Agriculture Committee on Nov. 21st, 2024

[Richard Lehoux, Conservative, Beauce, QC]

Thank you, Mr. Chair.

Thank you to the witnesses for joining us today.

My question is for Mr. Rosser, from the Department of Agriculture and Agri-Food.

Were consultations held by the Canada Border Services Agency or the Department of Finance on the possible repercussions on the supply chain, at the moment the initial decision was made?

[Tom Rosser]

If I remember correctly, the invasion of Ukraine began on February 22, 2022, and I believe the sanctions were announced on March 2, so 10 days later. There were therefore not many consultations held before the decision was made.

[Richard Lehoux, Conservative, Beauce, QC]

Thank you, Mr. Rosser.

I understand from this that the Department of Finance told the Canada Border Services Agency to impose these tariffs without analyzing the possible repercussions on the entire supply chain in eastern Canada.

I will put the same question, this time to the official from the Department of Finance.

This decision was made without any thought to the potential repercussions on the procurement of fertilizer, which is important in ensuring food safety in Canada. Did it not occur to the Department of Finance to analyze this aspect, especially since our country was the first and the only one to impose these tariffs?

[Michèle Govier]

As Mr. Rosser mentioned, there was little time between Russia's invasion of Ukraine and the measure being imposed. Nevertheless, we did look at what our imports from Russia were, to find out whether we depended on it for some of the fertilizers, and we noted that it was the case for some fairly significant fertilizers.

As I stated earlier, because of the way the law is structured, we had to impose a horizontal measure. There isn't really an easy way to exclude any products.

We definitely assessed the impacts of the measure after it was imposed. We knew that there could be problems, but it's something the government decided to put in place fairly quickly.

[Richard Lehoux, Conservative, Beauce, QC]

Why is it still in place?

[Michèle Govier]

Are you asking why the measure is still in place?

[Richard Lehoux, Conservative, Beauce, QC]

Yes. After two years, it's clear that it has had a direct impact on producers and therefore on our food safety. It's an additional burden.

[Michèle Govier]

Yes. We know the tariffs led to changes in the supply chains. That was the purpose of this measure. We had the opportunity to examine the situation again when we broadened the measure for the first time. I think it was in the fall of 2022. When it was later integrated into legislation as part of the 2023 budget, we decided to maintain it as a horizontal measure. There weren't any other discussions with department of finance stakeholders regarding changes at that time.

[Richard Lehoux, Conservative, Beauce, QC]

What I understand from this is that Agriculture and Agri‑Food Canada did not intervene with the Department of Finance to say that it might want to think about the direct impact of the measure on the supply chain and on production.

[Michèle Govier]

There were discussions on that, especially at the beginning of the process in 2022, but they are ongoing. People were aware of some of the impacts, but the decision was made by the minister and by parliamentarians.

[Richard Lehoux, Conservative, Beauce, QC]

There doesn't seem to have been a decision about, or thought given to, the impact of the fact that 11 months after giving Sollio a refund, the CBSA went back on its decision and asked for that amount back. Why is it so hard to make a decision in this case? This is despite the fact that things moved much more quickly in other cases.

The CBSA does not seem to be ready to answer this question. We know the request is being processed at the moment—

[The Acting Chair, NDP, Richard Cannings]

Monsieur Lehoux, your time is up.

We can allow Ms. Govier a brief answer.

[Michèle Govier]

I think that was more about the CBSA. I don't think I would weigh in on that one.

[The Acting Chair, NDP, Richard Cannings]

Oh, I'm sorry.

Go ahead, Mr. Lawton.

[Alexander Lawton]

Very briefly, any decision made by the CBSA with respect to the eligibility or the legitimacy of any refund or lack thereof can be further appealed to either the CBSA recourse directorate or the International Trade Tribunal. Even though the decision is final, there are levels of appeal that could be taken advantage of by any importer.

[The Acting Chair, NDP, Richard Cannings]

Thank you.

Mr. Louis, you have five minutes.

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

Thank you, Chair. I'll be sharing my time with MP Murray as well.

Thank you all for being here.

In terms of today's study, and from what I'm hearing at home, farmers are looking for predictability and stability, emphasizing the need for a predictable, stable supply of fertilizers to ensure that farmers can have a successful future planting season. We're hearing that farmers want to make sure that every dollar invested pays off. We know that fertilizer is the largest on-farm expense for crop producers. I would like to use my time to discuss ways to make fertilizer use more efficient, which makes it more environmentally friendly and helps farmers be productive at the same time.

I'll address my questions to you, Mr. Rosser, as assistant deputy minister of the Department of Agriculture. Do we have government supports that support nutrient management plans, equipment modification and at the same time maybe soil samples and analysis? These are the things that farmers want to do to be more efficient.

[Tom Rosser]

I appreciate the question.

I would say that over the past several years, the department has put in place approximately a billion and a half dollars of programming in order to allow us to partner with producers to reduce their greenhouse and environmental footprint.

Part of that is something known as the on-farm climate action program. Among other things, that helps farmers to utilize fertilizers in more efficient ways that can reduce both costs and their environmental impact. The Sollio witnesses earlier did talk about some of the technologies they're interested in partnering with. That's the kind of thing we hope to be able to support through some of the programs we have recently put in place.

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

Is that part of Sustainable CAP, the Sustainable Canadian Agricultural Partnership?

[Tom Rosser]

I believe the on-farm climate action fund is outside of CAP, formally speaking, but it is a federally delivered program.

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

Thank you.

I wouldn't mind sharing my time with MP Murray.

[The Acting Chair, NDP, Richard Cannings]

Go ahead, Ms. Murray.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

Thank you.

I want to ask a few questions just to get a sense of the scale of the problem we're exploring here.

My understanding is that the price of fertilizer is incredibly important to farmers. We do have a very strong agriculture sector in British Columbia, so I have their interests at heart. My understanding is that the price of fertilizer has gone down since 2022, despite the removal of the most favoured nation status from Russia's exports.

I wonder if the CBSA could confirm whether I'm correct in understanding that Sollio would have made their own determination of what they owe, but that there are thousands of situations in which an importer's self-assessment of tariff is reviewed but not supported by CBSA, and then an adjustment is made.

Is that how the system works?

[Alexander Lawton]

Due to the provisions of section 107, and putting aside any company's individual situation, just as a general rule in the customs duty regime, importers self-assess when they account for their goods, and then from there, the CBSA is able to review those self-assessments.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

In this case, then, the review suggested that the reduction in tariff was not appropriate by about $7.8 million.

I also heard that Sollio is a very prominent partner in the agriculture sector.

Every dollar that businesses or co-ops have to spend beyond what they need to is difficult for them. I'm trying to understand the scale of the negative impact. It was $7.8 million. Could the agriculture ministry help us understand Sollio's size in their marketplace? Would this be 10% of profits? Would this be 1% or 0.1%? Just with a broad brushstroke, what is the scale of this extra cost, when the assessment was made that cost Sollio $7.8 million?