Foreign Affairs Committee on Nov. 6th, 2023

[Natalka Cmoc]

Mr. Chairman, from what I understand, the Wagner Group is still present under new leadership, and other groups are also there. They're still part of it, but it's still not affecting the war any differently or less than it has so far.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you very much.

[The Chair, Liberal, Ali Ehsassi]

At this point, Madam Ambassador, allow me thank you on behalf of all members of this committee. We're very grateful that you made yourself available. We look forward to hearing from you again, hopefully very soon.

That said, I'm going to pause the meeting for approximately four or five minutes. We have more witnesses lined up for the second hour. I will suspend for approximately four to five minutes.

Thank you.

[The Chair, Liberal, Ali Ehsassi]

Welcome back, everyone.

We will now resume our meeting on the study of the situation at the Russia-Ukraine border and implications for peace and security.

I would like to welcome our witnesses.

First we have, from the United Nations World Food Programme, Matthew Hollingworth, who regrettably had some challenges last time. We're grateful that he could make it back. Mr. Hollingworth is the World Food Programme representative and country director for Ukraine.

From the Canadian Agri-Food Trade Alliance, we have Michael Harvey, executive director.

Last, we're grateful to have two witnesses from the Canadian Canola Growers Association. We have Dave Carey, vice-president, government and industry relations, as well as Ms. Gayle McLaughlin, who is manager, government and industry relations.

You will each be provided five minutes for your opening remarks. I understand that Ms. McLaughlin and Mr. Carey are going to share the five minutes.

That's for opening remarks, and then we have questions from the members. If it's getting close to the time that the members have available to them, I will hold this phone up in the air. That means you should please try to wrap it up as soon as possible.

We will start with Mr. Hollingworth.

You have five minutes. The floor is yours.

[Matthew Hollingworth, World Food Programme Representative and Country Director for Ukraine, United Nations World Food Programme]

Thank you, Mr. Chair.

On behalf of the United Nations World Food Programme in Ukraine, I'm honoured to sit before the committee today.

As you know, the Russian Federation's full-scale invasion of Ukraine has persisted now for more than 20 months. Every day we bear witness to the enormous human suffering and indiscriminate bombing of civilian areas and critical infrastructure, causing destruction and waves of displacement in the north, northeast and east of this country.

Over the past month, intensifying conflict in all frontline communities in the eastern crescent from Kharkivska to Khersonska has made it increasing challenging to provide essential humanitarian assistance where it's most urgently needed. In the south, attacks on the port and grain infrastructure following the termination of the Black Sea initiative last July have created additional hurdles to Ukraine's agricultural exports.

As of this week, the Office for the United Nations High Commissioner for Human Rights has documented 29 such infrastructure attacks. These attacks have targeted grain terminals, warehouses, port infrastructure, industrial equipment and administrative buildings, in direct violation of the United Nations Security Council resolution 2417, which condemns the use of hunger as a weapon of war. Moreover, these attacks have severely impacted the livelihoods of Ukrainian farmers and all people involved in food systems in the country, many of whom are women, thus compounding the hardship faced by rural communities and causing massive food production challenges, thereby endangering the right to lead an adequate life and have an adequate standard of living.

Mr. Chair, when it comes to the impacts of war on food security, I have three very significant concerns regarding food production and food systems in Ukraine.

The first is that remnants of war—land mines and unexploded ordnance—seriously constrain farming activities in frontline communities, thereby leaving many farmers unable to sustain themselves and unable to support their communities. That is a micro food system crisis that we're already facing.

The second is that the area from the northeast to the southeast, the crescent in which the front line exists, was the wheat-growing area of Ukraine. This was a country that was able export $5 billion of wheat to the world in 2021, the equivalent of almost 20 million tonnes. Ukraine was incredibly important in terms of food production for the world, but this crescent, as well as countless countries that depend on imports from Ukraine, is suffering the great impact of the war. That's a macro food system crisis.

As I mentioned earlier, the targeted missile strikes on food infrastructure across this country are most likely to continue throughout this winter and have created long-lasting harm to both domestic and global food security.

Mr. Chair, the World Food Programme is unwavering in our commitment to the Ukrainian population, especially as this winter looms. Despite the challenges from the ongoing conflict, we've adapted swiftly to meet evolving needs. To date, from the outset of this war, with Canadian help, we have distributed the equivalent of 2.3 billion meals to more than 10 million people, and 85% of everybody we support lives within the frontline areas.

WFP continues to rely on the generous support of Canada and other members of the donor community that work with us alongside the Government of Ukraine and other humanitarian partners that provide humanitarian relief and support to millions of Ukrainian families across the country.

Mr. Chair, I will stop now as the clock is ticking by, but I'm happy to answer questions about the food system crises inside this war and globally related to it and the impact of the full-scale invasion.

Thank you, Mr. Chair.

[The Chair, Liberal, Ali Ehsassi]

Thank you, Mr. Hollingworth.

We'll next go to Mr. Harvey from the Canadian Agri-Food Trade Alliance.

Welcome, Mr. Harvey. You have five minutes.

[Michael Harvey, Executive Director, Canadian Agri-Food Trade Alliance]

Good morning, and thank you to the committee for inviting me today.

The Canadian Agri-Food Trade Alliance, CAFTA, is a coalition of national organizations that advocate for a freer and more inclusive international trading environment specifically for the agriculture and agri-food sector.

CAFTA’s membership includes farmers, ranchers, producers, and producers and exporters from major agri-food sectors such as beef, pork, grains, oilseeds, sugar, pulses and soybeans.

CAFTA represents the 90% of Canadian farmers, producers, processors and agri-food exporters who rely on access to global markets. Russia's illegal invasion of Ukraine has, of course, had very negative effects on global agricultural markets, global food security and nutrition. My knowledge of the dynamics of the war and its regional effects come only from reading the media, so I'm not qualified to comment on that.

However, I would like to underline a few points that the war has brought home from the perspective of Canada's producers.

The first point is that interrupting the free flow of agricultural products leads to worse nutritional outcomes for the world's poor. Trade is not just about farmers and people employed along the food supply chain; trade also contributes to reducing food insecurity across the globe, including by buffering the impact of shocks such as Russia's invasion of Ukraine. Trade serves as the bridge to get food from where it is grown to where it is needed. In doing so, trade enables food security while creating economic opportunities for producers, farmers and SMEs. Trade is also a key factor in the sustainable and efficient use of scarce global resources.

My second point is that the conflict has significantly undermined the global rules-based order, creating greater uncertainty for Canadian producers. This is difficult for middle powers, like Canada, that have depended on this rules-based order. CAFTA believes that Canada must continue to work to reinforce the multilateral trading system to keep markets open as much as possible, thereby limiting the knock-on effects of shocks such as the Russian invasion of Ukraine.

The last point I want to make is that we should not respond to global uncertainty by turning inward and limiting our economic relations to countries with the same views. The best way for Canada to achieve economic resilience is to open markets, not close them. For example, the Canadian Agri-Food Trade Alliance strongly supports the Government of Canada’s efforts to expand into growing markets in the Indo-Pacific region, including the opening of the Indo-Pacific Agriculture and Agri-Food office in Manila.

I would be pleased to answer questions from members.

[The Chair, Liberal, Ali Ehsassi]

Thank you very much, Mr. Harvey.

We will now go to the Canadian Canola Growers.

You have five minutes for your opening remarks.

[Gayle McLaughlin, Manager, Government and Industry Relations, Canadian Canola Growers Association]

Thank you for the opportunity to be here today and to provide comments on this important study. I will share my time with my colleague Dave Carey.

CCGA represents Canada's 43,000 canola farmers on issues that impact the success of their farms. As the world's largest exporter of canola, Canada exports 90% of what we grow as seed, oil or meal, which was valued at $14.4 billion in 2022. International trade underpins the canola sector's $29.9 billion annual economic contribution and over 200,000 jobs nationally. Canola and its products are sold to 50 different countries.

Ukraine is also a major producer and exporter of oilseeds globally, focused on sunflower seed and to a lesser extent canola. Known in the Europe and the Black Sea region as oilseed rape, Ukraine production is relatively small in the larger oilseed complex. On average, it exports three million metric tonnes, largely destined to the European Union.

Russia's illegal invasion of Ukraine created significant uncertainty in global grain and oilseed markets and widespread concerns with food security at a time when the world was already reeling from the global pandemic, high food and input prices and widespread supply chain disruptions. The conflict highlighted the importance, one, of trade to global food security; two, for supply chains to nimbly pivot between markets as demand shifts, sometimes overnight and in unexpected ways; and three, for strong trade corridors to move product to market.

Trade provides food for one in six people globally, ensuring that food and other essential goods, such as fertilizer and crop inputs, get to where they are needed in a timely, reliable fashion. According to the World Trade Organization report called “One year of war in Ukraine”, “Trade is a critical means of adaptation to crises.” Trade between the affected countries has remained resilient; alternative suppliers stepped in to cover the gaps, and with the United Nations-brokered Black Sea grain initiative—which Russia has since terminated—the war's impact on food security was dampened. That said, the potential impact means global food security remains fragile and tenuous and should be closely monitored.

I'll go over to you, Dave.

[Dave Carey, Vice-President, Government and Industry Relations, Canadian Canola Growers Association]

The war highlights the importance of strengthening our multilateral trading system to ensure it remains relevant in our increasingly unpredictable world and contributes to a further breaking down of barriers to trade. For example, the WTO underpins our global trading system, providing rules of engagement, mechanisms to ensure transparency between member states and a forum to ensure trade corridors remain open.

The canola sector relies on these clear, predictable rules, as well as those provided by Canada's suite of free trade agreements, to manage our risks and uncertainty when selling abroad. In recent years, we've witnessed an alarming move away from multilateralism and are concerned with an increasing trend towards national—sometimes protectionist—approaches. World leaders are meeting this February for the 13th WTO ministerial conference with a goal to further operationalize reform, reinstate the settlement function in 2024 and deliver meaningful outcomes for agriculture and food security and other areas. An ambitious outcome would send a message globally that WTO members are committed to strong, inclusive multilateral trade.

Today the canola sector faces a range of market access issues that limit our ability to seamlessly pivot between markets. Differences on sanitary and phytosanitary measures, food safety requirements and approaches to modern agriculture create significant barriers when looking to shift trade flows. More emphasis on trade-facilitative approaches and recognition of international standards would ensure more efficient movement of agriculture and food products.

The importance of open markets applies equally to the inputs required to grow food. In March 2022, Canada imposed a series of trade restrictions on Russia, withdrawing the most favoured nation status and imposing a 35% tariff on fertilizer imports. Russia is a key exporter of fertilizer, an essential building block to achieving plant yields and to sustainable production. Multi-country trade restrictions impede the movement of fertilizer globally, including to Ontario and Quebec, and the Canadian tariff increased Canadian farmers' costs by an estimated $34 million as of November 2022. Canada remains the only G7 country to retain a farmer tariff on Russian fertilizer.

In conclusion, I'd like to stress the importance of strong Canadian trade corridors.

Since the invasion, Canada has witnessed labour strikes that have impacted the movement of grains and oilseeds in both our western and eastern ports and have complicated our ability to supply global markets. In addition to port capacity, Canada needs an effective and responsive rail transportation system to provide grains and oilseeds globally in an efficient and competitive manner. For prairie farmers, grain travels an average of 1,500 kilometres by rail to reach port position. Disruptions can significantly increase farmers' costs, constrain deliveries and hinder Canada's reputation as a reliable supplier.

Thank you for the invitation. We look forward to your questions.

[The Chair, Liberal, Ali Ehsassi]

Thank you, Mr. Carey.

We will now go to members for questions.

For the first round, every member has five minutes. We start off with MP Epp.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you, Mr. Chair.

Thank you to all the witnesses for appearing today.

The war in Ukraine, the illegal invasion, has interrupted what has been obvious—the food trade—and it's also been obvious in the energy trade, particularly in Europe. We were exploring at this committee how Canada can respond, but that link perhaps isn't quite as obvious, and I'm going to build upon Mr. Carey's comment that “an essential building block” of food is fertilizer. Actually, an essential building block of fertilizer is natural gas. Fifty per cent of the world's production is dependent upon access to and conversion of natural gas.

I'm going to start with Mr. Hollingworth.

Would you agree—and we've had previous testimony around this—that essential to your work is access to natural gas for synthetic fertilizer so that we can feed the world collectively?

[Matthew Hollingworth]

Certainly, Mr. Chair, the unavailability of fertilizer in the world stands at the worst level since prepandemic: We know that the price indexes are now at 98% above the prepandemic level for fertilizer, according to the IMF. It's very clear that without access to fertilizer, the poorest and most vulnerable countries in the world that rely upon it to eke out sufficient food to cover parts of their sustainability are the worst affected.

We know from the IMF that the estimated additional costs to the import bills for some 48 countries in the world most affected by food shock are almost $9 billion today from the pre-February 2022 invasion time. Conflict, economic shocks, climate extremes and elevated fertilizer prices have an impact on global food insecurity, and today we see a situation in which 345 million people in 79 countries face acute food insecurity, so a fertilizer crisis—

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

My time is limited. Thank you.

I'm going to add to that. I'm going to look with more of a Canadian perspective at Canada's policy, given the change in the status with Ukraine.

Canada has announced targets for fertilizer emissions. On my own farm—I have shared this with this committee before—we've used more Belarusian potash and more Russian urea on our farms, yet, as a country, we don't have the infrastructure in place.

Can you comment on the consistency of our policy on fertilizer and the calls from the world to produce more food? Are we being consistent? Have you seen a shift yet in the Canadian position to actually answer the calls, given what we can do as a country?

I'll start with Mr. Carey, please.

[Dave Carey]

Thanks for the question.

Absolutely. For canola, for example, nitrogen is the second most important input after moisture. If we do not have nitrogen, we cannot grow a canola crop, and canola is a heart-healthy cooking oil. It figures prominently in biofuels, etc., and meal, particularly for animal feed.

As a country, we have not made significant investments in our infrastructure—going back to the 1970s, really—whether it's electrification or the fact, as you noted, that if you're in eastern Canada, the gasoline you're using in your car is probably from Venezuela or Saudi Arabia and not from Alberta. The same issues are certainly true with natural gas and propane, and then you get into fertilizer.

In western Canada, our farms are mostly supplied by western production, with huge amounts of potash coming from Saskatchewan. However, because of the state of our own infrastructure, it's too expensive to move products from western Canada to eastern Canada. It's actually cheaper to import urea, nitrogen and other products from abroad, whether that be from Morocco, Belarus or Russia.

Certainly, Canada is a very fortunate country production-wise, and we have an economic imperative to get our products abroad.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

I also want to give Mr. Harvey a chance to comment.

Is this war teaching us anything, Mr. Harvey?

[Michael Harvey]

Sure. Mr. Carey gave quite a bit of information there.

I'd just add from a broad perspective that often, when Canada wants to play an important role in the world, the things that hold us back are things that we do in Canada. It is very important for us to play this role of exporting our food and exporting our natural resources to contribute to global peace and security, so we have to work on the things that hold us back inside Canada and prevent us from playing that global role.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you.

Going back to canola, Ukraine was a significant exporter of sunflower product. What is the interchangeability of canola and sunflower? Is the canola industry seeing an impact specifically on your canola exports because of the Russian invasion?

[Dave Carey]

Yes. On our exports, we haven't noticed a huge.... Canada is the global leader. We export about 60% of the world's canola.

Sunflower is certainly part of the broader oilseed complex. Ukrainian production of sunflower is far less than Canadian production. Australia is our biggest competitor.

However, as my colleague Gayle alluded to in her opening comments, the concern is that it's very difficult to pivot and do quick transfers, because even in times of crisis, if we don't have the proper sanitary and phytosanitary measures for exporting a commodity into a country, we still can't move it.

It speaks to the global insecurity we are facing, and our inability to position more quickly means that markets that require our products go without them.

[The Chair, Liberal, Ali Ehsassi]

Thank you.

We next go to MP Damoff. You have five minutes.

[Pam Damoff, Liberal, Oakville North—Burlington, ON]

Thank you, Chair.

Thank you to all our witnesses for being here today.

I wanted to talk about trade with Ukraine. As you probably know, there's a modernized Canada-Ukraine trade agreement currently trying to get its way through the House.

I'm going to start with the Canola Growers Association. Do you export canola oil or canola to Ukraine?

[Gayle McLaughlin]

No, not to our knowledge.

[Pam Damoff, Liberal, Oakville North—Burlington, ON]

Where do your exports go?

[Gayle McLaughlin]

We export to about 50 markets around the world. It goes largely to the United States, China and the European Union to be used for biofuel, as well as to Mexico and Japan.

[Pam Damoff, Liberal, Oakville North—Burlington, ON]

To all the witnesses, I'm wondering if you have any comments on whether you see benefits from this agreement. It eliminates the majority of Ukrainian tariffs on agrifood products.

I'll start with you, but I'd like to hear from all the witnesses about whether you see that this would benefit your trade between our countries.