International Trade Committee on May 11th, 2017

[The Chair, Liberal, Mark Eyking]

Thank you, sir. That's a good comment.

We're going to move over to the Conservatives now.

Mr. Van Kesteren, you have the floor for five minutes.

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

Thank you, Chair.

Thanks to all of you for being here.

Mr. Innes, you're not allowed to sell the processed margarine in the United States. What do they use? Do they use a lot of canola for their margarine or is it palm oil?

[Brian Innes]

Certainly, you need both. To have a spreadable product that's solid, you need solid fat like palm oil—

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

Before canola came around, they didn't have.... What did they use then?

[Brian Innes]

You can make it not just with palm oil, but you need other oils as well, such as canola oil or soybean oil that you use together to make that product, so—

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

That's a pretty big market, though, isn't it? That's a huge market, and if the butter market is sizable, margarine must be twice what butter is.

[Brian Innes]

There are certainly significant opportunities. Right now, we have a pretty thick border when it comes to being able to move those products back and forth.

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

They're protecting that piece of the pie. Is that safe to say?

[Brian Innes]

I think what we saw in the TPP, for example, was that both countries agreed that this is an artifact of history that we don't need any more, but the TPP has not been implemented right now, of course, so there is an opportunity to be able to fix it within NAFTA. Sometimes these issues aren't necessarily about protectionism. In this case, it's about things that have changed since NAFTA was brought in and that are a little difficult to change on their own. Once you have an opportunity to talk about things more holistically, you can enable that to happen.

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

Getting to beef, they don't grade it. It just comes in. That's probably to their advantage, isn't it, Dan and John? This way, they can just buy it at whatever price. If the AAA grade is $10 a pound, let's say, what are they buying it at? Is it $6 or something, where they're saying they're going to buy it all...?

[John Masswohl]

There does end up being a price difference because of that, yes, for sure.

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

It's fair to assume that they like this arrangement. This is not a bad deal for them.

[John Masswohl]

It's also been suggested that this is almost a substitute for country of origin labelling. The same people who advocate for country of origin labelling also advocate for preventing—

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

That's where I was going. We hear a lot about.... We took the tour in the States. In the Midwest especially, the people there are pretty upset because they've lost all their jobs. I say this gingerly, but the truth of the matter is that it's the elephant in the room. When we talk about the auto industry, most people just.... If you're living in that environment, then we've just kind of said that they've priced themselves out of a job. As for what happens eventually, car manufacturers have to be competitive, so they're going to find somewhere where they can produce those cars at a better rate.

I'm going to go to you, Levi. I'm going to ask you a right straight-out question: are Canadian farmers better than American farmers?

[Voices]

Oh, oh!

[Levi Wood]

No, I wouldn't say so. I think they're very much equal. On either side of the border, I think Canadian and American farmers both are very prosperous, very entrepreneurial, and extremely productive. I think there are a lot of similarities between us at a farmer level. I think there's obviously a very different agricultural experience at play in terms of whether you're a Canadian farmer or an American farmer, but at face value, I would say that generally, in terms of technology and the use of modern practices, the Canadian farmer and American farmer are very much equal.

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

I'd say that's a good thing, because from what I'm hearing—experience has taught me this—in so many other industries and so many other segments is that once we get the edge, that's when these other things start to happen. Is that a fair assumption? Or am I going out on a limb that nobody wants to tackle? Nobody wants to climb that tree.

Hans, you said something about the pork industry and how you can compete in any.... I know that in the States there are some pretty big operations that produce pork. You would think that they'd be able to just obliterate us. Is that the truth or do we...?

[Hans Kristensen]

The pork industry is a very complex and integrated industry. I'd say that I can hold my own in any market in the world, as any Canadian pork producer does. When you look at the total volume of pork we produce and export into the United States compared to the total volume of pork produced and consumed in the U.S., essentially we are supplying a niche market in some cases. Our exports to the U.S., while hugely economically significant to us, are but a very small drop in the bucket in terms of U.S. consumption and production of pork. When we look at the potential in China, Japan, and other areas, it's the same idea.

There are very large integrated companies in the U.S. that can produce a pound of protein maybe cheaper than I can, but there are not companies in the U.S. that can produce the quality of product and the marketing, the branding, and everything wrapped into one. There are markets there for us. I'm not trying to sell the cheapest cut of pork in the world. I'm trying to help Canada's pork become a desired cut of pork so that I can sell to the higher-priced customers in the emerging markets.

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

Levi, I'm in corn country in southwestern Ontario. I have just a quick question.

[The Chair, Liberal, Mark Eyking]

You might be in corn country, but you're over your time. Go ahead. You just have to be quick.

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

All right.

We're pretty proud that we're hitting about 300 bushels an acre in some places, but then you get to places like Iowa, where the topsoil is 13 feet deep and those guys are cracking out, what, 400 or 450 bushels? We must be doing something right if we can still compete on a world stage if they have that advantage over us. Maybe you can help me with that. How—

[The Chair, Liberal, Mark Eyking]

It's going to have to be a very short answer.

[A voice]

It's the cost of production.

[Levi Wood]

Yes, absolutely. I think you've made a good point. In outright production, I think you can see, especially with western Canadian farmers, that Canadians are very forward thinking. We've had some challenges that we've had to overcome, and I think that experience has contributed to making western Canadian farming the success it has been and will contribute to its success going forward.

I personally believe that one of the true advantages the western farmer has developed or has used in their tool box has been diversification. Typically, especially on the Prairies, we are at this point basically of competing directly with the American farmer in the corn and soybean markets. In the west, there's a very big diversity of crops that wouldn't necessarily exist in the U.S. Midwest. In many ways, I think, that's what we've done to adapt to some of our challenges in many of the opportunities we've had, and that has made western Canadian agriculture very successful and somewhat different than it is in the U.S.

[The Chair, Liberal, Mark Eyking]

Thank you, sir.

We're going to move over to the NDP.

Mr. Choquette, you have three minutes. Go ahead, sir.