Evidence of meeting #112 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 organic.
A recording is available from Parliament.
Conservative
Lianne Rood Conservative Lambton—Kent—Middlesex, ON
Thank you, Mr. Chair.
Thank you to our witnesses for being here today.
We've heard throughout this study about carbon border adjustments—that they don't work, they hurt farmers, and if something hurts farmers it's going to hurt consumers. At the end of the day, as a farmer, I know what my costs are, and I know that I have to pass those costs on to the wholesalers.
Dr. Charlebois, you talked about the difference in prices between the U.S. and Canada. I'm curious, in your opinion, if the carbon tax is one of the factors and the differences between the inflation in the U.S. and Canadian food prices.
Senior Director, Agri-Food Analytics Lab and Professor, Dalhousie University, Agri-Food Analytics Lab
Thank you for the question.
It's hard to answer that question, given the fact that we don't have any firm, level data, but we do believe that it is possible that the carbon tax is making our food supply chain less competitive. Since 2019 we've seen a dramatic shift between wholesale and retail in Canada, and prices.... You would think, perhaps, it has to do with a global economic context, but the United States has been immune to what has happened in Canada. Something different is happening in Canada versus the U.S. You would have to look at factors that are different in Canada and the U.S., and one of them is the carbon tax policy.
Conservative
Lianne Rood Conservative Lambton—Kent—Middlesex, ON
Thank you very much.
Do you believe that carbon border adjustment measures would further drive up the cost of food?
Could you maybe comment on how price pressures are driving Canadians to use food banks more right now?
Senior Director, Agri-Food Analytics Lab and Professor, Dalhousie University, Agri-Food Analytics Lab
As soon as you implement tariffs or any barriers at the border, you are eliminating options for consumers. At retail and, of course, wholesale, there could also be complications. It is highly likely that you would push prices higher as a result of a policy like that.
Food insecurity in Canada is at 22.9% right now. It's at the highest it's ever been, and it's a problem. A lot of people need help. A lot of people need support, and a lot of people can't buy the food that they need at the grocery store right now.
Conservative
Lianne Rood Conservative Lambton—Kent—Middlesex, ON
If our standards were aligned with U.S. standards, because we talk about reciprocity and different food standards, what would that mean for Canadian consumers? Do you believe that we'd have access to more food and perhaps lower prices for food?
Senior Director, Agri-Food Analytics Lab and Professor, Dalhousie University, Agri-Food Analytics Lab
Not necessarily, but I am sensitive to the issue of standards. I think it's important that Canada remains an example.
I would say that the work that is being done by organic farmers is a great example. I think we need to support that sector as much as possible and expand it. There are things that we can do very well and remain competitive.
At the end of the day, we need to also be cognizant of the fact that we could jeopardize food affordability in Canada when we play with the border, and we've seen that time and time again throughout history.
Conservative
Lianne Rood Conservative Lambton—Kent—Middlesex, ON
Thank you.
I'll cede the rest of my time to Mr. Steinley.
Conservative
Warren Steinley Conservative Regina—Lewvan, SK
Thank you very much.
I have one question for Dr. Charlebois
It's good to see you again, Sylvain.
He is from Regina at the University of Regina, and we met many years ago when I was a young student at the University of Regina.
I have been trying to figure this out, and I haven't. We're talking about a carbon adjustment or a carbon price where a tax has decreased the cost of a product. When a tax has been applied to something, is there a rationale why that product would ever go down in price?
Senior Director, Agri-Food Analytics Lab and Professor, Dalhousie University, Agri-Food Analytics Lab
Do you mean a retail tax or a tax at the border, a tariff?
Conservative
Senior Director, Agri-Food Analytics Lab and Professor, Dalhousie University, Agri-Food Analytics Lab
We have a good example in Canada; it's supply management. I know there are a lot of supporters of supply management in the room, but when you look at prices in the U.S. versus Canada, we have high tariffs at the border protecting our supply management sectors. That's the choice we've made but, of course, it really suppresses competition.
If you look at retail prices in Canada versus the U.S., generally speaking, for poultry, eggs and milk, prices are much higher in Canada than in the U.S.
Liberal
The Chair Liberal Kody Blois
Unfortunately, we're out of time, but thank you, Mr. Charlebois.
Thank you, Mr. Steinley.
Monsieur Drouin, you have the floor.
Liberal
Francis Drouin Liberal Glengarry—Prescott—Russell, ON
Thank you very much, Mr. Chair.
There are a couple of facts here. Obviously, Canada exports more than 50% of what we produce, so we're subject to export controls from other countries, and I think that's why we're having this conversation today. Canada's not necessarily talking about implementing a carbon border adjustment, although G20 countries are talking about it. Canada is having this conversation, but nobody's talking about imposing a CBAM tomorrow morning.
My issue is that, when you analyze the political landscape of what's happening in the EU and understand what happened in December, January and February with the farmer's movement there.... My colleague Monsieur Perron and I call these les clauses de réciprocité here. In the EU, they call them mirror clauses.
The largest economy in the EU is pushing the EU to implement a CBAM on agricultural products right now. I agree with you that there is no perfect way to measure this right now, but if you're chatting with the folks in the academia sector, they are trying to measure and find out, whether in a wet season or a dry season, if we can we find that delta to determine how much crops are capturing carbon versus how much they are exposing carbon.
I just believe that if we do not take this seriously, we may end up putting our ag sector at a competitive disadvantage.
In the U.S., down south, right now we have a presidential candidate who is actively saying that there will be a 10% tariff on anything, so the world has completely changed from what it was 10 years ago. That's where I'm trying to take us to. What does Canada do?
Monsieur Charlebois, you mentioned that more incentive is the best way to go. Back in the early 1990s and late 1980s, we said, “We're going to put a price on CFCs.” We got rid of CFCs that were in the refrigerators because two countries got together and said that enough was enough.
The carbon tax, whether you agree with it or not, is the cheapest way to motivate a sector to move to substitute products, Mr. Steinley. That's what economists would say.
They both won a Nobel Prize, by the way—I'm just saying.
What does Canada do in 10 years if we export 50% of what we produce and they start introducing a CBAM, and because the technology has adapted it's now easy to measure our agricultural carbon output? What do we do?
I can start with Mr. Charlebois. I would also ask you whether you've looked at other jurisdictions, what they're doing and the political landscape as well.
I'll start with Monsieur Charlebois, and afterwards I can go to Mr. Cosbey too.
Senior Director, Agri-Food Analytics Lab and Professor, Dalhousie University, Agri-Food Analytics Lab
Thank you, Mr. Drouin.
I'll be brief to allow my colleagues to answer your question.
I would say that we absolutely need to continue to decarbonize our agri-food economy. There's no doubt in my mind. Of course, we tend to disagree on how to do that. I would prioritize two initiatives. One is investing in green technologies, and two is measuring carbon capture, at the farm level specifically and across the supply chain as well, to understand exactly what is happening.
The accounting of carbon capture essentially is, in my view, underappreciated.
Liberal
Francis Drouin Liberal Glengarry—Prescott—Russell, ON
I agree 100% , but if we do that, then we obviously have effectively found a way to aggregate this data down the line to provide a general number to the world to say that this is how much carbon we are capturing or how much carbon we are putting out.
If we are to participate in a cap and trade, for instance, and companies are investing in agriculture, we need to be able to say that if you plant x amount of whatever, you're capturing x amount of carbon. Therefore, you have found an effective way to measure.
Senior Director, Agri-Food Analytics Lab and Professor, Dalhousie University, Agri-Food Analytics Lab
That's correct.
Liberal
Francis Drouin Liberal Glengarry—Prescott—Russell, ON
Okay, but we're still working on that. That I understand.
Mr. Cosbey, I'll go over to you.
Senior Associate, International Institute for Sustainable Development
I would just very quickly agree that it's a no-lose policy to work on the measurement. To my knowledge—and I'm not an expert in this field—the measurement and the science of soil carbon capture and release is not there yet. However, it provides a foundation, not only for the kinds of things we're talking about here but for the proper functioning of offset markets that might rely on agricultural soil carbon retention in the future. That's all good.
Let me try one more time to convince you why this isn't a threat, though, if we're talking about the CBAM or carbon adjustment. The CBAM functions by asking individual producers for their data. It's not a national average figure. It works in the context of steel. We have about six big steel mills in Canada. How many agriculture producers do we have in Canada? Would you imagine a system that asks each of them to measure at the farm level, at the operation level, their carbon intake and their carbon emissions and then report on that?
Would it make any economic sense for any individual operator to participate in a regime like that, or would we just export somewhere else?
Liberal
Francis Drouin Liberal Glengarry—Prescott—Russell, ON
Technology is changing that conversation, and that's the point. Obviously, we don't want auditors on properties; obviously, we don't want that. However, technology is making that much easier today, and it will make it easier tomorrow. If you just go to the farm show out in Saskatchewan or Woodstock, you'll see a bunch of companies that are working on that right now.
Liberal
The Chair Liberal Kody Blois
We're at time. I gave a little bit extra to Mr. Cosbey.
Mr. Perron, you have the floor for two and a half minutes.
Bloc
Yves Perron Bloc Berthier—Maskinongé, QC
Thank you, Mr. Chair.
Mr. Charlebois, I understand the context of the example you gave regarding supply management.
That said, you explained that in the United States, agriculture was subsidized upstream. Consumers in the United States are therefore paying twice for their milk. You may get the impression that the purchase price is lower, but at the end of the day, it's not necessarily the case.
The countries that removed supply management systems did not see a significant drop in the selling price of products. There has, however, been a significant drop in producer incomes.
Am I wrong?
Senior Director, Agri-Food Analytics Lab and Professor, Dalhousie University, Agri-Food Analytics Lab
In my opinion, we have not made a choice in Canada. I would remind you that compensation is currently being offered to producers through the agreements that were recently signed. I'm talking about billions of dollars. It's not subsidies; it's compensation. I think it amounts to the same thing. Currently, in Canada, we offer both.
In my opinion, there is a bit of a hypocrisy going one here. On the one hand, the state sets quotas. On the other hand, producers are compensated indirectly with money because we have signed an international trade agreement with three major zones.
Personally, I have always said that there should be a single vision, not three or four.
Liberal