Agriculture Committee on Nov. 24th, 2020

[The Chair, Liberal, Pat Finnigan]

Good afternoon, everyone.

I shall call the meeting to order. Welcome to the seventh 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. I would like to welcome our witnesses for the first hour this afternoon. With us today, from the Agricultural Producers Association of Saskatchewan, we have Mr. Todd Lewis, president. Welcome, Mr. Lewis.

From the Cowichan Green Community, we have Ms. Judy Stafford.

We shall start with the opening statements. Each organization has seven and a half minutes to do its presentation. We'll start with APAS.

Go ahead, Mr. Lewis.

[Todd Lewis, President, Agricultural Producers Association of Saskatchewan]

Good afternoon, everyone, and thanks for the opportunity to present to the committee today.

My name is Todd Lewis. I operate a grain and oilseed farm at Gray, Saskatchewan, with my brother and nephew. I am the president of the Agricultural Producers Association of Saskatchewan, or APAS.

APAS is Saskatchewan's general farm organization, representing over 16,000 farms and ranches, as well as 32 associate member organizations. We are a proud member of the Canadian Federation of Agriculture on the national level.

Saskatchewan producers are very big players in Canada's agricultural sector. We manage 40% of Canada's cultivated farmland and 35% of our nation's grasslands. Agriculture and food contribute $142 billion to the Canadian GDP, and Saskatchewan represents 10% of that total production. Agriculture and food make up 12% of Canada's total exports, and Saskatchewan agricultural producers make up one quarter of that total, which is worth $15 billion.

We are world-leading producers of several commodities. We have grown from being historically known for our wheat production as the breadbasket of the world to now being the world's leading producer of many other commodities. Canola was developed at the University of Saskatchewan in Saskatoon, and we are the world leader in canola production. Saskatchewan is the leading producer and exporter of lentils, flax, durum wheat, field peas, mustard, canary seed and malt barley. We sell high-quality cattle and hogs and meat products to international markets.

There's a common theme here, and that is our reliance on export markets for the large majority of our production. We have always relied on the international marketplace. Our distance from larger population centres in North America has been a disadvantage for the processing of consumer food products, so our supply chain has been focused on the shipment of bulk commodities for export by rail to distant ports.

Historically, provincial and federal governments have placed a high priority on increasing the value added to agricultural products through processing. Recently, we have had both levels of government set ambitious targets for value added and export growth, and ambitious targets for increases in production. There's a continued growth in demand for agricultural products worldwide and a strong desire to take advantage of this demand.

Producers share these goals. We would like to see the increased opportunities and added market stability that selling to local processors would provide, and we would like to see the increase in employment and economic activity for our communities.

Building on our worldwide reputation for high-quality and sustainable products, we can grow the processing sector. We can add value to our existing commodities, and we can take advantage of new opportunities. We can respond to the need for animal protein in emerging economies. We can build on our capacity in biofuels and biomaterials. We can develop opportunities with nutraceuticals, vegetable proteins and fibre products.

We have seen an increase in further processing in recent years. We are selling more canola oil from crush plants on the Prairies, and further processing of pulse crops for vegetable protein markets is being constructed. If we are to build for the ambitious production and export growth targets, Canada is going to have to focus on the sectors and regions that currently export unprocessed products and overcome the historical hurdles.

I will lay out a few examples.

Trade access is key. One barrier to the export of processed products is the trade and non-tariff barriers. Our industry is subject to wild swings in demand and prices due to trade wars and arbitrary decisions by foreign governments.

A fair market return is essential. Profit margins for farms and ranches are decreasing, and our input costs are increasing above the rate of inflation. Access to information on new opportunities is critical.

Transportation is also a key factor. We ship long distances to both domestic and international markets, and processed products require different transportation systems than bulk shipments of raw commodities.

Competitiveness is essential. It's hard to compete with jurisdictions that have lower costs, and we make it worse when we impose costs like the carbon tax that can't be passed along to prospective customers.

Access to modern high-speed Internet is essential to both processors and producers who are contributing to their supply chains. Access to adequate water and power supplies is essential. Access to labour resources is also essential.

Continued public research on crop and livestock development is essential. Canola was developed through a public program, and that investment created hundreds of billions of dollars of economic activity.

We need far-reaching investments like the one announced for irrigation recently. Irrigated production has huge potential in Saskatchewan, and the expansion will open the doors to new processing opportunities.

As producers, if we are being asked to increase our investment in increased and diversified production, we need a commitment to improve business risk management programs. This is especially important to young producers and new entrants. There is a major generational transfer of agricultural operations under way, and the new generation needs improved risk management to allow for the investment to expand the industry and meet growth targets.

Thanks for the opportunity to serve as a witness today. I look forward to the discussion and to your questions coming forward.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Lewis.

Now we'll go to Cowichan Green Community with Ms. Judy Stafford.

Go ahead, Ms. Stafford.

[Judy Stafford, Executive Director, Cowichan Green Community]

Thank you for inviting me to present today.

First of all, I want to acknowledge that I am located here on the unceded territory of the Cowichan people.

My name is Judy Stafford and I am the executive director of Cowichan Green Community, a non-profit organization focused on improving food security and educating on the importance of a strong local food system.

We feel that you can't have local food security without a vibrant agriculture sector. Within our mandate, we tackle everything from advocating for backyard chickens to teaching children that french fries actually come from potatoes grown in the ground, covered in dirt. We operate two teaching farms. We produce the Cowichan local farm map and the Island Farm and Garden magazine. We manage the Cowichan food recovery project, the reFRESH Cowichan Marketplace—a low-cost grocery store—and we run a Meals on Wheels program and various other food security initiatives.

We employ 34 staff, as tackling food insecurity is more than a full-time job. It's daunting. Cowichan is tied for first place in B.C. for the highest levels of child poverty. One in six children on Vancouver Island experiences food insecurity, and more than one in 10 families worry about having enough food to eat. Before COVID-19, there were 4.4 million food-insecure people in Canada. That number is expected to double.

When COVID hit, CGC quickly ramped up our programming as increased demand—specifically for meal services—escalated. We set up an emergency food task force and 25 organizations, including local government and the school district, have been meeting weekly since March to determine how to best service our community and ensure no one goes hungry.

During a typical month, members of the task force provide over 8,000 meals and 5,000 food hampers. They give out tens of thousands of grocery store gift cards and food coupons, and they recover and redistribute more than 15,000 pounds of food. Collectively, the task force has raised over $1 million for Cowichan to support food and temporary housing.

Here on Vancouver Island, a shocking 97% of our food is imported, making us highly vulnerable to instability in transport and trade. Disruptions in the food system represent catastrophic impacts to our most vulnerable citizens.

Among the challenging emergency responses this pandemic has elicited, there have also been opportunities for our local agriculture sector. In my neighbourhood alone, I've seen at least half a dozen cute little farm stands pop up over the summer, selling everything from eggs to homemade soaps to vegetables. In Cowichan, there are almost 700 small-scale farms, and with almost 10% of this region's land base capable of agriculture production, there is room for many more.

The Duncan Farmer's Market is one of the largest in B.C. and it's open year-round. The Cowichan Valley Co-operative Marketplace, our local online farmer's market, was founded with support from CGC in 2014. They've struggled as an organization for many years, with a very good week of sales equating to $2,000. During the height of COVID, the co-op had to scramble and hire several staff to process and distribute over $25,000 a week in sales. You couldn't find a freezer around here to save your life. Some local producers were noting record sales, to which I contributed substantially, as noted by the half a cow and pig that are in my freezers.

Many farmers are struggling with ongoing challenges, such as navigating horrendous regulatory hurdles, getting into large retailers and competing on price. Until I read the briefing note calling for fair business practices in preparation for this presentation, I had no idea of the rampant unfair and unethical practices going on in this sector. It's shocking.

A very successful local hothouse grower of cucumbers and tomatoes went bankrupt here after they were forced to reduce their prices to match the prices of vegetables imported from Mexico. After 38 years, a local family-owned bakery closed its doors—going from 40 staff to zero—as a result of Sobeys purchasing Thrifty Foods.

According to a recent Dalhousie report, the overall price of food is going to continue to be a problem. Beef is up an average of 6% to 8%. We've all seen prices creep up and the California wildfires are going to have long-term consequences for years to come. Combining this with the information provided in the briefing note, local, small-scale farmers are definitely the underdogs in a very unfair fight.

Even with countless challenges, the farmers we have the privilege of working with at CGC are very passionate, unbelievably hard-working, and we do everything we can to support them. This is the time for organizations such as CGC and others across the island, B.C. and Canada to shine. We've been waiting for some kind of shift in thinking for increasing support for local agriculture and getting it the recognition it deserves.

This past June, a group of food security organizations that form the Island Food Hubs presented to the Select Standing Committee on Finance and Government Services for British Columbia. We urged government to put a stronger focus on localized food systems, because we feel that food security and the local food discussion should be a pillar of all budgetary considerations. We were so disappointed to see that food was omitted in the provincial budget 2021 consultation document.

Comparatively speaking, the federal government has begun putting stronger emphasis on food through the creation of the federal food policy, releasing a food policy for Canada's food guide in June 2019, with over $134 million in initial investments to support that policy.

As part of that investment, CGC is working on securing funding through the federal local food infrastructure fund to build a commercial kitchen with larger-scale processing equipment to provide much-needed processing space, and increased access for value-added production for our local farmers. We're working on a HACCP facility, and hopefully providing food to our new hospital being built in 2024, which has committed to a 30% local food procurement.

I have been working with the federal staff since August. I am providing my fifth round of clarifications. I was dismayed, however, to hear in an earlier session of this committee that the fund has been exhausted, so hopefully, our application is in the processing pile and not dead.

We have also applied to B.C.'s community economic recovery infrastructure fund for a mobile abattoir. In Cowichan, there are only three processors, with none providing service to small-scale poultry farmers. There is a four-month wait-list to harvest beef, with some farmers having to resort to travelling three hours to a processor, or going off the island. The situation is dire for animal production.

In closing, the information in the briefing note was shocking, when we work on the ground with people in our community already facing undue hardships from poverty and struggling to put food on their tables. Of course, with limited food budgets, people are going to shop at the big box stores for cheap, heavily subsidized food. To have the five grocery store monopolies holding the purse strings is definitely unfair and tipping the scales in the wrong direction.

People, no matter what their income, should be able to enjoy fresh, local, healthy food, but more often than not, it comes down to a choice of dollars versus quality, and that's not okay.

Even though there are more uncertain times ahead, I do feel optimistic. We're seeing the awareness of the importance of a strong local food economy increasing. Attending presentations like these and seeing the time and energy that's being put toward these issues is a step in the right direction. I will enjoy even more walking around the corner from my house to pick up eggs from my local farmer, knowing we're doing good work.

Thank you to all of you for your efforts, and thank you for giving me this time.

I also look forward to addressing any questions.

[The Chair, Liberal, Pat Finnigan]

Thank you very much, Ms. Stafford. That was right on time.

We'll now start with our question round.

Mr. Steinley, go ahead for six minutes.

[Warren Steinley, Conservative, Regina—Lewvan, SK]

Thank you very much, Mr. Chair.

To our presenters, thank you for being with us today. Mr. Lewis, it's good to see you again.

I am going to ask a few questions. You touched on a few issues, and I'd like to delve deeper into a couple. One is regarding the building capacity and processing in Saskatchewan, western Canada and across the country.

You touched on interprovincial trade barriers, and how some of those non-tariff barriers are going to be disincentives to increasing our capacity capabilities on the Prairies. Could you address a few of those in more detail and give us a couple of examples of the internal trade non-tariff barriers that would be standing in the way of increasing our processing capacity?

[Todd Lewis]

A good example would be in meat processing. We still don't have standardization between provincial and federal regulations. There should be more standardization and less red tape as far as meat processing is concerned. If it is good enough for Saskatchewan people to consume, why isn't it good enough for somebody in Ontario to consume the same product? These kinds of barriers have been long-standing and continue to be in place.

Even the last presenter talked about the abattoirs. It's difficult to find space in an abattoir in Saskatchewan right now, as well. Part of that is because a lot of the local abattoirs have been closed down because of consolidation, and a lot of it is due to non-standardization of being able to transport their products across provincial boundaries. That's an example where we could have processing that will begin in Saskatchewan small-scale, or inside other provinces small-scale, and then go domestically and hopefully build into....

I think interprovincial trade barriers have hampered the establishment of new processing facilities in provinces, as that business would build across Canada and then expand into further markets internationally. I think that would be a good example of how non-tariff barriers have affected the processing in the Prairies.

[Warren Steinley, Conservative, Regina—Lewvan, SK]

You touched a little on another big issue our future processing facilities will face, and that is competitiveness. You touched on the carbon tax. You walked around it, but I think you were also talking about the clean fuel standard—and I know you have contact with a lot of producers—which might be coming down the pipe from this current government.

I'm wondering how those will affect our ability to address our processing capacity. Are those two of the bigger barriers you would see in attracting new processing plants to our country—whether they be in oilseeds or beef—and specifically to our western Canadian provinces?

[Todd Lewis]

I think the fuel standards are an example. For the United States, their number one export market for ethanol today is Canada. It doesn't matter what product comes out of the United States; it's heavily subsidized, so we're competing against that product, the ethanol that's heavily subsidized. It's coming into the Canadian market for Canadian fuel blends. Why aren't we using Canadian feedstock for that? That's a perfect example. We should have processing in the country that is providing that feedstock for Canadian fuel producers.

We consistently compete against the international marketplace, and we end up with a situation like this, with heavily subsidized products coming into Canada. It really is to the detriment of providing a good processing industry here in Canada, especially in western Canada, where most of this feedstock is available and readily usable for ethanol production.

[Warren Steinley, Conservative, Regina—Lewvan, SK]

Thank you very much.

Mr. Chair, I hope I can get one more question in.

[The Chair, Liberal, Pat Finnigan]

You still have a minute.

[Warren Steinley, Conservative, Regina—Lewvan, SK]

Thank you, Mr. Chair.

One thing I do want to touch on is that this government has said there might be existing and maybe even further opportunities when you look at processing if we go down the clean fuel standard. I've been speaking with producers and producer groups across the country as well as you. You represent 16,000 and many people are in Saskatchewan. The one thing I'm worried about is what you just said: the heavily subsidized product that could come in and be the feedstock and the feed fuel for either renewable biodiesel or ethanol in gasoline.

Is there a possibility that, even if they go down this path, producers will not have another market, because that heavily subsidized stock fuel is going to be cheaper for refineries to use and ship in from the States, as in the example you gave? We saw the same thing in the energy sector, where we saw cheaper oil being imported continuously from other jurisdictions. Would that be an issue for processing capacity?

[The Chair, Liberal, Pat Finnigan]

Mr. Steinley, unfortunately that was a bit longer than your time, so I'm going to have to pass. Mr. Lewis may have a chance to reply on another question.

Mr. Ellis, go ahead for six minutes.

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

Good afternoon.

I would like to thank the witnesses for taking time out of their busy day to testify in front of the committee.

Ms. Stafford, you mentioned a few programs you run. Could you explain the food recovery project? I think you mentioned that.

[Judy Stafford]

Thank you.

Two years ago, we started a food rescue project, where we pick up from five local grocery stores—Thrifty's, Country Grocer, Save-On-Foods—and that food is collected and redistributed to our community partners, food banks, etc.

Since we started, we've done about 300,000 pounds of food. Very little goes to waste. If it's not able to be eaten, then it's processed in our commercial kitchen right now.

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

I think you touched on the resiliency program or project.

[Judy Stafford]

I have a resiliency project. I don't think I talked about it, but it's about invasive species.

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

I thought you mentioned that, but maybe you didn't.

Mr. Lewis, you mentioned new farmers and better risk management. Can you drill down and explain on that point?

[Todd Lewis]

As we see agriculture expand, farmers' risk is rising every year as we expand into different crops and different opportunities. Irrigation is a good example. There's a heavy capital cost to become involved in an irrigation project. That's real money to farmers and we need the backstop to ensure that if we do have a natural disaster or a trade issue we're able to survive to fight another day until the market corrects itself or the weather gets better. I think that's an example there.

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

What about for young farmers in particular? Is there anything that you can think of that would help them?

[Todd Lewis]

I think just a good base of programming. Right now, AgriStability is not good for any farmer, young or old. I think good programs will help all farmers and especially attract new entrants, because that's what we're going to need, new entrants. The next generation are the people.... We want to see as many people farming as possible. If we don't make it more attractive for young people, we're going to continue to see larger and larger farms and more and more consolidation going forward.

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

Ms. Stafford, did you want to touch on that also?

[Judy Stafford]

In B.C. we have the Young Agrarians project. It's a land-matching program where the young farmers or emerging farmers are matched with perhaps a retired or wanting to retire farmer and they can lease their land. That's been a very successful project funded by the Ministry of Agriculture.

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

Thank you for that.

Mr. Lewis, you did mention obstacles to growth in food processing in Canada. I think you touched on some of the things, but what do you figure the biggest obstacles are that you face?

[Todd Lewis]

I touched lightly on transportation. We're going to need a different transportation system. Something as simple as crushed canola oil requires tanker cars, not grain cars. That's an example there. If we are going to process more canola in the Prairies, we're going to need oil tanker cars to move that product to market.

Another example would be that with a lot of these products, as we process them in Saskatchewan and in the interior of the country, the container traffic is going to be very important. Right now in the pulse industry we have a shortage of containers. We're having trouble getting containers to move some of our product offshore. That's another example of things that may not be thought of but that are going to be very important if we're going to be able to reach our markets.