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Proceedings of the Standing Senate Committee on
Agriculture and Forestry

Issue 22 - Evidence - Meeting of December 11, 2014


OTTAWA, Thursday, December 11, 2014

The Standing Senate Committee on Agriculture and Forestry met this day at 8:05 a.m. to begin its study on Bill C-18, An Act to amend certain Acts relating to agriculture and agri-food.

Senator Percy Mockler (Chair) in the chair.

[Translation]

The Chair: Welcome to this meeting of the Standing Senate Committee on Agriculture and Forestry. I would like to thank you for being here this morning for the study of Bill C-18.

[English]

My name is Percy Mockler, senator from New Brunswick and chair of the committee. At this time, I would like to ask senators to introduce themselves.

Senator Beyak: Senator Lynn Beyak from Ontario.

Senator Merchant: Senator Pana Merchant from Saskatchewan.

Senator Tardif: Good morning, minister. Claudette Tardif from Alberta.

[Translation]

Senator Dagenais: Senator Jean-Guy Dagenais from Quebec.

[English]

Senator Plett: Don Plett. I'm from Manitoba.

[Translation]

Senator Maltais: Ghislain Maltais from Quebec.

[English]

Senator Oh: Victor Oh, Ontario.

Senator Enverga: Tobias Enverga from Ontario.

Senator Unger: Betty Unger from Alberta.

Senator Ogilvie: Kelvin Ogilvie, Nova Scotia.

The Chair: Thank you very much to the minister and your officials for having accepted our invitation to come and share your opinions and your leadership on C-18.

This bill is designed to modernize and strengthen federal agriculture legislation, support innovation in the Canadian agriculture industry and enhance global market opportunities.

Honourable senators, this morning, the Honourable Gerry Ritz, P.C., M.P., Minister of Agriculture and Agri-Food, will be making a presentation. He is accompanied by Veronica McGuire, Executive Director, Program, Regulatory & Trade Policy, Canadian Food Inspection Agency; and Rosser Lloyd, Director General, Business Risk Management Programs Directorate, Programs Branch, Agriculture and Agri-Food Canada.

Minister, we will now ask you to make the presentation, and it will be followed by questions from the senators.

Hon. Gerry Ritz, P.C., M.P., Minister Agriculture and Agri-Food: Thank you, Mr. Chair and senators. Good morning. I am pleased to be here today to speak to you in support of Bill C-18, the proposed agricultural growth act. As the chair has already introduced my colleagues, I won't do that again. I'll just say that I welcome them here. They have the expertise on some technical questions you may have.

With the emergence of new agricultural production techniques and new scientific developments, legislative tools for agriculture must keep pace.

The act proposes to modernize and streamline nine different statutes, some of which have not been updated in over 60 years. By updating these acts in tandem, C-18 puts farmers first in their quest to produce more safe and high-quality food to be enjoyed both here at home and around the world.

Innovation and efficiency have always been the hallmarks of agriculture in Canada. Perhaps more than in any industry, the pressure to innovate and advance is stronger today than ever before.

As the global population grows to a projected 9.3 billion by the year 2050, so too must Canada's role in helping to meet global demand for safe, sustainable food supplies. The year 2013 saw Canadian agriculture and processed food exports hit a record $50.4 billion, so it's no surprise that this act has the support of a wide range of farm and agricultural industry organizations.

When it comes to farmers' privilege, Bill C-18 creates a stronger climate of innovation, while fully protecting farmers' right to save, store, clean and use seed for their own operations. Our government heard from stakeholders on this issue, and we passed an amendment to clarify the language around the storage of seed.

The farmers' privilege — explicitly stated in the act — known as UPOV 91, is now crystal clear. A farmer does not need to seek permission from the rights holder to store saved seed for replanting in future years.

Our government has heard concern raised over the potential for farmers' privilege to be adjusted through regulations made by the Governor-in-Council.

Let me explain why it is necessary to have this ability to adjust farmers' privilege in regulations. There are over 300 species of plants that have protected varieties, and this number, of course, will grow. This is not a homogenous sector. There are protected grapevines, fruit trees, cereal crops, ornamentals and countless other plant varieties. There may be necessary and legitimate reasons, supported by both the sector and by farmers, in certain crop types, for adjusting farmers' privilege in the future. This regulation-making authority gives the government the flexibility to be able to address the varying needs of the farmers and industry overall.

However, our government has been very clear that no regulations would be advanced in this area without very comprehensive consultation and work with both the sector and farmers, figuring out the best solution for them and for the benefit of all. After all, we have been 23 years getting to this point, Mr. Chair.

The practice of developing new plant varieties through breeding is as old as agriculture itself. Seeds from well-performing crops are saved and replanted the following year. Through this cycle of selective cultivation, improved versions emerge. More recently, scientific methods and innovative techniques have yielded new plant varieties with superior traits and characteristics.

Plant breeding is a long, intensive process and requires a significant investment of both time and money. The reward for developing a successful new breed must outweigh the risk of failure. To succeed, plant breeders must enjoy conditions that will attract investment.

Unfortunately, at present in Canada, this is not the case. Canada lags behind the rest of the world in this regard due to outdated legislation covering intellectual property protection for plant breeders. In fact, Mr. Chair, our current legislation conforms to an outdated international convention put in place more than 35 years ago. A lot of innovation has happened since then. This proposed agricultural growth act will get us back into the right era when it comes to innovation. The act proposes to extend Canadian plant breeders' rights protection and also to bring us into line with our colleagues in the international community.

This will improve Canadian farmers' access to innovative new varieties, regardless of where around the world they are developed. In the case of domestic plant breeders, the possibility of greater returns will attract investment — we have seen that happen already — which, in turn, will encourage more players to enter the field. That's a little bit of a pun — enter the field — right?

Our agricultural industry has been asking for innovation and modernization, Mr. Chair. Bill C-18 is part of our government's comprehensive plan to modernize Canada's world-class grain sector to meet the needs of an ever innovative industry. The industry has moved forward over the past number of years, and our legislative tools must move in step with it. As well, our modernization agenda includes marketing freedom for western grain growers; legislation to get the grain moving and keep it moving; an aggressive trade strategy including new agreements with Europe and Korea; Bill C-48, which we just introduced, the modernization of Canada's Grain Industry Act; and investments in innovation, including over $73 million in industry-led grain science clusters for grains and oilseeds.

Bill C-18 proposes another way to modernize, which I would like to clarify. I'm referring to the authority in the bill for the regulations under the Feeds Act, the Fertilizers Act, the Seeds Act, the Health of Animals Act and, of course, the Plant Protection Act to incorporate documents by reference. Incorporation by reference is a very well-understood regulatory drafting tool. Incorporation of documents occurs in many government regulations already. The bill seeks to lay a baseline or foundation for the use of incorporation of regulation.

When a document is proposed for incorporation, it will go through the normal rigorous government regulatory-making process, where stakeholders are consulted and the issue is weighed as to whether incorporation is the right tool in the tool kit at that time. Once the document is incorporated, the bill sets out specific provisions on the government making sure that incorporated documents are accessible and that no one can be found in non-compliance for not following a document they couldn't access.

Mr. Chair, our farmers deserve to have the best agricultural tools and products at their disposal, meaning that anything we can do as government to encourage new and innovative products coming to the Canadian market will be a benefit to farmers. To support this, Bill C-18 proposes to add provisions in the Feeds Act, the Fertilizers Act, the Seeds Act and the Health of Animals Act to explicitly provide for foreign data and analysis to be submitted as part of a package supporting the authorization and review of a new product, such as a fertilizer or a veterinary biologic. This confirms the practice that currently goes on where Canadian scientists review all information they can in making a determination of whether a product should be allowed to be sold or marketed in Canada.

This does not take away from the rigorous scientific assessment but simply sets out that the Canadian Food Inspection Agency can consider foreign data and in no way means that Canada will simply accept what foreign jurisdictions have accepted with a rubber stamp. Using sound science, the CFIA will always make its own determination. This amendment has been supported by many farm organizations to make it clear that we can consider what foreign jurisdictions have concluded on a product.

Mr. Chair, as well as innovative tools, Canadian farmers need tools to manage the business risks inherent in agriculture. Bill C-18 will proactively help farmers manage their business risk through proposed enhancements to the Advance Payments Program. Offering interest-free cash advances, the APP helps producers to manage cash flow during peak periods so they can market their products for optimal profitability. Responding directly to stakeholder engagement and input, C-18 will amend the APP legislation to provide better service delivery; enhanced accessibility to the programs; additional repayment options with greater flexibility; and reduced administrative burden for farmers, producers and producer organizations. Bill C-18 proposes to make it easier for our hardworking farmers to finance their operations, take advantage of emerging market opportunities, and overall grow their business.

A key to competitiveness for our world-class producers is an efficient and effective regulatory framework. Bill C-18 is designed to enhance our farmers' ability to remain internationally competitive in the years to come. Continued investment in science and innovation through the tools provided within this proposed legislation will bring unparalleled success to our agricultural industry.

In the end, farmers and the Canadian economy will benefit. After 23 years of discussion, it is time to act. This is the right bill at the right time. Thank you, and I look forward to your questions.

The Chair: Thank you very much, honourable senator.

Mr. Ritz: Not yet.

The Chair: It was well presented and very informative.

Senator Tardif: Thank you, minister, for your presence here today and for presenting the bill. This is a large and fairly technical bill. As you stated, it proposes to amend nine acts. One could almost call it an omnibus bill.

Mr. Ritz: We prefer "comprehensive'' because it all pertains to agriculture.

Senator Tardif: There is a lot that's good in this bill. It modernizes the legislation and provides for enhanced trade opportunities. However, areas of concern have been raised. As you mentioned, one of them is around the question of farmers' privileges. Can you explain why farmers are given privileges while the breeders are handed rights? You keep saying that the bill will give farmers more than they already have, but privileges can be revoked while rights cannot. Why were farmers not granted rights?

Mr. Ritz: Actually, rights can be revoked by any government at any time, too. In a majority, they can pass bills that will change rights. We have seen that happen with other instances. At the end of the day, it is more legal jargon and the way it is done around the rest of the world so that we are in parallel with how it is applied in other jurisdictions. That's what it is about, senator. The only group that has concerns around farmers' privilege is the National Farmers Union. Every other relevant farm group is supportive of this; so that's what we based our discussions on.

As I said, there've been 23 years of discussions, and no one has changed their mind an iota as to what needs to be done or not to be done. It hasn't changed, so it is time to act. I think there are only two countries in the world that haven't embraced UPOV 91, and we're one of them. As a major agricultural producer, it is time to get it done.

Senator Tardif: I understood there were 17 countries. They may not be developed countries, but I believe that 17 countries have not adhered to the UPOV 91 standards.

Mr. Ritz: They don't export like we do.

Senator Tardif: Countries like Brazil and Argentina export a lot of beef, minister. They're pretty good agricultural producers. Let me get back to the point of the farmers' privilege, as you state.

Mr. Ritz: Yes.

Senator Tardif: It is my understanding, if it is correct, that the government through Governor-in-Council could pass regulations that would amend the privileges that farmers could have. Is that correct?

Mr. Ritz: As the bill outlines, only through discussion with affected parties. The regulatory process would take placegazetting and all those legal challenges and so on that could come out of that. I can assure you that our government has no intention of changing farmers' privilege, the rights of a farmer, to save seed at the end of the day. I'm sure your government would never do the same. We're both looking for strength for agricultural producers in Canada, not to weaken their stance.

Senator Tardif: I understand your very good intentions, minister, and I do not doubt that in any way, but things change. Regulations could be made later on that could put some of these things in jeopardy.

What concerns me about the incorporation by reference is that any amendments that would be brought further on would not be published in the Canada Gazette. Could you explain that, minister?

Mr. Ritz: It is a very technical procedure. It is certainly not unparalleled throughout government, other departments and so on, that this is how things are done. It allows for more flexibility and more discussion with industry. As a government, we're not arbitrarily doing things that farmers are not accepting of before we do that.

Our history proves that we consult broadly and that we act in the best interest of producers. History has proven that the decisions we have taken are well documented as supported; so we continue to move forward. I haven't had it raised by anyone we've had discussions with that they are concerned that somehow this government would do less than what is in their best interests.

Senator Tardif: The concern is that with incorporation by reference and not being published in the Canada Gazette, there's no public debate in Parliament because people don't know it is there. How can they react if they don't know everything has changed?

Mr. Ritz: The process would begin by someone raising an issue, and the discussions would go on with all the affected parties within the definition of that issue before anything is done. The discussion is not held in the public purview, as such, but it is certainly a good, frank, open and honest discussion amongst the parties that would be affected.

Senator Tardif: Can you tell me if documents that have foreign standards could be incorporated?

Mr. Ritz: Not without Canadian overview. We're not going to buy them carte blanche. It forms a starting point, rather than go back to zero. We all recognize each other's international science with these free trade agreements — international organizations like Codex and OIE and so on; there are standards out there. If we're dealing with a foreign entity, predominantly the U.S., and we agree with their standards scientifically and they are up to speed with Codex and the governing bodies around the world, then that's our basis to start from. We Canadianize it from that point.

Senator Tardif: I'll leave it at that for now.

Senator Plett: Thank you, minister. I want to congratulate you and our government that have shown so clearly that our largest concern is for farmers in this country by what you have done over the last number of years. I think this is the fifth major bill that you have brought through the House of Commons and now into the Senate. Rightly, this is called C-18 as your first one was called C-18, the Marketing Freedom for Grain Farmers Act. We have all seen the success there. We know that we will see equal success in this, so thank you, minister.

I'm a small businessperson, or I was before I was in the Senate. So the advanced payment interests me. I know you mentioned it briefly in your remarks, but I would like you to explain the advanced payment a little bit — what it was before, what it is now and some of the improvements.

Mr. Ritz: Sure. I'll have Mr. Lloyd jump in if I forget certain things.

The advanced payment program is a program where a farm entity can borrow up to $400,000, with the first $100,000 interest-free. It used to be very much tied to whatever commodity, and livestock was not included at all. This will be part of that under this new regime. You were forced to put product against that loan, and you could only repay that loan with the sale of that product. In some cases, when it came due, you were forced to sell your canola or whatever at a price that you really didn't like. Changes in here now mean that you can actually repay with cash. You can sell your wheat to repay your canola advance. You can do things like that to give a farmer flexibility to actually adjust to the market and make decisions that are in their best interests, as opposed to being forced to resell.

Farmers have the ability to take an advance in both the fall and the spring, so they can pay off their fall expenses and take money against spring expenses — because there are both — which is very timely and helpful in what we saw last year with the railways not moving product. We actually saw applications go up for the cash advances so that farmers could hang on and actually pick the time of their marketing.

Less than 2 per cent of grain, last year, was sold at that stretch basis, which is a good news story, at the end of the day, simply because they were able to do this. We allowed both a spring and a fall advance to be taken out.

Farmers are great. A handshake is their bond; their word is their bond. We have very little slippage on repayments on those terms.

The changes in here will also allow changes in administration, in that you can come in and do the cash advances for multiple years. You can't take the money, but your application says, "I'm into this program. Year one, I take the max available to me, and, year two, I'll do the same, three and four.'' You do your application all at one time. It saves on administration costs.

Senator Plett: Five years?

Mr. Ritz: For up to five years, yes. So there are a lot of good things in here that actually streamline the product and make it far more farmer-friendly than it's ever been before.

Senator Plett: Thank you. Minister, administrator liability has been increased from 1 per cent to 3 per cent. Could you explain that one for me as well, please?

Mr. Ritz: I'm going to let Mr. Lloyd explain that one because it is fairly technical.

Rosser Lloyd, Director General, Business Risk Management Programs Directorate, Programs Branch, Agriculture and Agri-Food Canada: We changed our entire approach to the administrator liability. Under the previous legislation, we didn't give them 100 per cent guarantee. The administrators remained responsible for a portion of any default under the program. Maybe I should back up here. Producer organizations —

Senator Plett: Tell me first who the administrator is.

Mr. Lloyd: The producer organizations, the administrators —

Mr. Ritz: It varies across the country, province by province.

Mr. Lloyd: Yes. There are about 60 of them across the country, and they issue advances to producers. Should that producer fail to reimburse that advance, we offer a guarantee on that advance. The administrators currently remain responsible for a portion of that advance to ensure that they show due diligence in issuing that advance.

We recognized that in the current legislation, that wasn't working. What the administrators were doing was simply holding back a portion of the producer's advance and sticking it in a bank account. In the event of a default, they'd pull that money out of the bank account and reimburse their administrator's liability.

Mr. Ritz: They were using farmers' money to hedge it and not giving the farmer full value.

Mr. Lloyd: What we have done under this legislation is taken that away and put it onto the advance rate itself. So the administrators won't be issuing as much up front, but dependent upon their experience under the program. A good administrator will issue at the top-of-the-line advance rate. A poorer administrator will be issuing at a lower advance rate, thereby providing some encouragement to show due diligence and make sure that the advances are given in the right form so that we get the money back.

Senator Merchant: Welcome to all of you, and welcome, minister. Minister, I would like to ask a couple of questions about the amendments to the Plant Breeders' Rights Act. It has to do with the fact that the plant breeders are granted exclusive rights to sell reproductive material — the new plant variety — for the term of the plant breeders' rights. Could you explain to us how the royalties are collected and paid to the holder of the plant breeder's rights and how much these royalties could amount to?

Mr. Ritz: I'm not sure you could quantify what the royalties will amount to. It would depend on the variety and how many farmers would take it up and put it into their cropping rotation. That's very much a variable. When it comes to return on investment, we're looking at anywhere between 10 and 15 years to actually commercialize, to bring a seed into that commercial aspect where farmers would have the ability to buy it in volume and work it into their cropping rotation.

We went for a lot of years without much of any kind of investment in wheat varieties especially. We have targeted that. I was part of some investments in Saskatoon, at the University of Saskatchewan, $100 million on new wheat varieties that was actually done through Industry Canada, not necessarily Agriculture Canada, but we were a big portion of making that work. We have actually reconfigured a lot of our science and research along the ideas of new varieties coming out. It is not just Agriculture Canada anymore that does that on our experimental farms. It is now a combination of industry saying, "I need this variety. Something that is Fusarium-resistant, something that actually makes use of the protein and the nitrogen left in the soil because it is all now cropping rotation.''

It is very important that we have the right varieties to put in the ground. We have seen that other countries, like the U.S., have made some changes to take advantage of those types of inputs in a cropping rotation that we were falling behind on.

So there are some new varieties down there that we can capture now that we couldn't before. Everything that came into Canada and the U.S. was considered a feed variety under the old Canadian Wheat Board Act. Now we are able to actually ascertain and assign an act. Under the piece that we just proposed the other day in the house — and you will see that shortly — those changes can come into play so that that variety comes up here and is usable by Canadian farmers, not just as a feed variety. There are a number of things in the works.

When it comes to how it all works, when it comes to the owner of the rights and a farmer, contracts will be signed. At that point, they can decide how they're going to ascertain and make it work. Some of the royalties will come back through government because of our actions through Agriculture Canada and other science centres within the government, depending on who has made the discovery and how it works. Certainly, I'm sure that if that doesn't work out, a good lawyer will be suing me and figuring out how to get that money back.

Senator Ogilvie: Minister, I too want to congratulate you on the improvements in the various acts that you have covered in this bill. I want to speak to one in particular because I have some history with it. That is the plant breeders' rights developments and progress that we're making in that area. I was on a national biotechnology advisory committee in the 1980s that initiated the recommendations that Canada develop plant breeders' rights. We had none at all at that time.

I think it is important for us to understand that there are two aspects to plant breeders' rights, not only for the plant breeder that comes up with a novel plant within Canada but also for producers to gain access to novel plants made elsewhere.

Mr. Ritz: One does no good without the other.

Senator Ogilvie: Absolutely because a breeder in another country who comes up with a novel plant will not sell it into a country that doesn't have plant breeders' rights because, under biotechnology, which is what we developed in the early 1980s, all you have to do is take a leaf off of any plant and break it down into as small parts as you want, thousands of pieces from a single leaf, for example, and you can make an identical plant from each little piece, in a technique called tissue culture. That was a development that occurred in the early 1980s on a large scale.

In order for producers or nurseries or anybody to gain access to plants in the international market, we had to have rights. Similarly, for Canadian producers, if you came up with a novel plant and somebody sneaks into your yard and takes a leaf, your invention is gone.

Mr. Ritz: Right.

Senator Ogilvie: These were tremendously important developments for Canada. We hadn't even signed on to the then-feeble existing international rights.

Mr. Ritz: Right.

Senator Ogilvie: It took almost a decade, until 1990, to get the act imposed and then of course, to get the cultivars identified and the exemplars and so on.

Your proposed developments here will modernize that act in particular and bring it up-to-date to try to bring a compromise between the rights of users and the protectors of intellectual property. That's a real challenge in that area, as everybody knows. I want to congratulate you on the developments here. I find it a significant irony having been one of the two or three who strongly advocated for plant breeders' rights in the 1980s to be here today to help adjudicate this tremendous improvement to the act that you've brought in. Thank you very much.

Mr. Ritz: I face the same type of thing, senator. My father was a seed grower. He didn't farm; he gardened. He was unbelievably good at what he did. He's still forgotten more than I'll ever know when it comes to agriculture.

Look at some of the significant changes that have come out of Canada that we haven't been able to take advantage of, such as genome mapping and all those things done now. With this new legislation, we'll start to capture the ability to export and market those types of significant scientific discoveries around the world. There's a tremendous amount of agricultural expertise in Canada that's not being taken advantage of right now because it's not protected. Certainly, this is the right line to take.

Again, nothing's static when it comes to agriculture. Look at the size and scope of what Canada is going to be asked to do in the future. It's only through biotechnology and efficiencies through innovation that we'll be able to come anywhere close to starting to deliver what's going to be required.

Senator Ogilvie: Absolutely.

[Translation]

Senator Dagenais: Thank you for your presentation, Mr. Minister. Good morning again, Ms. McGuire and Mr. Lloyd.

I think Bill C-18 will amend nine federal acts, which should improve competitiveness and innovation in the agriculture industry. Passing the bill will also improve trade and the Canadian economy. I have no doubt whatsoever.

Could you tell us more about how competition and innovation will be improved? I would also like to hear how passing the bill will strengthen trade and the Canadian economy in terms of access to the international market.

[English]

Mr. Ritz: Thank you, senator, for those pertinent questions. I'll start with the last point first because it underscores everything we're doing. The international marketplace is never static. The demands are ever changing as countries come up to speed. I guess the biggest example would be China, where the middle class is in excess of 450 million people and growing at a rate of Canada's population every year. The demands are ever changing there.

For the first time last year, we saw the diet in Japan change from predominantly rice to wheat flour. There are new demands for us to produce, and they're asking for products pertinent to their marketplace. They want things that they can put on their menus either in their own kitchens or in their restaurants that address the palate and desire of their people.

The international marketplace is something and I've been talking to our groups when we travel. We do a major trip to China every year; and I was there three times this year. On the major trip last June, we had in excess of 100 industry personnel with us across the spectrum from maple syrup to grains, meats and everything. They realize, and I've been telling them for years, that we have to market what the market wants, not what we have; so it's a matter of re-addressing how and what we grow.

We've been hewers of wood and drawers of water in Canada for so many years. If we try to sell a 16-ounce T-bone steak to Japan, nobody buys it because that's enough to feed a village. Senator Plett might like that on his plate on a Saturday night, but in Japan they're looking for a two-ounce cut. We have to come to grips with how we market that beef without destroying the integrity of how we produce it. To that end, we've opened a centre of excellence in Calgary that will bring in butchers and distributors from around the world to teach us how they want it delivered. That's value added in this country.

We're doing the same thing with grains and oilseeds. We're starting to look at cropping rotations and new varieties of product. At the end of the single-desk era, we had some of the large mills, such as the largest in the world in Jakarta and Warburtons in Great Britain, a major buyer of Wheat Board products. Through their representation in Canada, they got hold of me and said, "We can't deal with the Wheat Board anymore. They won't supply what we want. All they will ship us is No. 1 Hard Red, and we don't want that anymore. We want new varieties that will actually turn into some of the pastries we're trying to make and so on. We're not just bread anymore. We've diversified and can't just use Hard Red.'' We've seen Warburtons buying 50 per cent more than they did under the old single desk.

A friend of mine in Saskatchewan had 4,000 acres contracted for a new variety to Warburtons. We're seeing that type of growth — direct producer to consumer connection that we were never able to see before. Again, it's not static. Warburtons is already talking about the next generation, how they want to do it and what they need to do. They're in discussion with groups like the Canadian International Grains Institute and the Canadian Grain Commission as to how we'll get our producers producing them and how we'll bring those new varieties to market so we can maintain that valuable marketplace through Warburtons.

Senator Enverga: Minister, it's a pleasure to have you here. I've been reading about the rights of breeders. We took advantage of going to UPOV 78 to UPOV 91. It's already 2015. Is there anything in the works that would make it UPOV 2015?

Mr. Ritz: There's UPOV 98 out there already but it's not significantly different from UPOV 91. As I said, none of this is static. There are always ongoing changes throughout the world that drive the innovation agenda. We can't be left behind. We're struggling to catch up at this point. UPOV 98: I should be back in about 2023 to push that one through. I'm being facetious.

Senator Unger: Minister, your presentation was extremely interesting — and Mr. Lloyd and Ms. McGuire.

Minister, at the beginning of your speech, you mentioned Codex standards. Will the adoption of UPOV 91 work with Codex standards? Are they linked? Will this allow Canadian farmers to sell their products and enhance the Codex standards?

Mr. Ritz: Codex is the international body that governs a lot of this on plant rights and so on. This allows us to take advantage of what's developed in other countries. We've always had a closed shop in Canada. We develop varieties at some of the experimental farms of Agriculture Canada, some universities and so on. Now, we're doing it as a partnership. Agriculture Canada scientists are part of the solution but not the only part. We've directed all of our science work to be industry-led and results-based: They want this done. How do we get there? It's a combination of Agriculture Canada scientists, private sector and universities putting together a proposal through Agriculture Canada's funding and some from Industry Canada, which I talked about. How do we get to that result? We have a much better working relationship than we've ever had before. There are strengths in all aspects that come together and focus on that result.

Agriculture is diverse in Canada, as it is in a lot of other countries but more so here because of our climate, soil, fresh air and water. We have an abundance of all of those things. One thing I talk about in China all the time that helps us to sell Canadian products is the ability of Canada to produce an environmentally sustainable product with clean land, clean water and clean air, because they have none of those. They literally gobble it up. Our problem is getting enough product and maintaining that flow. It's not hard to get into a market, but it's sometimes hard to sustain it when you're running out of canola or other products. It's going to take investments.

My grandfather went out and homesteaded, and my father did and now my nephew is doing that. So the farm's carrying on generation after generation. The biggest change I notice from when my grandfather farmed to now is that although you still work hard, you have to work smart. Marketing is done on your iPhone and things like that. While he's in the cab of the combine and the GPS is steering the combine, my nephew is on his iPhone marketing whatever's just going into the hopper.

At the speed of commerce, agriculture is no longer take it off, put it in the old wooden bin, shovel it off, shovel it back in, haul it to the elevator. Now they have choices. Now they market ahead. They hedge into next year. They do all sorts of things that are leading edge, cutting edge.

Senator Unger: Is there a connection between this and Codex standards? We heard from earlier witnesses that the Codex standards —

Mr. Ritz: Did you want me to name them?

Senator Unger: No. Codex needed to be enhanced for it to continue to be used.

Mr. Ritz: Codex is not a static document, either. We're making application. We're the lead country making applications to that governing body at Codex on low-level presence, maximum residue levels and things like that that need to change. It's very much a partnership. Everything happens in parallel. It would do us no good to have all of these brand new varieties, and then, as we trade them with another country, they throw up a non-tariff trade barrier saying, "There's low-level presence in there; there are residue levels of such-and-such a chemical.'' It's no longer parts per billion. It's parts per trillion. The testing is that intense. We faced that issue in Europe, a short time ago, with Triffid flax, and at first when the genetic marker came up, it looked like a sugar cane variety. Everybody uses the same containers, same trucks, same railways, same boats and all of those types of things. It's very hard to ascertain. Canada is part of the solution as we're driving that, but we're also at zero tolerance as well on those issues. You have to start to recognize and realize what the reality is moving forward. Everything is done through a lens of public safety, of healthy food. We've never had a problem with that to this end.

Senator Beyak: Thank you very much, minister, Ms. McGuire and Mr. Lloyd. My question was just answered, but I want to commend you all as a girl who grew up in farm country and has lived there most of my life, completely non-partisan. Your experience and your comprehension of the issues are evident. It's one of the most perfect bills I've ever read, and I've read all of the acts it pertains to. Congratulations.

Mr. Ritz: Well, we've had 23 years to get it right.

Senator Beyak: You have. Thank you.

Senator Oh: Minister, welcome to the standing committee. I know you travel frequently to China and the Asia-Pacific Rim to promote our agri-food. It's important to grow it well in Canada, but you have to be able to market it well too.

Mr. Ritz: Exactly. We've proven to the world we can grow it. Now, you have to sell it.

Senator Oh: I know you mentioned earlier about the Japanese, that they changed their habit to a different type of oat that they're buying. What about the Chinese? It's such a huge market. How do you work with them on what the next five years will be? What changes in their diet patterns are coming up? That is so important. The market is so big.

Mr. Ritz: The biggest change we're seeing in China is more of a red meat base than we've ever seen before. Having said that, we're also doing a tremendous amount of work with Chinese industry over there on blending pea flour into noodles so that you end up with a protein as opposed to just a carbohydrate starch. It's a more complete meal. There are tremendous opportunities in doing that. We are the world's leading producer of durums and some of the pulse crops, peas and so on. If we can put together a package that combines the two, it's a win-win. A lot of good scientific work is being done in partnership with some of the expertise in China as to what they exactly need and how we make that happen. It sounds easy. You just blend the flour and away you go, but there are so many different consistencies to pasta. It has to flow properly. It can't break down. It has to cook properly. It's not like you just blend the flour, whip it up and have a cake. It's very comprehensive. Cigi has been doing a lot of work on that blending. They bought some very specialized equipment and put together some that is proprietary working with some of these groups.

Senator Tardif: Minister, there's concern that Bill C-18 could alter revenue collection methods, including end-point royalties. End-point royalties would allow seed companies, including plant breeders, to collect revenue on harvested grain, not only on the seed sold.

Mr. Ritz: Only if you have made that differential in your contract up front. This would all have to be worked out as a commercial agreement. I know one farm group out there is saying, "They will bill me three, four and five times. Every time I open the bin door and look at it, they're going to charge me.'' That's ridiculous in the extreme. You will sign a contract that everyone is very familiar with now for their canola, where you pay the royalty, the IP cost, up front as part of that new seed variety. The new seed varieties sell out first every year. Farmers are accepting of that because they need that new trait. The same type of thing would happen in other varieties that come under the auspices of UPOV 91. You would either, under your contractual obligations, pay that IP up front, as we're used to doing now, or, if you decide that you want to keep a few bushels of seed to use on your own crop land next year or the year after, you would pay an end-point royalty on what you save. So you either pay the IP up front, or you pay it on what you save. You don't do both.

Senator Tardif: I think there's a concern, minister — and I've heard it from some groups — that the larger companies who are selling the seeds could, with changes in regulations down the line, be able to —

Mr. Ritz: They can't do it arbitrarily. They'd have to come back before us to do that.

Senator Tardif: But would regulations allow it to happen that a company could charge at different points in the production cycle?

Mr. Ritz: I would say they would try. All of that would have to be laid out in a contract, and any farm who would sign on to that, where they will be charged three and four times, shouldn't be farming.

Senator Tardif: So the onus would now be on the farmer to make sure that he negotiates a good contract with the company that does that.

Mr. Ritz: That's always the way. Any farmer runs their business based on contractual obligations right now if they're buying canola and soybean and corn and so on, and they will continue to do exactly that. If someone decides they want to save seed, the opportunity is there to do that. How many farmers will take that up? Very few. As I have said, the newest, best variety of seed sells out first every year. There's never enough. So I don't see any major change. All of the farm groups that we talked to, all of the relevant ones, said that it is highly unlikely that anyone will carry seed over. As a seed grower, I watched my dad every year testing the germination of seed. Every year you grow the seed, the germination goes down. It drops by 25 to 30 per cent the first year; then it drops 50, 60 per cent. It just starts to drop down. The strength of the seed isn't there. The strength is in that year's production. We've developed a number of drought-resistant varieties of canola, and, when we had the flooding in Saskatchewan and Alberta and even a little bit into Manitoba, we saw that strength of seed, even though it's drought-resistant, do well with too much water because it's a stronger seed. It puts everything into that year's growth. It doesn't really put it into the potential of the next generation of seeds. That's just the nature of the beast.

Senator Tardif: Minister, how do you propose going about the extensive consultations that you've said that you will put in place before you move forward to the regulation stage?

Mr. Ritz: A lot of the consultations have been done. If there are changes in regulations going forward, there's a whole new consultative phase moving forward. We're not going to drive changes in regulations. It would be up to the farm groups themselves and maybe the proprietary interest of some seed producer, but they would have to have that interchange. If we need to facilitate that, as a department, we certainly would.

Veronica McGuire, Executive Director, Program, Regulatory & Trade Policy, Canadian Food Inspection Agency: Just to add a few comments, there are ongoing consultations by the department, as well as by the CFIA, with stakeholders. Typically, before we recommend embarking on any regulatory process, there are pre-consultations with the various stakeholder groups, in this case producers, private enterprise and other stakeholders. If that pre-consultation indicates an appetite to propose some regulatory changes, there would be a very extensive stakeholder consultation process before government would make any regulatory proposals for further consideration by the Governor-in-Council.

Senator Plett: Minister, we of course in Canada have zero tolerance for animal cruelty. We are making some changes to penalties in this act.

I have one question, but I will break it up into a few pieces. With regard to the penalties imposed, they are being significantly increased. We have terms like "minor violation,'' "serious violation'' and "very serious violation.'' What criteria are used? What goes from minor violation to very serious violation? Who determines that? Is a CFIA inspector solely allowed to hand out a fine to a producer? I know we're working together with the provinces, but to what extent are we working together with the provinces on this type of issue?

Mr. Ritz: The short answer, senator, is that it would vary case by case. The CFIA official would have the initial contact, and then it would go higher up the chain for penalties to be assessed. As a federal government, we're not involved at all on the farm. Our oversight begins as the product is loaded on a truck and leaves that farm gate to move to the processing plant or wherever it goes. There are exceptions to that when it comes to moving cattle to pasture, which is still provincial. It's a clearly defined set of criteria as to when CFIA steps in.

Senator Plett: The farm is provincial. Once it's on the truck, it's federal.

Mr. Ritz: It depends on where it's going on the truck. As I said, if it's being moved to pasture or, for example, it's a case of taking pigs to another farm, it's not necessarily us. Auction marts and so on are provincial. There was a case in Alberta a short time ago where an auction barn was attached to a processing facility. Not everything went into the processing facility, but that's the disconnect. Everything came in on the truck; some of it was ours, but as it went through the auction barn, it was provincial. There's a very good working relationship between the two; and those discussions continue as to how best to serve industry to ensure that animals are safe and handled humanely. As I say, it varies case by case, jurisdiction by jurisdiction.

Senator Plett: The CFIA inspector would simply file a report as to the allegations that he or she might have.

Mr. Ritz: They have the ability to go beyond that. They can actually stop an action and then recommend how egregious it was and so on.

Ms. McGuire: With respect to the application of the ministry and monetary penalties, how those penalties are applied under the various statutes is defined through regulation. For example, the regulations would set out the provisions subject to the monetary penalties and would identify the seriousness of the offence and whether it constitutes a minor infraction or something more serious.

Mr. Ritz: Whether it's a first time or repeat as well.

Ms. McGuire: That is also a consideration. Through the regulatory process, there are full consultations with stakeholders. The general principle is governed by risk or the consequences of non-compliance. Obviously, if the consequences or the risks are more significant, then it would attract the penalty associated with a serious infraction.

Mr. Ritz: At the end of the day, senator, no one wants a black eye. Industry is very much involved in those discussions as well as an umbrella, down to their partners on the ground.

Senator Plett: I want to echo Senator Beyak's comments. This is a great piece of proposed legislation. Thank you; and I'm proud to be the sponsor of it.

Senator Merchant: I have a question about the proposed amendments to the Farm Debt Mediation Act. Can you tell us what difficulties this proposes to address? How does it work now and so on?

Mr. Ritz: It's more to streamline administration, but Rosser Lloyd is the key guy on that.

Mr. Lloyd: Farm debt mediation provides a service to farmers when they face financial difficulties. They are offered a consulting service to figure out a business plan and then a mediation service to mediate with their creditors to come up with a solution that hopefully sees the farm carrying on business. Currently, as a guarantor of an advance, the minister — the department — is not a participant in those mediation services. The Advance Payments Program can represent a significant debt owing by a producer; so we end up in a situation where the farmer is in mediation that doesn't involve all of his creditors. The amendments to the FDMA will allow the minister to participate in those mediations as a guarantor of the advance.

Mr. Ritz: On behalf of taxpayers.

Mr. Lloyd: The producer gets a complete look at his debts and a complete solution to his financial situation.

The Chair: As we conclude, I had said "senator'' at the beginning. I would say to the minister that maybe someday he could be a member of this extraordinary committee.

Mr. Ritz: Extraordinary committee. I'll give you that, senator. I'm aging fast, so I think I'll be timed out.

The Chair: Minister Ritz, on behalf of the committee, I sincerely thank you for appearing and being the first witness on Bill C-18, the proposed agricultural growth act. To you, your family and your team, Merry Christmas and Happy New Year for 2015.

Mr. Ritz: I certainly reciprocate that thought, senator, to you and yours and all senators around the table. Enjoy the break; I know how hard you work. Everybody deserves that time. Get reacquainted with your families as I intend to do. My wife told me the other day that I spent more time in China than I did at home. She keeps track of those things.

The Chair: Thank you.

Honourable senators, as we move to the second hour on Bill C-18, I want to recognize the witnesses and thank you for being here and sharing your comments and your opinions and to answer questions from senators.

We have, From Agriculture and Agri-Food Canada, Mr. Rosser Lloyd, Director General, Business Risk Management Programs Directorate, Programs Branch; and Mr. Martin Crevier, Assistant Director, Financial Guarantee Programs Division, Programs Branch. From the Canadian Food Inspection Agency, we have Veronica McGuire, Executive Director, Program, Regulatory & Trade Policy; and Mr. Nicolas McCandie Glustien, Manager, Legislative Affairs. From Justice Canada, we have Ms. Louise Sénéchal, General Counsel and Deputy Executive Director, Agriculture and Food Inspection Legal Services; and Ms. Sara Guild, Acting Manager and Senior Counsel, Agriculture and Food Inspection, Legal Services.

I have been informed by the clerk we have no presentations; therefore, we will go to questions.

Senator Tardif: I want to get back to this question about farmers buying their seed. Now, I understand that if they buy their seed from a corporation, for example, they pay a fair price and their return is the yield they get from the seed. According to Bill C-18, can farmers trade their seeds amongst themselves?

Nicolas McCandie Glustien, Manager, Legislative Affairs, Canadian Food Inspection Agency: Currently that is not a practice that is supported, if it's a protected variety. That's already the case under UPOV 78 and our current plant breeders' rights. As a farmer, I can't trade the seeds across the farm gate to another farmer, because that is essentially a sale; so I'm giving a protected variety for consideration across a farm fence.

That continues to be the case under UPOV 91 and then the Plant Breeders' Rights Act amendments that we are proposing here. So that trading of seeds of a protected variety, if there is a contract in place, continues to not be allowed.

Senator Tardif: If, for example, a corporation found that one of their products appeared in a farmer's field that had not been bought by the farmer, but happened to be there — maybe the wind blew, maybe something happened — could the farmer be prosecuted by the company for that situation?

Mr. McCandie Glustien: It would not be an offence under the act. They would not be prosecuted. However, a civil action could be brought by the rights holder of the protected variety.

The chances of it being wind-blown for this, so what you are looking at is in one field the farmer has variety A, across the street a farmer has variety B, and some seed blows across and pollinates in variety B. You no longer have variety A or B; you have a third variety — variety C, which is not protected and very likely of no benefit to the farmer. It is not what he was hoping to grow, and so if that accidental contamination were to happen, it wouldn't be the protected variety of the first part.

Senator Tardif: There's nothing there that says that the farmer had to show wilful intent to do wrong; right?

Mr. McCandie Glustien: That is true, but that's true for most of the intellectual property-type statutes, such as the Patent Act. If you infringe, you don't need to show a wilful intent to have infringed. That is fairly standard across intellectual property law, and perhaps my colleagues at Justice would like to talk about that.

Louise Sénéchal, General Counsel and Deputy Executive Director, Agriculture and Food Inspection, Legal Services, Justice Canada: I can only confirm that this is the case. The intellectual property doesn't usually have an intent content; so, yes, I can only confirm at this point.

Mr. McCandie Glustien: If a civil action were to be brought, both parties would be able to demonstrate this is the situation and this is what happened; so that the finding in that civil action could likely take into account the fact there was no wilful intent if there was some sort of cross-contamination.

Senator Tardif: You see where I'm coming from. I'm trying to protect the small farmer as opposed to the corporate interest and just what that balance is. I don't want to see things tip to the large corporate entity.

Mr. McCandie Glustien: If I can reiterate, that is the current situation under UPOV 78 and the current legislation.

[Translation]

Senator Maltais: Ms. Sénéchal, you talked about civil action. Does the so-called act of God principle not apply in this specific case?

Ms. Sénéchal: Every case is unique. You know what lawyers say: that depends. We would have to see the facts in a specific case. It is possible that an act of God could apply, but once again, everything depends on provincial legislation, because civil action is usually carried out under provincial law. We would have to look at each case separately.

Senator Maltais: Have there been any precedents?

Ms. Sénéchal: Yes, there was one. I would like to specify that there was indeed only one precedent and that this is extremely rare. So the reality is that big companies do not see the real benefits of going against small-scale farmers who have limited resources. It is not to their advantage. This is not really a legal answer.

[English]

Senator Plett: I want to talk about licensing of feed and fertilizer establishments. We have heard that some companies are complaining that they find it more difficult to do business within Canada than internationally. I understand that the proposed changes in this bill for licensing and registration of businesses that sell their animal feed and fertilizer products across provincial and interprovincial borders will facilitate interprovincial trade and eliminate red tape for producers. I know we have an ambitious trade agenda in our government.

What are the advantages of the proposed licensing and registration for businesses that sell their animal feed and fertilizer products across provincial and interprovincial borders?

Ms. McGuire: These are provisions that are being adopted in the food sector in Canada but also by many of our major trading partners. A licensing regime will typically enhance the ability to sell safe products, not only within Canada but abroad. Certainly we have heard from a number of stakeholders in the various sectors who strongly endorse the concept of licensing establishments.

For example, in the case of the Feeds Act and the representations that we have received from the Animal Nutrition Association of Canada, they have been advocating for some years now that we adopt the practice of licensing commercial feed mills and enhance their capacity to sell feed, again, across the country as well as internationally.

Mr. McCandie Glustien: I would like to add a couple of things. We see this as being a benefit to producers in that right now feeds and fertilizers are registered product by product. So I'm making three different types of feeds. I have to have them each registered and looked at and churned out of my facility that way, whereas if we move to a licensing type of regime, you can look at the facility or the manufacturer as a whole. Perhaps there's one registration or one licence that then has multiple products. There is potentially a red tape savings there in terms of looking at the overall facility.

Senator Plett: They don't have to license every product.

Mr. McCandie Glustien: Exactly. As well, from that we see that there are a lot of potential safety benefits. If we're looking at information around traceability of a contaminated feed, if we're having to go back through product by product in registered products, it is much harder than if we have the actual facilities registered and we can go directly to them and find out what they produced.

As well, as Veronica mentioned, our international trading partners, certainly in the feeds sector but also fertilizer, are looking at having preventive control plans and safety plans put in place at the facilities themselves. Having this type of a regime allows their trade to remain much more open, especially to the United States.

Senator Plett: Thank you. I have one more question. I know we've beat this almost to death, the plant breeders' rights and farmers' privilege, but I have another question around that. I think I'm clear on what we are now doing, but what I am not entirely clear on is what we now have.

We are giving plant breeders' rights and we are giving farmers their farmers' privilege, and I think it is wonderful. Yet we have groups, like the minister said, the National Farmers Union, that are somehow upset about the farmers' privilege. Right now, the farmers don't have that privilege, I understand.

Explain that, because I know that we will have the National Farmers Union in here at some point, and if they're watching this, they may change their presentation if you explain ahead of time what it is that we have now and what makes this better.

Ms. McGuire: Let me make some general remarks, and I will ask Nic to provide additional details. There is an act in place now, as you know, the Plant Breeders' Rights Act. As was mentioned previously, that dates from 1990. It reflects the provisions of the international convention on plant breeders' rights, dated from 1978. The proposed amendments generally reflect the approaches and provisions of UPOV 91, to which Canada is a signatory. Most of our trading partners have adopted legislation that reflects the elements of the UPOV 91 treaty.

With respect to farmers' privilege, I will ask Nic to clarify to get to your question, senator.

Mr. McCandie Glustien: Certainly. Currently, under the UPOV 78 regime and our Plant Breeders' Rights Act, there is no explicit farmers' privilege. This is something that is implicitly understood, that a farmer can save and reuse seed, but there is no language around it. We feel by taking this provision out of the UPOV 91 regime and putting it in the Plant Breeders' Rights Act, it will really clarify and make it crystal clear that this is an ongoing right of the farmer, or — sorry — an exemption to the right of the breeder, which is the technical way the legislation is drafted. It is an exemption that is maintained in the law. Right now it is kind of on a case-by-case, not really clarified basis.

There are other sets of things that are amended in moving from UPOV 78 to UPOV 91. The farmers' privilege is certainly the most key one, I would say, but some of the other exemptions to the plant breeders' rights in there are exemptions for research, exemptions for small, non-commercial farming-type operations. If I'm growing things in my backyard, that is now clearly exempted as well. And then some other aspects in terms of the length of the protection.

Senator Plett: Farmers' privilege, we are enshrining something in law now that was being done but wasn't —

Mr. McCandie Glustien: Absolutely, yes.

Senator Merchant: I am going to ask a question about the amendments to the acts on agricultural inputs and the importance of aligning Canadian regulations with those of our main trading partners. The worry is that something can be approved here in Canada, but there may be some time before, let's say, the same thing is approved in the United States. On average, how long does it take for the approval process on a new agricultural product?

As to the involvement of the minister to determine whether or not information from a foreign or international review meets Canadian scientific standards, could you maybe explain to us how that works, how that will change?

Ms. McGuire: Sure. The pre-approval of products, for example, in the feeds sector, as well as the fertilizer sector, involves a very rigorous review by our specialists and scientists at the CFIA. We typically have service standards for the evaluation of product safety and approval. It depends on the programs. But because of the in-depth analysis that is required and the fundamental principle that we have to be confident that the product is safe for use in Canada, I would say generally it would take at least a year, in some cases longer.

It is not a process that typically happens very quickly, because our experts at the agency will do a scientific review from an agency perspective. We will do a peer review. We will, on occasion, consider the studies done by other experts and like-minded countries. But as I think was mentioned earlier, even in situations where we're able to consider the scientific analysis done by peers in the United States or in the European Union and elsewhere, that complements the analysis done in-house by CFIA experts. Foreign data and approvals are not a substitute for CFIA decision making, but they're an element in our decision making.

In terms of ministerial involvement in those types of decisions, those decisions are typically very technical. They're done by our toxicologists, our specialists in the different programs. To the best of my knowledge, there's absolutely no ministerial involvement, unless changes to regulations are required; and then, of course, we would pursue the typical regulatory process. In the review itself, in the determination of safety, that rests in the hands of specialists at the Canadian Food Inspection Agency.

Senator Merchant: But I thought that the amendments proposed in this act will allow the minister to consider international scientific findings during the approval and registration process for new agricultural products.

Ms. McGuire: That's the way the wording of the act is structured. That ministerial authority can be delegated to officials at the agency, which would be the case in these instances.

Mr. McCandie Glustien: Currently, the authorization for a new product is done at the ministerial level but delegated down to the officials of the CFIA who are working on the specific substance. This is a complement to that, to just be very clear that foreign data and foreign analysis can go as part of the overall package that is looked at.

As Ms. McGuire alluded to, if a new substance was permitted, in certain situations — I'm thinking specifically of fertilizers — that may need to be added to a list that exists in the regulations. That, then, would need to go through a regulatory process, which can often be part of the time between a review being initiated, an approval and the actual product being available to farmers in Canada.

Senator Ogilvie: Ms. McGuire, I will put this question to you. It is an issue that has come up before. It came up a little bit in the minister's testimony this morning. It falls under the general category of regulatory tariff and trade barrier issues. That is that countries, including Canada, will often set a limit of zero traceability of, say, a pesticide or genetic modification or some issue.

The ability of scientific detection today is reaching the part-per-trillion level. These are areas where we are well beyond any possibility of any impact on any living organism to any extent that would be viable.

Simply putting in a regulation that says that a product in certain category coming into the country will show zero trace of whatever effectively sets a trade barrier without having to go through international negotiations on tariffs and trades. It could potentially be an absolute barrier to trade.

That can work both ways — coming into Canada and sales. In fact, most of the issues we have heard deal with Canadian exporters in the agricultural area attempting to sell into markets where there is a zero in certain categories.

I wonder if you could give us a brief summary of how important or how extensive or how much of a concern this issue is. Setting a zero requirement may seem to be on the side of the angels in terms of protecting the population, whereas, in actual fact, with detection limits beyond anything that anyone had ever imagined even just two or three years ago, it acts in a very different way. So could you give us a little bit of a primer on this issue?

Ms. McGuire: I would be happy to. Certainly, it is true that scientific methods and laboratory approaches continue to evolve, and, as you well point out, they are becoming more and more sophisticated and able to detect substances or other elements to a degree that was not possible even a few years ago.

So the science is continuing to evolve, and, for us, as a science-based regulator, we work hard to keep in tune with scientific developments. Our first priority is with respect to safety, although we are also cognizant of trade considerations, as well as economic considerations.

I do want to point out that we work with international standard-setting bodies. There are bodies that set standards both from a plant health perspective and an animal health perspective, and Codex is the international standard-setting body for food safety. Canada plays a very active role in all three of the international standard-setting bodies and works hard, in conjunction with other departments like Health Canada, to negotiate, at the international level, standards that are oriented towards safety, with a view that member countries in an organization like Codex will put in place domestic regulations that reflect the international standards based on science.

With respect to certain trade considerations — and the minister this morning made reference to the issue of low-level presence — we are consulting with stakeholders in other countries on how we might address issues associated with low-level presence, which is the presence of genetically modified substances that have been approved in one jurisdiction, and the detection methods now allow for, as you point out, the detection of trace amounts.

So we're very active on that particular file, working in collaboration with our colleagues at the Department of Agriculture and exploring policy approaches that reflect the current realities, particularly in the grain trades sector, and that, obviously, don't compromise safety because, as I mentioned, that's the top consideration but that minimize trade disruptions and enable trade to flow as expeditiously as possible across the various countries.

Senator Ogilvie: I understand everything you have said, and I agree entirely and understand the process overall. But the term that I used was "zero.'' Zero is an absolute number.

Ms. McGuire: Yes.

Senator Ogilvie: My real question is this: To what degree is the imposition of zero levels becoming an issue in international trade?

Ms. McGuire: It is becoming an issue, and I think most people would agree that it will be a growing issue as detection methods continue to evolve. In the case of low-level presence, for example, some of the debate is certainly around moving away from zero tolerance, and there are a large number of stakeholders who would argue about the need to move away from zero tolerance, that it's simply not realistic given business practices as well as testing methodologies and that countries should consider looking at adjusting levels away from zero to other levels that, again, don't compromise safety but reflect current trade practices as well as business practices.

I hope that answers your question.

Senator Ogilvie: I will be able to explore it, I think, with other witnesses a little further, but you have given us a very good summary of the issue itself. The absolute impact on individual exporters is a different issue, so I will leave it at that.

[Translation]

Senator Dagenais: Thank you, Mr. Chair. Thank you to our witnesses. I would like to go back to the Farm Debt Mediation Act, because I am particularly interested in that issue. We know that the current farm debt mediation process works.

How will it work with Bill C-18? Will it change? Will it be improved? What shortcomings will Bill C-18 help us address, if there is anything that could be called negative in this process?

[English]

Mr. Lloyd: Again, the Farm Debt Mediation Act is the act that provides for the Farm Debt Mediation Service. Again, under this service, producers facing financial difficulty can apply to the service and receive consultant assistance to put together a business plan to move forward in the farming operation. These are often producers facing bankruptcy. If somebody is threatening to foreclose, they need a business plan to get out of that problem. That is then brought to mediation.

We provide a mediation service to mediate between the creditors and the producer. The objective is to get all creditors in there such that when you face the business plan, you get a solution that responds to the needs of all creditors, and, therefore, the plan actually works going forward.

We've got a situation right now where as a guarantor of those advance payments, the department represented by the minister and whoever he designates cannot participate in those mediation services. So we've got an administrator who can participate, but they really don't know what the department is willing to do in terms of an agreement that the producer may put forward.

The amendments we propose in the bill will allow the minister, represented by whoever he designates, to actually participate in those mediations. He would be advised of the business plan and the mediation and would actually participate during the mediation session such that when the producer walks away from that mediation, he ends up with a complete picture of what all of his creditors think of the business plan.

Senator Enverga: I would like to know whether plant breeders' rights include a GMO produced by other companies.

Mr. McCandie Glustien: We need to draw a distinction between the plant breeders' rights in protected variety versus a genetically modified organism, which is patentable in terms of the trait and the gene. They are very different. Plant breeders' rights are concerned only with the plant as a whole. It could be a GMO variety or a regular variety that's been crossed and bred to be resilient and better. It doesn't depend on the gene itself. The whole plant is given protected status under the act, versus a patentable trait that could be done through the Patent Act in terms of the gene.

Senator Enverga: Sometimes a patentable trait will become a natural trait. Is that possible? Have you looked into those kinds of things?

Mr. McCandie Glustien: Perhaps that goes beyond my capacity to answer. I would think that after a certain amount of time, when patent protection expires on the patented trait, then it would be part of the accepted protected variety. As well, when these protected varieties reach the end of their intellectual property protection, they become free to use for anyone; and certainly no royalties would be due then on those plants. I would think there is some overlap and commonalities in terms of the plants that are protected. But the Plant Breeders' Rights Act does not concern itself directly with GMO traits.

Senator Enverga: We've been talking about the Plant Breeders' Rights Act. How about animal breeders' rights? Are they in place? Are you looking at that maybe in another bill? Is it part of this bill?

Ms. McGuire: There are amendments proposed to our Health of Animals Act as part of Bill C-18.

Mr. McCandie Glustien: There are no comparable animal breeders' rights either built into Bill C-18 or federally within Canada right now. I believe that some traits are patented under the Patent Act, but I would have to ask my Justice colleagues about that. The patenting of traits in animals is certainly more contentious and more fraught with difficulties than patenting plant traits. There's nothing in this bill or otherwise federally in Canada that sets out animal breeders' rights.

Ms. Sénéchal: I just want to put on the record that as far as I'm aware, there's nothing of that sort.

Senator Unger: My question is around plant breeders' rights in countries that are Canada's primary partners and that already comply with UPOV 91. Have you noticed a larger capacity for innovation in terms of new varieties among trading partners that have adopted UPOV 91?

Mr. McCandie Glustien: Absolutely. The lack of UPOV 91 protections in Canada has definitely precluded a number of new varieties coming and the investment within Canada into new research and varieties. We've already seen with the announcement that Canada would be moving to UPOV 91 through the amendments in the Plant Breeders' Rights Act that a number of Canadian research projects have been initiated as well as international firms identifying that this is now an environment where they're comfortable coming in.

The further we go in terms of separation of our major trading partners, such as Europe and the United States, the more difference we'll see in new varieties brought into the market versus us not benefiting from those varieties. Even the indication that we were moving to UPOV 91 was enough to spur some announcements of new investment in Canada.

Senator Unger: Have you noticed a decline in the capacity of farmers to keep part of their harvest and seed?

Mr. McCandie Glustien: Is that referring to the decreased ability of the seed to propagate year by year for safe seed?

Senator Unger: With regard to plant breeders' rights.

Mr. McCandie Glustien: No. In those other international areas where the plant breeders' acts have been implemented up to UPOV 91, there have been differing ways of managing the farmers' privilege. Some have an outright farmers' privilege. Some have no farmers' privilege, and others, like Canada, have a modified version. It's left up to each jurisdiction as to how they feel it's best implemented. After many years of consultation, as the minister identified 23 years of discussing with farm sectors, I'd just like to reiterate his point. It's not homogeneous as well. This is many different plant varieties; and the needs of the cereal crop sector may be he very different than fruit trees and orchardists and the horticulture sector.

The solution of the modified farmers' privilege is what Canada feels is best for the sectors here. You can look at different international jurisdictions such as Australia, France and the United States, who have differing approaches to the farmers' privilege. We feel that the one we put forth is best in the Canadian context.

Senator Unger: Would you explain what you mean by "modified?''

Mr. McCandie Glustien: It is not an absolute farmers' privilege, and it is not a case of no farmers' privilege. Under UPOV 91, you don't have to have a farmers' privilege added. Canada felt that's not the right way to proceed for the sector, so we've identified the exemption to the breeders' rights. You can have an absolute farmers' privilege exemption where it is not able to be modified by regulations later. We found in discussions with many of the sectors, and I'm thinking specifically of orchardists and fruit trees where you buy up front one tree and clone the rest. You could create an entire orchard with one initial purchase.

For example, I may have purchased five or ten years ago and cloned my whole orchard, but I paid royalties only on the first fruit tree. The investment of all the crops and replanting and the many, many years of future for the breeder are never realized. That industry already recognizes that the farmers' privilege, for their sector, is not sustainable in terms of increased investment and a return on investment.

Orchardist areas already have non-propagation-type contracts where they're not allowed to do that, because they'll never recoup the original investment on breeding the plant. Sorry, that's maybe straying a bit afield here, but that's what I mean by "modified farmers' privilege.'' With regulatory changes and in close consultation with the sectors that desire this, we can modify the farmers' privilege.

[Translation]

Senator Maltais: Ms. Sénéchal, everyone knows that enforcing the law on cruelty to animals is mostly the responsibility of the provinces.

As the minister explained just now, the legislation will apply to transportation and slaughterhouses in particular, which are under your jurisdiction. Are there other areas that the legislation on animal protection will cover, other than the two areas of transportation and slaughterhouses?

Ms. Sénéchal: I am sorry, but I cannot answer that question.

[English]

Ms. McGuire: The CFIA takes animal welfare very seriously. We do have provisions in the stat sheets to take action against transporters, for example, who may be non-compliant.

One of the features in Bill C-18 is around the administrative monetary penalties, which we've talked about this morning. The proposal is to increase the fines.

[Translation]

Senator Maltais: More specifically, what are the areas covered? We know about balance, administration and fines. However, what are the areas being covered that do not infringe upon provincial legislation?

[English]

Mr. McCandie Glustien: The federal jurisdiction of the Health of Animals Act, as mentioned, covers the transport, but then as well it covers activities around those animals in federally legislated slaughterhouses, so the humane treatment of the animal is covered by the Health of Animals Act in the federally registered slaughterhouse, up until the point of slaughter, and then it becomes more of a food product. Then there is humane treatment of the slaughter in the Safe Food for Canadians Act, as well, and under that and under the Meat Inspection Act. There's actually a bit of an overlap in the federal jurisdiction there.

[Translation]

Senator Maltais: Are you confirming that the legislation covers transportation and slaughterhouses?

Mr. McCandie Glustien: Yes.

[English]

Senator Beyak: I just realized as I'm sitting around the table that we all understand UPOV 78 and UPOV 91, but there are many watching at home who would probably like an explanation, if one of you would provide that for them, the differences.

Mr. McCandie Glustien: Absolutely. I was just going to try to find the actual title of UPOV 91 and UPOV 78. It is the French acronym. It's the International Union for the Protection of New Varieties of Plants, the 1991 act and the 1978 act. This is an international body that originally came together in the 1960s to set up a standard internationally for plant breeders' rights. Canada first joined up. We were part of the discussions around UPOV 78 over the course of the time in the 1980s and such, as the other senator mentioned.

We implemented our legislation in 1990, reflective of the UPOV 78 regime. Very soon after, we signed the UPOV 91 convention, which was I think signed two years after we had introduced our legislation. So we have been playing a bit of catch-up. It has been an international regime first tested out in the 1960s, and then most countries moved to it in the UPOV 78 time frame. Now we are playing catch-up again in terms of catching up to the UPOV 91.

As the minister mentioned earlier, and I just thought I'd reiterate it, at the time there is no real foreseeable move to a UPOV something else for at least, we think, a decade. You don't know how these things actually move, but we probably won't be back here looking for UPOV 2020 at any time.

Senator Beyak: I guess the simplified version is in UPOV 78 farmers thought they could save their seeds but in UPOV 91 they actually can.

Mr. McCandie Glustien: Absolutely. Under UPOV 78, it was looked at as a traditional practice. Farmers have saved their seeds for replanting for millennia. They select the best ones and continue to use them and continue to harvest that material. But the protections aren't actually there. It was kind of a tacit understanding that this was done. Under UPOV 91, the idea internationally was, let's put this in legislation that so everyone sees it's there.

Senator Tardif: If I understand correctly, only registered varieties of seeds can be saved. A farmer cannot save a seed that is not registered. The fewer the varieties of seeds that get registered, the less the ability of the farmer to get a competitive price for the seeds they need to buy.

Could a company appeal to CFIA not to register a seed and therefore get more power in the marketplace?

Mr. McCandie Glustien: Thank you, senator, for the question. I'd first like to step back and talk about the two separate processes. Plant breeds are protected under the PBRA. Seeds are regulated under the Seeds Act and the Seeds Regulations, so that's a large registry and a list of seeds that are acceptable for use in the Canadian marketplace that meet safety in terms of cross-contamination and such. They are actually two very separate regimes. The registration list is maintained very differently from the protected varieties. As a protected variety comes off of protection, it still needs to be registered to be used.

To fill in what I think you're asking, would companies deregister seeds that are no longer protected?

Senator Tardif: That's right.

Mr. McCandie Glustien: This question has been asked of us at the other committee. We just aren't seeing it.

Senator Tardif: But it could be.

Mr. McCandie Glustien: We have not seen it because it doesn't seem to be in the interest of the way the industry works, where they're wanting to have a good relationship with the farmers. It becomes a contract between the two of them. They're both benefiting from good seeds and both benefiting from good harvests. In years of looking at the issue, we have not seen registered seeds taken off the registry.

It's also a complex process to take seeds off the registry. It doesn't happen overnight. We will do a study at the CFIA: Is deregistering a seed in the best interest of the marketplace as well? That process can be delayed and delayed, if the seed really should be remaining within the Canadian context.

Senator Tardif: But it is a possibility, and you will look at it?

Mr. McCandie Glustien: We will look at it, but I would say at this point it's a theoretical possibility, and we just haven't seen it over the last number of years.

Senator Tardif: Could you tell me how many research positions have been eliminated at Agriculture and Agri-Food Canada since 2013?

Mr. Lloyd: I'm not in a position to answer that question. That would be more for our research area.

Senator Tardif: Would it be possible for you to send it to this committee?

Mr. Lloyd: We can do that, yes.

The Chair: Please. Thank you.

Senator Plett: I said I was done, but I did go through some of my notes here and found something interesting.

Does this bill allow for countries that are not part of UPOV to get plant breeders' protection? Even Taiwan has an orchid that has proven to be quite successful, and apparently they could not protect it because they're not a member of UPOV. Would they now be able to under this bill?

Mr. McCandie Glustien: The quick answer is yes. They couldn't up until now. Under UPOV 78 we had reciprocal UPOV plant breeders' rights with other members of UPOV. That's how a country of the union was described in the bill. Now the act will be changed so that a country of the union is a member of the World Trade Organization. A member of the World Trade Organization can seek protection for its varieties in Canada now as opposed to having to be a member of UPOV, so that addresses a situation such as Taiwan, which is not a member of UPOV 91 but is a member of the World Trade Organization.

Senator Plett: Would they have to seek protection for every seed or plant they wanted protection for, or could they just seek an overall protection?

Mr. McCandie Glustien: No. It's done on a case-by-case by protective variety basis.

Senator Merchant: I have a question about the penalty changes under this act. I think there's an increase now in the maximums. Why the increased? Second, would these changes be more easily implemented if they were made in the regulations rather than in the act?

Ms. McGuire: The proposal is to increase penalties, and that is based on our experience with the use of monetary penalties, as well as by other government departments. Fundamentally, the monetary penalties are designed to encourage compliance. They're one of the tools used by the CFIA. That said, if the maximum amounts are too low then there is a risk that our objective to have compliant behaviour is not realized.

We've examined this issue and have developed the maximum amounts based on experience and the aim of having levels that will create an incentive for businesses or regulated parties to comply, rather than just absorb the penalty as part of doing business. Again, the objective is to promote compliant behaviour.

How we apply the monetary penalties would need to be done through regulation. This would allow us to apply maximum amounts, not beyond the amounts that are contained in the bill. But again, the specifics, as they apply to the different sectors, would be spelled out in regulations, identifying the types of infractions and the seriousness of those infractions, and as a consequence the penalty that those infractions would attract.

Mr. McCandie Glustien: I could add one thing to that summary, because it's a little confusing in terms of how the system works. The Agriculture and Agri-Food Administrative Monetary Penalties Act sets the maximum possible penalties, and that's what is being amended here; so moving from $2,000, $10,000 and $15,000 to $5,000, $15,000 and $25,000 for minor, serious and very serious. Those are the maximums.

To change the penalties that can be levied, you need to make a change in the regulations. Right now, for example, for a very serious violation the actual penalty is $10,000. The cap is $15,000, and the actually penalty is $10,000. We're moving the cap to be $25,000. Then the regulations set out, in very long schedules, what provisions are at what levels. So it would say that if you contravene section 3 of the Health of Animals Act, it's a serious offence; and then that gets applied that way.

It's a few-stage process, and I thought it might be useful to clarify that.

Senator Ogilvie: I want to follow up on Senator Tardif's question; if I understood it correctly, she wanted to know how many scientific positions have been eliminated. I wonder if you would put that in a larger context in terms of numbers created, really meaning the scientific complement within whatever body it is that she's looking for so that we can interpret it appropriately, and you would return that to the clerk of the committee.

Mr. Lloyd: The research is outside of the conversation on the legislation here, and we'll provide you with a broad answer to that.

Senator Ogilvie: Since she asked the question, you agreed to respond. I was hoping it would be in a larger context.

Mr. Lloyd: We can do so.

Senator Tardif: The reason I asked that question is that I understand that with this bill we're hoping there will be more stimulus for research and innovative practices, and we'll be relying on industry. I'm thinking: Are we now moving toward more privatization of the research and the innovative practice and we're diminishing the public research that's been generally done in the past by, for example, Agriculture and Agri-Food Canada? That is my interest in knowing the number of research positions that have been eliminated.

The Chair: To the officials: Would you please go back to Hansard, and, if you can, respond to those particular questions?

Mr. Lloyd: Would I be able to further respond to the point that was just made?

The Chair: I'll ask you to talk to the clerk after.

Mr. Lloyd: Fair enough. Thank you.

The Chair: The report of this committee, Innovation in Agriculture, I want to say to the officials, in recommendation 8, for the record, the committee recommends that:

The Committee recommends that Agriculture and Agri-Food Canada and the Canadian Food Inspection Agency bring the Plant Breeders' Rights Act (1990) up to the standards of the 1991 Act of the International Convention for the Protection of New Varieties of Plants.

The government responded:

The Government supports the recommendation that the Plant Breeders' Rights Act (1990) be brought up to the standards of the 1991 Act of the International Convention for the Protection of New Varieties of Plants (UPOV 91).

Thank you very much. We're on the same wavelength. It is part of Bill C-18.

Would the multiple negotiations to conclude international freer trades by the Canadian government — we know that Bill C-18, the agricultural growth act, will be helping farmers, as we heard from the minister; however, this bill brings some changes to export licensing. Could you comment on these proposed changes and possibly, briefly, walk us through such an exercise?

Mr. McCandie Glustien: Certainly. Thank you for the question, chair. There are two elements of the bill that touch on export. One is the potential to license those who are exporting feeds and fertilizer, and I think I already discussed that our federal role of looking at the facilities that manufacture those.

There's also a separate yet related authority under the Feeds Act, the Seeds Act and the Fertilizers Act on export certification. That allows the minister to issue documentation for exporters that states that the CFIA has looked at the product and we are satisfied that it either meets Canadian requirements or international requirements.

This is becoming very key for many of our international companies that are exporting out of Canada. I shouldn't say "international companies,'' but companies exporting internationally. They are looking for that attestation from the CFIA that we have looked at the product and it meets either Canadian law or the importing country's law.

We currently do that under a number of different ways of attestations. This clearly sets out that the CFIA can certify that an export meets another country's requirements. This is very important for a lot of our exporters — feeds, certainly — who are looking to say that with the worry about contamination of feeds and things such as the BSE crisis we had many years ago, they need to know internationally that a feed meets a certain standard. This allows for that.

I hope that's answered your question on the certification.

The Chair: Yes.

Canada is well known for its professionalism when it comes to our bureaucracy and our officials. This morning you have demonstrated the same. I want to say thank you on behalf of the committee and season's greetings.

Senators, I declare the meeting adjourned.

(The committee adjourned.)