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Proceedings of the Standing Senate Committee on
Agriculture and Forestry

Issue 24 - Evidence - Meeting of February 19, 2015


OTTAWA, Thursday, February 19, 2015

The Standing Senate Committee on Agriculture and Forestry met this day at 8:02 a.m. to study international market access priorities for the Canadian agricultural and agri-food sector.

Senator Percy Mockler (Chair) in the chair.

[English]

The Chair: Honourable senators and witnesses, I welcome you to this meeting of the Standing Senate Committee on Agriculture and Forestry. I am Percy Mockler, senator from New Brunswick and chair of the committee. At this time I will ask senators to introduce themselves.

Senator Merchant: Good morning, and welcome. I'm Pana Merchant from Saskatchewan.

Senator Tardif: Senator Claudette Tardif from Alberta.

Senator Enverga: Tobias Enverga from Ontario.

[Translation]

Senator Maltais: Good morning. I am Ghislain Maltais from Quebec.

[English]

Senator Unger: Good morning, I'm Betty Unger from Alberta.

[Translation]

Senator Dagenais: Good morning. I am Jean-Guy Dagenais from Quebec.

[English]

Senator Ogilvie: Kelvin Ogilvie, Nova Scotia.

The Chair: Thank you, senators. To the witnesses, thank you for accepting our invitation to share your views, comments and recommendations with the committee. The committee is continuing its study on international market access priorities for the Canadian agriculture and agri-food sector.

Canada's agriculture and agri-food sector is an important part of the country's great economy. In 2012, the sector accounted for one in eight jobs in Canada, employing over 2.1 million people, and close to 6.7 per cent of Canada's GDP. Internationally, the Canadian agriculture and agri-food sector was responsible for 3.6 per cent of global food exports of agri-food products in 2012.

[Translation]

In 2012, Canada was the fifth largest exporter of agri-food products globally.

[English]

Free trade agreements between Canada and various countries have been signed or are already in force. There are currently 10 free trade agreements in force and one agreement has been signed with the Republic of Korea. Canada has just concluded negotiations with the EU, and negotiations are ongoing with 11 other countries or groups of countries. Several of these agreements and negotiations concern activities related to the Canadian agriculture and agri-food sector.

Honourable senators, for the witnesses this morning we have Rod Scarlett, Executive Director, Canadian Honey Council. From Flowers Canada Growers, we have Andrew Morse, Manager, Plant Health and Trade.

I have been instructed by the clerk that Mr. Scarlett, followed by Mr. Morse, will make a presentation, and senators will then ask questions.

Rod Scarlett, Executive Director, Canadian Honey Council: I want to extend my thanks to the senators of this committee both for the invitation today, but also for to work they have been doing with regard to honeybees as we await the recommendations of this committee.

I want to give you a quick update of the status of the industry. We have statistics from 2014. The number of beekeepers in Canada increased substantially. There are now 8,777 beekeepers producing about 81 million pounds of honey valued at approximately $200 million. The number of colonies in 2014 also rose to 694,000. In addition, bees were an integral component in the $7 billion canola industry, and pollination provided an additional $700 million in farm gate value in crops such as blueberries, cranberries, fruits, forages and vegetables.

The Bee Health Roundtable is currently revising the economic contribution of pollination figures and is also doing some projections on pollination demands in the future. However, there is little doubt that the potential growth in the apiculture sector is very high.

It is interesting to note that domestic consumption of honey nearly doubles our exports. In 2013, Canada exported about 26 million pounds of honey, with over 20 million of that going to the U.S. Japan was our next biggest importer of Canadian honey at about 5 million pounds.

This brings me to the first issue of concern regarding international markets, which is the labelling and identification of genetically modified food products in Europe. In 2010-11, our second biggest importer of Canadian honey was Europe. However, a series of unintended events has meant no or very little sales of Canadian honey have gone into Europe since.

First, because a majority of our honey is produced for export in Canada and is sourced through canola, we got caught in the European GMO debate. Court rulings decided that the pollen was a component of honey, it was GMO and it had to be labelled as GMO. Further, that GMO event from canola had to be registered for human consumption and it took time to get that through the process. In a nutshell, it has taken five years to clear the water, but there still remains uncertainty as to labelling, and the unintended and intended content of GMO. That's a definition we're still wrestling with. We still have no clarification on it.

Further muddying the waters is the introduction of GM alfalfa in Canada. Currently, because of the lack of European markets for this product, there is no intention to register this event for human consumption. This is understandable, yet if traces of this GM event were ever found in Canadian honey, exports to Europe would be jeopardized indefinitely.

In the winter of 2014, we had loads of Canadian honey destined for Japan held at port as a result of emerging food safety concerns and the lack of what we can say is Canadian government coordination. Tylosin is a vet drug used to combat resistant American Foulbrood in bees. In essence what happened, in layman's terms, is that Japan recently changed its maximum residue levels for tylosin to zero if the exporting country does not have its own MRL.

When notice of the Japanese changes went out, Canadian officials did not make any comments, for reasons unknown. In Canada, PMRA has completed their notice for a change in the MRL for human consumption, but it has not been finalized. We are caught in a grey area where we have no MRL and Japan has zero. However, tylosin has been used by beekeepers for a long time.

It's somewhat convoluted, but honey producers are very concerned that international markets will continue to publish their own MRLs for food products and honey, being a small commodity, will be overlooked by both the Canadian international trade officials, PMRA and CFIA. We need the Canadian government's involvement and attention. This issue should not be downloaded to producers and honey exporters to wade through the myriad of MRLs that are international.

Recently, there has been a visible increase in the sales of Chinese honey domestically. As members of this committee are no doubt aware, there has been considerable concern in North America primarily due to quality issues, but pricing is also a grave concern to beekeepers. Chinese honey can be purchased at about half the cost of domestically produced honey, and producers are not subject to the same food safety requirements. This development has caused some within the beekeeping community to push for anti-dumping action.

The aforementioned issues are some of the current international trade concerns of the industry, but we are and having been taking steps to enhance food safety and traceability. Aside from the development and implementation of a national bee biosecurity program, the industry was proud to complete the Canadian Bee Industry Safety Quality Traceability Program, or CBISQT, last year. The document is intended to provide general food safety guidelines for the production and primary processing of raw honey and related honey products. It is a voluntary program that the CHC will be encouraging all beekeepers to follow. We are currently developing an educational platform for highlighting the commonalities of the CBISQT program and the bee biosecurity programs. We are planning for national distribution of this educational platform.

Last, I want to briefly touch on the sustainable improvements to the production capabilities of the supply chain. There is a wide divide on how we as an industry should look at ways to improve production capabilities. The Bee Health Roundtable is addressing some of those components that deal with bee health, such as bee care and nutrition, bee pests and pathogens, pesticides in-hive and outside of the hive, and environment and surroundings. Currently, Canadian beekeepers are very dependent on queen suppliers from the U.S. and packaged bee suppliers from New Zealand and Australia. The industry will need to continue to promote and develop domestic supplies and look at diversifying international supplies.

Finally, most commercial beekeepers rely on temporary foreign workers to do the work for usually no more than eight months of the year, truly users of temporary foreign workers. Canadian workers are normally not interested or available due to the short nature of the employment. Changes to the Temporary Foreign Worker Program, particularly the four-in, four-out rule, are jeopardizing many successful commercial operations and putting undue strain on the supply chain.

With that, I want to thank the committee members and look forward to elaborating on these and other issues of concern.

Andrew Morse, Manager, Plant Health and Trade, Flowers Canada Growers: Good morning. Thank you for considering the input of the floriculture sector in this very interesting and important study. My name is Andrew Morse, and I work with Flowers Canada Growers on plant health and international trade.

Flowers Canada Growers is a national trade association which represents large-scale growers of cut flowers, potted plants, bedding plants and propagative material. We represent over 300 family-owned farm businesses nationwide. The floriculture sector is a large contributor to Canadian agriculture with $1.4 billion in farm gate sales. We estimate that floriculture has an economic impact of over $3 billion on Canadian GDP.

Our sector also employs 20,000 people, and we're one of the few agricultural commodities that generate HST or GST. The floriculture sector is very diverse and produces thousands of crop species in many different ways, some with significant barriers to success. In my presentation, I'll highlight some of these barriers in relation to market access.

Today, most of Canada's floriculture production is focused on potted plants, but this was not always the case. Historically, cut flower production had accounted for a large proportion of the sector. Increasing competition from countries such as Colombia and Ecuador forced many flower growers to realign their businesses. Potted plant production grew tremendously because it faced more barriers to international trade and thus less competition domestically and internationally.

Competition for the cut flower market further increased with the signing of the Canada-Colombia Free Trade Agreement at the expense of many ornamental farmers. Competition has encouraged Canada to largely abandon production of some cut flowers such as cut roses or carnations. This is not to say that Canadian flower farmers have abandoned cut flowers entirely. Instead, cut flower growers have focused on perishable products that are more difficult to ship over long distances. As a result of this, Canadian flower growers have tended to focus on the domestic and U.S. markets. We do not see much opportunity to ship to markets beyond the continental United States. The bulk of our cut flower production does not ship well and foreign restrictions on growing media prevent us from exporting potted plants beyond the United States.

The U.S. remains an important market for Canadian flower growers. Last year we exported over $300 million in floriculture to the U.S. Much of our success in the U.S. market has depended on three factors: production of very high- quality products in very large volumes; production in close proximity to major markets in the northeastern and northwestern U.S.; and capacity to supply U.S. clients on short order, often within 24 hours.

We believe our greatest opportunities for increasing exports is to sell more in the United States. Regulatory barriers are one of the largest obstacles to Canadian floriculture maintaining U.S. market presence. We often refer to floriculture as a just-in-time sector. Quickly supplying U.S. clients is absolutely critical for our success.

Meeting client timelines can be difficult when flower growers must wait for CFIA to issue phytosanitary certificates required for export. The Canadian Greenhouse Certification Program, or CGCP, is a systems approach which expedites the export process and facilitates Canadian access to the U.S. market. This program has received a tremendous amount of buy-in from Canadian potted flower growers and exporters.

It is important to note that the CGCP is currently being redesigned by the CFIA and APHIS under the regulatory cooperation council. Without access to this program, Canadian floriculture exporters would be bottlenecked by CFIA's inability to quickly issue phytosanitary certificates. One flower grower in the Niagara region can require more phytosanitary certificates per day than an entire CFIA office can issue. Maintaining access to this program is a very high-level priority for our association.

We rely on CFIA to work on our behalf and maintain programs such as the CGCP. In many cases, plants may be removed from eligibility on the program at the request of our trading partner. In some cases, we see these as non-tariff trade barriers. We rely on CFIA to resolve these issues quickly and ensure that our market access is not hindered. Current resource limitations within the CFIA have strained their capacity to address issues related to floriculture. We are very grateful for the work they have done to maintain our market access and we look forward to working with them in the future.

We also face several challenges in production that our international competitors do not. Health Canada's requirement for dislodgeable foliar residue data, or DFR data, for some greenhouse pesticide registrations differs from many other jurisdictions in the world, including the United States. Crop protection companies often choose not to register products for Canadian greenhouse uses due to the additional research cost and perceived limited market size. This, in effect, has reduced Canadian access to new, safer pesticides and lowered growers' ability to manage pests compared to international farmers. This clearly reduces our competitiveness. Canadian flower growers have been forced, in some cases, to rely on outdated products with limited efficacy on pests and diseases.

In addition, recruitment and retention of a reliable workforce remains a critical challenge for flower growers. Many floriculture greenhouses are located in rural communities with limited access to a robust labour market. Our sector depends on sales associated with several seasonal holidays, including Valentine's Day, Easter, Mother's Day and Christmas. As a result, much of our labour needs are seasonal. Seasonality and rural communities with limited public transportation leads to difficulty in recruiting and retaining Canadian workers. Many Canadian greenhouses rely on access to temporary foreign workers to respond to this challenge.

In closing, the floriculture sector is a very diverse collection of family-owned farms which have worked tirelessly to improve the quality of life for millions of people. While I have not touched on food security, we do like to think of flowers as food for the soul.

We are very grateful for the efforts of the Canadian government in helping us share the value of flowers across Canada and the United States. We look forward to continued collaboration on sharing our product with the world. Thank you very much for the opportunity to speak today. I will attempt to field any questions you may have.

Senator Tardif: Thank you both for being here this morning. Mr. Scarlett, you indicated in your testimony that Canada was facing substantial trade barriers with the European Union as a result of their labelling requirements for genetically modified products. As well, you indicated that Japan had enforced a zero tolerance for the presence of the product tylosin and, if I understand correctly, a shipment of Alberta honey was refused in 2014. Can you tell me if other countries have refused entry of Canadian honey because of the tylosin residues and whether we apply similar restrictions on other countries?

Mr. Scarlett: As far as I know, there have been no other instances where countries have not allowed the shipment of Canadian honey because of tylosin. That's because each country sets its own MRL level. That's one of the difficulties for the commodity we're in, or actually any food production commodity; it varies from country to country.

Japan, up until a year ago, allowed a level that was 0.1 parts, I believe, per billion, but it might be per million. They changed it to zero if a country does not have its own MRL. We didn't have one and we still don't have one because of delays at PMRA for setting it; so we just got caught in a bad situation with no notification from government officials. There have been no shipments anywhere else that I know of.

The GM issue is also kind of one where we got caught as a result of non-registration of the event. We still don't know how the European Union is doing it. Certainly, the free trade agreement has impacted it somewhat because we now see that some countries of the European Union are going to allow the growth of GM products and some are not; but that hasn't clarified the labelling component yet.

Senator Tardif: What can the Canadian government do to help you in this particular situation?

Mr. Scarlett: On the Maximum Residue Levels, MRLs — and tylosin is just an example — an increasingly important component of international trade is government setting food safety levels for their public. In part, it becomes a pseudo trade barrier.

We need help because our export of product, even though it might be small to some countries, is reliant on our international offices to put forward responses to WTO notifications on MRLs. There is some indication that they want producers and exporters to know what's going on in those countries. Take a look at those listings. For example, last week China changed their MRLs by adding 150 different products. Unless you know what's going in that food product, it's really difficult to comprehend.

We need Canadian trade officials to be on top of what goes into our food products; and honey producers need to know what conceivably can appear in honey. Some of it's natural. Two years ago it was benzaldehyde and butyric acid, which both occur naturally in honey, but some countries put MRLs on them. It takes effort but, in cooperation with the Canadian Honey Council and provincial associations, we have to work on that.

Senator Tardif: Thank you for explaining that so clearly.

Mr. Morse, you spoke about accessing phytosanitary certificates required for export. What does that mean?

Mr. Morse: The Phytosanitary Certificate can be thought of as a plant passport. You usually have to have a phytosanitary certificate to cross the border. It's an internationally standardized procedure.

Senator Tardif: Do you have trouble accessing those?

Mr. Morse: You have to have Phytosanitary Certificates for each species. Because we grow many species, we need a lot of phytosanitary certificates for each shipment. A grower shipping 400 species needs a lot of Phytosanitary Certificates, so it can be complicated. The Canadian Greenhouse Certification Program for export of greenhouse- grown plants to the United States is a systems approach that essentially allows the grower to ship using a sticker instead of the passport. It's a bilaterally agreed-upon program between Canada and the U.S., which meets same requirements.

[Translation]

Senator Dagenais: I would like to thank our two guests for being here. Mr. Scarlett, you mentioned that you had organized a national round table and implemented a national action plan to obtain better results for bee health. You clearly have ambitious goals. You have placed priority on two areas: varroa mite control and promoting ways to reduce the exposure of bees to pesticides inside-hive and outside-hive. I would like to know where you are with your two projects.

[English]

Mr. Scarlett: We have made significant progress on the varroa mite control. We have one product that we're attempting to fast-track through emergency registration, a product called HopGuard. We know that another product should be in the queue probably next year, so that helps on the product side. We've also done some work with the assistance of the Canadian Association of Professional Apiculturists to develop a list of non-chemical ways to address the issue; so we'll be looking at that at our next round table meeting on March 5.

With regard to the pesticide inside-hive and outside-hive, certainly the inside-hive relates closely to the varroa mite control. We will have an almost-complete listing of best management practices on behalf of beekeepers for our March 5 meeting, which is North American. That will provide a good framework for us for both pesticide use in-hive, varroa mite control, and a little bit for outside-hive pesticide use.

Our association, along with the Canadian Seed Trade Association, announced a rather major program, we thought, in the reduction of the use of seed treatments across Canada to a low level. Certainly, that doesn't address the prophylactic use of the seed treatment, but it does reduce exposure. I believe that the roundtable is achieving things at a remarkable rate.

Senator Merchant: I will ask Mr. Scarlett an additional question about the incident with Japan. How much does what happened about two months ago cost the honey industry? How quickly do you hope to have this resolved, if not tomorrow?

Mr. Scarlett: It's difficult to say how quickly it will be resolved because, first, we need to have the Pest Management Regulatory Agency introduce the maximum residue level for tylosin in Canada. Once we have that, we'll go to Japanese officials to say that we have a residue level and ask whether we can negotiate a change in their regulatory platforms to match up with ours. I have no idea how long it will take to work with the Japanese government to get to that stage.

The cost is difficult to pinpoint. We have sent notice to pretty much all commercial distributors of honey to say that, if they're shipping to Japan, they must have zero tylosin residues. I don't know how many shipments may have been refused as a result of the changes.

Senator Merchant: Could I ask you about the safety quality traceability program that you have developed? Could you maybe tell us something about it?

Mr. Scarlett: The program looks at approximately 12 good management practices for beekeepers in the production of honey. It will look after the bees and ways to address the facilities. The program is perhaps even more stringent than what CFIA has for their food safety programs. Right now it's voluntary, of course. We're going to try to get all producers of honey to follow the program within four or five years. That should provide consumers and our exporting nations with some degree of comfort that we've developed something that's probably better than anywhere else in the world.

Senator Merchant: Mr. Morse, who are your competitors? You said that the U.S. is your big market. Who are your competitors there?

Mr. Morse: In both the Canadian and U.S. markets, it's obviously very dependent on the product. For many cut flowers, the major competitors are largely Colombia, Ecuador, Netherlands and also the U.S. itself. For potted plants, however, because of the restrictions on movement of growing media, the only competitor is the U.S.

You can get far more granular down to the individual flower, where certain flowers are grown quite a bit in Canada. For instance, I mentioned that we really focus on plants or flowers that don't ship well, so that would be tulips and gerbera. Canada is a very large producer of those two flowers as a direct result.

Senator Merchant: Can you compete price-wise with flowers that come from Colombia?

Mr. Morse: On some flowers, yes, and on other flowers, no. It depends on the product, and also it's not always just the value of the product, the price, but also the quality of it. For instance, Canadian gerbera is second to none. If you really want very nice gerbera, it's probably going to have to come from Canada.

Senator Merchant: Can I ask you about the temporary workers program? Are you facing some difficulties now that you haven't faced before?

Mr. Morse: I'm not well versed in the Temporary Foreign Worker Program, but I will say that it's a critically important program for us. Many facilities have to use it largely because they're so seasonal and it's difficult to get Canadian workers to do the same job. You get a certain level of consistency out of those workers where they're willing to put in the work and do a good job.

[Translation]

Senator Maltais: Mr. Scarlett, you are the Executive Director of the Canadian Honey Council. How many producers does the council have in Canada?

[English]

Mr. Scarlett: There were 8,777 in 2014.

[Translation]

Senator Maltais: Does that include all the provinces and territories, from St. John's, Newfoundland, to Victoria?

[English]

Mr. Scarlett: It excludes Newfoundland right now. They just formed an association. It is every other province but Newfoundland.

[Translation]

Senator Maltais: Are the pesticide problems the same nation-wide, or are there differences from province to province? For example, does New Brunswick have the same pesticide issues as Alberta?

[English]

Mr. Scarlett: Certainly, senator, it does vary from province to province. The pesticides are a component of a number of issues that affect bee health. We'll see that in let's say the Prairies, there might be a much greater use of aerial pesticides than in Quebec or Ontario. It varies a little bit from crop to crop, too. There is a difference.

[Translation]

Senator Maltais: You spoke about how strict the Japanese government is on pesticide levels in honey. Is Japan a major importer of honey from Canada?

[English]

Mr. Scarlett: It is. Right now, it's our second greatest importer of Canadian honey, but it's also a high-end market. We get a better value shipping to Japan than just about any other country in the world.

[Translation]

Senator Maltais: Is the American market an important one?

[English]

Mr. Scarlett: It is by far and away our largest. As I mentioned, we exported about 26 million pounds, and 20 million of that goes to the U.S. A lot of that is coming from the Prairies, and it's a big market.

[Translation]

Senator Maltais: That means that the remaining six million could go to Japan, Europe, Korea or China. Is that six million divided among other countries around the world? So Japan is a relative market; it is important, but perhaps not as important as the United States.

[English]

Mr. Scarlett: It is 5 million of that 6 million and, because we can't export to Europe, that 20 million that is going to the U.S., the U.S. was able to take up that gap. Europe was also another high-end market. We've lost that high-end market. It's not replaced by anything, so it goes to the U.S.

[Translation]

Senator Maltais: Mr. Scarlett, we understand that Canada's beekeepers must constantly fight against producers of pesticides. What is your relationship with farmers in light of the problems you have as beekeepers?

[English]

Mr. Scarlett: I think the Canadian Honey Council has taken a stance where we are not in opposition or disagreement with the chemical companies, with the agri-chemical companies. In fact, we need to work with them to make sure their products are as bee-friendly as possible, while at the same time integrating what we do into the whole agricultural sector. There is a sector within our beekeeping industry that say it's the big bad chemical companies but, for the most part, I think we recognize we need to work with them because they do provide the products that we use inside of the hive to address varroa. We can't take them to task on one side of the equation and, on the other side of the equation, try to encourage them to work with us to develop the products.

[Translation]

Senator Maltais: A few pesticide manufacturers, including Monsanto, have appeared before our committee, and they explained at length that most of their pesticides were even good for bee health. Do you agree with that?

[English]

Mr. Scarlett: It really does depend. I don't know if there's any pesticide that's good for bee health, but what we can say is there are some that mitigate the risks to bees better than others, and what we're trying to do is work in cooperation to mitigate that risk, at the same time recognizing that crop producers need to produce crops and fruit producers need to produce fruit. All those guys need to make money, too. We just want to be part of that solution and not part of the problem.

[Translation]

Senator Maltais: Do you also represent what we call urban beekeepers, people who have small hives in cities? We had representatives from Toronto, Montreal and elsewhere. Is that a big component for you?

[English]

Mr. Scarlett: They're probably the biggest component of our membership in numbers but, in the number of colonies, they're really quite small. It's a difficult one. Not all of those urban associations are members of the provincial association, so they're not really members, but they are.

Senator Enverga: Thank you for the presentation. I heard that Europe is not accepting our honey because of some GMO by-products that could be in it. As a beekeeper, do you isolate the bees for wild flower honey so we get blackberry honey? Can you sell it that way to the Europeans?

Mr. Scarlett: Certainly you can. There is still some sold in Europe, and that might be an example of a beekeeper who is able to do that, but the difficulty is that we are now at testing levels of parts per billion, and the science wasn't there all that long ago.

There are a lot of genetically modified crops out there. It's not just canola. You can't put a cage around where the bees go. So, if there's not a genetically modified crop within a five-mile radius, for example, you're pretty safe in saying that your GMO-free pollen is there and you can sell it. But your market then becomes a lot more restricted, because you have to be able to create enough for a shipment to make it worthwhile. If your Canadian market is going to buy it anyhow, is it worthwhile shipping? There are economics that come into play.

Senator Enverga: Are there any regions in Canada where there is no GMO planted at all? Maybe we could focus on those regions to take care of our bees there.

Mr. Scarlett: Sixty-five to 70 per cent of the honey in Canada is in the Prairies, and there are 19 million acres of canola there, and that's just canola. There are probably areas, but we're not talking about significant amounts of honey to be produced and shipped.

Senator Enverga: I see that the bulk of exports for the flower growers are to the U.S. You say 2 per cent are export, and 98 per cent go to the U.S. Where does that 2 per cent go? Is there a possibility that we could expand exports to those particular countries?

Mr. Morse: The only real opportunity for shipping to other locations is in niche products, very small volumes. We ship some things. We do some peony breeding in Canada, which is shipped to other growers. I think Holland is the second largest recipient. A lot of that ends up being propagated material, things that were bred in Canada. How much opportunity is there to expand that? It's difficult to say.

We've done some studies to identify what our other potential markets were, and we've seen there were some opportunities to ship cut flowers to Scandinavian countries. We know there are at least a couple of people in British Columbia who ship wild flowers to Japan.

Senator Enverga: When you ship products to those countries, are they are propagated and eventually they become competitors? Does that happen?

Mr. Morse: I'm not really aware of that. I think you would still own the royalty. If the breeder was here, then the royalty would still be held here. I'm not entirely sure, but I can get back to you.

Senator Enverga: Another question is on UPOV 91. We're doing it already. We have made a lot of progress. We can be implementing it soon. How does it affect your industry in flowers?

Mr. Morse: It certainly affects our sector, because we can grow so many species with royalties attached to them. It is not just our sector, but also nursery and other groups that we are closely associated with it, so it does affect us. We would be one of the largest affected by it, because of the sheer volume of royalties. Unfortunately, I don't have a tremendous amount of information with me on UPOV 91, but I can certainly get back to you.

Senator Enverga: Do you think it will help immensely?

Mr. Morse: To give you some general concept, I believe it will help us gain access to some new propagated materials or new varieties. Accessing varieties is extremely important for our sector, as well. Consumers are a fickle bunch. They want new flowers that are pretty, interesting, and it has to look perfect. If we can't access new varieties, then we are lagging behind our competitors who have every variety they want. I think UPOV 91 will help us to access new varieties that some breeders and producers were unwilling to send to Canada previously.

The Chair: Mr. Morse, if you're following the questions from senators and you want to provide additional information, would you please go through the clerk to provide it to the committee.

On this, as we say Happy New Year to China, we will now recognize Senator Oh.

Senator Oh: Happy New Year to all.

We talked earlier about the honey problem with Japan. Are we applying similar things to any other country coming to Canada on the MRL problem?

Mr. Scarlett: We have our own set of MRLs in Canada so, in essence, yes, but part of the issue is that not all countries have the same levels. Each country varies its level depending on what they consider safe and what they can test for. For example, in Japan, they don't have a capability to test to a certain level. They send a lot of their product to Italy to be tested. In Canada, we have the equivalent to Italy. We can test down to minute levels. Depending where you are importing and exporting to, and what their capabilities are, it will help to determine what kind of an MRL they set.

Senator Oh: Do you have any idea what happened to the first shipment that got stuck in Japan? Is it in port or has it been returned back to Canada?

Mr. Scarlett: I know it was stuck in port for an awfully long time, because we have to find a Canadian importer to take it back. It doesn't just get shipped back. In essence, why are you going to ship Canadian honey back and how are you going to make any money doing that?

Senator Oh: I understand Japan is a niche market. They pay good prices, including maple syrup. They consume a lot of our high-quality maple syrup and I hope that problem can be resolved as soon as possible.

My question to you is about flowers. I just came back from Ecuador recently and they export tremendous roses all over the world. They are pretty remote; it took us a long time to get to Ecuador. We have a better hub here, so we should be able to do a much better export than Ecuador. Can you comment on that?

Mr. Morse: Ecuador's production is focused on flowers that ship very well and are easy to produce. Roses can be shipped all over the world and last quite a while in a box. It's very secure. If you go back even 20 years, you would find there were quite a few more rose growers in Canada.

Unfortunately, there is a big difference in producing a rose in Canada and producing one in Ecuador. Climate-wise, it is far more expensive to produce a rose in Canada. Labour-wise, it is far more expensive to pay workers to work on that product. With access to pesticides, they have substantially greater access to crop protection products than we do. All in all, Ecuador has a lot more tools available in their tool box to produce these products that we in Canada don't right now. As a result of that, we focused on plants which are more difficult to ship long distances.

In addition, another thing that is quite difficult to change is the amount of light, which is very critical to production. We can augment that using lamps, but it's very expensive. It's far more expensive to produce that product in Canada than some of these other countries, so many growers have looked for other products where we have a competitive advantage or can be far more competitive.

Senator Unger: Thank you for being here, gentlemen. Mr. Morse, there is the NAPPRA for imports to the U.S. Which pests is the U.S. trying to limit under this NAPPRA?

Mr. Morse: NAPPRA stands for Not Authorized Pending Pest Risk Analysis and it is a requirement that any plants on that list may not enter the United States until they have been deemed safe for import, that they're not going to carry a pest.

As for a specific pest, I can't isolate one because there are several hundred plants on the list and several of them are produced by our sector and each one would be regulated for a pest. It is not strictly prohibited. They're basically saying, "We don't know if this is a risk. CFIA and USDA have to take time to study before we do that."

It's important to note that Canada also has a NAPPRA list, which closely matches the U.S. list. However, this does pose challenges for accessing propagative materials. Many of the plants we produce are produced from cuttings or other propagative material that may come from anywhere in the world. When some of these plants go on the NAPRA list, it means that we can no longer access new varieties for that product and we can no longer ship it to the U.S.

Senator Unger: Is any work going on between Canada and the U.S. to try to develop a similar list so that it wouldn't be such a trade barrier?

Mr. Morse: It can be extremely challenging. They discuss this back and forth. I'm not sure whether Canada gets notice before the list is released, but it is always made public before it's enforced. I think they're currently working on their third round of the list. The second one still hasn't been enforced and the first one was enforced only recently.

The CFIA tends to use a similar list to try to reduce the confusion. It gets really complicated when a plant that is eligible to enter the United States from all countries but two or three and eligible to enter Canada from only two or three countries and those two or three countries don't match. It then becomes complicated to ensure that you don't import from a place that can't ship to where you're trying to export.

Senator Unger: Years ago, I received a bouquet of roses from Ecuador. I was absolutely amazed at how long those roses lasted. I wondered what was in the water — it was amazing. They were beautiful. I admire the persistence that Canadian growers maintain in the face of these many challenges.

Mr. Morse: Thank you.

Senator Unger: Mr. Scarlett, I'd like to pick up on your comments about honey from China and the fact that you said they have added 150 products to their MRLs. What was our response? Who evaluated all of these?

Mr. Scarlett: Yes, they added 150 new products to their Maximum Residue List. That came out in English just last week. It will be sent to the associations for comments. Well, it's pretty difficult because some of this stuff is more than just technical; you have to have a science degree to understand what they're talking about. I hope that it will go to our provincial apiculturists who have a better understanding of the scientific makeup and that our international trade offices understand what some of these products are and where they're found. Our association will take a look at the list, and I'll do the best I can.

Senator Unger: Is your organization pushing for the deciphering of the list? Is that honey being allowed into Canada?

Mr. Scarlett: Our organization is asking for help to decipher the myriad issues related to Maximum Residue Levels.

The issue of Chinese honey is not a lot different than the Japanese issue or what's occurring in other countries. Taiwan has kind of done the same thing. Each of these countries consistently adds things to their food safety lists, like Canada does; it's just a matter of trying to keep up.

Small organizations that create food products, for example maple syrup producers, don't have the personnel or the expertise to handle all of that all the time.

Senator Unger: I found it interesting that Japan sends their honey to Italy. Is that for the MRLs?

Mr. Scarlett: It's for testing.

Senator Unger: Why don't they send it to Canada, if we can test it? How long does that actually take?

Mr. Scarlett: They have testing facilities in Japan, to be clear, where they test for some things. We have many facilities in Canada, but not all facilities test for all things. What they send to Italy might be something for which they just don't have the capability or expertise to get down to a certain level.

The Chair: I heard Mr. Morse talk about the Phytosanitary Certificate as a passport for Canadian products. There's no doubt that it is just that; and we must continue it. I also heard Mr. Scarlett saying we need government to continue to be involved in the process.

With the indulgence of the committee, I will ask a question about the Canadian Maple Syrup Institute vis-à-vis the U.S. Canada produces 95 per cent of all the maple syrup in the world. They asked the government about better labelling and better traceability, which we moved on in this committee, in respect of the MRLs coming from other countries.

Would the Canadian Honey Council look at such a mechanism to be put in place by governments, knowing that the Phytosanitary Certificate is our passport, to enable the industry to increase market share internationally, looking at better labelling and better traceability? What's your comment on that?

Mr. Scarlett: It's an excellent suggestion. Not only our industry but also other small industries out there just don't have the capability. The maple syrup industry has advanced to create that. If we could create a similar type of institution with that expertise, it would be wonderful.

Senator Tardif: Mr. Morse, you said that floriculture relies heavily on the CFIA to address a number of issues but that resource limitations have strained their capacity to address these issues. Could you expand on that and tell us exactly what kind of resource limitations you're speaking about?

Mr. Morse: We work very closely with the Plant Health and Biosecurity Directorate, specifically, the Horticulture Division and even the greenhouse group within CFIA. My understanding is that the Horticulture Division has seen a substantial reduction in budget. My understanding is that they've lost 25 per cent of their staff. With fewer bodies working on addressing barriers on programs like the CGCP, it's difficult to get your priorities to move forward.

I've listed quite a number of challenges that we've addressed, but we have a limited number of bodies to look into these things. I can give them a list of maybe one, two or three and if we're lucky, maybe we'll get them looked at. That's come down to prioritization.

Senator Tardif: I can understand what a challenge it can be to lose 25 per cent of staff, especially when you're dealing with the issues you've identified.

Mr. Morse: My understanding is that it's 25 per cent. I can verify that for the committee.

Senator Enverga: When you think about honey, you think about pollination and flowers. Do you ever collaborate with each other to make better honey and better flowers?

Mr. Scarlett: I can say we haven't collaborated with Flowers Canada specifically. We are starting to work a little more closely with the Canadian Horticultural Council but not with Flowers Canada Growers.

Mr. Morse: Flower Canada Growers, specifically, don't want bees to get to the flowers before we ship them because once a flower has been pollinated, it typically dies.

Senator Unger: Mr. Scarlett, we have heard about many issues concerning pollinator health. It seems to boil down to five specific issues. This morning, in my opinion, you've opened up a whole new bag of issues or problems. In the grand scale of all of these things, where would you rank the issues? Where would you rank the trade barriers as a serious issue facing honey producers?

Mr. Scarlett: For honey producers, I believe food safety is going to be an increasingly important concern, even more so than the bee health itself, because if you can't sell your product there is no point in having the bees. These trade issues are extremely important for honey producers, extremely important.

The Chair: Witnesses, thank you very much for sharing your opinions and views with the committee.

Honourable senators, for our second panel, we have with us the Canadian Produce Marketing Association, Ron Lemaire, President, and Jane Proctor, Vice President, Policy and Issues Management. Mr. Lemaire, you will make the presentation and we will follow with questions.

Ron Lemaire, President, Canadian Produce Marketing Association: Good morning, honourable members of the Standing Senate Committee on Agriculture and Forestry. On behalf of the Canadian Produce Marketing Association, I would like to thank you for the opportunity to speak to you today on the topic of international market access priorities for the Canadian agricultural and agri-food sector.

CPMA is a 90-year-old, not-for-profit trade association representing over 800 member companies within a supply chain that contributes $11.4 billion in real GDP and supports roughly 148,000 jobs in Canada.

CPMA believes in an open-market philosophy that reduces irritants to trade and allows for economic prosperity and consumer choice. We follow a food systems approach and work with a wide range of partners, including government and health sectors, to build innovative partnerships to mutual benefit.

In 2013, farm cash receipts equaled approximately $4.2 billion in Canada, $2 billion of which was exported. There are many reasons for this high percentage of export, including a high value of return, easy market access and Canadian dollar fluctuations.

The Canadian produce industry appreciates the government's commitment to increasing trade opportunities through free trade agreements. We encourage the government to continue to work to reduce trade barriers and establish better relationships with our potential trading partners. As new agreements are negotiated, it is important that all industries are treated equitably, with no sector receiving preferential considerations.

An important issue to consider when establishing agreements or looking at longstanding, established trading relationships is the potential for non-tariff barriers created under the guise of plant protection or food safety. Food safety is imperative to the produce industry, and it is essential that all are held to the same standards. It is also important that measures be truly focused on providing safe food for consumers and not be used as a cover for protectionism.

Similarly, plant protection is critical to protecting plant species and our domestic environment, but decisions must be based on science and risk, not as a cover for domestic protectionism through overly burdensome regulation.

To ensure we can harvest the necessary products for market, labour is essential. Access to labour is a growing concern within the horticultural sector. The reality is that a majority of Canadians are not interested in the difficult work that must be done on fruit and vegetable farms. The Seasonal Agricultural Worker Program has worked well and is in place to supplement and provide additional labour to farmers. It is reviewed annually by industry and government.

The Temporary Foreign Worker Program is in place to supplement and provide additional labour not covered under the Seasonal Agricultural Worker Program. Unfortunately, the agricultural stream has been impacted by changes to the larger Temporary Foreign Worker Program, which has caused significant difficulties for some to our Canadian farms. In particular, Quebec farms last year saw millions of dollars of fruit and vegetables left to rot on trees and on farms, in large part due to the difficulty of securing visas for workers through the Temporary Foreign Worker Program.

Canadian producers have watched their U.S. counterparts lose many millions of dollars of produce each year through the lack of a guest worker program and the inability to secure immigration reform. We do not want to see this same problem become a regular issue in Canada, as well.

An important consideration to ensure sustainable improvements to the produce industry in Canada is our ongoing need for collaborative investment and research that brings together both industry and government to develop new varieties to meet changing domestic and international market needs. There is concern that due to the closing of Agriculture Canada research stations, we have seen a negative impact on research and innovation, and it is important that we look at new models that are in place that can fill this need.

Further, more streamlined processes to allow faster access to new technologies are also important to allow the Canadian industry to be competitive. This is a particular concern as it relates to pest management. When U.S. growers have access to a larger range of crop protection products at a lower cost that their Canadian counterparts, we have some concerns.

The Canadian produce industry operates in a global environment, and it is important that requirements around food safety and traceability follow internationally accepted standards. This ensures consistency and allows for the use of common tools such as standardized identification of items and entities, and standard protocols for record keeping and recall.

CPMA and the Canadian produce industry have taken a leadership role on a global level to develop standards to ensure a harmonized implementation of traceability and food safety. It is crucial that industry-developed standards are considered in any regulation that is being developed. Government can learn from industry and, we hope, not create redundant or contradictory outcomes in their processes.

Industry was encouraged by the efforts of the Canadian Food Inspection Agency to develop recognition programs for industry-developed food safety schemes. As we move into a new regulatory environment with the pending implementation of regulations to support the Safe Food for Canadians Act, CFIA should now stand behind its own rigorous recognition programs. This means programs that have gone through this rigour should be recognized as meeting food safety requirements at both domestic and international levels.

Food security is an important issue for all Canadians, as well. No other food products offer the equivalent nutritional content and health benefits that a diet rich in fruit and vegetables can provide. Yet, Canada is the only G7 country without a national fruit and vegetable consumption scheme. This is why CPMA is working with our health partners, including the Canadian Public Health Association, the Heart and Stroke Foundation and the Canadian Cancer Society, on developing a national fruit and vegetable nutrition policy for Canada. Such a policy would allow federal leadership that respects provincial jurisdictions and supports the successes that are in place across the country at a provincial, territorial and community level to increase the consumption of fruit and vegetables and develop Canadians' food skills.

While Canadian produce companies will continue to explore new markets and trade opportunities, the reality of the industry is that the United States is by far our largest export destination and it is likely to remain so. The produce industry in Canada and the U.S. are strongly integrated and the highly perishable nature of fresh produce can limit opportunities to ship produce overseas. In 2013, 87 per cent of Canadian produce exports went to the U.S. with a value of approximately $1.74 billion.

In closing, I have one final point and that is the lack of payment protection for fruit and vegetable sellers during bankruptcies in Canada resulting in disproportionate financial risk for produce companies. This has cost Canadian companies selling into the United States our long-standing preferential access to the protections under the Perishable Agricultural Commodities Act, also known as PACA, which was revoked on October 1, 2014.

This will have significant consequences for the fresh produce industry in Canada and unpaid bills will increase for Canadian companies exporting to the U.S. In the past, just the threat of action under PACA was enough to settle most disputes and ensure bills were paid. Now, to pursue a formal claim against a delinquent buyer, a Canadian company must post a bond of double the value of their claim. For cash flow, they risk being without for up to a year and, on top of this, the loss of the amount already owed. For many companies this is not feasible and they are forced to accept less than the amount they are owed.

We are already seeing this happen to Canadian companies. In the fall, a B.C. farm shipped blueberries to a buyer in Michigan who later claimed there were issues with the shipment that warranted a reduced price. The buyer did not follow agreed terms and did not document to support their claim. On an original invoice of approximately $128,000, the farm was forced to accept only about $60,000, therefore losing about $67,000.

The Canadian industry is requesting the creation of a limited statutory deemed trust that provides financial protection for produce sellers in Canada in the event of bankruptcies. Assets available to trust creditors would be limited specifically to produce accounts receivable and any cash and inventory from the sale of the produce. A trust does not require any government funding or administration. This solution would also meet the U.S. requirements for a comparable Canadian system in order to reinstate our preferential access to PACA.

The unique characteristics and volatile financial environment of the fresh produce sector mean that a unique solution is necessary to achieve success. Models from other industries, in this case with very different operations, simply do not work. Targeting the individual bankruptcy through a deemed trust is our most effective cost-saving measure and inclusive way to provide payment protection in the produce sector.

Thank you on behalf of our industry, and I'm more than happy to answer any questions.

Senator Tardif: Thank you, Mr. Lemaire, for your presentation. You raised so many interesting points. I'm not sure where to begin. I want to get to the issue of non-tariff trade barriers. You indicated you have a concern that in many cases we're using plant protection food safety requirements as a cover for domestic protectionism. Do you have specific cases you can provide us with?

Mr. Lemaire: We heard earlier that phytosanitary measures were our passport to ensure our products can flow. Whenever we have to go through the process of inspection or review, we want to ensure we are protected in the Canadian domestic environment. We also want to ensure we have standards and systems in place so that we can export to other countries, as well. This moves to a global level as well as a domestic level to the point that we want to ensure that our food safety systems are recognized on a domestic and international level, and that the science is current and relevant, that we're not following pest issues may have been in play 15 years ago and are still hindering the trade of our product.

An example of this is the shipping of hothouse peppers to Japan and the need to address how we can identify that we do not have a pest issue relative to those peppers and we can easily ship peppers from B.C. to the Japanese market.

Senator Tardif: Thank you for that example. I was concerned, as well, by the case that you made for an individual bankruptcy plan in setting up a trust. We just concluded our study on Bill C-18, An Act to amend certain Acts relating to agriculture and agri-food in Canada. There is a protection, an advance payment program where people can borrow up to $100,000 interest-free in order to cover their needs. There is nothing in place like that for the fruit and vegetable growers?

Mr. Lemaire: This is a unique scenario. The produce sector is a cash business. It's highly perishable and flows through a system very quickly. The challenge we have currently in Canada is that if I'm a farmer and I sell to someone in another part of the country, the product has been received by that buyer. In the event that the buyer has perhaps stretched themselves too thin — we're working on very tight margins and we're undercapitalized, so access to increased capital to leverage is a challenge — what tends to happen is in the event that company cannot meet their financial obligations, they declare bankruptcy. There is no product to access. The product has moved through their system and is sold or rotten, so no inventory to identify. Because of that process under the Bankruptcy and Insolvency Act currently, the produce seller is not recognized. While the BIA, under sections 81.1 and 81.2, recognizes the farmer, it is very limited as to what the farmer is. The farmer is someone who has a linkage directly back to the soil and the time frames for how the collection are framed is limiting.

While the current model has the best of intentions under the Bankruptcy and Insolvency Act, it does not support how business is currently done or has been done for the past 70 years in the produce sector. The challenge we have now is that produce sellers, in the event of a bankruptcy, are left with nothing in many cases.

Senator Tardif: Has there been a change lately to either requirement in the U.S. or in Canada with regard to the B.C. example you gave? Has there been a change that makes it more difficult? I think I recall something problematic being passed that's affecting you.

Mr. Lemaire: For many years, industry and government have been looking for a solution to frame what we call "three legs to the financial protection stool." The first piece is ensuring that we have a dispute resolution mechanism, which in 2000 the Government of Canada helped to create with industry. The name of this organization is the DRC, Dispute Resolution Corporation. Produce sellers, companies, farmers and retailers are members of the DRC. In the event of a dispute over the terms of sale, the DRC can step in and provide mediation, arbitration and direction as to the outcomes.

That similar model is also seen in the U.S. under the Perishable Agricultural Commodities Act, PACA, whereby we have a reciprocal relationship. However, about 30 years ago under PACA, they also introduced a deemed trust that protected produce sellers in the event of a bankruptcy. Canadians were beneficiaries of that because Canada and the U.S. are such strong trading partners we were given preferential access. If I sold to the U.S., all I had to do was post a $100 administration fee and a claim could be started to try to recover what was owed. However, we did not have the bankruptcy piece. The U.S. introduced it under PACA, but Canada does not have that in a similar model.

For years, we have tried to find a solution. Finally on October 1, 2014, the U.S. decided they didn't have reciprocity so they revoked our privileged access to PACA. After 70 years of trading and using the tool, we could no longer use it. We can use the tool in the same way as every other country uses it by posting double the cost of the claim in the form of a bond; and many companies can't afford that.

Senator Tardif: I had forgotten the details but I knew that something critical to your association had been lost.

[Translation]

Senator Dagenais: Good morning to our two witnesses. Mr. Lemaire, you raised an issue that piqued my interest. You mentioned the difficulty the producers have in finding workers and the fact that you have to get foreign workers. Perhaps Canadians are available, but they do not want to do this work. The same problem exists in the United States, and I know from having travelled there often that the Americans often use Cuban and Mexican labour. Indeed, Americans do not want to do this work.

I visited a producer last summer, and I learned that there is another problem related to the fact that foreign workers sometimes stay for four or five months, and then return to their country. They can return a second time, but not a third. The producers wondered if the laws should be changed. In fact, when these workers come here, they gain some experience and sometimes become team leaders. They are good employees, and the producers want to be able to hire them again. They come back a second time, but then there is the whole issue with visas. I would like to hear your thoughts on the matter, because I think you have a few things to say.

Mr. Lemaire: Yes, it is a problem for the industry.

[English]

The largest problem is the skill set to pick fruits and vegetables, which requires training. When a worker comes from another country, trains for two or three terms on the farm and then is unable to return to provide those ongoing services, it creates a burden on the farmer due to the additional cost of training and the complexity and challenges of finding new workers that can provide those services. What we don't account for is that all of this additional time adds costs to the consumer. The farmer has to invest in training, picking and leftover product in the fields if the individual hired doesn't harvest well. All of these components start playing into the basic element of needing qualified foreign workers to do work that Canadians are not willing to do.

The challenge around visas is extremely frustrating. Many workers come into Canada with a visa to work on one farm. However, there may be multiple farms that require those services. They try to spread foreign workers across multiple farms but they need multiple visas to move to different locations to work legitimately in Canada. There were challenges around providing that form of visa to those farms in Quebec. I understand in some cases that in the end approximately $30 million in produce was left to rot.

[Translation]

Senator Dagenais: From what I understand, one possible solution would be to obtain visas that would let them work for several farmers and to make those visas renewable, even after two years. I know that other workers from Latin countries would also like to come and work in Canada, and that there are waiting lists. I understand that training is the problem because you still have to provide for a training period.

[English]

Mr. Lemaire: The solution is exactly that. The solution could be to provide visas that provide opportunities for the foreign worker to work on multiple farms; to ensure that the visas can be extended beyond the two years; and to ensure that the visa process is not an administrative burden to the farmer. Again, all of these additional administrative costs add to the consumer's cost for the product. Those would be ideal solutions.

The Chair: For clarity, the government put in place an express entry system for temporary foreign workers in agriculture. Do you have any comments on that to clarify this going forward?

Mr. Lemaire: At this time, I don't have any comments. We can provide additional comments to the committee. I haven't heard of any issues or challenges from our members. If they have had issues, they have not identified them to us. I can do some research to see if there are challenges.

The Chair: Could you please do that and send the information to the clerk of the Standing Senate Committee on Agriculture and Forestry.

Senator Unger: With regard to the situation in Quebec, do you know what the unemployment statistics are for Quebec in that labour market?

Mr. Lemaire: For that specific labour market, I don't have the statistics off the top of my head. This is an issue not only in Canada but also in the U.S. Even when there are higher unemployment rates in certain regions, trying to get those who are unemployed to do the manual labour required to harvest and to work on the farm is extremely difficult.

Senator Unger: It's a refusal of Canadian workers to accept this type of work that creates this need for temporary foreign workers who will do the work.

Mr. Lemaire: That's right.

Senator Merchant: I had a few questions about the temporary workers program. It's been in the news in the last six months. Has the situation worsened and, if so, in what ways, or are you still just struggling with the same problems that you have had over a period of time? For your industry only.

Mr. Lemaire: For our industry only, we saw a true issue last harvest and specifically out of Quebec. Relative to the administrative processes and challenges, we are hearing that not only in Quebec. It's an issue that goes across the industry. Having said that, the Seasonal Agricultural Worker Program that brings workers in from the Caribbean is reviewed annually. It is extremely well managed. This program is functioning quite well.

Again, this goes back to my comments about how industry has found solutions to be effective and streamlined. When government has worked with industry to adopt some of those solutions, we found very successful outcomes. The Seasonal Agriculture Worker Program is a great example of that collaborative approach of how we find qualified workers and how we ensure they can come into the country and be part of the community. In most all cases, these workers, when they come to Canada, are living in the community and are spending money in the community. They are truly a fabric of rural Canada, and they are the building blocks for our future so that we can put product in the mouths of Canadians.

Senator Merchant: I thank you for that. I have a question now about your comment about the closing of agricultural research stations. Can you maybe elaborate a little bit on that and bring us up to date? Is this happening now? Did it happen many years ago? What can you do or what are you doing, since this is affecting you, to make sure this does not continue to go on and that maybe some new ones will be opened?

Mr. Lemaire: The membership within the Canadian Produce Marketing Association represents the grower/shipper right through to the retailer/food service operator. It's the entire supply chain. What we have seen since the change to the research stations and the closing of the research stations is that industry has taken on a more active investment. You have some retailers now working with growers to develop varieties that meet their understanding of what future consumer needs are. That business-to-business research investment is a result of competitiveness in the marketplace, as well as the changes to government-supported research.

Through the horticultural value chain roundtable and working with the Canadian Horticultural Council, the Horticultural Council does manage funds for research clusters for specific commodities. At this point, it looks like there is opportunity in that solution for future development that we should be looking at investing in, again ensuring that the Horticultural Council at a primary producer level can clearly understand the needs for that very specific sector and apply the appropriate funding, both from a business standpoint and from, if possible, a government standpoint, if funds are available, since they're not being allocated to the research stations.

Senator Merchant: And how is that working? Where does the funding come from other than the government? You must need extra funding. What are you doing to get this extra funding and how much are we talking about?

Mr. Lemaire: From my understanding, it is 50 cents, 50 from government and 50 from industry. Funds will come from individual businesses ranging to associations or organized commodity groups, whether that is potato, apple, blueberry and so on. The mechanism is important to be collaborative. In no way does industry ask for 100 per cent contribution from government, but there is a requirement that government does provide some type of support to ensure a stabilized approach to research on a national level so that it doesn't also become a propriety component in a market where a business-to-business relationship creates the research for competitiveness. Growing Forward 2 is where the funding mechanism comes from.

Senator Tardif: How many agriculture research stations have been closed across Canada?

Mr. Lemaire: I don't have those statistics in front of me, but we can provide those to the committee.

Senator Tardif: Can you provide that to the committee? That would be appreciated. Thank you.

[Translation]

The Chair: Before giving the floor to Senator Maltais, I would like to welcome the participants of the Parliamentary Officers' Study Program.

[English]

I welcome you to the Standing Senate Committee on Agriculture and Forestry. Thank you for choosing our committee as an experience. I have no doubt that you are in good hands.

[Translation]

There is no doubt in my mind that you are in good hands with Mireille Aubé. I would like to thank Ms. Aubé and her group for attending our committee meeting.

[English]

These parliamentary officers are from different provincial legislatures across Canada and national parliaments outside of Canada. Welcome to our committee. We are very proud that you are here this morning. If you have any comments on your way out, please advise the clerk.

[Translation]

Senator Maltais: It makes sense that these people chose the Standing Senate Committee on Agriculture and Forestry since it's because of us, our witnesses and our farmers that Canadians can eat.

Mr. Lemaire, where is your office located?

Mr. Lemaire: Here, in Ottawa.

Senator Maltais: Is there still a problem with tariff barriers?

I will ask you a question that I'm curious about. Quebec and Ontario do a lot of interprovincial trade. I'm sure you know that Quebec is the largest producer of hothouse tomatoes, and Ontario, the largest producer of cucumbers. We visited some tomato plants. We saw big trucks leave with tomatoes and come back with cucumbers and lettuce during the winter.

There don't seem to be any tariff barriers. They work day and night. We could see it when we visited the plants. Do they have any problems with the two governments? How does it work?

[English]

Mr. Lemaire: The produce industry is fortunate as the House agriculture committee is currently looking at internal trade barriers within Canada. When you're looking at wine and other products, there are some challenges. For fresh produce, the trade of fresh produce between provinces is very dynamic and vibrant. The challenges we face don't tend to be a barrier specific to anything other than potentially a pest or an issue around container size. If I'm shipping and selling tomatoes or cucumbers from one province to another, I have that right as a Canadian that allows me to ship that product in, as long as I'm shipping a product that is pest-free and that is not coming from a regulated area depending on the product.

[Translation]

Senator Maltais: We also visited a medium-sized business in New Brunswick that specializes in french fries. This business serves Quebec City, Montreal and Toronto. Do these people face tariff barriers? They leave from New Brunswick, pass through Quebec and reach Ontario. Three provinces are involved. Are there any problems between them? Do they have to obtain special permits?

[English]

Mr. Lemaire: For processed potatoes, our organization works specifically with the fresh industry and we don't handle trade requirements for the processed side. So I don't have the answer for you on the processed potato market and french fries.

Relative to the sale of potatoes across provinces, there are regulated areas for potatoes that have certain pests and have to ensure they are pest-free when shipping out of those areas. Those would be the types of barriers that the produce industry deals with. It would be more pest-based.

A challenge we do have that is of concern is apples being shipped to B.C. Quebec and Ontario apples being shipped into the B.C. market require a CFIA inspection for a certain pest that, to my understanding, our members have told us they have not found in many years and yet they still require an inspection for that pest because of a requirement many years ago.

That product has to be sealed in the truck after inspection and cannot be reopened until it reaches British Columbia. The challenge for the industry is because of our small margins and our need to find efficiencies on how we move product with the high cost of transportation and those processes, in many cases we try to have multiple products on a load. So we would ship to B.C. from Ontario or Quebec, and you could have apples and other products, or you may have apples that would be dropped in Ontario and then again dropped in Alberta, and finally reaching British Columbia to save money.

We cannot do that currently with the requirement for the inspection and the sealed truck, yet, from what the growers are telling me, they do not have an issue on pests.

[Translation]

Senator Maltais: Perhaps I didn't express myself very well. The industry that the committee chair and I went to visit sends round potatoes to a small french fry manufacturer in Quebec City. The same is done for Montreal and Toronto, based on the needs of the restaurateurs and the orders. The load that leaves New Brunswick contains round potatoes, which are made into fries at the destination. So, there shouldn't be any tariff barriers, either in Quebec or in Ontario, because it is permitted.

[English]

Mr. Lemaire: Apples and potatoes require what's called a ministerial exemption to ship in bulk, 50 and up for potatoes and —

Jane Proctor, Vice President, Policy and Issues Management, Canadian Produce Marketing Association: Up to 200 for apples.

Mr. Lemaire: To ship those from New Brunswick to Quebec, they would require a ministerial exemption to ship those in bulk into the province. For some, that could be considered a barrier because of the increased cost of having to pack in smaller packages and then ship into another provincial destination. The administrative time to apply for an exemption requires that the industry approve, and that they and the minister are in agreement that the product can be shipped.

We do know that the government is looking at standard containers and the potential change to standard containers. More consultation has to happen. Industry has to have an opportunity to provide input to ensure we don't create any disparity or challenges for them.

[Translation]

Senator Maltais: If you had a recommendation to make to the Standing Senate Committee on Agriculture and Forestry, I am an ardent believer in abolishing tariff barriers. There is a lot of red tape in our country. If we got rid of the barriers, while maintaining food safety and traceability — which is now possible with the means available to us — that would be good.

As a representative of the Canadian Produce Marketing Association, could you draft a recommendation and send it to our committee so that we can analyze it, as we did with wine? It's a start. Perhaps we could do it with other foods as well. Our committee was responsible for wine. There is a demand for wine across the country. It's a difficulty faced by producers, buyers and sellers of fruits and vegetables.

Mr. Lemaire: I do have a recommendation.

[English]

In Canada, we do need alignment between the provinces and the federal government. With the Safe Food for Canadians Act coming forward, we hope in 2015 at the latest, and the regulations to support the Safe Food for Canadians Act, food safety is a key component, as well as traceability. We need to ensure that the provinces are aligned around food safety and that additional requirements are not created to your point of adding burden to the industry, so a grower in Quebec isn't asked by their buyer to run a certain food safety protocol, whereas the government is asking to run another food safety protocol, and the provinces are asking for a different protocol.

It is likewise on labelling. We need to ensure that labelling is aligned so if I'm packing potatoes in Quebec, I'm able to ship those potatoes into another part of the country, and vice versa if I'm packing in Ontario and shipping into Quebec such that I'm not having challenges with good product that has to be disposed of or repacked because it isn't following certain requirements for that region.

Alignment is key. Harmonize the approach. Traceability is important to all of us, as is ensuring we are aligned interprovincially, federally and, most importantly, internationally because our market is a global market. Canadians are demanding more and more product not only domestically and in a more diverse variety, but they are also demanding a wider international offering as well. We need to ensure we do not create complexity in the trading platform we are currently operating within.

[Translation]

Senator Maltais: We will be pleased to receive your recommendation. Thank you.

[English]

Senator Unger: Mr. Lemaire, how many producers does your organization represent?

Mr. Lemaire: It's an interesting question. The numbers vary between 8,500 producers up to 10,000, with very small guys as well. Our organization represents the grower/shipper. The way the industry operates, we are a small- to medium-sized industry also representing large companies and multinational companies. Our grower/shippers will buy from many of those 8,500 small- to medium-sized farms, consolidate their product and sell into market. The downward stream, those small farms, are represented through our grower/shipper community who are buying, repacking and supporting them.

Senator Unger: Are there other organizations like yours representing growers in Canada?

Mr. Lemaire: The Canadian Horticulture Council represents the primary producer. The council is made up of other grower organizations that represent growers across Canada. We work closely. Up until the early 2000s, our organization and the Canadian Horticulture Council were run by the same staff person and it was an amalgamation of staff to run the two organizations. In 2000, we divided operations and currently Anne Fowlie is the executive vice- president with the Canadian Horticulture Council, and Keith Kuhl, a grower out of Manitoba, is their president. To ensure integration and efficiencies, we work closely with the Canadian Horticulture Council.

Senator Unger: I have one other quick question. You said the CFIA must stand behind its own rigorous standards. Would you explain that?

Mr. Lemaire: I will ask Jane to comment on this as well. Jane works closely on this file.

We're very pleased that CFIA has agreed to accept and review industry-based food safety standards and go through the rigour of determining if they fit the criteria that they could then acknowledge. This is so that industry programs, such as CanadaGAP, which is a GFSI benchmarked program, is not only recognized here in Canada but is also enabled and globally accepted to be able to sell domestically and internationally.

The challenge we have is that, in the process that we've gone through with CFIA, we have found, with time, interpretive changes that have created challenges for the process we've gone through with them on the application of some of our systems. I'll ask Jane to give more detail on that.

Ms. Proctor: Thank you. CFIA has a very rigorous program to recognize, as Ron said, these programs. Our concern is that, especially with the advent of all of the regulations that will flow from the Safe Food for Canadians Act, we are really encouraging them to, as we say, stand behind — in other words, defend these programs. They've recognized them. It is a very rigorous process; it involves the provinces also. There is a great deal of scrutiny put on them. We're saying that, if you've done that and spent a great deal of time as civil servants and as industry doing this, then we would like to see you stand behind it and say, "We know; we've gone through the rigour and know this is a good program, like CanadaGAP, which now includes the repacking and wholesale program, so it's on-farm all the way through." Defend it, not just within the country, recognizing it as they build regulations and identify what they will accept as meeting these regulations, but also, equally importantly, on an international level, as Ron said. When we go through the rigour, when we know we have programs that are so very good that they're HACCP-based and have the rigour of the Global Food Safety Initiative, the GFSI, defend those to our international trading partners and say, "Yes, we can say, because we have recognized them, we have gone through the rigour. These are legitimate programs. There is no concern with the safety of our food, in this case the produce." They will be, I believe, reviewing other sector food safety programs, also.

So, if we're going to do this and put all that effort into it with government and industry, then let's make sure that we stand beside it, defend it and represent ourselves to the rest of the globe.

Senator Enverga: Thank you for the presentation. A while ago, in your presentation, you mentioned that one of your challenges is that there's no national consumption scheme. I mean, I'm surprised about that, but can you please expand on this issue that you're having? Right now, we're studying obesity and I am wondering how it would link to our other study.

Mr. Lemaire: Fresh produce is your best weapon against chronic disease and obesity. Currently, in Canada, on a range of provincial programs and municipal programs, there is a lot of good activity happening. At a federal level, we do not have a scheme or plan similar to what they have in the EU where they support the delivery of programs throughout the EU countries that run fruit and vegetable promotion.

At a federal level, recognizing the jurisdictional challenges that we have when trying to put something in place across the country, there needs to be leadership to frame a policy model that the provinces can adopt and buy into.

How do we support and drive provincial programs federally and ensure that we don't create duplication and add increased costs in the system? There are a lot of great things happening out there already. How do we build on those successes and add to those successes in the market?

We've run similar programs in the past federally, and one we'll all remember is ParticipACTION, a successful program that changed a generation. We are at a point in time where we see our children who are overweight, not active and without the food skills to be able to eat well into the future. It's an issue. It will become an epidemic, and we need to find a solution. Produce is one of the key tools in the toolbox.

Senator Enverga: The way you say it, it looks like you're saying that there is not enough demand for your produce. Is that true? If ever we were planning to create some policy about this, do you have the capacity to supply it?

Mr. Lemaire: We have the capacity to supply it. The challenge is the understanding of how to prepare it, the lack of food skills, understanding why you should be eating it and how you store it. There is a range of challenges. We actually hosted a health summit for the last two years, bringing the health community and the produce industry together to try to determine what the barriers to consumption are. How do we best move forward to find solutions to increasing consumption? The outcome of this health summit in the last two years came to the conclusion that a federal policy framework is necessary as a starting point. That policy framework then can support the provincial and municipal programs that are in existence and potentially those that could be created.

So, food skills are key. To create demand, you have to understand how to prepare.

Senator Enverga: Thank you. Maybe you will be our next witness on the other committee.

Mr. Lemaire: I'd be happy to.

Senator Oh: Thank you for being here today. My question is: The CETA agreement will eliminate the EU tariff on fresh strawberries, vegetables apples and so on, and that also includes frozen, processed fruits, such as sweetened cherries, and frozen potatoes, et cetera. What is the estimated value that will benefit your members? Also, can you tell us: Are you ready for this shipping process?

Mr. Lemaire: It will vary across communities. Any time we open up a new market, there is opportunity. The global market is very competitive. This goes back to my comments on the need for research, innovation and investment by the industry and government. If we are not changing the variety, for example, of apples to meet the European need, if we are not ensuring that our food safety protocols and food traceability protocols are in place, then we will not access the European market to the extent at that we potentially should.

So, at this point, it's difficult to say that we will see this many more millions and/or billions of dollars come back into the industry through that export opportunity. Time will tell, and the important aspect is what the foundational building blocks are that we're putting into place now to ensure we can ship, also recognizing the perishability of the product. Strawberries compared to blueberries or apples or other call them hardcore products that can survive the shipment may not have that immediate opportunity that we may see for other commodities.

You cannot put a blanket across all of the fruit and vegetable sector and say that you will see everyone grow, but you definitely will see opportunity if we are giving the European consumer the right product, the right quality, at the right price, with the right food safety protocol and traceability protocol.

I can give you an example of where we've seen this. When we look at Asia and Japan, there is a huge opportunity. Canadian cherries and Canadian apples: There is a massive demand because we do create some of the highest quality product in the world, and we've been able to create those markets by providing the right food safety mechanism, the right traceability mechanism and the right innovation around the products that we ship out to those countries. The opportunity is there, but there is some work to be done to get there.

Senator Oh: I'm sure you will do well. The Asian market loves the maple leaf brand.

Mr. Lemaire: They do.

The Chair: As we conclude, the committee, through the chair, would like to bring to your attention that the comments that you have made in the past did not go unconsidered in looking at recommendations that we made in our report of 2014, when it came to innovation in Agriculture Canada versus the international markets.

On recommendation 19, you had brought something to our attention when you were previously the witness, and the committee made a recommendation. The recommendation was: "The Committee recommends that Agriculture and Agri-Food Canada improve the strategic market information available to sector stakeholders in order to effectively meet their needs."

The response from the government was the following: "The government supports the recommendation that Agriculture and Agri-Food Canada improve the availability of strategic market information for sector stakeholders in order to effectively meet their needs. AAFC has been delivering market information since 1905 and regularly adjusts its programs to meet industry needs."

I think some of the recommendations that you have made this morning or your comments will certainly be reflected as we go forward with the next report.

Mr. Lemaire: Thank you to the committee. We greatly appreciate, as an industry, the work that the Standing Senate Committee on Agriculture and Forestry does to support and drive innovation and change. Recognizing that it's a collaborative effort, we greatly appreciate all of the work that you have done, and we look forward to providing further input as you need it moving forward. Thank you very much.

The Chair: As you have said, it's a two-way street. As we go forward, Canada must continue to be the best country in the world to provide food safety.

Mr. Lemaire: Exactly.

The Chair: That said, honourable senators, thank you. I now declare the meeting adjourned.

(The committee adjourned.)