Agriculture Committee on Feb. 6th, 2024

[The Chair, Liberal, Kody Blois]

Thank you, Mr. Currie.

Thank you, Mr. Barlow.

We'll turn to Mr. MacDonald online for up to five minutes, please.

[Heath MacDonald, Liberal, Malpeque, PE]

Thank you. I'll go directly to Mr. Currie.

Mr. Currie, you mentioned it a little bit. We've heard many examples of acrimonious retail-supplier relationships in the absence of such a code. I'm wondering if you can explain the present role of that relationship right now in some of the prices of food on the shelves in grocery stores.

[Keith Currie]

Most of our farmers don't have direct contact with the end retailer. It's more prevalent in the horticulture sector in particular, where there may be some direct contracting with the big grocers, so to speak. From time to time they will be affected if all of a sudden the contract that was signed isn't honoured—somebody offers them less money or they drive to the next laneway.

That's why this concept of a code of conduct is appealing to farmers. We have the security, the transparency and the good business accolades through the entire supply chain, and we're actually rewarded for what we do. When farmers are profitable, the money doesn't go in their pockets, it gets reinvested in their businesses, like all small businesses, so it's good for the economy. That economic development piece often gets lost in some of these conversations.

[Heath MacDonald, Liberal, Malpeque, PE]

Thank you.

I want to flip to tariffs—Ms. Roy talked about them. Last year the U.S. enacted the most significant climate policy to date, and over the past year, a mix of Republicans and Democrats, who don't always agree, as we know, echoed a push for measuring greenhouse gas emissions from certain products produced in the U.S. They hope the data will underpin the creation of a tariff on imports of carbon-intensive goods from other countries. We know there's a former president running who used it as a geopolitical weapon. We know the European Union is also implementing, or contemplating implementing, carbon tariffs on those countries without a recognized carbon-pricing mechanism.

We're in a position. If we don't provide a carbon-pricing mechanism and our trading partners start enacting tariffs, what are we presently preparing for with regard to some of these issues that could happen relatively quickly? In some cases, they are happening now.

Mr. Currie, do you have any opinion on that?

[Keith Currie]

It's a very complex subject matter. We've heard comments already this morning about international trade deals and carbon pricing, and it's true that carbon border adjustments are going to become a real thing very shortly. Those conversations are happening all the time around trade deals. With the ministerial conference coming up at the end of this month, that will certainly be a big part of what's on the agenda.

With respect to what's going on in the United States—it was also referenced here today—our farmers are dealing at a competitive disadvantage, because there are lots of programs out there that are financially supporting the farmers in the U.S. Our farmers can get angry about it, but the reality is that their government is looking after their farmers in a financial way much better than our own government is. I think that's where we struggle in the competitiveness of producing our products. We can grow products with the best of them on a level playing field, but when we have differences of opinion or policy across borders that affect how we are going to have to farm, or if we can farm, that's where we struggle.

[Heath MacDonald, Liberal, Malpeque, PE]

Basically, in terms of preparation relevant to carbon tariffs, do you feel this is going to be enacted? What preparations should governments be doing now? I know there was a 25% increase in the budget in agriculture. Maybe that's, as a difference of opinion, not enough, obviously. However, I want to know what we are doing as an industry and sectors to prepare for the likes of situations where tariffs are going to be imposed on some of our products.

We hear the conversations around doing away with carbon pricing and doing away with carbon mechanisms altogether in Canada, but I don't believe that's the way the world is going. I want to know, for my farmers in my riding, so I'm able to talk to them directly and say, “Here's what we need to be doing.”

I'm trying to throw it back at you. What should we be telling government officials—ourselves—the department and, moving forward, our trade partners? Where are we at?

[Keith Currie]

I think what's very frustrating, from my perspective, is that nobody comes and talks to us before they put policies in place. It's not that farmers don't want to do the right thing or get to the right place in climate discussions or on carbon pricing, but we're never given the opportunity to have meaningful input or work with the government of the day to create the right regulatory framework, where we accomplish the ability to put an effective pricing on carbon without hurting the farmer.

Let's not forget that the two most important things to human beings are food and shelter, and food security is going to trump carbon pricing every day. I hope we just don't leave it too late.

[Heath MacDonald, Liberal, Malpeque, PE]

Okay.

[Scott Ross, Executive Director, Canadian Federation of Agriculture]

If I could briefly add to that—I don't know if I have a moment—I would just add the other point that we, as farm organizations, are working internationally with our counterparts on the need to ensure there is appropriate discipline at the WTO to ensure that all of those measures are implemented in a science-based fashion and that we have consistent grounds on which they're being developed. I think from our perspective that is absolutely paramount. If we're going to see mechanisms like that employed, there have to be international legal frameworks that hold those accountable to the science and ensure they're being built around a real strong basis of science and evidence.

[Heath MacDonald, Liberal, Malpeque, PE]

Thank you, Mr. Ross. I was a minister of trade locally, and I can remember when the former president, Mr. Trump, superseded the WTO on those issues you're talking about. I think we need to be prepared.

Thank you.

[The Chair, Liberal, Kody Blois]

Thanks, Heath.

We'll now turn to Mr. Perron for two and a half minutes, please.

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

Thank you, Chair.

Ms. Brisebois, I’d like to continue with the questions I asked you earlier.

In your opening remarks, you mentioned that you were in discussions with two of your members—we can guess which ones—and that you were optimistic.

Do you really think you can convince everyone to sign the code of conduct? Should that not happen, would you consider introducing it anyway?

[Diane J. Brisebois]

We prefer not to focus on the possibility that it won’t happen. Our planning is based on a commitment from all stakeholders. As I said at the beginning, Mr. Perron, this is a huge undertaking because we’re including everyone. We actually expected some stakeholders to have concerns.

The steering committee’s goal is really to try to find solutions. We want to invite all the major companies into the discussion and understand their concerns about the code so that we can increase our chances of all of them signing it. The primary goal is to find a solution.

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

Were there concerns that this process would result in a diluted or less effective code of conduct? Could these fears be well founded?

[Diane J. Brisebois]

You raise a very good point.

The major challenge is that many organizations think that this code should be like the one used in England, while other organizations think that adherence to the code should be voluntary and reciprocal.

Even if we’re talking about one or two companies, it’s important to know that a huge number of groups have voiced their concerns, and it’s not just retailers. Because there are so many concerns, there’s still a lot of work to be done. Several meetings will be held over the coming months to try and find a solution that will satisfy everyone.

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

Thank you.

[The Chair, Liberal, Kody Blois]

Thank you very much.

Mr. MacGregor, you have two and half minutes.

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

Thank you very much, Mr. Chair.

Dr. Charlebois, much has been made at this committee about carbon pricing. With respect to Mr. Currie's intervention on Bill C‑234, I think the provisions of that bill are in line with the exemptions that are already in the Greenhouse Gas Pollution Pricing Act. You can already see exemptions for farming machinery, farm fuels and farming activity.

You were talking about volatility. The price is set per litre, but of course, we've seen extreme volatility in the price of diesel fuel. I think that, in British Columbia in 2022, some regions were seeing a price of around $2.30 per litre. Now we're at a stage where I think it's around an average of $1.70 per litre, so there's extreme volatility in the price of diesel. That's very important because it's a transport fuel.

I worry, though, that the state of our discourse is doing a disservice to the overall problem, where there's just too much of a focus on carbon pricing. We know that oil and gas companies have certainly seen their bank accounts do very well in recent years, and there's incredible volatility on a fuel source. Is there anything more that you can add on that area of price volatility?

Is the question of the price of fuels something that we need to pay a bit more attention to in a holistic way?

[Dr. Sylvain Charlebois]

I assume that you're talking about price volatility at retail. Is that correct?

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

Yes.

[Dr. Sylvain Charlebois]

Okay.

We don't see any immediate volatility due to carbon pricing in Canada. In fact, if you look at months when the tax actually goes up—so in April, May and June—there's actually little volatility, so we don't see evidence of that. However, like I said, over time, over several years, we could actually force companies to see their costs increase and become less competitive. Because we do have access to firm-level data—we can't share that, unfortunately, for obvious reasons—we do see that some companies struggle financially a lot more because of the low margins.

You're referring to the petroleum industry. Margins there, as I'm sure you know, are much more significant than in the food industry. From farm gate to plate, margins are extremely low, so the carbon-pricing policy can have a huge impact on an industry where margins are incredibly slim.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. MacGregor.

Colleagues, I'm just going to exercise two or three minutes while we have our witnesses here.

This is for the folks at the Retail Council of Canada.

How much longer do you think...? I'm not trying to be facetious, but this is a process around the code of conduct that has now been a year and a half in the making, maybe even longer. We've heard from the Canadian Federation of Agriculture and from Mr. Charlebois that this is a really important mechanism. We sit around the table as parliamentarians, and at some point, if industry can't get itself together and figure out what that pathway is, there is going to increasingly be a pressure for us to just mandate and legislate a code ourselves.

How much longer do you think is reasonable for us, as parliamentarians, to wait before we actually move forward and maybe legislate them?

[Diane J. Brisebois]

It's difficult to answer that question, Mr. Chairman.

I think there is good faith in the different companies and organizations that have voiced some concerns or that need clarification. I think we are all working towards the development and launch of a code of conduct. We need to ensure that there are no unintended consequences.

In fact, we've been working on this since early 2021. I can't tell you how many meetings I've attended. There's a lot of work. Obviously, when we reported to the FPT ministers, we were hoping to launch the code at some point in 2024. We continue to be optimistic that this will be the case.

[The Chair, Liberal, Kody Blois]

We had Mr. Weston before our committee here before Christmas. As a member of Parliament, I'm not as concerned about whether or not PepsiCo, Coco-Cola or Procter & Gamble have a certain provision that they can rely on. They are big enough players in the market to be able to have that commercial battle with the Loblaws and the Empires and the Metros of the world. I'm concerned about my small and medium-sized businesses in Kings—Hants that are saying that this is really important. We know that it's not going to be a silver bullet, but we need some type of provision that we can rely upon in instances where we think that there's almost unfair dealing.

Do you at the Retail Council of Canada see a world where you would exempt large multinationals that may not need the protection of a grocery code of conduct, but where you would actually move for SMEs for which maybe this is an important mechanism and element for some transparency?

[Diane J. Brisebois]

Maybe I should suggest that you join our steering committee.