Agriculture Committee on Feb. 15th, 2024

[The Chair, Liberal, Kody Blois]

I call this meeting to order.

Welcome to meeting number 92 of the House of Commons Standing Committee on Agriculture and Agri-Food.

I'm going to start with just a few reminders. Today's meeting is taking place in a hybrid format. The proceedings will be made available via the House of Commons website. I note for your information that the webcast always shows the person speaking rather than the entirety of the committee.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Thursday, November 2, 2023, the committee is resuming its study on the challenges facing the horticultural sector.

I would now like to welcome the witnesses who will be with us for this first hour.

We have Ron Lemaire, who is no stranger to this committee. Ron, welcome. Ron is going to be participating virtually today. He's from the Canadian Produce Marketing Association.

From the Fruit and Vegetable Growers of Canada, we have Stefan Larrass, who is the chair of business risk management, and from my home province of Nova Scotia and right from the Annapolis Valley, we have, from Horticulture Nova Scotia, William Spurr, who is the president and a hell of a farmer.

It's great to have you here in Ottawa.

We're going to start with five-minute opening remarks from each organization.

Mr. Lemaire, it's over to you for five minutes, my friend.

[Ron Lemaire, President, Canadian Produce Marketing Association]

Thank you, Mr. Chair, and good morning, committee members. I want to thank the committee for the opportunity to speak on the issues impacting Canada's horticultural sector.

CPMA, as you know, represents 850 companies growing, packing, shipping and selling fresh fruit and vegetables, and is responsible for 90% of the produce sales in Canada. In 2023 the Conference Board of Canada pegged our sector's contribution to the national GDP at almost $15 billion and found that the fresh produce supply chain supported over 185,000 jobs in rural and urban communities across the country.

The issues impacting the fresh produce supply chain are diverse and complex. First, fresh produce consumption is declining. This is a concern. Government support is needed to keep produce accessible to Canadians and make it easier for Canadians to meet Canada's food guide recommendation to fill half your plate with fruits and vegetables.

Year over year, consumption rates have decreased as food prices have increased. Canadian adults should be eating seven or more servings of fruits and vegetables daily, but recent reports found that 34% of Canadians are consuming just one or two servings per day. In fact, the latest Stats Canada numbers show that almost 80% of Canadians over the age of 12 are eating less than five servings a day.

There are both health and economic consequences to these trends. A recent report by Professor Krueger at the University of British Columbia found that as fruit and vegetable consumption has decreased, the economic burden attributed to low consumption in Canada has increased to close to $8 billion annually, a 60% increase since 2015. Supporting access to nutritious produce, including through a national school food policy and school meal program, could contribute significantly to Canadians' health and well-being, while also decreasing the government's health care spending.

Second, increasing overall access to fruits and vegetables across Canada requires government programs and policies to address the regulatory burden and significant challenges impacting our sector's ability to produce and distribute fresh fruits and vegetables, such as the availability and costs of labour, production costs, transportation and border access. The national supply chain office and the development of a national supply chain strategy are important opportunities for more effective cross-government collaboration to help ensure that Canadians can continue to put our essential products on their table.

Third, it is crucial to recognize the costs of adjusting our supply chain to meet the challenges posed by emerging sustainability and environmental policies. CPMA members have been showing leadership in addressing such areas as biodiversity, greenhouse gas emissions, carbon sequestration, food loss and waste, renewable energy, soil health, water conservation and much more. The fresh produce sector has also undertaken significant efforts to align with the government's zero plastic waste agenda. Since 2019, our sector has experienced a 17% decrease in plastic volumes due to industry programs to address the government targets. However, the produce industry remains concerned with recent ECCC proposals related to the fresh produce packaging elimination strategy and targets that are impossible to meet for our sector.

We are keen to work with the government to support and build on industry's substantial efforts with regulatory and policy initiatives that align with global practices and policies to ensure the sustainability and competitiveness of the agri-food industry, offer incentives for industry efforts, provide secure access to safe food for Canadians and do not create unintentional food waste or increase the carbon footprint of the Canadian food supply.

I would be remiss if I did not mention financial protection for produce sellers and the grocery code of conduct. CPMA is greatly appreciative of the support shown by all committee members for Bill C-280. We hope you will strongly encourage your Senate counterparts to prioritize the passage of this important legislation. Also, as an interim board member of the code, I can attest to the fact that everyone continues to work hard to introduce a voluntary code that is uniquely Canadian.

As noted earlier, the issues impacting our sector are very complex. We need to take a full food system approach. We have shared with the committee our list of recommendations for the 2024 federal budget. These recommendations include areas not covered in my remarks.

I would close with this: The government needs to make food a federal priority and promote effective policies to support the production and movement of perishable items like produce to ensure the long-term viability of the fresh produce supply chain in Canada.

Thank you very much for the opportunity to join you today. I'm happy to answer questions later.

[The Chair, Liberal, Kody Blois]

Thank you very much, Mr. Lemaire.

We will now turn to Mr. Larrass for up to five minutes, please.

[Stefan Larrass, Chair, Business Risk Management, Fruit and Vegetable Growers of Canada]

Thank you, Mr. Chair. It is a pleasure to present to this committee today, and it's icing on the cake that I get to do it with Ron. It's good to see everyone.

My name is Stefan Larrass. I'm the chair of the business risk management working group at the Fruit and Vegetable Growers of Canada.

I will do my best today to provide you with the collective perspectives of our 14,000 farm members who grow fruits and vegetables across the country today.

I know this committee is examining issues affecting the horticultural sector. The critical issue for our sector that I will focus on today is financial viability.

A 2022 survey conducted by our association revealed that 44% of our growers are operating at a loss and that 77% can't offset production cost increases. Our findings are consistent with AAFC's analysis of recent farm income trends at the sectoral level.

There are several headwinds I want to speak to that are causing this financial challenge, the first one being inflation on input costs. Consumers are experiencing 15%-20% increases, commonly, in many of their grocery prices. What they often don't know is that this includes the share of the retailer and wholesaler as well, and not just the farmer. What consumers definitely can't be expected to know is that farming input costs, like nitrogen fertilizer, have increased by as much as 128%, and diesel by 110%, and natural gas by 85% between 2020-2023.

Labour costs are typically the largest operating expense for fruit and vegetable farms, which often rely significantly on manual labour, due to the sensitivity of our crops, as you are well aware. When the federal government projects that the only major input cost that isn't stabilizing or declining in the foreseeable future is labour, this is particularly worrisome for our sector, because it will impact our farms' bottom line five times more than others, like livestock and grains.

The other headwind is asymmetrical regulatory burden and support compared to our competitors.

I will start with some questions.

How much do we expect ourselves to know about the environmental regulations for blueberries from Peru before we buy them, or for grapes from Chile? How much can we expect to know about the labour regulations for raspberries or tomatoes from Mexico before we buy them? How much should we expect ourselves to know about the financial support levels for U.S. farming imports before we buy American lettuce or cauliflower?

Obviously, we can't ask consumers to reflect on this, when all they want to do is buy food for their families and contain their growing grocery bill. Groups like this and policy-makers need to reflect on these questions because they matter.

The answers explain so much about why many of our Canadian growers find themselves struggling to keep up with our international competition. For example, when it comes to financial support, the U.S. provides twice as much as Canada to sectors that are outside of the supply management system. When it comes to environmental regulations, research like the 2020 study by the Fraser Institute showed that Canada ranked well ahead of import competitors like Chile, for example, on important issues like pesticide use. The only countries more stringent than Canada in this study were European countries, and they happen have twice as much support level as Canada.

Again, I don't think we can expect people to know all of the regulations or support levels that surround each fruit or vegetable being put into their grocery cart. We do know that Canadians—and we know this for sure—care to know that whatever is grown in Canada is grown at the highest level of care, responsibility, and due diligence, whether we're talking environmental standards, labour laws or otherwise, and that is entirely fair and appropriate.

The question I hear from growers that I want to share with this committee is this: If we can't force other countries to raise their regulations to meet ours, but we allow their blueberries to be sold next to ours, and if we can't force other countries to lower their financial support to our levels, but we allow their subsidized lettuce to be sold next to ours, can we really be that surprised that many of our domestic growers report they can't keep up and are facing a financial crisis as a result of the recent inflation input costs?

I will conclude with this question. What can be done? I know this committee is examining crop insurance and one-off programs. I will conclude on those two themes by starting with a quote from Alan Ker, who is a researcher at the University of Guelph and the managing editor of the Canadian Journal of Agricultural Economics. He said:

Note that AgriInsurance is mainly for field crops whereas AgriStability is mainly for livestock operations.

Moreover, the horticulture sector which faces significant product quality variability does not fit either program.

That's the challenge that I welcome for discussion. AAFC analysis shows that not only does our sector have significant gaps in the crops that have crop insurance available to them, but even for crops where coverage is available, the uptake is, on average, significantly lower than in the cash crop sector. This reflects the difficulty to develop effective insurance products for the 120 crops in our sector.

The difficulty in establishing a crop insurance product is a cautionary signal for anyone hoping that revenue insurance will be a silver bullet for our sector, since revenue insurance essentially relies on a given commodity having an underlying crop insurance product.

Our growers have made it clear that AgriStability needs to be fixed to make it effective, particularly for those with insufficient or no crop insurance options. The program's trigger level needs to be returned to 85% of a farm's historical reference margin. Our growers believe that while AgriStability remains at the current 70% trigger level, there is a significant opportunity for the federal government to provide additional support to this sector in the short to medium term.

Provinces like Ontario and Quebec have shown that sector-specific solutions are possible. Our growers are looking to the federal government to work with provinces and territories to develop or enhance regional solutions that address the financial challenges experienced in our uniquely diverse sector.

With that, on behalf of Canada's fruit and vegetable growers, I would like to thank you for the opportunity to share our perspectives.

[The Chair, Liberal, Kody Blois]

Thank you very much.

We'll now turn to Mr. Spurr from Horticulture Nova Scotia for up to five minutes.

[William Spurr, President, Farmer, Horticulture Nova Scotia]

Thank you.

Honourable members of the standing committee, I thank you for inviting me here today.

I am here as an advocate for agriculture and as a concerned farmer who is invested in the overall health and well-being of our industry.

Before I delve into the challenges facing Nova Scotia horticulture, allow me to provide some context about myself.

As mentioned, I'm William Spurr, president of Horticulture Nova Scotia, and I'm a farmer. My family farm is a fifth-generation farm that grows onions, carrots, potatoes, winter wheat, apples, pears, peaches, garlic, strawberries and more. I mention this to emphasize the diversity of our farm and of most horticulture farms in Nova Scotia.

Reflecting on the past of not that long ago, I cannot help but recall a time when I was optimistic and enthusiastic about farming. Agriculture in our province seemed to be at the top of its game. The apple industry was thriving, the wine industry was making a name for itself on the international stage and the horticulture sector was adapting and investing in new equipment and technology. It was a time of prosperity and promise, fuelled by innovation and good yields.

However, in recent years, I've witnesses a troubling trend. Over the last few years, it feels as though we are heading downhill at a very fast pace. Last year was especially extremely challenging. The rain, the polar vortex, the winds and the fire wreaked havoc on our farms. This served as a stark reminder of how fragile our agriculture industry really is.

Aging demographics, rising costs and climate change, with increasingly unpredictable weather, threaten to undermine the progress we have made and jeopardize the future of Nova Scotia agriculture.

Access to healthy food is fundamental to maintaining a healthy population. As farmers, we play a critical role in ensuring that fresh, locally grown produce is readily available. We face challenges of food security and limited access to affordable healthy foods. We need to get the cost of production down. It is imperative that we work together to address these issues and create a food system that prioritizes local, healthy and accessible foods.

We need to invest in agriculture. Farmers face numerous obstacles. Rising input costs and labour costs are major concerns going forward. By investing in agricultural innovation and technology, we can strengthen, compete and help farming families in rural communities.

I cannot talk about agriculture without talking about the environment. The health of our environment is paramount to the long-term prosperity of Nova Scotia agriculture. Climate change poses a grave threat to our agricultural lands, with more frequent extreme weather events. As stewards of the land, we must prioritize sustainable farming practices that mitigate greenhouse gas emissions, conserve soil and water resources, and preserve biodiversity, but we need help to do this. We need to advocate for policies and initiatives that prioritize the production, distribution and consumption of locally grown foods that are environmentally sustainable.

I also must draw attention to the pressing issue of business risk management programs, which are currently failing to adequately serve our horticulture sector. Despite the diverse nature of our farms, existing BRM programs struggle to accommodate this diversity, making it challenging for farmers to access the support they need.

The reduction of AgriStability triggering compensation levels has left our sector very vulnerable to climate change impacts, with only a small fraction of horticulture acreage covered by existing production insurance. As we anticipate more severe weather events in the future, the inadequacy of current BRM programs becomes even more apparent.

In conclusion, the health of Nova Scotia agriculture requires help. I urge you to prioritize policies and investments that support agriculture sectors and promote healthy local food in Nova Scotia and Canada.

[The Chair, Liberal, Kody Blois]

Thank you very much, Mr. Spurr.

We'll now turn to questions from our colleagues. We're going to start with the Conservatives.

I believe Ms. Rood is up first for up to six minutes.

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

Thank you, Mr. Chair.

Thank you, witnesses, for being here today.

Mr. Lemaire, you touched on plastics a little bit. We've heard that the new plastic ban is going to cost grocery retailers at least $6 billion. I'm just wondering if you could tell us how that figure may have been arrived at. How would the loss of plastics affect packaging costs?

[Ron Lemaire]

That's a very conservative estimate of the cost to grocers. The number was derived through work that we've done as an industry with Deloitte to understand what the cost of food will be based on the elimination of plastics.

This isn't single-use plastic; these are plastics that could be recycled and put into a circular economy. We're anticipating that if we were to eliminate the technology from our sector, there would be upwards of a 34% increase in food costs. Even beyond that, there would be a dramatic impact on greenhouse gas emissions.

Food waste is a concern of Canadians at this time. The affordability of food has been noted by one of the other witnesses.

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

You did touch on the fact that it's going to cost an extra 34%. That is what we could see as the rise in cost for produce for Canadian consumers when they are already faced with challenges of affordability for groceries.

What are the alternatives to plastics right now for the industry? How do they compare to plastic? Are they as effective? You've already mentioned that it's going to increase the cost.

[Ron Lemaire]

Currently there are some alternatives in the market. The industry continues to innovate; however, all these alternatives come with increased cost. If we are looking at using, for example, a clamshell for strawberries in moving to an alternative packaging format, the moisture level in strawberries does not allow for that product to be effectively shipped and transferred for the distances that we move product, whether from Île d'Orléans, from Ontario or from B.C.

We need to look at a fit-for-purpose package that meets the requirements. I'm referring to a bagged salad, a fresh-cut product, a strawberry package, and I could go on. It comes back to the need to convey product from field, where in many cases it is packed, through a system to a consumer and ensure that this living, breathing, organic product can survive the journey and still have five, six, seven and up to 10 days of shelf life in the home.

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

In general terms, how would removing primary plastic packaging affect hygiene? You touched on efficiency and the cost of moving the perishables. Will there be a higher cost to move those items?

[Ron Lemaire]

It will be dramatically higher, if we can move them at all. This is part of the challenge. It would basically, with the current proposed model, eliminate all the bagged salad industry. It would eliminate any of the value-added components like all of the fresh-cut business.

Consumers, especially coming out of the pandemic, have a heightened sensitivity to food handling. There are some food safety risks relative to conveyance with a plastic-free environment. That was provided through research that was done by industry in the last six months.

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

Do you have a dollar figure on job costs as well as spending if we have an inability to provide fresh fruit and veggie trays, for instance, as well as all those premade packaged goods that you find in the grocery store?

[Ron Lemaire]

If we start combining all the.... I mentioned that because of a lack of consumption and because the convenience of packaging also enables consumption and drives consumption within the Canadian market, we are looking at that $8-billion figure. With every reduced serving, we see the numbers increase significantly. We're looking conservatively at $6 billion, so add on $8 billion.

Then you start looking at a shift in the market. Canadian producers in the greenhouse industry are investing in new technologies. We're looking at a massive shift of job loss out of our horticultural sector. They're basically looking at new opportunities and/or producing and shipping to other jurisdictions. We will see our Canadian food being shipped to the U.S. and other jurisdictions where they can package and ship effectively.

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

What role does plastic play in encouraging consumers to purchase fresh fruit and vegetables?

[Ron Lemaire]

There are a series of components. The right packaging choice is packaging so that the consumer can identify and see the product. It's a visual experience to see and understand the product. Everyone turns their strawberries upside down when they purchase them.

Then you're looking at whether we are complying with the messaging around what the product is. Unfortunately, the consumer is uneducated relative to one tomato versus another tomato. That messaging and marketing component drives consumption relative to what I am getting in it. Am I getting a product with more antioxidants if it's a health message? Am I getting a product that has certain taste variations compared to other products?

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

I have one last quick question.

How much food would be wasted without primary plastic packaging, and what would be the consequences for landfill sites and our physical environment?

[Ron Lemaire]

On the impact on food loss, we're looking at an increase of over 50% for food waste on certain products, which is dramatic. What's really scary is an increase in greenhouse gas emissions of over 50% because of the waste components that start occurring, from field right to the consumer.

[The Chair, Liberal, Kody Blois]

Thank you very much.

Mr. MacDonald, it's over to you for six minutes.

[Heath MacDonald, Liberal, Malpeque, PE]

Thank you.

I'm going to follow up on that line of questioning with Mr. Lemaire.

Mr. Lemaire, have there been any other advancements from other countries relevant to moving towards more environmentally friendly packaging?

[Ron Lemaire]

I was just in Europe last week. We had the opportunity to have one of our team on a panel with German, Dutch and Belgian panellists, an individual from the U.K. and an Italian. There's great concern in the EU, where we're seeing a shift towards looking at how to move to a plastic-free environment for produce.

What's interesting is that in the European Commission, Parliament shot down the wording that was proposed. It's gone back to the EU commission. The commission has proposed new wording that looks at introducing a model with a series of caveats. It's the opportunity to basically enable the state governments to not incorporate an elimination strategy if there is a disproportionate economic and administrative cost.

I'm just looking at this, which is from our EU partners. I apologize for looking at a document here. It's looking at whether they see issues relative to increased water loss or turgidity loss, microbiological hazards or physical shocks, oxidation.... All of these exemptions for which the states would be enabled have gone back to the European Parliament.

We understand that the Parliament is potentially going to reject this as well because of the hypersensitivity in the EU relative to where industry is, where the ability is to actually meet these targets and the dramatic impact on the consumer in these jurisdictions because of the inability to transfer from a plastic environment.

The bigger picture here is a circular economy. How do we keep the plastics in the system? How do we enable collection and recycling—

[Heath MacDonald, Liberal, Malpeque, PE]

Thank you, Mr. Lemaire.

I don't want to interrupt you, but I only have so much time.

[Ron Lemaire]

Yes—no worries.

[Heath MacDonald, Liberal, Malpeque, PE]

I was interested in that, and I don't have all of the insights, but I did read something relevant to it while I was also looking at cross-border tariffs, which I'm assuming your sector would be very concerned about if other countries that were exporting started doing cross-border tariffs on the imports that they're receiving, and if we're not on an equal playing field, the producers will end up paying for this. It's something that I will obviously be watching very closely, and I'm sure you are too.

I'm going to move on now to Mr. Spurr, please.

Mr. Spurr, you mentioned rising costs in your preamble. Could you elaborate on what those actual rising costs are for your growers?