Agriculture Committee on Oct. 10th, 2024

[Scott Ross]

Our experience is that there would be an outsized impact on smaller operations. Certainly, they still have to have the same sorts of equipment costs and the like, and the smaller-scale you are, the less wiggle room you have within your operating margin to really account for these added costs.

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

Thank you.

I'm going to switch gears and go over to the Agri-Food Innovation Council.

All of us farmers in the room know that farmers are the best stewards of the land, and they don't need more punishing government policy to direct them to take the best course of action to make sure their fields stay healthy and their crops are growing and plentiful. I know the best techniques and the best innovations are used by farmers to maximize yield, even on my farm, and preserve the environment they are responsible for.

I'm curious how the increased costs from these border carbon adjustment mechanisms affect the ability of Canadian farmers to invest in necessary innovations for their sustainability.

[Serge Buy]

Any added cost, as Mr. Currie and Mr. Ross indicated, would be an issue for all farmers in Canada, as well as for food processors and the whole system. This would definitely have a negative impact. This is why we're saying not to move in that direction at this point but rather move toward funding programs that really support the adoption of some of the techniques and help productivity and competitiveness.

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

In what ways could the implementation of these CBAMs undermine Canada's effort to enhance agricultural innovation and research as outlined in your national strategy proposal?

[Serge Buy]

The issue is simple. Any cost that you add to farm operations will result in farmers being unable to invest in further adoption. The challenge or the equation is really clear and simple. If you can't invest in new technology, then you're stuck and you're going to have challenges in looking at the future. We're definitely promoting a very different perspective on that, one in which the government should be supporting producers and food processors, etc.

[The Vice-Chair, Conservative, John Barlow]

Thank you very much, Mr. Buy.

Thank you very much, Ms. Rood.

We go now to Ms. Murray for five minutes, please.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

Thank you for the interesting discussion we're having on this matter.

I can completely understand the various concerns being raised by industry representatives here today, such as the need to be cautious about competitiveness and the impacts on small farms. At the same time, this is not completely a Canadian decision.

If there were to be investments to prepare for potential CBAMs, including in Europe, the United States, etc., where should those investments go? What do you think industry needs to do to prepare and assist your members, and what does Canada need to do to prepare and assist the agricultural sector in Canada in the case this should happen? We can put our heads in the sand and we can say we don't like it—I get that, and I get why—but what should we do to move in a direction that makes us less vulnerable to CBAMs?

Mr. Currie, I'm interested in hearing from you, but also from Mr. Northey and Mr. Buy.

[Keith Currie]

Thank you. That's a great question.

As my colleague, Scott Ross, indicated, we're still at a very high level on this whole subject matter.

Something we've been calling for, for a long time—and it applies not just to agriculture but to a lot of industries—is that we need to develop a national data strategy, because data is key to understanding how we move forward, how we invest.

Realistically, I think if we're looking at sustainability as a whole, holistically, we really need about $2 billion, over the next five years, of investment in Canadian agriculture sustainability initiatives to make sure that we're ready to go when carbon border adjustments do come along. I think that would be important, not only for the Government of Canada in terms of making sure that we continue our high export standards, but also for our Canadian producers to be able to be competitive and stay in business.

When it comes to sustainability, I know we want to focus a lot on the environment, and farmers are always willing to do their part, but we can't lose sight of the social aspect of this, more specifically food insecurity. Let's not forget the economic impact, too, because, as this committee has probably heard several times, it's hard to be green when you're in the red. If we can't be profitable while doing this, none of this is going to happen, so it needs significant investment in sustainability, yes.

Thank you.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

What should the industry invest in and do, or Canada invest in and do, to prepare should this be moved forward by our trading partners?

[Greg Northey]

If we look at the example of the industries impacted by the CBAM now, they've had a two-year transition period basically to adjust to the data requirements.

Similar to Keith, I would say we need a national accounting system. We need to understand our carbon intensity is better than that of any other country in the world. I would say, whether a CBAM comes or not, that is something we're already investing in, because the reality is that our supply chains want to see that kind of data. They want to understand a pulse and how it works through a supply chain, and what the fractions from a pulse are as far as carbon intensity is concerned.

We're investing in that already, but absolutely, for the government, when you look at all of grain production, that's the focus. There's a win-win there, because the reality is, whether there will be a BCA or not—who knows—that data, that understanding of what our intensities are, how to account for them, setting the global standard.... Canada should be leading, setting the global standard on that kind of thing and understanding our national inventory report better. Canada can lead in that whole space, and we can basically insulate ourselves against a BCA or other supply chain requirements.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

Thank you.

Mr. Buy.

[Serge Buy]

I would echo my colleagues' comments on that, but I would go a little bit further in terms of other specific measures that could be added to support the adoption of measures on the farm to further reduce greenhouse gases and increase productivity. Ultimately, we need to deal with those issues to prepare ourselves for something that, you're correct, may come at some point. It is important to look at all of those things.

It is important, as well, to look at ensuring the success of our innovators on many fronts. I'll give you a quick example. I won't take too long—

[The Vice-Chair, Conservative, John Barlow]

I'm sorry, Mr. Buy. Make it quick. We're running tight on time.

[Serge Buy]

When people are successful, innovators are successful. They go in the public markets and raise funds in the public markets, but then that disqualifies them from getting refundable tax credits to support the development and launch of lower-carbon solutions. Why are we doing this? Why are we not saying, “This is great. You've been successful. Let's support you even more”? Those are issues that we're looking at.

[The Vice-Chair, Conservative, John Barlow]

Thank you very much.

Mr. Perron, you may go ahead for two and a half minutes.

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

Ms. Forcier, I want to revisit the matter of working conditions. It's very hard to do anything on that front. You mentioned the production cost disparity between Mexico and here.

What can we do to balance things out a bit and maintain domestic production? Is more government support needed in some cases?

[Stéphanie Forcier]

To answer your question, I would say that we talked about California being a major player. Even California, though, is looking to Mexico right now. That means we're going to see more and more Mexican strawberries coming into Canada. The conditions of the workers growing those strawberries are not questionable, but they aren't necessarily in line with the working conditions in Canada.

How can the government help? It could introduce measures to create a level playing field for Canadian strawberry growers. Again, if we look at the private sector, it is possible to visit suppliers on the ground or see how the food is produced in plants. Inspections need to be done, but not just at the border. It's also important to go to suppliers' sites.

Should it fall to the government or retailers? The important thing is making sure that suppliers adhere to certain requirements, not necessarily environmental requirements, but social ones. If a supplier will not commit to adhering to all the requirements or fails to adhere to them, unfortunately for them, their products shouldn't be allowed into Canada.

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

Thank you. That's something that could be negotiated at the international level, then.

Mr. Buy, you mentioned in your opening statement that many other policies were available. You started to talk about that, and I'd like to hear your comments. If you run out of time, you can provide additional information to the committee in writing.

I'm eager to hear what you have to say on that, but if there's something else you'd like to bring up, I'm all ears.

[Serge Buy]

Thank you very much, Mr. Perron. I always appreciate having the opportunity to expand on certain ideas.

Right now, I think it's important to look at this as a proposal for consideration. Obviously, the tariff or policy won't be put in place today, but we are getting ready for tomorrow. Getting ready for tomorrow involves a lot of things. We have identified, and pushed for, nine measures. We will follow up with those in writing, so the committee will have the information.

I think many things can be done when it comes to productivity and the way research and innovation can contribute to productivity. In that respect, it's important to ensure that Canadian farms, food producers and the rest of the supply chain can be competitive internationally. That's the most important thing on that front.

I think it's also important to review how federal funding programs are developed. In 2023, the Standing Committee on Science and Research recommended that the government review the various funding programs for redundancies. The government responded to the report, but did not address the issue through the same lens at all, let's just say.

[The Vice-Chair, Conservative, John Barlow]

Thank you, Mr. Buy.

That's the time.

Thank you very much, Mr. Perron.

Now it's Mr. Cannings for two and a half minutes, please.

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

Thank you.

I'm going to turn to Mr. Currie.

I'm trying to get at the complicated nature of this. You talked about how this has to be an integrated approach, especially with other countries. I couldn't possibly see Canada going into Lithuania or somewhere and doing an audit on the carbon balance on the farms of Lithuania.

I'm wondering what you see as the possibility of this even moving forward. How the EU approaches these other sectors, could this even work in the whole agriculture or agri-food sector?

[Keith Currie]

We're at a place right now where we need to be ready. Agriculture is probably not going to have to look at carbon border adjustments in the very near future, but it's coming. Any trade discussions we've had in the last four or five years have included carbon border adjustments as part of future trade negotiations, so we certainly need to be ready.

As I've said before, we need to have the data behind what we're doing. We need to make sure we're collaborating with our most trusted jurisdictions that we trade with to make sure that we're on the same page with respect to how we apply border carbon adjustments.

I think it's imperative that our government makes sure we're ready to go. As an export nation, especially in agriculture products, we need to make sure that we are ready and that we do it as right as possible. We can take our time to make sure we get it right, but we have to make sure we are ready to go when these adjustments are put into place.

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

One of the preparations you just mentioned when you were talking to Ms. Murray was the need for data. I can imagine any calculation of a border adjustment in this case would require a lot of data from the agriculture sector, and that might be easy in some cases.

Can you or Mr. Ross, or whoever wants to take that, elaborate on what we would need to get ready for this?

[Scott Ross]

Mr. Northey said it quite well: What is really important is carbon intensities and better understanding of what that looks like across the diversity of our sector.

Another key issue at the heart of this is that we also need to ensure that the national inventory report, which we often use for measuring or reporting our emissions, for example, accurately reflects what's actually happening on a farm. We continue to see areas, like the manner in which fertilizer emissions are measured, where there is not a full grasp of the practices on farms and the ramifications in terms of emissions. Critical to this is making sure that our central repository on emissions reporting is accurate from a farming perspective, and that's not a small task, because of the diversity of the sector. We're working in complex biological systems and ecosystems. That's number one.

However, more than anything, it's also about ensuring that, at the sector level, we have that granular insight and understanding of what's happening on individual farms. That's certainly paramount in this.

[The Vice-Chair, Conservative, John Barlow]

Thank you, Mr. Ross.

Thank you, Mr. Cannings.

Thank you to our witnesses for being here with us today and for the excellent information.

Colleagues, before we suspend, I need the consent of the committee to knight Mr. Cannings to allow him to take the chair for the second panel. Are there any concerns with that?

Are you having a concern with that yourself?