Agriculture Committee on Dec. 1st, 2020

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

Thank you.

I'll turn to you, Dr. Campbell and Dr. Van Acker, for your comments. We also got to tour the University of Guelph. It's a fantastic facility. The research you have going on there si amazing. We also made it out to Saskatoon to look at the Saskatchewan Food Industry Development Centre.

Is there anything you want to comment on that you would ultimately really love to see as a recommendation in our report?

[Malcolm Campbell]

I'll double down on Professor Charlebois' comment around having the capacity to incubate company start-ups here in Canada. EIO is a great example.

By the way, MP MacGregor, it was wonderful to have you in Guelph. It's great to see you again.

If we take a look at the investment opportunities in start-ups in Canada, even during COVID we saw an increase in venture capital going into start-up companies across the country, and we also saw significant federal investments in that regard. I know that Sheryl Groeneweg has already talked to this particular committee. She spoke explicitly to the investments that ISED has made under the SIF, the strategic innovation fund, as but one example. Similarly, the regional development offices, such as FedDev here in Ontario, have been making investments in those companies to mobilize them. As Professor Charlebois said and I would reiterate, the challenge is making sure that those investments are in companies that are relevant to this particular sector, the agri-food sector, and more specifically to food processing. I think there are clearly opportunities there.

It seems to be the case that, as I often describe it, everybody and their grandmother has a recipe that's lived in their family for years and years and they want to start a company on the basis of that. The challenge is pulling that together into a venture that will actually gain mileage, gain traction and have a long life. Professor Charlebois mentioned having the supports in place. One of those four components that you describe as necessary is the guidance for those companies. I would say that actually does exist across the country—maybe not specifically for agri-food, but we have some great examples there, with Bioenterprise as but one example here in Ontario. You'll be hearing from Bill Greuel later today. I think PIC is wanting to be very active in this space as well.

Other international players are looking at opportunities in Canada for investment. We ourselves just partnered with SVG Thrive, a major investor out of Silicon Valley that's looking at Canada as an opportunity to grow companies.

[The Chair, Liberal, Pat Finnigan]

Thank you, Dr. Campbell.

As chairman, I'd like to ask a question. This is a very interesting conversation. There's a lot of good stuff coming out today that we'll be able to use.

I'm just curious; we're not seeing the private sector. We're talking a lot about various federal programs. What about the private sector? Over my lifetime it seems we've had a lot of private companies that would invest. We're seeing, as Mr. Charlebois said, a lot of investments south of the border that should have been here. Just very quickly, because I don't want to take much time, what do we need to do to get the investors?

That question is for anyone who wants to answer it.

[Dr. Sylvain Charlebois]

That is the reason I mentioned the CDL. The CDL is a forum that is publicly funded, but the capital is all private. All of the investments in the companies, the discipline—they are imposed by private sector venture capitalists. Dalhousie University offers the forum and provides the facility to accommodate discussions and the mentorship. In essence, it's a private-public partnership accommodated by an educational institution, but nobody is focusing on agri-food.

[The Chair, Liberal, Pat Finnigan]

Thank you very much.

Unfortunately, we have to end it here. We have a shortened panel today.

I really want to thank—

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

Mr. Chair, Mr. Charlebois mentioned interprovincial trade barriers and some of the challenges. We have such a short time in these sessions. Is there a chance that Mr. Charlebois or Mr. Campbell or Mr. Van Acker would have any thoughts on that? I think that's an important point.

Can we ask them to submit any type of reference or direct...? I think that would be helpful to us.

[The Chair, Liberal, Pat Finnigan]

Yes.

If you could submit it to the committee, we'll certainly include as part of our study.

Thank you so much, Mr. Charlebois from Dalhousie University.

Thank you, Dr. Campbell from the University of Guelph. It was good to see you again.

Rene Van Acker from Ontario Agricultural College, thank you for taking the time today.

We'll suspend for the second round, folks, and we'll be right back.

Thank you.

[The Chair, Liberal, Pat Finnigan]

We shall get going with our second panel.

Welcome to the members of our panel.

Welcome, everyone.

Now we have Fernande Ouellet, coordinator of Le Petit abattoir. Thank you for being with us this afternoon, Ms. Ouellet

We also have, from Protein Industries Canada, William Greuel, chief executive officer.

Ms. Ouellet, you have the floor for seven and a half minutes to make your opening remarks

[Fernande Ouellet, Coordinator, Le petit abattoir]

Good afternoon, Mr. Chair. Thank you for inviting me to appear before you today.

Thanks as well to the members and other witnesses for taking part in this meeting on such an important topic.

I would like briefly to introduce our organization, which is called Le petit abattoir. We are a solidarity cooperative that is subject to federal inspection. Our aim is to offer poultry slaughtering services to small-scale producers, who are struggling to find their place among the industrial and automated facilities. We offer them a solution in the form of a modular poultry micro abattoir. The model will be reproducible and adaptable in various regions, and we plan to assist Canadian communities in developing and implementing their solutions.

As emphasized during the committee's meetings, the current health crisis has amplified a remarkable groundswell of efforts to buy local, to support small farms that market within short supply chains and to carry on this type of agriculture, which provides structure in the regions and creates social ties. It has also been stated over and over again that the COVID-19 pandemic has revealed the fragile nature of the country's processing capacity, but what may have been outlined to a lesser degree, and what I would like to discuss today, is how we should address this concept of capacity.

There are two approaches to slaughtering. On the one hand, you can look at processing capacity based on the number of head and determine that slaughtering capacity based on the number of head produced in the country is adequate but undermined by infrastructure concentration. To solve the problem, you must correct deficiencies in the current facilities and networks. On the other hand, with a view to territorializing food systems and food system resilience, you have to look at capacity based on geographic proximity between producers and processors and on the ability to mesh production scales, failing which the problem remains intact.

In recent decades, we have seen what might be called a technology gap appear between small-scale production and medium- and large-scale production. That gap has occurred as a result of a decline in the number of abattoirs and an increase in the size and output of remaining facilities.

Consequently, you have, on the one hand, traditional production, which fortunately enjoys increasingly efficient infrastructure well adapted to its scale of production.

On the other hand, there has been an increase in the number of small farms that, by contrast, are less and less well served and less and less compatible with the remaining, more mechanized and automated slaughterhouses. These producers face numerous issues and are required to transport their animals hundreds of kilometers to the few abattoirs that still agree to process small animal consignments. As a result, they can no longer guarantee the animals' welfare in accordance with the system of values that guides their work as producers. In addition, they can't always guarantee product traceability, which is essential to marketing a distinctive product. They are also required to bear the additional workload and economic burden involved in transportation.

Lastly, the inherent dependent relationship and power differential always favour the operator, a fact that limits the producer's ability to seek accommodations and express discontent. As a result, these small farms are less and less able to respond in a viable manner to the growing public demand for the type of products they offer. Traditional-production farms and small-scale farms operating in closed supply chains therefore do not find themselves in comparable situations. This situation therefore justifies us in addressing the issue of processing capacity based on these two distinct systems.

In the following three points, I would like to provide some food for thought on how to improve the processing capacity of the small-scale farm network.

First, we should aim to increase the number of small abattoirs in the regions and to adopt a mobile slaughtering strategy. This kind of infrastructure network would help establish an investment-friendly climate, which in turn would reduce economic uncertainty and enhance the viability of these businesses and the food security of their communities, while guaranteeing animal welfare, particularly in the mobile slaughtering scenario. With nearby infrastructure adapted to their situation, small-scale farmers will increase their herds, some will diversify production, and new farmers will establish themselves in the region. An abattoir is not just an abattoir; it is a rural development tool.

Second, we must, without delay, establish non-repayable assistance to provide community initiatives with the initial capital that is essential in implementing their solutions. We have, at the community level, knowledge, energy, a will and solidarity that must be invested in now because all we lack are financial resources. Many business opportunities will be wasted if we cannot draw on our community's strengths. We are motivated by need, and that's a guarantee of success.

Third, you have often discussed the regulatory burden in this committee. I'd like to underscore the organizational culture that prevails in many departments, where, all too often, people focus on means rather than ends.

Small facilities characteristically do not seek ways to avoid meeting standards but rather ways to meet standards by their own means, which are usually more limited than those of conventional facilities. Consequently, we must rethink the "same for all" paradigm by helping to adapt means based on an objective that is in fact the same for all, regardless of means. Fortunately, there are highly competent, open-minded and respectful people in all these departments, which makes it possible for us to innovate with confidence.

However, this way of addressing matters must become the watchword in the departments so that stakeholders can create and seize opportunities. The European example is inspiring here, as European authorities are lifting barriers to entry by allowing farming and animal welfare defence organizations to work hand in hand to establish farm slaughtering procedures that are secure from a health standpoint and by certifying facilities rather than every animal carcass.

Similarly, there has been an unprecedented spread of micro abattoirs in the United States, especially since the start of the pandemic, all of which have received technical and financial assistance in setting up.

In conclusion, just as we acknowledge that the resilience of nature depends on biodiversity, we must value and protect the diversity of economic models. This is necessary for the resilience of our economic and food systems. We must unleash energies and ensure that the primary aim of the assistance measures and regulations in place is to ensure that no one is left behind.

Thank you for your attention.

[The Chair, Liberal, Pat Finnigan]

Thank you, Ms. Ouellet.

Now we'll go to William Greuel, from Protein Industries Canada, for seven and a half minutes.

[William Greuel, Chief Executive Officer, Protein Industries Canada]

Thank you.

Good afternoon. My name is Bill Greuel. I'm the CEO of Protein Industries Canada. I'm joining you today from Regina, so I'd like to take a second to acknowledge that I'm on Treaty 4 territory, the original land of the Cree, Ojibway, Saulteaux, Dakota, Nakota and Lakota, and homeland of the Métis nation.

Protein Industries Canada is one of Canada's five innovation superclusters. We were created because Canada has the potential to be a leader in the production of plant protein ingredients and food.

We were created to capture more value here at home and create a significant economic benefit for Canadians. We will do that by increasing ingredient and food processing capacity in Canada.

The Barton report, which has been mentioned today, laid the foundation for Protein Industries Canada, and we continue to use the goals set out in this report as our top-line objectives.

To date, we have over 240 members from coast to coast. Along with our private industry partners, we have invested well over $300 million into Canada's agri-food sector, with a large portion of that directly supporting ingredient and food processing activities.

Agriculture is a Canadian success story. We are known worldwide as the supplier of high-quality cereals, pulses and oilseed crops. Through the hard work of our farmers, ranchers, researchers, processors and many other important links in the value chain, agriculture and food, including food and beverage manufacturing, contributes upward of $112 billion to our GDP and employs more than 2.3 million Canadians.

Our success is understandable. We have the third-largest area of arable land per capita in the world, with some of the best growing conditions. We have proven to be resilient and dedicated, adopting new technologies to increase production while sequestering carbon in our soils, yet for everything we have to be proud of, we also still have much work to do.

We are only the 11th-largest global agri-food economy ,and I would argue that we should be much higher. We continue to be commodity-focused, making us vulnerable to trade disruptions of the kind we witnessed with canola sales to China and our pulse trade with India. We are lagging in science and innovation expenditures relative to many other nations. The reality is that we have a lot of land and resources, but we are not a large enough global agri-food sector. We have room to grow.

There is one way we can overcome these challenges to create more opportunities for Canada and for our people, and that's to increase ingredient and food processing here at home to add more value to raw commodities in Canada. Increasing ingredient and food-processing capacity in Canada is critical to our economic recovery and future growth. By increasing Canada's processing capacity, we will secure a safe supply of healthy, sustainable foods for Canadians and for our partners around the globe. We will insulate ourselves against trade disruption and create jobs and wealth for Canadians.

The vulnerability of our agri-food supply chain became evident in the early days of COVID-19, when for the first time many Canadians experienced a shortage of staples at their grocery store shelves. Thankfully, our food system bent but did not break. This is good news for Canadians, but we need to take some lessons from what 2020 has handed us, most notably in how we are fostering and supporting the food processing sector in Canada to ensure a resilient system that can take advantage of the growth opportunity that ingredient and food processing offers us to insulate ourselves in future from shocks to the system of the kind we experienced in the early days of COVID-19.

I believe we must do as much for the ingredient and food processing sector as we've done for primary production. It is not a question of either/or; it is a question of “and”. If Canada makes ingredient and food processing and food manufacturing a higher national priority, we have the opportunity to build an industry that can help with our economic recovery while also ensuring we insulate ourselves from future economic and unforeseen shocks, such as the global pandemic we are currently facing.

More processing will also insulate us from trade disruptions, and more importantly, create economic growth and jobs for Canadians. We know that by processing even an additional 20% of Canadian crops, such as pulses, canola and wheat, here in Canada, we can add an additional $12 billion to our national economy every year. I believe 20% is just the start and that we can and should do more.

In order to reach that objective and those of the Barton report, we need to take our ingredient and food processing sector to a higher priority. We need continued and deliberate investment and a plan like the one we have at Protein Industries Canada.

Canada needs to be a leader in science, technology and innovation. We need a regulatory environment that can keep up with the pace of innovation to ensure that our products can get to store shelves.

We need continued access to new markets to build on the brand as a preferred and reliable commodity supplier and to ensure that Canada is a preferred choice for sustainably produced ingredients and food. We need to attract capital investment. We know that in order to reach our full potential and to be able to process more here in Canada, we will need a significant amount of investment to build new processing facilities.

We are starting to see and build momentum. We have seen Roquette build the world's largest wet-fractionation pea processing facility in Portage La Prairie, Manitoba, and Merit Functional Foods' new processing plant in Winnipeg will open in early 2021. As well, Verdient Foods and Ingredion continue to expand and commission new technologies in Saskatchewan.

Protein Industries Canada is working with all of these partners to do its part to grow Canada's processing sector. We must build on the momentum and capture this opportunity for Canada.

We continue to make connections between companies, from processors in the west to food manufacturers in the east and to multinational food companies that are incorporating Canadian ingredients into their global food brands. This work, and more, is what will help grow Canada's processing sector, a sector that's of the utmost importance and one that's a growth opportunity for Canada.

I have had the honour of being involved in agriculture my entire life, from growing up on our family farm in central Saskatchewan to working in seed genetics and crop protection to working in the public service in regulatory and policy roles. I'm very proud to be a part of this sector. This job as CEO of Protein Industries Canada is by far the most exciting, because I'm helping write a new chapter for Canada's agri-food sector, one that helps Canada become a global leader in the production of high-quality, sustainably produced ingredients.

I want to thank you for your time today and for your hard work and commitment to Canada's agri-food sector.

[The Chair, Liberal, Pat Finnigan]

Thank you very much, Mr. Greuel.

We will go right away to our question round.

Mr. Steinley, you have six minutes. Go ahead.

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

Thank you very much, Mr. Chair. I will be splitting my time with Mr. Lehoux for the opening round.

It's good to see you again, Bill. It's nice to have another Regina contingent on the call.

You mentioned two or three times that there needs to be a higher national priority put on agri-food and [Technical difficulty—Editor]. Could you elaborate on what you mean by a higher priority, and how this government could show a higher priority on this file?

[William Greuel]

When I look at investments in the agri-food sector for the past number of years in Canada, I think we have done a lot at the start of the value chain. That's breeding, agronomy, production agriculture, support for producers through CAP. Those are all good investments and we need to continue those investments, but there is a whole additional side of the value chain, which is ingredient processing and food processing. Further investments at that side of the value chain also comes with incenting private sector investment and with a need for regulatory modernization, which I can speak to, but Dr. Charlebois already spoke to it.

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

I appreciate that.

Dr. Charlebois also mentioned the need for internal non-tariff trade barriers to be taken down. You mentioned our food is going from east to west. I think we should look at doing a national food corridor.

I know there's trucking standardization and a few other things, but what would be the major internal non-tariff trade barriers that we need to take down to have a more secure food system and to help increase the capacity in processing?

[William Greuel]

I think there are a couple of things, maybe not so much for the plant protein sector or the plant sector as much as it would be for the livestock sector and the movement of finished goods. Harmonization of some regulations would be helpful.

I do believe we're in relatively good shape in terms of plant-based ingredient movement east to west for a national food corridor.

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

Thank you very much.

I have one more question, if I have time. You mentioned access to new markets. Obviously one of our biggest impediments is transportation logistics.

What would we need to do in the coming months and years to ensure that we do have the ability to access new markets by increasing our transportation infrastructure?

[William Greuel]

We're going to see a bit of a transformation in the movement of food products and ingredients. Right now it's largely commodity focused. If we fast-forward several years into the future, higher-value ingredients are going to be moving, so that comes with a different look at the transportation system, perhaps through more intermodal trade and other means as well.

At the same time, commodity agriculture and production is increasing in western Canada. Those products will also have to get to market. We can't take our foot off the gas in terms of the current transportation infrastructure and port infrastructure that we have as well.

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

Thank you very much, Mr. Greuel.

Is that my time, Mr. Chair, or do I have time for one more?

[The Chair, Liberal, Pat Finnigan]

You have two and a half minutes left on your time, Mr. Steinley.

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

I'm sharing with Mr. Lehoux, so Mr. Lehoux can have the last two and a half minutes.

[The Chair, Liberal, Pat Finnigan]

Go ahead, Mr. Lehoux.

[Richard Lehoux, Conservative, Beauce, QC]

Thank you, Mr. Chair

Thank you, Mr. Steinly.

My question is for Ms. Ouellet.

Ms. Ouellet, you mentioned non-refundable assistance and amendments that should be made to the regulatory culture.

What do you mean by those two items? What role could the federal government play in taking action on your recommendations?

[Fernande Ouellet]

Let's start with the need for capital. One of the biggest challenges for community initiatives is size. By that, I don't mean private projects, but rather cooperative projects such as ours and those we see appearing across the country. The problem is always that the players are so small that, even if they pool all their resources, they can never amass enough capital to start the project and transfer its ownership to the community.

The reason it's so important for small-scale infrastructure to belong to the community is that it has a major structural effect. When a private project runs into trouble and has to be terminated, the major structural effect is ultimately the destructuring of the network. People are forced to adapt very quickly and to try to find solutions in an environment where there are already very few. The structural effect can be preserved where the infrastructure relies on the community, not a private project.

However, who among us has the necessary capital to decide to break the piggy bank and invest in the project so its ownership can be turned over to the community? This is impossible.

The solution would be to have a start-up fund so that we can go further. Then everything's a matter of attitude. From a regulation standpoint, it's a matter of attitude. We need people to view our ability to cobble things together as a strength rather than a threat as regards the health aspect.

[Richard Lehoux, Conservative, Beauce, QC]

I like hearing you talk about the problem from that angle, Ms. Ouellet, because it's really important.

Earlier you also mentioned land use, and I think that can play an important role.