Agriculture Committee on Dec. 8th, 2020

[The Chair, Liberal, Pat Finnigan]

I'll call this meeting to order.

Welcome to the 11th meeting of the House of Commons Standing Committee on Agriculture and Agri-Food. Pursuant to Standing Order 108(2) and the motion adopted by the committee on October 24, 2020, the committee is resuming its study on processing capacity.

Today's meeting is taking place in a hybrid format, pursuant to the House Order of September 23, 2020. The proceedings will be made available via the House of Commons website. So you are aware, the webcast will always show the person speaking, rather than the entirety of the committee.

To ensure an orderly meeting, I would like to outline a few rules to follow.

Members and witnesses may speak in the official language of their choice. You have the choice, at the bottom of your screen, of either Floor, English or French.

Before speaking, please wait until I recognize you by name. A reminder that all comments by members and witnesses should be addressed through the chair.

When you are not speaking, your mic should be on mute.

With that we are ready to begin.

First, I would like to welcome our witnesses to today's meeting. From CropLife Canada we have Ian Affleck, vice-president, biotechnology. We also have Dennis Prouse, vice-president, government affairs. From the Government of Alberta, we have assistant deputy minister Jamie Curran, processing, trade, and intergovernmental relations division, Alberta Agriculture and Forestry.

We'll get going.

If CropLife wants to start, you have seven and a half minutes for your opening statement. Go ahead.

[Dennis Prouse, Vice-President, Government Affairs, CropLife Canada]

Excellent. Thank you, Mr. Chair.

My name is Dennis Prouse, and I am the vice president of government affairs for CropLife Canada. With me is my colleague, Ian Affleck, vice president, biotechnology.

CropLife Canada represents the Canadian manufacturers, developers and distributors of pest control and modern plant breeding products. Our organization's primary focus is on providing tools to help farmers be more productive and more sustainable. We also develop products for use in urban green spaces, public health settings and transportation corridors.

Last week, this committee heard from Mr. Jim Everson, president of the Canola Council of Canada. We feel that he provided some excellent comments and context for the committee, and some of his points are ones on which we hope to build and expand today.

This study is a timely one, as it speaks to the broader economic challenges we have and the post-COVID-19 future for Canadian agriculture. Specifically, how can Canadian agriculture and agri-food act as a driver for investment, jobs and growth at a time when Canada will need it more than ever?

Fortunately, a road map to this future already exists in the form of both the Barton report and the agri-food economic strategy table report. Both outline the tremendous promise of Canadian agriculture and how we are now falling short of meeting that promise.

The Barton report, for instance, sets as a goal of having Canada as the number two agriculture and agri-food exporter in the world. Currently, we are number five. That's simply not good enough for a country with Canada's potential. The economic challenge post-COVID-19 is going to be making Canada's critical industries more competitive, and agriculture and agri-food is at the top of that list.

The road to growth in agriculture and agri-food lies in replacing out-of-date and globally unaligned regulatory regimes with new enabling regulatory frameworks that leverage global best practices. These points are also being stressed by the Canadian Chamber of Commerce, the Canadian Federation of Independent Business and the Business Council of Canada.

For governments, regulatory modernization is relatively easy to implement in that it often doesn't require legislation or even regulatory change. Often, new policy is all that is needed. It also does not require new money—an important consideration in the years to come—and it delivers fast results. It should be a top priority for government across the economy, particularly in agriculture and agri-food. Regulators need to be given a growth mandate—as they are in the U.K.—with clear, measurable targets on regulatory modernization.

Specific to processing and value-added products, we have a number of examples of innovations in the form of new plant varieties that have either moved to the United States already or are in danger of doing so simply because Canada lacks a clear regulatory framework for plant-breeding innovations broadly. A key example of that is products of gene editing. These are value-added products that could be grown and processed in Canada, giving benefits to both Canadian consumers and our export markets. In short, processing plants will get built wherever the innovative technologies hit critical acreage first, which is where they get planted first, and unfortunately, right now that is not in Canada.

It's unfortunate that Canada is lagging behind many of its like-minded, science-based global competitors, including Australia, New Zealand, Japan, Brazil, Argentina and the United States, which have found a reasonable path forward for gene editing and are already reaping the benefits.

The Treasury Board Secretariat's regulatory road maps highlighted this as a priority two years ago. We would be pleased to talk about these examples in detail in the question and answer period, but we sincerely hope that, with the announced public consultations on the relevant policies slated to begin in January 2021, Canada can align with these countries quickly and put us back in the game.

This is why the government needs to act quickly on the concept articulated in budget 2019 of placing a competitive lens on regulatory agencies.

I want to confront one issue head-on. Whenever regulatory modernization comes up, there are instantly accusations that this involves industry's somehow skirting or attacking health and safety standards. That's not the case at all. Our members are deeply proud of the role that our technologies have played and will continue to play in making Canadian agriculture more sustainable than ever. This improved sustainability is not a slogan. It's a scientific fact.

Farmers also care strongly for the stewardship of their land, and they are determined to leave a better environmental future for the next generation. Sustainability has been, and remains, a cornerstone of what we do.

What that means in practice is that regulators acknowledge and embrace their role in helping to facilitate innovation and competitiveness for Canadian companies, all while maintaining their focus on science-based regulation and the health and safety of Canadians. This is about allowing regulators to focus on their core mandates by being more efficient and focusing on actual risks.

Securing market access and growing trade markets will also be a vital part of our recovery. Canada consumes only 30% of what it produces, and agriculture and agri-food create a net $10-billion surplus in our trade balance. Protectionist forces, however, will be strong around the world in the coming months and years. Canada needs to work with like-minded nations to fight for science-based regulation, and against non-tariff trade barriers wherever and whenever they pop up.

Despite our current challenges, we believe the future is bright. We have tremendous natural advantages and a smart, strong workforce. Give Canadian farmers and agri-food producers a competitive regulatory environment and access to global markets and we can help lead the post-COVID-19 recovery. Making this happen, though, requires bold, decisive action by government. There is nothing preventing expediting implementation of the road map that has already been broadly consulted on, and nothing preventing starting today.

Thank you. We'd welcome any questions the committee might have.

[The Chair, Liberal, Pat Finnigan]

Thank you very much, Mr. Prouse.

Now we'll hear from Mr. Jamie Curran, assistant deputy minister, from the Government of Alberta.

Go ahead, Mr. Curran. You have seven and a half minutes.

[Jamie Curran, Assistant Deputy Minister, Processing, Trade and Intergovernmental Relations, Alberta Agriculture and Forestry, Government of Alberta]

Thank you, Mr. Chair.

I appreciate the opportunity to speak to the Standing Committee on Agriculture and Agri-Food and to be part of the committee's study of processing capacity.

I'm happy to provide some input on how the Alberta government is working to expand value-added agriculture and agri-food processing capacity in the province, and identify some opportunities and challenges for this important sector.

Alberta has also expressed support for the six agri-food sector recommendations of the Barton commission report of 2017, supporting the position that expanding world populations, a rising protein demand in Asia and a need for safe, reliable markets gives Canada and Alberta the opportunity to become trusted global leaders in safe, nutritious and sustainable food in the 21st century.

Alberta is well positioned to help feed the growing global demand for food. We are an export-driven province producing significantly more food than we consume. Agriculture and food processing directly employs more than 77,000 Albertans and creates thousands of indirect jobs. A robust, diverse and thriving agri-food processing industry is essential to our provincial and national economy.

Under Alberta's recovery plan, economic diversification is a key objective. The agriculture sector and agri-food processing in particular are expected to play a significant role in our province's post-pandemic economic recovery, and we're investing in agriculture as a key element of Alberta's recovery.

The COVID-19 pandemic has confirmed that the strength of the entire food supply chain is only as good as the strength of each segment of the chain. Early on in our pandemic response, we identified agriculture and food processing as an essential service to ensure continuous operation of Alberta's food supply chain. We partnered with the Canadian Food Inspection Agency to increase the food inspector capacity, ensuring that our provincial inspectors had the know-how to step in if additional federal inspectors were needed.

In April, through the Canadian agricultural partnership and Labour and Immigration's workforce development agreement with the Government of Canada, we developed a new agriculture training support program to help employers in the food supply chain provide training. This helps ensure the security and sustainability of our food system and is helping to chip away at the increased unemployment that COVID-19 has caused in our province.

Access to capital is another important factor in enabling more food businesses to expand and diversify. Alberta supports Farm and Food Development Canada's capital lending increase by up to $5 billion per year, and in Alberta, Agriculture Financial Services Corporation has also increased its lending portfolio and streamlined the process to get capital into the hands of agri-food businesses quickly and efficiently.

Building agri-food processing capacity is a major focus for Alberta. In about half our provinces, agri-food exports consist of primary agricultural products. The proportion of raw commodity exports is much higher for crops: 97% for wheat, more than 60% of canola, more than 50% of barley and almost all pulse exports.

Processing more of these commodities in Alberta to generate additional value and create jobs inside the province is incredibly important. Expanding value-added processing will help build a resilient primary agriculture as well, reducing our sector's reliance on global commodity markets that are prone to market instabilities. Processed products are subject to fewer trade barriers than primary agricultural commodities.

The Food Processing Development Centre and Agrivalue Processing Business Incubator in Leduc support value-added agri-food business development and are an example of the Alberta government's long-term, continuing support for value-added agriculture in the province. Alberta Agriculture and Forestry also operates the Bio Processing Innovation Centre, which provides product development and scale-up supports for things like fibre decortication and grain fractionation. With a natural health product licence from Health Canada, the facility can also work with cosmetics, personal care products and natural health products.

Alberta Agriculture and Forestry has announced an aggressive investment and growth strategy to attract investment to our province to build and expand value-added processing capacity and create thousands of jobs over the next four years.

We set ambitious targets of attracting $1.4 billion in investment over the next four years, growth of 7.5% per year for primary agriculture exports and growth of 8.5% per year for value-added agriculture exports. The increased investment will directly benefit producers and bolster Alberta's entire economy. To help us hit those targets, new agriculture-specific investment officers will join our international offices in Mexico City, Singapore, United States and the European Union, doubling our international presence.

Securing and improving market access is a critical element of expanding Alberta's value-added processing capacity. A favourable investment environment is key to this investment and export strategy, through low business taxes and red tape reduction, among other measures.

The regulatory environment has been a significant factor in limiting processing growth in Canada and Alberta. Modernizing, aligning and eliminating overlaps and gaps in Canada's regulatory framework is crucial to reducing barriers to interprovincial and international trade. As a co-champion and chair of the regulatory agility subcommittee, Alberta foresees continued collaboration on finalizing the regulatory excellence initiative. A clean, streamlined regulatory food safety framework would benefit both new and existing processors.

Over the past three year years, Alberta spent on average $328 million on BRM programming each year and remains committed to finding more effective ways to support Alberta. At the last FPT conference, it was good to see that long-term options were explored as alternatives to AgriStability to drive predictable, timely and equitable support for the agricultural community.

Alberta continues to support funding to AgriInsurance and is opposed to any potential reduction in federal funding. Our province also acknowledges the importance of immediate, short-term agriculture support provided through AgriRecovery. A good example of AgriRecovery in action was the Alberta government's introduction of the fed cattle set-aside program in the spring to help the industry mitigate processing disruptions from COVID-19.

In Alberta, we look forward to reviewing the findings of the committee on food processing capacity in Canada in the near future. Alberta hopes the study will contain enough provincial content addressing unique challenges and potential solutions.

Thank you again for the opportunity.

[The Chair, Liberal, Pat Finnigan]

Thank you very much.

With that, we'll go directly to our question round.

We will start with Ms. Lianne Rood, for six minutes.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you very much, Mr. Chair, and thank you to all of the witnesses for appearing here today.

Mr. Prouse, I'm glad you decided to bring up regulatory approvals. I want to ask you about producers who supply processors and their ability to bring products to new markets. You did touch on that. It is my understanding that Canadian innovators of new crops and varieties find it really difficult to receive regulatory approvals in Canada.

Could you tell us about the innovators and the products they have recently attempted to bring to market in Canada?

[Dennis Prouse]

I'm actually going to punt this question over to my colleague, Ian Affleck. Ian is our vice-president of biotechnology, and he's had direct experience with a number of these products.

[Ian Affleck, Vice-President, Biotechnology, CropLife Canada]

Thank you, and thank you to the committee for having us here today.

Excuse me if I get a little impassioned with the answer. I grew up on a potato farm in P.E.I. and studied plant breeding at the University of Guelph, so new plant varieties are probably more exciting to me than many.

There are a lot of examples of where new varieties could have come to market in Canada and then didn't. Linking back to what Dennis said in his opening statement and how this relates to processing capacity, I'm sure you've heard from many folks about what it takes to get a processing plant built and how you create an environment that is ripe for investment in this space, but part of that is that you have the product to process in your country that is desired by the person investing in the plant.

I can give you a couple of examples of where opportunities have passed us by.

Recently, a company working out of Saskatchewan, Yield10, developed four canola varieties with a higher oil content. This is a great processing opportunity and it has benefits for more than just the processor. The farmers are getting more oil per acre, so their greenhouse and carbon footprint is going down. Their farm gate values are going up, and also, then, a processor is able to produce canola oil more efficiently because they're crushing less canola per minute to get the same amount of oil. What that comes back to is that it helps the processor decide that Canada is where they're going to put their capital investment.

Unfortunately, they've taken those varieties to the United States first. Those are new canola varieties developed in Canada and commercialized in the U.S. first. As that gets to critical mass acreage and you're a processing company trying to decide where you're going to build that plant, things are leaning in the direction of the other jurisdiction. We have other examples that follow along.

Coming to future examples, the protein industry supercluster has invested $30 million in some high-protein varieties that are really exciting and have a lot of opportunity for Canada, but if we don't have a clear pathway to commercialization in Canada, you could also see those be commercialized elsewhere. There's a high-oil soybean in the United States developed by Calyxt, and we still don't have approvals for that in Canada.

More so than just getting the approvals, it's the idea that they're needed at all for certain products in Canada. In many countries, the standard food safety requirements are all that is needed and no special reviews of these new products. While at times we talk about gene editing, which is the interesting and exciting new kid on the block for technology, this is really about plant breeding at large, and the plant breeding industry in Canada has seen the impact of our regulatory system over the years. We're falling behind the rest of the world.

If we can catch up, if we can make Canada competitive for new varieties that are either specialty for processing or provide the farmer the ability to produce that variety more efficiently per acre, more sustainably per acre and with higher value per acre, it just continues to create the environment where building processing capacity continues to make more and more sense.

I hope that responds to your question.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Sure.

You touched on this already and you named a couple of different companies looking for regulatory approvals. What is the experience of getting those regulatory approvals in Canada, and do you have a suggestion on how the Government of Canada should be facilitating regulatory approvals for companies such a this?

Could you maybe touch on what the future is of product research in Canada without the reform of those regulatory processes?

[Ian Affleck]

Thank you for that. You're hitting on the key point there. What do we do moving forward?

Plant breeding is at a crossroads. We've demonstrated through surveys of plant breeders that have been published through the University of Saskatchewan the impact this has had on our ability to bring new varieties to market and how we move forward in a way that makes Canada both interesting for R and D investment and then commercialization. As Dennis mentioned, we're seeing global regulatory trends in Argentina, Australia and Japan that have detailed regulatory approaches and that are very amenable to innovation. We need to catch up with those science-based, risk-based regulatory trends.

As Dennis said, we hope there's an opportunity here for Canada. CFIA and Health Canada have both announced public consultations on revised models, starting in January. Here's a real opportunity for us to prepare our regulatory system, our programs, for the next 20 years of plant breeding innovation so that we can continue to see the great successes we've seen in canola and soybean over the last 20 years.

The answers are there. They've been followed by other countries in the last five years, and looking at those models and integrating them into Canada is how we'll be able to maintain safety and risk base but also be competitive with other jurisdictions.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Affleck, and thank you, Ms. Rood.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you very much.

[The Chair, Liberal, Pat Finnigan]

Now we go to Mr. Blois for six minutes.

Go ahead, Mr. Blois.

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

Thank you, Mr. Chair.

I'd like to thank our witnesses for their testimony today.

I'll start with Mr. Prouse, or perhaps Mr. Affleck, in relation to regulatory reform. I think this will be important writ large, beyond agriculture, in the days ahead. We'll probably have challenges on the fiscal framework on the other side of the pandemic, and we will have to look at creative ways to help drive economic activity.

You mentioned, of course, trying to clarify or create a regulatory pathway. What does that look like right now? I understand that other countries look at processing, at the actual tools you are using, the gene editing tools, and Canada looks at the end product and whether or not it's safe. Can you quickly explain a bit about that?

[Ian Affleck]

“Quickly” is the tough part. This is getting into the science, which I'm far too excited by.

You're right. Canada set the right process at the beginning, 25 years ago. It's the product that matters and not the process, but it's the implementation of that regulatory theory that is so important in the policy interpretation of our regulations. As Dennis mentioned, we don't need to throw out regulations and change them to new ones. We just need to look at the risk and the science supplied by other countries and integrate it into our already robust regulatory framework.

It's a departure from some of the ways we've looked at things in the past, but it does fit. We can move there. We've seen, even in the last year, that the number of countries taking these new models, and I would say actually starting to do the product-based approach better than us, is increasing. This is our chance to show the world that we know how to do it.

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

Just quickly, which act and regulations? Perhaps you can table that, if you don't know offhand.

[Ian Affleck]

At Health Canada it's the novel foods regulations. At CFIA it's the seeds regulations and the feeds regulations. Those are the three that are key. It's policy interpretation that is really needed.

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

Thank you.

I'd like to go to Mr. Curran with the department of agriculture in Alberta.

I really appreciated your testimony in terms of the work your province is doing to attract and to cultivate that culture of bringing innovation and some of the value added to the province. Can you talk about the incubator? Is that something that's driven by government? Is it a partnership not unlike the protein cluster we saw in western Canada? Can you quickly elaborate on what that looks like?

[Jamie Curran]

It's a government asset located in Leduc, Alberta. It is certainly a partnership with industry and our food processing community, where we help develop products and help scale and commercialize products in both bioindustrials and food. It's been around in Alberta for many years, over 20 or 30 years. Certainly, many successes have come out of it, but it's a long-term application of trying to commercialize processing in the province.

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

Is some of the success that Alberta has had that, when you speak with industry stakeholders, they point to this particular investment as being key to bringing some of their focus to your jurisdiction?

[Jamie Curran]

For sure. We have specific examples of where industry has grown and created several jobs in testimonials for this specific tool.

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

You mentioned some of the individuals who will be working in your international offices with the Alberta government. Beyond the incubator in Leduc, what are the selling points or what are these individuals doing to try to attract in Alberta? Beyond that, what are some other policy initiatives you've done to try to meet that goal of $1.4 billion that you mentioned in your testimony?

[Jamie Curran]

With respect to the international offices, they're going to be in-market professionals. They have an understanding of the market conditions and have relationships in the business community. They will be able to foster and sell the attributes of the province to the world. With this addition, we'll have a presence of up to eight international offices. They will be located with the new investment agency in Alberta. There will be a strong interplay between the investment agency and ourselves.

In terms of policy applications, in addition to our macroeconomic policies around red tape reduction and a low-tax environment, we have made significant investment into our irrigation infrastructure. There was a recent announcement to enable high-quality supplies for grower irrigated acres. We then have, through the Canadian agriculture partnership, programming for value-added that will help work for the expansion and growth of those 600 companies that exist in Alberta and support our overall growth objectives for the province.

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

Okay. I think it's important to note the partnership that exists between the federal and provincial governments. You mentioned it. Of course, this is more downstream, but it has knock-on effects to the processing capability, which is BRM. We just got a study on that. You brought it up, so I'll quickly mention it. Minister Bibeau has put on record her willingness to improve certain aspects, particularly around the reference margin limits and the compensation amount.

Is that something the Alberta government is looking at?

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

I apologize for interrupting you, Mr. Blois.

Mr. Chair, the interpretation is no longer working.