Agriculture Committee on Dec. 11th, 2023

[Ron Lemaire]

It's a great question. Thank you, Ms. Rood.

The opportunity to be part of the discussion in the working group and to provide input through the steering committee was given to Loblaws and Walmart. They leveraged the opportunity to use the Retail Council of Canada and other association channels that were available to them.

At the very beginning, there was representation around the table from Loblaws, and that opportunity was available throughout the process.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you very much.

We've been talking a lot in this committee, and I've asked several people this question with regard to the proposed P2 plastics ban by the Liberal government. We've heard that it's going to cost the industry $6 billion.

For the sake of those watching at home, can you tell us why the new proposed ban on plastics could essentially cripple the produce industry in Canada? What effect will it have on consumers in terms of the availability of fresh produce in the grocery stores and the prices that consumers see? What could we potentially see disappear from grocery store shelves, meaning what could Canadians no longer buy at grocery stores if this proposed ban goes ahead?

[Ron Lemaire]

This is very concerning, and I appreciate your bringing this up on committee.

Ninety per cent of what packaging does, it does before the consumer sees it. If this moves forward, the notice will remove all bagged salads. It will remove all value-added...so all of the clamshells of fresh-cut blueberries and strawberries, all of the products that you would get out of California—or shipped from Mexico when we're not in season—would be removed from the market, just because they wouldn't be able to make the journey. We wouldn't have bananas in Canada, because bananas are shipped in a plastic bag to Canada to control ripening and damage.

You would basically take out a significant portion of the market. You would add an over 20% cost to produce that is available to the market. You would change the dynamic. Even a locally grown product coming out of the fields in Quebec, shipped to local retailers, would have a reduced shelf life.

We would also see waste increase by 50%. We would see GHG emissions double by another 22 million....

It's would be a dramatic impact to the industry and to the consumer.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Mr. Lemaire, in your meetings with ECCC, have they at all been open to your suggestions for pausing the timeline for implementation of the P2 plastics ban?

[Ron Lemaire]

We have requested a pause and a regroup. I know that the department is very focused on achieving a goal and trying to look at what solutions would be available. The discussion isn't about what the P2 notice looks like; it's about whether the P2 policy model is the right model. We don't think it is. We don't think it's functional within a complex food industry. It's going to create too many issues. We provided five recommendations to the department, which they could use to effectively move forward.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

I'm wondering if you could comment on how the carbon tax affects the input costs of the suppliers you represent.

[Ron Lemaire]

Right now, if we're looking at the carbon tax, we see that the issue is that the carbon tax imposes.... I'm going to take the greenhouse industry, because it's one of the key industries in our sector that relies on natural gas to heat; and because of the nature and climate we live in, it's an essential part of their business.

Right now, the greenhouse vegetable sector is estimating a cost of over $22 million annually due to the carbon tax. With the lack of an exemption, which was denied in the bill coming out of the Senate, they're looking at an expected rise to $82 million to $100 million by 2030.

I appreciate the other witness providing his commentary. That cost will be passed on. It won't be an immediate pass-on, but there's no way the greenhouse industry can take on that burden of cost and move forward. Many of them are already relocating their operations to the U.S. and Mexico to satisfy production costs and competitiveness in the Canadian marketplace.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Mr. Lemaire, would you say it's harder to do business in Canada, then?

What keeps potential suppliers out of the Canadian market?

[Ron Lemaire]

It's a complex question. It is getting more complicated to do business. The challenge is beyond just the carbon tax. It also includes looking at the cost of borrowing and interest rates. The complexity and layering of regulatory burden on the industry is becoming a challenge. There are access to labour and the cost of labour.

Adding all of these pieces together drives down the opportunity to develop and invest in our own businesses. Many growers are saying that they're not investing the way they would like to because of the uncertainty of the Canadian marketplace.

[The Chair, Liberal, Kody Blois]

Thank you very much, Ms. Rood.

Thank you, Mr. Lemaire.

We'll have Mr. Drouin now for up to six minutes.

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

Thank you, Mr. Chair.

Mr. Lemaire, I want to build on what you're saying.

Would you have some numbers to provide to committee in terms of greenhouse investments in Canada versus the U.S., for instance, which would be a comparable market?

A lot of the issues you brought up, like access to labour in the U.S., are the same issues. Talking to our counterparts down there, they also have worker programs and they face the same labour crunch. There are the same issues in Europe, where they face the same labour crunch.

I'm curious to understand—

[Ron Lemaire]

It's a combination.

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

Yes, it's a combination.

[Ron Lemaire]

It's the culmination. It's the energy and the tax incentives for investment. A range of different elements link into that shift of investment from one country to the other. You add in the packaging. A range of elements come into play.

What was the second part of your question? The first was greenhouses.

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

You've said...a lot of your members are now shipping down to the U.S. I'd love to see the comparable. If that's in fact happening, that is concerning to me. I'd love to see those numbers.

[Ron Lemaire]

I'm happy to sit down and also work with the Ontario Greenhouse Vegetable Growers to look at where and how those cost centres truly impact growth in the marketplace. My chair was former president of BC Hot House.

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

Mr. Stanford, thanks for your presentation. I know it's not your first appearance before this committee.

You have created a report that outlines the misconception that every grocer that's been before committee has said, which is that they are operating in a competitive landscape.

Do you believe that they are operating in a competitive landscape, when we're talking about the five major grocers that own 80% of the market share?

Would that be the definition of an oligopoly or would you say it is a tremendous competitive landscape right now?

[Dr. Jim Stanford]

It does fit the definition of an oligopoly, which is where the controlling share of a market is held not by one company, but by a few companies. I don't think there's any question about that.

Is it competitive? Oligopolies do compete with each other. There's no doubt about that. They compete with each other in particular, limited ways that don't necessarily conform to the assumptions of competition as it's taught in economics textbooks.

There's not a black and white spectrum between competitive and non-competitive. There are ways in which they compete with each other, but there are ways in which they clearly don't.

I do think that the fact that this industry is so concentrated does help to explain why its profits have remained at these elevated levels postpandemic, while other sectors in Canada have seen profits retrenched towards pre-COVID norms.

As some of those initial inspiring factors that cause the inflation—things like supply chain shortages and even energy prices—start to abate elsewhere, that has led to a slowdown in inflation and reduced profits. In the food retail sector, profits continue to grow. That is an exception.

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

The last time we had Mr. Weston before committee in March, he said that their profits had increased, but you have to look at their pharmaceutical side.

I don't think its a more noble cause...to find out that you've increased profit margins from sick Canadians. I think it's disgusting.

Do you agree with that statement?

I know you haven't provided the entire analysis that you've done, but do you agree that the profit margins have increased specifically on food items?

[Dr. Jim Stanford]

The data in my submission, sir, is from Statistics Canada's industry-wide data in which companies are allocated to different sectors based on their dominant business. It would include all the revenues and profits from supermarkets that happen to sell some pharmaceuticals on the side, as well. In that regard, we see that, as noted in my submission, the quantity of sales in real terms has shrunk over the last two years of high prices. That would include their attempts to diversify into other products, whether it's pharmaceuticals, clothing or other things some of these chains are selling.

Now, I am also puzzled by the logic of that argument. As a consumer, I don't really care whether I was ripped off in aisle A with the produce, aisle C with the packaged food or aisle F, where they sell Tylenol and other over-the-counter pharmaceutical products. I don't see that argument helping them.

If anything, the breadth of these companies' dominance not just in one industry—food—but also in others further attests to concerns about the corporate power this oligopoly is able to assert.

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

Thank you.

Mr. Léger Bourgoin, it's a pleasure to see you again. We often meet each other via videoconference, although I was able to see you in person the last time.

Would you please tell us how important the code of conduct is for the fruit and vegetable sector in Quebec? I think you even suggested that the government legislate on the matter, didn't you?

[Patrice Léger Bourgoin]

Yes, absolutely.

We negotiated for more than two years for a code of conduct that suited retailers and suppliers. It's utterly unacceptable for two retailers to express their disagreement at the last minute. If those two request changes to the code's wording, then suppliers must have the same privilege.

The negotiations were tough at times. It took an enormous amount of goodwill and good faith on the part of all parties for them to reach compromises acceptable to everyone. I think it's unacceptable to be reviewing provisions and entire swathes of the code of conduct at 11:59 p.m. If there are a few superficial changes, we'll consider them, but we definitely won't be starting a new round of negotiations.

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

Thank you.

[The Chair, Liberal, Kody Blois]

Thank you very much.

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

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

Thank you, Mr. Chair.

Thanks to the witnesses for being with us.

Mr. Léger Bourgoin, you ran through a number of recommendations in your opening statement. I'd like us to take a closer look at them. If we run short of time, I'd appreciate it if you'd provide your answers to the committee in writing.

First you said it was important that the government get involved in risk management. Would you please expand on that idea?