Agriculture Committee on Feb. 28th, 2022

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

I would like to ask you one last brief question, if I have any time left.

[The Chair, Liberal, Kody Blois]

Your time is up, Mr. Perron.

It is now Mr. MacGregor's turn for six minutes.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Thank you, Mr. Chair, and thank you to our witnesses for being with us today.

I'd like to direct my first questions to the Canola Growers and the Canola Council.

I know we have been trying our utmost to add more crush capacity, with changes to the clean fuel standards, and trying to add more biofuel refining capacity in Canada. These are incredible value-added products, and they really help our canola producers. As we bring both more crush capacity and more biofuel refining capacity online, what is that going to do in terms of longer-term trends for Canada's supply chain issues? I know that per rail car, you get much more value for oil. If we're trying to grow more biofuel refining here in Canada, to have more carbon-neutral fuels, then I'm curious as to what the longer-term trends will be for our supply chains.

[Chris Davison]

There are a few different ways to look at this. Certainly, on one aspect of the supply chain, we may see some change and balance over time between domestic and exports, because the biofuels market that you're talking about is largely focused on North America—Canada and the U.S.—so I would call that out.

Also with that, we anticipate seeing some change in movement and direction. That is not forsaking what we have in terms of that east-west movement that my colleagues were talking about earlier to ports, but also, given both the Canadian domestic market and the size of the U.S. market to the southwest, we will expect to see some increased north-south traffic, as well.

Dave and Steve might want to add to that.

[Dave Carey]

It's a great question. I think you spoke to some of the conversations earlier at committee where we're also looking to produce more, Mr. MacGregor. We're looking to intensify to move up to our goal of 52 bushels an acre, to produce more.

We definitely don't see it as an all or nothing, but what is interesting if we look at where the trade irritants are that canola faces, they tend to be around the trading of raw seed. When you get into the value added, it is a different trade avenue. The non-tariff trade issues that we face with canola tend to be canola seed-specific and are different when you get into meal or oil, because you're not dealing with maximum residue limits and other things like that.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

I very much empathize with what you outlined with the port of Vancouver. I guess the problem with the port of Vancouver is that it's stuck between the mountains to the north and the U.S. border to the south. It is a massive population centre, which is growing up. You have residential areas pretty much right beside industrial facilities; the Burrard Inlet is incredibly congested, and you have that narrow point right by the Lions Gate Bridge.

It's affecting my constituents right across the water in Vancouver Island. When we don't see an efficient port operation, we see vessels anchoring in the waters around my riding for weeks at a time. My constituents feel like they're being used as an industrial overflow parking lot for the port of Vancouver.

In the United States, the U.S. port envoy expressed a view that participants in the global supply chains do not share sufficient information. Since we have clear federal jurisdiction, both over our rail networks and our port operations, I wonder what more we can do to facilitate that information sharing, so that vessels are arriving in an efficient manner and are not staying anchored for eight weeks at a time anywhere near the port of Vancouver. Maybe we could have some kind of a just-in-time arrival system.

Do you have any thoughts as to what we can recommend for that?

[Dave Carey]

I'll begin by saying I can sympathize, as I have family in your riding as well, but the accrual cost for those tankers or those grain vessels sitting there is significant as it is passed on to the exporter. Ultimately, it hurts our farmer constituents.

I may ask my colleague, Steve, for his perspective at a more granular level.

[Steve Pratte]

What you're experiencing and what you're seeing even this year as being an emphatic point is the suboptimal outcome of our supply chain disruptions. It's that proxy kind of visual or metric being the number of boats, be they grain, other bulk commodities or container. It is absolutely not an efficient use of anyone's time.

On the human aspect that you referenced, if we were talking about this 10 years ago.... Where we are today, as far as information sharing, programs, robustness of data and the grain sector go, we have a platinum system with several of our ways to see things. The Port of Vancouver has a project under development. Transport Canada is working on some other supply chain metrics.

I would say, though, that it allows you to understand what has happened. Potentially, there would be some warning signs, but with such a multi-party actor system, the most perfect data in the world would still not save you from having supply chain issues, the ramifications of which are the boats sitting out there.

This is a roundabout answer for you, Mr. MacGregor, but—

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Quickly, Mr. Pratte, in the last 30 seconds, when we have those sudden interruptions to our transportation networks, like we saw in November with the flooding cutting off the port of Vancouver from the rest of Vancouver, what systems do your people have in place to get around that very quickly? Do we need more, so there's that real-time data so people can reroute their shipments?

[Steve Pratte]

People knew it was coming. You could see it in the data, but, unfortunately, the boats are booked months in advance, so that's not going to be helpful.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Okay. Thank you.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. MacGregor, and thank you, Mr. Pratte.

We're going to go to one more panel. We'll go five, five, two and a half, two and a half, and then we'll wrap up.

It's over to the Conservatives. Oh, it's Mr. Falk. I'm sorry, Mr. Falk. I should have welcomed you to the committee. Welcome. It's great to see you.

[Ted Falk, Conservative, Provencher, MB]

Thank you, Mr. Chair, and thank you to our witnesses for joining us this morning and for contributing to this important supply chain study.

It was mentioned that we've become a globally trusted trading partner when it comes to the canola industry. Kudos to our canola industry for achieving that. Last year we saw a 40% reduction in production. Typically we average 40 bushels to the acre of canola. The industry has set a target, to meet the demands of being a trusted trading partner, of 52 bushels to the acre.

What does the reduction of fertilizer on the horizon mean to your industry as far as meeting those demands goes?

[Chris Davison]

I'll kick things off and ask my colleagues to jump in.

My first comment is that I hope we're not going to see a reduction in fertilizer. I think we need to make a distinction between emissions and actual fertilizer use.

How do we work on that in the right way?

I would just highlight that, as you pointed out, nitrogen fertility is extremely important. It's the second-most important external factor, after moisture, to canola production, so I think there's work, as I've alluded, that can be done on the emissions front. In my opening remarks, I mentioned our innovation strategy, with increased focus on performance, precision and the like. We have some tools to work with through precision agriculture. We continue to encourage the uptake of things like 4R practices and precision agricultural hardware and software.

However, we are going to continue to need fertilizer and fertility to support that yield intensification you're alluding to, so that we can continue to produce more canola but on more or less our existing land base. That's what we're going to look at doing, obviously through sustainable intensification.

[Dave Carey]

I guess the only thing I would add is that we need to look at it holistically. Reducing emissions from fertilizers is one thing. Reducing fertilizer use on farms is another.

As Chris said, nitrogen is a key tool in terms of yield. Something that is also important to look at holistically is that 70% of all carbon storage in field crops is actually through canola. Canola stores 70% of the carbon stored by field crops. The deep root system is very good at storing carbon. Reducing a key fertility tool like nitrogen would actually impact the amount of carbon being stored while also having economic ramifications for farmers in the value chain.

We need a holistic approach to these conversations. They can't be held as one-offs that we then try to marry together on top of Agriculture and Agri-Food Canada's wanting to reach $75 billion in exports. We need a holistic approach that looks at all the moving pieces, Mr. Falk.

[Ted Falk, Conservative, Provencher, MB]

Okay, thank you.

You indicated that the average canola product moves about 1,500 kilometres to market.

Could you tell me the difference between what rail costs versus trucking costs would be for that distance?

[Steve Pratte]

I can take a stab at that.

Really when we think about western Canadian production—and I do not have specific numbers in front of me to share with you—typically we look at trucks being price competitive within a couple of hundred kilometres of a delivery point, maybe 200 to 250 kilometres. For rail, it's measured in a fraction of what the trucking would be. There's really no alternative to rail in terms of both volumes and the price to move bulk grain. There's just nothing that can compare to that.

We see trucking as regional, and for the long haul, no one does it better than the railways.

[Ted Falk, Conservative, Provencher, MB]

That being said, are rail companies committed to bringing a certain volume to market every year? Have they met those commitments?

[Steve Pratte]

Well, certainly coming out of the shadows of Bill C-49, the Transportation Modernization Act, there's now bolstered communication between the railways and their grain shippers. Certainly, though, the railways consult. They put on paper their plans with the Ministry of Transport every year—their idea of what they are going to move for that year and the size of the actual crop to be hauled. There's nothing that holds them to that. What we saw this year was that we were going to do X but in reality Y has happened. There is some accountability within contractual arrangements, but it's not to the level that the grain shippers and grain industry would like to see.

[Ted Falk, Conservative, Provencher, MB]

Do you know if some of the disparity between what you as an industry wanted and needed in terms of the amount being shipped was due to that being offset by fuel or crude oil being hauled?

[Steve Pratte]

There's always that dynamic tension. Certainly we can look at the first 16 weeks of the crop year this year and say that both railways were doing wonderfully. Recovery post-flooding has been choppy and slow. Also, there are commercial and operational decisions being made within the railways that affect that. At the end of the day, the bottom line is their operating ratio and shareholder value, and there are certain things that they do within their companies that can have an effect on the amount of grain or any other product moved on the common railway system.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. Pratte, and thank you, Mr. Falk.

We'll now move to Mrs. Valdez, for five minutes.

[Rechie Valdez, Liberal, Mississauga—Streetsville, ON]

Good afternoon, colleagues and Chair, and thank you to all the witnesses who are here today.

I have a question for Mr. Davison. Mr. Pratte and Mr. Carey, feel free to jump in if you would like to answer as well.

Now that the Fraser Grain Terminal is operational, what opportunities are available for the canola industry?

[Chris Davison]

Steve, I'll to defer to you on that as it relates to the terminal specifically. I'd be happy to come in on some other comments regarding canola generally and some of the comments we made earlier in terms of the opportunities for future growth, but if there is a specific transportation link to that question....

Steve, I don't know if you want to comment or not.

[Steve Pratte]

Very briefly, what we've seen in terms of the long game and the bet from the participants in the green sector, the buyers and exporters, is that when something like the Fraser Grain Terminal comes on line, that's another investment. That's another long bet on the industry and our ability for growth and profitability through the whole supply chain, to the benefit of everybody and the economy.

As we discussed earlier, certainly we're getting towards the end of available land in Vancouver in general. In terms of the ability for that party to make investments, again, with another outlet and another buyer out there in the marketplace, it's seen as generally a good thing.