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Proceedings of the Standing Senate Committee on
Agriculture and Forestry

Issue 3 - Evidence - Meeting of October 27, 2011


OTTAWA, Thursday, October 27, 2011

The Standing Senate Committee on Agriculture and Forestry met this day at 8:04 a.m. to examine and report on research and innovation efforts in the agricultural sector (topic: Innovation in the agriculture and agri-food sector from the producers' perspective).

Senator Percy Mockler (Chair) in the chair.

[English]

The Chair: Good morning; I declare the meeting in session.

[Translation]

I would like to welcome everyone to the Standing Senate Committee on Agriculture and Forestry.

[English]

My name is Percy Mockler, and I am a senator from New Brunswick and the chair of the committee. At this time, I would ask all other senators, starting on my left, to introduce themselves.

Senator Mercer: Senator Terry Mercer, from Nova Scotia.

[Translation]

Senator Robichaud: Fernand Robichaud.

[English]

Senator Fairbairn: Joyce Fairbairn, from Lethbridge, Alberta.

Senator Mahovlich: Frank Mahovlich, from Ontario.

Senator Plett: Don Plett, from Landmark, Manitoba.

Senator Eaton: Nicole Eaton, from Toronto, Ontario.

[Translation]

Senator Rivard: Michel Rivard, Laurentides, Quebec.

[English]

The Chair: I thank the witnesses for accepting our invitation to share with us and all Canadians their knowledge and views of the farming community that they represent. No doubt they have taken into consideration the committee's order of reference. A report on developing new markets domestically and internationally, enhancing agricultural sustainability and improving food diversity and security will be presented to the Senate.

[Translation]

The purpose of today's meeting is to gain an understanding of innovation in the agricultural and agri-food sector, while taking into account the perspectives of farm producers themselves.

[English]

We have, from the Canadian Produce Marketing Association, Ron Lemaire, President; and Jane Proctor, Vice President, Policy and Issues Management.

[Translation]

We also have with us the Executive Vice-President of the Canadian Horticultural Council, Anne Fowlie.

[English]

I am informed by the clerk of the committee that the first witness to present is Mr. Lemaire, followed by Ms. Fowlie. Following presentations, senators will ask questions. Mr. Lemaire, please proceed.

Ron Lemaire, President, Canadian Produce Marketing Association: Honourable committee members of the Standing Senate Committee on Agriculture and Forestry, on behalf of the Canadian Produce Marketing Association, I thank you for the opportunity to present today.

The Canadian fresh fruit and vegetable market contributes approximately $5 billion in measurable economic activity in Canada and provides direct employment for over 90,000 Canadians across the country. The CPMA is a not-for-profit association that has represented the interests of the fresh fruit and vegetable trade in Canada for the past 87 years. Supporting a vertically integrated supply chain, we represent over 770 companies from farm gate to dinner plate — in other words, growers and shippers to food retailers, food service and most everyone in between. As an example, members include Prince Edward Island Potatoes, BC Tree Fruits, Loblaws, Metro, Sysco and Gordon Food Service. Within our membership, CPMA represents the interests of 456 Canadian companies, including over 150 Canadian growers, shippers and packers. This diversified Canadian membership provides CPMA with a unique perspective on the issues and challenges facing Canadian agriculture at both the primary production and market levels.

While no single solution or magic bullet will solve the long-standing or historical challenges faced by the fresh fruit and vegetable market, we need to look to new policy and economic models that will support Canadian companies to be more competitive both domestically and internationally. On this, I would like to focus quickly on some identified areas of opportunities within the context of the three areas of interest as outlined in your order of reference.

In terms of developing new markets domestically and internationally, the lack of sound market information for the fresh fruit and vegetable sector is a current gap and potential opportunity for the government to support business planning, trade negotiations and the sustainability of the Canadian fresh fruit and vegetable industry within our global marketplace.

I must note that the current Infohort system is underfunded and under resourced. Industry and government are currently working in the dark and at a competitive disadvantage when it comes to market information on a domestic level. Accurate market information is essential to support our needs for market and economic analyses to build business and cultivate opportunities.

Additionally, innovation in the Canadian marketplace is required to meet the ever-changing diversity of the Canadian mosaic. Immigration, an aging population and globalization are some of the factors influencing eating habits, trends and food spending in Canada. The introduction of new products in Canada, food as nutraceuticals and other innovations, ranging from packaging to production technologies, will ensure the long-term sustainability and viability of Canadian agriculture, if Canadian agriculture has the support to keep pace; and this support is fundamental.

The positive for the fresh fruit and vegetable industry is that we are seeing a growing trend of Canadians looking to whole foods to address health and wellness. The question we must ask is this: Are we, as Canadian policy-makers and producers, supporting this trend with the appropriate policy and environment for Canadian innovations to flourish and lead the market domestically and internationally?

Grower access to new production technologies, including crop protection products, is essential to remaining competitive. The Government of Canada must be agile and proactive to support the rapid pace of change that the fresh fruit and vegetable industry functions within every day. To this end, we encourage the continued cooperation between the Pest Management Regulatory Agency and their international counterparts to ensure that Canadian industry has access to the products and technologies that ensure competitiveness and a safe and secure supply chain for Canadians. Additionally, the government must work closely with industry in other areas, such as the modernization of the fresh fruit and vegetable program, including food safety, grades and standards, and traceability.

Furthermore, for an industry to be competitively sound, financial risk mitigation tools must be available. Financial risk mitigation has been an issue since the late 1980s. In 2005, the issue gained more prominence as it was reported that the fresh fruit and vegetable trade held the highest rate of bankruptcies at 2.3 companies per $1 billion. This figure does not include deliberate closure or termination of companies in the trade either to avoid payment of suppliers or legitimate business termination, including insolvency. The impact on Canadian business, specifically the primary producer within the fresh fruit and vegetable market, was and still is significant.

Additionally, the 2005 Hedley report, submitted by industry to the Government of Canada, identified illegal to unethical practices on the issues of non-payment, slow payment and insolvency. This report demonstrated the need to develop a tool for a financial protection program similar to the Perishable Agricultural Commodities Act, or PACA, trust in the United States. Why do we need this? The benefits are simple. It is about people being paid fairly and in a timely manner, all of which indirectly impacts consumer pricing and food security and directly impacts producer incomes.

The solution, however, is not simple but essential: Improve the current marketing regulations. The Hedley report provides scope for change. As an example, this could include amendments to the CAP act and improved market information be made available to industry for improving greater transparency and information symmetry in the markets.

Currently, 60 to 70 per cent of Canadian fresh fruit and vegetable exports go to the United States. Canadians enjoy the benefit and security of PACA when trading within the United States. Without a reciprocal risk mitigation tool available in Canada, there is a risk that the U.S. industry may pressure the United States government to remove Canada's preferential treatment under PACA, thereby putting Canadian growers shipping to the U.S. at risk. While industry is appreciative of the work currently under way by Agriculture and Agri-Food Canada, more needs to be done quickly.

Trade barriers within North America are another concern for CPMA and its members. On this, CPMA supports a North American perimeter approach, as developed by Prime Minister Harper and President Obama, as we hope this will support the removal of trade barriers between our two countries.

Finally, and perhaps our area of greatest concern, is the rising levels of childhood obesity and associated disease. Fresh fruit and vegetables play a significant role in the health of our children and all Canadians. Statistics Canada data from 2010 has shown a decline in the number of fruit and vegetable servings Canadians consume. We need the Government of Canada's help to stop this decline. Access to fresh fruit and vegetables and the perception that fresh fruit and vegetables are costly and difficult to prepare are all factors that impact food security. Consumer education and bringing Canadians closer to the farm are important steps to addressing the issue. Examples of this can be seen around the globe — the U.K., Ireland and our neighbours to the south have all invested at the national level in some form of fruit and vegetable program. We must recognize that every dollar spent today on programs that put another serving of fruit and vegetable in a Canadian's stomach will exponentially reduce the amount spent by government on future health care costs, address food security issues and support the delivery of a year-round supply of healthy and tasty fresh fruit and vegetables for our children and the overall population.

In closing, CPMA is co-hosting, with our partner the Canadian Horticultural Council, a fall harvest event on November 22 and 23 in downtown Ottawa, which will focus on many of the issues I have outlined today. This event will include meetings with your colleagues in Parliament and will aise awareness of the issues impacting industry and the significant role the Canadian produce industry plays in the health of Canadians and the financial viability of Canada. Thank you.

The Chair: Thank you, Mr. Lemaire.

[Translation]

Anne Fowlie, Executive Vice President, Canadian Horticultural Council: Good morning and thank you. It is truly a privilege for us to share information with you.

[English]

The Canadian Horticultural Council, established in 1922, is a national association representing producers, packers and storage intermediaries of a diverse assortment of over 120 fresh fruit and vegetable crops. Membership includes provincial and national horticultural commodity organizations representing more than 25,000 producers in Canada as well as allied and service organizations, provincial governments and individual producers. Our mission is a commitment to advance the growth in economic viability of horticulture by encouraging cooperation and understanding to build national consensus on key issues and deliver clear and united messages and representation to you and other colleagues and international parties.

The industry is highly diversified, as in agricultural production, and is one of Canada's largest agri-food industries. For example, Canadians spend more than $14 billion on fruit and vegetable products, fresh and processed, which accounts for 25 per cent of all retail food expenditures, so certainly it is not insignificant. It is indeed one of the larger agricultural production sectors, with over $5 billion in cash receipts. It is the major source of cash receipts in British Columbia and Prince Edward Island and accounts for more than one half of crop receipts in all provinces outside of the Prairies.

As in all farm sectors, horticulture has been greatly affected by globalization, the strengthening of the Canadian dollar, increasing regulatory costs and, of course, the concentration at each end of the supply chain.

As an organization, we have achieved a certain measure of success over time. The Seasonal Agricultural Worker Program began as a partnership with producers, the Canadian Horticultural Council and the Government of Canada over 40 years ago. It thrives today, and many producers are in business as a result of it. The memorandum of understanding for the partnership was struck between the Government of Canada and the Canadian Horticultural Council and remains in place today.

In reference to the pest management centre within Agriculture and Agri-Food Canada, the council and its efforts were integral to the establishment of this all-important facility, which is contributing to horticulture's competitiveness.

With respect to food safety, the CanadaGAP On-Farm Food Safety Program for growers, packers and storage intermediaries is the only food safety program in Canada to have been successfully benchmarked to the Global Food Safety Initiative. This is a tremendous credit to producers, to the minister and the department and to the Canadian Food Inspection Agency.

We are very pleased that you are considering the issues in your order. I will begin with a few comments on improving food diversity and security, as we like to refer to that, by Canadians for Canadians. It is a priority that will be achieved only through dialogue, understanding and strategic collaboration.

What is required? You have already heard my colleague, Mr. Lemaire, touch on a number of things, and I will as well: providing adequate funding for research and innovation; taking appropriate actions to develop and implement policies and programs that foster producer profitability, and this includes traditional and non-traditional risk management programs in the very broadest sense; ensuring a favourable regulatory environment that is conducive to commerce, and timely access to new crop protection technologies; and, of course, supporting and promoting food safety and traceability initiatives.

However, it begins on the farm, and prosperity at the farm gate will drive prosperity beyond the farm gate. A consistent, safe, nutritious, quality product produced in a sustainable and competitive manner, which includes timely access to new and innovative technologies and a host of risk mitigation tools, marketed at a reasonable price with full and timely payment will provide long-term benefits. This is the true recipe for innovation and sustainability.

Research and innovation are critically important to maintaining the competitiveness of Canada's horticultural sector. The announcement of the Canadian Agri-Science Clusters Initiative was received with enthusiasm and a sense of opportunity for horticulture and indeed all of agriculture. Its stated purpose is to encourage key agricultural organizations to mobilize and coordinate a critical mass of scientific and technical capacity in industry, government and academia in order to create, design and implement a national program of applied science, technology transfer and commercialization plans in support of sector strategies and priorities to enhance profitability and competitiveness.

In 2009, horticulture rationalized its needs and priorities vis-à-vis research and innovation into five theme areas: health and wellness; food safety and quality; production and production systems; environmental performance of the horticultural system, which includes pest management; and energy management and efficiency. We believe these to be well aligned with the Government of Canada priorities.

Our mandate with respect to our science cluster is to ensure appropriate linkages with science and technology stakeholders to contribute to an accelerated pace of innovation in horticulture; facilitate the adoption of new technologies across horticulture; provide a forum to address and access the new agri-innovation program under Growing Forward, which we hope will be sustained in the next agricultural policy framework; and protect the interests of members and their investment through appropriate IP protection and the acquisition of licensing rights, where appropriate.

The result of this program is that it enables industry and researchers to collaborate and work toward the goal of enhanced profitability and competitiveness through the use of scientific and technical resources to support innovation strategies. Innovation is critically important to producers in order to maintain competitiveness. The potential benefits and synergies that will be accrued through the cluster by improving coordination of applied research initiatives among various Canadian research organizations are of great value to the industry, as well as the public good.

The suite of initiatives now under way through the agri-science cluster may be found in the annexes in the document you have received.

I mentioned production research, and we certainly cannot underscore that. I will use a few examples. One I am familiar with, because I worked for 20 years in the potato industry in New Brunswick, is wireworm, which is a national problem. The devastation that wireworm has been causing in the potato industry in P.E.I. has been accumulating and the dollar value associated with these losses is increasing substantially. Estimates are that approximately $3 million in claims, or 20 per cent of the total crop insurance claims paid out to Island farmers, have been due to wireworm damage, and that is just in Prince Edward Island. It is an issue in all potato-producing areas.

Carrots are also affected. In P.E.I. and Nova Scotia, fields have been abandoned because of the damage. This is just one example of the need for research and technology because, as I said, it begins at the farm. Without those quality raw products to then take along the supply chain to sell as fresh or further process into other products, we do not have that competitiveness and that economic driver that the sector is.

Key to enhancing agricultural sustainability are risk management, which includes pests and disease, and looking at new ways of producing things. As we move toward many new types of food and technologies, we will be looking at other ways of production and marketing. It may not be necessarily by the traditional barrel of potatoes, but perhaps by grams or pounds of nutrients from blueberries or other crops.

There will need to be different risk management tools associated with that. The types of things we need to be thinking about as we look ahead include a favourable regulatory environment; food safety and traceability — and let us keep it to the science; bio-security; and for our sector in particular, we look very much to developing and establishing a national plant pest response strategy. One does not exist for the plant side. There is one for animals but not for plants, and we are fortunate that the minister recently approved a project for us to begin the first steps in looking at that.

On industry challenges and opportunities, I have spoken to some of the production-related challenges. They are often overlooked, but that is where it started. There is also access and commercialization of new varieties; storage and post-harvest management; and marketing and education.

Regarding developing new markets domestically and internationally, in 2009, Minister Ritz announced the creation of the Market Access Secretariat. They just held their annual meeting earlier this week. The minister attended to release their first report, which shows some positive success. This was an initial response to industry's recommendations as to how to strengthen Canada's market access approach.

A number of our commodities are participating in programs that are enabled through agri-marketing and are looking at the development of long-term international strategies. Those include apple, greenhouse, potato and tender fruit.

Some of the sector challenges and barriers are that the regulatory and standards playing field is not level. Canada has world-class regulatory standards in the areas of health, food safety, labour and environmental considerations. Canada complies with these regulatory standards and absorbs the associated costs and implications. However, many other countries do not have these in place. As we look to negotiate international trade agreements, perhaps it is time to include some language that can help us come closer together with some of our competitors.

There are many non-tariff trade barriers, which include phyto-sanitary regulatory requirements, the high cost of foreign inspectors to visit Canada when opening new markets, and lack of free trade agreements with some target markets. One thing to remember with respect to target markets is that one shoe does not necessarily fit all because there are many industries that can compete but are at varying sizes and states of maturity.

How do we address some of these challenges? My colleague spoke to the deficiency we have in strategic market intelligence. I cannot stress that enough. It is so evident in many things that we do, not the least of which over time has been using U.S.-generated import information to defend ourselves in trade actions against the U.S. It is not appropriate.

Training for exporters on regulatory requirements and shared adaptation and development of material from the brand Canada campaign is gaining traction. Now we can use that domestically; it has been a great move to be able to do so.

As far as a vision goes, it includes securing market intelligence; looking at sanitary and phyto-sanitary preparedness, including prevention and response; having an appropriate dispute resolution; and knowing up front what a lever of compensation may be starting out.

Finally, there is the health advantage, which my colleague also concluded with. We see that as a tremendous opportunity for our sector in particular. Healthier Canadians will place less demand on publicly funded health care, and we have a unique opportunity to contribute to that.

We are in the food production business, but we also see ourselves very much in the health business. We are the only group that truly can say "eat more," and there is a lot of data to back that up. Hippocrates had it right a long time ago, when he said: "Let food be thy medicine and medicine be thy food." He was not too far off all those years ago.

We have an event coming up in a few weeks, as my colleague mentioned. We hosted one nearly a year ago. At that time, Dr. Colin Carrie from Health Canada made an encouraging comment to everyone present when he said horticulture has an unprecedented opportunity to impact the lives of Canadians. That very much reflects the feeling we have coming from our sector.

With that, I look forward to your questions and dialogue.

The Chair: Thank you very much, Ms. Fowlie. Before beginning the question round, I just want to share with you that on the marketing side, last week I saw potatoes in a New Brunswick warehouse that had white flesh, red flesh and now blue flesh. They were looking at it also on the health side for food across Canada.

[Translation]

Senator Robichaud: Thank you for your presentation. Senator Mockler forgot to mention that there are also red potatoes. Where I grew up, we had to have red potatoes with fish. They went very well together.

You talked about market intelligence; actually, you both mentioned it. How do you suggest going about it? On one hand, producers and associations such as yours certainly have a role to play. But on the other hand, how could government agencies help you with that?

[English]

Mr. Lemaire: The current issue we have is the change in resources and in the structure and collection of the data. Historically — and this goes back 20 to 25 years — we had government officials, through Agriculture Canada or the Canadian Food Inspection Agency, available in the markets to collect data. Data collection is a very resource-intensive process. Some of the best practice in the collection of market information can be seen in the United States, where there is a fairly intensive resource allocation in the field, at wholesale markets and at the farm level, to understand storage data, production data and market pricing.

Those resources have been reallocated, as time has passed, to other priority areas. We have moved to a voluntary information system. The Infohort system, currently operating under Agriculture and Agri-Food Canada, is a voluntary system and collection of data. It is totally inaccurate.

We have been working with Agriculture Canada, the Canadian Horticultural Council and the Canadian Produce Marketing Association, the CPMA, to try to find solutions. One of the challenges comes back to the information that is being provided. An example is prices at the wholesale level being priced at what would be on their sales sheet. They are not true market prices. There could be a difference of $20 a case. What happens is that market information is showing what the wholesale price is, but then negotiation happens relative to what the actual price will be once sold. That actual price is not being captured. When we sit down and start talking about true pricing — what product is being sold for in the market — we are not able to capture that data. Additionally, we are not able to capture true market- pricing data that is coming from the farm, wholesale or retail.

All of this does help the primary producer to understand what the market activity is, how they can get the best price for their product within the market and, when they look at other economic drivers, whether they are actually growing and providing the right product to Canadians. We have to be ahead of the curve relative to that changing mosaic. Right now we are seeing a wide change in Canadian eating habits due to a change in the Canadian landscape. People have new appetites for different foods. The Canadian producer has to be in a position to support those changing appetites and to introduce their products to that changing dynamic in the Canadian marketplace. Without the appropriate market information to understand what is being sold, eaten or consumed and how it is really priced, it is difficult to develop a business strategy for the production and supply chain of a product, to market that product through as one piece.

Senator Robichaud: It is the chicken or the egg. Where do we start?

Mr. Lemaire: I totally agree; that is a very good point. The piece of the puzzle comes back to setting the structure. We currently do not have an appropriate structure to collect data, and that is a starting point. The structure has moved to a position where it is not functioning to meet the needs of government and of industry.

Work is happening, through the Horticulture Value Chain Roundtable, to determine what industry requires and what information could be collected. The Quebec Horticultural Council is leading some of that market-data collection. They are running a pilot project, and it is very labour intensive. We are finding that it does come back to investment. What are we investing in the collection of that data to improve our business and trade practices to be more productive on an economic level?

[Translation]

Ms. Fowlie: You are absolutely right. It starts with producers. But we need to trust them and ensure the information is used correctly. As my colleague mentioned, the necessary structure is not in place. A number of years ago, the Canadian Food Inspection Agency was involved in data collection. That is no longer the case. The same goes for Statistics Canada. This is key in terms of risk management, because if producers do not know the real price on the market, they sell for less. And that affects the entire market, not only where they are, be it Grand Falls or Charlottetown, but Toronto and Montreal, as well. We need the right structure and coordination. We need to take a close look at structures that are working well elsewhere.

Senator Robichaud: You would need supply management, a structure of that nature, would you not? Okay, thank you.

[English]

Senator Plett: Ms. Fowlie — and I would like both you and Mr. Lemaire to answer this question — you referred, in your presentation, to buying Canadian for Canadians. We are upset when President Obama comes out and says, "Buy American." I think we are very dependent on exports. I want you to go more into to whom we export and how much. If we really promote buying Canadian for Canadians, are we being a little hypocritical when we then want to export our products?

Ms. Fowlie: Is that not always the name of the game when negotiating trade agreements? We want access, but we have to give access as well.

In the document you have, I did include some charts that indicate the top 10 export markets for Canada's fruit products, vegetable products, and potato and potato products, which are categorized separately. Certainly, the United States — no surprise there — is our key trading partner.

It is no surprise that, as Canadians, we are maybe a little shy and not as enthusiastic as we could be about our own products or about buying our own products. I think some of that can begin at home. Perhaps there are a few things to learn from our colleagues to the south. I am not looking to cause trade disruptions or anything, but there are things that we can do here, possibly through a number of our food institutions and food service purveyors. Perhaps there is not always the extent of Canadian product available that there should or could be.

If I digress slightly in talking about health and what is going on in the U.S., it is because what has happened there is phenomenal. In January they re-released their food guide. All the messaging and visuals suggested make your plate half fruit and vegetable. That fits well with what we look at buyers to do within our sector to try and contribute to Canada's health agenda. Part of the issue is that it is not short-term — or low-hanging fruit, if you will excuse the pun. Rather, it is a long-term investment and philosophy that has to be adopted. In the U.S., 18 per cent of GDP is going to health care costs. That is not sustainable for them. Canada's percentage is not that high yet, but that it could be the trend and where we are going.

The solution is a philosophy and is multidisciplinary and multi-departmental in that a number of departments and ministers need to champion and collaborate on this.

Mr. Lemaire: Relative to the local movement program demand, on a global level we are seeing an increased demand within geographic areas of interest in their own local production, which is positive. We need to capture and leverage that. Also, we have to recognize that within the Canadian climate, we do not necessarily produce the range of products that our changing Canadian population is demanding. For example, we do not produce citrus or bananas. There is a balance between what we are importing and what we are selling domestically. Industry has begun to adjust and work together.

Canadian retailers want to sell local product. It is part of their vision and mission to include the highest quality and volume of product in the market. Part of that process includes understanding when production is available at the beginning of season and how easily or well they can provide that product throughout the season, while ensuring that, as Ms. Fowlie touched on, the product is being produced at a high-value level, which comes back to innovation and the production level.

Industry partners with allied industries around the globe. For example, a tree fruit industry in Canada recognizes that while they have a certain production level they would like to sell domestically, they also have product that is exported. Work with the U.S. tree fruit industry is collaborative, in peaches, for example. When our season comes in at this time of the year, work ensures that the shoulder components are covered off with imported product and through the off-season with local product. That is a healthy market relative to a grower relationship and production base. To ensure that we meet consumer needs, we build a domestic market and an export market to ensure balance between local sales and international sales.

[Translation]

Ms. Fowlie: Obviously, in Canada, we do not produce oranges or other such fruit, as Mr. Lemaire mentioned.

[English]

Imagine a salad bar and baked potato oven in every school in this country. Kids love them. Imagine the additional volume of Canadian-grown products throughout the school year that could be consumed in that manner. That is a huge trend south of the border. There is a huge impetus around putting a salad bar in every school, in part because inner city schools are thought to be food deserts. Often people do not have access to stores and transportation with the kinds of produce you might find in a downtown store. Putting a salad bar in a school does not require the infrastructure work that a big kitchen requires. New schools being built could readily have a salad bar set up without that kind of infrastructure. In schools being retrofitted, the old kitchens are being removed. This is transportable, easy, fun and healthy.

Senator Plett: We are closing school cafeterias because kids do not want to eat there.

Ms. Fowlie: We have to make it so they will want to eat there. We are seeing it happen.

Mr. Lemaire: If I may, I will answer the question relative to consumption. There is an issue relevant to the infrastructure at school cafeterias. The U.S. food service model within their schools is different in that they can provide food in an efficient manner at the elementary and high school levels. However, that should not be a barrier to Canadians finding a solution. The issue comes back to taking a step before the cafeteria food delivery at the education level. We have seen that happen with the recycling program.

For example, I have three young children who do not bring a disposable drink container to school. They pour their juice or milk into a reusable container; it is part of their lifestyle. They think about how they are impacting the environment. We have not been effective in increasing the consumption of fruit and vegetable to the extent that we could be. We need to educate young Canadians, our consumers of tomorrow, that this should be a major part of their diet. Low nutrition foods that they have easy access to should be secondary.

Senator Plett: I guess I am from Missouri on that one. We need to lock the school doors and tell the kids they will eat there, if that is what we want them to do. If a McDonald's is located beside the school, the kids would rather eat there.

I just came back from China, where we visited a school of 1,200 kids with a New Brunswick curriculum, New Brunswick principal and many teachers from New Brunswick; certainly all the teachers were from Canada.

They expected everybody in a kindergarten to grade 12 school to eat in the school cafeteria. They had a card and parents put money on that card so the kids could simply swipe the card to eat in the school cafeteria. These kids are eating healthy. I asked about the grade 11 and 12 kids and was told that because there was no other convenient choice, most of them were eating at school as well. If a McDonald's is close to the school, kids will prefer to eat there. That is an observation more than anything. Before you address that, I see that China is on your chart.

We had a presentation by our good friends from McCain when we were in China, where they are making a lot of French fries. They buy most of their potatoes in Mongolia. How much of our food do we export to China, where 1.35 billion people eat a lot of vegetables and French fries? Are we doing what is needed to tap into that market?

Mr. Lemaire: The Chinese market is a priority area for many Canadian producers and exporters, as it is for many around the globe. It is a very competitive market to engage. Beyond just export, some Canadian growers-shippers and primary producers are setting up relationships with Chinese companies to run secondary businesses there to deal with some of the shipping issues. That process is beginning. That area needs further investment and work on the part of the government as well as industry to build relationships. The Chinese market is truly one of relationship development to build commerce.

Stepping back to touch on your final comment about school food programs, I was part of the subcommittee under the Horticulture Value Chain Roundtable with Agriculture Canada for marketing, and we had looked at opportunities for developing a similar concept or programs. Funding is always an issue. I am fully supportive of the concept of introducing a salad bar or some type of fruit and vegetable program in elementary and high school levels, but I think this comes back to my comment relative to no magic bullet or single bullet that can solve our issues. Addressing how our youth consume food has to be an integrated approach that addresses not only what they are eating in the schools. Locking the doors and keeping them in for lunch would be a challenge, but very interesting. I think there is an opportunity of addressing what is being served in fast food, and we are starting to see that transition within some of our fast food partners of introducing more sliced apples and more salads and other alternatives to their traditional offering. That is the trend we have to begin introducing and changing, so that when the young consumer goes to an opportunity purchase, their selection is fresh fruit and vegetables. That takes education.

There is a combination approach that has to be introduced. One is access and introduction to food so they taste and understand what they are eating and they are exposed to it, where you would get that through the school program, whether it is salad bar or some type of snack program, and two is what they are getting on the exterior through their home life and fast food exposure and trying to bring the entire puzzle together. The many pieces have to be connected.

Senator Plett: I believe Quebec tried to outlaw poutine in hockey arenas, did they not? I do not know how far they got.

Senator Mercer: I remember the riots in the street about banning poutine. I am sure there would have been.

Thank you for being here. We do appreciate it. Mr. Lemaire, in your presentation, you talked about 67 per cent of Canadian fresh fruit and vegetables going to the United States. We enjoy the benefits and security of PACA when trading with the United States without a reciprocal risk mitigation tool available in Canada. You say there is a risk that U.S. industry may pressure the United States government to remove Canada's preferential treatment under PACA, et cetera.

This is the first time that I have heard about a possible threat to fruit and vegetables from Canada. I have been on this committee for eight years now. I am quite familiar with the problems with beef we had through the BSE crisis and other issues of food. Is there a real threat? Are people talking about this? Are people gathering together in the United States, as they did to attack softwood lumber where we ended up leaving money on the table so they could have more money to challenge us in the future? Is this real, or is it something you are thinking might happen?

Mr. Lemaire: I can answer that, and then I will ask Ms. Fowlie also to address the issue. Between our two organizations, Canadian Horticultural Council has taken the lead on driving the issue forward on behalf of the primary producers and Canadian growers who are truly at impact here.

To quickly answer your question, yes, this is a serious concern. There is discussion. As I mentioned, it has been an issue since the 1980s. Within the 2000s, we have been able to address the concern on a direct financial impact level. The United States shippers to Canada, who are also being impacted because of non-payment, slow payment or insolvency are ready to call for action because of their frustration that the Canadian system has not addressed the issue for a such a long period of time.

I mentioned the Hedley report in 2005 went to Agriculture Canada identifying this issue, and I can make that available to the committee. The Government of Canada, through Agriculture Canada, created an additional review. I do not have the name of that report off the top of my head. The two were conflicting, and that puts us now in the position of nothing truly being done.

The current activity under way through a project with Agriculture and Agri-Food Canada is an analysis of the actual issue that we currently stand in around bankruptcies, insolvency and non-payment and the potential solutions. This issue has been brought forward to the regulatory cooperation committee through Treasury to look at how we can address this under current regulation, but the Hedley report has identified that that may not be a potential based on how our current regulatory framework is structured.

At the end of the day, with having our products that are being exported from the United States and imported here in Canada and those U.S. companies not receiving payment or slow payment, the frustration levels are high, and it has come up in every single North American trade committee meeting that we hold within our organization.

Ms. Fowlie: Thank you for the question. It is a legitimate problem.

[Translation]

As I said, I worked in the potato industry for many years. From 1978 to 1986, I was involved in marketing potatoes, and I can tell you that my preference was to sell to Boston or New York, not Montreal or Toronto. The reason is that if there were problems, I was sure that I would be paid, thanks to the PACA program that was in place in the U.S.

[English]

It is legitimate. There are several large groups in the U.S., large producer associations as well as individual companies marketing to Canada, that are frankly tired of the situation where there is slow pay, no pay, legitimate bankruptcy or fraudulent bankruptcy where they are not being paid. They are saying they are prepared to go to the U.S. trade representative. This has been stated at meetings that Mr. Lemaire has referred to. We have seen this written in trade publications. Certainly folks at the U.S. embassy here in Ottawa are well aware. In the booklet that you have, in the annexes, there is a two-page document on financial risk mitigation in the fresh fruit and vegetable industry. This was used as a briefing note for Ambassador Doer. At the United States-Canada Consultative Committee on Agriculture, this has been on every agenda for the meetings since 2005.

Senator Mercer: You identified the problem. I now understand it is a real problem, but what I do not understand is how we solve it. This is come and go. There are insolvencies and bankruptcies, most legitimate and some fraudulent. I suspect that will continue in all industries. What is the role of the government in stopping this?

Ms. Fowlie: The role is to help facilitate implementing a made-in-Canada solution that will provide an outcome similar to that of the Perishable Agricultural Commodities Act. Part of what this does look to do, quite frankly, is provide a preferential creditor status for vendors of fresh fruits and vegetables. They are highly perishable. There is no serial number. If there is a problem, there is nothing to go and reclaim to try and receive any money.

Frankly, it is a little more complicated in Canada because of the federal-provincial-territorial infrastructure and jurisdictions. Now, that being said, just because it is complicated does not mean there cannot be a solution, because in a number of reports and legal opinions that have been done, there are recommendations as to the jurisdictions that the Government of Canada has and the provinces have with respect to contract law. I can never remember what the second one is. One is one and one is the other. Each can delegate to the other — federal or provincial — some responsibilities, or they can each delegate their respective responsibilities to a third party. There are ways of doing that.

We are not looking to Treasury Board for funds for this. It needs to be a grower-driven and maintained solution long-term, which is what it is in the United States. If you look at the history around it, it started many years ago because of cattle rustling; cattle were being stolen and people were not getting paid. That was the genesis of it in the U.S.

Senator Mercer: Industry will drive this, not government; is that correct?

Ms. Fowlie: Government has a role to play in helping facilitate it.

Senator Mercer: That is a much simpler role. It is a role I think government can and should play.

Senator Robichaud: As a supplementary to that, how would the growers, the primary producers, participate? Would they be the ones on a check-off or something to provide funds to operate that mechanism?

Ms. Fowlie: We can provide supplemental information to you that would have more details as to how that would work. Particularly in the potato industry and in Atlantic Canada, there have been a lot of significant losses over time from this type of thing. We will follow up on this with you because we could spend a lot of time on it.

Senator Mercer: Ms. Fowlie, you talked a bit about pricing, as did Mr. Lemaire — about producers not knowing what the price was. I am a city boy, so a lot of this is new to me as I go through my education here on this committee. However, in the farms I visited, I was always impressed by the fact that every farmer had a computer in the kitchen or the office, and one of the things that he or she was doing was monitoring the prices. They could tell you what was going on in Chicago with respect to the price of beef or pork or what have you at that very moment as they went through their day, as well as the price of feed, et cetera. I am surprised there is a lack of understanding as to what the prices are on any given day.

Mr. Lemaire: You touched on two important points, senator. First, they are getting information on Chicago prices because the U.S. does have a comprehensive market-data collection program. Second, they are not collecting it on fresh fruit and vegetable data; they are collecting it on pork and other commodities.

If we are looking at a potato producer or a blueberry producer — you can pick any fresh fruit and vegetable commodity here in Canada — they will not have access to that same accurate market information that you see in the U.S. It is not available here in the Toronto market, the Montreal market, in Vancouver or smaller markets across the country. That is part of the challenge on our domestic delivery.

For understanding market pricing on an international level, specifically selling to the U.S., they do have the opportunity to access more accurate data in determining what they are selling for to their U.S. buyers.

Senator Eaton: Your presentations interested me very much because we have just come out of spending a year looking at the forest industry. What we learned is that some sectors of the forest industry were full of self-help. With FPInnovations, they did things for themselves. Others came, and it was the government should be doing this and the government should be doing that. I guess what struck me about your presentations was I did not hear what you guys were doing.

Senator Mercer touched on it. Businesses go out of business; we all know that. Why would your association not have some kind of insurance for all your members? When you complain about people not eating enough vegetables and fruits, unlike Senator Plett, I believe it starts at home. What are you guys doing? Why are you not flooding us with educational material? I am serious.

I do not think it is the government's place to educate people to eat more fruits and vegetables. I think it is a good thing to come out with what you should be eating, but it is your industry. You have some rich players in that industry — Loblaws, Sobeys, you name it. Why are they not on board helping you guys? Tell me, what do you do for your producers?

Mr. Lemaire: I will take the education and marketing component first.

CPMA created back in 1994, through the Fresh for Flavour Foundation at the time, a program called "Reach for it." That was in cooperation with Health Canada, to support Canadians consuming five to ten servings of fruit and vegetables per day. Prior to that, there were monthly promotional activities happening through the CPMA on fall harvest events, such as consumer awareness on how to prepare, store and can fresh fruit and vegetables as a component of outreach.

Since the 1994, aggressive, direct-to-consumer programming that CPMA has been involved in, we have moved and transitioned our programs from "Reach for it" to "5 to 10 a day — For better health!" That is a new version of the program, which is in cooperation with the Heart and Stroke Foundation of Canada and the Canadian Cancer Society.

Senator Eaton: Where do Canadians like me see that?

Mr. Lemaire: On that note, we leverage the opportunity to use public service announcements. The delivery of a direct-to-consumer campaign, to be truly effective and make change, is between $8 million and $12 million per year. As a produce industry that functions on margin, not volume, we do not have those types of funds. We are not supply managed. We do not have a check-off program to collect funds. We have a diversity of commodity groups in Canada.

Senator Eaton: Why would you not have a check-off fund? Why would your associate members not pay a membership fee? Why would people who buy produce from you not throw money back in to help you sell more? Surely it is a benefit to everyone if you sell more.

Ms. Fowlie: Part of it comes back to infrastructure. When you look at milk and dairy campaigns, holy cow they are good. They are fantastic. We would love to do it but we do not have the instrument in place through supply management to have those types of check-off.

I mentioned in my presentation that a one-size shoe does not necessarily fit all, and that applies to many things. When I look at a number of instruments that are in place with supply managed commodities, they were at a far different level of maturity a number of years ago when those types of instruments could be put in place. The produce industry was not there then. That is part of it.

Having a check-off for research and promotion is something that we are looking at, but that is something that will take probably five years to implement.

Senator Eaton: What you are saying is you are still very early days of your association, is that right?

Ms. Fowlie: The associations are old; it is the margins. As my colleague referred to, there are not those margins in the fruit and vegetable sector at the producer end of things to be able to fund those types of programs.

Mr. Lemaire: Relative to what we have been able to achieve — and the figure has varied — the Canadian Produce Marketing Association, through industry partnership and allied association partnership, has invested a mere $150,000 per year in our direct-to-consumer outreach program. We have been extremely creative through social media, public service announcements, the heart and stroke and cancer relationships and other allied industry partners to deliver the message of the "Mix it up!" campaign with fruit and vegetables. Prior to that, there was the "5 to 10 a day — For better health!" campaign and the "Reach for it" program. These programs have been effective. Health units across the country utilize our posters and our information.

However, it does come back to the investment in the program relative to the amount of funds currently available to primary producers not only from the minimal margins but also through the entire supply chain. While Loblaws, Metro and all of the major retailers that are part of our organization are massive companies, they still function, on the produce side, within the tight margin framework that the primary producer and the entire supply chain function within. It is slowly added to as we move through, but the margins are still very tight within the entire chain itself.

Are we looking for an industry solution? Most definitely. The produce industry has thrived, grown and developed because of how we operate together, but we operate together through a public and private relationship. When we talk about the need to work with government, we refer to a collaborative approach to find solutions. Every program or issue that we bring forward, through both of our organizations, comes with a solution-based approach. That is fundamental to our success in determining what government and industry can do to find common ground and solutions.

You ask what we have done. On the risk-mitigation side, we had found, leading up to early 2000, that we did not truly have a sound licensing program, which is fundamental. Someone in Canada must hold a CFIA licence to sell and market fruit and vegetables, but there is an issue relative to the licensing. We worked with Agriculture Canada, at that time under Minister Vanclief, to develop the Dispute Resolution Corporation, the DRC. At that time, the executive vice-president of the CPMA moved to become the CEO of the DRC. This organization, which licenses companies to sell and market fruit and vegetables in Canada and also provides dispute resolution services to deal with some of the issues around payment, has been a tremendous win for the produce industry to start addressing non-payment or slow payment. Part of that process could not have been achieved without the relationship with, and support of, the Government of Canada, and that is where we see the win-win relationship between public and private.

From an association perspective, we want to look at other potential models to do that. On the risk-mitigation side, as Mme Fowlie noted, the primary focus is on how we find a solution together. The U.S. industry, while voicing concern, does want Canadians to find a solution. That is the position they are taking now, saying, "Okay, what do we need to do to find that solution?" This is happening to the point that some of U.S. industry was willing to contract with representatives from Harvard to do an economic analysis of Canada to determine what the solutions could be. The industry is working together to try to find an outcome, but we have to do it together in a public-private sense.

Senator Eaton: Thank you.

Jane Proctor, Vice President, Policy and Issues Management, Canadian Produce Marketing Association: I wanted to touch on one of the comments that Senator Eaton made. I certainly appreciate that we, as industry, have a role to play in education and in helping consumers, and ourselves, understand. However, I hope all will agree that there are opportunities to partner between government and industry for education. I think we all agree that the government does have a role to play in the health of Canadians. Because the products we represent contribute so much to the health of Canadians, if they consume enough of them, that is what we are looking for. How can we work with government where there are those mandates, within health, for example? How can we work together as an industry? There is no question that there is a desire within industry to work with government wherever possible. I think that is what we are hoping to do. We are not-for-profit associations, though you are right that we have members that are very large companies. What we are trying to do is leverage what we can do as not-for-profit organizations, with unfortunately limited funds, and what we can do together with government to try to impact the long-term health of Canadians. We know what that will achieve for us in long-term health care.

Senator Eaton: When you go to government, do you go saying, "This is the package we have put together; could you finance this?" Do you go having worked together and thought out exactly how you want it done?

Ms. Proctor: We do.

Senator Eaton: You have gone with an eductaion package and a risk package?

Mr. Lemaire: When we approach any of our public partners, like the federal government, for example, we bring a solution-based approach. We identify the issue and a potential solution. If we do not have the solution, we ask our government partners to form a working group with us to determine a solution, if one can be found.

We have a Committee of Government and Issue Management, which includes CFIA, Agriculture Canada, the Canada Border Services Agency, Health Canada and the Public Health Agency of Canada. We created this group, to meet twice a year, because we found that various departments were not communicating amongst themselves on the issues that the industry needed to address. We brought those departments together with industry from the Canadian Horticultural Council, CPMA and DRC to frame industry concerns, and potential solutions and how to find them. A good example of an issue was the concern we had with the border and the way that inspections were handled in what we call hot docks. Products have to be maintained in the cold chain. When they are not, you run of risk of product spoilage and of a greater challenge to the economic issue of the industry.

Working with CBSA, we have been able to run an education program where we went to a Loblaws distribution centre and taught their staff what the cold chain involved. Then, our industry went to their facilities, and they walked us through it. From that, we have come out with a statement of work that can be used by CBSA at the border to find best practices and to reduce the risk of hot docking, product spoilage, or whatever the case may be. That is a perfect example of that win-win situation in finding a solution. We are not asking for money. There may be a financial requirement somewhere, but, in many cases, the solution comes with a better understanding of how we function and how we need both government and industry. It is a win-win for everyone.

Senator Eaton: Thank you.

Senator Mahovlich: I want to thank our guests. They have answered quite a few questions.

You mentioned that exports were 60 to 70 per cent. What are our imports of vegetables? I am not asking about citrus or bananas. However, you can get a baked Idaho potato at certain restaurants here, and it is still popular. How many vegetables do we import?

Mr. Lemaire: I apologize; I do not have those numbers off the top of my head, but I can provide them to the committee. They are available through Statistics Canada.

Broadly speaking, at a retail level, $3 out of every $4 spent on fresh fruit and vegetables is spent on imported product.

Senator Mahovlich: $3 out of $4?

Mr. Lemaire: This comes back to our discussion earlier relative to opportunity. The Canadian domestic market has an opportunity to attract more Canadians to their products and to work with their buying partners to expand their market, but there are a few pieces they have to introduce — the right product and the right quality, at the right price. They are three very basic elements. To get there, there are the elements that Ms. Fowlie identified relative to being competitive in the market around innovation and technology. These have historically been challenges for some sectors within our industry.

The Canadian mosaic is a huge influence, as I touched on. In Calgary, I was in a retail outlet, and there were dragon fruit displays from Vietnam. That amazed me. Why? There is a very large Vietnamese community that is driving the demand for that product. We need to have appropriate Canadian demographic and market information to understand what we are producing, whether we are meeting the needs of Canadians, and if not, what do we need to do to enable them to experience the products we do produce and to build the market for our Canadian producers. I hope that answers your question.

Senator Mahovlich: Yes, it answers part of it. You can go to Chinatown in Toronto and get vegetables from China all the time.

I want to go to food safety. As soon as I start making a salad, I have to wash all the lettuce — everything needs to be washed. My wife is always after me. Is this necessary?

Mr. Lemaire: Safe food handling is an important part at the consumer level. The CPMA is part of the Canadian Partnership for Consumer Food Safety Education. This group represents not only the fresh fruit and vegetable producers but also the entire food industry, including beef, eggs and poultry. The partnership identifies the importance of "wash, cook, clean" because safe handling by a consumer is extremely important and is part of our food safety continuum. Canadians must recognize that. Primary producers and individuals within the supply chain are operating within best practices and clearly identified food safety programs to ensure that Canadians eat safe and nutritious food.

We see a potential breakdown when a consumer takes a product off the shelf, brings it home, opens a bag of salad and starts cutting it on the same cutting board that they just used to cut chicken. The partnership, which is another not- for-profit funded by our organizations — the CPMA and others — educates consumers on how to handle products safely. Yes, you should handle your product appropriately to ensure that you have a safe food supply.

Senator Mahovlich: I am from Northern Ontario and grew up on blueberries. People often ask me: Why do you look so good? I think it is the blueberries. I see that some research is being on blueberries and that the results will come out in November. Are you telling me that I will be able to get a wild blueberry in the middle of winter?

Senator Plett: You will look better yet.

Mr. Lemaire: Currently, speaking to production levels relative to production techniques, you will notice that you can buy a Canadian strawberry later in the season. Everyone remembers when they were growing up that they had to eat the strawberries as soon as they got them home because the shelf life was very short. Canadian producers have introduced new products that enable a longer season to support needs within the domestic and export markets.

Work is being done on blueberries, as well as a range of other products, so that Canadians can enjoy blueberries in the winter. Whether the research is on wild blueberries, the determination is potentially there. Overall, there are new blueberry varieties that extend shelf life.

Ms. Fowlie: You might not get a fresh wild blueberry in the winter but certainly you will find frozen wild blueberries.

The invasion in new varieties and growing techniques is phenomenal. We can find many fall varieties of strawberries grown in Canada, which we did not have years ago. The Canadian strawberry season can extend to almost the beginning of October. The blueberry research referred to is quite interesting. It has to do with crop protection technologies. Nova Scotia Agricultural College has worked with camera manufacturers and tractor manufacturers.

[Translation]

Senator Robichaud, I think they are working on that in your part of the country as well.

[English]

The electronic eyes and cameras go through the field on a tractor and discern between the blueberry plant and a weed to apply the crop protection product only where it is needed. It is really neat. We would love to come back and show you a video of that and bring some of the research findings. There are interesting and innovative things going on.

Senator Mahovlich: Thank you.

[Translation]

Senator Rivard: Thank you, Mr. Chair. I had a lot of questions and was very interested in the Hedley report, from 2005, dealing with the financial protection program. But I would say that you addressed most of them. The only question I still have about the Hedley report is, if there were a financial protection program, would it apply only to sales abroad — the U.S., China or elsewhere — or would you want it to apply to the domestic market as well?

Ms. Fowlie: We think it should be available for sales in Canada and in the U.S. It would be to have something equivalent to the tool available in the U.S. That is not to say that it could not apply to sales elsewhere, but for the time being, it would be to really address what is happening at the Canada-U.S. level and the lack of tools in Canada.

Senator Rivard: I appreciate that your industry is fragile, with margins being low and so forth, but I wonder what kind of impact this would have on Canadians in other sectors if the government were to intervene to secure your debt.

Ms. Fowlie: It would not be the government securing the debt.

Senator Rivard: It would be your association.

Ms. Fowlie: Exactly. The government would not be involved, except to help us stickhandle in terms of federal versus provincial authority. We would be happy to send you a more detailed explanation of how it works in the U.S. The government is not involved; the industry manages everything and the government steps in only to provide backup.

Senator Rivard: I would like you to provide that information. In Quebec, for instance, dairy producers do not belong to Canadian associations, they belong to the Union des producteurs agricoles or UPA. In the horticultural sector, as regards fruit and vegetables, does Quebec belong to the Canadian association?

Ms. Fowlie: Yes, the Canadian Horticultural Council. The Conseil québécois de l'horticulture is a member. Other Quebec associations are members of the CHC as well — potatoes, strawberries, raspberries, apples. A number of them are members.

Senator Rivard: Thank you. I wanted to pick up on what Senator Plett said about poutine. We know that Quebec, like the other provinces, has a lot of arenas. When the skating rink belongs to the city, the city can do what it wants. I know that some arenas have stopped selling poutine in favour of selling more fruits and vegetables to help change people's eating habits. The fact remains, however, that a number of arenas have concession stands, so it is tough for the city to legislate in this area. It may seem odd, but some cities have chosen to prohibit the sale of poutine in arenas.

Our committee is tasked with studying research and innovation in Canada's agricultural sector. We have not discussed it a lot, but some of the witnesses we have heard from in recent weeks have told us they could increase production and reduce waste through innovation. How do you handle waste? Do you think research grant programs could help to solve waste problems and increase productivity at the same time?

Ms. Fowlie: Yes, but it would really involve a partnership between programs, producers and members of the CPMA. That is especially important given what we are seeing as far as new varieties go and the fact that they can really change the percentage of waste. Regardless of whether we are talking about potatoes or apples, that is really where things are. Innovation in the right production practices can help make chemicals and other pest control technologies accessible. It has an impact on product quality.

So there are many ways of managing things. But as far as certain varieties are concerned, there are long-term considerations, especially with respect to development. It takes 15 to 20 years to develop a new potato variety. If you are trying to change an apple variety and you introduce a new seed this year, it can take up to seven years before you get a crop.

I am not sure whether any of you have tried a Honeycrisp apple before.

[English]

Wow. We do it better in Canada than anybody else. If you have not had them, it is the most refreshing. It is just like eating candy or having a drink. They are fantastic. Get your Honeycrisp while they last. It is a relatively new variety, so the quantities are not bulked up hugely. There will be Canadian Honeycrisp available probably until the first of the year. If you have not had one, get yourself a treat. We will send you the information about where it comes from.

Mr. Lemaire: Additionally, innovation is a very wide subject area, similar to sustainability.

You commented regarding onions, linking sustainability and innovation together, sustainability looking at both economic and environment. One of our U.S. members, an onion producer in the state of California, presented a sustainability model that we could learn from here in Canada. This organization was trying to determine what they would do with the onion waste from their processing plant, which they traditionally would put on fields. The cost of disposal of that material on fields was approximately $450,000 plus the issue of dealing with the soil challenges that the waste creates by spreading.

Working with the State of California and their models around energy efficiency and production, they invested in a sustainability program that took the onion waste, created a liquid from that waste that was then moved through a system that generated enough electric energy to totally power their entire facility. Not only did they find efficiencies relative to no longer having to pay the $450,000 to spread the materials, they found the opportunity to reduce their total operating costs and sell power back to the grid. That is innovation relative to how industry here needs to function.

You had touched on the jurisdictional elements around how we operate in Canada. This is one of our barriers. We need to ensure we are working — municipal, provincial, federal, territorial — and bringing an alignment and harmonized approach with those multiple levels is fundamental in moving forward.

Back to our discussion on how we operate as industry, there is the need to ensure there is a collaborative and open dialogue between all those levels of government to finding solutions, whether it is innovation, whether it is production, whether it is new atmospheric packaging that enables product such as blueberries to stay on the shelf longer and or in a child's lunch box longer and that is biodegradable and safe for the environment. All of these are elements being developed by industry currently, but more innovation is necessary, and how do we work with the various levels of government to find that innovation, whether it is through sustainability at a provincial level and federal and or economic through various other means available to us through production.

[Translation]

Senator Rivard: I appreciate your comments very much. But I would like you to provide some information if you have time — and it may already be in your documents, but we got them just before the meeting began so we have not had a chance to consult them yet. With respect to the innovation programs you have, you made an excellent point about blueberry consumption and land farming involving onion waste. Could you give us a brief synopsis of what you are doing vis-à-vis innovation and what you would like to do in the medium term if you had the funding?

Ms. Fowlie: That will take some time. Obviously, as a sector, we have priorities for the various areas of crop production based on the five themes I mentioned. We are currently working on a study into innovation projects and research. In time, we will be able to provide some reports. But, certainly, in terms of innovation in the long term, as Mr. Lemaire said, everything goes. From production to packaging and storage, it really covers all aspects.

Senator Rivard: You can provide us with whatever you can. I am not asking what you think could be done over a generation, but rather what can be done in the short and medium terms. What kind of government assistance would help in terms of figuring out ways to increase production while lowering waste?

Ms. Fowlie: Maintaining the agriscience cluster program is quite crucial because it is truly a partnership, and industry brings money to the table.

Senator Rivard: You do not know whether many federal programs are going to be renewed from one year to the next. I would like to hear any suggestions you have when it comes to, for example, keeping the industry viable or sustaining research efforts, both of which require a firm commitment from the government. That might include an annual increase of such and such amount or, more importantly, a firm time frame. Would you be looking at a five- or ten-year program?

Ms. Fowlie: The policy framework on research and innovation should cover ten years. Five is not enough because results take time. You are right, then; longer is better.

The Chair: In terms of follow-up, this matter is particularly relevant. Therefore, I would like to have you, the experts, examine the entire gamut of federal and provincial products available, known as programs, given your authority at the provincial level. Would you then be able to provide the committee, through the clerk, with your feedback on those programs and suggestions on how producers, processors and governments can work jointly to improve your sector, as well as the remarks you made this morning? That is what I have in mind.

[English]

Senator Ogilvie: I want to follow up on my colleague's drawing our attention to our mandate here with regard to research and innovation and to seize upon an example you just gave with regard to the Honeycrisp apple and to tie it into the willingness or reluctance of producers to invest in research to deal with their very own futures.

I sat in on a meeting between growers and a certain government agency in a certain region of the country in which the problem was described as follows: By the way, to preface it and follow up on observation about the value of the Honeycrisp, it is my understanding that on either a volume or weight basis, it commands four to five times the price of the average apple from the producer. That is a pretty good premium. It enters high-value markets particularly in Europe and elsewhere. There are other competitors for this particular market. The specific example that was discussed while I was present was the fact that it appears that there is the odd tree within the Honeycrisp orchard that will produce apples in a given season that are prone to core rot. It is not possible to detect just by looking at the tree or the surface of the apple which trees will lead to this. The apples are all harvested. It may well be that within a given bushel of apples there may be an apple from that particular tree which, when it lands in a high-value market in Europe, turns out to have rotted because of the issue with the stem disease.

I want to be careful here, but I will say that I am aware that some of the producers who are sitting at that table are among the most financially successful individuals in this particular region. Yet it was extremely difficult for them collectively to come up with $25,000 to match the government program that is available to help deal with this kind of problem.

To detect and deal with this problem requires a scientific solution. It is not the case of modifying a piece of equipment or training a field worker more. It requires clear scientific knowledge of the modern variety.

I simply want to indicate, as we are dealing here with the idea of research and innovation, that from my own observations there is some distance to go in your area with regard to the recognition of the importance of research to the end-value product. Here is one that commands a huge premium and is being produced by very large producers.

I understand the difference between supply management and your area. That was a point very well made and I understand it. Nevertheless, the issue of research and innovation is extremely important, and I think we are probably at a transition point regarding the attitude of major producers to the importance of investing in an area of their own business that they have not recognized in the past as being important. They sort of expect government to simply take it over and do it.

My own feeling is that as we move into the value-added products from fruit, for example, where you can take the skins of juice apples and attempt to press those and turn them into juices that you will argue have antioxidants in them and so on, we are in an era where your members need to recognize it is in their best interests to find ways to invest with the government in research that is now high-end research, if you want to consider the knowledge base from which it needs to be drawn. I would make that observation to draw into my colleague's question about the importance of innovation and research to us in this particular sector.

Senator Fairbairn: I sat up quickly when you mentioned Calgary as we listened to what you are doing together all across the country. I am from Lethbridge in Southern Alberta, which is near Calgary, and I was wondering about your activities in that area. It is filled with all sorts of things, but out on the land, I am curious about the way that you would be pulling that together — the land and some of other things that are around Calgary. How does that figure in your work, in what you are doing and how you are moving in a place like that part of Canada?

Mr. Lemaire: I will start and then ask Ms. Fowlie to follow up. From a supply chain approach, we look at a range of elements within Calgary, but also you can translate that across the rest of the country.

I mentioned the diversity and multiplicity of how we operate in the industry. When we come to Calgary and talk about how we look at marketing or promoting fresh fruits and vegetables, because we have such a limited resource base to educate consumers on why and what they should be eating, we take a broader-scope approach. We cast the net to identify why you should be eating them — they are good for you, they are tasty and easy to get to — dealing with some of the food security issues.

We are not in a position to target right down to say eat your potatoes, your carrots, your bananas or your broccoli, where some of the local outlets — whether it is retail, health units or others in the community — can take our support material and deliver more targeted activity to change consumption patterns and increase consumption. We also need to look across that entire chain approach, ensuring that industry is being innovative and investing.

It is a very diversified industry, from very small producers to very well-positioned producers in the Canadian marketplace, as well as others in the supply chain. That is what creates some challenges relative to how to move some of the innovation forward as an industry approach. It is something we cannot stop trying to achieve because if we do not bring the entire industry forward, none of us will be successful.

The approach on innovation and education from the grower and shipper through to the packer, the wholesaler and the retailer on areas from food safety, traceability, product handling, marketing and consumer education are all fundamental to opening and enabling the right product to be in the hands of the consumer so that when they walk into the retail outlet or wherever they are buying, they make the right decision to purchase a product that will meet their immediate needs for consumption.

One of the areas we have changed our focus on from a CPMA perspective is children. Our traditional focus for our marketing activities has been the primary shopper — women from 25 to 40 years of age. Our research has shown that while we have been successful with the limited investment, our greater opportunity is the refocusing of our educational materials back into the schools — working at a provincial level to educate children, through curriculum support and other tools, on the benefits of eating fruits and vegetables and linking that into what is available in your community.

To your point of bringing them closer to the farm, we lose sight of that because of the change and the urbanization in our country. It is not like it was even 20 or 30 years ago, where there was some connection. Someone had a relative or friend who was a farmer or had a link to the farm. That linkage is gone and the understanding of how that operates is gone for many Canadians.

How do you make them understand what the Canadian food supply chain looks like, where their food is coming from and why it is important to support the produce industry for the benefit of their community and nationally?

[Translation]

Senator Robichaud: We talked about poutine earlier. And we need to make the distinction between Quebec poutine and Acadian poutine. They are nothing alike, except for the fact that they both use potatoes as a base. Perhaps we should ask the Library of Parliament researchers to find a recipe for each version. I encourage people to try Acadian poutine, for that matter.

As for research and development, are there sectors where more could be done? You mentioned fruit that producers were able to use. What avenues should we be exploring further?

Ms. Fowlie: There are several. The first thing that we should point out, however, is the fact that, as a community of producers, we see a lack of communication between research centres. Researchers in British Columbia who are doing work with potatoes, for instance, are not all that familiar with what is happening with potatoes in Prince Edward Island. The same is also true of apples in certain regions. There is no inventory of the various research activities that are under way across the country. We need that kind of information as well, but it is hard to come by.

A number of years ago, the Cark group — which no longer exists — used to collect that type of information. We really need researchers at Agriculture Canada, and their laboratories are pretty much the only places where expertise in certain sectors can be found in Canada.

[English]

I use potato blight, or even wireworm, as examples. The expertise of Agriculture Canada is the only game in the country. There are some things there that we cannot lose, so how we collaborate and communicate within the department, and from the department to the user community, needs to be looked at and improved. We have a very serious concern in that a lot of researchers are leaving the industry. The next generation is not coming on. We have a real concern over the gap that will be there in areas like managing pests, plant health, plant diseases and variety development. We are losing that expertise, and that will be a huge gap. It will place Canada at a competitive disadvantage, vis-à-vis countries that are maintaining that expertise.

Mr. Lemaire: This is an issue in both government and industry, with retirements at the public service and the loss of skill sets in industry. Industry itself is transitioning, and younger generations are not moving through. The human resource side is a major area that we are both focusing on.

Senator Robichaud: When you say the new generation is not coming through to those research centres, where are they going?

Ms. Fowlie: They are either not going into the disciplines in the first place, or they are going elsewhere. It is a combination of both.

Mr. Lemaire: We are not close to the farm any more. The choices that many of the younger generation are making are away from the farm.

Ms. Fowlie: There are so many opportunities for the current and coming generations to have absolutely outstanding and challenging opportunities and careers in plant science, entomology, food sciences and so forth, but we seem to be collectively missing the mark in drawing the bright, young talent out there our way.

[Translation]

Senator Robichaud: You raise a very important point. You started by highlighting the lack of communication between researchers, but researcher turnover is also a problem.

[English]

Senator Plett: I want to continue a little bit along the line of your answer to Senator Robichaud.

Land is becoming ever more expensive. I live close to the city, in a bedroom village. Around my village, farmers are starting to develop their land. Instead of selling it at $2,000 or $3,000 an acre, they are selling it at $50,000 an acre if they develop it into two-acre lots. It is a better living than farming. I know that the people who own orchards in Kelowna would like to sell their orchards for development, and I think there are some restrictions.

How does that affect the vegetable farmers? If they are trying to make a living selling their vegetables, but they could simply develop the property into a dozen two-acre lots and retire, is that a problem?

Ms. Fowlie: It is a concern. It is a business decision that people are making for various reasons based on their situation, but it is very much a concern. I guess when we look to sustainability and food security, it is very much a concern. There is no easy answer. It is a combination of things, many of which we have spoken about here this morning. We talked about bringing in talent for research. How do we keep that next generation on the farm or bring new entrants into farming? For the life of me, I wish there were an easy answer, a recipe to make some blueberry muffins or whatever it would take, to answer that. It is a combination of things, and it will take a lot of commitment and strategic thinking on the part of many.

Senator Plett: We had the dairy farmers here the other day. The chair or the clerk might want to correct me on this, but they were talking about their demand. I am not sure whether it was doubling by 2050, but it was something along those lines. It is irrelevant what the number was. It was a huge number, and it was going to double by 2050. Will the same thing happen in your industry, and would that not be a very positive thing?

Ms. Fowlie: It would be wonderful if it would. I think there are opportunities for growth here and in export markets. There are opportunities to work with a number of other markets in exchanging technology and expertise that we have here in Canada. That is part of what the Market Access Secretariat is looking at doing with various countries. There were two delegations from Russia here this summer, looking at the potato industry and how they can work with Canada and look at exactly some of those things. I believe there are opportunities, and there are a number of factors that will play into that.

Senator Plett: I would suggest that you put a lot of effort into exports. I think there are tons of opportunities with other countries, particularly Asian countries and their tremendous populations. I encourage you to keep on in that vein.

Senator Eaton: I used to buy tomatoes in Florida, and the Canadian ones were the best. They had the most flavour. I have been reading about storage and insecticides. Where does taste rank?

Mr. Lemaire: The taste is a piece of the profile on purchase. Price is still a driving factor for many Canadians and consumers in their purchase of fruits and vegetables. As part of that purchase profile, the product is required to have the right characteristics for colour, texture and, of course, taste. If we are not providing and addressing the taste profile, it is very hard to increase consumption relative to the product.

Senator Eaton: I agree; but in the past, have we not emphasized uniformity, packaging and shelf life rather than taste? Are we going forward now with taste?

Mr. Lemaire: Taste is a massive piece. We run a national trade show for the fresh fruit and vegetable industry. This coming April we will be in Calgary. The show is a cornucopia of product pushing primarily the taste. The taste of fruit and vegetable, compared to many other products, is essential for consumer benefit. At the end of the day, if it does not taste good and bounce off your tongue, you will not come back and buy it again.

The Chair: We thank the Canadian Produce Marketing Association and the Canadian Horticultural Council for sharing their knowledge. I have a couple of questions to which you can respond in writing to the committee; we would appreciate it. We see super structures in food distribution, such as Walmart and Costco. First, what impact do those stores have on local food producers?

Second, you did not expand on interprovincial trade barriers. The committee would like to have your comments on this and how we can help to reduce trade barriers. That links to a supplemental question so you can share your knowledge and comments with us on NAFTA, especially in Canada. What can we recommend to government and partners in the U.S. and Mexico to improve the NAFTA vis-à-vis your associations?

Thank you; we might ask you to appear again.

[Translation]

Potatoes are indeed a great product.

(The committee adjourned.)