Evidence of meeting #30 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 study.
A recording is available from Parliament.
Chief Executive Officer, Sollio Cooperative Group
I think I just figured it out.
Chief Executive Officer, Sollio Cooperative Group
My apologies; thank you very much.
Sollio agriculture supports producers in eastern Canada to help them maximize their yields by specializing in the marketing of agriculture inputs and value-added agronomic services. We are proud to have fulfilled our duty to ensure our producers were supplied with fertilizer this past spring and to avoid shortages despite the sanctions imposed on fertilizer coming from Russia.
The prices, the large volumes required and the logistical constraints are the reasons that traditionally explain why eastern Canadian farmers purchase fertilizer from Russia. In eastern Canada, we normally fill our warehouses before the St. Lawrence Seaway closes to ensure we have at least half of the quantities of nitrogen required to supply growers for the 10 or so days of spring planting. The other half, which represents more than 10 ships for us, then arrives in the spring just in time to keep up with the rate at which our warehouses are emptied during planting.
This usual process calls for considerable collaboration and planning by producers and their suppliers in order to have the product available in the spring. However, because of the impacts of the war in Ukraine, some types of nitrogen are not currently available and producers are having to adjust their plans accordingly.
As a result, many are concerned about product availability and high prices and are delaying their orders. Consequently, without firm orders, we must review our supply strategy to avoid stock outs, knowing furthermore that our deadline is February to avoid the food insecurity associated with a decrease in production.
I'll turn to Mr. Gervais.
President, Sollio Cooperative Group
Producers need to be confident that the government will adequately support them through major fluctuations in fertilizer costs. Otherwise, producers will change their seeding plans and cut their fertilizer applications, which will reduce yields and hurt both domestic production and Canadian exports.
In the short to medium term, innovation and technology will not be enough to reduce reliance on foreign fertilizer. The tariff creates an additional production cost for Eastern farmers, compared to their counterparts in other provinces or the United States.
We are calling for clear and consistent policies for the 2023 season so that we do not find ourselves in the same perilous situation we were in this past March when the sanctions came into effect.
The federal government must lift the 35% tariff on Russian fertilizer. We understand and respect the sanctions imposed on Russia. That said, if necessary, we should consider lifting the sanctions on fertilizer from Russia to ensure our food security and our ability to do our part to feed the world.
The government should provide a stable and predictable business environment for Eastern farmers.
Thank you again for your invitation. We will be pleased to answer your questions.
Liberal
The Chair Liberal Kody Blois
Thank you, Mr. Gervais and Mr. Kaastra.
We're now going to have our first round of questions. We will have a second round, if time allows, but it will be shorter.
Mr. Barlow, over to you.
Conservative
John Barlow Conservative Foothills, AB
Thank you very much, Mr. Chair. I'll be sharing my time with Mr. Lehoux.
I'm going to try to be as quick as I can, as we have limited time today.
Mr. Thompson from Nutrien, you mentioned that trying to reach this fertilizer emissions reduction target of 30% could have significant risks. As we talk about the importance of food production right now as we talk about food security, could you maybe expand on what some of those risks would be?
Executive Vice-President, Chief Strategy and Sustainability Officer, Nutrien Ltd.
Thank you, Mr. Barlow, for the question.
As was mentioned by me and other panellists today, our view is that Canadian agricultural producers are already leading on the world stage in terms of production per unit of greenhouse gas emissions. Given the situation we're in globally, with tight supplies of crop commodities and fertilizers—and strong demand for each—we're acutely aware that any further disruptions to these supply chains could result in further tightness in the supply chain, putting food security at risk to a greater degree.
The war in Ukraine has exacerbated a situation that had already been worsening over the past few years. Food security was becoming more of an issue due to suboptimal production in North America and South America in 2021. Given the significance of Ukraine and Russia in the production and export of key global commodities, this situation has become much worse. Therefore, were we to impose a situation where fertilizers were cut arbitrarily, without consideration for food security, we could see that balance tighten even further and put the world in dire need of food supplies.
As I mentioned in my opening comments, many studies point to the fact that fertilizers account for up to 50% of global crop yields. Therefore, they are of paramount importance. Our focus is on continuing to increase performance on a greenhouse-gas intensity basis, while also accounting for food production.
Conservative
John Barlow Conservative Foothills, AB
Thanks very much. I appreciate that.
Mr. Prouse, as quickly as you can.... I only have about a minute left, because I want to split my time.
On the same kind of question, what would the impact on commodities and our yields be if we were to do this 30% emissions reduction and triple the carbon tax on April 1?
Vice-President, Government Affairs, CropLife Canada
I'll let fertilizer answer fertilizer questions.
Our concern is on access to innovation for crop protection products. As discussed with many members of this committee, we're concerned about where the current PMRA transformation may be heading. We're concerned about a very broad, unfocused review of the Pest Control Products Act. It's creating a great degree of uncertainty in the sector. Frankly, we're concerned that a lack of access to innovation for growers might lie at the end of the road.
Conservative
John Barlow Conservative Foothills, AB
Thank you.
I'm going to give the rest of my time to Mr. Lehoux.
Conservative
Richard Lehoux Conservative Beauce, QC
Thank you, Mr. Chair.
I would like to thank my colleagues as well.
My question is for Mr. Gervais from the Sollio Cooperative Group.
We know that orders for the 2023 seeding season will be made in the fall. In your current discussions with the government, are you getting an idea of what measures will be taken to meet your needs in 2023?
President, Sollio Cooperative Group
Thank you for the question, Mr. Lehoux.
Given that it is of a rather technical nature, I will ask Mr. Kaastra to answer.
Chief Executive Officer, Sollio Cooperative Group
You are right, Mr. Lehoux.
We are making our procurement plans for the next season. Obviously, we are looking at buying from countries other than Russia, as I said earlier.
Before, approximately 60% of the fertilizer imported for Eastern Canada came from Russia. The percentage was even higher for nitrogen, which was about 80%.
We are currently looking to source our supplies elsewhere, in the Middle East, Africa, Nigeria or Trinidad and Tobago, to name a few. I would add, however, that things are not that simple.
Conservative
Conservative
Richard Lehoux Conservative Beauce, QC
I have another question for you. It concerns the 35% tariff imposed last spring on Russian fertilizer.
Our research has revealed that $34.1 million were collected in June 2022 and that amount has been put into a fund. We are now wondering how that fund will be used.
I imagine, after speaking with your colleagues, that you may have ideas on the way that the fund could be used. Should it be paid out to producers, given that they are on the frontline in terms of the tariff's impact?
What are your thoughts on this issue?
President, Sollio Cooperative Group
Mr. Lehoux, I would answer by saying that it is not up to us to make suggestions as to the way the $34.1 million could be used. I think that that is rather your remit. We are asking, however, that the monies collected be paid back to producers.
I will now complete the answer I gave to your first question.
Last week, myself and Mr. Kaastra were in France on an economic mission. We have the opportunity to hold many discussions with our counterparts, the French cooperatives. We learned that in Europe, a good number of fertilizer factories have shut down due to energy prices. That means that countries that weren't importing fertilizer in previous years are now looking for fertilizer on the international markets. That makes things even more complicated in terms of supply for the 2023 season.
Liberal
Liberal
Liberal
Francis Drouin Liberal Glengarry—Prescott—Russell, ON
Thank you very much, Mr. Chair.
My first question is for the representatives of the Sollio Cooperative Group.
If I understood you correctly, you are suggesting to the committee that the 35% tariff be abolished.
In December of last year, I received calls from farmers in my riding, when nitrogen prices shot up by 100%. I must state that this was not caused by the war in Ukraine. The rise in prices preceded the war.
Obviously, there is the issue of the tariff, but we can't encourage Canadian businesses to continue to do business with Russia.
You have suggested that the tariff be abolished, but what is the guarantee that Russia will be a reliable partner? We have seen what has happened in the North Sea. Russia will not be a reliable partner, whether it be on a short, middle or long-term basis.
What can I say to farmers in my riding?
Is Sollio making changes to its supply chains for nitrogen? As we know, Eastern Canada imports 40% of the nitrogen that it uses.
President, Sollio Cooperative Group
Mr. Drouin, what you have to know is that a 100% price increase, coupled with the 35% tariff, amounts to a huge increase to the fertilizer bill. Unfortunately, Eastern Canadian producers are the ones currently footing the bill.
As I stated earlier, sourcing supplies for the 2023 season is becoming very complicated. Moreover, farmers are already expressing their concerns in terms of available fertilizer for 2023.
Perhaps Mr. Kaastra has something to add?
Chief Executive Officer, Sollio Cooperative Group
That is indeed the situation.
Of course, we could not have predicted the war in Ukraine. We bought our fertilizer from Russia for logistical reasons, so that Eastern Canadian farmers could get the product they needed. Those are the main reasons why we sourced fertilizer from Russia.
Of course things will change in the future. The moment the sanctions were imposed, which was at the end of February or the beginning of March, we had already ordered the equivalent of eight boatloads. It was already planned and paid for by farmers under contract. Then a 35% surcharge was slapped on which brought additional costs...
Liberal
Francis Drouin Liberal Glengarry—Prescott—Russell, ON
I understand all that. It remains, however, that 60% of the nitrogen imported for Eastern Canada is not hit by the 35% tariff.
What happened when the price went up by 100% before the war? You are part of a supply chain, perhaps you can explain to the committee why prices shot up by 100%.
The 35% tariff is at issue here, but it seems to me that a 100% increase hurts farmers a lot more.