House of Commons Hansard #67 of the 42nd Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was industry.
The Speaker Liberal Geoff Regan
I have the honour to lay upon the table, pursuant to section 67(1) of the Official Languages Act, a special report by the Commissioner of Official Languages entitled “Air Canada: On the road to increased compliance through an effective enforcement regime”.
Pursuant to Standing Order 108(3)(f), this report is deemed to have been permanently referred to the Standing Committee on Official Languages.
The Speaker Liberal Geoff Regan
I have the honour to lay upon the table the annual reports on the Access to Information Act and the Privacy Act of the Commissioner of Lobbying for the year 2015-16.
Pursuant to Standing Order 108(3)(h), these reports are deemed permanently referred to the Standing Committee on Access to Information, Privacy and Ethics.
Kevin Lamoureux LiberalParliamentary Secretary to the Leader of the Government in the House of Commons
Mr. Speaker, pursuant to Standing Order 36(8), I have the honour to table, in both official languages, the government's response to 19 petitions.
Alaina Lockhart Liberal Fundy Royal, NB
moved that the third report of the Standing Committee on Agriculture and Agri-Food, presented to the House on Tuesday, May 17, be concurred in.
Mr. Speaker, it is a true privilege today to rise and speak about the Canadian dairy industry as the member for Fundy Royal, the dairy centre of the Maritimes. The farmers in my riding contribute to approximately half of the province of New Brunswick's milk production. I am also particularly proud to rise today as the granddaughter of a dairy farmer, Reg Tabor, who probably never imagined that I would be here in this House delivering my maiden speech in support of Canadian dairy farmers.
I am standing here today to raise an important issue in this House on behalf of the Standing Committee on Agriculture and Agri-Food. As stated in the tabled report, the government strongly supports supply management, dairy producers, and the Canadian dairy industry. Likewise as stated in the report, we recognize the magnitude of the issue of diafiltered milk to the Canadian dairy industry, and recognize the industry is calling for a resolution of the problem. Our government is actively engaged on the issue.
On May 2, 2016, our government announced its intention to initiate discussions within 30 days to help the dairy industry adjust to CETA. The government has delivered on that commitment, and continues its important and productive conversations with the industry. While meeting with stakeholders, the Minister of Agriculture and Agri-Food and the parliamentary secretary discussed CETA, the issue of diafiltered milk, and sustainable solutions to modernize Canada's dairy industry.
The government is moving forward on all points in this report. I would like to point out that the government understands very well the challenges that milk producers face on a daily basis. In fact, the Minister of Agriculture and Agri-Food and the parliamentary secretary were both dairy producers. The minister's farm is in Prince Edward Island while the parliamentary secretary's farm is now in its fourth generation in Quebec.
The supply-managed Canadian dairy sector is one of the largest agriculture and food sectors in the country and is essential to a strong and prosperous Canadian economy. It supports over 12,000 farms and farm families and 200,000 Canadian jobs; and contributes nearly $20 billion to the Canadian economy. On this side of the House, support for Canadian supply management is clear. Our system is a model of stability around the world. It provides a fair price for farmers; stability for processors; and safe, high-quality products for consumers at affordable prices. Supply management preserves and sustains Canadian farmers, farm families, and rural communities across this country, including in my riding of Fundy Royal.
Recently, I have found it shameful that the Conservative leadership contestant is advocating for an end to this crucial Canadian system. That member has said that Conservative values are not in line with supply management. The Liberal Party is the party that fought for and implemented supply management. We will continue to protect and defend it for all of those who would like to see it destroyed. I would like to assure this House that Liberal values are in line with supply management and will continue to be.
The position of the member for Beauce is frankly disturbing, especially given the large number of dairy farms and farm families in his region. I can only imagine the type of feedback the hon. member will receive from the hard-working farmers and their families in his riding who depend on supply management for their future. Perhaps even more disturbing is that the Conservative deputy critic for agriculture, the member for Lévis—Lotbinière, is the co-chair for the leadership campaign calling for the end of supply management. Not only that, but the former Conservative finance minister, Joe Oliver, has also recently spoken out against supply management. That is the Conservative record and the Conservative position. However, I want to be clear that on this side of the House we support supply management and dairy farmers. Our government is committed to supporting a bright future for Canada's dynamic dairy industry.
This year, the government announced an additional federal investment of $1.75 million in the dairy research cluster. This investment will support the work of scientists at Agriculture and Agri-Food Canada in two key areas: number one, increasing the energy content of Canadian forage crops to help increase milk production; and, number two, understanding the role played by dairy-fat products, including their positive impact on type 2 diabetes.
The total federal investment in the dairy cluster is $13.75 million. Our message has been clear from the beginning: the Government of Canada strongly supports Canada's supply management industries.
I want to speak about an experience I had yesterday. I was able to visit the Bühlmann dairy farm in the riding of my colleague, the member for Glengarry—Prescott—Russell. What I witnessed there was a family working together, embracing technology, and planning for the future because of the stability offered to them by the supply management program.
The work they are doing not only provides Canadians with world-class milk but their farm is an economic provider in the community of St. Isidore, Ontario. This farm is not unique, it is not one of a kind. In fact, innovation of our dairy farmers can be seen from coast to coast, from Scott and Sabrina Robinson's farm in Wards Creek, New Brunswick, to the Haambuckers' farm in Enderby, British Columbia.
As the executive director of Dairy Farmers of Canada said yesterday, “It is important for elected officials to meet a dairy farm family and see first-hand the dedication and care that goes into operating a modern dairy farm.” This might be good advice for the hon. member across the way.
Innovation is critical to the success of Canada's dairy industry. Farmers are making great strides in productivity and sustainability. Canadian dairy farmers can now produce the same quantity of milk as they did 20 years ago, with close to half the number of cows and producing 20% less greenhouse gases. Canadian dairy farmers are among the global leaders of their industry when it comes to the environment. Our dairy farmers have a smaller footprint of carbon, water, and land than almost all leading dairy farmers around the world. Our farmers are taking action on the environment, but they need the resources to do so.
Earlier this year, the Minister of Agriculture and Agri-Food and the Parliamentary Secretary to the Minister of Agriculture and Agri-Food were at McGill University to announce federal funding and an investment of $27 million over five years to help producers find ways to reduce greenhouse gases on their farms. This investment is part of the Government of Canada's efforts to support a competitive, viable, innovative, and sustainable agriculture sector, and that includes the dairy sector.
To further help farmers implement green measures on the farm, budget 2016 is investing $1.9 million in green jobs for young people. Not only will this get farmers the help that they need, but it will also inspire our young people to consider a future in agriculture.
Dairy Farmers of Canada is also showing strong leadership on the environment. DFC has launched a sustainability initiative called “proAction”. This program highlights farmers' commitment to high standards of care on their farms, from milk quality to food safety, animal care, traceability, biosecurity, and the environment. Dairy farmers clearly demonstrate responsible stewardship of their animals and the environment, sustainably producing high-quality, safe, and nutritious food for consumers.
As I said, our government is fully engaged with the industry over the concerns with respect to the use of diafiltered milk in the making of cheese. Our government is working hard on this issue, in line with this report from the Standing Committee on Agriculture and Agri-Food. Consultations with producers and processors from all across Canada have been very co-operative and productive, and discussions are continuing on this important issue.
The minister and government officials are in regular contact with dairy stakeholders in order to find long-term, sustainable solutions to the very serious issue. Our government also understands the importance of transition support to the dairy sector resulting from the increased access to cheese under the Canada-European Union Comprehensive Economic and Trade Agreement, CETA.
In anticipation of Canadian ratification of CETA, we will move forward with a plan to help the industry adjust to market access concessions. Several meetings have been held with the dairy industry to obtain its views on the program and investment options for producers and processors.
Engaging with the dairy sector is crucial to developing the best options possible to help sector transition in the face of both challenges and opportunities. The result will inform our government's important work toward long-term, sustainable solutions for the Canadian dairy industry.
There are challenges that we need to address, and I appreciate the opportunity to do that here in this chamber. However, it is important to remember that the challenges also come with opportunities. The Canadian dairy industry is doing great work in growing markets through branding, collaborating with industry, and harnessing innovation.
The Canadian dairy industry is second to none. Further development of unique Canadian dairy products that meet changing consumer preferences will help sustain and strengthen demand amongst Canadian consumers. A report from Farm Credit Canada, released in April, notes that Canadian dairy consumption is projected to continue to increase by 6.8% over the coming decade. This is largely due to positive consumption trends of butter, yogourt, and specialty cheeses.
We will continue to work with the industry to help dairy farmers take full advantage of new marketing opportunities here in Canada and throughout the world.
In order to capture the tremendous opportunities that lie ahead, the government has begun to discuss with industry, the provinces, and territories a new multi-year agricultural policy framework for Canada. Innovation will be a central part of that discussion as a key to helping producers and processors keep pace with changing consumer preferences and tastes.
We are reaching out to producers and all stakeholders to develop a framework that is built for the future. The Department of Agriculture and Agri-Food has launched a website designed to seek feedback from stakeholders to help shape the development of the next agricultural policy framework. This first phase of online consultation will provide stakeholders and Canadians with the opportunity to share their views on Growing Forward 2, the current agricultural policy framework, as well as to offer input on what they would like to see included in the agricultural policy framework of the future.
Additional consultation activities will be ongoing in the coming months to gather feedback and will help form the next framework. In July, the Minister of Agriculture and Agri-Food will begin meeting with provincial and territorial colleagues to begin discussions on the direction of the new framework for agriculture. As well, our Standing Committee on Agriculture and Agri-Food will also be examining the agricultural policy framework, and I do look forward to getting started on that important study very soon.
These open and transparent consultations with Canadians will help shape the direction of future policy and programs to meet this objective. The goal is to help the agriculture and agrifood sector be more innovative, safer, and stronger.
Within the dairy industry itself, a constructive dialogue is under way between farmers and processors on ways to make the industry more competitive and innovative. There is no doubt that collaboration with the industry is the best way to address broader challenges facing the dairy sector.
To close, meeting challenges and capturing opportunities will take a lot of hard work and collaboration. Our government will continue to partner with the Canadian dairy farmers and food processors to grow a great future for the Canadian dairy industry.
We will continue to protect, preserve, and defend Canada's supply management system. That is why I am pleased to say that the government concurs with this, the third report of the Standing Committee on Agriculture and Agri-Food.
There is an old saying that I would like to remind the House, as well as all Canadians, about, “If you have eaten today, thank a farmer.”
Marilyn Gladu Conservative Sarnia—Lambton, ON
Madam Speaker, I just wanted to comment on what the member had to say in her speech.
I would quote from our Conservative Party policy document. On page 45, paragraph 117 on supply management says, “A Conservative Government will support supply management and its goal to deliver a high quality product to consumers for a fair price with a reasonable return to the producer.”
I would like to correct the member's view of what our party believes. We certainly support supply management.
I heard a lot of talk coming from the other side, but there have been questions from this side of the House, coming continually, asking what immediate action the government will take to stop the unfair practices and products that are coming in and unfairly competing with ours.
Alaina Lockhart Liberal Fundy Royal, NB
Madam Speaker, I appreciate the hon. member's interest in the dairy industry.
It is interesting that you point to your policy statement, that of the Conservative Party, on supply management and the support of dairy farmers. Certainly, you must be as surprised as we are to hear several members—
The Assistant Deputy Speaker NDP Carol Hughes
I just want to remind the member that she is to address her comments to the Chair and not to individual members.
Alaina Lockhart Liberal Fundy Royal, NB
Excuse me, Madam Speaker.
I find it interesting that the member opposite brings forward this point as there are several members of her party who have spoken out clearly against supply management. I want to reaffirm that this side of the House does not waver on our support for supply management. It is part of our Liberal values and we will continue to support supply management, and dairy farmers and their families.
Charlie Angus NDP Timmins—James Bay, ON
Madam Speaker, I listened with fascination to my colleague, trying to see if they were actually doing anything to support supply management. As for the Liberal Party's record, I will give the member five words: Martha Hall Findlay, John Manley. They ran to take down supply management. It comes from the member's own party. Far be it for me to defend the Conservatives on anything and they will back me up on that, but let us talk about a clear record.
When the region I represent, which is dairy, is looking at the undermining of supply management through the trade agreements that have been signed in terms of cheese standards, in terms of milk substitutes coming in, we see that the government is telling us that it supports it but we have not seen any action.
Rather than tell us all to thank a farmer today, the farmers are saying, “Do your job”. I want to see what commitments the Liberals are going to make to stand up and stop the practice of undermining supply management through these trade deals that are being negotiated. That is the question before us today, not pablum.
Alaina Lockhart Liberal Fundy Royal, NB
Madam Speaker, thank you to the member across the way for your interest in the dairy farm industry. I think it is interesting that you point to a couple of members who have spoken out—
The Assistant Deputy Speaker NDP Carol Hughes
I want to remind the member again that she is to address the questions to the Chair and not to individual members. Thank you very much.
Alaina Lockhart Liberal Fundy Royal, NB
I am sorry, Madam Speaker.
I find it interesting the member opposite has referred to members who are no longer here in the House because I think that speaks very clearly to what farmers think when politicians do not support supply management. That is why we are so focused on making sure that we do deliver a message that is supportive to them.
In respect to what we are doing to support dairy farmers and to address this issue, as I mentioned in my speech, we have taken the opportunity over the last 30 days to meet with several stakeholders. I have had the opportunity to speak with farmers and they have told me that they found these meetings to be very productive and focused on long-term solutions in how we move the dairy industry forward.
Agriculture and Agri-FoodCommittees of the HouseRoutine Proceedings
Winnipeg North Manitoba
Liberal
Kevin Lamoureux LiberalParliamentary Secretary to the Leader of the Government in the House of Commons
Madam Speaker, I appreciate the many fine words from my colleague. What farmers want to hear is that commitment to supply management. I believe the member was right on when she emphasized just how important supply management is for this government.
We have seen, whether it is the Parliamentary Secretary to the Minister of Agriculture and Agri-Food or the Minister of Agriculture and Agri-Food, emphasize time and time again that this government supports supply management. The Liberals are the same political party that instituted supply management.
At a time in which people have concerns, I believe and would ask my colleague to affirm that what dairy farmers want to hear is that commitment to supply management. That is something that has been unequivocal from the Prime Minister and from the government. They should rest assured knowing and feel confident that this government will do what is necessary in order to protect a vital industry for all Canadians.
I would ask my colleague to provide some further comment in terms of the importance of confirmation.
Alaina Lockhart Liberal Fundy Royal, NB
Madam Speaker, I think the hon. member makes some very good points. Supply management is the key to the success of the dairy industry in Canada and we have been very careful as a government to consult with dairy farmers as we look forward to the opportunities of the future.
Certainly we have some challenges now and we are looking at long-term solutions for those, but we also need to be focused on the opportunities that are afforded to farmers through trade deals such as CETA. I have heard from farmers that they are very happy about the conversations that they have had and how this government is prepared to invest in the industry so that they are prepared for those trade deals.
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
Madam Speaker, I think the record will show that over 10 years in government, the Conservatives not only defended supply management but defended it in the midst of a variety of very important trade deals in which many people thought it would not be possible. People thought we would lose supply management in the trade deal with Europe and TPP, yet we got through those very important negotiations and we preserved the supply management system.
I want to ask the member specifically about the record of Martha Hall Findlay, who is the former international trade critic for the Liberals. While we were negotiating important trade deals preserving supply management, the Liberals had a critic responsible for international trade who came out later as being opposed to supply management. How does the member square that with these high-minded words about the Liberals' commitment to supply management, when the person they put in charge of international trade clearly did not have a commitment to supply management?
Alaina Lockhart Liberal Fundy Royal, NB
Madam Speaker, I would reiterate that this is a former member who no longer represents the Liberal Party and the views we have going into these trade negotiations and ratifications.
Our Prime Minister and the Minister of Agriculture and Agri-Food have been very clear when talking to farmers and among ourselves. I want to mention as well that this discussion has been very meaningful in the way that it has involved members who are not only representing areas of dairy but also the consumers, those who consume milk, because it has raised awareness about the importance of the dairy industry and has provided many people with the opportunity to discuss this important topic.
Ruth Ellen Brosseau NDP Berthier—Maskinongé, QC
Madam Speaker, I would like to thank the hon. colleague for her speech today in the House. It has been a pleasure working with her on the agriculture committee.
As we know, thousands of farm families came to Ottawa last week. They took the time out of their days. These are people who work 365 days a year and support rural economies. They took the time to come to Ottawa with their tractors and cows 30 days after the consultations with the government. These farmers are losing thousands of dollars. They are fed up with the government. They are at the end of their ropes. This is the glass overflowing. They have no hope. They are coming to us saying, “I have to sell my farm. I'm giving up hope. I don't know what to do.”
The government has been consulting. It has been listening but there has been no action. The farmers are fed up. We all know what the answer is. The long-term solution is for the government to stand up, apply the rules in place, and ensure that we are defending Canadian farmers instead of getting on our knees for the Americans. We have to ensure that we are applying the rules as they are. Will the government finally do that and stop these consultations?
Alaina Lockhart Liberal Fundy Royal, NB
Madam Speaker, I thank the member opposite for the discussions we have had in the agriculture committee in support of dairy farmers. We have many similarities when it comes to wanting to support dairy farmers.
I too was able to speak with farmers on the Hill last week. I found it to be a very productive conversation. Their presence here has elevated this issue. It has allowed many members of the House to partake in the discussion. We definitely understand the importance of their issue. I very much think that the conversations we have had over the last 30 days will contribute to a long-term solution for the dairy industry.
Jacques Gourde Conservative Lévis—Lotbinière, QC
Madam Speaker, nearly two months have passed since April 20, and here we are once again debating the subject of diafiltered milk. Why? Because this government does not take action. The facts have not changed. They are the same. The government has neither taken our recommendations into consideration nor changed its position.
To help the Minister of Agriculture get a clue about the situation and to remind him that his inaction is costing our cheese producers hundreds of millions of dollars right now, I would like to lay things out clearly.
Supply management is like a three-legged stool. Each leg, or pillar, is equally important. The first is farmgate prices, which ensure that the price dairy producers get for their milk takes into account production costs, including capital and labour costs, and overall Canadian economic conditions.
It is important to note that the retail price is not set by the Canadian Dairy Commission, the provincial milk marketing boards, or the producers. The price paid by the consumer at the grocery store and in a restaurant has always been set by the retailers or restaurant owners. That is the first pillar, and it is currently being undermined by diafiltered milk. Indeed, farmers are facing a drop in milk prices specifically because diafiltered milk is being allowed into the country. The first pillar is therefore under attack.
The second pillar is production discipline, which ensures that the supply of Canadian milk corresponds to the demand from consumers. Each dairy producer in Canada holds a quota, that is, a market share establishing the quantity of milk that it can produce, depending on the demand from consumers. The quantity that the quota allows to be produced is adjusted upward or downward according to demand.
That is the second pillar of supply management, and it is also being undermined by diafiltered milk, because Canadian dairy farmers have seen a drop in their production capacity, given that diafiltered milk is replacing Canadian milk. This means that two of the three pillars are being threatened by diafiltered milk.
The third pillar is import control. For supply-managed sectors, imports are controlled by means of tariff rate quotas.
Tariff rate quotas allow a predetermined quantity of dairy products to be imported at preferential tariffs, generally duty-free, while maintaining control over the quantity imported.
The third pillar is also very threatened by the import of diafiltered milk to Canada because diafiltered milk bends the rules related to American milk's access to the Canadian market.
The three pillars of supply management are being threatened by diafiltered milk. I hope that the government fully realizes that.
When the three pillars of supply management play their allotted roles, they enable the dairy industry to weather all economic storms, attain a high degree of self-sufficiency, and ensure its sustainability.
Conversely, if one of the three pillars becomes unstable, as all three currently are, it can jeopardize the whole system.
This brings me to the reason why we are here today, namely milk proteins. It used to be that Canadian milk was a primary source and basic component in the making of dairy products. Even though certain makers of cheeses and yogurts still use 100% milk, for which I congratulate them, a growing number of them are adding ingredients such as milk protein isolates, milk protein concentrates, and diafiltered milk to replace milk.
These ingredients may be produced in Canada or imported. When they are imported, they are not classed under chapter 4 of the customs tariff schedule, which includes milk products. Instead they are classed under chapter 35, which includes ingredients such as milk protein substances.
Originally, these milk protein substances were imported in dry form. Over the last five or six years, however, we have seen a change in the import model. The quantities of milk proteins imported in liquid form under the same tariff line have increased significantly.
Once they have entered the country, these milk protein substances are used as ingredients in making cheese and yogourt.
However, the situation becomes complex when the same product is treated differently by two government agencies. When one agency considers a product to be an ingredient and the other treats it as milk, then we have a serious problem.
Under the Canadian cheese composition standards, a minimum percentage of the protein used to make cheese must be sourced from milk. The percentage required varies from one type of cheese to another. For example, at least 80% of the casein contained in cheddar must derive from milk, and a maximum of 17% of the total protein content can derive from ingredients, including milk protein substances.
The Canadian Food Inspection Agency is responsible for applying the cheese compositional standards. That means that it has to verify that the milk-to-ingredients ratio defined in those standards is adhered to for every cheese. Since milk protein substances are ingredients that are sometimes less expensive, some processors use them to make up their required minimum quantity of milk in cheese making, instead of using them for their permitted percentage of added ingredients. This situation is also inconsistent with the classification of these ingredients at the border, where they are not treated under the chapter on milk and dairy products and enter the country duty-free.
One of the most serious issues today is the growth in the uncontrolled importing of milk protein isolates. Imported in ever-larger quantities, they are competing with the skim milk solids and milk proteins produced here in Canada, thereby altering the competitive context and undermining the revenue of dairy producers.
The importing of milk protein isolates has been growing exponentially since 2012. Canada adopted tariff rate quotas on milk protein concentrates around the mid-1990s. About 10 years ago, a few companies began to import milk protein concentrates, isolates, to obtain larger protein concentrations.
Milk protein concentrates are a skim milk product from which lactose and permeate, which is mostly water, have been removed to varying degrees. These highly concentrated proteins are imported into Canada duty-free, which allows companies to get around the tariff rate quotas. The Dairy Farmers of Canada tried to resolve this situation by bringing the matter before the Canadian International Trade Tribunal. The concentration of protein in normal farm gate skim milk is about 35% in dry matter. Any product whose protein concentration is above that percentage is considered a concentrate.
The Canadian International Trade Tribunal determined that a product with a concentration of over 85% is an isolate, not a concentrate, even if it is used for the same purposes. This product was designed for the sole purpose of circumventing the tariff rate quota on milk protein concentrates. This decision defies common sense and is not in line with government policy.
In any case, the Government of Canada attempted to rectify the situation. Around 2008, the government set a new tariff rate quota and tariffs for milk protein isolates. The only problem is that these tariffs do not apply to NAFTA countries, namely the United States and Mexico. Consequently, the border with the United States remains open. Milk protein isolates cross the border as ingredients but can be used in Canada as milk. This conundrum leaves an ambiguous situation.
The Conservative government took significant action in 2007-08 by establishing cheese production standards to limit the quantity of ingredients that could be used. However, recent imports of diafiltered milk from the United States are once again threatening supply management. This product was designed solely for the purpose of circumventing border controls and Canadian cheese standards.
These proteins replace skim milk in cheese and yogurt production. In fact, there is no technical limit to the use of these proteins in production. This scheme is unacceptable.
At the border, this product is considered an ingredient by the Canada Border Services Agency, which allows it to enter tariff-free. However, for yogurt and cheese production, it is considered milk by the Canadian Food Inspection Agency. This means that its use is not limited by cheese and yogurt production standards. The federal Liberal government therefore has an important role to play.
Diafiltered milk needs to be considered an ingredient under the compositional standards for cheese and yogurt. This will ensure that the standards and the spirit behind them are honoured. Also, the verification rules for these standards need to be strengthened to ensure compliance.
We all have to work together to come up with a solution to the problem of diafiltered milk. We are all aware of that. I believe that many members of Parliament are keenly affected by and aware of this serious problem. We ran into the problem of solid proteins and then pizza kits, which the previous Conservative government was able to fully resolve.
The dairy industry says it has no choice but to use diafiltered milk in the composition of its dairy products. As I said earlier, diafiltered milk was created to circumvent border rules and manufacturing rules.
I was able to confirm, when one of my questions was answered in the Standing Committee on Agriculture and Agri-Food, that no one in the United States was making cheese using liquid protein concentrates, whose protein content is 85%. Processors do not do that. That does not exist in the United States.
In Canada, processors use that product now for competitive reasons, that is, for the sole purpose of reducing their production costs. However, that makes no sense, because those savings cannot benefit Canadian dairy farmers. In the end, the processors do not benefit, either. It is profitable downstream from the processing stage.
Frankly, this situation must end, because the whole industry is doing it to the detriment of supply management. As long as the issue of imported diafiltered milk remains unresolved, we can be sure the processors will use every means possible to reduce their production costs. We want the rules of the game to be fair for everyone, and we urge the Liberal government to take action on this matter.
The processing industry in the United States produces cheese without using diafiltered milk. Hence, Americans are eating cheese made without diafiltered milk. Canadians should not be eating cheese made with American diafiltered milk. There is no justification for it, because there is no economic incentive to do so. There is no reason to act in this manner.
The only thing driving Canadian processors to import diafiltered milk is that that ingredient is cheaper, because it is not subject to tariffs and can be used in production with no restrictions. That is the only reason.
With regard to imports coming into Canada, what quantities do we need to meet market demand? We do not need any, because in Canada there is an abundance of skim milk that can be used to produce those ingredients.
If the government decided to control the use of those ingredients, we would produce them in Canada at a competitive price, and we would use them here. We have no need of those imports, since we have an abundant quantity of skim milk at our disposal.
Whether it is imported or produced in Canada, the product used by many processors is composed of milk protein substances containing at least 85% milk protein. That is consistent with the definition of ultra-diafiltered milk. According to the regulations, there are no restrictions on the use of ultra-diafiltered milk in ordinary cheese and other dairy products.
With no control of imports, it is impossible to manage supply so that it matches demand. Failure to control imports would inevitably lead to overproduction and instability in our supply management system.
Moreover, it is not enough to have the right regulations in place; the validation and audit process and the enforcement of those regulations are just as important.
At the moment, people who might want to circumvent the rules are fully aware that when it comes to dairy products, Canada is not enforcing the existing border controls consistently and uniformly.
It is therefore essential that laws be enforced and audits be performed properly to discourage those who might try to exploit those loopholes. People can be very creative when it comes to circumventing tariffs and quotas. The problem of pizza toppings is an excellent example.
The Canadian dairy system is unique and has proven its worth. It provides dairy farmers with enough income to cover their costs, and it provides processors with a stable environment. It helps maintain the social fabric and support the economic development of our communities, while providing consumers with high-quality products at a competitive price. To us, therefore, it seems clear, justified, and more important than ever that everyone involved must work to support supply management.
In recent trade agreements, the Conservative government succeeded in keeping high tariffs at the borders. That is a vital pillar in maintaining our supply management system. We hope that the Liberal government will not tear down what the previous Conservative government built up to protect the supply management system.
With regard to controlling the borders, at least four departments are concerned with the issue of effectiveness. The Department of Finance is concerned with the payment of tariffs, while the Department of Public Safety is responsible for border controls through the Canada Border Services Agency. There is also the Department of Agriculture and Agri-Food, because agricultural policy is involved, and the foreign affairs department, when we have trade agreements and we have made commitments to our partners. Our trading partners also have agricultural policies and specific requirements.
In conclusion, by doing whatever has to be done to solve the problem of diafiltered milk and other dairy substitutes crossing our Canadian borders, we will restore balance in our supply management system, thus benefiting the entire Canadian dairy industry. We will also restore harmony in the entire industry, from farmers to processors and distributors, so that products can be delivered to consumers.
For more than 45 years, we have managed to keep Canadians happy with high-quality dairy products at a fair price, in accordance with the wishes of this House. To succeed, the industry needs to be supported by a regulatory and policy climate that maintains supply management and the three pillars that are currently being threatened by diafiltered milk, including producers' revenue. At the same time, it must provide flexibility for primary and secondary processing and the value chain and support the development of new capacity through technology and cutting-edge manufacturing processes that also boost productivity.
In closing, I can assure my colleagues that we will do everything in our power to support the vitality of Canada's dairy industry for future generations.
Agriculture and Agri-FoodCommittees of the HouseRoutine Proceedings
Liberal
Alaina Lockhart Liberal Fundy Royal, NB
Madam Speaker, I thank the member opposite for his insight into the diafiltered milk issue.
I need to seek clarification from the member opposite, because he has spoken quite strongly today about his support for supply management. I wonder if he would clarify how he can have this strong a position and also be co-chair with a member who is seeking the leadership of the Conservative Party.
Jacques Gourde Conservative Lévis—Lotbinière, QC
Madam Speaker, my party and I have always supported supply management.
Our party is in the middle of a leadership race. I will let the potential candidates debate their election platforms. I would like to remind my colleague that when I was first elected in 2006, the first thing we did when we went to the WTO with our chief negotiator was change our negotiators' mandate. According to the mandate that Paul Martin's former Liberal government gave them, they were not to protect supply management. The first thing our government did in its first months in office was give our WTO negotiators a new mandate. I was there personally, and I would like to remind my colleague of those facts.
Alexandre Boulerice NDP Rosemont—La Petite-Patrie, QC
Madam Speaker, I listened with interest to my colleague's speech, but it left me rather perplexed.
I wonder how many personalities can coexist in an MP's head. For 20 minutes, the hon. member talked about the importance of defending and maintaining the supply management system. The NDP could not agree more on that. There is no greater defender of dairy farmers and the supply management system than the NDP.
However, while the member tells us that it is important to maintain and defend the supply management system, he is the one who is going to head the leadership campaign for the member for Beauce, who has already promised to abolish Canada's supply management system.
How do these two realities coexist in his brain?
Jacques Gourde Conservative Lévis—Lotbinière, QC
Madam Speaker, that policy decision will be made by the members of our party at our next convention in 2018.
Today, the Liberal Party recognizes the problem of diafiltered milk. When we recognize a problem and do nothing about it, we become part of the problem.
I urge the Liberal Party of Canada to do its homework as the government and resolve this problem as soon as possible. Last year, Canadian dairy farmers lost $220 million. This year, the losses could go as high as $300 million, and who knows what will happen next year. The time to act is now.
Mel Arnold Conservative North Okanagan—Shuswap, BC
Madam Speaker, I thank my colleague for his speech today and for the great explanation of the importance of supply management. It is a very important issue in my riding of North Okanagan—Shuswap. I truly support the dairy and poultry producers there and the economic input they have.
I would like to ask the member if he sees this issue popping up today as a deflection issue to take the focus away from what really concerns dairy producers across Canada, and has for a number of months, while the Liberal government dithers and does not deal with the issue of diafiltered milk entering Canada. Does he see this as a deflection issue?
Jacques Gourde Conservative Lévis—Lotbinière, QC
Madam Speaker, the Liberal Party is a master in the art of deflecting issues.
To me, diafiltered milk is like termites in a house. If you have termites in your house and do not do something to resolve the problem, sooner or later, it will fall apart.
As I stated very clearly in my speech, diafiltered milk is undermining the three pillars of supply management. First of all, its entry into Canada is no longer being controlled. Second, Canadian farmers have seen a drop in milk prices. Third, their production has also decreased because American diafiltered milk is replacing Canadian milk. Diafiltered milk imports are a direct attack on the three pillars of supply management.
The government acknowledges this problem in its motion, which is why we will be supporting it. However, if the government does not do something, it is part of the problem.