Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue No. 13 - Evidence - Meeting of June 7, 2016
OTTAWA, Tuesday, June 7, 2016
The Standing Senate Committee on Agriculture and Forestry met this day at 5:21 p.m. to study international market access priorities for the Canadian agricultural and agri-food sector.
Senator Ghislain Maltais (Chair) in the chair.
[English]
The Chair: Welcome everyone. I am Honourable Senator Maltais from Quebec, chair of the committee.
Before beginning, I will ask the senators to introduce themselves, beginning on my left.
Senator Mercer: I'm Senator Terry Mercer from Nova Scotia. Welcome, minister.
Senator Merchant: Hello, minister. I'm from your neighbourhood. I'm Pana Merchant from Saskatchewan.
Senator Plett: Hello, minister. I have already introduced myself. I'm Don Plett.
Senator Dagenais: Hello, minister. I am Jean-Guy Dagenais from Quebec. I learned my English with Senator Maltais.
The Chair: This committee is continuing its study on international market access priorities for the Canadian agricultural and agri-food sector.
Today we have the great pleasure of having with us the Honourable Ralph Eichler, Minister of Agriculture, Government of Manitoba.
Welcome, Mr. Minister, and thank you very much. We know you have a short time, but we'll give you a great time.
The Honourable Ralph Eichler, Minister of Agriculture, Government of Manitoba: Thank you very much. We're very pleased to be able to present to the committee this afternoon. My understanding is you have a slide presentation that has been given to you.
The Chair: Yes.
Mr. Eichler: We'll proceed then. Thank you for this opportunity. It is indeed a pleasure to be able to present. Of course, with this new technology, I feel like I'm part of your committee as I sit here and watch you.
If we turn to the first slide, it shows our agriculture and food industry. Manitoba is unique. We have a large land mass with a diverse production base. Agriculture generates $6 billion in cash receipts. While we may have a smaller population, we are largely comprised of small and medium enterprises. Food processing produces about a quarter of all goods manufactured in Manitoba each year, $4 billion.
Slide two is the importance of trade. While our diversity in Manitoba serves us well, trade is of the utmost importance. Sixty-seven per cent of manufactured food products leave the province. That's an impressive amount considering our population. Our exports total just under $5.2 billion. Growth in value-added processing and exports of commodities and food is necessary for economic growth and job creation. Additionally, improving market access is critical for Manitoba's export-dependent sectors to be competitive. Effective federal assistance to support our producers and processors is critical.
On slide three you'll see federal successes. We have shared federal successes that will improve trade opportunities and allow us to meet trade obligations. We're pleased with the joint efforts that resulted in the repeal of COOL for beef and pork, allowing greater market access for Manitoba livestock producers. Manitoba producers have leveraged Going Forward 2 funding that supports market expansion with great success.
Slide four talks about concerns in market access. We applaud the federal government for opening the door to new markets. We must now educate our producers and processors on how to maximize those opportunities. This includes sharing market information, production-based information, protocol and how to meet the global standards.
Continued federal investment for infrastructure is essential in order to get our goods across Canada to consumers via roads, rail and off to our Canadian ports effectively. Time and cost quickly add up if we cannot get our goods to market in a timely manner.
We still have some market access concerns that prevent free trade. GMO labelling and COOL requirements for sheep are two of them. We support continued advocacy efforts to address these regulatory barriers.
A shortage of skilled available labour in the agriculture and food processing sectors is a barrier to success and growth. Changes to the Temporary Foreign Worker Program have had significant impacts on the ability of Manitoba agriculture and agri-food employers to meet their labour market needs. It has hampered the ability to grow our meat processing industry. Our major pork processors, Maple Leaf and HyLife, have had their capacity to grow severely diminished and will continue under such constraints unless we allow them access to labour that cannot be found locally.
We continue to request the federal government to increase the flexibility of each region to evaluate its own labour market with the needs of the TFWP. Our producers have voiced concerns of a need for stricter border import control measures and enforcement of the rules that are affecting returns from the marketplace.
With trade agreements comes enhanced opportunities, but they also provoke competition for our domestic market as they are forced to compete against an increase of imported goods. We have to maintain investments that keep our producers competitive with imports.
Slide five will show you Manitoba's strategic investments. Manitoba wants to increase its exports of processed foods and bioproducts to world markets and has made strategic investments in research and innovation capacity in key areas. Agriculture is one of the sectors leading the way in innovation, and we will continue to partner with businesses and community leaders to create new and innovative economic opportunities. CentrePort is our inland port and foreign trade zone that provides access to other transportation channels.
Slide six talks about collaborative efforts in trade. Trade is a shared jurisdiction, and we will continue to work collaboratively to remove barriers. We will also continue our advocacy work within our industry in areas of mutual benefit. We intend to enhance the trade of goods and services within the Canadian market by joining the New West Partnership. We support the TPP for expanded exports and to protect jobs. Reducing red tape is a priority for Manitoba, and doing so will provide further support to trade. Manitoba is ready. We will work together with our global partners to ensure economic growth in the agriculture sector.
On slide seven, you will see Manitoba's recommendations. To summarize, these are our recommendations: Regulatory alignment of food safety regulations and ease of entry into new markets; joint investments in infrastructure are necessary; addressing the labour and skilled capacity shortfalls; building together in the creation of shared and accessible market intelligence information for our sector; action on import control of supply managed producers and processors.
I want to thank the committee for the opportunity to present to you this afternoon and share with you how important it is for us to work together with our federal government and, of course, other provinces to ensure that we work well together.
The Chair: Thank you very much, Mr. Minister. We know you have to go now for the vote, and we have no time for questions.
Mr. Eichler: The bells have not started to ring yet, but they will very shortly.
Senator Plett: Thank you, again, minister, for being here. Now that we're on the record, I want to again offer you my congratulations both for the tremendous win that our party had in Manitoba, as well as for your personal success in being appointed as the Minister of Agriculture. I think that's great, and I look forward to working with you in that capacity.
I have two questions, minister; and if you need to run at some point, maybe your deputy can answer them. The first question deals with the hog industry, and the second with poultry.
With regard to the hog industry, I'm not sure how aware you are of some of the border issues we have. This is something I've been dealing with for quite some time and that we dealt with through our previous government in Manitoba and of course with our previous federal government. I know the Minister of Agriculture federally is now aware of the issue with the trucks coming back across the border after they have delivered hogs into the United States and with the washing facilities.
The fact of the matter, minister, is that when trucks go across with a load of hogs, everything in that truck is Canadian and everything coming back is Canadian, i.e., the straw in the truck, the manure in the truck. Literally, everything coming back is Canadian and hasn't touched American soil, other than the wheels, of course.
Now, mostly CFIA, I guess, but also Canadian Border Services, is insisting these trucks get washed in the United States before they return to Canada, creating two problems. Number one, many of the United States truck washers use recycled water, which of course means that you are recycling germs when the next truck comes along. The other problem, of course, is if they want to go to truck washers that do not have recycled water, they have to go many miles, sometimes a hundred miles out of their way, to get their trucks washed.
There is a perfectly good solution they've been using, which is that they get to the border, the truck gets sealed and they have to have an appointment at a truck wash, the first available truck wash in Manitoba, and wash their trucks. Many of these trucks are going through Manitoba and into Western Canada.
Minister, can we have your assurance that the Province of Manitoba is going to be very aggressive in trying to help our great hog producers and the trucks that are running across and that our new Conservative government is aware of this and will be working with the Canadian Border Services Agency and CFIA to rectify this?
Mr. Eichler: Firstly, thank you for your best wishes. I certainly appreciate that, and I know our party does as well.
Thank you for the question. It gives me the opportunity to tell you that we are very much focused on this issue. As you know, we have had a PED case, porcine epidemic diarrhea. Here in Manitoba it's of the utmost importance that we have the best biosecurity measures, not now but also going into the future. We're committed to ensuring that our trucks are returning in a safe manner. We have to make sure that the trailer washing here in Canada is at the best level it can possibly be.
I have talked with my federal counterpart about this, and we've also brought it forward to CFIA. I can't stress enough the importance of working together in making sure that we keep diseases out of Manitoba. We're proud to be able to say that, yes, we support that initiative wholeheartedly.
My bells are ringing, unfortunately, so I will turn it over to my deputy. I wish you all the best.
Senator Plett: Thank you. I know you should be able to win this vote fairly easily. Good luck to you.
Mr. Eichler: Thank you very much.
The Chair: Thank you very much, Mr. Minister.
Welcome, Ms. Gingera-Beauchemin. I would like to present the senators who have joined us: from Alberta, Senator Betty Unger; from Alberta, Senator Tardif; from Ontario, Senator Oh; and also from Ontario, Senator Beyak.
Are you ready for questions from the senators?
Dori Gingera-Beauchemin, Deputy Minister, Ministry of Agriculture, Government of Manitoba: I'm prepared, absolutely.
Senator Plett: Ms. Gingera-Beauchemin, thank you for being here. My second question — there is a good chance Senator Mercer would have asked if I had left, but maybe I'll steal his thunder — has to do with spent fowl. We have heard many poultry producers complaining that chicken meat coming across is being labelled as spent fowl, then being brought across the border and being sold as something other than spent fowl. Are you aware of this situation, and what is the Province of Manitoba doing about this?
Ms. Gingera-Beauchemin: Thank you. As of just last Friday, the Manitoba chicken producers had their first meeting with our new minister and brought to his attention the impact of spent fowl on our industry. Manitoba has a strong poultry industry, however, with supply management, certainly knowing that having those controls at the border is critical to the prosperity and profitability of the industry. In the past, other ministers have expressed their concern about spent fowl coming across the border and called the federal government to action to maintain due diligence at the border in order to reduce that competition for our poultry industry. Our minister is very aware and has that as a high priority in order to support our poultry industry.
Senator Mercer: This will be a short and non-partisan question.
Thank you for being here. I was interested in the minister's comment about strategic investments in Manitoba. I have the honour of being the longest-serving member of the Standing Senate Committee on Transport and Communications, so I was interested in his reference to CentrePort. Could you tell me how it is working and its contribution to the agriculture sector in Manitoba?
Ms. Gingera-Beauchemin: Certainly. Being one of Canada's only inland ports, one of their objectives is bringing together the various modes of transportation in order to make trade effective, both in and out of Canada, and, particularly given our position in North America, to have reach across the continent.
CentrePort has agriculture as one of its primary clients. Within the last year, they've also announced a project with BroadGrain where they will be investing in infrastructure in the CentrePort park in order to be able to move grains in and out of Winnipeg to foreign markets. Agriculture is a big part of CentrePort's portfolio. They are certainly very aggressive in marketing the infrastructure internationally and have several other potential clients in the queue. We see it as a solution for market access, knowing that the feeder in on the rail is a critical part of CentrePort being successful.
We are one of the provinces that are significantly impacted by the availability of cars in order to move our commodity grains, and CentrePort echoes the importance of having a timely and effective grain transportation system in order to capitalize on that system in order to reach their markets.
Senator Mercer: Are you having difficulty getting cars to move grain? This has been a problem in the past, and we've heard that the problem hasn't gotten much better.
Ms. Gingera-Beauchemin: We certainly have it as a high priority, and the minister made reference to it. Manitoba is in a unique position, being somewhat distant from the western ports. Sixty-seven per cent of our grain is shipped through Thunder Bay. When there was high pressure on grain cars, we were concerned and not able to get the allocation that our grain handlers required. We also, of course, are very interested in accessing the American market but find difficulty in getting timely cars. However, since the dramatic situation in 2013, things have improved.
It is fair to say that we keep it a high priority and want to make sure that grain allocation is done on a corridor basis because we are impacted by being furthest from ports. Given the fact that it's easy to turn around cars to meet their requirements when it is closer to the port from our sister provinces of Saskatchewan and Alberta, we tend to have the most consequences for limited cars.
Senator Mercer: In the days of the Wheat Board, the Port of Churchill was a focal point of the export of grain. Has that changed significantly since the previous government dismantled the Wheat Board?
Ms. Gingera-Beauchemin: The grain companies have been making investments in their port infrastructure. In order to be profitable, they need as much grain going through their terminal investments, and they're interested in keeping their terminals operating. The majority of our grain companies invested in the Port of Vancouver, so their target is to move their grain through those terminals.
Churchill, with its limited shipping season, has also been used to market some of the grain companies' grain, but their target is to move it through their existing infrastructure, the majority of it on the Port of Vancouver.
Senator Mercer: The minister talked about market access concerns for small and rural, GMO labelling and COOL requirements for sheep. How big a problem is this? How big is the market?
Ms. Gingera-Beauchemin: Our sheep industry is small, but they see this as an opportunity to grow. They certainly see the ability to access markets to the south of us as an opportunity to invest. We have some new investments happening in our sheep industry, and part of their business plan is to export south. Although currently we are a small player in the sheep industry, we have investments and business folks looking to expand the sheep industry and take advantage of it. We want to play in that game, and we need those markets open.
Senator Unger: My question concerns social licence, which is defined as an ongoing acceptance, approval and trust of consumers with regard to how food is produced. During our fact-finding mission to Western Canada, we heard the importance of taking into account social licence in agriculture and agri-food practices.
In this regard, what actions are being put into place to inform consumers about how and where food is being produced? Do you encourage consideration of social licence along the food supply chain?
Ms. Gingera-Beauchemin: I join my colleagues at the deputy minister level across the country in efforts to raise the issues of public trust. Many will admit that one of the greatest challenges for the agriculture industry will be gaining and maintaining the public's trust in the food system.
It is also about profitability in the industry and being able to ensure that the food system and its framework have agreement across the value chain, allowing producers to be able to meet the expectation on a continuous basis.
Part of the challenge faced by producers is that the game keeps changing. The requirements from the market keep changing. Every time there is an adjustment to market demand and the public's expectation, the cost, of course, is borne by the producer in making those changes. Yet the producer wants to meet the expectations of the consumers. The producer wants to be able to provide that food and then have the consumer return respect for the food in ways of being able to pay for it.
I join my colleagues from across the country in working on a large collaborative effort to bring all the players together.
The other question is: What is the government's role in the building of public trust? There are certainly many players from the food industry and from the food production side that have the most important parts to play. Governments strive, through their efforts, to bring those players together to the table to have them come to consensus as to the requirements and how the industry will be able to meet those requirements on a sustainable basis.
Whether we are working with our primary agriculture producers or with those who transform commodities into food products, or whether we are working with the retailers or restaurant and hotel trade, if the whole supply chain isn't agreeing on the framework we have, then we will lose continuously profitability as producers trying to react to changing market demands. It has to be the whole system in order to be able to be effective and consistent and to be able to provide the trust that consumers are looking for. Their interests are in food that they can trust, and our interest is in providing it to them. The conversation is what we are striving for so that we can get both sides of this important food discussion to agree on the standards.
Senator Unger: It's like a moving target such that you're always trying to hit that target on a never-ending basis.
Ms. Gingera-Beauchemin: I think it has been a moving target, but the understanding of the need to develop a framework is gaining momentum all the time.
This is certainly not to suggest that anyone has actually considered it this way. As new requests from the market are realized, people categorize them as a fad. This will change. The food production system is realizing that consumers' interests and expectations of the system are being vocalized, and they are expecting and demanding them.
It is now time for the system to agree on a framework that allows as much of the market demand to be satisfied by Canadian product. We produce the best food in the world. For us to be able to ensure that Canadians as well as our global customers can trust our food is the next important space for the industry to play in. We have a framework that works. We are small enough and we have lots in common. Canada can set an example around the world in bringing that consensus together.
[Translation]
Senator Dagenais: The Trans-Pacific Partnership Agreement will certainly cause an increase in traffic in the port of Vancouver. Have measures already been announced to deal with that situation? What are the recommendations we should include in our report to improve the fluidity of activities in the port of Vancouver?
[English]
Ms. Gingera-Beauchemin: Certainly the ability for companies to take advantage of TPP will require them to have a consistent and well-working infrastructure for transportation. We join with our partners, our provinces to the west, in having an efficient port system. The Port of Vancouver, of course, has a number of most recent investments by grain companies in their terminals. We also realize that there are some demands on land and infrastructure feeding those ports that need to be taken into account.
Again, the grain transportation system that is feeding the ports is critical. For our grain companies, our shippers, to have a grain transportation system that is consistent and that they can rely on, the Port of Vancouver will have to respond to the infrastructure demands that the grain companies require.
It's a huge advantage for Canada to have the Port of Vancouver, but it requires the system to have investments particularly on feeding in on the grain transportation side.
Senator Tardif: The minister, in his presentation, made reference to the success of the Growing Forward 2 policy framework, indicating that this policy allowed Manitoba to improve certain market expansion activities and investment, citing the Bee Maid Honey market expansion strategy.
The Growing Forward 2 program is set to expire in 2018. As we move forward, what recommendations could you give our committee with regard to the next phase of this particular program?
Ms. Gingera-Beauchemin: I wish the minister was here to respond to this one, because although he is fairly new in his portfolio, he is passionate about ensuring Growing Forward 3 continues to build on the investments of the two previous Growing Forward programs. Manitoba has made significant investments in research and innovation. For Growing Forward 3 to build on those investments is critical.
He would also call for the flexibility that Growing Forward 1 and Growing Forward 2 allowed for. It allowed for the bilaterals between the federal government and each of the individual provinces to be able to craft and deliver programming that would meet the unique needs of the provinces. I think that contributed to the success. The ability for the flexibility in the programs, which allowed provinces to work with the federal government in changes while the programs were being delivered, was important.
Certainly we want to ensure that sustainability and public trust are key elements in Growing Forward 3. It is evolving with the industry's needs and their requirements in order to have funding and assistance to address the more global issues of sustainability, changing climate as well as public trust.
We, of course, are anxious to continue to invest in commercialization. The minister made reference to our pork industry. We believe that those are just two examples of where our Growing Forward 2 dollars have assisted the company and we want to continue to invest in the commercialization and innovation elements that our food companies are doing.
We want to bring to attention the work on biocomposites and bioproducts. We believe that needs to be a key feature of Growing Forward 3 because there are many products that are not obvious that have lots of market potential. Manitoba has significant investment in their composites innovation, and we believe Growing Forward 3 could assist us in taking advantage of that and be a global leader in biocomposites.
We are working toward many good elements of Growing Forward 1 and Growing Forward 2 continuing in Growing Forward 3. I appreciated the question on public trust; I think it will be one of the new pieces in Growing Forward 3 that we will ask to be considered.
Senator Tardif: Thank you for those excellent recommendations.
Senator Mercer: Deputy minister, I want to go back to the essence of our study. It is a study about international market access and priorities for the Canadian agriculture and agri-food sectors.
Obviously our number one customer has been and continues to be our American friends, and you have made a reference to that, but we also want to talk about the opportunities coming up with the TPP and with the Canada- European Union free trade agreement. Has your department studied that to look at the opportunities that might be there for the Manitoba agricultural sector?
Ms. Gingera-Beauchemin: Certainly. We have been consulting, and the minister as he moves into his portfolio is hearing from our commodity groups about the importance of the recently signed trade agreements. He is asking them for their input. He will be hosting a large industry consultation in early July. He is inviting over 100 groups to provide him with input on issues such as the trade agreement as well as Growing Forward 3.
In order for him to represent Manitoba's interests, our new minister is making sure he is consulting and hearing from all sides the advantages as well as perhaps some of the negative impacts of the trade agreements. We certainly know there are many of our commodities that have identified the new or expanded markets as part of their profitability. We are working alongside with them.
Of course, Manitoba's new government has signalled they will be joining the New West Partnership Trade Agreement. That is not international, but certainly the ability to work across western Canada also adds to Manitoba's approach to meet market demands.
Senator Mercer: All of that is important; I appreciate that. The minister briefly skimmed over supply management. Do you see any threats to supply management in Manitoba because of the new agreements?
Ms. Gingera-Beauchemin: When the minister, in his presentation, made reference to enforcement of border measures and enforcement of rules, that is what he is hearing from some of the supply-managed commodities. When he mentioned spent fowl, diafiltered milk and biosecurity, the minister is interested in ensuring the existing system is maintained and works well.
Again, to leave that question for him is probably fair because he is in the process of consulting with the supply- managed commodities and would have some opinions. If you don't mind, senator, I will leave him to answer that.
Senator Mercer: Actually, I would encourage you, and if you could encourage the minister, that if you have anything to add to what we have talked about today, please do not hesitate to write us via the clerk. We consider this to be the beginning of a conversation, not the end.
Ms. Gingera-Beauchemin: Absolutely. Thank you for offering that. The minister is very committed to consulting with the industry, and he is in his early days of doing that. I certainly want to respect that and have him form his opinions and be able to provide that response to you. We will also encourage him to submit in writing.
The Chair: Thank you very much, Ms. Gingera-Beauchemin, for appearing this afternoon and for your valuable contribution to this committee this afternoon. Good luck in the future.
Ms. Gingera-Beauchemin: Thank you very much. It was a pleasure for Manitoba to be able to present, and we certainly will provide the minister with your remarks and ask him to follow up in writing if there are any other issues he didn't get a chance to share with you.
Senator Terry M. Mercer (Deputy Chair) in the chair.
The Deputy Chair: Our next witness this afternoon is Derek Sturko, Deputy Minister, Ministry of Agriculture, Government of British Columbia. Thank you for accepting our invitation to appear.
We're continuing our study on access to international markets for Canadian agriculture and agri-foods, particularly as it may be affected by the Trans-Pacific Partnership and the Canada-European Union free trade agreement and other free trade agreements.
We appreciate your being here. After you make your presentation, we will go to questions and have as many rounds as possible, and that's why we ask the senators to keep their questions succinct and you to keep your answers the same as well.
Derek Sturko, Deputy Minister, Ministry of Agriculture, Government of British Columbia: Thank you for the opportunity to provide remarks on behalf of the Honourable Norm Letnick, B.C.'s Minister of Agriculture. I'm joined in the room by James Mack, one of my ADMs, and Solveig McLaren, who is with our trade and market access group.
The B.C. Ministry of Agriculture has a mandate to work with the agriculture, aquaculture, commercial fisheries and food and beverage processing sectors. I'll deal with that broad sector, not just one component.
I'd like to provide context about some of the things that make B.C. unique within Canada's agri-food and seafood world.
We have a diverse seafood and agri-food industry. We have over 200 agricultural products and 100 seafood products, which make us different than most provinces. We have about 25,000 small- and medium-sized operations. These include farms, primary seafood facilities, such as aquaculture and wild fisheries, and food and beverage processing firms. Food and beverage processing account for over 70 per cent of the revenue that comes from the sector.
Our number one export is farmed salmon. Other top exports include food preparations from manufacturing, blueberries, baked goods, crabs, chocolate and cocoa preparations and wild sockeye salmon. I'm sure you've heard of blueberries and cherries being exported to China. B.C. exports agri-food and seafood products to over 150 countries, and that represent about $3.5 billion in export value.
In December of last year, the ministry released a new B.C. agri-food and seafood strategic growth plan. This is part the province's jobs plan. This plan builds on the success of our former five-year plan, which concluded last summer and for which we had completed all the activities.
The purpose of this plan is to foster long-term growth to a sustainable, economically diverse and socially responsible sector. The new plan articulates a vision for an innovative, adaptive and globally competitive sector, and we set an ambitious target for growth to go to $15 billion in sales by 2020, and this represents about a 20 per cent increase in sales over five years.
In terms of the topics I was presented with, in terms of building markets, the economic context of the province is shifting with new trade agreements with Europe, Korea and other key Pacific Rim countries. This has created new market opportunities. Building international and domestic markets is a key focus for our plan to ensure sustainable long-term growth for the industry.
B.C. is supportive of increasing international market access through trade agreements. We are well positioned to serve as Canada's gateway to the Asia-Pacific and recognize and welcome economic opportunities for the agri-food and seafood sectors these markets offer.
A range of partners are involved in building international markets for B.C., including obviously our ministry, the Ministry of International Trade in British Columbia, and we work cooperatively with Agriculture and Agri-food Canada.
In order to ensure alignment of these efforts, we have recently completed a multi-year international market development strategy that provides a common framework for marketing strategies with our partners. The strategy identifies our top priority markets for agri-food and seafood as well as secondary and longer term market opportunities.
Together, the U.S., China, Japan, Hong Kong and Korea account for the vast majority of B.C.'s exports, and this is a little over 85 per cent of those exports, and that is 85 per cent of the $3.5 billion I mentioned earlier.
In order to maximize growth, B.C. will be focusing on market development and promotion in those priority markets for the next five years while supporting industry-led activities in secondary and longer term markets throughout Europe and Asia-Pacific.
Lack of access to innovation and competitiveness funding received by the producers is hampering the industry's growth and creates inequalities compared to agri-foods. My point is there are a lot more opportunities on the traditional agricultural side than the seafood side for access to funds.
There is a limited amount of funding available for seafood products under the federal-provincial-territorial Growing Forward 2 cost-shared agreement, or GF2, in the areas of traceability, market intelligence and international market development funding. At the same time, the federal fisheries mandate continues to be focused on conservation, with limited access to economic development.
Seafood products account for $1 billion in international exports for B.C., making the funding gap a key priority for the province. While the Council of Fisheries and Aquaculture Ministers has recently developed a market access task group, clarification of its mandate is needed in order to reduce duplication with Agriculture and Agri-Food Canada's Market Access Secretariat.
One of the questions I was asked had to do with stakeholder expectations. Greater international trade brings concerns over increased competition with the domestic market. Other countries may enjoy greater economies of scale and lower capital, labour, land and input costs. The sector's profitability is affected by exchange rates, which can influence the cost of inputs like energy, water and animal feed.
Access to labour is a key concern amongst B.C.'s producers. B.C. employs the third largest number of temporary foreign workers in Canada, which makes stable and predictable access to foreign labour essential to the continuing success of the sector. In addition, we need to invest in the skills of Canadian workers in order to grow the next generation of entrepreneurs.
Further, our agri-food and seafood industry must contend with varying international standards for the production of safe food. That is why our growth plan includes an action to support industry efforts to implement internationally recognized food safety, sustainability and traceability standards to sustain and expand trade.
While major upcoming trade agreements, such as the Canada-European Union Comprehensive Economic and Trade Agreement, CETA, and the Trans-Pacific Partnership bring opportunities for many sectors, domestic market concessions for dairy products also raise concerns for some of our producers.
While B.C. welcomes these new trade agreements and the opportunities they offer, we are also conscious that the supply-managed sector, which accounts for $1.1 billion in farm cash receipts in this province, may need a range of policy responses to improve its underlying competitiveness.
Industry expects government to ensure they can access the markets they are interested in. This means that governments need to work together to address issues such as trade negotiations and technical barriers to trade. On a practical level, doing so requires sufficient resources for the Canadian Food Inspection Agency to facilitate the continued growth of Canada's and B.C.'s agri-food exports.
In regard to sustainable improvements for production capabilities of the supply chain, competitive pressures are a major challenge for many established B.C. producers and processors. As the global reach of supply chain makes it possible to source products from nearly anywhere in the world, producers and processors need to continually update their production capabilities and develop innovative responses to be more competitive.
As part of GF2, the innovation programs provide funding for producers and processors to develop, test, adopt and commercialize technologies, processes and practices. Innovation programs fund projects that result in the development, commercialization and adoption of innovative technologies that allow for efficiencies and use of inputs — such as fertilizers, pest management products, et cetera — increased yields and the overall maximization of critical resources such as land and water. Strong support for innovation in the supply chain encourages leading-edge research from academia and industry, attracts business investment and nurtures the ability of producers and processors to provide value-added and highly innovative goods and services.
In regard to competitiveness and profitability, the food and beverage processing sector, one of the largest manufacturing sectors in B.C., is strategically located near B.C.'s highly integrated transportation system, making it easy to access ingredients and ship finished goods.
Seafood, agri-food and beverage processors figure prominently in B.C.'s food supply chain. Keeping a diverse and innovative food processing sector is important to food supply security and economic growth. The Ministry of Agriculture developed a Food Processing Action Plan, one of its actions in the Strategic Growth Plan, to encourage processing capacity growth and promote commercialization opportunities. This new action plan identifies industry and company capacity, investment in infrastructure, and technology and labour shortages as the three key challenges to B.C. food processors.
Innovation programs are also supporting business mentoring and coaching for food processors, with the goal of helping them identify and address challenges to growth. B.C. looks forward to working with the federal government to develop the Agri-Food Value Added Investment Fund to help support much-needed innovation in B.C.'s agri-food and seafood industry.
With regard to diversity, food security and traceability, the sector's innovative culture enhances competitiveness through a sustainable, environmentally responsible food system. The approach helps to increase productivity, develop novel products for new markets and find new ways to provide safety and quality assurance to customers, while reducing operating costs and exposure to business-related risks.
I might add that this is an important feature in B.C., where we have so many commodities where we produce a lot of things but a little bit of each of them, so that competitiveness and those diverse markets are important to us.
B.C. agri-food and seafood processors benefit from a number of attributes, which is important to food supply security. This competitive advantage places B.C. in a strong position in the event of possible future disruptions to food supply.
The province is working to enhance food supply security. For example, we have established agreements for effective coordination of critical disease control responses, such as a federal-provincial Foreign Animal Disease Emergency Support Plan.
Government and industry can work together to develop and expand domestic, interprovincial and international markets, and raise production and processing capacity, to strengthen food supply. Sustainability efforts include assisting our seafood processors to become Marine Stewardship Council, or MSC, certified and to assist the finfish aquaculture industry to become Aquaculture Stewardship Council, or ASC, certified.
Other risks to our food supply security are related to food safety, livestock disease outbreaks, identity preservation and new traceability regulations that have prompted calls for better traceability systems. The province provides GF2 cost-shared funding to encourage adoption of traceability systems and practices by producers and processors.
Traceability systems generate both public and private benefits. The province provides cost-shared funding to encourage adoption of those systems, and the voluntary provincial livestock premises registration system has seen low uptake in this province for some sectors. This, of course, limits the effectiveness of the system.
This situation will be improved when the CFIA introduces livestock movement regulations, anticipated to follow this year, which are expected to include a requirement for livestock operations to provide their provincially issued premise identification numbers on livestock movement documents.
In conclusion, I would like to reiterate that B.C. recognizes the importance of international markets for continuing the trend for economic growth in the sector. In 2015, the sector saw an unprecedented increase of close to $1 billion in sales, expanding community strength in the sector and the B.C. economy. B.C. is supportive of ratifying the CETA and TPP agreements, and we look forward to capitalizing on the existing markets and expanding to new markets.
At the same time, key challenges, including difficulties accessing labour and difficulties accessing funding based on artificial divisions between land-based and water-based food systems, are hampering the sector's ability to maximize growth.
In light of the shared jurisdiction over agriculture and fisheries, B.C. looks forward to working with the federal government, including through the upcoming Growing Forward 3 negotiations, to strengthen production, processing and marketing of agri-food and seafood products.
Thank you.
The Deputy Chair: Mr. Sturko, thank you very much for your presentation. It was very thorough. We'll now go to questions, starting with Senator Oh.
Senator Oh: Hello, minister. How are you? I want to talk about traceability systems and ensuring the safety of agri- food products along the food supply chain. We are now using them on a nationwide and international level for export of cattle, bison, sheep, pigs and health of animals regulations. What about fruits and vegetables, which could also lead to some kinds of disease? Do you think there is a need to implement traceability systems for horticulture products, and why?
Mr. Sturko: Thank you for the question.
B.C. has been an active participant in all the traceability and tracking activities that have gone on across Canada, so we're very engaged in that. There are programs under GF2 to try to enhance the traceability of other food products besides the ones you've mentioned, and we are actively engaged in those.
I should also point out that we have a very robust, active and well-respected plant and animal health lab in British Columbia. Part of the activities of that lab are to track and test for things coming into the province, either on the plant side of the industry or the animal side of the industry. They seem to be very much leaders, certainly in North America, in terms of that trace tracking.
We've got the other side, which is watching for stuff coming into the province or country. I should point out that a good example of that is we're doing a very proactive effort to try to track the spread of avian influenza and eliminate it coming into the country through wild animals before they come into contact with domestic animals.
Senator Oh: For horticulture products for export, do you have the same system that the private sector is doing?
Mr. Sturko: I'm not sure I understood the question.
Senator Oh: I'm talking about the traceability system. Does it apply to fruits and vegetables for overseas exports?
Mr. Sturko: Not to the same extent as livestock. All the products that leave the province go through testing by the Canadian Food Inspection Agency to be able to leave the province, but not to the same extent as animals.
Senator Tardif: Thank you for your very interesting presentation, Mr. Sturko.
You alluded to the difficulty of having a sufficient labour market and the difficulty that was causing your industries. We heard the same thing from the BC Fruit Growers' Association and the B.C. organic group when we had public hearings in Calgary a few weeks ago. They indicated that that was a concern of theirs as well.
According to some witnesses, the Seasonal Agricultural Worker Program lacked flexibility and included long administrative delays in processing files. Would you concur with that statement, and are you having difficulties in that same area?
Mr. Sturko: Thank you for the question. I would say that in addition to the two parts of the industry you have mentioned, we're also having the same experience with our aquaculture industry, again also having difficulty trying to get a sufficient and consistent supply of labour.
We're working with our Ministry of Jobs, Tourism and Skills Training, which has the strongest connection with Canada on those labour market programs and programs to do with temporary foreign workers. I would say there is some indication and evidence that we're having difficulty getting a sustained, consistent labour supply in those three sectors. So the answer to your question is "yes.''
Senator Tardif: I'm not sure I heard you correctly, so I just want you to clarify or expand on something you've stated here. You indicated that the supply managed sector needed a managed response. What did that mean? I'm not sure that I quoted it correctly, but it was something about the supply managed sector that needed more flexibility, perhaps, or a managed response.
Mr. Sturko: I think my comment was in regard to the impact of some of the trade agreements, CETA and TPP, on the supply management.
They have the sense that as part of the negotiations, there will be a little bit more market access provided to other countries, particularly the United States, in some particular products coming into the country, and they're looking for some way to be compensated for or for some kind of an adjustment to be made to respond to that impact on them, which they see as negative.
Senator Tardif: You're saying you're supportive of those agreements, but you would hope there would be some type of compensation for the loss of market that could be incurred.
Mr. Sturko: Yes. The province is very supportive of both of those agreements, and they've been public about that, but we are cognizant that there are some small parts of the sector where there are some negative impacts, and we're supportive of them getting additional support.
[Translation]
Senator Dagenais: Thank you, Mr. Deputy Minister. Before asking my question, I would like to draw your attention to something. Earlier, Senator Tardif was talking about foreign workers, and this morning on Montreal radio, I heard about a farmer who had lost his asparagus crop because the foreign workers have not arrived yet. Strangely, at the Montreal airport, during the night, a plane landed with 300 foreign workers on board. Just imagine; the foreign workers arrive, but the asparagus crop has already been lost. The workers are important, but so is coordination.
I would like to get back to the challenges your province faces in the agricultural sector. I know that you have a plan to further economic growth, but you must adapt to climate change, to water-related issues, as well as see to the safety of the agri-food supply chain.
How will your strategic growth plan overcome these challenges your government is facing?
[English]
Mr. Sturko: Thank you for the question. If you have seen our strategic growth plan, you will have seen that climate change and adapting to climate change is a very important part of our plan.
As is the case with the current federal government, our ministers received mandate letters from the premier. One of the key objectives given to our minister this year was to come back with a plan to respond to both the challenges and opportunities posed by climate change for the agriculture sector.
As part of the analysis we've done, we discovered there are both challenges and opportunities. For example, if one looks at the forecast of the impact of climate change on food and fisheries production, it is, in fact, some parts of the northern hemisphere that have the most opportunities being creating by the warming climate, but it also brings with it the challenges of drier and hotter temperatures. In British Columbia right now, we are experiencing that in some parts of the province where it's dry already.
You're probably also aware that British Columbia has served very much as a leader on climate change activity in the country and is known nationally and internationally on that leadership.
The province is working on its Climate Action Plan 2.0, which is the next phase of the overall climate change adaptation. There are two streams to that, one dealing with greenhouse gases on the mitigation side, which is less of an agriculture issue than adaptation, which is trying to figure out the best ways to shift what B.C. agriculture does.
We have local and regional environmental plans that are climate based, which are trying to help individual regions of the province adapt to the changing climate circumstances, whether or not that's water or temperature in those regions.
We're working on a more aggressive, comprehensive province-wide plan that has a big feature in it that will have to be water based and, most importantly, water retention and storage based. We still have a lot of water in this province, but it comes early and disappears quickly, so we have periods of time when it's very dry. We're trying to adapt and respond to that. Having alternative ways of getting water to the crops and the animals will be an important part of our plan.
I think it's fair to say we haven't got it all figured out yet, but we're definitely working on that in a very aggressive way. It's part of our growth plan and also part the province's Climate Action Plan.
I'm not sure I've answered all of your question.
The Deputy Chair: I was very interested in your discussion about your farmed salmon versus wild salmon as an export. Have you had good success in shipping farmed salmon to markets other than the United States?
Mr. Sturko: Yes. A lot of the Asian countries are very interested in our farmed salmon. We have a very high demand for our farmed salmon products and some of our other aquaculture products, and our supply is nowhere near the demand. So countries other than the United States, yes.
The Deputy Chair: That is the issue, that you've got that demand now. By 2050, we will have 9 billion people on this planet, and we have to be collectively prepared to feed those people or there will be a fair amount of civil unrest that goes with people not having enough to eat.
British Columbia has been a leader in development of new products in the agricultural sector. At the centre of that has been Agriculture Canada's Summerland Research Station. Have the recent cutbacks there had an effect, as far as you are concerned, on future development?
Mr. Sturko: It would be fair to say there is no tangible evidence of impact, but our industry has definitely been vocal in telling us they believe there has been an impact. They have told us that they saw the value in what was going on at the centre. However, on the other side, there is a fair amount of effort through Growing Forward 2 to support innovation and the development of new technologies, crops and methodologies. To some degree, that has offset some of those impacts.
I would like to speak to your original comment about the 9 billion people. You probably heard me mention a couple of times in my opening comments about food supply security. That has become a primary driver of our growth plan tied not only to being able to feed ourselves, which is primary, but also to thinking about the world. We are in agreement with your comments in that regard, sir.
The Deputy Chair: While that sounds very humanitarian of both of us, there are also some large economic opportunities for everyone.
You also mentioned a plant and animal health lab.
Mr. Sturko: Yes.
The Deputy Chair: What has the focus been? Has it been on poultry, which is a primary product in British Columbia, or is it on other animals as well? I know beef is also an important product from British Columbia. Where has the focus been on the animal side, and where has their focus been on the plant side?
Mr. Sturko: I can start with the animal side. We have a pretty diverse focus with a growing team at the lab. I will use a couple of examples. We have a very aggressive team of well-respected and well-known scientists leading efforts to track the relationship between wild and farmed salmon and the impact of wild salmon on farmed salmon and vice versa. We have a strong team. That is a significant effort on our part because we want to be sure that we don't have one negatively impacting the other.
We have a strong effort around poultry. Recently, in late 2014, we had an outbreak of avian influenza that was brought under control quickly. In addition to learning from that effort, both how the lab performed and the emergency response process — shutting down the borders, et cetera — we are doing a leading edge bit of effort to try to figure out the source of avian influenza in order to stop it before it gets to animals.
The third one you mentioned was cattle. We have a strong testing regime around cattle to prevent some of the diseases that have occurred in the past. We at least track the diseases and identify them when they occur.
It is a comprehensive group, and those are three examples of some of our priorities.
On the plant side, there is a lot of effort to try to track and minimize the impact of any disease or whatever on tree fruit and berry products. We have a very large tree fruit industry, such as apples, in this province, in particular the Okanagan. We minimize or mitigate or eliminate any impact of diseases in our lab work.
The Deputy Chair: In your presentation, you talked about an action plan. You said there were three concerns: capacity and labour shortages but I can't recall the third. How are you addressing those concerns? You can remind me what the third concern is.
Mr. Sturko: The three difficulties around accessing labour: Our view in British Columbia — and I think a few other coastal provinces share this view — is that some of the funding provided for different programs is artificially divided between land-based and water-based food systems. For example, in GF2, many more of the traditional food-based systems are supported through GF programming. On the water supply, our analogy is that on many things, we fund the french fries but not the fish; so we have this kind of imbalance. Those were the major ones.
On the issue of imbalance, as part of our negotiations toward Growing Forward 3 or whatever the new policy framework will be called eventually, discussion is part of the FPT process and how to get a better balance, whether that is through an expansion or a change in the GF 2 model or a different approach on the DFO side or a parallel approach on that side. In British Columbia, we look at the entire sector as an industry, whether that is coming from the water, the land or being processed, such as the wineries, et cetera. We try to treat them all as an integrated package.
In terms of the challenge around labour, we have alluded to that. The important part for us is our work with the other ministries to try to maximize our opportunities under labour market programs, such as the Temporary Foreign Workers Program, et cetera. We have had a series of round tables and labour market forums in the province with all sectors, including the food and food processing sectors, with our affected to try to inform them so they can make the best case possible with Ottawa around where the challenges exist and what we need to do to fix those. We have a pretty aggressive approach on both fronts.
The Deputy Chair: I don't blame you for being aggressive.
Senator Tardif: You mentioned the importance of the food and beverage industry. Of course, we all know of the wonderful wine-growing regions in B.C. as well as the great wine that is produced. Is the wine-producing industry a growing export market for the province?
Mr. Sturko: Yes. I think it is fair to say that B.C. wines are now being seen to be world-class in international venues. We are not a big industry on the scale of rural production, but we are an impressive industry. Increasingly, we see our wines winning awards and our sales going up.
The funny thing is that we sometimes have more of a challenge getting products across the country than outside the country.
Senator Tardif: We have heard that on many occasions.
Mr. Sturko: We try to initiate a conversation with other provinces, and some have responded to open the border to the movement of wine and other liquor commodities. It is a growing and very successful industry, after such a short time in existence compared to European countries.
Senator Tardif: I certainly hope that those interprovincial trade barriers will be eliminated with regard to the transportation of beverages that B.C. produces as well as other countries. I know the federal government has done its part in eliminating it but, unfortunately, some of the provinces have not moved accordingly.
What percentage of the market do you export?
Mr. Sturko: Do you mean what percentage of our production gets exported? Is that the question?
Senator Tardif: That's right. I'm sorry; my question was not phrased well.
Mr. Sturko: Is that overall or just for wine?
Senator Tardif: For wine. Would you be including cider, for example, in that as well?
Mr. Sturko: I would have to follow up with the specific numbers for wine. We don't have a large-scale cider or craft beer export program yet. Probably the fastest growing part of our industry now is the craft beer industry, although it is not aimed at export yet. I would have to follow up and get that information to you.
Senator Tardif: If you could send that information to our clerk, that would be most appreciated.
The Deputy Chair: Thank you. I want you to know that this committee has done its part on the consumption of wine while we were there.
Mr. Sturko: Thank you.
The Deputy Chair: Also, the export of wine when we left. We all left with as much as we could possibly handle. I know that I went back to Nova Scotia and was pleased to share some absolutely terrific British Columbia wine with my family and friends. They were envious that I had access to it but they didn't. That is an ongoing problem for wine. That is also an ongoing problem for wines coming the other way, too, because I know that you are all lining up from British Columbia to try some of the great Nova Scotia wines.
Mr. Sturko, thank you very much for your presentation. We appreciate your time. If you think of anything else that might be pertinent to our study, please don't hesitate to send it to us via the clerk. We wish you well. We are always very proud of the agriculture and agri-food sector in British Columbia. We know how important it is to your economy, but that makes it also extremely important to the national economy so thank you very much.
Mr. Sturko: Thank you very much for your time and the opportunity.
(The committee adjourned.)