No.
Evidence of meeting #8 for International Trade in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was sector.
A video is available from Parliament.
Evidence of meeting #8 for International Trade in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was sector.
A video is available from Parliament.
7:45 p.m.
Vice-President, Strategy and Industry Affairs, Gay Lea Foods Co-operative Ltd.
7:45 p.m.
Conservative
Michael Kram Conservative Regina—Wascana, SK
There are no talks of a dairy export tariff rebate program coming from the new dairy export tariff.
7:45 p.m.
Vice-President, Strategy and Industry Affairs, Gay Lea Foods Co-operative Ltd.
7:45 p.m.
Conservative
Michael Kram Conservative Regina—Wascana, SK
Could you give us some idea of the options you are considering for adjusting to the new export tariffs? You've talked about your facility in Guelph. What are some of the most likely scenarios we're seeing coming out of this?
7:45 p.m.
Vice-President, Strategy and Industry Affairs, Gay Lea Foods Co-operative Ltd.
Certainly some of that is what we can use domestically. Some of that will be what that product mix is and where we go forward. Some of this will have an implication on—it's three specific dairy goods that have been captured by the export thresholds—what else and how else we can make things. Even just with my colleague sitting next to me, there are variations of different products, depending on what the marketplace needs, where we could be putting fat-filled milk powder with it, and that changes tariff lines.
There are variations like that as well that we'll need to assess for what the marketplace will want, not just what we would like to make.
7:45 p.m.
Conservative
Michael Kram Conservative Regina—Wascana, SK
Okay.
South of the border, the American government subsidizes their dairy industry to the tune of billions of dollars a year. If the American government would just stop subsidizing their dairy farmers, would that make Canadian dairy farmers more competitive?
7:45 p.m.
Vice-President, Strategy and Industry Affairs, Gay Lea Foods Co-operative Ltd.
It would in some ways. I would also put back as well that the U.S. is not looking to Canada to be their complete solution. We are a bit of a dumping ground. If we look at the size of our marketplace compared to the size of California, we see we're not going to be their solution either, going forward.
7:45 p.m.
Conservative
Michael Kram Conservative Regina—Wascana, SK
During the course of the NAFTA negotiations, were you made aware of any attempts by our negotiators to eliminate or at least reduce the American tariffs to their dairy farmers?
7:45 p.m.
Vice-President, Strategy and Industry Affairs, Gay Lea Foods Co-operative Ltd.
There are some market access gains for Canadian dairy under this agreement, similar to those that were made under CPTPP.
7:45 p.m.
Conservative
7:45 p.m.
Liberal
7:45 p.m.
Liberal
Terry Sheehan Liberal Sault Ste. Marie, ON
Thank you once again to all the presenters.
We've made a commitment, and we've heard it over and over again, to get the NAFTA deal through expeditiously. Obviously, the dairy farmers have some concerns, and we've heard them. They've come to the table with a number of ideas to help to continue to strengthen the dairy producers. I appreciate that testimony, too.
I'm not going to ask any questions that have already been asked, that the analysts have already gathered. We gather all your information, not only yours but from many other people, and we create a report.
I have one quick question that I have not heard yet. I'm probably going to have some time left over.
We're talking a lot about the United States in the NAFTA deal. When the canola farmers made the presentation, they mentioned that the United States is their number one market and Mexico is the fourth.
I would ask the canola farmers what opportunities there are in increasing exports to Mexico, taking it from fourth to higher, or just increasing exports with Mexico.
7:50 p.m.
President and Chief Executive Officer, Canadian Canola Growers Association
Dave, will you go?
7:50 p.m.
Dave Carey Vice-President, Government and Industry Relations, Canadian Canola Growers Association
Sure. I think that trade diversification is key.
I think that with the U.S. and China representing so much of our exports, looking towards Mexico to increase.... We were at about $782 million in 2018. So I think a newly invigorated NAFTA is a good thing—CUSMA.
I think the key is that we can't be so reliant on any one export market. As we look to strengthen relationships with Mexico, we see there certainly are market gains to be found there.
To the expeditious nature of your question, 90% of our crop is exported. We can't consume everything that we grow here on the canola side.
We also have to look at where the U.S. is in their electoral cycle. Right now with the U.S. and Mexico having ratified, we're still under NAFTA, but if we get into the U.S. election cycle, we would be in a dangerous position, where Canada would be outside of NAFTA, and the U.S. and Mexico would continue to be....
We'd love to see more exports going to more markets, more to Japan and more to Southeast Asia, Bangladesh, Pakistan. There are lots of other markets. Mexico is certainly one where we can make inroads, but we can't do it without the CPTPP.
7:50 p.m.
Liberal
7:50 p.m.
Conservative
Chris Lewis Conservative Essex, ON
Thank you, Madam Chair.
I'll try to be as brief as possible.
Ms. MacLellan, this is for you, please.
I did read a statement from Gay Lea Foods. I believe it's from October 1, 2018.
Very quickly, one of the statements was that USMCA “will have destabilizing and detrimental impacts on the Canadian dairy industry, our co-operative business, and dairy farmers.” It went on to speak about the investments that you spoke about, I believe, in your opening statements. I see numbers in here of $140 million to build a dairy ingredients hub in Ontario, $68 million for an ingredients facility in Teeswater, a $3-million innovation centre in Hamilton, and so on and so forth.
You mentioned the statement that CUSMA will call into question millions of dollars of investments Gay Lea has made over the last several years. Have you been able to research the impact of CUSMA since this statement, and what are your findings? In other words, can you talk us through how the new NAFTA will potentially impact those specific investments?
7:50 p.m.
Vice-President, Strategy and Industry Affairs, Gay Lea Foods Co-operative Ltd.
Teeswater, the nutraceutical-grade dairy ingredients facility that we commissioned last summer, will be making a variation of MPC as well as milk protein isolate for domestic as well as export sectors.
As Global Affairs will look at how they allocate what can actually be exported under those thresholds, we don't know yet what our volume of that will be. That will be part of our decision-making going forward.
The second part will be this. What of this can we be looking at from a domestic market perspective, and what else can we do with that? What is captured under the three specific dairy goods for exports under the thresholds and what is actually outside of that?
With some of the other investments, we continue to make strong investments in our cheese operations, both in the Etobicoke facility and our Hamilton facility, as well as in some of our smaller facilities in parts of rural Ontario and Alberta.
7:50 p.m.
Conservative
7:50 p.m.
Vice-President, Strategy and Industry Affairs, Gay Lea Foods Co-operative Ltd.
We have not. We have opted to focus more on the opportunities and how we can continue to strengthen and grow. We have a very progressive membership of dairy farmers who are very committed to the Canadian dairy industry and who see huge potential. Our focus has been on how we actually ensure that they have a bright future tomorrow.
7:50 p.m.
Conservative
Chris Lewis Conservative Essex, ON
Excellent.
This is my last question for you.
You have more than 4,200 producer and investor stakeholders. What has been the response to the new NAFTA and the export cap?
7:55 p.m.
Vice-President, Strategy and Industry Affairs, Gay Lea Foods Co-operative Ltd.
I think much of this caught the industry by surprise, more disappointment, because it was yet another hit. I think it's that cumulative effect of all of this overall.
I think we had seen some strong growth, particularly as we have been one of the lead actors in helping to create class 6 to class 7 in the national ingredients strategy. They've seen quota increases. We're seeing strong investment. They are seeing milk production going up. It's more of a matter now of how we look at how we can continue to ensure that this keeps going. How do we ensure that we continue to have government support to enable us to make some of the investments that we've made that are high risk with very long payback periods to ensure that we can continue to have a successful sector here in Canada?
7:55 p.m.
Conservative
