Finance Committee on Oct. 1st, 2018

[Brenda Simmons]

Thank you very much.

[The Chair, Liberal, Wayne Easter]

I will say as well, Brenda and Pat, that as soon as this is translated, it will go to committee members.

[Brenda Simmons]

Thank you, and sorry about that.

The first one was CFIA and the current round of cost recovery that's under way. Do you want me to go into a little more depth on each of those items?

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Sure.

[Brenda Simmons]

As I mentioned, for our farmers here in P.E.I., our potato farmers pay over a million dollars a year already to CFIA. That's quite a bill. Farmers have been willing to pay that—obviously they've been doing business on that basis—but now we hear of much bigger increases and so on. When we started to look into this, we found that CFIA's current revenue from cost recovery is $55 million. We're one province with one crop that's paying a million of that $55 million. We're a much smaller portion of the Canadian agri-food industry, and we feel we are paying more than our fair share in that term.

We have done some analysis, and we're hoping for a meeting with the Minister of Agriculture on that. Nationally we've done some work together. We see where our farmers on the fresh side are paying 30% to 630% more for fresh inspection fees than U.S. growers. Down there it's on a state basis, so that's why there's such a variation. On the seed side, it's between 11% and 94% more than U.S. seed growers. We're quite concerned about the thought of much higher cost recovery.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

You have identified the inspection system as an international competitiveness issue.

[Brenda Simmons]

Absolutely.

Also, we're willing to work. We're not saying it has to be status quo and we want it for free. We're willing to work with CFIA to talk about how things might be a little more efficient in terms of what we see, but so far we haven't really had that opportunity because they're regulated.

On the second point—shall I move on?

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Yes, I was going to say the further ones are the ones I was the least clear on, so keep going.

[Brenda Simmons]

On the Pest Management Regulatory Agency, we understand that the difference between Canada and the U.S. Environmental Protection Agency is that one of the key elements for agriculture is that the competitiveness, or the economic impact on farmers, is not part of something that PMRA has to take into consideration. We feel this is leading to some decisions that are imperilling farmers because we're losing products that we need in order to manage the crops. That's a big concern for us.

We see some differences in how PMRA and EPA look at re-evaluations in particular, and that could be streamlined a bit by doing a little more upfront work before there is a proposal. A lot of times now we see proposed decisions, and they're coming out almost weekly, that say “Eliminate all uses, no matter what.” That's a huge concern and then we go through a lot of work, and then PMRA may say, “Continue but you can only use it three times a year instead of 10 times, like you could before.” Maybe you can make that work if you lose one product, but then if you lose two more fungicides and get those same types of results, you really cannot manage in a bad year with blight or something. You don't have the tools there, so that's a big concern.

You've probably heard this before, but we also compete, then, with products that come in from the United States that have been using those same products. So that's a real blow.

I'll turn to agricultural research and knowledge transfer, and those two things really need to go together. That was our third aspect. For us, we have benefited from the use of cluster programming funds across the country. We've worked together with our processors, with our packers and growers, to come up with a national priority through potato research. We've funded those—we put our money in as well—but the demand for the whole program was too big so we didn't get everything we were looking for. I understand a lot of commodities are in the same category. We think that type of research will help keep the farms competitive and we'd like to see more funds there.

If we just do the research and we don't get it to the farm level, we've lost opportunities. That's a big part of the research. We really feel that knowledge transfer needs to be directly funded with some new models. Again, we're willing to participate in what that might look like. I don't have the answer but we do think there is great research in some cases. In some cases maybe the researchers don't have a 100% grasp on what the farmers really would need, and there is a bit of a gap there both ways.

[The Chair, Liberal, Wayne Easter]

I have to cut it there, Brenda, because I have to go to Mr. Julian.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thanks very much to all the witnesses. Their testimony has been very interesting.

I'm going to go back to English now, but you'll have other interventions in French.

Mr. Phelan, I want to come to you because you had a very compelling presentation as well, talking about the necessity of really looking at food sovereignty. That's not just an economic issue; that's an environmental issue as well. The idea that Canada would eliminate its ability to feed itself has tremendous environmental ramifications.

I want to hear your comments more specifically around supply management. We have an agreement that was signed yesterday that will be devastating to the supply-managed sector, according to all of the comments that we've heard this morning.

To what extent should the government have defended supply management, and what will be the impact of allowing a significant increase in American imports in the supply-managed sector in Canada?

[Reg Phelan]

Yes, it's very important what you've just said there.

Supply management, I think, has really been the backbone for a number of years in our agriculture in our rural communities. If we hadn't had the dairy and the supply management, we wouldn't have nearly the rural society we have today. It's been an incredible support system to a type of agriculture that we would like to see. Our farmers have a bit of say in terms of what they get paid for their product, because the price of milk was somewhat reflected in terms of what the cost of production was over a longer period of time for farmers. That was really important and it helped that stability within rural Canada.

It's an example, I think, many other countries in the world would like to emulate, and a lot of American farmers would like to see it there, also. They don't want to see what Trump is looking for, and what they've done in New Zealand and in other places, and what's happening in Europe now. They have wreaked havoc within their rural communities there by doing away with a supply-management type of approach.

Here, as you mentioned, it really helps. It's much more involved so that everybody benefits from this. Our society benefits. If we didn't have dairy cows right now, we wouldn't have our manure supply and other situations within P.E.I. If we are concentrating a lot on potato production and monoculture in certain crops, our soils are showing that. They just cannot stand that type of pressure over a longer period of time. We're seeing where that diversity is much more needed within the farm operations.

We're starting to see people move in that direction now and doing that. That's where it's so important to have the supply management.

I'd just like to let my colleague come in here. He is a supply-managed producer and he can probably add a couple of comments about that.

Doug.

[Douglas Campbell, District Director, Prince Edward Island, National Farmers Union]

My comments after hearing what took place last night are very harsh when it comes to the federal government. As we know, supply management today has basically been ruined. It has been ruined to the point where to take another practically 4% of the dairy industry out of our control is the ruination of rural Canada.

It's going to be the ruination of a lot of dairy farmers because every trade deal we've had to this point has been a sacrifice for supply management. It was 3% on CETA. I understand we're talking about nearly 4% on this. It was an about-face. It was two-faced of our federal government to tell us all along that they are supporting supply management when they sold us out yet again.

I'm getting very tired of hearing from all of our federal governments that they support supply management but are making concessions. There have been concessions made to the point where we as farmers cannot take it anymore economically. We are to the point now where our cost of production is 20% below what it should be. To add another 4%, as they are talking about now, basically eliminates the western dairy producers.

It's going to be harder for us here in the Maritimes too. It's not going to improve our bottom line. It's not going to improve the American farmers' bottom line. The ones who have been making a profit from all these trade negotiations are the processors. Meanwhile, as dairy farmers, we keep losing share in the market. We keep getting classes of milk that are of no benefit to us as producers. Without actual subsidizing of the dairy industry at this point, when it comes to us as farmers, we simply cannot afford to operate.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you for this. It is very compelling testimony.

I had one further question, though, and I only have another minute and a half left.

I want to follow up on the devastating impacts to supply management, and the pretty profound impacts, Mr. Phelan, that you spoke to with the elimination of single-desk selling, which took place under the previous government but has been continued under the current government.

What has been the decline in farm receipts when we talk about the elimination of single desk? What you're talking about in your presentation really is a very distinctive Canadian approach to agriculture. Supply management and single-desk selling have been the mainstay of rural communities across this country, and we've seen both the previous government and now the current government devastating those sectors.

What has been the impact of the elimination of single-desk selling?

[Reg Phelan]

The impact has been incredible in terms of that. In the brief here, as you will probably see, we said how much is left, even in western Canada, because of when they closed down the Canadian Wheat Board.

The Canadian Wheat Board had an incredible history in the west, with western producers being able to establish it. It took an awful lot of work and effort over the years to do it and maintain it. They had an elected advisory board all across the country of farmers who were advising the wheat board in terms of how it operated. It had an incredible advantage. The farmers got the returns from the world market, and Canada was doing really well on it. We had high-quality grains, and we were able to ship them to many places. Our whole stability was from that.

The industry got their share of it, and the remainder then went back to producers. Now all this has changed. All those facilities the producers were involved in have now been sold off—we don't even know for what price—to concerns from Saudi Arabia and other places. Our Canadian producers' earnings have been drastically reduced.

It has had an incredible impact on the west and what's happening there, even in terms of closing down some of the shipping we used to have and how the thing used to be well organized. The impact is incredible.

We're hoping we can move back in some of those directions again to revive our rural areas, to be able to have some stability there, and to build on our environment. Our environment can't take that type of pressure. It's not just the farmers involved. It's also the health of the environment, of our communities, and of consumers too.

[The Chair, Liberal, Wayne Easter]

I'll have to cut it there, and we'll go to five-minute rounds.

Mr. Sorbara.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, Mr. Chair.

Welcome, everybody, and thank you for your presentations.

I'd like to start off with the P.E.I. Potato Board. You talked briefly about one of the biggest issues you face, the trucker shortage.

[Brenda Simmons]

Yes, it's very significant for us. I guess you heard this earlier. I did catch the end of a question in your first session. There are not enough truckers, and the cost of freight, of getting our potatoes to market, has gone up substantially. We've also seen, though, that even if dealers are willing to take a particular price, they may or may not get the truck in the end. It may end up somewhere else.

We were able to do business, as we have done for years and years, for generations, down the eastern seaboard of the United States, and there's a bit of a triangle there. People can bring goods up to Atlantic Canada, to Montreal, and so on, and then back down, but it's a real concern for us, getting to market as we'd like to.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Does the outlook and demand for P.E.I. potatoes remain robust?

[Brenda Simmons]

Yes, I actually have some numbers. I won't kill you with them but we've increased by $120 million in sales over the last four years. Processed products count for a lot of that, but that increase is more than the exchange rate differential. It's volume as well.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Summerside Port Corporation Limited, how's business?

[Arnold Croken]

It was interesting listening to the conversation that happened here a minute ago. One of the areas that we've been looking at that has potential for expansion for small ports like ours is short-sea shipping, but that's a challenge because of the numbers of containers required. If we can develop technology....

If you look at the 14 ports in Atlantic Canada that are sprinkled through the rural areas, time to market is critical for all of these commodities that we're talking about. For us to try to connect from our ports with short-sea shipping, containerized modules and the capacity to handle those are some of the things we've looked at. There are certainly high costs associated with that and that's a deterrent, but it's an opportunity for us.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

We generally don't think about it on a daily basis, but our ports play such a vital role in the movement of goods and services. I actually grew up on the west coast in the port of Prince Rupert, which has gone through a metamorphosis, with Maersk and the CN shipping line there, the grain elevator, and the cold terminal there as well, but the number of CTUs going through that port is astronomical. The shipping time from any port to any other port on the west coast is three days shorter, including Long Beach and Vancouver. There is a faster train cycle time down to Chicago just because of the way the earth is shaped, of course.

We've seen through CETA that the volumes through the port of Montreal are up 20%, and anecdotally, I've talked to some folks in my business community who actually have containers sitting in Halifax and they can't get them moved fast enough. They're benefiting on the zero tariffs but they're actually having to pay an extra $2,000 a day for those containers sitting there because they can't get them moved quickly enough out to Ontario. If there's anything we could do, in terms of the money that we've invested in infrastructure, that would help your port, we'd love to hear about it.

Finally, to Mr. Ghiz, the CCA—I'm pushing for that personally, the capital cost allowance—just how much of a boon would that be for further investments in 5G? Also, what's your opinion on the spectrum? We auction spectrum in Canada. The government makes the money off of it. It is an asset, but also, when you buy something, you have to get an ROI, and that sometimes tends to lead into higher domestic wireless rates.

[Robert Ghiz]

I'll tackle that one first.

With regard to spectrum, we do pay some of the highest rates in the world for spectrum in Canada. I think they're about 10 times higher here than in the United States, and that would be an area where we'd look for some relief, in terms of spectrum, but I think the CCA will add to those investments.

I went through some of our numbers and we're looking at an incremental increase over six years of $40 billion to the economy, just with the introduction of 5G. It's going to take a $26 billion investment over a five-year period or a six-year period. Right now, the facilities-based carriers in Canada are investing anywhere between $2.5 billion and $3 billion a year. This is going to be a massive investment taking place over those six years. If you look at the numbers that are going to come back with that—and that's just factoring in the first six years—once you then build the system that will have to be maintained in the future, you're going to look at all the different areas that we're going to be able to help through.

Ports, for example, I've seen presentations where ports will now have drones that will be flying over to monitor all of the containers, which will save money. Then you will need to create new jobs for those people who will deal with that technology.

It's going to help our entire economy and we're highly recommending the increase from 30% to 100%.

[The Chair, Liberal, Wayne Easter]

On Francesco's question, Mr. Croken, I think you said that 50.5% of the cargo is at the small ports, yet you're not entitled to the money out of the gateway funding or other means that the big ports are. Is that the key problem?