Agriculture Committee on Dec. 3rd, 2020

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

Thank you very much.

You've also raised labour issues and there are two components. One is access to people for labour, but also I've heard for years that Canada lags the U.S. when it comes to labour productivity. I hear the words of Dr. Larry Martin in my ears from the George Morris Centre that it's not a function of the laziness or anything like that of our Canadian labour, but much more a function of the investment. You touched on that with automation.

What does that need? You mentioned the capital, but is that also related to Canada's taxation policies, to our depreciation rates and things like that? Can you make a comment there on exactly what could be best used to spur more automation in our processing sectors?

[Sylvie Cloutier]

I will leave it to my colleague, Dimitri, to answer this question.

[Dimitri Fraeys]

Yes. It's tough to compare companies in Canadian provinces with one another or with those in the United States. A few years back, a study showed that 80% of businesses in Quebec were small and medium-sized enterprises with fewer than 50 employees, whereas in Ontario, 50% of businesses were divisions of larger companies. Businesses like those have significantly greater investment capacity.

The market in the United States is 10 times the size of Canada's, so businesses in the U.S. can spread their costs over a larger number of products, something businesses in Quebec can't do. Small and medium-size businesses in Quebec aren't able to be as competitive. What's more, since they have lower margins, it is much harder for them to invest and catch up productivity-wise. That partly explains the productivity gap between businesses in Quebec and those in Ontario or those in the United States.

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

Thank you.

I'll move on to Canada's regulatory environment. It's been often described as a two-edged sword. Our regulators are held as the gold standard, and then Canada has a first-rate international reputation when it comes to food safety, which can be used in our marketing efforts.

I'll direct this both to the processing sector as well as the canola sector.

There is, of course, a cost of complying with that. Can you each comment fairly briefly on the balance between those two aspects?

[Jim Everson]

I would say that you're quite right. We have an excellent regulatory organization and regulatory policy.

What we find is that there is a lot of international negotiation that takes place that involves regulators, and it's increasingly an important part of our market access challenges. Therefore, in our first recommendation, we've talked about the need for more resources, particularly in Asia. Those resources are really very much those same regulatory and science kinds of resources.

The market access challenges that our processors run into these days internationally are around what's called sanitary and phytosanitary measures. They're around crop protection measures and regulatory issues and so on. It really takes real science and technical experts to help us with those, not policy developers, and that's why there's that recommendation.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Everson.

Now we'll go to Mr. Ellis for five minutes.

[Neil Ellis, Liberal, Bay of Quinte, ON]

I'd like to thank everybody for being here today and taking time out of their busy schedules.

I just want to touch on the labour shortage. I know that in my riding we have a big food processing sector and they've partnered with the college to actually teach a course on food processing. It's about a two-month course. It's full capacity and everybody ends up being employed through the course.

I just wonder if the sector itself has thought of any programs like this or what it is doing to address the shortage if it's not getting any better. There are issues, and I guess we can fill jobs with temporary foreign workers but are there any programs that the actual industry has thought about?

[Sylvie Cloutier]

Mr. Fraeys, would you mind answering that?

[Dimitri Fraeys]

Yes, programs do exist, but as I said earlier, young people, students and unemployed workers need to know about them. People aren't aware of the occupations in the sector. If the processing sector in your riding is fully staffed, good for you. It means you're doing a good job communicating with people and educating them. Unfortunately, that is not the case everywhere.

That is why I mentioned the importance of raising awareness, in Quebec and all of Canada, regarding the quality jobs the processing sector and the food sector overall have to offer. I think a campaign like that would attract people. It's also worth noting that certain harvesting and processing jobs aren't exactly sought after by Canadians, so we have to turn to foreign workers to fill the void.

I hope I adequately answered your question.

[Neil Ellis, Liberal, Bay of Quinte, ON]

Yes, you have.

We spoke about margins declining, and somebody said that margins had declined by around 7%, I believe. I just wonder why, and whether those margins have fallen over the last few years or there has been a process over the last 10?

[Sylvie Cloutier]

It's been a process over many years. They have declined more and more since 2014.

The reasons are many including the lack of capital, the labour shortage, the needed investments in innovation, including R and D, the cost of getting products on store shelves and the rise in input costs. All those things have led to the significant drop in food processing margins.

[Neil Ellis, Liberal, Bay of Quinte, ON]

Thank you.

My last question is what do you think are the investment trends right now in the Canadian food processing industry? Are more investments being made in machinery as opposed to labour? What are your investments?

[Sylvie Cloutier]

I can start.

Clearly, we need to invest in automation, in productivity, so that businesses can be a lot more competitive. Investing in innovation is also important. Globalization and the opening of markets mean that we are competing with major players worldwide. Access to programs that support investments in innovation and help businesses remain competitive is paramount to the food processing sector.

As mentioned, promoting the agri-food sector is important in order to attract Canadian workers.

I will let my colleagues comment further.

[Dimitri Fraeys]

I have one thing to add, and it's quite important as well. When a small or medium-sized business wants to automate its operations, it needs support. It needs guidance. Adopting that new way of doing things is not easy. Things that come to mind are coaching and engineering support, and all the services that help businesses adopt this new type of equipment. Take management software packages, for example. Very few are developed for the food processing sector. That expertise would be worth developing.

At this point, there are businesses that are fully automated, but they are few and far between. We need to follow their lead. Small and medium-sized businesses really need the coaching and consulting support to help them make the shift.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Fraeys.

It is now over to Mr. Perron for two and a half minutes.

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

Thank you.

If I understand correctly, massive investment is needed to help the sector upgrade and innovate. I want to turn to R and D.

Do you think enough R and D is being done in the country, in universities?

Say a program was launched tomorrow to give businesses access to capital, would they be able to move quickly to upgrade their facilities?

[Dimitri Fraeys]

if I may, I'd like to clarify something. Investing in universities and investing in businesses are not the same thing. It's important to distinguish between the two. The crucial thing to remember when you invest in universities is the time it takes for the knowledge to be transferred from the academic realm to the business realm. It doesn't happen all that quickly, so that is often where the challenge lies. Universities have a tremendous body of knowledge, but intermediary organizations need to step in to take that knowledge and convert it into methods and technologies that businesses can adopt.

The focus, in my view, has to be the transfer of knowledge.

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

I gather, then, that there is a deficiency in that respect.

[Dimitri Fraeys]

Yes, that is where the deficiency is. It's really about speeding up the transfer of knowledge. I mentioned consulting and coaching services, and that is precisely what I'm talking about. Businesses need access to advice and support. They need to know what tools are available to them and they need to make the right choices. Once they have chosen the tool, they have to be able to implement it quickly and then use it. I would say that's really where the investment is needed.

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

I see.

The sector is in need of workers, so let's say a public awareness campaign were conducted and all kinds of people applied for jobs. Would you have the resources to train them all, even for positions that require more technological know-how?

[Dimitri Fraeys]

I can speak to the situation in Quebec, but not so much for the situation in the rest of Canada. Quebec is fortunate in that it has a number of institutions, not just universities, but also agri-food technology institutes. In other provinces, they're called colleges.

Yes, the capacity is there, but it's becoming clear that, in terms of education, the audience we need to target is high school students, at the secondary II and III levels. When they are choosing what to study at CEGEP or university, the processing sector has to be one of the options on their radar. That isn't usually the case. The sector is often called a little-known gem. We need to make young people aware of the occupations we have to offer.

[The Chair, Liberal, Pat Finnigan]

Thank you. You are out of time, Mr. Perron.

Now we have Mr. MacGregor for two and a half minutes.

Go ahead, Mr. MacGregor.

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

Thank you, Chair.

I suppose we're at the point now where most of the questions have been asked.

Maybe Madame Cloutier, if there's really anything else you want to add for our committee's consideration, anything that you haven't yet covered or anything you want to emphasize a little bit more, I'll give you this opportunity to do so.

[Sylvie Cloutier]

I would actually like to add that food processing is Canada's and Quebec's main manufacturing sector, but it is often treated as though it is unimportant. The pandemic has shown, however, how essential the food processing sector is. It has also brought the deficiencies to light. The pandemic has provided an opportunity to really expose the deficiencies that hinder our industry.

Obviously, we could make a slew of recommendations. I could talk about the need to boost productivity, increase innovation, expand R and D, and raise the sector's visibility. Canada's food processing industry is essential to the country and our communities.

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

Monsieur Fraeys, is there anything you'd like to add to that?