Agriculture Committee on March 24th, 2022

[The Chair, Liberal, Kody Blois]

I declare this meeting open. I want to welcome you to meeting number 10 of the House of Commons Standing Committee on Agriculture and Agri-Food.

I have a few reminders, folks. We've been here before.

This meeting is taking place in a hybrid format, pursuant to the House order of November 25, 2021. The proceedings will be made available via the House of Commons website, and the webcast will always show the person speaking rather than the entirety of the committee.

Screenshots are not permitted and, frankly, the rest we've heard before.

To our witnesses, thank you for being here.

If you need to toggle between languages, all of that is available, and, of course, we have the sound check.

We're going to get right to it.

This is the last meeting on the study. Pursuant to Standing Order 108(2) and the motion adopted by the committee on Monday, January 31, 2022, the committee is resuming its study of the agriculture and agri-food supply chain.

I would now like to welcome our witnesses to our first panel.

Joining us via video conference today is Al Mussell, who is the research director of the Canadian Agri-Food Policy Institute.

Mr. Mussell, welcome back. We know you had technical difficulties. You won't have any opening remarks, but you'll be available for questions, and I'm sure members will take you up on it.

We have, from the Keystone Agricultural Producers, Bill Campbell, president; and from Pattison Food Group, Julie Dickson Olmstead, managing director of public affairs and corporate responsibility at Save-On-Foods Limited Partnership. Welcome.

Finally, with the Union des producteurs agricoles, we have Martin Caron, general president; and David Tougas, coordinator, business economics.

Each party will have five minutes for opening remarks.

I'd like to invite Mr. Campbell to make an opening statement of up to five minutes.

[Bill Campbell, President, Keystone Agricultural Producers]

Thank you very much, and good afternoon, everyone.

Mr. Chair and members of the committee, thank you for this invitation to appear before you today to discuss agriculture and the agri-food supply chain. My name is Bill Campbell, and I am currently serving as president of Keystone Agricultural Producers. Keystone Agricultural Producers is the voice of farmers in Manitoba. We represent over 4,600 farms across the province, along with 20 commodity groups and organizations. We advocate on behalf of all farmers to all levels of government.

Over the past couple of years, Canadians have come to see how agriculture and agri-food supply chains can no longer be taken for granted. Floods, fires, overseas conflicts and railway work stoppages have highlighted how interconnected and fragile our supply chain is. Creating resiliency and long-term stability in our supply chain is a complex endeavour. This resiliency and this stability are dependent on a supply system in which each individual part operates in unison with the others. Having a resilient and stable supply chain means that problems are addressed in an efficient and effective manner.

Labour shortages, transportation issues and rising input costs are all top concerns for Manitoba producers. These uncertainties can impact market stability and eventually supply. Nearly all grain elevators in Manitoba are served by CP or CN, which means that grain farmers are fully reliant on a single railway to have their products shipped to market. This railway structure makes disruptions such as work stoppages or natural disasters detrimental to our industry and has cascading effects throughout the supply chain. Farmers are not only reliant on class I railways to have their products shipped to market, but are dependent on the railways for inputs such as fertilizer and feed for livestock. Fertilizer is very important to crop yields and ultimately farm revenue. The latest CP work stoppage created serious concerns amongst Manitoba farmers given the closeness to the seeding season and the need for nutrient sources and feed shortages. Given how critical rail transportation is to the agricultural supply chain, our organization recommends that the federal government classify class I carriers as an essential service, which would limit an unfettered strike scenario.

Another issue of concern for Manitoba farmers is the cost of inputs. Producers are seeing significant price increases for nitrogen, phosphorous and potassium fertilizers. For example, last year the average producer in Manitoba paid around $700 a tonne for urea; they are now paying close to $1,300. Some prices for anhydrous fertilizers are quoted as being $2,270 per tonne, while in the fall of 2021, the price was $1,170. Furthermore, high input costs and high grain prices are burdensome for livestock operations that require the growing and buying of feed for their animals.

Chronic labour shortages have been an ongoing problem in the agricultural sector. Currently there exist challenges with hiring skilled workers, difficulties with employee retention, geographical recruitment barriers and an aging workforce. A few pork producers in the province have commented that 50% of their barn positions remain unfilled.

Agriculture is perhaps one of the most critical and essential industries in Canada. Consumers often take for granted the quality, safety and availability of food found in grocery stores. A large part of the population is unaware of all the steps that are required to bring livestock, wheat or other commodities from a field to the grocery shelves. Widespread drought and severe supply chain issues can have major impacts on the availability of food in stores. Water and food are essential and basic human needs. If these needs are not met for most of the population, then the outcomes are dire.

Nearly all Canadians lack the skills, knowledge or access to land needed to obtain an independent supply of food or water outside of grocery stores. For this reason, the producers and workers who are part of the agricultural supply chain are an indispensable component to ensure the health and safety of all Canadians. There is perhaps no better time than now to act on addressing the current issues in our supply chain.

Thank you once again for the opportunity to meet with you today. I am more than happy to answer or address any comments or questions you may have.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. Campbell. That was right on time, which is lovely.

Ms. Dickson Olmstead, we'll go over to you for five minutes.

[Julie Dickson Olmstead, Managing Director, Public Affairs and Corporate Responsibility, Save-On-Foods Limited Partnership, Pattison Food Group]

Thank you and good afternoon, Mr. Chair and committee members.

My name is Julie Dickson Olmstead, and I am speaking to you from the traditional unceded territory of the Katzie, Semiahmoo, Kwantlen and Coast Salish Peoples of British Columbia. We very much appreciate the opportunity to be here today to provide a perspective from the west.

I'm here on behalf of the Pattison Food Group, which is Canada's largest western-based provider of food and health products, originally established in New Westminster, B.C., in 1915. Collectively we employ 30,000 team members, and our companies are proud to be recognized as among the top 100 employers in B.C. and Canada.

We have 11 retail banners, with close to 300 food and drug retail locations throughout western Canada, Whitehorse, Yukon, and Washington state and Oregon. Our largest and signature company is Save-On-Foods.

Our four wholesale businesses cater to nearly 2,000 independent grocers, restaurants and specialty retailers, from B.C. to Quebec. We operate five food and pharmacy production facilities.

Innovation is a hallmark of our company, and agility has never been more important to our business than in the last two-plus years. Supporting our communities is at the heart of our business. We serve over 2.3 million Canadians every week, travel tens of millions of miles annually on western Canadian highways and depend on all forms of distribution to move our goods efficiently.

Doing business with local growers, producers and suppliers is a key priority for us. We carry thousands of locally made products from more than 3,500 local growers and producers, including up to 75% of our produce when in season.

With that backdrop, and in consideration of the short time we have, allow me to focus on the following, and then I'll be happy to answer any questions.

In the food sector, the greatest impediment to growth is the lack of regulatory harmonization and coordination. Understanding that food regulations lie with different jurisdictions in Canada, it cannot be said often enough that these disparate rules represent the greatest costs and greatest growth impediments for small to mid-size grocery businesses.

With that in mind, we would encourage this committee to consider convening provincial, territorial and federal agri-food officials, and industry stakeholders including grocers, to come together to review, address and agree on a framework that would not only eliminate regulatory barriers in the supply chain but also allow for greater speed of innovation. This includes food, but also transportation, labour and various other matters.

Of great importance is a focus on better alignment and communication between federal ministries, specifically Agriculture Canada, Health Canada, and Innovation, Science and Economic Development Canada, and the need for these ministries to better understand the role of all stakeholders in the agri-food supply chain, which includes small, mid-size and large grocers.

Grocers and their partners in the agri-food supply chain continue to incur huge costs from the inconsistent rules and regulations and the lack of harmonization in standards and increasing red tape.

Speaking of regulations, let me address a question that was asked by members of this committee regarding the proposed grocery code of practice.

As a member of both the Retail Council of Canada and the Canadian Federation of Independent Grocers, both of which serve on the FPT code steering committee, I can attest to the hard work under way to develop a made-in-Canada code, one that reflects the unique nature of our country and its agri-food sector, and one that is national, inclusive of all supply chain partners, reciprocal, mandatory, enforceable and non-regulated.

Speaking on behalf of many of my colleagues, I would ask that we avoid referring to it as the “retail fee code”, but more accurately refer to it as the “grocery code”.

Finally, I would urge this committee to support the ongoing work of the FPT industry steering committee. It has taken time to develop a framework and ensure that there is extensive stakeholder engagement, but I believe you would agree with me when I say that no code would be better than a bad code. We all want a good code, one that will ensure stability, healthy competition and fair negotiations, sustained growth and a thriving agri-food sector in Canada, and also one that doesn't add costs and complexity to the business, which would ultimately drive up the cost of groceries for consumers.

In closing, together with government, we must enable the Canadian food industry to build a sustainable food supply system, with competitive pricing for consumers, by levelling the playing field between domestic businesses and multinationals so that Canadian businesses can compete. This includes investing in new technologies and innovation, and investing in ways that enable our sector to attract and retain a skilled workforce that can meet the demands of today and tomorrow. We must guard against over-regulation and red tape.

If there is a lesson we have learned during the events of the past two years, and more recently during the catastrophic climate events that happened in British Columbia last November, it's that when we truly partner together to solve problems, we can move mountains overnight, literally.

To be successful, we must together collaborate and commit to innovate with urgency.

Thank you.

[The Chair, Liberal, Kody Blois]

Thank you, Ms. Dickson Olmstead.

Mr. Caron, you have the floor for five minutes.

[Martin Caron, General President, Union des producteurs agricoles]

Thank you, Mr. Chair.

I thank the members of the committee for inviting me to testify today.

My remarks will focus on two points, namely the labour shortage and the fluctuating cost of inputs.

On the labour front, temporary foreign workers, or TFWs, are essential workers in the agri-food sector and they are critical to the food security of Canadians. The pandemic has shown just how important they are.

The unemployment rate is 5.5% in Canada, and 4.5% in Quebec. Farm production, however, is increasing by 8% per year. In some areas such as the Chaudière-Appalaches region, the unemployment rate is 4%. The labour shortage is expected to last another 10 years. This explains the 10% per year increase in the number of temporary foreign workers. As this number will continue to grow, it's essential that the program's administrative requirements be reviewed.

Employers prefer to hire the same workers every year, for the same period and the same duties. Applications for labour market impact assessments, or LMIAs, should therefore be valid for three years. This would be a quick and practical way to reduce the administrative burden. It would reduce delays and time wasted at each of the many steps in the process. Every setback in the process can potentially delay the arrival of workers, and even increase the risk that they won't arrive at all.

At this point we have to deal with three different programs. We recommend reducing the number of programs and simplifying the paperwork. On several occasions we have tabled a sample form that is six pages long instead of the current twelve.

We also recommend that you do away with the National Commodity List for the seasonal agricultural workers program. Simply refer to the definition of "primary agriculture" set out in the Immigration and Refugee Protection Regulations. It took 10 years for maple syrup production to be added to the list, and several other industries are still missing, including rabbit breeding and forage production.

There is another issue to consider. Small farms are not able to offer TFWs a 40- to 50‑hour work week. The rules should be changed to allow producers to share a worker's hours. Workers could split their time between two farms, depending on their needs and priorities. They could, for example, milk cows on one farm in the morning and on the other in the evening.

With regard to the second point, fluctuating input costs, if you go back a few years you'll realize that we can't count on the certainties of the past in the future. The U.S.–China trade war has made it clear that the world's major agricultural powers are interdependent. These countries all have a role to play in the global agri-food supply chain, including Canada's. The pandemic and the war in Ukraine have confirmed this. The idea that all links in the global supply chain will be dependable in the future has been put to rest.

The impact of this new reality can best be described in one word: volatility. Current agricultural commodity prices were the first to experience volatility and it has now spread to inputs. Fertilizer prices have doubled and fuel prices, including diesel, have risen by 24% in 12 months. The prices of plant protection products, packaging and plastics have also risen faster than inflation over the past year. Add to this the impending rise in interest-related expenses due to the recovery announced by the Bank of Canada. All of these items account for 25% of farm operating expenses. If you include food-related expenses, such as grains and feed, you have 35% of expenses rising faster than inflation.

The solution to this problem may seem complex, but in reality it's very simple and already almost within reach. You need to enhance the AgriStability program. The program was designed to handle exactly this type of situation. It's designed to deal with fluctuations in operating margins. In the past, these fluctuations were generally caused by price volatility in the markets. The volatility of input prices in recent years, and even in recent months, may generate margin declines that will require AgriStability. However, in its current form, the program is unable to adequately support farms experiencing margin declines due to rising input costs.

In order for this program to step in, the margin has to be 30% lower than the historical margin.

[The Chair, Liberal, Kody Blois]

Mr. Caron, I'm sorry, but your time is up. I know that all committee members want to ask you questions.

Mr. Epp, you have the floor for five minutes.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you, Mr. Chair, and thank you, witnesses, for your excellent testimony.

I'd like to begin with Ms. Dickson Olmstead. You referenced in your testimony the creation of a grocery code of conduct for a fair and equitable process down the line.

On March 8, a large retailer sent the following letter to a food processor in my riding. I'm just going to read the one relevant paragraph. Note that this was from three weeks before the potential CP lockout or strike. It says that in the event that a CP labour dispute causes service interruptions, it's the retailer's expectation that freight will continue to be delivered on time to service its stores and its customers. The letter also says there will also be no exemptions from fining due to late POs as a result of any rail issues.

This letter was written by a retailer, I'm told, that has an extensive history of using fining with its suppliers. Would a voluntary, non-regulatory code of conduct influence the existence of threatening letters such as this, or would there be no effect at all?

[Julie Dickson Olmstead]

That's a great question. I'm familiar with the retailer who wrote that letter.

I'll speak first to the intent of that letter and then I'll answer as it relates to the code. The letter you referred to was intended to be a way of allowing for a dialogue to occur between the retailer and the supplier community, so that everyone was aware of the need to appropriately plan and, more importantly, appropriately communicate should there be disruptions to the supply chain that needed to be managed otherwise.

That would be my comment about the substance of that letter. I wouldn't have thought of it as particularly threatening, but rather as a way to open the door to a dialogue and prevent some of the issues that have occurred, in particular in the west, where we routinely have no-shows in our deliveries and there is a lack of communication and issues with constraints on our docks when we're expecting shipments that simply don't show up for one reason or another.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you. I know that the processor in question took it as a threat, given the statement about there being no exemption from fines.

Mr. Chair, I'd like to cede the rest of my time to the member for Provencher.

[Ted Falk, Conservative, Provencher, MB]

Thank you, Mr. Chair.

Thank you, witnesses, for your presentations. They're very helpful to our current study on supply chain challenges.

I'd like to start with Mr. Campbell from the Keystone Agricultural Producers.

Mr. Campbell, you indicated that rail capacity was a significant issue for prairie farmers. Can you tell the committee more clearly what inventory levels are like at grain elevators across the Prairies?

[Bill Campbell]

In terms of railway transportation and how dependent we are on it to move our products to market, in 2019 to 2021 we exported 47 million tonnes of grain. It's anticipated that may reach 63 million tonnes by 2030. If we are to achieve those goals, we will need to be able to ensure a very time-effective transportation system.

Currently, under the grain plan, the railway transportation system compiles a forecast for moving forward on grain transportation. Currently we are seeing that it is not being followed and we are sitting with high levels of grain inventories at Manitoba terminals. We are concerned that if we have a traditional average crop, that will have a significant impact on our ability to move our products to market.

[Ted Falk, Conservative, Provencher, MB]

Thank you very much.

You also talked about the increase in the price of crop inputs. I met with the Young Cattlemen's Council this last week, and they told me that feed challenges are also a problem—not only accessing and acquiring feed for their cattle but also the price of it. It's almost not affordable to feed cattle. Could you comment on that a little, and on how supply chain issues are affecting the price?

[Bill Campbell]

As we have encountered a drought in western Canada, the supply of feedstocks has become quite apparent. We are getting closer to the end of the feeding season, but there are producers who are having issues acquiring alternative feed sources. We have utilized every means possible: outside sourcing of feeds, salvage crops and just utilizing anything green at a particular point in time.

I agree with you that some of these alternative feed products have become uneconomical for the feeding of livestock herds, so there is a financial impact that may be felt on producers as we move ahead. We have done a very good job of adapting to the situation, but there is the potential for an economic crisis within the livestock industry because of the high cost of feeds and alternative feed sources.

[The Chair, Liberal, Kody Blois]

Thank you very much, Mr. Campbell.

Mr. Falk, that's six minutes.

We now have Mr. Drouin for six minutes.

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

Thank you very much, Mr. Chair.

I want to thank all the witnesses appearing before the committee today.

My first question, which is for Mr. Caron, is about foreign workers transferring from one sector to another. There are some concerns about that.

Mr. Caron, I understand that you agree with allowing foreign workers on one farm to go work on another.

Is that correct?

[Martin Caron]

That's right. We're talking about worker mobility, allowing workers to move from one farm to another, staying in the agricultural sector.

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

The Union des producteurs agricoles (UPA) represents some really good dairy farmers in Quebec.

Mr. Caron, you stated that workers could milk on one farm in the morning and then travel to another farm in the evening to provide that same service.

Are your members telling you that even if farmers want some downtime, they often can't do it because there is no replacement service in the farming industry?

Foreign workers would provide that service, because they could go and do the work on neighbouring farms. I think that's also a factor to consider.

Is that right?

[Martin Caron]

That's right. The need to give farmers that break is one of the important factors to consider. We mustn't forget the issue of development in outlying rural areas, where people have needs.

Smaller operations are not always able to hire full-time workers. If the employees could work for two or three farms, it would keep these operations in our rural areas afloat and contribute to food self-sufficiency in Canada.

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

You also recommend that LMIA applications, which prove that you need temporary foreign workers, be done every three years rather than every year, because you don't find any more workers from year to year.

Can you tell us more about that?

[Martin Caron]

Yes, we need that. Right now, we have to apply each year. In our opinion, the process really needs to be streamlined so that we can apply every three years.

Administratively speaking, we need to cut down on paperwork. We recommended that the number of pages in the form be reduced from 12 to 6, which would eliminate 24 very repetitive questions.

Farmers are being asked to be more and more efficient. However, we would like to see systems that are as efficient and flexible as possible within the established framework.

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

My riding is right at the Quebec border, where the sun rises in Ontario.

What are the costs associated with paperwork when you have to prove that you can't find workers in the Vaudreuil area, for example?

What does it mean to farmers to have to go through this process again each year? Is there a cost attached to that?

[Martin Caron]

The administrative requirements involve substantial costs.

We represent horticultural producers and vegetable growers who grow asparagus, onions and so on. The first real problem they encounter comes when they need to buy their seed, whether it's for produce or horticulture. They have no guarantee that they will have workers in time to do the seeding.

This leads to insecurity, and that's what we are trying to avoid. I've had farmers tell me time and time again that they have asked for 15 temporary foreign workers and been assured they will get six, but they aren't certain they will get the rest.

That's why we're asking for less paperwork, because naturally there are costs associated with it. If we want to be more efficient, we need to reduce costs.

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

My next question would be for you, Ms. Dickson Olmstead, with regard to your opinion on the grocery code of conduct and how that relates to supply chain issues. Is there a link that's directly related to the issues your members, or the companies you represent, are having with regard to problems with supply chain issues within your industry?

Also, just before I give it over to you, you've proposed a non-regulated approach, so that's a voluntary code of conduct. Is that correct?

[Julie Dickson Olmstead]

That's correct. Yes.

Yes, a mandatory.... I'm sorry. I'm getting a lot of echo there.

We proposed a voluntary...a mandatory code that is non-regulated. That's correct.

To answer your question as to how we think a code would satisfy issues as it relates to supply chain constraints, I think that a code built on transparency, collaboration and reciprocity, where there's a good, solid understanding of the way we do business, is never a bad thing. It's always a good thing, but it needs to be something that industry works on together and collectively solves together, so that we don't inadvertently end up with language that gets in the way of innovation, the speed at which we have to move or the ability to collaborate and adjust, as we've needed to do over the last two years in particular.