Agriculture Committee on May 30th, 2024

[The Chair, Liberal, Kody Blois]

I call this meeting to order.

Welcome to meeting number 106 of the House of Commons Standing Committee on Agriculture and Agri-food.

I will start 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. Of course, colleagues, screenshots or taking photos of your screen is not permitted.

Pursuant to Standing Order 81(4), the committee will commence its consideration of the Main Estimates 2024‑25: Vote 1 under the Canadian Dairy Commission, Vote 1 under the Canadian Grain Commission and Votes 1, 5 and 10 under the Department of Agriculture and Agri-Food.

I would now like to welcome the Honourable Lawrence MacAulay, Minister of Agriculture and Agri-Food.

Minister, we're both MPs from the Maritimes. On behalf of the committee, I wish to welcome you here and thank you for the work you're doing for Canadian farmers and producers across the country. You have five minutes for your opening remarks.

[Lawrence MacAulay, Liberal, Minister of Agriculture and Agri-Food]

Thank you very much, Mr. Chair. It's wonderful to be back here; it truly is.

I understand you've been busy over the last few months, so I want to begin by thanking you for all the work you have done on behalf of farmers, ranchers and processors right across this country. I've also had a busy few months, so I'd like to provide a short update on what's going on at Agriculture Canada.

On the international stage, we continue to help our producers and processors maximize their opportunities in the global marketplace. Last year, Canada's agriculture and food exports reached a record of close to $100 billion. I know you're all fully aware that I was in the Indo-Pacific back in February to open a new agriculture and agri-food office in Manila. This office will be vital in helping our farmers grow their markets, and it lets the region know that Canada is there and we're there to stay.

Over the last few months, I've also been in Washington to meet with Secretary Vilsack about Canada's agricultural priorities, and I was in Boston to help promote our world-class seafood products at the Boston seafood show. I can tell you that our customers there are looking for more of our world-class Canadian agri-food products. Next week, I will be visiting Iowa and Minnesota to meet with key officials and stakeholders there.

Since we last met, I've made significant funding announcements for the sector.

In January, I joined your committee colleague Mr. Louis to announce $10 million for step five of the local food infrastructure fund, which will support 192 projects. This program is doing an incredible job of strengthening our communities right across the country. I was so pleased to see the program receive an additional $62.9 million in budget 2024 to renew and expand it.

In March, we announced a $177-million extension of the wine sector support program to support our world-class wine industry. Shortly after that, we announced the latest stream of the agricultural clean technology program, which included $97 million to support 162 projects across Canada that will keep farmers on the cutting edge with clean technology.

Our producers have faced major challenges with high input prices and interest rates, which impact their cash flow. As farm operating costs remain unclear this year, farmers have asked us to continue support under the advance payments program. We have delivered by raising the interest-free limit of the advance payments program to $250,000 for 2024. We will also work with industry partners, such as the Canadian Cattle Association, to make sure the livestock tax deferral delivers more quickly and more efficiently for producers in times of need.

Finally, I'd like to update you on the department's main estimates for 2024-25.

The estimates you have before you total some $3.7 billion. This includes over $2 billion to support our programs under the sustainable Canadian agricultural partnership; over half a billion dollars to continue our support of the hard-working dairy, poultry and egg producers under the supply management system; and $250 million to the agricultural climate solutions program and agricultural clean technology program to give our farmers the tools they need to produce the most sustainable food on the planet.

While these are tremendous opportunities in the agriculture sector, we know folks are facing significant challenges. We will keep working together to help put money in the pockets of farmers and to make sure the farmers are able to feed Canadians and the world.

Thank you very much. I'm very pleased to attempt to answer your questions.

[The Chair, Liberal, Kody Blois]

Thank you very much for your opening remarks, Minister.

I forgot, at the start of the meeting, to introduce the other witnesses with us today.

From the Department of Agriculture and Agri-Food, we welcome Stefanie Beck, deputy minister; and, by video conference, Marie‑Claude Guérard, assistant deputy minister, corporate management branch; and Tom Rosser, assistant deputy minister, market and industry services branch, who is a familiar face to this committee.

From the Canadian Food Inspection Agency, we welcome Robert Ianiro, vice-president, policy and programs, and Stanley Xu, vice-president, corporate management, and chief financial officer.

Welcome everyone and thank you very much for the work you do for our farmers.

We'll now begin our rounds of questions. We'll start with Mr. Barlow for six minutes.

[John Barlow, Conservative, Foothills, AB]

Thank you, Mr. Chair.

Thank you, Minister, for being here today.

I want to start with questions about the Auditor General report that came out earlier this month. The commissioner of the environment and sustainable development issued a pretty scathing report on agriculture specifically. Minister, it stated that you implemented agriculture programs and policies without proper consultation, with incomplete measurements and without any clear plan or strategy. In fact, the report shows that you've achieved less than 2% of your 2030 overall greenhouse gas emissions targets.

You've repeatedly said that farmers support the carbon tax, but you voted against Bill C-234, you voted in favour of a carbon tax carve-out for home heating in Atlantic Canada but not for farmers, and you voted in favour of quadrupling the carbon tax.

Can you tell me, as a result of that report, what the emissions reductions from agriculture specifically will be when the carbon tax is quadrupled? Has Agriculture Canada done that work?

[Lawrence MacAulay, Liberal, Cardigan, PE]

I certainly appreciate the commissioner's report, and, of course, I agree with the recommendations. There's no question that we need to do more in agriculture to reduce emissions. We have invested $1.5 billion to help farmers innovate and reduce emissions.

We're in the development stage of a sustainable agriculture strategy that will share a vision for the sector's ambitions over the next number of years. In fact, in putting a sustainable agriculture strategy together, what we're trying to do is make sure we involve the agricultural sector. That's what we want to do. When we put the strategy together, we want to make sure we continue to—

[John Barlow, Conservative, Foothills, AB]

Are you measuring those reductions? Are you measuring the emissions reductions in agriculture specifically? If so, what is the number, and if not, why not?

[Lawrence MacAulay, Liberal, Cardigan, PE]

We are continuing to reduce emissions in this country, as my honourable colleague is fully aware, and we will continue to put programs in place to make sure that we reduce emissions.

I can assure my honourable colleague that farmers and ranchers in this country fully understand how important it is to reduce emissions. We are reducing emissions and will continue to reduce emissions because we understand the problems of climate change. If we do not address them, that puts massive costs on farmers. I've seen the results of it right across the country, and they are massive.

We will continue to invest to make sure farmers are able to make changes to reduce their emissions.

[John Barlow, Conservative, Foothills, AB]

Minister, you're not measuring those results. In fact, your emissions have gone up, not down. The fact is, you're not measuring those emissions. You're clearly saying that.

You don't know how much emissions will be reduced, and you don't know the impacts on farmers. The Parliamentary Budget Officer was very clear that the reductions in emissions in agriculture would be negligible as a result of the carbon tax going up, yet the cost to farmers is going to be close to a billion dollars in 2030 when you quadruple the carbon tax. The Parliamentary Budget Officer knows those answers, but for some reason you don't want to share them.

It is my understanding that the Government of Canada and Agriculture Canada have started to repay the money they took from farmers for the fertilizer tariff and gave Sollio $7.5 million to start repaying farmers. It started redistributing that money, but then the Government of Canada asked for the $7.5 million back.

Is the financial picture of the Liberal government so bleak that you have to take money out of the pockets of farmers yet again by asking for the $7.5 million back that you owe them?

[Lawrence MacAulay, Liberal, Cardigan, PE]

It's a very important issue. Without question, I'm always on the side of farmers.

There is a bit of a mix-up, and it's being evaluated at this time. We know what we're dealing with in regard to the Ukraine war and Russian fertilizer. Of course, I will work closely with farmers to establish what measures can be taken to be sure they're properly refunded.

[John Barlow, Conservative, Foothills, AB]

The war in Ukraine doesn't have anything to do with your department taking back the money after you gave it to farmers. Asking for a $7.5-million cheque back is embarrassing.

Let's go back to the Auditor General, who said that Agriculture Canada has not been doing its job. I hope you have an answer for this one: Have you done any assessment of the financial implications of the capital gains inclusion change? What impact is that going to have on the financial viability of farmers? Have you done that work? Did you do a consultation assessment before it was announced in the budget?

[Lawrence MacAulay, Liberal, Cardigan, PE]

All farm property is eligible for the newly increased $1.25-million lifetime capital gains tax exemption. Deferral taxes when transferring a farm to a spouse or a child will also remain in place.

What we've done over the last period of time is work hard to make sure.... As we're all aware, it's a major issue to shift large farms, or any type of farm, in families. What we want to do—

[John Barlow, Conservative, Foothills, AB]

Did you consult with farmers before the capital gains change was announced?

[Lawrence MacAulay, Liberal, Cardigan, PE]

—is make sure that we're making it easier for farm families to transfer—

[John Barlow, Conservative, Foothills, AB]

So you didn't consult.

[The Chair, Liberal, Kody Blois]

Mr. Barlow.

[Lawrence MacAulay, Liberal, Cardigan, PE]

—their property, so they'll be able to continue in the agricultural sector.

I know my honourable colleague is fully convinced of and cares a lot about the need for us to make sure the young generation is able to take over without a lot of financial burden. We will continue to work on that.

[The Chair, Liberal, Kody Blois]

Thank you, Minister MacAulay.

Thank you, Mr. Barlow.

I'll remind this committee, and indeed all Canadians, that the exemption on home heating oil applies across the country, not just in Atlantic Canada. As one of the architects involved in that, I made sure it applied across the country. I just want to make sure the record is very clear.

Right now, we'll turn to Mr. MacDonald for up to six minutes.

It's over to you, my friend.

[Heath MacDonald, Liberal, Malpeque, PE]

Thank you.

Welcome, Minister.

I had the opportunity recently to talk to several players in the beef industry. Maritime Beef was on the Hill just recently, and I met up with Nathan Phinney not that long ago. I heard the same comments last summer at the Canadian Cattlemen's Association meeting in Calgary. It was all regarding livestock price insurance. This has been brought up in the last couple of years as well. I know you haven't been in that chair for that long, but I think it's something we need to look at as a government.

They're concerned about climate change and about droughts, which we're seeing. They're concerned about floods and wildfires too. They're a driving factor for why there should be a permanent BRM program.

Would the AAFC consider this request from beef producers? If they would, are we in that process? Is it a possibility at all or is it something we're looking at?

[Lawrence MacAulay, Liberal, Cardigan, PE]

I appreciate your question.

As you're fully aware, I've been around for a while and this question has been around for quite a while—even more than two years. The program was pretty much copied from western Canada to make sure to give the eastern Canadian beef producers more stability.

Of course, I fully understand they're going through climate change issues, with the destruction that is taking place. With that, it's very difficult, but even without that, you always have fluctuations in prices. That makes things very difficult, no matter what sector of agriculture you're in, but beef producers have been discussing and working together with each province in the eastern part of the country to put a program together with the Government of Canada.

All I can tell you is that progress is proceeding very well. I think I probably shouldn't say any more because I don't want to pre-empt any announcement that I shouldn't pre-empt, but I can tell you it's on a good path. That's exactly where we want it and I'm sure where everybody around this table wants it too.

[Heath MacDonald, Liberal, Malpeque, PE]

I'm going to move on to something close to you and me. It's potato wart.

The draft national potato wart response plan modifies the scheduling of C and D fields and creates a more viable and streamlined path to restarting production in fields that carry a low risk of wart. Can you expand on these changes? How were they decided upon and what benefits will they provide to growers on the international stage?

[Lawrence MacAulay, Liberal, Cardigan, PE]

The international stage is what played a big part in this major potato issue. I was not the Minister of Agriculture when that hit, but I can assure you that I got an immense number of calls on the issue. Considering we're such a large potato grower in the eastern part of the country—I believe close to if not the largest producer in the country—it's massive income for Prince Edward Island.

There has been great difficulty, I will certainly agree, over the last couple of years. However, as you know, we're putting a potato wart consultation program in place. It has been announced. We want to make sure, as I said before regarding the sustainable agriculture strategy, that growers in Prince Edward Island, the potato marketing board and exporters are fully involved and all working together.

There are rules we have to follow. The biggest is that we do not want to do anything that would jeopardize the export side. We export 95% of what we produce, so we have to make sure that the border does not close. It causes nothing but havoc. I've seen it closed a number of times, and it creates great difficulty.

I think where we are at the moment is a good place. In the last budget, we announced $12 million to further advance studies and make sure we're able to continue the progress down the line.

As you know, soil testing took place during the last harvest season, and it caused some concern. However, when growers understand that our biggest trading partner wants this to happen, you have to pretty well.... I agree that the buyer who signs the cheque should have some say in it. It worked out pretty well, but not without a lot of misery, again, for farmers and potato growers. Particularly in Prince Edward Island, there was great difficulty.

[Heath MacDonald, Liberal, Malpeque, PE]

Some of our colleagues sitting at this table and I were in Washington talking to congressmen about agriculture and issues of agriculture. Last week, we had parliamentarians from Germany, which is part of the EU. One of the questions I posed to the contingent from Germany was on their cross-border tariffs, the relationship those have with farming and what they're considering. The response I got was kind of interesting. They went right to dairy and supply management, using the term “protectionism”. I found that rather interesting.

I'm wondering what the department is hearing on cross-border tariffs. If you don't have time to answer that, we can come back to it in my next round.

[The Chair, Liberal, Kody Blois]

We are at time, but I'll give you around 30 seconds, Minister.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Supply management can always be an issue. It works very well in this country, as we're all aware.

I understand what you're talking about with cross-border tariffs. If you don't have a program in place to deal with the environment and you want to export, you're going to be in trouble. Quite simply, importing nations will have great difficulty with a country that does not have a climate change plan in place.

When I was in Manila, I met importers from Manila. One of the first questions they asked me was, “What's your green footprint and what's your environmental plan? Quite simply, if you don't have one, you won't be doing much business here.”

[The Chair, Liberal, Kody Blois]

Thank you very much, Mr. Minister and Mr. MacDonald.

Mr. Perron for six minutes.