Agriculture Committee on Nov. 24th, 2020

[The Chair, Liberal, Pat Finnigan]

We're basically done, Ms. Rood. You have three seconds left.

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

Thank you, Mr. Chair.

Thank you, Ms. Allen.

[The Chair, Liberal, Pat Finnigan]

Thank you.

Mr. Blois, you have six minutes.

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

Thank you, Mr. Chair. I'll be splitting my time with Mr. Drouin.

Quickly, I'll go first to our friends in the Yukon. It was great to hear from you about the experience in the north. On the mobile abattoir system.... I know that's something that has been discussed in my province of Nova Scotia. Can you quickly talk about the role government played? Was this done by the private sector or was it a bit of a co-operative model?

[Matthew Ball]

Thanks for the question.

It was government-driven. We had the dollars put up. This was back in 2006. There was a study done co-operatively with industry at that point, but it was entirely government-funded. It has been a real success story in this last decade.

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

Thank you very much.

I'd like to turn my questions to Ms. Allen. You mentioned a lot about a code of conduct. We've been hearing about that on this committee. I don't think anyone questions the validity of those types of measures to support farmers. I didn't hear a whole lot else about how we help grow the processing sector.

My questions is, are the margins being made by some of the largest processors in our country different from those in other jurisdictions in the world? Do we have a smaller margin in North America or in Canada for our processors?

[Denise Allen]

Thank you very much for that question.

I would have to say yes. We have a fairly uncompetitive landscape in Canada. Land values, taxation and regulatory reform.... Some of that has created part of the quality value proposition that we have for export of food products. We have a very safe food system in Canada and one that we recognize as being a part of our value proposition, but at the same time regulatory reform to remove some of the barriers to competition is needed in order to—

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

Sorry about that, but I'm short on time.

What are some of those regulatory barriers that need to be removed?

[Denise Allen]

Some of them are overlapping between federal and provincial jurisdictions. Some of them are uncompetitive inputs, such as having to pay for or import inputs for further processing compared to other jurisdictions.

We have worked with the Canadian Chamber of Commerce in Ottawa to prepare a white paper to that effect. That is asking for regulatory reform in order to improve competitiveness. In it, we outline a number of measures that could be taken to streamline some of the regulatory process in Canada to improve competitiveness and capital investment.

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

What I'm hearing from you is that if we implement a code of conduct, your processing capability will improve. That's what you see as the silver bullet or one of the key metrics.

[Denise Allen]

In short, yes. A grocery code of conduct will allow us to have greater input on which fees and fines are imposed on us. We would have a mechanism to have fair and reasonable good-faith negotiations with retailers and, in doing so, keep more profit in those processing companies to reinvest in capital investments. Yes, I do stand by that.

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

Thank you.

Quickly, I have a comment for our deputy minister from Ontario. Obviously, this is part of where we're headed in terms of the other side of the economic recovery. Perhaps I'll turn it over to Mr. Drouin, but certainly from where I stand in the wine country of the Annapolis Valley, I hope this is something the provinces and territories are looking at in terms of collaboration to find more harmonization to be able to make some of these efficiencies, whether in processing or not.

Mr. Drouin, it's over to you.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Mr. Chair, just for reference, how much time do I have?

[The Chair, Liberal, Pat Finnigan]

You have two minutes and 20 seconds.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

That's perfect.

I will ask a question and the witnesses may not have time to answer all of it, but I would appreciate a written submission later on. It has to do with automation.

Mr. Kelly, I believe I heard you say that those who adapted technology or automated their systems had far less delay in production. I'd be curious to hear from you on that particular analysis.

Ms. Allen, we've heard from CME that automation generally in Canada—pick your manufacturing companies—was behind compared to other countries. I'd be curious if you could make some recommendations as to how we can help the sector adapt new technologies.

[John Kelly]

As a quick response, investment in robotics, blockchain technology, data management and anything we can do to track systems will help us. Labour is the number one cost for food processing, and anything we can do to improve that will improve our efficiency and competitiveness with our foreign counterparts.

[Denise Allen]

I'd have to agree with Minister Kelly.

First and foremost, we face a labour crisis in Canada as it pertains to the manufacturing sector, which is acutely felt in food processing. We need greater-skilled workers, access to labour forces, and that will immediately improve our competitiveness and ultimately profitability. We can then reinvest in capital investment and plant equipment.

I think that is a great place to start.

Also, I'd be very happy to share the report that we have generated in order to increase competitiveness through regulatory reform. In it, we outline some of the obvious—and perhaps not so obvious—opportunities to streamline that regulatory reform.

That, combined with medium- and longer-term investment in efficiencies in the sector should see us with a marked improvement.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Thank you, Mr. Chair.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Drouin.

Thank you, Ms. Allen.

Now we have Monsieur Perron for six minutes.

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

Thank you, Mr. Chair.

I thank the witnesses for taking the time to attend this meeting.

I am going to please my colleague Mr. Drouin and come back to the issue of automation. My question is for the witnesses from the Ontario ministry, including Mr. Kelly.

What could the federal government do to facilitate technological innovation?

In your presentation, you talked about foreign-owned companies and a lot of pressure. I believe I understood that these companies are subject to underinvestment, or at least delayed investment, particularly in Ontario. You seemed to be saying that you could draw a fairly direct link between foreign ownership of these companies and underinvestment in technology.

What could the federal government do to improve the situation? For example, would having more locally owned corporate headquarters improve things?

[John Kelly]

We have a lot of foreign direct investment in various companies, whether it's in things like Nutella manufacturing, pizza manufacturing or those types of things. Those plants are all very new plants and they're very automated, so they have a competitive advantage over others.

Our plants are dealing with an aging infrastructure that we really desperately need to improve. You'll see that some of the older plants, for example in downtown Toronto, have had to close because they couldn't compete.

What is required is capital investment in new technology, which will increase the efficiencies of our own plants. That's both small and medium-sized enterprises in particular, because they make up the bulk of our food processing here.

It's a real challenge for some companies to even get their products manufactured, let alone being able to compete on a global basis.

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

Thank you.

From what I understand, people may need government support through investment programs more focused on Canadian-owned SMEs.

Several witnesses have said that a code of ethics would be needed. You are part of the Ontario government. The jurisdiction issue is quite important in this matter. I feel the federal government could set up a voluntary code, but the provinces would have to set up a mandatory code, because it's their jurisdiction.

Have you begun work on this in Ontario? Are you talking to other provinces or the federal government? Do you have any plans to do so?

[John Kelly]

Certainly, we're in discussions here in Ontario and with other provinces; you're quite right. We're currently in the middle of our federal-provincial-territorial meetings. We are having discussions concerning the activities of some of these retailers and the provision of a grocery code of conduct.

You're quite right that the jurisdiction does lie with the provinces. It will be up to each of the individual provinces to determine its path forward. But I think there's value in understanding the impact of the activities of the major retailers on processors as well as primary production.

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

Thank you very much.

Ms. Allen, I will continue with you, again on the subject of this code of ethics from the provinces, which will have to be strict. You talked about the role of the federal government, which could amend the Competition Act. Since we went quickly through that part of your speech, could you tell us what changes might be made to that federal legislation to help you move forward on this issue?

[Denise Allen]

There is no doubt that the Competition Bureau...and the act itself holds opportunity to provide it with more reach, or teeth, if you will, to investigate where there are concerns of over-concentration, certainly in sectors that have such far-reaching impact on Canadians' lives as our food system. Food Processors of Canada is part of a coalition of more than 35 industry associations that have come together to prepare a number of submissions on this topic. I would be very happy to provide a more detailed submission of where we see opportunity within the act.