Agriculture Committee on Oct. 19th, 2022

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

I'm going to put that out there.

Mr. Menzies, you've made some statements—and I agree with you—that a lot of farmers are using good practices. I'm wondering, because the Government of Canada just gave $17 million to the Canola Council of Canada to help implement more widespread use of 4R. Are you saying that all farmers are currently doing 4R? I'm going to call them up and get $17 million back, because if we're wasting money....

I know that some farmers, as there is always a bell curve, are at the forefront of technology and that some of them take longer. It's not because they're bad people; it's just the way that society behaves. I know. I have farmers back home. It takes one neighbour to start the ball rolling. They come and they kick the tires. They say, “Okay, now that I see you guys are doing this, maybe I'll adopt it.”

I know we can get to almost anywhere between 50% to 75% of our target just by implementing 4R. I would say that flexibility in the way you farm back west is completely different from the way that our farmers farm back east. Cover crops in your neck of the woods don't make any sense. You'd spend more resources and more carbon implementing cover crops, so flexibility in order to produce more food is key here.

[Ted Menzies]

Yes, it certainly is. No, not everybody is practising 4R nutrient stewardship, but it's good that there's an incentive. It will get more people interested.

It's like environmental farm plans. People can put down on paper what they are doing. It's good for our credibility around the world, as well, that we are practising it, but focusing on fertilizing the good land more and the poorer land less and using sectional controls have all contributed to less use of fertilizer.

We used to overlap way too much without GPS. I can drive straight, but not really straight, and we wasted. We wasted seed, we wasted fertilizer, we wasted manpower, and all of that. That simple improvement, GPS technology, made immense improvements in our environmental footprint.

Then there's zero till. I went to zero till back in the eighties. I was one of the first in our area. I cut my fuel consumption by 40% in the first year. Look at the greenhouse gas emission reductions just there.

Not everybody can do it. They're working on it, but they don't—

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

It has to make sense, because growing season would start about a month and a half later if there wasn't access to tilling, just because there's too much clay in the area.

I think the key here is that there are different ways to get to an objective. Governments have to recognize that there has to be flexibility in ways that we can achieve the same objectives.

Thank you for your comments.

Bill, thanks so much for coming before our committee. I know you guys have been doing an amazing job, and you've come up with about three recommendations. One of them is to increase ingredient processing capacity in Canada.

What is it that you think the government could do to do that? Is it through more incentives? Is it through more potential grants?

[William Greuel]

There are a couple of things. To set the stage in terms of the numbers, we produce on average 90 million metric tons of crops in this country and we're processing 16 to 21 million metric tons, depending on what you put in the bucket, so the delta is huge.

Incentives in investment and innovation are critically important, but what the sector really needs is a competitive business environment in which organizations and companies can make large investments, because we're talking about investments of upward of $600 million. It's anywhere from $200 million to $600 million, so greater access to capital is certainly something that organizations need.

We've talked a bit about the regulatory environment in Canada. The novel food regulations and ingredient regulations in this country need to be thought about and reformed to make it more attractive for companies to invest and to support the entire value chain. One reason that Canada is an attractive place for ingredient manufacturing is producers like my good friend Ted beside me. These producers ensure that we have access to supply. Really, it is about bolstering the whole of the Canadian agriculture economy. We shouldn't be thinking about ingredient manufacturing in and of itself.

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

Thanks for that.

I know we can't have this conversation in two minutes right now. I'd love to sit down later, after this meeting, to discuss specifics of how we can modernize that regulatory environment so that it makes sense.

You also mentioned international reputation. You mentioned that if we produce more food here, or process more ingredients, we can avert some of the non-trade barriers we sometimes face. I'm wondering whether Canada should focus more on making their international trade deals work—the ones we currently have—or continue signing trade deals left and right. In an ideal world, we'd have resources to do both, but I think we probably don't.

I'm wondering about your opinion on that.

[William Greuel]

We have trade deals with a large number of global consumers. As you say, you can always do more, but the reality is that as a net exporter of food, crops and ingredients, we have to do a bit of both. The markets where we have trade deals today are probably the most lucrative for us, from an agricultural perspective, especially as we think about evolving from commodities to higher-value ingredients.

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

Thank you.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. Drouin and Mr. Greuel.

Mr. Perron, you have the floor.

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

Thank you very much, Mr. Chair.

I thank the witnesses for being here today.

Mr. Hurst, you drew up a very interesting list of recommendations. Among other things, you said we need to improve trade predictability and facilitate innovation. You also mentioned access to fertilizer.

You said that you agree with the sanctions against Russia, but that this should not affect our local supply chain. I tend to agree with you.

Do you think we can secure access to fertilizer, considering that this conflict is not about to end?

Have you received any information on it?

[Russel Hurst]

Thank you for the question.

From a fertilizer security standpoint, I think eastern Canadian farmers and fertilizer importers play in a global value chain. The difficulty we experienced collectively with the fertilizer sanctions is.... Russia was a very significant, major player until last spring, in terms of Canadian fertilizer imports. One challenge with the tariff is that it hampers our members' and fertilizer importers' ability to successfully negotiate good terms with other global fertilizer players. They fully realize that our negotiating power is significantly hampered when there are particular sanctions on such major producers.

Moving forward, I won't speak for any individual business decision. However, generally speaking, the fertilizer importers bringing product into eastern Canada are looking to source product from other regions of the world. When there are certain issues around negotiating power, anything you can do to make Canadian importers and, directly, farmers more competitive in a global marketplace and not hamper them with sanctions that have an unintended consequence for Canadian farmers is something we bargain for.

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

Mr. Hurst, there could be a compensation system to make up for imposed sanctions.

You said that we are unable to negotiate elsewhere.

What is preventing these negotiations?

[Russel Hurst]

There are two parts to that.

We're certainly very supportive of growers in eastern Canada receiving some degree of compensation. I think it's been discussed with the farm associations. Peggy noted that today, previously.

To the second part of your question, the difficulty is that when supply opportunities at a global level specifically for nitrogen fertilizer become significantly restricted, the ability for Canadian importers to secure the quantity of nitrogen required to satisfy the needs of eastern Canadian growers becomes quite stressed. Therein lies the challenge for us: making sure there aren't any external factors that hamper importers' ability to negotiate good prices.

The reality is that a significant portion of Canadian nitrogen fertilizer used in eastern Canada came from Russia, previous to this current year. It poses a lot of challenges for those importers looking to secure other supply chains.

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

Thank you very much.

In your opening remarks, you talked about the need to encourage resilience in the food chain.

Do you think we need to strengthen or improve our processing capacity at the regional level?

[Russel Hurst]

Absolutely.

I think Bill noted a bunch of really good examples there, but from our standpoint we export way too many commodity crops that we could be further processing domestically. Specifically within the province of Ontario, that's something we would look for: a business environment that fosters agribusiness investment domestically, where they see a predictable business environment and see a positive return on investment moving forward.

I think Bill gave a lot of really good examples of what that may look like specifically on the protein side of the business.

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

Thank you very much, Mr. Hurst.

Mr. Greuel, you talked about supporting local food processing.

Can you add a few comments on that?

[William Greuel]

The only thing I would add is that local processing of crops and ingredients is really the foundation of the next stage, which is plant-based food production in Canada.

Anything we can do to move further up the value chain in the conversion of our crops to plant-based foods is a critical piece. If you want to think about local food production and domestic food production, I would say the first and critical step is ingredient manufacturing and the conversion of our crops into high-value ingredients in Canada.

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

I understand your point.

You said this would help us avoid non-tariff barriers.

Is that correct?

[William Greuel]

Yes, I do think that would avoid non-tariff trade barriers, because what we're seeing mostly in trade barriers is at the commodity level. If we're better integrated into supply chains on a global basis with high-value ingredients in food products, it becomes more challenging for those to be subject to non-tariff trade barriers.

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

Thank you, Mr. Greuel.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. Greuel.

We now have Ms. MacGregor for six minutes.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Thank you very much, Mr. Chair.

I want to continue on the discussion we're having around fertilizer.

Thank you, Mr. Menzies, for your opening statements. What you've been able to do in your career of farming is remarkable and very commendable. The amount of food you've been able to produce with fewer inputs is remarkable. It shows that many of our farmers are the ones who are leading the way on this.

When it comes to the discussions we've been having, it's become very politically charged. Some people are using fertilizer reduction when actually it's an emissions reduction target.

I think you would agree with me that if you gave two farmers the same amount of fertilizer, they could have wildly different emissions depending on how it was applied. Am I right?

I think having an emissions reduction target is a good thing, and it speaks to the 4R principle that many people are employing. Given that it's a voluntary target, I think the political hoopla over this is based on a lot of misinformation. It's an emissions reduction target that we're trying to achieve. Many farmers are already doing this. I think ultimately it's something we want to encourage the sector to do.

I want to change the subject.

In your opening statement you mentioned RADARSAT and how it's helped your operation and helped many farmers. I went to a reception on Monday from Space Canada. Canadian technology in space is well known. We have the Canadarm and RADARSAT. The astronaut who was there was speaking of the need for further federal investments in space technology, particularly RADARSAT.

Can you discuss how that Canadian technology has helped you and other farmers, and possibly the uses you see for it in the future within the theme of our study today?

[Ted Menzies]

Thank you. That's a very good question.

A lot of it is tied to data and data collection and ways of analyzing data. Farmers collect that data. Part of the problem—and I'll digress a bit here— is that most farmers collect all of this data in their combine or tractor and can't download it until they get home at two o'clock in the morning because they don't have Internet access out in the field. We have to work on that too, but that's a side point.

That data I collect as to where in the field I could use more fertilizer and where in the field I don't need to use more fertilizer is cross-referenced with the yield so that I can tell the high spots that need a little more fertilizer. Where there's a yield bump for this year, that goes into the planning for next year. It's beyond me how this is all done and collected, but the collection of data is so valuable.

Something I want to add is that when we're talking about trade and exports here, the one thing we can export without even having to get into trade negotiation with another country is technology, our scientific advances—just what you're talking about—and our knowledge. It's not just food. Nobody puts a tariff on exporting knowledge, helping other countries or bringing students here to our post-secondary institutions, which are amazing places. There are no trade barriers on that whatsoever.

I digress, but I wanted to get those points out. You're right: Canadian technology is great.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Thank you. I appreciate that.

I'd like to turn now to Protein Industries Canada.

I've been fortunate enough to be a member of this committee for four and a half years now. It's a real passion of mine. Back in 2018, during the 42nd Parliament, this committee went across the country as part of our technology and innovation study. I believe one of our stops was in Saskatchewan to look at one of the superclusters. We were treated to some of the amazing food products that Canadians were developing from things like lentils, and they were able to derive those proteins from plants, which is what you're all about right now.

We know that right now many Canadians are struggling with the price of food. They're making difficult decisions, and we know that protein-rich foods tend to be pretty expensive. I think that ties in with the theme of food security. Can you explain how the ability to derive more protein from plant-based sources, through what this technology offers, is ultimately going to help Canadians who may not have the means and give them more options to have a protein-rich diet?

[William Greuel]

Thank you.

I think what you've described underpins the imperative that we increase food and ingredient processing in Canada, because at the end of the day, consumers want choice and accessibility, and they want to choose food products for whatever reason, whether it's environmental health, their own health or animal welfare. The choices are theirs. What we need to be able to do in this country is to give them choices for doing that and to make the choices affordable.

The way to get there on the plant-based food side so they can make those choices is to support ingredient manufacturing in this country, because the more ingredient manufacturing we have, the more we can drive down costs through having price parity, bringing in more choice and supporting that with innovation and development of new food products. This is really the nexus of environmental sustainability, food security and economic growth for the country. It all really hinges on our support for ingredient manufacturing.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. Greuel.

Thank you, Mr. MacGregor.

Colleagues, we're only going to have time to go to the Conservatives and then the Liberals, and then I have a few final notes before we go for the day.

We have Mr. Steinley up next for up to five minutes.