Agriculture Committee on Nov. 30th, 2022

[Yves Ruel]

I repeat that it's up to importers to decide based on their preferences. However, since the Canadian market, like the North American market in general, has a preference for chicken wings, we can very likely expect that chicken wings produced in Ukraine will be shipped to Canada.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

What are the anticipated consequences of the mass importing of chicken wings from Ukraine?

[Yves Ruel]

As regards market impact, I repeat that my concern is still related to food safety. Our concern remains the same regardless of type of product or volume. Even if the product is completely safe and can enter Canada, we have to know that chicken wing production truly represents a small segment of chicken production. If millions of kilograms enter the country, that will have a disproportionate impact because the chicken wing market is a very minor one.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

As we all know, there will be close monitoring. According to the government officials, if a significant level were reached, we could revise the order.

When do you think we should sound the alarm?

[Yves Ruel]

I repeat: we think the alarm should be sounded more for food safety issues than volume issues.

I also can't say how long the government would take to conduct the necessary process to amend the conditions of the order.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

We hear you loud and clear. Your testimony was clear and has made us realize that major updates must be made.

Thank you.

[The Chair, Liberal, Kody Blois]

Thank you very much, Mr. Savard-Tremblay and Mr. Ruel.

Ms. Collins, you have the floor for two and a half minutes.

[Laurel Collins, NDP, Victoria, BC]

Thank you, Mr. Chair.

Again, for our witnesses from the Ukrainian Canadian Congress, I think the concern here really is food safety. Can you talk a little bit about how difficult it is for Ukrainians to access things like medication and sanitation products, and how frequent power disruptions and water disruptions are, and what you see as some of the mitigating factors when it comes to the concerns you have heard raised today?

[Orest Zakydalsky]

In terms of access to electricity, it depends entirely on how frequently and where the Russians strike Ukrainian infrastructure with missile attacks. There's been a marked increase in attacks on Ukrainian energy infrastructure in the last six weeks or so. It's the same with water facilities and with medical facilities. Part of Russia's war against Ukraine is that it is purposefully trying to murder civilians. That's something that we should all remember.

Again, in terms of what impact that has on the food industry and the production of goods, I would simply say that as far as we know, the Ukrainian system for food safety, etc., is functioning as it should be. Ukraine is part of all the international organizations to which it reports on these issues. The European system that—

[Laurel Collins, NDP, Victoria, BC]

I only have 30 seconds left.

[Orest Zakydalsky]

—checks food safety for the European Union is also in place. I'm not an expert on the issue, but it seems to be functioning fairly well.

[Laurel Collins, NDP, Victoria, BC]

Thank you.

Just out of curiosity, if the CFIA shares these concerns about food safety and if it were to make a different decision about the importation of chicken, are there ways Canada could better support Ukraine in either the agricultural sector or trade? Are there other supports you see?

[Orest Zakydalsky]

The most important things that Canada can do to support Ukraine are, one, deliver weapons to the Ukrainian military and, two, assist the Ukrainian government in being able to meet its budgetary requirements. Trade is one of the ways in which we can help with the second of those two issues.

[Laurel Collins, NDP, Victoria, BC]

Thank you so much.

[The Chair, Liberal, Kody Blois]

Thank you, Ms. Collins.

Colleagues, that brings us to the end of panel of number one.

I'm going to exercise just one brief question for the Chicken Farmers of Canada.

Mr. Klompmaker, in response to one of the questions that Mr. Drouin asked, which was about where the market goes, I think you mentioned that 40% goes to the European Union. I just want to build on Ms. Collins's point, because I think market access is really important. I have the most supply-managed farms east of Quebec, and I think that that's an important element.

You really touched on food security. Are you aware of any type of regulatory parameters that the European Union has put on the importation of chicken from Ukraine to Europe? Have they put out any advisories? Have they put any type of procedure in place to highlight some of the same concerns about avian influenza and other things that you mentioned here today?

I know you shouldn't be expected to be experts in European Union regulatory policy, but given the fact that I know you've spoken a lot about it today, do you have any highlights or reflections for this committee on their concern or lack thereof in that regard?

[Michael Laliberté]

No, we're not aware of any restrictions that the European Union would have put on. The only thing we know is that since the war started, the imports from Ukraine to the EU are essentially up by 100%. It's quite high.

[The Chair, Liberal, Kody Blois]

Thank you very much.

Colleagues, we're going to take a short break. Then we're going to be back for the second panel, so please don't go far.

Thank you so much to our witnesses for joining us here today and for their testimony.

[The Chair, Liberal, Kody Blois]

Colleagues, we'll get started with the second panel.

It's great to see this many people in the room for an agriculture committee. As Ms. Collins correctly identified, we have great food at the agriculture committee. It's Canadian product, of course. Whether it be milk products, chicken, vegetables or the whole bit, we make sure we take care of our members.

Colleagues, I will introduce today's second panel.

First, here with us is Katrina Coughlin, a partner at Gowling WLG Canada. Ms. Coughlin, welcome to the committee.

From the Canadian Poultry and Egg Processors Council, we have Ian McFall, chair of the board of directors. He is online with us. We also have Jean-Michel Laurin, president and chief executive officer. He is here in the room. Mr. Laurin and Mr. McFall, welcome.

From Egg Farmers of Canada, we have Roger Pelissero, who is the chair, and Tim Lambert. Roger told me he doesn't wear a tie often, so it's great to have him here. You're looking sharp, Mr. Pelissero.

Ms. Coughlin, we'll start with you. The floor is yours for up to five minutes.

[Katrina Coughlin, Partner, Gowling WLG (Canada) LLP, As an Individual]

Good afternoon.

Thank you to the committee for inviting me to speak today. I'm a lawyer based in Ottawa. I advise clients in the food industry on issues pertaining to Canadian food safety laws, regulations and policies. I'm here as an individual. My evidence today represents my own views, not those of the firm.

In my work, I regularly advise clients on requirements under the Safe Food for Canadians Act and the Health of Animals Act and their regulations, as well as the associated policies, procedures and guidance published by the Canadian Food Inspection Agency. As a result, I have knowledge of Canada's food safety requirements, including those generally associated with the recognition of foreign systems under the safe food for Canadians regulations, or SFCR. I'm honoured to be here today to provide the committee with information on this topic to assist in the study.

Under the SFCA and SFCR, all imported food products must be manufactured, prepared, stored, packaged and labelled in a manner and under conditions providing at least the same level of protection as food products produced in Canada. Food importers must obtain a safe food for Canadians licence, and are responsible for ensuring that the food safety-related requirements set out in the SFCR are being met. There's a further requirement specifically for meat products, including poultry. These products can be imported to Canada only from a country that CFIA has recognized as having an inspection system for meat products that provides the same level of protection as that of Canada. As CFIA testified on Monday, an audit was conducted in Ukraine in 2019 as part of this recognition process.

Once a foreign inspection system is recognized, CFIA negotiates the terms of the official meat inspection certificate, or OMIC, that must be used by the exporting country for meat shipments destined for Canada. CFIA's recognition of a foreign inspection system can include limitations or special conditions. For example, there may be conditions with respect to species, product preparation or geographic regions or zones within the country.

Pursuant to paragraph 170(3)(a) of the SFCR, when reviewing a foreign state's inspection system, the CFIA takes into account the following:

(i) any applicable legislative framework, controls and procedures,

(ii) the organizational structure of the authority that is responsible for the system,

(iii) the implementation of the system,

(iv) the resources that support the objectives of the system,

(v) the humane treatment of the food animals that are intended to be slaughtered,

(vi) the chemical residue monitoring and microbiological monitoring of the meat products,

(vii) the certification process for the export of the meat products, and

(viii) any other relevant information;

As it relates to these considerations, an event such as the terrible invasion taking place in Ukraine may impact the implementation of a food inspection system as well as the resources that support the system. Therefore, the occurrence of such an event would reasonably be considered as part of CFIA's recognition determination under the regulations.

Another relevant consideration related to the recognition of a foreign inspection system is the animal health status of the country with respect to diseases of concern, such as the highly pathogenic avian influenza. To that end, CFIA publishes information on the countries, regions or zones that it recognizes as being free of diseases of concern. If a country is not recognized as being free of a disease, or a country usually recognized as being free of a disease is experiencing an outbreak, the importation of certain products may be prohibited to protect the Canadian food supply system, or special conditions may be negotiated for the OMIC.

As noted by CFIA in their published guidance, the evaluation of disease-free status of a country, region or zone is reviewed by CFIA on a case-by-case basis. CFIA also indicates in its guidance that recognition of disease freedom is not solely dependent on the World Organisation for Animal Health, or WOAH, status or country self-determination. Therefore, as it relates to this study, Ukraine's current WOAH status for avian influenza is one consideration for CFIA's risk assessment, but should not necessarily be determinative of whether CFIA considers the country to be free of the disease.

If there's a change to a recognized foreign inspection system or a country's animal health status, CFIA may negotiate revised conditions for the OMIC. Furthermore, the SFCR contemplates the suspension of a foreign inspection system if there is a material change.

Under subsection 172(1), the minister must suspend the recognition of a foreign state's inspection system if:

(a) the foreign state fails to notify the Minister in writing, as soon as feasible, of any changes that it has made to the system or to the legislation governing the system; or

(b) the system no longer provides at least the same level of protection as that provided by the provisions of the Act and these Regulations.

That refers to the SFCA and the SFCR.

The foreign inspection system recognition can then be reinstated once the circumstances that gave rise to the suspension have been remedied.

Thank you for your time. I hope this overview of the Canadian food safety legal context is of assistance to the committee. I'd be happy to answer any questions at the appropriate time.

[The Chair, Liberal, Kody Blois]

Thank you very much, Ms. Coughlin.

We'll now turn to either Mr. McFall or Mr. Laurin on behalf of the Canadian Poultry and Egg Processors Council.

[Ian McFall, Chair of the Board of Directors, Canadian Poultry and Egg Processors Council]

Thank you, Mr. Chair.

Good afternoon. Thank you for the invitation to appear before the committee.

My name is Ian McFall. I'm here as chair of the Canadian Poultry and Egg Processors Council's board of directors. I'm joined today by CPEPC's president and CEO, Jean-Michel Laurin.

We're pleased to take part in this study on the Ukraine goods remission order. Before sharing our news on this topic, I would like to remind everyone that CPEPC represents Canadian hatcheries, egg graders and processors, chicken and turkey processors and further processors. Collectively, our membership represents more than 180 establishments of all sizes and collectively processes over 90% of the poultry and egg products raised by Canadian farmers.

First off, we want to say that we recognize the very difficult situation faced by Ukrainians and the Ukrainian agriculture and food industry and the need for our government to take a broad range of actions aimed at supporting Ukraine in these difficult times.

Before talking about the remission order specifically, let me provide some broader context on the role of imports in our industry.

As you know, poultry and egg production in Canada is governed by supply management and, for this reason, our industry's main focus is to supply the Canadian market. Supply management rests on three pillars, import controls being one of them.

Imports usually come in using quotas called TRQs. Those are set import quantities negotiated in trade agreements. They cap how much can be imported in any given year. When producers set production volumes based on Canadian market demand, they take those import volumes into account.

I should also mention that our members receive a significant share of the TRQs allocated every year. If products come into Canada outside of the quota system, our members would therefore be directly impacted.

While the remission order has been in place since June, Ukraine is not currently authorized to export poultry and egg products to Canada. CFIA briefed you on Ukraine's request to get some of their establishments certified to export to Canada and where that stands. That request to certify three Ukrainian chicken-processing plants was made in 2019, but we only became aware of it recently. We also hear that Ukraine made a similar request to export egg products to Canada.

It's also known that Ukraine is a major chicken exporter, as evidenced by the significant increase in their exports to Europe this year. Allowing Ukrainian chicken plants to export to Canada under the current remission order in a supply-managed environment could have a significant disruptive impact on Canadian processors, our suppliers and our customers. We are greatly concerned by this potential impact.

TRQ is key to managing imports and supply. Any measure that allows products to enter Canada without quota makes it very difficult to forecast imports. The market could be short if we overestimate imports or long if we underestimate how much product will come in. Either scenario could have significant impacts on different parts of our value chain. In other words, not knowing the exact quantities that could enter jeopardizes our ability to ensure the market is properly supplied.

If, following the completion of the process, CFIA issues official meat import certificates to Ukraine, it would be critical that government and industry work together to manage and mitigate risks to the supply management system. In addition, it would be critical for us to receive trade information as soon as possible. We were pleased to hear that Ukraine agreed to voluntarily share that information with CFIA before any products leave Ukraine. The government should also be ready to consider introducing a cap or safeguard measures if imports prove disruptive to the Canadian market.

Finally, if the government considers renewing the remission order in 2023, we believe it would be best to exclude supply-managed products. Poultry and egg products from Ukraine would then be allowed to enter Canada using the TRQ process.

Mr. Chair, I will end my remarks here. JM and I would be pleased to answer any questions you may have.

Thank you.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. McFall.

We'll now turn to either Mr. Pelissero or Mr. Lambert for up to five minutes.

[Roger Pelissero, Chair, Egg Farmers of Canada]

Thank you, Mr. Chair, vice-chairs and members of the committee. It's great to be here today.

It's going to sound like I'm repeating messages you've heard already.

A very unfortunate situation took place on February 24 when Russia declared war on Ukraine. It's not a good situation at all. My grandfather immigrated from Ukraine back in 1927, so it was near and dear to my heart too, even though my last name is Pelissero. I'm Italian on one side and Ukrainian on the other side. I was born in Canada, and I'm just confused and mixed up, so that's why I'm wearing a tie today.

In all seriousness, we're here today to discuss those same concerns that our colleagues have discussed regarding food safety. In the egg sector, there are 1,200 family farms across this country producing eggs each and every day for Canadians so that they have them to buy in the grocery stores. The egg sector delivers roughly 19,000 jobs and adds $1.3 billion to our GDP.

We are very thankful for the measures the government has taken to support Ukraine in this crisis. However, it would be unwise of us not to raise our concerns here today regarding the remission order and how it relates to Canada's egg-farming sector.

While the intent of the remission order is to support the Ukrainian farmers, our concerns shine a light on the complexity of hasty decisions when it comes to the trade of food items. It is likely that once CFIA completes the export certificate process for eggs and egg products, large egg-processing companies based in Ukraine could leverage this remission order.

I'm also a member of the International Egg Commission and an office-holder there. There is one large processor in Ukraine. Their name is Ovostar. They are also the largest egg producer in Ukraine, with 6.4 million layers. That's 8% of the production in Ukraine. Our concern is whether they would be helping all Ukrainian farmers or whether it would be one producer and one processor benefiting from all of this.

As far as traceability and food safety programming there go, they also have a processing facility in Latvia. Does that mean product will flow in from there? We're not sure. We hope it wouldn't be, if that was the case.

We talk about the welfare standards for hens and the high level of accountability of our farmers, through daily audits, for instance, that are rigorous. We are concerned about the unfortunate situation in Ukraine. We know that just being able to farm each and every day is enough for these farmers, never mind the audits they have to have in place. I can't imagine having to deal with a war along with doing all the paperwork farmers need to do each and every day in order to export something through a processor to go to Canada.

As we continue to talk about the things that are unfolding, we cannot guarantee what level of production will be tapped into. We have just come through COVID. We were managing that, pivoting on an almost weekly basis with the spikes and openings and closings of restaurants and how those affected the production. Not once were we shorted in the market, but trade agreements and TRQs, as Mr. McFall mentioned, make things far more manageable for us and do not impact our farmers each and every day.

Mr. Lambert will identify and highlight the other topic, so I'll pass it over to him.

Go ahead, Tim.

[Tim Lambert, Chief Executive Officer, Egg Farmers of Canada]

Thanks very much, Roger.

The third matter to highlight for us this evening is the impact of allowing unlimited duty-free egg imports from Ukraine into Canada. This approach weakens the Canadian egg-farming sector by removing our ability to plan our domestic production net of imports, which is a fundamental element of supply management.

Allowing an unclear volume of foreign eggs or egg products into our country has a direct impact on our national economy and rural communities. While the implications across our sector are significant, the equation is rather simple: An increase in imported eggs means fewer domestically produced eggs. This affects not only the livelihood of our farmers but also the recovery of rural Canadian communities in a post-COVID economy.

Our farmers are committed to continuing to feed Canadians and providing strong domestic food security today and tomorrow. However, displacing Canadian products with foreign products takes income from Canadian family farms and the many small businesses that rely on those farms in rural communities. While it is difficult to say what volume of egg or egg products may enter Canada under the remission order, we encourage government to consider solutions that minimize the impact on Canadians and our domestic agriculture community while supporting the people of Ukraine.

As we conclude, there is one final item that we wish to raise with you today. According to the World Food Programme, as many as one in three Ukrainians is food-insecure. We encourage our government to consider ways to work with Ukrainian officials and farmers to address the food crisis the country is experiencing rather than establishing channels to allow a few large companies the opportunity to export a staple food out of a country experiencing a food crisis.

We offer our collaboration and assistance to find ways to help Ukrainian farmers directly and to support their domestic food supply.

We thank the members of the committee for their time.

[The Chair, Liberal, Kody Blois]

Thank you very much, Mr. Lambert.

We will now go to the period of questions.

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