Industry Committee on Feb. 19th, 2019

[John Masswohl]

No, not that we're aware of just yet.

[Lloyd Longfield, Liberal, Guelph, ON]

Okay. That's something we need to look at.

[John Masswohl]

It tends to be the sort of thing where, once CFIA has reviewed it and said, “This is what it'll be,” they'll put it out in a notice in the Canada Gazette, but they'll pretty much have their minds made up.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you.

[The Chair, Liberal, Dan Ruimy]

Mr. Lloyd, you have seven minutes.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Thank you.

My first question is for Mr. Carey.

You were talking about the PMRA and pesticide management. I know that in Canada we have a federal agency. Specifically, there are some pesticides known as neonicotinoids which I believe are considered safe from the federal perspective, but from the provincial perspective, there are some provinces that have put in additional regulations.

Can you comment on that generally? Do you think that some special interests have an outsized influence on pushing non-objective, non-scientific agendas in this area?

[Dave Carey]

Thanks for the question.

PMRA is currently in the latter stages of re-evaluating the three classes of neonicotinoids that are registered here in Canada. It's part of their statutory requirement to do so, which we support. We also have concerns, though, that if the European Union bans a product using a hazard-based assessment, it sparks a special review in Canada. Now, each of those three neonicotinoids are undergoing three different reviews at the same time.

Our default position is that the PMRA is the only body that's really capable of making these decisions. It is a very specific science. Either you're working for a crop protection company or you're working at PMRA, or perhaps a university in Canada. It's a very specialized area. We do think that interprovincial trade barriers are a significant issue. We always remind our provincial counterparts that there is in fact a Canadian Free Trade Agreement.

Currently in Ontario, there are the class 12 pesticides. Small seed companies and farmers can use neonicotinoids, but it requires a mountain of paperwork and reporting to get that done. Quebec has introduced a 3A pesticide classification, which is arguably more onerous than Ontario's.

What we see is that the way farmers operate in Manitoba, Alberta and Saskatchewan means that they are at a competitive advantage against farmers operating in Ontario and Quebec, and it's not based on science. There have certainly been a number of interventions from interest groups in Ontario and Quebec, but the Ontario government is looking at the class 12 regulations, I believe, as part of their red tape reductions. It is a concern when the cost of doing business changes from province to province. We believe that all decisions on pesticides should be made federally by Health Canada's PMRA.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Thank you.

You kind of touched on this, but you only had about five minutes to speak. Could you elaborate on the magnitude of the regulatory costs to plant breeders in Canada?

[Dave Carey]

It really depends on the data requirement. Essentially what's happened is that only large multinational companies are capable of, one, using GMO technology, and, two, bringing something to market. But it costs millions of dollars for one variety. If you look at something like corn, there's a 25% turnover every year in the varieties that are on the market because after four years, farmers don't want that four-year-old variety. Corn, canola and soybeans are really the example where innovation is the strongest as far as R and D is concerned, but it costs millions of dollars.

Essentially what happens is if CFIA and Health Canada determine you need to do a pre-market assessment, you have to do field trials. You have to have confined field trials to grow it all out. It really depends on the data package, the data submission. The actual cost of making the submission is not that high. It's what comes with it. They'll say you need to generate data on this, and data on this. These are lengthy reports, multi-hundred page reports.

Where it really becomes difficult is there's no clear path to when this is going to be over: “When is my assessment done? When am I approved or rejected?” That makes it really difficult for a company to commercialize, to say they want to invest $6 million to get this variety to market. They have no idea when they'll be able to plant that and actually start getting a return on investment.

It does depend on the particular situation, but it has essentially created a system where only six to seven major multinationals play in that PNT space. Smaller companies might license from them but they certainly don't have a four-person team in regulatory affairs to steward their innovation through the process.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

I will say this over and over again, that regulations tend to disproportionately affect small and medium-sized enterprises versus the large enterprises that have the expertise and the economies of scale to pay for these things.

You were touching on some GMO, gene editing, CRISPR technology. Has the government been making any moves to better position Canada to take advantage of these going into the future?

[Dave Carey]

Last year, under Agriculture and Agri-Food Canada, there were a number of round tables. There would be one for John's and Brady's sector. There's a seed and grain round table. The industry co-chairs of each of those committees wrote a letter to Minister MacAulay essentially saying, on behalf of the seed and grain industry, that Canada's PNT system is not ready for the next wave of technology. The minister replied in the positive and agreed.

After that reply, a technical working group was struck with Health Canada, the two branches of CFIA, ourselves, CropLife Canada and the Canada Grains Council. We're seeing progress being made, but it took a long time from once that letter was written to actioning that. We are seeing progress.

The United States, Latin America and Australia are quite a bit further ahead than we are currently.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Thank you.

My next question is for Mr. Masswohl.

On front-of-package labelling, I'm hearing about this issue quite a bit from many stakeholders. They're telling me that they feel it's unfair. Can you give us some perspective on what our trading competitors are doing in terms of front-of-package labelling? How does that compare to what the plans are in Canada?

[John Masswohl]

I think there's an international thing that's happening. We've seen the new food guide that's come out that's really trying to move Canadians away from animal-based proteins. That seems to be a trend that is happening around the world. I guess to some extent Canada has just followed what other countries have done without any regard really to the health of beef and meat. They certainly do acknowledge that beef is a healthy product. It's nutrient dense. But I think the food guide missed the opportunity to basically say to include it in your diet.

They say things that are out of context. They say to eat plant-based proteins more often. More often than what? More than you used to? More than beef? More than something else? It's out of context. I think it's that line of thinking that is problematic on the package labelling as well. It's going to say certain things. They're going to pick certain nutrient points.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Is the United States still pursuing front-of-package labelling?

[John Masswohl]

I'm not aware that the United States is doing that or has a proposal in place.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

What about the costs? I know that when we were dealing with those rules about separating Canadian herds, country-of-origin labelling, that was a huge irritant to you guys. Is this front-of-package labelling basically Canada just hamstringing its own cattle guys?

[John Masswohl]

I think the challenge in the front-of-package labelling if they're going to fix it is they'll pick a few data points and say that this is bad, and somehow this is good. I think a lot of people who care about nutrition know that there's good fat and there's bad fat. They know there's saturated fat and there's unsaturated fat, and that there's monounsaturated fat and polyunsaturated fat. I don't think most consumers, even those who are nutrient conscious, could tell you which is the good fat and which is the bad fat.

If you now say we have a single ingredient product like beef or an apple, or something like this, and watch out because it has saturated fat, is that the good fat or is it the bad fat? The apple has sugar. For maple syrup, they want to put.... I don't know if they're going to put a skull and crossbones on it, but it's something that's going to be a warning to consumers. People will say, “I always thought this was healthy.” It is, but now there is a signal in the marketplace that they don't understand.

That's what I think is very concerning to us.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

We're going to move to Mr. Masse for seven minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Thank you, witnesses, for being here.

I'm going to start with Mr. Biln, so that we can get him involved in the conversation. You mentioned something that I think is really important.

I was in Brussels for the Brexit discussions. First, we were in London and then in Brussels. The thought from the trade commission there was that CETA was failing Canadians. We've actually had a growth in European deficits, with regard to trade since signing CETA, with most of the blame laid on, I guess, companies not taking advantage of the opportunity. That was the message coming out and that it was especially small and medium-sized businesses. They were experiencing or at least trying to advocate for more connections to get Canadians involved in that trading relationship.

You've touched on it, but can you maybe explain a little bit what support you get? Have you received any support to actually access the European markets, since we've signed CETA?

[Ray Biln]

I would say that our company's been guilty of not pursuing the European market as aggressively as we could be. Being on the west coast, our focus has been Asia for the short term, but we definitely intend to take advantage of CETA in the future. There are some challenges with the European market for products like ours, in that in Europe there are a lot of old relationships that exist currently in the marketplace that will take time for companies like ours to overcome. As a result, our company is focused more on new opportunities in Asia versus Europe, but I believe CETA is definitely important. It will take time for companies like ours to take advantage of it.

[Brian Masse, NDP, Windsor West, ON]

You brought up an excellent point about old relationships. My comments came across as pretty critical, but they're meant to be more general. The commission in Brussels is looking for ways to address—we're making the problem worse, in terms of a trade surplus, as opposed to better, with the current agreement, because of issues like old relationships. What things would you need as a company? Are there suggestions that you would have? I know we're looking at regulations here, but what type of supports would you need from them to actually get into the market there or at least to explore a bit more about taking advantage of that market? Obviously, you don't have endless and unlimited resources to do so. They were quite clear that the larger companies seem to be doing fine and almost use them as a tool or a resource and pick what they need and go from there, but it's the small and medium-sized businesses that seem to be missing out on opportunities.

[Ray Biln]

What we found in other markets is just general market intelligence is so important. It's very hard to get accurate information on different markets, different market players in the different industries and the different buying communities. We can also help to connect Canadian businesses, small, medium or large, with the appropriate companies in the different markets. It's worked really well in Asia, like in Korea, or the Middle East. In Japan, in particular, the trade commissioner offices have played a very important role in just connecting different businesses, whether it's through food shows, whether it's at different one-off food events or one-on-one meetings that have been requested by companies themselves.

[Brian Masse, NDP, Windsor West, ON]

Last, it seems to me they're looking at doing more outreach for those things. Is that more of a concern than, say, a regulatory change that's necessary for your products, either through labelling identification or meeting their markets? Under the CETA, I know that they grandfathered specific zones of entitlement, which was something that I tried to get in an amendment in our agreement over here. For example, champagne and other types of products are identified as exclusive in marketing on their side. In general, is it mostly just the infrastructure necessary to help businesses like yours to get what you've identified versus actually changing practices necessary to penetrate their markets?

[Ray Biln]

For our industry, there are definitely regulatory challenges when it comes to MRLs in Europe or the MRLs in Canada for our product, for example. There are some of those, but the main challenges in the short term are building those connections in relationships with the buying community in Europe.

[Brian Masse, NDP, Windsor West, ON]

Thank you very much.

I will move to Mr. Carey.

Living on the border, I get a chance to hear national public radio in the United States. There is quite a debate going on with regard to their agricultural community and some products that are used to spray on certain farms. Their neighbours and so forth are having to move to those products, even when they don't want to, because of the runoff and the consequences on their own farming properties.

Is that happening over here? Are there some regulatory challenges? I know in the U.S. there's quite a debate. A couple of products in particular have benefited from what some would argue is a lax regulatory system where, for example, one farmer is using certain types of chemicals and agricultural products that create usage problems on their.... It could be related to insect management or a fertilizer. They have gotten into a position where many of them are moving to certain particular dominant markets because if they don't, they are affected by the consequences of their neighbour anyway.