Agriculture Committee on Oct. 1st, 2024

[The Chair, Liberal, Kody Blois]

Thank you, Mr. Cannings.

We'll now turn to Mr. Steinley for up to five minutes.

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

Thank you very much.

Mr. Rosser, I was listening to some of the answers you gave my colleague, Mr. Barlow, and you said there isn't really a comparable for how we're doing environmentally with that 10% of agricultural emissions to other areas of the world. We have a colleague coming up on the next panel from the Global Institute for Food Security, which did a study in 2022 that examined the carbon footprint and production of various crops, including canola, non-durum wheat, field peas, durum wheat and lentils. They compared that carbon footprint to countries including Australia, France, Germany, Italy and the United States, and the results demonstrated that Canadian producers, particularly in Saskatchewan and western Canada, are producing crops with the least amount of greenhouse gas emissions or carbon dioxide equivalents among the regions compared.

We do have actual data that shows we are already doing a very good job and shouldn't be trying to penalize our farmers further. Has the agriculture department taken that data into consideration when looking at implementing some of these different policies?

[Tom Rosser]

On that, there absolutely are people who have done comparative analysis on greenhouse gas intensity, including the upcoming witnesses.

What I meant by my earlier comment was that there is no single, definitive global source where people go, “Aha, these people have it.” There are different sources, and, in general, those sources that exist show that Canada's performance is very favourable.

Again, different studies show different gradients of that. I'm aware of this one being published, and we absolutely take account of all available analysis in that area.

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

If there are different sources, would you share with this committee some of the other sources?

This is one of the most definitive studies I've seen when it comes to our comparables. It compared the supply chain, too, not just the field. It compared everything in the export, from field to fork.

If there are other studies that you are using at Ag, Environment or Health Canada, which makes most of our ag policy, could you share those studies with us?

[Tom Rosser]

Certainly, the Food and Agriculture Organization publishes some comparative data in this area. The OECD doesn't do so regularly, but I think they have at times in the past.

Certainly, we'd be happy to share with the committee those analyses that we are aware of in this area.

[The Chair, Liberal, Kody Blois]

We'll go now to Ms. Rood.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you very much.

This is for Ms. Donohue or Ms. Soo.

I've heard from industry and from farmers that your agency lacks the necessary resources to work in a timely manner or even enforce currently existing regulations properly.

Do you have an idea of the additional burden that CBAMs would impose on the CFIA? Does the Department of Finance possibly know the costs associated with the additional support for the CFIA?

[Kathleen Donohue]

We don't, with regard to CBAM. We have not looked at that in relation to our work at the Canadian Food Inspection Agency, which is focused on food safety and animal and plant health.

In general, in terms of our resourcing, we take a risk-based approach to target our inspection and to verify compliance. In doing so, we look at the location, scope and frequency of our activities in relation to the type of product imported, and the associated risk to human health and to consumer protection. That really allows us to focus our resources in the area of greatest need and greatest risk.

Thank you.

[Michèle Govier]

I would just add, from a border carbon adjustment perspective, that to the extent that a border carbon adjustment is increasing the cost for companies that want to get into Canada, it would likely decrease the amount of imports that are coming in, so I would think the CFIA would not be affected in terms of needing more resources.

I think where we would see it is more on the administration side. For example, it could be ECCC expertise in terms of ensuring that we know what the embedded emissions are in goods, CBSA at the border, and the Department of Finance to some extent as well.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

On that topic of the embedded emissions, the process can create administrative burdens for the exporting country. I'm just curious about whether the Department of Finance has an estimate on what those costs could be in Canada.

[Michèle Govier]

Is this with respect to complying with the EU CBAM, for example?

I don't have that. As I said, it's more colleagues at Global Affairs Canada who are tracking the CBAM and its implications for Canadian exporters, so it would be best directed there.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you very much.

[The Chair, Liberal, Kody Blois]

We'll now turn to Ms. Taylor Roy for up to five minutes, please.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

Thank you very much, Mr. Chair.

I just want to clarify, because in doing this study, we're trying to assess the impact of CBAMs being applied by the EU or the United States, where there is interesting discussion right now. In fact, I think the stat is that 73% of Americans think there should be border mechanisms put in place to protect their farmers.

Wouldn't these CBAMs that other countries put in place actually benefit countries that have strong environmental policies and whose farmers already have a good environmental track record?

[Michèle Govier]

I can speak briefly to that.

Generally, that should be the case. I know we have certain industries that are exporting to the EU in sectors that will be affected by the CBAM. They feel that they will benefit from having a green premium for being cleaner. To the extent that's the case, there could be those benefits, depending on how it's all designed.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

Any reduction, or if we move backwards on our environmental program, could have the effect of actually putting our farmers at a competitive disadvantage if, in fact, CBAMs were put in place by many of the countries that we export to, because we're such a large exporter.

Is that correct?

[Michèle Govier]

That's right. To the extent that it's based on what our pricing is in Canada or what our emissions performance is in Canada, then that could be the case if those deteriorate vis-à-vis other countries that are exporting to those markets.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

We've heard from my Conservative colleagues, and I agree, that our agricultural sector is actually relatively good when it comes to carbon emissions. It seems to me that we would have an advantage, not only in terms of our exports not getting the tariff, or as much of a tariff as imports from other countries such as the EU or the U.S., but also, having the environmental program or the price on pollution in place in Canada, because we would encourage new technologies and encourage Canadians to develop these things. There might be a bigger market for that if some of these other countries are now facing CBAMs from the EU or U.S. or other countries. Is that correct?

[Michèle Govier]

Part of the motivation for CBAMs is to increase the level of ambition, not just in the market where they're introduced but elsewhere as well, so that countries can have better access and perform better. I can't speak directly to how that implicates the agriculture sector, but in principle that's correct.

[Tom Rosser]

Just to add to that, we see many examples of this, outside of CBAMs and carbon border examples, where ideas that are put in place by trading partners that are good in theory can create non-tariff barriers and cause impediments to trade.

If the system were done or worked as it was intended to, I suspect that Canadian agricultural products would fare very well if and when trading partners imposed CBAMs or related measures on Canadian products. The difficulty is that it's a complicated thing to do. Either deliberately or not, the trading partners could undermine trade.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

It does appear that this is the way the world is going right now. We see the EU looking at the many sectors, and the U.S. clearly. There's been legislation introduced looking at these. Would Canada really have a choice, in that case? We would be subject to other countries' CBAMs at that point. We have a strong pollution pricing program here. Wouldn't we want, in terms of protecting our farmers, to also put in place those border adjustment mechanisms to avoid imports from countries that don't have the same environmental standards that we have?

[Michèle Govier]

I guess, just to clarify, the more important policy that is helping us in those markets is our carbon pricing. Whether or not we have a border carbon adjustment doesn't get us better access into the EU market. It's more about addressing the carbon leakage that could be arising in our market.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

Right, but to the extent that we import some goods in certain sectors, wouldn't that level the playing field a bit, so that countries that don't have carbon pricing mechanisms wouldn't have an advantage over our farmers?

[Michèle Govier]

Yes.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

Thank you very much.

I'll cede my last 30 seconds back to the chair.