Evidence of meeting #45 for Finance in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was mead.
A video is available from Parliament.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
I'll move to my next question. You have a bottling deadline of July 1. Anything bottled from July 1 on will be subject to this new tax. Is your industry ready for this, or are they having supply chain issues like we are seeing in cider and with the wineries?
President, Association of Mead and Honey Alcohol Producers of Quebec
We are all in the same situation. Actually, it's going to be a big issue. It will arrive very fast.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Your industry has not had to pay this tax before. Are many of your producers aware that they're going to have to pay this, or will it be a shock when they receive the bill in the mail?
President, Association of Mead and Honey Alcohol Producers of Quebec
For sure it's going to be a shock. We're an association, and we were looking for this information many months ago. We received this information and we began to do our representations. We found it problematic. We cannot have this.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
This is my last question, sir. You said that, because of the way your mead is produced, this tax will hit you harder than other industries. Is that correct?
President, Association of Mead and Honey Alcohol Producers of Quebec
Yes. It's correct. It's more expensive to produce mead because honey costs more to produce than apples or grain or other agricultural matter.
Liberal
The Chair Liberal Peter Fonseca
Thank you, MP Albas.
We're now moving to the Liberals.
MP MacDonald, you have five minutes.
Liberal
Heath MacDonald Liberal Malpeque, PE
Thank you, Chair.
I'm going to address my questions to you, Mr. Charlebois. I follow you, being from Atlantic Canada and living in a riding that consists of many farms. I'm always reading and seeing what you have to say.
Conflict and climate change are having major effects on inflation, as you said. They're also creating financial speculation in trading and grain futures, for example. I won't be as kind as you were in what you called them. The last farmer I spoke to called them grain pirates. That's how he referred to them. They're creating artificial inflation by doing this.
With everything that's happening right now, are high food prices here to stay, based on what we're seeing now?
Director and Professor, Agri-Food Analytics Lab
Thank you, Mr. MacDonald, for the question. Yes, I think we're seeing a new normal. Prices won't drop any time soon for a variety of reasons. Unpredictability is really pushing companies to hedge against risks very differently. I think since COVID, they're adopting a new mindset. We're seeing it across the board, not just in Canada but around the world.
I want to go back to one comment I made about the White House and what's going on in the United States versus Canada. There's much more oversight in the United States. I believe the reason we're seeing more of a forceful government in the United States looking at what is, I would say, unacceptable behaviour from some companies is that they have data. They actually have access to a lot of data to see exact patterns in terms of pricing and what's going on across the supply chain.
That's something that in Canada, frankly, we do not have. If companies have data, it's either protected or it's very pricey. It's very expensive. In Canada, data is not democratized in the agri-food world. That's why we created the lab in the first place, by the way, at Dalhousie University.
In the United States, it's so easy to get data and get the story and perhaps see particular scenarios that wouldn't be acceptable socially. That's why we're seeing a much more forceful American government looking at the beef industry or the grain industry and things like that. That's how I would explain it.
Liberal
The Chair Liberal Peter Fonseca
Mr. MacDonald and Mr. Albas, just a moment please.
Members, bells are ringing. I think we have about 27 minutes or so right now. I'm looking for unanimous consent to see if we can go up to....
Is everybody okay with that? Okay, great.
You may continue.
Liberal
Heath MacDonald Liberal Malpeque, PE
Mr. Charlebois, we have the Food and Agriculture Organization, FAO. How do we strengthen and expand that market information system that you were just talking about, and what would you personally do to adhere to that or create a more open process?
Director and Professor, Agri-Food Analytics Lab
Sir, are you talking about the FAO specifically?
Director and Professor, Agri-Food Analytics Lab
The FAO has a critical role to play, obviously, with the World Food Programme in particular, which is going to be in a deficit again this year. I would certainly recommend continuing to support the program itself.
I've actually had the pleasure of working at the FAO in Rome for a month about six years ago. The FAO is trying its best to supply and support developing countries where food security is actually an issue. Yes, certainly I would encourage Canada to continue to support the program supported and sponsored by the FAO at this point.
Liberal
Heath MacDonald Liberal Malpeque, PE
In one of your recent interviews on BNN, you talked about the tension in the food industry. Can you elaborate on what you mean by the “tension in the food industry”?
Director and Professor, Agri-Food Analytics Lab
If I remember correctly, I was actually using, as an example, the stop sale that occurred between Frito Lay and Loblaws. You may recall, about a month ago, Frito Lay or PepsiCo decided to stop selling to Loblaws because they couldn't agree on prices.
Stop sales are frequent in the food industry, but right now there are many stop sales as a result of a higher food inflation rate. Companies try to increase prices or adjust prices, but as I said, going back to my comment about power and influence, grocers in particular will try to keep prices down and increase margins at the same time.
Right now, the federal government is working on a code of practice. I think this would solve a lot of these issues right now. I'm hoping that, at some point, we will see a code of practice being implemented in Canada as we are seeing right now in the U.K. and Australia.
Liberal
The Chair Liberal Peter Fonseca
Thank you, MP MacDonald.
This is our third round, members. We have MP Fast up first, for five minutes.
Conservative
Ed Fast Conservative Abbotsford, BC
Thank you, Mr. Chair.
Thank you to all of our witnesses. I'm going to direct my questions to Mr. Charlebois.
In your testimony, you referred to food inflation as a disease. Did I hear you correctly?
Director and Professor, Agri-Food Analytics Lab
Yes, you did, sir.
Conservative
Ed Fast Conservative Abbotsford, BC
All right.
Today, in the Guardian newspaper, the governor of the Bank of England has warned of “apocalyptic” food prices, which he said will be disastrous for the world's poor. Those are his words, but I think they reflect what you've just said.
Do you agree with the assessment that this could be apocalyptic in its scope?
Director and Professor, Agri-Food Analytics Lab
Thank you for the question, Mr. Fast.
I consider myself an optimist most of the time. I do believe in the nature of free markets, and I do believe that we have a strong agri-food economy in Canada. It lacks ambition, but it is a strong economy. We do very well for the most part, but I am greatly concerned right now.
I'm very concerned, and I'm not convinced, based on conversations I've had with different people in Canada.... I've travelled back to Canada several times over the last few weeks. I actually don't believe that Canadians are fully aware of what's going on. We're really facing a global food security crisis.
As I said, I don't think Canada will run out of food, but it will get pricier. Germany is one country where we're likely to see prices explode, the U.K. as well. We need to prepare ourselves.
Conservative
Ed Fast Conservative Abbotsford, BC
You said that you expect food prices in Canada to surpass—I think these are your words—“way beyond 7%”. Am I correct in having heard you say that?
Director and Professor, Agri-Food Analytics Lab
That's correct.
Numbers are being reported by StatsCan, but we actually have every reason to believe that Statistics Canada is underevaluating the current food inflation rate right now. We believe that the actual food inflation rate in Canada, in March, was close to 9.5% or 10%.
Conservative
Ed Fast Conservative Abbotsford, BC
I'd like a little bit of additional guidance from you. You've mentioned a number of things that Canada could do. On price fixing, you said we should perhaps be looking at how we do mergers and acquisitions within the grocery space and have more affordable fertilizer and fuel for farmers. You talked about perhaps suspending the GST.
You also referenced genetic innovation in how we produce food. Perhaps you could expand on that a little bit.
Director and Professor, Agri-Food Analytics Lab
Yes. There's a lot of great work. Canada's a leader in genetic engineering. I don't think we've embraced that enough. From a business perspective we're doing very well. Farmers believe in the technology being developed in Canada.
There's a lot of noise, as you probably know, Mr. Fast. There's a lot of noise in the margins discouraging governments and industry from using genetic engineering to make our agriculture safer. I think the science has been pretty clear for decades now. The science is pretty strong. We need to be clear.
Right now we're just waiting for Health Canada to make public guidance for gene editing. It's been months now. We've been waiting for the guidance. You can feel that Ottawa is always hesitating to approve traits and new technology. I think we need a firm commitment from the federal government at this point, just because of what we're seeing right now around the world.