International Trade Committee on Sept. 23rd, 2022

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you, Madam Chair.

Thanks to all the presenters. It was very informative.

For our study, the motion names a number of countries we're looking at analyzing and studying. One of them is Taiwan. Basically I have not heard anyone talk about the Taiwan market, so my question will be, through you, Chair, to our three presenters. What do you see as the opportunities in Taiwan or any possible threats? Are you doing business there now? It's that line of questioning about the Taiwan market.

I'll start with Brian.

[Brian Innes]

Thank you.

Taiwan is certainly an important market for our soybeans, primarily our food-grade soybeans that are turned into tofu, soy milk, natto, miso and other products really central to the diet that's local there. It's a market that's strong and stable. It also is growing, not at the same rate that other markets are, but we're certainly very interested in maintaining that. It's been an important market for us for a long time, and we'd like that continue.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

To the people online, I put the same question.

[Brendan Byrne]

I would just echo what Mr. Innes said. I'm sorry, but it cut out there. I think that roughly 1% of the soybeans that are exported are currently going to Taiwan. With that being a growing market, I think there are opportunities for growth, especially here in Ontario. On our family farm, for probably about the last 30 years off and on, we have grown identity preserved beans for specialty markets, for tofu or whatever else they're looking for. I think that any of these have potential for growth. That's why we're here exploring this alongside you.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you for that.

I'll go back to Brian.

Soybeans are the third most important food crop in Indonesia after rice and maize. The demand for soybean consumption tends to increase annually. In 2020 the figure was about 3.28 million tonnes, while the domestic production was 0.63 million tonnes. Thus, about 83% of the soybean needed was imported.

Can you tell the members of the committee what the cause of this annual increase is, in your opinion, and how Canadian soybean contributes to meeting the Indonesian demand for soybean? Also, do you believe the world trend will continue?

[Brian Innes]

Absolutely, and that's why we're so interested in the negotiations between Canada and Indonesia. Indonesia is also an incredible growth story. If we're looking at the statistics even back three or four years, our exports from Canada to Indonesia have grown incredibly. Between the U.S. and Canada, we supply the lion's share of the soybeans to Indonesia.

We see that continuing to grow, hopefully, and for Canada to continue to have significant market shares and be competitive in the Indonesian market with our soybeans relative to competitors like the United States, for example. Yes, there's a huge opportunity for us to continue growing, but it's also one where we've had amazing growth in the last few years.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Are there any current barriers that exist there which might prevent you from exporting more beans to Indonesia?

[Brian Innes]

I referenced my conversations around interaction between plant health regulators because there are always issues that arise in the trade of food products. It creates risk when we don't have confidence that the conditions in place today will continue in a month, and to be more candid, when there are challenges that come up, what is the capacity we have to solve them?

All of that creates risks and challenges for us to really maximize our ability to take advantage of that growth. If we look at other competitors and other countries, we can certainly say that they are much more active on the ground in working with regulators and industry to have smooth trade, which then enables them to take advantage of that growth.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Sheehan.

We'll move on to Mr. Savard-Tremblay for two and a half minutes, please.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you, Madam Chair.

I'd like to continue with Mr. Innes to obtain further details about the precise nature of the tofu that apparently has such a comparative advantage in this region.

As we have only two minutes left, I'd like you to briefly answer the following question: Why is there none of this specific variety of soybean in a region like that, which is after all a major grain producer?

[Brian Innes]

We've been particularly successful in Canada thanks to seed producers in Quebec and Ontario, as Mr. Byrne explained so well. It's because the varieties of soybean are really local. The quality of the seed for tofu, for example, is really specific to the variety. That's why we produce over 100 varieties of food-grade soybean in Canada to factor in the very specific requirements of the industries.

In Canada, we have the capacity to invest in seed production. We are highly advanced in this area. It's also the result of investment from Agriculture and Agri-Food Canada, and the quality program that operates in Harrow, near Windsor. Our system is therefore working very well.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

You were saying that we import a lot of American soybeans. Even though 80% of our production is for export, is part of it used for domestic consumption? Does that include the higher-quality food-grade soybeans that you mentioned.

[Brian Innes]

Yes, definitely. We too consume our food-grade soybeans. It's just that in Canada, we eat a lot less tofu than they do in the Indo-Pacific countries, for example. In Canada, we use our soybeans for animal production, including chicken and pork, but also for the production of soy milk, tofu and natto.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

What, approximately, is the tariff on what goes to the Indo-Pacific region?

[Brian Innes]

It depends on the market. The stiffest tariffs are in India, but they are also high in Indonesia. This could be dealt with in a trade agreement.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you.

[The Chair, Liberal, Judy Sgro]

Mr. Masse, we will go to you for two and a half minutes, please.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Madam Chair.

Mr. Gaudreault, what would be your biggest competition in terms of other countries? I'm just curious as to what you see in terms of your market challenges.

[Raphael Gaudreault]

In terms of quality, Russia has the most igneous phosphate available, so they would be the greatest importer. In terms of quantity, Morocco definitely is the biggest competitor.

[Brian Masse, NDP, Windsor West, ON]

I'm not familiar with this. That's interesting. What's the difference in the products?

[Raphael Gaudreault]

The product you'll find in Morocco is of sedimentary origin, so it will concentrate to lower levels, around 28% to 30% P205. Igneous deposits are able to concentrate to around 40%. You get more phosphate for the same tonne of concentrate, basically. Igneous phosphate is usually easier to transform into a high-quality acid, because it will have less contaminants.

[Brian Masse, NDP, Windsor West, ON]

Lastly, real quick, do you have any logistical or other operational advantages over those other countries, or is their infrastructure for trade stronger than ours?

[Raphael Gaudreault]

Of course, they've been running for more than 100 years in Morocco, so yes, definitely everything there is very well set up. They are located close to the seaboard, so they have strong exporting facilities.

In our case, we have 240 kilometres of road we need to upgrade. We also have to build new port facilities on the north shore of the Saguenay River. That's definitely a hurdle we have to go over.

[Brian Masse, NDP, Windsor West, ON]

Interesting.

Thank you, Chair.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Lewis, you have five minutes.