Industry Committee on Oct. 5th, 2016

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

It's the lack of resources.

[Carla Ventin]

It's not only the existing regulations, like that 20 years for the existing regulations to be modernized. The sciences back this up. The science is there, and everyone agrees that they have to be modernized, but it's all of the new regulations as well.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

I understand.

[Carla Ventin]

So how is the department going to handle that?

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

I'm going to jump very quickly with a question to Mr. McInnes.

You had mentioned we could use standards to our benefit. How could we raise international standards? Could we do that in Canada and then force that on to the industries that are trying to come in here?

[David McInnes]

This is a long-term proposition around how international food standards and other standards are set. The real issue here is that, if we have not factored in the full cost of production into the food ingredients we eat, we are basically conferring and keeping an advantage with our competitors. How do we best move the goal posts so we can better compete, achieve scale, and innovate from this country? The international standards and the global subsidy issue that I mentioned are such an opportunity where we try to raise the bar on our competitors for residues in our foods.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

What can we do for standards?

[David McInnes]

Do you want to jump in?

[Ted Bilyea, Chair, Board of Directors, Canadian Agri-Food Policy Institute]

I think we have to think very hard and long every time we go to Codex and not simply agree on the lowest possible standard that we can all agree on. Where we have a distinct advantage, we should dig our heels in a little bit at Codex.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Who does those negotiations on our behalf?

[Ted Bilyea]

I think that's run through Agriculture Canada, CFIA, and Health Canada. They are all involved.

[The Chair, Liberal, Dan Ruimy]

All right, thank you very much.

Mr. Dreeshen, you have six minutes.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Mr. Chair, it's great to have the witnesses here.

One of the things you spoke about earlier, Mr. McInnes, is developing our food brand around trust. I think that's so critical, but by the same token, we have so many different fads that are coming about. I mean I think you can go to the Calgary Stampede and you can buy lard on a stick, but you're going to have gluten-free buns that are being advertised at the same kiosk. We see these types of things happening, like the issue with A&W as far as hormones are concerned. If you do any research on it, you realize that you could probably eat 50,000 burgers to get as much estrogen as a male is going to produce during a day. Yet these are things that we see become marketing ploys.

I understand the significance of that, the types of things that are associated with it, but then you start to fear where this is going. We also hear in the beef industry that people are saying there should be restrictions because of the methane gas coming from beef animals. Those become some of the things producers are looking at and they are nervous about them. We may end up with the same situation if we have all of these groups that come in, because as Canadians, we apologize for everything we do, and therefore Brazil will take up the beef production in the world. It will be the same as bringing in oil and gas from the Middle East because we don't want our oil and gas moved. These are the kinds of issues that people are so concerned about, when all your hear is media turning things around. Farmers are concerned about that.

I mean the issue with Earls on the humane treatment of animals, again, was a marketing ploy. There are people who will say, “Well, I can do that because that's how I run my operation anyway, so if somebody wants to sign me up, go ahead.” These are the concerns that people in agriculture have, and they are going to affect our industry and our manufacturing industry as well. What can we do to try to make sure we can stay on top of this, as it is so important for every one of us?

[David McInnes]

That was a great question. There were a lot of pieces to that.

On the one hand, we're not talking about trying to get in the way of day-to-day marketing and ask what trend is the right trend to brand Canada around. That's just not what we're looking at.

On the other hand, there is this issue of social licence. A lot of work is being done across the country by a lot of people in industry and government on how we can counter bad information, misinformation, or the lack of scientific information, so we can better communicate the care and responsibility that the agrifood sector takes to produce and supply food.

Actually, we're going beyond that. That's a communication, education, and information imperative. We're also moving into the space of thinking about our Canadian brand not necessarily in terms of what we put on a website and how we market with the Canadian flag but more in terms of what stands behind the food that we produce here. We're looking at brand in a much deeper way. For example, when you mentioned the beef sector, when we initially started looking at traceability, we wanted to trace where an animal was raised, what feed protocol it was given, and what drugs it may have had from a health standpoint. If there is a food incident, we want to understand and to be able to identify and isolate very, very quickly a problem that occurs. That's driven by food safety, and that's very important to the Canadian beef brand. However, there's another aspect, which is that information shared through traceability can also be used to improve the calibre, quality, and cuts of meat that different consumer demographics might desire, whether in China, in Japan, or here at home.

The sophistication of using traceability is not necessarily about putting the Canadian flag on the package. There are a lot of good people trying to promote Canadian food. We're looking at the protocols that stand behind it. That is what we're getting at in terms of trust. What we're seeing are global supply chains quite rightly trying to ensure safety, quality, and sustainability themselves. We're asking ourselves, if global supply chains are doing this, how then are we going to differentiate ourselves if we're merely going to subscribe to these often very good standards? Otherwise we're still playing on the same playing field as our competitors.

The caution, quite rightly pointed out or implied, is that there's a marketing piece here, and we want to make sure we're careful that we don't adopt a cost structure that puts us off base. This is a very complex issue that requires industry, government, and scientists to actually work far more collaboratively. I think that is what we're trying to emphasize around this issue of trust.

[Ted Bilyea]

May I just add one point, if you don't mind?

The reason we're onto this is fundamentally that we want to get people to begin paying attention to the fact that, when you have to ship grain to animals, there's no one in the world who can make an equation that can show me that you can actually profitably ship grain to animals. North America has a grain surplus; Europe doesn't. Last year, China imported 70% of its pork in record numbers from Europe, and the other 30% came from the Americas, which have a grain surplus. Give your head a shake and try to figure out how that works. Then you can begin to understand that if you can drive something into this equation so they will actually have to look at their external costs in this process.... That's where we're coming from. It's very much a cost argument, and it will help North American exports of beef and alfalfa to Asia.

How can that work when you have the alfalfa here? That's where we're coming from. If you put a value on the natural capital, the water, and things like that, suddenly the competitive thing changes completely.

[The Chair, Liberal, Dan Ruimy]

Thank you.

[Carla Ventin]

May I jump in here quickly?

I agree. Consumer pressures are everywhere. Everybody has an opinion about food, and it's not just the farmers who feel it, it's also the food manufacturers. I think we need to step back and put it in context. If we basically reacted to every single consumer interest or whim, we would have, for example, food labels that were larger than this room, and that had every single detail that had nothing to do with health, or safety, or science.

It's a challenge, yet we do have to address the issue of consumers with regard to trust and transparency.

[The Chair, Liberal, Dan Ruimy]

Thank you.

Mr. Masse, you have two minutes.

[Brian Masse, NDP, Windsor West, ON]

What I'd like to follow up on is the issue over percentage of budget for food manufacturing. That's obviously something that's very important to consider.

For example, Nestlé Waters, which is essentially known for “rip and ship”, what would be in the manufacturing element there that they could actually add, other than production processing? What percentage do you think is a fair percentage for R and D back into, say, their Ontario operations?

[Carla Ventin]

Concerning the 5% in the department's budget, I think that's a very low number for the value-added for the largest manufacturing employer in Canada. In dealing with other federal government departments, we're always punted back to Agriculture and Agri-Food Canada. That 5% number is extremely important to us. It really does reflect a lack of research policy and focus on our sector, government wide. As per specific company issues, I don't speak to those specific things in here. I speak in a general broad sense on behalf of our members and on behalf of the industry.

[Brian Masse, NDP, Windsor West, ON]

That's unfortunate, because you do represent three versions of Nestlé here. What would be the average industry research and development investment?

[The Chair, Liberal, Dan Ruimy]

You have about 30 seconds.

[Brian Masse, NDP, Windsor West, ON]

We know that for other sectors, for example the pharmaceutical industry, generic industry, we generally get an industry average of R and D.

[Carla Ventin]

Right.

From what I understand—I would have to look at those stats. Maybe you know—it is lower than some of the leading manufacturing sectors in Canada.

[Brian Masse, NDP, Windsor West, ON]

Could we get that?