Agriculture Committee on Feb. 6th, 2023

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

Thank you, Mr. Chair.

I want to thank all the witnesses who are before us.

That includes my friends from Quebec who are with us today.

I want to thank everyone for making the time to meet with the committee, especially at 7:30 on a Monday evening. I realize it's quite the way to start the week.

I'll start with Mr. McCann and the Canadian Agri-Food Policy Institute.

You talked about the importance of data collection. Have you had those conversations with Statistics Canada and others who are trying to gather data? I'd be curious to find out what they're saying in terms of their limited capacity or maybe some of the barriers they're facing in terms of collecting data versus what the USDA is doing down south.

[Tyler McCann]

When it comes to a variety of different data points across the agriculture supply chain, the United States has more powers to collect and compel data than we do in Canada. They also have more resources to do meaningful analysis of that data.

Statistics Canada makes an effort to do analysis based on the information they have, but I think it often leaves something to be desired. If you look at what the economic research service at the USDA is able to produce and the information they're able to shine a light on, leveraging publicly available data, it far exceeds what's available in Canada. The difference between what their agriculture department and our agriculture department produces is quite stark. I think it's become increasingly clear, if you look at how this debate has unfolded around food inflation and the drivers of it, that we just don't have that information.

Some of it is there, and some of it could be better accessed and leveraged by government departments if they were looking at it, but there's an opportunity to do more to compel more information.

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

Yes. Obviously, the U.S. is a country of 330 million-plus, and we're 38.5 million. We are an agriculture powerhouse, but understanding that we have limited resources, have you made a proposal to StatsCan—I know that you guys do a lot of research in the ag space—to help them maybe fill those gaps? Do you know of any other organizations that have made a proposal to fill those gaps, or...?

[Tyler McCann]

It's not a proposal that we've made, and I'm not aware of others. It is fair to say that significant resources are dedicated to it at USDA in particular, but government needs to decide what government wants to do and how it should invest its resources. I think producing public, credible, objective analysis is a good way for government to invest the resources it has.

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

Great. Thank you.

I'll turn now to the chair of the Canadian Federation of Agriculture.

As has already been mentioned here, Sylvain Charlebois will often point the finger at supply management and say with regard to dairy farmers and egg farmers that it's so expensive in Canada as compared with our U.S. counterparts. Now we're finding out that buying a carton of eggs in Florida, California or Texas is a lot more expensive than buying a carton of eggs in Canada.

Could you perhaps speak to that point, where food inflation is not necessarily tied to supply management as some, or a professor, would attest to before this committee and publicly?

[Mary Robinson]

Thank you for the question.

I'm definitely not a professor. I'm a farmer. It's a great comparison, because I think it really highlights the fact that stability brings resilience. I should have said in my opening remarks that, on the cost of egg production, we're seeing a 13.8% increase in cost. I think it really further emphasizes Tyler's point that we need to dive deeper into this and really have some price information that would let us help answer that question.

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

I'm glad to hear you mention in your opening remarks the government, which has collected $34.1 million in fertilizer tariffs. I know we're working with your sectors and various other organizations to return that to farm organizations in some way, shape or form. We're hoping to get something to a positive outcome on this soon.

We know that fertilizer prices have gone way through the roof, since before the war in Ukraine. In December 2021, I was already getting calls from farmers who were trying to book those particular farm inputs.

The government reacted with the increase of the interest-free portion of the advance payments program. I know we've gone from $100,000 to $250,000. Are farmers using that? Is that positive news for farmers? Are they seeing this as good news in order to help them alleviate some of the cash flow that they're facing because of input increases?

[Mary Robinson]

I think so. I'll let Scott finish up.

Farming, for a lot of people, is pretty big business. Those numbers.... What we've seen in BRM, for example, is that we haven't even kept up with the cost of inflation with the funding of our business risk management suite of programs. Those numbers, from a producer's perspective, could always be stronger. As we see more inflationary pricing pressures, this money becomes more and more valuable to producers.

Scott, did you want to...?

[Scott Ross]

The increase in the interest-free portion of the advance payments program is a long-standing interest of ours, and we're really pleased to see that. We hope that can be made permanent, recognizing that these inflationary pressures will have long-standing impacts.

On the fertilizer side more generally, I would note that, when we look at the scale of increases in prices, one of the things we will be advocating for moving forward is taking a critical input strategy analysis on what's going on in this space. Another is looking not just at what's happening today, but at what the future looks like as we approach a world in which input scarcity is a reality that we never really had to experience previously.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. Ross.

Thank you, Mr. Drouin.

We'll go to Mr. Perron for six minutes.

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

Thank you, Mr. Chair.

Thank you to the witnesses for being here in person. It's really nice.

I have a lot of things I'd like to discuss.

Ms. Lefebvre or Mr. Léger Bourgoin, you said that vegetable growers are paying more for their inputs than they used to, but that their income or selling prices don't reflect the higher costs. The previous witness seemed to say that the price was negotiated. Could you please explain how the price is set?

How do you negotiate your price with a grocery store?

[Catherine Lefebvre]

To begin with, the price is negotiated well in advance. I mean months in advance. To know the going price of a product at the right time, taking into account when the store flyer will come out, you need a crystal ball.

The grocery store negotiates with two or three suppliers at the same time for the same product. Whatever the price is magically determined to be, the lowest bidder gets the order. In order to get part of the order, the highest bidder has to match the lowest bidder's price. Otherwise, the whole order goes to the lowest bidder. Nevertheless, production is based on an initial agreement approved by both parties, the grower and the supermarket chain.

If the grocery chain asks the growers to produce 10,000 cases of lettuce a week, say, but ends up taking only 2,000, what do we do with the other 8,000 cases? It's better to sell them at a discount than to leave the crop in the field and throw it out.

I wouldn't call it a two-way negotiation. The most powerful side or the lowest bidder comes out on top. That's really how it goes.

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

I realize there's a power imbalance—hence the importance of a code of conduct, which you mentioned in your opening remarks.

If I'm not mistaken, Mr. Léger Bourgoin said that the code of conduct would not capture pricing. The idea is to have an impact on the negotiating process.

Would you mind elaborating on what you said and tell us what should be done?

[Patrice Léger Bourgoin]

I genuinely believe that the Competition Bureau needs to take a hard look at how negotiations between suppliers and major supermarket chains play out.

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

Would you make that a recommendation?

[Patrice Léger Bourgoin]

Indeed, I would.

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

I see.

[Patrice Léger Bourgoin]

Five major chains hold about 80% of the Canadian market, when you have 2,000 vegetable growers in Quebec alone. The big players in the grocery sector—and that includes wholesalers—have absolutely no trouble bringing prices down, so much so that it's tough for vegetable growers to get a good enough price at the farm gate to earn a decent living.

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

As I understand it, sometimes you earn less income from a product than you did a year or two ago.

Do I have that right?

[Catherine Lefebvre]

I'll give you an actual example. In 2022, the average farm gate price for a 50-pound case of green cabbage was under $16, so less than 30¢ a pound. The best sale at the grocery store this year was 99¢ a pound, so triple what the grower received. A head of cabbage usually sells for between $1.49 and $1.79 a pound, which is five to six times what the grower can get.

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

I asked Mr. Thibault to explain what happened between production and the point of sale. The grower is a price-taker to some extent but doesn't make a profit even though their products ultimately sell for a lot more.

How do you explain that?

[Catherine Lefebvre]

I can't. I'm not sure when exactly the price goes up. All I know is that farmers can barely keep their heads above water.

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

Something in the sector has to change. You can't keep going like this for years on end.

[Catherine Lefebvre]

Exactly.

Mr. Léger Bourgoin made this point earlier. Reciprocity of standards is also having a negative impact. In the spring, when we're getting the first harvest ready for the summer, competing with the growers in the U.S., Mexico and elsewhere is really tough because their prices are lower than ours. Growers in a number of other countries don't have to follow the rules and standards that Canadian growers do, environmental or otherwise. We have more to cover in the way of costs than many foreign growers do.

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

Grocery retailers have told us that they promote local produce, but you're saying that isn't necessarily true.

Is their primary way of promoting local produce putting it in competition with imported products?

Do I have that right?