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AGFO - Standing Committee

Agriculture and Forestry

 

Proceedings of the Standing Senate Committee on
Agriculture and Forestry

Issue 26 - Evidence - Meeting of March 31, 2015


OTTAWA, Tuesday, March 31, 2015

The Standing Senate Committee on Agriculture and Forestry met this day at 5:01 p.m. to study international market access priorities for the Canadian agricultural and agri-food sector.

Senator Ghislain Maltais (Acting Chair) in the chair.

[English]

The Acting Chair: Welcome to the Standing Senate Committee on Agriculture and Forestry.

[Translation]

I'm Senator Ghislain Maltais from Quebec, acting chair of the committee. I would like to start the meeting by asking the senators to introduce themselves.

[English]

Senator Beyak: Senator Lynn Beyak from Ontario.

Senator Moore: Welcome. Wilfred Moore from Nova Scotia.

Senator Oh: Senator Oh, Ontario.

Senator Enverga: Tobias Enverga from Ontario.

Senator Unger: Betty Unger, Alberta.

[Translation]

The Acting Chair: This evening, the committee is continuing its study on international market access priorities for the Canadian agricultural and agri-food sector.

Canada's agricultural and agri-food sector is a major 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, Canada has signed and is signing several trade agreements. The future looks promising. For our first witnesses, we welcome this evening from the Canadian Food Exporters Association, Susan Powell, president, and from the Canadian Organic Trade Association, Matthew Holmes, executive director. Ms. Powell, the floor is yours.

[English]

Susan Powell, President, Canadian Food Exporters Association: Thank you for inviting me here today.

The Canadian Food Exporters Association is a not-for-profit association established in 1996 to assist small to mid-sized Canadian manufacturers with their export initiatives. Our organization deals primarily with the promotion of Canadian food, beverage and ingredient products overseas and offers an one-window approach to our members to access market related and regulatory information required for them to successfully export.

The food and beverage processing sector is Canada's largest manufacturing industry in terms of value of production, with shipments worth $98.8 billion. Canada has approximately 6,500 processing establishments and employs approximately 283,000 Canadians. About 90 per cent of the industry would be classified as small to mid-sized, with approximately 100 employees or less. Members of our association primarily fall into this category.

In 2014, exports of Canadian processed food and beverage products to the world were estimated at $25.7 billion, which was an increase of over $2 billion from the previous year. Our top three markets are the United States, Japan and China. Our members target these three markets, as well as a number of other markets throughout Asia, the Middle East and Europe.

We have been very pleased with this government's level of interest in opening up trade for Canadian manufacturers. However, we do have some concern as to how this trade could actually benefit some of our members, specifically those that cannot source 100 per cent of their ingredients from Canada. We see this as an issue, particularly with CETA. As you are aware, we have limitations with what we can grow in Canada, so some ingredients need to be sourced elsewhere. These products, while fully manufactured in Canada, will not qualify for preferential duties nor for organic equivalency.

I have brought some with me today. You can see these are wonderful products that are made in Canada, and unfortunately because of some of the ingredients, they don't qualify for this duty.

Going forward, we hope that our government will consider those manufacturers that are making these diverse products so that they can also benefit from the agreements being negotiated. This will lead to increased exports and more job creation in Canada.

I'd like to raise one final concern, and this is about the level of government support provided to our industry. Products from countries such as the United States and the EU countries, as examples, are more widely recognized around the world than Canadian products. We believe this is due in part to the level of government support dedicated particularly towards promotion. Canada, while it does offer some promotional support, is not to the level of these other countries. We believe in order to raise the awareness of Canadian products and for our manufacturers to compete at the same level as their international competitors that more promotional support needs to be dedicated to the processed food and beverage industry.

Thank you very much.

[Translation]

The Acting Chair: Thank you very much, Ms. Powell. We will now hear from Matthew Holmes.

[English]

Matthew Holmes, Executive Director, Canada Organic Trade Association: Thank you. Good afternoon, honourable members. It's a pleasure to be here, in front of you again.

I'm happy to provide you with our perspective on international markets. In my capacity as the Executive Director of COTA, I have also served on the World Board of the International Federation of Organic Agriculture Movements, on the international Codex Committee on Food Labelling, and I also sit on Export Development Canada's Industry Stakeholder Panel, among others.

The Canada Organic Trade Association is a membership-based organization that represents organic farmers, manufacturers, inspectors, exporters, distributers and provincial organizations. We view progressive trade measures as a means to furthering our goals of expanding and strengthening the organic marketplace, both at home and abroad, while improving the competitiveness of our farmers and businesses.

The latest figures show the global organic market is now valued at well over US$72 billion per year in consumer sales. Canada is the fifth largest market valued at over $4 billion per year in sales.

COTA recently collaborated with AAFC on some estimates of our organic exports and concluded these now total more than $550 million per year, which is a 20 per cent increase in the last two years alone.

Organic is poised for continued double-digit growth, but our biggest challenge remains inadequate supply. There are over 5,000 certified farms, handlers and manufacturers in the country, but there is little growth at the production base. We don't have enough ingredients or farmers to keep up with demand. I spoke to one member this morning in the Prairies who said he could contract over 10,000 acres of new crop today if it was there. That is one company out of hundreds in a similar situation.

Whatever your views on organic agriculture, there is absolutely no question that it is among the fastest growing sectors and holds massive economic potential for agriculture in Canada. Our partnership with the government over the past few years through the AgriMarketing Program has been very important in establishing a strategy for international markets and supporting the efforts of our organic exporters.

The top markets are the U.S., EU, Canada and Japan, together representing nearly 95 per cent of world sales. For this reason, obviously we are very interested in seeing closer trade ties developed, which enable Canadian organic farmers and processors better access to these and other critical markets.

One of the principal policy tools for opening markets for Canada's organic sector has been via equivalency arrangements. Canada has been a pioneer in establishing these agreements based on mutual recognition and reciprocity. They allow our producers multiple market access with only their Canadian certification, saving them money and time and giving them a significant competitive edge. In fact, the first organic equivalency was cited as a precedent at the formation of the Regulatory Cooperation Council with the U.S.

We now have five such agreements with the U.S., the EU, Switzerland, Costa Rica and, as of January, with Japan. However, these agreements are not all made equal. For example, and as Susan Powell just mentioned, our agreement with the EU is asymmetrical with strong rules of origin for Canadian exports that effectively keep our manufacturing sector from benefiting from the arrangement. Meanwhile, we place no such restrictions on organic imports from Europe. So there is some room for improvement to market access, but the organic sector has made this a priority and hopes to see this continue with your support.

Returning to the question of how we can best position ourselves to take advantage of an international market that is growing by leaps and bounds and continue to adapt our sector here at home, we need to look at what sort of domestic supports are in place. Transition to organic can be a disruptive and costly time for a farmer, demanding new skills and methods and sometimes a temporary reduction in yields. With no access to the organic premium that organic farmers can enjoy, it can take up to three years to reach them. Canadian farmers currently bear the full cost to transition to organic. By comparison, the EU and the U.S. have assisted farmers with the cost of transition for well over 15 to 20 years and now enjoy a solid producer base as a result. The U.S. has earmarked $57.5 million this year alone through the Farm Bill for exactly this purpose.

A Canadian organic transition program championed by the federal government and delivered through the FPT agricultural policy framework would ensure that Canadian farmers are able to meet domestic demand and fill the current organic supply gap. Canada has one of the world's leading organic markets, but we still have some work to do to ensure that our own producers remain the most competitive within it. Helping our sector bring more supply in is likely the most effective place to start. It will provide farmers with sound economic opportunities while increasing transparency and food security here at home.

Thank you so much for your interest today and I'm happy to answer any questions you have.

The Acting Chair: Thank you, Ms. Powell and Mr. Holmes, for very good presentations.

Senator Moore: Thank you both for being here.

Ms. Powell, you mentioned CETA as being a problem, saying that some Canadian products don't qualify. Can you tell us some of the details about that and which products?

Ms. Powell: Currently under the agreement, the products have to contain 100 per cent Canadian ingredients. Manufacturers like the two I brought today don't have 100 per cent Canadian ingredients because of the different types of profiles on their product. They have to import some of the ingredients because we don't grow them. This one has banana in it. We don't grow bananas. To make an interesting flavour profile, they added banana. This is marketed to children and children like bananas.

Senator Moore: So do adults.

Ms. Powell: Unfortunately, those products won't qualify for the preferential duty treatment in the EU, but they are currently exporting there.

Senator Moore: Are there many products in that situation?

Ms. Powell: Many. Almost all our manufacturers, unless they have a single product, like maple syrup, are in that situation. Even cranberry juice is up for debate because it contains sugar, and we don't grow sugar. It affects most of the manufacturing industry in Canada. Basically, the trade agreement was well positioned for commodities, not for processed product.

Senator Moore: What can we do about that? What do you recommend to the committee?

Ms. Powell: I think it needs to be renegotiated, if not for the EU then going forward if there are other free trade agreements that you're looking at, and I know India is of interest, so that it's not an issue for our manufacturers and they are able to compete. Our concern with the EU in particular is that the U.S. is negotiating. They're guaranteed to negotiate in favour of their processed food industry, and our manufacturers will be again at a disadvantage for that market.

Senator Moore: Let me ask you this: What portion of our products do qualify? Any of them? Are we saying 100 per?

Ms. Powell: It's quite a large number. For our membership, it would probably be about 95 per cent. We have a couple of members that have one-ingredient products. These companies would love to source all-Canadian, but we don't grow everything.

Senator Moore: I wonder if the negotiators took that into consideration. I mean, it seems to be an obvious one.

Mr. Holmes, you mentioned that the CETA relationship is not reciprocal; we just heard about that. You also said, and I found it interesting, that Canadian farmers have to pay the cost to go organic. In the last 15 years, I think you said, the U.S. government has been assisting its farmers and this year will spend $55 million through its Farm Bill to do that. Tell me about going organic and what costs a farmer would have to incur.

Mr. Holmes: The costs are generally internalized around inspection and certification. A farmer has to come in over the oversight of a certifying body and pay for the services of inspection and verification against the Canadian Organic Standards and Regulations. At the same time they are doing that, they're transitioning their practices on farm to full organic compliance. So they're not using any of the substances prohibited by the standard; and they're implementing any other required practice standards.

During that time, which is critical, they will sometimes see a temporary reduction in yields. They also can't see or realize any of the premiums for organic products because they're not allowed by law to sell that product as organic until after the transition time, which typically is about three years.

Other countries, in a very strategic way, have assisted only during that transition time to encourage new entrants into organic. At the point, once they are fully organic, one would expect within their business model that they can pay for the costs of business as any business might expect.

Senator Moore: Is there any amount that you could tell the committee about? I suppose the costs they can expect depend on which crops they're growing.

Mr. Holmes: It is scaled to the size and type of production. It could range from $600 to $2,000 a year, depending on the farm, plus the costs of inspection. If you're in a remote location, you need to cover the cost of inspections from third-party verification officers coming in to verify the farm.

Senator Moore: Is the certification process onerous? Is it timely? Are inspectors on a farm for a couple of days? Is information sent in advance and they come and say, "You're okay; we certify you as being organic"? How does that work?

Mr. Holmes: There are a couple of inspections. One is the annual inspection required for certification. The other is a minimum percentage of random inspections, which vary depending on the size of the operation and the type of production, such as a complex mixed production farm, meaning there are many more things that the inspector has to look into. If it's a single commodity or a single rotation, it may be pretty straightforward. It can range on average from one to three days for that.

An incredible amount of paperwork is required throughout the year to show compliance with the standards requirements and to provide everything in good order for the inspection. It's somewhere between an on-site inspection and a full forensic audit. That's the best way to describe an organic inspection.

Senator Moore: That sounds like the Senate of Canada.

Mr. Holmes: On certain days, it might be.

Senator Moore: Where is Canada Organic Trade Association based?

Mr. Holmes: We are here in Ottawa.

Senator Moore: Do the people who do the certifying come out of your office in Ottawa?

Mr. Holmes: There are a number of different certification bodies. Some are non-profit and some are private. They offer their services in a competitive way on the open market to the organic sector.

Senator Oh: To follow up on organic issue, the EU is having the same problem. They don't grow bananas either. How do they qualify for the organic brand?

Mr. Holmes: It's a very interesting scenario. In 2011, we reached an equivalency with Europe. It's outside of the CETA agreement. It's a technical or administrative arrangement where we recognize their organic system and they recognize ours. However, when it was implemented, they put in place a rule of origin. All products had to be 100 per cent Canadian. That works great for commodities, but, as soon as the manufacturing sector is involved, unless you have a product with no sugar, no cinnamon, no vanilla, no fruit that's from a tropical area such as the banana example, you don't have a product going to Europe under that. You have to then take in another certification. You have to take on a second redundant certification.

We didn't, in good faith, put the same restriction on the Europeans, so they can source bananas from wherever they can source them and send those products to us.

Interesting enough, six months later, the U.S. reached a similar agreement with Europe, and that clause was not in that agreement. The U.S. waited. They watched the agreement that we reached with Europe, and then they got a better one. That's been a very serious impediment for our competitiveness in the processing sector.

Senator Oh: Can you not buy certified organic bananas from somewhere?

Mr. Holmes: Yes, absolutely. You can get organic bananas. This company is an organic company with organic bananas in that product. But to go to Europe, you have to buy EU certified organic bananas, and then you have to have your entire plant and every single ingredient in your product certified to the European system. You can't use the Canadian system.

Senator Enverga: Thank you for the presentations.

I was surprised about you being unable to sell with certain kinds of ingredients. Basically, what you're referring to is just the flavour. Has the company made any adjustments? Let's say instead of banana they use some Canadian cherries. I mean, I think we have to be flexible. Is the company flexible enough or the industry flexible enough to adjust so that we can penetrate the markets as we go along? Is there a possibility for that?

Ms. Powell: My initial response would be no. I guess they could, and this company does have a couple of products that are fully Canadian, but it's quite challenging to change an entire product to only Canadian and to be able to market it in that way, even in Canada. This product alone with the banana in it contains one entire serving of vegetables, and they're marketing it to children. I don't know what equivalent they could put in it in place of a banana. They have chocolate in it too, and we don't grow chocolate, so it definitely doesn't qualify.

Senator Enverga: What are the potential opportunities lost with regard to this? What have we lost here industry-wise? Can you quantify it? How many millions of dollars have we lost because of this?

Ms. Powell: Since it's still being ratified, it isn't really a loss at this time. I think it will be once the U.S. agreement comes into play, because then the U.S. will have an advantage over Canada. They'll negotiate an agreement that fits the processed food industry, where we didn't. Right now, they're still —

Senator Enverga: Negotiating, right?

Ms. Powell: They're still paying duty if they want to export it to the EU, and they are exporting it to the EU. The hopes were that they would get better duty, and then their product would increase within the market because it would be more competitively priced against, say, a local manufacturer from the EU, and that would in turn create more production in Canada and create more jobs.

Senator Enverga: You mentioned the EU, but how are our chances for more exports to, let's say, Korea? Can you let me know, please, especially with organic? Do you have a good market there at this time?

Mr. Holmes: The Korean market is growing rapidly. We anticipate it will be a very important market in the coming years. However, in the last year, the Korean department put in place a new regulation that makes their system mandatory, so everything has to be certified to their standards in order to be marketed as organic.

Often with organic, as new countries emerge with new regulations to support organic, they introduce technical barriers to trade. That's why we've reached these equivalency arrangements with other major trading partners, such as those I mentioned. Korea would be one of our next priorities, and we're certainly working with the authorities on our side to provide them with the technical expertise to negotiate with the Koreans.

We were very happy to get the Japan arrangement this January, and we've already heard from a number of companies that were immediately, in the first week of January, setting up contracts with Japan. We see Korea as a similar potential once we can get that arrangement negotiated.

Senator Enverga: Ms. Powell, do you have any comment on the Korean market?

Ms. Powell: Korea is a new market for our members. We were actually there last April investigating the opportunities, and it seemed favourable that they would be interested in Canadian products. It again comes down to promotion, support and help by the Canadian government to increase exports of Canadian products there.

Senator Merchant: I will pick up on what you just said, Ms. Powell. You look to the Canadian government to help you. Because we're doing the support, what exactly can the Canadian government do? Can you tell us what you would like them to do?

Ms. Powell: I would like to see a little bit more funding support for promotion, be it trade shows, missions or in-store promotions. We need to increase awareness about what Canada has to offer.

We're not very well known internationally, with the exception of a few key products like maple syrup or icewine. We need to expand that. We have a very large processing sector. Whenever we go in, countries are extremely surprised at what we have. They're not aware of it, and it's because we're not doing enough promoting. The manufacturers are trying, but it is expensive to go into a market, especially if it is a new market and is just opening. Any support they would receive would be of help to them.

Senator Merchant: I read a report this week that the Toronto Region Board of Trade has an annual scorecard on their prosperity report, and they say that Canadians have become too complacent; because it's so easy for us to trade with our American partners, we have not taken advantage of the markets in Asia, and that's an area that's growing very rapidly. The other thing that they mentioned was that, unfortunately for us, the American economy in the last few years has been doing poorly, so we weren't doing as well there. We were ignoring the market in Asia and not doing enough.

They also said that we were not taking advantage of the fact that we have a multi-ethnic group in Canada and using that as a tool to access markets. If we look around the table, Senator Oh knows a lot about the Chinese market, and we have Senator Enverga. We are not using these communities, and we would have a great advantage if we could use these communities. What do you say about that comment that we are too complacent?

Ms. Powell: I agree, and that's why our association's long-term strategy focuses on emerging markets like Asia and the Middle East. We encourage our members, and there is growing interest for them, to go into those markets. We don't put very large emphasis on the U.S. In fact, we encourage them not to. It is an easy market to enter because we're very close, right next door, but there are so many more opportunities elsewhere. It's just a matter of educating them and getting them out there.

In the Middle East in particular, it's growing considerably. We just had 35 companies with us in February in the Middle East.

Senator Merchant: Mr. Holmes, does that mean anything to you?

Mr. Holmes: Yes. In many cases we face this when we are developing our international strategy as well. There has been an encouragement of looking at new and emerging markets over some of the traditional stalwarts. But in many cases, organic is itself an emerging market, so it's been rising rapidly. It's really starting in those traditional markets of ours in Europe and the United States, and Japan as well. So it's not yet in some of those other markets that we're targeting when we speak more generally of the food and beverage sector, agriculture in general. We're still starting at that base of the U.S. and Europe and now are branching into Japan.

We are very interested and have been doing a lot of work over the last couple of years to better understand the Brazilian, the Korean market and even the Mexican market. Over the next probably 15 years, we predict that instead of 95 per cent of world organic sales being in North America, Europe and Japan, it will probably be more like 60 per cent, with some of the BRIC nations making up a big piece of the remainder.

Senator Merchant: Do your organizations have programs where you try to educate your small business people on how to navigate this world trade export market?

Ms. Powell: We do offer seminars and we also do trade missions that are educational. For the more experienced, we offer trade shows to the market as well. We have one coming up to China, in May. We are encouraging them to look beyond North America.

Senator Merchant: You hold these where?

Ms. Powell: The seminars are held in Toronto, and the trade missions and the trade shows are held "in market."

Mr. Holmes: We do a number of different things such as webinars, training and missions, usually introductory missions where we try to introduce people to the logistics providers, the ports of entry, insights into the local market and perhaps buyers, distributers or importers of record.

As well, we will bring companies or groups to trade shows that we target and provide a support. We'll do some market intelligence gathering as well. For many of these, not all of them, we have the support of the AgriMarketing Program through Agriculture and Agri-Food Canada.

Senator Enverga: We're talking about the government helping out. A couple of weeks ago, the government announced appointments of a lot more trade commissioners. Have you heard about that?

Ms. Powell: I was present for that announcement by the Prime Minister and also the mention of more funding support, but we don't know where that money is going. We don't know if it's going to food, to car manufacturers or who it's going to. It's very vague.

The trade commissioner support is very welcome. We access that service all the time, so we're very happy with that news.

Senator Beyak: Thank you for excellent presentations. Every time I think our committee has heard just about every challenge the agriculture sector faces, we hear of a new one. I didn't know that about the ingredients.

In the past, I have heard from witnesses that there will be changes for grains. The tariffs will be phased out over seven years when CETA comes into full force. The EU will eliminate tariffs that apparently it's currently imposing on processed foods and beverages. Do you see a window in any committees or groups? They say there will be a biotechnology working group that will be able to address your concerns within the current agreement.

Ms. Powell: Unless there's a change to the actual agreement, it doesn't apply to our members, except for our grain members. We do have quite a number of those as well, but for processed food, under the current agreement it doesn't apply. So I'm not sure if a working group — unless there's a change as a result of the working group, then yes, it would be to our benefit.

Mr. Holmes: From the organic perspective on this, the equivalency arrangement is outside of CETA, so that allows the negotiation of the terms of that, such as the rule of origin, to be negotiated. So the governments, the two competent authorities in the European Commission and the Canadian Food Inspection Agency have been meeting and continuing that dialogue, and we're doing everything we can to support them. It's been about four years since the original agreement was struck, so we're getting somewhat desperate, but we're still very optimistic that we can find a solution.

Senator Beyak: I guess as long as people are still talking, there's hope that they will get it right.

Mr. Holmes: Absolutely.

Senator Unger: How many members does each of your organizations have and that you advocate for?

Ms. Powell: Our current exporter membership is about 150 right now. We have three classes, but the manufacturing side is about 150.

Senator Unger: Is this from all across Canada?

Ms. Powell: Yes, it's from all across Canada.

Mr. Holmes: We have about 175 members, but not all of them would be exporting. Included in that number are most of the provincial organizations that represent a broad group. There are about 3,700 organic farmers in the country and another 1,300 manufacturers and handlers throughout the supply chain.

Senator Unger: I find it surprising, and I think it was your comment, Ms. Powell, that the world doesn't really know much about Canada and yet it seems to me that there is a horde of groups. I know the provinces and the federal government do their own trade missions, and you each represent a certain number of organizations, but there are many in the agriculture and agri-food sector. It just seems that by now everybody should have Canada as number one on their radar list. How do you reconcile those ideas?

Ms. Powell: I travel quite a lot. We do a lot of trade missions every year. It's the same thing every time we meet a new buyer: They're surprised at what we have to offer. They know of Canada. They know how wonderful our country is, but they're not aware of the variety of products we have to offer.

On the processed food side, it comes into play for consumers. If you go into a supermarket overseas, there are a lot of promotions going on by other countries, not so much by Canada, with one exception. I'll give credit to the Trade Commissioner Service in Singapore. They're very active and Canadian products are well known in Singapore because they do a lot of in-store promotions. That doesn't happen anywhere else, though. I think that's something that needs to be looked at and see if there are ways to increase promotion so that our products do become better known.

Mr. Holmes: I would agree. I think internationally, in my travels, there's a lot of trust and goodwill in doing business with Canadians. Our food safety is seen as tops in the world. We're known to have modern food processing and transport capabilities. So there seems to be a lot of those essential ingredients that we might need, but there's still that stereotypical surface awareness of some of the commodities that we're known for, such as maple syrup, cranberries or something like that. There isn't an appreciation of the breadth and diversity of the products that are very modern and cosmopolitan. They are very dynamic and innovative products, and there's a lot of potential there for Canadian brand leveraging.

Senator Unger: Ms. Powell, you used the word "buyer." So when you go on a trip to Japan or Korea, for example, are you meeting one, two or three different buyers as opposed to organizations like your own that might have a large number of members?

Ms. Powell: A lot of times we are doing trade shows, so we actually see thousands of buyers come by. We're in a Canada pavilion. We're branding ourselves heavily and showing what we have to offer. There are thousands of buyers walking by and they're always surprised.

On the trade mission side, we work with chambers of commerce. We organize one-on-one buyer meetings with our members "in country" to increase awareness of Canadian products. But it's an ongoing, long effort. The buyers are starting to see it, but if it's not getting on the shelf and not promoted enough on the shelf, then it sits in a corner somewhere.

Senator Unger: So trade shows, when you're over there, be one way to reach out. You're selling specific products made by different companies. Would you also go into grocery stores and market chains?

I'm thinking of the last time I went to Europe and went into a supermarket. I was amazed at all the products they had. I looked and realized we don't have most of this. That would be a typical reaction, I would think, if people came here and went into a supermarket: Oh, gee, look at all the food. You can't possibly penetrate a whole country's market when you're going with specific buyers in mind and you have specific products. There's a lot of that.

I'm thinking back to when I was on the Fisheries Committee some time ago. They actually had people going to China. They were trying to make inroads in China, so they were doing some of the things. They were relying heavily on the Canadian brand, but they were taking lobster and, of course, inviting delegations to come back. You're right about the perception that people have of Canadian products. In the case of seafood, it's the pristine waters off the East Coast of Canada. I'm just trying to get my head around how you measure your success and what your success is based on what you're doing.

Ms. Powell: We go to supermarkets in every market. We bring our members to the supermarkets. We introduce the supermarket buyers to our members. They bring their products with them and encourage people to buy them.

Buyers have been coming back into Canada as well, thanks to the Ontario and Quebec provincial governments. They have been hosting buyers to come to Canada to encourage further awareness. They are doing plant tours, and they're also attending supermarkets here so they can see what we have on our shelves versus what they have on theirs.

There is a lot of promoting back and forth, but I think it really comes down to the consumer level. The consumer, the one buying the product off the shelf, doesn't always know it's Canadian. I think that's something we need to look at further.

Senator Unger: Branding is important.

Ms. Powell: We need to brand. We need to do sampling. We need to do advertising, whatever it takes to make them more aware of the Canadian product.

Senator Unger: Mr. Holmes, anything to add?

Mr. Holmes: I would echo the comments of Ms. Powell. We try to facilitate the introduction of markets to the right buyer groups, and those could be importers, distributors, retailers or manufacturers, depending on the client.

As soon as one of my members starts a sale or does business, my job is to get out of the way. We're not there to facilitate sales. We're just trying to get them the information they need and the introduction to that space. Some members have made their first international export sale and others have entered a major new market country-wide immediately because of one of our missions. Afterwards we follow up and ask them to report back to us on some of the sales and impacts of that trip so that we can have certain measures of our success for each trip.

Senator Unger: Early on you mentioned it would be good if the government stepped up with more money for this industry. If you were the government, a representative taking the decision, where on earth would you start funding? Who would you fund?

Mr. Holmes: I've mentioned it and I know Ms. Powell also worked with the AgriMarketing Program. Previously, there was the Canada Brand initiative, which did a lot of marketing of Canadian products in certain target markets. Both of those are positive. I would see the next iteration of the Growing Forward framework. I would hope to see tenets of both programs continue.

Additionally, we're looking to encourage and incentivize more farmers to choose organic because it is such an incredible market opportunity. We'd like to see a new initiative to try to build that into a future program.

Senator Oh: Japan is the largest organic market at the moment in Asia.

Mr. Holmes: Yes.

Senator Oh: I can see the markets in Korea and China — China is probably even bigger. China has a large middle-class income that's coming up. I think people who go for organic are mostly young people. How many trips did you make to China last year on trade missions or for trade shows?

Mr. Holmes: We've been in regular contact with colleagues in China to assess the market. I think your instinct is the right one in that it is a very large organic market, but it hasn't been quantified until last month, when for the first time we had proper data on the Chinese market. It's roughly the size of Canada's right now but growing probably much faster in terms of organic sales at the consumer level.

At this time, it would be very concentrated in certain cities. Shanghai and Beijing would obviously be very important centres. The issue, however, is that, like Korea within the last couple of years, China has implemented new mandatory regulations for organic at import, which make it almost impossible to enter that market. For a Canadian exporter, it is onerous. I don't know of a single Canadian producer or manufacturer right now who is going to China under the organic system, but we once had a number of them who did.

Again, it's an issue that these market access problems happen outside any other trade agreements we have in the organic space; so it can make it very difficult to go to market.

We want to go to Japan because we have an agreement with them. We have one with the U.S. and with Europe, and we're trying to get one with Korea. We'll have to assess whether China is open to negotiating one as well.

Senator Oh: When I was in Singapore at the trade commissioner's office, I saw a lot of Canadian products displayed on shelves. I talked to the locals a lot. I heard that Canadian products are in the Singapore market.

Mr. Holmes: We're seeing it strong in Taiwan as well. There has been a lot of initiative to showcase Canadian products at retail. It's very good.

Senator Oh: Who now exports the most organic products to China?

Mr. Holmes: The Australians are probably very strong in China. I know the Europeans are talking to China right now, but I don't believe China has any agreements at this time for organic.

Senator Oh: We have to work on that so we can sell in China.

Mr. Holmes: It will be a very big market.

Senator Beyak: We have heard from other witnesses about the branding, and I think your points are very well taken. We've had some excellent suggestions from other witnesses as well, and I believe that money would be very well spent there. Our committee can make recommendations.

We talked about the Canadian flag and how it's so well-known. There is goodwill just behind a flag. There are a lot of beautiful flags in the world, but the Canadian flag does stand out, as Betty said, for the pristine waters and the excellent quality.

Senator Merchant and I were talking about the sampling, and I believe you're onto something there. Once people get a taste of something besides maple syrup, they'll realize the products we have. I think that would work here in Canada, too. I haven't seen any of those products, as I live in a small northwestern Ontario town. The flag on the products would be a great thing as well to let Canadians know that they're proudly made in Canada.

Can you tell me a little bit about what you do to market and how we can help further?

Ms. Powell: Right now, our effort through the association is through the trade shows and trade missions but, because we do receive AgriMarketing funds, we did ask for and receive approval to do some in-store promotions in the Middle East. We're very excited about that. They have a very large ex-pat community of Canadians. I think Canadians are going to be very happy because they're going to see a lot more product on the shelf, and it will also increase awareness among the rest of the people within those countries. We're going to work with the trade commissioner "in market" and organize it. We're targeting our Thanksgiving as a way to show that this is what we do in Canada.

Mr. Holmes: It's an interesting quandary sometimes. First of all, if you tell a company what to put on their packaging, they'll list you off a long litany of the pressures for them and their packaging space. You don't want to get them started on that. However, most of them will recognize the value of the Maple Leaf.

At the same point, the CFIA very clearly provides directions saying that if you put the Maple Leaf on your product, then you need to have these very bureaucratic long statements that follow it, saying it also includes imported ingredients or ingredients from this country and that country, and it becomes a disincentive to that sort of branding. Instead of the packaging level, we have to step back and look at how we provide a backdrop or a pavilion or a thematic sampling that can then carry the Canadian message forward without making the product itself carry that message.

Many times we're too nice or too accurate in what we do. If you saw a similar product in the U.S., they would proudly say it's a U.S. product. They would emblazon it with stars and all sorts of things, and they wouldn't be a problem because it's creating jobs and industry and selling product. I think we're a little more cautious around such things here.

Senator Enverga: My question is more about organic products and with regard to the organic equivalency. Around 2009 we had an agreement with the U.S. in regard to organic equivalents. However, there were some exceptions, and those are the ones that contain sodium nitrates that can't be sold in the market in Canada. Can you tell us more about that? Has it been easy to implement on your end?

Mr. Holmes: You're getting into a technical space, senator. Sodium nitrate is also called Chilean nitrate. It's a highly soluble mined source of nitrogen, basically, a soluble nitrogen that is used in farming in the U.S. Basically it's a fertilizer of a natural origin. The U.S. standards allow it. The Canadian and pretty much all other global organic standards do not allow it.

I think this is a real measure of the success of this equivalency. When we reached that agreement with the U.S. in 2009, we said, "That's an area of concern for us because we see it as a major difference. What we're going to do is say you can certify to your U.S. organic standards, but to come into our country, you also have to assure us in writing that this sodium nitrate was never used in the production of that good. We're willing to take your standard with this additional caveat that meets the outcome that we're looking for, without forcing you to use our standards." It became a very dynamic and flexible approach. That was one of the reasons it was used as a model for the Regulatory Cooperation Council. It respects mutually the two standards and the two systems, but it finds a way to get some of those added outcomes that may be important to one jurisdiction over another.

Senator Enverga: For the sake of the millions of viewers watching us today —

Mr. Holmes: The fans.

Senator Enverga: Yes. When you say "organic," can you describe it? We have the impression that it has no fertilizer or pesticides.

Mr. Holmes: If you wanted to describe it that way, technically a lady bug could be considered a pesticide. There are organic farms that release a swarm of lady bugs into their greenhouse or into their farm to prey on some of the insects that are pests.

Today's modern organic farming is a very scientific, agronomic practice that uses a lot of crop rotation for nutrient management within the farm. It does not typically use synthetic, persistent toxic fertilizers or pesticides. What we would call a pesticide may come from natural sources. They're not pervasive and they don't stay in the environment once supplied.

Integrated pest management is typically what it's described as. You might have a push of one thing that repels an insect. You may have a pull of another crop that they prefer and it draws them away from the crop you're looking to harvest.

At the manufacturing level, it's very strict on the types of cleaners and additives. There are no artificial colours, flavours or preservatives, and also the cleaners used on the equipment are very strictly based on natural cleaners as well.

[Translation]

The Acting Chair: Let me make a comment. Senator Beyak opened the way for me.

You are looking for international markets for organic products, whether in Europe, China or elsewhere.

Unfortunately, Canada has a large organic products market that is untapped. Let me give you some examples. I come from Quebec City; some supermarkets have a section for organic products. I will not name the chain. However, other supermarkets have no organic products at all. There is a discrepancy between having an entire section for those products and not even having small counters for them.

I am saying that you have a lot of promotion to do in Canada and, before going abroad, you should convince Canadians that the products they consume can be exported, especially since your products are a little more expensive than regular products. Producers and your associations need to do the work to convince Canadians.

The government may well step in, but you are responsible for taking the lead. Every province has an organic producers association. Unfortunately, they are not well regarded; they are seen as "whiners" when they should be involved in Canadians' diets. That is the work I'm asking you to do. You have a range of good products. How many of us are familiar with them? No one around the table. That's sad because there is a great future for organic products.

I sincerely believe that, by working on promotion in every province and across Canada, you might not need to go to foreign markets, because we give our children bananas and sugar regardless of their origin if the children like them. In addition, the criteria in the free trade agreements have time to change.

I urge you to promote the products to Canadians, to launch a campaign in supermarkets, and to make your products known even in schools. They are organic, so they are healthy. I urge you to go back to the basics, and I am sure that you will not be able to keep up with the demand.

Honourable senators, joining us now by videoconference is Cam Dahl, president of Cereals Canada.

Welcome, Mr. Dahl. We will listen to your presentation, followed by questions from senators. The floor is now yours.

[English]

Cam Dahl, President, Cereals Canada: Thank you very much, chair and senators. I appreciate the opportunity to appear before you via video conference. I know that this is not ideal, but it does allow for time management, so I appreciate it. On behalf of Cereals Canada, I thank the standing committee for the invitation to appear.

The free flow of goods both within Canada and to our international customers is absolutely critical for the growth and competitiveness of the Canadian cereals sector. My name is Cam Dahl and I am the President of Cereals Canada. Cereals Canada brings together a broad and diverse collaboration of partners from all sectors of the cereals value chain with the goal of enhancing the domestic and international competitiveness of the industry. Our members include farmers, grain handling firms and processing firms, along with seed and crop development companies.

Our board of directors is 37.5 per cent farmers, 37.5 per cent grain companies, exporters and processors, and 24 per cent of the crop development companies; and the budget is split in exactly the same way. Cereals Canada is focused on supporting and coordinating market development efforts, promoting innovation in the cereals sector and supporting policy initiatives that will ensure the profitability and long-term sustainability of all elements of the value chain.

I will go backwards and present my summary comments to you first.

Canada's farmers and exporters depend on free and open trade around the world. Increased access supports the entire Canadian value chain, from crop development and seed companies, farmers, shippers and exporters. The future prosperity of this critical sector of the Canadian economy depends on free and predictable access to international markets.

The opening of new markets will not only benefit farmers and industry in the short term but will make Canada a key choice for investment and innovation and development, increasing our competitive advantage in the long-run. It is for this reason that Cereals Canada strongly supports the pursuit of international trade agreements that reduce access barriers. Recent examples include the Comprehensive Economic and Trade Agreement with the European Union and the Canada-South Korea trade agreement. This is also why Cereals Canada supports Canada's involvement and active engagement in the Trans-Pacific Partnership negotiations.

All future successful trade agreements will include science-based mechanisms to resolve sanitary and phytosanitary terms of trade. If agreements do not include these mechanisms, sanitary and phytosanitary conditions will be used as political tools to block trade and will come to replace the tariffs and quotas that have been eliminated through negotiations.

Open access is not just about reaching trade agreements. It is also about supporting markets, and industry has a role to play in that. That is why Cereals Canada has engaged with the Canadian International Grains Institute, or Cigi, the Canadian Grain Commission, producers and industry to form the Team Canada missions. This past fall, Team Canada reached out to over 20 different countries in Europe, the Middle East and North Africa, as well as Latin America and Asia.

I would like to turn in a little more detail to trade and trade negotiations. Trade and open markets are absolutely critical for the Canadian cereal producers across Canada. Almost 60 per cent of what we produce is exported from Canada. In the 2013-14 crop year, Canada exported over 22 million tonnes of wheat and durum from a crop of 37.5 million tonnes.

For bread wheat, the most important markets outside of Canada are the U.S., Japan and Indonesia. Latin American countries like Peru and Colombia are of growing importance, as are the growing Asian markets like China. It will not surprise anyone on this committee to learn that the South Asian markets are increasing in importance because of the volume they import and also because of the increasing demands for high-quality imports. This is a relevant fact when considering the importance of negotiations like the Trans-Pacific Partnership.

For durum wheat, our most important customers might surprise you just a little bit. The North African countries of Algeria, Morocco and Tunisia together import over 1.5 metric tonnes of high-quality durum every year. If you have couscous in Casablanca, you are supporting Canadian farmers. Italy and the U.S. are also important customers for durum wheat, which they turn into pasta.

Because Canadian cereal exports depend so heavily on trade, market access is critical to our future. This is why Cereals Canada is a strong supporter of trade negotiations like the CETA and the South Korea trade agreement.

The Canada-Korea trade agreement is also an example what can happen when our competitors arrive at agreements before us. Key competitors like Australia and the U.S. were able to reach an agreement before Canada. This meant that their products had unrestricted access to the South Korean market, while we faced trade barriers. This placed Canada at a competitive disadvantage.

This is a critical point when discussing the Trans-Pacific Partnership negotiations. Canada has a great deal to gain from the removal of trade barriers in these key and growing markets, and I do note that the countries in the Trans-Pacific Partnership represent 40 per cent of the world GDP. We should be focused on the positive potential, but we must also keep in mind the cost of being left behind. If competitors like Australia and the U.S. are able to gain preferential access to existing valued customers like Japan, Canadian farmers will be hurt. This hurt will only increase as the opportunities grow for our competitors in the rapidly developing Asian markets. We simply cannot afford to let that happen. Canada must be part of this agreement, both for the positive returns we will gain from open access as well as because of the large potential harm if we find ourselves on the outside looking in.

I would like to briefly comment on science-based trade. It is important to discuss science-based trade rules. Why is this important for trade negotiations? Historically, trade negotiations have focused on tariff and quota barriers, and that is important and will continue to be important. However, going forward, sanitary and phytosanitary rules are going to be just as important as tariff barriers, if not more important.

All governments feel from time to time the political pressure to restrict trade. In the past, tariffs and quotas have been the tools of choice. Those are always bad for Canadian agriculture. As these trade barriers are removed through negotiations, governments will turn to other means, such as hiding behind unscientific health and safety rules. It is absolutely critical that the sanitary and phytosanitary rules be included in our trade negotiations. It is unacceptable to our industry to see the tariff walls come down only to be faced with unscientific restrictions that are just as impenetrable.

Science-based food safety rules and other rules of trade such as environmental conditions must be part of future trade agreements. Also required are robust, dispute resolution processes that will ensure the rapid and independent resolution of any trade dispute resulting from different interpretations of the sanitary and phytosanitary rules of trade.

I mentioned that it is not just about opening markets but supporting markets. Customers must be supported once markets have been opened and access secured. There is a new Team Canada hitting the world stage that is designed to accomplish this goal for the cereals industry. The new team has two primary goals. The first is to promote the qualities of Canadian wheat and durum in every region of the world. The second is to receive feedback from our customers so that we can ensure that Canadian wheat and durum continue to demand a premium on international markets.

Team Canada is a collaboration between Cereals Canada, the Canadian International Grains Institute, the Canadian Grain Commission, provincial crop commissions, Canadian exporters and farmers. This past fall, Team Canada travelled throughout Asia, Latin America, Europe, North Africa, and the Mideast to conduct seminars with key customers, government officials and agencies. In total, Team Canada reached 20 different countries.

The successful launch of this new Team Canada is the result of coordination and cooperation between all links in the wheat and durum value chain — government, researchers, industry and producers. Together, Team Canada is providing customers around the world with a comprehensive overview of how Canadian wheat and durum performs in their mills and high-quality breads, steamed buns and noodles that will be made from every class of Canadian wheat and durum.

Providing technical information and support to our customers around the world is a paramount goal for Team Canada, but the new crop missions are about more than information flowing to our customers. Seminars will provide customers with a key opportunity to provide input to and raise concerns with the Canadian value chain. In the past, the CWB provided a single window for concerns and questions from customers. The new Team Canada approach is designed to assure customers that Canada's quality assurance systems are still in place and that the Canadian value chain is listening and responding to their needs. The inclusion of the entire value chain within Team Canada gives us the opportunity to provide information directly back to Canadian farmers, the research community and private crop development companies.

The Team Canada approach does not end with the new crop missions. In order to better understand the needs of our customers, Cigi and Cereals Canada have launched a comprehensive review of future customer needs. The results of this study will guide ongoing customer support and outreach as well as help the Canadian value chain develop a strategic plan for public and private investments in research innovation.

Forming the new Team Canada allows the Canadian value chain to provide critical customer support as well as guide the ongoing development of our industry. Both are critical for maintaining Canada's competitive advantage.

Mr. Chairman, that concludes my remarks, and I am more than happy to answer questions.

The Acting Chair: Thank you very much, Mr. Dahl, for your good presentation.

Senator Merchant: Thank you very much, Mr. Dahl. I think you come from a sector that is great at promotion. Perhaps that is because for many years we have been known as the breadbasket of the world, so maybe that is helpful.

Our previous guests here were the Organic Trade Association and Canadian Food Exporters Association. This may not apply to cereals, but I asked them whether being next door to our great friends and trading partners, the U.S., has made us complacent and whether being next door to them is a blessing but also maybe a handicap. Can you comment on that?

Mr. Dahl: For us the United States is both a very good customer as well as our leading competitor. My counterparts in the U.S. Wheat Associates have multiple offices around the world, and I think they have almost 10 times as many staff as I have. In fact, they have a lot more than 10 times as many staff.

The U.S. is a market that is important to us because they do import Canadian wheat for blending to increase the quality of flour produced, and Canadian durum simply has no match in the world. Pasta is made from Canadian durum.

But they are also our competitors, and they are our leading competitors in markets like Japan and Asia. In fact, the U.S. Wheat Associates has an explicit objective of replacing Canadian exports into those markets, so we don't want that to happen.

I would not say we're complacent. In fact, I would say that we're very much aware that in addition to being a good and valued customer, they are also our leading competitor in international markets.

Senator Merchant: But that may be a blessing too because it forces us to go out and explore new markets. If they're forcing us to be more competitive, that's maybe a good thing.

Mr. Dahl: That is something that the industry is doing. I would focus on new markets in South Asia as well as Latin America. Significant effort is being put into developing those markets.

[Translation]

Senator Dagenais: You mentioned international markets, and I would like to go back to the various agreements that have been signed. You seem pleased with them, but what challenges do you see, and what could the government do to help you overcome them?

[English]

Mr. Dahl: I think there are a few challenges. One of those I did mention, and it's probably at the top of the list, is sanitary and phytosanitary rules around food health and safety. We have to work to ensure that those international rules are based on sound science.

In some ways our ability to test for things is exceeding our understanding of some of their impacts. We can now test parts per trillion. To give you an idea of what that is, a part per trillion is one second in 32,000 years. It's a very small number. But that doesn't necessarily mean that finding something in a part per trillion is actually a food safety concern. That level of risk is scientifically determined.

We need to ensure that our trading partners are following science or these health and safety rules and phytosanitary and sanitary rules are simply going to replace tariffs and quotas as barriers. I would put that at the top of the list.

The other thing we need to do is ensure that there is ongoing market support after we open markets and ensure that regulatory agencies like the Canadian Food Inspection Agency or the Canadian Grain Commission have the resources available to resolve these kinds of disputes and issues when they arise. So it's not just good enough to open markets, although it's critically important, but we need that follow-up support from our regulatory agencies as well.

Those are the two recommendations I would leave with you.

Senator Unger: With regard to changing from tariffs to attention to sanitary and phytosanitary rules, how do you actually avoid that? If you suspect someone is doing it or if you know they are, what can you actually do about it?

Mr. Dahl: That's why it's so important to have things like dispute resolution processes outlined in the trade agreements that we sign to deal with possible issues that may arise, for example, if countries are not following Codex guidelines. There are international bodies established to set these limits and these science-based approaches. So we need to have those dispute resolution processes in the agreements. That's absolutely critical.

Senator Unger: And is that the only thing or the best thing?

Mr. Dahl: That is the best thing, to ensure that our trade is based on science, and if there are health and safety regulations put in place, they are science-based health and safety regulations. That is our best defence against new barriers being put in place.

Senator Tardif: Good evening, Mr. Dahl. I know how important transportation is to your industry. Is the grain industry experiencing difficulties in terms of rail transportation, and how do these types of difficulties in Canada affect exporters?

Mr. Dahl: Well, first off, you're absolutely correct. There is no doubt you're all aware of the difficulties that our transportation and logistics system experienced last year. There is no question that situation had an impact on our reputation abroad, and we simply can't afford to let that happen again.

Things are much better this year. I was recently in Japan with Minister Ritz meeting with some of our key customers in Japan and some of our most important customers around the world, and things are much better and they are much happier. It is always more pleasant to meet with customers when they're happier.

We still have shortfalls in the orders that companies have placed, and we still do need to have those long-term fixes to the system. We need to have a balance between the market power of the railways and the ability of shippers and exporters to ensure that the rail companies are accountable for meeting customer demand.

Senator Tardif: What about a work shortage? Witnesses in the agriculture and agri-food sector have indicated to us that they're experiencing difficulty recruiting sufficient workers. Is your sector experiencing a worker shortage?

Mr. Dahl: The issue is probably bigger for the meat sector and the meat processing sector specifically, so I think that is where the labour shortage issue is likely most acute in agriculture. But yes, farmers do sometimes have difficulty getting the labour and help they need, especially with some of the growing operations.

It is something we pay attention to, but I would suggest that the issue is not as acute as it is in the livestock and meat sectors.

Senator Enverga: Thank you for your presentation.

When you talk about wheat, do you mean full grade, or it is processed as flour that is ready for baking?

Mr. Dahl: The majority of our exports are the raw product. We don't export a great deal of flour or semolina, and there's a simple reason for that. Wheat doesn't spoil very much; flour, on the other hand, is subject to transportation damage. While you can put a boatload of wheat on the ocean and haul 60,000 tonnes at a time, you can't do the same thing with flour. So flour processing tends to be close to the customers. We tend to export wheat and not flour.

Senator Enverga: I noticed in your presentation you said that products like durum wheat have a regional market. Bread is for Asians and durum is for North Africans.

With Canada being a multicultural country, have you tried using our multicultural community to be able to sell more to other countries? Have you thought about that? Is it in the works?

Mr. Dahl: Yes, companies do market that way. When we comment on countries like Japan or North Africa being important customers, they are very important customers, but our most important and biggest customers are still Canadian. Our domestic market and our domestic processors are still our most important customers. That market can't be ignored.

Senator Enverga: You said the U.S. is one of your major competitors.

Mr. Dahl: It is.

Senator Enverga: Is the U.S. exporting to Canada?

Mr. Dahl: I'm sorry that I don't have those figures off the top of my head, but there is some north-south trade where some U.S. product is imported into Eastern Canada and we ship it to Western Canada. But we do ship more to the U.S. than they ship into Canada, so we are a net exporter to the U.S. market.

Senator Enverga: Why can't we just control our own market here? Why can't we sell better product to Canadians?

Mr. Dahl: We can. Wheat is not just wheat; there are different products for different end uses. Wheat that is used to make crackers is not the same wheat that is used to make a loaf of Wonder Bread. Those are actually different commodities.

We simply must depend on access to international markets for the simple reason that we produce far more than we can consume. So if the borders were to close tomorrow, 40 per cent of Canadian producers wouldn't have anywhere to sell their product.

Senator Mockler: Your presentation, Mr. Dahl, was based on emerging markets and also on the agreements we have signed. I also understand that under CETA, a biotechnology working group will be tasked to address a great subject of concern, or if it's not a concern, a great subject of discussion, and that's GMO approval. Are you participating in this working group? When I look at 37.5 per cent of grain companies, exporters and processors, 37.5 per cent of farmers and 34 per cent of crop development and seed, are you participating? What steps have been accomplished to date? What do you recommend?

Mr. Dahl: I'm aware of this working group. In fact, it's an example of these side agreements on sanitary and phytosanitary issues that are important to have in trade agreements.

We're not participating directly, and one of the reasons is that Cereals Canada has — I've just been in place for one year. The CETA negotiations, of course, took place long before Cereals Canada came into existence.

These are the kinds of agreements that are within our trade negotiations and are absolutely critical to us. So, yes, this is one example where we need to ensure that our trade is based on sound science. That is our objective through these agreements.

Senator Mockler: Mr. Dahl, when we look at international and emerging markets and the free trade agreements that we have signed, looking at the CETA agreement, let's do a little exercise. You are in the chair and have to make three recommendations. What would be your three recommendations for the federal government to address that are most important in order to secure international markets for the Canadian agricultural sector?

Mr. Dahl: My most important recommendation is a comment I made with regard to the Trans-Pacific Partnership negotiations: We can't be left behind. That is a point I can't stress enough.

My second critical recommendation would be that we are a trading nation, so as much as possible we need to pursue tariff-free and quota-free access around the world.

My third recommendation would be in relation to the sanitary and phytosanitary rules of trade that I mentioned. We need to have strong, science-based dispute resolution processes embedded into those agreements to ensure that if disputes and disagreements do arise, we have a science-based process to resolve them.

Those would be the three top comments that I would make.

Senator Tardif: Mr. Dahl, in your presentation you indicated that Cereals Canada as well as Cigi has launched a comprehensive review of future customer needs and that you're hopeful this study will guide ongoing customer support and outreach as well as keep the Canadian value chain strong. Your hope is that a strategic plan for public and private investments in innovation will be put forward.

Mr. Dahl: Yes.

Senator Tardif: What are you hopeful for? What do you want when you talk about a strategic plan for public and private investments and innovation in your sector?

Mr. Dahl: Mr. Chairman, I'm wondering if we could have an extra hour so I could answer that question. It is a very good question.

Cereals Canada has begun leading a process through the Grains Roundtable, which is collaboration among all industry participants and federal and provincial governments, to help develop a strategic plan for wheat research in Canada.

The demands of our customers and what our customers want, which is what this Cigi and Cereals Canada project is going to reveal, is a key foundational piece to this strategic plan. One of the culminations of this process will be a workshop this fall where we will bring together funders, federal and provincial governments, as well as organizations like the Western Grains Research Foundation together with researchers and research organizations, public and private, to precisely answer those questions. What should Canada's strategic research goals be? What are we doing research on today? Where are the holes? Where are the gaps? What do we need to be focused on to meet the end-use needs of customers?

In the end, this is something that's going to be useful for both governments and industry. In my view, it's not as useful to just come to government and say, "Innovation is critically important, would you please fund it?" At the end of this process, we'll be able to say, "These are our strategic objectives, this is what we want to accomplish and this is where government fits." That's a very different conversation. That is our ultimate goal.

Senator Tardif: Thank you for that clarification.

The Acting Chair: Thank you very much, Mr. Dahl, for your good participation in our committee. All senators have been very happy to hear from you.

(The committee adjourned.)


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