Industry Committee on Feb. 19th, 2019

[The Chair, Liberal, Dan Ruimy]

That brings us to the end of this round. We will suspend very briefly. We want to maintain our time for questions.

Thank you very much.

[The Chair, Liberal, Dan Ruimy]

We're back. Thank you, everybody, for making that a quick transition.

For the second panel, we have with us, from the Canadian Cattlemen's Association, John Masswohl, director, government and international relations, and Brady Stadnicki, policy analyst.

We have, from Silver Valley Farms, Ray Biln, general manager, all the way from Maple Ridge, British Columbia. I know that place.

From the Canadian Seed Trade Association, we have Dave Carey, executive director.

Thank you everybody for being here today.

I have to point out that we have technical difficulties. Mr. Biln is on an actual land line —yes, we have those—so there won't be a video portion.

We're going to start off with the Canadian Cattlemen's Association.

John Masswohl, you have up to seven minutes.

[John Masswohl, Director, Government and International Relations, Canadian Cattlemen's Association]

Thank you very much, Mr. Chairman. We appreciate the invitation to provide input into the committee's study.

The Canadian beef production sector is comprised of 60,000 beef farms, ranches and feedlots and is a major economic driver with a significant multiplier effect in the Canadian economy. In 2017, the beef cattle industry generated $8.9 billion in farm cash receipts and contributed $17.2 billion to the Canadian GDP. A 2011 study found that every job in the beef sector yields another 3.56 jobs elsewhere in the economy, and for every dollar of income received by workers and farm owners, another $2.08 is created elsewhere.

Agriculture and food manufacturing represents one of Canada's biggest global economic opportunities. World population growth estimates will require a 70% increase in global food production by the year 2050. We are eager to capitalize on this opportunity and exceed Canada's target of $75 billion in agri-food exports by 2025.

For the Canadian beef industry to be competitive, it's necessary to have a regulatory system that supports the industry, encourages innovation and efficiency and doesn't add unnecessary costs.

I want to outline four principles that we see as necessary for good regulation.

First, we seek a risk-based, scientific regulatory system. In achieving the mandate to ensure public health and food safety, protect animal health and welfare and sustain the environment, we believe that government regulations must be based on appropriate management of real risks and an accurate analysis of the costs and benefits of the regulations.

Canada must maintain a science-based approach to regulatory decision-making to provide industry with a predictable, credible, consistent and transparent regulatory environment. Recent regulatory proposals in Canada have included potential changes that our industry believes are not rooted in scientific evidence. A couple of examples of those would be Health Canada's proposal for front-of-package labelling regulations and at CFIA the proposed amendments to the health of animals regulations, or humane transport regulations as they're sometimes called.

Second, the government should pursue flexible outcome-based regulations. We encourage an examination of how regulatory approaches can be made outcome-based. This is important not only to ensure that we achieve best results but also to support new and more efficient approaches to achieving regulatory objectives. An outcome-based approach will require a significant mindset shift as well as additional training for current regulators.

Another priority for the beef sector is ensuring that service standards are based on the speed of commerce. In one recent case where we sought guidance, regulators advised that we would have a decision in 100 days. That's far too long a service standard, maybe about 95 days too long, and becomes a serious impediment to our capability to service new market opportunities.

Third, the government should ensure that regulations enhance competitiveness and support innovative products and inputs. It's imperative that Canada's beef industry have access to competitively priced inputs and that the business environment in Canada support the development of new innovative inputs. This is particularly important as Canada is a relatively small market, which can in itself be a disincentive for companies to pursue commerce in Canada and register new products. Some of the things we're thinking of, which Dave might also go into, are registering new plant varieties and new veterinary medicines. Even packaging materials need to be approved.

Regulatory oversight and delivery is also a vital input for the food production sector. We can't sell meat without the regulatory oversight. The ongoing fee review at CFIA, which looks to achieve complete cost recovery, does not have a view to economic growth or competitive regulation. This needs to be reconciled, and the role of government and taxpayers in building a competitive economy must prevail over simplified approaches like cost recovery.

Like many areas of the Canadian economy, growth in the beef industry is afflicted by a shortage of skilled labour. It's a constant challenge to find employees who not only have the skills attuned to the needs of the agriculture and processing sectors but also want to work and live in rural Canada. We ask that the government strategically address national labour shortages and ensure a strong labour supply by implementing the Canadian agriculture and agri-food workforce action plan. The action plan includes changes to make the temporary foreign worker and immigration processes more efficient and to facilitate permanent immigration status.

The fourth principle involves international harmonization and equivalency. We encourage an ongoing effort to increase the extent to which Canadian regulations are harmonized or deemed equivalent with other jurisdictions. Harmonization should continue to be pursued to the greatest extent possible by establishing international standards and encouraging adherence to such standards. We recognize that it's not always possible or practical to achieve full harmonization, and in such instances, we should be focusing on recognizing the equivalency of outcomes.

We applaud initiatives such as Beyond the Border and the Regulatory Cooperation Council, and we remain hopeful that positive outcomes can be achieved for the beef sector. As we open new trade agreements, there remains much scope to pursue similar initiatives with other trading partners, as well.

That's my fairly high-level overview of the general direction we would like to take with the regulatory structure. I'd be glad to take questions and focus on specific areas.

Thank you.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

You mentioned the Canadian agriculture and agri-food workforce action plan. Is that a document that your sector has created?

[John Masswohl]

Absolutely. I believe, also, that we presented that at the human resources committee.

[The Chair, Liberal, Dan Ruimy]

Would you be able to send that to our clerk? We could then distribute it to our committee.

[John Masswohl]

Absolutely.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

We're now going, via old-fashioned telephone, to Ray Biln from Silver Valley Farms in Maple Ridge.

Sir, welcome. You have up to seven minutes.

[Ray Biln, General Manager, Silver Valley Farms Ltd.]

Good morning. Thank you for the invitation to talk with the committee. I am speaking on behalf of myself and our company, Silver Valley Farms.

I will start with a little background on our company. My grandfather and father started our operation. We have been growing berries in Maple Ridge-Pitt Meadows, British Columbia, since 1981. Our business has grown from 21 acres, including both blueberries and strawberries, to 525 acres of blueberries and 20 acres of strawberries today.

We expanded our operations into marketing and exporting of fresh berries in 2004. We started marketing and exporting frozen berries in 2010. We currently market and distribute our Canadian products into the domestic market, into the U.S. and also into various Asian markets. We also sell a small amount into the U.K. market.

We strongly believe that the federal and provincial governments can play a positive role in helping businesses like ours compete in the global market. I will mention a few areas where we feel the government can support Canadian agribusinesses to increase their global market presence and their global competitiveness.

The first area is to harmonize scientific data requirements for pesticide registration with countries with which we have a free trade agreement. Crop protection tools are a critical element of producing food, whether we are practising organic or conventional farming. Changes in the environment are constantly having an impact and the challenges are faced by producers nationwide. For the safety of Canadians, we agree that the Pest Management Regulatory Agency needs to maintain sovereignty over final decisions. However, we should work with other countries to streamline decision-making. If the countries with which we have an FTA worked together using the same data requirements from pesticide manufacturers, this could help reduce the time and cost for all countries to review and decide on different regulations and maximum residue limits. Each country could work with the same data. Then we could make decisions for our respective countries based on our own standards, taking into account different domestic variables. We have done similar harmonizing with our U.S. partners, but we should now include other regions with which we have signed free trade agreements.

The second area where we feel we need progress is protection, like the Perishable Agricultural Commodities Act, PACA, in the U.S. Two House of Commons standing committees—the agriculture and agri-food committee and the finance committee—have recommended a move towards a PACA-like system, yet we still do not have a program in place. The absence of a reciprocal financial protection tool continues to be a trade irritant with our largest trading partner, the United States.

Canadian produce growers and exporters do not have the protection offered their American counterparts under the Perishable Agricultural Commodities Act. Establishment of a PACA-like financial protection mechanism would provide similar protection in Canada to both Canadian and foreign produce shippers. American officials have repeatedly confirmed that access for Canadians to PACA in the U.S.A. would be reinstated once Americans have access to similar coverage in Canada.

Dealing with perishable food products is very risky. For small businesses, a PACA-like system would allow us to take that risk more confidently when exporting to the U.S.A.

The third area is continued market development assistance and trade commissioner office investments. I'm thankful for the vision in pursuit of FTAs globally where it makes economic and geopolitical strategic sense. We need continued support to open up markets in Asia that were not included in the CPTPP and other global markets as well.

Furthermore, we need continued investment in trade commissioner offices globally. Having an FTA is a major accomplishment and takes a lot of hard work over years of negotiations. However, for small businesses to take advantage of those FTAs, trade commissioner offices require adequate resources and direction to connect Canadian businesses with market players in each of the countries.

I've witnessed how our business and those of our domestic competitors were, and continue to be, assisted by trade commissioner offices globally. I've also seen times when trade commissioner offices were underinvested in and, as a result, impacted Canadian businesses' access to market intelligence and contact in a market with a newly signed FTA.

The fourth area is for the CFIA to increase its defence of the Canadian food chain. With new FTAs, opportunities to export Canadian products to global markets increase. In addition, opportunities to import products into Canada grow as well. There are many differences globally on the definition of what constitutes food safety. Canadian producers are held to a very high standard by domestic standards and regulations. The CFIA should be given the direction and resources needed to ensure that all products imported into Canada also meet those same standards for what we produce here.

The fifth area where we feel that government can continue support of agri-food business is in investment in higher education and skills development. Agriculture is a growing and dynamic sector of the global economy. If the Canadian government continues to value the food industry, more needs to be done to build higher education programs and skills that the domestic food industry can count on for growth. Companies are having to rely on foreign nationals to fill their food technology vacancies and for management of their food operations, farm practices operations, food safety programs, and information technology research and development. Domestic education and training programs have not been producing these key people who are required for the agri-food industry in the numbers needed to support growth.

Last, I feel the government can support industry by staying ahead of the curve. Markets are changing. Climate is changing. Consumers are changing. Geopolitics have not been this uncertain in decades. Our government and private businesses need to work together in a much more unified manner to remain globally competitive. There needs to be constant dialogue to discuss those challenges, and decisions will need to be made in a much more timely manner than we have been accustomed to in the past.

Thank you, Mr. Chair. That concludes my opening statement.

[The Chair, Liberal, Dan Ruimy]

Thank you, Mr. Biln.

We are going to the Canadian Seed Trade Association.

Dave Carey, you have seven minutes, sir.

[Dave Carey, Executive Director, Canadian Seed Trade Association]

Thank you, Mr. Chair. On behalf of our members, I appreciate the opportunity to be here.

I'll start by saying that I echo a lot of what both John and Ray have said here this morning.

CSTA is a not-for-profit association made up of more than 130 company members engaged in all aspects of seed from research and development to production, processing and domestic and international sales. The seed industry contributes $6 billion a year to the Canadian economy and employs more than 60,000 Canadians, with exports of more than $600 million. Our members also do approximately $171 million in domestic research and development annually.

Our members range from small family-owned companies to large multinational firms operating in over 50 different crop kinds. By developing high-quality seeds, our members supply Canada and the world with the material used to produce food, feed, fuel and fibre. This is why seed is so important. Seed is the start of it all, the first link in the agri-food value chain. It's the microchip that powers the now close to $111 billion annual agricultural industry. It is where the innovation is delivered.

However, innovation requires investment, and to secure investment, Canada needs to be an attractive place to do business. Cumbersome regulations can curb or discourage investment in innovation, especially for smaller enterprises, and the majority of our members would be considered SMEs, small and medium-sized enterprises. That said, we applaud the committee for undertaking this important study.

In much the same vein as John, I'd break our members' major barriers to innovation into three categories: an intellectual property system that encourages investment, which we call value creation; a clear path to market for the commercialization of new plant varieties, which we call plant breeding innovation; and continued access to crop protection products, essentially protecting the seed once it is planted in the ground.

On average, it takes seven to 10 years and millions of dollars to develop just one cereal variety. We're pleased to see the ongoing Agriculture and Agri-food Canada and Canadian Food Inspection Agency consultation on the plant breeders' rights regulations. Proposed amendments would ensure the long-term sustainability of both public and private breeding. This is value creation with a robust intellectual property system.

The current regulatory system for plant-breeding innovation, known as the plants with novel traits system, lacks clarity and service standards and is excessively expensive for smaller and medium-sized companies. There are multiple stages for the pre-market assessment of new plant varieties, and these are managed by two different departments within CFIA and another within Health Canada. The complexity and length of the pre-market submission process increase the cost and administrative burden on small organizations. Plant breeders need a clear regulatory path to market to bring their innovations forward.

Canada's globally unique PNT, plants with novel traits, system has served us well for the past 25 years, but in future, it will curtail crop innovation if enhancements are not made. The case-by-case approach used to determine which new varieties are subject to pre-market assessments causes great uncertainty for the plant-breeding community. They cannot be sure if their products require approvals, and if they do, how much it will cost, what data they will need and how much additional time it will take to do field research and obtain the necessary approvals.

A recent study of Canadian plant breeders done by the University of Saskatchewan indicates that nearly half change or scale back the research and development activities in Canada to avoid falling under the Canadian PNT regulations. Moreover, 20% of varieties regulated in Canada are not regulated anywhere else in the world.

The advent of new breeding methods, such as gene editing, will amplify this problem. There are examples of products being commercialized in the U.S. or elsewhere where regulatory regimes for plant-breeding innovation are clear. We are pleased to see that Minister MacAulay has tasked an industry-government technical working group to discuss how the PNT system is delivered and how it can be improved. CSTA does have a seat on that committee.

Given Canada's reputation for high-quality agricultural products, we should be championing and encouraging the adoption of the newest tools that will drive innovation in seed and grains. Tools like gene editing can bring new varieties to the market faster and at lower costs than ever before. Providing a clear regulatory market will allow us to continue to invest in new plant varieties. This will also encourage smaller enterprises to engage in plant breeding. This in turn will enhance competition in the marketplace and ultimately increase the choices available to farmers to produce for the world.

Last, once the seed is in the ground, farmers need access to the best chemistry to ensure that every seed planted results in a successful harvest. On this subject, we echo the comments of our partners, the Canadian Canola Growers Association, who stated that, while the health of Canadians and the environment must remain paramount, evaluations of pesticides should consider the economic impacts they will have on farmers and small businesses. Changes to the Pest Management Regulatory Agency of Health Canada are needed, and we are pleased to see that consultations on the subject are also under way.

Thank you for the opportunity, and I welcome any questions.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

We're going to go right into our line of questions.

This is a reminder that, as we have somebody who's on a land line, if you're going to address your questions to Mr. Biln, please state your name and the party you're with so that he knows who is addressing him.

We're going to start off with Mr. Longfield.

You have seven minutes.

[Lloyd Longfield, Liberal, Guelph, ON]

Thanks, Mr. Chair. Maybe I will start with Mr. Biln, just to make it easier for you.

I'm Lloyd Longfield from the Liberal Party. I'm also sitting on the agriculture committee. I feel as though I'm at the agriculture committee this morning, which is very cool, because we are looking at how we support farmers as small business people.

Looking at the organic industry in particular, where we've invested $300,000 to support Canadian organic standards, I'm wondering, Mr. Biln, if that impacts your farming operation. Are you working with the organic standards? Is that something that will help you to trade in other jurisdictions?

[Ray Biln]

The organic sector is something we are working in. Harmonizing standards across multiple jurisdictions will definitely help our organic farms with access to market and just to make sure we're playing by similar rules.

Most of our business is still in conventional production. A lot of that has to do with our needing more investment in tools that will allow us to increase our organic production.

[Lloyd Longfield, Liberal, Guelph, ON]

Do you have an example of an investment that would help?

[Ray Biln]

Well, with the climate that we have, in particular with our growing regions, there are a couple of challenges that prevent us from going large scale with organic. On berries there is certain insect pressure that we do not have adequate organic tools for. There are requirements for fungus controls in our humid environment on the west coast. There hasn't been enough development of controls for those challenges to allow us to move over to organic production in a more meaningful way.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you.

Mr. Carey, when you talked about the need for us to get ahead of the curve, and this might be an example of gene editing or some way of managing pests without the use of chemicals, could you comment again? You also represent some very large businesses that supply seeds into the industry, but at the end of the day, we're trying to support small businesses, the farmers who are trying to reduce their costs to be competitive. Could you comment on what types of regulations—or delay of regulations—get in the way, in terms of supporting small farm operations?

[Dave Carey]

Absolutely. As I mentioned, we represent the whole spectrum, but of our 130 members, I'd say over 100 would be considered small to medium-sized enterprises.

I think the biggest area in which it causes issues is the one I talked about, involving the system for Canada's plants with novel traits. Even if you're not using biotechnology or GMO or whatever you want to call it—we represent organic, conventional, and biotech, all three—even conventionally bred plants, as Ray was speaking to, can be subject to Canada's plants with novel traits system.

What we've seen is that some companies that don't have regulatory affairs teams based in Ottawa.... Our largest companies certainly do, here in Ottawa, or they are based out of Calgary. When they're doing their own innovation in-house, they set their own parameters. They innovate to a certain level, because they feel that if they innovate above that level, they're going to be subject to a pre-assessment from the CFIA and Health Canada.

They often come to us or our partners at CropLife Canada. What we've actually seen of late is that our small or medium-sized companies are actually going to our large multinationals to get their feedback on whether they feel they would be regulated.

The biggest thing is a clear path to market so that a company that employs 12 in Morden, Manitoba, can know what the requirement is to bring a new variety forward.

[Lloyd Longfield, Liberal, Guelph, ON]

Right. So being more transparent is what I'm hearing.

[Dave Carey]

Yes. I think service standards, tiered risk assessments, something that says, “This is the data package you need.” In the U.S., they've gone to a, “Am I regulated?” system, in which you can contact the regulator and say, “This is what I want to do. Where will my regulatory burden fall?” It allows that company to decide whether or not to pursue that innovation.

[Lloyd Longfield, Liberal, Guelph, ON]

That's terrific. Thank you.

Finally, I'll go to Mr. Stadnicki and Mr. Masswohl. It's great to see you at this committee.

You mentioned the fee review on cost recovery. I'm going back a few years, to when I was president of the chamber of commerce in Guelph, where we were looking at meat inspection in processing plants, some of them federally regulated, some provincially. There were standards in Ontario that were different from those in Saskatchewan. For some, the government paid for the testing and for some the farmers had to pay for the testing. Where are we in that whole process now? It's a bit of a mess. I can tell by your raised eyebrows.

[John Masswohl]

It is complicated, for sure, and it does seem to be the trend that more and more things are going to be subject to cost recovery.

[Lloyd Longfield, Liberal, Guelph, ON]

Explain quickly about cost recovery. Does cost recovery mean that the farmer has to pay?

[John Masswohl]

It would be the farmer or the processor.

We don't represent the packers, the companies that take a live animal and turn it into meat. In the past, it used to be that where the cost recovery would come in would be more in the value-added things, such as grading. We know there are different qualities of meat—prime, AAA, that sort of thing. The grading function used to be done by a government employee. We spun that off and created an agency. That is done at a cost to the industry because it adds value.

What we're talking about now is the primary safety function, where there's a CFIA inspector in the facility making sure the meat is safe. They're now moving to cost recovery on that. The question is whether that is something that purely benefits the industry or Canadian society and the economy as a whole. We're providing safe food for Canadians. We're providing jobs.

By putting that fee on, you now change the competitive environment. Do we produce that beef in Canada, or is it more economical to produce it in the United States where that fee is not charged?

[Lloyd Longfield, Liberal, Guelph, ON]

In terms of our regulatory study, you've mentioned that's being studied. Is there a panel working on that? Is there a report we can see as part of our study?