Agriculture Committee on March 24th, 2022

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

Mr. Campbell, in the 45 seconds I have left, are there any thoughts you'd like to add on that same line of questioning?

[Bill Campbell]

Yes.

With regard to that, we need to ensure there is a competitive market and, as we move forward, any impediments to having competition for the supply of inputs need to be closely examined through the Competition Bureau.

I also believe that there's an element of potential for more local processing so that we can reduce our carbon footprint on the movement of products. We need to entertain that component of value added in a regionalized area.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. MacGregor and Mr. Campbell.

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

[Richard Lehoux, Conservative, Beauce, QC]

Thank you, Mr. Chair.

I'd like to thank the witnesses for being with us this afternoon.

Mr. Caron, could you send us this infamous form that has been reduced from 12 pages to six? It would be interesting if we could recommend in our report that this form be adopted. I like it when we simplify paperwork.

Along the same lines, we received the Minister last Monday. She mentioned that the need to recognize the problems of owners and make it easier for them to bring in immigrant workers.

Along with the redesigned form, could this be included in our recommendations, as well as the proposal that LMIAs be valid for three years instead of one? I think these would be very important things to add to the report.

Could you send us that?

[Martin Caron]

Certainly, Mr. Lehoux.

We'll be pleased to send you the form. In fact, we've already sent it to members of the Standing Committee on Citizenship and Immigration. We'll be happy to send it to you, too.

[Richard Lehoux, Conservative, Beauce, QC]

Okay.

As for the possibility of allowing temporary foreign workers to be transferred from one farm to another, it might be appropriate to provide us with comments and clarification on this. Currently, concerns have been raised in my riding by producers about the poaching of temporary foreign workers by some companies.

Current regulations may need to be adapted to address this issue.

Do you agree?

[Martin Caron]

Yes, I agree with you. This needs to be corrected.

There was a slowdown in the fall, but the government and other authorities still allowed us to get support quickly.

Poaching has an impact on the ground. As I was saying, it poses risks to producers as well as causing uncertainty for them. The situation is alarming.

[Richard Lehoux, Conservative, Beauce, QC]

So it would be important to regulate that and recognize the problems businesses are experiencing, as the Minister said.

Ultimately, it would be appropriate to increase the validity of LMIAs from one year to three years to ensure that foreign workers are working in companies that follow certain rules.

Is that right? Is this part of your recommendations?

[Martin Caron]

That's right.

We talk about foreign workers, but in many cases, these workers become members of the family. Producers even decide to visit these workers in their own country. A real community is being created. That's why we have to extend the validity period from one year to three, and perhaps even longer. The process needs to be simplified for the benefit of the worker and the producer.

[Richard Lehoux, Conservative, Beauce, QC]

Thank you, Mr. Caron.

The committee recently re‑tabled its report on processing capacity. We would like to get positive responses from the Minister on everything related to temporary foreign workers as there is a significant labour shortage. You mentioned earlier that the unemployment rate in the Chaudière-Appalaches region was 4% and that it was less than 3% in Beauce. So clearly there is a dire need. So the issue of temporary foreign workers would be really relevant, because we have leading processing companies.

I'm going to talk about the other point you made about input price volatility. You suggested raising the threshold of the AgriStability program from 70% to 85%. This recommendation was included in our report, “Facing the Unexpected: Enhancing Business Risk Management Programs for Agriculture and Agri‑food Businesses”. No concrete action has been taken.

We understand that agreement is required from all or a majority of the provinces to move forward.

In terms of the agriculture sector in Canada, is there any way to agree on a way to work so that provinces that want to can make this change?

Could we all work together in this regard?

[Martin Caron]

One of the things we've been discussing is the flexibility of the programs with our partner, Mr. Campbell, who is here today, and with representatives of the Canadian Federation of Agriculture. We've talked about how we can address that.

Our organization represents all producers. There may be some programs that apply across Canada, but we would like them to be flexible.

I think we can agree. Given what we're going through right now, if we don't want to lose businesses, we need to put programs in place quickly.

I'd like to say that, right now, businesses in rural areas are being put at risk, whether because of the labour shortage or financial problems. We really don't want to lose these businesses, and I'm sure everyone on the committee—

[Richard Lehoux, Conservative, Beauce, QC]

Thank you, Mr. Caron.

[The Chair, Liberal, Kody Blois]

Mr. Louis, you now have the floor for five minutes.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

Thank you, Mr. Chair. I appreciate that.

I want to quickly give thanks and appreciation for the IT support just when we got lost. I had a phone call from my team to make sure everything was all right. They are very thorough, and that allows us to be here in various parts of the country at the same time, so thank you to the IT department for making this happen.

Also, in both official languages, merci beaucoup to our translators for allowing me to talk to everybody at once.

I thank all the witnesses for being here, but I thank you especially, Mr. Campbell and Monsieur Caron. Please extend our thanks to your members. You have been dealing with the pandemic, dealing with droughts and dealing with flooding in British Columbia. We've heard about the blockades at some of Canada's critical border crossings, the invasion of Ukraine by Russia, and all of these things, and yet still you persevere, and food is still on our tables. I want to thank your members on behalf of a grateful nation.

My friend and colleague, Mr. MacGregor, mentioned resiliency.

Monsieur Caron, you mentioned that support was needed to remain competitive, and that's one of the things we want to do. We've heard a lot on the supply chain. One thing I want to focus on now is managing food waste on farms. When you're the farmer who's growing the food, any product that goes to waste before it even reaches market is going to be bad for your bottom line. I'm confident that farmers are doing everything they can to ensure that as little as possible of the food grown is wasted. That is essential for our supply chains, but reducing food waste and getting more of the produce to market would be one of the best ways to improve profit margins. With study after study, we have seen how small profit margins can be for farmers.

What I'm looking to learn is this: Are there ways farmers can manage food waste on farms, and more importantly, are there ways we can support those measures, given those thin margins you're working with, as far as planning crops or harvesting goes?

Mr. Campbell, go ahead.

[Bill Campbell]

That's a very good question, and it hits home as we work on the landscape. I am a primary producer and I am certainly aware of waste. I'm quite conscious of that part.

Any of our products that are not utilized in the food system are then utilized in supplementation for livestock. We have that alternative with that, be it heated grain or out-of-storage grain or other components. We need to ensure that we have a diversified portfolio that is economically viable so we can utilize all of these products. We see the utilization of dried distillers' grain in the ethanol process. We also see some of the other products, such as in the protein strategy in Manitoba. We utilize some of the pea milk, as they call it, as a protein.

One of the things that are very important in ensuring that there is no food waste would be the removal of the carbon tax on grain drying and the heating of barns for livestock. If we can get our commodities into a safe storage position, we will not have that potential for food wastage and degradation and the decline in value of product. We are very proud of what we do, of growing the best product we can, but if we don't have the tools to ensure that safe storage and delivery.... I think you need to realize that our products are delivered 12 months of the year to export positions and that there is that storage component to that. In Canada we do not always have the most favourable harvest conditions.

To your question, yes, we do the very best we can, because we need to secure the most revenue we can on our farms.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

Thank you.

Monsieur Caron, I will ask you the same question. Are there things that you can do to reduce food waste and programs we can use to help you?

[Martin Caron]

I'll add something to what Mr. Campbell said about processing, which could be done on a local basis. We need to support and invest in the processing sector. The pandemic has shown us how enthusiastic Canadians are about Canadian products. I think we need to put in place local processing systems.

One example is organic production, which we don't talk about enough. There's a lot of demand for organic products, but there isn't enough supply. There are many imported organic products. We need to support local production, such as organic production, and have local processing plants. When we invest in this, we also invest in sustainable development.

[The Chair, Liberal, Kody Blois]

Thank you very much, Mr. Louis and Mr. Caron.

Thank you, witnesses, for your time here.

That ends our first panel. We are going to move quickly to our second panel. Please, members, do not go far.

To all our witnesses, thank you for your work, for your leadership in agriculture and for contributing to our study. Have a great day.

[The Chair, Liberal, Kody Blois]

Colleagues, we're back, and we're going to get started with the second panel.

Thank you to all the witnesses for being here today. Each of you has five minutes for opening remarks.

We have Mr. Mussell here and, as a reminder to committee members, I think some of you want to ask questions. Unfortunately, we're going to have time for only one round of questions, for about 24 minutes.

We're going to have five minutes for opening remarks.

I'm going to start with Mr. Sands. It's over to you for five minutes, my friend.

[Gary Sands, Senior Vice-President, Canadian Federation of Independent Grocers]

Good afternoon. Thank you for your invitation to appear today. My name is Gary Sands. I am the senior vice-president of the Canadian Federation of Independent Grocers.

There are approximately 6,900 independent grocery stores in Canada, and in some provinces, such as this one, Ontario, independents actually account for the majority of grocery stores.

Some of you may have read the op-ed article I wrote in the Toronto Star this past weekend on food affordability, and for those of you who did, please forgive me for repeating some of the points I made in that article.

As you know, Canada is like a tapestry. It's woven together from a myriad of urban, semi-rural, rural and remote communities. We need to bear in mind that in many of those rural and remote communities, an independent grocery store is often the only grocery store. That context is extremely important when we talk about issues of food affordability, fair supply, uneven fluctuations in the cost of inputs, labour shortages and the spiralling costs of things like trucking and fuel.

Over the course of the last two years and dealing with the challenges of a global pandemic, the supply chain is probably experiencing what could best be described as combat fatigue. We weathered catastrophic flooding in British Columbia, resulting in significant damage to infrastructure and transportation corridors. Omicron followed up with another blow, as it ripped through the supply chain, causing widespread labour shortages. In roughly the same time frame, we had the so-called “freedom protesters” set up blockades at some of our critical border crossings, resulting in more supply chain disruption and delays and higher costs for our members.

Of course, the most recent hit will soon be felt as a result of the invasion of Ukraine by Russia, which we know will significantly impact costs for a range of products. As I have said before, the supply chain stakeholders could be forgiven for thinking that Vladimir Putin and the four horsemen of the apocalypse have decided to forge new careers in the food industry.

The cumulative impacts to the entire supply chain that arise from these challenges are not always borne entirely equally. We know that many of our members are seeing cost increases from suppliers in the range of 25% to 30%. They are seeing trucking costs more than double, and fuel surcharges have gone through the roof.

Again, going back to my earlier comment about independents being the only grocery store in many communities, we have to remember that food security for those areas is very much predicated on the ability of those grocers to access fair supply at affordable prices. Retail grocers operate on overall averages of 1.5% to 2.5% lower than other sectors, yet they are dealing with significant increases in prices for dairy, eggs, bread and meat. The rationale given by all of these sectors is that costs are rising—yes, they are—but they are rising for independent grocers too. Who do we pass these costs on to? There is no alternative but to pass them on to the consumer.

This month, a study commissioned by the Beef Farmers of Ontario found that while the price of beef has risen significantly, the source of those increases is getting lost somewhere between gate to plate. According to the study, while farmers' share of profits fell from 41% in 2016 to 39% in 2021, “Grocers and butcher shops fared worst of all...earning an eight per cent share of the profit margin in 2016, to just over two percent in 2021.”

As the last link in the supply chain, and the one who interfaces and is sometimes on the firing line with the customer, the resistance to increasing prices by grocery stores is commendable, but for small and medium-sized independent grocers, it's simply not sustainable. Based on the shared experiences of the last two years, governments and industry, I believe, recognize that they need to work collaboratively together to develop long-term solutions to systemic issues and vulnerabilities that have become very apparent in our supply chain.

One of the last areas that I heard discussed on the last panel and want to address is that of a grocery code of conduct. I want to emphasize that it is a grocery code, not a retail code.

I am one of the members of the steering committee currently working on that industry-led process, so I'm bound by a confidentiality agreement and I have to be careful about what I say. I am raising this issue only because it has been raised with this committee by another organization that is also a member of the steering committee and I would like to expand on those comments.

CFIG has been advocating for a code of conduct for longer than any other association in Canada. We have done so because the Competition Bureau has never been a realistic or helpful instrument for our members in dealing with unfair competition and, in our view, excessive consolidation. We support the concerns that suppliers have with respect to fines and penalties imposed on them by chain retailers. That highly concentrated market has resulted in distorted and sometimes unfair market practices. However, there is also a power imbalance between the independent grocers in your ridings and the large suppliers.

Price increases are often imposed on our members, not negotiated, and often not even explained. We have fought hard—and we shouldn't have had to fight hard—in the last two years to secure fair supply for some essential products. That's not equal supply, but fair supply.

A grocery code of conduct is not just about protecting or helping large, multinational suppliers. It needs to ensure that Canada's small and medium-sized suppliers and processors, and its small and medium-sized retailers, have an instrument that can provide more transparency and fairness in the industry.

We also support a mandatory code that is enforceable, but we do not support a legislated code, which would have to be enacted in every single province—

[The Chair, Liberal, Kody Blois]

Thank you, Mr. Sands. I apologize, but we're at five minutes and we have to keep it tight.

We'll go now to the National Cattle Feeders' Association, with either Mr. Bekkering or Ms. Tranberg, for five minutes.

[James Bekkering, Chair of the Board, National Cattle Feeders' Association]

Thank you, and good afternoon. I am James Bekkering, chair of the National Cattle Feeders' Association and a feedlot owner in Taber, Alberta. I am joined by Janice Tranberg, president and CEO of the National Cattle Feeders' Association.

NCFA was established in 2007 as a unified voice for Canadian cattle feeders. We are a business- and solutions-oriented organization focused on sustainable growth and profitability, improved competitiveness, and industry leadership and partnership.

Agricultural supply chains are under tremendous pressure and are negatively impacting national food security. In the beef industry, much of the current stress stems from two challenges: securing critical farm inputs, especially feed, and keeping cattle and beef products moving smoothly through the supply chain.

Last year's drought was unprecedented, causing significant shortages of livestock feed and resulting in a surge of feed imports from the U.S. Increased feed demand, along with fires and floods in B.C., has exposed weaknesses in our transportation systems, such as inadequate unloading infrastructure and lack of storage facilities.

Transportation bottlenecks are magnified by a severe trucker shortage, which is expected to triple by 2023. In addition, recent protests that stopped traffic at the Canada-U.S. border and labour stoppages at CP Rail have added further stress to the supply chain. The recent CP Rail labour disruption caused severe angst on my farm and on many others.

In Alberta, we have only a one- to two-week supply of feed grain available, and cattle cannot easily switch their diet in a healthy way, even if other feed grains are available. It was difficult to watch my family farm go through this—we wondered how we would feed our animals, especially when CP Rail and the union had the option to enter into binding arbitration and allow rail movement to continue. While we recognize the right of Canadians to strike, the Government of Canada must declare rail an essential service when animal welfare is on the line.

[Janice Tranberg, President and Chief Executive Officer, National Cattle Feeders' Association]

This year magnified how critical our supply chain is for agriculture. Last fall, we started to see the impact the drought was going to have on cattle feeders. The entire value chain was not able to fully comprehend the amount of corn and dried distillers grains we were going to require, or the importance of timely delivery. In 2020, Canada imported around 600 railcars of feed from the U.S. In 2021, that rose to over 8,000 railcars, and we've already surpassed this number in 2022.

Train delays depleted our supplies early in 2022 and, just when we thought things were running smoothly, the border was blocked by protesters. This meant not only that beef and live animals could not exit or enter our country, but also that dried distillers grains, which are needed as a feed protein source, were prevented from entering Canada. DDGs are primarily delivered by truck. Therefore, the border closure added another devastating blow. Now, after the CP Rail strike, there is no feed buffer left. Without regular shipments, most feedlots would have been out of feed within one to two weeks, leaving animals compromised.

We appreciate that the agriculture standing committee is looking into supply chain issues. For the cattle sector, this is about more than just the CP Rail strike. It's about the Government of Canada ensuring that essential supply chains are not blocked.

The government must declare railways an essential service. There are no alternatives for the delivery of essential supplies, as we have just outlined. It's not only the railways. Border crossings and other critical supply chain routes cannot be blocked. Any impediment to.... The flow of critical goods necessary for the health, welfare and safety of Canadians must be upheld.

Second, we need the Government of Canada to create an infrastructure funding envelope dedicated to rural infrastructure and the transportation needs of agriculture. Beyond a focus on rural broadband, agriculture desperately requires essential investments in hard economic assets, such as roads, bridges, local transportation networks, and improved rail transfer, storage facilities and infrastructure.

Thank you.

[The Chair, Liberal, Kody Blois]

Thank you very much.

We're going to now move to Mr. Hemmes—I think I'm saying that right—for five minutes.

[Mark Hemmes, President, Quorum Corporation]

Thank you, Mr. Chairman and committee, for the invitation to participate in today's meeting.

I'm Mark Hemmes, the president of Quorum Corporation, which is based in Edmonton. Quorum Corporation has been responsible for monitoring Canada's prairie grain handling and transportation system on behalf of Transport Canada and Agriculture and Agri-Food Canada since June 2001.

The grain monitoring program reports to the government and to industry on the efficiency, reliability, structure and operation of the grain handling and transportation system, as well as any impacts that change may have on producers and the industry.

The GMP tracks grain from the farm gate to the destination at port, including the performance of port vessel activities. We collect industry data and develop and maintain over 250 key measures on the GHTS and publish weekly, monthly, quarterly and annual reports on the grain handling system, in addition to ongoing analysis and discussions with industry stakeholders.

I'm not going to repeat many of the excellent points that have been made by some of the previous presenters, but I do wish to expand on some of the issues that have been raised.

First, a continued focus on infrastructure improvement throughout Canada's transportation network is imperative to Canada maintaining its place in the global agricultural marketplace. The grain industry has enjoyed an annual volume increase of 3% a year over the last eight to 10 years, and the grain companies have invested well over $4 billion in that time, adding to and expanding the capacity of their portion of the supply chain. In order to remain competitive, the balance of the supply chain partners must continue to invest in their infrastructure to match that rate of growth.

Second, the shortage of empty container capacity is crippling an increasing proportion of Canadian specialty grain markets that have successfully been developed over the past 15 years, and is putting those markets at a risk of loss. An important point is that in Canada we have an extreme lack of detailed short-term data on container movement and performance. The data that is available comes more than six months after the fact and describes only the traffic moving from port position, without any information on where the traffic originated. Therefore, the inability to determine the impact of the shortfalls or disruptions in the supply chain cannot be examined in detail until as long as six months after the fact. In contrast, we have extraordinary detail on the movements and effectiveness of bulk movement and export movements.

The lack of data and information on container movements is a critical issue for Canada's container exporting sector, in particular in times such as we're experiencing right now, with shortfalls in available empty capacity and extended service delivery times. At present, we can refer only to anecdotal evidence until the actual data becomes available.

Thirdly, the resilience and recoverability of the railways after the unplanned service disruptions they will always incur is another critical factor that impacts Canada's reputation as a reliable and consistent supplier of products into the global markets. At issue, and what draws the consternation of the rail shippers, is the length of time it takes to recover from outages, which can often extend to months, as in the case of the present post-B.C. flood period.

Regarding resilience and recovery, the measures that come from the GMP and the Ag Transport Coalition provide good examples of how data and statistics can help identify problems in the supply chain. The graph that was provided in the document we've sent on uses GMP and ATC data to show the causal relationship when railways do not meet shipper demand and how it impacts the port grain terminals and may cause vessels to stack up waiting for that grain to arrive. The graph portrays the comparison over the last three and a half years, where six times we can see the almost immediate effect of shortfall in shipper demand, causing terminals to run out of cars to unload, ultimately lengthening the time vessels wait and therefore causing vessel lineups to grow, consequently filling the anchorages in the Vancouver port area.

We see this even in the current crop year, where volumes have been reduced by 40% as a result of the summer's drought conditions and grain vessels should be much lower. Despite this, the railways have not been able to maintain consistent service or supply adequate car supply to meet demand, and the vessels that are in port are experiencing much longer wait times and creating record levels of vessel demurrage. Should there have been a normal-sized crop this year, as Bill Campbell mentioned earlier, this situation would have been very much worse.

While shortfalls in car supply and cars available for unloading—