Agriculture Committee on Oct. 19th, 2022

[John Barlow, Conservative, Foothills, AB]

Okay.

We had a witness in a previous study, Murad Al-Katibfrom AGT Foods, who I'm sure you know well. He said that one of the key issues for the supply chain and food security was ensuring that commodities that could be moved by pipeline are moved by pipeline and that commodities that need to be moved by train are moved by train. Is that something you would agree with? Is it important that we have all supply chain options available?

[Doug MacDonald]

Absolutely. We should be moving goods by the lowest-cost method to bring them to market. That helps everyone maximize what they're going to make, from the farmers all the way through to whoever is moving that product, and it helps to have the cheapest cost for the people who buy it.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. MacDonald.

[John Barlow, Conservative, Foothills, AB]

The pipeline is lower on GHG emissions too.

[The Chair, Liberal, Kody Blois]

That's fine. Thank you, Mr. Barlow.

We'll go to Mr. Louis now for five minutes.

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

Thank you, Mr. Chair.

Actually, I am going to split my time with Mr. Turnbull and let him go first. He seemed to be on a roll in the last round.

[Ryan Turnbull, Liberal, Whitby, ON]

Thanks.

Mr. MacDonald, I'll go right back to you with the question I posed.

I'll refresh your memory. It was about the innovation you spoke about and funding that innovation within our supply chains, specifically looking at the intermodal system that CN Rail relies upon and, to some degree, oversees.

I think it's surge capacity and resilience within that supply chain that I'm really interested in, and where, specifically, there are strategic investments and innovations that we could be helping fund.

[Doug MacDonald]

There are two things for innovation. First of all, very briefly, we're going to basically electrify a lot of the cranes, I'll say, and things like that within the terminals. That will help out.

What you're really talking about is how we add capacity at the same time. One of the things we want to do is add smaller regional terminals within smaller population centres. Why is that good? That allows us to cut down on trucking. Right now it's port or major city to major city. A lot of trucking comes out of our intermodal terminals. A lot of the trucking is for one, two, three or four hours, and some of the trips are a lot longer.

By putting in smaller regional terminals...and we're actually working with the port of Hamilton to do one now. It's key for us to be able to actually cut those GHG emissions and make things more available for everyone at a cheaper cost.

[Ryan Turnbull, Liberal, Whitby, ON]

That's great.

I noticed that in your package here, “Intermodal 101”, you said that about 30 kilometres of empty cars have to go into the different ports in order to be able to be filled with product coming in. Is that right?

[Doug MacDonald]

Yes. It seems like a big number, but it's not. When you look at all the ports in Canada, we deliver 30 kilometres of cars a day. Usually they're stacked full with loads going for export, or they're empty containers. They get off-loaded. Then they get reloaded and shipped out the next day.

[Ryan Turnbull, Liberal, Whitby, ON]

Yes. I know that in the trucking industry we talk about backhauling and the idea of making sure that trucks aren't driving empty. I'm wondering if there are any opportunities for that within your system and whether that's something you've looked at. I'm sure you have, but I'm just wondering.

[Doug MacDonald]

Probably about 70% of the containers we move back into the ports are actually loaded for export going out of Canada. Only about 30% are empty.

[Ryan Turnbull, Liberal, Whitby, ON]

That's great.

I'll go back to my colleague Mr. Louis, who was gracious enough to share his time.

Thanks.

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

I want to say thank you to the witnesses. I appreciate everyone being here.

Mr. MacDonald, in your report in 2022, you talked about the.... Well, Mr. MacGregor spoke about the importance of the climate crisis we're going through and how much it's affecting things. Now we're moving into resilience. With the closure of a navigation system for the seaway system here in Ontario, that end-to-end grain supply chain capacity is going to be reduced when the Great Lakes St. Lawrence Seaway system is closed.

What kind of resilience measures are being taken to prevent the damage, and what more can be done?

[Doug MacDonald]

The key thing is using every output you can. We have tried to present a balanced plan within the industry. When the Great Lakes closes down and Thunder Bay shuts down for grain, you can move more to Montreal and do export, or go through Hamilton, if you want to do that. Generally, Montreal and Quebec City are the two major export ports for us, and Trois-Rivières; or you can go west.

The issue is that it's not really taken full advantage of strictly because the grain companies make more profit going over to Vancouver. That's fine and that's their prerogative, but it leaves open a large supply chain. The St. Lawrence Seaway in the winter used to do something like 10 million tonnes a year via rail through those export ports, and now it's down to two or three million, so there's a lot of capacity there that could be used. It just won't be as profitable for the grain companies to do it.

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

You mentioned container shortages in your opening statement, and you talked about the rates. In the previous Parliament we did a study on the supply chain and the rates. You said they're coming down, or that you hope they're coming down.

What needs to be done? I hate to use the word “predictions”, but what would your predictions be?

[Doug MacDonald]

The market has brought them down. When you're looking at containers coming inland, they're down into almost the historic levels, not those of the last two years.

In terms of export, it's not the container supply. The supply is there. It's actually that with COVID, the trade lanes out of Vancouver were cut to almost nothing. Now containers are forced to go over to Montreal, which still has all their trade lanes open. It's created a whole different supply chain that's in effect.

I'll say that the supply is there, but the ocean steamship lines have to reopen their trade lanes to make it more competitive for Canada to get to other markets.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. MacDonald, and thank you, Mr. Louis.

Mr. Perron, you have two minutes and thirty seconds.

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

Thank you, Mr. Chair.

I will turn to Mr. Tougas.

Together with Mr. Caron, you have made a number of interesting recommendations to the committee.

What about increasing regional processing capacity?

We have heard other witnesses raise the importance of developing this network. Other committee members even talked about it earlier. I’d like to hear from you on that. I would also like to know if you have a recommendation, a potential solution to propose to the committee in that regard.

[David Tougas]

Actually, we at the Union des producteurs agricoles believe that all types of markets are important, from the local and regional markets to the export market.

We are therefore in favour of these markets. As I mentioned earlier, regional markets have advantages, such as reducing GHGs, close customer relationships, and so on. They offer a lot of advantages. That said, at the same time, our industry also needs the bigger markets, such as commodities markets, which we call export markets. To have dynamic agriculture, we need all these markets.

We are in favour of regional markets, but cannot overlook other types of markets, and so on.

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

Of course. Obviously, it’s not exclusive.

What difficulties do you encounter in regional processing? I’m thinking of slaughtering, for instance.

Do you think that support is necessary? Is there another potential solution?

[David Tougas]

Those are good questions.

I know some projects had regulatory constraints. There are probably funding constraints and profitability issues too. It’s case by case, and there are several elements, but regulatory issues are probably at the top of the list.

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

Thank you.

A number of people mentioned the importance of funding innovation, or at least encouraging it. Do you think that makes sense? How can we encourage innovation?

Would recognizing and rewarding positive environmental actions by producers give companies the capital to innovate?

[David Tougas]

That’s a very interesting idea. Farm businesses are already spending a lot in agri-environment, and will continue to do so in the coming years. Rewarding businesses for it will give them the cash flow they need to invest elsewhere, especially in improving their efficiency, automation, etc.

That is indeed an interesting solution for farm businesses.

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

Thank you very much.