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Proceedings of the Standing Senate Committee on
Agriculture and Forestry

Issue 24 - Evidence - Meeting of February 26, 2015

OTTAWA, Thursday, February 26, 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.


The Chair: Again, I welcome you to the Standing Senate Committee on Agriculture and Forestry. This morning we have a witness, Mr. Kingston, who will be introduced in a few minutes. My name is Percy Mockler. I'm the chair of the committee, a senator from New Brunswick and at this time I would like to ask the senators to introduce themselves please.

Senator Merchant: Pana Merchant from Saskatchewan.

Senator Maltais: Senator Maltais, Quebec.

Senator McIntyre: Senator Paul McIntyre, New Brunswick.

Senator Unger: Betty Unger, Alberta.


Senator Dagenais: Good morning, my name is Jean-Guy Dagenais, and I am a senator from Quebec.


Senator Ogilvie: Senator Ogilvie, Nova Scotia.

The Chair: Before we begin with today's business, honourable senators, it is my duty as chair to inform you that there is now a vacancy for the position of deputy chair of the committee.

As chair of your committee, it is my duty to preside over the election of the deputy chair. At this point in time, I'm open to receive a motion or motions to identify a deputy chair. The chair will recognize Senator Maltais.


Senator Maltais: Mr. Chair, it is my privilege and honour to nominate Senator Tardif. She is not here this morning, but I obtained her consent to submit her nomination as deputy chair of the committee.


The Chair: The chair will recognize a motion from Senator Maltais that Senator Tardif be the deputy chair. Do you I have a seconder?

Senator Merchant: I second it.

The Chair: Seconded. Therefore, we are going to accept and I'm sharing with you that the deputy chair will be Senator Tardif.

The motion is adopted.

Again, to the witness, Mr. Kingston, the committee is continuing its study on international market access priorities for the Canadian agricultural and agri-food sector.


Canada's agriculture and agri-food sector is a very important part of the country's economy. In 2012, the sector accounted for one in eight jobs in Canada — employing over 2.1 million people — and close to 6.7 per cent Canada's gross domestic product.


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

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 an agreement has been signed with the Republic of Korea. Canada has also just concluded negotiations with the European Union and negotiations are, honourable senators, ongoing with 11 other countries or group of countries. Several of these agreements and negotiations concern activities related to the Canadian agriculture and agri-food sector.

This morning, the Standing Senate Committee on Agriculture and Forestry welcomes the Canadian Council of Chief Executives, Mr. Brian Kingston, Senior Associate. Mr. Kingston, thank you for accepting our invitation and to share with us, from the council, your comments, recommendations and views going forward in the agri-food sector of the Canadian economy.

That being said, there is no doubt in my mind that you have been instructed by the clerk that you will make a presentation, to be followed by questions from the senators. On this, Mr. Kingston, the floor is yours and thank you for being here today.

Brian Kingston, Senior Associate, Canadian Council of Chief Executives: Good morning, honourable senators and committee members. Thank you for the invitation to appear before you to discuss Canada's agriculture and agri-food international market access priorities. The Canadian Council of Chief Executives represents 150 chief executives and leading entrepreneurs in all sectors and regions of the economy. Our members lead companies that collectively administer $6 trillion in assets, have annual revenues in excess of $850 billion and are responsible for the majority of Canada's private sector investments, exports and training.

As you've noted, Mr. Chair, Canada's agriculture and agri-food sector plays a significant role in the Canadian economy. International market access achieved through the elimination of tariff and non-tariff barriers is critical to this sector's competitiveness. Today I would like to make four points on Canada's agriculture and agri-food international market access priorities and what can be done to ensure the ongoing competitiveness of Canada's agriculture sector.

The first point I'll make is that Canada needs to capitalize on opportunities in Asia. Over the next 20 years, Asia's middle class will generate significant increases in demand for energy, natural resources, financial services, education, clean tech and agriculture and agri-food products. But Canada is not well positioned to take advantage of the rapid growth in the ranks of Asia's middle class consumers. Of the total value of Canadian agriculture and agri-food export, the U.S. accounted for 48 per cent and China, our second largest export destination, 11 per cent. Canada must act quickly to secure preferential market access to key Asian trading partners by concluding negotiations with members of the Trans-Pacific Partnership or TPP. The TPP region is responsible for approximately 40 per cent of the world's economic output. Concluding an ambitious high quality TPP agreement is the most efficient way for Canada to deepen its integration with other Asian economies and take advantage of Asia's fast growing markets. At the same time, Canada should conclude its negotiations with Japan. Japan has the largest market of current and prospective TPP participants with whom Canada does not have an FTA. A joint study by Canada and Japan has estimated that the annual boost to Canada's GDP from partnership agreements would be between US$3.9 billion and US$9.3 billion. Finally, Canada should launch free trade negotiations with China, our second largest agriculture and agri-food export destination. Eliminating trade and investment barriers will give Canadian agriculture and agri-food exporters a significant competitive advantage and boost exports. For example, since concluding a trade deal with China in 2008, New Zealand's exports have grown by over 450 per cent.

My second point is that we need to ensure the success of recently concluded trade agreements. The Canada- European Union: Comprehensive Economic and Trade Agreement or CETA is the most important trade deal for Canada since NAFTA. The EU has a GDP of US$17 trillion, a market of 500 million consumers and is by far the largest importer of agriculture products in the world. Ratifying and implementing the CETA is a top priority for the Canadian Council of Chief Executives. While the market access achieved in CETA is positive for the agriculture sector, many agricultural goods continue to confront non-tariff barriers. The real market access in CETA will depend on Canada's ability to prevent or resolve non-tariff barriers that may arise for agriculture exports.

The recently implemented Canada-Korea FTA is another significant milestone for Canada and the CCCE has recommended the creation of an advisory committee to Minister Ed Fast to ensure the effective implementation and promotion of the South Korea FTA.

My third point is that we should continue to engage at the WTO. Despite the proliferation of regional and bilateral trade agreements, the WTO remains the preeminent forum for global trade liberalization. Canada must continue to provide leadership at the WTO and reinforce the multilateral system through various next generation agreements. The WTO has proven effective in addressing blatantly protectionist measures, such as U.S. country-of-origin labelling. COOL significantly disrupted the North American supply chain. It creates unpredictability in the market and imposed additional costs on producers on both sides of the border. Canada's successful challenge of COOL is an example of the important role the WTO continues to play to ensure agriculture and agri-food market access.

Canada must remain vigilant and react quickly to protectionist measures. International market access is inhibited by a range of trade barriers including tariffs and quotas, trade distorting domestic support, export subsidy, export taxes, tariff escalation and non-tariff barriers. The WTO is the only venue for addressing these issues on a large scale.

My fourth point is that we need to improve the competitiveness of Canada's agriculture and agri-food sector. Building a competitive agriculture and agri-food sector requires investments in machinery and equipment. To this end the temporary two-year accelerated capital cost allowance for machinery and equipment should be made permanent to allow for long-term business planning. Faster write-offs of eligible investments helps business retool with new machinery and equipment to remain competitive in the global marketplace. The sector's competitiveness also depends on the ability of producers to transport goods to market in a timely and efficient fashion. As demand rises for Canadian goods, we must upgrade our transportation and storage infrastructure to handle increased export volumes.

Finally, my last point is that the time has come for Canada to reform the supply management system for dairy and poultry producers. Current restrictions on dairy and poultry imports hurt Canadian consumers and are inconsistent with our reputation as a champion of open markets. Supply management diminishes our credibility with our trading partners and it limits market access opportunities for Canadian companies and workers, including the 80 per cent share of Canada's agricultural sector that is not subject to supply management.

In China, urban consumers' disposable incomes have risen by more than 245 per cent in the past decade, yet Canadian dairy and poultry producers are missing out on an opportunity to supply a growing demand among the emerging middle class. We only need to look to New Zealand and Australia for proof of the benefits of more open competition. Both countries began to phase out their supply management programs more than a decade ago, and they are now responsible for half of the world's dairy trade, exporting to more than 150 countries.

I would be happy to answer any questions.

Senator Ogilvie: Mr. Kingston, you gave a very good summary of the major issues. One thing keeps appearing in all of the issues I look at, which you summarized with regard to direct and indirect subsidies both internally and with regard to export-import issues and non-tariff barriers. Could you briefly summarize the opportunities available to Canada within the free trade agreements and how effective you think they are with regard to resolving some of these issues?

Mr. Kingston: A good example is what we've negotiated with the Canada-European Comprehensive and Economic Trade Agreement, CETA. I've heard from many agriculture stakeholders that the agreement is fantastic and eliminates tariff barriers. But much of the access will depend on things around issues like Technical Barriers to Trade, TBT, and Sanitary and Phytosanitary Measures, SPS, that have been long-standing for products such as canola. Pork as well has had almost no access to Europe. Side agreements have been negotiated to address some of those technical barriers, which the industry is hopeful will live up to their promise and grant real access. Two examples are canola and pork.

Senator Ogilvie: One clear example is that countries in the EU put in requirements that a given agricultural product be absolutely free of components A, B and C. Those were historically reasonable when you were looking at detection levels in parts per million but now one can detect to the level of parts per trillion, dramatically below any possible capacity to affect living systems. It seems to me that those barriers are being deliberately applied or at least maintained in order to ensure that even though we supposedly have free trade access in certain areas, they're blocked because of the capacity for modern analytical detection to go down to parts per trillion. Can you tell me how you see us being able to deal with these issues?

Mr. Kingston: That's an excellent point and something that I know that the beef industry has been dealing with in terms of the production of hormone-free beef, particularly into the European market. They have to make their whole supply chain hormone-free and set up a certification system to ensure that it can be certified hormone-free for that market. As you know, even a miniscule detection of hormones can bar access. That's where the importance of the WTO is still very much relevant and where these issues should be brought on a large scale. The WTO has been very keen on scientific-based rulings on issues such as hormones.

Senator Ogilvie: Can you give us any example of where Canada has been successful in having such a barrier removed and able to show that the levels of detection are well beyond rational decision?

Mr. Kingston: I don't have an example of a level of detection. I would go to the U.S. Country of Origin Labelling measure as an example of where we have been effective getting a positive ruling on an issue that doesn't actually have any grounds. I know that COOL has been frustrating for the industry because it's such a long process at the WTO and that needs to be changed. We got the positive ruling but the fact is Canada doesn't really want to put countervailing duties on the U.S. because that's not positive for anyone. We've had successful examples but it's not quick.

Senator Merchant: You identified Asia as a part of the world where we need to make more progress. You spoke about the TPP. What is your immediate hope that the government can do to move more quickly to deal with these countries?

Mr. Kingston: Our hope would be for the TPP to conclude as soon as possible. We've heard a lot of positive momentum coming out of Washington recently on the agreement. Our understanding is that negotiators are nearing the endgame right now. So conclusion this year would be fantastic. In the absence of that conclusion would be an economic partnership agreement, EPA, with Japan. As I noted, Japan is really the major attraction to Canada in the TPP. It's the biggest market that we don't have an FTA with. If the TPP stalls and we could at least get that deal with Japan, it would be excellent. At the same time it's an issue that an FTA with China hasn't gained much traction in Canada yet but we have been pushing for one. There's huge potential there, in particular for agricultural and agri-food goods.

Senator Merchant: What about India?

Mr. Kingston: Yes, that's a very good point. I didn't mention it in my remarks but India as well. We're involved with the India-Canada CEO Forum. We've been pushing through that to finalize the Comprehensive Economic Partnership Agreement, CEPA, the investment promotion agreement, which has been under negotiation for some time, and the trade agreement as well. That would be another huge market, in particular for pulses. I believe that's a big market for Canadian pulse farmers.

Senator Merchant: One animal in Alberta was diagnosed with BSE. Is it only Korea so far that has closed down its import of our beef? What can we do? This was just one animal but it can hurt the industry very much. How do you work with the government to help in such an instance?

Mr. Kingston: I've been following that issue closely. I see that Taiwan has also blocked imports and other countries are lining up to do the same. Canada has taken the appropriate measures to ensure that this is tracked and doesn't happen but cases continue to pop up every now and again. I don't know if there's anything we could do to go to a place where we would have zero instances of it.

Something that I came across as I was preparing for this is that countries are always looking for ways to block imports of Canadian agriculture because it's very competitive and very high quality. The second something like this comes up, even if it's a single cow that has been traced and is not in the food system, it's a reason to jump on board to ban all imports and make it extremely difficult for Canada to win access again. For example, it took years to gain access back into the Korean market. Frankly, I don't think there is much we can do, other than continue to work the WTO and ensure that any bans on our products are done on reasonable grounds.

Senator Unger: I want to raise the subject of COOL. Yes, it has been a long process. Our committee was recently in Washington where we spoke with a couple of congressmen, one of whom represents a fairly large organization of farmers, I believe. He was very cool toward the whole idea. You said it's a long process. How do you work with WTO to facilitate these trade talks, in particular in the case of an animal with BSE, which appears to be an isolated incident? I'm wondering if these things happen spontaneously. I knew about Korea banning beef, but I didn't know about Taiwan. So there is definitely a ripple effect there.

Mr. Kingston: On COOL, from our perspective at the council, it has been our counterparts at other agricultural and agri-food associations that have really led on that issue. We've supported by enforcing the importance of the WTO just to make sure that the dispute resolution mechanism is used effectively and ideally a little more quickly than in the current process.

But I think Canada has been very effective in its work on COOL, despite the long time lines. We've had very good representation in Washington, in the U.S., working with congressmen to make sure they're aware of the impact this has on Canada.

The thing that always surprises me about COOL is that we have an integrated North American supply chain, so why you would want to cut out one of your major producers is beyond me. I forget what the fact is, but the average North American beef product crosses the border more than 10 times as it's growing up and being processed, so things like COOL are so damaging to that supply chain process.

On BSE, I don't know the science behind it. I don't know if you can get to a zero probability of BSE ever popping up. I know that Canada has taken excessive measures to make sure that the supply chain is able to trace it and to prevent it, so it's unfortunate that these incidents pop up. I think all we can do is continue to work with the WTO to make sure that these bans are done on reasonable grounds.


Senator Maltais: Mr. Kingston, we know that in the 21st century, Canada will be called upon to play a very important role in global food exports. A series of free trade agreements were cited, agreements concluded with industrialized countries that do business with us. However, more than a billion and a half people are suffering from undernourishment in the world. I imagine that you have economists and people who forecast Canada's role in the future. In your opinion, over the next 20 years, what role will Canada have to play to support food aid to countries that desperately need it?


Mr. Kingston: Thank you, senator. In terms of food aid, I'll say a couple of things.

First, Canada has a huge role to play in being a major supplier of food to the world. We've become the fifth largest exporter in the world, and I think that's really impressive. Frankly, I think that's going to continue to grow.

I know there has been much debate about genetically modified agriculture, but when you look at the production yields that we've seen because of some of these advanced seeds, it's really amazing. So I think Canada has a role to play there by ensuring that we're part of the supply that can feed the world.

In terms of our levels of food aid, I actually have to apologize; I'm not familiar with what we're currently contributing in terms of food aid. But a general statement that the council has been very supportive of for some time is we think that Canada has to play a big role on the international stage in terms of international development and aid.

I know that Mr. Bill Gates is in town, I believe today, to meet with the Prime Minister and will be speaking about maternal health, but he's also going to be making a push for Canada to be more engaged internationally in helping ensure that living standards rise around the world. I think that's something that Canada should be doing. That's a challenge that we need to address. I can't comment specifically on the amount of aid, but I think it's extremely important.


Senator Maltais: I thank you for your wisdom and prudence. Agricultural lands in Canada are being used with new technologies that protect the land, the environment and the products. Do you think it is still possible to increase that production from sea to sea, for example, from Newfoundland to Victoria? There are certainly some agricultural lands that could be developed, which would permit an increase in production. When production is higher, we can sell product for less to known markets. This would allow us to help meet the needs of the countries that are seeking food aid.


Mr. Kingston: Yes, absolutely. In terms of being able to produce more, the more that I've been involved in agricultural issues, the more I've learned about the technologies available. It's unbelievable. Farmers are using things like drones now to monitor their field production. There's GMO, as I mentioned.

There's no doubt that we can increase our agricultural capacity. I'm very optimistic about how we can do that, and I think Canada can be at the forefront of that, frankly, and is at the forefront. There's huge potential there. If we're producing a huge amount, I don't know why we couldn't use that as food aid for countries that need it.


Senator Dagenais: Thank you, Mr. Kingston, for your presentation. You said that Taiwan was reluctant to purchase our beef. When I went there two years ago we strongly urged them to purchase Canadian beef, and it is true that we perceived reluctance on their part. This is not new. I do not know their reasons.

I would like to get back to the obstacles Canadian businesses face on international markets. You mentioned that Canada was very competitive and that this frightened other countries. Sometimes they have a tendency to put roadblocks in our way. What measures could be put in place to make Canadian businesses more competitive? Where could we obtain greater market share?


Mr. Kingston: Thank you, senator. I was actually in Taiwan recently myself, and I noticed that Canada has such a fantastic reputation. It's known as a safe, clean and friendly country, and sometimes I wonder why we don't capitalize on that enough, particularly for food products. I notice some countries will market their products in another country. You'll see "American beef," and it's very well advertised, and I think that is very successful, whereas I don't see Canada doing that as much.

I think one thing we could do is to capitalize on our existing and strong reputation. I know in China — and this is why my comments about supply management are very important — Canada is known to have very high-quality dairy products, and China's demand is essentially insatiable right now for milk and protein. So if we could be there and be exporting and marketing ourselves as this safe, stable country, I think we would be extremely successful.


Senator Dagenais: I would like to make one last comment. I know that Canada has an economic mission in Taiwan. I imagine that you are working in close cooperation with people to see this mission come to fruition.


Mr. Kingston: Yes, absolutely.

The Chair: Senator Unger, did you have a supplementary question?

Senator Unger: Yes, just a brief one regarding Canada's marketing, or lack thereof.

Would you recommend the implementation of a Canadian brand, a stamp that would go on almost everything that people would come to know and recognize? I certainly agree about the way the U.S. markets their products, and you often see tags saying "Proudly Made in the U.S.A." I agree, I don't think we market ourselves enough. Would a national brand, that sort of idea, be a good thing?

Mr. Kingston: I think it would be. Yes, I think it's a great idea. A number of countries are doing it, like the U.S. I noticed Switzerland is another country that has done so well with that. If something is Swiss-made, suddenly people are willing to pay 50 per cent more for a Swiss-made washing machine, or whatever it may be. I don't see why Canada shouldn't be doing that as well. We're considered a very high-quality brand that people are willing to pay more for.

Senator Unger: Is that something your organization would become involved with and actively promote?

Mr. Kingston: I'm sure that that's something that we would be supportive of. I don't see why not. We're always trying to promote Canada and Canadian businesses, so promoting our products as a high-quality item, I don't know why we wouldn't support such an idea.

Senator McIntyre: Thank you for your presentation, Mr. Kingston. Approximately three years ago the council released a report regarding the opportunities for Canadian agriculture in Asia. I'm sure you are aware of the report. Can you tell us the impacts this report has had on Canadian business?

Mr. Kingston: Thank you, senator. I'm happy you mentioned that report. That was part of an initiative that we launched a few years ago called "Canada in the Pacific Century." The purpose was to promote the rise of Asia and the opportunities there for Canadian business. We released a series of reports, including that report on agriculture, which really highlighted the growing demand for protein in Asia and what it means for Canadian farmers. We also had a number of other reports on a range of issues related to Asia. It culminated in a conference in Ottawa with our CEOs. We have 150 CEO members who came here to discuss what this means.

We haven't been able to measure coming out of those reports and that conference what that did for their business, but we were really happy with the amount of awareness we raised about Asia. I think we were a bit on the leading edge of that discussion. A huge number of our businesses are involved there. They were before, but even more so now. It was really awareness raising and I think it was quite successful.

Senator McIntyre: My understanding is that the council engages in consultation and advocacy on various issues of national, economic and social importance to Canada. Do you also engage in research, and could you tell us about that, please?

Mr. Kingston: Yes, we do. We engage in a lot of research throughout the year. It's on a range of issues. I will give a couple of examples of recent reports, not agriculture related, just to give you a sense of what we're working on right now.

Our latest multi-year initiative is called Taking Action for Canada, and it's about developing a labour force for the 21st century. We have been publishing and researching on what skills we need to ensure Canadians are learning in the education system and what companies are providing in terms of training to ensure that we have a world-class education system.

I have been doing a lot of work myself researching tax payments, looking at what large companies pay in taxes. This is part of this global trend towards tax transparency. We do all kinds of research, but those are a couple of examples of some recent high-profile initiatives.

The Chair: Mr. Kingston, we have seen the U.S. challenging China in the World Trade Organization over Chinese export subsidies recently. There is no doubt that your organization has been looking at that factor. How detrimental would those export subsidies be? And what impact would they have on market access seen from the perspective of a Canadian entrepreneur?

Mr. Kingston: Chinese export subsidies are definitely something that we follow through the WTO. They can have a huge impact, particularly in the steel industry, for example, where you have issues of dumping into the Canadian market. That's been hugely problematic in the past. Our industry has been successful in challenging some of that, using either our Canadian International Trade Tribunal, which looks at that, or going to the WTO. Yes, it can be very damaging, but I think we do have the right domestic system in place to make sure that trade is fair, frankly.

The Chair: When you have a tête-à-tête with Chinese entrepreneurs, do you share that type of information?

Mr. Kingston: The way we'll engage with other countries is typically through a CEO forum environment. We don't have a CEO forum with China at this point, but our CEO John Manley travels to China quite frequently and would discuss a range of issues, from trade to political issues to you name it.

The Chair: We've also had some concern about traceability of products, and some witnesses have been very energetic in talking about it. Could you expand and comment on the traceability of our products when it comes to import and export?

Mr. Kingston: Traceability is a huge issue. Canada has come a long way in ensuring traceability. A lot of this came out of the BSE issue, where we need to actually be able to trace exactly which cow or which farm it first showed up on. I know it's also been an issue in Canada-U.S. and Beyond the Border, where there's more demand now from consumers, frankly, to know exactly where a product is coming from. I think this is actually leading the industry to a way now where you can trace a product from the farm it came off of. A good example is New Zealand wool. There is a New Zealand company which, when you buy your socks and scan the bar code, will tell you which sheep that wool was sheared off of, and you can actually watch this sheep on a webcam. I'd say that's probably going a little bit too far, but this is what consumers want. They want to know exactly where their product is coming from. Canada is doing a lot of work on that. It's becoming more and more of a trend, and producers will have to adapt to it.

The Chair: What is the biggest factor right now in order to move on traceability? I don't want to say the erroneous comments that we have vis-à-vis certain products but, in agriculture, how would that impact improving our exports?

Mr. Kingston: The biggest thing to improve traceability, first off, would be we just need more communication throughout the supply chain. I know some supply chains are very good, where you have your producer communicating directly right down the line to the person who is actually selling the product abroad, but that doesn't apply necessarily to every product. That's a way to improve it. To answer the second part of that, the greater we can show that we have complete traceability of our supply chain, that actually improves our brand, frankly, and would help us in exports and markets abroad.

The Chair: Would that be helping the Canada brand?

Mr. Kingston: Yes, exactly.

Senator Beyak: Your question about brand, Senator Unger, reminded me of something that the chair said as well.

We had a group from the dairy farmers here before Christmas, and they were worried about cheese and our competitiveness on the world market. Has your group discussed those issues? Some of them suggested that Canada needs to make concessions on its supply management system in order to gain access to the new markets through the TPP, an idea that was contested by witnesses from the supply management sector. I would like your point of view, if you could.

Mr. Kingston: We've done quite a bit of work on supply management. We were first brought on to this issue because we felt as though it was impeding Canada's negotiation ability in some of the agreements that were under way. With CETA at the time, it was obviously a very hot topic.

We are of the view that Canada has a really high quality product, and Canadian cheese is top notch. I would say it's some of the best in the world. The reason we call for reform is that we think there is a huge opportunity and that we're missing out on it. I know the dairy industry is obviously concerned, and I understand that any transition would have to be very carefully plotted and thought out to make sure it was done in the most efficient way possible. I'm confident that Canadian products would compete with the best.

On TPP, we've heard over the past few months that Canada has been accused of being the slow negotiator and not putting everything on the table. It's always a challenging position for Canadian negotiators to have such an obvious sector that we have to protect. We always protect those tariff lines in our negotiations. Other countries know that and will extract concessions as a result. I don't envy our negotiators. They're the best in the world, but it's a tough job when you have a sector that is clearly being protected like that.

The Chair: Are there other questions?

Mr. Kingston, you have been very informative. You have been to the point. Thank you for answering our questions. If Mr. Manley wishes to appear as we progress toward our final report, please let him know that he is welcome. As we go forward with our report, if you want to add or share additional information please do. We know you are an important stakeholder in the industry and are being consulted by governments and stakeholders. On this we want to thank you for your leadership.

Honourable senators, the Standing Senate Committee on Agriculture and Forestry 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 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 gross domestic product.


Internationally, the Canadian agriculture and agri-food sector was responsible for 3.6 per cent of global exports of agri-food products in 2012.


In 2012, Canada was the fifth largest exporter of agri-food products globally. Free trade agreements between Canada and various countries have been signed and we are looking forward to continuing to work with our stakeholders to have Canada be the best exporter in the food chain agriculture, and have the best innovations, so we can continue to feed world markets.

Honourable senators, I welcome our next panel, from the Canadian Sugar Institute, Ms. Sandra Marsden, President; and Mr. Mike Walton, member from Saint John, New Brunswick and travelling the world. From the International Maple Syrup Institute, we have Mr. Dave Chapeskie, Executive Director. Welcome.

Please proceed.

Sandra Marsden, President, Canadian Sugar Institute: Thank you, Mr. Chair and honourable senators. The Canadian Sugar Institute represents refined sugar producers, including both cane sugar from imported raw cane sugar, in Vancouver, Toronto and Montreal, and beet sugar in Alberta. The industry is a capital-intensive value-added industry, historically based on the refining of raw cane sugar. About 90 per cent of our production is from cane sugar and 10 per cent from beet sugar. That supports sugar beet production in Alberta.

The industry has added further value through investments in two further processing facilities in Ontario, producing products such as hot chocolate, iced tea and similar sugar blends. A lot of that is exported to the U.S. under strict quotas. The Canadian sugar industry is an integral part of Canada's food processing chain. We depend on food processors for 80 per cent of Canadian sales, and food processors in turn depend on a local supply of high-quality, competitively priced sugar. In fact, Canadian sugar is an input to about 30 per cent of food processing in Canada. Major sugar users account for approximately $18 billion in revenues, $5 billion in exports and 63,000 Canadian jobs.

As recently reported by the Canadian Agri-food Policy Institute, there has been limited growth in value-added in the food processing sector in Canada, which has had a direct impact on our industry as input suppliers. I've outlined in my remarks many of the factors that have contributed to that.

The impact has been that essentially from 2004 to date we've lost about 160,000 tonnes of sugar production in Canada. That reflects the sugar content in products that are no longer being exported to the United States as well as import competition from further processed products. You may have heard of recent plant closures at the Heinz plant in Leamington and the Kellogg plant in London, which have created further challenges for our industry.

Our first priority to address these challenges is to support the government in securing meaningful increases in export market access. We need to diversify our markets because Canada is relatively small in the global context and the market is not growing in any appreciable way other than through population growth.

We strongly support the CETA as one first new opportunity since the NAFTA but that is limited to about a 50,000- tonne benefit for the whole industry over the long term. Our current top priority is the Trans-Pacific Partnership, TPP, negotiations because they include the United States principally and because under the NAFTA, sugar was not liberalized for Canada. We face very restricted access for both sugar into the U.S. as well as sugar-containing food products.

Improved access under the TPP with respect to the U.S., Japan and other countries, provides a critical opportunity for us to gain access for both our products and our customers' products to restore that capacity utilization that we've lost over the last 10 years or so. We believe that all member countries of the TPP, including Canada, must maintain a strong ambition and vision for the TPP. We are concerned somewhat about recent comments in the media that Canada is not sufficiently engaged in market access talks with the U.S.

Our secondary target is Japan, which will have meaningful benefits particularly for western operations. Mike Walton can speak to that. He can tell you a little bit about the impact on Lantic.

Mike Walton, Member, Canadian Sugar Institute: Good morning. Lantic is a Canadian-owned company with 650 dedicated employees across the country and annual sales of over $600 million. Lantic is the largest refiner of sugar in Canada by way of its two brands, Lantic in the east and Rogers in west. We have three capital-intensive refined sugar operations in Canada, two cane refineries — one in Montreal and the other in Vancouver — as well as a sugar beet processing plant in Taber, Alberta. We also have a distribution centre in Toronto and a blending facility in Scarborough, Ontario, that produces products such as iced tea, dry dairy and bakery blends for the Canadian and U.S. markets.

Today, I would like to reinforce briefly the comments made by Sandra and emphasize the importance of trade negotiations with the high-value markets, including the historic trade opportunity that the TPP represents for our company.

Lantic welcomed the conclusion of the CETA, which when implemented will be the first opportunity for Lantic to compete in the European market. This is not free trade but will eventually provide proximately 50,000 tonnes of sugar- containing product access for the Canadian industry. This is a good start but not enough to restore competitiveness in our industry. Similarly, Canadian sugar and chocolate confectionery and other processed products will see some opportunity in the European market. However, the trade balance will be skewed in favour of the EU.

The only meaningful export market we have today for Canadian sugar is the United States. However, our sugar exports are constrained to a minimal 10,300-tonne quota, which represents just one tenth of 1 per cent of that market. We have some sugar-containing product access to the U.S. for our eastern refinery, yet that quota is providing less value given the competition from Mexico and other countries, which have duty-free access to the United States under their preferential agreements. In other words, our trade situation will continue to deteriorate relative to our trading partners if Canada does not negotiate commercially meaningful access to the U.S., Japan and other TPP countries.

We at Lantic applaud the ongoing efforts of the government to widen Canada's commercial relationship on a global basis. The CETA is a very positive development in a highly restricted global market, but it is not enough to maintain the competitiveness of our industry and our customer base in the decades ahead. We believe that the TPP is a critical opportunity that we cannot afford to miss. We strongly support and encourage these trade-liberalizing negotiations that will help us to diversify our customer base and ensure that Lantic continues its important contribution to the Canadian economy, which it has done for over 125 years.

The Chair: Mr. Chapeskie, please proceed.

Dave Chapeskie, Executive Director, International Maple Syrup Institute: Thank you, Mr. Chair, and good morning, everyone. I think we have the appropriate format here because we've introduced the umbrella for the sugar industry as a whole. I'm going to be focused on the pure maple syrup industry. The International Maple Syrup Institute represents maple industry stakeholders, producers, packers, equipment manufacturers and others in the supply chain in both Canada and the United States, and has been operative since 1975. I want to begin by saying a few words about pure maple syrup and pure maple products and what makes them stand unique.

First, it's uniquely North American produced. It's recognized in our country for its national heritage significance. It's sustainable and the first agriculturally produced crop in the spring. It's natural and produced with not a lot of energy inputs in terms of land, and it's pure.

One of the central mandates of our institute is to ensure the integrity and purity of pure maple products, not just in domestic markets but in the international marketplace as well. It is one of the highest nutritional content sweeteners out there. I have some information that I will leave with the committee on that. Recent research findings indicate that it has great promise in terms of its health benefits as well, but the final verdict is that clinical trials have not been completed on that. It's suitable for various diverse food applications. I think at this point we've just scratched the surface in terms of exploring that potential, particularly in international markets.

In 2013, the maple syrup industry was worth an estimated just over $400 million to the Canadian economy, and about three quarters of that was exports. The export market and the maintenance of access to export markets for pure maple syrup and pure maple syrup derivatives are extremely important to our industry. At the present time, roughly two thirds of our exports go to the United States, with 9 per cent to Japan, 15 per cent to Europe and the rest spread out globally, basically.

That's where we're at right now. The International Maple Syrup Institute is currently working on a market strategy. We have a goal to double the value generated from our industry over the next seven to ten years. We think that that is entirely possible, particularly when you look at the uniqueness of our particular sweetener product and the potential to develop diverse products and market them around the world.

As an industry, we would like to see the government continue to support production as well as product and market research as recommended by the Canadian maple advisory committee. Our institute is closely affiliated with the committee, except that we also have representation from stakeholders in the United States, which we see as very important, particularly when you consider that, at the present time, pure maple products only represent about 1 per cent of the total sweetener market. When we say we have a goal over the next seven to ten years to double, we're talking about doubling to 2 per cent and maybe ramping the overall value to the Canadian economy up closer to $1 billion per year.

We would like to see more emphasis on developing markets for value-added products and development of more applications for especially the processing grade of maple syrup. Recently, both the Canadian and U.S. governments have approved implementation of a new grade and classification standard for maple syrup that will be applied around the world. This has come out of close cooperation and collaboration. It was advocated for by our institute, and it was the collaboration and the consensus-building that happened between Canada and the United States that helped finalize the recommendations for that.

We feel that that standard of identity for our product, one definition, one clear description in terms of the unique classes of maple syrup that is reflected in the standard will make it easier for the consumer to identify with our product. It will make it easier to set it apart from the other sweeteners that are out there in the marketplace and, again, recognize its uniqueness around the globe. This is part of positioning the industry for growth well into the future.

We believe that much more needs to be done in terms of consumer awareness and education. We have a role as an industry in that, working in partnership with governments to get that awareness out there, still even in North America but also around the globe, and particularly where we market our products strategically. When I talk about strategic marketing around the globe, the best liaison for government is the Canadian Maple Industry Advisory Committee. I think that's very important.

We're starting to look at the potential for possibly getting recognized under Codex for quality assurance at the international level. We feel that that would have perhaps some significant advantage to our industry. Also, since we're uniquely North American, we're starting to explore the potential to see if we can get some certification or standard of authenticity, which has been done for a number of products such as wine in other countries and so on, to further differentiate pure maple products.

Thank you very much.

The Chair: Thank you.

Senator Merchant: Thank you very much. I'm going to ask the first question of the sugar people. The EU is the world's largest producer of beet sugar and the main importer of raw cane sugar for refining. The sugar market in the EU is regulated by production quotas, minimum beet price and trade mechanisms. Imports of sugar in the U.S. are subject to tariff trade quotas that permit entry to a certain quantity of sugar under the low tariff. I'm going to ask you some questions about that.

Given these trade barriers, to what extent is Canada able to compete in international markets? Did the CETA address with the EU any of these trade barriers in Europe? Does Canada impose any restrictions on imports of sugar and sugar products?

Ms. Marsden: The first question was does Canada compete in international markets? If I'm correct, that was the question?

Senator Merchant: Yes.

Ms. Marsden: You're quite correct. The U.S. would be our first logical export market, the EU a secondary market given distance. Nevertheless, sugar is one of the most restricted commodities globally, and we are significantly restricted. We do have some access to the U.S., as Mr. Walton mentioned, that small quota for beet sugar, and some sugar-containing products that our members produce, but most of that access has been through processed food products. The EU is even more restrictive. We have zero access for sugar, and they have more restrictions on food products based on the sugar content, cocoa, wheat and so on.

We have been constrained in terms of exporting outside our borders, but nonetheless we are competitive because our market is open. We are one of the few markets in the world that does operate on a world market barrier. We have a very small tariff of 8 per cent on refined sugar. We have had to become competitive, closed plants, consolidated operations, invested in existing plants, even plants that were established in the 1800s. We are competitive and we want to maintain that competitiveness as we look forward to these new trade negotiations so that the playing field doesn't tilt further.

In terms of the CETA, it did not address those fundamental distortions in the European sugar program. We have gained some access, but yes, we do have this potential threat coming from the European Union. Since 1995, we have had countervailing duties against European subsidized sugar. We're in the process of going through a five-year sunset review on that, so there's no guarantee that we can maintain that. The European Union has a very large surplus because their market price is supported and that supports production. We do operate in a very un-level playing field. Unfortunately, or fortunately, it has created a competitive industry, and I would say we're at that tipping point where we threaten further plant closures if we don't restore capacity utilization in our plants through exports.

Senator Merchant: Mr. Walton, can you tell me if consumption of sugar in Canada is up or down? How much sugar per year do Canadians consume?

Mr. Walton: There's modest decline in consumption in Canada, but Sandra speaks to that on a national basis and can give you the exact percentage figures.

Senator Merchant: I'm just interested in the Canadian consumption of sugar.

Ms. Marsden: Right. On percentage of calories, it's estimated at about 11 per cent, or 53 grams per day. That's total added sugar, so refined sugar itself. To translate into grams per day, it's about 35 kilograms per person per year. That's the availability. So from a business perspective, it's the sales that matter as opposed to actual consumption. Actual consumption is estimated at about 40 per cent less than that, due to all of the waste and losses from production through to consumption.

Mr. Walton is correct that there has been a modest decline in per capita consumption, but the biggest impact on our industry has been the trade imbalance with the loss in production in Canada's processed food products.

Senator Merchant: Could I ask a question about maple syrup?

The Chair: Yes.

Senator Merchant: Good morning, Mr. Chapeskie. Are you after a niche market with maple syrup? Can you compete with all the other syrups? I'm asking price-wise. I know that you have a quality product, but competition is important and consumers look at prices when they make purchases.

Mr. Chapeskie: Absolutely, but I believe that — I guess we can use the example of right now. Right now in our industry, I would describe it as pretty much thriving, notwithstanding the difference in price, which relates back to capital investment and the cost of producing pure maple products, the energy inputs and all the rest of it.

But I think we're very competitive. I think as an industry, what we want to do is put the focus on accenting the uniqueness of our sweetener compared to the other syrups, for example, that are out there in retail markets. We're doing a pretty good job of that.

One of the concerns and one of the challenges our institute is currently working on is that there is a fair bit of retail misrepresentation of maple in the marketplace. For example, some products are using the symbolism from the maple industry, like the maple trees and the buckets and all the rest of it, along with containers that have been long-standing in use in the maple industry. It's giving consumers the impression that, in fact, it's the real deal, while if you walk up and have a closer look at the ingredient listing, you'll soon find that a lot of times there's no pure maple in it, not 2 per cent, not 1 per cent, and that is a real concern. That makes it more difficult for our processors and people in the supply chain to compete, but we have a strategy now that we're working on to address that.

The price difference is not insurmountable. I think we can compete very well with the other sweeteners that are out there.


Senator Maltais: Mr. Chapeskie, first, I would like to say one thing to you: there is no place in Canada where maple syrup is talked about more than in this committee. I do not know if you follow the debates of the Senate Agriculture and Forestry Committee, but there is nowhere in Canada where it gets talked about more, and that is a good thing.

Where is your International Maple Syrup Institute located?


Mr. Chapeskie: The question is where the International Maple Syrup Institute located. I'm the executive director of the institute, and our executive office is actually at my home, about an hour south of Ottawa. So I guess I would have to say that's where we're located. But when my predecessor was involved, about 10 years ago, the executive office was in the state of Vermont. We're dynamic, you know; we move around.


Senator Maltais: Who are your members?


Mr. Chapeskie: First of all, pretty much all of the state- and provincial-level producer associations are volunteer associations that represent the best interests of the maple industry and those state- and provincial-level jurisdictions. For example, the Federation of Quebec Maple — no?


Senator Maltais: I do not agree with you.

You are talking about the Fédération des producteurs acéricoles du Québec, and 80 per cent of Quebec producers are members of that federation. There is the New Brunswick Maple Syrup Association, to which a very high percentage of producers belong, and there are associations in Ontario, Maine and Vermont. I do not know if you are aware of how they operate — you must be, I am sure of it — but are you in contact, for instance, with Maine and Vermont?


Mr. Chapeskie: I think there's perhaps some misunderstanding because when I say that the producer associations, including the federations, are members of the institute, that means the federation or the association of producers in Ontario are represented within our institute. They have a voice and they have a vote within the —


Senator Maltais: Mr. Chapeskie, I must stop you; I apologize. But in order to understand the situation well, you have to know that the Ontario Maple Syrup Producers Association is one of the smallest in Canada.

Talk to me about Quebec and New Brunswick.


Mr. Chapeskie: Okay. All of the Canadian maple producer associations are represented as members of the International Maple Syrup Institute. That's Nova Scotia, New Brunswick, Quebec and Ontario, all of the four producing provinces.

In addition to that, many of the major packers like, for example, in Quebec — Citadelle Coopérative, Turkey Hill Sugarbush, LB Maple Treat Inc. — and other packers in both New Brunswick and in Quebec are members of our institute. Again, what it means is that the institute is kind of an umbrella association that brings in stakeholders from both Canada and the United States, including the different associations and the different voices that have an interest, that have a stake in the industry. That's kind of the way it works.

We come together as a board and make decisions that the board feels are in the best interests of the North American maple syrup industry.


Senator Maltais: Together with the associations and federations of Quebec, New Brunswick, Ontario, Maine and Vermont, do you take part in the delegations that go abroad to promote Canadian maple syrup?


Mr. Chapeskie: I didn't really get that. Could you repeat it?


Senator Maltais: Does your organization join the various associations from Quebec, Ontario, New Brunswick, Maine and Vermont on the trips these associations make to other countries in order to promote Canadian maple syrup? I am referring to trips to Japan or Korea, for example; are you a part of those groups?


Mr. Chapeskie: No, the way it works now is the promotion — like the different associations in Canada, led by the federation because Quebec is the largest producer province, they input into the marketing strategies at the international level. That is the Canadian maple advisory committee group. The International Maple Syrup Institute links with them. In some cases, they're the exact same people in both organizations. It's this Canadian group that has been involved in inputting into the Canadian marketing strategic industry position and we interface with them. We link with them. I guess you could say we're kind of like a partner with them.

The Chair: If you permit me just to add, this is why, when you look at your membership of 2014, the Federation of Quebec is present, as are New Brunswick, Vermont, Maine, Ontario and Nova Scotia. Each of those members, they do participate internationally and nationally to expose your product. However, you being linked to represent them on the quality, like you have informed the committee earlier, on the product itself?

Mr. Chapeskie: That's correct. But it is important that for the first time in a long while, we are currently, and I take it it's an important point to emphasize, under the International Maple Syrup Institute that that same group — those same representatives, the Canadian representatives and the U.S. representatives — are working on a market strategy for the North American industry. How this strategy will be carried forward remains to be seen because obviously there will be dollars that will need to be invested. It will depend — like historically, it has been primarily Canadian investment. That's where the majority of the industry is. But if the U.S. comes to the table, representatives come to the table with a cost-share proposal. It's not beyond the realm of possibility that there would not be a partnership to advance the whole industry globally.

The Chair: For clarity, if you permit me, before we move on to the next senator: this is why your institution in December 2014, the federal government announced changes to the Maple Products Regulation and that was an initiative of the U.S. and Canada, so we could give a definition and grading system between U.S. and Canada, while also giving consumers more consistent and relevant information about different varieties of maple syrup.

Mr. Chapeskie: Absolutely. That's the best example of how this North American collaboration works, in the best interests of both the Canadian industry and the U.S. industry.

The Chair: Absolutely. On the basis that you were the instigator to propose and request governments to look, and that's why the U.S. and Canada engaged in this format?

Mr. Chapeskie: That's correct, and even with that one we circled back to the Canadian maple advisory committee to get their endorsement separate, even after we had their vote within the institute.

Senator Unger: Thank you, guests. Your comments are very interesting. I'd like to go back to sugar. I'm looking at a paper from the Canadian Sugar Institute. It talks about a significant share of global trade that takes place under historical country preferences or bilateral agreements. So while the United States and Europe allow for preferential imports from certain developing and least-developed countries, industrial countries such as Canada cannot freely export to their markets. Of course, this is what is distorting the whole issue of trade.

First, two questions: Since sugar is so restricted, is that why it was excluded from NAFTA and again CETA? You're fighting a battle here that you probably will never win.

Ms. Marsden: We keep fighting. I think in part, just as a preamble, if we don't, our view is that things will get worse. As bilateral trade agreements get negotiated, if we aren't part of those then we get further behind, so it's essential that we be part of it.

With respect to the NAFTA, sugar was excluded with respect to Canada and the U.S., whereas Mexico and the U.S. did negotiate bilateral access, so that's having an impact on us as well because Mexico has free access into the U.S. and we do not. The outcome of sugar was linked to some of Canada's sensitive issues. There are always trade-offs in these negotiations and that's why our view is that all countries must have everything on the table because there will always be linkages and that of course is an issue potentially in the TPP with countries such as the U.S. and Japan. Pretty much all of Canada's export commodities are sensitive in the Japanese market.

The bilateral is a negotiation with the CETA will not change its domestic programs. It has given us a little bit of access which is much better than none. We have to support that improvement, but it will be the long term before these things are changed. With the numerous bilateral and regional trade negotiations, ultimately we have to hope that this will bring us back to the World Trade Organization negotiations, which are the mechanism to liberalize markets in a more comprehensive way that get at the export subsidies and domestic supports and so on.

Senator Unger: Do you think that emerging global markets like the U.S. will allow trade with those countries and ban Canada? Is that a factor, they're trying to be a good big brother here and helping developing countries export their sugar? Charity, does that come into in?

Ms. Marsden: In sugar, in particular, this is a long history of skewed markets and preferential access to essentially limit it to certain countries to protect the domestic industry. So that's really the rationale for Europe and the U.S. in particular protecting their markets.

Many countries provide preferential access for developing and least developed countries and that's a good thing. Ultimately, economies would and value chains would work better if there was more liberalization, more broadly.

Senator Unger: The Canada brand, which is a marketing strategy, that wouldn't really do a heck of a lot of good in this industry? Your colleague is shaking his head.

Okay. I can understand that. My last question is: Do you think that under the TPP that Canada, you've already mentioned Japan, are we going to get a better deal there, do you think?

Ms. Marsden: I would be reluctant to speculate, but it's absolutely essential that Canada maintain a leadership role in that negotiation because if we get carved out, we've got 12 countries and it's the vast majority of trade in agri-food, and if Canada isn't in that group, all of our agri-food commodities are going to get further behind and that's not just sugar. We're in a particular situation with the U.S. and Japan, but all of the other agri-food commodities, beef, pork, grains, will be compromised as well. We are members of the Canadian Agri-Food Trade Alliance, so we work collaboratively to advocate that position.

Mr. Walton: If I may add to that, I like your question. I would add to it that we must get a better deal in TPP. There hasn't been a significant trade deal that's been in front of this industry in a very long time, likely a generation, and we must get a better deal. We have a beet plant in Taber, Alberta, that is supported by over 250 individual farmers that grow sugar beet. We have a large seasonal workforce for harvest. That plant is directly across from access to the United States and is dependent on getting a good teal on TPP. Fifty-five per cent of the sugar produced in the United States is beet sugar. They are very familiar with the beet product. It's an excellent market for that plant.


Senator Dagenais: My question is for Mr. Chapeskie. As you know, free trade agreements have been signed with Korea and the European Union. How would you assess your market share? What are the tariff barriers that could get in the way of your increasing your market share?


Mr. Chapeskie: Thank you for the question. In terms of the Korean market and the markets that you mentioned, I would need to consult with our members, in particular, members like the Federation of Quebec Maple Producers, which has been kind of the lead on the Canadian maple advisory committee, and also representatives from folks like Citadelle Coopérative. That's not a question I can answer directly. I don't have that information.

The Chair: Mr. Chapeskie, could you verify that with the membership of your association and provide the information through the clerk, please?

Mr. Chapeskie: Absolutely.

The Chair: Thank you.


Senator Dagenais: I think that these agreements will eliminate the 8 per cent tariff barriers. This could open up other markets. However, as the chair said, it is important to know the impact of that measure on maple syrup sales. In my opinion, it could have important repercussions.


The Chair: You can provide us with the information.

Mr. Chapeskie: Absolutely. Just as a comment on the tariffs, especially from the U.K., I can say from feedback I have gotten from our people, tariffs have been a restriction in the U.K. and viewed as somewhat of a barrier. If that's happening, and this is not information that I'm plugged into directly at this point, but I'm certain that that would be advantageous from what I had reported in to me, anyway. Beyond that, as the chairman requested, I'll get some information back to committee.

The Chair: When you're looking at this, on the same matter, if you could link the emerging markets with China, please?

Mr. Chapeskie: Okay. Thank you.

Senator McIntyre: Thank you for your presentations. As I understand, the Canadian Sugar Institute represents sugar manufacturers on nutrition and international trade affairs. As far as nutrition is concerned, I further understand that the institute offers a science-based nutrition information service. Could you elaborate on that service, please?

Ms. Marsden: We established that service in 1988, given the increasing misinformation, essentially, in the consumer media marketplace around sugar — many diet books, low-carbohydrate, low sugar, sugar busters, and today we have sugar is toxic. There is a huge amount of misinformation not based on science. We have dietitians and a PhD in nutrition who work to monitor the science and communicate that to health professionals to present at conferences to really try to encourage more science-based information so that consumers are better informed.

Senator McIntyre: Several witnesses who have appeared before this committee expressed some concerns regarding the shortage of skilled employees in various agricultural and agri-food sectors. Among those concerns we note administrative burden and fee cost. The federal government recently introduced a new electronic system called the Express Entry system. As I understand, this system offers flexibility regarding employee selection and processing time application. What would you suggest to improve employers' access to skilled workers?

Mr. Walton: We have many programs in all of the provinces that we operate in and take advantage of various access to skilled employees. We have gone through a drought, as you would imagine, in our Taber, Alberta, plant for the last 10 years because of the oil fields, and it was very difficult to get skilled workers. I would suggest, without knowing specifically, that our HR group has worked with that access point. We have even held recruitment fairs in Saint John, New Brunswick, where we used to have a plant and had many skilled workers trying to recruit employees to move to Alberta to satisfy the demand.

Senator Unger: How would you describe a skilled worker? What skills are needed?

Mr. Walton: Mostly in our business it's skilled tradespeople. Millwrights, electricians and things like that would be the specific skilled workers that we have a hard time recruiting.

Senator Beyak: Thank you very much for your information. There's the old expression that a spoonful of sugar helps the medicine go down. Have you considered aggressively fighting back about all the misinformation on sugar and actually the healing powers of sugar that have been well documented over decades? There was gangrene during the Second World War. While we ate natural sugar as a society, whether it was cane, beet, maple, we were very healthy. Diabetes was rare. Insulin helped to solve the incidence of diabetes. Now that we've put so many additives and chemicals and artificial sugars into our products, diabetes is rampant. I have done a lot of research on this issue. I come from a long line of people who live a long time, eating moderately, a little bit of everything, and walking. I think there is a huge market out there for the healing powers of sugar and everything in moderation. I wonder if your research arm has looked into that at all.

Ms. Marsden: Thank you for the question. Actually, the industry used to have an advertising campaign to consumers, and we used to get the Rotten Apple Award from the Quebec dietitians. It's all context. We're not in the context to be aggressively promoting sugar, for many different reasons. We don't want to promote consumption. You're absolutely right. It's a natural product. It hasn't changed in centuries. It's a safe product. Statistics show we're consuming it in moderate amounts. Yet, it's an easy target in the context of a society that is overweight and obese.

We have elected to focus our educational, scientific strategy to work with opinion leaders and health professionals so that they can communicate the message, to work with government and to try to eventually inform consumers so that policies and programs are more accurate. The problem is there are so many out there that want to sell a diet book or create a new documentary, so we tend to be on the defensive, but we're just not in the kind of climate where it would be appropriate to actively promote sugar.

Senator Beyak: Thank you for your honesty.

Senator Merchant: My question is related to the previous question. What effect do artificial sweeteners have? There are so many of them, and there are new ones all the time. Have you noticed that they have affected the consumption of sugar per capita in Canada or in the world?

Ms. Marsden: It's almost impossible to measure that because there is no measure of the production of substitute sweeteners. There is a great range of them, and certainly they are being used in many different products, particularly in the beverage sector. Our industry has few sales in the beverage sector. Most such products today are sweetened with high fructose corn syrup, so it would have a bigger impact on that sector.

Sugar has many functional properties that those sweeteners don't have. In food products, sugar is still the dominant sweetener. For example, breads won't rise without sugar and you can't brown cookies and cakes without it. Fortunately, there are many products where sugar is an integral ingredient with many properties that can't be substituted. There aren't data for analyzing to what extent it has reduced sugar. Most of that would be in the liquid sector.

Mr. Walton: We find on the retail side some degree of measurement by looking at shelf space. Today, the shelves are more and more crowded with non-nutritive sweeteners. That market segment is pretty much stable. It's a case of everybody fighting for the same shelf space and everybody trying to appear more natural or be more natural. You have seen a lot of press lately in the last few months about people trying to get the artificial sweeteners out of their diets and going to the natural non-nutritive sweeteners. That tide always seems to come and go but it doesn't have a big overall impact on sugar.

Senator Merchant: Would they have an impact on the maple syrup industry?

Mr. Chapeskie: I don't think there would be much impact, no.


Senator Maltais: Ms. Marsden, you said in the beginning of your presentation that 80 per cent of your production was from sugar cane. Can you tell me which countries you import this from in order to process it in Canada?


Ms. Marsden: Our members would source it from a variety of countries, principally in the Western Hemisphere. Brazil would be the largest supplier and then Central American countries, which would vary according to their commercial relationships with those suppliers.


Senator Maltais: Do you import sugar cane from Cuba?


Ms. Marsden: There have been no imports of sugar from Cuba in many years. The Cuban sugar industry has collapsed substantially. The last time sugar was imported into Canada from Cuba was in the 1980s.


Senator Maltais: Is there a reason why you do not import sugar from Cuba at this time?


Mr. Walton: I can speak to that on a commercial basis. Having been with Lantic Sugar for 34 years, I have seen both sides of the Cuban dilemma. It would be the perfect supplier from a logistics supply point of view to Canada because of its proximity. Many of our customers in Canada are on both sides of the border at U.S. and Canadian plants with goods transferring back and forth. As you know, during the Cuban embargo, you weren't allowed to use any ingredients from Cuba in products that entered the United States. It became absolutely impossible to segregate the two streams of "raws" in one plant at any of our facilities. We had to abandon using Cuban sugar back in those times.


Senator Maltais: Would that be one of the reasons why you have had trouble penetrating the American market?


Mr. Walton: There are trade restrictions. The tariffs don't allow us to enter into the U.S. market. As I said, I have a very small quota of 10,300 tonnes per year, less than one tenth of 1 per cent of the American market and that's the quota we have for direct share.

The Chair: I thank the witnesses for sharing their opinions. As we go forward, if you want to add information for the committee, please do not hesitate to contact us through the clerk.

Honourable senators, I declare the meeting adjourned.

(The committee adjourned.)