Agriculture Committee on Oct. 1st, 2024

[The Chair, Liberal, Kody Blois]

Thank you. I always appreciate that.

Mr. Perron, you have the floor for two and a half minutes.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you, Mr. Chair.

Ms. Donohue, you won't be surprised to see me speak to you again, because we hadn't finished our discussion.

You say that there was a ban in the case of Hungarian ducks, but the fact remains that this product managed to enter Canada. People in the industry had to realize the problem and denounce it. I'm not sure that a local product that had the same defects could have been put on the market.

Isn't there a problem somewhere?

[Kathleen Donohue]

Thank you for the question.

As I mentioned before, we take a comprehensive, risk-based management approach. We are a science-based organization. We conduct that science-based assessment of hazards, looking at three rubrics, if you will.

One is our regulatory framework. We have import control policies designed to comply with both international and national food safety standards. As I said, the imported product and the product produced in Canada have to meet those standards. The other element is our inspection and monitoring. We regularly inspect food imports. We use a risk-based approach to do that, to point to where we focus our resources. We also look to collaborate with—

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

I fully understand what you're saying, Ms. Donohue. Thank you for your co‑operation and for answering our questions. However, what I understand is that foreign products are not subject to as many inspections as local products. Perhaps we should correct the situation.

Earlier, I talked about carrots from China. How do you explain that the United States doesn't allow this product onto its territory, citing protection of soil quality and protection against disease, but that Canada allowed some onto its territory last year? What I usually hear is that Canadian standards are often higher than U.S. standards. So what is the reason for the situation, in the case of carrots from China?

[Kathleen Donohue]

I must admit that I am not aware of the specific situation of carrots from China.

What I can tell you is that our agency has the national chemical residue monitoring program.

We annually survey for compliance. It's testing food in specific categories: meat, dairy, eggs, honey, maple products and processed fruits and vegetables.

Did that meet your 40 seconds? I hope it did.

[The Chair, Liberal, Kody Blois]

You did very well, Ms. Donohue. Thank you.

Thank you very much, Mr. Perron.

Mr. Cannings, you have the floor for two and a half minutes.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Again, I'm going to continue trying to understand how the EU's CBAM is working right now.

I assume we're either in or entering into this reporting phase, where European importers in those sectors—I assume it's just for fertilizer, steel and cement—will have to report the carbon intensity of the materials. If they're importing Canadian aluminum, for instance, they're now trying to figure out what that carbon intensity is.

Canada's carbon tax, I assume, has something to do there. Am I right?

[Michèle Govier]

Again, I don't want to speak out of turn about the system.

During the reporting phase, I think, they are looking less at whether our carbon pricing is comparable to EU pricing, or whether a charge would apply. It's more about sorting through the reporting mechanisms to make sure the information provided is well substantiated and that the methodologies are all correct. It's to make sure they have a good stream of information coming in during this phase. That kind of assessment of carbon pricing becomes more relevant when the charge is actually in place.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Is this some kind of life cycle analysis? Sometimes it gets pretty complicated, calculating the carbon intensity of a product when there are several steps to it.

[Michèle Govier]

Yes. I think they go a bit beyond the product itself.

I'm looking to Judy to help me out if I'm getting this wrong, but I don't believe it's a full life cycle analysis.

[Judy Meltzer]

I will add that, again, we defer to Global Affairs on the CBAM specifics.

However, they're looking at an explicit price on carbon. This is what CBAM is taking into account. It's whether a country has an explicit price on carbon.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I think I'll leave it there.

[The Chair, Liberal, Kody Blois]

All right, Mr. Cannings.

We'll do our last round.

Mr. Barlow, it's over to you. You can do five minutes. Go ahead.

[John Barlow, Conservative, Foothills, AB]

I don't know if I'll take that long, Chair, but I appreciate it.

I think this is a very important point to make, and Mr. Rosser and Ms. Govier kind of touched on it: Carbon border adjustments by the EU or the United States don't benefit Canadian producers, because we have a much better carbon footprint in agriculture that somehow gets us better access.

I'll give you a real-life example that I'm sure Mr. Rosser knows well. Harmony Beef in Alberta redid their entire kill floor to meet the EU standards for beef imports. The EU imports exactly zero pounds of Canadian beef, despite a meat processing plant in Alberta doing essentially everything they could to meet EU standards. I look at a CBAM as another non-tariff trade barrier that the EU or other jurisdictions will implement to protect, as Ms. Leah Taylor Roy said, their own producers.

Maybe, Ms. Donohue, you would know best.

When the EU implements CBAM in 2026-27, I understand it will not include agriculture. Is there a set standard, let's say, or an organization overseeing and administering that carbon border adjustment, which is very clearly defined? If another jurisdiction—Canada, for example—wants to import or export a product with the EU, do we know exactly what the game is and what standards we're asked to meet? In your experience, could this very well be another non-tariff trade barrier that will make it that much more cumbersome for Canadian producers to access those markets?

I know it's a big question, but I think it's very important that we understand exactly what we're getting ourselves into here.

[Tom Rosser]

Perhaps I'll take an initial attempt at answering, but other colleagues may have something to add.

Yes, it is absolutely the case that we are concerned, that even well-meaning environmental measures.... When it comes to carbon border adjustments in the agricultural world, we're still talking about hypotheticals, because nobody has proposed any. However, certainly the concern would be that even if it were very well designed, it could...like some of the non-tariff barriers that members cited in relation to the export of beef. We encounter that all the time, and there is certainly potential for carbon border adjustments that are climate measures to turn into non-tariff barriers. It's a risk that we will work to actively manage.

I think avoiding those types of things is one of the discussions that Canadian agricultural stakeholders are really passionate about discussing, not just domestically but also internationally.

I had another point, but it's escaping me, so in the interest of time, I'll leave it at that.

[John Barlow, Conservative, Foothills, AB]

To your point, there is no standard in place right now. This could very well be another non-tariff trade barrier blocking our access to those markets, as Ms. Taylor Roy mentioned, to protect their producers. Is a carbon border adjustment mechanism WTO-compliant, or has the WTO done some work on ensuring that those countries that are implementing these types of policies are going to have very clear guardrails in terms of how to access those markets? Do you know that?

[Michèle Govier]

There are no existing WTO rules specifically addressing this type of measure, and the WTO role is different. They don't take the role of policing things. It's really up to members to express concerns over that. I believe there have been some concerns raised over the CBAM at the WTO by other countries. It is yet to be seen, I think, whether that evolves into a dispute where these things will really be tested. It's a bit premature, I guess, to comment on whether that's going to cause issues.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. Barlow.

We'll turn it over to Mr. Louis for up to five minutes.

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

Thank you, Mr. Chair.

I want to thank the witnesses as well. I appreciate your being here, and I appreciate your ongoing work. I think you can help us as we're exploring the strategic advantages with the continuing shift towards sustainability in Canada's agriculture sector.

In recent years, Canada has seen a significant shift towards sustainability and carbon neutrality in its agriculture sector. Canadians are increasingly prioritizing these aspects, recognizing the importance of sustainable practices for long-term food security and for environmental health as well. We're feeling that momentum in the ag sector to drive change in collaboration with the technology, infrastructure, policy and finance.

One of the examples I know of locally is work being done at the Arrell Food Institute at the University of Guelph, developing a plan to enhance climate-smart agriculture. It aims to produce 26% more food by 2050 while reducing emissions, which means you can have more productivity, more sustainable farming and higher profits for farmers at the same time. I hope we can all agree and work together for those results.

I wanted to address the initial questions to Tom Rosser from the agriculture ministry and ask about the financial incentives, programs and support mechanisms that are already in place to encourage farmers and agribusinesses to adopt more sustainable practices.

[Tom Rosser]

I thank the member for the question. I think it is absolutely the case that strong sustainability performance, irrespective of border adjustment measures or what other countries may do, can be good economics for the ag sector, although there are cases where farmers need assistance to implement something that will have long-term sustainability benefits. Although I won't describe them in detail, I suspect many of them will be known to the members of this committee.

We as a department have announced something like $1.5 billion in programming in the agri-environmental space over the past several years to try to assist farmers in realizing those opportunities and to recognize that even things of long-term economic benefit as well as environmental benefit sometimes have an upfront cost that can present a barrier to farmers adopting them.

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

That leads me to the question of the sustainable agriculture strategy and addressing those long-term benefits right now. Can we do that? Can we adopt sustainability, achieve carbon neutrality, protect the environment, help our economy and basically feed more people with fewer inputs?

[Tom Rosser]

I would note that a number of commodity groups in the ag sector have set net-zero targets for themselves for 2050 and are very anxious to partner. One element of the incentives to try to realize these opportunities is the development of an offset system, and perhaps Judy can speak briefly to that.

[Judy Meltzer]

Thanks, Tom.

Adding to the measures that Tom referenced, Canada's carbon offset system was launched in 2022 and basically offers an opportunity for reductions that are beyond the “business as usual” type of removal, for example, in the ag sector, which is a priority sector, to earn some revenue from voluntary initiatives that reduce or remove emissions.

Environment and Climate Change Canada is in the process of developing some different protocols for agricultural projects and trying to find crediting opportunities for reductions in methane from beef cattle, from manure management and from enhanced soil organic carbon. It's just one other way in which to try to pull forward and recognize the added value of those types of initiatives.

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

Thank you for that. It can also build resilience to more extreme weather and conditions. That's something that can help, and I appreciate that.

Maybe I could switch over in the final minute to Ms. Govier.

Concerning that shift to sustainability in the agriculture sector, how can that enhance Canada's competitive advantage in the global market these days?

[Michèle Govier]

I'm not sure I'm the right person to answer that. I can speak to how it might impact if there's a market that has some kind of border measures in place. An EU-type border measure that has pricing in place certainly helps in terms of how our experts are recognized. If it's a different system that's based on more emissions intensity and not so much about pricing, there are potentially advantages there too, but it really depends on what's in place in those markets.