Agriculture Committee on May 28th, 2026

[Mathieu Frigon]

First and foremost, it certainly provides considerable stability. Our industry does focus on the domestic market, but we still export. Perhaps a certain paradox has emerged. I spoke earlier of a fundamental change, in a good sense, resulting from the protein craze. Usually, in the Canadian dairy market, demand for butterfat grows faster than demand for protein. However, over the past two years, we've seen the opposite. The speed of this change has been quite dramatic. Fundamental changes resulting from consumer demand may still occur. I would say that stability is definitely the key word that comes to mind.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Given the current circumstances, I would like to emphasize the need to focus on processing. The dairy industry is one sector in our region that does just that, with Lactalis, Laverlochère, Boréalait and all the other companies.

Can you talk about the need to develop local distribution channels, in particular to lower transportation costs? How can the dairy sector model be replicated in other agricultural sectors?

[Mathieu Frigon]

I think that there was a report on Boréalait recently, if I'm not mistaken. I visited Abitibi two years ago—

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

I could send you its yoghurt. It's particularly good.

[Mathieu Frigon]

Yes, and I know the Rancourt family, who—

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

So you know Evelyne Rancourt. We would like to extend our greetings to the whole family.

[Mathieu Frigon]

You asked a good question.

I always say that this is driven by consumer demand. We see a demand for local distribution channels. We must respond to it. Other consumers are more interested in obtaining the best price for their purchases. We need to satisfy this demand too. We must really adapt to consumer demand. Producers and processors are striving to do just that. We're now faced with a soaring demand for proteins that we didn't see coming. We must meet this demand.

Of course, local distribution channels have their place. The market is there. It may be a niche market, but it's a growing market.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

What are the risks for processors? This risk management study gives the impression that things are looking up for processors. However, what risks must be addressed today?

[Mathieu Frigon]

I talked about this earlier. It has to do with the uncertainty and risks associated with international trade. I think we have to learn to live with these risks, because, obviously, we know the administration south of the border: it's not exactly a model of stability. There can always be surprises. I'd say that's probably the main risk for investments, because there are still major investment projects. That's what it comes down to.

So, indeed, the strength of the system is its stability, but external events increase the risk of instability. That certainly has an impact. We have to take this risk into consideration when it comes time to make investments, obviously.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

One of the first bills Parliament passed to protect supply management was Bill C‑202. It brought a great deal of stability and confidence to the market among producers. However, I get the impression that it is the processors—we had the chance to discuss this—who may be a bit more vulnerable with regard to the market share that American companies would like to capture.

How are you preparing for that? What recommendations do you have for us to protect the Canadian processing sector?

At the same time, how can we ensure that Canadian processors can continue to purchase Canadian milk or dairy proteins?

[Mathieu Frigon]

We are preparing for this by working closely with Canada's dairy producers. In fact, I would even say that we always meet with government representatives together. We stand united in saying that we have already made enough concessions.

Indeed, regarding the Americans' demands, even though producers are also affected, one could argue that, when it comes to certain demands, processors are likely the ones on the front lines. We maintain that we have given enough.

It's funny, because some things were agreed upon at a time when everyone had a protein surplus, including the United States. Now, we're heading into a world where, conversely, there could be a protein shortage. So, these changes in consumption are disrupting everyone, including the United States, which is experiencing the same phenomenon. It remains to be seen whether this will have an impact on the demands they place on the Canadian dairy system.

[The Vice-Chair, Conservative, John Barlow]

Thank you very much.

We will now go to Mr. Gourde for six minutes, please.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

Thank you very much, Mr. Chair.

My first question is for Ms. Gosselin.

In your opening remarks, you spoke of a partnership between farms, farmers, Novalait, and Agriculture and Agri-Food Canada. I would like you to tell us about the importance of this direct partnership with farms. Dairy producers have agreed to dedicate time, animals and infrastructure to a collaboration with Novalait to conduct research and drive progress.

It's fair to say you've done a good job: Over the past 30 years, the Canadian dairy sector has changed and evolved significantly. Today, we know that the dairy sector's great success stems from innovation and research and development, whether regarding dairy breeds or milk composition.

Tell me more about the importance of producers. What contribution have they made in these areas of research?

[Élise Gosselin]

Thank you for this excellent question.

Agriculture and Agri-Food Canada created a program that is outstanding, even on a global scale: the living laboratories initiative. I've been with Novalait for 25 years, and I can say that this project achieves a very important goal. Every research project we undertake must address a question or a problem faced on a farm. We seek knowledge so that it can be shared and put to use. However, often, the typical process is one where the research project is carried out and then transferred to producers.

What's great about the living laboratories—carbon-neutral milk project, which is still ongoing, is that this process happens in real time and collaboratively. Producers discuss with researchers how to improve their on-farm practices. They are the ones who identify problems and suggest improvements. They are supported in this process by a group of scientists, which means that bringing the research to market—that is, putting it into practice—happens almost in real time. It's an extraordinary showcase for all producers, because they see other producers getting involved in the research and implementing the results. This is then a wonderful concept.

Furthermore, the producers are not on Novalait's payroll. They are not paid to do this; they do it because they see short, medium and long-term benefits for their businesses. They also take risks, because they are innovative. They provide an incredible amount of data, especially technical and economic data, but also on all adoption factors. They explain to us why they like or dislike certain practices. So, their contribution to the living laboratories initiative is exceptional.

As I said, we're very happy to be able to complete this project. We had hoped this initiative would be continued, because it's the kind of project that needs to be carried out over the long term. These are reflections on topics such as adapting to climate change and reducing greenhouse gas emissions. This science is still new. These are things we're still in the process of refining. So we had hoped for something more long-term, but unfortunately, this initiative is coming to an end.

That said, some elements of this are essential, and they must continue. We will be proactive and may propose new solutions to Agriculture and Agri-Food Canada and other partners.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

Ms. Gosselin, you took the words right out of my mouth when you mentioned the producers' exceptional and unpaid contributions. They agreed to volunteer their time, provide animals and make facilities available.

If we could calculate what it would have cost if we had been required to pay for the entire study, would the producers' share have been higher than the federal government's share?

I don't know how you can tell us this, but would the producers' share represent 40%, 50% or 60% of the total cost of the study, for example? Would it have been impossible to do without the participation of producers?

[Élise Gosselin]

You'll note the caution typical of someone working in the sciences: I wish I had a study to analyze all this.

Indeed, it's not entirely comparable to what we do in terms of research. These people are giving more than just their time: they're reorienting the way they produce milk by adopting new practices. It remains important to find ways to quantify this. I think Agriculture and Agri-Food Canada was fully aware of this. We're trying to account for and quantify all of this, but, indeed, it's a multiple of the financial contribution provided by Agriculture and Agri-Food Canada. It's a collective effort. Novalait funded part of the research, as did Agriculture and Agri-Food Canada, so that we could carry out this project, and the producers participated in it. Indeed, their contribution is exceptional.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

Could you say that—

[The Vice-Chair, Conservative, John Barlow]

Thank you, Mr. Gourde. Your time has expired.

Now we have Ms. Mingarelli for five minutes, please.

[Giovanna Mingarelli, Liberal, Prescott—Russell—Cumberland, ON]

Thank you very much, Mr. Chair.

I'd like to thank all the witnesses for being here today.

My first questions are for Mr. Frigon.

Is Canada at risk of losing dairy processing capacity to other countries? If so, why?

[Mathieu Frigon]

It depends on what happens under future international trade agreements. There is a law in place, but that could indeed happen if there is increased access to our market. Furthermore, if we reduce the capacity of certain companies that are more focused on exporting niche products, it could also have an impact on the country's dairy processing capacity.

[Giovanna Mingarelli, Liberal, Prescott—Russell—Cumberland, ON]

Thank you.

What conditions are essential for Canada to remain a good place to invest in the dairy processing industry?

[Mathieu Frigon]

It requires conditions that attract investment, as you suggested. I was talking about uncertainty earlier. We would like to be able to control what happens on the other side of the border, but unfortunately, that's beyond our control.

Furthermore, we need to ensure stable conditions without making additional concessions in the context of international trade agreements. I'm thinking of everything that can contribute to stability. That is the very nature of the system.

As I said earlier in response to a question, it's a stable system, but it's also an emerging system. When I say “stable”, that doesn't mean the system is stagnant. We need to make that distinction. Right now, growth is strong. All factors that contribute to greater stability are conducive to investment, of course. Since it's a growing market, there are investment projects. That's what's interesting right now in Canada's dairy sector. However, there's always a cloud of uncertainty hanging over international trade. If we could dispel that cloud, it would certainly be very beneficial.

[Giovanna Mingarelli, Liberal, Prescott—Russell—Cumberland, ON]

Thank you very much, Mr. Frigon.

I'm now going to turn to Mr. Duff with my questions.

Should provinces have more flexibility to tailor BRM tools to regional risks and commodity differences?

[Stephen Duff]

It's not necessarily in the policy realm right now, but I believe that there are significant differences across the country. The datasets, etc., and the administration systems we have in place now do give flexibility to contemplate those types of things. We have some differences across Canada already.

We have price insurance in western Canada that has developed over time, with the objective of giving some flexibility to producers. We have the ASRA program, which is a long-standing program in Quebec. We have the risk management program in Ontario and some other different contexts across the country.

It really starts with a framework of information and data, and with understanding that every sector is different and how you best fit within that. It's recognizing that we have international trade agreements, etc., that we're trying to comply with. The reality is that most producers are operating within a set of frameworks as far as their production and the economics on their farm go. It's how we can try to adjust that.

[Giovanna Mingarelli, Liberal, Prescott—Russell—Cumberland, ON]

Are there Ontario-specific programs or innovations that could serve as models for federal BRM reform?