Evidence of meeting #119 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 fertilizer.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Casper Kaastra  Chief Executive Officer, Sollio Cooperative Group
Patrice Héroux  Vice President, Finance, Sollio Cooperative Group
Marc Poisson  Director, Governmental and institutional affairs, Sollio Cooperative Group
Alexander Lawton  Acting Director General, Trade and Anti-dumping Programs Directorate, Canada Border Services Agency
Michèle Govier  Director General, International Trade Policy Division, Department of Finance
Tom Rosser  Assistant Deputy Minister, Market and Industry Services Branch, Department of Agriculture and Agri-Food

8:50 a.m.

Conservative

Lianne Rood Conservative Lambton—Kent—Middlesex, ON

Thank you, gentlemen, for being here.

I want to go back to the shipments and the tariff issue we were talking about.

I come from southern Ontario. We have a lot of farmers who use your services.

You mentioned that you had three shipments in transit. The government approved a refund of $7.8 million. Did you receive that refund from the government once they approved it?

8:50 a.m.

Vice President, Finance, Sollio Cooperative Group

Patrice Héroux

Absolutely; we received the full $7.8 million. The same amount was redistributed throughout our networks, in line with our commitment to agricultural producers, in proportion to the rates initially paid.

8:50 a.m.

Conservative

Lianne Rood Conservative Lambton—Kent—Middlesex, ON

The government authorized and gave you the $7.8-million refund, and you in turn gave it back to the farmers, which was the right thing to do.

If I understand this correctly, the CBSA now has asked for that refund back, which you have already distributed to farmers. On top of that, the CBSA is asking you for interest payments, and they're the ones who gave you the authorization for the refund and refunded the money.

Is that correct?

8:50 a.m.

Vice President, Finance, Sollio Cooperative Group

Patrice Héroux

Absolutely.

Eleven months later, we received an adverse notice from the agency requiring us to repay the sum of $7.8 million, plus interest, which totalled $395,000.

8:55 a.m.

Conservative

Lianne Rood Conservative Lambton—Kent—Middlesex, ON

You are shouldering this burden on behalf of farmers right now, from what I understand. What is that impact on the producers and on the cost of their production right now?

8:55 a.m.

Chief Executive Officer, Sollio Cooperative Group

Casper Kaastra

I'll field that one.

Yes, technically our organization is fielding the full amount of the tariff of 7.8%, plus the interest repaid. With our organization being owned by farmers, it means that it impacts their results as owners of the co-operative.

The impact for us is really that it limits our ability to reinvest in ongoing business activity and in improvements to basic business functions, and it limits our ability to try to improve productivity and to invest in technology. Those are funds that we would certainly deploy to better use than what we believe they're being used for today.

8:55 a.m.

Conservative

Lianne Rood Conservative Lambton—Kent—Middlesex, ON

Obviously fertilizer is an essential input for many crops, especially where I come from in southwestern Ontario.

How have these tariffs contributed to higher food prices for Canadian consumers? What does this mean for food sovereignty in Canada?

I know you alluded earlier to the tariffs contributing to decisions made by your own organization. Is it contributing to decisions by farmers to reduce their production capacity at all, and what does that mean for food price stability?

8:55 a.m.

Director, Governmental and institutional affairs, Sollio Cooperative Group

Marc Poisson

It’s an interesting question, because it goes back to the premise of the special permits we got from Global Affairs Canada to bring in four of our ships. We didn’t allude to this earlier, but given that some ships were flying the Russian flag, the sanctions did not allow them to dock and unload their cargo. The country’s food security was the premise that allowed these ships to dock and unload their cargo. In our opinion, it makes no sense, in a way, to maintain the tariff even though we know that these shipments are necessary for the country’s food security. From our perspective, it doesn’t make sense.

This is all the more senseless given that, right now, Canada is allowing Russian aluminum to enter Canada. It’s a specific grade of aluminum, but there is Russian aluminum coming in to supply the aerospace industry. We need a good explanation of why the aviation industry is more important than food production in Canada.

8:55 a.m.

Conservative

Lianne Rood Conservative Lambton—Kent—Middlesex, ON

Thank you. That's a very good point. I would like to ask the same question to the officials in the next hour.

How do the fertilizer tariffs exacerbate the trend of reduced investment in Canadian agriculture, and what does that mean for the sector's future resilience and innovation?

8:55 a.m.

Chief Executive Officer, Sollio Cooperative Group

Casper Kaastra

I think the amount that was deployed and paid certainly is a direct impact on funds that could be used for other areas, in terms of either finding alternatives from new technology or helping to reduce reliance on imports from other regions of the world. Those are funds that certainly could be used elsewhere to improve investment, either at the farm level or through the supply chain, for sure.

8:55 a.m.

Conservative

Lianne Rood Conservative Lambton—Kent—Middlesex, ON

Thank you very much.

The Vice-Chair Bloc Yves Perron

Thank you very much, Ms. Rood and Mr. Kaastra.

I now give the floor to Mr. Louis for five minutes.

Tim Louis Liberal Kitchener—Conestoga, ON

Thank you, Mr. Chair.

Thank you for being here today. I do appreciate this.

You mentioned in your opening statement that eastern Canadian farmers, especially in Ontario where I am from, are disproportionately affected by these tariffs, and about 85% of the nitrogen fertilizer used in the region is imported from Russia.

Ultimately, today, farmers are looking for predictability, and they're looking for stability in the supply of fertilizers to ensure that they can plant effectively for the future. We mentioned that, again in Ontario, about 40% of the nitrogen comes from Russia, but I just want to confirm this.

Canada produces the potassium we need; we're self-sufficient in potassium. As far as phosphorus is concerned, do we mostly rely on the United States for phosphorus, or what countries would they be?

8:55 a.m.

Chief Executive Officer, Sollio Cooperative Group

Casper Kaastra

The major supply sources for phosphorus have been traditionally in the U.S., from the central Florida region. We continue to supply the eastern Canadian and Canadian market from that region. Morocco is a very significant and rising source of imports for Canada as well.

Tim Louis Liberal Kitchener—Conestoga, ON

Today farmers are considering nitrogen products. I want to talk about the nitrogen protection products and procedures that can help, because that's one of the ways we can do this. Farmers are looking for that. Every dollar invested in fertilization should pay off. We're talking about help with volatilization, leaching and denitrification.

Are you working with farmers to help them reduce those uses of nitrogen, which could not only take our reliance off of those fertilizers but also save them money?

9 a.m.

Chief Executive Officer, Sollio Cooperative Group

Casper Kaastra

Thank you for the question.

That's relevant for us, because we recently invested in a partnership with a firm from the U.S. for a reduced-release technology fertilizer that can be applied to traditional fertilizer products. We recently invested over $20 million in a coating facility in St. Thomas, Ontario. That's a clear example of the commitment we have to find ways to improve efficiency in fertilizer's nutrient use.

9 a.m.

Liberal

Tim Louis Liberal Kitchener—Conestoga, ON

Do you have numbers or a report you can share with us, as far as the success of that goes?

Go ahead, Mr. Poisson.

9 a.m.

Director, Governmental and institutional affairs, Sollio Cooperative Group

Marc Poisson

I just want to let you know that we have a study under way, jointly with McGill University in Quebec, to monitor the reduction of greenhouse gases from these controlled-release fertilizers. At the end of the study, we will be able to share the findings with the committee.

9 a.m.

Chief Executive Officer, Sollio Cooperative Group

Casper Kaastra

I would add that there is some public information available indicating that greenhouse gas emissions are significantly reduced by as much as 30% through the use of controlled-release fertilizer products, or nitrogen-inhibited products. Our estimation is that the results of tests we currently have under way should validate this.

9 a.m.

Liberal

Tim Louis Liberal Kitchener—Conestoga, ON

Thank you.

As I said, we're looking to help the farmers in more ways than one. We've talked about this: Sollio, Agromart and others in the industry have obviously been exploring other sources of fertilizer that will reduce our dependency on Russian imports.

What is your long-term strategy to ensure fertilizer supply stability, without relying on politically unstable regions?

9 a.m.

Chief Executive Officer, Sollio Cooperative Group

Casper Kaastra

There are a couple of key areas.

One, for sure, is what we just mentioned: improving nutrient-use efficiency to ensure that what's applied to the field is taken up by the plants, so it's used and directly inputted into production at the farm level. This reduces waste and benefits the farmers. It benefits everybody by focusing on different technologies and practices in those cases.

We're not a direct manufacturer, but we certainly support manufacturer efforts to have more domestic production of fertilizer products in Canada or in other safe regions of the world, including the U.S. and adjacent countries.

9 a.m.

Liberal

Tim Louis Liberal Kitchener—Conestoga, ON

I appreciate that, and I think everyone at this table is looking out for our farmers, including you.

The stability issues are obviously global. You mentioned extreme weather and geopolitical issues. Are you looking at other countries and companies? Are you working together globally to try to solve this problem?

9 a.m.

Chief Executive Officer, Sollio Cooperative Group

Casper Kaastra

The short answer is yes.

As I mentioned earlier, there are limited regions of the world where fertilizer is produced and manufactured, which increases the risk for supply wherever it's consumed globally. However, we actively work to find alternative technologies to help minimize that risk, or to find alternative sources globally.

The Vice-Chair Bloc Yves Perron

Thank you very much, Mr. Louis and Mr. Kaastra.

It’s now my turn to take the floor for two and a half minutes. You may have an opportunity to complete your previous answers by answering the main question I want to ask you: What is the long-term impact of this tariff on food security in the country, as well as on the cost of food?

The cost of production has certainly had an impact beyond the amount, which, in all likelihood, should be reimbursed to you. I imagine that will ultimately be the case, since this request seems logical. There is also the imposition of the tariff on supply change and the imbalance that has created with respect to western Canada, which is a producer.

I’m listening to what you have to say about that.

9 a.m.

Director, Governmental and institutional affairs, Sollio Cooperative Group

Marc Poisson

I’ll answer the first part of the question, at least. Mr. Kaastra can add to the answer, about western Canada.