Canada-China Relations Committee on May 27th, 2024

[Damien Kurek, Conservative, Battle River—Crowfoot, AB]

Sure. Go ahead, Mr. Carey.

[Dave Carey]

It does. My organization has been a proponent of Bill C-234 since its inception. That would alleviate the carbon pricing on a farm. However, every time the price of carbon goes up, whether that's rail, inputs or custom haul trucking, that all gets passed down to the farmer in many ways. For canola, Canada has 60% of the world trade, but Australia is our largest competitor. They're much closer to markets, and they do not have a carbon tax. Anything that takes money out of the farmers' pockets to reinvest in their operations does impact our ability to compete with places like the United States, Australia and South America.

[Damien Kurek, Conservative, Battle River—Crowfoot, AB]

I appreciate that, and I hope my Liberal colleagues are watching, because quite often they say, “Oh, well, because you get money back, therefore everything is a wash.” However, it's that impact on competitiveness that is very significant, and Bill C-234 does address, at least in its original form, a key part of that.

However, you're saying that it's so much more than that in terms of the impact on the sector as a whole. Am I correct in that?

[Dave Carey]

Yes. Bill C-234 is only for on-farm activities related to natural gas and propane use. However, all the costs that we all see as normal Canadians, as well as transportation—

[Damien Kurek, Conservative, Battle River—Crowfoot, AB]

I'm sorry to interrupt. Just in my last 10 seconds, would all of you—Mr. Innes, Mr. Carey and Mr. Harvey—quickly answer this? Can Canada grow its place in the world when it comes to agricultural exports, yes or no?

[Brian Innes]

Absolutely.

[Dave Carey]

A hundred per cent.

[Michael Harvey]

Yes.

[Damien Kurek, Conservative, Battle River—Crowfoot, AB]

Thank you.

[The Chair, Liberal, Ken Hardie]

You're right on time, Mr. Kurek. Well done, sir.

All right, we'll go to Mr. Oliphant for six minutes or less.

[Rob Oliphant, Liberal, Don Valley West, ON]

Thank you, Mr. Chair.

Thanks to all the guests for being witnesses today with us.

I'm not a trade person, and I'm not a farmer. I eat food, so I care about what you do, but I really am going to ask some questions that may sound dumb. I want to talk about where Mr. Kurek ended up—growing the markets. Given the numbers you're talking about in terms of the billions of dollars of exports we are now doing in the agri-food business, like in canola, soy and others, how does that market grow? Is that growing because we're better than our competitors, or is the market itself growing and we want a greater share of a new market? I'm interested in knowing that.

Who are our competitors? You mentioned the United States and Australia in different ways.

Does the growth of the market come from expanded consumption, or does it come from stealing or getting or earning a larger share of the markets that we're talking about? Who are our competitors, and how does the IPS perhaps help us to strategically position ourselves vis-à-vis either a growing market or competitors?

Why don't we start with soy, and then we can go to canola and then agri-food generally?

[Brian Innes]

Thanks for the question. When we look at the Indo-Pacific especially, it's a region that needs protein and oil, so the demand growth that we are seeing in soy for the two products that come from soy—oil and protein—is really coming because we're seeing population growth, income growth and shifting diets that are really growing the market for plant-based proteins, for example. That is growing more demand for soy milk and soy products, whether for tofu or tempeh, in Indonesia, for example. When we look at that growth opportunity, it's all of the above—more people, more income, changing diets.

When we look at the competition we face, in food-grade soybeans, for example, Canada is a major player. The other major player in the world is the U.S. We're about a third of the market, and the U.S. is most of the rest. When we see competition, it really comes down to how we're able to produce a value-added product that provides the most value to our customer and the ecosystem that supports our ability to do that, as well as being competitive in the real things that we do, whether that's planting, moving, processing or exporting.

[Dave Carey]

Thank you for the question. I'd echo my colleague's comments, and perhaps I'll save the competitor's side for my colleague Michael Harvey. It's a good question because, despite rising export numbers, those are not bankable and not necessarily repeatable every year. We're dealing right now with global conflicts, which are leading to increased commodity prices. In 2023, actually, we had a smaller canola crop, because of droughts in Saskatchewan and other situations.

We have an opportunity to grow. As my colleague Brian said, there's a growing middle class with growing incomes that is demanding different products. However, banking on the fact that we export almost $98 billion of agriculture products next year does not mean that we can necessarily repeat that year after year. If we're not reliable in our delivery of our products to global markets, other markets will go elsewhere. We're in a good place, but we can't rest on our laurels.

[Michael Harvey]

The main reason the market is increasing is that the number of people on the planet is increasing and the number of people on the planet who are eating better, who have moved into the middle class, are moving into the middle class or are moving up the chain is increasing. As was mentioned, there's a lot more protein but more calories in general and higher-quality calories.

In terms of competitors, we already talked about the U.S. and Australia. I'd also mention countries like Brazil and Argentina. The big agri-food exporters are countries that have a lot of land and have a lot of water. South America produces a lot of products that compete with ours globally.

[Rob Oliphant, Liberal, Don Valley West, ON]

Excellent.

Mr. Carey, you mentioned drought last year. I know that there are droughts and periods that are up and down. Can you explain to me the impact of climate change, what is happening about climate change and how farmers are having to deal with this?

This could be in canola. It could be in soy or more generally in agri-food. I am feeling it, but I'm just wondering how farmers are dealing with it.

[Dave Carey]

Farmers are at the forefront whenever there are significant changes. Last year, we had significant droughts in the Prairies, particularly Saskatchewan, where our canola production was down to 18.3 million tonnes.

If it weren't for advances in seed technology, as my colleague Brian alluded to earlier, some of those farmers would have been relying solely on crop insurance, but because of advances in research and development—increases in drought tolerance with crops like canola, soybean, corn, etc.—they were able to get off a decent-sized crop.

For canola, it's moisture, nitrogen and then not too much heat. There are certainly going to be challenges. However, gene editing—now that the government is providing clarity on that pathway to commercialization—is a real opportunity for Canada to take back some of those global R and D dollars to invest in crops that need less water, can deal with greater heat and can be grown in different soil zones.

[Rob Oliphant, Liberal, Don Valley West, ON]

I would just maybe echo Mr. Kurek, who was hoping Liberals were listening when he was talking about taxes, in expressing my hope that Conservatives are listening when we're talking about climate change. I think it's a really important point.

Mr. Innes, do you have anything you want to add?

[Brian Innes]

I'd just say that, when we look into the future for the soybean industry, it has to work for farmers.

As the climate evolves, so too do the crops that make sense for farmers in the regions that we farm. We're growing soybeans in the most northern places they grow anywhere on the planet, and we have many diverse growing regions.

When we think about innovation that needs to respond to farmers' needs, it's creating the varieties that work in the specific regions where farmers grow, that are resilient to changes in weather and that are ultimately profitable for farmers.

[The Chair, Liberal, Ken Hardie]

Thank you very much, Mr. Innes.

Thank you for your time, Mr. Oliphant.

We'll now go to Monsieur Perron for six minutes or less.

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

Thank you very much, Mr. Chair.

I'd like to thank the witnesses for being with us, either in person or by video conference. It's always a pleasure to see them.

I'm going to start with Mr. Carey.

This committee is studying Canada's relationship with the People's Republic of China. In 2019, China blocked canola imports from two Canadian companies, Richardson and Viterra. Can you quickly tell us what the impact of that ban has been?

After the ban was lifted in May 2022, how did the market recover? Have you regained the market share you had before? Was there a decrease in the amount of canola being sold to China during that time?

[Dave Carey]

Thank you for the question.

Restrictions on Canada's two largest exporters of canola seed began on March 6, 2019. In 2018, we exported 2.8 billion dollars' worth of canola. After the restrictions, we were exporting $800 million, so it was a $2 billion loss in exports over a one-year period. It is estimated that the economic impact to Canada was between $1.54 billion and $2.35 billion in 2021 as a result of that economic loss.

Since market access was re-established for the two largest exporters, 2023 was actually our largest year ever of exporting canola seed to China. As Brian said, China imports approximately 60% of the world's oilseed, so there's no getting away from their buying capacity, as well as their domestic crushing capacity. They have the ability to crush a lot of oilseed.

We have recovered. However, farmers certainly felt the acute economic impacts of losing our second-largest market.

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

Mr. Innes, do you want to add any comments?

[Brian Innes]

We've also seen a halt in our soybean exports to China. That's certainly the case for Quebec producers. Like canola, 2018 was a big year for our soybean exports, both from eastern and western Canada. In 2020, however, we exported almost nothing. There was no formal mechanism like in the canola sector, but our industry has also been hit hard by the difficult relations between Canada and China, as well as those between the United States and China.

We live in a multipolar world. The same thing went for soybean. Our sector was affected by the U.S.-China soybean war, if I can put it that way, as well as strained Canada-China relations.

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

Thank you for that. I was just going to go to you, Mr. Innes.

China intends to increase its soybean production to reduce its dependence on other countries. It has set a goal of increasing its local production by 40% by 2025.

Is that a worrisome direction for you?

[Brian Innes]

In the soybean world, we are a high-quality producer. Our industry in Quebec, Ontario and here in Manitoba is a world leader in food-grade soybean production. We're talking about soybean used to produce tofu and soy milk, for example. Soybean produced in China isn't exactly of the same quality. So it will certainly have an impact on non-GMO soybean production, for example, but not really on high-quality food-grade soybean production. There will certainly be competition in our export markets such as Indonesia, Vietnam, Malaysia or the Philippines, but we won't face major competition in those regions.