Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 26 - Evidence - Meeting of March 24, 2015
OTTAWA, Tuesday, March 24, 2015
The Standing Senate Committee on Agriculture and Forestry met this day at 5:22 p.m. to study international market access priorities for the Canadian agricultural and agri-food sector.
Senator Percy Mockler (Chair) in the chair.
[English]
The Chair: I welcome you to this meeting of the Standing Senate Committee on Agriculture and Forestry. My name is Percy Mockler, senator from New Brunswick and chair of the committee.
At this time I would like to ask the senators to introduce themselves.
Senator Beyak: Lynn Beyak from Ontario. Welcome.
Senator Merchant: Pana Merchant from Saskatchewan.
Senator Tardif: Claudette Tardif from Alberta.
[Translation]
Senator Maltais: Ghislain Maltais from Quebec.
[English]
Senator Oh: Victor Oh from Ontario.
Senator Enverga: Tobias Enverga from Ontario.
Senator Unger: Betty Unger from Alberta.
The Chair: Thank you very much, senators. To the witnesses, before we introduce you formally, this evening the committee is continuing its study on international market access priorities for the Canadian agricultural and agri-food sector.
[Translation]
Canada's agriculture and agri-food sector is an important part of the country's economy. In 2012, the sector accounted for one in eight jobs in Canada — employing over 2.1 million people — and close to 6.7 per cent of Canada's gross domestic product.
[English]
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 ranked the fifth-largest exporter of agri-food products globally. Canada is engaged in several free trade agreements, FTAs. To date, 12 FTAs are in force. The Canada-EU Comprehensive Economic and Trade Agreement has been concluded, and 11 FTA negotiations are ongoing, including negotiations to modernize a Canada-Costa Rica free trade agreement.
Also, the federal government is undertaking three exploratory trade discussions with Turkey, Thailand and member states of Mercosur, namely Argentina, Brazil, Paraguay, Uruguay and Venezuela.
Honourable senators, our first panel will be composed of three witnesses. We welcome this evening, from the Canadian Agricultural Human Resource Council, Portia MacDonald-Dewhirst, Executive Director; Mark Wales, Chair, CAHRC and Labour Task Force; and Mark Chambers, Chair, Policy and Programs Workforce Action Plan.
To the witnesses, thank you for accepting our invitation to share with the committee and Canadians your opinions, comments and recommendations on this important sector.
I have been informed by the clerk that we will have a joint presentation from the three witnesses. At this time the chair will recognize Madam Portia MacDonald-Dewhirst to start the presentation.
Portia MacDonald-Dewhirst, Executive Director, Canadian Agricultural Human Resource Council: Thank you very much for inviting the Canadian Agricultural Human Resource Council here to speak with you today about the pervasive issues facing the industry in terms of labour shortages and the extent to which those are impacting competitiveness for the industry.
As the chair mentioned, the agriculture and agri-food industry, including the seafood sector, is a very large and important contributor to Canada's economy and success. It encompasses several industries, including the farm input and service supplier industries, primary agriculture, food and beverage processing, aquaculture, food distribution, retail, wholesale and food service industries. In 2012, the agricultural and agri-food systems employed 2.1 million Canadians and accounted for one in eight jobs in Canada, or 12 per cent of the total Canadian employment. Regionally, the agriculture and agri-food industry, including the seafood industry, is an important source of economic activity in many provinces and contributes over $100 billion annually, close to 8 per cent of Canada's gross domestic product.
Industry stakeholders have expressed significant concern about the immediate labour challenges facing Canadian agriculture and agri-food businesses and the risks to their viability and growth into the future. The agriculture and agri-food industry needs workers to remain globally competitive, to take advantage of export opportunities provided by the federal government's free trade agenda, and to ensure the security, safety and sustainability of food for all Canadians.
At the Canadian Agricultural HR Council, we are focused on researching and addressing human resource issues facing agricultural businesses across Canada. We work with farmers and industry to fully understand and meet the unique HR, management and training needs within the agricultural commodities. The council works with industry leaders, governments and educational stakeholders to research, develop and implement solutions to challenges in employment and skills development for the industry.
We fully serve the agricultural community as a one-stop shop, a centre for reliable agricultural research, such as labour-market intelligence, and the access point for customizable solutions to agricultural management and training carried to the grassroots level.
Our current research initiatives, covered in the handout you received, include a project around supporting the advancement of women in agriculture. This project is examining and addressing critical barriers to advancement facing women in the industry. The purpose of the initiative is to engage women and stakeholders within the agricultural community to develop and implement a strategic program to support improved access to leadership opportunities and strengthen the success of women working in the industry.
We are also working on a labour market information project, which is about defining a labour market information supply-and-demand model that will provide an overview of the current agricultural labour market so that we can forecast labour supply and demand provincially, nationally and by commodity. The project is identifying labour and skills gaps and investigating opportunities and barriers to participation amongst population groups that have traditionally been under-represented in the agricultural work force, and this is critical at this juncture when we're in shortage, and those under-represented groups include Aboriginal peoples, new Canadians and older workers, among others.
We are also engaged in a national agricultural occupational framework project. This project is about clarifying a variety of much-needed information about core jobs in agriculture and leveraging that information to build meaningful support tools to assist the sector to address its labour requirements and ensure the health and sustainability of Canada's agricultural industry. It is an in-depth study of the exact jobs and skills involved in today's modern agricultural workforce.
We are also related to those projects supporting the implementation of the national workforce action plan. This Agriculture and Agri-Food Workforce Action Plan is a recommendations report designed to address the immediate and pervasive issue of an inadequate supply of workers currently impeding Canadian agriculture and agri-food business operations and their future growth potential. The effort is guided by a labour task force, which Mark Wales is the chair of, and it is a solution-oriented forum made up of industry stakeholders from across Canada's agricultural and agri-food sector working in collaboration to research and prepare plans to mitigate risks to the agricultural and agri-foods sector as a whole across the value chain. The work force action plan presents recommendations that are practical and essential to maintaining a strong industry value chain to ensure the safety, sustainability and affordability of food for all Canadians and to support Canada's continued position as a leader and significant contributor to food production for the world.
At this point, Mark Wales, our chair, will now give more details about the Canadian Agricultural Human Resource Council and the Labour Task Force, and the Canadian Agriculture and Agri-Food Work Force Action Plan.
Mark Wales, Chair, CAHRC and Labour Task Force, Canadian Agricultural Human Resource Council: Thank you for inviting us to participate in your study on international market access priorities for the Canadian agricultural and agri-foods sector. As mentioned, my name is Mark Wales. I am a vegetable and grain farmer from Elgin County in southern Ontario.
I am the chair of the Canadian Agricultural Human Resource Council. We represent over 200 different crops and commodities that farmers produce in this country, and we represent over 200,000 small business employers.
As well, I am the chair of the Labour Task Force, which is a committee of our organization providing strategic advice and guidance for the implementation of the Canadian Agriculture and Agri-Food Workforce Action Plan.
Portia has outlined the ongoing work that CAHRC is involved in. The labour market information being researched is greatly needed at this time. I sit on the advisory committee for the National Agricultural Occupational Framework project, which is helping to define exact job skills which take place on our farms and helping to provide the tools which farmers will need to hire and retain workers. The Canadian Agricultural Human Resource Council offers farmers the opportunity to learn about recruitment and retention and the online tools that are better connecting workers and farmers needed by our industry, which is clearly facing critical labour shortages.
The Labour Task Force, to which I was recently elected chair, functions as a solution-oriented forum made up of industry representatives from the 12 Agriculture and Agri-Food Canada value chain round tables. The task force was originally established in 2012 to examine issues of agriculture and agri-food labour management and shortages. The Canadian Agriculture and Agri-Food Workforce Action Plan was researched and developed by the task force. It is a comprehensive plan, a road map forward for the agriculture and agri-food industry, including the seafood sector, and was released last year.
This work is an important part of our organization's efforts to research and address critical workforce issues relevant to the agriculture sector. Industry and stakeholder engagement is an important part of successful quality research and a cornerstone for our organization. With over 50 implementation partners, the workforce action plan is bringing farmers and industry, the complete agriculture value chain, together to work on a permanent solution for what is a permanent problem.
There are many unique workforce challenges for the agriculture industry, which are outlined in the update before you. One of our biggest challenges is the seasonality issues associated with our industry.
The horticulture sector, which encompasses 120 different crops comprised of fruit, vegetables, flowers and ornamental plants, necessitates a mixture of full-time, long-term seasonal, short-term seasonal and harvest workers. The horticulture sector is a huge contributor to the Ontario economy and to the broader Canadian economy. Farm gate sales alone in Ontario exceed $1.4 billion yearly from Ontario horticulture.
Horticulture is just one of the value chains that deals with workforce issues associated with seasonality. Grain farmers have seeding and harvesting deadlines that involve intensive workloads in the spring and fall. Also, livestock producers in the cattle industry have an intensive workload associated with the calving season. Sheep producers likewise have a shortage of skilled shepherds willing to work in seasonal positions. The seafood sector is also one of Agriculture Canada's value chain round tables. They, too, have a seasonal component.
There needs to be a clear recognition that there will always be a seasonal part to agriculture and our food production that won't be able to provide full-time jobs.
One of the most frightening things as an employer is to spend hundreds of thousands of dollars to grow a crop, get it to harvest and not have enough people to harvest it. The possibility of losing a perishable crop to frost or over-maturity is always a real, daunting issue for farmers.
The other unique workforce challenge our industry is dealing with is rural depopulation. This trend is affecting rural areas across Canada, including Ontario. According to a research series prepared for the Rural Ontario Institute, Ontario's non-metro economy has been declining since October of 2012. The sector with the largest employment decline since the peak in 2008 was manufacturing. The long-run pattern shows total employment in non-metro Ontario has been generally flat since 2004.
There is clearly a deficit in the balance of incoming versus exiting working-age population, which predominates in non-metro areas of the province. Potential labour market shortages are more likely to be a concern in these areas.
The rural challenge is that our employment opportunities are in non-urban areas, making it difficult for employers to access and attract workers, and there are many reasons for that, for example, housing, transportation and access to child care.
According to rural statistics prepared for the Federation of Canadian Municipalities in 2014, the new rural challenge is to create people, not jobs. People creation, not job creation, holds the key to growth in rural Canada. Canada is approaching a scenario with more deaths than births, and some rural areas are already there. To grow, these communities must attract immigrants or migrants from elsewhere in Canada.
The Canadian Agriculture and Agri-Food Workforce Action Plan research is indicating that a gain for the agriculture and agri-food industry is a gain for Canadian rural development. Repopulating rural Canada with workers wanting to work in the agriculture industry will stimulate economic growth and jobs for all Canadians and will provide a lasting rural economic and development feature.
Mark Chambers will now speak to the Canadian Agriculture and Agri-Food Workforce Action Plan.
Mark Chambers, Chair, Policy and Programs Workforce Action Plan, Canadian Agricultural Human Resource Council: Thank you very much for inviting us to testify here today. My name is Mark Chambers, and I'm the chair of the Labour Task Force policy and programs working group. It is solutions-oriented group of 18 active members, and we have been working on an update to the Canadian Agriculture and Agri-Food Workforce Action Plan. We have been researching the critical workforce agricultural labour shortage issue, offering short-term, medium-term and long-term solutions for agriculture and agri-food.
I am the production manager for Sunterra. We're a family-owned farming business in Acme, Alberta, so I'm a long ways from home here. On this particular farm, we raise about 60,000 market hogs per year, and we do value-added processing at a meat plant in Trochu.
Trochu is very rural Alberta. About 130 people are employed at that plant. It's a huge economic driver for our rural economy. The head office is in a town called Acme, which is about 500 people, and the value added in our meat plant in Trochu is in a population of a town of about 700 people. It's a large employer of the community.
We are a pork operation, but we are in agreement with the Canadian Cattlemen's Association study, which indicates that for every worker employed in the sector, 4.2 workers are employed in Canada, counting direct and indirect impacts, and almost 7 workers are employed if all impacts are included.
The agriculture value chain provides a huge positive economic impact to our rural communities. Our farm and our value-added operations support our rural economy. We need farm workers and plant butchers. These employees purchase goods at local stores in the rural communities. The broader employment benefits to the Canadian economy include such things as truckers, retail meat sales at your local grocery store and so on. Schools are being built or rebuilt, and our rural communities are being revitalized.
As the workforce action plan indicates, there are currently over a thousand job openings that remain unfilled in the meat sector alone. This is because we can't find domestic labour to fill the jobs. This is being felt through the value chain, all the way back to the farmer, meaning more grain will have to be transported by the railroads from farm to port, if you could get the railroads moving. If things do not improve, agribusiness will have to consider exporting the livestock rather than doing the value-added processing here in Canada, which means the industry is effectively transporting jobs and economic opportunity.
The reality is that Canada's agriculture and agri-food industry needs either to import more workers or to export livestock and then import processed meat for consumers to buy at the local grocery store.
This is true for our company, Sunterra, where we are about 20 workers short in our value-added meat processing facility. Trochu is two hours northeast of Calgary and southeast of Red Deer. Our plant is drawn from 70 per cent domestic Canadian labour. We use workers from abroad as a backstop because in our rural location it's extremely difficult to find more workers. Anyone who wants to or is able to work is already working. We have an aggressive recruitment campaign throughout Canada. I was at a job fair in Ontario a couple of weeks ago recruiting for our business, and it's extremely difficult to get people interested in the agriculture and agri-food industry. We do numerous recruitment efforts across Canada like this.
Because of the changes in June last year, we are at our 30 per cent cap in our value-added plant, so we can't hire any more workers through what is currently known as the Temporary Foreign Worker Program. We are feeling unintended consequences of the changes made to address the abuse of the program, which did not come from the agriculture and agri-food community.
Lack of labour in our plant has a huge impact on our farm. I've been in the barn with the workers many times in recent months, ready to ship our pigs to the value-added plant, when we get a call that tells us they don't have room to take the shipment because they don't have enough workers to cut the meat. What are we supposed to do with these pigs when they are ready to go to market? It's a nine-month process from the time you breed the sow until the time the animals are ready to go to market.
We can't stop the pigs from procreating as they are bred months in advance. This is just one example of how it is putting pressure on the value chain. It is a unique value chain that is important in every step of the way. It's another reason why the agriculture value chain needs to be considered unique, because the productivity and success of our industry are tied to a perishable product related both to the handling of live animals — which can be a welfare concern if it's not done correctly — and to the safety, security and sustainability of food production for Canadian consumers.
When Canadian domestic workers cannot be found, agriculture and our value-added processing need a farmer-focused value chain option. When we can't find Canadian workers by aggressively advertising and recruiting, we need a dedicated pathway for agriculture and primary processing companies willing to hire workers from abroad as a backstop measure and a viable pathway to permanent residency for those successful workers.
Many opportunities for career promotion exist within the agriculture sector, making these workers strong candidates for economic immigration in rural communities, and these jobs are readily available today.
We have an example of how this works with a recent article, which is the cover story in the new joint publication of the Alberta Barley Commission and the Alberta Wheat Commission called GrainsWest. It's an example of a migrant worker coming to Canada and permanently settling here and becoming a permanent resident and now moving on to become a Canadian citizen.
The agriculture workforce challenges that we face are not temporary. Industry feedback our working group is receiving provides evidence that we need an integrated, permanent solution for a permanent problem. We need a Canadian agriculture and agri-food workforce program.
Through extensive industry consultation over the last three years, industry has developed the Canadian Agriculture and Agri-Food Workforce Action Plan with recommendations to address the immediate and pervasive issue of the inadequate supply of workers.
Within our workforce action plan update that we have been working on since before Christmas, we have taken a short-, medium-and long-term approach recommending a new integrated, permanent labour solution for the agriculture and agri-food industry.
Number one is short-term solutions. Many adjustments could be done to streamline the systems and processes immediately to help the agriculture and agri-food sector successfully adapt to new policy changes. Medium-term solution: a Canadian agriculture and agri-food workforce program, a new streamlined program with Employment and Social Development Canada designed for and dedicated to the agriculture and agri-food industry. Long-term solutions include the Canadian Agriculture and Agri-Food Workforce Action Plan providing a pathway to permanent residency for agriculture and agri-food workers with Citizenship and Immigration Canada.
Implementation of the long-term elements of the Canadian Agriculture and Agri-Food Workforce Action Plan: This new Canadian Agriculture and Agri-Food Workforce Action Plan should be considered an important part of Canada's export strategy. Our industry needs more workers to take advantage of new opportunities offered by new trade deals. The pork industry is export-focused. For example, 70 per cent of the product at our meat plant at Trochu is exported to international customers. We have a new trade opportunity with Asia associated with one of the trade deals which we would like to take advantage of, but the lack of workers in our plant today is making that extremely difficult.
Our working group's research indicates that implementation of the Canadian Agriculture and Agri-Food Workforce Action Plan will help revitalize the rural Canadian economy and its communities by creating a policy environment which allows our industry to remain viable, competitive and a significant contributor to the Canadian economy.
By creating a policy environment that fills our industry's workforce needs, the end result will be productivity expansion. This will enable rural Canada to become an agri-food engine for the new export opportunities offered by the federal government's trade agenda. Thank you.
Senator Tardif: Thank you to all three of you for your very interesting presentations.
Previous witnesses, as well as you, have indicated that you're facing major labour shortages, especially in the wake of changes to the Temporary Foreign Worker Program. The government has introduced a new express entry system as of January this year. Has the new program resolved in any way some of the issues that you're facing?
Mr. Chambers: In the short term, no. The express entry is geared towards high-skilled workers. If you're familiar with the NOC code matrix, it starts at O, A, B, C and D; so it's geared towards O, A and B NOC codes, which are higher skills. However, in our meat plants they are considered lower skills, even though they're not low-skilled workers. Every occupation has a skill. So does a skilled meat cutter, but it's considered a C occupation, which is not eligible for express entry.
Senator Tardif: What is the definition of an agricultural worker, according to the federal program and rules, and how would a worker be defined as "skilled" in agricultural terms?
Ms. MacDonald-Dewhirst: I'll take that question. Thank you; it's a very good question. ESDC uses the National Occupation Classification system. Those are the NOC codes that Mark was speaking of, and the NOC codes classify work in Canada according to function and also level of skill. Those codes are used to define who is applicable and eligible for the different elements of the Temporary Foreign Worker Program, along with the National Commodities List. That is a list of commodities that can access both the Seasonal Agricultural Worker Program and the agriculture stream of the Temporary Foreign Worker Program. So the answer is that it's complicated, and there are two systems that are used to answer that. However, it's complicated not only for those who aren't involved in agricultural production, but also for those who are in it trying to access programs, and complicated for those trying to oversee and manage the program. It's difficult in its nature in terms of how it has been formulated, and partly that's because it has grown and expanded over time.
Senator Tardif: If I understand correctly, you feel that your sector is perhaps being penalized in a sense because the Temporary Foreign Worker Program has been effectively dismantled, and you cannot have workers apply under the new express entry system. So there's a huge gap out there that's not fulfilling the needs of your market sector. Is that correct?
Mr. Chambers: Yes, that would be correct. Our focus has always been to try to focus on permanency with the use of the Temporary Foreign Worker Program, and I think that's what Canada's new agenda is — the temporary foreign worker has a stigma behind it — to focus on permanency, which is why they created the express entry program. It is geared towards higher-skilled workers, so it has restricted our ability to bring in enough workers.
[Translation]
Senator Maltais: Ms. MacDonald-Dewhirst, your association is a national organization. Do you have contacts with Quebec, New Brunswick and Newfoundland? If so, with whom?
[English]
Ms. MacDonald-Dewhirst: Yes, we do. We work with stakeholders from across Canada, including AGRIcarrières, UPA in Quebec and the Quebec Farmers' Association. We also work with the Agricultural Alliance of New Brunswick, and also the Newfoundland and Labrador Federation of Agriculture. So we are well represented across Canada as a national organization, regionally and also by commodities. Did you have anything to add?
[Translation]
Senator Maltais: Your answer is clear. I am looking over your mandate and I am trying to find a solution to the problem I am going to raise.
Your mandate is to be the centre for reliable agriculture research, such as labour market information and the access point for customizable solutions related to HR management and training carried to the grass-roots level.
What do you think about that, Mr. Chambers? How many agricultural workers have you found with this mandate?
[English]
Mr. Chambers: Trying to find agricultural workers in Canada has been getting difficult over the years, and it's getting more difficult today, because fewer and fewer people are growing up in rural communities. Historically, if you go way back when there were farms and you would grow a grain and have a quarter section with two or three kids growing up in that quarter section, they would enter into agriculture, whereas today, when someone sells a farm, it's not the family that buys it. It's taken up by a larger farm, so there are fewer and fewer people. So that's making it a lot more difficult.
[Translation]
Senator Maltais: That's what I wanted to hear you say.
I think we need to make a distinction between agricultural workers and those in the agricultural industry. Processing represents one sector, but the true agricultural workers are the ones putting their hands in the soil in the spring to plant, and in the fall, to harvest, and I must say that they are not easy to come by in Canada. Regardless of whether they are market gardeners or livestock producers like you, this is a problem, because we end up finding more half-time or quarter-time people. Anyone who works in this industry cannot make a living if they don't work throughout the year. We will not be planting raspberries today in Canada, because it is a little chilly, and it is not the season.
How can we ensure that the person who works in the spring and in the fall can have an income during the winter, in processing or in any other sector, and can have a profession and full-time employment? How can we do that?
Ms. MacDonald-Dewhirst, do you have an answer?
[English]
Ms. MacDonald-Dewhirst: It's a good question. I don't know that I have the answer, but we are working to sort out how to better enable mobility within the industry to access under-represented groups — those who aren't working currently in the industry — to try to bring them in and also to help employers understand how to be flexible with the opportunities that they offer to their workers. There are good examples of operations that try to make full-time jobs where possible, but it's not always possible. Our climate dictates that we have a seasonal component to this industry.
[Translation]
Senator Maltais: Thank you very much, Ms. MacDonald-Dewhirst. Mr. Chambers, I would like to congratulate you. You are a young agricultural entrepreneur. Not many like you come to see us here. Congratulations!
I would like to raise another point, which I think is important for the entire country: the next generation of farmers. The next generation of farmers is responsible for tomorrow's dinner; who will make that work? We see this problem in Quebec, in Ontario, in the Maritimes and in Western Canada, in British Columbia. What do we have to do to get young people interested in the need for Canadian agriculture?
[English]
Mr. Chambers: That's a very good question, and I get very passionate when I talk about that because trying to get young people engaged in agriculture is extremely difficult. As I said earlier, they're not growing up in it, but, then again, no one is growing up in the oil industry or growing up as a carpenter. Every industry has that issue. But when you drive through town, you'll drive past factories and these facilities, so you see them. But if you live in a city, no one sees agriculture and what goes on, so we're not getting any exposure. From my perspective — and we've talked about this a lot — we need to get some type of — I don't just say agriculture — I call it food production — how food is produced, how it's grown, whether it's a crop, whether it's livestock or whatever — into the school curriculum because we need to expose kids as young as possible to food production and opportunities in food. I've been to schools. I've done presentations. I went into some classrooms. I'm from Drumheller, Alberta, and I've gone in there with 14-year-old kids and talked about agriculture and opportunities in agriculture. They sit there doing this kind of stuff. You've lost them at that point; it's too late. When they're five and six is the perfect time to get in there and start talking to them — fix, six, seven, eight, nine — about agriculture and what goes on. My son will go to school and tell the kids what I do on the farm. He has been to the farm with me, and he tells them. They say, "Oh, that's just not right." He explains to them, and then they say," Oh, yeah." Then, they get it, but because no one talks about it, they don't get it.
[Translation]
Senator Maltais: You are a great educator, and I think we need people like you.
My last question is more a request for Ms. MacDonald-Dewhirst. To follow up on what Mr. Chambers told us, we will not be able to make young people discover agriculture when they are 15 or 16.
As the CEO of the Canadian Agricultural Human Resource Council, could you commit to reaching out to human resources at a younger age? What I mean by that is whether you or your employees could go to primary schools in Canada and explain to young people that agriculture does not only come from Loblaws or Provigo, but that it comes from the ground first. They need to become interested at that age so that, when they turn 14 or 15, it is not rocket science when they learn that pork comes from pigs; they will know that when they are 5, 6 or 7 years old. I think that would be a good objective for your mission. Thank you.
The Chair: That was not a question, it was a comment.
Senator Maltais: It was a request.
[English]
Ms. MacDonald-Dewhirst: It is an excellent comment. In fact, I just delivered a webinar to the industry about how those within the industry need to do more to get youth engaged and thinking about agriculture and where their food comes from. There is a movement around this in the industry. There's a recognition that more of this needs to be done. There are organizations like mine that continue to do this work. There are organizations, such as Agriculture in the Classroom, or in Ontario there's an Ontario education and food organization, that are focused on this very issue. And 4-H is another that is focused on engaging with youth, moving forward and selling the good news that this is a great industry to work for.
Mr. Chambers: It is very important. As farmers we're very good at producing and farming. We're very good at going out, tending to the livestock and growing our crops. As farmers, what we fall short on is educating people, unless they're in front of us and then we're great at showing them what we do. But going out there and being a voice for educating people of what we do and how we do it — this is why it is important to have an industry collaboration like this, such as CAHRC and someone like Portia to kick us in the butt and say, "Come on guys; we have to get out and get more people educated." We have to get the message out because if we don't, then this problem will get worse and worse. We will be in real trouble because Canada was built off the foundation of agriculture.
The Chair: Thank you. That was a really good comment.
Senator Merchant: I must thank you for being here, making your presentation and educating us as well. You have a difficult task, if you don't have workers to do the work. Ms. MacDonald-Dewhirst, I think you mentioned that we need to make it possible for women to engage in the agri-food sector.
You did mention daycare — I don't know if it was schools. What other barriers are there to women becoming involved in agriculture, and do you have a lot of women who want to do this kind of work, or is it the wives of the men who are involved in agriculture?
Ms. MacDonald-Dewhirst: That has been the history. But that's changing. In fact, this weekend, there is an Advancing Women in Agriculture Conference in Calgary, and more than 500 women will be attending. It is a new conference, and we are going to be making an announcement about our project there, that there is the need for more research in this area. It is an under-represented group.
We know that science students are interested in food. We know that youth are interested in food, and we need to leverage that. That includes women as well. That's what we're doing. We're exploring and examining the leadership opportunities that are available for women and also providing some supports for networking to ensure that there's a strong way that women can feel more encouraged from one another and working in the industry.
Mr. Chambers: A couple years ago we had a woman managing one of our farms here in Ontario. She would always give herself a hard time because she was a woman and she was not looked at, but I tell you something — and I'm not lying or blowing smoke — she had the best producing farm in our whole system. It was clean, tidy and the top performer, the most efficient, lowest-cost producer.
And today, she beats up on herself. She still keeps saying, "I'm a woman." It doesn't matter. You have a successful career and you can do a great job. You have done a better job than any guy that's been managing a farm. At times, we have had lots of women. It is not just a guy working for us and his wife or something. It is women that have entered the industry. The thing to think about in pig production is that there's a huge maternal component to it, and women are better at that than guys are. We're just not very good in that component.
Senator Merchant: I was going to ask a question regarding the difficulty that you are having with getting skilled workers. In 2011, the government introduced a regulation limiting the period of time during which a temporary foreign worker can work in Canada. Once a foreign worker has accumulated four years of work in the country, he or she has to wait four years before working in Canada again.
What did they do? Did they leave the country? Did those people come back once you had trained them? How do you feel about that?
Mr. Chambers: Not very good.
Senator Merchant: No.
Mr. Chambers: Yes, that deadline comes April 1 this year. That means that anyone who accumulated four years by April 1 has to leave, and they can't come back for another four years. Now, some people in the industry, who are considered, back to the NOC codes, who are not considered NOC code OA or B have transitioned to permanent residency. So they can stay and become permanent residents. For the people that are still on a work permit, it is problematic.
I will pick the mushroom industry, for example. They have got a lot of workers that are working year-round because mushrooms are produced year-round now. They are considered what is called a lower-skilled occupation, so they do not qualify for permanent residency.
It is problematic for that industry because those people have no pathway to permanency. So they have to go home after four years and be replaced by someone else, which seems kind of ironic, because now you are just replacing someone versus keeping that person that has taken six months to get trained to do a good job. That is a problem.
There is also another component to it. We have the Seasonal Agricultural Worker Program, SAWP, which has been around for years —
Mr. Wales: Over 40 years.
Mr. Chambers: — for 40 years. There's no duration cap applied to that because that is attached to a number of bilateral agreements with other countries and it is seen as it is needed for seasonal. There's always going to be a seasonal component to agriculture. For those people there is no cap, but there are certain requirements to qualify for that program. If you are a grain farmer, for example, and you are not on the commodities list, you don't qualify to use SAWP, so that means you have to use the conventional stream. That person is coming to drive a combine for six months a year, help with seeding, then combining, and then they go home. They do end up getting hit with that duration cap. Once they hit four years, they can't come back again even though they're carrying out a seasonal position.
I think again it comes back to the unintended consequences of this program, which is a national program for all commodity groups, and all industry. It has ended up hitting everyone the same. For us, it is a bit of a problem.
Senator Merchant: Do those people come back? Can you just keep trading them? These four-year people go home then you get another group that you train, then they're ready to go home after four years, but you get the previous ones to come back. Does that work?
Mr. Chambers: That's possible, yes.
Senator Merchant: It does go like that, or do they go away and stay away?
Mr. Chambers: It is possible. They might come back, might find something else and might not. You could potentially be training new people all the time, which is kind of crazy, really. The focus needs to be on creating pathways to permanency for those people.
Senator Merchant: I agree. Thank you.
Senator Enverga: Thank you for the presentation. Being a senator, you get conflicting issues here. On the Aboriginal Committee, we have always heard so much grief about the unemployment in the First Nations, with some of them having 30 per cent unemployment. Have you ever reached out to those people there and said, "There's a job for you here; we will come over here and we will give you good compensation?" Has that ever been done on your end?
Ms. MacDonald-Dewhirst: Yes, quite a bit of work has been done by various groups across the industry. The Canadian Meat Council and some of the meat processing plants have specifically worked with particular areas of the country and Aboriginal people. The council has been very busy researching this issue. It is an important component. We need to ensure that, as an industry that is short of workers, we are trying to find them wherever we can find them.
The industry is in such critical crisis that everybody is looking as far and wide as possible and using interesting and innovative methods. So yes, that has been explored and examined and continues to be a focus as we move forward.
This issue is pervasive and critical. We have some long-term strategies about how to shore up the labour supply, including getting youth more interested in agriculture careers and being broader in our communications about the industry. We have shorter-term recommendations around the need for better and focused access to temporary workers at this point in time.
We have a full gamut, but part of that absolutely includes accessing under-represented groups within the industry.
Senator Enverga: How successful are you in recruiting First Nations or Aboriginal groups?
Mr. Chambers: It has been a challenge. Initially, when any of our agricultural companies were looking for labour, we have done conventional advertising in newspapers, and then we have gone to job fairs. It has got to the point where some of our members have gone to the band leaders, discussed it with them and said, "We need people. Can we get some?" The chiefs will say, "We will get you workers," but it doesn't go anywhere. We just don't get them.
Some of the companies have hired from the First Nations, but not a lot of them come and not a lot of them stay for very long. It is a problem. There is high unemployment, and we would like to somehow be able to work with the First Nations in trying to get some more people engaged in agriculture because there is an opportunity there, if we can figure out how to get it done.
The government recognizes that it is an issue, and industry knows it is an issue, but it is a difficult barrier to cross to make it successful. There have been some success stories, absolutely, but there have been a lot that have not been success stories.
Senator Enverga: You spoke about teaching kids. Here in Ontario, they're proposing more sexual education, but don't you think there should be more education about pollination and germination? Shouldn't that be a focus in Ontario? Is there any such drive for education to teach kids at an earlier stage to think about farming?
Have your organizations thought about it?
Ms. MacDonald-Dewhirst: There's lots of work in this area, but it hasn't become mandatory curriculum as of yet. There are movements to push that forward. Certainly, there are lots of us that would love for that to occur. It is really important that people know where their food comes from and how pollination is a piece of that. It is with ongoing effort that we encourage those within the community to go into classrooms to engage with teachers. Teachers are busy. They need help. Farmers can come in and speak to the issues as guest speakers, offer co-op placements or tours — there are all sorts of ideas. The industry is engaged.
Mr. Chambers: Curriculum is left up to the provinces. It is not like you can go to the Canadian government; you have to go to each province. As Portia said, somehow we need to get agriculture into the curriculum so that they grow some plants; grow a garden.
When I went to school, we grew a garden. We grew vegetables, and it was fun. But we knew how to dig a garden, and we knew where our food came from. If we want this to be successful and to continue to be successful, the government has to put their foot down and say, "All you provinces, this is part of the curriculum. Now get it done."
Senator Enverga: Has your organization lobbied, or worked, or engaged the various provincial governments to do this for you?
Mr. Wales: One of the other challenges here is that people need to know not only where their food comes from but also how to prepare it once they purchase it. That's one of the challenges. For the most part, we don't have home economics in school anymore, so kids don't know how to cook. That's one of the things in Ontario we have been lobbying to get back into the school curriculum. The term we use is "six by 16." If a 16-year-old can prepare six meals from scratch, then that would be a real achievement. It would be a huge step forward.
There is a growing movement. People do want to know where their food comes from; they do want to know who is producing their food. In my own operation, I grow quite a few different vegetables. We have a large pick-your-own operation, so we have people travelling from over two hours away to come to pick peppers, onions, garlic, and so on.
That is a new area. Not only do they need to know how it is produced, they also need to know what to do with it, which will reduce the waste and is better for everybody. That's something we have been promoting as well.
The Chair: Home economics was that venue?
Mr. Wales: Yes.
The Chair: Thank you.
Senator Unger: I had a comment about my colleague's comment. I would like to quote Mr. Wales from his opening comments. He said that our job is to create people, not jobs. I don't know if I would like to ask you to elaborate on that. I know what you mean, though.
Mr. Wales: I will try to elaborate. When we first started the CAHRC, one of our first projects was a labour market information study. What we discovered was that basically there's a shortfall of 35,000 jobs nationally in this country every year. Those are jobs that could be filled and aren't being filled. Some crops are not being grown because, as a farmer, you know you are not going to have anyone who is able to grow and harvest it, so you don't grow it in the first place; but you could.
That's really what that is about. We need people. Historically, with the immigration patterns we have had, say, probably up to the 1970s, a lot of people emigrated from different parts of the world and came to different parts of Canada. Many of them would end up in the rural areas and be part of agriculture. Many went on to be farmers, or they then evolved into the broader workforce. We haven't had that degree of immigration for quite some time. That's really led us to the position we're in today and a real dependence on both the Seasonal Agricultural Worker Program and the Temporary Foreign Worker Program.
We need to get away from that. We need people to come to Canada, to live in rural Ontario and to work in rural Ontario — not only in primary agriculture, but in processing as well, so there will be a range of good jobs.
[Translation]
Senator Dagenais: Mr. Chambers, you said that you went to visit young people in a school and that they were twiddling their thumbs. Don't worry. I went to a high school about a month ago, and the students were surprised. I think they had never seen a senator in their lives, because they were looking at me as if I were an alien. I said, "Go ahead and touch me!" Meetings with teenagers are always interesting.
We have talked at length about seasonal workers. Last summer, I went to a dairy farm with about 4,000 cows. The producer was explaining to me that his problem was that he had to train workers every two years. The seasonal workers he hires can work for him only for eight months the first year and eight months the following year. After those two eight-month periods, those same workers do not return to work for him.
You have proposed some solutions, but what would you like the government to do to help you? Is the renewal of contracts the problem?
[English]
Mr. Chambers: We have been meeting with government for the last month, with ESDC and CIC, and we have been floating an idea in front of them. We're trying to work with them on solutions, a permanent solution for a permanent problem, and to create the Canadian Agriculture and Agri-Food Workforce Action Plan that is specifically for the value chain in agriculture, so from the primary side right through to the primary processing.
That is a workable, long-term solution that gives us opportunity to access immigrant workers, bring them in and move them to permanent residency. One component is always going to be seasonal, so it is always going to be temporary. But there's a huge component that is year-round, that is going to need to be permanent, so for those positions we don't want temporary workers. We want permanent workers.
The government needs to recognize that agriculture is unique. It is not a drive-through Tim Hortons in a metropolitan area. These are rural locations, and it is very difficult to get people, so we need a unique program for a unique industry that is set up to create pathways for permanency.
Something like that, where you are training people and you have to send them home and bring someone else in and go through the process of retraining, becomes very expensive.
[Translation]
Senator Dagenais: You say that the government should set up a permanent workers program. However, I got the impression that those people, after their eight months, are happy to go back to their country with Canadian money in their pockets, and I think that money goes a long way for them, because the cost of living is cheaper there. I am talking about Latin countries. It was a good deal for them to come back to Canada for another eight months, to make a lot of money and to then go back to their countries. Not all of them acclimatize to our Canadian winters, which are quite harsh, like our winter this year. What would you like the government to do in those cases? You may want to give them a permanent worker's permit, but does that mean that they are interested in the offer? Or would they rather work for eight months and go back to their countries? Their families are often left behind. The wives wait with the children and the men come with the money. I heard this from Latin Americans. They say that they want to go back to their countries, because they can afford a lot of things with the money they make in Canada. They want to come back to Canada, but they can't do so after two years. Can we do something? Are there solutions that would allow these people to come back for three contracts, or four?
[English]
Mr. Chambers: We have talked about the two components. There is a seasonal component in which they come for a duration of eight months max. I'm not too familiar with it, but I think eight months is the max they can come, and they have to go home during Christmas, and that's part of that temporary program.
Those people can keep coming back year after year inside the Seasonal Agricultural Worker Program. There is no duration, and they do. They send home. It creates economic spinoff in their own homes and communities and different countries for their families and children, for better education and so on. Canada is doing their part to stimulate some growth around the world and help other countries.
If you qualify for the seasonal component, those people will always go home, and they always can go home, and there is no duration cap.
There are some issues if it's outside of the Seasonal Agricultural Worker Program where you do hit the duration cap, which is what some people are facing. Then after four years they can't come back again, and you lose that spinoff.
There is a component of this program that we have said you need to look at for agriculture that is unique, that if they work in a seasonal position we feel there shouldn't be a cap on it because it is seasonal. If it's not a seasonal position and it is year-round, then there needs to be a pathway to permanency. So there are two components to that.
Don't worry about people thinking you look like an extraterrestrial because my kids think that of me as well.
Senator Oh: This has been wonderful information from all of you. From which region of the world do your temporary workers come from mostly?
Mr. Chambers: For our business, we have people from the Philippines, Mexico, Germany, Ukraine, El Salvador. There are a number of different countries. Brazil is another.
Ms. MacDonald-Dewhirst: Jamaica.
Mr. Wales: Guatemala.
Senator Oh: In our program now, every four years they have to go back. They go back, and they're probably going to find something else and probably fewer than half return. If you are lucky, you might get 35 per cent returning.
Mr. Chambers: Yes.
Senator Oh: Yes. So what would be the best recommendation? Would it be for them to stay up to 10 years before they can apply for permanent residency?
Mr. Chambers: No, no. I think if it's a year out position and they want to stay, we need to create a permanent pathway for them to become permanent residents and stay.
I think the four-year cap is fine because that gives you four years to become a permanent resident. If your English language isn't that great, employers provide ESL classes to help these people get a better English language level so that it qualifies.
That four-year duration cap was fine if there was a pathway for permanency. For example, in our sector we can have a NOC code C, which is a skilled livestock person. If you are a skilled livestock person, you can apply for permanent residency through a provincial nomination program, and we have had a lot of people do that. Within the meat industry, they are a lower National Occupation Class, a level C, but there have been some agreements made with the provinces calling that semi-skilled, so they have been allowing them through the provincial nomination programs as well.
It has worked very well, but they have to check off the boxes. Their language has to be at a certain level and so on and so forth. They have been able to transition, but the problem is the lower-skilled occupations that don't have a pathway to permanency, and employers don't want them sitting here for 10 years in limbo. Do they live in Mexico? Do they live in Canada? Where are they living? If we can have a pathway for those people to become permanent residents, that would be the best solution.
Senator Oh: I think for the long run in Canada I still prefer school education.
Mr. Chambers: Yes.
Senator Oh: Train them up for the long term. That's the only way to solve the long-term problem.
Mr. Chambers: That's right, because we have got the short-term issue right now, and the medium-term issue we have to supplement. But if we can grow our own farmers, that's by far the greatest option.
Senator Beyak: I agree with our chair; you are an excellent tag team. Thanks for your presentation.
You have shown that you have a great perception of the problems that were in the Temporary Foreign Worker Program and why changes were made but that you weren't a part of it. I'm glad to see your action plan and how you are working cooperatively to address that part, but I'm interested in how we got to this point.
Was it a gradual process? Was it more acute the last few years? Are family farms getting smaller, fewer kids following in their parents' footsteps, bigger crops, more immigrants moving to the cities instead of the country? Can you pinpoint anything specific and how we can help you fix it with our recommendation?
Ms. MacDonald-Dewhirst: You had a great list going there. You had your finger on it. Our population is focused in urban centres. Although we have an agricultural history in this country, people are moving away from the family farms. Farms are becoming bigger and not so driven by families anymore. Fewer kids are staying on the farm; they're moving away. We have the seasonal nature, and that component is an impact, so there are lots of reasons why. It's a physically demanding occupation, and frankly, Canadians are pushing their kids to be knowledge workers, so there is less of a push by the Canadian public for their children and young Canadians to go into the agricultural industry.
All of that is impacting, along with immigration policies that are bringing in different kinds of workers. Mark mentioned that the immigration policy of the 1970s was very different than it is today, and that has an impact as well.
That's why we have a proposed workforce action plan with the short-, medium- and long-term solutions that really target what we need to be doing in the long term to fix this issue so that we can maintain a healthy and vital and vibrant agriculture and agri-food industry. We want it to grow and to prosper, and to do that we have to invest in young people and get them excited about these careers, but we always will have this other conundrum where it's seasonal, physically demanding and difficult to get people to do the entry-level work.
Senator Beyak: Thank you for that. I think Senator Oh is correct about the education component, because kids get very excited. I worked on a farm as a girl, and I loved it. Congratulations on what you're doing and best of luck with it because we all appreciate what you're doing.
The Chair: As we conclude the first panel, the last question will go to Senator Unger.
Senator Unger: Just a short question: I'm wondering how well you pay. The reason I wonder is that, for example, I know that tree farmers have young university students and high school students going off to the mountains to plant trees in areas that are not always that safe, and it's like seasonal work for them. They go, they get paid per seedling that they plant, and there never seems to be a shortage of them.
In Alberta, I'm very well aware of Sunterra. I think you need to locate perhaps closer to Edmonton, because southern Alberta is certainly a hotbed of activity.
I know the challenges. Alberta is a province that does teach home economics. I have two grandsons, and they both have taken it and really enjoyed it.
I'm just curious about your pay scale. Is that a factor? I don't need to know the amount, but is that a factor in this?
Mr. Chambers: A couple of comments, I guess. The first one is about locating closer to Edmonton. We can't pick up our farms or plants and move them. They are where they are, and they need to be in a rural location. To give you an example of that, there was a meat plant just northeast of Calgary, near Balzac, a small town, and it closed several years ago. It's just trying to reopen right now. Harmony Beef purchased it and put $20 million into that plant to revitalize it, and they're having problems with the City of Calgary. They don't want it in their backyard. It's located closer to an urban centre where we can try to get labour, but then you run into this problem where Calgary doesn't want it there. The cities are saying, "Go out in the middle of nowhere," so then it creates the problem again of not having the labour. The location component is that agriculture will always be rural; it will never be anything but rural, and that's just the way it's going to be.
As far as wages go, we're competitive. The meat industry varies on the skill level. Right now, we're advertising because we need workers on our farm. We're advertising a starting wage of $16.25 an hour. People keep saying the industry is suppressing wages, but it's not suppressing wages. It's not a wage issue because I always come back to if it's all about wages, why was the oil sector looking for people when they were paying $30, $40, $50 an hour? If it's all about money, there should be no one on farms, and the oil patch should be full, but it's not about wages. It's about what people want in life. Some people want to live in a camp. Some people want to be home every night. Some people want to work inside. Some people want to work in a team environment. It's about people's quality of life and what they want out of life. It's not all about wages. It's not pay more, pay more. That's such a short-term look at anything.
We spend a lot of time on HR in our company and what people want for part of their job. When you talk about pay, that always ranks way down at the bottom because I can pay you today, and, yes, you'll be satisfied today, but after three weeks that becomes the same. Then you want more and more because it's not rewarding. It's about what you get every day.
The Chair: Thank you. If there is a message you're giving us as a team, it's certainly the education side and where we should be going in our schools from ages 5 and 6 to 16.
Thank you very much. On behalf of the committee, we appreciate your presentations.
Honourable senators, we will now move on to the second panel.
[Translation]
Honourable senators, our witness now is Bruno Larue, full professor at the Faculty of Agricultural and Food Science of Laval University. Mr. Larue holds a PhD in agronomy from Iowa State University. He is a professor with the Department of Agri-food Economics and Consumer Sciences at Laval University. Mr. Larue has held the Canada Research Chair in International Agrifood Trade since 2003.
Mr. Larue, thank you for agreeing to appear before our committee. The floor is yours. The senators will ask their questions afterwards.
[English]
Bruno Larue, Full Professor, Faculty of Agricultural and Food Sciences, Université Laval: It's a pleasure for me to be here.
I was told I have seven minutes to talk about four different topics, so I'll try to be very fast. The first one has to do with expectations of Canadian agricultural and food exporters and market access. Like any other exporters, agricultural exporters would like to have markets as free as possible of obstacles to trade in agriculture. Unfortunately, there are a lot of obstacles to trade. Tariffs tend to be higher than for non-agricultural sectors. If you look at Table 1, you'll see that the average agricultural tariff is higher than non-agricultural tariffs. There are also usually fewer goods that enter free of taxes in agriculture than in non-agricultural sectors, and most countries have their highest tariffs on agricultural goods, what we call tariff peaks, tariffs that often go as high as a few hundred per cent. Regional trade agreements, like NAFTA, for example, and other trade agreements that Canada signed, allow Canada to go around some of these high tariffs. If you look at our list of trade agreements, Table 2, you'll find that a lot of our trade agreements are with countries that the United States has trade agreements with. This is not a coincidence. Every time the U.S. negotiates a trade agreement with a third country, their exporters have preferential market access, so it's important for Canada to negotiate trade agreements with the same countries so that our Canadian exporters face the same sort of preferential access.
So, in some cases, we were quick on the draw. With the Europeans, we managed to negotiate our trade agreement faster than the U.S. The U.S. is still in the process of negotiating, but, for example, with South Korea, we were lagging. Because of that, our exporters of meat products face higher tariffs in that market than their U.S. rivals do.
A lot of the so-called sensitive sectors in agriculture are protected by tariff rate quotas. Basically, a tariff rate quota allows a certain volume or quota of imports to enter a country at a very low tariff rate. Any imports above that are taxed, usually at a very high rate like those tariff peaks I was talking about — 300 per cent or 400 per cent. Basically, it's almost impossible to export over these sorts of quotas.
In the case of the agreement with the Europeans, we were successful in negotiating tariff-rate quotas with the Europeans for soft wheat, beef, corn and pork. In exchange, we increased the quota on cheese. So there will be 18,000 tonnes more European cheese entering into Canada. Overall, I think we did pretty well in these negotiations.
Non-tariff barriers are also very important in agriculture. There are restrictions on food additives and maximum pesticide residue limits. There are also restrictions on how we are supposed to structure our slaughterhouses. There are all kinds of restrictions that are fairly complex and can block trade. Luckily, in the WTO and also in regional trade agreements, we try to harmonize these kinds of norms and standards. One of the biggest benefits of the Canada-U.S. trade agreement that we implemented in 1989 — signed in 1986, I think — was the recognition of national inspection. So, for exporters of beef and pork products, basically that meant that products leaving Canada didn't have to be inspected again once these products had crossed the border. So that greatly facilitated trade.
But still, there are some irritants on that front, like the U.S. law on country-of-origin labelling that essentially discriminates against the export of livestock products like beef cows and hogs that are to be slaughtered in the United States. A lot of U.S. slaughterhouses prefer not to deal with Canadian imports, even when they're cheaper, because there is too much paperwork. We won two panels of the WTO on this issue. We are expecting a third one because the U.S. every time says that they're trying to respond to the panel decision, but, basically, they're dragging their feet. So we're hoping that we will win. If we don't, then we'll most likely impose retaliation measures.
There are also embargoes that hurt us. You probably heard that in February a cow was suffering from the bovine spongiform encephalopathy. I know the term in French. In English, I'm not so good, but the acronym in English is BSE. Anyway, the last time we had such an event was 2011. It's not as if we have a huge problem. These things don't occur very often. As soon as it was announced, the meat from that cow never entered the food chain. Six countries decided to close their market for a single case, and the meat was never processed, actually.
Things like that hurt our industry. It's mostly Asian countries that closed their markets. As a whole, they didn't make a huge amount of trade, but they were considered markets where we wanted to grow. So that was a setback. Of course, there are political issues, like the Russian embargo. That mainly hurt Quebec pork exporters because Russia was the third-largest market for Canadian pork exports, after the United States and Japan, so we had to scramble to find other markets. When you're exporting meat, you have to be fast.
Of course, if we could progress at the WTO, markets would open, not just a few markets at a time, like we do with trade agreements, but a whole bunch of markets. If Canada could use its weight in negotiation, that would certainly help. There's also the Trans-Pacific Partnership that we're in the process of negotiating that would open markets but also create more congestion on the U.S. market. So it's not only good news for our exporters.
In terms of sustainability, environmental health and animal welfare issues, farmers are increasingly adopting agro-environmental practices or what we call best management practices, so they are very sensitive to environmental issues. Because we've done studies on that, we know that they know that they benefit from adopting such practices, and what they are doing also helps their neighbours and family. It's the same with food processers. They are very concerned about that, as well as about health issues and animal welfare issues.
You probably heard not too long ago that McDonald's U.S.A. decided not to buy chicken from suppliers that would use certain antibiotics. That was a major move — a bold move on their part. In terms of antibiotics, a big issue is the cross-resistance. On that front, we've got a lot to do. I would say that is the weaker side of our approach on sustainability.
On animal welfare, I mention a case in California because California adopted a new law in 2008 about giving more space for each bird in cages. Unfortunately it sort of backfired on them because a lot of farmers, instead of investing in new cages, decided to put fewer birds in each cage. As a result, production declined and prices have gone up.
Other states are suing California also because they are not allowing eggs from other states. So it's one thing to pass regulation; it's another thing to live with the consequences.
In terms of food security, diversity and traceability, in terms of diversity, food is no different from any other sector. Consumers want diversity. People don't want to always eat the same thing. It's normal that we import and export a lot of goods, especially processed goods. A lot of companies, like Maple Leaf, are moving in big ways into further processing, and that's not by accident. That's where the margins are. Nowadays, if you go to a grocery store you'll see rows with nothing, but also rows with seasoning already on them, different flavours and brands. That's exactly what international trade theory says: If you create an environment where people can have market access, they'll develop new products to bring diversity.
It's not by accident that we are exporting a lot of food product, processed product, but we're also importing a lot of processed products.
In terms of food security, the best way is to have an open border, and our big distributors are pretty good at sourcing goods from everywhere, including the domestic market, and of course to be productive. In order to be competitive, we don't have to be a net exporter at all levels of the marketing chain. In Quebec, the second-largest exports are chocolate products, right behind pork meat and ahead of maple and soy products. Of course, we don't grow cocoa beans.
Likewise, if we look at exports from Western Canada, they export a lot of primary products to be processed elsewhere, like wheat, like canola, so the canola is not necessarily crushed here. We see more and more of that sort of supply chain. For example, the auto industry where they source parts from everywhere, and different countries are exporting and importing cars. We see the same sort of thing happening in the food industry.
Regarding traceability, it's a tool. It's a useful tool because the quicker we can identify the source of a problem, the quicker we can solve it and limit the damage. Unfortunately, the research shows that consumers are not willing to pay for it. So it has to be paid for by the industry, and then how do you split the risk and the cost? That's difficult. To some extent, that's why there's more and more vertical integration to deal with those sorts of thing. But traceability is certainly part of a broader risk management strategy.
On competitiveness and productivity, if you look at Figure 1, you'll see the trade balances for crops, livestock, processed products and beverages. The biggest surplus is for crops, and then we have lower surpluses for food products and livestock products. We have a deficit for beverages, so I guess we're drinking too many imported wines. In terms of total exports, of course, food exports are the largest.
In terms of productivity, if you look at Figure 2, you have several countries. The country that has the highest level of productivity growth between 1962 and 2011 is Brazil. That's not surprising. They have a lot of land. They have water. They have a great climate, the know-how and good entrepreneurs. The largest meat processor in the world is a Brazilian firm. They're the ones who bought XL Foods in Alberta after the problem with XL Foods. Canada is in the middle of the pack. We're behind China. I don't think China can sustain that sort of productivity growth. They are facing water constraints. They have tremendous pollution problems. They're going to have to address these issues. So I don't think they can sustain what they've achieved in the last 20 years. The U.S. and France are ahead of us. But overall, we're doing a lot better than the U.K., India and Argentina, which is also a competitor. They export beef. They also export wheat, like us.
In terms of the processing sector, we have firms that are leaders in their industry; Saputo, Agropur and dairy products are doing very well. Maple Leaf is a very large firm, highly competitive. We're doing really well except, I would say, in dairy where we have the third-highest production costs in the world. Our processors are now investing everywhere except in Canada. So they're investing in Australia, the United States and South America.
That's all I have prepared.
[Translation]
The Chair: We have about 15 minutes left before Mr. Larue has to leave. Senator Tardif will start, followed by Senator Maltais.
Senator Tardif: Professor Larue, thank you for a most interesting presentation and thank you for sharing your expertise with the committee.
Mr. Larue: It is a pleasure.
Senator Tardif: In the document provided to us, you said that Canada needs to start negotiating agreements with other countries before the United States. You gave the example of meat exports in South Korea, where the Americans have an advantage over Canadian exporters. What is the impact of this advantage on Canadian exports, and how can we set ourselves apart from the Americans to reduce their advantage?
Mr. Larue: The best strategy is to negotiate with them. If I remember correctly, in South Korea's case, we had started to negotiate before the Americans, but then the negotiations dragged on, and when the Americans approached the South Koreans, they ended up taking up the whole space.
Things dragged on with Canada because the automotive industry and the meat industry were lobbying in opposite directions. The beef and pork exporters wanted to sign an agreement quickly, but the automotive industry was far less keen on the idea of opening up the Canadian market.
The ideal is to do what we did with the European Union. We must hurry to sign agreements before the Americans get serious about their negotiations with those countries. Otherwise, we are at a disadvantage. In some cases, there is a tax difference of 10 per cent to 15 per cent, which can be quite significant.
Senator Tardif: Between 2006 and 2014, 143 food processing plants closed down. Does the closure of those plants reflect a lack of productivity and competitiveness on their part?
Mr. Larue: That can vary from case to case. The plants that shut down in Ontario made more noise. In the case of the Kellogg plant, productivity may have been an issue, but there is also a question of consumer habits changing. People will often have yogurt for breakfast instead of cereal. Young people have different eating habits from older ones. They no longer may be eating three meals a day like other generations. They snack a lot. They might eat five or six times a day and not eat full meals. They often eat in front of their computers or when they are checking their smart phones. Eating habits have changed.
Senator Maltais: I would like to thank Mr. Larue for appearing before our committee. I am always happy to receive people from my city, especially people of your calibre. Congratulations on your work on free trade agreements.
A lot of free trade agreements are being signed or will be signed in the near future, so this will not end overnight. Canada is being called upon to produce more in terms of food. A lot of people from all over the world don't eat three meals a day. In other words, improving our production means industrializing it to the extreme. Would you not like to have a nice little provision that would allow us to import the workforce permanently?
Mr. Larue: The workforce is a problem, not only here, but also in a number of other countries. For instance, the United States has a lot of foreign workers. In addition, some regions such as in California are dealing with water problems, which we don't have. They are dealing with closer competition from Mexico. We are not the only ones with workforce problems. Vegetable producers need foreign workers.
Workers in plants no longer make the same salaries as before. For instance, jobs in packing plants used to be very well paid, but we had to adjust to the U.S. wages. I think it was in 2007 that there was a significant adjustment in Quebec for the Olymel plants, I believe, and all the other plants jointly negotiated new labour contracts. The workers had to accept wage cuts of about 30 per cent. Incidentally, an Olymel plant is now on strike, which harms exports. The workers are trying to make up for past losses.
Clearly, they also factor in the exchange rate. One of the things that is really helping us right now is the exchange rate with the U.S., because most of our exports go to the U.S. When I was talking about the export of chocolate products from Quebec, 98 to 99 per cent of those exports go to the U.S. When the Canadian dollar drops, we catch a big break.
Senator Maltais: Thank you.
Senator Dagenais: Thank you, Mr. Larue. I am thinking of two large chocolate exporters in Saint-Hyacinthe. I can't remember their name, but they are major exporters. There is —
Mr. Larue: Barry Callebaut.
Senator Dagenais: That's the name I was looking for. I would like to go back to the Canadian dollar that is at 79.99 cents right now. It has gone up a little. I often go to the U.S. for personal reasons, so I experience this on a daily basis. Some producers say that the drop of the dollar can improve exports abroad. Others claim that we must not develop our competitiveness strategies based on how weak the dollar is. We are hearing two different stories. What do you think about that?
Mr. Larue: If we look at the evolution of plant wages, the adjustments were made at the beginning of the 1980s in the U.S., but not in Canada, where that was done much later because the dollar was very weak. I took a sabbatical year and I spent it in the U.S. when the dollar was at around 65 cents. I was being paid in Canadian dollars and living in American dollars.
Senator Dagenais: That's not easy.
Mr. Larue: At that time, the dollar made up for higher wages in our plants and productivity problems. Since the lock-out in some slaughterhouses — in 2007 I think — processors took that opportunity to modernize their plants, which made it possible to increase productivity. We can't expect the dollar to stay down and to continue to go down. If oil prices go up, the dollar will definitely start going up again. We cannot rely on that factor only. At one point, the dollar went up significantly, which prompted our exporters to diversify their destinations. Our pork exports, among others, now go to about one hundred countries. In the past, we were only present on the U.S. and Japan markets. We had taken large segments of the market in Russia, which undermined the embargo. However, exporters were expecting that. They don't rely on the exchange rate only. They know that things can change and that it is very difficult to predict the future of the markets.
Senator Dagenais: I would have another question. You mentioned McDonald's, which is considering selling antibiotic-free chicken. I know someone who has a chicken farm in the Quebec area. We were talking about the Saint-Hubert chicken chain, which is one of their biggest clients. Mr. Léger said that poultry producers act a bit like lords, because they are protected by supply management. The producer I mentioned said that if he wants antibiotic-free chicken, he can obtain it. However, we should not forget that antibiotics prevent salmonella contamination of food. I would like to know what you think about this.
Mr. Larue: McDonald's restaurants purchase chicken without certain antibiotics; you have to make a distinction. In my opinion, the total elimination of antibiotics is not realistic. That is what veterinarians think. I am not an expert on this. Antibiotics are used preventively, and probably far too much so. So certain improvements need to be made to deal with disease outbreaks, among other things. The chicken production cycle can be very short. If there is only about a week left in the production cycle and an infestation occurs, the chickens have to be treated before being sent to the abattoir. In situations like that the producer does not really have a choice. According to my discussions with veterinarians, the regulations differ from one province to another as to the use of antibiotics. Some measures should probably be put in place in this regard.
Senator Dagenais: Thank you very much, Mr. Larue, this was very interesting.
[English]
Senator Enverga: Thank you for the presentation. You have a publication about the GI, the geographical indicators. I know we will have trade between the EU and Canada. Is it advisable for us to have the same GI protection system? How would it affect us?
Mr. Larue: Traditionally we had the same position as the U.S. — that is, we didn't have geographical indicators. We didn't have protection for that because we were using, basically, copyright laws. If you wanted to use a term, you could buy the copyright for it. For example, in Canada, the designation "Parma Ham" is owned by Maple Leaf Foods. The Italians from Parma that wanted to export Parma Ham could not export Parma Ham. I think they had to call it Ham No. 5 or something like that, which was a bit crazy.
We recognized certain terms and certain geographical indicators, but at the same time, we're allowing some terms that were very close to be used by our processors that had been using these terms. We're hoping to develop more product. We have a few, so some firms are hoping to build new marketing strategies around designations of that kind.
Personally I don't think that it was a big — it took a long time to arrive at an agreement on this, but I don't think there was a major loss for our businesses.
The Chair: I have something before we leave, honourable senators.
[Translation]
Mr. Larue, you mentioned that the United States is also facing a labour force challenge. How does this compare with Canada, and what mechanisms could be stepped up in North America to increase production?
Mr. Larue: For workers, clearly some jobs are harder than others. In California, for instance, strawberry producers complained that peach producers were stealing their workers, because it is less difficult to pick peaches off trees than to bend over to pick strawberries. However, when workers are paid the same amount, they will of course prefer to pick peaches rather than strawberries.
They have the same kind of problem. For processing plants, the training of workers is another issue. In certain cases, some workers have developed manual dexterity because of experience. For some businesses it is clearly important to try to keep their workers after having devoted time to their training, and they would like to avoid having them stolen away by competitors. Certain processors have spoken to me about that in the past.
However, generally speaking, we are doing a lot of work. For instance, we try to make sure young farmers receive a minimum amount of training. Now they are practically forced to have a college degree, three years of training, which means a CEGEP degree in Quebec; in other provinces, I think these are two-year programs.
The typical farmer these days is someone who is better able to adapt to new technologies. They are very connected people who follow the markets on the Internet. A lot of ground has been covered in that area. These are people who use software for their accounting. Most of the time now, a farm is a multimillion dollar enterprise. Not only do farmers have to be good agronomists, and have good general knowledge in veterinary medicine in some cases; they also have to be good managers. In this regard, there has been a lot of improvement.
The Chair: Mr. Larue, thank you very much. You have given us a lot of information, including a whole chapter on the international situation. We thank you.
(The committee adjourned.)