Thank you.
Evidence of meeting #111 for Agriculture and Agri-Food in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was agriculture.
A recording is available from Parliament.
Evidence of meeting #111 for Agriculture and Agri-Food in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was agriculture.
A recording is available from Parliament.
Liberal
The Chair Liberal Kody Blois
That's all the time you have. Thank you.
Now we have the pride of Malpeque. We'll go over to you, Mr. MacDonald.
Liberal
Heath MacDonald Liberal Malpeque, PE
Thank you, Chair.
Thank you, witnesses, for being here today.
I want to go back to the first round. I heard a couple of things that make me feel that we're in a situation here of trying to get out in front of it.
Mr. Harvey, you said something about not being sure yet, that maybe we're getting at this too early. I've been sitting around government for nine years now. It's never too early for government, because bureaucracy doesn't move very quickly, Mr. Harvey. I think it's important that we do get out in front of it.
There are a lot of issues, obviously, and a lot of unanswered questions. There are some theoretical issues that we're dealing with, but I think it is extremely important that we do come together as industries and governments at all levels. No one's talking about the provincial governments, but I think they have a major role to play in this as well, and it has to be science-based, obviously, in all of trade.
I've said this at this committee before, but if the U.S. moves on this, we'd better be ready, because it's over a billion dollars in pork alone, I believe, that is exported to the U.S.
It's understandable that there are a lot of questions, but it's also understandable that we're acting now as opposed to having you come back here someday saying that we need more time. I think that's really important. I also think—and Mr. Lehoux touched on this a little bit—that our farmers in Canada—whether everybody recognizes it or not, and sometimes that doesn't happen in the media, obviously—are in a very good position. When you look around the world and see what everybody else is doing on sustainability in regard to climate change, our farmers are leading the way. To me, yes, trade is trade, and you're always going to have those obstacles that the Pork Council runs into on the EU and so on and so forth, but in putting our farmers up against anybody in the world, I think we're in a very good position.
One thing that wasn't mentioned that I think could be very unfair if we're not ready to act on this—or it could be very beneficial—is that if we don't meet the trade obligations through cross-border tariffs to another country, the tariffs that we're paying those countries are going back to those industries. No one is really talking about that, and I think that's something that this government and your advocacy should be certainly pushing for, and maybe we'd get to that $2 billion relatively quickly.
Anybody can take this. What are the opportunities for our farmers in Canada if this does, in fact, take place, which we assume it's going to?
Go ahead, Mr. Roy.
Chair, Canadian Pork Council
I would start by saying that having the proper information infrastructure to be able to demonstrate to our trading partners all the good things that we are doing is essential. This is much more on the public service side, because it's an infrastructure. It cannot be private. It has to be something that is common, that is regulated, that is standardized and that helps us as producers be able to demonstrate to the world the good things that we are doing and how we are leading in the world.
For us it's a little bit frustrating, because we hear a lot of people say, “Oh, we are not doing this and that well”, but, in reality, we are a kind of an A-plus student. We are saying, “Oh, I would like to have the bonus”. Yes, it's good to have the bonus, but let's make sure that we compare to others in the world, that we are able to compete to the right standard and that we are not diminishing ourselves by just looking at the little problem that we have.
Executive Director, Canadian Agri-Food Trade Alliance
I agree that we need to be on top of things, but right now we're at the monitoring phase. I don't represent the seafood sector, but I'm going to be shucking a dozen Malpeque oysters tomorrow night—but that's not an international trade issue.
What's an international trade issue? Today, the European CBAM doesn't cover Malpeque oysters or Canadian agri-food products. We're watching, because it covers steel, cement and fertilizer, and that's starting to get towards agriculture, but it's not there. It doesn't cover those things, so for Canada to be implementing a border carbon adjustment today on similar products from other countries would mean Canada would be going it alone and doing something that's trade restrictive and would probably lead us down a path that will be complicated for us with partners.
We do see people talking about things. We don't have a position because we're not faced with it today, but I read American trade blogs and Substacks and stuff in order to do my job well. I see that some U.S. senators have discussed the issue. It's not totally clear to me. I haven't hired somebody to study how close that is to getting adopted and if it's like a private member's bill that rarely moves but sometimes does. I know people in the U.S. are talking about it, so we're at the monitoring phase.
If the world starts moving toward it, Canada shouldn't be leading and doing that and starting trade disputes out of nowhere. If different countries in the world were to move toward it, we'd be having a different discussion and we'd be coming back saying that we should be doing this with our partners and not going it alone, because what we always want to be doing is strengthening the rules-based trading system and not tearing it apart.
Liberal
The Chair Liberal Kody Blois
We're at time.
The one thing I'll say, Mr. Harvey, is that we had officials before this committee on Tuesday, and the position from the departments is that there's contemplation and there's work being done because of other countries.
This study wasn't originated on the idea that the government should necessarily establish one, but more about how Canada should respond, given the fact that this could be a reality down the line. I just want to make sure that's clear.
Mr. Perron, you have the floor for two and a half minutes.
Bloc
Yves Perron Bloc Berthier—Maskinongé, QC
Thank you, Mr. Chair.
Ms. Grossenbacher, I'm going to come back to you and give you the two minutes or so I have left to explain what you wanted to explain to me earlier.
Just before that, however, a word for all the witnesses who have proposals or recommendations. Mr. Roy, for one, seemed to have a number of them to share with us. It's important to send them to the committee in writing so we can read them and include them in our report.
Go ahead, Ms. Grossenbacher.
Director of Policy, Farmers for Climate Solutions
I'm going to put your question in context. You asked about how farmers could be rewarded. That's a good question.
As farmers—and this is especially true for me as a vegetable grower—we like carrots more than sticks.
Director of Policy, Farmers for Climate Solutions
I'll go back to Mr. MacDonald's question.
If the government implements carbon border adjustments, it must take care to ensure that there are more carrots than sticks.
Having said that, we think readiness is the best defence against regulation. In terms of climate resilience and competitiveness, yes, we're doing well with some crops, but not with others. The reality on the ground is that producers need help. We're doing good things, but we still need support and incentives. For example, AgriInvest could offer a top-up to producers who employ good practices. That would be a good way to encourage producers to adopt good practices and keep going in that direction.
Many producers tell us they need more support or technical assistance to get to the next level. Mr. Roy mentioned that earlier. Producers in Quebec can access advisory services. There were also some very effective programs that offered more coverage for organic production or next generation producers. The federal government could set up programs like that. For example, producers who adopt a particular technique could get even more support or more access to advisory services.
Basically, more agronomists need to be trained to help producers adapt to climate change. There's a real shortage. I can share an example, if there's time. I grow vegetables, and an agronomist comes from Montreal to visit my farm. She actually goes to seven farms in two days. If we're lucky, she comes two or three times over the summer, for an hour each time. My neighbours are grain corn producers, and they get visits from an agronomist several times a week, for several hours. We don't get the same level of support. Very few agronomists know how to help producers adapt to climate change, so they need to be trained, and then they need support to get out there on the ground, to go to farms.
NDP
Richard Cannings NDP South Okanagan—West Kootenay, BC
I'm going to turn to Mr. Harvey.
We've been hearing today that these border adjustments haven't been implemented anywhere for agriculture. There's a list of other sectors that use them and are looking at them, and they seem to be sectors that are much easier to measure. It's much clearer where the benefits might accrue for Canada, for instance, going down that route.
From what we heard in our last meeting and at this meeting, it sounds like agriculture would be a very difficult and complicated sector to put a carbon border adjustment mechanism into, because every farm is different.
I want to ask you the same question I've been asking others. To help us deal with trade with the United States, our biggest trading partner, where do you think Canada should put its efforts and its money to support agriculture in Canada?
I come from an agricultural riding that is just swamped with American product. We grow fruit. We go to the grocery stores, and all the fruit we buy in our grocery stores is from the United States.
Could you comment in general terms on where we should be putting our efforts and our funding to support Canadian agriculture in the trade aspect?
Executive Director, Canadian Agri-Food Trade Alliance
Right now, we should be getting ready for the 2026 CUSMA review. Canadian trade efforts around the CUSMA review should generally be trying to keep that review as narrow as possible, because there's a lot of political risk for Canada if that review gets too wide.
However, at the same time, Canada should be preparing a list of things we don't think are working as well as they could be with the United States, because if the discussion widens, we should be ready to discuss things.
Our initial efforts should be to try to keep the discussion as narrow as possible, because there's a lot of political risk for Canada if we open that discussion up.
Liberal
The Chair Liberal Kody Blois
There's just a quick question from the Chair.
One of the interesting things about this study is what I've heard consistently from witnesses—and I would agree—about how Canadian agriculture would be either top shelf or maybe even superior to most other agri-food products around the world, certainly on an index for carbon intensity. We've heard that about 10% of emissions in Canada are tied to agriculture, while the global average is 30%. Even against comparator countries, I think Canada's doing quite well.
Obviously, one of the elephants in the room has been carbon pricing. We've heard about that. It's largely exempt, but, Mr. Roy, you talk about things like natural gas and propane still existing. Whether or not it's carbon pricing or, to Ms. Grossenbacher's point, the idea of more government subsidies and more taxpayers' dollars going in, it has a true cost in the treasury sense.
How do we account for that? That's what I think this committee is trying to establish. How do we make sure that Canadian superiority on some of these products is accounted for, but also ask our domestic industry to be part of the solution on reducing emissions?
I think the science is clear that we need to be doing that across a variety of different sectors for countries that are choosing not to ask their domestic industries to be a part of that.
Mr. Harvey, I take your point that it's early. Politicians are rarely accused of that. I think it's probably good that we're thinking a bit ahead. If not a carbon border adjustment mechanism, is there some other type of policy that you think is important to protect Canadian competitiveness in an environment where we are asking domestic industry to be part of that solution and bear the costs, whether in a carbon price or in additional subsidies that ultimately come from the Canadian taxpayer?
How do we account for that in the system? Is it a club approach? Is it the case that either you're doing something and therefore you're not subject to a tariff, or you're not and you're a baddy and you are subject to a tariff?
How do we get there? Do you have any thoughts on that?
Executive Director, Canadian Agri-Food Trade Alliance
The CAFTA perspective is that we have a global rules-based trading order that works very well for Canada and has allowed export around the world. The majority of Canadian agriculture is export-focused, and everything we do should be trying to strengthen that system, not weaken it.
If we think it's very important to take certain domestic measures for our domestic reasons, which cause problems for the trading system, we should be going multilaterally and trying to work on them with other countries. Otherwise, if every country goes on its own, we're going to split into blocs—or worse, into specific countries—and we're all going to be poorer.
Liberal
The Chair Liberal Kody Blois
A certain position around trade is important. I think it's how we account for this, and that's where the question becomes about asking either for more taxpayer dollars or pricing....
Is there any further quick comment?
Director, Policy Development, Canadian Pork Council
I think a very important aspect with whatever we're discussing is information management. If we are able to better manage our information and not work in silos, I think we will have 95% of the answers. Instead of being defensive, we can actually have a stand.
I'll give you a simple example. We have granting programs going from the provinces down to the producers, meaning implementation of best management practices. Do we have information on the implementation monitoring and what's happening with the BMPs? We don't. They're in the inventory over there, and there's no follow-up.
If we manage to work with the provinces on getting the information from whatever is being implemented through the granting programs down to the producers and follow each implementation grant the producers are getting, we will have a much better understanding of what is being done on the farms. It's a simple example.
Even within our institutions, with cross-sector collaboration, there's a lot of data available on animal vaccines and animal health, but it's not necessarily being integrated into the sustainability information and data. We can use that and work with them. There's so much information, and we're doing so much, but everything is being done in silos.
Liberal
The Chair Liberal Kody Blois
That really comes back to the point about trying to establish international norms or standards.
This is going to be more of a club approach. Either you're doing something demonstrably and you hit a baseline or you don't, because otherwise I think it's going to be very challenging.
Anyway, this has been an interesting conversation. Thank you, colleagues, again for the brief indulgence. I'm going to, on your behalf, thank our witnesses for their participation today and for their contribution to agriculture.
We'll suspend briefly and bring up our next two witnesses. Thank you.
Liberal
The Chair Liberal Kody Blois
Colleagues, we're back for the second panel.
From the Canadian Agri-Food Policy Institute, we have Tyler McCann, managing director. He's no stranger to this committee. We must be in double digits now, over the years, for sure.
From the Canadian Canola Growers Association, we have Mr. Rick White, president and chief executive officer. He is joining us by video conference.
Thank you, gentlemen. I apologize for the slight delay. We went a bit longer in the first panel. There was some good conversation here in the room, but we're going to get to it.
I'm going to turn it over to you, Mr. McCann, for up to five minutes, and afterwards I'll turn to you, Mr. White.
Tyler McCann Managing Director, Canadian Agri-Food Policy Institute
My opening remarks are in French and English.
Good afternoon, Mr. Chair.
Thank you for inviting me to appear before the committee this morning. I always appreciate the opportunity to contribute to your work.
The Canadian Agri-Food Policy Institute, or CAPI, has been working on the link between international trade and sustainability for years. I would like to share my thoughts on how these two elements intersect—or collide.
It is essential to frame any conversation on sustainable trade around a couple of really critical facts. The world is facing increasing food insecurity. Supply, demand and stocks of key commodities are tightening. There are fewer net exporters and more net importers. Not all food is created equal. What it is, and how it is produced, all play an important role in its environmental footprint. Transport, especially ocean freight, actually has a very small impact on most food’s environmental footprint.
Therefore, trade will increasingly be essential to ensuring that food can get from the small number of countries where it can be produced in abundance more sustainably to those countries where they cannot produce enough to meet demand.
While economists and trade lawyers have long explanations for them, border carbon adjustments are there to ensure a level carbon playing field among countries, but how you measure the carbon and how you know if the playing field is level is immensely more complicated than that. The BCAs are not likely to be an issue for the food system for the foreseeable future.
While the EU is moving ahead with BCAs, the coverage is limited to six emissions-intensive trade-exposed products that are covered under the EU Emissions Trading System. Fertilizer is the only agriculture-related product impacted by the BCA. Agriculture production is not covered by the EU ETS, and there is no serious dialogue that it would be covered by the ETS or the BCA.
The world is struggling to figure out how to deal with carbon at the border. This is incredibly complicated, and the solutions are not evident. It is not likely that a border carbon adjustment will be the solution to that problem.
While it is not an agriculture commodity, it is important to recognize the impact that a BCA could have, and is likely to have, on Canadian fertilizer. Luter Atagher, a recent CAPI doctoral fellow, put out an excellent paper exploring the potential impact of a BCA on fertilizer.
The recent tariffs on Canadian fertilizer imports have shown how much of a negative impact tariffs can have on Canadian farmers and how Canada should be motivated to seek out a different approach.
Setting aside fertilizer, for most Canadian agriculture exports, the EU deforestation regulations are a significantly greater challenge than a theoretical BCA. It was positive to see yesterday that they have been delayed by a year, but there's a lot more work to be done there.
While much of the attention on the collision between sustainability and trade focuses on regulatory and border measures, it is important not to lose sight of the impact that domestic policies and green spending could have on Canadian exports around the world.
The increasing use of green subsidies in the U.S. is a great example of sustainability measures that have the potential to negatively impact Canadian exports. At the WTO, the green box is typically seen as not trade distorting, but that is an antiquated view of the world.
I would also like to make a few comments on the reciprocity of standards.
It's easy to understand why Canadian producers are concerned and support the concept of reciprocity. They produce very high-quality food and don't want to be forced to compete with imported products that aren't of equivalent quality. Producers also don't want to compete with products made or grown using inputs not available on the Canadian market.
Again, while it's easy to understand the concerns raised, it isn't as easy to find solutions.
First and foremost, the Canadian government has the authority to ensure that imported food is safe for consumption and meets Canadian requirements. Whether they have the resources is a different question.
The issue of reciprocity of standards is indeed a competitiveness issue, not a food safety issue. Beyond potential conflicts around international trade rules, the reciprocity of standards remains a difficult approach to implement without adding costs and creating friction in the food chain.
A better approach would be to encourage greater harmonization of farm input standards, regulations and approvals. For example, Bill C-359 creates conditions that can ensure access to competitive technologies without creating a thicker border and less functional international trade.
There is clearly a need to develop solutions that continue to improve agricultural sustainability while promoting trade and supporting food affordability. However, adding taxes and barriers at the border is not likely to have the desired impact. It is through collaboration and co-operation among governments, farmers and food producers around the world—not barriers, taxes and regulations—that we will find the solutions needed to meet the productivity growth required to deliver the economic, environmental and social sustainability the world needs from its food systems.
Thank you.
Liberal
Rick White President and Chief Executive Officer, Canadian Canola Growers Association
Thank you for the invitation to appear before this committee to discuss the impact of carbon border adjustment mechanisms.
As the chair indicated, my name is Rick White, and I'm the president and CEO of the Canadian Canola Growers Association. I'm based here in Winnipeg, and we have an Ottawa-based team as well.
CCGA is the national association for Canada's nearly 40,000 canola farmers, representing them on issues, policies and programs that impact their farms' success.
Developed in Canada, canola is a staple of Canadian agriculture, as well as science and innovation. Today it is Canada's most widely planted crop and the largest farm cash receipt of any agricultural commodity, earning Canadian farmers over $13.7 billion in 2023.
Annually, the canola sector contributes $29.9 billion to the Canadian economy and provides over 200,000 jobs. Canola farmers are heavily trade-dependent, exporting 90% of what they grow as seed, oil or meal, while importing critical crop inputs such as fertilizer, crop protection products, and farm machinery and infrastructure. Exports alone were valued at $15.8 billion in 2023.
We urge the government to exercise utmost caution when considering a carbon border adjustment mechanism and do its due diligence to ensure any such mechanism does not go against the principles of international rules-based trade. It is imperative that we balance Canada's climate change ambitions with our economic competitiveness and our global trade reputation and commitments.
Additionally, any design should fully account for Canada's World Trade Organization commitments and respect our bilateral free trading agreements. The WTO's framework underpins our international trading system, offering clear and predictable rules on trade. The mechanism's design and details will determine trade compliance, and any deviation from that could open Canada up to potential trade disputes or criticisms of protectionism, undermining the mechanism's stated objectives.
Our partners at the Canadian Agri-Food Trade Alliance, also known as CAFTA, stated before committee last week that it is essential that sustainability measures do not become barriers to fair and free trade or serve as cover for protectionist trade policies. CCGA is fully aligned with this statement. CAFTA has also developed principles of sustainable trade, which would be an excellent resource for this committee to review.
While other countries may have similar goals to reduce greenhouse gases and achieve carbon neutrality, approaches to carbon border adjustments are not standardized and likely not easily harmonized. A patchwork of regimes has the real potential to enact barriers and disrupt trade, increase the possibility of a double carbon price, and create new and possibly cumbersome accounting regimes for both government and industry. Engaging early in the design process increases the chance of a multilateral approach and of having Canada's approach recognized as equivalent, most notably by countries such as the U.S. and the European Union.
With international trade being the lifeblood of our sector, canola farmers need to remain competitive in global markets. Any mechanism must consider the cost increase of imported products and mitigate impacts on downstream users. Fertilizer, fuel, food and beverage, and steel and aluminum are highlighted as emissions-intensive and trade-exposed sectors. Farmers rely on fertilizer imports for specific nutrients not produced in Canada in order to grow and realize crop yields, whereas steel and aluminum are required to produce tractors, equipment and storage bins. For example, targeting primary steel production could potentially shift the cost to end-use products like combines. Farmers are ultimately responsible for any increased cost. As the last link in the value chain, and with grain prices set globally, they can't pass on any of those increased costs.
While CCGA understands Canada's commitment to achieving ambitious climate change targets, we are also wary of the negative impacts this mechanism could have on open trade and thus have a trickle-down effect on farmers. Given the current trade investigation China has launched on canola in response to Canadian-imposed tariffs on EVs, steel and aluminum, canola farmers—now more than ever—need the Canadian government to follow international rules-based trade principles.
Given these considerations, CCGA recommends that government exercise extreme caution and thoroughly consider the unintended consequences of implementing carbon border adjustment mechanisms. Any Canadian CBAM must maintain our global competitiveness and be designed to align with, and be recognized by, our major trading partners.
Thank you.
Liberal
The Chair Liberal Kody Blois
Thank you, Mr. White.
Just to clarify, because it has come up in some of the testimony, on the idea that the government itself is trying to establish a Canadian.... No, I think the origin of the study was more around other countries potentially moving down this route and how best to respond.
I certainly appreciate your testimony.
I'll turn it over to Mr. Barlow as a starting point for six minutes.