Agriculture Committee on May 7th, 2024

[The Chair, Liberal, Kody Blois]

I call this meeting to order.

Welcome to meeting number 102 of the House of Commons Standing Committee on Agriculture and Agri-Food.

I will begin with a few reminders.

Today’s meeting is taking place in a hybrid format. The proceedings will be made available via the House of Commons website. Just so you are aware, the webcast will always show the person speaking, rather than the entirety of the committee. Screenshots and photographs of screens are, of course, not allowed.

I'm going to remind colleagues that we have taken some additional measures to protect the health and well-being of our translators. For the witnesses who may not have been privy to this yet and who are in the room—I guess that's you, Mr. Forest—if you're not using your headset, we ask that you keep it away from the microphone.

Colleagues, please make sure you wait until you're recognized so that we don't have multiple microphones in play at the same time. I know that shouldn't be a problem, but we'll make sure that we keep the health and safety of our translators top of mind.

We have a couple of substitutions today.

Welcome back, so to speak, Mr. Epp; you are a regular in substitution at least. Certainly you're here for Mr. Steinley today.

We have Mr. Chiang in for Mr. Carr.

Ultimately, Ms. Murray will be joining our committee on the Liberal side, I'm told. We'll look forward to having another voice from British Columbia to join Mr. MacGregor.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Thursday, November 2, 2023, the committee is resuming its study of issues relating to the horticultural sector.

I'd now like to welcome our panellists here today.

First of all, we have Jean‑Philippe Gervais, who is executive vice-president, strategy and impact as well as chief economist of Farm Credit Canada.

Mr. Phil Tregunno, from the Ontario Tender Fruit Growers, is with us by video conference.

We also have with us Pascal Forest, who is president of Producteurs de légumes de transformation du Québec.

Finally, from Sustane Technologies Inc., we have Peter Vinall, president, joining us by video conference.

It's great to have all of you here.

Colleagues, we're going to move as quickly as we can because we have four witnesses in this panel and up to five minutes for each organization.

I'll start with Farm Credit Canada.

Mr. Gervais, you have up to five minutes. It's over to you.

[Jean-Philippe Gervais, Executive Vice-President, Strategy and Impact and Chief Economist, Farm Credit Canada]

Good afternoon, Mr. Chair and members of the committee. Thank you for inviting me to join you today.

My name is Jean-Philippe Gervais. I'm the executive vice-president of strategy and impact and chief economist at Farm Credit Canada, or FCC.

FCC is a federal Crown corporation committed to the Canadian agriculture and food industry. With a loan portfolio of over $50 billion, we support 102,000 customers through over 2,300 employees and 103 offices across the country. We provide financial services, as well as advisory services, management software and knowledge sharing to the industry.

FCC provides broad support to customers in the horticultural industry, which is comprised of greenhouse, field vegetables and fruit sectors. As of March 31, FCC’s total horticulture portfolio was 3,576 customers with $4.77 billion of total owing. This represents 6.3% of FCC’s overall customer base and 9.4% of our portfolio balance. Regionally, British Columbia, Ontario and Quebec contribute the largest amount to the horticulture industry.

Recent production challenges across the country have impacted FCC customers and the industry. The greenhouse sector has experienced disease outbreaks, which, combined with a tighter profitability environment because of elevated interest rates and input costs, have led to an increase in impaired loans in the sector. In the fruit sector, adverse weather conditions and high input costs as well have led to increases in impaired loans. Overall, these financial challenges are not currently significant at our portfolio level and represent less than 5% of the total owing by the greenhouse and fruit sectors.

FCC is currently offering additional support to fruit and wine sector customers in B.C. who are facing financial hardship as a result of prolonged cold temperatures over the winter and the significant resulting damage to wine vines and fruit trees across the province. In addition, last summer's severe drought and wildfires adversely affected tourism, a critical source of revenue for many wineries in the region. Our 2023 adverse weather customer support program has been in effect since last July.

Customer support is a central part of FCC's business, and we consider a variety of credit and deferral options to reduce the financial pressures on producers. We also provide knowledge to help producers make informed business decisions. For example, we will be releasing the 2023 FCC fruit land value analysis tomorrow, on May 8.

Ontario orchard and tender fruit growers, the majority of whom are in Niagara, are witnessing a period of robust crop quality and strong fruit prices, and the Quebec apple market remains stable. In the Atlantic region, there has been a persistent issue of excess supply in fruit, particularly with wild blueberries, which is straining the market. This demonstrates the wide regional disparity in the horticulture industry, specifically in fruit production.

FCC is committed to not only supporting our customers through these adverse events, but helping all affected persons become more resilient and disaster-resistant in the future.

Thank you for your time. I look forward to answering any questions you may have.

[The Chair, Liberal, Kody Blois]

Thank you very much, Mr. Gervais.

We're now going to turn to Mr. Tregunno, who is with the Ontario tree fruit growers, I believe.

Go ahead.

[Phil Tregunno, Chair, Ontario Tender Fruit Growers]

Thank you very much for the opportunity to speak to you today.

My name is Phil Tregunno. I'm the chair of the Ontario Tender Fruit Growers. Our organization represents all growers of stone fruit and pears across Ontario, with a farm gate value in 2023 of over $85 million.

I myself am a fruit grower. Our family operates 700 acres of tender fruit and grapes in Niagara-on-the-Lake, and we are fully invested in the future. Our farm is right along the Niagara River

With an outdoor crop, we face many weather challenges and rely primarily on crop insurance to provide a safety net. Frost and freeze are our main perils, with an average of 83% of all claims when things like that happen.

Climate change has resulted in more erratic swings in temperatures, and winter was no exception, with warm February and March temperatures, resulting in full bloom from April 7 to 10. That was days earlier than 2023. It's about a month earlier than when I started farming. We used to have blossom time on Mother's Day and now it seems to be a month earlier.

Temperatures fluctuate a fair bit. On the last full moon, we had negative three degrees Celsius. We expected a bit of damage from that, but luckily everything seems to have come through, and we expect a full crop.

Drought and high heat as a result of climate change are also perils that we face. We definitely have a lot of impact as a result of that. At that point in time, of course, we have all our labour and all our inputs for the season in, so it is a very hard hit for farms.

The big part about this is that a lot of this is site-specific. In some of these cases, you can have freezes or hailstorms or whatever in one site, but the nature of Niagara is that there are a lot of smaller farms that are not necessarily adjoining parcels. Site-specific insurance is something that we've been really pushing for. It's something that's really important.

Agricorp delivers production insurance programs, and we're working with them to make changes to the plans to make them more responsive to our particular risks. We believe that rather than whole-farm coverage, one of our real asks is to get into site-specific coverage. We've been blocked on that, for a number of reasons. Some of the case is the funding between the federal and Ontario governments on that.

They've also said that moral hazard is an issue for having site-specific coverage. We've developed the farm management software Croptracker, and we believe that we would overcome any sort of moral hazard with that.

On our use of AgriStability, it also operates on a whole-farm basis and, really, it's disaster insurance. The nature of Niagara is that we grow multiple crops, and to trigger a benefit on a whole-farm basis is less likely in our sector, so AgriStability has not really been too beneficial for us. Our main.... It really is for crop insurance. That's the real need: a good, working crop insurance system.

We've also received funding from AAFC to continue new variety development with a focus on climate change and import replacement. The funding will take us to 2028, and we hope it will result in some heartier varieties that can better withstand frost, freeze, drought and high heat events. The funding also includes life-cycle analysis, carbon sequestration platform, investigation of potential best management practices and reduction of the on-farm greenhouse gases.

We continue to work at the provincial level for a Niagara region-wide irrigation system. Some of us who are close to things like the Niagara River have some real benefit. Other areas have no access to raw water. It's something that we desperately need to produce fruit across the whole area and to mitigate some climate issues. We're looking for federal infrastructure dollars to construct a region-wide system and make upgrades in the Niagara-on-the-Lake system.

Labour is a really key issue for us. It's very seasonal. Lately we've been informed by ESDC that they're going to make some changes to the seasonal agricultural worker program. That program has been there for 58 years, and we feel there is a tremendous amount of oversight to it and it's very beneficial. We're worried—a little more than worried—that ESDC will lump it in with some of the other temporary programs and not treat us the same way as we have been treated over the years with the seasonal aspect of the nature of growing fruit.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. Tregunno.

I apologize. We're just over time. I gave you a little bit of extra time. I appreciate your being able to make the sentiment on the labour piece.

I'm being advised of one thing by our clerk. I note that you have a background that is blurred, and it seems to be slowing your connection speed a little bit. As we go to our other witnesses, maybe you can play around with it or work with our technical team. We would appreciate that.

Mr. Forest, the floor is yours for five minutes.

[Pascal Forest, President, Producteurs de légumes de transformation du Québec]

Thank you, Mr. Chair.

Ladies and gentlemen, thank you for taking the time to listen to my concerns about the future of Canada's horticulture sector.

My name is Pascal Forest, and I am president of the Producteurs de légumes de transformation du Québec. I also sit on the board of Fruit and Vegetable Growers of Canada and am a fifth-generation horticultural producer.

The current risk management programs no longer work, mainly as a result of climate challenges. Given economic developments and the vagaries of weather, the effectiveness of those programs and the ad hoc assistance made available to horticultural producers leave much to be desired.

This is evidenced by the events that occurred in Quebec last summer, when the major horticultural regions were hit by historic rains. On August 4, we sought emergency assistance from the Quebec government, which then requested that the federal government activate the AgriRecovery program in response to the disaster. Unfortunately, however, we are still waiting for a response more than nine months after making that request. The situation has had substantial financial consequences for many horticultural entrepreneurs.

In the short term, the government must increase its disaster responsiveness and improve the ability of its risk management programs to adapt to the instantaneous and substantial impacts of climate change.

Food resilience concerns must also be taken seriously. It would be irresponsible to think that the population of Canada isn't exposed to potential fresh fruit and vegetable shortages as a result of damage caused by climate incidents and the major production losses they more frequently cause. It would also be delusional to think that existing programs, in the medium and long terms, can cover climate-change-related costs or increase adaptability to a degree commensurate with those significant impacts.

The economic profitability of our horticulture farms has also come under even more pressure now that the retail and wholesale industry has been concentrated in recent years. Five players now hold a 75% market share in Quebec's retail sector, and the vast majority of food wholesalers belong to foreign interests.

The imbalance of market power among major retailers and producers has increased that pressure. Production costs are rising as retail and wholesale giants strive to cut prices by forcing us to compete with foreign products. However, since the societal and environmental standards of the exporting countries are, in many instances, more permissive, this leads to unfair competition.

The Canadian government must do a better job of protecting horticulture producers. If the major players refuse to sign voluntarily on to a code of conduct, such a code must sooner or later be imposed. As far as I'm concerned, the ultimatum for that will come at the end of May. This situation has dragged on too long.

The Canadian government must also be more energetic in its efforts to demand reciprocal standards for foreign products.

To sum up, since the population of Canada is now 40 million inhabitants, we must have an adequate number of farmers who want to continue farming. I will close on a personal note: My children and nephews aren't convinced that their professional future includes taking over the business that is the result of the work of five generations. Urgent action is required if they are to change their minds.

Thank you.

[The Chair, Liberal, Kody Blois]

Thank you very much, Mr. Forest.

Go ahead, Mr. Vinall.

[Peter Vinall, President, Sustane Technologies Inc.]

Good morning, Mr. Chair and members of the committee.

My name is Peter Vinall, and I'm the president of Sustane Technologies. This morning I'm joined by Kevin Cameron, our senior vice-president of business development.

Thanks for giving us the opportunity to speak to you today about how Sustane is uniquely positioned to assist the horticulture sector in meeting the government's climate change goals through the reduction of plastics waste and the use of society's organics as a negative carbon fertilizer.

We were founded in 2014, and we're based in Halifax. Sustane is a Canadian clean-tech company, and we're on a mission to improve waste circularity, materially reduce greenhouse gas emissions and have a global impact with our solutions.

Every year Canadians throw away over 2.5 million tonnes of plastic waste. Only 9% of plastic is actually recycled in Canada and North America, and the rest ends up in landfills and in the environment, threatening our health, wildlife, rivers, lakes and oceans.

Certain kinds of plastics can be replaced with biodegradable alternatives. Single-use plastics, however, play a critical role in health care and food safety, among other things. For example, the horticultural sector needs to use plastics to transport goods to markets. While there's a desire to reduce the sector's carbon footprint, there are very few cost-effective or viable alternatives in production, distribution and transportation.

That's where our sustainable solution comes in. At Sustane, we're focused on improving waste circularity by repurposing single-use and end-of-life plastics back into a plastic precursor. We can take end-of-life plastic and put it back into the plastic food chain, so to speak.

Through our proprietary mechanized process, we're able to recycle up to 90% of landfill-destined waste into plastic precursors and negative carbon fertilizer, replacing the current high-carbon processes. We're already doing that in Nova Scotia at our full-scale demonstration plant in Chester, where, in addition to municipal solid waste, we also process plastic from the federal government's ghost gear cleanup program and agricultural waste from farmers.

Just last month we signed an agreement with Wetaskiwin County in Alberta to build a facility there, which will also process some of their agricultural waste, improving the carbon footprint of farming in the province.

We've also signed a memorandum of understanding with Washington state, and we're planning our expansion into the United States.

At a community level, our innovative approach to use waste management reduces a municipality's carbon footprint by up to 10% through the prevention of up to three tonnes of greenhouse gas emissions for every tonne of waste that we would process.

Mr. Chair, Sustane believes that industry needs to be responsible in the use of plastics, but that government must also recognize that for many processes, plastics are the only economically viable material for the immediate future. If the government truly wants to support our agriculture sector, it should be funding circular economy projects that can process horticultural waste and support extended producer responsibility programs to fight climate change.

We should also be working to support the sector through the adoption of new technologies as they become available. Canada has the opportunity to lead on agricultural sustainability by investing in solutions that promote waste circularity. Canada can not only achieve its climate goals without punitive measures on industry but can also help bring forward a mature, made-in-Canada technology that's in high demand around the world.

Thanks again for the opportunity for us to appear. We're more than happy to answer any questions you might have. I hope you have the opportunity to visit our Chester plant in Nova Scotia to see our cutting-edge technology in action.

Thank you very much.

[The Chair, Liberal, Kody Blois]

Thank you very much, Mr. Vinall.

As the proud member of Parliament for Kings—Hants, I invite any Canadian and all committee members to come to Nova Scotia to see our beautiful province, whether it's for Sustane Technologies or otherwise.

With that, we're going to turn it over to questions.

Mr. Epp, welcome to the committee. It's great to have you back. We'll go over to you for six minutes.

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

Thank you, Mr. Chair, and thank you to all the witnesses for their excellent testimony.

I'll start with Mr. Phil Tregunno.

Sir, what's a nectarine, and how long has the industry been growing them in Ontario?

[Phil Tregunno]

Well, a nectarine is a rather interesting story, because most of the varieties are American nectarines that we've transplanted over here and have taken off.

In lots of the other areas, nectarines are basically 50% of the markets—it's 50% peaches, 50% nectarines. We're likely about 30:70 in Canada right now, so it's fairly attractive.

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

What's one of the issues that have been holding back getting that fifty-fifty balance?

I have copies of an exchange of letters from your industry to the CFIA. I understand that the industry has been going through an exercise in grading. Can you explain? I can hardly believe what I read, which is that it has been a 14-year process, and it's not been completed yet. Is that correct?

[Phil Tregunno]

That's correct.

We initially got nectarines brought in as a test. We were told we would have a grade schedule out there. It was supposed to be completed in the last year or two, after 14 years. Instead, we were just sent something that said it would continue on as a test.

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

There's an initial pilot that was started 14 years ago under a different government. Where is the delay?

My understanding is that the industry has actually developed the standards. Is this not a “review, adopt and process” process? Where is the holdup?

[Phil Tregunno]

The holdup is at the CFIA. We've put in all the documentation. The industry has sent everything in to the CFIA, so it just needs approval.

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

When did the industry submit that information?

[Phil Tregunno]

It went in, I would say, four or five years ago, at least, and we were told it would be completed by this year.

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

What is the effect on the supply chain of this delay?

[Phil Tregunno]

Our retailers in that had great concern because they would not be able to advertise the product as “Canada No. 1” as far as the grade is concerned. Even though all our cartons and containers are printed ahead of time, we would have had to somehow redo all those cartons and containers, so we wouldn't have been able to have them labelled as Canada No. 1.

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

Is this a food safety issue?

[Phil Tregunno]

Absolutely not. It's a grading issue. It's things like sizing or marks, or something like that. It's basically to get something across someone's desk and get it accomplished.

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

Has there been any viable reason given for why it's taken four years since the department got all the information?

[Phil Tregunno]

No. There's been nothing, other than it's the Safe Food for Canadians Act that they're working on.

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

Thank you.

I'm going to turn my attention to a colleague of mine from 30 years ago.

Mr. Forest, my French isn't very good, but I'm learning with Duolingo.

My French is marginally better than when we met 30 years ago. I'm working on it.

You listed a number of issues facing the horticultural industry. When you interact with retailers on their choices to bring in imported produce versus Canadian produce, be it fresh or processed—I know our intersection was on the processed side, while presently you're here more in the fresh capacity—what is their reaction to additional plastics burden costs and carbon tax issues that the farmers and producers face? How is that taken into account by the retailers?

[Pascal Forest]

I couldn't answer that question as it pertains to Canada, since I deal solely with the United States for fresh vegetables.

The pressure that producers face definitely won't lower production costs. Every additional requirement will obviously increase costs. Then we're being asked to charge lower prices to reduce the costs for Canadians. However, if our competitors whose products are imported here don't have to meet the same requirements, we'll lose ground every time.