Agriculture Committee on Oct. 19th, 2022

[The Chair, Liberal, Kody Blois]

I call this meeting to order.

Welcome to meeting No. 32 of the House of Commons Standing Committee on Agriculture and Agri-food.

To start, I’d like to give a few reminders.

Today’s meeting is taking place in a hybrid format.

Proceedings will be made available via the House of Commons website. Just so you are aware, the webcast will always show the person speaking, rather than the entirety of the committee. Screenshots or taking photos of your screen is not permitted.

Today, Mr. Jean-François Lafleur is acting as the committee’s clerk. He usually works at the Standing Committee on Justice and Human Rights, but today, he is replacing Ms. Josée Harrison, our committee’s usual clerk, since she is ill.

We send our best to Josée, but we're in good hands here today.

Colleagues, you have a copy of the budget before you. This is for Bill C-234. It's standard stuff.

Do I have unanimous consent to approve the budget on C-234?

[Some hon. members]

Agreed.

[The Chair, Liberal, Kody Blois]

We're going to continue to move forward.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Monday, May 30, 2022, the committee is resuming its study of global food insecurity.

I would now like to welcome our witnesses for the first panel.

We have in person here in the room, from the Canadian National Railway Company, Mr. Doug MacDonald. Thank you for being here.

Doug serves as the chief marketing officer.

From the Ontario Federation of Agriculture, we have Peggy Brekveld. She serves as the president.

Peggy, it's great to see you again. I saw you in August. You're no stranger to this committee. Thank you for all the work you do.

We were also supposed to hear from Mr. Caron, general president of the Union des producteurs agricoles.

Unfortunately, due to technical difficulties, Mr. Caron is unable to testify. Mr. Tougas, coordinator for the Union des producteurs agricoles, will testify before the committee.

Mr. Tougas, thank you and welcome.

We have five minutes for opening statements, colleagues. We have really good witnesses today. I know we were delayed because of the votes, but we're here to do our work, and I don't want to chew into the second panel, so I do intend to go right until seven o'clock. Let's get started with five-minute opening remarks.

I'm going to start with Mr. McDonald here in the room. You have up to five minutes, my friend.

[Doug MacDonald, Chief Marketing Officer, Canadian National Railway Company]

Good evening, everyone.

I thank the committee for giving CN the opportunity to contribute to its work and provide information about CN’s role in Canada’s food supply chain, as well as on potential next steps that would benefit all participants in freight transportation coming to and coming from Canada.

CN is a major contributor to the import and export of goods for Canada. In 2021, CN moved over 5.7 million shipments of freight across its network, with over 30% of that being import or export business. Primary commodities moved for export are grain, coal, potash, propane, pulp, ore concentrates and many more. Imports are more concentrated around containers filled with retail merchandise.

CN is also a major transportation partner for the food industry. CN moves significant amounts of grain for export to countries around the world. This is moved in railcars to port for furtherance by ship, at roughly 30 million tonnes per year. Grain is also moved in containers loaded near farms or at the ports for movement around the world, at roughly half a million tonnes per year. Additionally, CN moves both imported and domestic food products in our fleet of refrigerated and heated containers, as well as in our customers' fleets.

One of the main areas that have caused insecurity for food are the disruptions in the supply chain caused by climate events in the last few years. These are events such as record rainfalls that cause roads and train tracks to be washed away with no notice, forest fires that tragically wipe out towns and the transportation infrastructure in the area, and freezing cold temperatures for record lengths of time that prevent normal transportation movements. These events cause serious disruption in the supply chain and impact Canada's reputation as a reliable food supplier to the world.

Drastic changes in the container markets over the last two years are another key cause of food insecurity. The supply chain challenges created by COVID have disrupted the normal worldwide flow of goods and services. The container industry has adapted to these market forces with higher prices and reduced trade lanes. This has caused a shift in the availability of containers for grain exports from Canada. As supply chains normalize, we believe rates will come down to historic levels and trade lanes will slowly be re-established. As this happens, CN will work with our customers to adapt to the new supply chains.

I will highlight some areas for improvement for all supply chain participants.

New and additional infrastructure will be a key requirement to improve the supply chain and security for food. In order to handle more volume through existing supply chains, capacity expansions must be undertaken. This includes port infrastructure, rail capacity and intermodal terminal capacity. If Canada wants to have surge capacity available on short-term notification, it will need to fund it. The NTCF program is a good solution for this. It needs to be fully funded and used for this infrastructure.

Canada also has one of the longest timelines to approve infrastructure investment. This makes it impossible to quickly adapt to changing supply chains. In order for Canada to expand in trade, the government needs to streamline the process for infrastructure investment. By way of example only, it took CN over seven years to get its Milton intermodal terminal approved. These delays threaten the agility of the supply chain to respond to emerging issues or crises.

Regulation in Canada continues to slow down or stifle investment decisions as well. Canada's national transportation policy provides that “regulation and strategic public intervention are used to achieve economic, safety, security, environmental or social outcomes that cannot be achieved satisfactorily by competition and market forces”. I submit that regulation has departed from that guidance and needlessly interfered with market forces that would deliver better results for market participants and the global economy. If the need to regulate exists, it must be based on hard evidence and tailored to address real issues, rather than issues presented through the perspective of certain market participants. Uncertainties and lack of evidence-based regulation create uncertainties that deter investments in Canada, versus other countries with a consistent policy agenda.

The government needs to promote further automation of the supply chain while considering the ESG impacts of those changes. All supply chain participants will continue to automate while reducing the impact on the environment. The government can help in these areas by funding innovations that provide the largest impact for all Canadians. This would all need to be done with a solid implementation plan, with safety embedded in every area.

With that, I would like to thank the committee for the time. I would be happy to answer any questions.

[The Chair, Liberal, Kody Blois]

Thank you very much, Mr. MacDonald.

We'll get to that in a moment, but first we're going to turn to Ms. Brekveld. It's over to you for up to five minutes.

[Peggy Brekveld, President, Ontario Federation of Agriculture]

I'm happy to be here.

Canada is one of the few countries that have the ability to grow more food than we will ever consume. We have the land, water and climate. We have the people and knowledge. We don't worry about hitting a landmine as we prepare the soil. We have markets, a great reputation and safe food policies. Canada has a lot going for it. The world sees us as an answer to global food insecurity.

Global food insecurity is real and significant, and it needs long-term strategic answers. What can Canada do to improve the situation? Three things come to mind: one, ensure that farmers have the vital tools they need to be the best they can be; two, protect the resources that are required to farm; and three, continue to push the envelope through research, development and knowledge transfer.

No one can control the weather, but there are some things that we can control. Cell and broadband Internet allows us to be connected to markets and should be thought of as an essential service in Canada. Insurance programs such as AgriStability need enough dollars and need to work for and with farmers. Fairness inside of the marketplace through proposals such as the grocery industry code of conduct and Bill C-280, the proposed financial protection for fresh fruit and vegetable farmers act, will make it easier for farmers to balance some of the financial risks. Continued access to farm labour, both domestic and from other shores, will ensure that crops are planted, tended to and harvested on time, and that livestock is cared for. Finally, access to inputs such as fertilizer, equipment and packaging is critical to farmers and processors. These come from global markets.

Wise decisions and cautious development of ways forward need consultation with agriculture and decision-makers such as you. We can get these things right. The industry wants to be a part of a successful way forward.

To farm, there are a few basic needs. We need farmland, soil health, and access to water and the sun, but it tends to go up and down on its own. There are ways to protect farmland that the Canadian government can help with. As we look at infrastructure investment in urban areas, such as transit, government can ask great questions: Will this encourage walkable communities and renew cities inside of their boundaries? Will intensification targets be met?

Pushing for long-term strategic land use policies inside our major cities will actually protect farmland that grows food for the world. We can't keep watching our cities sprawl and expect that we can continue to grow as much food as we do now. Technology is great, but I am not going to grow wheat inside a container anytime soon. Farmland is a finite resource, and once it is put into homes or concrete, it never goes back to farmland.

Soil health also matters, and if we don't feed our plants as recommended by crop advisers, we see degradation, because the plants will mine the soils for the nutrients they need. Farmers know this and must balance the feed that the plants need according to their needs, including manure and green solutions, synthetic fertilizers and micronutrients. We can't feed the world without paying attention to the needs of plants and our soils.

Farmers would like to be acknowledged and rewarded also for the great practices they are currently doing. There are creative ways to do this, and the promotion of best management practices needs to be strategic. Farm organizations like ours can help you with this.

Finally, too often research into the best solutions for farming can't happen because of dollars. I'm aware of sectors that are struggling to get investment in research facilities and of research that isn't field-trialled because the dollars aren't there. Publicly funded agriculture research benefits all of society. It is trusted more and can answer some of society's concerns. Both basic research and knowledge transfer are critical to seeing Canadian farmers continue to be the best they can be.

As president of OFA, I see farmers' passion for growing things. Few have a desire to stay the same. They want to be the best that they can be in an environment that has tight profit margins and has many factors outside of their control. Our slogan is “Farms and Food Forever”. Farming isn't thought about in terms of years or decades, but rather in generations, and we should reflect on global food security, or insecurity, in the same way.

Thank you.

[The Chair, Liberal, Kody Blois]

Thank you very much, Ms. Brekveld.

The next speakers will be Mr. Tougas and Mr. Caron, from the Union des producteurs agricoles.

Mr. Caron, you have five minutes.

[Martin Caron, General President, Union des producteurs agricoles]

Thank you, Mr. Chair.

My name is Martin Caron. I am the general president of the Union des producteurs agricoles du Québec. I am also a dairy and field crop producer.

Let me begin with a word for the Ukrainian people. The war in Ukraine has shown us that the food supply of our fellow citizens must depend as little as possible on external markets. The resilience of the world’s food supply depends on its distribution around the globe. No state should be overly dependent on international markets to ensure its population’s food security.

The most obvious strategy for increasing Canada’s food resilience is to produce a significant portion of the food consumed by our citizens within our borders. In this regard, the UPA has been advocating the concept of agricultural exemption for many years. Agriculture and food have both commercial and non-commercial aspects. Of course, this is the case for other products, such as cultural products. But none, except water, are as vital to humans. Freedom from hunger is a basic human right.

Agricultural exemption is based on the idea that the agricultural sector deserves a special status during negotiation of international rules and treaties for trade and investment. There are several reasons for this, including the strategic aspect of minimum independence in food supply that a state wants to achieve or maintain. This is what Feeding Humanity Sustainably, a coalition in which the UPA participates, is defending.

For Canada, the principle of agricultural exemption would make it possible to maintain the supply management system in its entirety, without it being challenged by other countries. Indeed, this system promotes food security by stabilizing food production and helping to prevent disruptions and shocks in the supply chain. Canada needs to thoroughly analyze all links in its food chain to find weak points that can undermine the public’s food security.

As you know, the foundation of Canada’s food chain is the agricultural production sector, which generated over $80 billion worth of agricultural products in 2021. However, the global political and economic situation is affecting the agricultural sector’s resilience. Although Canadian agricultural production occurs within our borders, some required inputs are imported.

First, the Canadian agricultural sector is increasingly dependent on temporary foreign labour, particularly in the horticultural sector. This means that availability of and access to these workers must remain a priority for the government.

Second, three of the key production inputs, specifically feed, fertilizer and fuel, have experienced dramatic price increases since the fall of 2021. For horticultural products, the price of containers also rose significantly. The average price of these inputs rose by about 50% while the CPI increased by only 6.8% over the same period.

For Quebec’s agricultural sector, these increases represent nearly $2 billion in additional annual expenditures. For the Canadian sector, it’s $10 billion. This is unprecedented.

Because of their higher debt load, next-generation businesses and start-ups are being hit hard by soaring production costs and rapidly rising interest rates.

In this context, considering the essential nature of agriculture for food security, the government must act quickly to support the agricultural sector and limit this unusual inflationary context. We insist on the need to intervene quickly to support agricultural enterprises in financial difficulty. Assistance could be modelled on the Canada Emergency Business Account, combining liquidity support with assistance to support businesses’ financial viability.

The government must also optimize the tools and programs already in place so that they respond adequately to the current context. For supply-managed production, price adjustment mechanisms must be reviewed to make them more flexible and creative. It is important to limit the consequences of rising input prices on businesses’ liquidity in this sector.

Our agricultural businesses are at the heart of Canada’s rural fabric. They shape the face of our regions’ geography, communities and economy. Their potential for growth is almost limitless, due in part to the growing demand for food, the quality of our products and the enthusiasm of our fellow citizens for local products.

Let’s always keep in mind that investing in agriculture is also investing in the health of Canadians, the economy of the country and the food supply of future generations.

Thank you.

[The Chair, Liberal, Kody Blois]

Thank you very much, Mr. Caron.

We will now begin the question-and-answer period.

Ms. Rood, you have the floor for six minutes.

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

Thank you, Mr. Chair.

Thank you to the witnesses for being here today.

Ms. Brekveld, you touched on a couple of things that are near and dear to me, coming as I do from a very highly agricultural area in southern Ontario where we do a lot of fruit and vegetable production. I've been in the fruit and vegetable business for a lot of my life. My family has a long history there.

Seeing that we're heading into a recession, which is what we're hearing from experts out there, you talked about PACA—the Perishable Agricultural Commodities Act—and the importance of having this in place for fruit and vegetable growers. If we're going to see a recession, I'm sure we're going to see some downturn for some of our businesses. I'm just wondering if you could speak to how important it is right now that we get this measure in place to protect our fruit and vegetable production.

[Peggy Brekveld]

I was speaking to a representative from Ontario Fruit and Vegetable Growers just today. They talk about the financial challenges right now, with the input costs rising significantly, whether those are carbon pricing, the tariff on fertilizer or just simple inputs. Labour prices have gone up, and bringing in packaging and such has been difficult. We want to manage as often as we can to provide some financial risk assurances. We used to make it better, and this is one opportunity to do that by using a model that's already there.

One of our biggest export customers is the U.S. We want to make that process as good as we can for our fresh market. It's a perishable product. You can't put it back in the box and send it back, so let's ensure that they get paid for what they grew.

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

Thank you very much.

As we are talking about food insecurity and food sovereignty and ensuring that we can grow fresh product for ourselves here in Canada, I think this is an important part in that.

You touched on how a lot of farms in Canada are generational. I think that's something that the general public doesn't think about. It's the fact that healthy soil means that we can have generations of farmers producing food in this country to feed the world.

You touched input costs just a second ago. The input costs have gone through the roof, whether it's for fertilizer, especially in Ontario with the tariffs on imported fertilizer from Russia that are adding extra expense, or whether it's the carbon tax and the potential tripling of the carbon tax going forward. What would you like to see in policy to help reduce some of those costs so that we can ensure we continue to have food security in this country?

[Peggy Brekveld]

Farmers have paid a lot of tariffs. That certainly is evident as we looked at bills this spring and as we look to the new season. I really think that there's an opportunity for government to take those tariffs and return them back to the farming community as a whole, to agriculture, and find ways to reinvest that. Whether that is to help with promoting more best management practices or whether that is to bring it back to the farmers themselves so that they can invest in better technologies that will help reduce emissions, there are a lot of opportunities there and a lot of creative ways to bring those dollars back to the industry, including even the potential for production of fertilizer in eastern Canada.

One thing I will say is that farmers are very, very nervous about the potential of losing the ability to use inputs, including fertilizer. There has been clarity that the government is looking to reduce emissions, and I understand that, but on the other side, many farmers see that if we measure using fertilizer, we're probably making a mistake, because when we use fertilizer, if we don't use enough, we actually degrade the soil. The plant will slowly but surely take the nutrients from the soil, and eventually you won't have a good quality of soil. If we use more but it is the right amount for the crop that we are currently growing, if the crop absorbs it and uses it the way it should, with the right trait, the right product, the right timing and the right placing, we actually will see good fertilizer usage and reduced emissions.

I think the better way to measure for emissions would be to use a reckoning of how many best management practices farmers are using on the land. We know from research that those actually will reduce emissions, and I do think that it also will provide us with the ability to continue to produce more and more food for the world. That's what your committee is looking for: answers that will make us the best growers.

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

I have just one more quick question, as my time's almost out.

I'm wondering if the OFA was consulted on the fertilizer issue, the reduction.

[Peggy Brekveld]

We've had conversations and we certainly engaged in the process. I know people around the table here who I've spoken to on the issue and I appreciate the opportunity to do that.

[The Chair, Liberal, Kody Blois]

Thank you very much, Ms. Rood. Thank you, Ms. Brekveld.

Mr. Turnbull, you have the floor for six minutes.

[Ryan Turnbull, Liberal, Whitby, ON]

Thanks to the witnesses for being here today.

Ms. Brekveld, I'll start with a couple of questions for you. Welcome to the committee.

A number of years ago, in 2015, some colleagues that I know quite well produced a report called “Dollars & Sense”. It was funded by the McConnell and greenbelt and Metcalf foundations. Some really great research there showed that in 2015, southern Ontario had a $10-billion trade deficit. In other words, the economy in southern Ontario could actually produce $10 billion more food that didn't necessarily need to be imported from California, Mexico or wherever else. That's the concept of import substitution.

Since then, we've experienced quite a number of crises, from COVID-19 to the war in Ukraine to numerous extreme weather events, that I think have consistently exacerbated the challenges that farmers are already facing.

I'm wondering, especially with the droughts in California and this global integrated food system that we have, how Ontario is going to respond. We can grow more food for export, but there's also a lot to be said for growing more food at home for the people of Ontario.

What is the OFA doing on that front?

[Peggy Brekveld]

Both domestic and international production are important. It doesn't matter if you're producing for global or for domestic consumption; both of them require the land, the soil and the best management practices, etc.

I will go back to this: We actually really do need to protect farmland. OFA has worked very hard to make it known that in the province, we are losing 319 acres a day. That adds up to 75 million carrots, or 25 million apples or 1.2 million bottles of VQA wine, if you want to have something in the evening. That's significant—

[Ryan Turnbull, Liberal, Whitby, ON]

That's great. I love wine. Thank you very much for relating it to wine. I always appreciate that.

I don't mean to cut you off; I just want to get another question in.

In terms of your perspective and the OFA's perspective, I know you have a large membership in Ontario. I know many of the farmers and have worked with them in the past. Do you support regional food systems?

Oftentimes, in regional food system work that I've done in the past, there's this missing middle. There are small-scale distribution and storage options and obviously abattoirs and processing. It is a real challenge. We know regional food systems are better for the environment and reduce the number of kilometres on all food that's produced. It's those short supply chains.

Are you working to develop regional food systems across Ontario?

[Peggy Brekveld]

We have approximately 50 federations across the province and we certainly work with each one. Part of that work is asking what it looks like in their area.

Local food is a big component of our work. We certainly are engaged in promoting local food, such as the Source Local program that we just did recently for Ontario Agriculture Week.

We love that, but we know it isn't the only food we're going to produce. We are going to produce for export markets as well, whether in fruits and vegetables, beef, pork, or grains and oilseeds.

[Ryan Turnbull, Liberal, Whitby, ON]

Sure.

Multiple times at this committee I've heard people say and reiterate that Canada can feed the world. I get it that we have a strong suit in agriculture and we can export product around the world, but if we're relying on international trade to supply ourselves at a time when we could actually produce a lot of that food here, are we not setting ourselves up—with climate weather events and supply chain disruptions—for more challenges within our domestic food system?

[Peggy Brekveld]

When World War II happened, in Holland they had famine at a certain point because the war had destroyed so much land. For a long time, Holland had a pretty strong national food system. They cared about their food producers for quite a few years after the war happened, because they knew what food insecurity was. When I think about Canada, I certainly agree. We need those regional and local food networks to be strong, but we also have an opportunity to export beyond that.

If you want me to say I'm a supporter of local food, I am. I love—

[Ryan Turnbull, Liberal, Whitby, ON]

Yes, that's what I wanted you to say. Thanks.

[Peggy Brekveld]

I will also say that we can't envision ourselves as doing it only for Canada.

[Ryan Turnbull, Liberal, Whitby, ON]

How much time do I have?