Agriculture Committee on Feb. 17th, 2022

[The Chair, Liberal, Kody Blois]

I call this meeting to order.

Welcome to meeting No. 6 of the House of Commons Standing Committee on Agriculture and Agri‑Food.

Today's meeting is taking place in hybrid format, pursuant to the House Order of November 25, 2021. The proceedings will be made available via the House of Commons website. So you are aware, the webcast will always show the person speaking, rather than the entirety of the committee.

Screenshots or taking photos of your screen is not permitted. In addition, we are following the public health guidelines imposed by the Board of Internal Economy.

Colleagues, we'll get right to it.

Pursuant to Standing Order 108(2), in the motion adopted by the committee on Monday, January 31, 2022, the committee is resuming its study of the agriculture and agri-food supply chain.

I would now like to welcome our witnesses on our first panel.

Joining us by teleconference today, we have, from the Canadian Produce Marketing Association, Guy Milette, who is the chair of the board of directors; and Ron Lemaire. Welcome to you both. From the National Farmers Union, we have Katie Ward, who serves as the president.

With us today from the Quebec Produce Growers Association, we have the president, Catherine Lefebvre, and the general manager, Patrice Léger Bourgoin.

We have five minutes for opening statements, and I'm going to turn it over to Mr. Milette to make the five-minute opening remarks for the Canadian Produce Marketing Association.

[Guy Milette, Chair of the Board of Directors, Canadian Produce Marketing Association]

Quickly, I would like to introduce Ron to begin that introduction. He will start.

[Ron Lemaire, President, Canadian Produce Marketing Association]

Thank you, Guy, and thank you, Mr. Chair.

I'd like to thank all the committee members, on behalf of the Canadian Produce Marketing Association, for the opportunity to speak on the ongoing supply chain disruptions having a significant impact on the fresh fruit and vegetable industry, agri-food supply chain and the Canadian economy.

I'll start by saying that many of the supply chain issues we're facing today existed before the pandemic and have been dramatically amplified and further complicated over the last two years. The committee has heard a lot about labour from earlier testimony, so we will not dive into this issue, except to say that labour is undoubtedly a significant piece of the puzzle.

In addition to our ongoing call for improved access to workers under SAWP and the agriculture stream of the TFW program, CPMA is extremely supportive of the proposal for an emergency foreign worker program, as highlighted by Food and Beverage Canada and the Canadian Meat Council.

Regarding our supply chain disruptions, our members are facing death by a thousand cuts as a result of the layering of disruptions, which my chair will touch on shortly. Supply chain issues impacting a fresh produce supply chain that deals in just-in-time delivery of highly perishable food means not only lost sales but also product spoilage and food waste.

There is no doubt that the ongoing supply chain disruptions are complex and interconnected, and so too are the solutions. They require action across multiple federal ministries and departments as well as collaboration with provincial, territorial and local governments.

Short-term and long-term plans need to be established to start the creation of a mechanism to prioritize the movement of perishable and essential goods in the event of disruptions, as we’ve experienced over the last two years.

Additionally, there is a need for a centralized focus in the form of a supply chain commissioner who is mandated and empowered to bring the necessary parties together to find a solution.

We would be happy to discuss the recommendations that were provided to committee.

At this time, I would like to hand it over to my chair, Guy Milette, as he can provide his perspective on the situation and real-life experiences.

[Guy Milette]

Thank you very much, Mr. Lemaire.

Mr. Chair and committee members, I'm pleased to be able to speak with you today.

As chair of the Canadian Produce Marketing Association, or CPMA, I have visibility to the scope of challenges across our supply chain. As a Canadian wholesaler, importer and exporter based in Montreal, I live with these issues every day.

Even prior to the Omicron wave of the pandemic, a survey of CPMA members last fall found labour shortages reported by 92% of growers, 75% of wholesalers, and 100% of retailers—with warehouse labour noted as a particular area of concern.

As international shipping companies have sent empty containers back to Asia and posted record high profits, the availability and costs of containers have become a huge challenge for Canadian importers and exporters. Over the past two years, freight truck shipping costs have also increased 50% to 80%, both cross‑border and domestically.

From my own experience at Courchesne Larose, I can attest that we are seeing the following areas of impact.

Between May 2021 and December 2021, when looking at our volume of at least 400 truck loads per week, we have seen a minimum increase of $250,000 per week in freight costs. That's quite an increase.

We have seen important issues related to access to labour and absenteeism. We currently have a labour gap of 15%, which is lower than the market average of 20% for our sector. We are seeing absenteeism decline as we emerge from Omicron.

We are also suffering from an impact on availability of supply. The just‑in‑time program, which has taken over 10 years to build, is under tremendous strain due to the logistics issues, labour and delays. This is why consumers are seeing disruptions in product availability.

While every port of entry is different, we continue to see challenges both nationally and internationally as most jurisdictions are suffering from trucking issues and labour. Also, maritime ports are seeing significant unloading and loading delays, creating challenges to our integrated supply chain.

These examples all impact the average cost of fresh fruit and vegetables. In the last year alone—

[The Chair, Liberal, Kody Blois]

I'm sorry for interrupting you, Mr. Milette, but the five minutes are up. I have to move on to the next witness.

Ms. Ward, you have five minutes.

[Katie Ward, President, National Farmers Union]

Thank you very much.

Good afternoon, Mr. Chairman and members of the committee. I'm pleased to provide insights and recommendations from the National Farmers Union regarding agriculture and agri-food's supply chain issues. We represent farmers who operate all scales and types of farms across Canada. We've advocated for economic dignity, social justice and ecological health for over 50 years.

Today's topic is timely indeed but the acute supply chain issues that we face now have roots going back decades. Canada has set ambitious goals to increase agricultural exports, and our reliance on imports has increased. Multinational companies pursue global sourcing and just-in-time delivery to minimize their costs. Our food and agriculture system has now become dependent on long, complicated supply chains with weak links creating vulnerabilities.

We see ever-greater concentration with fewer and larger companies controlling inputs, processing, transportation, financing and distribution. When a small number of corporations dominate their sector, they are able to set prices to maximize their own profits at the expense of individual farmers, workers, small businesses and consumers.

A case in point is that of fertilizer. Companies charging exorbitant prices blame supply chain issues, and yet these same companies are making huge windfall profits. The NFU has asked this committee to investigate all the factors behind fertilizer prices, and we hope you will announce such a study very soon. As farmers, we are price-takers. We have no say in the price of commodities we sell or the inputs we buy.

In January, Statistics Canada reported that farm families continue to depend on off-farm sources for nearly two-thirds of their family's income. Furthermore, farm income includes program payment money, so income from the market averages less than one-third of farm family incomes. Farm families are subsidizing the system with their off-farm jobs. When agricultural supply chains break down, farmers bear the brunt of the costs.

For rural people, the supply chain is a one-way street such that the results of their work and the value of their crops and livestock disappear into the bank accounts of distant multinational companies. It is not surprising that so many feel left behind. Increasing economic inequality leads to social instability and disempowerment.

The climate crisis will also continue to disrupt production and infrastructure. The prairie drought of 2021 and B.C. and Atlantic floods cannot be seen as outliers but as signals that adaptation is no longer optional.

Resolving supply chain vulnerabilities requires planning to prioritize resilience and stability instead of putting all of our policy eggs in the export-maximization basket. Going forward, agriculture policy should be designed to build in safety valves and surge capacity so that disruptions are manageable challenges instead of full-scale crises.

We urge the committee to avoid the appeal of false solutions such as big data, automation and artificial intelligence, which would intensify inequality, reduce farmer autonomy and create new risks. True solutions will rebalance power, bring greater fairness and equity into our food system, and mitigate greenhouse gas emissions while implementing adaptation measures. The federal government can do this by providing the program, policy and regulatory support needed to develop and sustain our domestic market, creating broader and more diverse supply networks while retaining more of our high-value food dollars within Canada.

Whether the sector is beef, pork or vegetable processing, concentration of infrastructure ownership means that the packers, processors and retailers are benefiting regardless, but in all of these sectors, our past shows us that a different way of organizing our food system is both possible and desirable. Let's use the beef sector as an example. In 1988 there were 119 federally inspected beef-packing plants in Canada. All were 100% Canadian owned and the four largest beef plants killed 35% of Canada's cattle.

Now just two companies slaughter over 95% of our cattle. They failed to prevent COVID outbreaks and deaths, and cattle prices are low while grocery beef prices are skyrocketing. More smaller abattoirs located throughout Canada and available to serve producers in every region, coupled with regenerative production practices, would provide food system resilience and rural jobs as well as climate mitigation and adaptation benefits.

Banning captive supply and legislating caps on packing plant revenues would stop companies like JBS and Cargill from taking unfair advantage of farmers and consumers.

By learning from history and envisioning a more equitable and climate-friendly future, the federal government can create a better framework for rural jobs, infrastructure to serve farmers and farm prices that reflect the cost of production, to bring prosperity and stability to Canada's rural communities and agriculture sector.

I believe my time has nearly run out, so I thank you very much for your attention today and I look forward to answering your questions.

[The Chair, Liberal, Kody Blois]

Thank you, Ms. Ward, and, yes, you were right on time, so thank you for that.

Ms. Lefebvre, you have five minutes.

[Catherine Lefebvre, President, Quebec Produce Growers Association]

Good afternoon, hon. members.

I'd like to thank you for giving us the opportunity to speak before the committee today.

My name is Catherine Lefebvre, and I'm the president of the Quebec Produce Growers Association, or QPGA. With me today is our general manager, Patrice Léger Bourgoin.

The issues we are discussing today are of concern to our economic sector. The availability and cost of inputs are a constant concern, especially in a context where increases in production costs aren't accompanied by similar increases in sales prices. In fact, the renowned business journalism website MarketWatch stated at the end of January that, despite rising retail food prices, several farm groups are finding that stagnant farm‑gate prices and soaring fuel and fertilizer costs over the past five months are putting our operations at risk.

The globalization of markets has a negative impact on many aspects of the country's market gardening activities. Fruits and vegetables compete with imported products. In many cases, labour and enforcement costs are not comparable to those here. However, sales prices are generally similar.

The very nature of our industry means that producers have no control over the selling prices of their products. Most have a very short life cycle, and they can't be left in the field to be harvested later. Once harvested, they have to be sold and transported as soon as possible. This puts the producer at a significant disadvantage to the buyer.

However, several raw materials such as fertilizers, pesticides, seeds and other essential products such as cardboard, pallets, packing sacks, construction material and machinery parts are affected by the phenomenon of rising prices. Again, we're not in a position to influence the price of our vegetables.

Soaring energy prices have led several countries to cut back on the production of various fertilizers and reduce exports. That's the case for China and several European countries, including Russia. It goes without saying that producing countries will favour the domestic market over exports. Canada is therefore at the mercy of international markets. That said, fertilizer costs are expected to remain high. Farm Credit Canada estimates that fertilizer prices will increase by 60% in 2022. Pesticide and seed prices have also increased significantly.

I will now address the transportation and logistics challenges, also related to fuel costs. Transportation capacity is drastically reduced. Delivery times are increasing and rates are skyrocketing. The shortage of drivers and spare parts are crippling the transportation fleet. Right now, it's not uncommon for a producer of perishable products to pay 42% more to get fruits and vegetables shipped, compared to a few months ago. The situation is untenable. We are really caught in a bind. On the one hand, we need these trucks, but on the other, these costs are directly added to our production costs, which are exploding on all sides.

I will now talk about labour issues. As you know, there are fewer local workers to fill the needs. There are none left. We have had a quality foreign workforce for several decades, but the global pandemic has unfortunately exacerbated several constraints that have slowed the immigration process. In addition, recent changes by Service Canada allow temporary foreign workers in agriculture to be poached by people in the manufacturing and construction sectors. Labour costs continue to be a major challenge. In Quebec, minimum wage has increased by 14% since 2020. Market gardeners are having to absorb this increase without being able to pass it on in the selling price.

We believe that the federal government should move forward with the creation of a supply chain task force. Producers could speak to the key factors affecting their ability to produce, transport and distribute their products. The Government of Canada's appointment of a supply chain commissioner to lead a joint task force would be helpful in guiding this process.

With respect to labour, it is essential to improve programs by ensuring that administrative processes are more efficient and predictable. In that sense, a foreign worker who has been returning to the same place for many years and whose employer has an impeccable track record should be able to benefit from expedited processing.

Furthermore, the phenomenon of stagnating sales prices and the increase in all the main elements of our production costs greatly affect the profitability of our businesses and jeopardize their long‑term survival. Emergency assistance should be put forward to ensure the country's food security.

In conclusion, our production sector operates in an open global market, which forces us to compete with countries with lower labour costs and a regulatory framework that is much less costly to implement. We have very little control over selling prices.

Thank you very much for your attention.

I would be pleased to answer any questions you may have.

[The Chair, Liberal, Kody Blois]

Thank you, Ms. Lefebvre.

Mr. Epp, you now have the floor for six minutes.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you, Mr. Chair.

I want to thank the witnesses for their excellent testimony and also for the materials they provided ahead of time.

I'd like to begin with the Canadian Produce Marketing Association.

I'm very interested in your support for a supply chain commissioner, taking a whole-of-government approach to tackle some of these issues. I'm very familiar with the dynamics of a problem that crosses jurisdictions and departments and ministries, having dealt with temporary foreign workers in my own riding and with the intersection of COVID with illegal workforces, bunkhouses, etc. Those dynamics I'm very familiar with.

It reminds me, actually, of my own household from a decade ago, as a father of four daughters. On Saturday morning at chore time I always had five—Alyssa, Carina, Brenna, Kiana and “Not Me”. It was always Not Me's job to take out the garbage.

Starting on that lighter note, although this isn't light, can you provide some specific examples as to issues that have either been punted from department to department or have fallen through the cracks, or where a siloed approach has not been efficient in addressing the issue?

[Ron Lemaire]

Maybe I'll start, and then I'll see if Guy has any comments to add.

I think you need to start looking at this in a model where we see agriculture playing a significant role in Agriculture Canada and our supply chain being an economic engine for Canada. Based on that, we start looking across multiple jurisdictions. The first jurisdiction, as was noted by one of the witnesses, is on access to labour, especially the on-farm, and the challenges around while improving the process [Technical difficulty—Editor] making sure it's effective.

The greenhouses are a perfect example from your riding. They are the tip of the sword in production. They are one of the first to come in full steam relative to domestic production in Canada. While they have identified that it's been moving better than what they've experienced in the past, there still have been some challenges on delays with last-minute switches to paperwork due to worker changes in the pipeline. Overall, 3,200 workers are on-farm now, and they have another 4,000 to 4,500 coming in for peak in June.

When you start looking at the divisions, you have to look at the divisions between labour, and then you have to look at the other components around the simplicity of transport. If you're a ministry of transportation you start looking at the division of labour. You start looking at the municipal division and jurisdictions around health and the power of the municipal health department. As we start migrating forward, under a supply chain commissioner model, in a simplistic way, we start asking how we streamline. The first piece is looking at reopening Canada as one piece of the puzzle. What are the strategic moves—

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you, Mr. Lemaire. I do want to pick up on something you identified there with regard to labour shortages.

I'm aware that your organization supported the emergency worker program. We read all five components of that into the record in the last meeting. We heard from the processing and meat-packing sector about the cap, that raising the cap is primary.

I have two questions for you. First, what issue would be primary, from your perspective, of those five pillars? Second, are you making any progress? Are you meeting with officials? I understand that you had some meetings last night. Can you update this committee on the progress you're making?

[Ron Lemaire]

I'll start with the progress. Minister Bibeau has been very responsive to our request, to the 11 organizations that signed the proposal. It's our understanding that conversations on the proposal are under way. However, as industry we're looking for some indication from ministers Qualtrough and Fraser that our proposal is being considered for action and for implementation in the immediate future. This is, again, a jurisdictional challenge.

Even after two months, we've yet to receive a definite response on the proposal. We are requesting that ministers Qualtrough and Fraser sit down with our associations to discuss the proposal and to immediately look at the measures that can be taken to address the labour risk within that component of our supply chain.

Although the food and beverage processing side of the business is only one of several sectors undergoing labour shortages, the government has identified our sector, which includes that component, as part of Canada's critical infrastructure during the pandemic. The inability to meet those labour needs, as we heard on the meat side and some of the other pieces, is affecting [Inaudible—Editor] animal welfare.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you. I do want to get in another question.

Specifically on your call for investments in infrastructure with regard to port containers, shipping delays, etc., I know we're short of infrastructure in the greenhouse sector in my own area with regard to sewer capacity and things like that. Where else in Canada...or are those the main areas—ports facilities, address shipping costs, and other infrastructure for greenhouse growth?

[Ron Lemaire]

For greenhouse growth to the U.S., it's fundamental. They're our biggest trading partner. As an example, 80% of the product out of Ontario goes to the U.S. We need [Technical difficulty—Editor] a few key areas.

Going south, we need to ensure that we have access to the main means of transportation, and that is our trucking industry. It's not a federal rule, but we need to look at how we can support the provinces in driving access for more truckers through licensing, insurance schemes and some other strategies around bringing more truckers to market.

On the port side, it's around looking specifically at the issue of moving containers, at moving containers off the ports, so that they can move to distribution centres off the main hub and be addressed and moved out of the system and into the market as quickly as possible, but then go back into the system to be loaded with product to leave the country—

[The Chair, Liberal, Kody Blois]

Thank you, Mr. Lemaire. I appreciate that.

Thank you, Mr. Epp.

We're now going to move to Mr. Louis for six minutes, please.

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

Thank you, Mr. Chair.

I want to thank all the witnesses for being here and also thank everyone in their industries, the many people who continue to work every day to find those solutions to make sure that we have access to safe and healthy products.

I would like to start where my colleague left off: with the Canadian Produce Marketing Association.

You mentioned in your opening statement the layered disruptions: port congestion, costs of shipping containers, inconsistent product delivery, labour shortages, which we've already delved into, input shortages and stockpiling of consumer goods. Those were the major ones.

I want to continue with port congestion. With ships waiting to dock and unload, especially with perishable products, this could lead to food loss, food waste and loss of sales. What processes could be implemented to prioritize the movement of perishable goods or essential goods to mitigate the congestion and food waste?

[Ron Lemaire]

I'll quickly talk to that.

I mentioned the point earlier around creating that secondary hub outside the main port to be able to identify perishable items. On top of that is having the resources on ports, so that if it's CFIA or border services they can review and identify the products coming through and the inspections can happen in a timely manner to get the product moving into the system.

On the other side of that, it's also about working with the municipalities and the unions, such as the longshoremen's union, but also enacting the appropriate regulatory model that takes fresh produce as essential, so that in the event of any further disruptions the labour is there to move the product through the port. That's the fundamental principle. There are examples of similar approaches to this already in existence. We're looking for a similar approach for produce, in that if it's held at the port during a disruption, the longshoremen and others within the system are able to take the product and move it out to trucks.

I'll hand it over to Guy to see if he has any other comments.

[Guy Milette]

Real quickly, one of the issues with the major container companies—they're worldwide companies and they're not here in Canada—is that right now they've not been accountable for all their actions. With some of them, for the price fluctuation of the containers, we have absolutely no control, with prices that have more than doubled and tripled.

These companies are outside this country. Not only that, they send letters to receivers of fresh produce containers stating that they're no longer going to be responsible for delays in transit, so you don't even have recourse because they took 60 days to deliver your bananas instead of 21, even if the cargo is a total waste.

[Ron Lemaire]

On top of that, the fees themselves, sir, are a challenge.

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

That was actually my next question, so I'll let you continue to talk about that exponential growth in container costs. We've heard about that price fluctuation, including for refrigerated containers, and that's obviously creating these challenges. Can you help us with out maybe some best practices that we can have if you've seen otherwise? Or, on that letter you're referring to, when did that start and how can we put that into the record?

[Guy Milette]

As soon as the container companies saw the disruptions in the transportation ports around the world, they knew that they were not in control of transit time anymore, so we go back to the beginning of the pandemic. We go back maybe about a year and a half and, as I said, every receiver with large volumes of containers was advised not to present any claims based on transit time. This is still ongoing today. I don't know when it's going to finish. We hope they're going to remove this rule very soon, because it's a struggle. We can count our losses in the hundreds of thousands.

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

I feel for you there.

Are there any best practices that we can see elsewhere in the world and any solutions? Sometimes we can learn lessons from how other countries are working.

[Ron Lemaire]

We're actually part of a global supply chain group that is looking at this. It's representative of multiple associations and multiple countries. We're beginning to look at some of these best practices. The U.S. has started it. They're a bit ahead of us relative to our supply chain position, in targeting and requiring ports to implement key strategies to move perishable products through to the external hubs off port so that trucks have quicker access to put the product to market.

It's also ensuring that the ships that are arriving are not leaving empty. This is part of the need we have to start driving towards: How are we managing those ships coming into ports so that they are not dead weight going back to China or other markets, but taking Canadian goods with them to create that reciprocal trade model? Part of that is speed at port.

We're beginning that process of doing the analysis. We hope we'll have information to report on in the coming months.

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

Thank you very much.

I have less than a minute left, but I want to check with Ms. Ward.

Thank you for being here.

You said that 66% of farm family incomes were from off-farm jobs. Can you confirm that? I mean, we always think of farmers as farming 100% of the time and having a job that has income security.