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Proceedings of the Standing Senate Committee on
Agriculture and Forestry

Issue 22 - Evidence - Meeting of December 2, 2014


OTTAWA, Tuesday, December 2, 2014

The Standing Senate Committee on Agriculture and Forestry met this day at 5:05 p.m. to study international market access priorities for the Canadian agricultural and agri-food sector.

Senator Percy Mockler (Chair) in the chair.

[English]

The Chair: I welcome you, honourable senators and the witness to this meeting of the Standing Senate Committee on Agriculture and Forestry. My name is Percy Mockler, a senator from New Brunswick and chair of the committee. At this time, I would like to start by asking the senators to introduce themselves.

Senator Merchant: Hello again, my neighbour from Manitoba, I'm Pana Merchant from Saskatchewan.

[Translation]

Senator Dagenais: Good evening. I am Jean-Guy Dagenais, a senator from Quebec.

[English]

Senator Enverga: Tobias Enverga, Ontario.

Senator Oh: Victor Oh, Ontario.

[Translation]

Senator Rivard: Good evening. I am Michel Rivard, a senator from Quebec.

[English]

Senator Unger: Betty Unger from Alberta.

Senator Lang: Dan Lang, Yukon.

Senator Ogilvie: Kelvin Ogilvie, Nova Scotia.

The Chair: Thank you. To the witness, thank you very much for accepting our invitation to come here this evening and share your opinions, your recommendation and your vision of the mandate that we have received from the Senate of Canada.

The committee is continuing its study on international market access priorities for the Canadian agricultural and agri-food sector.

[Translation]

Canada's agriculture and agri-food sector is an important part of the country's economy. In 2012, the sector accounted for one in eight jobs in Canada — employing over 2.1 million people.

[English]

And also close to 6.7 per cent of Canada's gross domestic product.

Internationally, the Canadian agriculture and agri-food sector was responsible for 3.6 per cent of global exports of agri-food products in 2012. Also in 2012, Canada was the fifth-largest exporter of agri-food products globally.

We have the honour to have at our committee this evening a witness from Pulse Canada, Mr. Gord Kurbis, Director, Market Access and Trade Policy. Mr. Kurbis, we will ask you to make your presentation. It will be followed by questions from the senators and on this, again, the floor is yours. Thank you very much.

Gord Kurbis, Director, Market Access and Trade Policy, Pulse Canada: Thank you very much, honourable senators. Thank you for inviting Pulse Canada to present to you today.

The chairman of our Pulse Canada board, Nick Sekulic, sends his regrets. He and I were originally supposed to appear together, but he had important business to attend to at his farm in Rycroft, Alberta.

As many of you will be aware, Pulse Canada is a national industry association, and it is funded by farmers from across Canada who grow lentils, peas, beans and chickpeas. A farmer levy is collected by provincial pulse organizations and combined with funding from the processors and exporters of pulse crops. Farmers and the trade work together under the auspices of Pulse Canada. We have always been a strong supporter of the pursuit of bilateral and multilateral trade. Being on an equal footing with other exporting nations has allowed Canada to become the largest exporter of pulses in the world. We regularly trade with nearly 160 countries around the world.

Pulse Canada has also been an advocate of trade-enabling policy and regulatory processes in Canada and at the international level. I would like to use my time to address one of these specific policy challenges.

Crop protection products, like fungicides and herbicides, protect crops from weeds and diseases that reduce yields. These yield-enabling technologies are the key to growing enough food for the entire world on the existing land base. So they are part of the sustainable intensification of food production.

Crop protection products are available to farmers only after they have been thoroughly evaluated from a human health and environmental safety perspective. Each crop protection product is assigned a maximum residue limit or MRL. By definition, an MRL is the maximum amount of residue that can be detected on the crop that is harvested and is an indicator of proper use of the product. Importantly to consumers, the MRL is also an indicator that shows that the food product is well below the level of concern for health or environmental safety. It's a science-based risk assessment system that's as important to farmers as it is to the pharmaceutical and the health care systems. Efficacy and safety are the cornerstones of building public trust in food systems, as they are in the health system.

Farmers in the Canadian trade have to be aware of both the MRLs established by regulators in Canada and the MRLs that are in place around the world, and specifically in the export destination for the Canadian crop in question. It's both the process to establish the MRL and the timing of the establishment of the MRL that are of great importance.

In the global food system, a strong argument can be made for an effective global standard setting body. The Codex Alimentarius Commission was established by the World Health Organization and the Food and Agriculture Organization — both agencies of the U.N. — to develop food safety standards. Codex is responsible for establishing MRLs for food products.

The challenge that farmers and the Canadian trade face is that neither the process nor the timing of MRL establishment is synchronized between regulators, like Codex at the international level, national or regional groups, like Health Canada's Pest Management Regulatory Agency, the EPA in the United States, or the European Food Safety Authority. In fact, rather than seeing a strengthening of alignment at the international level, we're seeing more national approaches to food safety with some countries moving away from Codex to establish their own national systems.

The problem is that from a trade perspective, and this is one that we have lived through directly in Pulse, is that a product can be tested and registered for use in growing a crop in the exporting country before it has been deemed acceptable by the regulatory body in the importing country. This puts trade at risk. And it's not a food safety issue; it's a risk produced solely by a regulatory gap.

I would like to suggest two positions for your committee to consider. These considerations raise important questions about Canada's food policy, Canada's position on Codex reform, and the position that Canada would need to take in bilateral and multilateral trade negotiations.

First, we favour a global approach to food safety standards and recognize that many countries, like Canada, will feel the need to establish their own separate national approaches. I also suggest that we need to have a process to allow for mutual recognition of standards established by other competent authorities. This will only be acceptable to the public if there is an acknowledgement that science-based risk assessment of another competent authority, such as the World Health Organization through Codex Alimentarius, provides adequate protection to the health of Canadians.

Health Canada's PMRA has already gone part of the way by making progress towards full harmonization of science-based approaches within the OECD global joint reviews. This involves the sharing of processes and some standardization of approaches in registering products for use. We need to continue to work towards harmonized approaches at the registration level, and Canada needs to push for reform of codex processes to achieve alignment in process and timing of Codex MRL establishment with the OECD approach.

The key question that we need to address during our trade discussions is whether nations will accept competent science-based approaches of other nations or bodies like Codex when establishing import tolerances. It would certainly be in the interest of Canadian farmers to have an importing country accept as an import tolerance the MRL established by the PMRA in registering a product for use, or to propose to a party that we are negotiating with to accept the standard established by another competent authority, like the EPA in the U.S.A., EFSA in Europe, or Codex at the international level.

This mutual recognition is an effective way of avoiding the regulatory gap in the establishment of a standard. In fact, it's already being used in several cases around the world within the UN's World Food Programme and in countries ranging from Costa Rica to Egypt to Panama.

The second issue is that if we are to ask other countries to accept the approach of mutual recognition, we can expect to be asked the question: How would Canada respond to a similar request? Would Canada be willing to move to a mutual recognition when an MRL had not been established by Canadian regulatory authorities but where the work has been done by EPA or the World Health Organization through Codex? The challenge is clear: Adoption of new technology is key to the sustainable intensification of food production. Canada is a trading nation and needs to export and regulatory gaps put trade at risk.

We look forward to your report and to how the Senate would suggest we deal with these issues.

The Chair: The first question will go to Senator Merchant to be followed by Senator Dagenais.

Senator Merchant: What other countries around the world are our trade competitors in Pulse products?

Mr. Kurbis: We have a wide range of competitors, with the United States and Australia being the two principal competitors. The trade is complex, as well. For example, China is our largest importer of feed peas, but they are also one of our largest competitors in the export of dry, edible beans around the world. Europe is a big destination for beans, but Europe is also a competitor in the pea trade.

On our largest bulk commodity, which is yellow peas, we are seeing increasing competition from the former Soviet union with Russia, Kazakhstan and Ukraine.

Senator Merchant: Because of the concerns you have with science-based evidence and regulations, do those countries have similar problems? Have they overcome some of them by some means? Are there other countries we can look to see how they are resolving these difficulties?

Mr. Kurbis: Well, yes. The best practice being employed today on the principle of mutual recognition is the global joint reviews conducted under the umbrella of the OECD. These health and food safety regulators are from Canada, the U.S., Australia and Europe and, increasingly, we're seeing countries like China and Japan.

This is a very promising example that we need to build on where teams get together in the same room and review the same data. Usually they then harmonize their tolerances and importantly the timing of when those tolerances are issued. It's not as complete as it needs to be just yet.

Senator Merchant: My next question is about our transportation system. You have been having some difficulty with exporting products because you've got to do it in a timely manner. Do you have some suggestions for the difficulties we experienced with grain transportation in the past year? What are your suggestions about resolving some of these difficulties?

Mr. Kurbis: Pulse Canada is part of a multi-commodity transportation project that has several components, one of which is the gathering of a data package that can document with more granularity and proof than ever before the specific challenges that rail service poses to exporters. We will be making recommendations on the basis of what that data show. It's still in the collection process. Pulse Canada, through that multi-commodity project, is also in the process of putting a submission to the CTA review.

We have a dedicated lead on that transportation area. It is not I, and I am not sure that I want to speak for the project.

[Translation]

Senator Dagenais: Thank you, Mr. Kurbis, for your presentation.

I would like to come back to your exports, and correct me if I am wrong, but I was told that 65 per cent of your pulse exports were marked out for five main markets: India, Turkey, China, Bangladesh and the United Arab Emirates.

Is the regulatory environment of those countries stable and predictable enough to ensure the growth of your exports? If so, why do you think your exports to those countries may increase?

[English]

Mr. Kurbis: That's a good question. Let me answer by suggesting that there are currently two categories of predictable market access, or relatively more predictable market access that we trade into. One is represented by countries like Japan. While it is not problem-free, by and large the processes, the regulations and the manner in which the regulations will be enforced are clear. There might be instances where we don't like the rules, but we do have the predictability, which is key in trade.

Other countries around the world have very poor regulatory capacity indeed. Those countries also tend to be not without problems, but again, relatively predictable.

It's in countries that are currently transitioning from developing countries to rich countries, that are moving through a process, where — and there are some on the list of the five that you named — they are saying, "Now that we've got some money, we can afford to have our own building that would be similar to Health Canada's Pest Management Regulatory Agency, so we're going to come up with our own sets of food safety tolerances for our own population rather than continuing to use Codex.''

This is a disturbing trend, and, on the list of countries that you have provided, China has recently moved away from Codex to its own national list. As they are doing so, we don't have predictability going into China, and you know what kind of market China is, not only for pulses but also for many Canadian commodities. In some cases, we don't know what legal tolerances are in place that we need to be compliant with.

The UAE is now going towards its own national list of food safety standards. They are going to be coming up with 20,000 individual MRLs. Fortunately, in the case of the UAE, most of those are already harmonized with the EU.

India currently continues to defer to Codex, but it does have some national MRLs in place for specific products. We don't know whether they could be in a position to say, "We no longer use Codex; we'll use our own MRLs,'' but some in the trade speculate that they too will be moving in that direction.

So in terms of stability we see a trend developing toward less, rather than more, harmonization around the world, and that, to us, is very disturbing, hence our observation that some method of employing the principle of mutual recognition is becoming increasingly imperative.

Senator Enverga: Thank you for the presentation. We actually completed our study about bees. When you say here that you are having some issues with regard to herbicides to protect the crops and low level presence, where they say it's a low-level presence, what type of herbicides are you using? Are you still using the neonicotinoids or is it a different kind of pesticides that you are referring to?

Mr. Kurbis: In pulse crops, there is not a large use of insecticides generally. Let's say we get a late season grasshopper outbreak, which we haven't had for close to two decades, insecticide use is not that widespread. It's mostly herbicides and fungicides. If you don't mind, let me take a step back and observe that default levels in most countries around the world today that have defined default policies say, "If we don't have a tolerance in place, what do we use as a catch-all?'' are at 10 parts per billion, 0.01 PBM. That's been in place for many years. Canada's is 100 parts per billion. At those levels, the vast tests that come back are what we in the industry call "non-detects.'' There is no detection of any residue whatsoever. By global standards, our crops are as clean as they come.

So what we worry about is not the level of residues that are on our crops at 10 parts per billion. We worry about a future where that testing technology will go down to 1 part per billion and then 500 parts per trillion and then maybe even more sensitive. It's at that point in the future where, if we continue to have zero tolerance in place, where we have these regulatory gaps where we haven't yet completed the approval process in the importing country, it will be that testing technology that could be very problematic. Is it problematic today at 10 parts per billion? No, so there's an opportunity to get in front of this problem. And I think that you would hear from people who contend with the adventitious presence of unapproved GM events that they would very likely tell you the same thing.

Senator Enverga: So you're more worried about the future, the future of technology that can detect it? There's no real issue at that point, then?

Mr. Kurbis: The answer is a bit greyer, as you might expect. The defaults in place around the world today are set at 10 parts per billion. That is ostensibly set at the limit of detection, but, in the past few years, we are now aware of limits of detection that are in the single parts per billion. We did some residue tests last year and the detection level was 500 parts per trillion. So we're already there. Are those specific methods the ones that trade is being subjected to today? We wish we had better data on that.

Senator Enverga: But are the same herbicides being used on these crops?

Mr. Kurbis: Yes.

Senator Enverga: Is there any particular herbicide that they are worried about?

Mr. Kurbis: It's not any particular class of herbicide. As you know, there are some pesticides that are being subjected to concerns around environmental and bee health issues. These are not the insecticides, by and large, that are at issue for us. Typically fungicides would be registered across a wide range of crops, pulse crops, cereal crops, oilseeds. Herbicides can be a bit different, depending on whether they are broadly persistent, but, typically, we apply products very early in the season. At today's 10 parts per billion, there are no detectable residues.

Senator Enverga: May I ask one more?

The Chair: Yes.

Senator Enverga: Assuming that, right now, you're using the herbicides and pesticides, what happens if you don't use them? Just like the other countries, right? How much yield are you going to lose? Is there any percentage?

Mr. Kurbis: It would be good to see some presentation of data like that because I think that would help make the case, but, anecdotally, farmers would tell you that they could face very heavy losses indeed if there was an outbreak of disease that couldn't be controlled or if there was severe insect damage that couldn't be controlled. There's also weed pressure that could gradually overtake fields and present some very serious problems.

I don't have good numbers on percentage losses to share with you at this time.

Senator Oh: Thank you, witness.

Pulse Canada recommends taking proactive measures to reduce international trade barriers. Can you describe the proactive measures you have been taking?

Mr. Kurbis: Can you expand on the question slightly, please?

Senator Oh: Yes, I'm talking about you having been doing proactive measures to increase your trade more internationally, open up your market. You recommend being more proactive. How do you encounter that approach?

Mr. Kurbis: We have been doing international market development in the pulse industry for several decades, and it has been varying to the extent of focus in our organization. Initially, 20 years ago, when we didn't grow much for pulses in Canada, we did a great deal of market development indeed in order to convey the quality advantages and the availability and reliability of supply from Canada. Over time, most buyers around the world have become well aware of the availability and the quality of Canadian pulses, now that we've gone from a very small player to the world's largest exporter. So that would be one manner.

In another, the UN has designated 2016 as the International Year of the Pulse. We have five thematic areas set up under that committee where we would like to expand the interest in utilization of pulses. We're focusing on food security, health and nutrition, sustainability and market access, et cetera.

In one of those committees on market access we are currently reaching out to Codex, through FAO, to try to provide evidence and be able to document that delays at Codex are working directly at cross-purposes with their larger food security objectives. So these are a few examples of the work we do as an association.

Senator Oh: What do you foresee? What is the growth every five years on this? Any idea?

Mr. Kurbis: I think that on market access, we do worry that these problems are going to get worse before they get better. As I described these harmonization challenges, which are very difficult challenges, we have two effects. One is the more sensitive testing technology that could cause the existing extent of un-harmonized tolerances to become problematic. But perhaps the most difficult trend is the number of countries that are now coming up with their own custom approaches. In the last few years, South Korea, Hong Kong, Taiwan, China, United Arab Emirates and, most recently, Mexico, are going away from their old systems towards their new lists. These will be done, by and large, by health regulators, who don't have a mandate for trade. It makes us very nervous to see these developments and it's a concern.

Senator Oh: Does it mean every country will be setting up its own standards?

Mr. Kurbis: That would be a nightmare if that happens.

Senator Unger: My question is almost a supplementary. You recommend that Canada push for reform of Codex. I'm wondering why, when other countries are moving away from it. I'm not sure what reforms you're talking about, but would reform of Codex perhaps stop other countries from moving away from it?

Mr. Kurbis: That's exactly it. That's a very debated issue within crop protection circles, because Codex has so many delays now. I think that the extent of those delays and MRL gaps — so tolerances that they should have, that they don't yet have because their waiting list is so long — that is a driver, to some extent, why countries are moving away from Codex.

But on the other hand I think we all now have a better picture of what the trading environment could look like if we see double or triple the number of countries move away from Codex, as the short list that I shared with you has. The vision of that potential convinces us even more of the need for a global regulatory body for these types of tolerances or, failing that, some form of mutual recognition so we have the equivalent established.

Senator Unger: Another question: Are there problems that ensue when some of the countries to whom we export some of our products are also our competitors? Does that bring up a new set of problems? China, for example.

Mr. Kurbis: Can you help me understand the question? I'm sorry.

Senator Unger: We export certain products to China, which is also an exporting nation of other products. I'm just wondering if that creates a new and different set of problems. Some of them are our competitors.

Mr. Kurbis: I don't think those create material or new problems. In the case of China, the peas we send them they need and we need to export to them. We reached almost a million tonnes in 2013. But on the beans, those are two distinct markets in our trade, although for other commodities perhaps that could be an issue, as you described.

Senator Unger: So basically a reformed Codex system would go a long way or has the potential to go a long way to solving this global trading problem?

Mr. Kurbis: Yes, that's right. I think I understand the question better. If I may, the imperative to move in the direction of harmonized standards is as important to importing countries, arguably, as it is to exporting countries. So it's not just five or six countries around the world that are exporters that would be pushing for this agenda. It could also be China, which is a big importer, but they would also need the same approach for its exports. I can tell you that India, which is our largest pulse buyer by far, has had these very issues harm its basmati rice export market to the European Union. As trade becomes more complex, all countries around the world that both import and export, I think there could be a chance to build the momentum for this type of approach.

The Chair: On the second round, being that it is your birthday, Senator Enverga, we will ask you to continue on the second round.

Senator Enverga: Thank you.

My second question is: As we do our free trade with other countries, how much capacity do we have? Do we have a supply management issue in the future? How do you see the future with this free trade that's ongoing right now?

Mr. Kurbis: It would be great if we achieved three things from free trade agreements. One would be the removal of any remaining tariffs that we face going into key markets, whether we're trading into those markets now or whether we've yet to start our trade.

The second would be to make sure that there is no other country that has just finished its own negotiation, so our trade will now become curtailed as they begin to enjoy a tariff advantage that we have not yet achieved because we don't have a free trade agreement with that country.

The third benefit would be to see free trade agreements establish what I would call 21st century trade rules, so we can move away from the type of zero or near-zero tolerances that we have on the books around the world in many cases, that the testing technology could make it very problematic for us. I think if we had these three things, we have a very bright future.

Senator Enverga: And we have the capacity to produce more?

Mr. Kurbis: Tremendous capacity.

Senator Enverga: If you have the problem with regard to those things you've mentioned, how are other countries coping with this? Are they having the same problems, the same issues, when they try to export their pulses?

Mr. Kurbis: I think that Canada is among the leaders globally in contending with these kinds of problems, because so many other producing regions around the world are way less dependent on trade. We have 35 million people and the amount of farmland that we do, and we would be in a position to export 80 to 90 per cent of what we grow. Brazil, for example, is one of the largest dry bean producers in the world, but they export and import very little, so they're almost 100 per cent self-sufficient. These issues will be important to them, but I think Canadian exporters are first because of their dependency on trade.

Although we would have other grower groups around the world who are smaller but in similar positions — the California specialty crops industry, so tree nuts and this kind of thing comes to mind — we work closely with them in identifying harmonization issues of mutual concern.

The Chair: As we close, Mr. Kurbis, we're curious to know whether your industry is affected by the Country of Origin Labeling, COOL, policy of the U.S. Do you have any comment on this subject?

Mr. Kurbis: We are not affected by COOL, although we have sympathy for our fellow groups that are, because it seems to be a difficult issue indeed.

The Chair: In 2011, Canada exported a record 4.7 million tonnes of pulses worth nearly $2.7 billion. We have provincial regulations. What are the roles and responsibilities of the provinces? Do they create trade barriers that affect your industry?

Mr. Kurbis: I can't think of one. I would say there are no material trade barrier problems created by provincial policy.

The Chair: Mr. Kurbis, thank you very much for sharing your opinions and recommendations with us. There's no doubt the industry is listening and watching what we do with the order of reference that we have received from the Senate of Canada. Please feel free to contact the clerk if you want to share additional information with us.

Do you have additional comments?

Mr. Kurbis: I congratulate the committee for taking a look at this very important issue. As a grower and trade group, we look at what we need to advance our contribution to the Canadian economy in the future and market access is a big priority for us. Congratulations for taking a serious look at this issue, as you appear to be.

The Chair: It is a known fact that years ago we had five trade agreements. Today, Canada is looking at 42 trade agreements that either we are signing or are in consultation with other countries for.

On this, honourable senators, I declare the meeting adjourned.

(The committee adjourned.)