Agriculture Committee on June 13th, 2022

[Jean-Marc Ruest]

I agree. I think the demand for grains and oilseeds to be used as fuel obviously adds a new consumption source, and that can only have an impact on price, so the market will sort out where it ought to go. Food should win. People need to eat. There would naturally be, then, an increase.... If production does not increase and you add the consumptive demand, then the price is going to increase. The solution to that is to increase production. It goes to the point that I think Mr. Saik was making: that you—

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you. I'd like to get one more question in if I can

For Fertilizer Canada, is there any risk to any of our international trading patterns if we strive for more self-sufficiency? I'm thinking particularly of phosphorus now, because we should have the capabilities for nitrogen and potassium. Do you have any comments?

[Catherine King]

I know that Clyde is here, but I don't think he can answer.

In terms of phosphorus, we import all our phosphorus, primarily from the U.S., and from Morocco as well.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you.

Mr. Falk, go ahead.

[Ted Falk, Conservative, Provencher, MB]

Thank you, Mr. Epp.

Thank you to all of our witness.

Mr. Saik and Mr. Epp, like you, all four of my grandparents come from Ukraine as well, from southern Ukraine.

I would like to direct my questions to Mr. Ruest today.

Mr. Ruest, Richardson's has some assets in my riding, including their research farm in Glenlea, and you do a tremendous amount of good work there.

There were two things you mentioned in your presentation.

The first thing is that there need to be policies changed that would promote agriculture growth and increased yields. You also said that we need to grow as much as quickly and as soon as we can when it comes to food production.

You talked about impediments in policy that we have here in Canada, but you also talked about infrastructure. Where is the bottleneck in our infrastructure and where should we prioritize investments, and also about policies...? Could you address those two things?

[Jean-Marc Ruest]

Let me start with the infrastructure and the pinch points. Again, the rail issues that we've seen over the last number of years are chronic. There is a capacity issue in rail service. On that capacity, when we have something like forest fires and washouts, etc., those limitations literally wipe out the system for weeks or months at a time, with a very limited ability to recover quickly. I think there's an area of redundancy for excess capacity, for surge capacity that's required when we have those types of issues.

We also see the Port of Vancouver as a key port for exports, and we're seeing increased traffic coming through the port, which is a good thing. It's a sign of a healthy economy, with product needing and wanting to be exported, but we just don't have the infrastructure to match it. Second Narrows bridge is not equipped to take the number of railcars that need to pass through to load onto vessels. The Thornton passage needs to be expanded.

We need to accept the fact that a growing number of vessels will be coming in and out of the Port of Vancouver. Rather than pursuing policies that seem to try to limit the amount of vessels that are coming in or out, we need to facilitate their entry and exit.

[Ted Falk, Conservative, Provencher, MB]

Also, to some of the policies Canada has that you see are detrimental to agriculture...?

[Jean-Marc Ruest]

I think some of them have been touched on previously: things like a blanket reduction of fertilizer use by 25%. Without making the connection of what that will mean with respect to agricultural output, making a connection and understanding what the purpose or objective is, which is a laudable one of being environmentally conscious and sustainable, but making sure that it is aligned—

[The Chair, Liberal, Kody Blois]

I'm sorry. We're going to have to leave it there, gentlemen. That's six minutes, and we are under a tight schedule.

Mr. Drouin, it's over to you.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Thank you, Mr. Chair.

I want to correct something Mr. Ruest said.

We aren't calling for a blanket reduction of fertilizers in Canada; rather, we want a reduction in the emissions attributable to fertilizer use. That is not the same thing. There are strategies that could be used in agriculture. For instance, the Fertilizer Canada representatives spoke about 4R nutrient stewardship. I think it's important to use the right words.

Mr. Ruest, I proposed that we invite representatives from Richardson International because I think your company plays a major role in exporting canola. Canada plays a major role as well. Canada produces 40% of the world's canola exports. Cooking oil is the product you often hear about. We talked a bit about market forces, but obviously, you work with farmers who supply you with the canola.

How do you see the issue of cooking oil? What role can Canada play when it comes to canola, in particular?

[Jean-Marc Ruest]

One of the benefits of canola is that canola oil is recognized as being very high in nutrients. That's a huge advantage. I would also say that canola oil is largely produced in an environmentally responsible way. We compared the system we use for the production of canola oil with production systems for other cooking oils, including palm oil, and we found that our system of production was much more environmentally responsible.

Canola doesn't necessarily grow well in all environments or conditions. Canada has conditions that are very conducive to growing canola, so our production capacity gives us an edge.

We've made very smart investments in developing canola production in Canada, and we have solid infrastructure. That sets us apart from our global competitors. All of that is very good news for Canada.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

You spoke with my fellow member about the infrastructure that was needed for agricultural development. When floods like the ones in British Columbia occur, it illustrates how fragile our infrastructure is.

Are you recommending increased government investment in export infrastructure and measures to improve rail access?

[Jean-Marc Ruest]

Yes, that is definitely something we recommend. It's crucial to understand how important good infrastructure is, not only to meet current needs, but also to be able to seize future opportunities. That type of work is a huge undertaking, and it can't be done overnight. These projects take years, if not decades, to complete—hence the importance of getting started right away.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

If I'm not mistaken, your company has been investing in your terminal facilities for five to 10 years.

Is that right?

[Jean-Marc Ruest]

Yes, that's right.

We nearly doubled our terminal capacity seven or so years ago. A number of our competitors with grain elevators at their Vancouver port facilities actually did the same thing. The industry has made significant investments in infrastructure.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

As I understand it, your facilities have the capacity to accommodate many rail cars, but there is too much traffic in certain spots to accommodate that increase.

Is that true?

[Jean-Marc Ruest]

The grain elevator at our port terminal facilities in Vancouver could accommodate twice as much grain coming in by rail. We have a lot of unused capacity.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Thank you.

My next question is for Ms. King.

We know fertilizer plays an important role in growing food. Obviously Russia and Belarus are out of the market now. Checking for next year's season, are your members readjusting their supply chains? Without naming any, have you had those conversations with some of your members?

[Catherine King]

I think conversations are still going on about supply and demand from our members' perspectives. I know that on the potash side, our members made an announcement on increased production. It's just on the production side of things.

Unfortunately, it's not like flipping a switch. There's a lot of complexity, so they're going to do all they can to meet the demand that's out there. We haven't had, other than those announcements, any in-depth conversations with them on where the market is looking for 2023.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

We know that the availability varies when it comes to certain fertilizers out west versus out east. Out east we're missing a lot of nitrogen. Are you having conversations with some of your members about...? We're good at transportation, and obviously cost is an important factor, but do your members see that west to east travel as something that is feasible or not feasible?

[Catherine King]

It still remains more economical to receive product by ship in the east. I would echo the comments on infrastructure. I think Canada really needs to come up with a strategic 10-year path forward on what we're going to do for that. As these announcements come on and our members increase their production, they'll need to have the railway availability to get that product to their customers.

[The Chair, Liberal, Kody Blois]

We'll have to leave it there. Thank you, Mr. Drouin.

We now go to Mr. Perron for six minutes.

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

Thank you, Mr. Chair.

Thank you to the witnesses for being with us today.

I have a lot of questions, but little time, so I'm going to be quick about it.

Mr. Ruest, when it comes to increasing production and exports, you recommend we take a long-term view, not a short-term one, as is the case with an emergency relief approach. We have heard from witnesses that Canada should direct a portion of its international aid to improve countries' food self-sufficiency and local capacity.

How do you think we should balance those two aspects?

[Jean-Marc Ruest]

As you mentioned, it's all about balance. Despite our best intentions, we need to be realistic about what we can do in every region and what the most effective way is to provide those populations with the food they need.

In some places, the challenges can revolve around geography, a lack of farmland and drought. No matter how hard we try, those places will always have a limited capacity to produce certain foods, at least. That is why it's important to look at the situation when determining what is feasible and to pay attention to regions in the world with overproduction.

Science can still play a role in helping to build local production capacity, such as the identification of seed varieties that are drought-resistant or better able to withstand diseases common in certain regions.

It's a complex issue, and it requires proper analysis. It all comes down to one question: What is the most effective and efficient way of achieving the goal?

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

Sorry, I have to stop you there, but you did a good job of answering my question. Thank you.

I want to come back to transportation, quickly.

Do you have any concrete recommendations for the committee when it comes to transportation?

You brought up rail, and we also touched on the port terminal facilities. In a previous study, we examined the challenges around farm products and containers and the lack of competition there.

Do you have any comments or recommendations on that?