International Trade Committee on Sept. 27th, 2016

[Reg Phelan]

Yes, I believe they are. We have a cheese plant on P.E.I. here, and they're experimenting and doing a lot of extra processing for cheese products here.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Don't you find that opening up the markets is an opportunity to export processed products?

[Reg Phelan]

Yes, we see an opportunity in doing it, but we don't see much opportunity in selling it at way below the cost of production, which is a big problem with the so-called trade agreement. It's more about control rather than trade, and that's one of our big points about it. Because right now, as I mentioned earlier, the Europeans are producing milk and they're looking at trying to subsidize it incredibly, but the amount of dollars is just beyond...and I think they're backing away from it now. But the producers there have just gone in a downspin because of the signing and taking away supply management.

If they look at a marketing system like supply management that we have here, rather than trying to dismantle it, I think it's much better to trade on such a system as that.

When you mentioned Japan, we have been trading even before.... A good example of that was when we had a wheat board in western Canada. We traded quality wheat with Japan and others, and they were interested in getting it because of the service we provided, the quality we provided. Once you take away those types of marketing approaches, and bring down the quality of a product, and bring it way below the cost of production, I think we're in for a lot of problems, particularly for our future generation of farmers.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Thank you.

You talked about Canadian standards for food products. That gives us a competitive edge.

We've talked a great deal about Japan. Do you think Japan would like to trade more with us because of our standards?

[Ronald Maynard]

The capital consumption in Japan is very small. Japan also has a protected dairy market. The opportunity for exporting dairy to Japan is not substantial. It's a niche market, but there is very little potential in dairy.

[The Chair, Liberal, Mark Eyking]

Thank you, Madam Lapointe.

We're going to move to Mr. Dhaliwal, who fell in love with P.E.I. lobsters last night. I think he has a suitcase full of them now.

Mr. Dhaliwal, you have the floor.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Thank you, Mr. Chair, and my thanks to the panel members.

Mr. Phelan, you mentioned the [Inaudible—Editor] period of five years and tariff-free access to 3.2% of Canada's dairy market.

Would you fellows like to see an outcome fairer than the five-year [Inaudible—Editor] period and 3.25% market access? Please explain your reasoning as well.

[Ronald Maynard]

What we're seeing is that this is what the government had to give to make the deal. That's not our job. Our concern is that it has an effect on dairy farmers' revenue. We would like to see no further access given. Canadian farmers want to produce milk for Canadians, and Canadians want to buy Canadian milk. The reason this product is coming is that it's cheaper. Mr. Phelan talked about the price of milk in Europe. I'm also involved in the International Dairy Federation. My colleagues there are hurting. They're crying because of the very low price of dairy products around the world right now.

We have a standard of living that's higher. We have costs that are higher. For my friends and colleagues in New Zealand, there's no such thing as winter. I have to maintain feed and housing for my cattle for six months of the year because it's -10°. My costs are higher. We are in Canada; we have higher costs. Everything costs more in Canada. That's our bottom line. If you want to have a trade deal that benefits Canadians, fine, but we as dairy farmers shouldn't have to pay for that benefit to the community.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

So you favour zero access. Ms. Ramsey mentioned smaller Canadian farms being devastated from the impacts of the TPP, but I'm going to take a positive approach.

This question is for all on the panel. Do you see any positive benefits from ratifying the TPP for these small family farms? Is there an advantage to them in preferential access to open markets?

[Ronald Maynard]

The problem is logistics. If I'm a small Canadian farmer, everyone is looking for volume. I can't afford to meet standards. I can't afford your export requirements, import requirements, or licensing for a small volume. That's an issue for the smaller processors like we see here on Prince Edward Island. If I'm in the dairy business, and I'm a major, if I'm Agropur, Parmalat, or Saputo, I'm already a multinational. It opens new opportunities.

If I'm a smaller processor, then there's a real challenge to set up distribution, marketing, and everything else. That's the challenge we see in the CETA. We see that the market is open for Canadian products there, but its the logistics of getting in. Right now, the importers that are coming in add another 10% to their volume. They already have the market distribution and everything else set up.

Export is fine, but we think the greatest opportunity is to feed Canadians. In agriculture and dairy, we are doing it. The market is growing. It's not for fluid milk, most certainly. It's in the speciality products—the yogourt, the fine cheeses, the ingredients. That goes to your question about plants for dairy products. We need to be in that market because that is the future, in ingredients.

[The Chair, Liberal, Mark Eyking]

Thank you, sir, and thank you, Mr. Dhaliwal.

We have five minutes left. We're pretty well on time here.

We have enough time for Mr. Van Kesteren. You have the last five minutes.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Everyone, it's my first time on the island. Thank you for your hospitality. I've been to every province in this country, and I saved the best for last, and I mean it.

I hear some clapping, and you can clap, because I called my wife last night and said, “We're moving. I am going to take you to this island.”

[Voices]

Oh, oh!

[Dave van Kesteren]

What a beautiful place. I come from one of the nicest agricultural areas in the country. I would argue it may be the best. At this point Kent County in southwestern Ontario grows everything.

However, last night I saw some corn, and I don't think it was there for silage. Am I wrong? Are you going to harvest that corn? You're growing corn here.

[Ronald Maynard]

Yes.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

I saw some soybeans.

A number of years back my father-in-law was farming about 40 kilometres north of London. If you think about that lateral line, that's probably well below Boston, at least, just to give you an impression. The big news at that time was that they were starting to grow soybeans. When I look at P.E.I., wow, you're at the cusp of something really exciting. I don't know if you realize that, but this is an incredible time of year for you.

We just bought some farmland, and I don't mind saying that we paid $10,000 an acre. We thought we had lost our minds. Land in Kent County right now is selling for $20,000 an acre. I heard tell about some land prices around here, and I think we ought to start buying land here.

You have enormous potential on this island. We had a talk yesterday with some people from Cavendish about their potato production:1.5 billion pounds. If you look at the population of the world, what potential for growth.

I want to encourage you, first of all, I think that you island Canadians have maybe one of the greatest potentials that I have yet seen in this country. I know you have some challenges. I know we have to work through those things. I wanted to make that comment, more than anything else.

There is great potential for growth in your potato industry. We haven't talked about that, and yet if anybody talks about P.E.I., they talk about potatoes. Mary, Robert, or Reg, do you want to tell me how you feel about the potato industry, where that's going, some of the challenges you have, and maybe where you see some of the greatest growth potential?

[Mary Robinson]

I want to speak to that point with regard to high land prices. I can tell you that here in our province we're going through a municipalization and amalgamation exercise, and we're developing a land use policy. As we see these rising prices for agricultural land, it makes it very difficult to pencil out for our primary producer. It's one of the biggest threats we have to protecting our resource land.

When we see outside interests looking at our province and wanting to come in to buy land at these high values.... We have a lot of Amish, Germans, and Dutch coming in. We all got off the boat at one point and we've all bought land, but right now when Canada looks at protecting its food sovereignty, we need to make sure these trade agreements allow us to be profitable on our farms. These high land prices are crippling for a lot of people.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

What is a high land price? I'm just curious.

[Mary Robinson]

It's laughable from an Ontario perspective. For the better part of my life, high value land traded at $3,000 an acre. Currently, we have had confirmed rumour—and take that with a P.E.I. grain of salt—that land prices are around $5,000 an acre, which is a massive increase.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

I've heard some rumours at $25,000.

[Mary Robinson]

Yes, and you pencil that out on potato production and the cost of farming here on P.E.I., as Ron alluded to, the high costs that we face. We have high input costs and high costs to get product to market. When you pencil it out, you have to qualify what it means to be profitable on a farm if you're paying $5,000 or in excess of $5,000 an acre.

[The Chair, Liberal, Mark Eyking]

Mr. Phelan.

[Reg Phelan]

One of the aspects we do have here in P.E.I. is the Lands Protection Act, which is about 30 years old. It took us quite a while to get it in place, but I think it's part of what's protecting some of our land base here. As part of that act, we have a maximum amount of acres that you can own, and we have three-year crop rotation to try to be implemented as part of that.

I think it's very important in terms of that, trying to protect our soil here in P.E.I. It's very sand-based, and in order to keep the organic matter up, we need that crop rotation and we need diversity. That's part of the problem the potato industry is running into here now. It just doesn't have that land base. When you're trying to put that in less.... We're having quite a problem with trying to keep the soil together because it has been so sandy. In order to keep that organic matter up, we need a bit more diversity. We need a little more in terms of that to keep the quality there.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

May I ask one little question that hasn't been asked yet?

[The Chair, Liberal, Mark Eyking]

It's going to have to be a quick one.