we need to upgrade equipment, facilities and everything else.

I will let Mr. Fraeys comment further.

[Dimitri Fraeys]

The labour shortage is very apparent across the sector, with a tremendous number of jobs available. Conversely, employees in other sectors of Canada's economy have been particularly hard hit.

We recommend broadening the sector's appeal through programs that promote occupations within the sector to attract workers who have lost their jobs and are looking to start new careers. We would do well to educate them on the advantages of working in the industry given its ability to withstand crises, albeit slightly the worse for wear. The pandemic has shown that.

Clearly, the thought of working in our sector has not occurred to many people, and yet we have good jobs to offer. Some 7,000 jobs are available in Quebec and 28,000 in Canada. The opportunities are really quite attractive.

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

One option might be a program to incentivize or educate people. If you have any specific recommendations, we would be keen to hear them.

You mentioned the need to raise the cap on the proportion of temporary foreign workers that can be hired from 10% to 20%, if only temporarily.

Is that something that is urgently needed? Would you make it a formal recommendation?

[Dimitri Fraeys]

Yes, it's urgently needed. It has become clear how much we need those workers. On top of that, the industry is facing a labour shortage.

I'll give you a bit of the history. About a decade ago, the temporary foreign workers program set the cap at 30%. It was reduced to 20% and, then, 10%. We would like to go back to when the cap was at 20%. Businesses could continue to operate thanks to a rotation of staff.

Some businesses have told me that, despite actually investing in robotics and digitization, the equipment is in use only half the time because they don't have the staff to keep it going over two or three shifts.

All that to say, yes, it is urgently needed.

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

You need help on both fronts.

What do you think of the three-year pilot program the government introduced to provide a pathway to permanent residence? Is that a good thing to do?

[Dimitri Fraeys]

The pilot project you're referring to is a federal program. It's not available in Quebec.

A pilot project is being discussed in Quebec; it is supposed to start on January 1. Owing to the federal-provincial agreement on labour, Quebec should be launching its pilot project on January 1. The program would run for five years and target 550 workers. That's something unique to Quebec, as compared with the rest of Canada.

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

In your view, it's a good idea.

[Dimitri Fraeys]

Yes, absolutely. We've worked a lot with the people at the ministry of immigration, precisely to point them in the right direction so the program does what we need it to.

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

Before I wrap up, I want to thank you for being here. I didn't mention it at the beginning.

I understand that a code of conduct is essential to your industry, given your margins. Many of the little guys have low margins.

What can we do to help the little guys?

[Sylvie Cloutier]

Provide support to help them market their products. Access to short or alternative channels of distribution is a good start. Of course—

[The Chair, Liberal, Pat Finnigan]

Sorry, Ms. Cloutier, but we have to move on.

Thank you, Mr. Perron.

Now we have Mr. MacGregor, for six minutes.

Go ahead, Mr. MacGregor.

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

Thank you very much, Mr. Chair.

Thank you to our witnesses for providing our committee with your testimony today.

Going back to what Mr. Steinley said earlier, with his obvious pride in the canola in his hometown, I can remember visiting Alberta last year, driving east of Calgary in August, and seeing those fields of canola. It's quite the sight.

Mr. Everson, maybe I'll start with you. I've read that canola is a superior biofuel feedstock because of its low saturated fat content, which allows it, as a biodiesel in particular, to operate at lower temperatures. In response to Mr. Drouin, you were talking about the development of new seed varieties and so on.

Can you go into a little bit more detail on that? Are you talking about specific seed varieties that will help as a specific stock that might be better as a stock for biofuel, with better yields and so on? If you could put that into the context of how that will help us with our processing capacity, I think that would be helpful for our committee.

[Jim Everson]

It's a regulatory issue that would be helpful for the whole industry, the whole value chain. It provides new opportunity, new innovation, that will help the processing sector and help others. Essentially, it comes down to a number of those things. Gene editing particularly, as a new and innovative technology in plant breeding, can unlock a toolbox of innovation that seed developers can use. It can lead to better nutritional values for the seed that comes from the process that farmers grow. It can lead to different biofuel profiles, for that matter, that are particularly good for biofuel use. It's a long-term kind of process.

The challenge we find now is that Canada seems to be kind of falling behind other jurisdictions that have created clarity in their regulatory plan for this new plant-breeding innovation to come along. That clarity lets those big biotech companies that are investing in seed development to invest in other countries and create the product in other countries. In canola, we badly need to maintain our competitive advantage by making it an innovative, friendly environment, obviously while maintaining the safety and efficacy of the products.

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

It's nice to see the ambitious targets you have with respect to biofuels. My wife and I recently had to buy a bigger diesel pickup truck for our farm, but we wanted to get a model that could operate with biodiesel capacity. When we were looking at the different diesel engines, some handled biodiesels better than others. The older models can run on B100, while newer models are only really rated for B20 or B10.

What have your conversations been like with diesel engine manufacturers on whether their new engine lines can be compatible with the goals you're trying to achieve in increasing biodiesel capacity?

[Jim Everson]

I'll ask Chris to address that. He would be more familiar with it.

[Chris Vervaet]

Sure.

When we talk to the manufacturers of the engines, most of them, if not all, are now approved up to a 5% blend of biodiesel or renewable content, and 80% of the engines, especially the heavy-duty engines, are now being approved up to 20% inclusion. We're definitely seeing the engine manufacturers keep pace with the higher inclusion rates of biofuels.

I'll take the opportunity to mention that there are also increasing amounts of renewable diesel coming online for production. This is a product that is renewable in content but it is equivalent, in terms of chemical composition, to conventional diesel fuel. There is no blend rate. You can use it with complete, 100% fungibility between renewable diesel and conventional diesel.

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

That's nice to hear.

If you look at the fuel demand in Canada as it currently is and maybe what our projected demands are, do you have a sense of how much of the market share you might be able to take on? What's the capacity of Canadian farmers to meet domestic demand of biofuels if they start increasing five, 10 or 15 years from now?

[Chris Vervaet]

At the moment, some of the answers to those questions are unclear. We hope to get some better clarity on what the potential is when we see the regulations for the CFS—released before Christmas, we think, or we hope. Certainly, as a canola industry, we are more than prepared to meet the demand, whether it's 5% or 10% or higher. As Jim mentioned, we have a target as a canola industry to increase our production here in Canada. We are prepared to meet any increased demand for canola in biofuels in Canada.

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

Thank you so much.

Chair, I'll leave it there.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. MacGregor.

Now we'll start our second round.

Mr. Lehoux, you may go ahead. You have five minutes.

[Richard Lehoux, Conservative, Beauce, QC]

Mr. Chair, it's Mr. Epp's turn.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you to my colleague, and Mr. Chair.

I'd like to thank all of the witnesses for your expert testimony, and also acknowledge the excellent translation I'm getting in my ear, which is very clear and very quick. Thank you very much.

I'd like to begin with Ms. Cloutier and one of the last challenges that you raised, namely with the retailer concentration.

We've had several witnesses testify that retailers seem to follow each other very, very closely when instituting new fees and new fines and often won't even accept—so we've heard—price increases from suppliers unless they have assurance that their competitors are facing the same impact. Do you feel that this is consistent with the federal Competition Act? Are your members seeing the same thing?

[Sylvie Cloutier]

Yes, that's the case with each of the big distributors and retailers. The competition in Canada is fierce. Four or five companies control all the distribution. Obviously, they follow each other very closely. In Canada, they always try to get the lowest price, but processors and suppliers are the ones on the hook for those price cuts.

We would like to see a code of conduct or a code of practice introduced to alleviate those requirements, which, in many cases, are not included in the contracts the company enters into with its suppliers. It actually happens all over Canada.