Evidence of meeting #30 for International Trade in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was industry.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Fred Gorrell  Assistant Deputy Minister, Market and Industry Services Branch, Department of Agriculture and Agri-Food
Alexander Lawton  Director, Trade Compliance, Canada Border Services Agency
Robin Horel  President and Chief Executive Officer, Canadian Poultry and Egg Processors Council
Yves Ruel  Manager of Trade and Policy, Chicken Farmers of Canada
Caroline Emond  Executive Director, Dairy Farmers of Canada

11 a.m.

Liberal

The Chair Liberal Mark Eyking

Good morning and welcome, everyone, back to the fall session. Of course, many of you know we met a couple of times in the summer. I hope everybody had a relaxing last few weeks.

This morning we have a few things on our agenda. We have the Minister of Agriculture here to give us a briefing, and he'll be with us for the first hour. In the second hour we're going to have the Canadian Poultry and Egg Processors Council, the Chicken Farmers of Canada, and the Dairy Farmers of Canada. I'll leave the last 15 minutes of this morning's meeting to go in camera to discuss future business.

Without further ado, we're going to start off with Mr. MacAulay.

Welcome, Minister. You were very busy this summer getting around and I hope you had some time to enjoy your beautiful island of P.E.I. Thank you for coming and bringing your officials. Sir, you have the floor.

11 a.m.

Cardigan P.E.I.

Liberal

Lawrence MacAulay LiberalMinister of Agriculture and Agri-Food

Thank you, Mr. Chair.

Hello everyone.

I'm honoured to be here today, and I know your committee has been doing a lot of important work.

I am joined by assistant deputy minister Fred Gorrell and executive director Doug Forsyth, both of Agriculture and Agri-Food Canada. Officials from the Canada Border Services Agency, Global Affairs Canada, and Finance Canada are also at the table should their technical expertise be needed.

I appreciate the opportunity to be here today to speak to you about issues of concern to Canadian dairy and poultry producers. I want the committee members to know that our government supports trade because it creates good jobs for Canadians and helps grow the middle class, which builds economic prosperity across the country.

Canadian farmers depend on trade to sell about half of their production. That is why our government is working hard to open up new markets for Canadian export producers. We are also equally proud to support Canadian dairy and poultry industries, which are essential to a strong and prosperous Canadian economy. All told, the dairy and poultry industries create almost 300,000 jobs in this country while creating economic activity of $32 billion. Both industries operate under the supply management system, which I and our government fully support. The goal of supply management is to match production with anticipated Canadian demand. The federal government supports the Canadian supply management system and we recognize the importance of effective import controls. The Canada Border Services Agency plays a central role in this regard. It administers the border controls that apply to dairy and poultry products in accordance with Canadian international trade obligations.

Let me briefly review the three issues mentioned in your study: duties relief program, spent fowl, and diafiltered milk. The duties relief program relieves customs duties on imported inputs used in the production of goods that are ultimately exported. Supply management producers worry that the program is being used inappropriately. They have expressed their concerns that some features of the program, specifically supply-managed products, are negatively impacting the domestic market, and they are concerned about potential diversion or substitution in the domestic market of supply-managed goods that are imported duty-free. Such imports could allow imported dairy and poultry products to displace domestically produced products, and that's not fair.

Government officials are actively reviewing this, and the Canada Border Services Agency has heightened enforcement activities to ensure that the program continues to be used as intended under the law. As a result of recent CBSA enforcement efforts, imports of supply-managed goods under the duties relief program have dropped since the start of 2016.

The second issue in your study concerns spent fowl. Canadian chicken producers have been concerned that some importers may be getting around the supply system by declaring that some broiler chickens are spent fowl. Spent fowl can be imported without tariffs from the United States.

There is a long-standing track record of legitimate imports of spent fowl to be used in the manufacturing of soups and chicken nuggets. Chicken producers believe the significant increase in spent fowl imports in recent years has been caused by the misdeclaration of broiler chicken meat as spent fowl. They are concerned that this trend will continue to lead to more broiler chicken meat being imported outside of import controls. As broiler chicken meat and spent fowl meat look basically the same, it is difficult to implement practical and effective means to ensure the legitimacy of spent fowl imports.

I can assure the committee that my department and others here today are examining ways to ensure the effectiveness of border control of poultry products. In fact, there's a working group looking at the potential options to ensure that products declared as spent fowl are appropriately treated at the border through measures such as enhancing compliance verification; requiring exporting countries to provide certification, similar to the United States Department of Agriculture's fowl meat verification program; and testing the DNA of products declared as spent fowl.

This goal is to ensure that the products declared as spent fowl are adequately treated at the border. In the meantime, we're in regular contact with producers and stakeholders all along the value chain.

Our government is equally committed to the support of a strong future for the Canadian dairy industry. It is one of the largest agriculture and food sectors in the country generating farm gate sales of $6 billion, processing sales of nearly $17 billion, and well over 100,000 jobs. This success is the result of our hard-working farmers and their commitment to excellence and to listening to consumers.

Being a farmer myself, I certainly am aware of the hard work and dedication that go into running a dairy operation and the concerns that face dairy farmers. In that regard, I want to acknowledge the efforts of the industry to work together.

At the same time, our government is aware of the industry's concerns regarding the use of diafiltered milk in the making of cheese. Over the past several months, my parliamentary secretary and I have had the opportunity to meet with many groups representing the entire industry from coast to coast. That includes the Dairy Farmers of Canada, the many processors and national organizations, young dairy producers, and provincial dairy producer organizations from across the country. We heard their thoughts on a number of key challenges facing the industry. Our discussions focused on transition assistance for the new market access for cheese under CETA and how to strengthen the sector in the face of domestic and international challenges, including the use of diafiltered milk in the making of cheese.

These discussions will certainly inform the development of a long-term sustainable approach for the Canadian dairy industry. Together, we are working to find solutions that work for the whole Canadian dairy sector. While we work to address these challenges being discussed today, our government is moving forward with a number of investments and innovations that will help dairy and poultry farmers succeed.

First and foremost are the dairy and poultry research clusters. These bring together industry and Canada's world-class agricultural scientists at Agriculture and Agri-Food Canada. These two clusters represent nearly $18 million in federal investment. The overall goal is to help farmers and processors strengthen their competitiveness and sustainability.

Under the poultry research cluster, scientists are looking at ways to combat bacterial diseases and avian influenza, as well as looking at innovative production technologies and practices. Recent investments in the dairy research cluster are supporting deliveries in two key areas: increasing the energy of Canadian forages to help increase milk production and researching the potential role played by dairy fat products, including their impact for a healthy diet.

We have also invested $1.3 million for the Dairy Farmers of Canada proAction program, as well as the traceability initiatives. As well, our government has invested $3 million to support a dairy research and innovation centre at the University of Guelph. The centre supports world-class research and outreach activities to stakeholders and the public.

To sum up, Mr. Chair, the bottom line is that Canada's dairy and poultry farmers provide growth, job creation, and innovation across the country. We will continue to work with the sectors to address these issues of concern, and I will continue to invest in innovation to foster growth in the agriculture and food sector.

We all want to see a Canadian agricultural sector that is safer, strong, and more innovative, and that is certainly my goal and the goal of our government.

Once again, I thank you very much for this opportunity to be here. I would be pleased to respond to your questions.

11:10 a.m.

Liberal

The Chair Liberal Mark Eyking

Thank you for your briefing, Minister MacAulay.

We're going to move to questions, starting with the Conservatives for five minutes.

Mr. Hoback.

11:10 a.m.

Conservative

Randy Hoback Conservative Prince Albert, SK

Thank you, Minister, for being here. I haven't had a chance to formally congratulate you in the past year on your job as the Minister of Agriculture. I have worked with you before, and I will enjoy working with you in the future.

In regard to the topic at hand here today, there are some very serious things going on, of course. One of the questions the industry would be asking is on timelines. What are your timelines for resolution in a lot of these areas? Can you give us an expected date to see resolution so that they actually know there's some bankability, and that you have this under control and this will actually be dealt with?

11:10 a.m.

Liberal

Lawrence MacAulay Liberal Cardigan, PE

Thank you very much. I appreciate your question, and of course, appreciate your concern. You're sitting with a man who fully understands these issues, and I think everybody around the table understands these issues.

I think you would also realize and understand that it's difficult to put a timeline on the resolution of these products. We are working on them. We're working at the border on spent fowl and are making sure—starting to make sure, let's say—that all efforts.... I'm sure that Chicken Farmers of Canada want more taking place at the border, but it's something we have to ramp up to make sure it's done. To put a date on it would be inappropriate, and I'm sure you understand that.

What I want to do and what the government wants to do is to make sure that we resolve these issues in a meaningful way and make sure that we have a strong supply management system and a strong dairy industry. This is vital to the country.

11:10 a.m.

Conservative

Randy Hoback Conservative Prince Albert, SK

You talked about DNA testing. I'm curious. If you're going to go down that route, you must have a timeline in that scenario and have a ballpark of what it's going to cost.

Actually the question I have is with broilers versus spent chicken. How is DNA testing actually going to be accurate to tell the difference?

11:10 a.m.

Liberal

Lawrence MacAulay Liberal Cardigan, PE

As you know, there are a number of suggestions. The Chicken Farmers of Canada have put forward a suggestion. We do not actually have a mechanism in place that will be efficient and fast. When you deal with these chickens at the border, you can't send something to a lab and take six months before you get the results.

11:10 a.m.

Conservative

Randy Hoback Conservative Prince Albert, SK

Six months?

11:10 a.m.

Liberal

Lawrence MacAulay Liberal Cardigan, PE

What we have to be able to do is put a mechanism in place that will be fast.

As you know, there are many other issues. We're dealing with the United States on this issue too. Possibly, with the countries working together, we can make sure it stops. What we want to make sure basically is that spent fowl is spent fowl. I can assure you that the people who are shipping the spent fowl from the United States into Canada also want to make sure that it's spent fowl.

We're working on a number of issues, but to put a timeline in place.... I think efficiency and making sure that we have a solution in place that works for the chicken farmers is vital.

I appreciate your question.

11:15 a.m.

Conservative

Randy Hoback Conservative Prince Albert, SK

Concerning the definition of diafiltered milk and milk going into cheese, why would we have a different definition at the border from that for the actual product that's going into the cheese block? Why wouldn't you have a consistent definition?

11:15 a.m.

Liberal

Lawrence MacAulay Liberal Cardigan, PE

There are a number of problems in this area. Again I appreciate your question and your concern.

The issue of diafiltered milk is one that has gone on for seven or eight years. What we're trying to do is make sure, with all of the other problems involved in the supply management system, that we put a long-term, sustainable solution in place. We're working with the Dairy Farmers of Canada, the industry people involved in production in the dairy industry, the people who create the products, create the cheese. What we want to do is make sure we get a system in place that works in the long term. It's not the place now, on its own.

11:15 a.m.

Conservative

Randy Hoback Conservative Prince Albert, SK

Again, it looks inconsistent when you have two different definitions of what milk actually is.

Minister, I only have a minute left. The question I have is from an article in today's The Globe and Mail. Who will be taking the lead on the file in defending the Canadian supply management sector against this ongoing or potential lawsuit coming out? Will it be the trade minister or will it be the agriculture minister? Who will have the lead on that file?

11:15 a.m.

Liberal

Lawrence MacAulay Liberal Cardigan, PE

As you're fully aware, we deal with issues potential or hypothetical as they come forward. My concern is more to make sure that we—

11:15 a.m.

Conservative

Randy Hoback Conservative Prince Albert, SK

Hypothetically, then, who would be the lead on that file?

11:15 a.m.

Some hon. members

Oh, oh!

11:15 a.m.

Liberal

Lawrence MacAulay Liberal Cardigan, PE

I appreciate that you want me to lead it, but we have enough issues before us that are difficult and that we want to resolve that we're not going to pick up potential issues at the moment. But that's a good concern.

11:15 a.m.

Conservative

Randy Hoback Conservative Prince Albert, SK

Canadians want to know that somebody is going to take the lead, that somebody's going to take charge and say, “I'm going to be here to have your back.” There hasn't been a lot of confidence, when I look at what's happening with the border at the U.S., whether on spent fowl or diafiltered milk. You haven't had their back, so—

11:15 a.m.

Liberal

The Chair Liberal Mark Eyking

We're going to have to move on.

11:15 a.m.

Conservative

Randy Hoback Conservative Prince Albert, SK

—I'm curious who's going to take the lead.

11:15 a.m.

Liberal

The Chair Liberal Mark Eyking

It will have to be a quick response, Mr. MacAulay.

11:15 a.m.

Liberal

Lawrence MacAulay Liberal Cardigan, PE

I appreciate the question, but it's fair to say that my honourable colleague the former minister was there for about eight years, and I've been there for about eight months.

11:15 a.m.

Liberal

The Chair Liberal Mark Eyking

We'll have to move on from there.

11:15 a.m.

Liberal

Lawrence MacAulay Liberal Cardigan, PE

If you give me eight years, I'll make sure the supply management system is strong in this country.

11:15 a.m.

Liberal

The Chair Liberal Mark Eyking

We're going to move on to the Liberals.

Mr. Dhaliwal, you're up for five minutes.

11:15 a.m.

Liberal

Sukh Dhaliwal Liberal Surrey—Newton, BC

Welcome to the committee, Minister. It's always a pleasure to work with you. You have been a veteran of politics, and nobody knows files better than you.

You mentioned that the department is taking some steps to put procedures in place for the import of spent fowl chicken. Would you be able to tell us and Canadians that the measures you and your department are planning, whether it's from the DNA, whether it's from the certifying of the agriculture department in the U.S., would be enough to deal with this situation? This problem has been going on for many years.