Evidence of meeting #11 for Agriculture and Agri-Food in the 43rd Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was alberta.
A recording is available from Parliament.
Liberal
The Chair Liberal Pat Finnigan
Welcome back. I'll call the meeting back to order for our second panel.
We have with us today, from Bonduelle Americas, Daniel Vielfaure, chief executive officer.
Welcome Mr. Vielfaure.
We also have, from Food Secure Canada, Gisèle Yasmeen, executive director.
Welcome, Ms. Yasmeen.
You will each have seven and a half minutes for your opening statements. We'll start with Bonduelle Americas.
Go ahead for up to seven and a half minutes, please.
Daniel Vielfaure Chief Executive Officer, Bonduelle Americas
Thank you, Mr. Chair.
Good afternoon, everyone.
I am Daniel Vielfaure, deputy CEO of the Bonduelle Group and CEO of Bonduelle Americas. I am also co-chair of Agriculture and Agri-Food Canada's food processing round table and co-chair of Food and Beverage Canada.
Food and beverage is the largest manufacturing sector in this country. It includes 7,000 companies, employing 290,000 Canadians and generating close to $120 billion in annual revenue. Unfortunately, it is also a sector that is often overlooked. That vast majority of food does not go straight from the farm to the grocery store. Our agriculture products are shipped to Canadian food plants, plants that turn wheat into bread, cow’s milk into yogourt and cheese, and hogs into bacon, and plants that can our tomatoes and other vegetables.
Food manufacturing is a critical component of Canada's domestic food supply. Our 7,000 companies buy over half of Canada's agriculture output. We add value to crops and livestock production, and we ensure Canada maintains its food sovereignty.
We should all be concerned that, with COVID, Canada’s food system has experienced a series of shocks: the collapse of food service, the disruption of supply chains, the impact of border closures, the costs to protect our workers and most recently, the fees imposed by some of Canada’s grocery retailers. These shocks have destabilized Canada’s food processing sector.
In 2018 Dominic Barton and the agri-food economic strategy table tapped agri-food to drive economic growth. To achieve this, we need to address some fundamental issues: resolving the processing sector’s labour problems, rebalancing relationships across the supply chain, and ensuring our front-line food workers are recognized as a priority.
First, I would like to talk about labour.
Even before COVID-19, labour was the biggest and most limiting issue facing our sector. We simply do not have enough people, and we do not have enough people with the right skills. On any given day, Canada's food manufacturing is short 10% of its workforce. By 2025 we expect to be short 65,000 workers.
This is a missed opportunity. There is demand for Canadian products here at home and abroad, but until we address industry labour issues, our ability to invest and grow will remain constrained. We are, therefore, encouraging the federal government to act on an urgent basis and work with industry to develop a labour action plan for Canada’s food and beverage manufacturing sector.
Second is rebalancing the supply chain.
Canada’s grocery sector is over-concentrated, with five large retail companies controlling 80% of the grocery market. This has allowed retailers to regularly impose arbitrary transaction costs, fees and penalties on their suppliers. Most recently, in the past few months, and despite the pandemic, major retailers have announced even more new fees.
This cannot continue. Other countries have faced this challenge and have addressed it by implementing a code of conduct. We are encouraging Canada to do the same. We were pleased that, at their meeting last week, the federal, provincial and territorial agriculture ministers committed to strike a working group to look at this issue. We encourage the federal government to continue to prioritize this and to commit to having a code in place by the end of 2021.
Finally, I want to talk about our front-line workers.
Even in a pandemic, Canadians need to eat. It is thanks to the efforts of our front-line workers that Canada’s food plants continued to operate throughout COVID-19. As companies, we have invested an estimated $800 million to keep our workers safe. We have also spent countless hours reinforcing with our front-line workers the importance of their continuing to come to work so that Canadians can eat. It is critical that governments also reinforce for our front-line food workers the critical nature of their work and the importance of their contributions.
As we move forward, in particular, we ask that the federal government consider the importance of front-line food workers in any rapid testing and vaccination programs. Despite the measures we have put in place to mitigate risk, food plants remain congregate settings, and it is on all of us to do what we can to ensure our front-line workers remain healthy and know we value their efforts.
Mr. Chair, these hearings have been organized to look at processing capacity in Canada. Let me be clear. There will always be food, but if we do not address the issues I have outlined, we will be importing more of our food from other countries and manufacturing less of it here.
I thank you for the opportunity to present to you today and look forward to your questions.
Liberal
The Chair Liberal Pat Finnigan
Thank you, Mr. Vielfaure.
Now, from Food Secure Canada, we have Ms. Gisèle Yasmeen.
Go ahead for seven and a half minutes. Thank you.
Gisèle Yasmeen Executive Director, Food Secure Canada
Thank you very much, Mr. Chairman and the members of the committee, for the invitation to appear today.
I'm coming to you from Musqueam territory, also known as Richmond, B.C., in greater Vancouver.
I'm representing Food Secure Canada, a national alliance of organizations and individuals committed to achieving zero hunger, healthy and safe food and a sustainable food system for all. We're happy to provide you with evidence to support your study to identify policies and measures that the Government of Canada can take to ensure stability and renewal of the value chain in the agri-food sector.
This presentation is further to the brief we submitted to you in July, based on our study published in May, entitled “Growing resilience and equity: A food policy action plan in the context of Covid-19”.
Liberal
The Chair Liberal Pat Finnigan
I'm sorry to interrupt, but there's an echo and there's a bit of background noise.
Can you unplug your headset and plug it back in?
Executive Director, Food Secure Canada
I've been having some problems with this one.
Is that better?
Liberal
The Chair Liberal Pat Finnigan
No, sorry, Ms. Yasmeen, it still has a kind of an echo and a scratchy noise in the background.
I think they're trying to figure it out here. We'll just give it a minute or two.
Okay. Let's give it a try.
Executive Director, Food Secure Canada
I would like to situate my remarks in the context of the food movement, which is a social movement that has been active on the ground in this country for decades and has had an impact on the supply chain, as well as positive impacts on human and animal health and the environment, particularly soil and waterways.
Given the commitments of the Government of Canada to the UN sustainable development goals, aligned with the food policy for Canada announced by Minister Bibeau in June 2019, as well as the commitments in the recent throne speech, it is imperative to include citizen perspectives such as ours in your work.
The activities of Canada's local food movement represent some of the most heartening developments for the country in decades. They include horticultural production, food processing and distribution activities, and innovative practices in retail sales, restaurants and waste management, from one end of the country to the other.
Food Secure Canada is proud to support this social movement, which includes the Coalition for Healthy School Food, whose work deserves consideration as part of this committee's work, as I will explain in a few minutes.
This committee has been tasked to look at opportunities and solutions to increasing processing capacity and competitiveness in regions across the country to meet the export objectives and also to support the goal of increasing local capacity to protect food security while providing safe food for all Canadians. The purpose of the study also includes identifying barriers to increased processing capacity in Canada, such as grocery concentration in the marketplace. Let me speak to these issues one by one.
Increasing processing capacity at local and regional levels is urgently and desperately needed as evidenced by COVID-19, and can build on what's already happening on the ground. Besides the explosion in demand for local food, we witnessed bottlenecks in the supply chain and unprecedented food loss and waste as a result. This was partly due to the lack of smaller-scale infrastructure and related diseconomies of scale due to the concentration of facilities controlled by a handful of transnational corporations. Canada needs infrastructure to serve small and medium-sized enterprises such a cold chain, small local abattoirs, food hubs and processing and storage facilities.
The policy priority should be to buttress the development of healthy, just and sustainable food systems in Canada with a full cost accounting of the health, environmental and broader economic impacts in supporting decent and sustainable livelihoods and community-based and -controlled development. The goal ought to be to prioritize lightly processed foods, given that excessive consumption of highly and ultra highly processed foods poses a serious health problem. Diet-related disease is costing this country $26 billion per year, according to a study by Heart and Stroke. Diverse stakeholders such as McKinsey agree that the externalities of the current global food system in health and environmental costs are greater than the value of agri-food itself.
In terms of the link between local capacity and food security, food insecurity is primarily about income inequality rather than a lack of food. Charity models won't get to the root of the problem. Unequal access to land and capital is also an issue for small-scale food producers and processors around the world, including Canada, where farmer debt is a serious concern. Workers' rights also need to be respected up and down the food chain with the goal of creating decent work regardless of immigration status and meeting the demands of temporary foreign workers for permanent status. Having said all that, logistics and supply chains are a distinct but very important issue. Our food system is so highly skewed towards the export of commodities that it hampers the development of opportunities here and poses risks when borders thicken or in emergencies.
The COVID crisis has exposed the interconnected fragility and concentration of power within Canada's dominant long-distance, globalized food supply chain. This isn't just in grocery retailing, but affects all facets of production, processing and distribution. Weaknesses include an over-reliance on import and export systems, especially for fruits and vegetables; the concentration of ownership by a handful of transnational corporations in the food sector; and the need for greater investment in local food infrastructure overall. COVID-19 recovery is an opportunity to build back better in the interests of greater resilience and equity as well as environmental sustainability.
I would like to provide an example of public sector procurement on how well-designed programs can help kick-start the transition we need. Canada is the only G7 country without a national school food program and in budget 2019 the Government of Canada committed to consult with the provinces, territories and other stakeholders that already invest, to develop such a program.
There are also compelling examples from indigenous communities, such as self-governing Yukon first nations. If well conceived, such a program could not only positively affect child nutrition, for which UNICEF has pointed out that Canada is grossly underperforming, and reduce hunger where, again, a wealthy country such as ours bears the shame of having one in six children living in food insecurity, but a national school food program could also have positive economic and environmental impacts if procurement prioritizes local small and medium-sized enterprises that produce and process healthy, sustainably produced food, as well as interest youth in related occupations.
Therefore, we should emphasize social as well as technological innovation, support small-scale processing by SMEs and support local food economies. There are opportunities for women, who have particularly been hard-hit by the pandemic, as well as economic potential in solidarity with communities that have been traditionally marginalized by the food system, including indigenous peoples and people of colour, especially Black communities. This is already happening on the ground and can be accelerated and deepened with the right supports.
To conclude, I would like to say a word about the economic aspects of local food. A 2015 study published by the McConnell Foundation showed that if only 10% of the 10 main fruits and vegetables imported into Ontario were replaced by local products, it would lead to a $250 million rise in provincial gross domestic product and the creation…
Liberal
The Chair Liberal Pat Finnigan
Excuse me, Ms. Yasmeen. As you are using a different headset, you need to change the language at the bottom of your screen for your comments to be interpreted into English.
Executive Director, Food Secure Canada
I'll finish in French. Is that okay?
Liberal
The Chair Liberal Pat Finnigan
Unless you change the language at the bottom of your screen, if you finish in French there will be no interpretation into English.
Executive Director, Food Secure Canada
Okay. I'll change to English for the end. Also, the interpreters have my notes, which you're welcome to have as well.
To sum up, a study by the McConnell Foundation showed that just increasing local production of fruits and vegetables by 10% would have very positive economic impacts on jobs, on gross product in Ontario and so on, so there's a real opportunity to invest.
I'll leave it at that. Thank you very much.
Bloc
Yves Perron Bloc Berthier—Maskinongé, QC
I just want to make sure that Ms. Yasmeen has understood properly.
Feel free to continue to speak French if you want. If you're speaking French, select "French" as the interpretation language and if you're speaking English, select " English". Otherwise the interpreters won't be able to hear you very well. It's just a technical matter. Please speak in your own language.
Liberal
The Chair Liberal Pat Finnigan
Thank you, Mr. Perron.
Just let us know if there's a problem, Ms. Yasmeen.
Now we'll go to our rounds.
Mr. Epp, you have six minutes. Go ahead.
Conservative
Dave Epp Conservative Chatham-Kent—Leamington, ON
Thank you, Mr. Chair.
To both of you, thank you for your testimony.
I'd like to direct some initial questions to Mr. Vielfaure. It's good to see you again, sir. I did appreciate your reference to tomatoes in your opening comment.
We've certainly heard many witnesses provide testimony documenting the practices that retailers have imposed upon their suppliers such as Bonduelle, with fines, fees and other unscrupulous practices. Can you comment on how, when you have that impacting your relationship with your customers, that impacts your suppliers, the farmers and the vendors who have you as customers?
Chief Executive Officer, Bonduelle Americas
It obviously complicates the negotiation with the unions of growers that we have to negotiate with, whether it's in Quebec, Ontario or Alberta, because every cost increase that we have, that we're experiencing, is pushed back. On top of that, incremental fees are brought into our balance sheet. Clearly, it makes it more difficult to value the whole chain and pay the growers what they're entitled to have.
It's a battle we have, because we're in the middle of it. Clearly, some of the opportunities that growers have are to grow something other than the crops that we need to manufacture, and they can sell those to different markets. We have to be competitive and pay them something that will allow them to grow our vegetables versus other crops and other things.
It just makes life impossible and we're stuck. There is a limit to where we can reduce our operational margins.
Conservative
Dave Epp Conservative Chatham-Kent—Leamington, ON
Thank you.
One of the goals of this study is for us to examine how we can attract additional foreign direct investment. Bonduelle is a bit of an anomaly, a private French company that's actually come into Canada and into the U.S. and bought companies. You have companies in Quebec, Ontario and Alberta, in Wisconsin and New York in the U.S., and in the Americas.
Can you comment, because you're operating in these different jurisdictions, as far as where you're finding favourable policies that encourage you to further invest? What kinds of incentives towards processing capacity are you seeing, and what advice would you have for our government?
Chief Executive Officer, Bonduelle Americas
Right now one of the burdens that we're facing is labour, and I've mentioned it. To bring in capital expenditure, to even increase our production and capacity in Canada.... I'll use Bonduelle as an example because we do export about half of what we produce in frozen vegetables to the U.S., even if we have plants in the U.S. One problem we have right now is that when we do present very good projects in Canada that will need to have more workers, we cannot guarantee we'll have the workforce to work these projects. It's a limitation where the group now is challenging us because we are experiencing problems.
Just this summer, 105 of our Canadian office workers had to go and work in the plants to subsidize the workforce we were short of. It's a first in the history of a 167-year-old company, so it's just not sustainable. We need to solve this issue.
I'd say, on the other hand, though, Canada is a well-regulated country with a lot of good agricultural land and everything, so that's what attracted Bonduelle to come to this place.
Conservative
Dave Epp Conservative Chatham-Kent—Leamington, ON
Thank you.
Perhaps you could thank some of those office workers. I think they processed some of the green beans we delivered to you.
Could we go now to two questions around the regulatory environment? In November 2017, the Competition Bureau ceased an inquiry into some of the practices, saying there wasn't enough evidence.
With what you're seeing this year coming from the retailers, is this something that should be reviewed again by the Competition Bureau? Is it warranting further inquiry? You've mentioned the code of conduct. Do you feel that would be enough?