Agriculture Committee on April 17th, 2023

[David Macdonald]

Those types of carbon taxes would be considered indirect taxes. In terms of the overall picture of what's playing a major role in driving inflation over the last three years in Canada, that part of indirect taxes is extraordinarily small. The major drivers are profit margins. That's where most of the money has ended up. It's not in carbon tax changes.

More broadly, if we're interested in inflation and where that money is going, it is going into corporate profits above labour costs. The labour costs are high, but corporate profits are higher still. It's going very specifically to those four industries.

[The Vice-Chair, Conservative, John Barlow]

Thank you very much, Mr. MacGregor and Mr. Macdonald, for your time.

Now we'll move to our second and final round of questions.

Mr. Steinley of the Conservatives, you have five minutes.

[Warren Steinley, Conservative, Regina—Lewvan, SK]

Thank you.

Mr. Macdonald, we'll agree to disagree on that.

I have questions for Mr. Riel.

I've heard a little about Costco selling frozen beef for the first time because it's not moving as quickly. I'm wondering if you've also heard that, because prices have increased so much, beef isn't moving as fast as before. Is that just hearsay?

[Pierre Riel]

No, we're not.... We're still into fresh beef and fresh meat and the overall things there.

[Warren Steinley, Conservative, Regina—Lewvan, SK]

Thank you very much for that.

I want a bit of a comparison and contrast of transportation costs, be it trucking or rail, between your American stores and your Canadian stores. Obviously you're a North American store. Have you done a comparison? Are there higher costs in Canada for transportation than there are in the United States?

[Pierre Riel]

I don't have the data with me to give you, sir. We did not do a comparison.

[Warren Steinley, Conservative, Regina—Lewvan, SK]

Would you be able to bring that back at some point in time for the committee to look at?

[Pierre Riel]

I can look for it.

[Warren Steinley, Conservative, Regina—Lewvan, SK]

Can you table it?

[Pierre Riel]

Yes.

[Warren Steinley, Conservative, Regina—Lewvan, SK]

Thank you very much.

I'll move on to FCC.

Ms. Hendricks, thank you very much for being here. I'm a huge fan. My wife worked at FCC before we were elected. You're a wonderful employer in Regina.

I have “Canada’s Food Price Report 2023” here. I want to read something and have your feedback on what you're hearing from your farming clients.

By 2030, a typical 5,000-acre farm could see taxes of over $150,000 which could compromise the owner’s ability to make a profit. The added cost of a carbon tax will increase production and transportation costs associated with food and may be passed on to the consumer as producers try to remain profitable.

I grew up on a family farm. Lots of my friends are still farming as well. Within FCC, you must have some data, and you must have gone out to visit some farms.

How many of your clients could afford to absorb a $150,000 hit to the bottom line from a carbon tax by 2030?

[Justine Hendricks]

I do not have the specifics on that, but you did ask whether or not I've connected with some of the farming community, and I have. I would tell you that the biggest issue facing primary agriculture right now is around transition. For our young farmers who are looking to enter the industry, it is also a challenge.

I would like to note, though, for the committee, that those are areas where we support the community. We do quite a bit of advisory work to help farmers transition. I'm sure many members of the committee have seen some recent articles stating some of the percentages for us to keep a close eye on. I can also share with the committee that we've supported young farmers to the extent of $5 billion, which is helping them come into the industry.

[Warren Steinley, Conservative, Regina—Lewvan, SK]

I have just one more quick question.

Would you be able to bring forward some data for this committee about how many farms of your clients could absorb a $150,000 tax hit to their bottom line by 2030?

[Justine Hendricks]

Mr. Steinley, I don't believe we have that exact data point in-house. We can see if there's something we can do, but I don't believe we have that specificity at hand.

[Warren Steinley, Conservative, Regina—Lewvan, SK]

Thank you.

[The Vice-Chair, Conservative, John Barlow]

Mr. Lehoux, you have the floor.

[Richard Lehoux, Conservative, Beauce, QC]

Thank you, Mr. Chair.

I'd also like to thank the witnesses for being with us today.

I have a quick question for Mr. Riel.

Mr. Riel, do you know what percentage of your agri-food purchases, including fruit, vegetables and meat, are produced and manufactured in Canada?

If you are unable to respond today, could you please let us know in writing?

[Pierre Riel]

I can tell you that 72% of our food product providers are Canadian and that we purchase 81% of what we sell in Canada.

[Richard Lehoux, Conservative, Beauce, QC]

Thank you, Mr. Riel.

Ms. Hendricks, a lot of things are going around, such as the fact that 40% of produce growers are allegedly selling at a loss.

Can you confirm that number?

If not, do you have the data on this?

[Justine Hendricks]

I don't have that kind of data at my fingertips. As I said in my remarks, if you're talking about the entire agri-food value chain, our portfolio includes about 102,000 clients, so we have good representation and it's doing well.

I wouldn't dare go any further on the number you mentioned, but if you provide me with the source, we could do an internal search. However, I wouldn't be able to confirm that number here and now.

[Richard Lehoux, Conservative, Beauce, QC]

We will get the source to you.

In addition to that, what impact will rising interest rates, particularly over the past year, have on emerging producers?

[Justine Hendricks]

That's an excellent question.

It's important to remember that rising interest rates are just one of the factors that will impact farm business profitability and viability.

What I can tell you is that 2,300 employees work every day with producers, and that is Farm Credit Canada's strength.

I can confirm to the committee that about 80% of the loans in our portfolio will come due in two years.

[The Vice-Chair, Conservative, John Barlow]

Thank you, Ms. Hendricks. I don't mean to cut you off. I let you go a bit over. Maybe you can carry on that answer with one of the other members.

Mr. Turnbull, you have five minutes, please.

[Ryan Turnbull, Liberal, Whitby, ON]

Thanks, Mr. Chair, and thanks to all the witnesses for being here today.

Mr. Sawtell, I'm have a few questions for you.

We've heard that farmers are price-takers time and time again at our committee. However, you said that your farmers set their prices. Would you say that farmers within your network get more value for their product?

[Paul Sawtell]

I don't have any comparative data that has what they get from other sources, but one of the founding principles and core values of our business is that farmers need to get paid appropriately for the products they produce. I think that kind of founding ethos is one of the reasons we've received six consecutive Best for the World awards from B Lab for our community impact. It is about transparency and accountability with our partners and making sure that it is a win-win-win for our customers, ourselves as distributors and most importantly the producers that make the products. We want to make sure everyone is viable financially.